Case Law Details
Brief of the Case
In the case of Pooja Industries vs. ITO, ITAT Chandigarh held that mere denial of deduction u/s 80IC, which the assessee has claimed on roller flour mills with a bonafide belief, would not lead to panel consequences. In any case, the assessee had made full disclosure regarding deduction and in fact, deduction has been allowed under section 80IB(4) at 25%. Therefore, it is not a case of concealment of particulars.
Facts of the Case
The assessee was deriving income from running of flour mill manufacturing atta, maida and suji, etc. The assessee had claimed deduction under section 80IC of the Income Tax Act amounting to Rs.1,12,94,962/-. This deduction was denied because according the Assessing Officer, deduction under section 80IC of the Act was not allowable to flour mill because the same was mentioned in Schedule-XIII. The deduction was allowed under section 80IB(4) at 25%. The penalty proceedings under section 271(1)(c) of the Act were also initiated. In response to the show cause notice, it was submitted that the assessee has carried out substantial expansion and was under the bonafide belief that the assessee was entitled to deduction under section 80IC of the Act. However, the Assessing Officer did not accept the submissions of the assessee and levied penalty at the minimum rate of 100% under section 271(1)(c) of the Act amounting to Rs.34,03,835/-. On appeal, the assessee mainly submitted that the claim of the assessee under section 80IC of the Act was rejected by holding that the assessee was running a flour mill, whereas the fact was that the assessee was running roller flour mill. Further the deduction was claimed on the basis of exemption order issued by the Government of Himachal Pradesh in respect of sales tax exemption in the case of roller flour mills. The learned CIT (Appeals) did not find force in the submissions of the assessee and confirmed the levy of penalty. Being aggrieved the assessee filed the appeal before the ITAT.
Contention of the assessee
The Ld. Counsel of the assessee emphasized that the assessee was under bonafide claim that the assessee was eligible for deduction under section 80IC of the Act particularly in view of sales tax Exemption order for roller flour mills issued by the Joint Secretary (Industries) to the government of Himachal Pradesh. Reliance was placed on the decision of the Hon’ble Supreme Court in the case of CIT Vs. Reliance Petro Products Pvt. Ltd., 322 ITR 158, decision of the Hon’ble Punjab & Haryana High Court in the case of CIT Vs. Himachal Agro Foods Limited, 9 DTR 46 and the decision of Hon’ble Supreme Court in the case of Cement Marketing Co. of India Ltd. Vs. ACIT of Sales Tax, 124 ITR 15. He further placed reliance on the decision of the Hon’ble Bombay High Court in the case of CIT Vs. Larsen & Toubro Ltd., 366 ITR 502.
Contention of the Revenue
The learned D.R for the Revenue strongly supported the order of the learned CIT (Appeals) that the assessee has tried to claim deduction under section 80IC treating its flour mill as roller flour mill and considering its business not in thirteenth schedule of Income Tax Act for the purpose of deduction u/s 80IC of the Act. In this case assessee is trying to manipulate the facts to evade the taxes by going into technicality of language and trying to distinguish its business from flour mill by stating that it is a “roller flour mill” and not a ‘flour mill’. Thus the assessee has twisted facts to evade taxes by claiming wrong deduction u/s 80IC.
Held by Tribunal
The Tribunal relied upon the judgment in the case of CIT Vs. Reliance Petro Products Pvt. Ltd wherein Hon’ble Supreme Court observed that “in order to be covered by the provisions of section 271(1)(C) of the Income Tax Act, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. Where no information given in the return is found to be incorrect or inaccurate, the assessee cannot be held guilty of furnishing inaccurate particulars. By no stretch of imagination can making an incorrect claim tantamount to furnishing inaccurate particulars. There can be no dispute that everything would depend upon the return filed by the assessee, because that is the only document where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise. To attract penalty, the details supplied in the return must not be accurate, not exact or correct, not according to the truth or erroneous.” Further the Hon’ble Himachal Pradesh High Court in the case of CIT Vs. Himachal Agro Foods Limited held that “mere wrong claim of deduction under section 80IB of the Act which was claimed under bonafide belief would not lead to penal consequences. Similar observations have been made by the Hon’ble Bombay High Court in the case of CIT Vs. Larsen & Toubro Ltd. Following the cited judicial pronouncement, the Tribunal observed that it was a case of mere denial of deduction which the assessee has claimed on roller flour mills with a bonafide plea that the same was also eligible for deduction after substantial expansion because the government of Himachal Pradesh had issued the order exempting the same from sales tax. Since the assessee had made full disclosure regarding deduction and in fact, deduction has been allowed under section 80IB(4) at 25%. Therefore, it was not a case of concealment of particulars. Accordingly the order of Ld. CIT(A) was set aside and the penalty was deleted.
