Appeal details
Counselvise Citation
[2017] 127 COUNSELVISE.COM (IT) 8636 (ITAT-AHMEDABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 3 month(s) 27 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
08-09-2017
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
SMC
Assessment Year
2012-2013
Appeal Filed On
11-05-2016
Judgement Text
, *,L *,L*,L *,L- -- -,E ,E,E ,E- -- -LH* LH*LH* LH* IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD EKUHK EKUHK EKUHK EKUHK CKSJM CKSJM CKSJM CKSJM BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER AND SHRI, MANISH BORAD, ACCOUNTANT MEMBER I.T.A. NO.1250/AHD/2016 ( / ASSESSMENT YEAR : 2012-13) EMPARCO CHEMICALS PVT. LTD. ACI PREMISES, OPP. VIJAY MILLS, NARODA ROAD, AHMEDABAD - 380025 VS. INCOME TAX OFFICER, WARD 2(1)(1), AHMEDABAD ! PAN/GIR NO. : AAACE 3449 A ( ' / APPELLANT ) .. ( #' RESPONDENT ) '$ APPELLANT BY : SHRI ARTI N. SHAH #'%$ / RESPONDENT BY : SHRI MAHESH JIWDE, SR.D.R. & '(%)* / DATE OF HEARING 05/09/2017 +,-.%)* / DATE OF PRONOUNCEMENT 08/09/2017 / O R D E R PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER : THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE OR DER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-2, AHMEDABAD, DATED 15/04/20 16, FOR CONFIRMING LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TA X ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMENT YEAR (AY) 2012-13. THE LEARNED CIT(A)-2, AHEMDABAD HAS ERRED IN LAW AN D ON FACTS OF THE CASE BY CONFIRMING LEVY OF PENALTY OF RS.2,35,000/- U/S. 271(1)(C) BY ASSESSING OFFICER. ITA NO.1250/AHD /2016 EMPARCO CHEMICALS PRIVATE LTD. VS.ITO ASST.YEAR 2012-13 - 2 - 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- IN THIS CASE, ASSESSEE IS A PRIVATE LIMITED COMPAN Y WHICH WAS DEALING IN VARIOUS INDUSTRIAL FUELS LIKE FURNACE OIL AND HAS A LSO RECEIVED COMMISSION INCOME FROM SALE OF COAL. 2.2 DURING THE ASSESSMENT PROCEEDINGS, ON VERIFICAT ION OF THE AUDIT REPORT IT WAS NOTICED THAT THE ASSESSEE HAS NOT UTILIZED ITS FIXED ASSETS DURING THE YEAR UNDER CONSIDERATION AND HAD NOT CLAIMED ANY DEPRECI ATION IN THE PROFIT AND LOSS ACCOUNT. HOWEVER, IN THE COMPUTATION OF INCOME FOR INCOME TAX PURPOSE, IT WAS NOTICED THAT THE ASSESSEE HAD CLAIMED DEPRECIAT ION OF RS.7,56,256/-. 2.3 THEREFORE, A SHOW-CAUSE NOTICE WAS SERVED TO TH E ASSESSEE AS TO WHY THE DEPRECIATION SHOULD NOT BE DISALLOWED AS NO MANUFAC TURING ACTIVITY HAD BEEN CARRIED OUT DURING THE YEAR. 2.4 THE ASSESSEE FILED HIS REPLY AND SAME IS REPROD UCED AS UNDER: DURING THE F.Y.2011-12, THE ASSESSEE COMPANY HAD N OT CARRIED OUT ANY MANUFACTURING ACTIVITY BUT THE MACHINERY WHICH WAS PREVIOUSLY USED FOR THE MANUFACTURING ACTIVITY WERE LYING IN T HE FACTORY AND DUE TO PASSAGE OF TIME IF GETS OBSOLETE. HENCE, THE ASSESS EE COMPANY HAS CLAIMED THE DEPRECIATION. THE ASSESSEE HAS ALREADY USED THE PLANT AND MACHINE RY IN THE PRECEDING PREVIOUS YEARS. AS HELD BY VARIOUS COURTS WHEN THE TERM USE INCLUDES READY FOR USE. IN OTHER WORDS, THE WORD USED IN THE SECTION MAY GIVE A WIDER MEANING AND EMBRACE PA SSIVE AS WELL AS ACTIVE USE AS HELD BY COURT JUDGEMENTS IN VISHWANAT H BHASKAR SATHE VS. CIT 10 ITC 386(BOM) AND CIT VS. VIDHYACHAL DIST ILLARIES PVT. LTD. TAXMANN 127 [MP][2015]. ITA NO.1250/AHD /2016 EMPARCO CHEMICALS PRIVATE LTD. VS.ITO ASST.YEAR 2012-13 - 3 - 3. AGAINST THE SAID ORDER ASSESSEE PREFERRED FIRST STATUTORY APPEAL BEFORE THE LEARNED CIT(A), WHO DISMISSED THE APPEAL OF THE ASS ESSEE. 4. WE HAVE HEARD BOTH THE COUNSELS AND GONE THROUGH THE IMPUGNED ORDER. LEARNED AR CITED A JUDGMENT OF PRICE WATERHOUSE COOPERS PVT. LTD. VS. CIT AND ANOTHER [2012] 348 ITR 306 (SC), IN WHICH IT WAS HELD THAT: THE FACTS OF THE CASE WERE PECULIAR AND SOMEWHAT U NIQUE. NOTWITHSTANDING THAT THE ASSESSEE WAS A REPUTED FIRM AND HAD GREAT EXPERTISE AVAILABLE WITH IT, IT WAS POSSIBLE THAT EVEN THE ASSESSEE COULD MAKE A SILLY MISTAKE. THE FACT THAT THE TAX AUDIT REPORT WAS FILED ALONG WITH THE RETURN AND THAT IT UNEQUIVOCALLY STATED THAT THE PROVISION FOR PAYMENT WAS NOT ALLOWABLE UNDER SECTION 40A(7) OF THE ACT INDICATED THAT THE ASSESS EE MADE A COMPUTATION ERROR IN ITS RETURN OF INCOME. THE CONTENTS OF THE TAX AUDIT REPORT SUGGESTED THAT THERE WAS NO QUESTION OF THE ASSESSEE CONCEALI NG ITS INCOME OR OF THE ASSESSEE FURNISHING ANY INACCURATE PARTICULARS. APA RT FROM THE FACT THAT THE ASSESSEE DID NOT NOTICE THE ERROR, IT WAS NOT EVEN NOTICED EVEN BY THE ASSESSING OFFICER WHO FRAMED THE ASSESSMENT ORDER. ALL THAT HAD HAPPENED WAS THAT THROUGH A BONA FIDE AND INADVERTENT ERROR, THE ASSESSEE WHILE SUBMITTING ITS RETURN, FAILED TO ADD THE PROVISION FOR GRATUITY TO ITS TOTAL INCOME. THE ASSESSEE SHOULD HAVE BEEN CAREFUL BUT T HE ABSENCE OF DUE CARE, IN A CASE SUCH AS THE PRESENT, DID NOT MEAN THAT THE A SSESSEE WAS GUILTY OF EITHER FURNISHING INACCURATE PARTICULARS OR ATTEMPTING TO CONCEAL ITS INCOME. ON THE PECULIAR FACTS OF THIS CASE, THE IMPOSITION OF PENA LTY ON THE ASSESSEE WAS NOT JUSTIFIED. 4.2 ASSESSEE ALSO CITED A JUDGMENT OF NAYAN C SHAH VS. ITO, [2016] 386 ITR 304 (GUJARAT) IN WHICH IT HAS BEEN HELD THAT: FURNISHING OF INACCURATE PARTICULARS OF INCOME - INCORRECT CLAIM FOR EXPENDI TURE DO NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS OF INCOME. IT IS WELL SETTLE D THAT WHILE ISSUING A NOTICE UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961, THE ASSESSING OFFICER IS REQUIRED TO SPECIFY THE DEFAULT ON THE PART OF THE ASSESSEE, WH ETHER THE CASE IS ONE OF FURNISHING INACCURATE PARTICULARS, OR WHETHER IT IS A CASE OF CONCEALMENT OF INCOME, OR BOTH. BUT IN THIS CASE AUTHORITIES BELOW HAVE BEEN FAILED TO DO SO. ITA NO.1250/AHD /2016 EMPARCO CHEMICALS PRIVATE LTD. VS.ITO ASST.YEAR 2012-13 - 4 - 4.3 WE ARE OF THE VIEW THAT IN ORDER TO IMPOSE PENA LTY THE AUTHORITIES MUST SEE THE CONDUCT AND DELIBERATE INTENTION ON THE PAR T OF THE ASSESSEE IN CONCEALMENT HIS TRUE INCOME. IN THE INSTANT CASE, T HERE WAS A BONA FIDE MISTAKE RATHER THAN A DELIBERATE MISTAKE ON THE PART OF THE ASSESSEE WHILE CALCULATING DEPRECIATION ON THE ASSETS OF THE ASSESSEE. 5. RESPECTFULLY, FOLLOWING THE ABOVE SAID JUDGMENTS , WE DELETE THE PENALTY AGAINST THE ASSESSEE. 6. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 08/09/2017 SD/- SD/- EKUHK CKSJM EKUHK CKSJM EKUHK CKSJM EKUHK CKSJM EGKOHJ IZLKN EGKOHJ IZLKN EGKOHJ IZLKN EGKOHJ IZLKN YS[KK LNL; YS[KK LNL; YS[KK LNL; YS[KK LNL; U;KF;D LNL ; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; ( MANISH BORAD ) (MAHA VIR PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 08/09/2017 PRITI YADAV, SR. PS !'# $#! COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT 2. #' / THE RESPONDENT. 3. 012) & 3) / CONCERNED CIT 4. & 3) 45 / THE CIT(A)-2, AHMEDABAD. 5. 678 )'12 *12. 0 / DR, ITAT, AHMEDABAD 6. 89:( GUARD FILE. % & / BY ORDER, #6) ) //TRUE COPY// '/& () ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD
