Deep Industries Limited, Ahmedabad V. The Dy.CIT.,(OSD), Range-1, Ahmedabad

ITA 1750/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89410 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 10 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 06-04-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 01-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Principle of natural justice; Revised return
• Section: 27

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD .., , BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ I.T.A. NO.1750/AHD/2011 ( / ASSESSMENT YEAR : 2006-07) M/S.DEEP INDUSTRIES LTD. OPP: SURYANARAYAN BUNGALOW SABARMATI BUNGALOW AHMEDABAD / VS. THE DCIT (OSD) RANGE-1 AHMEDABAD ./ ./ PAN/GIR NO. : AAACD 6915 E ( # / APPELLANT ) .. ( $% # / RESPONDENT ) #& / APPELLANT BY : SHRI TUSHAR P.HEMANI, AR $% #'& / RESPONDENT BY : SHRI NIMESH YADAV, SR.DR ()'* / DATE OF HEARING 06/04/2015 +,-.'* / DATE OF PRONOUNCEMENT 13/05/2015 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-VI, AHMEDABA D (CIT(A) IN SHORT) DATED 26/04/2011 PERTAINING TO ASSESSMENT Y EAR (AY) 2006-07. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF A PPEAL:- 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THE ACTION OF LD.AO IN LEVYING PENALTY O F RS.1,12,760/- U/S.271(1)(C) OF THE ACT, WHICH IS WHOLLY UNSUSTAIN ABLE IN LAW AND ITA NO.1750/AHD /2011 M/S.DEEP INDUSTRIES LTD. VS. DCIT (OSD) ASST.YEAR 2006-07 - 2 - ON FACTS AND AS SUCH THE APPELLANT COULD NOT BE CHA RGED WITH ANY GUILT OF FURNISHING INACCURATE PARTICULARS OF INCOM E OR CONCEALING PARTICULARS OF INCOME WITHIN MISCHIEF OF SECTION 27 1(1)(C) OF THE ACT. THE LEVY OF PENALTY BEING WITHOUT JURISDICTIO N AND TOTALLY UNCALLED FOR, DESERVES TO BE QUASHED. 2. IN ANY CASE, THE IMPUGNED PENALTY ORDER IS BARRED B Y LIMITATION AND THUS WITHOUT JURISDICTION AND ILLEGAL. 3. IN ANY CASE, QUANTIFICATION F THE PENALTY IS ERRONE OUS AND EXCESSIVE. 4. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF AO IN INITIATING AND LEVYING PENALTY UNDE R SECTION 271(1)(C) OF THE ACT WITHOUT RECORDING MANDATORY SA TISFACTION AS CONTEMPLATED UNDER THE ACT AT THE TIME OF FRAMING T HE ASSESSMENT ORDER. 5. BOTH THE LOWER AUTHORITIES HAVE PASSED THE ORDERS W ITHOUT PROPERLY APPRECIATING THE FACT AND THAT THEY FURTHER ERRED I N GROSSLY IGNORING VARIOUS SUBMISSIONS, EXPLANATIONS AND INFORMATION S UBMITTED BY THE APPELLANT FROM TIME TO TIME WHICH OUGHT TO HAVE BEE N CONSIDERED BEFORE PASSING THE IMPUGNED ORDER. THIS ACTION OF THE LOWER AUTHORITIES IS IN CLEAR BREACH OF LAW AND PRINCIPLE S OF NATURAL JUSTICE AND THEREFORE DESERVE TO BE QUASHED. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER, ED IT, DELETE, MODIFY OR CHANGE ALL OR ANY OF THE GROUNDS OF APPEAL AT THE T IME OF OR BEFORE THE HEARING OF THE APPEAL. 2. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE AS SESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143( 3) OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 26/12/2008, THEREBY THE ASSESSING OFFICER (AO IN SHORT) MADE ADDITION OF RS.3,35,000/- AS SHORT-TERM CAPITAL GAI N. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT AS PER SCHEUDLE-1 OF THE TAX AUDIT REPORT, I.E. DEPRECIATION SCHEDULE, I T WAS MENTIONED THAT BLOCK OF TANKERS WAS REDUCED TO NIL DURING THE YEAR . THE ASSESSEE IN ITA NO.1750/AHD /2011 M/S.DEEP INDUSTRIES LTD. VS. DCIT (OSD) ASST.YEAR 2006-07 - 3 - RESPONSE TO QUERY OF THE AO SUBMITTED THAT THE PROF ITS ON SALES OF TANKERS WAS NOT RECORDED IN THE STATEMENT OF TOTAL INCOME B Y MISTAKE. HOWEVER, THE AO PROCEEDED TO MAKE ADDITION OF RS.3,35,000/- AND ALSO INITIATED PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT. SUB SEQUENTLY, THE AO IMPOSED A PENALTY OF RS.1,12,760/-. AGAINST THIS, THE ASSESSEE FILED AN APPEAL BEFORE THE LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS, DISMISSED THE APPEAL 3. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT T HE AUTHORITIES WERE NOT JUSTIFIED IN IMPOSING THE PENALTY AND CONFIRMIN G THE SAME. HE SUBMITTED THAT IT IS NOT THE CASE WHERE THE ASSESSE E HAS CONCEALED THE MATERIAL PARTICULARS. HE SUBMITTED THAT IN THE A UDIT REPORT, IT WAS CATEGORICALLY MENTIONED THAT BLOCK OF TANKERS HAS B EEN REDUCED TO NIL, BUT DUE TO INADVERTENT MISTAKE, THE PROFIT RESULTI NG INTO TANKERS WERE NOT TAKEN INTO INCOME-TAX RETURN. IT WAS A GENUINE MIS TAKE AS THIS BEING THE FIRST YEAR FOR WHICH E-FILING WAS MADE. HE SUBMITT ED THAT FROM THE TAX AUDIT REPORT IT CAN BE INFERRED THAT THERE WAS NO I NTENTION TO CONCEAL THE INCOME. DURING THE ASSESSMENT PROCEEDINGS, THE AM OUNT WAS OFFERED FOR TAX. HE PLACED RELIANCE ON THE JUDGEMENT(S) OF HON BLE APEX COURT RENDERED IN THE CASE OF CIT VS. RELIANCE PETROPROD UCTS PVT.LTD. CIT VS. RELIANCE PETROPRODUCTS PVT.LTD. REPORTED AT (2010) 322 ITR 158 (SC) AND OF PRICE WATERHOUSE COOPERS (P.) LTD. VS. CIT REPOR TED 348 ITR 306(SC). ITA NO.1750/AHD /2011 M/S.DEEP INDUSTRIES LTD. VS. DCIT (OSD) ASST.YEAR 2006-07 - 4 - 3.1. ON THE CONTRARY, SR.DR HAS SUPPORTED THE ORDER S OF THE AUTHORITIES BELOW. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE LD.CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE BY OBSERVING AS UNDER:- 2.3. I HAVE CONSIDERED THE FACTS OF THE CASE, PENA LTY ORDER AND APPELLANTS SUBMISSION. IT IS NOT IN DISPUTE THAT APPELLANT DID NTO DISCLOSE CAPITAL GAIN UNDER SECTION 50 IN THE COMPU TATION OF INCOME. IF THE ASSESSMENT WOULD NOT HAVE BEEN PICKED UP IN SCR UTINY, THE FACT OF NO INCLUSION OF CAPITAL GAIN IN TOTAL INCOME WOULD NOT HAVE COME TO LIGHT. THEREFORE APPELLANT HAD DEFINITELY NOT DISCLOSED TR UE INCOME IN THE RETURN FILED ELECTRONICALLY. THE ARGUMENT OF INCLU DING THE CAPITAL GAIN IN TAX AUDIT REPORT IS NOT RELEVANT SINCE IT WAS NO T FILED WITH THE DEPARTMENT. FURTHER APPELLANTS ONLY DEFENSE IS TH AT SINCE IT WAS THE FIRST YEAR OF MANDATORY E FILING OF RETURN, THIS MI STAKE HAS HAPPENED. HOWEVER APPELLANT DID NOT SPECIFY AS TO HOW THIS MI STAKE CONTINUED TILL THE ASSESSING OFFICER RAISED QUERY ON THE ISSUE. T HERE IS ALWAYS A PROVISION OF TAKING PRINTOUT OF WHAT HAS BEEN FILED ELECTRONICALLY. IN THE PRINTOUT APPELLANT COULD HAVE COME TO KNOW IF IT WA S HAVING MISTAKE AND WOULD HAVE FILED REVISED RETURN IN TIME. BY NO T DOING SO, APPELLANT HAS CONCEALED THE PARTICULARS OF INCOME AS FAR AS T AXABLE CAPITAL GAIN IS CONCERNED. APPELLANT SUBMITTED THE EXPLANATION THA T IT WAS MISTAKE IN ELECTRONIC FILING OF RETURN BUT APPELLANT WAS NOT A BLE TO SUBSTANTIATE HOW IT HAPPENED AND WHY TIMELY REMEDIAL ACTION BY WAY O F REVISED RETURN WAS NOT TAKEN. THIS CLEARLY DISPROVES APPELLANTS EXPLANATION. BY ACCEPTING THE SAME AFTER ASSESSING OFFICER ISSUED S HOW CAUSE WILL NOT HELP APPELLANT FROM ITS LIABILITY TO PENALTY. BY N O STRETCH OF IMAGINATION SUCH MISTAKE CAN BE TREATED AS BONAFIDE BECAUSE APP ELLANT DID NOT ACT TILL ASSESSING OFFICER POINTED OUT TO HIM. THE DEC ISION OF JURISDICTIONAL HIGH COURT RELIED UPON BY THE ASSESSING OFFICER IS RELEVANT. CONCEALMENT AND INACCURATE PARTICULARS OF INCOME GO TILL THE END OF ITA NO.1750/AHD /2011 M/S.DEEP INDUSTRIES LTD. VS. DCIT (OSD) ASST.YEAR 2006-07 - 5 - FILING RETURN OF INCOME. I FIND THAT THIS DECISION IS CLEARLY APPLICABLE TO THIS CASE. AS AGAINST THIS THE DECISIONS RELIED UPON BY THE AP PELLANT INCLUDING THE SUPREME COURT DECISION IN THE CASE OF RELIANCE PETRO PRODUCTS LTD. DO NOT HELP APPELLANT. IN THE CASE O F RELIANCE PETRO PRODUCTS, HONOURABLE COURT HELD THAT CONCEALMENT OR INACCURATE PARTICULARS ARE WITH REFERENCE TO RETURN OF INCOME. IN THIS CASE APPELLANT DID NOT DISCLOSE CAPITAL GAIN IN THE RETU RN OF INCOME WHICH RESULTED IN CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF CAPITAL GAIN. THEREFORE EVEN AS PER THIS DECISION, APPELLANT IS CLEARLY LIABLE FOR PENALTY. ACCORDING LY I CONFIRM THE PENALTY LEVIED BY THE ASSESSING OFFICER. 4.1. THERE IS NO DISPUTE WITH REGARD TO THE FACT TH AT THE ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE TWO DIFFERE NT AND DISTINCT PROCEEDINGS. THE CONTENTION OF THE ASSESSEE IS THA T THE MISTAKE WAS BONA FIDE DUE TO E-FILING OF THE INCOME-TAX RETURN. IN THE INSTANT CASE, IT IS NOT DISPUTED BY THE REVENUE THAT IN THE AUDIT REPORT TH E ASSESSEE HAS REFLECTED THE BLOCK OF ASSETS AS NIL AND WHEN IT WAS POINTED OUT BY THE AO THE ASSESSEE ACCEPTED THE MISTAKE AND OFFERED THE SHORT -TERM CAPITAL GAIN AS THE SAME WAS NOT OFFERED FOR TAX IN THE INCOME-TAX RETURN. UNDER THE PECULIARITY OF THE PRESENT CASE, WE ARE OF THE CONS IDERED VIEW THAT THE MISTAKE PER SE SHOULD NOT BE THE GROUND FOR LEVY OF PENALTY. THE REFORE, RESPECTFULLY FOLLOWING THE RATIO LAID DOWN IN THE J UDGEMENTS OF THE HONBLE APEX COURT IN THE CASE(S) OF CIT VS. RELIAN CE PETROPRODUCTS PVT.LTD.(SUPRA) AND PRICE WATERHOUSE COOPERS (P.) L TD. VS. CIT (SUPRA), ITA NO.1750/AHD /2011 M/S.DEEP INDUSTRIES LTD. VS. DCIT (OSD) ASST.YEAR 2006-07 - 6 - GROUNDS RAISED IN THE ASSESSEES APPEAL ARE ALLOWE D. WE HEREBY DIRECT THE AO TO DELETE THE PENALTY. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON WEDNESDAY, THE 13 TH DAY OF MAY, 2015 AT AHMEDABAD. SD/- SD/- ( .. ) ( ) ( N.S. SAINI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 13/ 05 /2015 2*..,(.../ T.C. NAIR, SR. PS !'#$%&' &$ / COPY OF THE ORDER FORWARDED TO : 1. # / THE APPELLANT 2. $% # / THE RESPONDENT. 3. 345 6 / CONCERNED CIT 4. 6 ( ) / THE CIT(A)-VI, AHMEDABAD 5. 7(8$45 , *45. , 3 / DR, ITAT, AHMEDABAD 6. 8:;<) / GUARD FILE. ! / BY ORDER, %7$ //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 28.4.15 (DICTATION-PAD 9+ PA GES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER .. 12.5.15 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.13.5.15 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .13.5.15 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