Vishnu Trimbak Khatale, Nashik V. DCIT, Cir.-1, Nashik

ITA 1120/PUN/2011

• Counselvise Citation: 112024514 RSA 2011
• Duration Of Justice: 1 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 14-11-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 06-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANN KAPTHUAMA
• Keywords: Depreciation; Wrong claim

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO.1120/PN/2011 (ASSESSMENT YEAR: 2007-08) VISHNU TRIMBAK KHATALE B-24, STICE LTD., SINNAR DIST. - NASHIK PAN : ABDPK1069P . APPELLANT VS. DY. COMMISSIONER OF INCOME TAX CIRCLE 1, NASHIK . RESPONDENT APPELLANT BY : MR. M. K. KULKARNI RESPONDENT BY : MS. ANN KAPTHUAMA DATE OF HEARING : 08-04-2013 DATE OF PRONOUNCEMENT : 30-04-2013 ORDER PER G. S. PANNU, AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST AN ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, NASHIK DATE D 20.06.2011 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 28.05.2010 PAS SED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE INCOME-TAX A CT, 1961 (IN SHORT THE ACT), PERTAINING TO THE ASSESSMENT YEAR 2007-08. 2. IN THIS APPEAL, THE SOLITARY DISPUTE RELATES TO THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT AMOUNTING TO RS. 1,10,400/-. 3. THE ASSESSEE BEFORE US IS AN INDIVIDUAL, WHO IS CARRYING ON PROPRIETARY BUSINESS OF MANUFACTURING OF AROMATIC C HEMICALS. THE ASSESSEE FURNISHED HIS RETURN OF INCOME FOR THE ASS ESSMENT YEAR 2007-08 DECLARING A LOSS OF RS. 21,83,897/-. IN THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER DISALLOWED THE A SSESSEES CLAIM ITA NO.1120/PN/2011 VISHNU TRIMBAK KHATALE A.Y. 2007-08 FOR DEPRECIATION AMOUNTING TO RS. 3,60,780/- AND AC CORDINGLY THE ASSESSED LOSS WAS REDUCED TO RS. 18,23,117/-. SUBSE QUENTLY, THE ASSESSING OFFICER HAS HELD THE ASSESSEE GUILTY OF C ONCEALMENT OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT WITH RESPECT TO THE WRONG CLAIM OF DEPRECIATION MADE BY THE ASSESSEE. ACCORDI NGLY, PENALTY EQUIVALENT TO 100% OF THE TAX SOUGHT TO BE EVADED ON ACCOUNT O F WRONG CLAIM OF DEPRECIATION HAS BEEN LEVIED, AMOUNTING TO RS. 1,10 ,400/-. THE CIT(A) HAS ALSO UPHELD THE LEVY OF PENALTY AGAINST WHICH ASSES SEE IS IN APPEAL BEFORE US. 4. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN THE IMMEDIATELY PROCEEDING ASSESSMENT YEAR 2006-07, THE ASSESSING OFFICER HAD LEVIED PENALTY FOR A SIMILAR WRONG CLAIM OF DEPRECI ATION AND THAT SUCH PENALTY WAS DELETED BY THE CIT(A) VIDE ORDER DATED 12.07.20 11. IT HAS BEEN CATEGORICALLY STATED AT BAR BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE DEPARTMENT HAS ACCEPTED THE ORDER OF THE CIT(A) DAT ED 12.07.2011 FOR ASSESSMENT YEAR 2006-07 AND NO APPEAL HAS BEEN FILE D BEFORE THE TRIBUNAL. IT WAS THEREFORE CONTENDED THAT ON THE PRINCIPLE OF CO NSISTENCY, THE PENALTY IN QUESTION SHOULD BE DELETED. APART THEREFROM THE LEA RNED COUNSEL REFERRED TO A DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF AMRUTA ORGANICS PVT. LTD. VS. DCIT IN ITA NO. 1121/PN/2011 DATED 22.03.2 011 IN THE CASE OF SISTER CONCERN OF THE ASSESSEE WHEREIN PENALTY UNDER SECTI ON 271(1)(C) OF THE ACT LEVIED UNDER SIMILAR CIRCUMSTANCES HAS BEEN DELETED . APART THEREFROM THE LEARNED COUNSEL HAS POINTED OUT THAT THE CLAIM OF D EPRECIATION WAS MADE BY THE ASSESSEE ON BONAFIDE CONSIDERATIONS WITHOUT ANY INTENTION TO DEFRAUD THE REVENUE. IT WAS POINTED OUT THAT THE ASSESSEE HAS B EEN INCURRING HEAVY LOSSES EVERY YEAR SINCE 2003 DUE TO THE MARKET FORC ES AND NO TANGIBLE TAX BENEFIT HAS ACCRUED TO THE ASSESSEE BY CLAIMING THE DEPRECIATION AT THE HIGHER AMOUNT. ITA NO.1120/PN/2011 VISHNU TRIMBAK KHATALE A.Y. 2007-08 5. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPR ESENTATIVE CONTENDED THAT THE CIT(A) MADE NO MISTAKE IN UPHOLD ING THE PENALTY LEVIED ON ACCOUNT OF A CLAIM OF DEPRECIATION WHICH WAS CLEARL Y A WRONG CLAIM. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. IN THIS CASE, THE ASSESSEE HAD CLAIMED DEPRECIATION ON REVALUED PORTI ON OF CERTAIN ASSETS VIZ. BUILDING AND PLANT & MACHINERY WHICH WAS FOUND TO B E UNTENABLE IN LAW. NOTABLY, ASSESSEE HAD REVALUED SOME OF ASSETS VIZ. BUILDING AND PLANT & MACHINERY DURING THE F.Y. 2004-05 AND DEPRECIATION WAS ALSO CLAIMED ON SUCH ENHANCED VALUE. THE SAID CLAIM HAS BEEN DENIED BY T HE ASSESSING OFFICER. EVEN FOR THE EARLIER ASSESSMENT YEAR 2006-07, SUCH DEPRECIATION ON THE PORTION OF ENHANCED VALUE ASSET WAS DENIED, AS IS T HE CASE IN THE ASSESSMENT UNDER CONSIDERATION BEFORE US. FOR ASSESSMENT YEAR 2006-07 DENIAL OF DEPRECIATION ON THE ENHANCED VALUE WAS A SUBJECT MA TTER OF LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. WE FIND THAT TH E CIT(A) IN ASSESSMENT YEAR 2006-07 VIDE ORDER DATED 12.07.2011 DELETED THE PEN ALTY BY OBSERVING THAT THERE WAS NO MALA-FIDE INTENTION ON THE PART OF THE ASSESSEE IN MAKING TH E SAID CLAIM, WHICH WAS MADE ON THE BASIS OF THE ADVI CE OF A TAX CONSULTANT. AS PER THE CIT(A) THE FAULT OF THE ASSESSEE ACTING UPO N A WRONG LEGAL ADVICE WOULD NOT ATTRACT PENALTY UNDER SECTION 271(1)(C) O F THE ACT. AT THE TIME OF HEARING BEFORE US, IT HAS BEEN ASSERTED BY THE COUN SEL FOR THE ASSESSEE THAT THE AFORESAID DECISION OF THE CIT(A) HAS BEEN ACCEP TED BY THE REVENUE AND NO APPEAL HAS BEEN FILED BEFORE THE TRIBUNAL. THE A FORESAID ASSERTION OF THE ASSESSEE HAS NOT BEEN CONTROVERTED BY THE DEPARTMEN T. IN THE INSTANT ASSESSMENT YEAR THE PENALTY HAS BEEN LEVIED UNDER S IMILAR CIRCUMSTANCES AND IN OUR CONSIDERED OPINION, HAVING REGARD TO THE PRI NCIPLE OF CONSISTENCY, FOLLOWING THE STAND OF THE REVENUE IN ACCEPTING THE ORDER OF THE CIT(A) FOR ASSESSMENT YEAR 2006-07 DELETING THE PENALTY, THE I MPUGNED PENALTY IS UNSUSTAINABLE. APART THEREFROM, WE FIND THAT MERE M AKING OF A CLAIM WHICH IS FOUND TO BE UNSUSTAINABLE IN LAW WOULD NOT AMOUNT T O FURNISHING OF INACCURATE PARTICULARS OR CONCEALMENT OF INCOME UNLESS AND UNT IL IT IS ESTABLISHED THAT THE ITA NO.1120/PN/2011 VISHNU TRIMBAK KHATALE A.Y. 2007-08 CLAIM WAS MADE FOR NON-BONAFIDE CONSIDERATIONS. IN THE PRESENT CASE, WE FIND THAT THE ATTENDANT CIRCUMSTANCES DO NOT SHOW ANY MALA-FIDE INTENTION ON THE PART OF THE ASSESSEE IN MAKING A CLAIM OF DEPRECIAT ION, WHICH WAS OTHERWISE FOUND TO BE IMPERMISSIBLE IN LAW. THEREFORE, CONSID ERING THE ENTIRETY OF CIRCUMSTANCES, IN OUR VIEW, THE CIT(A) WAS NOT JUST IFIED IN SUSTAINING THE ORDER OF THE ASSESSING OFFICER LEVYING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 7. IN THE RESULT, WE SET ASIDE THE ORDER OF THE CIT (A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY IMPOSED UND ER SECTION 271(1)(C) OF THE ACT AMOUNTING TO RS. 1,10, 400/-. 8. RESULTANTLY, APPEAL OF THE ASSESSEE IS ALLOWED. 9. THE ABOVE DECISION WAS PRONOUNCED IN THE OPEN CO URT IN THE PRESENCE OF BOTH THE PARTIES AT THE CONCLUSION OF THE HEARIN G ON 30 TH APRIL, 2013. SD/- SD/- (SHAILENDRA KUMAR YADAV) (G . S. PANNU) JUDICIAL MEMBER ACCOUNT ANT MEMBER PUNE, DATED: 30.04.2013 SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-I, NASHIK; 4) THE CIT, NASHIK; 5) THE DR, A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// PRIVATE SECRETARY I.T.A.T., PUNE