ITO, Nashik V. M/S Ashoka Builders and Developers, Nashik

ITA 1494/PUN/2012

• Counselvise Citation: 149424514 RSA 2012
• Duration Of Justice: 2 year(s) 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 07-01-2014
• Assessment Year: 2001-2002
• Appeal Filed On: 06-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P S NAIK
• Keywords: Question of law; Wrong claim; Difference of opinion
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND MS SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.1494/PN/2012 (ASSESSMENT YEAR : 2001-02) INCOME TAX OFFICER, WARD 1(1), NASHIK. . APPELLANT VS. M/S ASHOKA BUILDERS AND DEVELOPERS, ASHOKA HOUSE, ASHOKA MARA, WADALA, NASHIK 422 011. PAN : AAEFA0311J . RESPONDENT DEPARTMENT BY : SHRI P. S. NAIK ASSESSEE BY : SHRI PRAMOD SHINGTE DATE OF HEARING : 25-09-2014 DATE OF PRONOUNCEMENT : 26-09-2014 ORDER PER G. S. PANNU, AM THE CAPTIONED APPEAL BY THE REVENUE IS DIRECTED AGA INST AN ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, NASHIK DATED 20.04.2012 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 29.02.2012 PASSED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT), PERTAINING TO THE ASSESSMENT YEAR 2001-02. 2. IN THIS APPEAL, THE GRIEVANCE OF THE REVENUE IS THAT THE CIT(A) ERRED IN DELETING THE PENALTY IMPOSED BY THE ASSESSING OFFIC ER U/S 271(1)(C) OF THE ACT AMOUNTING TO RS.31,29,640/-. 3. IN BRIEF, THE RELEVANT FACTS CAN BE SUMMARIZED A S FOLLOWS. THE RESPONDENT-ASSESSEE IS ENGAGED IN THE BUSINESS OF B UILDERS & DEVELOPERS AND FOR THE ASSESSMENT YEAR 2001-02 IT FILED A RETURN O F INCOME DECLARING TOTAL INCOME OF RS.1,22,33,250/- WHICH, INTER-ALIA, INCLU DED A CLAIM FOR SET-OFF OF BROUGHT FORWARD BUSINESS LOSSES OF EARLIER YEARS AM OUNTING TO RS.89,16,360/-. ITA NO.1494/PN/2012 IN AN ASSESSMENT FINALIZED U/S 143(3) OF THE ACT DA TED 08.03.2004 THE ASSESSING OFFICER DETERMINED THE TOTAL INCOME AT RS .2,15,86,644/-. IN ARRIVING AT SUCH ASSESSED INCOME, THE ASSESSING OFFICER DENI ED ASSESSEES CLAIM FOR SET-OFF OF BROUGHT FORWARD BUSINESS LOSSES OF RS.89 ,16,360/-. SUCH DENIAL OF SET-OFF OF BROUGHT FORWARD LOSSES HAS ALSO BEEN AFF IRMED BY THE TRIBUNAL IN THE QUANTUM ASSESSMENT PROCEEDINGS. 4. SUBSEQUENTLY, THE ASSESSING OFFICER HELD THE ASS ESSEE GUILTY OF FURNISHING INACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT QUA THE CLAIM MADE IN THE RETU RN OF INCOME FOR SET-OFF OF THE BROUGHT FORWARD BUSINESS LOSSES OF RS.89,16,360 /-. ACCORDINGLY, BY WAY OF AN ORDER DATED 29.02.2012, ASSESSING OFFICER IMPOSE D PENALTY U/S 271(1)(C) OF THE ACT OF RS.31,29,640/-, BEING 100% OF THE TAX SO UGHT TO BE EVADED ON SUCH CLAIM. THE AFORESAID PENALTY HAS SINCE BEEN DELETE D BY THE CIT(A) AGAINST WHICH THE REVENUE IS IN APPEAL BEFORE US. 5. AT THE TIME OF HEARING, THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE WAS ASSESSED AS AN ASS OCIATION OF PERSONS (AOP) IN THE YEAR UNDER CONSIDERATION BECAUSE ASSES SEE DID NOT COMPLY WITH THE REQUIREMENT OF FURNISHING A CERTIFIED COPY OF T HE PARTNERSHIP DEED CONSEQUENT TO A CHANGE IN CONSTITUTION OF FIRM. HI THERTO, ASSESSEE WAS ASSESSED AS A PARTNERSHIP FIRM. THEREFORE, THE BRO UGHT FORWARD LOSSES PERTAINED TO THE PARTNERSHIP FIRM, AND THE AOP BEIN G A DIFFERENT AND DISTINCT PERSON, SUCH LOSSES COULD NOT BE ADJUSTED AGAINST T HE CURRENT YEARS INCOME ASSESSED IN THE HANDS OF THE ASSESSEE AS AN AOP. A CCORDING TO THE LEARNED DEPARTMENTAL REPRESENTATIVE, ASSESSEE MADE A WRONG CLAIM IN THE RETURN OF INCOME WHICH HAS ALSO BEEN AFFIRMED BY THE TRIBUNAL AND THEREFORE THE ASSESSING OFFICER WAS JUSTIFIED IN IMPOSING PENALTY U/S 271(1)(C) OF THE ACT. ITA NO.1494/PN/2012 6. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE R ESPONDENT-ASSESSEE SUBMITTED THAT THE ISSUE REFLECTS A MERE DIFFERENCE OF OPINION ON A DEBATABLE ISSUE OF LAW AND THEREFORE PENALTY U/S 271(1)(C) OF THE ACT HAS BEEN RIGHTLY DELETED BY THE CIT(A). 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. FACTUALLY SPEAKING, IT IS TO BE NOTED THAT UPTO THE PRECEDING ASSESSMENT YEAR ASSESSEE HAS BEEN ASSESSED AS A FIRM. DURING THE YEAR UNDER CONSIDERATION, THERE WAS A CHANGE IN THE CONSTITUTION OF THE FIRM CONSEQUENT TO THE MINOR PARTNER ATTAINING MAJORHOOD. THIS CHANGE REQUIRED THE ASSE SSEE TO COMPLY WITH THE PROVISIONS OF SECTION 184(4) OF THE ACT ENTAILING T HE ASSESSEE TO ENCLOSE A CERTIFIED COPY OF THE PARTNERSHIP DEED EVIDENCING T HE CHANGES ALONGWITH THE RETURN OF INCOME. OSTENSIBLY, ASSESSEE DID NOT COM PLY WITH THE AFORESAID REQUIREMENT AND THEREFORE ITS STATUS WAS LIABLE TO BE ADOPTED AS AN AOP FOR THE PURPOSES OF ASSESSMENT OF INCOME. IT TRANSPIRE S FROM THE ORDERS OF THE AUTHORITIES BELOW THAT ASSESSEE WAS CONSCIOUS OF TH E SAID FACT AS THE ASSESSING OFFICER IN THE IMPUGNED ORDER HAS NOTED T HAT A NOTE BELOW THE COMPUTATION WAS ANNEXED STATING THAT THE FIRM IS TO BE ASSESSED AS AN AOP. SO HOWEVER, WHILE COMPUTING ITS INCOME FOR THE YEAR UNDER CONSIDERATION, ASSESSEE CLAIMED SET-OFF OF THE BROUGHT FORWARD BUS INESS LOSSES OF RS.89,16,360/-. THE SAID CLAIM OF THE ASSESSEE WAS DENIED BY THE ASSESSING OFFICER IN THE COURSE OF THE QUANTUM ASSESSMENT PRO CEEDINGS WHICH STANDS AFFIRMED BY THE TRIBUNAL. OF-COURSE, THE AFORESAID DISPUTE IS PENDING IN APPEAL BEFORE THE HONBLE HIGH COURT WHEREIN THE FOLLOWING SUBSTANTIAL QUESTION OF LAW HAS BEEN ADMITTED VIDE ORDER IN INCOME TAX APPE AL NO.5 OF 2012 DATED 20 TH MARCH, 2013 :- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF C ASE, THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT THE EFFECT OF SECTION 185 OF THE INCOME TAX ACT, 1961 WAS TO TREAT THE ASSESSEE FIRM AS BEING ASSESS ED IN THE STATUS OF AN AOP AND IN HOLDING THAT THE ASSESSEE BECAME A WHOLL Y DIFFERENT PERSON IN LAW, SO AS TO DISENTITLE THE CARRIED FORWARD LOSSES INCURRED BY THE SAME ENTITY FORM BEING SET OFF AGAINST THE PROFITS EARNED BY TH E SAME ENTITY. ITA NO.1494/PN/2012 8. IN THE ABOVE BACKGROUND, THE MOOT POINT IS AS TO WHETHER THE ASSESSING OFFICER WAS JUSTIFIED IN HOLDING THAT ASSESSEE FURN ISHED INACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) O F THE ACT QUA THE CLAIM FOR SET-OFF OF BROUGHT FORWARD BUSINESS LOSSES. IN OUR CONSIDERED OPINION, THE FOLLOWING DISCUSSION BY THE ASSESSING OFFICER IN TH E PENALTY ORDER :- THE ASSESSEE HAS MADE A NOTE BELOW THE COMPUTATION STATING THAT THE FIRM IS TO BE ASSESSED AS AOP IN VIEW OF THE PROVIS ION U/S 185 R.W.S. PROVISION U/S 184(4) & 187 (2)(B). BY MERELY PUTTING A NOTE IN COMPUTATION, THE ASSESSEE CANNOT SHUN AWAY FROM DEFAULT OF FILING IN ACCURATE PARTICULARS OF ITS INCOME ON THIS COUNT. THIS CAN BE SEEN, BY ASSESSE E WRONGLY CLAIMING EARLIER YEARS BUSINESS LOSS UNDER THE STATUS OF FIRM BEING SET OFF AGAINST CURRENT YEARS INCOME IN THE STATUS OF AOP. THE ASSESSING OFFICERS STAND HAS BEEN CONFIRMED BY THE ITAT PUNE AS PER ITS ORDER IN ITA NO.1682/PN/2004 DATED 29.07.2011. WOULD SHOW THAT IT IS A CASE WHERE A CLAIM MADE BY THE ASSESSEE IN THE RETURN OF INCOME HAS BEEN FOUND UNTENABLE BY THE ASSESSING OFFICER. THE FACT OF THE ASSESSEE BEING LIABLE TO BE ASSESSED AS AN AOP, AS DISTINCT FROM BEING A FIRM IN THE PAST YEARS, HAS BEEN ADEQUATELY DISCLOSED BY THE ASSESSEE ITSELF IN THE RETURN OF INCOME. MOREOVER, IT IS QUITE CLEAR THAT NO PARTICULARS OF INCOME DECLARED IN THE RETURN OF INCOME HAVE BEEN FOUND TO BE INACCURATE. IN THE CONTEXT OF THE CHARGE MADE AGAINST THE ASSESSEE OF FURNISHING INACCURATE PARTICULARS OF INCOME, THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD., (2010) 322 ITR 158 (SC) IS RELEVANT. AS PER THE HONBLE SUPREME COURT, WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND TO BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. DRAWI NG A DISTINCTION BETWEEN MAKING OF AN INCORRECT CLAIM AND FURNISHING OF INAC CURATE PARTICULARS OF INCOME, THE HONBLE SUPREME COURT HAS EXPLAINED THAT MAKING OF AN INCORRECT CLAIM WOULD NOT INVITE PENALTY U/S 271(1)(C) OF THE ACT O N THE GROUND OF FURNISHING INACCURATE PARTICULARS. IN THIS BACKGROUND, IF ONE IS TO EXAMINE THE CLAIM MADE BY THE ASSESSEE IN THE RETURN OF INCOME FOR THE SET -OFF OF BROUGHT FORWARD LOSSES, THERE IS NOTHING TO SUGGEST THAT ANY PARTIC ULARS THEREOF HAVE BEEN FOUND TO BE INACCURATE. IT IS MERELY A CASE WHERE A CLAIM HAS BEEN MADE IN ITA NO.1494/PN/2012 THE RETURN OF INCOME WHICH ACCORDING TO THE ASSESSI NG OFFICER IS INCORRECT IN THE EYES OF LAW. CERTAINLY SUCH A SITUATION WOULD NOT INVITE PENALTY U/S 271(1)(C) OF THE ACT ON THE GROUND OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. THEREFORE, IN OUR VIEW, THE CIT(A) WAS JUS TIFIED IN DELETING THE IMPUGNED PENALTY. 9. BEFORE PARTING, WE MAY ALSO OBSERVE THAT THE CIT (A) HAS ALSO FOUND THE PENALTY UNTENABLE ON THE GROUND THAT THE IMPUGNED P ENALTY ORDER PASSED BY THE ASSESSING OFFICER IS BARRED BY LIMITATION HAVIN G REGARD TO THE PROVISO BELOW CLAUSE (A) OF SUB-SECTION (1) OF SECTION 275 OF THE ACT. SINCE WE HAVE ALREADY HELD THAT THE CIT(A) IS JUSTIFIED IN DELETING THE P ENALTY ON MERITS, WE DO NOT ADJUDICATE THE OTHER ASPECT RELATING TO THE LIMITAT ION, WHICH IS RENDERED ACADEMIC. 10. IN THE RESULT, WE AFFIRM THE ORDER OF THE CIT(A ) DELETING THE PENALTY ALBEIT ONLY QUA HIS DECISION ON MERITS OF THE LEVY OF PENA LTY. 11. IN THE RESULT, APPEAL THE REVENUE IS DISMISSED, AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH SEPTEMBER, 2014. SD/- SD/- (SUSHMA CHOWLA) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 26 TH SEPTEMBER, 2014. SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-I, NASHIK; 4) THE CIT-I, NASHIK; 5) THE DR B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE