V. M. Salgaocar & Brothers P. Ltd., Goa V. Asstt. Comm. Of Income Tax Circle 2,

CO 19/PAN/2013

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 9118 (ITAT-PANAJI)
• Duration Of Justice: 4 month(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 08-11-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 1997-1998
• Appeal Filed On: 08-07-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: ASHA DESAI
• Keywords: Depreciation; Deemed to accrue or arise in india
• Section: 143(3); 80HHC; 234B; 115JB; 147; 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI P. K. BANSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NO. 118 /PNJ/2013 (ASSESSMENT YEAR - 1997 - 98 ) THE ASSISTANT COMMISS IONER OF INCOME TAX, CIRCLE - 2, MARGAO , GOA. (APPELLANT) VS. M/S. V.M. SALGAOCAR & BROTHERS PVT . LTD. SALGAOCAR HOUSE, F.L. GOMES ROA D, VASCO - DA - GAMA, GOA. PAN :AAACV5950B (RESPONDENT) CROSS OBJECTION NO. 19 /PNJ/2013 OUT OF ITA NO. 118 /PNJ/2013 (ASSESSMENT YEAR - 1997 - 98 ) M/S. V.M. SALGAOCAR & BROTHERS THE ASSISTANT COMMISSIONER OF PVT. LTD. INCOME TAX, CIRCLE - 2 , PANAJI SALGAOCAR HOUSE, F.L. GOMES ROAD, GOA. VASCO - DA - GAMA, GOA ( RESPONDENT ) PAN: AAACV5950B (OBJECTOR) AP PELLANT BY : SMT. ASHA DESAI , DR RESPON DENT BY : NITESH JOSHI, ADV. DATE OF HEARING : 30 /10/2013 DATE OF ORDER : 08/11 /2013 O R D E R PER P.K. BANSAL THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) DATED 25.03.2013 FOR THE ASSESSMENT YEAR 1997 - 98 . 2. THE REVENUE HAS TAKEN FOLLOWING EFFECTIVE GROUND OF APPEAL : 2 ITA NO. 118/PNJ/2013 M/S. V.M. SALGAOCAR & BROTHERS PVT. LTD. THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY LEVIED U/S 271 (1) (C) OF THE IT ACT BY THE ASSESSING OFFICER OF RS. 1,09,03,616/ - EVEN WHEN THE ASSESSEE HAS VIOLATED THE CLEAR CUT PROVISION OF LAW AND HAS CLAIMED DEDUCTIONS WRONGLY LEADING TO FURNISHING INACCURATE PARTICULARS OF INCOME. W HILE THE ASSESSEE IN CO HAS TAKEN FOLLOWING EFFECTIVE GROUND OF APPEAL. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE PENALTY ORDER PASSED AFTER RECEIPT OF THE HONBLE TRIBUNALS ORDER DOES NOT SUFFER FROM ANY INFIRMITY AS FAR AS TIME - BARRING IS CONCERN ED. 3. THE ONLY ISSUE INVOLVED IN THE APPEAL FILED BY THE REVENUE RELATE S TO DELETION OF THE PENALTY IMPOSED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE INCOME TAX ACT. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME FOR ASSESSMENT YEAR 1997 - 9 8 ON 29.11.1997 DECLARING A TOTAL INCOME OF RS. 2,82,42,861/ - UNDER NORMAL PROVISIONS OF INCOME TAX ACT AFTER CLAIMING DEDUCTION U/S 80HHC OF THE IT ACT TO THE EXTENT OF RS. 22,62,94,648/ - . THE ASSESSEE DECLARED THE BOOK PROFITS U /S 115JA OF THE IT ACT OF RS. 6,05,34,680/ - . THE ASSESSMENT WAS COMPLETED U/S 143 (3) ON 09.03.2000 DETERMINING THE TOTAL INCOME AT RS.14,27,55,184/ - AFTER ALLOWING DEDUCTION U/S 80HHC AMOUNTING TO RS. 7,51,96,065/ - . THIS ASSESSMENT WAS RECTIFIED DETERMINING THE TOTAL I NCOME AT RS. 8,02,82,316/ - ALLOWING THE DEDUCTION U/S 80HHC OF THE IT ACT TO THE EXTENT OF RS. 13,71,83,740/ - . SUBSEQUENTLY, ASSESSMENT WAS REOPENED U/S 147 AND THE ASSESSMENT U/S 143(3) READ WITH SECTION 147 WAS COMPLETED VIDE ORD ER DATED 27.03.2002 DETERMINING THE TOTAL INCOME AT RS. 13,32,11,626/ - AFTER ALLOWING THE DEDUCTION U/S 80 H HC AMOUNTING TO RS. 8,42,54,430/ - . IN THE ORIGINAL ASSESSMENT THE ASSESSING OFFICER HAS NOT INITIATED A PENALTY U/S 271(1)(C). THE DIFFERENCE IN THE CLAIM OF THE DEDUCTION U/S 80HHC WAS DUE TO THE DEPRECIATION NOT CLAIMED BY THE ASSESSEE BUT ALLOWED BY THE ASSESSING OFFICER WHILE COMPUTING DEDUCTION U/S 80HHC DURING THE ASSESSMENT PASSED U/S 3 ITA NO. 118/PNJ/2013 M/S. V.M. SALGAOCAR & BROTHERS PVT. LTD. 143(3) READ WITH SECTION 147. THE ASSESSING OFFICER INITIATE D THE PENALTY PROCEEDING U/S 271(1)(C) FOR CLAIMING THE DEDUCTION U/S 80HHC. THE ASSES SEE WENT IN APPEAL AGAINST THE ORDER DATED 27.3.2002 . ULTIMATELY MATTER TRAVE LLED TO THE INCOME TAX TRIBUNAL. A FTER GIVING THE EFFECT TO THE INCOME TAX APPELLATE TRIBUNA L ORDER , T HE ASSESSED INCOME WAS DETERMINED AT RS. 1,65,28,657/ - AGAINST THE RETURN OF INCOME OF RS. 2,82,42,861/ - WHILE THE DEDUCTION U/S 80HHC WAS ALLOWED TO THE EXTENT OF RS. 20,09,37,399/ - AGAINST THE CLAIM OF RS.22,62,94,648/ - . THE BOOK PROFIT ON WHIC H THE TAX WAS PAID BY THE ASSESSEE WAS DETERMINED AT RS. 6 , 05,34,680/ - U/S 115JA. THE ASSESSING OFFICER DUE TO THE EXCESS CLAIM OF DEDUCTION U/S 80HCC LEVIED THE PENALTY U/S 271(1)(C) FOR FURNISH ING INACCURATE PART ICULARS OF INCOME AMOUNTING TO R S. 1,09,03,616/ - @ 100% O N THE TAX ON THE EXCESS CLAIM OF DEDUCTION U/S 80HHC TREATING IT TO BE TAX SOUGHT TO BE EVADED . 5. THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A), AND CIT(A) DELETED THE PENALTY BY OBSERVING AS UNDER: THUS, IT CAN BE SEEN THAT MAN Y AUTHORITIES HAVE REDUCED OR INCREASED THE CLAIM OF DEDUCTION U/S 80HHC OF THE APPELLANT DURING THE COURSE OF ASSESSMENT, REASSESSMENT AND VARIOUS APPELLATE PROCEEDINGS. THIS IS BECAUSE OF DIFFERENT OPINIONS OF DIFFERENT AUTHORITIES. ALL THE FIGURES WERE AVAILABLE IN THE RETURN OF INCOME AND AUDITED ACCOUNTS, AND THE SAME HAVE BEEN TREATED DIFFERENTLY BY DIFFERENT AUTHORITIES AT DIFFERENT POINTS OF TIME. THEREFORE, IN MY OPINION, THE APPELLANT HAS NEITHER CONCEALED HIS INCOME NOR FURNISHED ANY INACCURATE P ARTICULARS. IT WAS ONLY A MATTER OF OPINION AND THE SAME HAS BEEN DEBATED AT THE LEVEL OF AO, CIT(A) AND HONBLE ITAT. IN VIEW OF THESE FACTS, I FIND THAT, PENALTY UNDER SECTION 271(1)(C) WAS NOT LIVEABLE ON THE FACTS OF THIS CASE AND IN LAW, AND THE AO IS DIRECTED TO DELETE THE PENALTY LEVIED U/S 271(1)(C) FOR AN AMOUNT AT RS. 1,09,03,616/ - . 6. THE LEARNED AR BEFORE US R ELYING UPON THE ORDER OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. NALWA SONS INVESTMENTS LTD. 327 ITR 543 CONTENDED THAT SINCE IN THE CASE OF ASSESSEE THE BOOK PROFITS U/S 115JA HAS BEEN DETERMINED AT THE SAME AMOUNT AS HAS BEEN RETURNED BY THE ASSESSEE, THEREFORE, IN THIS CASE , THERE CANNOT BE ANY T AX SOUGHT TO BE EVADED. REFERRING TO THE ORDER 4 ITA NO. 118/PNJ/2013 M/S. V.M. SALGAOCAR & BROTHERS PVT. LTD. OF ASSESSING OFFICER, ASSESSEE CONTENDED THAT THE PENALTY HAS BEEN IMPOSE D BY T HE ASSESSING OFFICER BY APPLYING EXPLANATION - 4 WHILE EXPLANATION - 4 IN THE CASE OF ASSESSEE CANNOT BE APPLI ED . IT WAS POINTED OUT THAT THE HONBLE SUPREME COURT HAS DISMISSED THE SLP AGAINST THE JUDGMENT OF T HE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. NALWA SONS INVESTMENT LTD. EVEN OTHERWISE TH E CLAIM OF THE ASSESSEE W AS BONA FIDE . I T IS NOT A CASE WHERE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF THE INCOME. THE ASSESSEE DULY DISCLOSED PARTICULARS OF THE INCOME. RELIANCE WAS ALSO PLACED ON THE DECISION OF JURISDICTIONAL MUMBAI HIGH COURT IN THE CASE OF CIT VS. M/S. ADITYA BIRLA NOVA LTD . IN ITA NO. 3899 OF 2010. IT WAS CONTENDED THAT THE CASE OF THE ASSESSEE IS DULY COVERED BY THE DECISION OF HONBLE HIGH COURT IN THE C ASE OF RELIANCE PETROPRODUCTS PRIVATE LTD. 322 ITR 158 . M ERELY THE CLAIM OF THE ASS ESSEE U/S 80HHC WAS NOT ACCEPTED BY THE REVENUE WILL NOT MAKE THE CLAIM MADE BY THE ASSESSEE LIABLE FO R PENALTY HOLDING THAT THE ASSESSEE HAS FAILED TO FURNISH ACCURATE PARTICULARS IN RESPECT OF THE SAID CLAI M. IT WAS ALSO CONTENDED THAT IN THE ORIGINAL ASSESSMENT ORDER THE ASSESSING OFFICER HAS NOT INITIATED PENALTY PROCEEDINGS . E VEN THOUGH WHILE COM PUTING THE CLAIM U/S 80HHC T HE ASSESSEE HAS COMPUTED THE BOOK PROFIT FOR THE PURPOSE OF 80HHC ON THE BASIS OF NOT CLAIMING THE DEPRECIATION U/S 32, THE ASSESSING OFFICER WHILE COMPUTING THE CLAIM U/S 80HHC ALLOWED THE DEPRECIATION TO THE ASSESSEE. ON THE SAME VER Y BASIS , THE CLAIM U/S 80HHC HAS BEEN REDUCED IN ASSESSMENT FRAMED U/S 143(3) READ WITH SECTION 147 WHILE COMPUTING NORMAL TAXABLE INCOME . 7. LEARNED DR, ON THE OTHER HAND , RELYING ON THE ORDER OF THE ASSESSING OFFICER VEHEMENTLY CONTENDED THAT THE EXPLAN ATI ON IN THE CASE OF ASSESSEE WILL APPLY. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME . W E NOTED THAT IN THE CASE OF THE ASSESSEE , THE PROVISION OF SECTION 115J A WAS APPLICABLE . T HE ASSESSEE HAS RETURNED INCOME AS PER THE PROVISION OF SEC TION 115J A AT RS. 6,05 , 34,680/ - . U LTIMATELY THE ASSESSEE HAS PAID TAX ON THE SAME 5 ITA NO. 118/PNJ/2013 M/S. V.M. SALGAOCAR & BROTHERS PVT. LTD. INCOME AFTER GIVING EFFECT TO THE ORDER OF THE TRIBUNAL. WE HAVE GONE THROUGH THE ORDER OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. NALWA SONS IN VESTMENT LTD. (SUPRA) IN WHICH THE ASSESSING OFFICER IMPOSED PENALTY U/S 271(1)(C) WHEREIN THE INCOME WAS DETERMINED U/S 115J B . W HEN THE MATTER WENT TO THE HONBLE DELHI HIGH COURT, THE HONBLE DELHI HIGH HAS HELD AS UNDER. 23. IN VIEW THEREOF, IN CONCLUSION, THE ASSESSMENT ORDER RECORDS AS FOLLOWS: - ASSESSED AT RS. 4,01,63,180 UNDER SECTION 115JB, BEING HIGHER OF TWO. INTEREST UNDER SECTION 234B AND 234C HAS BEEN CHARGED AS PER THE PROVISIONS OF INCOME - TAX ACT, 1961. PENALTY PROCEEDINGS UNDER SEC TION 271(1)(C) OF THE INCOME - TAX ACT, 1961 HAVE BEEN INITIATED. ISSUE NECESSARY FORMS. 24. THE INCOME OF THE ASSESSEE WAS THUS ASSESSED UNDER SECTION 115B AND NOT UNDER THE NORMAL PROVISIONS. IT IS IN THIS CONTEXT THAT WE HAVE TO SEE AND EXAMINE THE APPLI CATION OF EXPLANATION 4. 25. JUDGMENT IN THE CASE OF GOLD COIN HEALTH FOOD (P.)LTD.(SUPRA), OBVIOUSLY, DOES NOT DEAL WITH SUCH A SITUATION. WHAT IS HELD BY THE SUPREME COURT IN THAT CASE IS THAT EVEN IF IN THE INCOME - TAX RETURN FILED BY THE ASSESSEE LOSSE S ARE SHOWN, PENALTY CAN STILL BE IMPOSED IN A CASE WHERE ON SETTING OFF THE CONCEALED INCOME AGAINST ANY LOSS INCURRED BY THE ASSESSEE UNDER OTHER HEAD OF INCOME OF BROUGHT FORWARD FROM EARLIER YEARS, THE TOTAL INCOME IS REDUCED TO A FIGURE LOWER THAN THE CONCEALED INCOME OR EVEN A MINUS FIGURE. THE COURT WAS OF THE OPINION THAT THE TAX SOUGHT TO BE EVADED WILL MEAN THE TAX CHARGEABLE NOT AS IF IT WERE THE TOTAL INCOME. ONCE, WE APPLY THIS RATIONALE TO EXPLANATION 4 GIVEN BY THE SUPREME COURT, IN THE PRE SENT CASE, IT WILL BE DIFFICULT TO SUSTAIN THE PENALTY PROCEEDINGS. REASON IS SIMPLE. NO DOUBT, THERE WAS CONCEALMENT BUT THAT HAD ITS REPERCUSSIONS ONLY WHEN THE ASSESSMENT WAS DONE UNDER THE NORMAL PROCEDURE. THE ASSESSMENT AS PER THE NORMAL PROCEDURE WA S, HOWEVER, NOT ACTED UPON. ON THE CONTRARY, IT IS THE DEEMED INCOME ASSESSED UNDER SECTION 115JB OF THE ACT WHICH HAS BECOME THE BASIS OF ASSESSMENT AS IT WAS HIGHER OF THE TWO. TAX IS THUS, PAID ON THE INCOME ASSESSED UNDER SECTION 115JB OF THE ACT. HENC E, WHEN THE COMPUTATION WAS MADE UNDER SECTION 115JB OF THE ACT, THE AFORESAID CONCEALMENT HAD NO ROLE TO PLAY AND WAS TOTALLY IRRELEVANT. THEREFORE, THE CONCEALMENT DID NOT LEAD TO TAX EVASION AT ALL. 26. THE UPSHOT OF THE AFORESAID DISCUSSION WOULD BE T O SUSTAIN THE ORDER OF THE TRIBUNAL, THOUGH ON DIFFERENT GROUNDS. THEREFORE, WHILE WE DO NOT AGREE WITH THE REASONING AND APPROACH OF THE TRIBUNAL, FOR OUR REASONS DISCLOSED ABOVE, WE ARE OF THE OPINION THAT PENALTY COULD NOT HAVE BEEN IMPOSED EVEN IN RESP ECT OF CLAIM OF DEPRECIATION MADE BY THE ASSESSEE. THIS A PPEAL IS ACCORDINGLY DISMISSED. 6 ITA NO. 118/PNJ/2013 M/S. V.M. SALGAOCAR & BROTHERS PVT. LTD. THE SLP AGAINST THE SAID ORDER OF THE HONBLE DELHI HIGH COURT HAS BEEN DISMISSED BY THE HONBLE SUPREME COURT VIDE THE ORDER 4 TH MAY, 2012 , 21 TAXMAN.COM 184(SC). THE HONBLE DELHI HIGH COURT HAS TAKEN A SI MILAR VIEW IN THE CASE OF CIT VS. CENTRAL HOUSING CORPORATION , 80 CCH 055 (DELHI) . NO CONTRARY DECISION WAS BROUGHT TO OUR KNOWLEDGE BY THE LEARNED DR . U NDE R THE FACTS AND CIRCUMSTANCES, S INCE THE CASE OF THE ASSESSEE IS DULY COVERE D BY THE D ECISION IN THE CASE OF NALWA SONS INVESTMENT LTD. (SUPRA) , W E CONFIRM THE ORDER OF THE CIT(A) DELETING THE PENALTY IMPO SED U/S 271(1)(C) , THOUGH ON A DIFFERENT BASIS THAT THE EXPLANATION - 4 IN THE CASE OF THE ASSESSEE WILL NOT APPLY AND IN THE ABSENCE OF NON - APPLICATION OF EXPLANATION - 4, TAX SOUGHT TO BE EVADED COULD NOT BE COMPUTED AND IN THE ABSENCE OF NON - COMPUTATION OF TAX SOUGHT TO BE E VADED U/S 271(1)(C), THERE CANNOT BE ANY PENALTY AS THE CHARGING PROVISION FOR IMPOSING PENALTY WILL BECOME INEFFECTIVE. S INCE THE OTHER SUBMISSIONS MADE BY THE LEARNED AR ARE PURELY A CADEMIC AND WE HAVE ALREADY CONFIRM ED THE ORDER OF THE CIT(A) DELETING THE PENALTY AGAINST THE U/S 271(1)(C) , I N OUR OPINION, OTHER SUBMISSIONS MADE BY THE LEARNED AR DOES NOT RE QUIRE ANY ADJUDICATION. 9. COMING TO THE CO FILED BY THE ASSESSEE , T HE O NLY ISSUE INVOLVED IN THE CO RELATE S TO THE FACT THAT THE ORDER PASSED U/S 271(1)(C) WAS BARRED BY LIMITATION . LEARNED AR BEFORE US, VEHEMENTLY CONTENDED THAT THE ORDER U/S 143(3) READ WITH SECTION 147 WAS PASSED ON 12 TH AUGUST 2004 AND THEREFORE, THE PENALTY ORDER MUST HAVE BEEN PASSED BY THE ASSESSING OFFICER WI TH IN 6 MONTHS FROM THE END OF THE MONTH IN WHICH THE ORDER OF CIT(A) IS RECEIVED BY THE CHIEF COMMISSIONER OR COMMISSIONER. THE O RDER OF CIT(A) WAS RECEIVED ON 21.09.2004 AND THER E FORE, THE DUE DATE FOR PASSING THE PENALTY ORDER WAS 31 ST MARCH 2005. IN THIS CASE , THE ASSESSING OFFICER IMPOSED THE PENALTY ON THE ASSESSEE BY PASSING THE PENALTY ORDER ON 27.09.20 10 AFTER THE PENALTY ORDER WAS BARRED BY LIMITATION. THE LEARNED DR ON THE OTHER HAND CONTENDED THAT THE PROVIS O TO SEC. 27 5 (1)( A ) CANNOT SUPERSEDE THE MAIN PROVISION OF SEC. 275(1)(A) . 7 ITA NO. 118/PNJ/2013 M/S. V.M. SALGAOCAR & BROTHERS PVT. LTD. THE ASSESSING OFFICER CAN IMPOSE THE PENALTY WITHIN 6 MONTH S FROM THE DATE WHEN THE ORDER OF THE APPELLANT TRIBUNAL IS RECEIVED BY THE CHI EF COMMISSIONER OR COMMISSIONER. P ENALTY HAS BEEN IMPOSED WIT HIN THE SIX MONTHS FROM THE DATE OF THE ORDER OF T HE TRIBUNAL RECEIVED BY THE CIT . 10 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME. WE AGREE WITH THE LEARNED DR THAT THE PROVIS O CANNOT SUPERSEDE T HE MAIN PROVIS ION. OUR AFORESAID VIEW IS DULY SUPP ORTED BY THE FOLLOWING DECISION : CIT VS. MOHA I R INVESTMENTS & TRADING CO. PVT. LTD. 345 ITR 51 (DELHI) R A YAL A CORPORATION PVT. LTD. VS. UNION OF INDIA 288 ITR 452 (MAD) NO CONTRA RY D ECISION WAS BROUGHT TO OUR KNOWLEDGE BY THE LEARNED AR. IN VIEW OF AFORESAID TWO DECISIONS, WE CONFIRM THE ORDER OF THE CIT ON THE ISSUE THAT THE PENALTY ORDER WAS NOT BARRED BY LIMITATION. 1 1 . IN THE RESULT THE APPEAL FILED BY THE REVENUE AS WELL AS CO FILED BY THE ASSESSEE STAND DISMISSED. ORDER PRONO UNCED IN THE OPEN COURT ON 8.11 .2013. SD/ - SD/ - (D.T. GARASIA) ( P.K. BANSAL) JUDICIAL MEMBER ACCOUNTANT ME MBER PLACE : PANAJI / GOA DATED : 8.11 .2013 P.S. - *PK* COPY TO : (1) APPELLANT (2) RESPONDENT (3) CIT CONCERNED (4) CIT(A) (5) D.R (6) GUARD FILE TRUE COPY, BY ORDER PRIVATE SECRETARY, ITAT, PANAJI, GOA 8 ITA NO. 118/PNJ/2013 M/S. V.M. SALGAOCAR & BROTHERS PVT. LTD.