The DCIT, Circle-1, Ahmedabad V. M/s. Abhishek Engineers Pvt.Ltd., Ahmedabad

ITA 1302/AHD/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9253 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 25-01-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 02-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD .., , !' BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ./ I.T.A. NO.1302/AHD/2014 ( / ASSESSMENT YEAR : 2005-06) THE DCIT CIRCLE-1 AHMEDABAD / VS. M/S.ABHISHEK ENGINEERS PVT.LTD. ABHISHEK HOUSE 5, SHRIMALI SOCIETY AHMEDABAD % ./ ./ PAN/GIR NO. : AAACA 9827 E ( %( / APPELLANT ) .. ( )%( / RESPONDENT ) %(* / APPELLANT BY : SHRI JAMES KURIAN, SR.DR )%( +* / RESPONDENT BY : SHRI RAJESH C. SHAH, AR ,+ / DATE OF HEARING 25/01/2017 -./+ / DATE OF PRONOUNCEMENT 6 /02/2017 / O R D E R PER PRADIP KUMAR KEDIA, AM: THE CAPTIONED APPEAL IS DIRECTED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-6, AHMED ABAD [CIT(A) IN SHORT] DATED 04/02/2014 FOR ASSESSMENT YEAR (AY) 2 005-06 WHEREIN THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE INCO ME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT') IMPOSED BY T HE AO BY ITS ORDER DATED 30/03/2012 WAS DELETED. ITA NO.1302/AHD /2014 DCIT VS. ABHISHEK ENGG. P.LTD. ASST.YEAR 2005-06 - 2 - 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE REA DS AS UNDER:- 1. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE PENALTY OF RS.27.44 LACS LEVIED U/S.271(1)9C) DESPITE THE F ACT THAT THE CORRESPONDING QUANTUM ADDITIONS WERE ALREADY CONFIR MED BY THE CIT(A). 2. THE CIT(A) HAS NOT APPRECIATED THE FACT THAT IN THE RETURN OF INCOME THE ASSESSEE HAD CLAIMED DEDUCTION OF EXPENS ES IN CONTRAVENTION OF THE PROVISIONS OF SECTION 40(A)(IA ) AND HAD ALSO CLAIMED UNDUE DEPRECIATION/EXPENSES ON MOTOR CARS W HICH WERE NOT USED FOR THE PURPOSE OF BUSINESS. THE SAME TAN TAMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME LIAB LE TO PENALTY U/S.271(1)(C) OF THE ACT. 3. BRIEFLY STATED, THE ASSESSEE FILED RETURN OF INC OME FOR AY 2005-06 DECLARING TOTAL INCOME OF RS.7,79,010/-. THE RETUR N WAS SELECTED UNDER SCRUTINY AND ASSESSMENT ORDER UNDER SECTION 143(3) WAS PASSED VIDE ORDER DATED 31/12/2007. THE ASSESSING OFFICER (AO) WHILE FRAMING THE ASSESSMENT MADE CERTAIN DISALLOWANCES TOWARDS (I) L ATE PAYMENT OF TDS UNDER SECTION 40(A)(IA) RS.19,97,980/-, (II) DISAL LOWANCE ON ACCOUNT OF NON-DEDUCTION OF TDS UNDER SECTION 40(A)(IA) ON CAR TING EXPENSES RS.50,86,848/- AND (III) DISALLOWANCE OF DEPRECIATI ON ALLOWANCE ON MOTOR CAR QUANTIFIED AT RS.2,65,904/-. 4. CONSEQUENT UPON THE ASSESSMENT, THE AO ALSO IMP OSED PENALTY OF AFORESAID DISALLOWANCES VIDE ORDER DATED 30/03/2012 . IN THE PENALTY ITA NO.1302/AHD /2014 DCIT VS. ABHISHEK ENGG. P.LTD. ASST.YEAR 2005-06 - 3 - ORDER, THE AO ALLEGED THAT THE ASSESSEE HAS MADE PA YMENT TO CERTAIN SUB- CONTRACTORS OF RS.19,97,980/- AND TDS DEDUCTED THER EON AT RS.20,379/- WAS REMITTED TO GOVERNMENT TREASURY AFTER THE DUE D ATE PRESCRIBED UNDER THE ACT. IN RESPECT OF CARTING EXPENSES OF RS.50 ,86,848/- THE AO NOTED THAT THE ASSESSEE HAS NOT DISCHARGED ITS STATUTORY OBLIGATIONS OF TDS. THE AO THUS HELD THAT THE ASSESSEE HAS VIOLATED THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT AND ACCORDINGLY FOUND THE ASSE SSEE OF GUILTY OF FURNISHING INACCURATE PARTICULARS OF INCOME CONTEMP LATED UNDER SECTION 271(1)(C) OF THE ACT. SIMILARLY, THE AO ALSO INTER-ALIA OBSERVED THAT THE ASSESSEE COMPANY HAS INTER ALIA CLAIMED DEPRECIATION ON PURCHASE OF NEW CARS AMOUNTING TO RS.2,65,904/-. IT WAS NOTED BY THE AO THAT THE NEW CARS HAVE BEEN PURCHASED IN THE NAME OF DIRECTO RS OF THE COMPANY AND THEREFORE DEPRECIATION ON CAR BOUGHT IN THE NA ME OF DIRECTORS INSTEAD OF ASSESSEE-COMPANY IS NOT ALLOWABLE. FOLL OWING THE FINDINGS IN QUANTUM ORDER, THE AO ALSO IMPOSED PENALTY IN RESPE CT OF THE AFORESAID DEPRECIATION. 5. IN THE FIRST APPEAL BEFORE THE CIT(A), THE ASSE SSEE CHALLENGED THE PENALTY IMPOSED OF RS.27,44,812/- FOR ALLEGEDLY FUR NISHING INACCURATE PARTICULARS OF INCOME AS BAD IN LAW. IT WAS CONTEN DED BEFORE THE CIT(A) THAT ADDITIONS/DISALLOWANCES OF RS.19,97,980/- MADE UNDER SECTION 40(A)(IA) ON ACCOUNT OF DELAY IN DEPOSIT OF TDS HAS BEEN DELETED BY THE CIT(A) IN QUANTUM APPEAL. SIMILARLY, THE ADDITION O F RS.50,86,848/- ITA NO.1302/AHD /2014 DCIT VS. ABHISHEK ENGG. P.LTD. ASST.YEAR 2005-06 - 4 - UNDER SECTION 40(A)(IA) HAS BEEN SET ASIDE BY THE C IT(A) VIDE ORDER DATED 26/08/2010 WITH SOME SPECIFIC DIRECTIONS. IT WAS A LSO SIMULTANEOUSLY CONTENDED THAT THE ASSESSEE HAS NOT FURNISHED ANY I NACCURATE PARTICULARS OF INCOME TOWARDS CLAIM OF DEPRECIATION AND EXPENSE S ON MOTOR CAR, ETC. 6. THE CIT(A) EXAMINED THE CASE OF THE ASSESSEE THR EADBARE AND FOUND MERIT IN THE CONTENTIONS RAISED IN RESPECT OF VARIOUS ITEMS OF ADDITIONS/DISALLOWANCES AS REPRODUCED IN ITS ORDER AND CONSEQUENTLY DELETED THE PENALTY IMPOSED BY THE AO UNDER SECTION 271(1)(C) OF THE ACT. 7. ON PERUSAL OF THE ASSESSMENT ORDER, PENALTY ORDE R AND THE APPELLATE ORDER OF THE AUTHORITIES BELOW, WE DO NOT FIND ANY MERIT IN THE OBJECTIONS RAISED BY THE REVENUE AGAINST THE ORDER OF THE CIT( A). SUBSTANTIAL PENALTY ARISES ON ACCOUNT OF DISALLOWANCES MADE UN DER SECTION 40(A)(IA) OWING TO LATE PAYMENT OF TDS OR NON-DEDUCTION OF TDS AS PER PROVISIONS OF THE ACT. WE ARE IN AGREEMENT WITH TH E VIEW OF THE CIT(A) THAT SUCH DISALLOWANCES, PER SE , DOES NOT CALL FOR IMPOSITION OF PENALTY IN TERMS OF SECTION 271(1)(C) OF THE ACT. ON FACTS, WE NOTE THAT THE ASSESSEE HAS GOT SUBSTANTIAL RELIEF ON MERITS FROM THE CIT(A) IN QUANTUM PROCEEDINGS. THE AO HAS NOT CHALLENGED THE APPELL ATE ORDER IN QUANTUM PROCEEDINGS. THUS, THE BASIS FOR IMPOSITION OF PEN ALTY DOES NOT SURVIVE AT THE FIRST PLACE. PERTINENT TO SAY THAT NOTWITHS TANDING THE OUTCOME OF ITA NO.1302/AHD /2014 DCIT VS. ABHISHEK ENGG. P.LTD. ASST.YEAR 2005-06 - 5 - THE QUANTUM PROCEEDINGS, THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT NOT ATTRACTED FOR SUCH TECHNICAL DEFAULT TOWARDS NO N-DEDUCTION OF TDS OR LATE PAYMENT THEREOF. 8. AS REGARDS DISALLOWANCE OF DEPRECIATION FOR REGI STERING THE CAR ACQUIRED BY THE COMPANY IN THE NAME OF THE DIRECTOR , THE ISSUE OF ALLOWANCE OF DEPRECIATION OR OTHERWISE ITSELF IS QU ITE DEBATABLE AND IMPOSITION OF PENALTY ON SUCH DEBATABLE ISSUE IN OU R CONSIDERED VIEW IS FAR FETCHED. 9. IN THE TOTALITY OF THE FACTS AND THE CIRCUMSTANC ES OF THE CASE, THE ACTION OF THE AO IN RESORTING TO THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT FOR VARIOUS DISALLOWANCES/ADDITIONS AS NOTED AB OVE IS NEITHER VALID NOR LEGITIMATE. 10. IN THE RESULT, REVENUES APPEAL STANDS DISMISSE D. THIS ORDER PRONOUNCED IN OPEN COURT ON 6/02/2017 SD/- SD/- ( ..) ( ) ( R.P. TOLANI ) ( PR ADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 6/ 02 /2017 3..,.../ T.C. NAIR, SR. PS ITA NO.1302/AHD /2014 DCIT VS. ABHISHEK ENGG. P.LTD. ASST.YEAR 2005-06 - 6 - !'#$#! / COPY OF THE ORDER FORWARDED TO : 1. %( / THE APPELLANT 2. )%( / THE RESPONDENT. 3. 456 7 / CONCERNED CIT 4. 7 ( ) / THE CIT(A)-6, AHMEDABAD 5. 89:56 , 56/ , 4 / DR, ITAT, AHMEDABAD 6. :<, / GUARD FILE. / BY ORDER, )8 //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 25.1.17 (DICTATION-PAD 12 -PAGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 25.1.17 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.6.2.17 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 6.2.17 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER