DCIT, Circle - 4, Kolkata, Kolkata V. M/s. Camellia Tea Group (P) Ltd., Kolkata

ITA 13/KOL/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83234 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2014
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 04-08-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 03-01-2011
• Court: TRIBUNAL
• Department Lawyers: P B PRAMANIK
• Assessee Lawyers: MANOJ KATARUKA
• Keywords: Capital asset; Depreciation; Initiation of penalty proceedings; Reasonable cause; Wrong claim; Difference of opinion; Condonation of delay
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH B , KOLKATA [BEFORE HON BLE SRI MAHAVIR SINGH, JM& HON BLE SRI SHAMIM YAHYA , A M ] ITA NO.13/KOL/2011 ASSESSMENT YEAR : 2004 - 05 ( A PPELLANT ) (RESPONDENT) D.C.I.T., C IRCLE - 4, . - VS - M/S.CAMELLIA TEA GROUP (P)LTD KOLKATA KOLKATA (PAN: AABCC 5910 F) FOR THE APPELLAN T SHRI P.B.PRAMANIK, JCIT FOR THE RESPONDENT SHRI MANOJ KATARUKA,ADVOCATE DATE OF HEARING : 09 .12 .2014 DATE OF PRONO UNCEMENT : 11/12/2014. ORDER PER SHRI SHAMIM YAHYA, AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF L D. C.I.T.(A) - IV, KOLKATA DT. 24.03.2010 AND PERTAIN S TO ASSESSMENT YEAR 2004 - 05. 2. WE NOTE THAT THIS APPEAL OF THE REVENUE IS TIME BARRED BY 7 8 DAYS. THE REASONABLE CAUSE FOR THE DELAY WAS ATTRIBUTED TO LONG PENDENCY OF WORK. THE LD. COUNSEL OF THE ASSESSEE GAVE A CONCESSION THAT HE SHALL NOT BE HAVING ANY OBJECTION TO THE CONDONATION OF DELAY IN THIS CASE. IN THIS VIEW OF THE MATTER WE CONDONE THE DELAY . 3. THE ISSUE RAISED IN THIS APPEAL IS THAT THE LD. CIT(A) HAS ERRED IN LEVYING PENALTY U/S 271(1)(C) OF THE ACT AMOUNTING TO RS. 4,4 9,137/ - WITHOUT CONSIDERING THE FACT THAT THE ASSESSEE HAS CONCEALED ITS INCOME BY NOT SHOWING THE SAME U/S 4 5(1A) IN SPITE OF ITS KNOWN FACTS. 4. THE BRIEF FACTS OF THE CASE ARE AS UNDER : - IN THE CASE OF THE APPELLANT ASSESSMENT U/S 143(3) WAS FRAMED BY DISALLOWING LOSS ON FIRE OF RS.3129870/ - . THE APPELLANT HAD CLAIMED SUCH LOSS AS A EXPENSE AND DEBITED THE ITA.NO.13/K/2011 M/S. C AMELLIA TEA GROUP (P)LTD. A.YR. 2004 - 05 2 SAME IN THE PROFIT AND LOSS ACCOUNT. THE LOSS ON FIRE WAS IN RESPECT OF CAPITAL ASSETS USED FOR THE BUSINESS OF THE APPELLANT ON WHICH DEPRECIATION HAD BEEN CLAIMED AND THE DIFFERENCE BETWEEN THE INSURANCE VALUE RECEIVED BY THE APPELLANT AND WDV OF THE ASS ETS DESTROYED BY THE FIRE AS ON THE DATE OF FIRE WAS TREATED AS BUSINESS LOSS OF RS.3139870/ - . THE AO DID NOT ALL THE LOSS AS A BUSINESS LOSS BY RESORTING TO THE PROVISIONS OF SECTION 45(1A) OF THE I.T.ACT. SATISFACTION WAS RECORDED BY THE AO IN THE ORDER U/S 143(3) FOR INITIATION OF PENALTY PROCEEDINGS U/S 271(1)(C) AGAINST THE ADDITION MADE BY DISALLOWING LOSS ON FIRE OF RS.3129870/ - . THE APPELLANT PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) - IV/KOLKATA WHO ALLOWED THE CLAIM OF THE ASSESSEE TO TREAT THE LOSS ON SALE OF FIRE TO BE ALLOWABLE AS A BUSINESS LOSS ON THE BASIS OF THE DECISION OF THE SUPREME COURT IN THE CASE OF VANIA SILK MILLS (P)LTD VS CIT, REPORTED IN 191 ITR 647 (SC). THE DEPARTMENT WENT IN APPEAL BEFORE THE HONOURABLE TRIBUNAL AND THE HONOURABLE TRIBUNAL IN ITA NO.1576/KOL/2008 HELD THAT THE PROVISIONS OF SECTION 45(1A) OF THE I.T.ACT SQUARELY APPLIED IN THE CASE OF THE ASSESSEE AND THEREFORE THE LOSS WAS NO T ALLOWABLE AS A BUSINESS LOSS. 5. THE DEPARTMENT ALSO INITIATED PENALTY PROCEEDINGS. IN THE PENALTY PROCEEDINGS THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS NEITHER CONCEALED ANY PARTICULAR S OF INCOME N OR FURNISHED ANY INACCURATE PARTICULARS OF INCOME. IT WAS SUBMITTED THAT THE ISSUE OF CLAIM OF LOSS MADE IN THE RETURN WAS DISALLOWED BY THE AO DUE TO DIFFERENCE OF OPINION. HOWEVER, AO WAS NOT SATISFIED. AO REFERRE D TO THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF DHARMINDRA TEXTILE VS CIT AND IMPOSED PENALTY OF RS.4,49,137/ - . 6. THE LD. CIT(A) DELETED THE PENALTY BY OBSERVING AS UNDER : THE ASSESSEE HAS DISCLOSED THE LOSS ON FIRE ON THE PROFIT AND LOSS ACCOUNT, HAS FILED AUDIT PROFIT AND LOSS ACCOUNT ALONG WITH COMPUTATION OF INCOME AND THE LOSS ON FIRE IS ASCERTAINABLE FROM THE RECORDS. THE ASSESSEE HAS NOT CONCEALED ANY INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. THE ADDITION ON LOSS ON FIRE MADE BY THE AO HAS BEEN DELETED BY THE CIT(A) AND AGAIN CONFIRMED BY THE HONOURABLE TRIBUNAL. THE ADDITIONS HAS BEEN A MATTER OF DISPUTE BY DISCUSSION OF VARIOUS CASE LAWS AND THE PROVISIONS OF SECTION 45(1A) AND SECTION 32(1) OF THE I.T.ACT. IT CAN BE SA ID THAT THE ADDITION IS ON DEBATABLE ISSUE EVEN THOUGH IT HAS B EEN CONFIRMED FINALLY BY THE HONO URABLE TRIBUNAL, KOLKATA. ON A DEBATABLE ISSUE PENALTY CANNOT BE IMPOSED BUT THERE HAS TO BE A FINDING OF ITA.NO.13/K/2011 M/S. C AMELLIA TEA GROUP (P)LTD. A.YR. 2004 - 05 3 FACT THAT THE APPELLANT HAS CONCEALED HIS INCOME OR FU RNISHED INACCURATE PARTICULARS OF INCOME WHICH IS NOT THE CASE. PENALTY CANNOT BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO AND PENALTY IS NOT AUTOMATIC. THE A/R HAS CITED CASE LAWS ON THE ISSUE THAT MERELY BECAUSE AND ADDITION HAS BEEN SUSTAINED, IT DO ES NOT WARRANT OF PENALTY AUTOMATICALLY AND FURTHER HAS ALSO RELIED UPON CASE TO SUPPORT THE CONTENTION THAT WHERE TWO VIEW ARE POSSIBLE NO PENALTY CAN BE IMPOSED. I AM IN ACCEPTANCE WITH THE SUBMISSION MADE BY THE ASSESSEE AND THE CASE LAWS RELIED UPON BY HIM. THE AO SHOULD HAVE CONSIDERED THE FACTUAL ASPECTS OF THE CASE AND THE PROVISIONS OF LAW BEFORE RESORTING TO IMPOSITION OF PENALTY U/S 271(1)(C). THE AO HAS RELIED UPON THE DECISION OF SUPREME COURT IN THE CASE OF DHARMENDRA TEXTILES WHICH THE ASSESSE E HAS VERY WELL EXPLAINED IN THE WRITTEN SUBMISSION THE DECISION OF DHARMENDRA TEXTILE HAS BEEN EXPLAINED BY THE SUPREME COURT IN THE CASE OF RAJASTHAN SPINNING AND WEAVING MILLS REPORTED IN 224 CTR 1 AND BY THE HONOURABLE TRIBUNAL ITAT BENCH, IN KANBAY SO FTWARE INDIA (P) LTD. REPORTED IN 122 TTJ 721, WHEREIN IT HAS BEEN HELD THAT PENALTY CANNOT BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO, BUT BEFORE ADHERING TO THE PROVISIONS OF SECTION 271(1)(C) THE CONDITIONS THEREIN NEED TO BE SATISFIED. THE AO HAS NOT SATISFIED THE CONDITIONS FOR IMPOSING PENALTY AND THE ASSESSEE S CASE DOES NOT WARRANT LEVY OF PENALTY U/S 271(1)(C). THE PENALTY IMPOSED BY THE AO IS DELETED. THE APPEAL OF THE ASSESSEE IS ALLOWED. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEAL BE FORE US. 7. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT SECTION 271(1)(C) OF THE ACT POSTULATES LEVY OF PENALTY FOR FURNISHING INACCURATE PARTICULARS AND CONCEALMENT OF INCOME. IN THE PRESENT CASE WE FIND THERE WAS NO FURNISHING O F INACCURATE PARTICULARS AND CONCEALMENT OF INCOME. THE ASSESSEE HAS SUFFERED LOSS ON FIRE. IT WAS DULY DISCLOSED IN THE PROFIT AND LOSS ACCOUNT AND IN THE AUDIT REPORT. AO DID NOT ALLOW LOSS AS BUSINESS LOSS BY REFERRING TO PROVISION OF SECTION 45(1A) OF THE ACT. ON APPEAL THE LD. CIT(A) ALLOWED THE LOSS AS BUSINESS LOSS. IN FURTHER APPEAL ITAT HELD THAT THE SAME WAS NOT ALLOWABLE AS BUSINESS LOSS. FROM THE ABOVE WE NOTE THAT THE ISSUE WAS DEBATABLE AND IT CANNOT BE SAID THAT THE ASSESSEE HAD ANY MALAFIDE INTENTION. IT IS A SETTLED LAW THAT PENALTY CANNOT BE IMPOSED UNLE SS THE CONDUCT OF THE ASSESSEE I S CONTUMACIOUS. IT IS ALSO NOT THE CASE THAT ASSESSEE S CASE WAS A BOGUS CLAIM WHICH WAS PRIMA FACIE LIABLE TO BE DISALLOWED. THE ASSESSEE WAS UNDER BONA FIDE BELIEF THAT THE LOSS ON FIRE WILL BE ALLOWED AS BUSINESS LOSS. IF THE AO DOES NOT AGREE WITH THE ASSESSEE AND HOLD THAT LOSS CANNOT BE ALLOWED AS BUSINESS LOSS IT CANNOT LEAD TO A CONCLUSION THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME OR HAS CONCEALED ANY INCOME. ITA.NO.13/K/2011 M/S. C AMELLIA TEA GROUP (P)LTD. A.YR. 2004 - 05 4 7.1. IN THIS REGARD WE PLACE RELIANCE ON THE DECISION OF THE HON BLE APEX COURT IN THE CASE OF CIT VS RELIANCE PETRO PRODUCTS (P) LTD 322 ITR 158 (SC). IN THIS CASE IT WAS HELD THAT A GLANCE AT THE PROVISIONS OF SECTION 271 (1)(C) OF THE INCOME - TAX ACT, 1961, SUGGESTS THAT IN ORDER TO BE COVERED BY IT, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASESSESEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE MEANING OF T HE WORD PARTICULARS USED IN SECTION 271(1)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND TO BE INCORRECT OR INACCURATE, THE ASSESSEE 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 PARTICULARS. THERE CAN BE NO DI SPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LIABILITY WOULD ARISE. TO ATTRAC T PENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE, NOT EXACT OR CORRECT, 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 F ALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C). A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY 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. 7.2. WE WOULD ALSO LIKE TO PLACE RELIANCE ON THE DECISION OF HON BLE APEX COURT IN THE CASE OF HINDUSTAN STEEL LTD VS STATE OF ORISSA 83 ITR 26 (SC) WHICH HELD AS UNDER : AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTORY OBLIGATION IS THE RESULT OF A QUASI - CRIMINAL PROCEEDING, AND PENALTY WILL NOT ORDINARILY BE IMPOSED UNLESS THE PARTY OBLIGED EITHER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST, OR ACTED IN CONSCIOUS DISREGARD OF ITS OBLIGATION. PENALTY WILL NOT ALSO BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENALTY SHOULD BE IMPOSED FOR FAILURE TO PERFORM A STATUTORY OBLIGATION IS A MATTER OF DISCRETION OF THE AUTHORITY TO BE EXERCISED JUDICIALLY AND ON A CONSIDERATION OF ALL THE RELEVANT CIRCUMSTANCES. EVEN IF A MINIMUM PENALTY IS PRESCRIBED, THE AUTHORITY COMPETENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY, WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT WHERE THE BREACH FLOWS FROM A BONA FIDE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRIBED BY THE STATUTE. 7.3 . IN THE BACKGROUND OF THE AFORESAID DISCUSSION AND PRECEDENT WE DO NOT FIND A NY INFIRM ITY IN THE ORDER OF LD. CIT(A) AND ACCORDINGLY WE UPHOLD THE SAME. ITA.NO.13/K/2011 M/S. C AMELLIA TEA GROUP (P)LTD. A.YR. 2004 - 05 5 8. IN THE RESULT THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCE D IN THE COURT ON 1 1/12/2014. SD/ - SD/ - [ MAHAVIR SINGH ] [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE : 11/12/2014. R.G.(.P .S.) COPY OF THE ORDER FORWARDED TO: 1 . M/S.CAMELLIA TEA GROUP (P)LTD., 5F, PARK PLAZA NORTH BLOCK, 71 - PARK STREET, KOLKATA - 700016. 2 D.C.I.T., CIRCLE - 4, KOLKATA 3 . CIT(A) - IV, KOLKATA 4. CIT KOLKATA 5 . CIT(DR), KOLKAT A BENCHES, KOLKATA. TRUE COPY, BY ORDER, ASST. REGISTRAR , ITAT, KOLKATA BENCHES