Piparia Syntex Pvt.Ltd., Surat V. The Income tax Officer,Ward-1(4), Surat

ITA 2084/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 76765 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 29-05-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 24-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Assessee Lawyers: RAMESH MAL
• Keywords: Depreciation; Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH BEFORE: SRI D.K TYAGI, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTAN T MEMBER PIPARIA SYNTEX PVT LTD, 302-303/A, 3 RD FLOOR, CENTRE POINT, RING ROAD, SURAT PAN: AABCP4386L (APPELLANT) VS INCOME TAX OFFICER, WARD-1(4), SURAT (RESPONDENT) REVENUE BY: SRI P.L. KUREEL, SR.D.R. ASSESSEE BY: SRI RAMESH MALPANI, A.R . DATE OF HEARING : 29-05-2014 DATE OF PRONOUNCEMENT : 30-05-20 14 / ORDER PER : D.K. TYAGI, JUDICIAL MEMBER:- THIS IS THE ASSESSEES APPEAL AGAINST THE ORDER OF LD. CIT(A)-I SURAT DATED 16-06-2011 CONFIRMING THE PENALTY OF RS. 11,3 9,371/- LEVIED BY AO U/S. 271(1)(C) OF THE ACT. 2. BRIEF FACTS OF THE CASE ARE THAT DURING THE COUR SE OF ASSESSMENT PROCEEDINGS AO ON VERIFICATION OF DETAILS FILED BY THE ASSESSEE-COMPANY OBSERVED THAT ASSESSEE HAS CLAIMED DEPRECIATION ON PLANT AND MACHINERY ITA NO.2084/AHD/2011 ASSESSMENT YEAR 2007-08 I.T.A NO. 2084/AHD/2011 A.Y. 2007-2008 PAGE NO PIPARIA SYNTEX PVT. LTD VS. ITO 2 UNDER TUF SCHEME @ 50% AT RS. 48,35,632/- BEING 50% OF WDV AT RS. 96,71,262/- WHICH CONSISTS OF OPENING WDV AT RS. 74 ,98,599/- AND PERCHASES OF NEW MACHINERY FOR THE PERIOD EXCEEDING 180 DAYS AT RS. 21,73,005/-. THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS REGARDING EXCESS DEPRECIATION CLAIMED AT 50% INSTEAD OF 15%. IN REPLY, THE ASSESSEE COMPANY SUBMITTED THAT TEXTURIZING IS A VE RY IMPORTANT PROCESS WITHOUT WHICH NO FABRICS CAN BE MADE FROM POY YARN. THEREFORE, HIGHER RATE OF DEPRECIATION MAY BE ALLOWED IN AS MUCH AS T HAT THE TUF AUTHORITIES HAVE ALSO APPROVED THE PROJECT UNDER THE PREVAILING SCHEME. ACCORDING TO THE INCOME TAX RULES PLANT AND MACHINERY USED IN TH E TEXTILE INDUSTRY USED IN WEAVING, PROCESSING AND GARMENT SECTOR WHIC H ARE PURCHASED UNDER TUFS ON OR AFTER FIRST DAY OF APRIL, 2004 ARE ELIGIBLE FOR 50% DEPRECIATION. THE ASSESSEE DID NOT PROVIDE ANY DETA ILS AS IF THE MACHINERIES CLAIMED TO HAVE BEEN PURCHASED DURING T HE YEAR UNDER CONSIDERATION IS COVERED BY TUFS. IN ABSENCE OF ANY EVIDENCES/DOCUMENTS IT COULD NOT BE ASCERTAINED AS IF MACHINERIES ARE ELIGIBLE UNDER TUFS OR NOT. THEREFORE, AO WAS OF T HE VIEW THAT IT WAS ESTABLISHED THAT THE ASSESSEE-COMPANY ENGAGED IN TH E FIELD OF TEXTURISING THE POY WHICH WAS NOT COVERED BY EITHER OF THE PROC ESS AS COVERED BY THE PROVISION OF RULE 5 OF THE INCOME TAX RULES. HENCE , DEPRECIATION CLAIMED ON PLANT AND MACHINERY AT RS. 48,35,632/- BEING 50% OF WDV AT RS. 96,77,264/- WAS RESTRICTED TO THE DEPRECIATION ALLO WABLE AT NORMAL RATE AS PRESCRIBED FOR THE BLOCK OF ASSET UNDER THE HEAD P LANT AND MACHINERY @ 15% ON THE WDV WHICH COMES OUT AT 14,50,690/-. ACC ORDINGLY, THE EXCESS DEPRECIATION CLAIMED BY THE ASSESSEE-COMPANY WHICH COMES OUT AT RS. 33,84,942/- (BEING RS. 48,35,632/- - RS.14,50,690/- ) WAS DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. I.T.A NO. 2084/AHD/2011 A.Y. 2007-2008 PAGE NO PIPARIA SYNTEX PVT. LTD VS. ITO 3 3. SUBSEQUENTLY AO INITIATED PENALTY PROCEEDINGS U/ S. 271(1)(C) OF THE ACT AND AFTER GIVING OPPORTUNITY OF BEING HEARD LEV IED PENALTY OF RS. 11,63,494/- U/S. 271(1)(C) OF THE ACT FOR CONCEALME NT OF INCOME. THIS ACTION OF AO WAS CONFIRMED BY LD. CIT(A). 4. AGGRIEVED BY THIS ORDER OF LD. CIT(A) NOW THE AS SESSEE IS BEFORE US. 5. AT THE TIME OF HEARING AT THE OUTSET LEARNED COU NSEL OF THE ASSESSEE SUBMITTED THAT THE ISSUE INVOLVED IN THIS APPEAL IS COVERED BY THE ORDER OF HONBLE TRIBUNAL IN THE CASE OF ITO VS. HANUMAN FI LAMENT P. LTD VIDE ITA NO. 2819/AHD/2009 DATED 17/12/2009 IN WHICH ON IDEN TICAL FACTS THE HONBLE TRIBUNAL HAS DELETED THE PENALTY BY OBSERVI NG AS UNDER:- 6.1. THE PENALTY U/S. 271(1)(C) OF THE ACT IS LEVI ABLE IF THE AO IS SATISFIED IN THE COURSE OF ANY PROCEEDINGS UNDER TH IS ACT THAT ANY PERSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. IT IS WELL SETTLED THAT ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE SEPARATE AND DISTINCT AND AS HELD BY HONBLE SUPREME COURT IN TH E CASE OF ANANTHRAMAN & CO. VS. CIT- 123 ITR 457, THE FINDIN G IN THE ASSESSMENT PROCEEDINGS CANNOT BE REGARDED AS CONCLU SIVE FOR THE PURPOSES OF THE PENALTY PROCEEDINGS. IT IS, THEREF ORE, NECESSARY TO RE-APPRECIATE AND RECONSIDER THE MATTER ALSO AS TO FIND OUT AS TO WHETHER THE ADDITION MADE IN THE QUANTUM PROCEEDING S ACTUALLY REPRESENTS THE CONCEALMENT ON THE PART OF THE ASSES SEE AS ENGAGED IN SEC. 271(1)(C) OF THE ACT AND WHETHER IT IS A FI T CASE TO IMPOSE THE PENALTY BY INVOKING THE SAID PROVISIONS. THE ISSUE AS TO WHETHER OR NOT THE ASSESSEE IS ENTITLED TO HIGHER RATE OF DEPR ECIATION IS HIGHLY DEBATABLE. IN THE CASE UNDER CONSIDERATION, IT IS APPARENT THAT ALL THE RELEVANT FACTS HAVE BEEN DISCLOSED BY THE ASSESSEE. THE ONLY DISPUTE IS ON INTERPRETATION OF ITEM 111(6) OF APPE NDIX 1 OF THE IT RULES, 1962. IT IS WELL SETTLED THAT THE CRITERION AND YARDSTICKS FOR THE PURPOSE OF IMPOSING PENALTY U/S. 271(1)(C) ARE DIFF ERENT THAN THOSE APPLIED FOR MAKING OR CONFIRMING THE ADDITIONS. WH EN THE ASSESSEE HAS MADE A PARTICULAR CLAIM IN THE RETURN OF INCOME AND HAS ALSO FURNISHED ALL THE MATERIAL FACTS RELEVANT THERETO, THE DISALLOWANCE OF SUCH CLAIM AUTOMATICALLY LEAD TO THE CONCLUSION THA T THERE WAS I.T.A NO. 2084/AHD/2011 A.Y. 2007-2008 PAGE NO PIPARIA SYNTEX PVT. LTD VS. ITO 4 CONCEALMENT OF PARTICULARS OF HIS INCOME BY THE ASS ESSE OR FURNISHING OF ACCURATE PARTICULARS OF SUCH INCOME. WHAT IS TO BE SEEN IS WHETHER THE SAID CLAIM MADE BY THE ASSESSEE WAS BON-FIDE AND WHETHER ALL THE MATERIAL FACTS RELEVANT THERETO HAVE BEEN FURNISHED AND ONCE IT IS SO ESTABLISHED, THE ASSESS EE CANNOT BE HELD LIABLE FOR CONCEALMENT PENALTY U/S. 271(1)(C) OF TH E ACT. SINCE ALL THE MATERIAL FACTS RELEVANT TO THE SAID CLAIM HAD BEEN FURNISHED BY THE ASSESSEE, IN OUR OPINION IT IS NOT A FIT CASE TO AT TRACT THE LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT. A MERE REJECTIO N OF THE CLAIM OF THE ASSESSEE BY RELYING ON DIFFERENT INTERPRETATIONS DO ES NOT AMOUNT TO CONCEALMENT OF THE PARTICULARS OF INCOME OR FURNISH ING INACCURATE PARTICULARS OF INCOME, BY THE ASSESSEE. WHEN TWO V IEWS, ARE POSSIBLE, NO PENALTY CAN BE IMPOSED, IS A PRINCIPLE THAT HAS BEEN ENUNCIATED IN THE DECISION IN THE CASE OF CIT V. P. K. NARAYANAN [1999] 238 ITR 905 (KER) HONBLE PUNJAB & HARYANA H IGH COURT IN THE CASE OF CIT VS. AJAIB SINGH & CO. (2001) 170 CT R (P & H) 489: (2002) 253 ITR 630 (P & H) HAVE OBSERVED THAT MEREL Y BECAUSE CERTAIN EXPENSES CLAIMED BY THE ASSESSEE ARE DISALL OWED BY AN AUTHORITY, IT CANNOT MEAN THAT PARTICULARS FURNISHE D BY THE ASSESSEE WERE WRONG. IT WAS HELD THAT MERE DISALLOWANCE OF EXPENSES PER- SEE CANNOT BE MEANT THAT ASSESSEE HAS FURNISHED INA CCURATE PARTICULARS OF ITS INCOME. IN THE CASE UNDER CONSI DERATION, WE FIND THAT THE ASSESSEE HAD GIVEN ALL THE PARTICULARS OF INCOME AND HAD DISCLOSED ALL FACTS TO THE AO. IT IS NOT THE CASE OF THE AO OR THE ASSESSEE THAT IN REPLY TO THE QUERY OF THE AO, SOME NEW FACTS WERE DISCOVERED OR THE AO HAD DUG OUT SOME INFORMATION W HICH WAS NOT FURNISHED BY THE ASSESSEE. IN SUCH CIRCUMSTANCES, HONBLE DELHI HIGH COURT HELD IN THE CASE OF CIT VS. BACARDI MART INI INDIA LTD, 288 ITR 585 (DEL) THAT NO PENALTY WAS LEVIABLE. NO COG ENT MATERIAL OR EVIDENCE WAS BROUGHT TO OUR NOTICE WHICH MAY PROVE THAT THE REVENUE DETECTED THE CONCEALMENT. IN CIT VS. HARSH VARDHAN CHEMICALS & MINERALS LTD (259 ITR 212) HONBLE RAJA STHAN HIGH COURT UPHELD THE FINDING OF THE TRIBUNAL THAT WHEN THE ASSESSEE HAS CLAIMED SOME AMOUNT THOUGH THAT IS DEBATABLE IN SUC H CASES, IT CANNOT BE SAID THAT THE ASSESSEE HAS CONCEALED ANY INCOME OR FURNISHED INACCURATE PARTICULARS FOR EVASION OF THE TAX. IN VIEW OF THE ABOVE AND SINCE NO CONTRARY BINDING DECISION WAS CITED BY THE REVENUE, PENALTY IMPOSED BY AO AND SUSTAINED BY LD. CIT(A) IS HEREBY DELETED. I.T.A NO. 2084/AHD/2011 A.Y. 2007-2008 PAGE NO PIPARIA SYNTEX PVT. LTD VS. ITO 5 6. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE SD/- SD/- (ANIL CHATURVEDI) ( D.K. TYAGI) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 30/05/2014 AK / COPY OF ORDER FORWARDED TO:- 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,