Aqua Plumbing Private Ltd., Mathura V. The Asstt. C.I.T.-3, Mathura

ITA 101/AGR/2011

• Counselvise Citation: 10120314 RSA 2011
• Duration Of Justice: 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 18-03-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 18-04-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Depreciation; Wrong claim
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 101/AGRA/2011 ASSTT. YEAR : 2004-05 AQUA PLUMBING PRIVATE LTD., VS. A.C.I.T. 3, GAUR KENDRA, AGRA DELHI BYE PASS, MATHURA. MATHURA (PAN: AAACA 5366 Q) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M.M. AGARWAL, C.A. RESPONDENT BY : SHRI K.K. MISHRA, JR. D.R> DATE OF HEARING : 18.03.2013 DATE OF PRONOUNCEMENT OF ORDER : 22.03.2013 ORDER PER BHAVNESH SAINI, J.M.: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LD. CIT(A)-I, AGRA DATED 29.12.2010 FOR THE ASSESSMENT YEAR 2004- 05, CHALLENGING THE LEVY OF PENALTY U/S. 271(1)(C) OF THE IT ACT. 2. EARLIER, THE APPEAL OF THE ASSESSEE WAS DISMISSE D IN LIMINE VIDE ORDER DATED 07.06.2012. THE EXPARTE ORDER WAS RECALLED BY ALLOW ING M.A. NO. 27/AGRA/2012 FILED BY THE ASSESSEE VIDE ORDER DATED 14.12.2012. THE APPEAL WAS, THEREFORE, RE- FIXED FOR HEARING ON MERITS. ITA NO. 101/AGRA/2011 2 3. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE AO F RAMED ASSESSMENT ORDER U/S. 143(3) ON DATED 29.12.2005 BY MAKING CERTAIN ADDITI ONS AGAINST THE ASSESSEE, WHICH ARE NOTED AT PARA 3.1 OF THE IMPUGNED APPELLA TE ORDER MAKING TOTAL DISALLOWANCE AT RS.18,62,134/-, UPON WHICH THE AO L EVIED PENALTY U/S. 271(1)(C) OF THE IT ACT VIDE SEPARATE ORDER AND THE LD. CIT(A) P ARTLY ALLOWED THE PENALTY APPEAL OF THE ASSESSEE. 4. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN THE PRESENT APPEAL, THE ASSESSEE HAS CHALLENGED CONFIRMATION OF LEVY OF PEN ALTY ON TWO ITEMS, I.E., (I) DISALLOWANCE ON ACCOUNT OF WRONG CLAIM OF DEPRECIAT ION AT RS.45,020/- AND (II) DISALLOWANCE ON ACCOUNT OF REDUCTION IN THE AMOUNT OF DEDUCTION CLAIMED U/S. 80IA/80IB FROM RS.44,54,807/- TO RS.27,73,066/-. TH E LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET SUBMITTED THAT ON THE ISSUE OF DISALL OWANCE OF DEDUCTION U/S. 80IA/80IB ABOVE, THE AO HAS PARTLY ALLOWED THE CLAI M OF ASSESSEE AND RESTRICTED THE DEDUCTION IN THE ASSESSMENT ORDER, WHICH REMAIN ED UNDER CHALLENGE BEFORE THE ITAT, AGRA BENCH IN THE CASE OF SAME ASSESSEE IN IT A NO. 447/2006, COPY OF WHICH IS FILED AT PAGE 13 OF THE PAPER BOOK AND VID E ORDER DATED 31.05.2011, THE TRIBUNAL IN PARA 10 OF THE ORDER SET ASIDE THE ORDE RS OF THE AUTHORITIES BELOW AND DIRECTED THE AO TO ALLOW DEDUCTION TO THE ASSESSEE U/S. 80IA/80IB OF THE IT ACT ON THE ENTIRE AMOUNT CLAIMED BY THE ASSESSEE. THE LD. DR DID NOT DISPUTE THE ABOVE FACT OF DELETION OF ADDITION BY THE TRIBUNAL ON QUA NTUM. CONSIDERING THE FACT THAT ITA NO. 101/AGRA/2011 3 THE TRIBUNAL HAS DELETED THE ADDITION ON MERIT BY A LLOWING THE CLAIM OF ASSESSEE U/S. 80IA/80IB OF THE IT ACT, PENALTY IS NOT LEVIAB LE ON THE SAME ADDITION AS MADE BY THE AO AND CONFIRMED BY THE LD. CIT(A). WE, THER EFORE, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND CANCEL THE PENALTY WITH R EGARD TO DISALLOWANCE MADE U/S. 80IA/80IB OF THE IT ACT. 5. NOW, WE TAKE UP THE LEVY OF PENALTY ON DISALLOWA NCE ON ACCOUNT OF WRONG CLAIM OF DEPRECIATION. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT THE ASSESSEE HAS CLAIMED DEPRECIATION OF RS.2,21,188/- ON MOTOR CAR. A PERUSAL OF THE MOTOR CAR ACCOUNT SHOWS THAT THE ASS ESSEE HAS PURCHASED TWO NEW CARS OF RS.11,03,220/- IN THE SECOND HALF OF THE YE AR ON WHICH DEPRECIATION @ 50% OF THE NORMAL RATE IS ALLOWABLE. DEPRECIATION ALLOW ABLE ON NEW CARS IS RS.1,10,322/-. APART FROM THE ABOVE, THE ASSESSEE H AS OLD BALANCES OF CARS OF RS.7,79,332/-, OUT OF WHICH HE HAS SOLD A CAR OF RS .4,50,000/-. AS A RESULT, OUT OF OPENING BALANCE OF CARS, DEPRECIATION IS ALLOWABLE ON WRITTEN DOWN VALUE OF RS.3,29,232/- ON WHICH DEPRECIATION ALLOWABLE AT TH E RATE OF 20% COMES TO RS.65,846/-. TOTAL DEPRECIATION ALLOWABLE COMES TO RS.1,76,168/-. IN PLACE OF THIS CORRECT AMOUNT, THE ASSESSEE HAS CLAIMED DEPRECIATI ON OF RS.2,21,188/-. ACCORDINGLY, THE ASSESSEE HAS CLAIMED EXCESS DEPREC IATION OF RS.45,020/-. THE SAME AMOUNT WAS DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE. THE AO ALSO NOTED IN THE ASSESSMENT ORDER WITH REGARD TO T HIS ADDITION THAT HE WAS SATISFIED ITA NO. 101/AGRA/2011 4 THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICUL ARS OF INCOME. THEREFORE, HE WAS SATISFIED THAT IT IS A FIT CASE FOR INITIATION OF P ENALTY PROCEEDINGS U/S. 271(1)(C) AND ACCORDINGLY, PENALTY PROCEEDINGS WERE SEPARATELY IN ITIATED. THE AO IN THE PENALTY ORDER ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE. THE ASSESSEE INITIALLY DID NOT FILE ANY REPLY AND LATER ON WHATEVER REPLY WAS FILED WAS GENERAL IN NATURE. THE AO CONSIDERING THE ASSESSMENT ORDER AND THE APPELLATE ORDER FOUND THAT THE ASSESSEE HAS CLAIMED HIGHER AMOUNT OF DEDUCTION SOLELY WITH INTENTION TO EVADE THE PROPER TAX LIABILITY BY TRYING TO BEND THE TAX LAWS AND NO NEW ARGUMENTS HAVE BEEN MADE AND WHATEVER WAS STATED IN THE ASSESSMENT PROCEEDIN GS, HAS BEEN REPEATED. THE AO ALSO NOTED THAT THE REPLY OF ASSESSEE SHOWS THAT TH E ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF EXPENDITURE WAS A DEBATABLE ISSUE. THE ASSESSEES CONTENTION WAS NOT FOUND TO BE CORRECT BECAUSE THE FACTS AND CIRCU MSTANCES CLEARLY SHOW THAT THE ASSESSEE WITH WILLFUL INTENTION IN ORDER TO AVOID P AYMENT OF DUE TAX MADE A HIGHER CLAIM OF DEDUCTION, WHICH WAS NOT DUE TO THE ASSESS EE. THE AO ALSO NOTED THAT THIS IS NOT A ROUTINE ESTIMATED ADDITION, BUT IT WAS MAD E BY THE AO ONLY AS A RESULT OF PROPER AND MINUTE EXAMINATION OF ACCOUNTS OF THE AS SESSEE. THEREFORE, IT WAS HELD THAT THE AMOUNTS OF EXCESSIVE DEPRECIATION SO DISAL LOWED, CLEARLY PROVES THAT THE ASSESSEE FURNISHED INACCURATE PARTICULARS OF INCOME ATTRACTING PENALTY U/S. 271(1)(C) OF THE IT ACT. THE AO, THEREFORE, LEVIED THE PENALT Y. THE LD. CIT(A) ALSO NOTED IN THE IMPUGNED ORDER THAT THE DISALLOWANCE OF EXCESSI VE DEPRECIATION HAS BEEN MADE BY THE AO DUE TO FURNISHING OF INACCURATE PARTICULA RS OF INCOME AND, THEREFORE, THE ITA NO. 101/AGRA/2011 5 ASSESSEE IS LIABLE FOR PENALTY AND ACCORDINGLY, PEN ALTY WAS CONFIRMED FOR MAKING WRONG CLAIM OF EXCESSIVE DEPRECIATION. 6. THE LD. COUNSEL FOR THE ASSESSEE BY REFERRING TO THE FINDINGS IN THE ASSESSMENT ORDER SUBMITTED THAT THERE IS NO DISPUTE ABOUT THE ADDITION MADE BY THE AO, WHICH IS CORRECT ALSO. HOWEVER, HE HAS SUBMITTED THAT IT WAS A WRONG CLAIM MADE BY THE ASSESSEE BONAFIDELY AND EVEN THE AUDITORS HAVE NOT POINTED OUT SUCH MISTAKE IN THE AUDIT REPORT. THEREFORE, PENALTY IS NOT LEVIABLE AN D RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF PRICE WATERHOU SE COOPERS PVT. LTD. VS. CIT, 348 ITR 306, IN WHICH COMPANY WAS PROVIDING CONSULT ANCY SERVICE HAVING MORE THAN 1000 EMPLOYEES. FILING STATEMENT OF PARTICULAR S WITH RETURN OF INCOME SHOWING PROVISIONS TOWARDS GRATUITY AS NOT ALLOWABL E, BUT DEDUCTION CLAIMED IN THE RETURN. IT WAS CONSIDERED TO BE INADVERTENT SILLY M ISTAKE. THE AO ALSO NOT NOTICING THE SAME BUT FRAMED THE ASSESSMENT ORDER. IT WAS TH EREFORE, HELD TO BE BONAFIDE AND INADVERTENT ERROR AND THEREFORE, IT WAS HELD THAT P ENALTY WAS NOT JUSTIFIED. ON THE OTHER HAND, THE LD. DR RELIED UPON THE ORDERS OF TH E AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE DELIBERATELY FILED INAC CURATE PARTICULARS OF INCOME BY MAKING WRONG CLAIM OF EXCESSIVE DEPRECIATION. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND DO NOT FIND ANY JUSTIFICATION TO CANCEL THE PENALTY. THE AO HAS RECORDED SPECIFIC FINDING OF FACT IN THE ITA NO. 101/AGRA/2011 6 ASSESSMENT ORDER WHICH HAVE NOT BEEN DISPUTED BY TH E LD. COUNSEL FOR THE ASSESSEE DURING THE COURSE OF ARGUMENTS. THE ASSESSEE NOT ON LY PURCHASED TWO NEW CARS IN THE SECOND HALF OF THE YEAR, ON WHICH DEPRECIATION WAS ALLOWABLE @ 50% OF THE NORMAL RATE, BUT THE ASSESSEE WAS ALSO HAVING OLD B ALANCE OF CARS, OUT OF WHICH THE ASSESSEE HAS SOLD A CAR ALSO RESULTING INTO THE WRI TTEN DOWN VALUE OF EARLIER CARS HAVE ALSO REDUCED. THUS, THE ASSESSEE WAS AWARE OF THE FACT AT WHAT RATE AND FOR WHAT PERIOD AND FOR WHAT EXACT AMOUNT, DEPRECIATION IS ALLOWABLE TO THE ASSESSEE ON CARS. THEREFORE, THE CLAIM OF ASSESSEE THAT A WR ONG CLAIM WAS MADE INADVERTENTLY CANNOT BE ACCEPTED, PARTICULARLY WHEN THE ASSESSEE WAS ENJOYING DEPRECIATION ON CARS IN EARLIER YEARS AS WELL. THE ISSUE HAS BEEN VERIFIED AND PROBED BY THE AO AT THE ASSESSMENT STAGE MINUTELY AND THE AO CORRECTLY NOTICED THAT THE ASSESSEE HAS MADE DELIBERATELY A WRONG CLAIM OF EXC ESSIVE DEPRECIATION. FINDING OF FACT RECORDED BY THE AO HAVE NOT BEEN DISPUTED BY T HE ASSESSEE AT ANY STAGE AND NOTHING WAS EXPLAINED EVEN AT THE PENALTY STAGE AS TO HOW IT WAS AN INADVERTENT OR BONAFIDE ERROR ON THE PART OF THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT AUDITORS HAVE ALSO NOT POINTED OUT T HAT EXCESSIVE DEPRECIATION HAS BEEN MADE, BUT NO SUCH PLEA WAS TAKEN BEFORE THE AO AT THE ASSESSMENT STAGE INCLUDING THE PENALTY STAGE WHEN THE AO ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE FOR LEVY OF PENALTY. THE ASSESSEE MERELY STATED AT THE PENALTY STAGE THAT THE ISSUE IS DEBATABLE, WHICH ITSELF WAS ALSO INCORRECT BECAUSE THERE WAS NO DEBATE INVOLVED WITH REGARD TO GRANT OF DEPRECIATION IN THE CASE OF ASSESSEE. SINCE THE ASSESSEE HAS ITA NO. 101/AGRA/2011 7 FAILED TO EXPLAIN THIS ISSUE BEFORE THE AO AT THE A SSESSMENT AS WELL AS PENALTY STAGE AND FAILS TO OFFER ANY EXPLANATION TO THE SAME, THE REFORE, THE CLAIM OF THE ASSESSEE WAS RIGHTLY CONSIDERED TO BE FALSE. THE ASSESSEE FA ILED TO SUBSTANTIATE WHATEVER PLEA WAS TAKEN BEFORE THE AUTHORITIES BELOW. THEREFORE, EXPLANATION-1 TO SECTION 271(1)(C) OF THE IT ACT WOULD ALSO BE ATTRACTED IN THE CASE OF ASSESSEE FOR LEVY OF PENALTY. THE DECISION RELIED UPON BY THE LD. COUNSE L IS CLEARLY DISTINGUISHABLE ON FACTS OF THIS CASE. WE ARE, THEREFORE, OF THE VIEW THAT THE AUTHORITIES BELOW HAVE RIGHTLY LEVIED AND CONFIRMED THE PENALTY WITH REGAR D TO CLAIM OF EXCESSIVE DEPRECIATION. WE, THEREFORE, CONFIRM THE ORDERS OF AUTHORITIES BELOW AND DISMISS THE APPEAL OF THE ASSESSEE ON THIS ISSUE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. PRIVATE SECRETARY TRUE COPY