Paramount Products (P) Ltd., New Delhi V. ACIT, New Delhi

ITA 1601/DEL/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52484 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 12-08-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 09-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRATIMA KAUSHIK
• Assessee Lawyers: PANCHEM SETHI
• Keywords: Depreciation; Additional depreciation; Wrong claim; Bonafide mistake
• Section: 143(3)

Judgement Text

ITA NO. 1601/DEL/2010 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DELHI BEFORE SHRI C.L. SETHI, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 1601/DEL/2010 A.Y. : 2006-07 M/S PARAMOUNT PRODUCTS (P) LTD., A-55, OKHLA INDUSTRIAL AREA, PHASE-II, NEW DELHI VS. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 14(1), NEW DELHI (PAN/GIR NO. : AAACP1213B) (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSEESSEE BY : SH . RAJESH MALHOTRA, CA AND SH. PANCHEM SETHI, CA DEPARTMENT BY : SMT. PRATIMA KAUSHIK, SR. D.R. ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 04.1.2010 P ERTAINING TO ASSESSMENT YEAR 2006-07. 2. THE ISSUE RAISED IS THAT LD. COMMISSIONER OF INCOME T AX (APPEALS) ERRED IN CONFIRMING THE PENALTY OF ` 2,56,300/- U/S. 271(1)(C) WAS IMPOSED BY THE ASSESSING OFFICER. 3. IN THIS CASE ASSESSEE FILED ITS RETURN OF INCOME ON 30 .11.06 SHOWING TOTAL INCOME OF ` 8,12,11,100/-. ASSESSMENT IN THE CASE WAS MADE U/S 143(3) OF THE INCOME TAX ACT, 1961 ON 24.11.2008 ON TOTAL INCOME OF ` 8,28,57,270/-. THE ASSESSING OFFICER NOTICED THAT THE RE WERE CERTAIN ASSETS USED FOR LESS THAN 180 DAYS DURING THE PREVIOUS YEAR AND NORMAL DEPRECIATION @50% WAS CLAIMED ON THEM. HOWEVER, ASSESSEE HAS CLAIMED ITA NO. 1601/DEL/2010 2 ADDITIONAL DEPRECIATION ON THESE ASSETS AT FULL RATE. ASSESSEE WAS ASKED TO EXPLAIN WHY IT HAD CLAIMED ADDITIONAL DEPRECIATION AT FULL RATE. AT THIS POINT, ASSESSEE SUBMITTED A FRESH COMPUTATION FOR ADDITIO NAL DEPRECIATION AND ACCEPTED THAT IT HAS CHARGED EXCESS ADDITIONAL DEP RECIATION TO THE TUNE OF ` 7,61,437/-. THE ASSESSING OFFICER, THUS, MADE AN A DDITION OF ` 7,61,437/- TO THE ASSESSEES TOTAL INCOME. ASSESSING OFFICER IMPOSED A PENALTY ON THIS ACCOUNT U/S 271(1)(C) OF ` 2,56,300/-. 4. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX ( APPEALS) CONFIRMED THE PENALTY. 5. AGAINST THIS ORDER THE ASSESSEE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. 6.1 WE FIND SECTION 271(1)(C) OF THE INCOME TAX ACT POSTULATES THE LEVY OF PENALTY FOR FURNISHING OF INACCURATE PARTICULARS OR CONCEALMENT OF INCOME. IN THE PRESENT CASE, WE FIND THAT ALL THE PARTICULARS WER E DULY DISCLOSED, IT WAS ONLY BONAFIDE MISTAKE ON THE PART OF THE ASSESSEE WHICH LED THE WRONG CLAIM OF ADDITIONAL DEPRECIATION. ASSESSEE HAS ALSO SUBMITTE D AN AFFIDAVIT FROM THE CHARTERED ACCOUNTANT WHO CONDUCTED THE TAX AUDI T THAT THE MISTAKE WAS AN INADVERTENT ERROR ON THE PART OF THE CHARTERED A CCOUNTANT. UNDER THE CIRCUMSTANCES, IN OUR CONSIDERED OPINION, ASSESSEE IS NOT LIABLE FOR PENALTY U/S 271(1)(C) OF THE IT ACT. 6.2 WE WOULD LIKE TO REFER TO THE HONBLE APEX COURT DECISION IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS LTD. IN CIVIL A PPEAL NO. 2463 OF 2010. IN THIS CASE VIDE ORDER DATED 17.3.2010 IT HAS BEEN HELD THAT THE LAW LAID DOWN IN THE DILIP SHEROFF CASE 291 ITR 519 (SC) AS TO THE MEANING OF WORD CONCEALMENT AND INACCURATE CONTINUES TO BE A GO OD LAW BECAUSE WHAT WAS OVERRULED IN THE DHARMENDER TEXTILE CASE WAS ONLY THAT PART IN DILIP ITA NO. 1601/DEL/2010 3 SHEROFF CASE WHERE IT WAS HELD THAT MENSREA WAS A ESSENTI AL REQUIREMENT OF PENALTY U/S 271(1)(C). THE HONBLE APEX COURT ALSO O BSERVED THAT IF THE CONTENTION OF THE REVENUE IS ACCEPTED THEN IN CASE OF EVERY RETURN WHERE THE CLAIM IS NOT ACCEPTED BY THE AO FOR ANY REASON, T HE ASSESSEE WILL INVITE THE PENALTY U/S 271(1)(C). THIS IS CLEARLY NOT THE I NTENDMENT OF LEGISLATURE. 6.3 WE WOULD ALSO LIKE TO REFER THE DECISION OF THE HONBLE APEX COURT RENDERED BY A LARGER BENCH COMPRISING OF THREE OF T HEIR LORDSHIPS IN THE CASE OF HINDUSTAN STEEL VS. STATE OF ORISSA IN 83 ITR 2 6 WHEREIN IT WAS HELD THAT AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTORY OBLIGATION IS THE RESULT OF A QUASI-CRIMINAL PROCEEDINGS, AND PENA LTY WILL NOT ORDINARILY BE IMPOSED UNLESS THE PARTY OBLIGED EITHER ACTED DELIB ERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST , OR ACTED IN CONSCIOUS DISREGARD OF ITS OBLIGATION. PENALTY WILL NO T ALSO BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENALTY SHOULD BE IMPOSED FOR FAILURE TO PERFORM A STATUTORY OBLIGATION IS A MATTER OF DISCR ETION OF THE AUTHORITY TO BE EXERCISED JUDICIALLY AND ON A CONSIDERATION OF AL L THE RELEVANT CIRCUMSTANCES. EVEN IF A MINIMUM PENALTY IS PRESCRIBED , THE AUTHORITY COMPETENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY, WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT, OR WHERE THE BREACH FLOWS FROM A BONAFIDE BELIE F THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRIBED BY THE STATUTE . ITA NO. 1601/DEL/2010 4 7. IN THE BACKGROUND OF THE AFORESAID DISCUSSION AND PR ECEDENTS, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE T HE PENALTY. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STAN DS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12/8/2011, UP ON CONCLUSION OF HEARING. SD/- SD/- [ [[ [C.L. SETHI C.L. SETHI C.L. SETHI C.L. SETHI] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 12/8/2011 SRB COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES