9911796707
TMI Blog2019 (4) TMI 1301X X X X Extracts X X X X X X X X Extracts X X X X ..... preme Court approved Harshvardhan Chemicals and Minerals Ltd. v. Union of India [2002] 256 ITR 767 (Raj.) and reversed Decision of the Madras High Court in CIT v. Sree Ayyanar Spinning and Weaving Mills Ltd. [2008] 296 ITR 53 (Madras); these MAs are being disposed off on merits and not being rejected on the ground of limitation. (B) Relevant portion of the aforesaid consolidated order dated 11.08.2016 of ITAT in ITA Nos. 3953 & 3954/Del/2013, for Assessment Years: 2005-06 & 2006-07; which is sought to be amended through these MAs; is reproduced as under, for the ease of ready reference: "2. For the sake of convenience, these two appeals filed by the assessee are disposed off through this consolidated order. These appeals are filed against levy of penalties amounting to Rs. 10,35,008/- for asstt. year 2005-06 and Rs. 15,20,262/- for asstt. year 2006-07 levied u/s 271(1)(c) of I.T. Act. The penalties were imposed by the Ld. AO in respect of claim made by the assessee u/s 80IB of I.T. Act in the original return of income for asstt. years 2005-06 and 2006-07 respectively. The quantum of deduction claimed u/s 80IB of I.T. Act was Rs. 28,28,472/- for asstt. year 2005-06 and Rs. 45,16,5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot fulfilling the conditions specified in section 8018 of the I.Tax Act and filing the revised return was also not correct. Further in the event of penalty proceedings, it did not offer any explanation, regarding disallowances of deduction u/s 8018 and imposition of penalty. The case of the assessee, therefore, squarely falls under explanation 1 & 4 to section 271(1)(c) of Income tax Act, 1961. Reference can also be made to the case law of CIT vs. Escorts Finance Ltd. (2009) 226 CTR 105 (Del), where the jurisdictional High Court held that in case of false claim penalty for concealment is leviable even though the said claim is declared in the return of income. The above decision was rendered in view of the fact that each year, the Revenue hardly takes up three to five percent of returns under scrutiny u/s 143(2) of the Act after which assessment is framed under sub-section (3) of section 143 of the Act. Therefore, with the hope that its return may not come under scrutiny and may be assessed on the basis of 'self assessment.', as assessee can venture to give wrong information. Therefore, it was held that merely because information was available in the Tax Audit Report, would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lanation or information / particulars about eligibility criteria on the basis of which deduction u/s 80IB of IT Act was claimed and how or on what basis it was realised (at the time of filing of return for asstt. year 2007-08) that such deduction was not available. Ld. CIT(A) held in his order dated 19.3.2013 that the assessee has furnished inaccurate particulars of income on account of ineligible deduction claimed u/s 80IB of I.T. Act and confirmed the levy of penalty u/s 271(1)(c) of I.T. Act by relying on the following decisions : 1. K.P. Madhusudhanan v. CIT (2001) 118 TAXMAN 324 (SC) 2. Ravi & Co. v. ACIT (2005) 143 TAXMAN 287 (MAD.) 3. M. Sajjanraj Nahar v. CIT (2006) 155 TAXMAN 536 (MAD.) 4. CIT, Delhi-IV v. Escorts Finance Ltd. *(2009) 183 TAXMAN 453 (DELHI) 5. CIT v. Zoom Communication (P.) Ltd. (2010) 191 TAXMAN 179 (Delhi) 2.1.2. During penalty proceedings for asstt. year 2006-07 the AO issued show cause notice to assessee on 11.1.2012.The assessee filed its reply and submitted that all the details given in the return were correct, there was no concealment of income, nor there were any inaccurate particulars of such income furnished.The assessee company also submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee's appeal relying on the following decisions :- 1. K.P. Madhusudhanan v. CIT (2001) 118 TAXMAN 324 (SC) 2. Ravi & Co. v. ACIT (2005) 143 TAXMAN 287 (MAD.) 3. M. Sajjanraj Nahar v. CIT (2006) 155 TAXMAN 536 (MAD.) 4. CIT, Delhi-IV v. Escorts Finance Ltd. *(2009) 183 TAXMAN 453 (DELHI) 5. CIT v. Zoom Communication (P.) Ltd. (2010) 191 TAXMAN 179 (Delhi) 3. Now the assessee is in appeal before us for both asstt. year 2005-06 and 2006-07. We have heard both sides carefully. We have also perused the materials on record. The Authorised Representative of the assessee vehemently opposed the orders of the lower authorities for both asstt. years 2005-06 and 2006-07. She relied on Supreme Court decision in the case of Virtual Soft Systems Ltd. vs. CIT(2007) 159 Taxman 155 (SC) for the proposition that section 271 of Income Tax Act has to be construed strictly and narrowly and not widely or with the object of advancing the object and intention of the legislature. She also contended that the view favourable to the assessee should be adopted when two reasonable views are possible. She further relied on the decision of Hon'ble Supreme Court in the case of CIT vs. Reliance Petro Product ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nafide. In these facts and circumstances we also hold that facts relating to the explanation furnished by the assessee and material to the computation of assessee's total income have not been disclosed by the assessee. Thus, the assesee is clearly hit by explanation 1(B) of S. 271(1)(c) of I.T. Act, even on strict and narrow construction of S. 271(1)(c) of I.T. Act and two reasonable views are not possible. Hence the case of Virtual Soft System Ltd. vs. CIT (supra) does not help the assessee. The assessee withdrew deduction u/s 80IB of I.T. Act by filing revised return only when it was faced with query raised by Revenue during assessment proceedings for asstt. year 2005-06, to justify its claim u/s 80IB of I.T. Act. The assessee could have withdrawn the claim before the case was selected for scrutiny by issue of notice u/s 143(2) of I.T. Act, which the assessee failed to do. In fact the assessee did not withdraw the claim even after the case was selected for scrutiny by issue of notice u/s 143(2) of I.T. Act ; and waited till the AO issued the questionnaire specifically requiring the assessee to justify its claim. Under these facts and circumstances it reasonably can also be conclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view that a claim which is wholly untenable in law and has absolutely no foundation on which it could be made, the assessee would not be liable to imposition of penalty, even if he was not acting bona fide while making a claim of this nature, that would give a licence to the unscrupulous assessees to make wholly untenable and unsustainable claims without there being any basis for making them, in the hope that their return would not be picked up for scrutiny and they would be assessed on the basis of self-assessment under section 143(1) and even if their case is selected for scrutiny, they can get away merely by paying the tax, which, in any case, was payable by them. The consequence would be that the persons, who make claims of this nature, actuated by a mala fide intention to evade tax otherwise payable by them, would get away without paying the tax legally payable by them, if their cases are not picked up for scrutiny. This would take away the deterrent effect, which these penalty provisions in the Act have. "(Para20)" 3.2.1. Further, perusal of the binding order of Hon'ble Jurisdictional High Court in the case of CIT vs. Zoom Communication Pvt. Ltd. (supra), relevant portion of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... returns of income for asstt. year 2005-06 and asstt. year 2006-07. Also, the assessee did not withdraw the claims u/s 80IB of I.T. Act for asstt. year 2005-06 and asstt. year 2006-07 immediately after the case was selected for scrutiny for asstt. year 2005-06. Claims u/s 80IB of I.T. Act were withdrawn by the assessee much after the Ld. AO issued questionnaire dated 4.7.2007 asking the assessee to clarify why exemptions and deductions claimed by it should be accepted. By that time it is too late and the assessee has missed the boat. At that late a stage, well past the critical stage, the assesee cannot get away by merely paying taxes and the assessee must, in addition, also pay penalty u/s 271(1)(c) of I.T. Act. 3.2.2. The assessee has claimed that revised returns for both asstt. years 2005-06 and 2006-07 were filed, withdrawing claim u/s 80IB of I.T. Act at the time when return for asstt. year 2007-08 was being filed. The assessee claims that the realisation that the assessee was not eligible for deduction u/s 80IB of I.T. Act was arrived at the time of filing return for asstt. year 2007-08 impliedly claiming thereby that the assessee decided to withdraw the claims u/s 80IB of I. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... furnishing of inaccurate particulars of income in the matter of claim of deduction u/s 80-IB of the Income Tax Act, 1961, in the original return of income for the above Assessment Years, which was later suo-motu and bona-fidely withdrawn by the assessee, by way of filing revised return of income. Brief facts of the Case: Facts relating to Penalty Order bv Ld. AO and Appellate Order of CIT(Appeal) for A.Y. 2005-06 2. To briefly re-capitulate, in the original return of income filed by theassesse for A.Y. 2005-06 on 31.10.2005 the assessee had shown income at Rs. 65,99,767/- and made a claim of deduction u/s 80-IB of the Income Tax Act for an amount of Rs. 28,28,472/-.That the assessee company on 31.10.2007 filed a revised return u/s 139(5), withdrawing the claim of deduction of Rs. 28,28,472/-. In the interregnum, the only act on part of the Ld. AO had been to issue questionnaire dated 04.07.2007 wherein in point No. 6 the assessee was asked to give details of exemptions and deductions claimed in the return. The Ld. AO however treated the revised return of income, as not filed, on the ground that it was submitted beyond the statutory time limit. The Ld. AO hence disallowed the cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .Y. 2005-06 has inter-alia in paras 3.1, 3.2, 3.2.1 & 3.2.2 confirmed the levy of penalty on the following grounds/ reasoning:- (A) That the withdrawal of claim u/s 80-IB of the Act was made by the assessee only after questionnaire was issued on 04.07.2007 by the AO for A.Y. 2005-06, wherein the assessee was asked to furnish the details of all exemptions and deduction claimed by it in the return of income and to clarify as to why the deduction / exemption claimed by it should be accepted by the Department. (B) That at no stage either before the lower authorities or before the ITAT, the assessee has offered any explanation or information / particulars about the eligibility criteria on the basis of which the deduction under Section 80-IB was claimed by the assessee, in the original return of income. (C) That though the assessee has claimed that it came to his knowledge at the time of filing of return for A.Y. 2007-08 that deduction u/s 80-IB was not available to the assessee, the assessee has not provided any explanation or information/ particulars as to on what basis it realized that deduction u/s 80-IB was not available to it. 3.1 That in view of the above facts and circumstanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B of the Industries (Development and Regulation) Act, 1951. 4.2 That the assessee company on a bona-fide consideration of the provision of Section 11B of the said permission of Industries (Development and Regulation ) Act, 1951qualified as "Small Scale Undertaking" therefore the claim of deduction u/s 80-IB was made by it in the original Income Tax Returns for both A.Y. 2005-06 as well as A.Y. 2006-07. 4.3 That it was at the time of preparation of the Income Tax Return for A.Y. 2007-08 that it was noticed by the management of the assessee company that in terms of the Notification issued by the Department of Industrial Policy and Promotion dated 10.12.1997 under sub-section (3) of 1 IB of the Industries (Development and Regulation) Act, 1951 that "no Small Scale Industrial undertaking shall be subsidiary of. or owned or controlled by any other industrial undertaking." 4.4 That in the facts of the case of the appellant company since the assessee company is a joint venture company where 50% of the shareholding each stands in the name of "Caryaire Equipments India Pvt. Ltd." & "Nictora Gebhardt Spa" (as per the share holding pattern of the assessee /appellant, Nictora India Pvt. Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also kindly consider the fact that much emphasis is given to the questionnaire dated 04.07.2007 issued in case of the assessee for A.Y. 2005-06, calling for the details of all exemption and deduction claimed and to also clarify as to why the same should be accepted, is a stereo typed innocuous one out of total 21 queries and no follow up of this issue was undertaken by the Ld. AO during the assessment proceeding and therefore the view of the Ld. AO and CIT (A) as confirmed by the Hon'ble ITAT that it was this questionnaire which triggered the filing of revised return of income by the assessee for A.Y. 2005-06 is not supported from the overall facts and circumstances of the case, which may also be considered for rectification on the Order. That while the ITR was suo-motu revised by the appellant company on 31.10.2007 itself and the assessment order was passed on 30.11.2007, no separate show-cause notice was ever issued to the assessee company calling for the justification either for the claim or withdrawal of deduction u/s 80IB. Prayer 6. It is thus prayed before the Hon'ble Tribunal that the mistake apparent on record as submitted in preceding paras may kindly be consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Ld. AO vide order dated 18.12.2008 assessed the income as declared by the assessee in the revise return filed for an amount of Rs. 1,50,55,080/-. The Ld. AO however initiated penalty proceedings u/s 271(l)(c) on the ground that the assesse has furnished inaccurate particulars of income in it's original return of income filed on 01.11.2006. 2.1 Subsequently, penalty u/s 271 (1 )(c) was levied by the Ld. AO vide order dated 22.02.2012. In this order the submissions of the assessee were rejected by the Ld. AO without assigning any reasonsand observing that after introduction of explanation to Section 271(1)(c) the onus to prove that there was no fraud or neglect in filing the correct income was on the assessee and not on Revenue. It was also held that in the stated facts and circumstances, it is established beyond doubt that the assessee has furnished inaccurate particulars of income to the extent of Rs. 45,16,523/- on account of deduction u/s 80-IB of the I. T. Act and has also failed to discharge it's onus of proving that there was no fraud or neglect in filing the correct income. 2.2 In first appeal the Ld. CIT (A) confirmed the penalty order vide Appellate Order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le to the assessee, the assessee has not provided any explanation or information / particulars as to on what basis it realized that deduction u/s 80- IB was not available to it. 3.1 That in view of the above facts and circumstances that the Hon'ble ITAT has held that the case of the assessee is covered hit by Explanation-1 (B) of Section 271(l)(c) as it had filed the revised return withdrawing the claim of deduction u/s 80-IB only when it was faced with the query raised by the Revenue during the assessment proceeding A.Y. 2005-06 to justify such claim and not because subsequently at the time of filing return of A.Y. 2007-08 the assessee had on its own realized that deduction u/s 80- IB not admissible, as is being claimed by the assessee. Submissions 4. It is submitted with extreme humility that there has been a mistake apparent from record as the Hon'ble ITAT has inadvertently missed out to consider the paper-book dated 08.07.2016 filed in duplicate before the Hon'ble Tribunal (with one copy to the Departmental Counsel! containing synopsis detailing the reasons for making the initial claim of deduction u/s 80-IB as also the conflicting view which was the reason d' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a joint venture company where 50% of the shareholding each stands in the name of "Caryaire Equipments India Pvt. Ltd. Nictora Gebhardt Spa" (as per the share holding pattern of the assessee /appellant, Nictora India Pvt. Ltd. - page 7 of the paper-book dated 08.07.2016 ) that the management of the assessee company was of the considered view not to claim the deduction u/s 80-IB, even though the Indian undertaking namely Carvaire Equipments India Pvt. Ltd was "not controlling the Industrial undertaking of the assessee company" and therefore such claim of deduction was rightfully eligible to the assessee company as only 50% of it's shares were held by the said "Carvaire Equipments India Pvt. Ltd." The Income Tax returns of CEIPL, which were also filed in this paper book to show and explain that 80IB deduction was claimed by the management of CEIPL, which has a 50% stake in the Nictora India Pvt. Ltd. and NIPL is also similar type of industrial undertaking for the purpose of 80IB,it clearly show that management has acted bona-fide without any mala-fide. 4.5 It is submitted that the above reasons were re-produced and highlighted on page 4 of the paper book filed before the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t year 2006-07 the first questionnaire cum notice u/s 142(1) of the Income tax Act was issued only on 10.03.2008 in which the stereo typed question in point no. 4, calling for the assessee to furnish the details of all exemptions and deduction claimed and also to justify as to why the same should be accepted by the Department was issued and served. 5.3 It may moreover be noted from the assessment order for A.Y. 2006-07 that even the AO has in para 3.2. thereof held that the revised return for this assessment year is on account of the questionnaire issued by the AO on 04.07.2007 for A.Y. 2005-06, which can never be the legal basis for denying the assessee his statutory right to revise the return of income for A.Y. 2006-07. once he has himself discovered the omission/ wrong statement filed in the original return of income for this assessment year. Moreover under the Income Tax Act each assessment year being different, the notice issued u/s 142(1) for the previous assessment year i.e. 2005-06 cannot be made the basis for denying the right of the assessee to file revised return for a subsequent assessment year. That the Hon'ble ITAT may also kindly consider the fact that Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he reason d'etre for withdrawal of the claim of deduction, which though legally allowable to the appellant, was suo motu withdrawn on account of abundant care and caution and to avoid any conflict with the Revenue on the issue. 2. The decision would have been different had the Hon'ble Bench considered the Paper book dated 08.07.2016 and passed two separate orders as both years are different with different facts. 3. Since there are two separate Assessment Years involved, therefore it is humbly prayed that two separate orders may be passed by the Hon'ble ITAT as facts are different in two Assessment Years. In AY 2006-07 revised return was filed in time by the Appellant Company. 4. The documents in the paper book contained - i. Conditions for claim of section 80IB as appearing in Act of 2004 , ii. Decision of Hon'ble Supreme Court in the case of CIT vs Meghalaya Steels Ltd. iii. Copy of relevant part of Direct Tax ready Reckoner. iv. Copy of share holding pattern of the assessee Co (Appellant). v. Oral submissions - were made giving reasons of bona fide belief for claiming the deduction u/s 80IB and the reason for suo motu withdrawal of deduction u/s 80IB, which was other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad no power of recall of its own order in entirety; that the court was not going by the doctrine or concept of inherent power that the "rule of precedent" which is an important part of legal certainty in rule of law is not obliterated by section 254(2) of the Act; that if prejudice has resulted to the party due to the mistake, error or omission which is attributable to the Tribunal and it is manifest from the record, the mistake can be rectified. Thus understood, it is clear as crystal that their Lordships have held that the fundamental principle is that no party appearing before the Tribunal should suffer on account of any mistake committed by the Tribunal and no prejudice is caused to either of the parties before the Tribunal which is attributable to the Tribunal's mistake, omission or commission and if the same error is a manifest error, then the Tribunal would be justified to recall. In ChampaLal case - para 6 However, in a given case where the factual mistake is so apparent that it becomes necessary to correct the same, the Tribunal would be justified in not only correcting the said mistake by way of rectification but if the judgement has proceeded on the basis of that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Order of the Hon'ble Tribunal in ITA Nos. 3953/Del/2013, as deemed fit. That I have given this affidavit of my own free with without any force, coercion or undue influence of any type whatsoever." (C) At the time of hearing before us, in her oral submissions, the Ld. Authorized Representative ("AR", for short) for assessee relied on the contents of the aforesaid two MAs, on the written submissions and the aforesaid affidavit. She further submitted that representation by her before the Learned Commissioner of Income Tax (Appeals) ["Ld. CIT(A)", for short] was affected because of medical reasons and she filed copy of letter dated 21.02.2013 addressed to the Ld. CIT(A) in this regard. She also contended that the facts for Assessment Year 2006-07 were somewhat different from Assessment Year 2005-06 in the sense that while withdrawal of claim Under Section 80IB of I.T. Act was made by the assessee for Assessment Years 2005-06 and 2006-07 through revised returns; the revised return for Assessment Year 2005-06 was beyond the time permissible Under Section 139(5) of I.T. Act whereas for Assessment Year 2006-07, the revised return was filed within the time permissible Under Section 139(5) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ean that the Paper Book did not receive our full consideration. Thus, there is no mistake apparent from record as far as this contention of the assessee is concerned. (D.1) In the MAs, it has been contended by the Assessee that the Ld. AR of the assessee had made oral submissions before the Bench explaining reasons for initial claim of deduction Under Section 80IB of I.T. Act, as also subsequent suo-moto withdrawal by way of revised returns, both for Assessment Years 2005-06 and 2006-07. However, on perusal of our aforesaid order dated 11.08.2016, we find that, we had in paragraph 3.1 specifically recorded: ".... Further we have also noticed that at no stage, either before the lower authorities or before us the assessee offered any explanation or information / particulars about the eligibility criteria on the basis of which the deduction was claimed in the original return filed by the assessee. Similarly though the assesee claimed that it came to the knowledge of assessee at the time of filing return for asstt year 2007-08 that deduction u/s 80IB was not available to the assessee ; the assessee has also not provided any explanation or information / particulars as to on what basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation Pvt. Ltd. 191 Taxman 179 (Delhi). Further, in paragraph 3.2.2 of our aforesaid order dated 11.08.2016, we have categorically expressed the view: " ... The assessee claims that the realisation that the assessee was not eligible for deduction u/s 80IB of I.T. Act was arrived at the time of filing return for asstt. year 2007-08 impliedly claiming thereby that the assessee decided to withdraw the claims u/s 80IB of I.T. Act for asstt. year 2005-06 and asstt. year 2006-07 (by filing revised returns of income) not because of the questionnaire dated 4.7.2007 issued by the Ld. AO) but because subsequently at the time of filing return for asstt. year 2007- 08 the assessee on its own realised that deduction u/s 80IB was not admissible. This is a self-serving claim without any credible proof. Self-serving claims without credible proof do not merit serious consideration, and in the facts and circumstances of the cases before us, it does not advance the cause of the assessee. Had the revised returns been filed (withdrawing claim made u/s 80IB of I.T. Act for asstt. year 2005-06 and 2006-07) well before the time of filing return for asstt. year 2007-08 i.e. well before 31.10.2007, but afte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 410 (Mad.), it was held that the Tribunal has power under section 254(2) when there is an error apparent on fact of record, however, in guise of rectifying mistake, it cannot reverse its own order. Futhermore, in the case of Vatika Ltd. v. DCIT [2016] 68 taxmann.com 87/ 50 ITR (Trib.) 90 (Delhi), it was held that where assessee filed miscellaneous application seeking recall of an order but failed to point out any error apparent on fact of record and by filing application assessee was in fact seeking review of order, application so filed was to be dismissed. Moreover, in the case of Triad Resorts & Hotels (P.) Ltd. v. WTO [2016] 73 taxmann.com 245 / 160 ITD 668 (Bang.), it was held that Section 254(2) is not a carte blanche for Tribunal to change its own view by substituting a view which it believes should have been taken in first instance. Also, in the case of Gowthami Associates v. ITO [2018] 89 taxmann.com 192 / 168 ITD 509 (Bang. - Trib.), it was held that where miscellaneous petition filed by assessee was seeking a review of earlier order of Tribunal by reconsidering application of principles laid down by Superior Courts to facts of case or by reconsidering its findings recorde ..... 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