Chitavalsah Jute Mills Ltd., Agra V. A.C.I.T.-4(1), Agra

ITA 108/AGR/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 76570 (ITAT-AGRA)
• Duration Of Justice: 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 04-06-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 29-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: INDERJI T SINGH
• Assessee Lawyers: ASHISH S WAROOP GUPTA
• Keywords: Depreciation; Opportunity of being heard; Wrong claim
• Section: 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI JOGINDER SINGH, JUDICIAL MEMBER ITA NO. 108/AGRA/ 2014 ASSESSMENT YEAR: 2009-10 CHITAVALSH JUTE MILLS LTD. VS. ACIT-4(1), KAMLA NAGAR, AGRA AGRA (PAN AACCC 6834 D) (APPELLANT) (RESPONDENT) APPELLANT BY : SRI ASHISH S WAROOP GUPTA, RESPONDENT BY : SRI INDER JI T SINGH, CIT.D.R. DATE OF HEARING : 04.06.2014 DATE OF PRONOUNCEMENT : 04.06.2014 ORDER PER JOGINDER SINGH, JUDICIAL MEMBER: 1. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AG AINST THE ORDER DATED 15.11.2013 PASSED BY THE LEARNED CIT(A) IN THE MATTER OF PENAL TY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 FOR THE A.Y. 2009-10. 2. DURING HEARING OF THIS APPEAL, WE HAVE HEARD SHR I ASHISH SWAROOP GUPTA, LEARNED COUNSEL FOR THE ASSESSEE AND SHRI INDERJIT SINGH, LEARNED CIT.D.R. THE CRUX OF ARGUMENT ON BEHALF OF THE ASSESSEE IS THAT THE A SSESSEE REVALUED ITS ASSETS AND CLAIMED DEPREDATION ON THE REVALUED FIGURES BY MIST AKE AND WHEN THIS FACT CAME TO NOTICE OF THE ASSESSEE, DURING ASSESSMENT PROCEEDIN GS, THE ASSESSEE IMMEDIATELY ITA NO.108/AGRA/2014 2 FILED CORRECT WORKING OF THE DEPRECIATION THUS THE WRONG CLAIM OF THE DEPRECIATION WAS NOT ON ACCOUNT OF FRAUD OR GROSS NEGLIGENCE OF THE ASSESSEE RATHER IT WAS A BONA FIDE MISTAKE WHILE WORKING OUT DEPRECIATION. THE AS SESSEE PLACED RELIANCE UPON VARIOUS JUDICIAL PRONOUNCEMENTS LIKE GOYAL GASES PV T. LTD. VS. DCIT 56 TTJ (DELHI) 320, ADDL. CIT VS. JEEVAN LAL SAH 117 CTR ( SC) 130 : 205 ITR 244 (SC), CIT VS. GURUDAYAL RAM MUKH LAL 190 ITR 39 (GAU.) AN D CIT VS. KSD PANDURANGAN 218 ITR 8 (MADRAS). ON THE OTHER HAND, THE LEARNED CIT D.R. STRONGLY DEFENDED IMPOSITION OF PENALTY BY THE ASSESSING OFF ICER AS WELL AS CONFIRMATION BY THE LEARNED CIT(A) BY FURTHER SUBMITTING THAT THE A SSESSEE DELIBERATELY CLAIMED WRONG DEPRECIATION ON THE REVALUED FIGURES OF THE A SSETS THUS, THE PENALTY WAS RIGHTLY UPHELD. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSION AND PERU SED THE MATERIAL AVAILABLE ON RECORD. THE CONTROVERSY, AS PER THE REVENUE, IS THAT THE ASSESSEE REVISED HIS COMPUTATION FOR CLAIM OF DEPRECIATION AFTER IT WAS DEDUCTED BY THE DEPARTMENT WHEREAS THE CLAIM OF THE ASSESSEE IS THAT THE REVIS ED COMPUTATION OF DEPRECIATION WAS FILED SUO- MOTO JUST AFTER RECEIVING THE NOTICE FROM THE ASSESSIN G OFFICER AND THE MISTAKE, IF ANY, WAS INADVERTENT AND NOT DELIBERATE , CONSEQUENTLY, NO PENALTY IS LEVIABLE UNDER SECTION 271(1)(C) OF THE ACT. THE FA CTS IN BRIEF ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADIN G OF JUTE GOODS TRADING IN PETROLEUM PRODUCTS. THE ASSESSEE DECLARED INCOME AT NIL IN ITS RETURN FILED ON 30.09.2009 AND SHOWED CURRENT YEAR LOSS OF RS.8,60, 42,496/-. NOTICE UNDER SECTION 143(2) AND 142(1) OF THE ACT WERE ISSUED TO THE ASS ESSEE TO WHICH ASSESSEE ATTENDED ITA NO.108/AGRA/2014 3 THE PROCEEDING FROM TIME TO TIME, FILED WRITTEN REP LIES, DETAILS AND ALSO PRODUCED BOOKS OF ACCOUNTS AS IS EVIDENT FROM PARA 1, PAGE 1 OF THE ASSESSMENT ORDER. AS PER PARA 2 OF THE ASSESSMENT ORDER THE REQUIRED DETAILS WERE ALSO PRODUCED BY THE ASSESSEE AND SAME WERE EXAMINED WITH RESPECT BOOKS OF ACCOUNT. THE ASSESSEE WAS REQUIRED TO FURNISH OTHER DETAILS VIDE ORDER SHEET ENTRY DATED 14.11.2011. AS PER THE ASSESSING OFFICER ITSELF THE NECESSARY DETAILS ALON G WITH WRITTEN SUBMISSION DATED 17.11.2011 WERE FILED BY THE ASSESSEE. 3.1 AS PER THE ASSESSING OFFICER FROM THE BALANCE S HEET AND PROFIT AND LOSS ACCOUNT IT WAS NOTICED THAT THE ASSESSEE DEBITED DE PRECIATION TO THE TUNE OF RS.1,92,66,916/- AS THE ASSESSEE REVALUED ITS ASSET S AND CLAIMED THE DEPRECIATION ON SUCH REVALUED ASSETS. THE ASSESSEE WAS ASKED TO FUR NISH AND CALCULATION OF ADMISSIBLE DEPRECIATION. THE ASSESSEE AGAIN FILED I TS WRITTEN SUBMISSIONS. AS PER THE ASSESSING OFFICER THE ASSESSEE CLAIMED DEPRECIATION AT RS.1,92,66, 916/- WHEREAS THE ALLOWABLE DEPRECIATION IS ONLY RS.27,17,291/-, THUS , THE ASSESSEE CLAIMED EXCESS DEPRECIATION TO THE TUNE OF RS.1,65,49,625/- WHICH WAS ADDED BACK TO THE INCOME OF THE ASSESSEE. 3.2 ON APPEAL BEFORE THE LEARNED CIT(A) IDENTICAL G ROUNDS/SUBMISSION WERE PREFERRED. THE LEARNED CIT(A) EVEN HAS MENTIONED T HE UNDISPUTED FACTS OF THE CASE IS THAT THE ASSESSEE HAD REVALUED THE ASSETS DURING THE YEAR UNDER CONSIDERATION AND IN THE RETURN OF INCOME FILED BY HIM, THE DEPRECIAT ION WAS CLAIMED ON REVALUED COST OF THE ASSETS, WHICH WAS COMPUTED AT RS.1,92,66,916 /- AND THE SAME WAS NOT PERMISSIBLE UNDER THE INCOME TAX ACT. FOR THIS WRON G CLAIM OF DEPRECIATION IT ITA NO.108/AGRA/2014 4 CANNOT BE SAID THAT IT IS A DEBATABLE NATURE OF CON TROVERSY AND TWO VIEWS ARE POSSIBLE FOR CLAIMING DEPRECATION ON THE REVALUED FIGURES AT THE COST OF THE ASSETS. ULTIMATELY THE LEARNED CIT(A) AFFIRMED THE IMPOSITION OF PENAL TY. 3.3. BEFORE US AND ALSO BEFORE THE LEARNED CIT(A) THE ASSESSEE TOOK THE STAND THE INADVERTENT/ BONA FIDE MISTAKE WAS COMMITTED BY HIS COUNSEL. IN PARA 12 OF THE IMPUGNED ORDER IT HAS BEEN MENTIONED THAT IT WAS NO T EXPLAINED BY THE ASSESSEE AS TO WHO COMMITTED THIS ERROR RESULTING INTO WRONG CLAIM OF DEPRECIATION AND ALSO THE CIRCUMSTANCES. WE NOTE THAT NEITHER THE LEARNED ASS ESSING OFFICER NOR THE LEARNED CIT(A) EXAMINED THE PERSONS/COUNSEL/C.A/ WHO MADE T HE MISTAKE FOR MAKING THE CLAIM AT THE REVALUED FIGURE OF THE ASSET. THE HON BLE APEX COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. 322 ITR 158 ( SC) HELD THAT MERE MAKING OF CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISH INACCURATE PARTICULARS OF THE INCOME OF THE ASSESSE E AND THUS WILL NOT ATTRACT PENALTY UNDER SECTION 271(1)(C) OF THE ACT. FOR IMPOSING PE NALTY UNDER SECTION 271(1)(C) OF THE ACT EITHER THERE SHOULD BE CONCEALMENT OF INCOM E OR FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME. THERE IS NO CONCRETE FI NDING IN THE PENALTY ORDER/ASSESSMENT ORDER THAT THE ASSESSEE DELIBERATE LY MADE A WRONG CLAIM. THE HONBLE MADHYA PRDESH HIGH COURT EVEN WENT TO THE E XTENT IN THE CASE OF CIT VS. SKY LINE AUTO PRODUCTS PVT. LTD. 273 ITR 335, WHEN MISTAKE IS BONAFIDE NO PENALTY IS LEVIABLE UNDER SECTION 271(1)(C) OF THE ACT. IN THE ABSENCE OF CLEAR FINDING AND EXAMINATION BY THE REVENUE AUTHORITY AS TO WHO COMM ITTED THE ERROR IT IS NOT JUSTIFIABLE TO UPHOLD THE ORDER OF THE LEARNED CIT( A). THE CASES CITED BY THE ASSESSEE ITA NO.108/AGRA/2014 5 ALSO FORTIFIES THE CASE OF THE ASSESSEE. EVEN IN PA RA 7 OF THE IMPUGNED ORDER IN RESPONSE TO REMAND REPORT OF THE ASSESSING OFFICER THE ASSESSEE OPPOSED THE REMAND REPORT CONTENDING THAT THE REVISED COMPUTATION OF D EPRECIATION WAS FILED SUO-MOTO . THIS FACTUAL MATRIX WAS NOT CONTROVERTED BY THE REV ENUE WITH THE HELP OF ANY COGENT MATERIAL. AT THE SAME TIME, THE INTEREST OF REVENUE ALSO CANNOT BE IGNORED. IN VIEW OF THESE FACTS, KEEPING IN VIEW THE PRINCIPLE OF NATUR AL JUSTICE, WE REMAND THE FILE OF THE LEARNED ASSESSING OFFICER TO EXAMINE THE CLAIM OF T HE ASSESSEE. IN OUR CONSIDERED VIEW, THE RIGHT COURSE OF ACTIONS WILL BE TO IDENTI FY THE PERSON WHO HAS MADE THE MISTAKE, EXAMINE HIM ON OATH AND THEN EVALUATE WHET HER HIS EXPLANATION CAN INDEED BE ACCEPTED. IN THE COURSE OF PENALTY PROCEEDINGS F OR INADVERTENT WRONG CLAIM, ALL THAT CAN BE DONE BY THE ADJUDICATING AUTHORITY IS T O OBJECTIVELY EXAMINE THE EXPLANATION OF THE ASSESSEE, ON THE TEST OF PREPOND ERANCE OF PROBABILITIES, AND BEARING IN MIND ENTIRETY OF THE CASE. AS LONG AS NO INCONSISTENCIES OR ERRORS ARE FOUND IN SUCH EXPLANATION, IT CANNOT BE REJECTED ON THE BASIS OF WHAT OUGHT TO HAVE EXAMINED IN THE IDEAL CIRCUMSTANCES. ONE ALSO HAS T O BEAR IN MIND ALL SURROUNDING CIRCUMSTANCES, SUCH AS HUGE LOSSES INCURRED BY THE ASSESSEE AND THE FACT THAT NORMALLY IN SUCH A SITUATION, ASSESSEE HAS NOTHING TO GAIN BY MAKING DELIBERATELY WRONG CLAIMS. LET THE MATTER BE CONSIDERED AFRESH I N THE LIGHT OF ALL THESE FACTS AND THE CASE LAWS CITED ABOVE. NEEDLESS TO MENTION HERE THAT THE ASSESSEE BE PROVIDED DUE OPPORTUNITY OF BEING HEARD WITH FURTHER LIBERTY TO FURNISH EVIDENCE/REPLY, IF ANY, TO SUBSTANTIATE ITS CLAIM, RESULTANTLY, APPEAL OF T HE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES ONLY. ITA NO.108/AGRA/2014 6 THIS ORDER WAS PRONOUNCED IN THE OPEN COURT, IN TH E PRESENCE OF LEARNED REPRESENTATIVES FROM BOTH SIDES, AT THE CONCLUSION OF HEARING ON 04.06.2014. SD/- SD/- (PRAMOD KUMAR) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 04 JUNE, 2014 AMIT/ COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, AGRA TRUE COPY