FLSmith Minerals (P) Ltd., CHENNAI V. DCIT, CHENNAI

ITA 1279/CHNY/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6281 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 16-05-2017
• Assessment Year: 2003-2004
• Appeal Filed On: 12-05-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANN MARY BA
• Assessee Lawyers: G BASKAR
• Keywords: Depreciation; Opportunity of being heard; Revised return
• Section: 32

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI ... , , $ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ I.T.A. NO. 1279/MDS/2014 / ASSESSMENT YEAR : 2003-04 M/S. FLSMIDTH MINERALS P LTD., (SINCE MERGED WITH FLSMIDTHPVT. LTD.) FLSMIDTH HOUSE, 34, EGATOOR, KELAMBAKKAM, OLD MAHABALIPURAM ROAD, CHENNAI 600 103. [PAN: AAACF 1122D] VS. DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE II(1), CHENNAI 34. ( / APPELLANT) ( / RESPONDENT) &' / APPELLANT BY : SHRI G. BASKAR, ADVOCATE *+&' / RESPONDENT BY : MS. ANN MARY BABY, JCIT ' /DATE OF HEARING : 22.05.2017 ' /DATE OF PRONOUNCEMENT : 18 .08.2017 /O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER: THE ASSESSEE FILED THIS APPEAL AGAINST THE ORDER O F THE COMMISSIONER OF INCOME TAX (APPEALS)-II, CHENNAI IN ITA NO. 411/2013-14 DATED 16.01.2014. :-2-: I.T.A. N0. 1279/MDS/2014 2. FLSMIDTH PRIVATE LIMITED (FORMERLY FLS AUTOMATIO N INDIA PRIVATE LIMITED) IS A COMPANY, ENGAGED IN THE BUSINESS OF D ESIGN AND SUPPLY OF AUTOMATION SYSTEMS TO CEMENT AND OTHER INDUSTRIES IN THE ASSESSMENT MADE FOR THE ASSESSMENT YEAR 2003-04 ON 10.03.2006, THE ASSESSING OFFICER MADE VARIOUS ADDITIONS AND DISALLOWANCES AND INITIATED P ENALTY PROCEEDINGS U/S. 271(1)(C) . ASSESSEE APPEALED AGAINST THAT ASSESSM ENT ORDER, THE CIT(A) CONFIRMED THE ADDITIONS/DISALLOWANCE OF (I) DEPRECI ATION CLAIMED ON LET OUT PROPERTIES AT RS. 4,32,251/- AND (II) REVERSAL OF W ARRANTY PROVISION OF EARLIER YEARS OF RS. 87,84,696/-. CONSEQUENT TO THE ORDER OF THE CIT (A), THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS, GA VE OPPORTUNITY OF BEING HEARD, AFTER CONSIDERING ALL THE OBJECTIONS AND THE DETAILS SUBMITTED BY THE ASSESSE, LEVIED PENALTY AT RS. 33,87,230/- BEING 100% OF THE TAX SOUGHT TO BE EVADED. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A). THE CIT(A) DISMISSED THE APPEAL. 3. AGGRIEVED, THE ASSESSEE FILED THIS APPEAL, INTER ALIA, WITH THE FOLLOWING GROUNDS: A. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN REJECTING THE APPEAL OF THE APPELLANT HEREIN, VIDE ORDER DATED 16.01.2014, CONFIRMING THE PENALTY U/S. 271(1)(C) O F THE ACT LEVIED VIDE ORDER DATED 30.03.2010. B. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED I N CONFIRMING THE LEVY OF PENALTY WITH RESPECT TO THE CLAIM OF DEPRECIATION ON LEASED FACTORY BUILDING IN THE ABSENCE OF CONCEA LMENT OR FURNISHING OF :-3-: I.T.A. N0. 1279/MDS/2014 INACCURATE PARTICULARS IN THIS REGARD. THE PROVISIO NS OF SEC. 271(1)(C) ARE NOT ATTRACTED IN THE PRESENT CASE. C. THE LOWER AUTHORITIES OUGHT TO HAVE NOTED THAT I T IS ENTITLED TO DEPRECIATION IN RESPECT OF THE FACTORY BUILDING IRRESPECTIVE OF WHETHER THE INCOME THEREFROM OFFERED TO TAX UNDER THE HEAD 'BUSINESS' OR 'OTHER SOURCES'. THE CLAIM IS THUS IN ORDER. D. IN ANY EVENT, THE ELIGIBILITY TO DEPRECIATION IS A LEGAL ISSUE AND ANY DIFFERENCE IN INTERPRETATION THEREOF DOES N OT RESULT IN CONCEALMENT OR FURNISHING OF ACCURATE PARTICULARS. THE FACT THAT THE APPELLANT DID NOT CHALLENGE THE REJECTION AIM OF DE PRECIATION DOES NOT IMPACT THE LEVY OF PENALTY WHICH IS TO BE LEVIED ON THE BASIS OF THE APPLICABLE PROVISIONS. E. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED I N CONFIRMING THE LEVY OF PENALTY ON THE BASIS OF NON- REVERSAL OF PROVISIONS FOR WARRANTY RELATING TO ASSESSMENT YEARS 1999-2000 AND 2000-01. THE AUTHORITIES HAVE NOTED THE POSITION THAT THE APPEAL S IN THIS REGARD WERE STILL PENDING BEFORE THE INCOME TAX APPELLATE TRIBU NAL. THUS, THERE WAS NO FINALITY WITH REGARD TO THE ISSUE TILL THE ORDER OF THE JURISDICTIONAL HIGH COURT IN T.C.(A) NO.263 OF 2007 DATED 9.6.2009 AND 7.12.2009. UPON PRONOUNCEMENT THEREOF, THE PROVISIONS STAND REVERSE D IN FULL. THE LEVY OF PENALTY IN SUCH CIRCUMSTANCES IS WHOLLY UNJUSTIFIED . F. THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APP EALS) CONFIRMING THE LEVY OF PENALTY PROCEEDS ON ASSUMPTI ONS AND PRESUMPTIONS. THIS IS WHOLLY CONTRARY TO LAW. THE L EVY OF TAX AND PENALTY IS TO BE COMPLETED DE NOVO IN RESPECT OF EVERY ASSE SSMENT YEAR AND OBSERVATIONS IN REGARD TO OTHER PERIODS CANNOT FORM THE BASIS OF LEVY OF PENALTY FOR OTHER PERIODS. THIS IS ALL THE MORE SO IN THE CASE OF LEVY OF PENALTY. 4. THE FACTS ON THE FIRST ISSUE IS THAT THE ASSESSE E OWNED A FACTORY BUILDING AT ARAKKONAM WHICH WAS NOT USED FOR ITS BU SINESS FROM THE :-4-: I.T.A. N0. 1279/MDS/2014 ASSESSMENT YEAR 1999-2000 ONWARDS. IT LET OUT THIS UNUSED FACTORY BUILDINGS TO ONE OF ITS GROUP CONCERNS, RECEIVED RENTAL INCOM E DURING THE FINANCIAL YEAR 2002-03 AND ADMITTED THE INCOME UNDER THE HEAD INCO ME FROM 'HOUSE PROPERTY' IN ITS RETURN FILED FOR THE A Y 2003-04. HOWEVER, THE ASSESSEE CLAIMED A DEPRECIATION OF RS.4,32,251/- ON THOSE FA CTORY BUILDINGS ALSO, AS IF IT WAS USED FOR THE ASSESSEE'S BUSINESS. THE ASSESSIN G OFFICER IN THE ASSESSMENT ORDER HELD THAT SINCE THE RENTAL INCOME IS OFFERED TO TAX UNDER THE HEAD INCOME FROM 'HOUSE PROPERTY' , THE ASSESSE E IS NOT ELIGIBLE TO CLAIM DEPRECIATION ON SUCH LET OUT BUILDINGS AND DISALLO WED THE ASSESSEE'S CLAIM OF DEPRECIATION. THE CIT(A) CONFIRMED THE DISALLOWANCE , ON WHICH THE AO LEVIED THE PENALTY AND THE CIT(A) CONFIRMED THE LEVY. THE AR PLEADED THIS ISSUE ON THE LINES OF GROUND NOS (B) TO (D) OF THE APPEAL GR OUNDS EXTRACTED ABOVE. 4.1 PER CONTRA, THE DR RELIED ON THE CSIT(A) FINDI NG THAT THE ASSESSEE'S CLAIM THAT IT HAD AN OPTION TO OFFER THE RENTAL INC OME TO TAX UNDER THE HEAD 'INCOME FROM OTHER SOURCES' WHERE IT CAN CLAIM DEPR ECIATION U/S. 57(II) OF THE ACT, IS NOT CORRECT. THOUGH IT IS A FACTORY BUILDIN G, WHAT WAS LET-OUT WAS ONLY THE BUILDING. THERE ARE NO PLANT AND MACHINERY INCL UDED IN THE SAID LET-OUT. THUS ,THE RENTAL INCOME IS NOT A COMPOSITE RENT, IN ORDER TO OFFER IT UNDER THE HEAD 'INCOME FOR OTHER SOURCES'. THE ASSESSEE'S REN TAL INCOME FROM FACTORY BUILDING IS, THEREFORE, INDISPUTABLY ASSESSABLE UND ER THE HEAD INCOME FROM 'HOUSE PROPERTY' ONLY. IN FACT THE ASSESSEE, WHO HA S SUFFICIENT PROFESSIONAL :-5-: I.T.A. N0. 1279/MDS/2014 ADVISE, ITSELF OFFERED THE RENTAL INCOME UNDER THE HEAD INCOME FROM 'HOUSE PROPERTY'. THEREFORE, ASSESSEES EXPLANATION IS DE VOID OF ALLY MERITS. FURTHER, IF THE ASSESSEE WANTS TO OFFER THE RENTAL INCOME UN DER THE HEAD 'INCOME FOR OTHER SOURCES' AND CLAIM DEPRECIATION U/S.57(II) , IT WILL NOT BE ENTITLED FOR STANDARD DEDUCTION OF 30% OF THE RENTALS U/S.24(A) . IN OTHER WORDS, IF THE ASSESSEE WANTS TO CLAIM DEPRECIATION U/S.57(II) BY OFFERING THE RENTAL INCOME TO TAX UNDER THE HEAD 'INCOME FOR OTHER SOURCES', I T HAS TO LOOSE THE BENEFIT OF DEDUCTION OF 30% OF THE RENTALS U/S. 24(A). BUT THE INTENTIONS OF THE ASSESSEE ARE OTHERWISE. ON ONE HAND, BY OFFERING THE RENTAL INCOME UNDER THE HEAD INCOME FROM 'HOUSE PROPERTY', IT HAS CLAIMED DEDUCT ION OF 30% OF THE RENTALS U/S.24(A). AT THE SAME TIME, IT HAS ALSO CLAIMED DE PRECIATION ON THE SAME LET- OUT BUILDINGS UNDER SECTION 32 . THIS IS A CLEAR DO UBLE DEDUCTION, WHICH IS NOT PERMITTED IN THE ACT. FURTHER, THE FACT OF CLAIMING DEPRECIATION ON THE LET-OUT BUILDINGS HAS COME TO THE NOTICE OF THE ASSESSING O FFICER ONLY DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THUS, THERE IS A CLEAR CONCEALMENT OF TAXABLE INCOME, BY FURNISHING INACCURATE PARTICULAR S, ON ACCOUNT OF CLAIMING DEPRECIATION OF RS.4,32,251/- ON THE LET-OUT BUILDI NGS. THEREFORE ,THE ASSESSING OFFICER HAS RIGHTLY CONCLUDED THAT THE CL AIM OF DEPRECIATION ON LET- OUT BUILDINGS IS A CONCEALMENT OF INCOME BY FURNISH ING INACCURATE PARTICULARS, FOR LEVYING PENALTY U/S. 271 (1)(C) . :-6-: I.T.A. N0. 1279/MDS/2014 5. WE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH RELEVANT ORDERS AND MATERIAL.FROM THE ABOVE, IT IS CLEAR THAT THE ASSES SEE, ON ONE HAND, BY ADMITTING THE RENTAL INCOME UNDER THE HEAD INCOME F ROM 'HOUSE PROPERTY', HAS CLAIMED DEDUCTION OF 30% OF THE RENTALS U/S.24(A) . AT THE SAME TIME, IT HAS ALSO CLAIMED DEPRECIATION ON THE SAME LET-OUT BUILD INGS UNDER SECTION 32. THUS, THERE IS A DOUBLE DEDUCTION CLAIM, WHICH IS N OT PERMITTED IN THE ACT. FURTHER, THE FACT OF CLAIMING DEPRECIATION ON THE L ET-OUT BUILDINGS HAS COME TO THE NOTICE OF THE ASSESSING OFFICER ONLY DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THUS, THERE IS A CLEAR CONCEALMENT OF TAXABLE INCOME, BY FURNISHING INACCURATE PARTICULARS, ON ACCOUNT OF CL AIMING DEPRECIATION OF RS.4,32,251/- ON THE LET-OUT BUILDINGS. THEREFORE, THE ASSESSEES EXPLANATION IS FOUND TO BE FALSE WITHIN THE SCOPE OF EXPLANATI ON1 RWS 271(1)( C). ON SUCH FACTS AND CIRCUMSTANCES, THE ASSESSING OFFICER AND THE CIT(A) HAVE RIGHTLY CONCLUDED THAT THE CLAIM OF DEPRECIATION ON LET-OUT BUILDINGS IS A CONCEALMENT OF INCOME BY FURNISHING INACCURATE PARTICULARS AND HENCE THE LEVY PENALTY U/S. 271 (1)(C) ON THIS ISSUE IS CONFIRMED. 6. THE NEXT ISSUE IS THAT THE ASSESSEE IS A CONTRA CTOR FOR CERTAIN PROJECTS. IN SOME OF THESE PROJECTS, AS PER THE TERMS AND CON DITIONS, THE ASSESSEE IS LIABLE FOR CERTAIN WARRANTIES. IN ITS ACCOUNTS (P&L ACCOUNT), THE ASSESSEE IS SHOWING THE ENTIRE INCOME ON THE CREDIT SIDE AND DE BITING THE WARRANTY LIABILITIES BY WAY OF PROVISIONS FOR WARRANTIES'. WHEN THE WARRANTY PERIOD IS :-7-: I.T.A. N0. 1279/MDS/2014 EXPIRED AND WHERE THERE ARE NO WARRANTY CLAIMS FROM THE CONTRACTEES, THE ASSESSEE IS RECOGNIZING THE SAID AMOUNT AS INCOME B Y CREDITING THE SAME BY WAY OF 'WARRANTY PROVISIONS NO LONGER REQUIRED - WR ITTEN BACK'. THE RETURNS WERE ALSO BEING FILED ON THE SAME LINES. THIS IS TH E CONSISTENT METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE. IN THE SCRUTIN Y ASSESSMENTS MADE FOR AYS 1997 -98 TO 2002-03, THE ASSESSING OFFICER DISA LLOWED ASSESSEE'S CLAIMS OF 'PROVISIONS FOR WARRANTIES' DEBITED IN P&L ACCOUNT HOLDING THAT THEY ARE UNASCERTAINED LIABILITIES. THE CIT (A) CONFIRMED TH E ASSESSING OFFICER'S ACTION. FOR THE CURRENT A Y 2003-04 ALSO , THE BOOKS OF ACC OUNTS WERE MAINTAINED IN THE SAME MANNER . HOWEVER, IN THE 'COMPUTATION OF T AXABLE INCOME STATEMENT' , THE ASSESSEE REDUCED THE AMOUNTS OF 'W ARRANTY PROVISIONS NO LONGER REQUIRED - WRITTEN BACK', ON THE GROUND THAT THE CORRESPONDING PROVISIONS FOR WARRANTIES IN THE AYS. 1997-98 TO 20 00-01 WERE DISALLOWED BY THE ASSESSING OFFICER. SUBSEQUENTLY, THE ITAT HAD A LLOWED THE ASSESSEE'S APPEALS ON 'PROVISION FOR WARRANTY CLAIMS' AS A DED UCTION. HENCE, THE ASSESSING OFFICER WHILE DOING THE ASSESSMENT FOR AY 2003-04 CONSIDERED THE 'WARRANTY PROVISION WRITTEN BACK' AT RS.87,74,691/- PERTAINING TO AYS.1999-00 AND 2000-01, WHICH WAS CLAIMED AS DEDUCTION IN THE COMPUTATION OF INCOME, AS THE INCOME AND ADDED TO THE TAXABLE INCOME. THE CIT (A) CONFIRMED THE DISALLOWANCE, ON WHICH THE AO LEVIED THE PENALTY AN D THE CIT (A) CONFIRMED THE LEVY. :-8-: I.T.A. N0. 1279/MDS/2014 6.1 IN THIS REGARD, THE AR PLEADED THAT THE ASSESSE E'S CLAIM IS THAT THE AMOUNT ADDED AS INCOME REPRESENTS THE 'PROVISIONS F OR WARRANTIES' CREATED IN A YS.1999-00 AND 2000-01, AGAINST SUCH ADDITIONS IT FILED APPEALS BEFORE THE ITAT WHICH WAS PENDING AT THE TIME OF FILING THE RE VISED RETURN AND SUBMITTED THE CHRONOLOGICAL EVENTS AS UNDER : 12.12.2002 ITAT DISMISSED APPEALS OF AYS 1997-98 & 1998-99 THU S CONFIRMING THE DISALLOWANCE OF PROVISION FOR WARRAN TY 24.11.2003 ROI OF A.Y. 2003-04 WAS FILED ON 24.11.2003, WHEREI N THE REVERSAL OF THE WARRANTY PROVISIONS OF AYS. 1997-98 TO 2000-01 WAS REDUCED IN COMPUTATION STATEMENT. IN THAT THE PROVISION FOR WARRANTIES CREATED & DEBITED IN P &L A/C OF THIS YEAR WAS NOT CLAIMED AS DEDUCTION 21.07.2014 ITAT ALLOWED THE MISCELLANEOUS PETITION OF ASSESSEE AND DELETED THE ADDITION OF 'PROVISIONS FOR WARRANTIES' IN A.YS 1997-98 & 1998-99 18.10.2004 AO ISSUED FIRST NOTICE U/S.143(2) FOR A.Y.2003-04 31.03.2005 ASSESSEE FILED REVISED ROI FOR A.Y.2003-04 OFFERING THE REVERSAL OF THE WARRANTY PROVISIONS OF AYS 1997-98 & 1998- 99 TO TAX. AT THE SAME TIME THE PROVISIONS FOR WA RRANTIES CREATED IN F.Y.2002-03 WERE ALSO CLAIMED AS DEDUCTI ON IN THIS REVISED ROI 10.03.2006 ASSESSMENT U/S.143(3) WAS MADE BY BRINGING THE REVE RSAL OF THE WARRANTY PROVISIONS OF RS.87,84,696 OF AYS 1 999-00 & 2000-01 TO TAX. 29.03.2007 ITAT ALLOWED THE ASSESSEE'S APPEALS AND DELETED THE ADDITION OF 'PROVISIONS FOR WARRANTIES' MADE BY THE AO IN AYS 1999-00 & 2000-01 :-9-: I.T.A. N0. 1279/MDS/2014 31.03.2008 CIT(A) CONFIRMED THE ADDITIONS MADE BY THE AO FOR T HIS YEAR 16.05.2017 REVENUE'S APPEALS BEFORE THE HIGH COURT FOR AYS.199 7-98, 1998-99, 1999-2000 & 2000- 01 FILED AND ARE PENDING EVEN TODAY AND ARGUED THAT AS ON THE DATE OF FILING THE ORIGIN AL RETURN OF AY.2003- 04 ON 24.11.2003, THE ASSESSEE LOST ITS APPEALS UP TO ITAT LEVEL. THEREFORE, THE ASSESSEE HAD A REASON IN NOT OFFERING THE REVER SAL OF THE PROVISIONS OF EARLIER YEARS, THOUGH THE SAME WAS RECOGNIZED AS RE VENUE AND CREDITED TO THE P&L ACCOUNT OF F.Y.2002-03. SIMILARLY, THE ASSESSEE HAS NOT CLAIMED THE CURRENT YEAR'S WARRANTY PROVISIONS, AS DEDUCTION, E VEN THOUGH THEY ARE DEBITED IN THE P&L ACCOUNT OF F.Y. 2002-03. HOWEVER , THE ASSESSEE COMPANY HAD FILED MISCELLANEOUS APPLICATION AGAINST THE ORD ERS OF ITAT IN AYS.1997-98 AND 1998-99. THE ITAT WHILE PASSING THE ORDERS ON M ISCELLANEOUS APPLICATIONS FOR AYS.1997-98 AND 1998-99, ON 21.07.2004, HELD TH AT THE WARRANTY PROVISIONS DEBITED IN THE P&L ACCOUNTS ARE ALLOWABL E DEDUCTIONS. THEREFORE, AS ON 21.07.2004, THE ISSUE OF ALLOWABILITY OF 'PRO VISIONS FOR WARRANTIES', HAS BEEN HELD IN FAVOUR OF THE ASSESSEE BY THE ITAT. O N RECEIPT OF THE ORDERS OF ITAT OF AYS.1997-98 AND 1998-99, THE ASSESSEE FILED A REVISED RETURN OF INCOME FOR A Y .2003-04, IN WHICH THE ASSESSEE - (I) CONSIDERED AND OFFERED THE REVERSAL OF WARRANTY PROVISIONS OF A YS.1997- 98 AND 1998-99 AS THE INCOME OF THE YEAR (A.Y.2003- 04); AND :-10-: I.T.A. N0. 1279/MDS/2014 (II) CONSIDERED AND CLAIMED THE CURRENT YEAR'S PROV ISIONS FOR WARRANTY AS EXPENDITURE (DEDUCTION) OF THE YEAR. WHILE CONSIDERING AND OFFERING THE REVERSAL OF WAR RANTY PROVISIONS OF THE EARLIER YEARS AS THE INCOME OF F.Y.2003-04, THE ASSESSEE COMPANY HAS TAKEN THE PROVISIONS CLAIMED IN THE AYS.1997-98 AND 1998-99 ONLY. THE REVERSAL OF WARRANTY PROVISIONS OF RS 87,74,696/-, PERTAINING TO THE AYS.1999- 2000 AND 2001-02, WERE NOT CONSIDERED BY THE ASSESS EE AS INCOME IN THE REVISED RETURN AS THE CORRESPONDING APPEALS WERE ST ILL PENDING BEFORE THE ITAT AS ON THE DATE OF FILING THE REVISED RETURN. T HE AR FURTHER ARGUED ON THE LINES OF GROUND NOS (E) & (F) OF THE APPEAL GROUND S EXTRACTED ABOVE . 6.2 PER CONTRA, THE DR SUBMITTED RELYING ON THE ORD ER OF THE CIT(A) STATING THAT FIRSTLY, THOUGH THE APPEALS OF AYS.1999- 2000 AND 2000-01 ARE STILL PENDING BEFORE THE ITAT, THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE IN THE IMMEDIATE TWO PRECEDING AYS.1997-97 AND 1998-98. SINCE THE FACTS ARE COMMON AND THE ISSUE IN RECURRING AND IN CONTINUATION THE SAID DECISION, BY ALL PROBABILITY, WOULD HAVE BEEN FOLLO WED IN FOLLOWING AYS.1999- 2000 AND 2000-01 ALSO. HENCE THE ASSESSEE WAS WELL AWARE THAT IT IS, BY ALL PROBABILITY, IS GOING TO WIN THE APPEALS OF THE FOL LOWING TWO AYS. 1999-2000 AND 2000-01 ALSO. SECONDLY, THE ASSESSEE HAS BEEN FOLLOWING THE SYSTEM OF CLAIMING THE 'PROVISIONS FOR WARRANTY' AS EXPENDITU RE BY DEBITING TO THE P&L ACCOUNT; AND REVERSAL OF THE 'WARRANTY PROVISIONS N O LONGER REQUIRED' AS :-11-: I.T.A. N0. 1279/MDS/2014 INCOME BY CREDITING IN THE P&L ACCOUNT. THIS IS A C ONSISTENT PRACTICE BY THE ASSESSEE INCLUDING THE CURRENT YEAR. THEREFORE, WHE N THE ASSESSEE ITSELF HAD RECOGNIZED THE (REVERSAL OF WARRANTY PROVISIONS OF AY S. 1997-98 TO 2000-01 AS THE INCOME OF THE FY.2002-03 IN ITS BOOKS OF ACCOUN TS BY CREDITING THE SAME IN THE P&L ACCOUNT, IT SHOULD HAVE INCLUDED THE SAM E IN ITS TAXABLE INCOME, ESPECIALLY WHEN THE ITAT HELD THE ISSUE OF ALLOWABI LITY OF 'PROVISIONS FOR WARRANTY' IN FAVOUR OF THE ASSESSEE. IN SUCH A SITU ATION, THE ASSESSEE'S ACT OF OFFERING THE 'REVERSAL OF THE WARRANTY PROVISIONS' OF ONLY AYS.1997 -97 AND 1998-99 AND NOT THOSE OF A. YS. 1999-00 AND 2000-01 , IS A SMART AND DELIBERATE ATTEMPT TO DEFRAUD THE REVENUE. WHEN THE ISSUE IS DECIDED BY THE ITAT IN THE FIRST TWO YEARS AND LIKELY TO BE FOLLOW ED IN THE FOLLOWING YEARS (WHERE THE APPEALS ARE PENDING), THE ASSESSEE SHOUL D CONSIDER THE SAME FOR ALL THE YEARS, ESPECIALLY WHEN THE DECISION IS IN L INE WITH THE METHOD OF ACCOUNTING AND RECOGNISING THE INCOME IN ITS BOOKS OF ACCOUNTS. ANY FAILURE IN THIS REGARD, WILL AMOUNT TO CONCEALMENT OF INCOME O R FURNISHING OF INACCURATE PARTICULARS. 7. WE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH RELEVANT ORDERS AND MATERIAL. FROM THE ABOVE, IT IS CLEAR THAT THE ASSE SSEE HAS ADMITTED THE INCOME FOR THE PERIOD FOR WHICH THE ITAT HAS DECIDE D THE APPEALS IE FOR AYS 1997 & 1998 IN ITS REVISED RETURN. ITS EXPLANATION THAT ITS APPEALS FOR AYS, 1999-00 AND 2000-01 WAS PENDING BEFORE THE ITAT AS ON THE DATE OF FILING :-12-: I.T.A. N0. 1279/MDS/2014 THE REVISED RETURN FOR AY 2003-04 AND HENCE IT DID NOT ADMIT THE INCOME RELATED TO THOSE AYS IS A FACT, AS PER THE CHRONOL OGICAL EVENTS EXTRACTED, SUPRA. NEITHER THE AO NOR THE CIT (A) FOUND THAT TH IS EXPLANATION OF THE ASSESSEE TO BE FALSE. HENCE, ON THIS ISSUE, THERE I S NO GROUND TO LEVYING PENALTY U/S 271(1) (C) READ WITH EXPLNATION1. IN VI EW OF THAT THE PENALTY LEVIED ON THIS ISSUE IS DIRECTED TO BE DELETED. ALL THE GROUNDS OF APPEAL ON THIS ISSUE IS ALLOWED. 8. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED PARTLY. ORDER PRONOUNCED ON 18 TH AUGUST, 2017 AT CHENNAI. SD/- ( . .. . . .. . . . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER SD/- ( ) (S. JAYARAMAN) /ACCOUNTANT MEMBER /CHENNAI, /DATED: 18 TH AUGUST, 2017 JPV /COPY TO: 1. / APPELLANT 2. /RESPONDENT 3. /CIT(A) 4. /CIT 5. /DR 6. /GF