M/s. Gayatri Tourist Bus Services, Bharuch V. The Income Tax Officer, Ward-1, Bharuch

ITA 167/AHD/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8127 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 19-01-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 17-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROOP CHAND
• Keywords: Depreciation; Audit objection; Wrong claim; Competent authority; Revised return; Unabsorbed depreciation
• Section: 143(3); 147; 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENCH AHMEDABAD BEFORE SHRI S.S. GODARA, JM & SHRI MANISH BORAD, AM. ITA NO. 167/AHD/2014 ASST. YEAR: 2006-07 M/S GAYATRI TOURIST BUS SERVICE, A-22, 1 ST FLOOR, SEVASHRAM SHOPPING CENTRE, BHARUCH-392001 VS. INCOME TAX OFFICER, WARD-1, BHARUCH APPELLANT RESPONDENT PAN AAHFS2470D APPELLANT BY NONE RESPONDENT BY SHRI ROOP CHAND, SR.DR DATE OF HEARING: 19 /01/2017 DATE OF PRONOUNCEMENT: 24/01/2017 O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER . THIS APPEAL OF ASSESSEE FOR ASST. YEAR 2006-07 IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-VI, BARODA, DATED 0 1/11/2013 VIDE APPEAL NO.CAB/VI-590/11-12 ARISING OUT OF ORDER U/ S 271(C) OF THE IT ACT, 1961 (HEREIN AFTER REFERRED AS ACT) FRAMED ON 30/08/2011 BY ITO, WARD-1, BHARUCH. NONE APPEARED ON ABOVE OF THE ASSESSEE . ITA NO. 167/AHD/2014 ASST. YEAR 2006-07 2 APPEAL WAS HEARD WITH THE SUPPORT OF LEARNED DEPART MENTAL REPRESENTATIVE AND THE DETAILS PLACED ON RECORDS ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL :- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) -VI HAS ERRED IN CONFIRMING THE STAND TAKEN BY THE LEARNED ASSESSING OFFICER OF LEVYING PENALTY OF RS.5,45,820/-, WHEN THE ASSESSEE HAS, READILY AD MITTED THE MISTAKE OF CALCULATING DEPRECIATION TWICE DUE TO FACT THAT THE RETURN WAS FILED WITH THE HELP OF COMPUTER FOR THE FIRST TIME. 2. THE MISTAKE APPARENT ON THE RECORD COULD HAVE BE EN RECTIFIED BY THE ASSESING OFFICER U/S 155 OF THE INCOME TAX ACT INST EAD OF PASSING ASSESSMENT ORDER SECOND TIME U/S 143(3) READ WITH SECTION 147 WHEN T HE AUDIT OBJECTION WAS RAISED BY THE DEPARTMENTAL AUDITOR. THUS THE COMMISSIONER'S O RDER CONFIRMING PENALTY MAY BE SET ASIDE IN VIEW OF THE PRINCIPLES OF NATUR AL JUSTICE 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF PROVIDI NG VEHICLES ON HIRE AND CONTRACT BASIS . RETURN OF INCOME FOR A.Y. 2006 -2007 DECLARING NIL INCOME WAS FILED ON 31/12/2006 AND THE SAME WA S PROCESSED U/S. 143(1) OF THE ACT, ON 22/03/2007. THEREAFTER H E FILED REVISED RETURN OF INCOME ON 31/03/2008 DECLARING NIL INCOME . ASSESSMENT WAS COMPLETED U/S.143(3) OF THE ACT, ON 28/11/2008, ASSESSING INCOME AT RS. NIL. THEREAFTER RE-ASSESSMENT U/S. 143(3) R.W.S. 147 OF THE ACT, WAS COMPLETED ON 30/08/2011, ASSESSING INCOME AT RS.NIL AND ALLOWING UNABSORBED DEPRECIATION TO BE C ARRIED FORWARD AT RS.46,03,193/- PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT, WERE INITIATED ON ACCOUNT OF ASSESSEES DOUBLE CLAIM OF DEPRECIATION AT RS.16,21,557/- FOLLOWED BY PENALTY ORDER IMPOSING P ENALTY OF RS.5,45,900/- U/S. 271(1)(C) OF THE ACT. 3. AGGRIEVED ASSESSEE WENT IN THE APPEAL BEFORE LE ARNED CIT(A) AGAINST PENALTY ORDER U/S.271(1)(C) OF THE ACT, BUT COULD NOT SUCCEED ITA NO. 167/AHD/2014 ASST. YEAR 2006-07 3 AS LEARNED CIT(A) SUSTAINED PENALTY IMPOSED U/S. 27 1(1)(C) BY THE ASSESSING OFFICER BY OBSERVING AS FOLLOWS:- 5.3 I HAVE CAREFULLY CONSIDERED THE FACTS AND THE CIRCUMSTANCES OF THE CASE, THE OBSERVATIONS OF THE ASSESSING OFFICER, THE SUBMISSIONS OF THE ASSESSEE, MATERIAL AVAILABLE ON THE RECORD AND THE JUDICIAL P RONOUNCEMENTS ON THE SUBJECT. 5.4 THE PENALTY U/S 271(1)(C) HAS BEEN INITIATED FO R CONCEALMENT OF INCOME ON TWO ISSUES- (I) EXCESS CLAIM OF DEPRECIATION OF RS. 16,21,557/- AND (II) DISALLOWANCE OF EXCESS CLAIM OF BROUGHT FORWARD LOS S OF RS. 1,98,177/-. AS FAR AS THE ISSUE OF EXCESS CLAIM OF DEPRECIATION IS CONCER NED, THE ASSESSEE HAS EXPLAINED THAT IT WAS BECAUSE OF SOFTWARE PROBLEMS WHILE UPLO ADING THE RETURN THAT THIS CALCULATION MISTAKE HAPPENED. HOWEVER, HE FAILED TO SUBSTANTIATE THIS CLAIM WITH ANY EVIDENCE. IN THE CASE OF EXCESS CLAIM OF BROUGH T FORWARD LOSSES, THE ASSESSEE HAS FAILED TO EVEN FURNISH AN EXPLANATION. THE APPE LLANT HAS FAILED TO DISCHARGE THE PRIMARY ONUS CAST ON HIM TO EXPLAIN THE SOURCE OF THE INVESTMENTS. RESULTANTLY, EXPLANATION 1 TO SECTION 271(1)(C) IS CLEARLY ATTRA CTED IN THIS CASE. 5.5 IN CIT VS P.K.NARAYANAN, 238 ITR 901 (KER), IT WAS HELD BY HON'BLE KERALA HIGH COURT THAT UNDER EXPLANATION 1 TO SECTION 271( 1)(C) OF THE INCOME-TAX ACT, PRESUMPTION WILL ARISE IN A SITUATION WHERE ANY ADD ITION MADE BY THE ASSESSING OFFICER IS SUSTAINED BY THE APPELLATE AUTHORITY, TH EN THE ADDITION WILL REPRESENT CONCEALED INCOME OF THE ASSESSEE AND THE ONUS WILL BE ON THE ASSESSEE TO REBUT THE PRESUMPTION. IN VIEW OF THIS, APPELLANT'S CONTENTIO N THAT THE BURDEN IS ON THE DEPARTMENT TO PROVE THE CONCEALMENT BECOMES UNTENAB LE. 5.6 IN CIT VS K.B.MADHUSUDAN 246 ITR 218 (KER), IT HAS BEEN HELD BY HON'BLE SUPREME COURT THAT IF AN AMOUNT IS ADDED OR DISALLO WED IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE, IT IS DEEMED TO REPRESENT T HE INCOME IN RESPECT OF WHICH INACCURATE PARTICULARS HAVE BEEN FILED, 5.7 IN CIT VS KALYANDAS RASTOGI, 193 ITR 713 (SC ), HON'BLE SUPREME COURT HELD THAT A PENALTY IMPOSED FOR A TAX DELINQUENCY I S A CIVIL OBLIGATION, REMEDIAL AND COERCIVE IN NATURE AND IS FAR DIFFERENT FROM PE NALTY FOR A CRIME. IN THIS KIND OF PENALTY, ELEMENT REA IS NOT REQUIRED. IN UNION OF I NDIA V/S DHARMENDRA TEXTILE PROCESSORS [2008] 166 TAXMAN 65 (SC), HON'BLE SUPRE ME COURT REITERATED THIS POSITION AND HELD THAT PENALTY U/S 271(1)(C) IS A C IVIL LIABILITY AND FOR ATTRACTING SUCH CIVI! LIABILITY, WILLFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDIENT AS IS CASE IN THE MATTER OF PROSECUTION U/S 276C. 5.8 IN VIEW OF THE ABOVE DISCUSSION, IT IS CLEAR THAT EXPLANATION 1 TO SECTION 271(1)(C) IS ATTRACTED ON THIS ISSUE AND THE APPELL ANT IS LIABLE FOR PENALTY U/S 271(1)(C), CONSEQUENTLY, THE ORDER OF THE ASSESSING OFFICER WITH RESPECT TO THE PENALTY ON ACCOUNT OF EXCESS CLAIM OF DEPRECIATION AND ALSO EXCESS CLAIM OF LOSSES IS UPHELD. ITA NO. 167/AHD/2014 ASST. YEAR 2006-07 4 6. AS A RESULT, THE APPEAL IS DISMISSED. 4. NONE APPEARED ON ABOVE OF THE ASSESSEE, HOWEVER, LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY ARGUED SUPP ORTING THE ORDER OF CIT(A) AND SUBMITTED THAT ASSESSEE HAS IN TENTIONALLY CLAIMED DEPRECIATION TWICE AND PENALTY HAS BEEN R IGHTLY IMPOSED BY ASSESSING OFFICER AND DULY CONFIRMED BY CIT(A) U/S. 271(1)(C) OF THE ACT. 5. WE HAVE HEARD LEARNED DEPARTMENTAL REPRESENTATI VE AND PERUSED THE CASE FILE AND THE ORDERS OF LOWER AUTH ORITIES. SOLITARY GRIEVANCES OF THE ASSESSEE IN THIS APPEAL IS AGAINS T THE ACTION OF LEARNED, CIT(A) CONFIRMING PENALTY U/S.271(1)(C) OF THE ACT, AT RS.5,45,820/- IMPOSED FOR CLAIMING CURRENT YEAR DEP RECIATION TWICE. 6. FROM GOING THROUGH THE ASSESSING OFFICER U/S. 14 3(3) R.W.S 147 OF THE ACT, DATED 30/08/2011 WE FIND THAT THE SHO W CAUSE NOTICE U/S.143(1) OF THE ACT, WAS ISSUED TO THE ASSESSEE F OR EXPLAINING DISCREPANCIES IN CLAIM OF CARRIED FORWARD OF UNABSO RBED DEPRECIATION. WE FIND IT PERTINENT TO RE-PRODUCE THE REPLY OF THE ASSESSEE FILED ON 08/08/2011 STATING AS UNDER:- WE REFERENCE TO ABOVE, AND IN VIEW OF THE PARA 3 O F YOUR NOTICE, OF HAVING CLAIMED UNABSORBED DEPRECIATION TWICE AMOUNTING TO RS.12,25,601/- . WE WOULD LIKE TO SUBMIT FOLLOWING FOR THE KIND CONSIDERATION OF YOUR HONOR. SIR, WHILE PASSING ASSESSMENT ORDER THE SAME WENT UNNOTICED BY THE THEN ASSESSING OFFICER AND THE ASSESSEE AS WELL. SIR, TH E MISTAKE WAS UNINTENDED AND ITA NO. 167/AHD/2014 ASST. YEAR 2006-07 5 INADVERTENT. SIR, IN VIEW OF THIS FACT, WE REQUEST YOUR HONOUR TO ADD TO THE ASSESSED INCOME THE AMOUNT OF DEPRECIATION CLAIMED BY MISTAKE TWICE. SIR, AS THAT EFFECT THE RESULTANT DEPRECIATION REQUIRED TO BE CA RRIED FORWARD SHALL BE REDUCED TO THAT EXTENT. SIR, THIS WILL ALSO NOT GIVE RISE T O THE DEMAND. WE THEREFORE, ON OUR OWN SUE MOTTO OFFER OUR CLAIM OF DEPRECIATION TO BE ADDED TO THE ASSESSED INCOME. SIR, THE ORDER UNDER SECTION 143 WAS PASSED BY THEN ASSESSING OFFICER AFTER APPLICATION OF MIND AND DUE CREDIT FOR THE UNABSORB ED DEPRECIATION WAS ALSO ALLOWED TO BE CARRIED FORWARD. SIR, WE THEREFORE, REQUEST YOUR GOOD SIR, TO ADD DE PRECIATION CLAIMED TWICE TO THE RETURNED INCOME ASSESSED UNDER SECTION 143(3) WHILE PASSING THE ASSESSMENT ORDER . 7. FROM PERUSAL OF THE ABOVE SUBMISSION MADE BY AS SESSEE DURING THE RE-ASSESSMENT PROCEEDINGS WE UNDERSTAND THAT ASSESSMENT U/S.143(3) OF THE ACT, WAS FRAMED ON 28 /11/2008 WHEREIN ASSESSEE HAS CLAIMED DEPRECIATION TWICE BU T IT WENT WITHOUT NOTICE BY THE LEARNED ASSESSING OFFICER AS THERE WA S NO OBSERVATION TO THIS EFFECT IN THE ASSESSMENT ORDER 143(3) OF TH E ACT, WHICH WAS PASSED AFTER APPLICATION OF MIND. 8. FURTHER WE OBSERVE THAT THERE WAS NO MISTAKE POI NTED OUT BY THE REVENUE ABOUT CALCULATION OF DEPRECIATION I.E RATE OF DEPRECIATION APPLIED AND WRITTEN DOWN VALUE OF ASSET. IN FACT CU RRENT CURRENT YEAR DEPRECIATION WAS FIRST CHARGED TO THE PROFIT AND LO SS ACCOUNTS FOR ARRIVING AT THE NET PROFIT AND AGAIN IT WAS REDUCE D FROM THE TOTAL INCOME WHILE PREPARING COMPUTATION OF INCOME. IT I S ALSO A FACT THAT ASSESSEE HAS DULY ACCEPTED THE MISTAKE, INADVERTEN TLY COMMITTED ITA NO. 167/AHD/2014 ASST. YEAR 2006-07 6 WHILE FILING THE RETURN WHICH EVEN PASSED WITHOUT N OTICE BY THE ASSESSING OFFICER FRAMING ASSESSMENT U/S.143(3) OF THE ACT,. 9. WE FURTHER FIND THAT HONBLE APEX COURT IN THE CASE OF CIT U/S RELIANCE PETRO PRODUCTS PVT. LTD.,(2010)230 CTR 320 (SC) HAS HELD THAT PENALTY U/S.271(1)(C) WOULD NOT BE ATTRACTED IF ASSESSEE HAD CLAIMED EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTED TO THE REVENUE OR WAS NOT ACCEPTABLE TO THE REVENUE. SIMILARLY WE AL SO OBSERVE THAT IN THE CASE OF DCIT V/S BOSTON CONSULTATION GROUP PVT. LTD. 12 TAXMAN 27A (AHD)2011, HAS HELD THE PENALTY FOR CON CEALMENT OF INCOME CANNOT BE LEVIED MERELY BECAUSE ASSESSEE H AS MADE A CLAIM FOR DEDUCTION AND EXPENSES ON SOFTWARE PURCHA SED AND HAD NOT CHALLENGED IN APPEAL. 10. FURTHER GOING THROUGH THE SUBMISSION OF ASSESSE E MADE BEFORE CIT(A) WE OBSERVE THAT MISTAKE OF CLAIMING DEPREC IATION TWICE HAPPENED DUE TO SOFTWARE MALFUNCTION WHILE CALCULAT ING AND CLAIMING DEPRECIATION AND THERE WAS NO MALAFIED INTENSION IN MAKING SUCH WRONG CLAIM. 11. FURTHER ASSESSEE IN THE PROCEEDINGS BEFORE FIRS T APPELLANT AUTHORITY HAS REFERRED RELY IN JUDGEMENT OF HONBLE APEX COURT IN THE CASE OF HINDUSTAN STEEL LIMITED V/S STATE OF ORISS A 83 ITR26 (1971) WHERE HONBLE APEX COURT HAS HELD THAT PENALTY WIL L NOT BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO OR BECAUSE MI NIMUM PENALTY IS PRESCRIBED AND THAT THE COMPETENT AUTHORITY WILL BE JUSTIFIED TO LEVY PENALTY WHEN THERE IS A TECHNICAL OR VENIAL BREAC H OF LAW. IT IS ALSO ITA NO. 167/AHD/2014 ASST. YEAR 2006-07 7 BEEN HELD THAT PENALTY WILL NOT ORDINARILY BE IMP OSED UNLESS THE PARTY ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILT Y OF CONTUMACIOUS OR DISHONEST CONDUCT OR ACTED IN CONSCIOUS DISREGARD O F ITS OBLIGATIONS. 12. IN VIEW OF ABOVE DISCUSSION AND FOLLOWING THE R ATIO OF JUDGMENT AND DECISION DISCUSSED, WE ARE OF THE VIEW THAT IN THE CASE BEFORE US THE MISTAKE COMMITTED BY ASSESSEE OF CLAIMING DEPRE CIATION TWICE IS A BONAFIED AND INADVERTENTLY COMMITTED, WHICH EVEN WENT UNNOTICED BY THE ASSESSING AUTHORITY IN THE FIRST ROUND OF AS SESSMENT U/S.143(3) OF THE ACT, AND THEREFORE WE DO NOT FIND IT TO BE A CASE OF FURNISHING INACCURATE OPPORTUNITY OR CONCEALMENT OF PARTICULAR S OF INCOME FOR IMPOSING PENALTY U/S.271(1)(C) OF THE ACT. WE ACCOR DINGLY DELETE THE IMPUGNED PENALTY OF RS.5,45,820/- U/S.271(1)(C). 13. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH JANUARY, 2017 SD/- SD/- (S.S. GODARA) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER TRUE COPY DATED 24/01/2017 MANISH/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD