Shri K. Narendrareddy, Hyderabad V. ACIT, Circle-6(1), Hyderabad

ITA 2054/HYD/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66166 (ITAT-HYDERABAD)
• Duration Of Justice: 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 09-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMISHA SRIVASTAVA GUPT
• Keywords: Depreciation; Wrong claim; Difference of opinion; Revised return
• Section: 143(3); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ITA NO. 2054/HYD/2011 ASSESSMENT YEAR: 2006-07 SHRI K. NARENDRAREDDY, APPELLANT HYDERABAD (PAN AELPK9970J) VS. ASTT. COMMISSIONER OF INCOME-TAX, RESPO NDENT CIRCLE 6(1), HYDERABAD. APPELLANT BY : SHRI A. SRINIVAS RESPONDENT BY : SMT. AMISHA SRIVASTAVA GUPT DATE OF HEARING : 09/07/2012 DATE OF PRONOUNCEMENT : 24/08/ 2012 ORDER PER ASHA VIJAYARAGHAVAN, J.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF CIT(A), GUNTUR, DT. 27/01/2011 FOR THE ASSESSMEN T YEAR 2006-07. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE FILED HIS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION A FTER DUE DATE I.E. ON 16/11/2006 DECLARING TOTAL INCOME AT RS. 4,85,78 ,427/-. A SURVEY U/S 133A WAS CONDUCTED ON 23/10/2007 AND THE ASSESSEE HAD DECLARED ADDITIONAL INCOME OF RS. 1.7 CRORES TO WARDS UNVERIFIABLE EXPENDITURE UNDER THE HEAD EARTH WORK EXPENDITURE. ITA NO. 2054/HYD/11 SHRI NARENDRA REDDY 2 ACCORDINGLY, THE ASSESSEE FILED A REVISED RETURN ON 29/10/2007, ADMITTING ADDITIONAL INCOME OF RS. 1.7 CRORES TOWAR DS UNVERIFIABLE NATURE OF EXPENDITURE. THE ASSESSMENT WAS COMPLETED U/S 143(3) ON 24/12/2008 BY MAKING TWO ADDITIONS I) DISALLOWANCE OF EXCESS CLAIM OF DEPRECIATION AMOUNTING TO RS. 4,83,522/- AND UNV ERIFIABLE NATURE OF EXPENDITURE IN THE ABSENCE OF VOUCHERS @ 6% OF T HE EXPENDITURE CLAIMED UNDER THE HEADS MISC. EXPENSES, SALARIES, W AGES ETC. AT 2,99,59,389/- , WHICH COMES TO RS. 17,96,363/-. THE ASSESSEE DID NOT PREFER ANY APPEAL AGAINST THIS ORDER. 3. THEREAFTER, THE AO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT ON THE GROUND THAT THE ADDITIONAL INCOME WAS OFFERED BY THE ASSESSEE IN THE REVISED RETURN CONSEQUENT TO SU RVEY ONLY AND HENCE, THE ASSESSEE HAD CONCEALED PARTICULARS OF I NCOME AND HAD SUBMITTED INACCURATE PARTICULARS OF INCOME. THE AO AFTER CONSIDERING THE REPLY OF THE ASSESSEE VIDE HIS LETTER DATED 29/ 03/3009, LEVIED A MINIMUM PENALTY OF RS. 64,89,610/-. 4. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN AP PEAL BEFORE THE CIT(A). 5. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFOR E THE CIT(A), THE AR OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD PURCHASED A HITACHI EXCAVATOR FOR AN AMOUNT OF RS. 45,96,966/-. THE SAID INVOICE FOR THE SAME WAS DATED 31/03/2006 AND THE SAME WAS TAKEN DELIVERY OFF AT JAMSHEDPUR, BIHAR, FOR USE AT THEIR PATNA SITE. HOWEVER, AT THE TIME OF ASSESSMENT PROCEEDINGS, THE ASSESSEE COULD NOT PRODUCE THE DETAILS AS TO WHEN THE SAID EQUIPME NT WAS PUT TO USE AND IN SUCH CIRCUMSTANCES THE ASSESSEE HAD AGRE ED TO THE ITA NO. 2054/HYD/11 SHRI NARENDRA REDDY 3 DISALLOWANCE FOR DEPRECIATION ON THE SAME. THE AR O F THE ASSESSEE FURTHER SUBMITTED THAT THERE WAS NO INTENTION TO EV ADE TAX BY CLAIMING THE SAID DEPRECIATION, AS THE SAID ASSET W AS IN FACT PUT TO USE EITHER IN THE SAID YEAR OR IN THE SUBSEQUENT YE AR. HE POINTED OUT THAT THE AO HAD NEVER DISPUTED THE FACT THAT TH E ASSET WAS NOT PURCHASED, BUT ONLY THERE WAS DIFFERENCE OF OPINION AS TO THE TIME OF PUTTING THE SAME TO USE. 6. WITH RESPECT TO THE DEPRECIATION DISALLOWANCE, THE CIT(A) HELD THAT IT HAS TWO COMPONENTS, ONE IS THE PURCHASE OF HITACHI EXCAVATOR FOR RS. 45,96,966/- AND THE OTHER IS REGA RDING OLD MACHINERY PURCHASED DURING MAY, 2005 AMOUNTING TO R S.9,25,000/-. THE CIT(A) FURTHER HELD THAT IN CASE OF SECOND HAND MACHINERY NO ATTRIBUTES LIKE FURNISHING OF INACCURATE PARTICULAR S OR CONCEALMENT OF INCOME COULD BE ATTRIBUTED, THEREFORE, HE DIRECTED THE AO NOT TO LEVY OF CONCEALMENT PENALTY ON THE AMOUNT OF DISALL OWANCE OF RS. 1,38,750/-. 7. WITH RESPECT TO THE DEPRECIATION CLAIM OF RS. 3, 44,770/-, THE CIT(A) OBSERVED THAT FROM THE ORDER OF THE AO IT IS NOTED THAT THE INVOICE FOR THE MACHINERY WAS ISSUED ON 31/03/2006 AT RS. 16.47 HRS. AND THE MACHINERY WAS AN EXCAVATOR, WHICH IS T O BE USED IN EARTH WORKS. THE CIT(A) FURTHER OBSERVED THAT BY TH E TIME INVOICE WAS ISSUED IT WAS WINTER EVENING WHERE THE TEMPERAT URES ARE VERY LOW IN THAT PART OF THE COUNTRY AND, THEREFORE, AFT ER MOVING THE EXCAVATOR TO WORK SITE AND PUTTING IT TO USE IN EXC AVATION WORK WAS NEXT TO IMPOSSIBLE. HE, THEREFORE, HELD THAT THE AS SESSEE KNOWS ALL THESE FACTS FULLY AND KNOWINGLY HE MADE A WRONG CLA IM OF DEPRECIATION, THEREBY FURNISHING INACCURATE PARTICU LARS. ACCORDINGLY, ITA NO. 2054/HYD/11 SHRI NARENDRA REDDY 4 THE CIT(A) HELD THAT THE AO IS JUSTIFIED IN LEVYING CONCEALMENT PENALTY ATTRIBUTABLE TO THE QUANTUM ADDITION OF DEP RECIATION CLAIM ON HITACHI EXCAVATOR. 8. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESS EE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL:- 1. THE ORDER OF THE AO IS CONTRARY TO LAW, FACTS AN D CIRCUMSTANCES OF THE CASE. 2. THE AO ERRED IN LEVYING PENALTY ON THE DISALLOWA NCE OF DEPRECIATION OF RS. 4,83,522/-. 3. THE APPELLATE COMMISSIONER OUGHT NOT TO HAVE CON FIRMED THE LEVY OF PENALTY ON THE DISALLOWANCE OF DEPRECIA TION. 9. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES AND PERUSED THE RECORD AS WELL AS GONE THROUGH THE ORDERS OF TH E AUTHORITIES BELOW. WE FIND THAT THE FOLLOWING CASE LAWS SUPPORT THAT THE DEPRECIATION IS ALLOWABLE EVEN IF THE MACHINERY, KE PT READY FOR USE: 1) CIT VS. VAYITHIRI PLANTATION, 128 ITR 675 2) CAPITAL BUS SERVICE (P.) LD. VS. CIT, 123 ITR 4 04 (DEL.) 3) CIT VS. NORPLEX VAK INDIA, 198 TAXMAN 470 (CAL. ) 4) PREMIER INDUSTRIES LTD., 323 ITR 612. 10. HENCE, IN OUR OPINION, IT WAS NOT A WRONG CLAIM MADE BY THE ASSESSEE AND IT IS A BONAFIDE CLAIM AND AS SUCH THE RE IS NO INTENTION TO EVADE TAX BY CLAIMING DEPRECIATION AS THE SAID A SSET WAS IN FACT PUT TO USE EITHER IN THE SAID YEAR OR IN THE SUBSEQ UENT YEAR. THE AO HIMSELF ACCEPTED THAT THE INVOICE FOR MACHINERY WAS ISSUED ON 31/03/2006 AT 16.47 HRS AND HENCE, THE ASSESSEE HAS NOT MADE A WRONG CLAIM OF DEPRECIATION BY FURNISHING INACCURAT E PARTICULARS OF INCOME. THEREFORE, WE SET ASIDE THE ORDER OF THE C IT(A) AND DELETE ITA NO. 2054/HYD/11 SHRI NARENDRA REDDY 5 THE PENALTY LEVIED ON THE DISALLOWANCE OF DEPRECIAT ION OF RS. 4,83,522/- BY THE AO U/S 271(1)(C) OF THE ACT. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. PRONOUNCED IN THE OPEN COURT ON 24 TH AUGUST, 2012. SD/- SD/- (D. KARUNAKARA RAO) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL M EMBER HYDERABAD, DATED: 24 TH AUGUST, 2012. KV COPY TO:- 1) SHRI K. NARENDRA REDDY, PROP. SRI AVANTIKA CONTRAC TORS, 7-1-618, 610B, NILGIRI BLOCK, ADITYA ENCLAVE, AMEER PET, HYDERABAD 500 038. 2) ACIT, CIRCLE 6(1), HYDERABAD 3) THE CIT (A), GUNTUR 4) THE CIT-III, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABA D.