Phelix Appliances Limited, Baroda V. The Income tax Officer,Ward-4(2), Baroda

ITA 1418/AHD/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68100 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 17-12-2013
• Assessment Year: 2002-2003
• Appeal Filed On: 03-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J P JHANGID
• Assessee Lawyers: SUNIL H TALATI
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH AHMADABAD BEFORE SHRI MUKUL KR. SHRAWAT , JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI , ACCOUNTANT MEMBER ITA NOS. 1417 & 1418/AHD/2010 ASSESSMENT YEAR :1998-99 & 2002-03 PHELIX APPLIANCE LTD. 9-B, SHEETAL KUNJ SOCIETY, NEAR DAWAT RESTAURANT, MANJALPUR, BARODA V/S . INCOME TAX OFFICER WARD. 4(2) BARODA PAN NO. A A B CP1857C (APPELLANT) .. (RESPONDENT) BY REVENUE SHRI J. P. JHANGID, SR.D.R. /BY ASSESSEE SHRI SUNIL H. TALATI, A.R. /DATE OF HEARING 17.12.2013 /DATE OF PRONOUNCEMENT 31.12.2013 O R D E R PER : SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER THESE TWO APPEALS HAVE BEEN CONSOLIDATED ARISING FR OM TWO SEPARATE ORDERS OF CIT(A)-III, BARODA, RESPECTIVELY DATED 08 .12.2009 AND 15.12.2009 FOR A.Y. 98-99 & A.Y. 02-03. 1(I). FOR A.Y. 1998-99, THE MAIN GROUND RAISED IS A S UNDER: THE LEARNED AO HAS ERRED IN LEVYING PENALTY OF RS. 4,00,000/- ON RS.11,45,782/- THE FOLLOWING ITEMS AFTER ALLOWING C LAIM U/S. 35D BY RS.1,30,534/- AND DISALLOWING RS.11,45,782/-. YOUR APPELLANT SUBMITS THAT ITA NOS. 1417 & 1418/AHD/10 A.Y. 98-99 & 02-03 PAGE 2 PENALTY LEVIED BY AO IS UNJUSTIFIED AND LIABLE TO B E DELETED. IT BE HELD SO NOW AND PENALTY LEVIED BY AO BE DELETED. 1. PRELIMINARY EXPENSES RS. 1,616 2. PUBLIC ISSUE EXPENSES RS. 3,98,475 3. DEFERRED REVENUE EXPENSES RS. 8,42,891 4. TECHNICAL KNOW HOW EXPENSES RS. 33,334 ------------------- RS. 12,76,316 ------------------- 1(I). FOR A.Y. 2002-03, THE MAIN GROUND RAISED IS A S UNDER: THE HONBLE CIT(A) HAS ERRED IN CONFIRMING PENALTY OF RS.4,00,000/- ON RS.11,45,782/- THE FOLLOWING ITEMS AFTER ALLOWING C LAIM U/S. 35D BY RS.1,30,534/- AND DISALLOWING RS.11,12,448/-. YOUR APPELLANT SUBMITS THAT PENALTY LEVIED BY AO IS UNJUSTIFIED AND LIABLE TO B E DELETED. IT BE HELD SO NOW AND PENALTY LEVIED BY AO BE DELETED. 1. PRELIMINARY EXPENSES RS. 1,616 2. PUBLIC ISSUE EXPENSES RS. 3,98,475 3. DEFERRED REVENUE EXPENSES RS. 8,42,891 ------------------- RS. 12,42,982 ------------------- 2. FOR THESE TWO YEARS, ASSESSMENTS WERE MADE U/S. 143(3) R.W.S. 254 OF IT ACT, BOTH IDENTICALLY DATED 01.10.2007. AS PER A.O., THE TRIBUNAL HAD RESTORED THE ISSUE BACK FOR RE-CONSIDERATION IN RES PECT OF DEFERRED REVENUE EXPENSES RS.8,42,891/-. AS PER A.O., THE ASSESSEE HAS CLAIMED CERTAIN EXPENDITURES IN THE LIGHT OF PROVISIONS OF SECTION 35D OF IT ACT; HOWEVER, BROKERAGE, COMMISSION, ADJUSTMENT WERE ONLY COVERED U/S. 35D OF IT ACT. THEREFORE, THE A.O. HAD RESTRICTED THE DEDUCTION U/ S. 35D OF IT ACT. SINCE THE EXPENDITURE IN THE NATURE OF DEFERRED REVENUE EXPE NSES OF RS.8,42,891/- ITA NOS. 1417 & 1418/AHD/10 A.Y. 98-99 & 02-03 PAGE 3 WAS DISALLOWED, THEREFORE, CONSEQUENCE THEREUPON PE NALTY WAS LEVIED U/S. 271(1)(C) FOR THESE TWO YEARS OF RS.4 LACS AND RS.4 ,10,000/- VIDE ORDERS BOTH IDENTICALLY DATED 28.04.2008. WHEN THE LEVY OF PEN ALTY WAS CHALLENGED BEFORE THE CIT(A), IT WAS HELD THAT THE ASSESSEE HAD CLAIM ED EXCESS EXPENDITURE AND THEREFORE, FURNISHED INACCURATE PARTICULARS, HENCE, ACTION OF THE A.O. WAS CONFIRMED. FROM THE SIDE OF LD. A.R. MR. SUNIL H. TALATI APPEARED AND PLACED RELIANCE ON GEO SEA FOODS (37 ITD 233) & ASHOK GRI H UDYOG KENDRA (120 ITD 151). FROM THE SIDE OF REVENUE, LD. SR. D.R. H AS ARGUED THAT INSPITE OF SEVERAL OPPORTUNITIES, THE ASSESSEE HAD NOT EXPLAIN ED THE NATURE OF THE DISCLOSURE OF THE DEFERRED REVENUE EXPENSES, HENCE, PENALTY WAS RIGHTLY IMPOSED. 3. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, WE ARE OF THE CONSIDERED OPINION THAT THE ISSUE IN RESPECT OF CLA IM OF DEDUCTION U/S. 35D REMAINED CONTROVERSIAL IN THIS CASE BECAUSE THE MAT TER WAS ONCE RESTORED BACK TO FILE OF A.O. BY THE RESPECTED CO-ORDINATE B ENCH. BECAUSE OF THE SAID REASON, THE VEHEMENT CONTENTION OF THE ASSESSEE IS THAT THE CLAIM WAS MADE UNDER AN IMPRESSION THAT THE SAME IS ALLOWABLE AS P ER THE PROVISIONS OF LAW. WE HAVE NOTED THAT THE MATERIAL FACTS IN RESPECT OF ALL THESE EXPENSES WERE VERY MUCH BEFORE THE A.O. BEING DISCLOSED AT THE TI ME OF FILING OF RETURN, HOWEVER, IT WAS NOTED BY THE A.O. THAT SOME OF THOS E EXPENSES DID NOT QUALIFY FOR THE IMPUGNED DEDUCTION. IN A SITUATION, WHEN T HE MATERIAL FACTS WERE AVAILABLE AND THE ASSESSEE HAD OFFERED AN EXPLANATI ON WHICH WAS NOT FOUND TO BE FALSE OR UNTRUE THEN AS PER THE EXPLANATION T O SECTION 271(1)(C), THIS ITA NOS. 1417 & 1418/AHD/10 A.Y. 98-99 & 02-03 PAGE 4 ASSESSEE SHOULD NOT BE PENALIZED FOR CONCEALMENT OF INCOME. WE, THEREFORE, DIRECT TO DELETE THE PENALTY. RESULTANTLY, GROUNDS ARE ALLOWED. 4. IN THE RESULT, BOTH THE APPEALS ARE ALLOWED. THESE ORDERS PRONOUNCED IN OPEN COURT ON 31.12.2013 SD/- SD/- (ANIL CHATURVEDI) ( MUKUL KR. SHRAWAT) ACCOUNTANT MEMBER JUDICIAL MEMBER TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- 1. / REVENUE 2. / ASSESSEE 3. $%$& ' '( / CONCERNED CIT 4. ' '(- + / CIT (A) 5. -.+' &, ' ++' &, 01 % / DR, ITAT, AHMEDABAD 6. .34 56 / GUARD FILE. BY ORDER/ , 7/0' $+ ' ++' &, 01 % 9