ACIT., Circle-16(2), Hyderabad, Hyderabad V. M/s Platina Properties and Projects Limited, Hyderabad

ITA 1717/HYD/2014

• Counselvise Citation: 171722514 RSA 2014
• Duration Of Justice: 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 19-03-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 10-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAMAKRISHNA BANDI
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Depreciation; Search and seizure; Wrong claim
• Section: 132; 143(3); 153A

Judgement Text

ITA NO.1717 OF 2014 PLATINA PROPERTIES AND PROJECTS LTD HYDERABAD PAGE 1 OF 8 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER & SMT.ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO.1717/HYD/2014 (ASSESSMENT YEAR: 2005-06) ACIT CIRCLE 16(2) HYDERABAD VS. PLAT INA PROPERTIES AND PROJECTS LIMITED HYDERABAD PAN: AACCP 8484 G (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI RAMAKRISHNA BANDI, DR FOR ASSESSEE : SHRI P. MURALI MOHAN RAO, CA DATE OF HEARING : 19/03/2015 DATE OF PRONOUNCEMENT : 27 /03/2015 O R D E R PER SMT. ASHA VIJAYARAGHAVAN, J.M. THIS IS AN APPEAL FILED BY THE REVENUE DIRECTED AG AINST THE ORDER OF THE LD CIT (A)-V, HYDERABAD DATED 30.06.20 14, PASSED FOR A.Y 2005-06. 2. BRIEFLY STATED, THERE HAS BEEN A SEARCH AND SEIZ URE ACTION U/S 132 OF THE ACT IN THE GROUP CASES OF SUJANA UNI VERSAL INDUSTRIES LTD., HYDERABAD DURING FINANCIAL YEAR 20 04-05. SUBSEQUENTLY ASSESSMENT U/S 143(3) R.W.S. 153C OF T HE ACT HAS BEEN COMPLETED IN ASSESSEES CASE ON 22.12.2006 DET ERMINING ITA NO.1717 OF 2014 PLATINA PROPERTIES AND PROJECTS LTD HYDERABAD PAGE 2 OF 8 THE TOTAL INCOME AT RS.65,60,469 AS AGAINST THE RET URNED LOSS OF RS.99,73,735. IN THE ASSESSMENT, AO MADE AN ADDITIO N OF RS.52,85,744 BY RECOMPUTING THE INCOME UNDER THE HE AD INCOME FROM HOUSE PROPERTY. AO ALSO DISALLOWED LOS S ON SALE OF FIXED ASSETS CLAIMED FOR RS.10,74,750/-. 3. AGGRIEVED BY THE ASSESSMENT THE ASSESSEE FILED A N APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) WHO DISMISSED THE APPEAL. THEREFORE, THE ASSESSING OFFICER LEVIED A PENALTY OF RS.22,81,879/- U/S 271 (1 )(C) OF THE ACT VIDE HIS ORDER DATED 26/03/2009. 4. THE LD AR SUBMITTED BEFORE THE CIT (A) THAT THE ASSESSEE HAS NEITHER CONCEALED ANY INCOME NOR HAS FURNISHED INACCURATE PARTICULARS OF INCOME FOR THE YEAR UNDER CONSIDERAT ION AND THAT THE LEVY OF PENALTY U/S 271(1)(C) IS NOT JUSTIFIED. THE AR ALSO FILED THE FOLLOWING EXPLANATION: SEARCH AND SEIZURE OPERATION U/S 132 OF THE ACT WA S CONDUCTED IN THE CASE OF SUJANA GROUP OF INDUSTRIES DURING THE FINANCIAL YEAR 2004-05 SUBSEQUENT TO WHI CH A NOTICE U/S 153C OF THE ACT WAS ISSUED TO THE APPELL ANT AND AN ASSESSMENT U/S 143(3) R.W.S. 153A R.W.S. 153 C OF THE ACT WAS MADE ON 22.12.2006 DETERMINING THE TOTAL INCOME AT RS.65,60,469 AS AGAINST THE RETURNE D LOSS OF RS.99,73,735. AS CAN BE SEEN FROM THE ITA NO.1717 OF 2014 PLATINA PROPERTIES AND PROJECTS LTD HYDERABAD PAGE 3 OF 8 ASSESSMENT ORDER, THE ADDITIONS MADE ARE ON ACCOUNT OF THE FOLLOWING: (I) RECOMPUTATION OF INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY (II) DISALLOWANCE OF LOSS ON SALE OF FIXED ASSETS DEBITED TO P&L A/C. 2) AGGRIEVED BY THE ASSESSMENT, THE APPELLANT FILED AN APPEAL BEFORE THE CIT (A) WHO UPHELD THE ASSESSMENT. FURTHER THE APPELLANT COULD NOT PURSUE THE APPEAL FILED BEFORE THE HON'BLE ITAT WITH THE RESUL T THAT THE QUANTUM WAS CONFIRMED IN THE APPEALS. IN THIS BACKGROUND, THE AO LEVIED A PENALTY OF RS.22,81,879 U/S 271(1)(C) VIDE ORDER DATED 26.03.2009. IN THIS CONNECTION, IT IS TO SUBMIT THAT THE APPELL ANT HAS NEITHER CONCEALED ANY INCOME NOR FURNISHED INACCURA TE PARTICULARS OF INCOME FOR THE YEAR UNDER CONSIDERAT ION. FURTHER, THERE IS NO SEIZED MATERIAL BASED ON WHICH THE ADDITIONS ARE MADE IN THE ASSESSMENT. AS SUBMITTED IN PARA NO.1 ABOVE, THE ADDITION UNDER THE HEAD INCOM E FROM HOUSE PROPERTY HAS BEEN MADE BY THE AO ONLY B Y RECOMPUTING THE INCOME. FURTHER, THE CLAIM MADE B Y THE APPELLANT TOWARDS LOSS ON SALE OF FIXED ASSETS HAS BEEN DISALLOWED IN THE ASSESSMENT BY THE AO. THESE ARE THE ONLY TWO ADDITIONS MADE IN THE ASSESSMENT COMPLETED AND THE IMPUGNED PENALTY HAS BEEN LEVIED TAKING INTO CONSIDERATION TAX ON THE TOTAL INCOME T HUS COMPUTED. 3) IN THIS CONNECTION, IT IS SUBMITTED AS UNDER: A) A MERE MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE, WHEREBY NO PENALTY U/S 271(1)(C) IS EXIGIBLE. RELIANCE IS PLACED ON THE SUPREME COURT JUDGMENT IN THE CASE OF CIT V. RELIANCE PETROPRODUCTS PVT. LTD (2010) 322 ITR 0158 (S.C). B) AN ERRONEOUS CLAIM OF DEDUCTION, WHICH IS WITHDRAWN WHEN ERROR IS DISCOVERED IS NOT CONCEALMENT OF INCOME AND PENALTY CANNOT BE IMPOSED. RELIANCE IS PLACED ON THE FOLLOWING CASE LAWS: ITA NO.1717 OF 2014 PLATINA PROPERTIES AND PROJECTS LTD HYDERABAD PAGE 4 OF 8 I) CIT V. SRI SARADHA TEXTILE PROCESSORS PVT LTD (2006) 286 ITR 499 (MAD). II) CIT V. FREE MENTLE INDIA TELEVISION PRODUCTION PVT. LTD (2007) 294 ITR 88 (DEL.) C) WHERE THE FACTS WERE DISCLOSED BUT WRONG CLAIMS FOR SPECIAL DEDUCTION WERE MADE, IT WAS HELD IN THE FOLLOWING CASES, THAT IT WAS NOT A CASE OF CONCEALMENT OF INCOME AND PENALTY COULD NOT BE IMPOSED. I) CIT V. INTERNATIONAL AUDIO VISUAL CO (2007) 288 ITR 570 (DEL.) II) CIT V. NATH BROTHERS EXIM INTERNATIONAL LTD (2007) 288 ITR 670 (DEL.) D) IN THE CASE OF CIT V. SIRAMANDA STEEL LTD (2002) 256 ITR 683 (MAD.) IT WAS HELD AS UNDER: WHERE AN ASSESSEE CLAIMED DEPRECIATION AND INVESTME NT ALLOWANCE ON NEWLY INSTALLED MACHINERY BASED ON A H IGH COURT DECISION, THAT USER OF MACHINERY IN TEST PROD UCTION IS ALSO USER TO MERIT DEPRECIATION, THE INTERFERENCE T HAT THERE WAS DELIBERATE FURNISHING OF INACCURATE PARTICULARS IN ORIGINAL RETURN CANNOT BE CORRECT, SO THAT THE CANCELLATION OF PENALTY WAS JUSTIFIED. E) IN THE FOLLOWING CASES, THE ASSESSEE CLAIMED DIMINUTION IN VALUE OF SHARES AS REVENUE LOSS AND IT WAS HELD TO BE CAPITAL LOSS. ASSESSEE DISCLOSED WRITING OFF OF INVESTMENTS IN AUDIT STATEMENT. IT WAS HELD THAT IT IS NOT A CASE OF FURNISHING INACCURATE PARTICULARS AND PENALTY U/S 271(1)(C) CANNOT BE LEVIED. I) CIT V. GANESAN BUILDERS LTD (2008) 299 ITR 403 (MAD.) II) CIT V. NATARAJAN (P) (2004) 266 ITR 219 (MAD). F) IN THE CASE OF GUJARAT CREDIT CORPORATION LTD V. ACIT (2008) 302 ITR (AT) 250 (AHM), THE ASSESSEE HELD SECURITIES AS INVESTMENT AND INCURRED LOSS AND IT WAS ALLOWED BY THE AO. THE ASSESSMENT WAS REOPENED TO BRING THE LOSS UNDER CAPITAL GAINS. PENALTY U/S 271(1) (C) WAS LEVIED. IT WAS HELD THAT THERE WAS NO CONCEALMENT OF ITA NO.1717 OF 2014 PLATINA PROPERTIES AND PROJECTS LTD HYDERABAD PAGE 5 OF 8 INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME AND PENALTY U/S 271(1)(C) IS NOT LEVIABLE. G) IN THE FOLLOWING CASES, LEVY OF PENALTY U/S 271(1)(C) HAS BEEN HELD NOT JUSTIFIED WHERE A CLAIM FOR CERTAIN EXPENDITURE IS DISALLOWED IN THE ASSESSMENT. I) JAJOO (JK) V. CIT (1990) 181 ITR 410 (MP) II) CIT V. INDEN BISLERS (1999) 240 ITR 943 (MAD) H) IN THE CASE OF CIT V. CHINNI KRISHNA CHETTY (K.R) (2000) 246 ITR 121 (MAD) IT WAS HELD AS UNDER: MERE UPWARD REVISION OF INCOME BY THE ASSESSING AU THORITY DOES NOT AUTOMATICALLY MEAN THAT THE ASSESSEE CONCE ALED INCOME AND LEVY OF PENALTY U/S 271(1)(C) WAS NOT JU STIFIED. I) APART FROM PLACING RELIANCE ON THE CASE LAWS MENTIONED AT S.NOS (A) TO (H) ABOVE, THE ASSESSEE ALSO PLACES RELIANCE ON THE FOLLOWING DECISIONS OF THE TRIBUNAL IN SUPPORT OF ITS CONTENTION AGAINST LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. I) S. PRASAD RAO VS. DCIT (ITA NO.338/HYD/06) ITAT HYDERABAD BENCH. II) KANBAY SOFTWARE INDIA PVT LTD V. DCIT (ITA NO.300/PN/07) ITAT PUNE BENCH. 4) IN VIEW OF THE ABOVE SUBMISSIONS, IT IS REQUESTED TO KINDLY DELETE THE PENALTY LEVIED OF RS.22,81,829 U/S 271(1)(C) FOR THE YEAR UNDER CONSIDERATION. 5. THE LD CIT (A) HELD AS FOLLOWS: AS CAN BE SEEN FROM THE ASSESSMENT ORDER PASSED U/S 143(3) R.W.S 1537 R.W.S 153C DATED 22/11/2006WHICH HAS BEEN CONFIRMED BY THE COMMISSIONER OF INCOME TAX(APPEALS), THE ADDITION OF RS.52,85,744/- HAS BE EN MADE BY RECOMPUTING THE INCOME UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY'. THE OTHER ADDITI ON CONFIRMED IS TOWARDS DISALLOWANCE OF LOSS CLAIMED O N SALE OF FIXED ASSETS FOR RS.1 0,74,750/-. THERE IS NO CONCEALMENT OF INCOME OR FURNISHING OF ITA NO.1717 OF 2014 PLATINA PROPERTIES AND PROJECTS LTD HYDERABAD PAGE 6 OF 8 INACCURATE PARTICULARS IN THE APPELLANT'S CASE FOR THE YEAR UNDER CONSIDERATION. THE APEX COURT IN THE CAS E OF CIT V. RELIANCE PETROPRODUCTS PVT. LTD. [2010] 322 ITR 0158 (SC) . 6. WE HAVE HEARD BOTH PARTIES. THE ADDITION UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY' HAS BEEN MADE BY THE ASSESSING OFFICER ONLY BY 'RECOMPUTING THE INCOME'. DUE TO AN ARITHMETICAL MISTAKE IN THE COMPUTATION STATEMENT FILED BY THE ASSESSEE ALONG WI TH ITS RETURN OF INCOME, THE IMPUGNED ADDITION HAS BEE N MADE. THIS IS EVIDENT' FROM THE STATEMENT OF TAXABLE INCOME, A COPY OF WHICH WAS SUBMITTED IN THE PAPER BOOK. AS CAN BE SEEN FROM THE SAID STATEMENT, IT IS CLEAR THAT THE ASSESSEE HAS DISCLOSED ALL THE FACTS RELATING TO THE EARNING OF INCOME FROM PROPERTY IN T HE RETURN OF INCOME FILED. HENCE NO PARTICULARS OF INC OME FROM HOUSE PROPERTY HAVE BEEN SUPPRESSED. THE ADDITION OF RS.52,85,744/- HAS BEEN MADE ON RECOMPUTATION OF INCOME UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY'. AS SUCH, LEVY OF PENALTY U/S 271(1) (C) WITH REGARD TO THE ADDITION OF RS.52,85,744/- IS NO T WARRANTED. WE ARE OF THE OPINION THAT ASSESSEE HAS NEITHER CONCEALED ANY INCOME NOR FURNISHED INACCURATE ITA NO.1717 OF 2014 PLATINA PROPERTIES AND PROJECTS LTD HYDERABAD PAGE 7 OF 8 PARTICULARS OF INCOME FOR THE YEAR UNDER CONSIDERATI ON. FURTHER, THERE IS NO SEIZED MATERIAL BASED ON WHICH THE ADDITIONS ARE MADE IN THE ASSESSMENT. 7. FURTHER, THE CLAIM MADE BY THE ASSESSEE TOWARDS LOSS ON SALE OF FIXED ASSETS FOR RS.10,74,750/-HAS BEEN DISALLOWED IN THE ASSESSMENT BY THE ASSESSING OFFIC ER. WE FIND FROM SCHEDULE 10 TO P&L FOR THE YEAR UNDER CONSIDERATION, A COPY OF WHICH IS PLACED IN THE PAPE R BOOK THAT 'LOSS ON SALE OF FIXED ASSETS' FOR RS.L0,74,750/-HAS BEEN SHOWN IN IT AND HENCE THE ASSESSEE HAS NOT CONCEALED ANY PARTICULARS WITH REGARD TO HIS INCOME. THE ASSESSEE HAS NOT CONCEALE D ANY PARTICULARS OF INCOME AND THE ADDITION MADE BY THE AO IS A TECHNICAL ONE. WE ARE OF THE OPINION TH AT LEVY OF PENALTY U/S 271(1)(C) IN RESPECT OF THIS AD DITION IS NOT ALSO NOT WARRANTED. WE ALSO RELY ON THE DECISION IN THE CASE OF KANBAY SOFTWARE (P) LTD, WHEREIN IT HAS BEEN HELD AS FOLLOWS: THUS, EVEN ON THE FIRST PRINCIPLE, A PENALTY UNDER SECTION 271(1)( C ) IS NOT SIMPLY AS A CONSEQUENCE OF AN ADDITION BEI NG MADE TO THE INCOME OF THE ASSESSEE. THE PENALTY UND ER SECTION 271(1)( C ) IS A PENALTY FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OR UNDER THE E XTENDED ITA NO.1717 OF 2014 PLATINA PROPERTIES AND PROJECTS LTD HYDERABAD PAGE 8 OF 8 DEFINITION BY VIRTUE OF THE EXPLANATION 1 TO SECTION 271(1)( C ), FOR A DEEMED CONCEALMENT OF INCOME. AS A COROLLARY TO THIS LEGAL POSITION, UNLESS IT IS ESTABLISHED THAT THERE IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS O R IT IS ESTABLISHED THAT, ON THE FACTS OF THE CASE, CONCEAL MENT OF INCOME CAN BE DEEMED IN ACCORDANCE WITH THE PROVISIONS OF LAW, THE PENALTY PROVISIONS CANNOT BE INVOKED AT ALL. 8. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH MARCH, 2015. S D/ - S D/ - (P.M. JAGTAP) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 27 TH MARCH, 2015. VNODAN/SPS COPY TO: 1. ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 16(2) ROO M NO.611, 6 TH FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD 2. M/S. PLATINA PROPERTIES & PROJECTS LTD., 5-4-435 ST ATION ROAD, NAMPALLY, HYDERABAD 3. THE CIT(A)-V HYDERABAD 4. THE CIT IV HYDERABAD 5. THE DR, ITAT, HYDERABAD 6. GUARD FILE BY ORDER