DCIT, Mohali V. M/s JCT Electronics Ltd., Mohali

ITA 182/CHANDI/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5191 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 04-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Depreciation; Bonafide belief
• Section: 115JB

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER & MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NOS. 181 TO 183/CHD/2016 ASSESSMENT YEARS: 2008-09 & 2009-10 THE DCIT, VS. THE JCT ELECTRONICS LTD., CIRCLE 6(1), MOHALI MOHALI PAN NO. AAACJ5084A (APPELLANT) (RESPONDENT) APPELLANT BY : SH. MANJIT SINGH RESPONDENT BY : SH. NONE DATE OF HEARING : 29.03.2017 DATE OF PRONOUNCEMENT : 26.04.2017 ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE ABOVE CAPTIONED THREE APPEALS HAVE BEEN PREFERR ED BY THE REVENUE AGAINST THE SEPARATE ORDERS DATED 2.12.2015 OF THE COMMISSIONER OF INCOME TAX (APPEALS)-2 [HEREINAFTER REFERRED TO AS CIT(A)], CH ANDIGARH. 2. NO ONE HAS COME PRESENT ON BEHALF OF THE ASSESSE E DESPITE NOTICE. HOWEVER, A LETTER DATED 3.3.2017 HAS BEEN RECEIVED ON BEHALF OF THE ASSESSEE COMPANY SIGNED BY ONE SH. KAMAL KHANNA, EX. DIRECTO R, WHEREIN IT HAS BEEN STATED THAT THE ASSESSEE COMPANY IS IN LIQUIDATION IN VIEW OF THE ORDERS OF THE 2 HON'BLE PUNJAB & HARYANA HIGH COURT DATED 26.8.2016 . THAT THE OFFICIAL LIQUIDATOR HAS ALREADY TAKEN OVER POSSESSION OF ALL THE ASSETS INCLUDING RECORDS OF THE COMPANY. SINCE THE OFFICIAL LIQUIDATOR HAS T AKEN OVER CHARGE, NO ONE OTHER THAN THE OFFICIAL LIQUIDATOR HAS THE AUTHORITY TO R EPRESENT THE COMPANY BEFORE ANY FORUM. IT HAS, THEREFORE, BEEN REQUESTED THAT T HE NOTICE TO THE ASSESSEE BE SERVED THROUGH THE OFFICE OF THE OFFICIAL LIQUIDATO R AT CHANDIGARH. 3. WE HAVE GONE THROUGH THE ORDER SHEET AND HAVE FO UND THAT THE CASE HAS ALREADY BEEN ADJOURNED SEVERAL TIMES. WE HAVE ALSO GONE THROUGH THE GROUNDS OF APPEAL AND THE RECORDS OF THE CASE. SINCE THESE APP EALS HAVE BEEN PREFERRED BY THE REVENUE, WE ARE OF THE VIEW THAT THESE CAN BE D ISPOSED OFF AFTER HEARING THE LD. DR. 4. IN ITA NOS. 181 & 182/CHD/2016, THE REVENUE IS AGGRIEVED BY THE ACTION OF THE CIT(A) IN DELETING THE PENALTY LEVIED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE ACT ON IDENTICAL ISSUE IN RELATION TO ASSESSMENT YEARS 2008-09 AND 2009-10 RESPECTIVELY. 5. HOWEVER, IN ITA NO. 183/CHD/2016, THE REVENUE IS AGGRIEVED AGAINST THE ORDER OF CIT(A) IN DELETING THE PENALTY LEVIED BY T HE ASSESSING OFFICER U/S 271(1)(D) OF THE INCOME-TAX ACT, 1961 FIRST, WE WI LL TAKE UP ITA NO. 181 & 182/CHD/2016 ITA NO. 181 & 182/CHD/2016 6. THE BRIEF FACTS RELEVANT TO THE ISSUE ARE THAT T HE ASSESSEE CLAIMED DEPRECIATION ON CERTAIN ASSETS. THE ASSESSING OFFIC ER DISALLOWED THE CLAIM OF THE DEPRECIATION ON THE ASSESSEE ON THE GROUND THAT ASS ETS WERE NOT USED DURING THE RELEVANT YEARS AS THE UNIT OF THE ASSESSEE HAD REMA INED IDLE DURING THESE YEARS. 3 THE ASSESSEE PLEADED BEFORE THE ASSESSING OFFICER T HAT SINCE THE ASSETS WERE FORMING PART OF THE BLOCK OF ASSETS, HENCE, THE CLA IM OF THE ASSESSEE WAS ALLOWABLE. THE MATTER WAS TAKEN TO HIGHER AUTHORITI ES AND ULTIMATELY THE ORDER OF THE ASSESSING OFFICER DISALLOWING THE CLAIM OF D EPRECIATION WAS UPHELD BY THE TRIBUNAL IN RELATION TO THE ASSESSMENT YEARS 2004-0 5 AND 2005-06 VIDE ORDER DATED 30.04.2009 IN ITA NOS. 134 & 135/CHD/2009. FO LLOWING THE SIMILAR LINES, THE CLAIM FOR THE SUBSEQUENT YEARS I.E. YEARS UNDER CONSIDERATION WAS ALSO DISALLOWED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER ALSO INITIATED PENALTY PROCEEDINGS AND ULTIMATELY LEVIED PENALTY U/S 271(1 )(C) OF THE ACT IN RELATION TO THE ABOVE STATED DISALLOWANCE OF CLAIM OF DEPRECIAT ION. THE LD. CIT(A) HAS DELETED THE PENALTY OBSERVING THAT IT WAS NOT A CAS E OF FILING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME ON T HE PART OF THE ASSESSEE. HE OBSERVED THAT THE ASSESSEE HAD MADE A BONAFIDE CLA IM, THE SAME HOWEVER, WAS NOT FOUND SUSTAINABLE BY THE HIGHER AUTHORITIES. H E, WHILE PLACING RELIANCE ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CA SE OF RELIANCE PETROPRODUCTS LTD (2010) 322 ITR 158 (SC) WHEREIN IT HAS BEEN HEL D THAT MERE MAKING OF CLAIM WHICH WAS NOT FOUND SUSTAINABLE IN LAW IPSO F ACTO WILL NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME, DEL ETED THE IMPUGNED PENALTY SO LEVIED BY THE ASSESSING OFFICER. 7. WE HAVE HEARD THE RIVAL CONTENTION. WE DO NOT FI ND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) WHILE DELETING THE PENALTY IN THESE CASES LEVIED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE ACT. THE AS SESSEE WAS UNDER BONA FIDE BELIEF THAT HE WAS ENTITLED TO DEPRECIATION ON ASSE TS AND MERELY BECAUSE THAT CLAIM HAS NOT BEEN FOUND SUSTAINABLE THAT ITSELF IS NOT SUFFICIENT TO HOLD THAT ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF IN COME OR HAS TRIED TO CONCEAL ITS INCOME. THE ORDERS OF THE LD. CIT(A) IN RESPECT OF ALL THESE APPEALS ARE HEREBY UPHELD. 4 ITA NO. 183/CHD/2016 8. THE BRIEF FACTS RELEVANT TO THE ISSUE ARE THAT A SSESSEE HAD NOT PAID ANY FRIDGE BENEFIT TAX (FBT) DURING THE YEAR UNDER CONS IDERATION AND WHEN QUESTIONED ABOUT THE SAME, IT WAS SUBMITTED THAT TH E ASSESSEE WAS DECLARED AS SICK INDUSTRIAL UNDERTAKING BY BIFR ON12.12.2005 AN D BIFR HAS STATED AS UNDER:- THE INCOME TAX DEPARTMENT SHOULD CONSIDER EXEMPTIN G THE COMPANY FROM THE PROVISIONS OF SECTION 115JB AND FR INGE BENEFIT TAX AND CAPITAL GAINS ON SALE OF MOHALI ASS ETS UNDER THE INCOME TAX ACT DURING THE PERIOD OF REHABILITAT ION. THE ASSESSEE SUBMITTED BEFORE ASSESSING OFFICER THA T FBT WAS NOT PAID AS THE ASSESSEE WAS UNDER BONAFIDE BELIEF THAT THE SAME WO ULD BE WORKED IN VIEW OF THE BIFR RECOMMENDATIONS. THE ASSESSING OFFICER, H OWEVER, DID NOT AGREE WITH THE CONTENTION OF THE ASSESSEE AND HELD THAT THE A SSESSEE WAS LIABLE TO PAY FBT IN ACCORDANCE WITH THE PROVISIONS OF THE ACT. THE V ALUE OF FRINGE BENEFITS WAS WORKED OUT AT RS. 54,30,839/- AND FBT WAS LEVIED IN RESPECT OF THIS AMOUNT. THE ASSESSING OFFICER HAD ALSO INITIATED PENALTY PROCEE DINGS U/S 271(1)(D) OF THE ACT. IN THE PENALTY PROCEEDINGS, THE ASSESSEE HAD FILED A REPLY, BUT THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLAN ATION OF THE ASSESSEE AND LEVIED MINIMUM LEVIABLE PENALTY OF RS. 18,45,942/- U/S 271(1)(D) OF THE ACT. 9. THE LD. CIT(A), HOWEVER, DELETED THE PENALTY OB SERVING THAT IT WAS NOT A CASE OF CONCEALMENT OF PARTICULARS OF FRINGE BENEFI T OR FURNISHING OF INACCURATE PARTICULARS OF SUCH. HE, FURTHER OBSERVED THAT UND ER SIMILAR CIRCUMSTANCES, PENALTY U/S 271(1)(D) ON SIMILAR ISSUE, IN THE CASE OF THE ASSESSEE FOR ASSESSMENT YEAR 2008-09 WAS DELETED BY HIS PREDECESSOR VIDE OR DER DATED 28.11.2014. HE 5 BEING IN AGREEMENT WITH THE ORDER OF HIS PREDECESSO R DELETED THE PENALTY FOR THIS ASSESSMENT YEAR ALSO. THE REVENUE HAS THUS COME IN APPEAL BEFORE US. 10. THE LD. DR COULD NOT PRODUCE ANY RECORD TO SHOW THAT REVENUE HAS CHALLENGED THE ACTION OF THE CIT(A) IN DELETING THE PENALTY ON IDENTICAL FACTS FOR IMMEDIATE PRECEDING ASSESSMENT YEAR 2008-09. EVEN FROM THE FACTS OF THE CASE IT IS APPARENT THAT THE ASSESSEE COMPANY WAS DECLAR ED AS A SICK UNIT AND WAS UNDER LIQUIDATION. THE BIFR HAD SANCTIONED A SCHEME FOR REHABILITATION OF THE COMPANY AND HAD ASKED THE INCOME TAX DEPARTMENT TO CONSIDER TO EXEMPT THE COMPANY FROM THE PROVISIONS OF SECTION 115JB AND FB T AND CAPITAL GAIN TAX ON SALE OF MOHALI ASSETS DURING THE PERIOD OF REHABILI TATION. THE ASSESSEE WAS THUS UNDER BONAFIDE BELIEF THAT THE INCOME-TAX DEPARTMEN T WOULD EXEMPT THE ASSESSEE FROM THE PAYMENT OF FBT. IN THESE CIRCUMST ANCES, IT WAS NOT A CASE OF CONCEALMENT OF FBT OR FURNISHING OF INACCURATE PART ICULARS OF FRINGE BENEFIT TAX. THOUGH THE ASSESSING OFFICER HAS HELD THAT SIN CE INCOME TAX DEPARTMENT HAD NOT EXEMPTED THE ASSESSEE FROM FBT AND HENCE, H E HELD THAT THE COMPANY WAS LIABLE TO PAY FRINGE BENEFIT TAX; HOWEVER, THE LEVY OF PENALTY IN THIS CASE U/S 271(1)\(D) OF THE ACT CANNOT BE HELD TO BE JUST IFIED. IN OUR VIEW THE SAME HAS RIGHTLY BEEN DELETED BY THE LD. CIT(A). THE ORD ER OF THE CIT(A) IS, THEREFORE, UPHELD. THIS APPEAL OF THE REVENUE IS ACCORDINGLY DISMISSED. 11. IN THE RESULT, ALL THE THREE APPEALS OF THE REV ENUE ARE, HEREBY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26.04.12017 SD/- SD/- (ANNAPURNA GUPTA) (SANJAY G ARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED :26 TH APRIL, 2017 RKK 6 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR