SDS Ramcides Crop Science Pvt. Ltd., CHENNAI V. ACIT, CHENNAI

ITA 101/CHNY/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8160 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 30-12-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 10-01-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A B KOLI IRS
• Assessee Lawyers: T BANUSEKAR
• Keywords: Unexplained expenditure; Depreciation; Business expenditure; Wrong claim
• Section: 143(3); 80IB

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI , . , ! ' BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A.NO.101/2014 ! # $# / ASSESSMENT YEAR : 2009-2010 M/S. SDS RAMCIDES CROPSCIENCE PVT. LTD (FORMERLY SREE RAMCIDES CHEMICALS PVT. LTD) 2 ND FLOOR, AISHWARYA COMPLEX, N0.4, DURAISWAMY ROAD, T. NAGAR, CHENNAI 600 017. VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE VI(4) CHENNAI. [PAN AAACS 3784N ] ( / APPELLANT) ( /RESPONDENT) %& ' ( / APPELLANT BY : SHRI. T. BANUSEKAR, C.A )*%& ' ( /RESPONDENT BY : SHRI. A.B. KOLI, IRS, JCIT. ' + / DATE OF HEARING : 30-12-2015 ,-$ ' + / DATE OF PRONOUNCEMENT : 22-01-2016 / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER : THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AG AINST ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-VI, CHE NNAI IN ITA NO.1320/2013-2014, DT 31.10.2013 FOR THE ASSESSMENT YEAR 2009- ITA NO.101/MDS/2014 :- 2 -: 2010 PASSED U/S.271(1)(C) R.W.S. 274 AND 250 OF TH E INCOME TAX ACT, 1961. 2. THE ASSESSEE COMPANY HAS RAISED GROUNDS ON LEVY OF PENALTY U/S.271(1)(C) OF THE ACT ON THE DISALLOWANCES MADE BY THE ASSESSING OFFICER ON DIFFERENCE OF CALCULATION OF 80IB DEDUC TION, ADDITION U/S.69C ON ACCOUNT OF EXPENDITURE AND INTEREST FROM BANK. 3. THE BRIEF FACTS OF THE ARE CASE THAT THE ASSESSEE C OMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURER OF INSECTI CIDES AND FILED RETURN ON INCOME WITHIN DUE DATE ON 24.08.2009 DISC LOSING TOTAL INCOME OF ;12,12,95,604/- SUBSEQUENTLY, CASE WAS S ELECTED FOR SCRUTINY AND NOTICES WERE ISSUED. IN THE ASSESSMEN T PROCEEDINGS, THE LD. AUTHORISED REPRESENTATIVE SUBMITTED INFORMATION AND FILED BRIEF ON DEPRECATION CLAIMED IN RESPECT OF ELIGIBLE UNIT AT JAMMU WITH REVISED DEDUCTION U/S.80IB OF THE ACT AND EXPLAINED THAT AT THE TIME OF FILING OF RETURN, THE DEPRECATION AS PER THE INCOME TAX RU LES WAS NOT CLAIMED AND RECOMPUTED SUBSEQUENTLY AND FILED REVIS ED COMPUTATION OF INCOME IN THE ASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER WITHOUT CONSIDERING THE ARITHMETIC MISTAKE AND REVISED COMP UTATION OF THE ASSESSEE MADE AN ADDITION OF ;86,44,827/- AND ALSO MADE AN ADDITION U/S.69C OF THE ACT ON BASIS OF THE AIR TRANSACTION S WITH ITA NO.101/MDS/2014 :- 3 -: AMERICAN EXPRESS BANKING CORP. ;3,29,664/- AS UNEXP LAINED EXPENDITURE. FURTHER, THE ASSESSING OFFICER BASED ON THE 26AS FOUND THAT THE ASSESSEE HAS NOT OFFERED INTEREST ON BANK DEPOSIT AMOUNTING TO ;11,950/- AND TAXED AS UNACCOUNTED RECEIPTS. TH E ASSESSING OFFICER COMPLETED ASSESSMENT BY ABOVE ADDITIONS AND ASSESSED TOTAL INCOME AT ;12,66,60,264/- AND RAISED DEMAND. SUBSE QUENTLY, THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS AND ISSUED NOTICE FOR HEARING. IN THE HEARING PROCEEDINGS, THE ASSESSEE EXPLAINED THE CIRCUMSTANCES OF FILING REVISED COMPUTATION OF INCO ME IN RESPECT OF CLAIM OF DEPRECIATION ON JAMMU UNIT AND DIFFERENCE HAS ARISED DUE TO MISTAKE IN CLAIM AT THE TIME OF FILING RETURN AND THERE IS NO WANTON ACT OF THE ASSESSEE. THE ASSESSEE COMPANY REITERATED I TS SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER IN THE ORIGINAL A SSESSMENT PROCEEDINGS U/SEC. 143(3) OF THE ACT ON CLAIM OF EX EMPTION U/SE 80IB AND PROPOSED STEPS FOR RECTIFY THE MISTAKE. FURTHE R, IN RESPECT OF PAYMENT TO AMERICAN EXPRESS BANKING CORP, THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT THE ASSESSEE COMPANY HAS INCURRED ;26,79,737/- TOWARDS BUSINESS EXPENDITURE AND UNREC ONCILED AGGREGATE AMOUNT BEING ;3,29,664/-. THE INTEREST I NCOME FROM BANK AS PER THE 26AS WAS TAXED BY THE ASSESSING OFFICER AS THE COMPANY IS FOLLOWING MERCANTILE ACCOUNTING SYSTEM. BUT THE ASS ESSING OFFICER COMPLETED THE PENALTY PROCEEDINGS WITH FINDINGS THAT ASSESSEE HAS ITA NO.101/MDS/2014 :- 4 -: DELIBERATELY CONCEALED THE REAL INCOME AND WRONGLY CLAIMED DEPRECATION AND NOT RECONCILED EXPENDITURE AND LE VIED PENALTY OF ;29,82,025/-. AGGRIEVED BY THE ORDER OF THE ASSESSI NG OFFICER, THE ASSESSEE FILED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). 4. IN THE APPELLATE PROCEEDINGS, THE LD. AUTHORISED REPRESENTATIVE ARGUED THAT THERE IS NO WILLFUL OR W ANTON ACT OF CONCEALMENT OF PARTICULARS AND ASSESSEE HAS VOLUNTA RILY DISCLOSED ALL MATERIAL INFORMATION BEFORE THE ASSESSING OFFICER I N THE ASSESSMENT PROCEEDINGS AND PAID TAXES. BUT ON THE ISSUE OF D ISALLOWANCE OF DEPRECIATION, THERE IS OMISSION ON THE PART OF THE COMPANY TO DISALLOW THE DEPRECATION UNDER COMPANIES ACT AND TO CLAIM DE PRECIATION AS PER INCOME TAX RULES. IN ORDER TO BUY PEACE WITH THE I NCOME TAX DEPARTMENT ASSESSEE HAS ACCEPTED THE ADDITIONS IN RESPECT OF UNEXPLAINED EXPENDITURE AND INTEREST RECEIPTS. THE ASSESSEE FILED APPEAL AGAINST THE ORDER U/S.143(3) OF THE ACT BEFO RE THE COMMISSIONER OF INCOME TAX (APPEALS) ON THE GROUND OF ADDITION OF WRONG CLAIM OF DEPRECIATION ONLY. BUT THE COMMISSI ONER OF INCOME TAX (APPEALS) IN PENALTY APPEAL HAVING HEARD THE SUBMISSIONS PERUSED THE FINDINGS OF THE ASSESSING OFFICER RELIE D ON THE JUDICIAL DECISIONS AND PRESUMED THAT THE COMPANY HAS FILED I N ACCURATE ITA NO.101/MDS/2014 :- 5 -: PARTICULARS AND CONFIRMED THE ORDER OF THE ASSESSIN G OFFICER. AGGRIEVED BY THE ORDER OF THE CIT(A) THE ASSESSEE ASSAILED AN APPEAL BEFORE THE TRIBUNAL. 5. BEFORE THE TRIBUNAL, THE LD. AUTHORISED REPRESENTAT IVE ARGUED THE GROUNDS RAISED AGAINST PENALTY ORDER AND ASSESSEE COMPANY HAS VOLUNTARILY ACCEPTED THE MISTAKE WHICH HAS CREPT IN CALCULATION OF DEPRECATION AND ALSO FILED REVISED C OMPUTATION OF INCOME WITH SEC.80IB WORKING. THE LD.AR REITERATED THAT I N ORDER TO BUY PEACE THE ASSESSEE HAS ACCEPTED THE ADDITION OF UNEXPLAIN ED EXPENDITURE AND UNACCOUNTED RECEIPTS. FURTHER, ALL THE MATERIAL FACTS WERE DISCLOSED BEFORE COMPLETION OF ASSESSMENT AND CO-OP ERATED IN THE PROCEEDINGS AND ACCEPTANCE OF ADDITION DOES NOT LEA D TO LEVY OF PENALTY AND IT IS NOT AUTOMATIC. THE ASSESSEE ALSO FILED PAPER BOOK WITH DETAILS OF 154 PETITIONS AND REVISED COMPUTATI ON OF INCOME AND CALCULATION OF 80IB DEDUCTION. THE LD. AUTHORISED REPRESENTATIVE DREW ATTENTION ON THE ISSUE OF 80IB CALCULATION AND MEN TIONED THAT ON THE BASIS OF RETURN FILED BY THE ASSESSEE, ASSESSING O FFICER HAS NOT ALLOWED DEPRECATION IN RESPECT OF JAMMU 80IB UNIT. AFTER C ONSIDERING THE SUBMISSIONS AND THE PETITIONS FILED BY THE ASSESSEE THE ASSESSING OFFICER PASSED SEC. 154 ORDER AND ALLOWED DEDUCTION . FURTHER, LD.AUTHORISED REPRESENTATIVE DREW ATTENTION TO PAGE NO. 3 OF PAPER ITA NO.101/MDS/2014 :- 6 -: BOOK CONTAINING THE LEDGER ACCOUNTS COPIES OF AME RICAN EXPRESS BANKING CORP WITH DETAILS OF PAYMENTS AND CLOSING B ALANCE. THE BANK INTEREST DIFFERENCE ARISED DUE TO NON RECEIPT OF T DS CERTIFICATE BEFORE FINALIZATION OF ACCOUNTS AND PRAYED FOR DELETION OF PENALTY. 6. . ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTAT IVE RELIED ON THE FINDINGS OF THE LOWER AUTHORITIES AN D ARGUED VEHEMENTLY TO DISMISS THE APPEAL OF THE ASSESSEE. 7. WE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES, PERUSED THE MATERIAL ON RECORD AND ALSO JUDICIAL DECISIONS CITED. THE ASSESSEE COMPANY IS IN MANUFACTURE OF INSECTICIDES HAVING HU GE TURNOVER AND WORKING GLOBALLY. ON THE ISSUE OF DEPRECATION OF JA MMU UNIT DUE TO MISTAKE OF THE ASSESSEE COMPANY AT THE TIME OF FILI NG OF RETURN DEDUCTION WAS NOT CLAIMED AND SUBSEQUENTLY REVISED COMPUTATION OF INCOME WAS FILED IN ADDITION TO REVISED COMPUTATION OF 80IB DEDUCTION. THE ASSESSEE COMPANY EXPLAINED THE CIRCUMSTANCES OF DEDUCTION U/S.80IB TO THE ASSESSING OFFICER AND COMMISSIONER OF INCOME TAX (APPEALS) AND FILED RECTIFICATION PETITION U/S.154 AGAINST THE ORDER OF SEC.143(3) OF THE ACT AND ALSO AGAINST THE ORDER OF 271(1)(C) OF THE ACT. FINALLY, THE LD. ASSESSING OFFICER HAS CONSI DERED RECTIFICATION ITA NO.101/MDS/2014 :- 7 -: PETITION DATED 21.04.2015 OF THE ASSESSEE AND PASSE D ORDER DATED 7.7.2015 ALLOWING DEPRECATION IN RESPECT OF JAMMU U NIT ELIGIBLE FOR DEDUCTION U/S.80IB. THE MISTAKE COMMITTED BY THE A SSESSEE COMPANY WAS RECTIFIED IN THE YEAR 2015 AND THERE WAS A GENU INE REASON FOR THE ASSESSEE TO FILE PETITIONS AS PER THE LAW AND CLAI MED RELIEF. FURTHER, THE ASSESSEE HAS NOT FURNISHED ANY INACCURATE PARTI CULARS ON THE ISSUE OF DEPRECIATION AND WE RELY ON THE DECISION OF APE X COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS LTD 322 ITR 158 . 8. IN RESPECT OF ADDITION OF UNEXPLAINED EXPENDITURE OF ;3,29,664/- THE ASSESSEE HAS NOT RECONCILED THE PAY MENTS OF BANK ACCOUNT WITH BOOKS OF ACCOUNTS MAINTAINED THOUGH TH E DEPARTMENT COLLECTED INFORMATION BASED ON AIR DATA. EVEN BEF ORE US, THE ASSESSEE HAS NOT SUPPORTED HIS CASE WITH BANK STATE MENTS OF CREDIT CARD EXPENSES. FURTHER, UNACCOUNTED RECEIPTS OF ;1 1,950/- PERTAINING TO INTEREST ON BANK DEPOSITS, WHICH THE ASSESSEE HA S OMITTED TO INCLUDE IN THE BOOKS OF ACCOUNTS FOR TAXATION PURPO SE. IN RESPECT OF THESE TWO ADDITIONS THE LD. AUTHORISED REPRESENTATI VE SUBMITTED THAT TO BUY PEACE WITH THE DEPARTMENT HAS NOT FILED APPE AL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). HOWEVER, NO B ONAFIDE EXPLANATION FROM THE ASSESSEE SIDE FOR MAKING INACC URATE PARTICULARS TO THE DEPARTMENT. CONSIDERING THE FACTS AND CIRCUMSTA NCES OF PENALTY, ITA NO.101/MDS/2014 :- 8 -: WE DIRECT THE ASSESSING OFFICER TO RECOMPUTE PENALT Y IN RESPECT OF SUSTAINED ADDITION OF UNEXPLAINED EXPENDITURE ;3,29 ,664/-AND UNCLAIMED RECEIPTS OF ;11,950/- ONLY. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO.101/MDS/2014 IS PARTLY ALLOWED. ORDER PRONOUNCED ON FRIDAY, THE 22ND DAY OF JANUARY, 2016 AT CHENNAI. SD/- SD/- ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER ( . ) (G. PAVAN KUMAR) /JUDICIAL MEMBER / CHENNAI . / DATED: 22.1.2016 KV / ' )!+12 32$+ / COPY TO: 1 . %& / APPELLANT 3. 4+ () / CIT(A) 5. 278 )!+! / DR 2. )*%& / RESPONDENT 4. 4+ / CIT 6. 89# : / GF