M/s. Fixopan Machines (P) Ltd., New Delhi V. ACIT, New Delhi

ITA 1436/DEL/2014

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 6662 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 28-03-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 10-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIDHI SRIVASTAVA
• Keywords: Depreciation; Unabsorbed depreciation; Set aside
• Section: 271(1)(c); 143(3); 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT & SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA NO. 1436/DEL/2014 ASSESSMENT YEAR: 2006-07 FIXOPAN MACHINES (P) LTD., S-35, GREATER KAILASH-1, NEW DELHI. PAN NO. AAACF1367L VS ACIT CC-VII NEW DELHI. APPELLANT RESPONDENT ASSESSEE BY SHRI RAJAN BHATIA, ADV. REVENUE BY MS. NIDHI SRIVASTAVA, CIT DR ORDER PER SHRI BHAVNESH SAINI, J.M. THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST T HE ORDER OF LD. CIT(APPEALS)-XXV, NEW DELHI DATED 10.12.2013 FOR AY 2006- 07, CHALLENGING THE LEVY OF PENALTY U/S 271(1)(C) O F THE INCOME TAX ACT. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT SEARCH AN D SEIZURE OPERATION U/S 132 OF THE I.T. ACT WAS CONDUCTED ON THE PERSON OF SHRI L.K. SINGH AND SHRI S. RAWAT ON 11.07.2007 AT ARRIVAL LOUNGE OF RAJA BHOJ AIR PORT AT BHOPAL BY INVESTIG ATION TEAM OF BHOPAL. DURING THE SEARCH A SUM OF RS. 40,12,580/- WAS FOUND DATE OF HEARING 07.05.2019 DATE OF PRONOUNCEMENT 07.05.2019 2 ITA NO . 1436/DEL/2014 OUT OF WHICH RS. 40 LAKHS WAS SEIZED. THE STATEMEN T U/S 132(4) WAS RECORDED OF SHRI L.K. SINGH IN WHICH HE HAS STA TED THAT MONEY WAS WITHDRAWN FROM THE BANK ACCOUNT OF ORIENTAL BAN K OF COMMERCE, NEW DELHI BELONGING TO ASSESSEE COMPANY O F WHICH SHRI L.K. SINGH WAS THE MANAGING DIRECTOR. NOTICE U/S 153C WAS ISSUED TO THE ASSESSEE COMPANY AND ASSESSMENT WAS F INALIZED U/S 153C READ WITH SECTION 143(3) OF THE ACT DATED 15.1 2.2009. THE AO IN THE ASSESSMENT ORDER MADE AN ADDITION OF RS. 9,85,108/-. THE AO ON AN EXAMINATION OF A RETURN OF INCOME AND SUBMISSION OF THE ASSESSEE FOUND THAT ABOVE AMOUNT WAS CARRIED FORWARD BY THE ASSESSEE IN THE RETURN FILED U/S 139 OF THE ACT FOR AY 2005-06 AS THE INCOME SHOWN BY THE ASSESSEE U/S 115B FOR TH AT ASSESSMENT YEAR WAS NOT ADEQUATE ENOUGH TO ABSORB T HE ENTIRE DEPRECIATION CLAIMED. HOWEVER, IN THE RETURN FILED U/S 153C THE ASSESSEE HAS ALREADY TAKEN THE CLAIM OF ENTIRE DEPR ECIATION IN AY 2005-06 ITSELF, MEANING THEREBY THERE IS NO CLAIM O F DEPRECIATION LEFT WHICH WAS TO BE CARRIED FORWARD TO THE NEXT YE AR. IN THE RETURN FILED U/S 153C FOR ASSESSMENT YEAR UNDER APPEAL ASS ESSEE HAS SET OFF CLAIM OF RS. 9,85,108/- AGAIN FOR THE SECOND TI ME WHICH IS NOT AS PER LAW. THE AO, THEREFORE, MADE THE ABOVE ADDIT ION. 3. THE ASSESSEE AT THE PENALTY STAGE FILED THE REPL Y BEFORE THE AO WHICH READS AS UNDER: WHILE PREPARING THE COMPUTATION OF TOTAL INCOME ON THE COMPUTER SYSTEM DURING THE PREVIOUS YEAR I.E. AY 20 05-06 THERE WAS UNOBSERVED DEPRECIATION WHICH WAS CARRIED FORWARD TO THE SUCCEEDING YEAR IN THE ORIGINAL RETU RN WHICH WAS FILED U/S 139(1) OF THE I.T. ACT. HOWEVER, WHI LE 3 ITA NO . 1436/DEL/2014 PREPARING THE COMPUTATION FOR THE AY 2006-07 IN RES PECT OF RETURN TO BE FILED U/S 153 THE SAME BROUGHT FORWARD BALANCE OF RS. 9,85,108/- WAS PICKED UP BY THE SYST EM AND THIS ERROR WAS NOT NOTICED AT THE TIME OF FILIN G OF RETURN. THIS IS THE ERROR OCCURRED BECAUSE OF THE FIGURE AUTOMATICALLY PICKED UP BY THE SYSTEM ITSELF AND TH ERE WAS NO ANY INTENTION OF THE ASSESSEE TO CLAIM SUCH DEDUCTION OUT OF INCOME DECLARED FOR THE YEAR. THE ASSESSEE HAS INADVERTENTLY CLAIMED THE EXCESS AMOUN T WITHOUT ANY MELAFIED INTENTION. 4. THE AO WAS HOWEVER, NOT SATISFIED WITH THE EXPLA NATION OF THE ASSESSEE AND LEVIED THE PENALTY ON THE ABOVE ADDITI ON. THE LD. CIT(A) DISMISSED THE APPEAL OF ASSESSEE. 5. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE ARE OF THE VIEW THAT PENALTY IS NOT LEVIABLE IN THE MATTER. THE AS SESSEE SUBMITTED BEFORE AO AT THE PENALTY STAGE THAT WHILE PREPARING THE COMPUTATION OF TOTAL INCOME ON THE COMPUTER SYSTEM DURING THE AY 2005-06, THERE WAS UNABSORBED DEPRECIATION WHICH WAS CARRIED FORWARD TO THE SUCCEEDING YEAR I.E. AY 2006 -07 IN THE ORIGINAL RETURN WHICH WAS FILED U/S 139(1) OF THE A CT. IT WAS ALSO EXPLAINED THAT WHILE PREPARING COMPUTATION OF INCOM E FOR AY 2006-07 IN APPEAL IN RESPECT OF THE RETURN TO BE FI LED U/S 153C, THE SAME BROUGHT FORWARD BALANCE OF RS. 9,85,108/- WAS PICKED UP BY THE SYSTEM AND THIS ERROR WAS NOT NOTICED AT THE TIME OF FILING OF THE RETURN. IT WAS AN ERROR OCCURRED BEC AUSE OF FIGURES AUTOMATICALLY PICKED UP BY THE SYSTEM ITSELF. THUS , THE ASSESSEE DISCLOSED ALL THE FACTS IN THE COMPUTATION. IT, TH EREFORE, APPEARS THAT IT WAS AN INADVERTENT MISTAKE. THE EXPLANATIO N OF ASSESSEE 4 ITA NO . 1436/DEL/2014 SHOWS THAT THERE WAS UNABSORBED DEPRECIATION IN PRE CEDING AY 2005-06 WHICH WAS CLAIMED IN ASSESSMENT YEAR UNDER APPEAL I.E. 2006-07 U/S 139(1) OF THE ACT. HOWEVER, WHILE FILI NG THE RETURN OF INCOME FOR ASSESSMENT YEAR UNDER APPEAL I.E. 2006-0 7 U/S 153C, THE SAME FIGURE OF UNABSORBED DEPRECIATION HAS BEEN PICKED UP BY THE SYSTEM. THEREFORE, IT IS A MISTAKE ON THE PART OF THE ASSESSEE IN TAKING THE SAME FIGURE WHILE FILING THE RETURN O F INCOME U/S 153C OF THE ACT. HOWEVER, ALL THE FACTS RELATING T O UNABSORBED DEPRECIATION WERE AVAILABLE TO THE AO IN THE RETURN FILED U/S 139(1) OF THE ACT AND RETURN FILED U/S 153C OF THE ACT. T HE HONBLE SUPREME COURT IN THE CASE OF PRICE WATER HOUSE COOP ERS PVT. LTD. VS. CIT 348 ITR 306 CANCELLED THE PENALTY BECAUSE T HE CLAIM OF GRATUITY WAS NOT ALLOWABLE DEDUCTION WHICH WAS INAD VERTENT SILLY MISTAKE ON THE PART OF THE ASSESSEE. CONSIDERING T HE FACTS AND CIRCUMSTANCES OF THE CASE AND THE NATURE OF ADDITIO N MADE BY THE AUTHORITIES BELOW, WE ARE OF THE VIEW THAT IT IS NO T A FIT CASE FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. WE, ACCORDING LY, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND CANCEL THE PENA LTY. 6. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (G.D. AGRAWAL) (BHAV NESH SAINI) VICE PRESIDENT JU DICIAL MEMBER DATED: 07/05/2019 *KAVITA ARORA 5 ITA NO . 1436/DEL/2014 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION 07.05.19 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 07.05.19 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P S/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 07.05.19 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 07.05.19 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT 07.05.19 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 07.0 5.19 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER