The DCITA'bad Circle-8, Ahmedabad V. Sunij Pharma Pvt.Ltd., Ahmedabad

ITA 2018/AHD/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94382 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 15-09-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 07-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NARENDRA SINGH
• Assessee Lawyers: UKTI PARIKH
• Keywords: Depreciation
• Section: 32

Judgement Text

, B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ./ ITA NO.2017, 2018, 2019 AND 2020/AHD/2012 / ASSTT. YEAR: 2002-2003, 2003-04, 2005-06 AND 2006-0 7 DCIT, CIR.8 AHMEDABAD. VS SUNIJ PHARMA PVT. LTD. T-1/B, NATIONAL PARK GULBAI TEKRA, AHMEDABAD. PIN : 380 015. PAN : AAFCS 2899 M / (APPELLANT) / (RESPONDENT) REVENUE BY : SHRI NARENDRA SINGH, SR.DR ASSESSEE BY : MS. UKTI PARIKH ! / DATE OF HEARING : 15/09/2015 '#$ ! / DATE OF PRONOUNCEMENT: 16 /09/2015 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE PRESENT FOUR APPEALS ARE DIRECTED AT THE INSTA NCE OF THE REVENUE AGAINST THE ORDER OF THE LD.CIT(A)-XIV DATE D 28.6.2012 PASSED FOR THE ASSESSMENT YEARS 2002-03, 2003-04, 2005-06 AND 2006-07. 2. THE SOLITARY GRIEVANCE OF THE REVENUE IN ALL THE SE FOUR YEARS IS THE LD.CIT(A) HAS ERRED IN DELETING THE PENALTY OF RS.6 ,69,375/-, RS.5,16,796/-, RS.2,89,085 AND RS.1,99,690/- FOR TH E ASSTT.YEARS 2002- 03, 2003-04, 2005-06 AND 2006-07 RESPECTIVELY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT. ITA NO.2017/AHD/2012 (4 APPEALS) 2 3. THE FACTS ON ALL VITAL POINTS ARE COMMON. THERE FORE, FOR THE FACILITY OF REFERENCE, WE TAKE UP THE FACT FROM THE ASSTT.YEAR 2002-03. 4. THE ASSESSEE HAS FILED ITS RETURN OF INCOME ON 3 0.10.2002 DECLARING TOTAL INCOME AT RS.NIL. IN A SCRUTINY AS SESSMENT, THE LD.AO HAS DISALLOWED THE CLAIM OF DEPRECIATION ON GOODWIL L AND INTANGIBLE ASSET. THIS ADDITION WAS MADE AT RS.16,75,000/-. THE ASSESSMENT ORDER WAS PASSED ON 24.10.2008. THE LD.AO HAS INIT IATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT AND ISSUED A NOTICE UNDER SECTION 274 READ WITH SECTION 271(1)(C) OF TH E ACT. THE AO HAS FURTHER OBSERVED THAT IN THE APPEAL, THE LD.CIT(A) HAS FURTHER MADE ADDITION OF RS.2 LAKHS BY MAKING DISALLOWANCE ON TH E DEPRECIATION CLAIMED IN RESPECT OF GOODWILL. HE CONSIDERED THE ADDITION AT RS.18,75,000/- AND IMPOSED PENALTY OF RS.6,69,375/- , WHICH IS EQUIVALENT TO TAX SOUGHT TO BE EVADED ON THE ADDITI ON MADE BY DISALLOWING THE CLAIM OF DEPRECIATION. SIMILAR ADD ITION HAS BEEN MADE IN OTHER ASSESSMENT YEARS, AND THE AO HAS IMPOSED PENA LTY IN ALL OTHER ASSESSMENT YEARS. 5. THE LD.CIT(A) HAS DELETED THE PENALTY ON MERIT. ACCORDING THE LD.FIRST APPELLATE AUTHORITY, THE ASSESSEE HAS NOT CONCEALED ANY PARTICULARS OF INCOME. THE INTERPRETATION WITH REG ARD TO THE PROVISIONS ENABLING THE ASSESSEE TO CLAIM DEPRECIATION ON GOOD WILL IS A COMPLEX ASPECT, AND THEREFORE, FOR CLAIMING THE DEPRECIATIO N, THE ASSESSEE HAS NOT FURNISHED ANY INACCURATE PARTICULARS OR NOT CON CEALED THE PARTICULARS OF INCOME. THE ISSUE IS DEPENDED UPON THE CONSTRUC TION OF PROVISIONS OF SECTION 32 WHICH ALLOW THE DEPRECIATION TO THE ASSE SSEE ON THE INTANGIBLE ASSET. THE LD.COUNSEL FOR THE ASSESSEE, AT THE VERY OUTSET, SUBMITTED THAT THE TRIBUNAL HAS DELETED THE DISALLO WANCE ON DEPRECIATION IN THE QUANTUM APPEAL OF THE ASSESSEE. IN THE ASSTT.YEAR 2004-05, THE CIT(A) HAS DELETED THE PENALTY ORDER, AND THIS ORDER HAS BEEN FOLLOWED IN THESE FOUR YEARS. THIS ORDER OF THE CIT(A) HAS ALSO ITA NO.2017/AHD/2012 (4 APPEALS) 3 BEEN UPHELD BY THE TRIBUNAL. SHE PLACED ON RECORD COPY OF THE TRIBUNAL ORDER IN ITA NO.870, 871, 872 AND 873/AHD/2010 IN T HE ASSTT.YEARS 2002-03, 2003-04, 2005-06 AND 2006-07. THESE APPEA LS HAVE BEEN DISPOSED OF ALONGWITH NUMBER OF APPEALS INCLUDING T HE ITA NO.1846/AHD/2010 FOR THE ASSTT.YEAR 2004-05, VIDE W HICH THE APPEAL OF THE REVENUE DELETING THE PENALTY OF RS.6,13,984/- I MPOSED UNDER SECTION 271(1)(C) OF THE ACT FOR THE ASSTT.YEAR 200 4-05 HAS ALSO BEEN DISMISSED. THE LEARNED DR WAS UNABLE TO CONTROVER T THE CONTENTIONS OF THE LD.COUNSEL FOR THE ASSESSEE. 6. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. WE FIND THAT THE TRIBUNAL IN THE QUANTUM APPEAL OF THE ASSESSEE IN ITA NO.3884/AHD/2007 AND ITA NOS.870,87 1, 872 AND 873/AHD/2010 ORDER DATED 19.12.2014 HAS REVERSED TH E ORDER OF THE LD.CIT(A) BY ALLOWING THE CLAIM OF THE ASSESSEE OF DEPRECIATION ON GOODWILL AND INTANGIBLE ASSETS. A COPY OF THIS ORDE R IS PLACED ON RECORD. THEREFORE, SINCE ADDITION ON WHICH PENALTY HAS BEEN IMPOSED HAS NO FOOT TO STAND, PENALTY UNDER SECTION 271(1)(C) OF T HE ACT DOES NOT SURVIVE. 7. SECTION 271(1)(C) OF THE ACT HAS A DIRECT BEARIN G ON THE CONTROVERSY WHICH READS AS UNDER: '271. FAILURE TO FURNISH RETURNS, COMPLY WITH NOTIC ES, CONCEALMENT OF INCOME, ETC. (1) THE ASSESSING OFFICER OR THE C OMMISSIONER (APPEALS) OR THE CIT IN THE OF COURSE OF ANY PROCEE DINGS UNDER THIS ACT, IS SATISFIED THAT ANY PERSON (A) AND (B) ** ** ** (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. HE MAY DIREC T THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY. (I)AND (INCOME-TAX OFFICER,)** ** ** (III) IN THE CASES REFERRED TO IN CLAUSE (C) OR CLA USE (D), IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM WHICH SHALL N OT BE LESS THAN, ITA NO.2017/AHD/2012 (4 APPEALS) 4 BUT WHICH SHALL NOT EXCEED THREE TIMES, THE AMOUNT OF TAX SOUGHT TO BE EVADED BY REASON OF THE CONCEALMENT OF PARTICULA RS OF HIS INCOME OR FRINGE BENEFIT THE FURNISHING OF INAC CURATE PARTICULARS OF SUCH INCOME OR FRINGE BENEFITS: EXPLANATION 1- WHERE IN RESPECT OF ANY FACTS MATERI AL TO THE COMPUTATION 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 COMM ISSIONER (APPEALS) OR THE CIT TO BE FALSE, 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 AND MAT ERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOT AL INCOME OR SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE PURP OSES OF CLAUSE (C) OF THIS SUB-SECTION, BE DEEMED TO REPRESENT THE INC OME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED.' 8. A PERUSAL OF SUB-CLAUSE (III) OF SECTION 271(1)( C) WOULD INDICATE THAT IN CASE AN ADDITION IS BEING MADE TO THE INCOM E OF AN ASSESSEE, AND IT IS ESTABLISHED THAT THE ASSESSEE HAS CONCEAL ED OR FURNISHED INACCURATE PARTICULARS QUA THAT ADDITION, THEN APART FROM TAX TO BE PAYABLE BY THE ASSESSEE, HE WOULD PAY AN AMOUNT EQU IVALENT TO THE TAX OR THREE TIMES OF THE TAX AS PENALTY UNDER SECTION 271(1)(C) OF THE ACT. MEANING THEREBY, THE PENALTY WOULD BE COMPUTED EQUI VALENT TO THE TAX THREE TIME, SOUGHT TO BE EVADED BY THE ASSESSEE ON THE ADDITIONS MADE TO HIS INCOME FOR WHICH HE HAS HELD GUILTY OF CONCE ALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN THE PRESENT CASE, THE MOMENT, ASSESSMENT ORDER HAS BEEN SET ASIDE BY THE ITAT, THE VERY ADDITION ON WHICH THE AMOUNT OF TAX SOUGHT TO BE EV ADED WAS TO BE CALCULATED, HAS BEEN EXTINGUISHED. THEREFORE, THE ASSESSEE CANNOT BE CHARGED WITH ALLEGATION THAT IT HAS CONCEALED PARTI CULARS OR FURNISHED INACCURATE PARTICULARS OF THE ADDITIONS WHICH MADE TO ITS INCOME. IN VIEW OF THE ABOVE DISCUSSION, PENALTY IS NOT IMPOSA BLE UPON THE ASSESSEE, BECAUSE, THE ADDITION IN PURSUANCE OF THE ASSESSMENT ORDER ITA NO.2017/AHD/2012 (4 APPEALS) 5 DID NOT EXIT. THUS, THE LD.FIRST APPELLATE AUTHORI TY HAS RIGHTLY DELETED THE PENALTY. 9. IN THE RESULT, ALL THE APPEALS OF THE REVENUE AR E DISMISSED. ORDER PRONOUNCED IN THE COURT ON 16 TH SEPTEMBER, 2015 AT AHMEDABAD. SD/- SD/- (MANISH BORAD) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 16/09/2015