The Principal Commissioner Of Income Tax, Patiala v. M/S H.m. Steels Ltd., Dirba, Sangrur

ITA No. 295 of 2015 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 295 of 2015 (O&M) Date of Decision: 5.10.2015 The Principal Commissioner of Income Tax, Patiala ....Appellant. Versus M/s H.M. Steels Ltd., Dirba, Sangrur ...Respondent. 1.Whether the Reporters of the local papers may be allowed to see the judgment?the judgment? 2.To be referred to the Reporters or not? Yes 3.Whether the judgment should be reported in the Digest? CORAM:-HON'BLE MR. JUSTICE AJAY KUMAR MITTAL.HON'BLE MR. JUSTICE RAMENDRA JAIN. PRESENT: Mr. Zora Singh Klar, Advocate for the appellant. AJAY KUMAR MITTAL, J. 1.This appeal has been preferred by the revenue underSection 260A of the Income Tax Act, 1961 (in short “the Act”) against theorder dated 21.1.2015 (Annexure A-3) passed by the Income TaxAppellate Tribunal, Chandigarh Bench “B”, Chandigarh (hereinafterreferred to as “the Tribunal”) in ITA No. 910/CHD/2014, for theassessment year 2006-07, claiming the following substantial question oflaw:- Whether in the facts and in law, the Hon'ble ITAT wascorrect in law in deleting the penalty levied on theground that in similar circumstances the penalty had already been deleted for the immediately subsequentyear without appreciating the facts of both these yearsfor entirely different from each other? 2.Briefly stated, the facts necessary for adjudication of theinstant appeal as narrated therein may be noticed. The assessee isengaged in the business of manufacturing of MS Ingot, MS Bars, ERWPipes and GI Pipes. It filed its return on 30.11.2006 for the assessmentyear 2006-07 declaring the income at ` 3,67,510/- and ` 4,85,74,964/-forthe purposes of Section 115JB of the Act. The said case was taken upfor scrutiny under CASS. The assessment under Section 143(3) of theAct was completed by the Assessing Officer vide order dated 5.9.2008 ata total income of ` 3,67,510/-. The Commissioner of Income Tax, Patialavide order dated 31.8.2010 under Section 263 of the Act finding the saidorder to be erroneous as well as prejudicial to the interest of therevenue, set aside the same for re-examination of deduction claimed bythe assessee under Section 80IC of the Act. Thereafter, the AssessingOfficer during proceedings under Section 143(3) read with Section 263of the Act vide order dated 23.12.2011 made the total addition of` 2,23,00,432/- on account of disallowance under Section 80IC of the Actin respect of transport subsidy, bank interest and mibor premium.Feeling aggrieved, the assessee filed an appeal before theCommissioner of Income Tax (Appeals) [for brevity “the CIT(A)”]. TheCIT(A) vide order dated 28.1.2013 dismissed the said appeal. TheAssessing Officer had initiated penalty proceedings under Section 271(1)(c) of the Act for concealment of income and for furnishing inaccurateparticulars. The Assessing Officer vide order dated 21.3.2014(Annexure A-1) imposed penalty of ` 75,06,450/- upon the assessee. Being aggrieved by the said order, the assessee filed an appeal beforethe CIT(A) who vide order dated 28.8.2014 (Annexure A-2) deleted thepenalty of ` 75,06,450/- imposed by the Assessing Officer. Against theorder, Annexure A-2, the revenue filed an appeal before the Tribunal.The Tribunal vide order dated 21.1.2015 (Annexure A-3) upheld theorder of the CIT(A) and dismissed the appeal holding that under thesimilar circumstances, the Tribunal had deleted the penalty for theassessment year 2007-08. Hence, the present appeal by the revenue. Being aggrieved by the said order, the assessee filed an appeal beforethe CIT(A) who vide order dated 28.8.2014 (Annexure A-2) deleted thepenalty of ` 75,06,450/- imposed by the Assessing Officer. Against theorder, Annexure A-2, the revenue filed an appeal before the Tribunal.The Tribunal vide order dated 21.1.2015 (Annexure A-3) upheld theorder of the CIT(A) and dismissed the appeal holding that under thesimilar circumstances, the Tribunal had deleted the penalty for theassessment year 2007-08. Hence, the present appeal by the revenue. 3.Learned counsel for the revenue submitted that thededuction under Section 80IC of the Act was not allowable on thetransport subsidy, bank interest and mibor premium as rightly held by theAssessing Officer. It was urged that in such circumstances, the CIT(A)had wrongly deleted the penalty of ` 75,06,450/-. It was further arguedthat the Tribunal has also erred in holding that in the similarcircumstances it had deleted the penalty for the assessment year 2007-08 which was entirely different from the facts involved in the presentcase. 4.After hearing learned counsel for the revenue, we do notfind any merit in the said submissions. The additions on account ofdisallowance under Section 80IC of the Act had been made by theAssessing Officer holding that the transport subsidy was not earnedthrough any manufacturing process and it was not profit derived from thebusiness of the assessee. Additionally, the bank interest and miborpremium were also disallowed considering that these incomes were notderived from industrial undertaking but were merely incidental to thebusiness of industrial enterprises. The CIT(A) while deleting the penalty,inter alia, noticed that in the assessment year 2005-06, the assessee had claimed deduction under Section 80IC of the Act which was allowedby the Assessing Officer under Section 143(3) of the Act. In the presentcase, the return for the assessment year 2006-07 was filed on the basisof audited balance sheet and audit certificate issued under Section 80ICof the Act which was allowed by the Assessing Officer vide order dated5.9.2008. The said order was set aside in revisional proceedings underSection 263 of the Act and the disallowance was made subsequently. Allthe information, particulars and facts were duly disclosed with the returnof income and only view contrary to the original assessment was takenin the re-assessment proceedings based on the same material.According to the CIT(A), there was no concealment of income orfurnishing of inaccurate particulars. The CIT(A) had noticed as under:- “4.3. I have considered the submissions madeabove. The additions have been made by the A.O.against transport subsidy, Bank interest and MiborePremium. The A.O. has disallowed the transportsubsidy holding that it is not earned through anymanufacturing process and it is not a profit derivedfrom the business of the assessee. Similarly, theBank interest and Mibor Premium has beendisallowed considering that these income are notderived from industrial undertaking but are merelyincidental to the business of industrial enterprises.However, similar additions made in A.Y. 2007-08 hasalready been deleted by the Hon'ble ITAT, ChandigarhBench. It is further noted that in A.Y. 2005-06, theappellant claimed deduction u/s 80IC of the Act which “4.3. I have considered the submissions madeabove. The additions have been made by the A.O.against transport subsidy, Bank interest and MiborePremium. The A.O. has disallowed the transportsubsidy holding that it is not earned through anymanufacturing process and it is not a profit derivedfrom the business of the assessee. Similarly, theBank interest and Mibor Premium has beendisallowed considering that these income are notderived from industrial undertaking but are merelyincidental to the business of industrial enterprises.However, similar additions made in A.Y. 2007-08 hasalready been deleted by the Hon'ble ITAT, ChandigarhBench. It is further noted that in A.Y. 2005-06, theappellant claimed deduction u/s 80IC of the Act which was allowed u/s 143(3) of the IT Act, 1961. Thereturn for A.Y. 2006-07 was filed on the basis ofaudited balance sheet and audit certificate issued u/s80IC which was also allowed u/s 143(3) vide orderdated 05.09.2008. The assessment order washowever, set aside and disallowance was madesubsequently. All the information, particulars andfacts are duly disclosed with the return of income andonly view contrary to the original assessment wastaken in the re-assessment proceedings based on thesame materials. Therefore, it is seen that theappellant had duly disclosed the primary facts in thereturn. In the case ofCIT vs. ReliancePetroproducts Pvt. Ltd. 322 ITR 158 (SC), it is heldthat “A glance at the provisions of Section 271(1)(c) ofthe Income Tax Act, 1961 suggests that in order to becovered by it, there has to be concealment of theparticulars of the income of the assessee. Secondly,the assessee must have furnished inaccurateparticulars in his income. The meaning of the word“particulars” used in section 271(1)(c) would embracethe details of the claim made. Where no informationgiven in the return is found to be incorrect orinaccurate, the assessee cannot be held guilty offurnishing inaccurate particulars. In order to exposethe assessee to penalty, unless the case is strictlycovered by the provision, the penalty provision cannot be invoked. By no stretch of imagination can makingan incorrect claim tantamount to furnishing inaccurateparticulars. There can be no dispute that everythingwould depend upon the return filed by the assessee,because that is the only document where theassessee can furnish the particulars of his income.When such particulars are found to be inaccurate, theliability would arise. To attract penalty, the detailssupplied in the return must not be accurate, nor exactor correct, no according to the truth or erroneous. Considering the facts of the case, therefore, it isnoted that all the particulars and primary facts areduly disclosed by the appellant. The books ofaccounts are audited and Auditor's certificate u/s 80ICwas submitted. Therefore, looking into the entirety ofthe facts and the case laws discussed above, in myopinion, there is no concealment of income orfurnishing of inaccurate particulars in this case. Thepenalty imposed by the A.O. is, therefore, cancelled.”5.The Tribunal had affirmed the aforesaid findings of the CIT(A). Following the judgment of the Apex Court in Commissioner ofIncome Tax v. Reliance Petroproducts Ltd. (2010) 322 ITR 158 (SC),it was observed as under:- “7.Further in the similar circumstances theTribunal deleted the penalty in Assessment Year2007-08 by making following observations:-Tribunal deleted the penalty in Assessment Year2007-08 by making following observations:- “The Ld. CIT(A) has correctly adjudicated the issue because part of the addition has already been deletedby the Tribunal. Otherwise mere claim of deductionunder bonafide belief cannot be taken as concealmentof income or furnishing inaccurate particulars ofincome particulars. In this regard the Hon'bleSupreme Court has clearly observed in case of CIT v.Reliance Petroproducts Pvt. Ltd., 322 ITR 158 (SC): “7.Further in the similar circumstances theTribunal deleted the penalty in Assessment Year2007-08 by making following observations:-Tribunal deleted the penalty in Assessment Year2007-08 by making following observations:- “The Ld. CIT(A) has correctly adjudicated the issue because part of the addition has already been deletedby the Tribunal. Otherwise mere claim of deductionunder bonafide belief cannot be taken as concealmentof income or furnishing inaccurate particulars ofincome particulars. In this regard the Hon'bleSupreme Court has clearly observed in case of CIT v.Reliance Petroproducts Pvt. Ltd., 322 ITR 158 (SC): “A glance at the provisions of Section 271(1)(c)of the Income Tax Act, 1961 suggests that inorder to be covered by it, there has to beconcealment of the particulars of the income ofthe assessee. Secondly, the assessee musthave furnished inaccurate particulars in hisincome. The meaning of the word “particulars”used in section 271(1)(c) would embrace thedetails of the claim made. Where noinformation given in the return is found to beincorrect or inaccurate, the assessee cannot beheld guilty of furnishing inaccurate particulars.In order to expose the assessee to penalty,unless the case is strictly covered by theprovision, the penalty provision cannot beinvoked. By no stretch of imagination canmaking an incorrect claim tantamount tofurnishing inaccurate particulars. There can beno dispute that everything would depend uponthe return filed by the assessee, because that is the only document where the assessee canfurnish the particulars of his income. Whensuch particulars are found to be inaccurate, theliability would arise. To attract penalty, thedetails supplied in the return must not beaccurate, nor exact or correct, no according tothe truth or erroneous.” Therefore following the same we uphold the order ofthe Ld. CIT(A). In view of the above findings we are of the opinionthat Ld. CIT(A) has correctly decided the issue andtherefore we uphold his order.” 6.Learned counsel for the revenue was not able todemonstrate that the approach of the CIT(A) or the Tribunal waserroneous or perverse or that the findings of fact recorded were basedon misreading or misappreciation of evidence on record. The view of theCIT(A) and the Tribunal is a plausible view which warrant nointerference. 7.In view of the above, no substantial question of law arises inthis appeal. Accordingly, the instant appeal is dismissed. (AJAY KUMAR MITTAL) JUDGE October 5, 2015gbs (RAMENDRA JAIN) JUDGE