Appeal details
Counselvise Citation
170719914 RSA 2010
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 5 month(s) 22 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
24-08-2011
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
C
Next Hearing Date
11-08-2011
Assessment Year
2004-2005
Appeal Filed On
04-03-2010
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL 'C' BENCH, MUMBAI BEFORE SHRI R.V. EASWAR, PRESIDENT AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. 1707/MUM/2010 (ASSESSMENT YEAR: 2004-05) M/S. OSCAR FREIGHT P. LTD. INCOME TAX OFFICER - 8(2 )(4) 101 JAYANT APPARTMENT AAYAKAR BHAVAN, M.K. ROAD SAHAR ROAD, SAHAR CARGO VS. MUMBAI 400020 COMPLEX , MUMBAI 400099 PAN - AAACO 4909 K APPELLANT RESPONDENT APPELLANT BY: SHRI ASHOK L. SHARMA RESPONDENT BY: SHRI M.R. KUBAL DATE OF HEARING: 11.08.2011 DATE OF PRONOUNCEMENT: 24.08.2011 O R D E R PER B. RAMAKOTAIAH, A.M. THIS APPEAL BY ASSESSEE IS AGAINST THE ORDER OF THE CIT(A)- XVII, MUMBAI DATED 05.11.2009. 2. THE ISSUE IN THIS APPEAL IS LEVY OF PENALTY UNDER S ECTION 271(1)(C) ON RESTRICTION OF DEPRECIATION TO 50% OF WHAT WAS CLAI MED ON THE REASON THAT THREE TRUCKS PURCHASED BY THE ASSESSEE COULD NOT HA VE BEEN PUT TO USE BEFORE 30 TH SEPTEMBER 2003 AND THE CLAIM OF FULL DEPRECIATION WAS NOT IN ORDER. IN THE COURSE OF ASSESSMENT PROCEEDINGS THE DEPRECIATION WAS ACCORDINGLY RESTRICTED TO 50% OF THE CLAIM OF ` 11,76,788/- THEREBY ALLOWING ONLY AN AMOUNT OF ` 5,88,394/-. THE A.O. INITIATED PENALTY PROCEEDINGS AND LEVIED PENALTY OF ` 2,11,086/-. IT WAS THE SUBMISSION OF THE ASSESSEE I N THE PENALTY PROCEEDINGS THAT THE TRUCKS WERE PURCHASED IN AUGUST AND SEPTEMBER 2003 AND IN THE COMPANYS SCHEDULE ALSO T HEY WERE STATED AS PURCHASED IN AUGUST AND SEPTEMBER 2003 AND THEREFOR E UNDER A BONAFIDE ITA NO. 1707/MUM/2010 M/S. OSCAR FREIGHT P. LTD. 2 MISTAKE THEY HAVE CLAIMED FULL DEPRECIATION. THE A. O. ENQUIRED ABOUT THE PURCHASE OF TRUCKS. THE DETAILS WERE FURNISHED, WHI CH INDICATED THAT THE TRUCKS WERE REGISTERED ON 14 TH OCTOBER 2003 AND INSURED ON 16 TH OCTOBER 2003 AND THE FIRST RECEIPT WAS ON 31 ST OCTOBER 2003. THEREFORE, THE A.O. WAS OF THE OPINION THAT THE TRUCKS COULD NOT BE PUT TO USE BEFORE 30 TH SEPTEMBER. WHEN THIS WAS POINTED OUT ASSESSEE ACCEPTED THE DIS ALLOWANCE AS IT DID NOT HAVE ANY IMPACT ON THE OVERALL CLAIM AS THE SAME WO ULD BE ELIGIBLE IN THE NEXT YEAR. IT WAS SUBMITTED THAT IT WAS A BONAFIDE MISTAKE AS THE TRUCKS WERE PURCHASED IN AUGUST AND SEPTEMBER AND THEREFOR E PENALTY NEED NOT BE LEVIED. THE A.O. DID NOT AGREE AND LEVIED PENALTY. BEFORE THE CIT(A) THE SUBMISSIONS WERE REITERATED AND STATED THAT FULL IN FORMATION WAS FURNISHED AND THERE IS NO CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS. A WRONG CLAIM WAS MADE UNDER A BONAFIDE MISTAKE. 3. THE CIT(A) IN THE BRIEF ORDER HAS SUSTAINED THE PE NALTY BY STATING AS UNDER: - 3.2 THE SUBMISSION HAS BEEN CONSIDERED. THE CLAIM WAS ESTABLISHED TO BE INCORRECT BY THE FOLLOWING FINDIN GS BROUGHT OUT DURING ENQUIRY. (A) THOUGH DATE OF PURCHASE OF TRUCKS WERE SHOWN PRIOR TO 30 TH BILLS FOR BODY BUILDING WERE DATED 10 TH NOV. 2003. (B) THE VEHICLES WERE REGISTERED WITH RTO AUTHORITIES O N 14 TH OCT. 2003 AND THE VEHICLES WERE INSURED ON 16 TH OCT. 2003. (C) VERIFICATION OF TRANSPORT CHARGES A/C SHOWED THAT T RUCKS WERE FIRST USED ONLY IN OCTOBER AND NOVEMBER. THE CLAIMING OF FULL DEPRECIATION ON THESE ASSETS H ENCE AMOUNTS TO FILING INACCURATE PARTICULARS OF INCOME. THE LEVY O F PENALTY IS HENCE SUSTAINED. 4. THE LEARNED COUNSEL SUBMITTED THAT ASSESSEE IS IN T HE BUSINESS OF TRANSPORTATION AND PURCHASED THREE TRUCKS IN THE MO NTH OF AUGUST AND SEPTEMBER AND THEY WERE GIVEN FOR BODY BUILDING IN SEPTEMBER 2003 ITSELF AND ACCORDINGLY ENTERED IN COMPANYS ACCOUNT AS HAV ING PURCHASED IN AUGUST AND SEPTEMBER 2003 AND IN SUPPORT FURNISHED THE SCHEDULE AS PER COMPANYS BOOKS OF ACCOUNT. IT WAS THE SUBMISSION T HAT WHEN THE A.O. ENQUIRED ABOUT THE CLAIM OF DEPRECIATION ASSESSEE F URNISHED ALL THE DETAILS ITA NO. 1707/MUM/2010 M/S. OSCAR FREIGHT P. LTD. 3 INCLUDING COPIES OF THE RC BOOK WHEREIN IT HAS COME TO THE KNOWLEDGE THAT THE TRUCKS WERE ACTUALLY REGISTERED IN OCTOBER 2003 AND WHERE USED SUBSEQUENTLY. THEREFORE WHEN THE A.O. DISALLOWED TH E CLAIM ASSESSEE ACCEPTED THE SAME. IT WAS SUBMITTED THAT THE CLAIM WAS A BONAFIDE MISTAKE IN CLAIMING 100% ALLOWABLE DEPRECIATION OF THE BASI S OF DATES OF PURCHASE OF TRUCKS WHICH WAS NOT IN DISPUTE WHEREAS ASSESSEE SH OULD HAVE CLAIMED 50% OF THE ALLOWABLE DEPRECIATION ON THE REASON OF PUT TO USE SUBSEQUENTLY. IT WAS SUBMITTED THAT THERE WAS A BONAFIDE MISTAKE COM MITTED IN CLAIMING HIGHER DEPRECIATION AND PENALTY SHOULD NOT BE LEVIE D ON THE ABOVE. HE RELIED ON THE FOLLOWING CASE LAWS: - I. CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. 322 ITR 58 (SC) II. CIT VS. BHRAMAPUTRA CONSTRUCTION LTD. 2011-TIOL-470 -HC- DEL-IT DATED 03.08.2011 III. CIT VS. GLOW TECH STEELS LTD. 280 ITR 133 (GUJ) IV. CIT VS. SKYLINE AUTO PRODUCTS 271 ITR 355 (MP) V. DCIT VS. SHAHBAD CO-OP. SUGAR MILLS 129 TTJ (CHD) 9 2 VI. CIT VS. RUBBER UDYOG VIKAS PVT. LTD. 335 ITR 558 (P &H) VII. EQUEST INDIA PVT. LTD. VS. ITO 41 SOT 225 (MUM) 5. THE LEARNED D.R., HOWEVER, RELIED ON THE ORDERS OF THE A.O. AND THE CIT(A) AND SUBMITTED THAT THE VEHICLES WERE REGISTE RED WITH THE RTO AUTHORITIES ON 14 TH OCTOBER 2003 AND WERE INSURED ON 16 TH OCTOBER 2003 AND THE BODY BUILDING RECEIPTS WERE DATED 10 TH NOVEMBER 2003, THEREFORE, THE TRUCKS COULD NOT HAVE BEEN USED BEFORE 30 TH SEPTEMBER 2003 AS HELD BY THE A.O. IN THESE CIRCUMSTANCES, HE PLEADED FOR CON FIRMING THE PENALTY. 6. WE HAVE CONSIDERED THE ISSUE. AS FAR AS THE FACTS A RE CONCERNED THERE IS NO DOUBT THAT ALL THE THREE TRUCKS WERE PURCHASE D BEFORE 30 TH SEPTEMBER, I.E. FROM 27 TH AUGUST TO 9 TH SEPTEMBER 2003. IT IS ALSO NOTICED THAT THE ASSESSEE HAS SPENT AN AMOUNT OF RS.7,70,73 1/- FOR BUILDING BODIES OF THE ABOVE TRUCKS. EVEN THOUGH THE ACTUAL COMPLETION OF THE WORK WAS NOT ON RECORD BUT THE SCHEDULE IN COMPANYS ACC OUNT INDICATES THAT THESE WERE REPORTED TO HAVE BEEN COMPLETED BEFORE 3 0 TH SEPTEMBER 2003 AND ACCORDINGLY SHOWN IN THE SCHEDULE AS SUCH. AS C AN BE SEEN FROM OTHER DETAILS, THE TRUCKS WERE REGISTERED WITH THE AUTHOR ITIES ON 14 TH OCTOBER ITA NO. 1707/MUM/2010 M/S. OSCAR FREIGHT P. LTD. 4 2003. THEREFORE IT CAN BE STATED THAT THE TRUCKS WE RE READY FOR USE BEFORE THAT DATE. IT CAN ALSO BE CONSIDERED THAT THE RTO A UTHORITIES WILL TAKE SOME TIME IN REGISTERING THE VEHICLES, WHICH WAS ULTIMAT ELY DONE ON 14 TH OCTOBER. THEREFORE THE TRUCKS COULD HAVE BEEN READY ANY TIME BEFORE 14 TH OCTOBER 2003. THE FIRST RECEIPT OF INCOME DATED 31 ST OCTOBER DOES NOT PROVE THAT THE FIRST TRIP WAS MADE ONLY ON THAT DATE. ONCE THEY AR E READY FOR USE AND WERE REGISTERED, IT CANNOT BE STATED THAT THE TRUCKS WER E NOT PUT TO USE FOR MORE THAN 180 DAYS DURING THE YEAR. HOWEVER, SINCE THESE TRUCKS WERE PURCHASED IN THE MONTHS OF AUGUST AND SEPTEMBER AND WERE REGISTERED AROUND 14 TH OCTOBER, ASSESSEES EXPLANATION THAT THEY WERE UND ER BONAFIDE MISTAKE IN CLAIMING DEPRECIATION AT FULL CANNOT BE REJECTED. MOREOVER, THE ACCOUNT SCHEDULE A ALSO INDICATES THAT PURCHASE T O THE EXTENT OF RS.21,71,321/- WERE MADE IN AUGUST 2003 AND RS.7,35 ,000/- WAS MADE IN SEPTEMBER 2003, THE FACTS OF WHICH WERE NOT DISPUTE D. JUST BECAUSE THERE IS NO EVIDENCE OF PUT TO USE FOR MORE THAN 180 DAYS DURING THE YEAR, THE A.O. RESTRICTED THE DISALLOWANCE TO 50% OF THE ALLO WABLE DEPRECIATION. WE ARE OF THE OPINION THAT JUST BECAUSE THE CLAIM OF D EPRECIATION WAS NOT ALLOWED IN FULL, THE FACTS DOES NOT LEAD FOR LEVY O F PENALTY UNDER SECTION 271(1)(C) ON THE REASON OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS. MAKING INCORRECT CLAIM DOES NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS UNLESS WITH MA LAFIDE INTENTION AS HELD BY THE HONBLE P&H HIGH COURT IN THE CASE OF CIT VS . RUBBER UDYOG VIKAS PVT. LTD. 335 ITR 558. ON SIMILAR FACTS THE ITAT CH ANDIGARH BENCH IN THE CASE OF DCIT VS. SHAHBAD CO-OPERATIVE SUGAR MILLS 1 29 TTJ (CHD) 92 CAME TO THE CONCLUSION THAT THOUGH ASSETS WERE ADDED AFT ER 30TH SEPTEMBER AND ASSESSEE CLAIMED DEPRECIATION FOR THE FULL YEAR, TH ERE WAS A BONAFIDE MISTAKE WHILE FILING THE RETURN WHICH DID NOT INVOL VE ANY CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS AND DOES NOT ATTRACT PENALTY. THE HONBLE DELHI HIGH COURT IN THE CASE O F CIT VS. BHRAHMAPUTRA CONSORTIUM LTD. 2011-TIOL-470-HC-DEL-IT ALSO HELD T HAT WHEN THE ASSESSEE ACCEPTS THAT EXCESS DEPRECIATION WAS CLAIM ED INADVERTENTLY AND THE SAME BEING DISALLOWED BY THE A.O. PENALTY UNDER SECTION 271(1)(C) IS NOT WARRANTED. ITA NO. 1707/MUM/2010 M/S. OSCAR FREIGHT P. LTD. 5 7. HON'BLE SUPREME COURT IN THE CASE OF CIT VS. RELIAN CE PETROCHEMICALS LTD. 322 ITR 158 ALSO HELD THAT A ME RE MAKING OF CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NO T AMOUNT TO FURNISHING OF INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN WILL NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS. IN VIEW OF THESE JUDICIAL PRINCIPLES, WE ARE OF THE OPINION THAT MAKING HIGHER CLAIM OF DEPRECIATION ON A BONAFIDE M ISTAKE CANNOT BE CONSIDERED AS FURNISHING OF INACCURATE PARTICULARS OR CONCEALMENT OF INCOME SO AS TO ATTRACT PENALTY. 8. THE LEARNED D.R. IN HIS ARGUMENT RELIED ON THE PRIN CIPLES ESTABLISHED BY THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. ZOOM COMMUNICATION P. LTD. 327 ITR 510. THE FACTS IN THE CASE INDICATE THAT THERE THE ASSESSEE CLAIMED CERTAIN CAPITAL EXPENDITURE AS REVENUE EXPE NDITURE BY WRITING OFF IT IN THE BOOKS OF ACCOUNT. ON THE SET OF FACTS THE HO N'BLE DELHI HIGH COURT HELD THAT THE CLAIM BEING MALAFIDE CLAIM PENALTY WA S ATTRACTED. HOWEVER, IN THE PRESENT CASE WE DO NOT SEE ANY MALAFIDE INTENTI ON OF THE ASSESSEE IN CLAIMING DEPRECIATION AT FULL ( 40%) ON THE ASSETS WHEREAS AS PER THE PROVISO THE CLAIM IS TO BE RESTRICTED TO 50% OF THE ALLOWAB LE AMOUNT, IF THE ASSETS ARE NOT PUT TO USE FOR MORE THAN 180 DAYS IN AN YEAR. E VEN THOUGH THE A.O. MADE A STRICT CUT OFF DATE OF 30 TH SEPTEMBER 2003 TECHNICALLY SPEAKING THE 180 DAYS RESTRICTION CAN START ON 3 RD OR 4 TH OCTOBER 2003 ONWARDS. AS POINTED OUT EARLIER THE TRUCKS WERE REGISTERED BY 1 4 TH OCTOBER 2003. THIS INDICATES THAT THE TRUCKS WERE READY FOR USE AROUND THE FIRST WEEK OF OCTOBER 2003. IT CANNOT BE STATED THAT ASSESSEE MALAFIDELY CLAIMED MORE DEPRECIATION. IT CAN BE A BONAFIDE MISTAKE IN CLAIM ING FULL DEPRECIATION ON THE REASON THAT THE TRUCKS WERE PURCHASED BEFORE 9 TH SEPTEMBER 2003. THE DATE OF BODY BUILDING WERE SHOWN BY THE CIT(A) AS 1 0 TH NOVEMBER 2003. THIS ITSELF DOES NOT ESTABLISH THAT THE BODY BUILDING WA S DONE LATER AS THE REGISTRATION OF THE TRUCKS WAS DONE ON 14 TH OCTOBER 2003 ITSELF. THERE CAN BE NO REGISTRATION WITHOUT BODY BEING BUILT. SINCE WE ARE OF THE OPINION THAT THERE IS A BONAFIDE MISTAKE IN CLAIMING HIGHER DEPR ECIATION, RESPECTFULLY FOLLOWING THE PRINCIPLES ESTABLISHED AS STATED ABOV E, WE HAVE NO HESITATION IN ITA NO. 1707/MUM/2010 M/S. OSCAR FREIGHT P. LTD. 6 CANCELLING PENALTY LEVIED UNDER SECTION 271(1)(C). THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 9. IN THE RESULT, APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH AUGUST 2011. SD/- SD/- (R.V. EASWAR) (B. RAMAKOTAIAH) PRESIDENT ACCOUNTANT MEMBER MUMBAI, DATED: 24 TH AUGUST 2011 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) XVII, MUMBAI 4. THE CIT VIII, MUMBAI CITY 5. THE DR, C BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.
