ACIT, Noida V. M/s Spice Systems Ltd., Noida

ITA 1496/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 91486 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 26-06-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 14-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY CHADDHA ACIT
• Assessee Lawyers: S K AGGARWAL
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G , NEW DELHI BEFORE SH. N. K. SAINI, AM AND SH. GEORGE GEORGE K. , JM ITA NO. 1496/DEL/2013 : ASSTT. YEAR : 200 4 - 05 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE - 1, NOIDA - 201301 V S M/S SPICE SYSTEMS LIMITED, D - 1, SECTOR - 3, OR S. GLOBAL KNOWLEDGE PARK, PLOT NO. 19 - A, 19 - B, SECTOR - 125, NOIDA - 201301 (APPELLANT) (RESPONDENT) PAN NO. AA BCM0828A ASSESSEE BY : SH S. K. AGGARWAL , ADV. REVENUE BY : SH . VIJAY CHADDHA , ACIT DATE OF HEARING : 26 . 06 .2015 DATE O F PRONOU NCEMENT : 27 .07 .2015 ORDER PER N.K . SAINI , A.M. THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE ORDER DATED 17.12 .2012 OF THE L D. CIT(A) , NOIDA . 2. THE ONLY EFFECTIVE GROUND RAISED IN THIS APPEAL READS AS UNDER: 1. THE CIT(A) HAS ERRED IN LAW & ON FACTS IN DELETING THE PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 ON THE DISALLOWANCES ON ACCOUNT OF COMMISSION AT RS.8,39,516/ - , DEPRECIATION AT RS.3,88,724/ - AND BUSINESS PROFIT ON S ALE OF DEMO MACHINE AT RS.75,618/ - , WHICH DISALLOWANCES WERE CONFIRMED BY THE CIT(A). 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME DECLARING A NET LOSS OF RS. ITA NO.1496 /DE L/201 3 SPICE SYSTEMS LIMITED 2 36,39,913/ - ON 01.11.2004. LATER ON, THE CASE WAS SELECTED FO R SCRUTINY AND THE ASSESSMENT WAS FRAMED AT NET LOSS OF RS. 10,26,605/ - BY MAKING THE VARIOUS ADDITIONS WHICH INCLUDED DISALLOWANCE ON ACCOUNT OF COMMISSION AMOUNTING TO RS. 8,39,516/ - , DEPRECIATION OF RS. 3,88,724/ - AND BUSINESS PROFIT ON SALE OF DEMO MACH INE AT RS. 75,618/ - . THE AO INITIATED THE PENALTY PROCEEDINGS IN RESPECT OF THOSE ADDITIONS AND LEVIED THE PENALTY OF RS. 4,75,000/ - U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 4. BEING AGGRIEVED THE ASSESSEE CARRIED TH E MATTER TO THE LD. CIT(A) WHO DELETED THE PENALTY BY OBSERVING THAT THE ITAT VIDE ORDER DATED 15.05.2009 IN ITA NO. 595/DEL/2008 DECIDED THE ISSUE RELATING TO ADDITION ON ACCOUNT OF COMMISSION IN FAVOUR OF THE ASSESSEE , THE ISSUE RELATING TO THE DISALLOWA NCE OF DEPRECIATION AND ADDITION ON PROFIT OF DEMONSTRATION MACHINE WAS SET ASIDE TO THE AO. HE ALSO MENTIONED THAT ON THE BASIS OF SIMILAR DISALLOWANCES THE PENALTY WERE LEVIED IN THE EARLIER ASSESSMENT YEARS 2001 - 02 AND 2002 - 03 WHICH WERE DELETED BY THE ITAT VIDE ORDER DATED 17.09.2010 FOR THE ASSESSMENT YEAR 2001 - 02 IN ITA NO. 1936/DEL/2010 AND ITA NO.1496 /DE L/201 3 SPICE SYSTEMS LIMITED 3 ORDER DATED 18.11.2011 FOR THE ASSESSMENT YEAR 2002 - 03 IN ITA NO. 1164/DEL/2011. THE LD. CIT(A) ACCORDINGLY DELETED THE PENALTY LEVIED BY THE AO. 5 . NOW THE DEPA RTMENT IS IN APPEAL. THE LD. DR ALTHOUGH SUPPORTED THE ORDER OF THE AO BUT COULD NOT CONTROVERT THE FINDINGS GIVEN BY THE LD. CIT(A). 6 . IN HIS RIVAL SUBMISSIONS THE LD. COUNSEL FOR THE ASSESSEE STRONGLY SUPPORTED THE IMPUGNED ORDER PASSED BY THE LD. CIT( A) AND FURTHER SUBMITTED THAT THE ADDITIONS ON THE BASIS OF WHICH PENALTY WAS LEVIED BY THE AO ARE NO MORE IN EXISTENCE. THEREFORE, THE LD. CIT (A) RIGHTLY DELETED THE PENALTY. HE ALSO FURNISHED THE COPY OF THE ORDER DATED 15.05.2009 IN ITA NO. 595/DEL/2008 IN ASSESSEE S OWN CASE WHICH IS PLACED ON RECORD. 7 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT THE AO LEVIED THE PENALTY ON THE BASIS OF DISALLOWANCES OF RS. 8,39,516/ - ON ACCOUNT OF COMMISSION, RS. 3,88,724/ - FOR DEPRECIATION AND RS. 75,618/ - ON ACCOUNT OF PROFIT ON THE SALE OF DEMO MACHINE. OUT OF THE AFORESAID ADDITIONS THE ITAT VIDE ORDER DATED 15.05.2009 ITA NO.1496 /DE L/201 3 SPICE SYSTEMS LIMITED 4 IN ITA NO. 595/DEL/20 08 IN ASSESSEE S OWN CASE DELETED THE ADDITIONS ON ACCOUNT OF DISALLOWANCE OF COMMISSION AMOUNTING TO RS. 8,39,516/ - AND RESTORED THE ISSUE IN RESPECT OF THE OTHER ADDITIONS I.E. DISALLOWANCE OF DEPRECIATION OF RS. 3,88,724/ - AND BUSINESS PROFIT ON SALE OF DEMO MACHINE AMOUNTING TO RS. 75,618/ - TO THE FILE OF THE AO. THEREFORE, NO ADDITION REMAINED IN EXISTENCE WHICH WERE CONSIDERED BY THE AO FOR LEVYING THE PENALTY U/S 271(1)(C) OF THE ACT . IT IS WELL SETTLED THAT NO PENALTY CAN BE LEVIED U/S 271(1)(C) OF THE ACT WHEN THE ADDITION S ON THE BASIS OF WHICH THE PENALTY WAS LEVIED ARE NOT IN EXISTENCE . T HEREFORE, WE DO NOT SEE ANY MERIT IN THIS APPEAL OF THE DEPARTMENT. 8 . IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISMISSED . ( ORDER PRON OUNCED IN THE COURT ON 27 /0 7 / 2015) . SD/ - SD/ - (GEORGE GEORGE K. ) ( N. K. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 27 /0 7 /2015 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGI STRAR