TMI Blog2016 (5) TMI 1371X X X X Extracts X X X X X X X X Extracts X X X X ..... heard ld. Representatives of both the parties, perused the findings of authorities below and considered the material available on record. 3. Briefly the facts of the case are that the CIT passed order under section 263 of the Act vide order dated 24.03.2011. The assessee had claimed excessive deduction under section 10B of the Income Tax Act of ₹ 2,57,88,547/-. The CIT, in para 6 of order under section 263 held that the assessee is not eligible for deduction under section 10B on account of sale of incentives received from Ministry of Commerce, Government of India under Vishesh Krishi Upaj Yojna (VKUY) @ 5% of FOB value to exports direct income. The CIT also initiated proceedings under section 271(1)(c) of the Act for furnishing inaccurate particulars of income. The assessee went in appeal before ITAT Chandigarh Bench against the order of CIT under section 263 of the Act. The Tribunal passed the order on 03.01.2014 in ITA 553/CHD/2011. The Tribunal decided the issue against the assessee and in para 58, the Tribunal upheld the enhancement made by the CIT and held as under : 58.Further benefits are also given under the scheme, but the relevant benefits of the scheme vis- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issing the Miscellaneous Application. 4. Again, Show Cause Notice dated 23.09.2014 was issued to the assessee wherein it was intimated to the assessee that earlier the proceedings were kept pending and the Tribunal decided the appeal on 19.06.2014 in favour of the Revenue. It was also intimated that the order has been formerly received in the office of CIT-3 on 11.09.2014 only. Again Show Cause Notices were issued to the assessee for completion of the penalty proceedings. The assessee's main submission was that assessee filed return of income for assessment year under appeal on 30.10.2006 whereas the Supreme Court has given decision on 31.08.2009 which is much later than filing of the return. The assessee relied upon certain decisions in support of the contention. 5. The Pr. CIT in his findings noted that the contention of the assessee has no merit in view of the fact that Hon'ble jurisdictional High Court in the case of Liberty India (supra) pronounced; its judgement on 22.09.2006 whereas the assessee filed its return of income on 30.10.2006 i.e. later than the judgement of the Hon'ble High Court. It was incumbent upon the assessee to follow the decision of the j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order was received by the Commissioner of Income Tax on 28.06.1999 and, consequently, the penalty order was required to be passed on or before 31.12.1999. In the instant case, the penalty order was passed on 31.01.2002 much after the expiry of the period of limitation and, consequently, the order of penalty was barred by limitation. It was urged by the learned counsel for the appellant that after passing of the order of the Tribunal, a rectification application under Section 254 of the Act was filed by the assessee before the Tribunal, which was dismissed by the Tribunal on 30.04.2001 under Section 254 of the Act, which was received by the Commissioner of Income Tax on 16.07.2001 and, therefore, applying the provision of Section 275(l)(c) of the Act the period of limitation was extended till 31.03.2002 and, before the expiry of this period, the impugned penalty order was passed on 31.01.2002, hence, it was within the period of limitation. Having heard the learned counsel for the appellant, we are of the opinion that the period of limitation prescribed under Section 275 of the Act is apparently clear, namely, that the order of penalty must be passed within six months from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enalty order has been passed by Pr. CIT vide order dated 09.02.2015 which is within six months from the date of receipt of order i.e. on 11.09.2014 of ITAT passed in Miscellaneous Application filed by assessee. The ld. DR referred to Section 254 of the Act which provides the orders of the Appellate Tribunal and submitted that the same would also cover the order passed by the Tribunal under section 254(2) of the Income Tax Act. The ld. DR, therefore, submitted that limitation should be counted from the date of order received in the office of CIT-2 on 11.09.2014 which is order passed in the Miscellaneous Application by the Tribunal. The ld. DR submitted that the order is passed within the period of limitation by the ld. Pr. CIT on 09.02.2015. 7(ii) The ld. DR further contended that the assessee requested the Pr. CIT to keep the penalty proceedings in abeyance since Miscellaneous Application is pending before the Tribunal. Therefore, ld. counsel for the assessee has no moral ground to raise this issue with regard to time barred order passed by the Pr. CIT on the penalty order. The ld. DR, therefore, submitted that the penalty order has been passed within the period of limitation. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the month in which action for imposition of penalty is initiated, whichever period expires later.] [(1A) In a case where the relevant assessment or other order is the subject-matter of an appeal to the Commissioner (Appeals) under section 246 or section 246A or an appeal to the Appellate Tribunal under section 253 or an appeal to the High Court under section 260A or an appeal to the Supreme Court under section 261 or revision under section 263 or section 264 and an order imposing or enhancing or reducing or cancelling penalty or dropping the proceedings for the imposition of penalty is passed before the order of the Commissioner (Appeals) or the Appellate Tribunal or the High Court or the Supreme Court is received by the [Principal Chief Commissioner or] Chief Commissioner or the [Principal Commissioner or] Commissioner or the order of revision under section 263 or section 264 is passed, an order imposing or enhancing or reducing or cancelling penalty or dropping the proceedings for the imposition of penalty may be passed on the basis of assessment as revised by giving effect to such order of the Commissioner (Appeals) or, the Appellate Tribunal or the High Court, or the Supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of provisions of Section 275(1)(a) would not apply in this case regarding initiation of penalty proceedings in the order u/s 263 and completion of the order under section 263 of the Act. However, in the later provisions contained under section 275(1)(a) of the Act, the penalty order under section 271(1)(c) of the Act could be passed within six months from the end of the month in which order of the Appellate Tribunal is received by the Commissioner. Therefore, penalty order under section 271(1)(c) of the Act could have been passed by the ld. Pr. CIT on or before 31.07.2014. Therefore, the impugned penalty order dated 09.02.2015 is clearly time barred since it can be levied only within six months from the end of the month of the original order of ITAT received by CIT. 8(ii) The ld. DR, however, contended that according to Section 254, the orders passed u/s 254(1) and 254(2) shall have to be considered for the purpose of limitation. We do not agree with submission of ld. DR because Section 254(1) provides for passing of the order by the Tribunal as it thinks fit. However, in Section 254(2), the Tribunal in order to rectify any mistake apparent from the record, may amend any order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rts incentives i.e. VKUY . The assessee had filed return of income on 30.10.2006 and claimed deduction under section 10B of the Act on VKUY . Hon'ble Supreme Court confirmed the decision in the case of Liberty India (supra) confirming the decision of Hon'ble Punjab Haryana High Court on 31.08.2009 i.e. much later than the filing of the return of income. The issue in the case of Liberty India (supra) and in the case of assessee are totally different. Hon'ble Bombay High Court in the judgement dated 07.12.2011 in the case of CIT Vs Arts Crafts Exports, allowed deduction under section 10BA on DEPB after considering the decision of Liberty India (supra). He has also referred to decision of ITAT (Special Bench) Indore in the case of Maral Overseas Ltd. 16 ITR (Tribunal) 565 (Indore) in which it was held that, Once an income forms part of the business of income of eligible undertaking of the assessee, the same cannot be excluded from the eligible profits for the purpose of computing deduction under section 10B of the Act . The ld. counsel for the assessee, therefore, submitted that the issue is clearly debatable and on such facts, it could not be held that assessee fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to decision of the Bombay High Court in the case of Art Crafts Exports 246 CTR 463 dated 07.12.2011 in which Hon'ble Bombay High Court, considering the decision in the case of Liberty India (supra) decided the issue in favour of the assessee holding that Tribunal was justified in holding DEPB as a profit derived from export business for the purpose of computing deduction under section 10BA. The ld. counsel for the assessee also referred to decision of the Special Bench in the case of Maral Overseas Ltd. (supra) in which deduction under section 10B have been allowed on income forming part of the business income. 12(ii) These facts would, therefore, clearly show that on the date of filing of the return by assessee on 30.10.2006, the assessee may not be knowing nicety of two provisions of law and two different questions of law considered in the case of Liberty India (supra) and in the case of the assessee. Therefore, nothing can be inferred against the assessee that assessee has furnished inaccurate particulars of income in the return of income. The order of the CIT under section 263 was passed on 24.03.2011 after filing of the return by the assessee and the order of the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the particulars of his income. When such particulars are found to be inaccurate, the liability would arise. To attract penalty, the details supplied in the return must not be accurate, not exact or correct, not according to the truth or erroneous. Where there is no finding that any details supplied by the assessee in its return are found to be incorrect or erroneous or false there is no question of inviting the penalty u/s 271(1)(c). A mere making of a claim which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars. 13. No findings have been given by the authorities below that assessee made incorrect or erroneous or false claim for claiming deduction under section 10B of the Income Tax Act. Therefore, considering the totality of the facts and circumstances, we are of the view that assessee did not furnish inaccurate particulars of income in the return of income with regard to claim of deduction under section 10B of the Act on account of sale of incentives under Vishesh Krishi Upaj Yojna so as to attract provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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