R.Palanisamy, Tiruppur V. ITO, Tiruppur

ITA 1211/CHNY/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9052 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 1 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 20-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R ILAVARASI
• Assessee Lawyers: N VIJAYAKUMAR
• Keywords: Depreciation; Principle of natural justice; Wrong claim; Unabsorbed depreciation; Revenue expenditure
• Section: 80C; 143(3)

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL D BENCH, CHENNAI , . , BEFORE SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I.T.A.NO. 1211 /MDS/2015 / ASSESSMENT YEAR :20 1 0 - 1 1 SHRI R. PALANISAMY, NO. 45, PUSHPA NAGAR, KANGAYAM ROAD, TIRUPUR 641 604 . [PAN: A KQPP8270M ] VS. THE INCOME TAX OFFICER , WARD I(2) , TIRUPUR . ( / APP ELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI N. VIJAYA KUMAR, C.A. / RESPONDENT BY : S MT. R. ILAVARASI, J CIT / DATE OF HEARING : 1 2 . 0 4 .201 6 / DATE OF P RONOUNCE MENT : 30 . 0 6 .201 6 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : TH I S APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 3 , C OIMBATORE , DATED 22 . 0 1 .20 1 5 RELEVANT TO THE ASSESSMENT YEA R 20 1 0 - 1 1 . THE ONLY EFFECTIVE GROUND RAISED IN THE APPEAL OF THE ASSESSEE IS WITH REGARD TO CONFIRMATION OF PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT [ ACT IN SHORT]. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDU AL AND FILED HIS RETURN OF INCOME ON 11.03.2011 FOR THE ASSESSMENT YEAR 2010 - 11 BY I.T.A. NO . 1211 /M/ 15 2 ADMITTING NIL TAXABLE INCOME. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) OF THE ACT DT. 26.08.2011 WAS ISSUED AND SERVED ON THE ASSES SEE . IN THE RETURN, THE ASSESSEE HAS REPORTED INCOME OF .12,34,159/ - BEFORE CLAIMING BROUGHT FORWARD LOSS AND UNABSORBED DEPRECIATION AND OUT OF UNABSORBED DEPRECIATION OF .80,88,481/ - AND BUSINESS LOSS OF .15,67,196/ - OF THE DISSOLVED PARTNERSHIP FIRM IN WHICH THE ASSESSEE WAS A PARTNER, THE ASSESSEE HAS CLAIMED BUSINESS LOSS OF .7,98,222/ - AND UNABSORBED DEPRECIATION OF .4,35,937/ - THEREBY MAKING THE GROSS TOTAL INCOME AND TAXABLE INCOME AS NIL. THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS COMP LETED ON 22.03.2013 AFTER MAKING VARIOUS DISALLOWANCES. 3. THEREAFTER, THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS BY ISSUING NOTICE UNDER SECTION 271(1)(C) OF THE ACT REQUIRING THE ASSESSEE TO SHOW CAUSE WHY A PENALTY SHOULD NOT BE LEVIED FOR CO NCEALMENT OF PARTICULARS OF INCOME. THE ASSESSEE FILED A REPLY STATING THAT THE ENTIRE ASSETS AND LIABILITIES OF THE FIRM WAS TAKEN OVER BY HIM, HE WAS UNDER AN IMPRESSION THAT HE IS ELIGIBLE FOR CLAIMING UNABSORBED DEPRECIATION AND BUSINESS LOSS. HOWEVER, THE ASSESSING OFFICER HAS N OT CONSIDERED THE CONTENTION OF THE ASSESSEE AND LEVIED PENALTY OF .28,35,283/ - UNDER SECTION 271(1)(C) OF THE ACT ON THE GROUND THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS AND CONCEALED THE INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT. I.T.A. NO . 1211 /M/ 15 3 4. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) BY RAISING THE FOLLOWING GROUNDS: 1. THE ORDER OF THE LEARNED ASSESSING OFFICER IS OPPOSED TO LAW AND CONTRARY TO THE FACTS OF THE CASE AND AGAINST EQUITY AND PRINCIPLES OF NATURAL JUSTICE. 2. A. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE APPELLANT S CASE WOULD NOT FALL UNDER SEC. 271(1)(C) OR EXPLANATION 1 TO SEC. 271(1)(C). B. THE LEARNED ASSESSING OFFICER FAILED TO APPRECIATE THAT THERE IS NO CONCEALMENT OF PARTICULARS OF INCOME IN THE PRESENT CASE AS THE ASSESSEE OFFERED THE ENTIRE PARTICULARS OF HIS INCOME AND HIS EXPLANATION WAS BONA FIDE AND ALSO THE APPELLANT COOPERATED WITH THE DEPARTMENT DURING THE COURSE OF ASSESSMENT. C. THE LEARNED ASSESSING OFFICER FAILED T O FOLLOW THAT EACH AND EVERY OMISSION OR COMMISSION WOULD NOT BE AN ACT OF CONCEALMENT LEADING TO LEVY OF PENALTY AND THERE SHOULD BE A CONSCIOUS ACT OF CONCEALMENT ON THE PART OF THE APPELLANT TO ATTRACT THE PENAL PROVISIONS U/S 271(1)(C) OF THE ACT. 3. WITHOUT PREJUDICE TO THE ABOVE, ASSUMING BUT NOT ACCEPTING THAT THE CASE OF THE APPELLANT FALLS UNDER EXPLANATION 1 TO SEC. 271(1)(C). A. THE LEARNED ASSESSING OFFICER FAILED TO APPRECIATE THAT AS PER EXPLANATION 4 TO SEC. 271(1)(C) , THE PENALTY CAN AT MAXIMUM BE LEVIABLE ONLY TO THE EXTENT OF DIFFERENCE BETWEEN THE TAX ON INCOME ASSESSED AND TAX ON INCOME RETURNED. B. THE LEARNED ASSESSING OFFICER FAILED TO CONSIDER THE DEDUCTION PERMISSIBLE U/S 80C WHILE COMPUTING THE TAX ON INCOME ASSESSED. IN VI EW OF THE ABOVE GROUNDS AND SUCH OTHER ADDITIONAL GROUNDS AS MAY BE ADDUCED AT THE TIME OF HEARING WITH THE LEAVE OF THE HONOURABLE COMMISSIONER OF INCOME TAX (APPEALS), THE APPELLANT PRAYS BEFORE THE HONOURABLE COMMISSIONER OF INCOME TAX (APPEALS), A. T O CANCEL THE ORDER OF THE LEARNED ASSESSING OFFICER LEVYING PENALTY OF .28,35,283/ - . I.T.A. NO . 1211 /M/ 15 4 B. TO PASS SUCH OTHER CONSEQUENTIAL ORDER AS THE HONOURABLE COMMISSIONER OF INCOME TAX (APPEALS) MAY DEEM FIT TO RENDER JUSTICE. 5. THE LD. CIT(A) HAS GIVEN HIS FINDINGS AS UNDER: 5.0 I HAVE CONSIDERED THE PENALTY ORDER AND THE RIVAL SU BMISSIONS. THE APPEAL OF THE ASSESSEE IN RELATION TO ASSESSMENT PROCEEDINGS HAVE BEEN DISMISSED VIDE MY ORDER DATED 22/1/2015 IN APPEAL NO. 162/2013 - 14. THE ASSESSEE S CLAIM OF REVENUE EXPENDITURE HAS BEEN CAPITALIZED AND BROUGHT FORWARD BUSINESS LOSS AND UNABSORBED DEPRECIATION OF THE ERSTWHILE PARTNERSHIP FIRM CANNOT BE SET OFF IN THE HANDS OF THE INDIVIDUAL. 5.1 THE ABOVE WRONG CLAIMS OF THE ASSESSEE COULD NOT HAVE COME TO LIGHT BUT FOR SCRUTINY U/S 143(3) OF THE INCOME TAX ACT. THE ABOVE CLAIMS OF THE ASSESSEE WOULD CLEARLY FALL UNDER THE PROVISIONS OF SECTION 271(1)(C) WHEREIN IT IS STATED THAT HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME . 5.2 THE WRONG CLAIM OF THE ASSESSEE REGARDING REVENUE EXPENSES, BROUGHT FORWARD BUSINESS LOSSES AND BROUGHT FORWARD UNABSORBED DEPRECIATION WILL CLEARLY FALL WITHIN THE MISCHIEF OF FILING INACCURATE PARTICULARS OF INCOME AND THEREFORE LIABLE TO PENALTY U/S 271(1)(C) . THEREFORE, PENALTY OF .28,35,283/ - U/S 271(1)(C) LE VIED BY THE ASSESSING OFFICER IS CONFIRMED IN THE HANDS OF THE ASSESSEE. 6. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD. WE HAVE ALSO CAREFULLY PERUSED THE FINDINGS OF THE LD. CIT(A) AND THE GROUNDS RAISED BY THE ASSESSEE BEFORE THE LD. C IT(A). AS PER THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS ASSESSED THE TOTAL TAXABLE INCOME AT .25,09,183/ - . IN THE PENALTY ORDER PASSED UNDER SECTION 271(1)(C) OF THE ACT, THE ASSESSING OFFICER HAS NOT GIVEN ANY FINDING AS TO UNDER WHAT CIRCUMSTANCES HE LEVIED THE PENALTY OF .28,35,283/ - OVER AND ABOVE THE ASSESSED INCOME OF .25,09,183/ - . THE LD. CIT(A) HAS NOT GIVEN ANY FINDING SINCE THE ASSESSEE I.T.A. NO . 1211 /M/ 15 5 HAS RAISED SPECIFIC GROUND BEFORE HIM AS PER PARA 3.4.1 OF THE ORDER OF THE LD. CIT(A) . IN VIEW OF THE ABOVE, WE SET ASIDE THE ORDER PASSED BY THE LD. CIT(A) AND REMIT THE MATTER BACK TO THE LD. CIT(A) TO CONSIDER THE ALTERNATIVE SUBMISSIONS MADE BY THE ASSESSEE, WHICH WAS REPRODUCED IN HIS ORDER AT PARA 3.4.1 AND DECIDE THE ISSUE AFRESH BY PASSING A SPEAKI NG ORDER. THUS, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 7 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED ON THE 30 TH JUNE , 201 6 AT CHENNAI. SD/ - SD/ - ( CHANDRA POOJA RI ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 30 . 0 6 .201 6 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / D R & 6. / GF.