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ITA 120/DEL/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7017 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 08-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S R SENAPATI
• Assessee Lawyers: V RAJ KUMAR
• Keywords: Depreciation; Opportunity of being heard; Reasonable cause; Bonafide mistake
• Section: 40A(3); 143(3); 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: E: NEW DELHI) BEFORE SHRI N.K SAINI, ACCOUNTANT MEMBER & SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO:- 120/DEL/2016 (ASSESSMENT YEAR-2011-12) M/S REPLIKA PRESS PVT. LIMITED., B-214, ASHOK VIHAR, PHASE-I NEW DELHI-110052. VS. DCIT CIRCLE-15(1) NEW DELHI. PAN NO: AAACR1084L APPELLANT RESPONDENT ASSESSEE BY : SH. K. SAMPATH, ADV. & SH. V. RAJKUMAR, ADV. REVENUE BY : SH. S.R. SENAPATI, SR. DR DATE OF HEARING : 19.06.2018. DATE OF PRONOUNCEMENT : 10/07/2018. ORDER PER: KULDIP SINGH, JM THE APPELLANT, M/S REPLIKA PRESS PVT. LTD., NEW DEL HI-110052 (HEREINAFTER REFERRED TO AS THE ASSESSEE) BY FILI NG THE PRESENT APPEAL, 2 ITA NO.-120/DEL/2016. M/S REPLIKA PRESS PVT. LTD., NEW DELHI. SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 02.12. 2015 PASSED BY LD. CIT(A)-7, NEW DELHI, ON THE GROUNDS THAT:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION O F THE ASSESSING OFFICER U/S 271(1)(C) OF THE INCOME-TAX AC T, 1961 IN HOLDING THE ASSESSEE GUILTY OF FURNISHING INACCURATE PARTICULARS OF INCOME WITH REGARD TO CLA IM FOR DEPRECIATION DISALLOWED IN THE ASSESSMENT. THE ACTI ON BEING ARBITRARY, ERRONEOUS, UNJUSTIFIED, UNTENABLE AND UNLAWFUL MUST BE QUASHED WITH DIRECTIONS FOR APPROP RIATE RELIEF. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICATION OF THE CONTROVERSY AT HAND ARE:- ON THE BASIS OF COMPLETED ASSESSMENT U/S 143(3) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT) AT INCOME OF RS. 62572560/- BY MAKING ADDITION OF RS. 494230/- AND R S. 1563142/- ON ACCOUNT OF DISALLOWANCE U/S 40A(3) AND ON ACCOUNT O F EXCESS DEPRECIATION CLAIM, RESPECTIVELY, PENALTY PROCEEDINGS U/S 271(1) (C) OF THE ACT WERE INITIATED. DECLINING THE CONTENTIONS RAISED BY THE ASSESSEE, AO TREATED THE MISTAKE OF CLAIMING EXCESS DEPRECIATION OF RS. 1563 142/- AS FURNISHING OF INACCURATE PARTICULARS OF INCOME OF RS. 2057372/- AND THEREBY LEVIED A PENALTY OF RS. 699500/- U/S 271(1)(C) OF THE ACT. 3. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT (A) BY WAY OF FILING THE APPEAL, WHO HAS DELETED THE PENALTY IMPO SED BY THE AO QUA ADDITION OF RS. 494230/- ON ACCOUNT OF DISALLOWANCE U/S 40A(3), HOWEVER, 3 ITA NO.-120/DEL/2016. M/S REPLIKA PRESS PVT. LTD., NEW DELHI. CONFIRMED THE PENALTY OF RS. 494230/- LEVIED BY THE AO. FEELING AGGRIEVED, THE ASSESSEE HAS COME UP BEFORE THE TRIB UNAL BY WAY OF FILING THE PRESENT APPEAL. 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES O F THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS RELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN THE LIGHT OF TH E FACTS AND CIRCUMSTANCES OF THE CASE. 5. UNDISPUTEDLY, THE PENALTY HAS BEEN LEVIED IN THIS CASE, ON ACCOUNT OF EXCESS DEPRECIATION OF RS. 1563142/- CLAIMED BY THE ASSESSEE. IT IS ALSO NOT IN DISPUTE THAT THE DISALLOWANCE OF DEPREC IATION HAS BEEN ACCEPTED BY THE ASSESSEE. IT IS ALSO NOT IN DISPUT E THAT THE ASSESSEE CLAIMED BONAFIDE MISTAKE IN MAKING EXCESS CLAIM OF DEPRECIATION. 6. IN THE BACKDROP OF THE AFORESAID FACTS AND CIRCUMST ANCES OF THE CASE, ARGUMENT ADDRESSED BY THE LD. AUTHORIZED REPR ESENTATIVES OF THE PARTIES TO THE APPEAL, THE SOLE QUESTION ARISES FOR DETERMINATION IN THE CASE IS:- AS TO WHETHER THE ASSESSEE HAS CONCEALED PARTICULA RS OF INCOME OR HAS FURNISHED INACCURATE PARTICULARS O F SUCH INCOME DURING ASSESSMENT PROCEEDINGS?. 4 ITA NO.-120/DEL/2016. M/S REPLIKA PRESS PVT. LTD., NEW DELHI. 7. HONBLE SUPREME COURT IN A CASE CITED AS CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. 322 ITR 158 (S.C.) WHILE INTERPRETING THE PROVISIONS CONTAINED U/S 271(1)(C) OF THE ACT, DECIDED THE IDENTICAL ISSUE IN FAVOR OF THE ASSESSEE. OPERATIV E PART OF WHICH IS REPRODUCED FOR READY REFERENCE AS UNDER:- A GLANCE AT THE PROVISIONS OF SECTION 271(L)(C) OF THE IT. ACT, 1961 SUGGESTS THAT IN ORDER TO BE COVERED BY IT, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTION 271(L)(C) WOULD EMBRACE THE DETAIL OF THE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETUR N IS FOUND TO BE INCORRECT OR INACCURATE, THE ASSESSE E CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. IN ORDER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULA RS. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE, BECAU SE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LIABILI TY WOULD ARISE. TO ATTRACT PENALTY, THE DETAILS SUPPLI ED IN THE RETURN MUST NOT BE ACCURATE, NOT EXACT OR CORRE CT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE IS NO QUESTIO N OF INVITING THE PENALTY UNDER SECTION 271(L)(C). A MER E MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY 5 ITA NO.-120/DEL/2016. M/S REPLIKA PRESS PVT. LTD., NEW DELHI. ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. 8. BARE PERUSAL OF THE PENALTY ORDER, APPARENTLY GOES TO PROVE, THAT THERE IS NO FINDING WHATSOEVER ON THE PART OF THE R EVENUE AUTHORITIES BELOW THAT ANY DETAIL SUPPLIED BY THE ASSESSEE IN H IS RETURN OF INCOME IS FOUND TO BE INCORRECT AND ERRONEOUS OR FALSE. IN C ASE, THE ASSESSEE HAS CLAIMED EXCESS DEPRECIATION, IT IS FOR THE TAX AUTH ORITY TO EXAMINE IF THE SAME IS ALLOWABLE OR NOT. 9. FURTHERMORE, PERUSAL OF THE NOTICE ISSUED BY THE A SSESSING OFFICER TO THE ASSESSEE U/S 274 OF THE ACT, AVAILABLE AT PA GE 79 OF THE PAPER BOOK, GOES TO PROVE THAT EVEN AT THE TIME OF ISSUAN CE OF THE NOTICE AS WELL AS AT THE TIME OF PASSING THE PENALTY ORDER, AO WAS NOT CLEAR, AS TO WHETHER THE PENALTY PROCEEDINGS ARE BEING INITIATED FOR CONCEALMENT OF THE PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME, RATHER THE ASSESSEE HAS BEEN CHARGED FOR HAVING CO NCEALED THE PARTICULARS OF INCOME AS WELL AS FURNISHING INACCUR ATE PARTICULARS OF SUCH INCOME: FOR READY PERUSAL NOTICE IS EXTRACTED AS UN DER:- 6 ITA NO.-120/DEL/2016. M/S REPLIKA PRESS PVT. LTD., NEW DELHI. NOTICE UNDER SECTION 274 READ WITH SECTION 271 OF T HE INCOME TAX ACT, 1961 PAN-AAACR7619C DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE-15(1), NEW DELHI DATED: 24.12.2013 TO, M/S REPLIKA PRESS PVT. LTD. B-214, ASHOK VIHAR, PHASE-I, DELHI-110052. WHEREAS IN THE COURSE OF PROCEEDINGS BEFORE ME FOR THE ASSESSMENT YEAR 2011-12 IT APPEARS TO ME THAT YOU:- *HAVE WITHOUT REASONABLE CAUSED FAILED TO COMPLY WI TH A NOTICE UNDER SECTION 142(1)/143(2) OF THE INCOME TA X ACT, 1961 DATED *HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME IN TERMS OF EXPLANATION 1,2,3,4 AND 5. YOU ARE HEREBY REQUESTED TO APPEAR BEFORE ME AT.11 .00 .AM/PM ON 27.01.2014 AND SHOW CAUSE WHY AN ORDER I MPOSING A PENALTY ON YOU SHOULD NOT BE MADE UNDER SECTION 271 OF THE INCOME TAX ACT, 1961. IF YOU DO NOT WISH TO AVAIL Y OURSELF OF THIS OPPORTUNITY OF BEING HEARD IN PERSON OF THROUGH AUT HORIZED REPRESENTATIVE YOU MAY SHOW CAUSE IN WRITING ON OR BEFORE THE SAID DATE WHICH WILL BE CONSIDERED BEFORE ANY SUCH ORDER IS MADE UNDER SECTION 271(1)(C). ASSESSING OFFICER SD/- (JANARDAN DAS) DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE 15(1), NEW DELHI (JARANDAN DAS) DY. COMMISSIONER OF INCOME TAX CIRCLE-15(1), NEW DELHI. 7 ITA NO.-120/DEL/2016. M/S REPLIKA PRESS PVT. LTD., NEW DELHI. 10. THE IDENTICAL ISSUE HAS BEEN DECIDED BY THE HONBL E HIGH COURT OF KARNATAKA IN THE CASE OF COMMISSIONER OF INCOME-TAX, BANGALORE VS. SSAS EMERALD MEADOWS [2016] 73TAXMANN.COM 241(KARN ATAKA) AND HAS DELETED THE PENALTY BY FOLLOWING THE DECISI ON RENDERED BY DIVISION BENCH OF HONBLE HIGH COURT OF KARNATAKA IN THE CAS E CITED AS CIT VS. MANJUNATHA COTTON & GINNING FACTORY [2013] 359 ITR 565/218 TAXMAN 423/35 TAXMAN.COM 250(KARN). 11. HONBLE SUPREME COURT OF INDIA UPHELD THE DECISION RENDERED BY HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF SSAS EMERALD MEADOWS (SUPRA) BY RETURNING THE FOLLOWING FINDINGS:- SECTION 274, READ WITH SECTION 271(1)(C), OF THE INCOME- TAX ACT, 1961-PENALTY-PROCEDURE FOR IMPOSITION OF (CONDITIONS PRECEDENT)-ASSESSMENT YEAR 2009-10- TRI BUNAL, RELYING ON DECISION OF DIVISION BENCH OF KARNATAKA HIGH COURT RENDERED IN CASE OF CIT V. MANJUNATHA COTTON & GINNING FACTORY [2013] 359 ITR 565/218 TAXMAN 423/3 5 TAXMANN.COM 250, ALLOWED APPEAL OF ASSESSEE HOLDING THAT NOTICE ISSUED BY ASSESSING OFFICER UNDER SECTION 27 4 READ WITH SECTION 271(1)(C) WAS BAD IN LAW, AS IT DID NO T SPECIFY UNDER WHICH LIMB OF SECTION 271(1)(C) PENALTY OF PROCEEDINGS HAD BEEN INITIATED, I.E., WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME-HIGH COURT HELD TH AT MATTER WAS COVERED BY AFORESAID DECISION OF DIVISIO N BENCH AND, THEREFORE, THERE WAS NO SUBSTANTIAL QUESTION O F LAW ARISING FOR DETERMINATION-WHETHER SINCE THERE WAS N O MERIT IN SLP FILED BY REVENUE, SAME WAS LIABLE TO BE DISM ISSED- HELD, YES [PARA 2] [IN FAVOUR OF ASSESSEE] 8 ITA NO.-120/DEL/2016. M/S REPLIKA PRESS PVT. LTD., NEW DELHI. 12. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, AO HA S FAILED TO MAKE OUT THE CASE OF CONCEALMENT OF INCOME OR FURNISHIN G OF INACCURATE PARTICULARS OF SUCH INCOME BY THE ASSESSEE, SO AS TO ATTRACT THE PROVISIONS CONTAINED U/S 271(1)(C) OF THE ACT, HENCE PENALTY L EVIED BY THE AO AND CONFIRMED BY THE LD. CIT(A) IS HEREBY ORDERED TO BE DELETED. CONSEQUENTLY, PRESENT APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10/7/2018 SD/- SD/- (N.K SAINI) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 10.07.2018 POOJA/- COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 9 ITA NO.-120/DEL/2016. M/S REPLIKA PRESS PVT. LTD., NEW DELHI. DATE OF DICTATION 3/7/2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 9/7/2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS 10/7/2018 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 10 /7/2018 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 10/7/2018 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER 10 ITA NO.-120/DEL/2016. M/S REPLIKA PRESS PVT. LTD., NEW DELHI.