M/s ICE Infowave (P) Ltd., Mohali V. DCIT, Mohali

ITA 1069/CHANDI/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86121 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-01-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 08-01-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 25-10-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JYOTI KUMARI
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R.SOOD, ACCOUNTANT MEMBER ITA NO. 690/CHD/2013 ASSESSMENT YEAR: 2006-07 M/S ICE INFOWAVE (P) LTD., VS THE DC IT, C/O PARIKSHIT AGGARWAL, CIRCLE 6(1), CHARTERED ACCOUNTANT, MOHALI. H.NO. 1238, SECTOR 22-B, CHANDIGARH. PAN: AABCI3423P & ITA NO. 1069/CHD/2012 ASSESSMENT YEAR: 2006-07 M/S ICE INFOWAVE (P) LTD., VS THE DC IT, 41, PHASE III-A, CIRCLE 6(1), MOHALI. MOHALI. PAN: AABCI3423P (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PARIKSHIT AG GARWAL RESPONDENT BY : SMT. JYOTI KUMARI DATE OF HEARING : 08.01.2015 DATE OF PRONOUNCEMENT : 12.01.2015 O R D E R PER BHAVNESH SAINI,JM THIS ORDER SHALL DISPOSE OF BOTH THE ABOVE APPEALS FILED BY THE SAME ASSESSEE CHALLENGING THE QUANTUM ADDITION AND LEVY OF THE PENALTY UNDER SECTION 271(1)(C) OF THE INCOME T AX ACT. 2. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PA RTIES AND PERUSED THE FINDINGS OF THE AUTHORITIES BELOW. 2 3. ITA NO. 1069/CHD/ 2012 IS DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS) CHANDIGARH DATED 24.09.2009 FOR ASSESS MENT YEAR 2006-07. 4. GROUND NOS. 1 & 5 ARE GENERAL IN NATURE AND ARE DISMISSED. 5. ON GROUND NO. 2, ASSESSEE CHALLENGED THE DISALLO WANCE OF DEPRECIATION OF RS. 3,22,295/- ON PURCHASE OF FIXED ASSETS DURING THE YEAR. THE ASSESSING OFFICER ASKED THE A SSESSEE TO PRODUCE BILLS OF ADDITION TO FIXED ASSETS ON WHICH DEPRECIATION HAD BEEN CLAIMED. ON EXAMINATION OF THIS INFORMATI ON, IT WAS NOTED THAT ON CERTAIN PURCHASE BILLS OF FIXED ASSET S AMOUNTING TO RS. 5,37,157/-, THE ADDRESS WAS MENTIONED AS M/S IC E INFOWAVE (P) LTD., HOUSE NO. 128, SECTOR 18, CHANDIGARH. T HE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN WHY THESE ASS ETS WERE DELIVERED AT THIS ADDRESS WHEN THERE IS NO BUSINESS OPERATION OF THE COMPANY IS BEING CARRIED OUT FROM THE ABOVE NOT ED ADDRESS. IT WAS DIRECTED WHY DEPRECIATION BE NOT DISALLOWED. THE ASSESSEE SUBMITTED THAT SINCE THE DIRECTOR OF THE C OMPANY WAS DEALING WITH THE ACTIVITIES OF THE ASSESSEE COMPANY , HIS ADDRESS MAY HAVE BEEN WRITTEN ON THE BILL AND ALL THE ASSET S HAVE BEEN USED FOR THE PURPOSE OF BUSINESS ACTIVITY. THE EXP LANATION OF THE ASSESSEE WAS ALSO CALLED FOR AS TO WHICH OF THE DIRECTOR WAS RESIDING AT THE GIVEN ADDRESS BUT NO SUCH DETAILS W ERE FILED. IT WAS OBSERVED THAT REMAINING BILLS OF PURCHASE OF AD DITION TO FIXED ASSETS ARE IN THE NAME OF THE COMPANY. ONE O F THE DIRECTOR WAS FOUND TO BE RESIDING AT THE ABOVE ADDR ESS BUT THE COMPANY HAS NEVER CARRIED OUT ANY BUSINESS OPERATIO N FROM THIS ADDRESS. THE ASSESSING OFFICER, THEREFORE, HELD TH AT USE OF THE 3 EQUIPMENT IS DOUBTFUL AS THE COMPANY HAS NOT MADE A NY SALE DURING THE PERIOD. THE DEPRECIATION WAS, THEREFORE , DISALLOWED. 6. THE ASSESSEE EXPLAINED BEFORE LD. CIT(APPEALS) T HAT ONE OF THE PROMOTER DIRECTOR NAMELY SHRI PATRICK THOMAS ED WARD HANRATTY, A BRITISH CITIZEN USED TO STAY AT THE AFO RESAID ADDRESS AND JUST BECAUSE THE BILL BEARS THE ADDRESS OF THE DIRECTOR AND NOT OF THE COMPANY, DISALLOWANCE IS UNJUSTIFIED. T HE LD. CIT(APPEALS) ALSO NOTED THE REPORT SUBMITTED BY THE INSPECTOR TO SAY THAT NO SUCH DIRECTOR WAS RESIDING AT THE GIVEN ADDRESS. THE LD. CIT(APPEALS), THEREFORE, HELD THAT THE ASSE SSEE HAS FAILED TO ESTABLISH THAT THESE EQUIPMENTS WERE USED FOR TH E PURPOSE OF BUSINESS OF ASSESSEE COMPANY AND ACCORDINGLY, CONFI RMED THE ADDITION. 7. ON GROUND NO. 3, THE ASSESSEE HAS CHALLENGED THE DISALLOWANCE OF THE EXPENSES OF RS. 27,100/-. THE ASSESSING OFFICER DISALLOWED THE EXPENDITURE ON TWO CASH BILL S OF MOBILE SET FOR RS. 27,100/- ISSUED BY M/S RAJ HANS PHOTO CENTR E AS THERE IS NO NAME ON THESE BILLS. THE ASSESSEE EXPLAINED THAT CASH BILLS ARE ISSUED WITHOUT MENTIONING THE NAME OF THE PURCHASER. THE LD. CIT(APPEALS), HOWEVER CONFIRMED THE ADDITIO N AND DISMISSED THIS GROUND OF APPEAL OF THE ASSESSEE. 8. ON GROUND NO. 4, THE ASSESSEE CHALLENGED THE DIS ALLOWANCE OF HOSPITALITY EXPENSES OF RS. 81,006/-. THE ASSES SING OFFICER NOTED THAT ASSESSEE PRODUCED THE BOOKS OF ACCOUNT A LONGWITH VOUCHERS AND FOUND THAT VOUCHERS FOR HOSPITALITY EX PENSES WERE NOT PRODUCED. THE ADDITION WAS, ACCORDINGLY MADE. 4 9. THE LD. CIT(APPEALS) NOTED THAT ASSESSEE HAS VOL UNTARILY OFFERED TO MAKE THE ADDITION AT ASSESSMENT STAGE AN D ACCORDINGLY, DISMISSED THIS GROUND OF APPEAL OF THE ASSESSEE. 10. AFTER CONSIDERING RIVAL SUBMISSIONS, WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE ASSESSEE ON ALL THE THRE E EFFECTIVE GROUNDS OF APPEAL. THE LD. COUNSEL FOR THE ASSESSE E HAS NOT BEEN ABLE TO SUBMIT ANY CONVINCING EVIDENCE OR ARGU MENT DURING THE COURSE OF HEARING OF THE APPEAL AS TO WHY THESE ADDITIONS BE DELETED. THE DEPRECIATION WAS CORRECTLY DISALLOWED BECAUSE ASSESSEE FAILED TO ESTABLISH THAT THE PURCHASED ASS ETS WERE USED FOR THE PURPOSE OF BUSINESS. THE FINDING OF FACT R ECORDED BY THE AUTHORITIES BELOW HAVE NOT BEEN CHALLENGED THROUGH ANY EVIDENCE OR MATERIAL ON RECORD. FURTHER, THE EXPEN SES COULD NOT BE ALLOWED BECAUSE THE ASSESSEE FAILED TO PROVE THA T CASH BILLS OF MOBILE SETS HAVE BEEN USED FOR THE PURPOSE OF BUSIN ESS AND THE HOSPITALITY EXPENSES WERE CORRECTLY DISALLOWED BECA USE THE ASSESSEE HAS ACCEPTED AND VOLUNTARILY AGREED FOR AD DITION BEFORE THE ASSESSING OFFICER. IN THE ABSENCE OF ANY EVIDE NCE OR MATERIAL ON RECORD TO CONTRADICT THE FINDING OF FAC TS RECORDED BY THE AUTHORITIES BELOW, WE DO NOT FIND ANY MERIT IN ALL THESE GROUNDS OF APPEAL OF THE ASSESSEE. THE SAME ARE, A CCORDINGLY, DISMISSED. 11. IN THE RESULT, ITA NO. 1069/CHD/2012 IS DISMISS ED. 12. ITA 690/CHD/2013 IS DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS), CHANDIGARH DATED 01.04.2013 FOR ASSES SMENT YEAR 2006-07 CHALLENGING THE LEVY OF PENALTY UNDER SECTI ON 271(1)(C) OF THE ACT. THE ASSESSING OFFICER LEVIED PENALTY O N DISALLOWANCE 5 OF DEPRECIATION IN A SUM OF RS. 3,22,295/-. THE LD . CIT(APPEALS) CONFIRMED THE PENALTY AND DISMISSED APPEAL OF THE A SSESSEE. 13. THE FACTS ARE SAME AS NOTED ABOVE IN QUANTUM AP PEAL NO. 1069/CHD/2012 ON WHICH ON GROUND NO. 2, WE HAVE DIS MISSED THE APPEAL OF THE ASSESSEE ON THE SAME ISSUE. THE FACTS NOTED ABOVE CLEARLY REVEAL THAT ASSESSEE PRODUCED THE PUR CHASE BILLS OF THE FIXED ASSETS BEFORE THE ASSESSING OFFICER. THE BILL WAS IN THE NAME OF THE ASSESSEE COMPANY, HOWEVER THE ADDRESS W AS GIVEN OF HOUSE NO. 128, SECTOR 18, CHANDIGARH FROM WHERE, NO BUSINESS OPERATIONS WERE CARRIED OUT BY THE ASSESSEE. THE EX PLANATION OF THE ASSESSEE WAS NOT FOUND CONVINCING BY THE ASSESS ING OFFICER WITH REGARD TO THE USE OF THE ASSETS FOR THE PURPOS E OF BUSINESS AND ACCORDINGLY, DISALLOWANCE OUT OF DEPRECIATION W AS MADE. 14. THE LD. CIT(APPEALS) ALSO CONFIRMED THE QUANTUM ADDITION WHICH IS ALSO CONFIRMED BY US ABOVE. HOWEVER, THE FACTS CLEARLY REVEAL THAT THE ASSESSEE PRODUCED THE BILL OF PURCH ASE OF THE ASSET AND ALSO TRIED TO EXPLAIN BEFORE LD. CIT(APPE ALS) THAT ONE OF THE PROMOTER DIRECTOR RESIDED AT THE GIVEN ADDRESS TEMPORARILY BUT THE EXPLANATION OF THE ASSESSEE AND CONFIRMATIO N WAS NOT ACCEPTED BY THE LD. CIT(APPEALS). SINCE THE PURCHA SE BILL WAS FOUND TO BE IN THE NAME OF THE ASSESSEE COMPANY, TH EREFORE, ON MERE DISALLOWANCE OF THE DEPRECIATION ON ACCOUNT OF FAILURE TO PROVE THAT SAID ASSET WAS USED FOR THE PURPOSE OF B USINESS WOULD NOT DISCLOSE THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME OR FILED INACCURATE PARTICULA RS OF INCOME. IT IS A CASE OF MERE DISALLOWANCE OF THE DEPRECIATI ON IN THE ABSENCE OF FILING CONVINCING EVIDENCE BEFORE THE AS SESSING OFFICER REGARDING USER OF THE ASSET FOR THE PURPOSE OF BUSINESS. 6 IT IS WELL SETTLED LAW THAT LEVY OF THE PENALTY IN EACH AND EVERY CASE IS NOT AUTOMATIC AND IT DEPENDS UPON FACTS AND CIRCUMSTANCES OF EACH CASE. THE FACTS AND CIRCUMST ANCES NOTED ABOVE CLEARLY REVEAL THAT IT MAY NOT BE A FIT CASE OF LEVY OF PENALTY MERELY BECAUSE THE EXPLANATION OF THE ASSES SEE WAS NOT ACCEPTABLE TO THE AUTHORITIES BELOW. WE, THEREFORE , FOUND THAT ASSESSEE HAS NOT CONCEALED THE PARTICULARS OF INCOM E OR FILED INACCURATE PARTICULARS OF INCOME. THE LEVY OF PENA LTY IS, THEREFORE, NOT JUSTIFIED IN THE FACTS AND CIRCUMSTA NCES OF THE CASE. WE, ACCORDINGLY, SET ASIDE ORDERS OF AUTHORI TIES BELOW AND CANCEL THE PENALTY UNDER SECTION 271(1)(C) OF THE A CT. 15. IN THE RESULT ITA NO. 690/CHD/2013 IS ALLOWED. 16. IN THE RESULT, APPEAL OF THE ASSESSEE IN ITA NO . 1069/CHD/2012 IS DISMISSED, HOWEVER ASSESSEE'S APPE AL IN ITA NO. 690/CHD/2013 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH JANUARY,2015. SD/- SD/- (T.R.SOOD) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 12 TH JANUARY,2015. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT CHANDIGARH