The ACIT, Circle -5, Ahmedabad V. Parle International Pvt. Ltd., Ahmedabad

ITA 1603/AHD/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8296 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 16-08-2017
• Assessment Year: 1988-1989
• Appeal Filed On: 30-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M J SHAH
• Keywords: Depreciation; Opportunity of being heard; Wrong claim; Bonafide mistake

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER !# I.T.A. NO. 1603/AHD/2013 ( / ASSESSMENT YEAR : 1988-89) ACIT, CIRCLE 5, AHMEDABAD 380 015 # VS. PARLE INTERNATIONAL PVT. LTD., 101, GIDC VATVA, AHMEDBAD 382 445 $ # % & # PAN/GIR NO. : AAACP 9018 Q ( !$' / APPELLANT ) .. ( ($' # RESPONDENT ) !$') # APPELLANT BY : SHRI K. MADHUSUDAN, SR.D.R. ($' *) / RESPONDENT BY : SHRI M. J. SHAH, A.R. + ,*-. / DATE OF HEARING 26/10/2017 /012*-. / DATE OF PRONOUNCEMENT 31/10/2017 3# O R D E R PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER : THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-XI, AHMEDABAD, DATED 04/03/2013 FOR THE ASSESSMENT YEAR (AY) 1988-89, ON THE FOLLOWING GROUNDS: I. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE PENALTY OF RS.29,10,188/- LEVIED U/S.271(1)(C) OF T HE I.T. ACT IN RESPECT OF INCORRECT CLAIM OF DEPRECIATION OF RS.97 ,00,626/- CLAIMED BY THE ASSESSEE AND EXPLANATION 1 TO SECTIO N 271(1)(C) IS CLEARLY APPLICABLE IN THE CASE OF ASSESSEE. ITA NO.1603/AHD /2013 ACIT VS. PARLE INTERNATIONAL PVT. LTD. ASST.YEAR 1988-89 - 2 - II. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- IN THIS CASE, THE HON'BLE ITAT IN ITA NO.980/AHD/20 07 HAS RESTORED BACK THIS ISSUE TO THE FILE OF AO WITH THE FOLLOWING OBSERVATIONS:- '10. ON CLAIM OF DEPRECIATION, IT IS ADMITTED THAT THE A.O. AND THE LEARNED CIT(A) MAINTAINED ADDITION AND WHEN THE MAT TER WENT TO THE ITAT AHMEDABAD ON QUANTUM, THE APPEAL OF THE ASSESSES ON THIS ISSUE WAS DISMISSED VIDE ORDER DATED 29-08-2000. THE PART IES HAVE REFERRED TO PARA-14 OF THE TRIBUNAL ORDER IN WHICH THE TRIBU NAL HAS SPECIFICALLY NOTED THAT THE CONCLUSION OF THE LEARNED CIT(A) THR OUGH WHICH THE ASSESSEE COMMENCED TRIAL PRODUCTION IS 360 KGS. ONL Y WHICH WAS NOT FOUND SUFFICIENT TO EVEN START TRIAL PRODUCTION. TH E TRIBUNAL, THEREFORE, OPINED THAT THE DEPARTMENTAL AUTHORITIES WERE JUSTI FIED IN INCOMING TO THE CONCLUSION THAT THE ASSESSEE HAS FAILED TO SAT ISFACTORILY PROVE THAT THE TRIAL PRODUCTION HAS IN FACT STARTED. IT WAS AL SO HELD THAT THERE IS NO EVIDENCE LIKE PRODUCTION REPORT INDICATING THE QUAL ITY OF RAW MATERIAL CONSUMED AND PRODUCTION OF NOODLES AND THE NAMES OF THE DEALERS TO WHOM THE ALLEGED NOODLES WERE DISTRIBUTED FOR MARKE TING. THE TRIBUNAL ULTIMATELY HELD THAT THE ASSESSEE IS NOT E NTITLED TO DEPRECIATION AS WELL AS THE CLAIM OF EXPENSES IN RELATION TO THE ALLEGED TRIAL PRODUCTION WHICH IS NOT SUPPORTED BY ANY EVIDENCE. TH E FINDING FACT RECORDED BY THE TRIBUNAL IN THE CASE OF THE ASSESSEE THUS PROVES THAT THE CLAIM OF THE ASSESSEE WAS IN FACT WRONG. IT IS SETT LED LAW THAT THE FINDINGS GIVEN IN THE ASSESSMENT ORDER ARE RELEVANT AND HAVE PROBATIVE VALUE. WHEN THE ASSESSEE PRODUCE NO FRESH EVIDE NCE OR PRESENTS ANY ADDITIONAL OR FRESH CIRCUMSTANCES IN THE PENALTY PROCEEDINGS, HE WOULD BE DEEMED TO HAVE FAILED TO DISCHARGE THE ONU S PLACED ON HIM AND LEVY OF PENALTY WOULD BE JUSTIFIED. WE RELY UPON THE RECEN T DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS HARPRASAD & CO. LTD. 328 ITR 53. IT MAY ALSO BE NOTED HERE THAT THE LEARNED CIT(A) DELETED THE PENALTY HOLDING THAT THE ISSUE WITH REGARD DEPRECIATION IS DEBATABLE ONE. NO OTHER FINDING HAS BEEN GIVEN BY THE LEARNED CIT(A) IN THE IMPUGNED ORDER FOR DELETING T HE PENALTY. THE BRIEF ITA NO.1603/AHD /2013 ACIT VS. PARLE INTERNATIONAL PVT. LTD. ASST.YEAR 1988-89 - 3 - FINDINGS OF THE LEARNED CIT(A) IN PARA 4.1.4, 4.1.5 AND 4.1.6 ARE REPRODUCED ABOVE IN THIS ORDER. THE BRIEF FINDING OF THE ORDER OF THE LEARNED CIT(A) WOULD NOT SERVE THE PROVISION SECTION 250(6) OF THE I.T. ACT BECAUSE THE COMMISSIONER (APPEALS) ARE REQUIRED TO GIVE REASONS FOR DECISION IN THE APPELLATE ORDER WHILE DISPOSING OF THE APPEALS. EVEN, THE NOTING OF THE LEARNED CIT(A) THAT THE ISSUE OF DEPRECIATION IS DEBATABLE IS FACTUALLY INCORRECT BECAUSE THE FINDI NG OF FACT GIVEN BY THE TRIBUNAL IN THE CASE OF THE ASSESSEE IN WHICH IT WA S SPECIFICALLY NOTED THAT THE CLAIM OF THE ASSESSEE IS NOT BASED ON ANY POSITIVE EVIDENCE. IN THE LIGHT OF THE FINDING OF THE FACT RECORDED BY TH E TRIBUNAL VIDE ORDER DATED 29-08-2000 CONFIRMING THE ADDITION ON THIS IS SUE, THE LEANED CIT(A) WAS NOT JUSTIFIED IN CANCELLING THE PENALTY BY PASSING A NON- SPEAKING ORDER. CONSIDERING THE FACTS AND CIRCUMSTA NCES, IT WOULD BE APPROPRIATE TO RESTORE THE MATTER TO THE FILE OF TH E LEARNED CIT WITH DIRECTION TO RE-DECIDE THE ISSUE AFRESH BY PASSING REASONED ORDER IN WRITING GIVING POINT FOR DETERMINATION AND REASONS DECISION IN THE APPLICABLE ORDER. THE LEARNED CIT(A) SHALL GIVE REA SONABLE SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. IN THE RESULT, PART OF THIS GROUND OF APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSE.' 2.2 IN COMPLIANCE TO THE HONBLE ITATS HEARING WER E ISSUED DURING THE APPELLATE PROCEEDINGS. IN RESPONSE TO THE NOTIC E ASSESSEE SUBMITTED AS UNDER: (2) WE WOULD LIKE TO DRAW YOUR ATTENTION TO THE OR IGINAL ASSESSMENT ORDER DTD. 27.03.1991 (COPY ENCLOSED VIDE ANNEXURE - '1') WHEREIN THE ASSESSING OFFICER ON PAGE - 5 OF HIS ORDER HAS REJ ECTED THE CLAIM OF THE ASSESSEE REGARDING DEPRECIATION DURING TRIAL RUN PR ODUCTION ON FOLLOWING OBSERVATIONS: (I) THE ASSESSEE COMPANY COULD NOT SUBMIT EVIDENCE OF T HE ELECTRICITY CONNECTION. (II) AS REGARDS THE USE OF GENERATOR, THE A.O. DEMA NDED FUEL BILLS AND SUPPLIERS OF THE FUEL WAS SITUATED AT MUMBAI AN D THE ASSESSEE SHOULD HAVE PURCHASED FUEL FROM THE NEARBY AREA OF THE FACTORY AT PALGHAR AND THAT THE FUEL PURCHASED MIGHT HAVE USED FOR RUNNING VEHICLES. ITA NO.1603/AHD /2013 ACIT VS. PARLE INTERNATIONAL PVT. LTD. ASST.YEAR 1988-89 - 4 - 1. DIRECT EVIDENCES FOR TRIAL RUN PRODUCTION: TO REBUT THE ABOVE FINDINGS/ OBSERVATIONS OF THE AS SESSING OFFICER, THE APPELLANT COMPANY WOULD LIKE TO FILE FOLLOWING: 1. WE ARE ENCLOSING DEBIT NOTE NO. 6, DTD. 06.04.1988 OF M/S. B.E. BILIMORIA & CO., WHICH IS AN INDEPENDENT, GOVT. AP PROVED AND REPUTED SUPPLIER OF DIESEL (ANNEXUE-'2') (I) IF YOUR HONOUR WOULD LOOK AT THE SAID DEBIT NOTE, W HEREIN IT IS CLEARLY MENTIONED THAT IT IS RAISED ON THE APPEL LANT COMPANY. THE DELIVERY ADDRESS IS ALSO MENTIONED AS FACTORY AT PALGHAR. (II) IN THE DESCRIPTION, IT IS MENTIONED 'AS COST OF HSD OIL AND DIESEL UTILIZED FOR THE GENERATOR INSTALLED NEAR TH E WATER TANK AND FOR THE MONTH OF MARCH, 1988. (III) THE SUBSEQUENT CONFIRMATION FROM THE SUPPLIER WAS A LSO DATE 02.05.1991 FILED BEFORE THE APPELLANT AUTHORITY (AN NEXURE-'3') WHEREIN THE SUPPLIER HAS CONFIRMED THAT IT IS THEIR PREMISES TILL TO DATE. (IV) THE BILL, WHEN IT IS RAISED WHOSE DESCRIPTION ON TH E DEBIT NOTE CLEARLY SPECIFY THAT THE PERIOD WAS RELATED TO MARCH, 1988. THE SAID SUPPLIER HAS ALSO CONFIRMED THAT IT WAS PURCHASED LOCALLY BY THEIR SENIOR ENGINEER AT PALGH AR AND ONLY BILLS AND DEBIT NOTE ARE RAISED FROM HEAD OFFI CE MUMBAI. NEEDLESS TO SAY THAT THE SAID SUPPLIER IS C LASS-I REGISTERED CONTRACTOR OF GOVERNMENT HAVING VERY HIG H REPUTE AND LONG STANDING. (V) THE FACT OF PRODUCTION HAVE NOT BEEN DISPUTED NOR C HALLENGED BY THE LD. ASSESSING OFFICER. HE HAS ALSO NOT CHALL ENGED THE BILLS OF M/S. B.E. BILLIMORIA & CO., WHICH PROVIDED DIESEL AND OIL. 2. ELECTRICITY CONNECTION IS NOT CONDITION PRECEDENT B UT USE OF PLANT AND MACHINERY EVEN USE OF GENERATOR IS PERMISSIBLE: (I) WE ARE ENCLOSING THE BILL OF M/S. MARCO ENGINEERING & MARINE WORKS (ANNEXURE-'4') WHICH PROVIDED DIESEL POWER GENERATOR FOR 110 KVA STATES THAT HIRE CHARGES HAVE BEEN RECEIVED FOR USER AT SITE AT PALGHAR DAILY REPORT N UMBER AND DATES OF HIRE ARE ALSO MENTIONED FROM 25 TH MARCH TO 31 ST ITA NO.1603/AHD /2013 ACIT VS. PARLE INTERNATIONAL PVT. LTD. ASST.YEAR 1988-89 - 5 - MARCH, 1988 AND EXPENSES ARE ALSO ALLOWED AND NOT B EEN CHALLENGED BY THE ASSESSING OFFICER. (II) WE ARE ENCLOSING REGISTRATION CERTIFICATE FROM STEA M BOILER INSPECTION OFFICE LETTER DTD. 26.07.1988 PASSING PR OVISIONAL ORDER FOR BOILER NO.MR/11430 FOR THE PERIOD FROM 17.03.1988 TO 16.09.1988 (ANNEXURE-'5'). (III) WE WOULD ALSO LIKE TO SUBMIT THAT MAHARASHTRA STATE ELECTRICITY BOARD OFFICE AT KALYAN. DIST. THANE VID E ITS LETTER DTD. 24.03.1988 (ANNEXURE -'6/A') HAD SANCTIONED PO WER FOR THE PALGHAR UNIT FOR MANUFACTURING OF EXTRUDED FOOD PRODUCTS (INCLUDING SPAGETTI AND NOODLES) AND FOR I NFORMED THE COMPANY TO DEPOSIT RS.4,80,000/-. MAHARASHTRA S TATE SALES TAX REQN. (VIDE ANNEXURE -'6/B'). COPY OF REGISTRATION WITH MAHARASTRA STATE POLLUTION CONTROL BOARD VIDE ANNEXURE - 6C (IV) THE RELIANCE OF THE A.O. ON NON-AVAILABILITY OF POW ER CONNECTION IS NOT CONDITION PRECEDENT FOR USE OF PL ANT & MACHINERY SINCE THE ASSESSEE FURNISHED ALL THE EVID ENCE WHICH ARE SUFFICIENT TO CARRY OUT THE PRODUCTION WI TH THE HELP OF DG SET WHICH IS REQUIRED FOR TRIAL RUN PRODUCTIO N. (V) UNDER THE CIRCUMSTANCES A VIEW TAKEN BY THE ASSESSI NG OFFICER THAT THE DEBIT NOTE OF FURNACE OIL IS DATED 08/04/1988 AND THEREFORE, GENERATOR WAS NOT PUT TO USE IS FALL ACIOUS AS IN NORMAL PRACTICE THE MATERIAL ARE ALWAYS RECEIVED FI RST AND THE BILLS FOLLOW THEREFORE. IT IS THE CONCEPT OF ACCRU AL I.E. MATERIAL AND NOT THE BILL. THE DEPRECIATION OF THE DEBIT NOTE IS ABUNDANTLY CLEAR THAT IT PERTAINS TO SUPPLY OF DIES EL FOR THE MONTH OF MARCH AT PALGHAR UNIT. IF THE BILL IS OF A PRIL, 1988, HE OUGHT NOT TO HAVE ALLOWED THE EXPENSE. HE CANNOT BLOW HOT & COLD AT THE SAME TIME. 3. THE NECESSARY INGREDIENTS LIKE BILLS OF RAW MATERIA L, PACKING MATERIAL, PERMITTED FOOD CHEMICALS REQUIRED FOR THE MANUFACTURE OF NOODLES ARE RECEIVED FROM THE FOLLOWING PARTIES AND ACCEPTED BY THE ASSESSING OFFICER: (I) PAPER CUPS - BILL DATED 20.3.88 OF CP PLASTIC PVT. LTD. (ANNEXURE-7) (II) RAW MATERIALS IN THE FORM OF MAIDA, OIL ETC. FROM M /S. SHAH PREMJI KANUBHAI DATED 26.03.88 ANNEXURE- 8' ITA NO.1603/AHD /2013 ACIT VS. PARLE INTERNATIONAL PVT. LTD. ASST.YEAR 1988-89 - 6 - (III) TRANSPORT BILL OF BOMBAY - TARAPORE TRANSPORT CO. D ATED 26.03.88 FOR THE MATERIALS DISPATCHED BY SHAH PREMJ I KANUBHAI & CO. TO PALGHAR FACTORY ANNEXURE-'9'. (IV) CERTIFICATE OF THE PROJECT MANAGER CERTIFYING THE F ACT 'THAT BOILER WAS INSTALLED AT PALGHAR UNIT ON 17.3.88.(AN NEXURE-'10') (V) CERTIFICATE FROM THE PROJECT MANAGER CONFIRMING THE FACT THAT THE DIESEL GENERATOR OF 110 KVA CAPACITY HIRED AT P ALGHAR WAS SUFFICIENT TO RUN THE PLANT. (ANNEXURE -'11') (VI) BILL OF CROWN CHEMICAL CO. FOR THE PURCHASE OF PRES ERVATIVE ON 24.03.1988 ANNEXURE -'12' (VII) MARKET SURVEY REPORT OF RADIUS ADVT. ALSO SAYS THAT GOODS ARE DELIVERED BEFORE 31 ST MARCH, 1988 VIDE THEIR REPORT ANNEXURE- 13/A. (VIII) DETAILS OF RAW MATERIAL CONSUMPTION, PRODUCTION, CL. STOCK VIDE ANNEXURE 13/B. (IX) THE AUDITED BALANCE SHEET SUBSTANTIATED THE FACT TH AT APPELLANT COMPANY HAD SUPPLIED CERTAIN CUPS TO OUTSIDE PARTIE S AND THE BALANCE CUPS OF THE NOODLES WERE LYING IN STOCK AND ARE SHOWN AS STOCK IN THE BALANCE SHEET. SUCH ACCOUNTING ENTR IES AND CLOSING STOCK AND OTHER DETAILS PASSED THROUGH FOUR DIFFERENT AUDITS VIZ. A. INTERNAL CONTROL BY THE CO.S DEPT. B. TAX AUDITOR. C. INTERNAL AUDITOR & D. STATUTORY AUDITOR. AND NONE OF THEM HAVE POINTED OUT ANY DISCREPANCY I N THE ACCOUNTS MAINTAINED AND HAVE CERTIFIED THE SAME AS TIME AND FAIR. ON THE ABOVE FACTS AS FILED HEREWITH; THE APPELLANT RESPEC TFULLY SUBMITS THAT IT DID CARRY-OUT TRIAL PRODUCTION. 4. IT IS SUBMITTED WITH RESPECTS THAT ALL THE ABOVE RE FERRED DOCUMENTARY EVIDENCES REQUIRED FOR THE PRODUCTION OF THE NOODLE S FURNISHED BY SEPARATE PARTED HAVE NEITHER BEEN CHALLENGED NOR ST ATED AS IN GENUINE AND THE EXPENSE THEREOF HAVE BEEN ALLOWED I N FULL BY THE SAME ASSESSING OFFICER WHICH SUPPORTS THE STAND OF THE APPELLANT THAT THE PRODUCTION DID TAKE PLACE. ITA NO.1603/AHD /2013 ACIT VS. PARLE INTERNATIONAL PVT. LTD. ASST.YEAR 1988-89 - 7 - 3. AGAINST THE SAID ORDER ASSESSEE PREFERRED FIRST STATUTORY APPEAL BEFORE THE LD.CIT(A) WHO ALLOWED THE APPEAL OF THE ASSESSEE AND DELETED THE PENALTY LEVIED U/S.271(1)(C). 4. NOW MATTER IS BEFORE US. 5. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMP UGNED ORDER. LEARNED AR STATED THAT THE PURCHASE AND INSTALLATIO N OF PLANT AND MACHINERY WERE ACCEPTED BY THE AO. THE AO CONTENDED THAT APPELLANT WAS NOT HAVING ANY ELECTRICITY CONNECTION TO RUN THE PLANT. ON THE OTHER HAND APPE LLANT CONTENTED THAT THE PLANT WAS RUN ON POWER GENERATED BY THE GENERAT ORS. TO RUN THE GENERATOR, DIESEL WAS PURCHASED FROM M/S. B.E. BILL IMORIA & CO. IN THE DEBIT NOTE RAISED BY THIS CONCERN, IT IS CLEARLY ME NTIONED THAT THE DIESEL WAS SUPPLIED TO THE APPELLANT IN THE MONTH OF MARCH , 1988. THE APPELLANT HAS PURCHASED RAW MATERIAL LIKE PAPER CUPS, MAIDA, OIL PRESERVATIVES ETC TO RUN THE PLANT. THESE MATER IALS WERE PURCHASED IN THE MONTH OF MARCH, 1988. THERE ARE EVIDENCES ON RE CORD THAT 110 KVA GENERATOR WAS HIRED AT PALGHAR UNIT TO RUN THE PLAN T. THE PROJECT MANAGER HAS ALSO CERTIFIED THAT THE BOI LER WAS INSTALLED AT PALGHAR UNIT ON 17/08/1988. THE RAW MATERIAL CON SUMPTION AND PRODUCTION AND THE FACT OF CLOSING STOCK IS DULY RE CORDED IN THE BOOKS OF ACCOUNTS. ITA NO.1603/AHD /2013 ACIT VS. PARLE INTERNATIONAL PVT. LTD. ASST.YEAR 1988-89 - 8 - THE TAX AUDITOR, INTERNAL AUDITOR AND STATUTORY AU DITOR HAD OPINED THAT THE P&M WERE USED FOR THE PURPOSES OF BUSINESS DURING THE YEAR UNDER CONSIDERATION. 5.2 THE LD. DR CITED A JUDGMENT OF HONBLE DELHI HI GH COURT, IN THE MATTER OF CIT VS. ZOOM COMMUNICATION PVT. LTD. [201 0] 327 ITR 510 (DEL), IN THIS CASE IT IS HELD AS UNDER: PENALTY CONCEALMENT OF INCOME CLAIM FOR DEDUCT ION NOT BONA FIDE AMOUNTS TO CONCEALMENT OF INCOME ACCOUNTS SHOWI NG DEDUCTION OF INCOME TAX AND EQUIPMENT WRITTEN OFF NOT ALLOWABL E DEDUCTIONS ASSESSEE A COMPANY WITH PROFESSIONAL ASSISTANCE IN COMPUTING INCOME ASSESSEE HAD CONCEALED ITS INCOME LIABLE TO PAY PENALTY INCOME TAX ACT, 1961, SECTION 271(1)(C) 5.3 ON THE OTHER HAND LD. AR STATED THAT THE FACTS OF THE ZOOM COMMUNICATION ARE TOTALLY DIFFERENT. IN THE SAID CA SE, THE ISSUE IS REGARDING CLAIMING LOSS ON ASSET WRITTEN OFF AS TH E EXPENDITURE WHICH WAS FOUND BY THE AO DURING THE ASSESSMENT AND ASSES SEE HAS ACCEPTED THE BONAFIDE MISTAKE DURING THE PENALTY PROCEEDINGS . LD. AR VEHEMENTLY CONTENDED THAT THIS CITATION IS NOT APPLICABLE IN T HE PRESENT CASE. 5.4 LD. A.R. FURTHER STATED THAT IN THE ASSESSEES CASE THERE IS NO SUCH FALSE CLAIM AND THE ASSESSEE COMPANY HAS FURNISHED ALL THE DETAIL OF ADDITIONS TO ASSETS, PURCHASE OF RAW-MATERIALS, AND USE OF DG SET ETC., WHICH WERE QUITE ESSENTIAL FOR PURPOSE OF CARRYING OUT TRAIL RUN PRODUCTION. ITA NO.1603/AHD /2013 ACIT VS. PARLE INTERNATIONAL PVT. LTD. ASST.YEAR 1988-89 - 9 - 5.5 LD. AR CITED A JUDGMENT OF HONBLE GUJARAT HIGH COURT IN THE CASE DAHOD SAHAKARI KHARID VECHAN SANGH LTD. 282 IT R 321, HELD AS UNDER: 'ONCE THERE IS ABSENCE OF MENS REA MERE OMISSIONS F ROM THE RETURN OF INCOME OF AN ITEM OF RECEIPT NEITHER AMOUNTS TO CON CEALMENT, NOR DELIBERATE FURNISHING OF INACCURATE PARTICULARS OF INCOME, UNLESS AND UNTIL THERE IS SOME EVIDENCE OR SOME CIRCUMSTANCES TO SHOW THAT THE OMISSION WAS ATTRIBUTABLE TO AN INTENTION OR DESIRE ON THE PART OF THE ASSESSEE TO CONCEAL THE INCOME SO AS TO AVOID IMPOS ITION OF TAX THEREON. ABSENCE OF PROOF ACCEPTABLE TO THE DEPARTMENT CANNO T BE EQUATED WITH FRAUD OR WILLFUL DEFAULT. THE CIRCUMSTANCES MUST SHOW THAT THERE WAS A CONSCIOUS ACT OF CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS ON THE PART OF THE ASSESSEE. 5.6 LD. AR FURTHER CITED A JUDGMENT OF JURISDICTION AL HIGH COURT IN THE CASE OF NATIONAL TEXTILE VS. CIT [2001] 249 ITR 1 25 (GUJ) HAS HELD AS UNDER: IN ORDER TO JUSTIFY THE LEVY OF PENALTY, TWO FACTO RS MUST CO-EXIST, (I) THERE MUST BE SOME MATERIAL OR CIRCUMSTANCES LEADIN G TO THE REASONABLE CONCLUSION THAT THE AMOUNT DOES REPRESEN T THE ASSESSEES INCOME. IT IS NOT ENOUGH FOR THE PURPOSE OF PENALTY THAT THE AMOUNT HAS BEEN ASSESSED AS INCOME AND (II ) THE CIRCUMSTANCES MUST SHOW THAT THERE WAS ANIMUS, I.E. CONSCIOUS CONCEALMENT OR ACT OF FURNISHING OF INACCURATE PART ICULARS ON THE PART OF THE ASSESSEE. THE EXPLANATION HAS NO BEARIN G ON FACTOR NO.1, BUT IT HAS A BEARING ONLY ON FACTOR NO.2. THE EXPLANATION DOES NOT MAKE THE ASSESSMENT ORDER CONCLUSIVE EVIDE NCE THAT THE AMOUNT ASSESSED WAS IN FACT THE INCOME OF THE ASSES SEE. ABSENCE OF PROOF NOT ACCEPTANCE TO THE DEPARTMENT C ANNOT BE EQUATED WITH FRAUD OR WILFUL DEFAULT. 5.7 LD. AR FURTHER CITED A JUDGMENT OF RAJASTHAN HI GH COURT IN THE CASE OF CIT VS. NAKODA METALS [2006] 204 CTR (RAJ.) , IT WAS HELD: ITA NO.1603/AHD /2013 ACIT VS. PARLE INTERNATIONAL PVT. LTD. ASST.YEAR 1988-89 - 10 - WHETHER COMMERCIAL PRODUCTION HAS COMMENCED IS NOT RELEVANT - COMMENCEMENT OF COMMERCIAL PRODUCTION BY THE ASSESS EE DURING THE RELEVANT PREVIOUS YEAR IS NOT A CONDITION FOR ALLOW ING DEDUCTION AS INVESTMENT ALLOWANCE OR DEPRECIATION. WHAT IS NEEDED IS THAT THE MACHINES MUST BE USED FOR THE ASSESSEE'S BUSINESS. WHETHER THE ASSESSEE IS ABLE TO SUCCESSFULLY COMMENCE COMMERCIA L PRODUCTION OR COMMERCIAL PRODUCTION IS DELAYED ON ACCOUNT OF DEFE CT IN TRIAL PRODUCTION DOES NOT AFFECT THE ALLOWABILITY OF DEDU CTION ON ACCOUNT OF DEPRECIATION AND INVESTMENT ALLOWANCE IF FROM THE MATERIAL ON RE CORD, IT CAN REASONABLY BE INFERRED THAT MACHINES WERE USED FOR THE ASSESSEE'S BUSINESS DURING THE RELEVANT PREVIOUS YEAR. THE USE R OF MACHINES FOR TRIAL PRODUCTION, BEFORE GIVING FULL THROTTLE IS AS MUCH USE OF MACHINES FOR THE PURPOSE OF BUSINESS. 6. IN OUR CONSIDERED OPINION, FOR LAVING OF PENALTY U/S.271(1)(C), DEPARTMENT HAS TO PROVE ITS CASE BEYOND ANY REASONA BLE DOUBT AND DEPARTMENT SHOULD HAVE TO PROVE THAT DEPRECIATION C LAIM WAS FALSE. THEREFORE, WE DECLINE TO INTERFERE IN THE ORDER PAS SED BY THE LD. CIT(A). THEREFORE, WE DISMISS THE APPEAL OF THE DEPARTMENT. 7. IN THE RESULT, APPEAL FILED BY THE DEPARTMENT IS DISMISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 31 / 10 /201 7 SD/- SD/- ( ) 4 5 ( N.K. BILLAIYA ) ( MAHAVIR PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 31/10/2017 PRITI YADAV, SR.PS ITA NO.1603/AHD /2013 ACIT VS. PARLE INTERNATIONAL PVT. LTD. ASST.YEAR 1988-89 - 11 - !'#$ %$' # COPY OF THE ORDER FORWARDED TO : 1. !$' / THE APPELLANT 2. ($' / THE RESPONDENT. 3. 67- + 8- / CONCERNED CIT 4. + 8- 4!5 / THE CIT(A)-XI, AHMEDABAD. 5. 9:;-67 !.!672 ! / DR, ITAT, AHMEDABAD 6. ;<=, # GUARD FILE. & ' / BY ORDER, (9-- //TRUE COPY// (/' )* ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD TRUE COPY 1. DATE OF DICTATION ..26/10/2017 (DICTATION-PAD 4 PAGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 30/10/2017 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER