ACIT, Chandigarh V. M/s International Fresh Products India Ltd., Chandigarh

ITA 1119/CHANDI/2010

• Counselvise Citation: 111921514 RSA 2010
• Duration Of Justice: 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 29-08-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 31-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N K SAINI
• Keywords: Depreciation; Wrong claim
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL: CHANDIGARH BENCH A BEFORE HONBLE MS SUSHMA CHOWLA, JM AND HONBLE SHRI MEHAR SINGH, AM ITA NO. 1119/CHANDI/2010 ASSESSMENT YEAR: 2006-07 A.C.I.T. CIRCLE 1(1), CHANDIGARH V. INT ERNATIONAL FRESH PRODUCTS LTD. # 3, SECTOR - 5, CHANDIGARH PAN: AAACI 5038 D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI N.K. SAINI RESPONDENT BY: NONE DATE OF HEARING: 29.8.2011 DATE OF PRONOUNCEMENT: 30.8.2011 ORDER PER MEHAR SINGH, AM THE PRESENT APPEAL FILED BY THE REVENUE, FOR ASSES SMENT YEAR 2006-07, IS DIRECTED AGAINST THE ORDER OF LD. CIT(A ), CHANDIGARH DATED 17.5.2010, U/S 250(6) OF THE INCOME-TAX ACT ( FOR SHORT THE ACT). 2. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS OF A PPEAL: 1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY OF RS. 5,4 6,814/- IMPOSE AS PER THE PROVISIONS OF SECTION 271(1)(C) O F THE ACT. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2006-07 DE CLARING NIL ITA NO. 1119/CHANDI/2010 A.C.I.T. V. INTERNAT IONAL FRESH PRODUCTS LTD 2 INCOME ON 22.11.2006. THE ASSESSMENT WAS COMPLETE D U/S 143(3) OF THE ACT. THE AO MADE CERTAIN ADDITIONS INCLUDIN G DISALLOWANCE OF RS. 16,24,521/-, ON ACCOUNT OF EXCESS CLAIM OF DEP RECIATION, ON PLANT AND MACHINERY AND OFFICE EQUIPMENT. THE AO LE VIED PENALTY OF RS. 5,46,841/- U/S 271(1)(C) OF THE ACT, VIDE ORDER DATED, 26.6.2009. THE AO HAS QUOTED EXPLANATION 4 OF SEC 271C OF THE ACT, TO SUPPORT HIS CONTENTION. THE PENALTY WAS LEVIED ON THE GROU ND THAT THE ASSESSEE HAD CLAIMED DEPRECIATION @ 20% INSTEAD OF 15%. 4. THE LD. CIT(A), AFTER APPRECIATION OF THE FACTS OF THE CASE AND THE CASE LAWS RELIED ON BY THE ASSESSEE, DELETED TH E PENALTY. THE RELEVANT PART OF THE FINDINGS OF LD. CIT(A) ARE REP RODUCED HEREUNDER: 10 BEFORE IMPOSING, PENALTY, EXPLANATION OFFERED A ND INTENTION OF THE ASSESSEE NEEDS TO BE CONSIDERED. IN THE CASE OF CIT V. PADMANABHAN (2006) 155 TAXMAN 458, THE HO N'BLE HIGH COURT OBSERVED THAT WHEN AN EXPLANATION IS OF FERED, ALL THAT THE AUTHORITIES ARE EXPECTED TO CONSIDER IS WH ETHER THE SAID EXPLANATION IS REASONABLE AND WHETHER THE SAME IS OFFERED TO AVOID THE PENAL CONSEQUENCES FLOWING FRO M CONCEALMENT OF INCOME. HAVING REGARD TO THE EXPLAN ATION OFFERED THE CONDUCT OF THE PARTY BEFORE AND AFTER D ISCLOSURE IF THEY ARE SATISFIED THAT THERE IS NO FALSITY IN THE EXPLANATION OFFERED, THE QUESTION OF IMPOSING PENALTY WOULD NOT ARISE. 11 IN THE CASE OF CIT V. HARDAYAL SINGH (HUF) 2009, 178 TAXMAN 3 (HON'BLE PUNJAB & HARYANA HIGH COURT), THE HIGH COURT OBSERVED THAT DURING THE ASSESSMENT PROCEEDIN GS, THE AO FOUND THAT THE ASSESSEE HAD RECEIVED INTEREST ON FDRS ITA NO. 1119/CHANDI/2010 A.C.I.T. V. INTERNAT IONAL FRESH PRODUCTS LTD 3 WHICH HAD NOT BEEN INCLUDED IN HIS RETURN OF INCOME HE ACCORDINGLY INCLUDED THE SAID AMOUNT IN THE ASSESSA BLE INCOME AND ALSO IMPOSED PENALTY U/S 271(1)(C). ON APPEAL, THE LD. CIT(A) DELETED THE PENALTY AND TRIBUNAL UPH ELD THE SAME OBSERVING THAT THIS WAS NO CONSCIOUS BREACH OF LAW. 12. IN LINE WITH THE ABOVE REFERRED JUDGMENTS THE H ON'BLE COURTS, I FIND THE ASSESSEES EXPLANATION FOR CLAIM OF HIGHER DEPRECIATION AS REASONABLE AND IN MY OPINION, THERE WAS NO DELIBERATE DEFAULT WHICH COULD RESULT IN IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT. AS A RESULT, THE PENALTY IMPOSED IS CANCELLED, ALLOWING ASSESSEES GROUND OF APPEAL. 5. THE DR PLACED RELIANCE ON THE IMPUGNED PENALTY ORDER, PASSED BY THE AO. HOWEVER, NONE APPEARED ON BEHALF OF THE ASSESSEE. 6. WE HAVE CAREFULLY PERUSED AND CONSIDERED THE FAC TS OF THE CASE AND THE ORDERS OF LOWER AUTHORITIES, INCLUDING THE SUBMISSIONS MADE BY THE LD. DR. IT IS A CASE WHERE THE IMPUG NED PENALTY HAS BEEN LEVIED, FOR CLAIMING DEPRECIATION @ 20% INSTEA D OF 15%. THE ASSESSEE SUBMITTED BEFORE THE LD. CIT(A) THAT THE I MPUGNED CLAIM OF DEPRECIATION HAD BEEN MADE BY THE ACCOUNTANT, WHILE PREPARING DEPRECIATION CHART AS PER INCOME TAX RULES, INADVER TENTLY. THE ASSESSEE AGREED FOR ALLOWABILIY OF DEPRECIATION AT 15%. IN VIEW OF THIS, IT WAS CONTENDED THAT IT WAS NOT A CASE OF CO NCEALMENT OF INCOME U/S 271(1)(C) OF THE ACT. THE ASSESSEE PLAC ED RELIANCE ON A NUMBER OF DECISIONS, AS REPRODUCED BY THE LD. CIT(A ) IN PARA 4 OF THE APPELLATE ORDER. ITA NO. 1119/CHANDI/2010 A.C.I.T. V. INTERNAT IONAL FRESH PRODUCTS LTD 4 6.1 IT IS SETTLED LEGAL PROPOSITION THAT THE IMPOSI TION OF PENALTY U/S 271(1)(C) OF THE ACT IS NOT AUTOMATIC, BUT GOVERNED BY THE FACT- SITUATION OF A CASE AND THE APPLICABILITY OF THE PR OVISIONS OF SECTION 271(1)(C) OF THE ACT. IN THE PRESENT CASE, THE AS SESSEE HAS NOT MADE A FALSE-CLAIM BUT INADVERTENTLY MADE A WRONG C LAIM. THERE ARE PLETHORA OF DECISIONS OF VARIOUS HIGH COURTS, WHERE IN THE LEVY OF PENALTY, ON WRONG CLAIM, HAS NOT BEEN UPHELD. FURT HER THE HON'BLE JURISDICTIONAL HIGH COURT, IN THE CASE OF CIT V. SH AHBAD CO- OPERATIVE SUGAR MILLS (2010) 322 ITR 73 (P &H), CLE ARLY HELD THAT NO PENALTY CAN BE LEVIED WHERE THE ASSESSEE HAS MADE A WRONG CLAIM. FURTHER, THE HON'BLE SUPREME COURT, IN THE CASE OF CIT V. RELIANCE PETROPRODUCTS (P) LTD (2010) 322 ITR 158 (S.C) HELD THAT MERE MAKING A CLAIM BY ITSELF WILL NOT AMOUNT TO FURNISH ING INACCURATE PARTICULARS REGARDING INCOME OF THE ASSESSEE. THE P RESENT CASE SQUARELY FALLS UNDER THE RATIO OF THE ABOVE REFERRE D DECISIONS. RESPECTFULLY, FOLLOWING THESE DECISIONS, THE FINDIN GS OF THE LD. CIT(A), IN THE MATTER ARE UPHELD. 7. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. ORDER PRONOUNCED ON 30.8.2011 SD/- SD/- (SUSHMA CHOWLA) (MEHAR SINGH) JUDICIAL MEMBER ACCOUNANT MEMBER CHANDIGARH, THE 30.8.2011 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE CIT(A) / THE DR ITA NO. 1119/CHANDI/2010 A.C.I.T. V. INTERNAT IONAL FRESH PRODUCTS LTD 5