ITO, Ward-2(3), Kolkata, Kolkata V. M/S. Infovision Software Pvt. Ltd., Kolkata

ITA 2039/KOL/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99734 (ITAT-KOLKATA)
• Duration Of Justice: 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 07-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K N JANA
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA [BEFORE SHRI N.S.SAINI, A.M. & SHRI MAHAVIR SINGH, J.M. ] I.T.A. NO.2039/KOL/2010 : ASSESSMENT YEAR : 2006-07 ACIT, CC-XXIII, KOL. VS- M/S. ZENITH TIMBER PRODUCTS (P) LTD., KOL. PAN : AABCP 7789D ( APPELLANT ) ( RESPONDENT ) C.O. NO.01/KOL/2011 : ASSESSMENT YEAR : 2006-07 (ARISING OUT OF ITA NO.2039/KOL/2010) M/S. ZENITH TIMBER PRODUCTS (P) LTD., KOL. VS- ACIT, CC-XXIII, KOL. (CROSS OBJECTOR) (RESPONDENT) DATE OF CONCLUDING THE HEARING : 22.04.2013 DATE OF PRONOUNCING THE ORDER : 26.04.2013 APPEARANCES : FOR THE DEPARTMENT : SHRI K.N.JANA, SR.DR : FOR THE ASSESSEE : NONE O R D E R PER SHRI N.S.SAINI, A.M. : THIS APPEAL FILED BY THE REVENUE AND THE CROSS OBJE CTION FILED BY THE ASSESSEE ARE AGAINST THE ORDER OF THE CIT(A)-III, K OLKATA DATED 30.08.2010 FOR THE ASSESSMENT YEAR 2006-07. 2. THE SOLE ISSUE INVOLVED IN THE APPEAL OF THE REV ENUE IS THAT THE CIT(A) ERRED IN DELETING THE LEVY OF PENALTY OF RS.54,92,7 94/- UNDER SECTION 271(1)(C) OF THE ACT. 3. THE FACTS OF THE CASE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT THE ASSESSEE COMPANY HAD CLAIM ED DEPRECIATION ON LAND AMOUNTING TO RS.64,50,821/-. THE A.R. OF THE ASSESS EE FILED REVISED DEPRECIATION CHART STATING THAT THE COMPANY HAD WRONGLY CLAIMED SUCH DEPRECIATION ON LAND AND 2 I.T.A. NO.2039/KOL/2010 & C.O.NO.01/KOL/2 011 ZENITH TIMBER PRODUCTS (P) LTD . A.Y.2006-07 ALSO FILED RECONCILIATION CHART ON DEPRECIATION OF LAND AND STATED THAT DEPRECIATION ON LAND FOR ASSESSMENT YEAR 2003-04 WAS ALREADY TAX ED AND FOR THE ASSESSMENT YEAR 2004-05 ALSO, DISALLOWANCE OF DEPRECIATION ON LAND HAS BEEN COMPLETED. THEREFORE, THE AO ADDED RS.54,92,794/- TO THE INCOM E OF THE ASSESSEE BY DISALLOWING THE CLAIM OF DEPRECIATION ON LAND. 4. THEREAFTER, THE AO ISSUED NOTICE UNDER SECTION 2 71(1)(C) OF THE ACT AND REQUIRED THE ASSESSEE TO SHOW CAUSE WHY PENALTY SHO ULD NOT BE LEVIED ON ACCOUNT OF DELIBERATELY FURNISHING INACCURATE PARTICULARS O F INCOME AND CONCEALMENT OF INCOME TO REDUCE TAX LIABILITY. 5. THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD COM PUTED AND CLAIMED THE DEPRECIATION ON LAND DUE TO MISCONCEPTION AND CONFE SSED THE MISTAKE AT THE TIME OF HEARING BY SUBMITTING A FRESH DEPRECIATION CHART. I T WAS, THEREFORE, CONTENDED THAT THE SAME DOES NOT AMOUNT TO CONCEALMENT OF INCOME O R FURNISHING OF INACCURATE PARTICULARS OF INCOME. 6. BEING NOT SATISFIED WITH THE ABOVE EXPLANATION O F THE ASSESSEE, THE AO HELD THAT THE ASSESSEE HAS DELIBERATELY FURNISHED INACCU RATE PARTICULARS AND/OR CONCEALED INCOME TO REDUCE TAX LIABILITY. ACCORDINGLY, THE AO LEVIED PENALTY UNDER SECTION 271(1)(C) @100% OF THE TAX SOUGHT TO BE EVADED AMOU NTING TO RS.18,77,731/-. 7. BEING AGGRIEVED AGAINST THE SAID ORDER OF THE AO , THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). 8. THE ASSESSEE SUBMITTED THAT THE ISSUE OF LEVY OF PENALTY FOR DISALLOWING THE CLAIM OF DEPRECIATION ON LAND WAS ALSO RAISED IN EA RLIER ASSESSMENT YEAR 2005-06 AND THE ISSUE WAS DECIDED BY THE LD. CIT(A), C-III, KOLKATA IN FAVOUR OF THE ASSESSEE BY DELETING THE PENALTY WHICH WAS CONFIRME D BY THE TRIBUNAL IN FURTHER APPEAL BY THE REVENUE BEFORE THE TRIBUNAL. THE CIT( A), AFTER CONSIDERING THE ABOVE SUBMISSION OF THE ASSESSEE, DELETED THE PENAL TY BY OBSERVING AS UNDER: 3 I.T.A. NO.2039/KOL/2010 & C.O.NO.01/KOL/2 011 ZENITH TIMBER PRODUCTS (P) LTD . A.Y.2006-07 6. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND MATERIAL ON RECORD. AT THE OUTSET IT WAS BROUGHT T O MY NOTICE THAT, AS FAR AS FIRST TWO ADDITIONS ARE CONCERNED, ON IDENTICAL IS SUES, THE PENALTY IMPOSED FOR A/YR. 05-06 HAS BEEN CANCELLED BY THE LD. CIT( A):C-III:KOL AND SUCH CANCELLATION WAS UPHELD BY THE HONBLE ITAT. I HAV E GONE THROUGH THE COPIES OF BOTH THESE ORDERS, THE DETAILS OF WHICH ARE GIVEN BELOW: (1) APPEAL NO.71/CC-XXIII/CIT(A)/C-III/08-09 DATE D 08.12.2008; (2) ITA NO.221/KOL/09 A.YR. 05-06. 7. FURTHER GOING THROUGH THESE ORDERS I AM OF THE OPINION THAT THE ISSUES ARE IDENTICAL AND MY LD. PREDECESSOR HAS ELABORATE LY DISCUSSED THE ISSUES AND CANCELLED THE PENALTY WITH THE FOLLOWING OBSER VATION: THE AO HAS PRACTICALLY NO EVIDENCE TO PROVE THAT THE APPELLANT HAD SOLD THE PRODUCTION WASTAGE AND REALIZED INCOME O F RS.1,27,943/-. HENCE, THIS ESTIMATED INCOME CANNOT BE TREATED AS CONCEALED INCOME FOR LEVYING PENALTY U/S.271(1)(C) OF THE I.T. ACT 61. IN THE LIGHT OF THESE FACTS, THE PENALTY LEVIED IS NOT IN ACCORDA NCE WITH LAW. THE APPELLANT HAD FURNISHED ALL THE DETAILS OF AS SETS OWNED INCLUDING LAND IN SCHEDULE D- DETAILS FIXED ASSETS AS PER C OMPANIES ACT, 1956 AS ON 31.03.2005. THE APPELLANT HAD MISTAKENLY CL AIMED DEPRECIATION ON LAND AMOUNTING TO RS.41,63,495/- IN THE RETURN OF INCOME. THE APPELLANT HAD REALIZED THE MISTAKE AND IN THE COU RSE OF ASSESSMENT PROCEEDINGS RECTIFIED THE MISTAKE AND WITHDREW TH E ERRONEOUS CLAIM. THE AO HAD ALSO TAKEN THE REVISED CLAIM OF DEPREC IATION MADE BY THE APPELLANT FOR ALL THE ASSETS AND COMPLETED THE AS SESSMENT. IN THE PENALTY AND APPELLANT PROCEEDINGS, THE APPELLANT SUBMITTED THAT IT HAD MISTAKENLY CLAIMED DEPRECIATION AND HAD NO MALAFI DE INTENTION OF CONCEALING THE INCOME. THE APPELLANT, HAVING PROVIDED ALL THE MATERIAL F ACTS OF OWNERSHIP OF ASSETS AND HAVING FURNISHED A SATISFACTORY EXPLAN ATION WHICH IS BONAFIDE, IS NOT LIABLE FOR A PENALTY U/S.271(1)( C) OF THE I.T. ACT, 1961 ON THE AMOUNT OF DEPRECIATION OF RS.41,63,495/- E RRONEOUSLY CLAIMED AND LATER WITHDRAWN IN THE REVISED DEPRECIATION C HART. THE PENALTY LEVIED, THEREFORE, IS NOT IN ACCORDANCE WITH LAW. THE HONBLE ITAT AFTER GOING THROUGH ALL THE FACT S, UPHELD THE ORDER OF THE LD. CIT(A):C-III:KOL. 8. RESPECTFULLY FOLLOWING THE ORDERS OF THE HONBL E TRIBUNAL AND MY PREDECESSOR, I HOLD THAT THE IMPOSITION OF PENALTY ON THE AFOREMENTIONED 2 ADDITIONS IS NOT IN ACCORDANCE WITH THE LAW. 4 I.T.A. NO.2039/KOL/2010 & C.O.NO.01/KOL/2 011 ZENITH TIMBER PRODUCTS (P) LTD . A.Y.2006-07 9. THE LD. D.R. SUPPORTED THE ORDER OF THE AO. IN S UPPORT OF THE SAME, HE PLACED RELIANCE ON THE DECISION OF THE DELHI HIGH C OURT IN THE CASE OF CIT-VS- MORGAN FINVEST (P) LTD. [2013] 30 TAXMANN.COM 6 (DE LHI) WHERE IT WAS HELD THAT PENALTY UNDER SECTION 271(1)(C) WAS LEVIABLE ON THE GROUND OF FURNISHING INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE, W HERE THE ASSESSEE CLAIMED DEPRECIATION IN RESPECT OF PROPERTY ON THE GROUND T HAT IT WAS USED FOR BUSINESS PURPOSES AND THE COST OF LAND WAS INCLUDED IN THE C LAIM OF DEPRECIATION, THOUGH NO DEPRECIATION WAS ALLOWABLE UNDER THE ACT ON LAND, B UT NO EVIDENCE WAS PRODUCED BY THE ASSESSEE TO SHOW THAT THE PROPERTY WAS USED IN THE BUSINESS OF THE ASSESSEE. THE LD. D.R. ALSO PLACED RELIANCE ON THE DECISION O F THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT-VS- ZOOM COMMUNICATION (P) LTD. [2010] 191 TAXMAN 179 (DELHI) WHERE IT WAS HELD THAT PENALTY UNDER SECTIO N 271(1)(C) OF THE ACT WAS IMPOSABLE ON ACCOUNT OF CONCEALMENT OF INCOME BY TH E ASSESSEE WHERE NO EVIDENCE IN THE FORM OF ADVICE RECEIVED FROM HIS AU DITOR COULD BE PRODUCED BY THE ASSESSEE FOR CLAIMING DEDUCTION OF THE AMOUNT ON AC COUNT OF CERTAIN EQUIPMENT BECOMING USELESS AND HAVING WRITTEN OFF AND AMOUNT OF INCOME TAX PAID. 10. NOTICE OF HEARING WAS SENT BY REGISTERED POST W ITH ACKNOWLEDGEMENT DUE TO THE RESPONDENT ASSESSEE. NONE APPEARED ON BEHALF OF THE ASSESSEE WHEN THE CASE WAS CALLED FOR HEARING AND NEITHER ANY ADJOURNMENT APPLICATION WAS FILED. THEREFORE, THE APPEAL WAS HEARD EX PARTE QUA THE RESPONDENT ASSESSEE AND DISPOSED OFF CONSIDERING THE SUBMISSIONS OF THE LD. D.R. 11. WE HAVE CONSIDERED THE SUBMISSION OF THE LD. DR . IT IS SEEN THAT THE ORDER OF THE LD. CIT(A) FINDS SUPPORT FROM THE ORDER OF T HE TRIBUNAL PASSED IN THE CASE OF THE ASSESSEE ITSELF IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR 2005-06 ON IDENTICAL SET OF FACTS. NO SPECIFIC ERROR COULD BE POINTED OUT BY THE LD. D.R. IN THE ABOVE-QUOTED ORDER OF THE CIT(A). THE LD. DR COULD NOT BRING ANY MATERIALS ON RECORD TO SHOW THAT THE ORDER OF THE TRIBUNAL IN AS SESSEES OWN CASE, RELIED ON BY HIM, FOR DELETING THE LEVY OF PENALTY WAS VARIED IN APPEAL BY ANY HIGHER FORUM. 5 I.T.A. NO.2039/KOL/2010 & C.O.NO.01/KOL/2 011 ZENITH TIMBER PRODUCTS (P) LTD . A.Y.2006-07 THE LD. DR HAS RELIED ON THE DECISIONS OF THE HONB LE DELHI HIGH COURT IN THE CASES OF MORGAN FINVEST (P) LTD. ( SUPRA ) AND ZOOM COMMUNICATION (P) LTD. ( SUPRA ). WE FIND THAT THE ORDER OF THE LD. CIT(A) IS SUPP ORTED BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT-VS- RE LIANCE PETRO PRODUCTS PVT. LTD. [2010] 230 ITR (SC) 320. WE, THEREFORE, DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A). IT IS, THUS, CONFIRMED AND GRO UND OF APPEAL OF THE REVENUE IS DISMISSED. 12. THE CROSS OBJECTION FILED BY THE ASSESSEE IS BA RRED BY LIMITATION BY 14 DAYS, FOR WHICH THE ASSESSEE HAS FILED A CONDONATION PETI TION. AT THE TIME OF HEARING, THE LD. D.R. DID NOT RAISE ANY OBJECTION IN CONDONING T HE DELAY. THEREFORE, THE DELAY IN FILING THE CROSS OBJECTION IS CONDONED AND THE C.O. IS ADMITTED FOR HEARING. 13. THE CROSS OBJECTION FILED BY THE ASSESSEE IS IN SUPPORT OF THE ORDER OF THE LD. CIT(A), THERE BEING NO GRIEVANCE AGAINST THE ORDER OF THE CIT(A) AND WE HAVE CONFIRMED THE ORDER OF THE CIT(A) IN THE REVENUES APPEAL, THE CROSS OBJECTION FILED BY THE ASSESSEE IS INFRUCTUOUS AND HENCE DISM ISSED. 14. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED WHEREAS THE C.O. FILED BY THE ASSESSEE IS DISMISSED AS INFRUCTUOUS. THIS ORDER IS PRONOUNCED IN THE COURT ON 26 TH APRIL, 2013. SD/- SD/- (MAHAVIR SINGH) (N. S. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBE R DATED : 26 TH APRIL, 2013 COPY OF THE ORDER FORWARDED TO: 1. M/S. ZENITH TIMBER PRODUCTS (P) LTD., 5, NIMTALLA G HAT STREET, KOLKATA 700 006 2. ACIT, CC-XXIII, KOLKATA 3. THE CIT(A), KOLKATA 4. CIT, KOLKATA 5. DR, KOLKATA BENCHES, KOLKATA TRUE COPY, BY ORDER, TALUKDAR(SR.P.S.) ASSTT. REGISTRAR , ITAT, KOLKATA 6 I.T.A. NO.2039/KOL/2010 & C.O.NO.01/KOL/2 011 ZENITH TIMBER PRODUCTS (P) LTD . A.Y.2006-07