Farmson Pharmaceuticals Gujarat Pvt. Ltd., Baroda V. The Dy.CIT.,Circle-1(2), Baroda

ITA 1041/AHD/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9124 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 19-01-2017
• Assessment Year: 2002-2003
• Appeal Filed On: 09-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Wrong claim; Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.1041/AHD/2014 (ASSESSMENT YEAR:2002-03) FARMSON PHARMACEUTICALS GUJARAT PVT. LTD., 28-35, GIDC INDUSTRIAL ESTATE, NANDESARI, BARODA - 391340 APPELLANT VS. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1(2), AAYKAR BHAVAN, RACE COURSE, BARODA RESPO NDENT PAN: AAACF3358B /BY ASSESSEE : SHRI P. B. PARMAR ON BEHALF O F BHAVIN MARFATIA, A.R. /BY REVENUE : SHRI JAMES KURIAN, SR. D.R. /DATE OF HEARING : 19.01.2017 /DATE OF PRONOUNCEMENT : 22.02.2017 ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2002-03 ARISES AGAINST CIT(A)-I, BARODAS ORDER DATED 10.02.2014, IN APPEA L NO.CAB-I/06/2012-13, AFFIRMING ASSESSING OFFICERS ACTION IN IMPOSING PE NALTY OF RS.07,31,070/-, IN PROCEEDINGS UNDER SECTION 271(1)(C) OF THE INCOM E TAX ACT, 1961; IN SHORT THE ACT. ITA NO.1041/AHD/2014 (FARMSON PHARMACEUTICALS GUJ. PVT. LTD. VS. DCIT) A.Y. 2002-03 - 2 - 2. WE COME TO RELEVANT FACTS. IT IS EVIDENT THAT B OTH THE LOWER AUTHORITIES HAVE IMPOSED THE IMPUGNED PENALTY OF RS.7,31,070/- PERTAINING TO DISALLOWANCES/ADDITIONS OF BAD DEBTS WRITTEN OFF, F OREIGN TRAVEL EXPENDITURE AND CAPITAL LOSS OF RS.4,74,407/-, RS.1,91,501/- & RS.8,33,576/-, RESPECTIVELY. THEY TREAT THE SAME AS AN INSTANCE OF CONCEALMENT O F INCOME AS WELL AS FURNISHING OF INACCURATE PARTICULARS OF INCOME IN C OURSE OF QUANTUM PROCEEDINGS AT ASSESSEES BEHEST. 3. THE ASSESSEE COMPANY MANUFACTURES AND SELLS PARA CETAMOL. THE ASSESSING OFFICER COMPLETED A REGULAR ASSESSMENT ON 31.03.2005 DISALLOWING ASSESSEES BAD DEBT CLAIM OF RS.4,74,40 7/- ON ACCOUNT OF ITS FAILURE IN PROVING THE SAME TO HAVE BEEN MADE FOR B USINESS PURPOSES. HE FURTHER DISALLOWED FOREIGN EXPORT PROMOTION EXPENSE S OF RS.1,91,501/- ADOPTING A SIMILAR REASONING THAT ASSESSEE HAD NOT FILED SPECIFIC DETAILS ABOUT EXPENSES INCURRED ON VISIT OF ONE MR. VINEET MENON. HE THEREAFTER REOPENED THE SAID REGULAR ASSESSMENT TO FRAME THE IMPUGNED R E-ASSESSMENT DISALLOWING LOSS CLAIM OF RS.8,33,576/- BY QUOTING SECTION 43 R .W.S. 50 OF THE ACT. THE ASSESSING OFFICER ACCORDINGLY INITIATED THE IMPUGNE D PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT ALLEGING CONCEALMENT AS WE LL AS FURNISHING OF INACCURATE PARTICULARS OF INCOME. WE FIND THAT THE ASSESSEE DID NOT CHALLENGE THE SAID FORMER TWO DISALLOWANCES/ADDITIONS BY WAY OF REFERRING ANY APPEAL. IT HOWEVER ASSAILED CORRECTNESS OF THE ABOVE STATED LOSS DISALLOWANCE. THE CASE FILE INDICATES THAT THE SAID ISSUE ULTIMATELY STOOD DECIDED IN REVENUES FAVOUR IN THIS TRIBUNAL VIDE A CO-ORDINATE BENCH DE CISION IN ITA NO.666/AHD/2011 DECIDED ON 19.02.2015. 4. WE NOW COME TO THE IMPUGNED PENALTY PROCEEDINGS. BOTH THE LOWER AUTHORITIES STRONGLY RELY UPON THE ABOVE STATED QUA NTUM PROCEEDINGS TO CONCLUDE THAT THE ASSESSEES ACT AND CONDUCT THEREI N QUA THE THREE ISSUES AMOUNTS TO CONCEALMENT AS WELL AS FURNISHING OF INA CCURATE PARTICULARS OF ITA NO.1041/AHD/2014 (FARMSON PHARMACEUTICALS GUJ. PVT. LTD. VS. DCIT) A.Y. 2002-03 - 3 - INCOME ATTRACTING THE IMPUGNED MINIMUM PENALTY OF R S.7,31,070/- IN QUESTION. 5. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RI VAL CONTENTIONS. THERE IS HARDLY ANY DISPUTE ABOUT THE SETTLED LAW T HAT QUANTUM AND PENALTY PROCEEDINGS ARE ALTOGETHER DIFFERENT AND EACH AND E VERY DISALLOWANCE/ADDITION MADE IN THE COURSE OF FORMER PROCEEDINGS DOES NOT IPSO FACTO ATTRACT THE LATTER PENAL ACTION AS PER H ONBLE APEX DECISION IN CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. 322 ITR 158 (S C). VIEWED FROM THE SAID CONTOUR OF SETTLED LAW, IT IS APPARENT FROM TH E FACTS OF THE INSTANT CASE THAT SO FAR AS ASSESSEES FORMER TWO CLAIMS OF BAD DEBTS WRITTEN OFF AND FOREIGN TRAVEL EXPENDITURE (SUPRA) ARE CONCERNED, T HERE IS HARDLY ANY ISSUE THAT THE RELEVANT AMOUNTS IN QUESTION HAVE BEEN FOU ND TO BE OTHERWISE CORRECT. THE MERE FAILURE ON ASSESSEES PART IS ON ACCOUNT OF PROVING A NEXUS WITH ITS BUSINESS PURPOSES QUA THE FORMER ISSUE AND IN PRODUCING THE RELEVANT DETAILS QUA EXPENSES INCURRED ON ONE MR. VINEET MEN ONS VISIT (SUPRA). IT IS THEREFORE EVIDENT THAT THE ASSESSEE HAS NOT BEEN AB LE TO PROVE ITS TWO CLAIMS BY WAY OF PRODUCING NECESSARY SUPPORTIVE DETAILS. THE SAME CAN HARDLY BE TERMED AS AN INSTANCE OF ALTOGETHER A FALSE CLAIM I NVITING PENAL ACTION. WE THUS QUOTE HONBLE APEX COURTS ABOVE STATED DECISI ON TO HOLD THAT ASSESSEES TWO DEDUCTIONS CLAIM DO NOT AMOUNT TO EITHER AN INS TANCE OF CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. 6. THIS LEAVES US WITH THE THIRD REMAINING ISSUE OF DISALLOWANCE OF LOSS (SUPRA). THE ASSESSEE HAS DEBITED A SUM OF RS.13,3 3,814/- PERTAINING TO DISCARDED AND SOLD ASSETS. IT ADDED BACK A SUM OF RS.5,00,264/- ONLY THEREBY EXCLUDING THE REMAINING AMOUNT OF RS.8,33,576/-. I T CLAIMED THE SAME AS A CAPITAL LOSS. THE ASSESSING OFFICER WAS OF THE VIE W THAT THE SAID LOSS ARISING FROM SALE OF DISCARDED ASSETS DESERVED TO BE TREATE D AS CAPITAL IN NATURE. IN VIEW OF SECTION 43(6)(C) R.W.S. 50 OF THE ACT. THI S INTERPRETATION HELD GROUND ITA NO.1041/AHD/2014 (FARMSON PHARMACEUTICALS GUJ. PVT. LTD. VS. DCIT) A.Y. 2002-03 - 4 - RIGHT UPTO THE ABOVE STATED CO-ORDINATE BENCH DECIS ION. THE SAME INDICATES THAT THERE WAS NO ISSUE SO FAR AS ASSESSEES CLAIM ON FACTS WAS CONCERNED. IT IS RATHER ASSESSEES CASE THAT IT HAD FILED ALL NEC ESSARY PARTICULARS AS PER ITS BOOKS OF ACCOUNTS LEADING TO REJECTION OF ITS CLAIM ON LEGAL INTERPRETATION OF THE RELEVANT STATUTORY PROVISION. LEARNED DEPARTME NTAL REPRESENTATIVE IS UNABLE TO DISPUTE THIS BACKGROUND OF FACTS. WE THU S CONCLUDE THAT THIS THIRD DISALLOWANCE/ADDITION ISSUE DOES NOT AMOUNT TO EITH ER OF THE TWO LIMBS OF CONCEALMENT AS WELL AS FURNISHING OF INACCURATE PAR TICULARS OF INCOME U/S.271(1)(C) OF THE ACT. THE ASSESSEES ARGUMENT ON THIS THIRD ASPECT IS ALSO ACCEPTED. WE DIRECT THE ASSESSING OFFICER TO DELET E THE IMPUGNED PENALTY ACCORDINGLY. 7. THIS ASSESSES APPEAL IS ACCEPTED. [PRONOUNCED IN THE OPEN COURT ON THIS THE 22 ND DAY OF FEBRUARY, 2017.] SD/- SD/- ( MANISH BORAD ) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 22/02/2017 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )*+ ,--. . /0 / DR, ITAT, AHMEDABAD 1 +23 45 / GUARD FILE. BY ORDER / . // . /0