DCIT, New Delhi V. M/s. Jay Pee Greens Ltd., New Delhi

ITA 1883/DEL/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69592 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 04-06-2013
• Assessment Year: 2003-2004
• Appeal Filed On: 18-04-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DK MISHR A
• Assessee Lawyers: A K GARG
• Keywords: Depreciation; Wrong claim; Difference of opinion; Onus to prove; Reason to believe
• Section: 32; 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D : NEW DELHI) SHRI I.C. SUDHIR, JUDICIAL MEMBER AND BEFORE SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NOS.1882 & 1883/DEL/2011 (ASSESSMENT YEAR : 2002-03 & 2003-04) DCIT, CIRCLE 4 (1), VS. MS. JAY PEE GREENS LIMITE D, NEW DELHI. (NOW JAIPRAKASH ASSOCIATES LTD.), JA ANNEXE, 54, BASANT LOK, VASANT VIHAR, NEW DELHI. (PAN : AAACJ8718D) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI A.K. GARG, ADVOCATE REVENUE BY : SHRI D.K. MISHRA, CIT DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : BOTH THESE APPEALS FILED BY THE ASSESSEE EMANATE FR OM THE ORDER OF CIT (APPEALS)-VII, NEW DELHI DATED 08.02.2011 FOR THE A SSESSMENT YEARS 2002-03 AND 2003-04. 2. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF RUNNING AND OPERATING 18 HOLE GOLF COURSE IN GREATER NOIDA ALON G WITH RESORT AND OTHER RELATED HOSPITALITY SERVICES, SUCH AS, AN INDOOR CE NTRALLY HEATED SWIMMING POOL, OPEN SWIMMING POOL, CONFERENCE FACILITIES, BA NQUET, HEALTH CLUB/GYM, RESTAURANT AND BAR ETC. FOR THE ASSESSMENT YEAR 200 2-03, AN ADDITION OF ITA NOS.1882 & 1883/DEL/2011 2 RS.2,00,47,230/- WAS ADDED IN THE INCOME OF THE ASS ESSEE FOR NOT ALLOWING 100% DEPRECIATION CLAIMED BY THE ASSESSEE ON RS.2,2 2,74,699/- BY TREATING THE SAME AS TEMPORARY CONSTRUCTION. THIS CONSTRUCTI ON CONSISTED OFF ADMINISTRATIVE OFFICE, GUEST HOUSE FOR SENIOR OFFIC ERS, STAFF MESS, WORKSHOP, METER ROOM, SUB-STATIONS FOR DG SETS, STORE, DHOBI GHAT, LABOUR COLONY, SECURITY BARRACKS AND SECURITY POSTS. THE ASSESSEE CLAIMED 100% DEPRECIATION BY TAKING THE SAME AS TEMPORARY CONSTRUCTION. HOWEV ER, THE ASSESSING OFFICER DISALLOWED THE CLAIM AND RESTRICTED THE DEP RECIATION @ 10% ONLY. THE SECOND ISSUE ON WHICH THE ADDITION WAS MADE TO THE INCOME OF THE ASSESSEE WAS ON ACCOUNT OF NOT ALLOWING DEPRECIATION @ 20% O N THE BOUNDRY WALL AND THE DEPRECIATION WAS RESTRICTED TO 10%. THE OTHER A DDITION WAS MADE IN RESPECT OF PAYMENT OF PF/ESI PAID BEYOND THE TIME L IMIT AND THE ADDITION WAS MADE BY INVOKING THE PROVISIONS OF SECTION 2(24)(X) READ WITH SECTION 36(1)(VA). THE PENALTY PROCEEDINGS U/S 271(1)(C) WE RE INITIATED. SIMILAR ADDITION WAS ALSO MADE IN THE ASSESSMENT YEAR 2003- 04 OF RS.90,76,020/-ON ACCOUNT OF DEPRECIATION DISALLOWED ON TEMPORARY ERE CTIONS. THE ASSESSEE FILED APPEAL AGAINST THESE ADDITIONS BEFORE THE CIT (A) W HO HAS DISMISSED THE ASSESSEES APPEAL AND CONFIRMED THE ASSESSING OFFIC ERS ACTION VIDE HIS ORDER DATED 14.05.2009. THE ITAT HAS ALSO CONFIRMED THE A DDITION VIDE ORDER DATED 09.03.2010. ITA NOS.1882 & 1883/DEL/2011 3 2.1 THE ASSESSING OFFICER HAS LEVIED PENALTY U/S 27 1(1)(C) IN BOTH THE YEARS. THE CIT (A) HAS DELETED THE PENALTY BY HOLDI NG AS UNDER :- 4. THE SUBMISSION MADE ON BEHALF OF THE APPELLANT AND THE FINDINGS OF THE A.O. IN THE PENALTY ORDER HAVE BEEN CAREFULLY CONSIDERED. I HAVE ALSO PERUSED THE CASE LAWS REFER RED TO AND RELIED UPON BY THE ASSESSING OFFICER AS WELL AS BY THE APPELLANT. THE AO HAS LEVIED PENALTY ON FURNISHING INACCURATE PARTICULARS OF ITS INCOME IN RESPECT OF THE FOLLOWI NG ADDITIONS/DISALLOWANCES:- A) DEPRECIATION ON TEMPORARY ERECTIONS TO THE EXTE NT OF RS.2,00,47,230/- AND RS.90,76,020/- IN ASSESSMENT Y EARS 2002- 03 & 2003-04 RESPECTIVELY.; B) DEPRECIATION ON BOUNDARY WALL TO THE EXTENT OF RS.8,02,847/- IN ASSESSMENT YEAR 2002-03; C) DISALLOWANCE OF RS.6,97,024/- RECEIVED FROM THE EMPLOYEES BUT CREDITED TO THEIR PF & ESI ACCOUNTS A FTER THE PRESCRIBED DUE DATES IN TERMS OF SECTION 36(1 )(VA) READ WITH SECTION 2(24)(X) OF THE ACT IN ASSESSMENT YEAR 2002 -03 4.1 THERE IS NO DISPUTE TO THE WELL-SETTLED LEGAL P ROPOSITION THAT THE PENALTY PROCEEDINGS ARE DISTINCT AND DIFFE RENT FROM ASSESSMENT PROCEEDINGS. FINDINGS IN THE ASSESSMENT PROCEEDINGS ARE NOT CONCLUSIVE. THE ENTIRE MATERIAL AVAILABLE SHOULD BE CONSIDERED AFRESH BY THE ASSESSING OFFICE R BEFORE IMPOSING PENALTY U/S 271(1)(C). THE EXPLANATION TO SECTION 271(1)(C) PROVIDES A RULE OF EVIDENCE RAISING A REB UTTABLE PRESUMPTION IN CERTAIN CIRCUMSTANCES. NO SUBSTANTIV E RIGHT IS CREATED OR ANNULLED THEREBY. THE SUBSTANTIVE LAW RE LATING TO LEVY OF THE PENALTY IS PRESERVED. THE INITIAL BURDE N OF PROOF IS CAST ON THE ASSESSEE TO ESTABLISH THE PRESUMPTION A RISING IN CERTAIN CASES. THE ASSESSEE CAN DISCHARGE THE ONUS EITHER BY DIRECT EVIDENCE OR CIRCUMSTANTIAL EVIDENCE OR BY BO TH. THE CUMULATIVE EFFECT OF ALL FACTS SHOULD BE TAKEN INTO CONSIDERATION. DURING THE PENALTY PROCEEDINGS, THE ASSESSEE IS ENTITLED TO SHOW AND ESTABLISH BY THE MATERIAL AND RELEVANT FACTS, WHICH MAY GO TO AFFECT AND HAVING DIRECT BEA RING ON THE LIABILITY FOR PENALTY. WHETHER THERE IS A CONCEALME NT TO MAKE ITA NOS.1882 & 1883/DEL/2011 4 THE PENALTY EXERCISABLE IS NORMALLY A QUESTION OF F ACT. WHERE THE BURDEN OF PROOF IN A GIVEN CASE HAS BEEN DISCHA RGED ON A SET OF FACTS, IS ALSO A QUESTION OF FACT. THE BURDE N IS CAST ON THE ASSESSEE TO OFFER A BONA FIDE EXPLANATION. THERE IS A PLETHORA OF JUDGMENTS TO THE EFFECT THAT FINDINGS RECORDED OR C ONCLUSION DRAWN IN DECIDING THE QUANTUM APPEAL, ARE NEITHER C ONCLUSIVE NOR BINDING. FOR THIS PROPOSITION RELIANCE MAY BE P LACED ON THE JUDGMENT OF HON'BLE KERALA HIGH COURT IN THE CASE O F CIT V S. PAWAN KUMAR DALMIA [1987] 168 ITR 1 AND THE JUDGMEN T OF THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF BAN ARAS TEXTURIUM VS. CIT [1988] 169 ITR 782 AND ALSO THE J UDGMENT OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. CHETANDAN LACHHMANDAS [1995] 214 ITR 726. 4.2 THE CONSIDERATIONS IN PENALTY PROCEEDINGS ARE D IFFERENT FROM THOSE IN QUANTUM PROCEEDINGS. IT IS TRITE LAW THAT MERELY BECAUSE AN ADDITION HAS BEEN MADE AND CONFIRMED IN THE APPEAL, LEVY OF PENALTY IS NOT AUTOMATIC. IN NATION AL TEXTILES VS. CIT [2001] 249 ITR 125 THE GUJARAT HIGH COURT H ELD THAT IT IS NOT ENOUGH FOR THE PURPOSE OF PENALTY THAT TH E AMOUNT HAS BEEN ASSESSED AS INCOME, THE CIRCUMSTANCES MUST SHO W THAT THERE WAS ANIMUS I.E. CONSCIOUS CONCEALMENT OR ACT OF FURNISHING INACCURATE PARTICULARS ON THE PART OF TH E ASSESSEE. IN THE PRESENT CASE, THE APPELLANT'S CONDUCT AND THE E XPLANATION OFFERED BY IT SHOWS THAT THERE WAS NO CONSCIOUS OR INTENTIONAL ACT OF APPELLANT TO CONCEAL OR FURNISH INACCURATE P ARTICULARS OF INCOME. 4.3 IF SECTION 271 (1)( C ) IS READ IN THE LIGHT OF THE JUDICIAL PRONOUNCEMENTS WITHOUT THE EXPLANATIONS INSERTED W. E.F. 01- 04-1976, IT WOULD BE EASY TO HOLD THAT THE BURDEN W HICH LIES UPON THE ASSESSEE TO SUPPORT THE CLAIM IN THE ASSES SMENT PROCEEDINGS IS NOT EXTENDED IN RELATION TO THE PENA LTY PROCEEDINGS. IN ORDER TO JUSTIFY THE LEVY OF PENALT Y, TWO FACTORS MUST CO-EXIST, (I) THERE MUST BE SOME MATERIAL OR C IRCUMSTANCES LEADING TO THE REASONABLE CONCLUSION THAT THE AMOUN T DOES REPRESENT THE ASSESSEE'S INCOME. IT IS NOT ENOUGH F OR THE PURPOSE OF PENALTY THAT THE AMOUNT HAS BEEN ASSESSE D AS INCOME, AND (II) THE CIRCUMSTANCES MUST SHOW THAT T HERE WAS ANIMUS I.E., CONSCIOUS CONCEALMENT OR ACT OF FURNIS HING OF INACCURATE PARTICULARS ON THE PART OF THE ASSESSEE. HOWEVER, EXPLANATION 1 TO SECTION 271(L)(C) HAS BEEN INSERTE D W.E.F. 1-4- ITA NOS.1882 & 1883/DEL/2011 5 1976 BY THE FINANCE (NO.1) ACT, 1975. BY THIS EXPLA NATION A FICTION HAS BEEN CREATED FOR DEEMING THE CONCEALMEN T OF PARTICULARS OF INCOME, IF IN RESPECT OF ANY FACTS M ATERIAL TO THE COMPUTATION TO THE TOTAL INCOME ANY PERSON HAS FAIL ED TO OFFER AN EXPLANATION OR THE EXPLANATION HAS FOUND TO BE F ALSE OR WHERE SUCH PERSON HAS OFFERED AN EXPLANATION WHICH HE IS UNABLE TO SUBSTANTIATE. WHEREIN AN EXPLANATION IS F URNISHED WHICH THE ASSESSEE IS UNABLE TO SUBSTANTIATE BUT TH E ASSESSEE ESTABLISHES THAT THE EXPLANATION FURNISHED WAS BONA FIDE AND ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAS BEEN DISCLOSED BY HIM, EXPL ANATION L(B) WILL NOT BE APPLICABLE. 4.4 NOW WHETHER A PARTICULAR CASE FALLS WITHIN THE AMBIT OF THE EXPLANATION OR NOT WOULD DEPEND UPON THE FACTS OF EACH CASE. THEREFORE, IT WOULD BE APPROPRIATE TO REFER T O EXPLANATION 1 TO SECTION 271(1)(C) AND EXAMINE THE FACTS OF THE ASSESSEE'S CASE IN THE LIGHT OF THE EXPLANATION. EXPLANATION 1 TO SECTION 271 (L)( C) READS AS UNDER : 'WHERE IN RESPECT OF ANY FACTS MATERIAL TO THE COMP UTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT,- (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OF FERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) OR THE COMMISSIONER TO BE FA LSE, OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS N OT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATI ON IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AN D MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCL OSED BY HIM, THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUT ING THE TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHA LL, FOR THE PURPOSES OF CLAUSE (C) OF THIS SUB-SECTION, BE DEEM ED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULAR S HAVE BEEN CONCEALED. ' FROM THE ABOVE EXPLANATION IT IS EVIDENT THAT THE E XPLANATION IS A DEEMING PROVISION AND IF THE ASSESSEE'S CASE F ALLS WITHIN THE AMBIT OF CIRCUMSTANCES PROVIDED IN PART A OR PA RT B OF THE EXPLANATION, IT WILL BE DEEMED THAT THE AMOUNT ADDE D OR ITA NOS.1882 & 1883/DEL/2011 6 DISALLOWED IN COMPUTING THE TOTAL INCOME OF THE ASS ESSEE REPRESENTS THE INCOME IN RESPECT OF WHICH PARTICULA RS HAVE BEEN CONCEALED. PART A OF THE EXPLANATION WOULD BE APPLICABLE IN CIRCUMSTANCES - (I) WHERE A PERSON FAILS TO OFFER AN EXPLANATION; ( II) WHERE A PERSON OFFERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR BY THE COMMISSIONER OF INCOME-TAX (APPEA LS) TO BE FALSE. PART B OF THE EXPLANATION WOULD BE APPLICABLE-(I) W HERE A PERSON OFFERS AN EXPLANATION BUT HE IS UNABLE TO SU BSTANTIATE HIS EXPLANATION AND ALSO UNABLE TO PROVE THAT THE EXPLA NATION IS BONA FIDE. IF THE ASSESSEE IS ABLE TO PROVE THAT TH E EXPLANATION IS BONA FIDE AND ALL THE FACTS RELATING TO THE SAME HAS BEEN DISCLOSED, THE ASSESSEE'S CASE WOULD NOT FALL WITHI N PART B OF THE EXPLANATION EVEN IF HE IS UNABLE TO SUBSTANTIAT E THE EXPLANATION. 4.5 IN THE INSTANT CASE, THE ASSESSEE HAD NOT FURNI SHED THE INACCURATE PARTICULARS OF HIS INCOME WHEN IT FURNIS HED THE RETURN. THERE IS ONLY DIFFERENCE OF OPINION ON THE RELEVANT ISSUE. IT HAS BEEN HELD IN THE CASES OF CIT V. SIVA NANDA STEELS (2002) 256 ITR 683(MAD) AND IN BURRNAH-SHELL OIL ST ORAGE & DISTRIBUTING CO. OF INDIA LTD. V. ITO (1978) 112 IT R 592 (CAL) THAT QUESTION OF PENALTY SHOULD NOT ARISE IN CASES WHERE THERE ARE TWO DIFFERENT VIEWS AVAILABLE. IF AN ASSESSEE G IVES AN EXPLANATION WHICH IS UNPROVED BUT NOT DISPROVED I.E ., IT IS NOT ACCEPTED BUT CIRCUMSTANCES DO NOT LEAD TO THE REASO NABLE AND POSITIVE INFERENCE THAT THE ASSESSEE'S CASE IS FALS E, THE EXPLANATION CANNOT HELP THE AO BECAUSE THERE WILL B E NO MATERIAL TO SHOW THAT THE AMOUNT IN QUESTION WAS CO NCEALED BY THE ASSESSEE OR INACCURATE PARTICULARS OF THE SAID AMOUNT WERE FURNISHED BY THE ASSESSEE. THEREFORE, THE ASSESSEE' S CASE DOES NOT FALL WITHIN THE AMBIT OF PART A OF THE EXPLANAT ION. SO FAR AS PART B IS CONCERNED, I FIND THAT THE ASSESSEE OFFER ED AN EXPLANATION AND WAS ABLE TO PROVE THAT THE EXPLANAT ION WAS BONA FIDE AND ALL THE FACTS RELATING TO THE SAME HA D BEEN DISCLOSED. THEREFORE, PART B IS ALSO NOT APPLICABLE . IN THIS CASE, DURING THE ASSESSMENT PROCEEDINGS IT WAS NOTICED BY THE ITA NOS.1882 & 1883/DEL/2011 7 ASSESSING OFFICER THAT THE ASSESSEE COMPANY HAD CLA IMED 100% DEPRECIATION ON VARIOUS CONCRETE BUILT-UP CONS TRUCTIONS USED FOR OFFICE AND OTHER ACTIVITIES AMOUNTING TO RS.2,22,74,669/- AND RS.1,00,84,466/- IN ASSESSMENT YEARS 2002-03 & 2003-04 RESPECTIVELY. THE ASSESSING OFFIC ER RESTRICTED THE CLAIM OF DEPRECIATION TO THE EXTENT OF 10% AS AGAINST THE CLAIM OF THE ASSESSEE TO THE EXTENT OF 100%.THE MATTER TRAVELLED UP TO THE HON'BLE ITAT, DELHI WHIC H UPHELD THE ACTION OF THE ASSESSING OFFICER IN RESTRICTING THE CLAIM OF DEPRECIATION TO 10%. THE PENALTY HAS BEEN IMPOSED I N RESPECT OF THE DISALLOWANCE OF DEPRECIATION TO THE EXTENT O F 90% ON VARIOUS CONCRETE BUILT-UP CONSTRUCTIONS USED FOR OF FICE AND OTHER ACTIVITIES IN ASSESSMENT YEARS 2002-03 & 2003 -04. IN ASSESSMENT YEAR 2002-03 PENALTY HAS ALSO BEEN IMPOS ED IN RESPECT OF THE DISALLOWANCE OF DEPRECIATION ON BOUN DARY WALL AND DISALLOWANCE IN TERMS OF SECTION 36(1)(VA) READ WITH SECTION 2(24)(X) OF THE ACT. IT IS REPEATEDLY HELD BY THE COURTS THAT THE PENALTY ON THE GROUND OF CONCEALMENT OF PA RTICULARS OR NON-DISCLOSURE OF FULL PARTICULARS CAN BE LEVIED ON LY WHEN IN THE ACCOUNTS/RETURN AN ITEM HAS BEEN SUPPRESSED DIS HONESTLY OR THE ITEM HAS BEEN CLAIMED FRAUDULENTLY OR A BOGUS C LAIM HAS BEEN MADE. WHEN THE FACTS ARE CLEARLY DISCLOSED IN THE RETURN OF INCOME, PENALTY CANNOT BE LEVIED AND MERELY BECA USE AN AMOUNT IS NOT ALLOWED OR TAXED TO INCOME, AS IT CAN NOT BE SAID THAT THE ASSESSEE HAD FILED INACCURATE PARTICULARS OR CONCEALED ANY INCOME CHARGEABLE TO TAX. EVEN IF SOME DEDUCTIO N OR BENEFIT IS CLAIMED BY THE ASSESSEE WRONGLY BUT BONA FIDE AND NO MALAFIDE CAN BE ATTRIBUTED, THE PENALTY WOULD NO T BE LEVIED. IN THIS CONTEXT, RELIANCE IS PLACED ON THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN CIT VS. VIBROS ORGANIC S LIMITED: 159 TAXMAN 56/206 CTR 582 (DELHI). IN THIS CASE DEP RECIATION WAS NOT ALLOWED FOR WANT OF MANUFACTURING EVEN THOU GH ASSETS WERE KEPT READY FOR USE. IT WAS HELD BY DELHI HIGH COURT THAT THERE COULD BE TWO OPINIONS IN THE MATTER AND THERE FORE, TRIBUNAL WAS RIGHT IN DELETING PENALTY. RELIANCE IS ALSO PLACED ON THE JUDGMENT OF THE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT.LTD.(2010) 322 ITR 158. 4.6 FROM THE DECISIONS CITED ABOVE, IT CAN BE CONCL UDED THAT MERE DISALLOWANCE OR ADDITION WILL NOT BE SUFFICIEN T FOR LEVY OF PENALTY U/S 271 (1) (C). IN VIEW OF THE ABOVE AND A FTER TAKING INTO CONSIDERATION THE FACTS (A) THAT THE APPELLANT HAD DISCLOSED ITA NOS.1882 & 1883/DEL/2011 8 ALL MATERIAL FACTS AND (B) RAISING A LEGAL CLAIM, E VEN IF IT IS ULTIMATELY FOUND TO BE LEGALLY UNACCEPTABLE, CANNOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME, I H OLD THAT THERE IS NO CASE OF CONCEALMENT OR FURNISHING OF INACCURA TE PARTICULARS OF ITS INCOME IN RESPECT OF THE FOLLOWI NG ADDITIONS/DISALLOWANCES:- A) DEPRECIATION ON TEMPORARY ERECTIONS TO THE EXTE NT OF RS.2,00,47,230/- AND RS.90,76,020/- IN ASSESSMENT Y EARS 2002- 03 & 2003-04 RESPECTIVELY.; B) DEPRECIATION ON BOUNDARY WALL TO THE EXTENT OF RS.8,02,847/- IN ASSESSMENT YEAR 2002-03; C) DISALLOWANCE OF RS.6,97,024/- RECEIVED FROM THE EMPLOYEES BUT CREDITED TO THEIR PF & ESI ACCOUNTS A FTER THE PRESCRIBED DUE DATES IN TERMS OF SECTION 36(1)(VA) READ WITH SECTION 2(24)(X) OF THE ACT IN ASSESSMENT YEAR 2002 -03 THEREFORE, IT IS HELD THAT A.O. WAS NOT JUSTIFIED I N IMPOSING PENALTY U/S 271(1) (C) AMOUNTING TO RS.76,93,000/- & RS.33,35,500/- IN ASSESSMENT YEARS 2002-03 & 2003-0 4 RESPECTIVELY. ACCORDINGLY, THE SAME ARE DELETED. AGAINST THIS ORDER OF THE CIT (A), THE REVENUE IS I N APPEAL BY TAKING THE FOLLOWING GROUNDS :- 01. THE ORDER OF THE LEARNED CIT (APPEALS) IS ERRO NEOUS & CONTRARY TO FACTS & LAW. 02. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT (APPEALS) HAS ERRED IN DELETING TH E PENALTY OF RS.76,93,000/- LEVIED BY THE A.O. U/S 271(1)(C) OF THE I.T. ACT. 2.1 THE LD. CIT (A) HAS IGNORED THE FINDINGS RECORD ED BY THE A.O. AND THE FACT THAT THE ASSESSEE CLAIMED DEPRECI ATION WHICH IS NOT ALLOWABLE AS PER THE PROVISIONS OF I.T. ACT. ITA NOS.1882 & 1883/DEL/2011 9 03. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, OR TO AMEND ANY GROUNDS OF THE APPEAL RAISED ABOVE AT THE TIME OF THE HEARING. 3. WHILE PLEADING ON BEHALF OF THE REVENUE, LD. DR SUBMITTED THAT ASSESSEE IS A GROUP CONCERN OF JP GROUP. THE ASSESSEE IS RUN NING AND OPERATING A GOLF COURSE AND OTHER HOSPITALITY SERVICES. FOR PROVIDIN G HOSPITALITY SERVICES TO THE CUSTOMERS, THE ASSESSEE HAS DEVELOPED INFRASTRUCTUR E FOR THE EMPLOYEES OF THE RESORT, I.E. ADMINISTRATIVE OFFICE, GUEST HOUSE FOR SENIOR OFFICERS, STAFF MESS, WORKSHOP, METER ROOM, SUB-STATIONS FOR DG SETS, STO RE, DHOBI GHAT, LABOUR COLONY, SECURITY BARRACKS AND SECURITY POSTS AND CL AIMED DEPRECATION @ 100%. THESE CONCRETE BUILT STRUCTURES HAVE BEEN USE D BY THE ASSESSEE FOR THEIR OFFICES, STORE, WORKSHOP AND RESIDENCE OF THE EMPLO YEES. THE DEPRECIATION IS ALLOWABLE U/S 32 OF THE INCOME-TAX ACT, 1961 READ W ITH RULE 5 OF INCOME-TAX RULES, 1962. THE RULE PROVIDES THAT DEPRECIATION SH ALL BE CALCULATED @ PERCENTAGE SPECIFIED IN THE SECOND COLUMN OF THE TA BLE IN APPENDIX I. PART 1 OF APPENDIX I PROVIDES DEPRECIATION ON BUILDING A ND DEPRECIATION @ 100% IS ALLOWABLE ONLY ON PURELY TEMPORARY ERECTIONS, SU CH AS, WOODEN STRUCTURES. THE CONSTRUCTION ON WHICH THE DEPRECIATION CLAIMED BY THE ASSESSEE @ 100% WAS NOT A TEMPORARY CONSTRUCTION OR WOODEN STRUCTUR E AND IT WAS CONCRETE STRUCTURE OF ADMINISTRATIVE OFFICE, GUEST HOUSE FOR SENIOR OFFICER, STAFF MESS, WORKSHOP, METER ROOM, SUB-STATIONS FOR DG SETS, STO RE, DHOBI GHAT, LABOUR COLONY, SECURITY BARRACKS AND SECURITY POSTS. THE A SSESSEE IS A COMPANY ITA NOS.1882 & 1883/DEL/2011 10 RELATED TO THE BIG INDUSTRIAL GROUP ASSISTED BY A T EAM OF TAX AUDITORS AND MAKING SUCH EX-FACIE BOGUS CLAIM, THEN THE ASSESSEE DESERVES TO BE VISITED BY PENALTY FOR MAKING A COMPLETELY UNTENABLE AND EX-FA CIE BOGUS CLAIM IN THE RETURN OF INCOME. THE ASSESSEE HAS FAILED TO SUSTAI N THE BOGUS CLAIM MADE IN THE RETURN OF INCOME. THEREFORE, IT WAS A CASE OF CONCEALMENT OF INCOME AS WELL AS FURNISHING OF WRONG PARTICULARS OF COMPUTAT ION OF INCOME AND THE CIT (A) WAS NOT JUSTIFIED IN DELETING THE PENALTY BY HO LDING THAT ASSESSEE HAS NOT FILED INACCURATE PARTICULARS OF INCOME. HE RELIED O N THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. EX PORT FINANCE LIMITED REPORTED IN 328 ITR 44 AND CIT VS. ZOOM COMMUNICATI ON PVT. LTD. 327 ITR 510. 4. ON THE OTHER HAND, LD. AR RELIED ON THE ORDER OF CIT (A) AND SUBMITTED THAT THE CLAIM WAS MADE OF DEPRECIATION @ 100% AS T HE STRUCTURES WERE TEMPORARY AND IT WAS MADE UNDER BONAFIDE AND GOOD F AITH BY A REASONED VIEW THAT SUCH CATEGORY FALLS AS PER OLD APPENDIX I OF T HE INCOME-TAX RULES, 1962. ALL THE PRIMARY FACTS PERTAINING TO THE STRUCTURE W ERE DULY DISCLOSED IN THE RETURN AND ACCOMPANYING STATEMENT OF ACCOUNTS. THER E WAS GOOD REASON TO BELIEVE THAT TEMPORARY TIN ROOF STRUCTURES ERECTED ON LEASED LAND FOR A LIMITED PERIOD SPECIFICALLY PERMITTED BY THE AUTHORITIES CO NSTITUTED PURELY TEMPORARY STRUCTURES WHERE 100% DEPRECIATION ARE APPLICABLE. HE FURTHER SUBMITTED THAT BY NOT ACCEPTING THE VIEW TAKEN BY THE ASSESSEE AND THESE STRUCTURES WERE HELD ITA NOS.1882 & 1883/DEL/2011 11 TO BE OF DIFFERENT CATEGORY ENTITLED FROM LOWER RAT E OF DEPRECIATION SHALL NOT BE SUFFICIENT FOR LEVYING THE PENALTY FOR CONCEALMENT. THE ASSESSING OFFICERS RECORDING THAT IN DISCUSSION, IT WAS FOUND THAT THE SE WERE CONCRETE BUILT UP STRUCTURES WHICH HAS BEEN USED BY THE ASSESSEE FOR OFFICE STORE, WORKSHOP OR RESIDENCE FOR EMPLOYEES IS FACTUALLY INCORRECT. TH ESE STRUCTURES WERE PURELY TEMPORARY STRUCTURES WITH SHALLOW BRICK-FOUNDATIONS , UNPLASTERED BRICK WALLS AND TIN-SHEET ROOFS. THESE WERE NEITHER RCC FRAMES NOR RCC ROOFS, HENCE THEY WERE NOT CONCRETE STRUCTURES. LD. AR ALSO SUBM ITTED THAT THESE STRUCTURES WERE COMPLETELY DISMANTLED IN THE FINANCIAL YEAR 20 07-08. FINALLY, HE SUBMITTED THAT THE ORDER OF CIT (A) MAY BE SUSTAINE D. 5. WE HAVE HEARD BOTH THE SIDES. WE HAVE ALSO PERUS ED THE PAPER BOOKS SUBMITTED BEFORE US. THE FOLLOWING FACTS ARE UNDISP UTED : THE ASSESSEE WAS GRANTED SANCTION TO ERECT TEMPORA RY BUILDINGS AND FACILITATE THE DEVELOPMENT OF THE GOLF COURSE AND O THER FACILITIES. INITIALLY VARIOUS SANCTIONS GRANTED TO ASSESSEE FOR WHICH VAR IOUS TEMPORARY BUILDINGS WERE ERECTED WHICH ARE EVIDENT FROM PAGE 3 OF THE P APER BOOK WHERE THE DETAILS OF THE PLAN SANCTIONED ARE AS UNDER :- A. VIDE SANCTION LETTER NO.PLG/BP/114B/10056 DATED 12.09.2001 1. HALF-WAY HUT & SERVICE STATION, TOILETS 2. TIME OFFICE 3. MAINTENANCE BUILDING 4. 450 KVA SUB-STATION 5. FUEL STORAGE ITA NOS.1882 & 1883/DEL/2011 12 6. 250 KVA SUB-STATION 7. LANDSCAPE PLAN GOLF AREA 8. COTTAGES 9. HEALTH CLUB 10. INTERNAL ROADS 11. EXTENSION OF PRO-SHOP 12. EXTENSION OF CLUB HOUSE B. VIDE SANCTION LETTER NO.PLG/BP/114/922 DATED 07. 12.2000 1. CAMP FACILITIES ETC. C. VIDE SANCTION LETTER NO.PLG/BP/114 DATED 24.08.2 000 1. CLUB HOUSE D. VIDE SANCTION LETTER NO.PLG/BP/114/6029 DATED 26 .06.2001 1. LABOUR CAMP, LABOUR OFFICE ETC. E. VIDE SANCTION LETTER NO.PLG/BP/114/9154 DATED 21 .07.2001 1. MAIN STORE THUS, THE SANCTIONS WERE IN THE YEAR FINANCIAL YEAR 2000-01 ONWARDS. THE ASSESSEE HAS FURTHER SOUGHT EXTENSION OF THESE APPR OVED PLANS FOR FURTHER PERIOD OF FIVE YEARS WHICH IS ALSO EVIDENT FROM PAG ES 3 & 4 OF THE PAPER BOOK WHICH IS AN APPLICATION FOR EXTENSION OF APPROVAL F OR TEMPORARY BUILDING, DATED 18.10.2003. THE EXTENSION WAS GRANTED ON 19. 02.2004. THE TEMPORARY CONSTRUCTIONS WERE OF HALF-WAY HUT & SERVICE STATIO N, TOILETS, TIME OFFICE, MAINTENANCE BUILDING, 450 KVA SUB-STATION, FUEL STO RAGE, 250 KVA SUB- STATION, LANDSCAPE PLAN GOLF AREA, COTTAGES, HEALTH CLUB, INTERNAL ROADS, EXTENSION OF PRO-SHOP AND EXTENSION OF CLUB HOUSE, CAMP FACILITIES, CLUB HOUSE, LABOUR CAMP, LABOUR OFFICE AND MAIN STORE. P RIMA FACIE, THESE STRUCTURES WERE DEFINITELY NOT PURE TEMPORARY ERECT IONS, SUCH AS, WOODEN ITA NOS.1882 & 1883/DEL/2011 13 STRUCTURES. THE ASSESSEE HAS MADE A CLAIM OF 100% D EPRECIATION ON THESE TEMPORARY BUILDINGS AND IT WAS PLEADED BEFORE US TH AT THE CLAIM HAS BEEN MADE UNDER BONAFIDE AND GOOD FAITH BY REASONED VIEW . ON THIS ISSUE, WE NOTE THAT ASSESSEE IS A CONCERN OF A BIG INDUSTRIAL GROU P WHICH HAS TEAM OF TAX EXPERT AND AUDITORS AT ITS DISPOSAL. VERY FEW CASES ARE SELECTED FOR SCRUTINY, OTHERS ARE ACCEPTED AS THESE ARE FILED BY THE ASSES SEE. HAD THERE BEEN NO SCRUTINY OF THE ASSESSMENT, THIS CLAIM WHICH WAS EX -FACIE NOT TENABLE COULD HAVE BEEN ALLOWED ON THESE ITEMS AND ASSESSEE COULD HAVE GOT THE BENEFIT OF 100% DEPRECIATION FOR THE YEAR WHERE IT DOES NOT DE SERVE. FURTHER, WE DO NOT AGREE WITH THE FINDING OF THE CIT (A) THAT THE ASSE SSEE HAS DISCLOSED ALL MATERIAL FACTS. THE ASSESSEE HAS RATHER CLAIMED DEP RECIATION ON THESE STRUCTURES WHICH ARE NOT COVERED BY THE TABLE OF RA TES AT WHICH THE DEPRECIATION IS ADMISSIBLE @ 100% UNDER INCOME-TAX RULES WHERE ONLY PURELY TEMPORARY STRUCTURES, SUCH AS, WOODEN STRUCT URES DESERVE FOR 100% DEPRECIATION. THEREFORE, THE FINDING OF THE CIT (A) THAT ASSESSEE HAS DISCLOSED ALL MATERIAL FACTS IN THE RETURN OF INCOME IS NOT C ORRECT. THE SECOND FINDING OF THE CIT (A) IS THAT IT WAS A LEGAL CLAIM AND EVEN I F IT IS ULTIMATELY FOUND TO BE LEGALLY UNACCEPTABLE, IT CANNOT AMOUNT TO FURNISHIN G OF INACCURATE PARTICULARS. ON THIS FINDING, WE HOLD THAT IT WAS NOT A LEGAL CL AIM. CLAIM OF DEPRECIATION @ 100% IS PURELY BASED ON FACTS AS IT DEPENDS ON TY PE OF STRUCTURE. IT IS PURELY A CASE OF EX-FACIE UNTENABLE CLAIM OF DEPREC IATION @ 100% WHICH ITA NOS.1882 & 1883/DEL/2011 14 CANNOT BE SAID TO BE A LEGAL CLAIM. THEREFORE, THE CIT (A)S FINDINGS WITH REGARD TO THE CLAIM ON TEMPORARY BUILDINGS WERE NOT CORRECT. IN VIEW OF THESE FACTS, WE FIND NO MERITS IN THE FINDING OF THE CIT (A) FOR DELETING THE PENALTY ON THE ISSUE OF DEPRECIATION OF TEMPORARY BUILDINGS IN BOTH THE ASSESSMENT YEARS 2002-03 AND 2003-04 AND WE SET ASIDE THE ORDE RS OF THE CIT (A) ON THIS ISSUE. 6. WITH REGARD TO THE CLAIM OF DEPRECIATION ON BOUN DRY WALL TO THE EXTENT OF RS.8,02,847/- AND DISALLOWANCE OF PF/ESI U/S 36( 1)(VA) READ WITH SECTION 2(24)(X) OF INCOME-TAX ACT, 1961 OF RS.6,69,024/- I N ASSESSMENT YEAR 2002- 03, WE HOLD THAT NO PENALTY U/S 271(1)(C) OF THE AC T CAN BE LEVIED ON THE ASSESSEE. 7. IN THE RESULT, WE SET ASIDE THE ORDER OF CIT (A) FOR ASSESSMENT YEAR 2003-04 AND PARTLY SUSTAIN FOR ASSESSMENT YEAR 2002 -03. 8. IN THE RESULT, WE ALLOW REVENUES APPEAL NO.1883 /DEL/2011 FOR ASSESSMENT YEAR 2003-04 AND PARTLY ALLOW ITA NO.188 2/DEL/2011 FOR ASSESSMENT YEAR 2002-03. ORDER PRONOUNCED IN OPEN COURT ON THIS 6 TH DAY OF DECEMBER, 2013. SD/- SD/- (I.C. SUDHIR) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 6 TH DAY OF DECEMBER, 2013 TS ITA NOS.1882 & 1883/DEL/2011 15 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-VII, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.