ACIT, Moradabad V. M/s. Mohd. Nadeem Khan Prop., Moradabad

ITA 1237/DEL/2012

• Counselvise Citation: 123720114 RSA 2012
• Duration Of Justice: 6 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 25-09-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 13-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR PRABHA KANT
• Section: 143(3); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: E NEW DELHI BEFORE SHRI I.C.SUDHIR, JUDICIAL MEMBER AND SHRI A.N.PAHUJA, ACCOUNTANT MEMBER I.T.A .NO.-1237/DEL./2012 ASSESSMENT YEAR - 2003-04 ACIT, VS MOHD. NADEEM KHAN PROP., RANGE-I, M/S JADE EXPORTS, MORADABAD. DELHI ROAD, MORADABAD PAN : AERPK6217Q (APPELLANT) (RESPONDENT) APPELLANT BY: DR. PRABHA KANT, SR. DR RESPONDENT BY: SH. PIYUSH KAUSHIK, ADV. APPEAL HEARD ON-25.09.2012 ORDER PRONOUNCED ON-28.09.2012 ORDER PER I.C.SUDHIR, JM THE REVENUE HAS QUESTIONED THE FIRST APPELLATE ORDE R ON THE FOLLOWING GROUNDS :- 1). CIT(APPEALS) HAS ERRED IN LAW AND ON FACTS UNDE R THE CIRCUMSTANCES OF THE CASE IN CANCELING THE PENALTY WHICH WAS RIGHTLY IMPOSED BY THE THEN ASSESSING OFFICER. 2). CIT(APPEALS) HAS ERRED IN LAW AND ON FACTS UND ER THE CIRCUMSTANCES OF THE CASE IN CANCELING THE PENALTY WITHOUT APPRECIATING THE FACT THAT THE ADDITIONS MADE BY TH E THEN ASSESSING OFFICER WAS ACCEPTED BY THE ASSESSEE AND NO APPEAL WAS FILED BEFORE CIT(APPEALS), WHICH WAS CLEAR INDICATION THAT ALL T HE NECESSARY CONDITIONS WERE PRESENT IN THIS CASE MAKING LIABLE THE ASSESSEE FOR PENALTY U/S 271(1)(C). 3). CIT(APPEALS) HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THE FACT THAT THE ASSESSEE WAS DULY BO UND TO INCLUDE AMOUNT OF DEPB IN THE INCOME IN VIEW OF HIS ESTABLI SHED PRACTICE OF FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING AND HE (T HE ASSESSEE) COULD NOT CHANGE TO MIXED SYSTEM OF ACCOUNTING FOR THIS PURPOSE. 4). CIT(APPEALS) HAS ERRED IS NOT APPRECIATING THE FACT THAT A.O., IN VIEW OF GROUNDNO.3(SUPRA), RIGHTLY ADDED THE DEP B AMOUNT IN I.T.A .NO.-1237/DEL./2012 2 INCOME AND SINCE IT WAS NOT APPEAL IT AGAINST BY TH E ASSESSEE THE PENALTY U/S 271(1)(C) WAS RIGHTLY LEVIED. 5). ORDER OF CIT(APPEALS) MAY BE SET-A-SIDE AND OR DER OF THE ASSESSING OFFICER IS RESTORED. 2. THE RELEVANT FACTS ARE THAT DURING THE YEAR, THE ASSESSMENT U/S 143(3) WAS FRAMED ON THE TOTAL INCOME OF RS. 26,06,600/- AGAIN ST THE RETURNED INCOME OF RS. 9,37,411/-. THE TOTAL INCOME DETERMINED AT RS. 26, 06,600/- WAS INCLUSIVE OF AN AMOUNT OF RS. 31,65,654/-, ADDITION OF WHICH WAS MA DE ON ESTIMATED BASIS ON ACCOUNT OF DUTY CREDIT ACCRUED (DEPB) TO THE ASSESS EE DURING THE ASSESSMENT YEAR. THE ASSESSING OFFICER PROPOSED THIS ADDITION ON THE BASIS THAT ASSESSEE HAD NOT DISCLOSED ANY CREDITS IN RESPECT OF DEPB LICENS E ON ACCRUAL BASIS. THE ASSESSEE TRIED TO EXPLAIN THAT SUCH CREDIT WERE NOT DISCLOSED AS NO INCOME WAS ACTUALLY RECEIVED BY IT DURING THE PERIOD. THE ASS ESSING OFFICER DID NOT ACCEPT THIS EXPLANATION ON THE BASIS THAT THE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING AND AS PER THE AMENDED PROVISIONS, ASSES SEE COULD NOT ADOPT MIXED SYSTEM OF ACCOUNTING. THE ASSESSEE DID NOT PREFER FIRST APPEAL AGAINST THE SAID ASSESSMENT ORDER. THE PENALTY PROCEEDINGS U/S 271( 1)(C) WERE INITIATED AND PENALTY WAS IMPOSED. THE AGGRIEVED ASSESSEE PREFER RED FIRST APPEAL AGAINST THE LEVY OF PENALTY AND THE LD. CIT(A) BEING CONVINCED WITH THE SUBMISSIONS OF THE ASSESSEE HAS DELETED THE PENALTY RESULTING INTO THE PRESENT APPEAL PREFERRED BY THE REVENUE. 3. IN SUPPORT OF THE GROUNDS, LD. DR HAS BASICALLY PLACED RELIANCE ON THE PENALTY ORDER PASSED U/S 271(1)(C) OF THE ACT. HE SUBMITTED THAT THE FIRST I.T.A .NO.-1237/DEL./2012 3 APPELLATE AUTHORITY WHILE DELETING THE PENALTY, HAS FAILED TO APPRECIATE THE FACT THAT THE ASSESSEE WAS DUTY-BOUND TO INCLUDE THE AMO UNT OF DEPB IN THE INCOME IN VIEW OF ITS ESTABLISHED PRACTICE OF FOLLOWING MERCA NTILE SYSTEM OF ACCOUNTING AND THE ASSESSEE WAS NOT ALLOWED TO CHANGE TO THE MIXED SYSTEM OF ACCOUNTING FOR THIS PURPOSE. SINCE THE ASSESSEE HAD ACCEPTED THE ADDIT ION, MADE BY THE ASSESSING OFFICER, IT WAS CLEAR INDICATION THAT THERE WAS CON CEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS THERETO ON THE PART OF THE ASSESSEE TO ATTRACT PENALTY PROVISION FOR THE SAME U/S 271(1)(C ) OF THE ACT. LD. AR ON THE OTHER HAND, TRIED TO JUSTIFY THE FIRST APPELLATE OR DER WHEREBY THE LD. CIT(A) HAS DELETED THE PENALTY. LD. AR ALSO PLACED RELIANCE O N THE RECENT DECISION OF DELHI BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS DSL SO FTWARE LTD. , ITA NO. 861 & 862/DEL.2011(AYS 2003-04 & 2004-05) ORDER DATED 0 9.03.2012 (COPY SUPPLIED). 4. HAVING GONE THROUGH THE ORDERS OF THE AUTHORITIE S BELOW, WE FIND THAT DURING THE COURSE OF PROCEEDINGS U/S 143(3) OF THE ACT, THE ASSESSEE WAS REQUIRED TO EXPLAIN AS TO WHY INCOME FROM DEPB FOR THE PREVI OUS YEAR RELEVANT TO AY 2003-04 UNDER CONSIDERATION, WAS NOT SHOWN IN THE P ROFIT & LOSS A/C FOR THAT YEAR AND WAS FURTHER REQUIRED TO EXPLAIN AS TO WHY INCOME FROM DEPB @ 17% OF TOTAL EXPORT OF RS. 1,86,21,497/- AMOUNTING TO RS. 31,65,654/- SHOULD NOT BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE. THE ASS ESSEE HAD EXPLAINED TO THE ASSESSING OFFICER THAT THE INCOME OF THE DEPB IS AC COUNTED FOR IN THE YEAR IN WHICH THE SAME IS TRANSFERRED. THE ASSESSING OFFIC ER ERRONEOUSLY ADDED THE I.T.A .NO.-1237/DEL./2012 4 WHOLE AMOUNT OF RS. 31,65,654/- TO THE TOTAL INCOME OF THE ASSESSEE. THE ASSESSEE HAD FILED APPLICATION U/S 154 OF THE ACT F OR THE RECTIFICATION OF THE SAME. WHILE PASSING ORDER U/S 154 OF THE ACT, THE ASSESSI NG OFFICER HAD DELETED THE ADDITION OF RS. 21,57,696/- BUT NOTHING WAS DONE FO R THE INCOME RECEIVED FROM THE TRANSFER OF THE DEPB IN THE FYS 2003-04 & 2004- 05 AND AS SHOWN INCOME IN THE PROFIT & LOSS ACCOUNT IN THESE FYS. HENCE, THE SAME INCOME CANNOT BE TAXED TWICE. 5. AGGRIEVED WITH THE ORDER, THE ASSESSEE HAD AGAIN MOVED AN APPLICATION U/S 154 OF THE ACT ON 16.08.2006 BUT IT WAS NOT DISPOSE D OFF. AGAIN AN APPLICATION WAS MADE U/S 154 OF THE ACT ON 29.03.2011 WHICH WAS REJECTED BY THE ASSESSING OFFICER. THE ASSESSEE PREFERRED FIRST APPEAL AGAIN ST THE SAID ORDER. DURING THE PENDENCY OF APPLICATION U/S 154 DATED 16.08.2006, T HE ASSESSING OFFICER INITIATED PROCEEDING U/S 271(1)(C) AND IMPOSED THE PENALTY ON 12.09.2006. LD. CIT(A) HAS DELETED THE PENALTY IN QUESTION AFTER PASSING A COMPREHENSIVE ORDER. THE RELEVANT OBSERVATIONS OF THE LD. CIT(A) THAT THE AS SESSEE HAD DISCLOSED COMPLETE PARTICULARS IN RESPECT OF HIS INCOME FROM TRANSFER OF DEPB LICENSE AND NO MATERIAL FACT IN CONNECTION THEREWITH, WAS CONCEALE D, HAS NOT BEEN REBUTTED BY THE REVENUE BEFORE US. WE ALSO FULLY CONCUR WITH THE O BSERVATION OF THE LD. CIT(A) THAT INCOME FROM DEPB HAS TO BE TAXED IN THE YEAR O F ITS TRANSFER IN-COMPLIANCE OF THE SPECIFIC PROVISIONS OF SECTION 28(IIID) OF T HE INCOME TAX ACT. HENCE, THERE WAS NO SCOPE FOR ANY DEVIATION FROM THE SAME. THUS , ACTION OF THE ASSESSING OFFICER HAS RESULTED INTO DOUBLE TAXATION OF THE SA ME INCOME. THE ASSESSING I.T.A .NO.-1237/DEL./2012 5 OFFICER HAS NOT DISPUTED THIS FACT THAT THE LICENSE S WERE SOLD IN THE FYS 2003-04 & 2004-05. UNDER THESE CIRCUMSTANCES, WE FULLY CON CUR WITH THE FINDING OF THE LD. CIT(A) THAT THE ASSESSING OFFICER WAS NOT HAVIN G ANY MATERIAL TO ESTABLISH THAT CONCEALMENT OF PARTICULARS OF HIS INCOME OR FU RNISHING INACCURATE PARTICULARS OF SUCH INCOME WAS THERE ON THE PART OF THE ASSESSE E TO ATTRACT THE PENAL PROVISIONS U/S 271(1)(C) OF THE ACT. THE LD. CIT( A) WAS THUS JUSTIFIED IN DELETING THE PENALTY LEVIED BY THE ASSESSING OFFICE R, THE SAME IS UPHELD. THE GROUNDS QUESTIONING THE VALIDITY OF THE ACTION OF T HE LD. CIT(A) IN DELETING THE PENALTY ARE THUS REJECTED. CONSEQUENTLY, APPEAL IS DISMISSED. 7. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 28.09.2012. SD/- SD/- (A.N.PAHUJA) (I.C.SUDHIR) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 28/09/2012 *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI