MOHAMMAD RAFIQ,J. - (1.) This is assessee's appeal against the judgment dated 16.06.2017 passed by the Income Tax Appellate Tribunal, Jaipur Bench (SMC), Jaipur (for short 'the ITAT'), dismissing the appeal filed by it against the order dated 10.03.2016 passed by the Commissioner of Income Tax (Appeals), Aligarh at Jaipur (Camp Office), [for short 'the CIT(A)'], whereby also the appeal filed by the appellant-assessee was dismissed, confirming the order dated 08.03.2013 passed by the Income Tax Officer, Ward-3(1), Jaipur (for short 'the Assessing Officer').
(2.) The appellant is engaged in the business of manufacturing and exports of wooden handicraft items. During the Assessment Year 2008-09, the appellant filed the returns claiming deduction of Rs. 46,77,076/- under section 10BA of the Income Tax Act, 1961 (for short 'the Act'), which was allowed by the Assessing Officer. The case was selected for scrutiny and the original assessment was completed under Section 143(3) of the Act on 19.11.2010 at the returned income. Later on, it was noticed that the assessment under Section 143 (3) of the Act was completed for the Assessment Year 2008-09 on 19.11.2010 at the total income of Rs. 8,46,320/- by allowing deduction under Section 10BA of the Act at Rs. 46,77,076/- as claimed by the assessee. The total business income was computed at Rs. 50,11,332/- before allowing the said deduction. Thus, 93.33% of the total income was allowed as deduction. Perusal of the assessment records revealed that Duty Draw Back amounting to Rs. 17,02,681/- was included in the business income of Rs. 50,11,332/-. The Assessing Officer, therefore, issued notice under Section 148 of the Act on 29.03.2012 to the appellant-assessee. The appellant-assessee through its authorised representative vide letter dated 03.04.2012 stated that the original return filed on 30.09.2008 may be treated as the return filed in response to the notice under Section 148 of the Act. Subsequently, on change of incumbent, notices under Sections 143(2) and 142(1) of the Act were issued on 26.12.2012 along with the show cause letter requiring the assessee to show cause as to why the deduction under Section 10BA of the Act claimed and allowed at Rs. 46,77,076/- instead of Rs. 30,86,971/-, which was in excess of Rs. 15,88,601/- may not be disallowed and added to total income of the appellant-assessee. The appellant-assessee through its authorised representative submitted letter dated 16.01.2013 stating that there is no restriction in any of the sub-sections of Section 10BA of the Act while working out the profits of the business, the amounts received on account of Duty Draw Back (DDB) and Duty Entitlement Pass Book (DEPB) are to be excluded for allowing the deduction under this Section. It was further stated that the profits of the business were derived from the export of eligible articles. A request was made to drop the proceedings initiated under Section 148 read with Section 147 of the Act. It was also submitted that the benefit under Section 10BA of the Act was also allowable as certified by the auditors and the same may be allowed and not be added to the taxable income.
(3.) The Assessing Officer did not find the explanation furnished by the appellant-assessee as convincing and maintained that the receipts of Duty Draw Back were not eligible for deduction under Section 10BA of the Act as the same were not derived from the export of eligible articles or things which was the prime condition of eligibility for such deduction. The appellant-assessee had claimed deduction under Section 10BA of the Act at Rs. 46,77,076/-. The total business income was computed at Rs. 50,11,332/- before allowing the said deduction. Thus, 93.33% of total income was allowed as deduction. However, on verification of the assessment records, it was found that the Duty Draw Back amounting to Rs. 17,02,681/- were included in the total business income of Rs. 50,11,332/-. The receipts on Duty Draw Back were not eligible for deduction under Section 10BA of the Act as per the judgment rendered by the Supreme Court in Liberty India v. Commissioner of Income Tax, (2009) 9 SCC 328 , as the same were not derived from the export of eligible articles or things. Therefore, while allowing deduction under Section 10BA of the Act, the profit and gain from export of eligible articles is to be determined at Rs. 33,08,651/- by reducing the amount of Duty Draw Back of Rs. 17,02,681/- from total business income of Rs. 50,11,332/- and 93.33% thereof, which worked out at Rs. 30,86,971/-, is eligible for allowing the deduction under Section 10BA of the Act as against Rs. 46,77,076/- as claimed by the appellant-assessee. It was further noted that since the appellant-assessee had wilfully concealed its income and given inaccurate particulars of income by way of claiming excess deduction under Section 10BA of the Act, the penal provisions envisaged under Section 271 (1) (c) of the Act were clearly attracted in the case and the penalty proceedings were ordered to be initiated separately.;