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31-12-2019, Ultimate Flexipack, Section 80IC, 132(1), 153A, Tribunal Delhi

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2 weeks 5 days ago #11906 by amit
Section - 80IC, 132(1), 153A, 271(1)(c)
Order Date - 31-12-2019
Favouring - Revenue
Court - Tribunal Delhi
Appellant - ACIT
Respondent - Ultimate Flexipack Ltd.
Justice - G.S. PANNU VP & K. NARASIMHA CHARY JM
Citation - 120Taxpundit27
Appeal No. - ITA Nos.4883 & 4884/Del/2011
Asstt. Year - 2004-05 & 2005-06

Order

PER : K. NARASIMHA CHARY, J.M.

All these 3 appeals are preferred by the Revenue and cross objections by the assessee, challenging the orders of the learned Commissioner of Income Tax (Appeals)-III, Delhi (“Ld. CIT(A)”) for the assessment years 2004-05 to 2006-07. Since the facts, questions of law and the grounds of appeal in all these matters are similar, we deem it just and convenient to dispose of these appeals by way of this common order, with reference to the facts involved for the assessment year 2004-05 in ITA No. 4883 /Del/ 2011 and CO No. 03/Del/2019.

2. Brief facts of the case are that the assessee is a company engaged in the business of manufacturing of plastic film used in packaging industries, printed article in pouch form and is a diaphragm, having started a new manufacturing unit at Baddi (HP). For the assessment year 2004-05 they have filed their return of income on 31/10/2004 declaring nil income after claiming deduction under section 80 IC of the Income Tax Act, 1961 (for short “the Act”) to the tune of Rs. 9,13,69,859/-. There was a search and seizure operation in the M/s Flex group of cases on 23/02/2006 and the case of the assessee was also covered under section 132(1) of the Act. According to the assessee, on 31/3/2006 they have filed a revised return declaring income at Rs. 7,67,16,085/- wherein the deduction under section 80 IC of the Act was claimed at Rs. 1, 46, 53, 774/-. The revised income was computed by the assessee after excluding the income of Rs. 8, 44, 18, 0 24/- received by the assessee on account of license fee, from the direction earlier claimed under section 80 IC of the Act.

3. Pursuant to the search in section 132(1) of the Act, notice under section 153A of the Act was issued to the assessee and in response thereto, assessee filed the return of income on 6/10/2006 declaring income of Rs. 6, 76, 43, 647/-wherein the deduction under section 80 IC of the Act was claimed at Rs. 2, 37, 26, to 11/-. Assessment under section 153A of the Act read with section 143(3) of the Act was passed on 31/12/2007 at the income of the assessee of Rs. 8, 20, 90, 020/-, allowing the claim of the assessee for deduction under section 80 IC of the Act to the extent of Rs. 1, 06, 31, 753/-and the excessive claim wasdisallowed.

4. Learned Assessing Officer recorded in the order dated 31/12/2007 that the assessee has increased the amount of deduction claimed in section 80 IC of the Act over the earlier figur of Rs. 1,46,53,774/- implying manipulation in the accounts of the assessee, and but for the notice under section 153A of the Act the assessee could not have filed any written rectifying the claim for deduction under section 80 IC of the Act showing it at a lower figure, and therefore, the assessee having revised the figure of claim of deduction under section 80 IC of the Act as a result of search has committed the Act of furnishing inaccurate particulars, inviting penalty proceedings under section 271(1)( c ) of the Act.

5. Learned Assessing Officer issued notice under section 271(1)( c ) of the Act to which the assessee had issued a reply dated 18/3/2010 stating that the reduction in the brought forward losses and brought forward unabsorbed depreciation was on the basis of assessed figures of earlier assessment years and therefore, penalty was not to be levied on account of these additions in the current year; that the claim for deduction under section 80 IC of the Act was made by the assessee on the basis of audit report in form No. 10 CCB, as per which the deduction allowable was more than that claimed by the assessee; that the claim for deduction under section 80 IC on account of interest income was justified as it was an income earned from the business of undertaking; that the loss from the corporate unit was adjusted against the income from the eligible unit at Baddi and the claim for deduction under section 80 IC was after this adjustment; that the depreciation on technical know-how pertained to the corporate unit and not to the eligible unit at Baddi; that part of the administrative expenses pertaining to the corporate unit and therefore, were rightly not deducted from the income of the eligible unit at Baddi; that the proceedings for penalty are different from proceedings for assessment and every addition disallowance does not warrant the imposition of the penalty; that the penalty cannot be levied for mere claiming any deduction when there is no concealment of income or information from the learned Assessing Officer; and that all the material facts for computation of income were brought on record by the assessee and none of such particulars amounted to concealment or furnishing of inaccurate particulars thereof. Assessee also placed reliance on a catena of decisions in support of their submissions.

6. Learned Assessing Officer, however, by order dated 30/3/2010 passed in section 271(1)( c ) of the Act, did not agree with the assessee on several of these submissions and held that this is not a case of simple mistake committed by the counsel of the assessee and a heavy claims for deduction under section 80 IC was made without any sound legal basis and therefore, the reliance placed by the assessee on the judgement of the Hon’ble Delhi High Court in the case of M/s Comet Leasing and Finance Ltd vs. ACIT 2010-TIOL-134-ITAT-Delhi has no application to the facts of the case. Learned Assessing Officer distinguished the decisions relied upon the assessee and reached a conclusion that by inaccurately claiming excessive deduction under section 80 IC in the original return of
income than what the assessee was entitled to without any sound basis, the assessee had concealed the particulars of its income/furnished inaccurate particulars of income and consequently levied the penalty of Rs. 2.90 crores.

7. Assessee preferred appeal before the Ld. CIT(A and contended that the return of income filed in response to section 153A of the Act was the only written to be considered for the purpose of levying the penalty under section 271(1)( c ) of the Act and as there were no inaccurate particulars furnished in such return, no penalty for concealment is leviable. Assessee further contended that there is no concealment or submission of inaccurate particulars by the assessee even in the original return, as all the information relating to the claim of deduction under section 80 IC of the Act was clearly given in the return and the appended documents.

8. Ld. CIT(A) however did not agree with the assessee. According to the Ld. CIT(A) the doctrine of eclipse is applicable to the facts of the case and the original return gets eclipsed and could, therefore, not be acted upon for assessment purpose, due to legal embargo, but it does not get annulled.

9. Insofar as the merits of the case are concerned, on a careful consideration of the material available before him, Ld. CIT(A) recorded the fact that in the return of income filed on 31/10/2005, the assessee had in the 1st instance claimed 80 IC of the Act also on the license fee

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