M/s. ICICI Bank Ltd. (erstwhile Bank of Madura Ltd.), CHENNAI V. ACIT, CHENNAI

ITA 1589/CHNY/2010

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8262 (ITAT-CHENNAI)
• Duration Of Justice: 5 year(s) 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 1996-1997
• Appeal Filed On: 20-09-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR MILIND MADHUKAR BHUSARI
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Depreciation; Wrong claim

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.1589/MDS/2010 ( )( / ASSESSMENT YEAR : 1996-97 M/S ICICI BANK LTD., (ERSTWHILE BANK OF MADURA LTD.), C/O SUBBARAYA AIYAR PADMANABHAN & RAMAMANI, ADVOCATES, NEW NO.75A (OLD NO.105A), DR. RADHAKRISHNAN SALAI, MYLAPORE, CHENNAI - 600 004. PAN : AAACB 2929 E V. THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE I(2), CHENNAI - 600 034. (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SH. R. VIJAYARAGHAVAN, ADVOCATE -.+, / 0 / RESPONDENT BY : DR. MILIND MADHUKAR BHUSARI, C IT 1 / 2% / DATE OF HEARING : 29.12.2015 3') / 2% / DATE OF PRONOUNCEMENT : 07.01.2016 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-III, CHENN AI, DATED 28.06.2010 AND PERTAINS TO ASSESSMENT YEAR 1996-97. 2 I.T.A. NO.1589/MDS/10 2. SH. R. VIJAYARAGHAVAN, THE LD.COUNSEL FOR THE AS SESSEE, SUBMITTED THAT THE ASSESSING OFFICER LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'TH E ACT') BY AN ORDER DATED 28.03.2006 ON THE GROUND THAT THE ASSESSEE HA S FAILED TO MAKE TRUE AND CORRECT STATEMENT OF INCOME AND CONCE ALED THE PARTICULARS OF ITS INCOME BY CLAIMING BOGUS DEPRECI ATION. THE LD.COUNSEL FURTHER SUBMITTED THAT THE ASSESSEE CLAI MED FOR DEPRECIATION TO THE EXTENT OF ` 17,27,16,480/- BEING 50% DEPRECIATION ON THE ASSET WHICH WAS PURCHASED AND L EASED OUT IN THE SECOND HALF OF THE FINANCIAL YEAR 1995-96, WHIC H WAS DISALLOWED. THE ASSESSING OFFICER HAS ALSO DISALLOWED DEPRECIAT ION ON THE ASSET RELATING TO THREE MORE LEASE TRANSACTIONS WHICH WER E ENTERED INTO BY THE ASSESSEE DURING THE RELEVANT PREVIOUS YEAR WITH M/S ABAN LLOYD CHILES OFFSHORE LTD., M/S A.V.S. INDUSTRIES LTD. AN D M/S MID EAST INTEGRATED STEEL LTD. TO THE EXTENT OF ` 4,95,00,000/-, ` 36,25,000/- AND ` 7,30,59,000/- RESPECTIVELY. 3. ACCORDING TO THE LD. COUNSEL FOR THE ASSESSEE, T HE ASSESSING OFFICER FURTHER FOUND THAT DURING THE ASSESSMENT YE AR 1995-96, A SIMILAR TRANSACTION OF PURCHASE AND LEASE BACK WAS ENTERED IN THE CASE OF 14 PARTIES AND THE ASSESSING OFFICER FOUND THAT THE ENTIRE 3 I.T.A. NO.1589/MDS/10 TRANSACTIONS IN THE ASSESSMENT YEAR 1995-96 WERE BO GUS. FOR THE YEAR UNDER CONSIDERATION ALSO, THE ASSESSING OFFICE R ON EXAMINATION, FOUND THAT NO SALE COULD HAVE BEEN MAD E BY THE THIRD PARTY TO THE ASSESSEE-BANK WITHOUT THE SANCTION OF TAMIL NADU ELECTRICITY BOARD. ACCORDING TO THE LD. COUNSEL, T HE ASSESSEE BEING A BANK, HAS NOT VERIFIED THE MACHINERIES WHICH WERE PURCHASED AND LEASED OUT AND ACTED UPON THE BASIS OF INVOICES PRO DUCED BEFORE IT. THE ASSESSING OFFICER ALSO FOUND THAT THE PURCHASE AND LEASE BACK ARRANGEMENT IS ONLY A COLOURABLE DEVICE TO REDUCE T HE TAX LIABILITY OF THE ASSESSEE. ACCORDING TO THE LD. COUNSEL, TWO OF THE THREE SUPPLIERS OF THE ASSETS WERE NOT TRACEABLE. IN FAC T, THE BANK ACCOUNT OF THE ABOVE SAID PERSONS WERE ATTACHED BY THE CBI AND CRIMINAL CASES ARE PENDING AGAINST THEM. AS FAR AS THE ASSE SSEE IS CONCERNED, THE LD.COUNSEL SUBMITTED THAT THE COPIES OF THE INVOICES WERE PRODUCED BEFORE IT. ON THE BASIS OF THE INVOI CES, THE ASSESSEE BELIEVED IN GOOD FAITH THAT THE ASSETS WERE OWNED B Y THE RESPECTIVE PERSONS. ACCORDINGLY, THE ASSESSEE PURCHASED THE S AME AND LEASED IT BACK TO THE RESPECTIVE PERSONS. THEREFOR E, THE CLAIM OF THE ASSESSEE FOR DEPRECIATION CANNOT BE CONSTRUED AS BO GUS. THE ASSESSEE NEVER INTENDED ANY TRANSACTION WITH AN INT ENTION TO REDUCE THE TAX LIABILITY OF THE ASSESSEE. THEREFORE, ACCO RDING TO THE LD. 4 I.T.A. NO.1589/MDS/10 COUNSEL, A MERE CLAIM OF DEPRECIATION CANNOT BE CON STRUED AS FURNISHING OF INACCURATE PARTICULARS OF INCOME. TH E LD.COUNSEL PLACED HIS RELIANCE ON THE JUDGMENT OF APEX COURT I N MAK DATA P. LTD. V. CIT (2013) 358 ITR 593 AND SUBMITTED THAT M ERELY BECAUSE THE ASSESSEE SURRENDERED THE CLAIM OF DEPRECIATION AND OFFERED THE SAME FOR TAXATION, IT CANNOT BE CONSTRUED THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME. THEREF ORE, THE CIT(APPEALS) IS NOT JUSTIFIED IN CONFIRMING THE PEN ALTY LEVIED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE AC T. 3. ON THE CONTRARY, DR. MILIND MADHUKAR BHUSARI, TH E LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE ASS ESSEE CLAIMED BEFORE THE ASSESSING OFFICER THAT IT PURCHASED WIND MILL AND LEASED BACK THE SAME TO M/S ABAN LLOYD CHILES OFFSHORE LTD . SIMILARLY, THE ASSESSEE HAS ALSO CLAIMED 14 TRANSACTIONS AS SALE A ND LEASE BACK IN THE ASSESSMENT YEAR 1995-96 AND CLAIMED DEPRECIA TION. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSES SEE IN THE ASSESSMENT YEAR 1995-96. SOME OF THE ASSETS IN THE SE 14 TRANSACTIONS WERE ACQUIRED DURING THE SECOND HALF O F THE PERIOD RELEVANT TO ASSESSMENT YEAR 1995-96. THEREFORE, TH E ASSESSEE CLAIMED 50% OF DEPRECIATION ON SUCH TRANSACTIONS DU RING THE YEAR 5 I.T.A. NO.1589/MDS/10 UNDER CONSIDERATION. ACCORDING TO THE LD. D.R., TH E ASSESSING OFFICER HAS ALREADY COME TO A CONCLUSION IN THE ASS ESSMENT YEAR 1995-96 THAT THE ENTIRE TRANSACTIONS WERE BOGUS AND THE TRANSACTIONS WERE CONSIDERED TO BE FINANCE TRANSACT IONS, THEREFORE, THE ASSESSEE IS NOT ENTITLED FOR DEPRECIATION. 4. COMING TO THE TRANSACTION WITH M/S ABAN LLOYD CH ILES OFFSHORE LTD. WITH REFERENCE TO WINDMILLS, THE LD. D.R. SUBMITTED THAT THE LAND ON WHICH THE WINDMILLS WERE ERECTED W AS NOT TRANSFERRED TO THE ASSESSEE. THE SANCTION FOR EREC TION OF WINDMILLS STANDS IN THE NAME OF M/S ABAN LLOYD CHILES OFFSHOR E LTD. ON EXAMINATION, THE ASSESSING OFFICER FOUND THAT THE I NVOICES PRODUCED BEFORE THE REVENUE AUTHORITIES ARE BOGUS AND THERE WAS NO PURCHASE OF WINDMILLS AS CLAIMED BY THE ASSESSEE. THE ASSESSING OFFICER ULTIMATELY CAME TO A CONCLUSION THAT THE AS SESSEE IS NOT THE OWNER OF THE WINDMILLS, THEREFORE, THE ASSESSEE IS NOT ENTITLED FOR DEPRECIATION. THE ASSESSING OFFICER ALSO FOUND THA T IN THE CASE OF TRANSACTION WITH A.V.S. INDUSTRIES LTD., OUT OF THE THREE SUPPLIERS TWO OF THEM WERE FOUND TO BE UNTRACEABLE. WITH REGARD TO M/S MID EAST INTEGRATED STEEL LTD., THE ASSESSING OFFICER FOUND THAT M/S MID EAST INTEGRATED STEEL LTD. PURCHASED THE ASSETS EARLIER AND THEREAFTER 6 I.T.A. NO.1589/MDS/10 FORGED THE SALE INVOICES BY INSERTING THE NAME OF T HE ASSESSEE AS BUYER. THE ASSESSING OFFICER EXAMINED THE SUPPLIER AND THE SUPPLIER CLARIFIED DURING THE COURSE OF EXAMINATION THAT HE HAS NOT ISSUED ANY SUCH INVOICE TO THE ASSESSEE AS CLAIMED BEFORE THE ASSESSING OFFICER. SINCE THE TRANSACTION WAS ESTAB LISHED AS BOGUS, THE ASSESSEE ITSELF CAME FORWARD BY A LETTER DATED 30.03.1999 CLAIMING THAT THE CLAIM OF DEPRECIATION WOULD NOT B E PRESSED. THE LD. D.R. FURTHER SUBMITTED THAT WHEN THE TRANSACTIO NS BETWEEN THE ASSESSEE AND OTHER PARTIES COULD NOT BE TREATED AS SALE AND LEASE BACK TRANSACTIONS, THEN IT HAS DEFINITELY TO BE TRE ATED AS FINANCE TRANSACTIONS. THEREFORE, THE CLAIM BEFORE THE ASSE SSING OFFICER FOR DEPRECIATION ON THE BASIS OF THE BOGUS TRANSACTION WOULD AMOUNT TO CONCEALMENT / FURNISHING INACCURATE PARTICULARS OF INCOME OF THE ASSESSEE. THEREFORE, THE LD. D.R. SUBMITTED THAT T HE CIT(APPEALS) HAS RIGHTLY CONFIRMED THE ADDITION. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF DEPRECIATION ON THE WINDMILL LEASED TO M/S ABAN LLOYD CHILES OFFSHORE LTD. TO THE EXTEN T OF ` 4,95,00,000/-. MOREOVER, IN RESPECT OF TRANSACTIO NS WITH M/S 7 I.T.A. NO.1589/MDS/10 A.V.S. INDUSTRIES LTD. AND M/S MID EAST INTEGRATED STEEL LTD., THE ASSESSING OFFICER HIMSELF ALLOWED THE CLAIM OF DEPR ECIATION TO THE EXTENT OF ` 14,10,000/- AND ` 52,00,514/-. WE FIND THAT FOR EIGHT SALE AND LEASE BACK TRANSACTIONS, THIS TRIBUNAL REMITTED BACK THE MATTER TO THE ASSESSING OFFICER FOR RECONSIDERATION. THE ENQUIRIES CONDUCTED BY THE REVENUE SHOWS THAT THE ASSETS LEAS ED TO M/S MID EAST INTEGRATED STEEL LTD. ARE FORGED ONE. IN FACT , THE SUPPLIERS ALSO CLARIFIED THAT NO INVOICE WAS ISSUED IN THE NAME OF THE ASSESSEE. ACCORDINGLY, THE CIT(APPEALS) CONFIRMED THE ADDITIO N MADE BY THE ASSESSING OFFICER ON THE BASIS OF THE ENQUIRIES CON DUCTED. 6. NOW, THE QUESTION ARISES FOR CONSIDERATION IS WH ETHER THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF IT S INCOME OR CONCEALED THE PARTICULARS OF ITS INCOME. THE FACT REMAINS THAT THE ASSESSEE IS A BANKING COMPANY AND CLAIMED BEFORE TH E ASSESSING OFFICER THAT IT ENTERED INTO THE SALE AND LEASE BAC K TRANSACTION. THE CLAIM OF THE ASSESSEE THAT THE ASSET WAS ORIGINALLY BELONGED TO A PARTICULAR PERSON, WAS PROVED TO BE WRONG. IN FACT , THE INVOICES WERE FORGED IN THE NAME OF THE ASSESSEE. ON EXAMIN ATION, THE SUPPLIERS OF THE ASSET CONFIRMED THAT THEY DID NOT ISSUE ANY INVOICE IN THE NAME OF THE ASSESSEE. WHEN THE ASSESSEE WAS CORNERED ON 8 I.T.A. NO.1589/MDS/10 ALL THE FOUR CORNERS AND IT WAS FOUND TO BE A BOGUS TRANSACTION OF SALE AND PURCHASE OF ASSET, THE ASSESSEE WITHDREW T HE CLAIM OF DEPRECIATION. THEREFORE, IT IS NOT A CASE OF MAKIN G A CLAIM AFTER FURNISHING ALL THE PARTICULARS OF INCOME. IT IS A CASE OF MAKING A CLAIM ON THE BASIS OF THE SO-CALLED BOGUS TRANSACTI ON. THE SUPPLIERS OF THE ASSET CLARIFIED THAT NO TRANSACTION WAS ENTE RED INTO WITH THE ASSESSEE. ON IDENTICAL SET OF FACTS, THE BANGALORE BENCH OF THIS TRIBUNAL IN ALLIANCE INFRASTRUCTURE PROJECTS PVT. L TD. V. ACIT IN I.T.A. NOS.220 & 1043(BNG.)/2013 DATED 12.09.2014, IT WAS FOUND THAT THE ASSESSEE MADE A WRONG CLAIM OF DEPRECIATION AND THE REBY THE ASSESSEE FURNISHED INACCURATE PARTICULARS. AS OBSE RVED EARLIER, IT IS A CASE OF MAKING FALSE CLAIM ON THE BASIS OF THE FO RGED DOCUMENTS AND WHEN IT WAS BROUGHT TO THE NOTICE OF THE ASSESS EE, THE ASSESSEE WITHDREW THE CLAIM OF DEPRECIATION. THERE FORE, IT IS A CLEAR CASE OF FURNISHING INACCURATE PARTICULARS IN THE FO RM OF FORGED INVOICES AND THEREBY CONCEALED THE PARTICULARS OF I NCOME OF THE ASSESSEE. THEREFORE, THIS TRIBUNAL IS OF THE CONSI DERED OPINION THAT THE CIT(APPEALS) HAS RIGHTLY CONFIRMED THE PENALTY LEVIED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE AC T. THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY. ACCORDINGLY, THE ORDER OF THE CIT(APPEA LS) IS CONFIRMED. 9 I.T.A. NO.1589/MDS/10 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED ON 7 TH JANUARY, 2016 AT CHENNAI. SD/- SD/- (. !'# ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 7 TH JANUARY, 2016. KRI. / -267 87)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 92 () /CIT(A)-III, CHENNAI 4. 1 92 /CIT, CHENNAI-I, CHENNAI 5. 7: -2 /DR 6. ( ; /GF.