Indian Polyster Ltd., Surat V. The Income tax Officer,Ward-1, Surat

ITA 1934/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89496 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 20-05-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 03-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Depreciation; Third party statement
• Section: 143(3); 133(6); 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, A HMEDABAD (BEFORE SHRI RAJPAL YADAV, J.M. & SHRI ANIL CHATUR VEDI, A.M.) I.T. A. NO. 1934/AHD/2011 &ITA NO. 22 93/AHD/2013 (ASSESSMENT YEAR. 2005-06) INDIAN POLYESTER LTD., 504, EMPIRE ESTATE BUILDING, RING ROAD, SURAT V/S INCOME TAX OFFICER, WARD- 1(2), SURAT (APPELLANT) (RESPONDENT) INCOME TAX OFFICER, WARD- 1(2), SURAT V/S INDIAN POLYESTER LTD., 504, EMPIRE ESTATE BUILDING, RING ROAD, SURAT (APPELLANT) (RESPONDENT) PAN: AABCI2475N APPELLANT BY : SHRI MEHUL SHAH, A.R. RESPONDENT BY : SHRI NIMESH YADAV, SR. D.R. ( )/ ORDER DATE OF HEARING : 20-05-2015 DATE OF PRONOUNCEMENT : 26 -05-2015 PER ANIL CHATURVEDI, ACCOUNTANT MEMBER. 1. THESE 2 APPEALS, OF WHICH 1 IS FILED BY THE ASSESSE E AND THE OTHER IS FILED BY THE REVENUE ARE AGAINST THE ORDER OF CIT(A)-I, SURA T DATED 21.06.2011 & 11.07.2013 FOR A.Y. 2005-06. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. ITA NOS. 193 4/A/11 & 2293/A/13 . A.Y. 2005-06 2 3. ASSESSEE IS A COMPANY STATED TO BE ENGAGED IN THE B USINESS OF MANUFACTURING OF TEXTURISED YARN. ASSESSEE FILED ITS RETURN OF IN COME FOR A.Y. 2005-06 ON 30.10.2007 DECLARING TOTAL INCOME AT RS. NIL. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED U NDER SECTION 143(3) VIDE ORDER DATED 31.12.2007 AND THE TOTAL INCOME WAS DET ERMINED AT RS. 10,46,620/- INTERALIA BY MAKING ADDITION ON ACCOUNT OF UNEXPLAINED CASH CREDIT OF RS. 6,50,000/- AND DISALLOWING DEPRECIATI ON OF RS. 13,05,971/-. ON THE AFORESAID DISALLOWANCES MADE, A.O LEVIED PENALT Y U/S. 271(1)(C) VIDE ORDER DATED 25.03.2010 OF RS. 7,12,750/- AS HE WAS OF THE VIEW THAT ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME. A GGRIEVED BY THE PENALTY ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFORE L D. CIT(A) WHO VIDE ORDER DATED 21.06.2011 GRANTED PARTIAL RELIEF TO THE ASSE SSEE BY INTERALIA DELETING THE PENALTY ON DEPRECIATION BUT CONFIRMED THE PENAL TY ON UNEXPLAINED CASH CREDIT OF RS. 6,50,000/-. AGGRIEVED BY THE AFORESAI D ORDER OF LD. CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND THE GROUNDS RAISED BY ASSESSEE READS AS UNDER:- 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN P ARTLY CONFIRMING THE PENALTY ACTION OF ASSESSING OFFICER IN IMPOSING PENALTY U/S 271(1) (C) OF THE ACT BY SUSTAINING THE PENALTY ON ADDITION OF RS. 6,50,000/- ON ACCOUNT OF UNEXPLA INED CASH CREDIT. 2. IT IS THEREFORE PRAYED THAT PENALTY IMPOSED BY A SSESSING OFFICER AND CONFIRMED BY COMMISSIONER OF INCOME-TAX (APPEALS) MAY PLEASE BE DELETED. 4. AGAINST THE QUANTUM ADDITION MADE BY A.O, ASSESSEE PREFERRED 2 ND APPEAL BEFORE HONBLE ITAT WHO VIDE ORDER DATED 23.07.2010 IN ITA NO. 2695/AHD/2008, ON THE ISSUE OF DISALLOWANCE OF DEPR ECIATION OF RS. 13,05,971/- CLAIMED BY THE ASSESSEE RESTORED THE MA TTER TO A.O TO RE-DECIDE THE ISSUE AFRESH. PURSUANT TO THE DIRECTIONS OF ITA T, A.O VIDE ORDER DATED 30.12.2011 PASSED U/S. 143(3) R.W.S. 254 AND IN THE ABSENCE OF DETAILS FROM ITA NOS. 193 4/A/11 & 2293/A/13 . A.Y. 2005-06 3 ASSESSEE, ONCE AGAIN CONFIRMED THE DISALLOWANCE OF DEPRECIATION OF RS. 13,05,971/- AND ON THE AFORESAID ADDITION, A.O VIDE ORDER DATED 22.06.2012, LEVIED PENALTY OF RS. 4,57,098/- U/S. 271(1)(C) ON ACCOUNT OF CONCEALMENT OF INCOME. AGGRIEVED BY THE PENALTY LEVIED BY A.O, AS SESSEE PREFERRED APPEAL BEFORE CIT(A) WHO VIDE ORDER DATED 11.07.2013 DELET ED THE PENALTY. AGGRIEVED BY THE ORDER OF LD. CIT(A), REVENUE IS NO W IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS:- 1. ON THE FACTS OF THE CIRCUMSTANCES OF THE CASE, WHET HER THE LD. CIT(A) IS JUSTIFIED IN DELETING THE PENALTY ON DISALLOWANCES OF HIGHER DEP RECIATION CLAIMED BY THE ASSESSEE IN HIS RETURN OF INCOME, WHEN THE HAS ACCEPTED ADDI TION MADE BY THE AO IN RESPECT TO DISALLOWANCES OF EXCESS .DEPRECIATION DURING THE CO URSE OF RE-ASSESSMENT PROCEEDINGS COMPLETED IN THE LIGHT OF ORIGINAL ASSESSMENT BEING SET-ASIDE BY THE HON'BLE ITAT. 2. ON THE FACTS OF THE CIRCUMSTANCES OF THE CASE, WHET HER THE LD. CIT(A) IS JUSTIFIED IN DELETING THE PENALTY, WHILE THE ASSESSEE HAS NEVER RESPONDED TO THE PENALTY NOTICES ISSUED BY THE AO, DURING THE COURSE OF PENALTY PROC EEDINGS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 4. IT IS THEREFORE, PRAYED THAT THE ORDER OF THE CIT(A ) MAY BE SET-SIDE AND THAT OF ASSESSING OFFICER MAY BE RESTORED TO THE ABOVE EXTE NT. 5. BEFORE US, ON THE APPEAL OF REVENUE, ON THE ISSUE O F DELETION OF PENALTY ON THE ISSUE OF DEPRECIATION LD. A.R. REITERATED THE S UBMISSIONS MADE BEFORE LD. CIT(A). HE FURTHER SUBMITTED THAT ASSESSEE HAD CLAI MED DEPRECIATION AT 50% OF THE WDV ON THE NEW PLANT AND MACHINERY PURCHASED UNDER TUF SCHEME. A.O WAS OF THE VIEW THAT THE PROVISIONS OF RULE 5 I N APPENDIX-1, SERIAL NO. (III)(6) OF THE I.T. RULES WERE NOT APPLICABLE TO T HE MACHINERY UTILIZED IN YARN CRIMPING OR TEXTURISING INDUSTRY AND THEREFOR E ASSESSEE WAS ELIGIBLE FOR ONLY NORMAL DEPRECIATION AND NOT HIGHER DEPRECI ATION HE ACCORDINGLY DISALLOWED THE EXCESS CLAIM OF DEPRECIATION. ON THE AFORESAID DISALLOWANCE MADE BY THE A.O, THE MATTER WAS CARRIED IN 2 ND APPEAL. LD. A.R. SUBMITTED THAT WHILE DECIDING THE ASSESSEES APPEAL, THE HON BLE TRIBUNAL IN ITA NO. 2695/AHD/2008 ORDER DATED 23.07.2010 HAD PRINCIPALL Y AGREED THAT ITA NOS. 193 4/A/11 & 2293/A/13 . A.Y. 2005-06 4 ASSESSEE WAS ELIGIBLE FOR HIGHER DEPRECIATION BUT I N THE ABSENCE OF THE INFORMATION AS TO WHETHER THE ASSETS WERE PUT TO US E FOR LESS THAN 180 DAYS OR MORE THAN 180 DAYS, THE MATTER WAS RESTORED TO THE A.O TO RE-DECIDE THE ISSUE AFRESH. HE THEREFORE SUBMITTED THAT THERE WAS NO CO NCEALMENT OF PARTICULARS OF INCOME AND IN THESE FACTS LD. CIT(A) HAS RIGHTLY DELETED THE PENALTY. HE THEREFORE SUPPORTED THE ORDER OF LD. CIT(A). 6. ON THE ISSUE OF PENALTY ON ADDITION ON ACCOUNT OF U NEXPLAINED CASH CREDIT. THE LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE A.O AND LD. CIT(A) AND FURTHER SUBMITTED THAT AT THE TIME OF ASSESSMENT PR OCEEDINGS, ASSESSEE HAD FILED ALL THE RELEVANT EVIDENCES RELATING TO THE RE CEIPT OF APPLICATION MONEY LIKE PAN NUMBER, CONTRA CONFIRMATION, ACKNOWLEDGEME NT OF RETURN OF INCOME ETC. HOWEVER, A.O INSISTED THE ASSESSEE TO F ILE EVIDENCES IN THE FORM OF BANK STATEMENT OF SHARE APPLICANTS, SOURCE OF FU ND ETC. THE ASSESSEE TO PUT AN END TO LITIGATION, VOLUNTARILY OFFERED RS. 6 ,50,000/- FOR TAX. THE LD. A.R SUBMITTED THAT A.O HAS NOT BROUGHT ON RECORD AN Y EVIDENCE WHICH WOULD INDICATE THAT THE AMOUNT REPRESENTS CONCEALED INCOME OF THE ASSESSEE. HE FURTHER SUBMITTED THAT IN ORDER TO JUSTIFY LEVY OF PENALTY THERE MUST BE SOME MATERIAL OR CIRCUMSTANCES TO SHOW THAT THERE W AS CONSCIOUS CONCEALMENT OR ACT OF FURNISHING OF INACCURATE PART ICULARS. HE FURTHER SUBMITTED THAT THE A. O DID NOT ISSUE SUMMONS TO TH E DEPOSITORS U/S. 131 OR DID NOT OBTAIN RELEVANT INFORMATION U/S. 133(6) TO ILLICIT THE TRUE POSITION OF THE DEPOSITS. THE ASSESSEE FURTHER PLACED RELIANCE ON THE DECISION IN THE CASE OF NATIONAL TEXTILE VS. CIT 249 ITR 125 (GUJ). THE LD. D.R. ON THE OTHER HAND ON THE ISSUE OF LEVY OF PENALTY ON ADDITION U/ S. 68 SUPPORTED THE ORDER OF A.O. ON THE ISSUE OF LEVY OF PENALTY ON THE CLAI M OF DEPRECIATION, HE ITA NOS. 193 4/A/11 & 2293/A/13 . A.Y. 2005-06 5 SUPPORTED THE ORDER OF A.O AND LD. CIT(A) AND FURTH ER PLACED RELIANCE ON THE DECISION IN THE CASE OF ANAND LIQUOR 232 ITR 35. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS ABOUT LEVY OF PENALTY U/S. 271(1)(C) ON TWO ADDITIONS NAMELY ADDITION U/S. 68 ON ACCOUNT OF UNE XPLAINED CASH CREDIT AND ON EXCESS DEPRECIATION OF MACHINERY. ON THE ADDITIO N MADE U/S. 68, WE FIND THAT ASSESSEE HAD FILED THE DETAILS ABOUT THE NAME, PAN NUMBER, CONTRA CONFIRMATION ETC OF THE DEPOSITORS WHICH HAVE NOT B EEN FOUND TO BE UNTRUE BY THE A.O. IT IS ALSO A FACT THAT THE A.O HAS ALSO NO T BROUGHT ANY EVIDENCE ON RECORD TO DEMONSTRATE THAT THE AMOUNT OF UNEXPLAINE D CREDIT REPRESENTS CONCEALED INCOME OF ASSESSEE. THE ACT OF ASSESSEE O F NOT PREFERRING APPEAL AGAINST QUANTUM ADDITION CANNOT BE CONSIDERED TO BE A FACTOR AGAINST THE ASSESSEE MORE SO WHEN IT IS A SETTLED LAW THAT ASSE SSMENT PROCEEDINGS AND QUANTUM PROCEEDINGS ARE DISTINCT AND SEPARATE AND T HAT ADDITION CAN BE MADE ON THE BASIS OF PREPONDERANCE OF PROBABILITY BUT FO R THE PURPOSE OF LEVY OF PENALTY, HEAVY BURDEN IS CAST ON THE REVENUE TO PRO VE CONCEALMENT. WE FURTHER FIND THAT THE HONBLE GUJARAT HIGH COURT IN THE CASE OF NATIONAL TEXTILES VS. CIT 249 ITR 125 HAS HELD IN ORDER TO J USTIFY LEVY OF PENALTY FOR ADDITION OF CASH CREDITS, THERE MUST BE SOME MATERI AL OR CIRCUMSTANCES LEADING TO REASONABLE CONCLUSION THAT THE AMOUNT DO ES REPRESENT ASSESSEES INCOME AND THE CIRCUMSTANCES MUST SHOW THAT THERE W AS CONSCIOUS CONCEALMENT OR ACT OF FURNISHING OF INACCURATE PART ICULARS; EXPLN. 1 DOES NOT MAKE THE ASSESSMENT ORDER CONCLUSIVE EVIDENCE THAT THE AMOUNT ASSESSED WAS IN FACT THE INCOME OF THE ASSESSEE. AS FAR AS L EVY OF PENALTY ON DISALLOWANCE OF DEPRECIATION IS CONCERNED, WE FIND THAT LD. CIT(A) AFTER RELYING ON THE DECISION OF HONBLE AHMEDABAD TRIBUN AL IN THE CASE OF ITA NOS. 193 4/A/11 & 2293/A/13 . A.Y. 2005-06 6 DESHRAJ TEXTURISERS (ITA NO. 660/A/2010 ORDER DATED 07.09.2010) HAS DELETED THE PENALTY. BEFORE US, REVENUE HAS NOT BRO UGHT ANY CONTRARY BINDING DECISION IN ITS SUPPORT NOR COULD POINT OUT ANY LEGAL INFIRMITY IN THE ORDER OF LD. CIT(A). WE FURTHER FIND THAT THE FACTS IN THE CASE OF ANAND LIQUOR, (SUPRA) WHICH HAS BEEN RELIED UPON BY REVEN UE ARE DISTINGUISHABLE ON FACTS AND THEREFORE CANNOT BE APPLIED TO THE FAC TS OF THE PRESENT CASE. IN VIEW OF THE AFORESAID FACTS, WE ARE OF THE VIEW THA T IN THE PRESENT CASE NO PENALTY U/S. 271(1)(C) IS LEVIABLE ON BOTH THE ADDI TIONS AND THEREFORE WE DELETE THE PENALTY LEVIED ON ADDITION U/S. 68 AND U PHOLD THE ORDER OF LD. CIT(A) WHEREBY HE HAD DELETED THE PENALTY ON THE CL AIM OF DEPRECIATION. 8. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED A ND THAT OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 26 - 05 - 2015. SD/- SD/- (RAJPAL YADAV) (ANIL CHATURVEDI) JUDICIAL MEBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AH MEDABAD