STRAPPING SOLUTIONS P.LTD,MUMBAI vs. ITO 9(3)(2), MUMBAI
In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.
What did the Tribunal hold?
The Tribunal held that since the additions made by the AO in the quantum proceedings were deleted in appeal, the penalty levied would not survive. Therefore, the penalty orders were reversed.
What were the facts?
The assessee was denied deduction under Section 80IB for two assessment years. Subsequently, penalty proceedings were initiated for filing inaccurate particulars, and penalties were levied by the AO. The CIT(A) confirmed these penalty orders.
What were the issues?
Whether penalty under Section 271(1)(c) can be sustained when the primary addition leading to the penalty has been deleted in quantum appeal. The issue also involves the allowability of deduction under Section 80IB.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Heard together (2 matters)
Read from the judgment's own cause title. This page is filed under one of them.
अिधकरण, ‘ई’ खंडपीठ आयकर अपीलीय अपीलीय अिधकरण खंडपीठ मुंबई मुंबई आयकर आयकर आयकर अपीलीय अपीलीय अिधकरण अिधकरण खंडपीठ खंडपीठ मुंबई मुंबई INCOME TAX APPELLATE TRIBUNAL,MUMBAI “E” BENCH सव"ी सव"ी सव"ी राजे"" सव"ी राजे"" राजे"", लेखा राजे"" लेखा लेखा सद"य लेखा सद"य सद"य एवं सद"य एवं एवं संदीप गोसांई एवं संदीप गोसांई संदीप गोसांई, "याियक सद"य संदीप गोसांई "याियक सद"य "याियक सद"य "याियक सद"य Before S/Sh. Rajendra,Accountant Member & Sandeep Gosain,Judicial Member आयकर आयकर अपील अपील संसंसंसं/.ITA No. 1926/Mum/2012,िनधा"रण िनधा"रण वष" वष"/Assessment Year-2003-04 आयकर आयकर अपील अपील िनधा"रण िनधा"रण वष" वष" आयकर आयकर अपील अपील संसंसंसं/.ITA No. 1927/Mum/2012,िनधा"रण िनधा"रण वष" वष"/Assessment Year-2004-05 आयकर आयकर अपील अपील िनधा"रण िनधा"रण वष" वष" Strapping Solutions Pvt. Ltd. Income tax Officer-9(3)(2) 703, Autumn Grove, Lokhandwala Aayakar Bhavan Township, Kandivali -East Vs Mumbai-20. Mumbai-400 101 PAN: AAFCS 5628 C (अपीलाथ" /Appellant) (""यथ" / Respondent) िनधा"रती िनधा"रती ओर ओर सेसेसेसे/Assessee by : Shri Vimal Punmiya-AR िनधा"रती िनधा"रती ओर ओर राज"व क" ओर से/ Revenue by : Shri Sachidanand Dubey-DR सुनवाई सुनवाई क" क" तारीख तारीख / Date of Hearing : 18.11.2015 सुनवाई सुनवाई क" क" तारीख तारीख घोषणा क" तारीख / Date of Pronouncement : 01.01.2016 आयकर आयकर अिधिनयम अिधिनयम,1961 आदेश 1961 1961 क" 1961 क" धारा धारा 254 254 254(1)केकेकेके अ"तग"त 254 अ"तग"त आदेश आयकर आयकर अिधिनयम अिधिनयम क" क" धारा धारा अ"तग"त अ"तग"त आदेश आदेश Order u/s.254(1)of the Income-tax Act,1961(Act) लेखा सद"य सद"य राजे"" राजे"" केकेकेके अनुसार अनुसार PER RAJENDRA, AM- लेखा लेखा लेखा सद"य सद"य राजे"" राजे"" अनुसार अनुसार Challenging the orders dt.10.01.2012 of CIT(A)-20,Mumbai,the Assessee has filed the present appeals.Effective grounds of appeal for both the years is confirmation of penalty order levied by the AO u/s.271(1)(c) of the Act.
Facts of the case: Assessee-company is engaged in the business of dealing in container lashing and strappings. While completing the assessments for the above mentioned two Assessment Years(AY.s.), the AO had held that it was not entitled to claim deduction u/s.80IB of the Act.The First Appellate Authority(FAA)confirmed the orders of the AO and the assessee challenged his orders before the Tribunal.In the meanwhile,the AO initiated penalty proceedings against the assessee for filing inaccurate particulars.As per the AO,the assessee did not file any reply in response to the penalty notices issued to it.He levied penalty of Rs.87,921/- and Rs.4,51,211/- for the AY.s 03-04 and 04-05 respectively. 2.Aggrieved by the penalty order of the AO,the assessee preferred an appeal before the FAA.After considering the submission of the assessee and the assessmentt order,he stated that the issue before him was recurring,that the AO had disallowed the claim made by the assessee u/s. 80IB, that the then FAA had upheld the orders of the AO, that while deciding the appeal for AY.2005-06 a detailed order was passed and that penalty was confirmed.Finally,he upheld the order of the AO levying penalty for furnishing inaccurate particulars. 3.Before us,the Authorised Representative(AR) stated that the Tribunal,while deciding the appeal for above mentioned AY.s (ITA No.3516-17/Mum/2010 dt.21.10.2015),had deleted the addition in quantum proceedings,that penalty orders would not survive.Departmental Representative(DR)left the issue to the discretion of the Bench.
ITA/1926-27/M/12-Stapping Solutions ,AY.03 – 04 & 04-05
We have heard the rival submissions and perused the material before us.We find that the Tribunal in its order dated 21.10.15 (supra), had held as under:
“8. We have considered the rival contentions. So far as the error in writing the correction section while making the claim in the return of income is concerned, the assessee during the assessment proceedings itself had made the submissions before the AO that there was an inadvertent error in making the claim under section 10A instead of under section 80IB. The assessee submitted to the AO that this claim be considered under section 80IB. He also filed a revised return in this respect. However, the AO rejected the claim of the assessee. It has been time and again held that the taxing authorities should tax the real income of the assessee and if a claim is allowable to an assessee under the relevant provisions they should themselves consider the same and give appropriate relief. They are not supposed to penalise the assessee for their inadvertent errors. A duty is also cast upon the AO not only to disallow the claim which as per the provisions of law is not tenable but also to allow the claim to which the assessee is entitled as per provisions of the law and which has been brought to the knowledge of the AO during the assessment proceedings. Even a duty has been also cast upon the first appellate authority i.e. CIT(A) whose powers are coterminous with that of the AO to consider the claim put forward by the assessee and decide the same as per provisions of law. The case laws relied upon by the assessee are squarely applicable on the facts and circumstances of the case of the assessee.
So far as the employment of 10 or more than 10 persons during the year is concerned, the assessee has explained that more than 10 persons had been employed in the manufacturing activity. As per the case laws cited by the assessee, it is not necessary that the assessee must employee 10 or more than 10 employees during the entire financial year. If the assessee employs 10 or more than 10 employees for substantial part of working period of factory carrying on manufacturing process then, in that event it shall be presumed that the assessee has complied with the provisions of section 80IB(2)(iv). The above stated case laws are squarely applicable to the case of the assessee.
In view of the above, we find merit in the appeal of the assessee and the same is hereby allowed. The AO is directed to allow the deduction to the assessee for the assessment years under appeal under section 80IB.
In the result, both the appeals of the assessee are hereby allowed.” As the additions made by the AO have been deleted in the quantum proceedings,therefore, the penalty levied by the AO, in our opinion, would not survive.Reversing the order of the FAA,for both the AY.s,we decide the effective ground in favour of the assessee. As a result, appeals filed by the assessee for both the AY.s stand allowed. फलतः िनधा"रती "ारा दोन" िन.व.के िलए दािखल क" ग" अपील" मंजूर क" जाती ह". Order pronounced in the open court on 1st January, 2016. आदेश क" घोषणा खुले "यायालय म" %दनांक 01 जनवरी, 2016 को क" गई । (संदीप गोसांई संदीप गोसांई /Sandeep Gosain) (राजे"" / RAJENDRA) संदीप गोसांई संदीप गोसांई "याियक सद"य / JUDICIAL MEMBER लेखा लेखा सद"य सद"य / ACCOUNTANT MEMBER लेखा लेखा सद"य सद"य मुंबई/Mumbai,"दनांक/Date: 01.01.2016 व.िन.स.Jv.Sr.PS. 2
ITA/1926-27/M/12-Stapping Solutions ,AY.03 – 04 & 04-05
आदेश क" क" "ितिलिप "ितिलिप अ"ेिषत अ"ेिषत/Copy of the Order forwarded to : आदेश आदेश आदेश क" क" "ितिलिप "ितिलिप अ"ेिषत अ"ेिषत 1.Appellant /अपीलाथ"
Respondent /""यथ" 3.The concerned CIT(A)/संब" अपीलीय आयकर आयु", 4.The concerned CIT /संब" आयकर आयु" 5.DR E Bench, ITAT, Mumbai /िवभागीय "ितिनिध, ई खंडपीठ,आ.अ.अिध.मुंबई 6.Guard File/गाड" फाईल स"यािपत "ित //// आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार Dy./Asst.
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