Dy. Commissioner of Income Tax-4, Kanpur V. M/s Yash Papers Ltd., Kanpur

ITA 196/LKW/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1079 (ITAT-LUCKNOW)
• Duration Of Justice: 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 20-03-2018
• Assessment Year: 2006-2007
• Appeal Filed On: 23-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation
• Section: 143(3); 27

Judgement Text

I.T.A. NO.196/LKW/2017 C.O.NO.08/LKW/2017 ASSESSMENT YEAR:2006-07 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI T. S. KAPOOR, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER ITA NO.196/LKW/2017 ASSESSMENT YEAR:2006-07 DY.C.I.T.-4, KANPUR. VS. M/S YASH PAPERS LTD., 47/81, HATIA BAZAR, KANPUR. PAN:AAACY 0482 H (APPELLANT) (RESPONDENT) C.O.NO.08/LKW/2017 (IN ITA NO.196/LKW/2017) ASSESSMENT YEAR:2006-07 M/S YASH PAPERS LTD., 47/81, HATIA BAZAR, KANPUR. PAN:AAACY 0482 H VS. DY.C.I.T.-4, KANPUR. (APPELLANT) (RESPONDENT) O R D E R PER T. S. KAPOOR, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A), DATED 01/12/2016 RELATING TO ASSESSMENT YEAR 2006-0 7 TAKING THE FOLLOWING GROUNDS OF APPEAL: REVENUE BY CH. ARUN KUMAR SINGH, D.R. ASSESSEE BY SHRI P. K. KAPOOR, C. A. DATE OF HEARING 20/03/2018 DATE OF PRONOUNCEMENT 21/03/2018 I.T.A. NO.196/LKW/2017 C.O.NO.08/LKW/2017 ASSESSMENT YEAR:2006-07 2 1. THAT THE LD. CIT(A) ERRED IN LAW AND ON FACTS I N ALLOWING THE APPEAL OF THE ASSESSEE IN RESPECT OF DELETION O F PENALTY IMPOSED U/S 271(1)(C) OF THE I.T ACT 1961 WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS MERITS BROUGHT ON RECORD BY THE AO IN THE ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT WHICH WAS CONFIRMED BY THE CIT(A) AND ITAT IN THE APPELLATE O RDERS PASSED IN CONFIRMING THE ADDITIONS/ DISALLOWANCES O N ACCOUNT OF SETTING OFF THE INCOME FROM THE CAPITAL WORK IN PROGRESS OF RS.77,93,470/- AND RS.2,65,555/- AS CLA IM OF DEPRECIATION ON NON-FACTORY BUILDING. 2. THAT THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN ALLOWING THE APPEAL OF THE ASSESSEE IN RESPECT OF DELETION O F PENALTY IMPOSED OF RS.22,61,489/- U/S 271(1)(C) OF THE I.T ACT 1961 WITHOUT APPRECIATING THAT ASSESSEE COMPANY FAILED TO OFFER ANY JUSTIFIED EXPLANATION I N RESPECT OF THE DISALLOWANCES MADE ON ACCOUNT OF SET TING OFF THE INCOME FROM THE CAPITAL WORK IN PROGRESS OF RS.77,93,470/- CONSTITUTES SHORT TERM CAPITAL GAIN REGARDING INCOME FROM MUTUAL FUNDS AND INCOME FROM OTHER SOURCES IN RESPECT OF INTEREST INCOME FROM BA NK FDRS. 3. THAT THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN ALLOWING THE APPEAL OF THE ASSESSEE IN RESPECT OF DELETION O F PENALTY IMPOSED U/S 271(1)(C) OF THE I.T ACT 1961 WITHOUT APPRECIATING THAT ASSESSEE COMPANY FAILED T O OFFER ANY JUSTIFIED EXPLANATION IN RESPECT OF THE DISALLOWANCES MADE ON ACCOUNT OF RS.2,65,555/- AS C LAIM OF DEPRECIATION ON NON-FACTORY BUILDING THAT SHOULD HAVE BEEN CAPITALISED BY THE ASSESSEE COMPANY. 4. THAT THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN ALLOWING THE APPEAL OF THE ASSESSEE IN RESPECT OF DELETION O F PENALTY IMPOSED OF RS.22,61.489/- U/S 271(1)(C) OF THE I.T ACT 1961 WITHOUT APPRECIATING THAT ASSESSEE WIL LFULLY AND DELIBERATELY CONCEALED ITS INCOME AND FURNISHED INACCURATE PARTICULARS OF ITS INCOME. 5. THAT THE ORDER OF COMMISSIONER OF INCOME TAX (AP PEALS), BEING ERRONEOUS, UNJUST AND BAD IN LAW BE VACATED A ND THE ORDER OF ASSESSING OFFICE BE RESTORED. I.T.A. NO.196/LKW/2017 C.O.NO.08/LKW/2017 ASSESSMENT YEAR:2006-07 3 2. THE ASSESSEE HAS ALSO FILED CROSS OBJECTIONS TO THE APPEAL FILED BY THE ASSESSEE. THE GROUNDS TAKEN BY THE ASSESSEE IN ITS CROSS OBJECTIONS ARE SUPPORTIVE TO THE ORDER OF THE LEARNED CIT(A). 3. AT THE OUTSET, LEARNED D. R. SUBMITTED THAT THE ASSESSEE HAD CONCEALED THE INTEREST INCOME WHICH IT HAD RECEIVED AS INTEREST ON PUBLIC ISSUE DEPOSIT AND HAD ALSO CONCEALED THE PROFITS ON TRANSACTIONS IN MUTUAL FUNDS, THE INVESTMENT OF WHICH WAS MADE OUT OF SHAR E CAPITAL RECEIVED THROUGH PUBLIC ISSUE. LEARNED D. R. SUBMITTED THAT THE ASSESSEE HAD ADJUSTED THESE INCOMES AGAINST CAPITAL WORK IN PROG RESS WHICH WAS NOT IN LINE WITH THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF TUTICORIN ALKALI CHEMICALS AND FERTILIZER LTD. VS. CIT [1997] 227 ITR 172 (SC) AND THEREFORE, THE ASSESSEE HAD NECESSARILY CONCEALED T HE PARTICULARS OF INCOME AND ASSESSING OFFICER HAS RIGHTLY IMPOSED THE PENAL TY WHICH LEARNED CIT(A) HAS WRONGLY DELETED. 4. LEARNED A. R., ON THE OTHER HAND, STATED THAT TH E ASSESSEE HAD COME OUT WITH A PUBLIC ISSUE AND WAS IN THE PROCESS OF S ETTING UP ANOTHER UNIT AND DUE TO DELAY IN IMPLEMENTATION OF THE PROJECT, THE FUNDS WERE PARKED IN THE FORM OF FDR AND ALSO A PART OF FUNDS WERE INVESTED IN MUTUAL FUNDS FROM WHERE THE ASSESSEE GOT INTEREST AND ALSO EARNED PRO FIT FROM MUTUAL FUNDS. IT WAS SUBMITTED THAT THE ASSESSEE HAD REDUCED THES E INCOMES FROM THE SHARE ISSUE EXPENSES WHICH WERE INCLUDED IN THE COS T OF PROJECT AND WHICH WERE DULY DISCLOSED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AND WERE ALSO DISCLOSED IN THE BALANCE SHEET OF THE ASSESSEE AND THEREFORE, NOTHING WAS CONCEALED BY ASSESSEE AND ALL THE DETAILS WERE FURN ISHED BEFORE THE ASSESSING OFFICER AND THEREFORE, RELYING ON THE ORD ER OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS (P) LTD. 230 CTR 320 (SC) HAS RIGHTLY DELETED THE PENALTY. LEARNED A. R . SUBMITTED THAT HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS (P) LTD. HAS HELD THAT I.T.A. NO.196/LKW/2017 C.O.NO.08/LKW/2017 ASSESSMENT YEAR:2006-07 4 MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDI TURE WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT ATTRACT THE PENALTY U/S 271(1)(C) OF THE ACT. 5. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT ASSESSEE, WITH A V IEW TO SET UP A NEW UNIT FOR PRODUCING POSTER PAPER, RAISED FUNDS THROUGH EQ UITY FINANCING AND DUE TO DELAY IN IMPLEMENTATION OF THE PROJECT, PLACED T HE FUNDS FOR A SHORT PERIOD IN THE FORM OF FDR AND ALSO A PART OF FUNDS WERE INVESTED IN MUTUAL FUND AND FROM THESE INVESTMENTS THE ASSESSEE EARNED INCOME IN THE FORM OF INTEREST AND PROFIT FROM MUTUAL FUNDS. THE SAID IN COMES WERE DISCLOSED BY THE ASSESSEE IN THE BOOKS OF ACCOUNT AND IN THE BAL ANCE SHEET. HOWEVER, INSTEAD OF DECLARING THE SAME AS INCOME, THE SAME W ERE REDUCED FROM THE CAPITAL WORK IN PROGRESS AND THEREFORE, THE ASSESSE E HAD DISCLOSED THE FULL PARTICULARS OF SUCH INCOME IN ITS BALANCE SHEET. IN FACT THE ASSESSING OFFICER CAME TO KNOW ABOUT THESE INCOMES FROM THE P ARTICULARS FILED BY THE ASSESSEE ITSELF THEREFORE, IT CANNOT BE SAID THAT T HE ASSESSEE HAD CONCEALED PARTICULARS OF INCOME OR HAD FURNISHED INACCURATE P ARTICULARS OF INCOME. LEARNED CIT(A) HAS RIGHTLY DELETED THE PENALTY RELY ING ON THE CASE LAW OF RELIANCE PETROPRODUCTS (P) LTD. (SUPRA) DECIDED BY HON'BLE SUPREME COURT. THE FINDINGS OF LEARNED CIT(A) ARE QUITE EXHAUSTIVE AND HE HAS PASSED A SPEAKING ORDER. FOR THE SAKE OF COMPLETENESS, THE FINDINGS OF LEARNED CIT(A) ARE REPRODUCED BELOW: I HAVE PERUSED THE FACTS OF THE CASE AND THE ARGUM ENTS OF AO AND THE APPELLANT. PENALTY HAS BEEN LEVIED FOR TWO ABOVE MENTIONED ADDITION OF RS. 77,93,470/-. AFTER CONSIDERING ASSESSEES SUBMISSION AND FACTS A ND MATERIALS AVAILABLE ON RECORD, AO FOUND THAT APPELLANT WANTED TO INSTALL A NEW PAPER MANUFACTURING UNIT FOR WHICH ADDITIONAL P URCHASE OF LAND WAS REQUIRED FROM M/S UPSIDC LTD. DUE TO DELAY IN I.T.A. NO.196/LKW/2017 C.O.NO.08/LKW/2017 ASSESSMENT YEAR:2006-07 5 ACQUISITION OF LAND, DELAY IN THE EXPANSION OF ASSE SSES PROJECT TOOK PLACE. ASSESSEE IN ORDER NOT TO KEEP FUNDS IDL E AND TO MAXIMIZE THE BENEFITS FROM THESE IDLE FUNDS, INVEST ED THEM IN FDRS AND MUTUAL FUNDS. THE PROCEEDS FROM THESE INVE STMENTS WERE EITHER ADJUSTED AGAINST SHARE ISSUE EXPENSES O R TAKEN TO THE CAPITAL WORK IN PROGRESS, INSTEAD OF CREDITING THEM AS INCOME FROM OTHER SOURCES. IN ESSENCE, ASSESSEE TRE ATED THEM AS RECEIPTS OF CAPITAL IN NATURE. THE PROFITS ARISI NG IN THE TRANSACTIONS AMOUNTING TO RS.20,10.593/- THAT HAS B EEN ADJUSTED AGAINST CAPITAL WORK IN PROGRESS WERE TREA TED AS INCOME FROM CAPITAL GAIN BY AO. THE ASSESSEE'S INCO ME OF RS.57,82,877/- AS INTEREST ON FDRS THAT WERE ADJUST ED AGAINST CAPITAL WORK IN PROGRESS WAS TREATED AS INCOME FROM OTHER SOURCES BY AO. HON'BLE ITAT HAS CONFIRMED PART ADDI TION AND DELETED THE OTHER PART VIDE THEIR ORDER NO. ITA NO. 31 & 32/LKW/2013 FOR AY 2006-07 AND AY 2007-08. SINCE PENALTY PROCEEDINGS ARE SEPARATE PROCEEDINGS THAN ASSESSMENT PROCEEDINGS WHAT IS TO BE SEEN IS THAT W HETHER ADDITION MADE WERE OF SUCH NATURE AS TO ATTRACT PEN ALTY U/S 271(1)(C) OF THE ACT. IT IS EVIDENT FROM THE RECORD THAT ALL THE DETAILS THAT WERE RELEVANT TO THE ABOVE TWO TRANSACTIONS WERE DULY DI SCLOSED IN THE BOOKS OF ACCOUNTS AND IN THE RETURN OF THE INCO ME AND WERE ALSO SHOWN TO AO DURING ASSESSMENT PROCEEDINGS AND WERE FOUND TO BE CORRECT BY THE AO AS FAR AS THEIR NATUR E IS CONCERNED. THE DISALLOWANCE WAS MADE IN THE ASSESSM ENT ORDER SOLELY ON ACCOUNT OF DIFFERENT VIEW TAKEN ON THE SA ME SET OF DISCLOSED FACTS BY THE APPELLANT AND NOT DISPUTED B Y THE AO. HENCE, IT IS NOT A CASE OF CONCEALMENT OF INCOME OR A CASE OF FILING OF INACCURATE PARTICULARS OF INCOME AS CONTE MPLATED IN THE PROVISIONS RELATING TO CONCEALMENT PENALTY. SUCH IS SUES ARE NOW SQUARELY COVERED BY THE JUDGMENT OF THE HON'BLE APE X COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS RELIANCE PETROPRODUCTS (P) LTD 230 CTR 320 (SC), WHEREIN THE IR LORDSHIPS AFTER CONSIDERING VARIOUS DECISIONS INCLUDING THAT OF DILIP N. SHROFF VS. JCIT (2007) 291 ITR 519 (SC) HAS HELD TH AT MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, W HICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVEN UE, THAT BY ITSELF WOULD NOT ATTRACT THE PENALTY UNDER S. 27 1(1)(C). IN THE LIGHT OF THE CATEGORICAL EXPOSITION OF LAW LAID DOWN BY THE APEX COURT AS TO THE SCOPE AND AMBIT OF SECTION 271 (1)(C) OF I.T.A. NO.196/LKW/2017 C.O.NO.08/LKW/2017 ASSESSMENT YEAR:2006-07 6 THE ACT IN THE ABOVE SAID JUDGMENTS OF THE HON'BLE SUPREME COURT, I DO NOT FIND ANY ACT ON THE PORT OF THE APP ELLANT SO AS TO JUSTIFY THE IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT. PENALTY IMPOSED BY THE AO IS HEREBY DELETED. 5.1 WE DO NOT FIND ANY INFIRMITY IN THE ABOVE ORDER OF CIT(A) THEREFORE, THE APPEAL FILED BY THE REVENUE IS DISMISSED. 6. IN VIEW OF OUR DECISION ON THE APPEAL FILED BY T HE REVENUE, THE CROSS OBJECTIONS FILED BY THE ASSESSEE ARE ALSO DISMISSED . 7. IN THE RESULT, THE APPEAL OF THE REVENUE AS WELL AS CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 21/03/2018) SD/. SD/. (PARTHA SARATHI CHAUDHURY) ( T. S. KAPOOR ) JUDICIAL MEMBER A CCOUNTANT MEMBER DATED:21/03/2018 *SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW