M/s Sigma Steel Industries (Regd), Ludhiana V. ITO, Ludhiana

ITA 1019/CHANDI/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73563 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 16-12-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 05-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Bonafide belief; Unabsorbed depreciation; Bonafide mistake

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE SHRI T.R. SOOD, A.M AND MS. SUSHMA CHOWLA, JM ITA NO. 1019/CHD/2013 ASSESSMENT YEAR : 2006-07 SIGMA STEEL INDUSTRIES VS. I.T.O. WARD 1(3) (REGD) LUDHIANA B-23, PHASE II FOCAL POINT LUDHIANA AACFT 9042 P (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI SUDHIR SEHGAL DEPARTMENT BY: SHRI AKHILESH GUPTA DATE OF HEARING 1 2.3.2014 DATE OF PRONOUNCEMENT 20.3.2014 O R D E R PER T.R.SOOD, A.M THIS APPEAL IS DIRECTED AGAINST THE ORDER DATED 30. 8.2013 OF THE LD. CIT(A)-II. LUDHIANA. 2 IN THIS APPEAL THE ASSESSEE HAS FILED THE FOLLOWI NG GROUNDS: 1 THAT THE LEARNED CIT(A) HAS ERRED IN CONFIRMING PENALTY OF RS. 3,08,000/- LEVIED BY THE ASSESSING OFFICER U/S 271( 1)(C) OF THE INCOME TAX ACT, 1961. 2. THAT THE PENALTY U/S 271(1)(C) HAS BEEN CONFIRM ED AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE AND SUBMISSIONS FILED DURING THE COURSE OF HEARING HAS NOT BEEN CONSIDERED PROPERLY. 3. THAT THE LEARNED CIT(A) HAS ERRED TO APPRECIATE THAT ALL THE FACTS HAD BEEN DISCLOSED AND NOTHING WAS CONCEALED AND NO INACCURATE PARTICULARS OF INCOME WERE FURNISHED. 4. THAT THE LEARNED CIT(A) HAS NOT CONSIDERED THAT THE APPELLANT HAD FILED THE RETURN ON A BONAFIDE BELIEF AND ON THE AD VISE OF HIS COUNSEL AND FOR WHICH HE CANNOT BE PENALIZED. 3 AFTER HEARING BOTH THE PARTIES WE FIND THAT DURIN G ASSESSMENT PROCEEDINGS IT WAS NOTICED THAT THE ASSE SSEE HAS SET OFF THE UNABSORBED DEPRECIATION AND BUSINESS LO SSES 2 AGAINST THE INCOME UNDER THE HEAD CAPITAL GAIN WH ICH WAS NOT ALLOWED AND PENALTY PROCEEDINGS U/S 271(1)(C) OF TH E ACT WERE INITIATED. IN RESPONSE TO THE SHOW CAUSE NOTICE FO R LEVY OF PENALTY IT WAS MAINLY SUBMITTED THAT BROUGHT FORWAR D UNABSORBED DEPRECIATION AND BUSINESS LOSSES WERE SE T OFF AGAINST THE INCOME FROM CAPITAL GAINS UNDER BONAFID E BELIEF THAT THE SAME WERE ALLOWABLE. IT WAS FURTHER SUBM ITTED THAT WHEN THIS FACT CAME TO THE KNOWLEDGE OF THE ASSESS EE IMMEDIATELY CLAIM WAS WITHDRAWN. SINCE THE ASSESSE E HAS ALREADY DECLARED PARTICULARS OF INCOME, PENALTY SHO ULD NOT BE LEVIED AND VARIOUS CASE LAWS WERE ALSO RELIED ON FO R THIS PURPOSE. THE ASSESSING OFFICER DID NOT FIND FORCE IN THE SUBMISSIONS AND OBSERVED THAT THE ASSESSEE HAS CLEA RLY SET OFF BROUGHT FORWARDED UNABSORBED DEPRECIATION AND BUSIN ESS LOSSES AGAINST PROVISIONS OF THE ACT THEREFORE PENA L PROVISIONS WERE APPLICABLE AND ACCORDINGLY MINIMUM PENALTY @ 1 00% AMOUNTING TO RS. 308000 WAS LEVIED. 4 ON APPEAL BEFORE THE LD. CIT(A), THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER. HE FURTHER RELIED ON THE DECISI ON OF HON'BLE SUPREME COURT IN CASE OF PRICE WATERHOUSE COOPER PV T LTD. VS. CIT, CA NO. 6924 OF 2012. THE LD. CIT(A) DID N OT FIND FORCE IN THE SAME AND OBSERVED THAT SEC 72 SPECIFIC ALLY PROHIBITS SUCH SET OFF OF LOSS AND THEREFORE ASSESS EES CASE IS FIT FOR LEVY OF PENALTY AND ACCORDINGLY HE CONFIRME D THE PENALTY. 5 BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SUBMI TTED THAT THE ASSESSEE WAS ADVISED BY THE LD. COUNSEL FO R THE ASSESSEE TO SET OFF THESE LOSSES AND THEREFORE IT I S A SIMPLE CASE OF BONAFIDE MISTAKE ON THE PART OF THE COUNSEL FOR THE 3 ASSESSEE AND FOR WHICH THE ASSESSEE CANNOT BE PUNIS HED. IT WAS FURTHER POINTED OUT THAT THE ASSESSEE WAS A FIR M CONSISTING OF JAGDISH CHANDER AND KRISHAN KUMAR MANGAL. JAGDI SH CHANDER WAS AGED ABOUT 79 YEARS. THE ACCOUNTS WERE BEING LOOKED BY SHRI KRISHAN KUMAR MANGAL AND UNFORTUNATE LY HE DIED ON 27.4.2006. ON HIS DEATH HIS SON SHRI ANAND MANG AL BECAME PARTNER OF THE FIRM. IN FACT SHRI N.R. KAPOOR WHO WAS ORIGINALLY TAX CONSULTANT ALSO DIED ON 21.6.2006. IN HIS ABSE NCE M.K. KAPOOR HIS YOUNG SON WHO WAS IN PRACTICE ADVISED TH E ASSESSEE TO CLAIM SET OFF OF BROUGHT FORWARD UNABSO RBED DEPRECIATION AND BUSINESS LOSS. THEREFORE THIS MIS TAKE HAPPENED AND THE MATTER WAS BROUGHT TO THE KNOWLEDG E OF THE ASSESSEE. THIS CLAIM WAS WITHDRAWN. IT WAS FURTHE R SUBMITTED THAT THE ASSESSEE HAS NOT CONCEALED ANY INCOME THER EFORE PENALTY SHOULD NOT BE IMPOSED. IN THIS REGARD HE RE LIED ON THE DECISION OF HON'BLE SUPREME COURT IN CASE OF CIT V . RELIANCE PETROPRODUCTS PVT LTD, 322 ITR 158 (SC).` 6 ON THE OTHER HAND, THE LD. D.R. FOR THE REVENUE SUPPORTED THE ORDER OF THE LD. CIT(A). 7 WE HAVE GONE THROUGH THE RIVAL SUBMISSIONS CAREFU LLY AND FIND THAT SINCE SHRI KRISHAN KUMAR MANGAL DIED MAY BE HIS YOUNG SON WAS NOT FULLY CONVERSANT WITH THE AFFAIRS OF THE FIRM AND IN THE ABSENCE OF TAX CONSULTANT WHO ALSO DIED HE WAS PERHAPS WRONGLY ADVISED TO MAKE A CLAIM FOR SET OFF OF BROUGHT FORWARD UNABSORBED DEPRECIATION. IT IS A SETTLED L AW THAT A PERSON CANNOT BE PUNISHED FOR THE MISTAKES COMMITTE D BY THE COUNSEL FOR THE ASSESSEE OR HIS ADVISORS. ON THE OV ERALL CIRCUMSTANCES OF THE CASE WE ARE OF THE OPINION THA T THIS IS NOT 4 A FIT CASE FOR LEVY OF PENALTY AND ACCORDINGLY WE S ET ASIDE THE ORDER OF THE LD. CIT(A) AND DELETE THE PENALTY. 8 IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20.3.2014 SD/- SD/- (SUSHMA CHOWLA) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 20.3.2014 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/THE DR