The ACIT, Central Circle-2(2), Ahmedabad V. Shri Bhavesh C.Shah, Bhavnagar

ITA 191/AHD/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 8967 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 17-02-2010
• Assessment Year: 2001-2002
• Appeal Filed On: 10-01-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GOVIND SINGHAL
• Keywords: Depreciation; Difference of opinion
• Section: 63

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND N. S. SAINI, AM) ITA NO.191/AHD/2007 A. Y.: 2001-02 THE A. C. I. T., CIRCLE-2 (2), ROOM NO.309, 3 RD FLOOR, AAYAKAR BHAVAN, ASHRAM ROAD, AHMEDABAD VS SHRI BHAVESH C. SHAH, C/O. VIJAYKUMAR, DANAPITH, BHAVNAGAR, PA NO. AAGPS 6623R (APPELLANT) (RESPONDENT) APPELLANT BY SHRI GOVIND SINGHAL, DR RESPONDENT BY NONE O R D E R PER BHAVNESH SAINI: THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-III, AHMEDABAD DATE D 12-10-2006 FOR ASSESSMENT YEAR 2001-02, CANCELING THE PENALTY U/S 271 (1) (C) OF THE INCOME TAX ACT. 2. WE HAVE HEARD THE LEARNED DR. HOWEVER, NONE APPE ARED ON BEHALF OF THE ASSESSEE. REQUEST FOR ADJOURNMENT IS REJECTE D. 3. THE ASSESSEE CLAIMED 100% DEPRECIATION IN RESPEC T OF PLANT, MACHINERY AND BUILDING. THE AO OBSERVED THAT BILLS FOR PLANT WERE DATED 30-09-2000. THE AO FELT THAT THE EXPLANATION OF THE INSTALLATION HAVING BEEN COMPLETED BEFORE 30-09-2000 WAS NOT ACCEPTABLE AND WAS NOT ESTABLISHED BY EVIDENCE AND WHEN THE MACHINERY COUL D NOT HAVE BEEN PUT TO USE BEFORE 30-09-2000. HENCE, THE AO RESTRIC TED THE CLAIM OF DEPRECIATION ON PLANT AND MACHINERY AT 50% AND THER EBY MADE THE DISALLOWANCE OF RS.11,86,000/-. THE AO SIMILARLY OB SERVED THAT EXPENSES CLAIMED FOR REPAIRS FOR RS.1,65,940/- ON 18-07-2000 WERE NOT EXPLAINED ITA NO.191/AHD/2007 SHRI BHAVESH C. SHAH 2 AS THE BUILDING WAS COMPLETED BEFORE 20-09-2000 AND PRIOR TO THIS THERE WAS NO QUESTION OF REPAIR. ADDITION WAS ACCORDINGLY MADE. THE LEARNED CIT(A) CONFIRMED THE ADDITION. THE AO ACCORDINGLY H ELD THAT THE ASSESSEE HAD CONCEALED THE INCOME AND ACCORDINGLY LEVIED PEN ALTY VIDE SEPARATE ORDER. THE PENALTY WAS CHALLENGED BEFORE THE LEARNE D CIT(A) AND IT WAS SUBMITTED THAT THERE WAS NO DELIBERATE AND MALA FID E INTENTION FOR MAKING THE CLAIM OF DEPRECIATION IN RESPECT OF PLAN TS AND IN RESPECT OF REPAIR EXPENSES. THE CONSTRUCTION OF THE BUILDING A ND INSTALLATION OF THE MACHINERY WAS ON GOING PROCESS AND ALL THE FACTS WE RE DISCLOSED TO THE REVENUE DEPARTMENT. THERE WAS NO MOTIVE TO CLAIM HI GHER DEPRECIATION. THE LEARNED CIT(A) CONSIDERING THE CONTENTIONS OF T HE ASSESSEE NOTED THAT THE CLAIM OF DEPRECIATION WAS A MATTER OF DISPUTE W HICH CANNOT BE SAID WITH CERTAINITY THAT ITS CLAIM WAS DELIBERATE. ALL THE DETAILS WERE DISCLOSED TO THE REVENUE DEPARTMENT AND ALL THE PURCHASE VOUC HERS WERE PRODUCED IN SUPPORT OF THE CONTENTIONS. THEREFORE, IT IS NOT A FIT CASE OF CONCEALMENT OF INCOME OR FILING OF INACCURATE PARTI CULARS OF INCOME. THE LEARNED CIT(A) CANCELLED THE PENALTY AND ALLOWED TH E APPEAL OF THE ASSESSEE. 4. THE LEARNED DR RELIED UPON THE ORDER OF THE AO A ND SUBMITTED THAT SINCE THE ASSESSEE CLAIMED EXCESSIVE DEPRECIATION A ND REPAIRS AND THE ADDITIONS ARE CONFIRMED, THEREFORE, THERE IS NO NEE D OF ESTABLISHING WILLFUL CONCEALMENT AS DECIDED BY THE HONBLE SUPREME COURT IN THE CASE OF DHARMENDRA TEXTILES 307 ITR 277 (SC). 5. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LEARNE D DR AND PERUSED THE FINDINGS OF THE AUTHORITIES BELOW. IT I S ADMITTED FACT THAT THE ASSESSEE DISCLOSED ALL THE FACTS BEFORE THE AUTHORI TIES BELOW. IT IS A CASE OF DIFFERENCE OF OPINION FOR CLAIM OF DEPRECIATION BECAUSE THE ASSESSEE ON THE BASIS OF THE PURCHASE VOUCHERS TRIED TO ESTABLI SH THAT INSTALLATION OF THE PLANT AND MACHINERY WAS COMPLETED BEFORE SEPTEM BER, 2000, BUT THE ITA NO.191/AHD/2007 SHRI BHAVESH C. SHAH 3 AO DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE. S IMILARLY, INSTALLATION OF THE PLANT AND MACHINERY AND CONSTRUCTION OF THE BUILDING IS IN FACT, AN ON GOING PROCESS. THEREFORE, IF BILL IS RAISED PRIO R TO COMPLETION OF THAT, NO FAULT WOULD BE FOUND IN THE CONTENTION OF THE ASSES SEE. ITAT CHENNAI BENCH ON THE IDENTICAL FACTS IN THE CASE OF SOUTHER N GAS FITTINGS (P) LTD. VS DCIT 80 ITD 202 HELD AS UNDER: AT THE COST OF REPETITION, WE MAY MENTION HERE THA T FROM ALL THE FACTS AND CIRCUMSTANCES OF THE CASE, IT SEEMS I T IS A CASE OF DIFFERENCE OF OPINION, AS THE CLAIM FOR DEPRECIA TION ETC. WAS MADE BY THE ASSESSEE ON THE BASIS OF TRIAL PRODUCTI ON WHICH WAS SUPPORTED BY RECORD, BUT THE STAND OF THE DEPAR TMENT WAS THAT SINCE NO COMMERCIAL PRODUCTION WAS THERE, THE ASSESSEE IS NOT ENTITLED FOR SUCH CLAIM. ALL THE FA CTS OF THE CASE WERE BEFORE THE ASSESSING OFFICER AND AS SUCH, IT C ANNOT BE SAID TO BE A CASE OF FILING INACCURATE PARTICULARS OR MAKING ANY CONCEALMENT BEFORE THE ASSESSING OFFICER. EVEN IF T HE ASSESSEE WOULD CLAIM THIS DEPRECATION ETC., ON MERITS AND RE JECTED BY THE ASSESSING OFFICER, STILL LAW IS CLEAR THAT EVEN IF THE EXPLANATION OF THE ASSESSEE IS REJECTED, NO CASE FO R IMPOSITION OF PENALTY WOULD BE MADE OUT. 6. THE LEARNED DR RELIED UPON THE DECISION OF T HE HONBLE SUPREME COURT IN THE CASE OF DHARMENDRA TEXTILES (SUPRA) IN WHICH IT WAS HELD THAT WILLFUL CONCEALMENT IS NOT REQUIRED FOR THE PU RPOSE OF IMPOSING PENALTY. HOWEVER, THE HONBLE SUPREME COURT IN ITS LATER DECISION IN THE CASE OF M/S. RAJASHREE SPINNING & WEAVING MILLS 20 9 TIOL 63 SC HELD THAT ON EVERY DEMAND PENALTY IS NOT AUTOMATIC. CONSIDERING THE ABOVE FACT AND THE ABOVE DISCUSSION, WE ARE OF THE VIEW THAT IT IS NOT A FIT CASE TO HOLD THAT THE ASSESSEE CONCEALED THE PARTIC ULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. WE, THE REFORE, DO NOT FIND ANY ERROR IN THE ORDER OF THE LEARNED CIT(A) IN DEL ETING THE PENALTY. WE CONFIRM HIS FINDING AND DISMISS THE APPEAL OF THE R EVENUE. ITA NO.191/AHD/2007 SHRI BHAVESH C. SHAH 4 7. AS A RESULT, DEPARTMENTAL APPEAL STANDS DISMISSE D. ORDER PRONOUNCED ON 26-02-2010 SD/- SD/- (N. S. SAINI) ACOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 26-02-2010 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD