Applitech Solutions Ltd., Ahmedabad V. The ACIT.,(OSD) Range-1, Ahmedabad

ITA 1460/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94368 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 24-08-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 23-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIBHA BHALLA
• Keywords: Depreciation; Opportunity of being heard; Period of limitation
• Section: 143(3)

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ./ ITA NO.1460/AHD/2011 /BLOCK ASSTT. YEAR: 2003-2004 APPLITECH SOLUTION LTD. 503, PARITOSH NR. DARPAN ACADEMY AHMEDABAD. PAN : AABCA 8332 P VS ACIT (OSD), RANGE - 1 AHMEDABAD. %& / (APPELLANT) '( %& / (RESPONDENT) ASSESSEE BY : SHRI ANIL KSHATRIYA REVENUE BY : SMT. VIBHA BHALLA, CIT-DR / DATE OF HEARING : 24/08/2015 / DATE OF PRONOUNCEMENT: 26/08/2015 )*/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE OR DER OF THE LD.CIT(A)-VI, AHMEDABAD DATED 18.4.2011 PASSED FOR THE ASSTT.YEAR 2003-04. 2. THOUGH THE ASSESSEE HAS TAKEN SIX GROUNDS OF APP EAL, BUT ITS GRIEVANCE REVOLVES AROUND A SINGLE ISSUE, WHEREBY, IT HAS CHALLENGED CONFIRMATION OF PENALTY AMOUNTING TO RS.3,23,11,350 /- IMPOSED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED ITS RETURN OF INCOME ON 1.12.2003 DECLARING LOSS OF RS.1,74,56,03 9/-. THE ITA NO.1460/AHD/2011 2 ASSESSMENT ORDER WAS PASSED UNDER SECTION 143(3) OF THE ACT ON 27.3.2006 AND INCOME OF THE ASSESSEE WAS DETERMINED AT RS.9,42,02,619/-. THE LD.AO HAS MADE THREE MAJOR A DDITIONS UNDER THE FOLLOWING HEADS: I) DISALLOWANCE OF DEPRECIATION : RS.4,83,92,547 II) DISALLOWANCE OUT OF INTEREST : RS. 79,43,558 III) ADDITIONS U/S.68 BEING CASH CREDIT : RS.5,53,22,6 43/- IN FORM OF CREDITORS HE ISSUED SHOW CAUSE NOTICE UNDER SECTION 274 R.W. SECTION 271(1)(C) OF THE ACT INVITING THE EXPLANATION OF THE ASSESSEE AS TO WHY PENALTY UNDER SECTION 271(1)(C) OF THE ACT BE NOT IMPOSED FOR THE ADDITIONS MADE TO THE INCOME OF THE ASSESSEE. AFTER HEARING THE ASSE SSEE, THE LD.AO HAS IMPOSED PENALTY OF RS.3,23,11,350/-. 4. APPEAL TO THE CIT(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE, 5. LD.COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET S UBMITTED THAT DISSATISFIED WITH THE ADDITIONS TO THE INCOME OF TH E ASSESSEE, THE DISPUTE WAS TAKEN TO THE CIT(A) AND THEREAFTER TO T HE TRIBUNAL. THE TRIBUNAL HAS SET ASIDE THESE ADDITIONS VIDE ORDER D ATED 14.10.2011 IN ITA NO.954/AHD/2009. HE PLACED ON RECORD COPY OF T HE TRIBUNALS ORDER. ON THE STRENGTH OF THIS ORDER, HE CONTENDE D THAT SINCE THE ADDITIONS HAVE BEEN DELETED, THEREFORE, PENALTY CAN NOT SURVIVE. ON THE OTHER HAND, THE LD.DR WAS UNABLE TO CONTROVERT THE CONTENTIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE. SHE RELIED UPON THE ORDERS OF THE REVENUE AUTHORITIES BELOW. 6. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. THE FINDINGS RECORDED BY THE TRI BUNAL IN THE ORDER DATED 14.10.2011 IN ITA NO.954/AHD/2009 (SUPRA) REA DS AS UNDER: ITA NO.1460/AHD/2011 3 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MAT ERIAL ON RECORD. IT IS NOT IN DISPUTED FACT THAT THE ASSESSE E WENT IN LIQUIDATION AT THE INITIAL STAGE BECAUSE OF THE ORD ER PASSED BY THE HONBLE GUJARAT HIGH COURT AND THE OFFICIAL LIQUIDA TOR WAS APPOINTED IN THE MATTER. THE AO FRAMED THE ASSESSME NT IN THE NAME OF THE OFFICIAL LIQUIDATOR ATTACHED TO THE ASS ESSEE COMPANY AND ULTIMATELY AFTER VARIOUS ROUNDS OF LITIGATIONS AND TAKING STEPS IN THE MATTER WINDING UP WAS SET ASIDE BY THE HONB LE GUJARAT HIGH COURT IN JANUARY, 2008. THESE FACTS WERE SUFFI CIENT TO HOLD THAT THE ASSESSEE WAS PREVENTED FROM SUFFICIENT CAU SE FROM PREFERRING THE APPEAL IN TIME BEFORE THE TRIBUNAL. SINCE THE EXISTENCE OF THE ASSESSEE WAS IN LIQUIDATION BEFORE THE HONBLE GUJARAT HIGH COURT, THEREFORE, THE ASSESSEE COULD N OT HAVE MOVED THE APPEAL FOR THE PURPOSE OF FILING APPEAL BEFORE THE TRIBUNAL. CONSIDERING THE FACTS AND CIRCUMSTANCES AND THE DOC UMENTS PLACED ON RECORD, WE HAVE TO TAKE PRAGMATIC AND LIB ERAL APPROACH WHILE CONDONING THE DELAY IN THE MATTER. FURTHER, T HE ASSESSEE EXPLAINED THAT IN THE EARLIER YEARS THE MATTER IS R ESTORED TO THE FILE OF THE LEARNED AO FOR RECONSIDERATION. THE ASS ESSEE FURTHER EXPLAINED THAT IN ASSESSMENT YEAR 2000-01 IN THE CA SE OF THE SAME ASSESSEE, THE TRIBUNAL IN ITA NO.1507/AHD/2005 AND 1681/AHD/2005 (SUPRA) RESTORED THE MATTER TO THE FI LE OF THE AO FOR RECONSIDERATION. THE FINDINGS OF THE TRIBUNAL I N PARA 6 ARE REPRODUCED AS UNDER. 6. WE HAVE HEARD THE PARTIES AND CAREFULLY PERUSED THE MATERIAL ON RECORD. IN OUR CONSIDERED V IEW THE ENTIRE ASSESSMENT IS REQUIRED TO BE REDONE BY THE AO AS RE ASONABLE OPPORTUNITY OF BEING HEARD IS NOT PROVIDED TO THE A SSESSEE. IF LEGIBLE COPIES OF THE DOCUMENTS AND STATEMENTS WERE PROVIDED ON 25.3.2002 THEN VERY LITTLE TIME IS LEFT FOR ASSESSE E TO SUBMIT HIS REPLY AND TO CARRY OUT CROSS-EXAMINATION OF THE TWO PERSONS WHO HAVE NOW DENIED TO HAVE MADE ANY SALES TO THE ASSES SEE COMPANY. NO DOUBT THE ASSESSEE HAS SHOWN PURCHASES FROM RIPL AND VCPL, THEREFORE, TO SUPPORT THESE PURCHASES ONU S IS ON THE ASSESSEE TO PRODUCE THESE PARTIES BEFORE THE AO WHO HAS ALREADY RECORDED THE STATEMENT OF THESE TWO PERSONS AND WHO HAVE DENIED TO HAVE MADE ANY SALE TO THE ASSESSEE COMPAN Y. THUS PRIMARILY IT IS FOR THE ASSESSEE TO PRODUCE THESE P ERSONS BEFORE THE AO SO AS TO ENABLE HIM TO CONFRONT THESE TWO PA RTIES. IT WILL BE A STAGE OF RE-EXAMINATION. THE REVENUE AUTHORITI ES SHOULD ALSO EXERCISE THEIR POWERS TO ENFORCE THE PRESENCE OF TH ESE TWO PERSONS AND ASSESSEE IS REQUIRED TO GIVE FULL SUPPO RT BY WAY OF PROVIDING THE ADDRESSES, MOBILE NUMBERS AND THEIR O THER WHEREABOUTS SO AS TO ENABLE THE AO TO SERVE THE SUM MONS ON THEM. IT IS IN THE INTEREST OF THE ASSESSEE COMPANY TO EXTEND FULL SUPPORT TO THE AO TO ENABLE HIM TO ENFORCE THE ATTE NDANCE OF THESE TWO PERSONS. MERELY PUTTING THE BURDEN ON THE AO AND TO SIT ITA NO.1460/AHD/2011 4 QUIETLY WILL NOT BE IN ITS INTEREST. IF NECESSARY T HE AO CAN ISSUE COMMISSION TO THE OTHER OFFICER OF THE DEPARTMENT W HERE THE ASSESSEE CAN ALSO GO AND CONFRONT THE TWO PERSONS. ACCORDINGLY, BOTH THE APPEALS ARE RESTORED TO THE FILE OF AO FOR DECIDING AFRESH. 7. ON CONSIDERATION OF THE ABOVE DISCUSSIONS, WE AR E OF THE VIEW SINCE THE MAJORITY ADDITIONS WERE BASED ON THE FIND INGS GIVEN IN ASSESSMENT YEAR 2000-01 IN WHICH THE MATTER IS REST ORED TO THE FILE OF THE AO FOR RECONSIDERATION BY THE TRIBUNAL, THEREFORE, THE TOTALITY OF THE CIRCUMSTANCES WOULD PROVE THAT THE ASSESSEE IS ABLE TO PROVE THAT IT HAS SUFFICIENT CAUSE FOR CONDONATI ON OF DELAY IN FILING THE APPEAL WITHIN THE PERIOD OF LIMITATION B EFORE THE TRIBUNAL. WE ACCORDINGLY, CONDONE THE DELAY IN FILING THE APP EAL. THE APPLICATION OF THE ASSESSEE FOR CONDONATION OF DELA Y IS ACCORDINGLY ALLOWED. 8. NOW, CONSIDERING THE ADDITIONS ON MERITS, IT IS CLEAR THAT THE LEARNED CIT(A) CONFIRMED THE DISALLOWANCE OF DEPREC IATION AND DISALLOWED THE INTEREST ON THE BASIS OF THE APPELLA TE ORDER PASSED IN ASSESSMENT YEAR 2000-01. THE AO ALSO MADE ADDITI ON ON THE BASIS OF FINDINGS GIVEN IN ASSESSMENT YEAR 2000-01. IN ASSESSMENT YEAR 2000-01, THE TRIBUNAL DECIDED THE C ROSS APPEALS OF THE ASSESSEE AND THE REVENUE VIDE ORDER DATED 15 -10-2010 AND IN PARA 6 ALLOWED THE APPEAL OF THE ASSESSEE BY RES TORING THE MATTER TO THE FILE OF THE AO. THE PARTIES INVOLVED IN THIS YEAR WERE M/S. RAHUL INFOTECH PVT. LTD. (RIFL) AND M/S. VANDA NA COMPUTERS PVT. LTD. (VCPL). THEREFORE, THE FACTS BEING IDENTI CAL, THE MATTER REQUIRES RECONSIDERATION AT THE LEVEL OF THE AO. AS REGARDS CASH CREDITS, THE SUBSTANTIAL ISSUE IS ALREADY RESTORED TO THE FILE OF THE AO TO VERIFY THE DEBIT BALANCE AND FOR OTHER TWO CR EDITORS THE ASSESSEE DID NOT GET ANY PROPER OPPORTUNITY OF HEAR ING IN THE MATTER. THE ASSESSMENT ORDER IS FRAMED IN THE NAME OF THE OFFICIAL LIQUIDATOR AND DESPITE THIS POINT WAS RAIS ED BEFORE THE LEARNED CIT(A), THE CLAIM OF THE ASSESSEE WAS NOT P ROPERLY ADJUDICATED. CONSIDERING THE HISTORY OF THE ASSESSE E UNDERGOING IN LITIGATIONS AND FURTHER THAT THE ASSESSEE HAS LATER ON REVIVED FROM WINDING UP AND FURTHER THAT ASSESSMENT ORDER WAS FR AMED IN THE NAME OF THE OFFICIAL LIQUIDATOR WOULD PROVE THAT TH E ASSESSEE DID NOT GET FAIR OPPORTUNITY OF BEING HEARD IN THE MATT ER. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCE IN THE L IGHT OF THE ORDER OF THE TRIBUNAL FOR ASSESSMENT YEAR 2000-01 DATED 1 5-10-2010 (SUPRA), WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND RESTORE ALL THE GROUNDS OF APPEAL TO THE FILE OF TH E AO FOR ITA NO.1460/AHD/2011 5 RECONSIDERATION OF THE ISSUE. THE AO SHALL GIVE REA SONABLE SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. 7. SECTION 271(1)(C) OF THE ACT HAS DIRECT BEARING ON THE CONTROVERSY WHICH READS AS UNDER: '271. FAILURE TO FURNISH RETURNS, COMPLY WITH NOTIC ES, CONCEALMENT OF INCOME, ETC. (1) THE ASSESSING OFFICER OR THE C OMMISSIONER (APPEALS) OR THE CIT IN THE OF COURSE OF ANY PROCEE DINGS UNDER THIS ACT, IS SATISFIED THAT ANY PERSON (A) AND (B) ** ** ** (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. HE MAY DIREC T THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY. (I)AND (INCOME-TAX OFFICER,)** ** ** (III) IN THE CASES REFERRED TO IN CLAUSE (C) OR CLA USE (D), IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM WHICH SHALL N OT BE LESS THAN, BUT WHICH SHALL NOT EXCEED THREE TIMES, THE AMOUNT OF TAX SOUGHT TO BE EVADED BY REASON OF THE CONCEALMENT OF PARTICULA RS OF HIS INCOME OR FRINGE BENEFIT THE FURNISHING OF INAC CURATE PARTICULARS OF SUCH INCOME OR FRINGE BENEFITS: EXPLANATION 1- WHERE IN RESPECT OF ANY FACTS MATERI AL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT, (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OF FERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMM ISSIONER (APPEALS) OR THE CIT TO BE FALSE, OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS N OT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATI ON IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MAT ERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOT AL INCOME OR SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE PURP OSES OF CLAUSE (C) OF THIS SUB-SECTION, BE DEEMED TO REPRESENT THE INC OME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED.' 8. A PERUSAL OF SUB-CLAUSE (III) OF SECTION 271(1)( C) WOULD INDICATE THAT IN CASE AN ADDITION IS BEING MADE TO THE INCOM E OF AN ASSESSEE, ITA NO.1460/AHD/2011 6 AND IT IS ESTABLISHED THAT THE ASSESSEE HAS CONCEAL ED OR FURNISHED INACCURATE PARTICULARS QUA THAT ADDITION, THEN APART FROM TAX TO BE PAYABLE BY THE ASSESSEE, HE WOULD PAY AN AMOUNT EQU IVALENT TO THE TAX OR THREE TIMES OF THE TAX AS PENALTY UNDER SECTION 271(1)(C) OF THE ACT. MEANING THEREBY, THE PENALTY WOULD BE COMPUTED EQUI VALENT TO THE TAX SOUGHT TO BE EVADED BY THE ASSESSEE ON THE ADDITION S MADE TO HIS INCOME FOR WHICH HE HAS HELD GUILTY OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN THE PRESENT CASE, THE MOMENT, ASSESSMENT ORDER HAS BEEN SET ASIDE BY THE ITAT, THE VERY ADDITION ON WHICH THE AMOUNT OF TAX SOUGHT TO BE EV ADED WAS TO BE CALCULATED, HAS BEEN EXTINGUISHED. THEREFORE, THE ASSESSEE CANNOT BE CHARGED WITH ALLEGATION THAT HE HAS CONCEALED PARTI CULARS OR FURNISHED INACCURATE PARTICULARS ON THE ADDITIONS WHICH MADE TO HIS INCOME. IN THE SET ASIDE ASSESSMENT ORDER, IT IS YET TO BE DEC IDED WHETHER ANY ADDITION IS TO BE MADE TO THE INCOME OF THE ASSESSE E OR NOT. IT WILL BE IN THE DISCRETION OF THE AO TO INITIATE OR NOT INIT IATE PENALTY PROCEEDINGS AFTER PASSING THE FRESH ASSESSMENT ORDER. THEREFOR E, IN THE PRESENT PROCEEDINGS PENALTY IS NOT SUSTAINABLE UPON THE ASS ESSEE. WE SET ASIDE BOTH THE ORDERS AND QUASH THE IMPOSITION OF PENALTY . IT WILL BE IN DISCRETION OF THE AO TO INITIATE OR NOT TO INITIATE PENALTY AFTER PASSING FRESH ASSESSMENT ORDER IN PURSUANCE OF THE TRIBUNAL S ORDER DATED 14.10.2011 (SUPRA). 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON 26 TH AUGUST, 2015 AT AHMEDABAD. SD/- SD/- (MANISH BORAD) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 26/08/2015