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2016 (5) TMI 1371 - ITAT CHANDIGARH

2016 (5) TMI 1371 - ITAT CHANDIGARH - Tmi - Levy of penalty under section 271(1)(c) - claim of deduction under section 10B - Held that:- 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, 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 accoun .....

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sment year 2006-07 challenging the levy of penalty under section 271(1)(c) of the Income Tax Act. 2. We have 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 .....

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he 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-à-vis assessee are as referred to by us in the above para. In view of the scheme under which the assessee is entitled to the incentives which in turn are to compensate high transport cost and .....

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e case Liberty India Vs. CIT (supra) is linked to the FOB value of exports by way of Duty Credit Scrip. The said benefits are provided by DGFT in the case of the assessee and the said scheme being similar to the scheme of grant of Duty Drawback/DEPB and in turn applying the ratio laid down by the Hon'ble Supreme Court in the case of Liberty India Vs. CIT (supra) we hold that the assessee is not entitled to the claim of deduction under section 10B of the Act on the said incentives. In view th .....

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in the notice that earlier penalty proceedings were kept in abeyance in view of the appeal pending before ITAT Chandigarh Bench. The assessee's counsel submitted before ld. Pr. CIT that assessee has filed Miscellaneous Application before ITAT Chandigarh Bench and prayed to keep the penalty proceedings in abeyance. 3(ii) The assessee was again given notice dated 11.07.2014 even if Miscellaneous Application was pending. However, he did not give any reply, the Tribunal vide order dated 19.06.2 .....

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t 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 hi .....

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ntive given by the Government. The decision of Hon'ble Punjab & Haryana High Court is binding on the assessee from the date of the order. Further, ITAT had also decided the issue in favour of the revenue, that means issue was already settled against the assessee. The assessee could have filed the revised return which has not been done in this case. Since the assessee has taken conscious risk for taking such a claim, therefore, penalty could be imposed under section 271(1)(c) of the Act r .....

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iculars of income. 6. The assessee challenged the impugned order levying the penalty under section 271(1)(c) of the IT Act. The ld. counsel for the assessee contended that penalty is time barred since it can be levied only within six months from the end of the month of the original ITAT order is received by CIT and not from the date when Miscellaneous Application has been disposed off, was received by the CIT. It is submitted that in the case of the assessee firm, the original order was passed b .....

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inal ITAT order is received by the CIT. The assessee relied upon judgement of Hon'ble Allahabad High Court in the case of CIT-II Kanpur Vs M/s K.M. Sugars Ltd.,Kanpur in ITA No. 59/2006 dated 16.12.2015 in which it was held as under : In the instant case, admittedly, the Tribunal's 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 3 .....

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ying 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 end of the mont .....

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d of limitation. The decisions cited by the learned counsel for the Department in the cases of Hind Wire Industries Ltd. Vs. Commissioner of Income Tax, 212 ITR 639 (SC) and Henri Isidore Vs. Commissioner of Income Tax, 240 ITR 247 (Mad) have no application in the present case. Consequently, for the reasons stated aforesaid, we are of the opinion that the Tribunal was justified in rejecting the appeal and deleting the order of penalty holding it as barred by limitation. The appeal is, accordingl .....

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f limitation under section 275 of the Act. The ld. counsel for the assessee, therefore, submitted that the penalty order passed by the ld. Pr. CIT is clearly time barred and is liable to be set aside and quashed. 7(i) On the other hand, ld. DR relied upon impugned order. The ld. DR in his written submission has submitted that the order passed by the Tribunal against the order under section 263 of the Income Tax Act was received in the office of Pr. CIT-2 Ludhiana on 24.01.2014 which is supported .....

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.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 T .....

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he penalty order has been passed within the period of limitation. 8. We have considered rival submissions. The dates of passing of the orders by the CIT under section 263, order passed by the Tribunal and order passed in the Miscellaneous Application, have not been disputed by the parties. The dates intimated by the ld. DR after verification of the record with regard to receipt of the order of the Tribunal by CIT-2 on various dates have also not been disputed as mentioned above. Section 275 of t .....

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onths from the end of the month in which the order of the Commissioner (Appeals) or, as the case may be, the Appellate Tribunal is received by the [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner, whichever period expires later : [Provided that 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, and the Commissioner (Appeals) passes the order on o .....

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(b) in a case where the relevant assessment or other order is the subjectmatter of revision under section 263 [or section 264], after the expiry of six months from the end of the month in which such order of revision is passed; (c) in any other case, after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed, or six months from the end of the month in which action for imposition of penalty is init .....

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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 asses .....

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end of the month in which 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: Provided further that the provisions of sub-section (2) of section 274 shall apply in respect of the order imposing or enhancing or reducing penalty under this sub-section.] [(2) T .....

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y granted under section 245H remained in force; and (iii) any period during which a proceeding under this Chapter for the levy of penalty is stayed by an order or injunction of any court, shall be excluded.]] 8(i) In this case, the CIT-2 Ludhiana passed the order under section 263 of the Income Tax Act vide order dated 24.03.2011 and enhanced the income by ₹ 2,57,88,457/- considering excessive deduction claimed by assessee under section 10B of the Act. The CIT also initiated penalty procee .....

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on 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 hav .....

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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 passed by it under sub-section (1) of Section 254 of the Act. Therefore, Section 254(2) provides for rectification of the original order passed under section 254(1) of the Act. This important distinction could not be ignored while referring to the provisions of Section 275 of the Act. The contention of ld. DR has also been a .....

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erit and is rejected. 8(iii) The ld. DR also contended that the limitation was extended because assessee made a request before Pr. CIT to keep the matter in abeyance because appeal/M.A. is pending before the Tribunal. This point may raise some moral issue but could not supersede the provisions of law contained under Income Tax Act and same was also not taken into consideration favourably by ITAT Chandigarh Bench in its order in the case of Jasbir Singh Vs ITO (supra). 9. Considering above discus .....

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section 271(1)(c) of the Act. 10. The ld. counsel for the assessee, on merits contended that on 22.09.2006, Hon'ble Punjab & Haryana High Court in the case of M/s Liberty India (supra) held deduction under section 80IB, is not allowed on DEPB incentives. The assessee firm had claimed deduction under section 10B at 5% of FOB value to exports under Vishesh Krishi Upaj Yojna Scheme and not on DEPB. Therefore, the case of the assessee is different on two counts i.e. firstly, the assessee cl .....

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f 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, t .....

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assessee has been admitted on substantive question of law. Copy of the order of the High Court is also filed. The ld. counsel for the assessee, therefore, submitted that since two views have been taken on the matter and it is debatable issue, therefore, no penalty should be imposed against the assessee. 11. On the other hand, ld. DR relied upon impugned order and submitted that on the date of filing of the return by assessee, there was decision of jurisdictional High Court available against the .....

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ble issue arises on the issue. He, therefore, submitted that appeal of the assessee is liable to be dismissed. 12. We have considered rival submissions. The issue in the case of Liberty India (supra) before Hon'ble Punjab & Haryana High Court was, Whether Tribunal is justified in upholding the action of the assessing authority by not allowing deduction under section 80IB on amount of DEPB and Duty Draw Back being export incentive @ 25% of ₹ 22,70,056/- being ₹ 5,67,514/- . In .....

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on the profits from sale of duty credit scrip under section 10B of the Income Tax Act,1961 ?. The appeal has been dmitted. 12(i) The ld. counsel for the assessee referred 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 .....

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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 Tribunal was also pronounced on 03.01.2014 i.e. after filing of the return by the assessee. The Tribunal in its order dated 03.01.20 .....

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ptable to the revenue on having a difference of opinion based on different case laws i.e. case laws considered by the CIT in the proceedings under section 263 of the Act and the decisions considered by the assessee in his favour. The appeal of the assessee on substantial question have been admitted by the Hon'ble Punjab & Haryana High Court for adjudication and is pending. 12(iii) It is well settled law that on mere making of the claim which is not sustainable in law, by itself will not .....

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ncome of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. The meaning of the word particulars used in Section 271(1)(c) would embrace the details of the claim made. Where no information given in the return is found to be incorrect or inaccurate, the assessee cannot be held guilty of furnishing inaccurate particulars. In order to expose the assessee to penalty, unless the case is strictly covered by the provisions, the penalty provision cannot be invo .....

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