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2017 (1) TMI 1336

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..... ee’s certification stood proved w.e.f. 18.02.2009 (supra) as concluded in the above quantum proceedings. We thus observe that the learned CIT(A) has rightly quoted hon’ble apex court’s decision in a Reliance Petroproducts case [2010 (3) TMI 80 - SUPREME COURT] to conclude that the assessee’s bonafides are very much in order and each and every disallowance/addition made in the course of quantum proceedings does not necessarily resulting in Section 271(1)(c) penalty in question. - ITA No.1188/Ahd/2014 with C.O. No.228/Ahd/2014 & ITA No.1189/Ahd/14 - - - Dated:- 25-1-2017 - SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER For The Revenue : Shri James Kurian, Sr. D.R. For The Assessee : Shri Ankit M Talsania, Adv. ORDER PER S. S. GODARA, JUDICIAL MEMBER This batch of three cases pertains to assessment year 2009-10. The Revenue s former appeal and assessee s cross objection thereto arise against CIT(A)-VIII, Ahmedabad s order dated 30.01.2014 in appeal no. CIT(A)- VIII/ACIT/R.4/23/12-13, in proceedings u/s. 143(3) of the Income Tax Act, 1961; in short the Act . Its latter appeal emanates from the very CIT(A) s order of the same da .....

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..... Representative s statement that it had not been accorded STPI registration certificate, it rushed to the Assessing Officer along with STPI registration certificate as well as its audit report forming foundation of its revised return claiming Section 10B deduction. The assessee accordingly submitted that it came to know about the impugned assessment order already passed by then on 15.12.2011. It thus sought to make out a case of admission of above additional evidence. The CIT(A) sought for remand report. The same came on 06.12.2013. The Assessing Officer first of all stated that he had granted all necessary opportunities to the assessee in order to produce the relevant details of Section 10B deduction claim and therefore, there was no violation of natural justice principles in his assessment order. We notice as page 14 of the order that the Assessing Officer himself did not dispute on merits that the assessee had been able to procure its STPI certification dated 18.02.2009 as well as its rectification communication from STPI, Gandhinagar dated 09.07.2013 which found a necessary condition for the impugned relief as per Board s circular dated 18.10.2011. The CIT(A) thereafter holds t .....

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..... oreign exchange during the prescribed time. It is also submitted relevant certificate from a chartered accountant in form 56G, which is prescribed as per the provisions of section 10 B. Therefore, the appellant company satisfies ail the conditions related to grant of deduction under section 10 B and accordingly it is held that it is entitled for deduction under section 10 B. Now the issue which is to be further decided is that from what date the appellant would be entitled for deduction. The appellant has been doing this business from 23/01/2008. The records show that there is no local sale or domestic business. Whatever income has been earned by the appellant is from the export of software however the appellant did not apply for registration with STPI, it applied for the registration on 16/02/2009 and was accorded registration on 18/02/2009. The basic condition of claim of deduction is the registration with STPI and since the appellant was registered by STPI on 18/02/2009 the deduction would be available from that date, Accordingly if is held that the deduction under section 10 B would be available from the date from which it has been registered with the STPI that is 18/ 02/ .....

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..... No.10B. In the said case, the Audit Report in Form No. 108 was signed by the CA on 20/02/1985, much after the date of furnishing return of income. The Calcutta High Court, after analyzing the various High Court decisions and the intention of the Legislature, held that (a) the certificate / audit report only affirms the statement contained in the balance-sheet and income-expenditure account; the assessing officer can rely on the certificate / audit report for allowing the benefit of exemption; this is procedural matter for the purpose of enabling the assessing officer to complete the assessment on the basis of the certificate of the auditor without even asking the assesses to furnish supporting documents in support of the claim, (b) it cannot be said that the Legislature intended that, even where the assessee has got its accounts audited and the certificate is obtained in Form No.10B, merely because such report could not be furnished in the course of assessment proceedings, it would deprive a trust of getting the exemption if it is otherwise entitled to it in law, (c) where the audit report could not have been furnished before AO, the appeal being a continuation of the original pro .....

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..... it will be sufficient compliance if the same is furnished before the authority examining the claim. In the case of CIT vs. Valli Cotton Traders (P) Ltd. 171 Taxman 279 (Mad.), the return of income was filed declaring loss and the original assessment came to be framed u/s 143(3) of the Act accepting the returned ..Thereafter, reassessment was framed u/s 147 of the Act after making disallowance which resulted into positive assessed income. Since the assessee had not filed Form No.10CCAC, which ought to have been filed along with the return, to claim deduction u/s 80HHC, as he claimed only loss in his original return, the assessee claimed deduction u/s 80HHC based on the audit report by filing Form No.10CCAC before the CIT(A). However, the Tribunal allowed the appeal and directed the assessing officer to examine the issue after considering the audit report in Form No.10CCAC, The Madras High Court taking into cognizance of various authorities confirmed the finding of the Tribunal and in substance held that merely on account of technical reason of non-furnishing of audit report along with R01, deduction cannot be denied to the assessee. Similar view was expressed in the case o .....

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..... on fact turned out to be factually incorrect the assessee duly proved by way of additional evidence that the STPI certification stood granted on 18.02.2009 by way of a communication of ratification from the STPI, Gandhinagar vide letter dated 09.07.2013 i.e. during the pendency of the lower appellate proceedings. The Revenue fails to rebut this clinching factual position. We accordingly observe that the learned CIT(A) had rightly admitted assessee s additional evidence. And more so when the Assessing Officer himself did not dispute all these facts in his remand report dated 06.12.2013. This is accordingly also not a case of a failure on the CIT(A) s part in not affording opportunity of hearing to the assessing authority. We thus find no fault in lower appellate authorities order admitting assessee s additional evidence. 8. We now proceed to deal with both parties common grievance that the CIT(A) has erred in not upholding Assessing Officer s action making complete disallowance of the impugned Section 10B deduction claim and vise versa. The case file already indicates that the assessee has been granted an STPI registration on 18.02.2009. Learned CIT(A) has thus held it entitled .....

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..... that the claim was false. The appellant has submitted that it was under bona fide belief that it could start claiming deduction for a period of 10 consecutive assessment year beginning with the assessment year relevant to the previous year in which the undertaking has begun its operations. It satisfies all the conditions related to the claim. It is further been submitted by the appellant that under the scheme of the Act deduction for exports of goods or articles or things has been provided under various provisions of the Act such as 10 A/10 BA/80HHC, and the deduction is allowed from the year in which the operation of export has been started. It has also placed reliance on certain judgements in which it was held that the deduction could be allowed for the whole year irrespective of the date of approval. After considering all the facts it is observed that the appellant-had a certificate of registration with STPI with it during the course of assessment proceedings also. However due to the ignorance of the chartered accountant, appearing during the course of assessment proceedings, a statement was given that there was no certificate and the unit was not registered. Accordi .....

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..... he date of registration. In view of the above discussion and considering the totality of facts and circumstances it is seen that the appellant made the misrepresentation regarding claim under section 10B as the chartered accountant who was representing the case of the appellant before the AO made a wrong statement that there was no certificate of registration with STPI. It Is also noted that the appellant has earned all its income through software export and the proceeds have been realised in foreign exchange after following the due procedure. All the details regarding receipt of foreign exchange were also furnished at the time of assessment proceedings. There is no furnishing of inaccurate particulars regarding receipt of income from exports. Therefore, in my considered opinion no penalty of concealment is exigible on the appellant in these circumstances. The appellant has committed these errors due to mistakes committed by it started accountant. The appellant has explained its bona fide and the same have been found to be in order. Reliance is placed on the judgement of honourable Supreme Court in the case of Reliance Petro Products Private Limited 322 ITR 158. Accordingly, .....

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