M/s. N.J. Texturisers Pvt.Ltd., Surat V. The Income tax Officer,Ward-1(4), Surat

ITA 1911/AHD/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0570 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 14-02-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 02-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y P VERMA
• Assessee Lawyers: RASESH SHAH
• Keywords: Depreciation; Deemed to accrue or arise in india; Unabsorbed depreciation
• Section: 115JB

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD , .!' # , $% $ & BEFORE SHRI MUKUL KR.SHRAWAT, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A. NO.1911/AHD/2011 ( ' ' (' / ASSESSMENT YEAR : 2005-06) M/S.N.J.TEXTURISERS PVT.LTD. S-42, BELGIUM SQUARE OPP.LENIAR BUS STOP RING ROAD, SURAT ' / VS. THE INCOME TAX OFFICER WARD-1(4) SURAT ./ ./ PAN/GIR NO. : AABCN 7915 R ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI RASESH SHAH, A.R. / RESPONDENT BY : SHRI Y.P.VERMA, SR.D.R. / DATE OF HEARING : 14/02/2013 !'# / DATE OF PRONOUNCEMENT : 21/2/13 $% / O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE ARISING F ROM THE ORDER OF LD.CIT(A)-I, SURAT DATED 23/06/2011 PASSED FOR A.Y.2005-06. THE ASSESSEE HAS CHALLENGED THE CONFIRMATION OF LEVY OF PENALTY U/S.271(1)(C) OF THE IT ACT OF RS.3,95,236/-. 2. VIDE AN ORDER U/S.271(1)(C) DATED 22.3.2010, I T WAS OBSERVED BY THE AO THAT WHILE FINALIZING THE ASSESSMENT U/S.143(3) OF THE ACT DATED ITA NO.1911/AHD /2011 M/S.N.J.TEXTURISERS PVT.LTD. VS. ITO ASST.YEAR - 2005-06 - 2 - 18.12.2007, THERE WAS DISALLOWANCE OF SET OFF OF UN ABSORBED DEPRECIATION AND ALSO DISALLOWANCE OF EXCESS CLAIM OF DEPRECIATI ON. HOWEVER, THE ADMITTED FACTUAL POSITION IS THAT THE ASSESSEE HAS DISCLOSED THE NIL RETURN OF INCOME AND THE ASSESSMENT EVEN AFTER THOSE ADDIT IONS WAS MADE AT RS.NIL BECAUSE OF THE SET OFF OF CERTAIN UNABSORBED DEPRECIATION. AS PER THE IMPUGNED ASSESSMENT ORDER TAX ON THE ASSESSEE W AS CALCULATED BY INVOKING THE PROVISIONS OF SECTION 115JB OF THE IT ACT. THEREFORE, THE QUESTION BEFORE US IS THAT IN A SITUATION WHEN THER E WAS NO INCIDENCE OF TAX AS PER THE NORMAL COMPUTATION OF INCOME, WHEREI N THE IMPUGNED ADDITION WERE MADE OVER WHICH THE PENALTY IN QUESTI ON WAS LEVIED CAN BE SUSTAINED. ALTHOUGH THE LD.CIT(A) HAS AFFIRMED THE ACTION OF THE AO, BUT WE HAVE NOTED THAT SOME OF THE CASE LAWS CITED WERE NOT LAWFULLY ADDRESSED BY HIM. 3. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, WE ARE OF THE CONSIDERED VIEW THAT IN A SITUATION WHEN THERE IS NO INCIDENCE OF TAX ON THE ASSESSEE AS PER THE NORMAL COMPUTATION OF INCOM E BUT THE TAX WAS LEVIED ONLY BY INVOKING THE DEEMING PROVISIONS OF S ECTION 115JB OF THE ACT AND DEEMING PROVISIONS WERE NOT MADE THE BASIS FOR LEVY OF CONCEALMENT PENALTY, THEN SUCH CONCEALMENT PENALTY IS NOT SUSTAINABLE IN THE EYES OF LAW. IN THE CASE OF CIT VS. NALWA SONS INVESTMENTS LTD. REPORTED AT 327 ITR 543 (DEL), THE HONBLE HIGH COU RT HAS HELD THAT IT IS ONLY THE DEEMED INCOME WHICH WAS ASSESSED U/S.115JB OF THE ACT AND THAT DEEMING PROVISIONS HAVE FINALLY BECOME THE BAS IS OF ASSESSMENT FOR THE PURPOSE OF LEVY OF TAX. THE CONCEALMENT PENALT Y WAS NOT INVOKED IN RESPECT OF ANY OF THE INFRINGEMENT IN RESPECT OF TH OSE DEEMING PROVISIONS. ITA NO.1911/AHD /2011 M/S.N.J.TEXTURISERS PVT.LTD. VS. ITO ASST.YEAR - 2005-06 - 3 - RATHER, THE BASIS OF LEVY OF CONCEALMENT PENALTY WA S IN RESPECT OF CERTAIN ADDITIONS WHICH WERE MADE IN THE COURSE OF REGULAR ASSESSMENT. BUT EVEN AFTER THOSE ADDITIONS, THERE WAS NO INCIDENCE OF TA X BECAUSE THE FINAL INCOME WAS DETERMINED AT RS.NIL. HENCE, THE IMPUGN ED CONCEALMENT DID NOT LEAD TO TAX EVASION AT ALL. WE ARE ALSO OF THE VIEW, RESPECTFULLY FOLLOWING THE PRECEDENTS, THAT THERE WAS NO OCCASIO N TO LEVY THE CONCEALMENT PENALTY IN SUCH CIRCUMSTANCE ON THE ASS ESSEE. RESULTANTLY, GROUND IS ALLOWED. 4. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. SD/- SD/- ( &.'!( ')# ) ( ' ' * ) $ +, $ ( A. MOHAN ALANKAMONY ) ( MUKU L KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 21 / 02 /2013 -.., .,../ T.C. NAIR, SR. PS $* + ,-. /$.( / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / 01 2 / CONCERNED CIT 4. 2 () / THE CIT(A)-I, SURAT 5. 567 ,,01, 01#, ('$/$ / DR, ITAT, AHMEDABAD 6. 789 : / GUARD FILE. $*' / BY ORDER, 5 , //TRUE COPY// 0/ 1 ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD