Panaji-Goa v. M/S. Sesa Goa Ltd., Sesa Ghar, 20, Edc Complex, Patto, Panaji

Aura IN THE HIGH COURT OF BOMBAY AT GOATAX APPEAL NO. 43 OF 2016 The Pr. Commissioner of Income Tax,Having office at Aayakar Bhavan,Patto- Plaza, ..Appellant Panaji-Goa Versus 1. M/s. Sesa Goa Ltd., Sesa Ghar, 20, EDC Complex, Patto, Panaji. PAN: ...Respondent Mrs. Susan Linhares, Advocate for the Appellant.Mr. R. G. Ramani, Senior Advocate with Mr. P.Kakodkar, Advocate for the Respondent. CORAM:SUNIL P. DESHMUKH &M. S. SONAK , JJDATED: 2[nd] AUGUST, 2021 ORAL JUDGMENT (Per M.S. Sonak,J): 1.Heard Ms. Susan Linhares, the learned Advocate for the Appellant, and Mr. R. G. Ramani, the learned Senior Advocatewith Mr. P. Kakodkar, Advocate for the Respondent. 2.The learned counsel for the parties states that they have no objection to this Bench taking up this matter. 3.This appeal was admitted on 4/10/2016 on the following substantial question of law: (1) Whether Hon'ble Income Tax AppellateTribunal is justified in law in placing simpliciterreliance on the order in ITA No. 187/PNJ/2014dated 28.11.2014, in order to dismiss theAppeal filed by the revenue, without discussingand considering the facts interse between theassessee's case in the present proceedings? 4. However, today, Ms. Linhares pointed out that the case number referred to in the above substantial question of law isincorrect and the correct case number is ITA No.72/PNJ/2012 which was decided on 8/3/2013. Mr. Ramani also agrees thatthere was an error about the correct case number in thesubstantial question of law framed on 4/10/2016. 5. Therefore, with the consent of the learned counsel for the parties, the above substantial question of law is to be re-framed to read as follows: (1) Whether Hon'ble Income Tax AppellateTribunal is justified in law in placing simpliciterreliance on the order in No.ITANo.72/PNJ/2012 dated 8/3/2013, in order todismiss the Appeal filed by the revenue, withoutdiscussing and considering the facts intersebetween the assessee's case in the presentproceedings. 6. On 29/9/2009, for the assessment year 2009-2010, therespondent-assessee filed an E-Return declaring a total income ofRs.2007,48,80,920.This return was taken up forscrutiny, and theAssessing Officer (A.O) vide his order dated 28/12/2012concluded that the assessee made an incorrect claim of deductionin an amount of Rs.451,27,84,122/- by disregarding theJudgment of the Hon'ble Supreme Court in the case of therespondent-assessee itself. On this basis, the A.O levied a penaltyof Rs.200,00,00,000/- under section 271C of the Income Tax Act1963 (IT Act). 7.The respondent-assessee appealed the order dated28/12/2012 and the Commissioner of the Income Tax (Appeals),allowed the appeal vide order dated 17/2/2014 and ordered thedeletion of the penalty imposed by the A.O. 8.The appellant-revenue appealed the order dated17/2/2014, but the Income Tax Appellate Tribunal (ITAT) videits order dated 8/3/2013, dismissed the Revenue's Appeal andupheld the deletion of the penalty by the Commissioner ofIncome Tax (Appeals). Hence, the present appeal on the aforesaidsubstantial question of law. 9.The main issue involved before the Commissioner ofIncome Tax (Appeals) and the ITAT was whether the respondent-assessee had made an incorrect claim for deduction in its E-Return filed on 29/9/2009. 10.In the substantive appeal instituted by the respondent-assessee, the ITAT, by its order dated 8/3/2013 in ITANo.72/PNJ/2012 held that there was no error on the part of therespondent-assessee in claiming exemption under section 10-B ofthe IT Act and on the said basis seeking the deduction in the E-Return filed on 29/9/2009. The relevant discussion on this issueis to be found in paragraphs 45.21 and 45.22 of the order dated8/3/2013 and the same read as follows: 9.The main issue involved before the Commissioner ofIncome Tax (Appeals) and the ITAT was whether the respondent-assessee had made an incorrect claim for deduction in its E-Return filed on 29/9/2009. 10.In the substantive appeal instituted by the respondent-assessee, the ITAT, by its order dated 8/3/2013 in ITANo.72/PNJ/2012 held that there was no error on the part of therespondent-assessee in claiming exemption under section 10-B ofthe IT Act and on the said basis seeking the deduction in the E-Return filed on 29/9/2009. The relevant discussion on this issueis to be found in paragraphs 45.21 and 45.22 of the order dated8/3/2013 and the same read as follows: “45.21 In view of the aforesaid discussion, weare of the view that the assessee is entitled forexemption u/s 10B in respect of all the three100% Export Oriented Units, but during thecourse of the hearing, we noted that the assesseewhile computing the exemption u/s 10B hasdebited ore extracted from own mines in Amonaunit as well as Chitradurga unit at cost of Rs.45,25,23,692/- and Rs. 20,27,01,458/-respectively, while in view of provisions ofSection 10B(7) read with Section 80-IA(8) theassessee is required to transfer the crude ore extracted from its own mines at market value fordetermining the true profit derived by the 100%EOU for the purpose of computing the incomeillegible for exemption u/s 10B. We also notedthat the assessee has also purchased crude ore i.eROM from outside parties i.e from miningbelonging to the other parties. The price paid bythe assessee to these outside parties, in ouropinion can be regarded to be the best evidencefor determining the market value of the crudeore used by the assessee extracting it from itsown mines. Since the determination of marketvalue requires verification on the part of therevenue, we, therefore, restore this issue only fordetermining the market value of the crude oreconsumed by the assessee on the basis of thevalue paid by the assessee for the crude ore tothe outside parties during the year and therebyrecomputing the profit derived by the assesseefrom the 100% EOU units eligible forexemption u/s 10B. Accordingly, we direct theAssessing Officer to recompute the exemptionavailable u/s 10B to the assessee in respect ofAmona as well as Chitradurga units afterascertaining the market value of the crude orestransferred by the assessee to these units from itsextraction divisions on the basis of the averagemarket value as the assessee has paid to theoutside parties for the crude ores purchased bythe assessee from these parties during theimpugned assessment year and substituting ascost of the raw material in place of cost of thecrude ore derived by the assessee from its ownmines after giving proper and sufficientopportunity to the assessee to adduce the material and evidence in this regard. 45.22 With regard to Codli unit, the assesseeclaimed before us that the input, in this case, is'tailings' which is merely a waste product anddoes not involve any cost and also has notfetched any price in the open market, ITA No.72&85/PNJ/2012 therefore, its market value isnil for the purpose of computation of profiteligible for exemption u/s 10B from this unit.We find force in the submission of the assesseebut in the interest of justice and fair play to boththe parties, in respect of this unit also we directthe assessing officer to recompute the profit ofthis unit eligible for exemption after satisfyinghimself about the fair market value of 'tailings'after giving proper and sufficient opportunity tothe assessee to prove the market value of thetailings used in the Codli unit and allow theassessee exemption to the assessee u/s 10 B ofthe Income-tax Act, 1961 for Codli unit on theprofit so recomputed accordingly. The assessee isdirected to adduce the necessary evidence onwhich it may rely to prove the market value ofinputs before the assessing officer. Thus, theground nos. 7, 8 & 9 are partly allowed." 11.The ITAT, whilst making its impugned order in the presentmatter naturally relied upon its order dated 8/3/2013 in ITANo.72/PNJ/2012 and held that since there was no error inclaiming the deduction in the E-Return, the levy of penalty wasneither legal nor proper. 12.At the time when this appeal was admitted, the ITAT'sorder dated 8/3/2013 in ITA/72/PNJ/2012 had not been testedby this Court though, the Revenue had instituted Tax AppealNos.13 and 14 of 2013 and 25 of 2014 against the same.Recently, by Judgment and order dated 7/5/2021 these TaxAppeals were dismissed, thereby, confirming that the respondent-assessee had quite correctly claimed the deduction in its E-Returnfiled on 29/9/2009. 13.Now, that this Court has dismissed the Revenue's appealagainst the order dated 8/3/2013 in ITA No.72/PNJ/2012, it isquite clear that there was no error on the part of the respondent-assessee in claiming the deduction in its E-Return. Since therewas no error, there was obviously, no question of imposing anypenalty upon the respondent-assessee. Even, otherwise, anerroneous claim simpliciter does not automatically attract apenalty. It is only when an erroneous claim is based on adeliberate misrepresentation of facts or deliberate suppression ofrelevant material facts, that, a penalty is imposed after thededuction is denied. In this case, the deduction was ultimatelyallowed and, therefore, there was no question of levy of anypenalty. 14.The concurrent findings recorded by the Commissioner ofIT (Appeals) and the ITA, therefore, warrant no interference,inter alia having regard to the absence of any perversity and theaforesaid development involving the dismissal of the Revenue'sAppeal Nos. 13 and 14 of 2013 on 7/5/2021. 15.For all the aforesaid reasons the substantial question of lawas now re-framed will have to be answered against the Revenue and in favor of the Assessee. Resultantly, this appeal fails and ishereby dismissed. M. S. SONAK, J SUNIL P. DESHMUKH, J MARIA Digitally signed by MARIA AURA AURA PEREIRA PEREIRADate: 2021.08.03 16:23:25 +05'30'