Dugad Nandkumar Bansilal, Pune V. ACIT, Circle-9, Pune

ITA 2169/PUN/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 72156 (ITAT-PUNE)
• Duration Of Justice: 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 02-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: V L JAIN
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 2169/PN/2012 (ASSESSMENT YEAR 2006-07) DUGAD NANDKUMAR BANSILAL, ANAND HOSPITAL, PLOT NO.113, SEC.NO.26, PRADHIKARAN NIGDI, PUNE 411044. PAN NO.ABAPD7839B .. APPELLANT VS. CIT(A)-V, PUNE .. RESPONDENT APPELLANT BY : SHRI V.L. JAIN RESPONDENT BY : SHRI RAJESH DAMOR DATE OF HEARING : 19-09-2013 DATE OF PRONOUNCEMENT : 23-09-2013 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 11-09-2012 OF THE CIT(A)-V, PUNE RELATING TO ASSESS MENT YEAR 2006-07. 2. THE ONLY EFFECTIVE GROUND RAISED BY THE ASSESSEE READS AS UNDER : THE LD.CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRM ING PENALTY U/S.271(1)(C) ON ACCOUNT OF ADDITION OF RS.3,75,000 /- BEING EXCESS CLAIM OF DEPRECIATION. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS AN INDIVIDUAL AND ENGAGED IN MEDICAL PROFESSION. HE FILED HIS RETURN OF INCOME ON 31-10- 2006 DECLARING LOSS OF RS.15,03,681/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTED THAT THE AS SESSEE HAS CLAIMED DEPRECIATION @40% ON THE FIXED ASSETS ADDED DURING THE YEAR IN RESPECT 2 OF HOSPITAL MACHINERIES WHEREAS THE ALLOWABLE DEPRE CIATION IS ONLY 15%. HE NOTED THAT AS AGAINST THE CORRECT DEPRECIATION O F RS.8,51,440/- THE ASSESSEE HAS CLAIMED DEPRECIATION OF RS.12,26,440/- . THUS, THERE IS AN EXCESS CLAIM OF DEPRECIATION TO THE TUNE OF RS.3,75 ,000/- WHICH HE ADDED TO THE TOTAL INCOME OF THE ASSESSEE. THEREAFTER, H E INITIATED PENALTY PROCEEDINGS U/S.271(1)(C) OF THE INCOME TAX ACT. D URING THE COURSE OF PENALTY PROCEEDINGS IT WAS STATED THAT THE EXCESS C LAIM WAS BECAUSE OF WRONG CALCULATION OF DEPRECIATION OF MACHINERY. IT WAS SUBMITTED THAT THERE IS NO CONCEALMENT OF ANY PARTICULARS OF INCOM E. IT WAS ACCORDINGLY REQUESTED THAT THE PENALTY PROCEEDINGS SHOULD BE DR OPPED. HOWEVER, THE ASSESSING OFFICER REJECTED THE EXPLANATION GIVEN BY THE ASSESSEE. ACCORDING TO HIM, BY CLAIMING EXCESS DEPRECIATION, THE ASSESSEE OBVIOUSLY INFLATED ITS LOSS TO BE CARRIED FORWARD T O THE EXTENT OF RS.3,75,000/-. THIS ACT OF THE ASSESSEE AMOUNTS TO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS AND THEREFORE IT IS A FIT CASE FOR LEVY OF PENALTY. HE ACCORDINGLY LEVIED PE NALTY OF RS.1,30,000/-. 4. IN APPEAL THE LD.CIT(A) UPHELD THE PENALTY LEVIE D BY THE ASSESSING OFFICER BY OBSERVING AS UNDER : 6. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE AS WELL AS REPLY OF THE APPELLANT. IN THE REPLY, THE APPELLANT HAD SUBMITTED THAT THE LEARNED ASSESSING OFFICER HAS STARTED FROM THE WRONG MOTION THAT THE APPELLANT HAS CLAIMED DEPRECIATION @ 40% WHICH IS NOT CORRECT. I DO NOT FIND ANY MERIT IN THIS SUB MISSION OF THE APPELLANT AS IN THE ORIGINAL GROUND OF APPEAL ITSEL F (GROUND NO. 5) THE APPELLANT HAS CLAIMED 40% DEPRECIATION. THEREFO RE, THE ASSESSING OFFICER HAS NOT MADE ANY OBSERVATION ON H IS OWN BUT BASED UPON THE DEPRECIATION CHART AS WELL AS THE CL AIM MADE BY THE APPELLANT WHICH IS ALSO FORTIFIED BY THE ORIGIN AL GROUNDS FILED BY THE APPELLANT. FURTHER, THE APPELLANT HAS STATED THAT THERE WAS NO SATISFACTION IN THE ASSESSMENT ORDERS AS TO WHET HER THE PENALTY PROCEEDINGS WERE INITIATED FOR CONCEALMENT OF INCOM E OR 3 FURNISHING INACCURATE PARTICULARS OF INCOME AND THE REFORE, ON THIS ACCOUNT THE PENALTY LEVIED HAS NO LEG TO STAND ON. IN THIS CASE, IT IS SEEN FROM THE PERUSAL OF ASSESSMENT ORDER (PARA 4) THAT AFTER DISALLOWING EXCESS DEPRECIATION OF RS.3,75,000/- BY THE THEN ASSESSING OFFICER HAS STARTED PENALTY PROCEEDINGS U /S.271(1)(C) BY WAY OF WRITING 'PENALTY PROCEEDINGS ARE INITIATED S EPARATELY', THEREFORE IT CANNOT BE SAID THAT THERE IS NO SATISF ACTION OF THE ASSESSING OFFICER WHILE INITIATING PENALTY. WHIL E PASSING ORDER U/S. 271 (1)(C), THE ASSESSING OFFICER HAS HELD THA T BY CLAIMING EXCESS DEPRECIATION THE APPELLANT HAS CONCEALED THE PARTICULARS OF INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF I NCOME. THEREFORE, DEFAULT HAS BEEN ESTABLISHED ON EITHER O F THE ACCOUNT. THEREAFTER, IN THE SUBMISSIONS, THE APPELLANT HAS C LAIMED THAT ON ACCOUNT OF ERRONEOUS CLAIM OF DEDUCTION, PENALTY CA NNOT BE LEVIED U/S.271(1)(C) OF THE INCOME TAX ACT. THEREFORE, FR OM THE REPLY OF THE APPELLANT IT IS NO WHERE A CASE OF ERRONEOUS CL AIM. IT IS SEEN THAT THE APPELLANT HAS DELIBERATELY CLAIMED EXCESS DEPRECIATION AT HIGHER RATE AND IT IS NOT A CASE OF CLAIM OF EXCESS DEPRECIATION DUE TO OVERSIGHT OR SOME WRONG CALCULATION. THEREFORE, ON THIS POINT TOO, I DO NOT FIND ANY SUBSTANCE IN THE SUBMISSIONS MADE BY THE APPELLANT. ACCORDINGLY, ACTION OF THE ASSESSING OF FICER, LEVYING PENALTY U/S.271(1)(C) AMOUNTING TO RS.1,30,000/- IS UPHELD AND THE GROUND IS DISMISSED. 4.1 AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASS ESSEE IS IN APPEAL BEFORE US. 5. THE LD. COUNSEL FOR THE ASSESSEE REFERRING TO PA GE 22 OF THE PAPER BOOK DREW THE ATTENTION OF THE BENCH WHICH CONTAINS THE CALCULATION OF ALLOWABLE DEPRECIATION AS PER INCOME TAX ACT, 1961. HE SUBMITTED THAT ALTHOUGH THE RATE OF DEPRECIATION HAS BEEN CLAIMED AT 15%, HOWEVER, DUE TO SOME CALCULATION ERROR THE SAME HAS BEEN TAKEN A T RS.12,26,439.18 AS AGAINST RS.8,51,439/-. HE SUBMITTED THAT THE DEPRE CIATION CLAIMED IS NEITHER AT 15% NOR AT 40% BUT IT IS SOMETHING DIFFE RENT. DUE TO SOME CLERICAL ERROR, THIS MISTAKE CREPT IN THE AUDITED A CCOUNTS AND THERE IS NEITHER ANY CONCEALMENT OF INCOME NOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. HE SUBMITTED THAT THE MISTA KE WAS COMMITTED BY THE AUDITORS SINCE THE ACCOUNTS OF THE ASSESSEE ARE AUDITED. REFERRING TO 4 THE DECISION OF THE HONBLE SUPREME COURT IN THE CA SE OF PRICE WATERHOUSE COOPERS PVT. LTD. VS. CIT VIDE CIVIL AP PEAL NO.6924 OF 2012 HE SUBMITTED THAT THE HONBLE SUPREME COURT IN THE SAID CASE HAS CANCELLED THE PENALTY WHEREIN THE ASSESSEE HAD MADE A COMPUTATION ERROR IN ITS RETURN OF INCOME. HE ACCORDINGLY SUBMITTED THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE PENALTY LEVIED BY THE ASSESSING OFFICER AND UPHELD BY THE CIT(A) SHOULD BE CANCELLED. 6. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE CIT(A). 7. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAV E ALSO CONSIDERED THE VARIOUS DECISIONS RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE. FROM THE PARTICULARS OF ALLOWABLE DEPRECIATION PLACED AT PAGE 22 OF THE PAPER BOOK WE FIND ALTHOUGH THE ALLOWABLE RATE OF DEPRECI ATION HAS BEEN MENTIONED AT 15%, HOWEVER, THE ASSESSEE HAS CLAIMED DEPRECIATION AT RS.12,26,439/- AS AGAINST THE CORRECT DEPRECIATION OF RS.8,51,440/-. THE RATE OF DEPRECIATION IS NOT 40% AS HAS BEEN ALLEGED BY THE ASSESSING OFFICER BUT IT IS ABOUT 17.20%. WE FIND MERIT IN T HE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE THAT THERE IS NO QUESTION OF THE ASSESSEE CONCEALING ITS INCOME AND THERE IS ALSO NO QUESTION OF THE ASSESSEE FURNISHING ANY INACCURATE PARTICULARS. ALL THAT HA PPENED IN THE PRESENT CASE IS THROUGH A BONAFIDE AND INADVERTENT ERROR WH ICH CAN BE DESCRIBED AS A HUMAN ERROR. UNDER THESE CIRCUMSTANCES, WE AR E OF THE CONSIDERED OPINION THAT IT IS NOT A FIT CASE FOR LEVY OF PENAL TY. 5 7.1 WE FIND THE HONBLE SUPREME COURT IN THE CASE O F PRICE WATERHOUSE COOPERS PVT. LTD. VS. CIT HAS OBSERVED A S UNDER : NOTWITHSTANDING THE FACT THAT THE ASSESSEE IS UNDO UBTEDLY A REPUTED FIRM AND HAS GREAT EXPERTISE AVAILABLE WITH IT, IT IS POSSIBLE THAT EVEN THE ASSESSEE COULD MAKE A SILLY MISTAKE . THE FACT THAT THE TAX AUDIT REPORT WAS FILED ALONG WITH THE RETURN AND THAT IT UNEQUIVOCALLY STATED THAT THE PROVISION FOR PAYMENT WAS NOT ALLOWABLE U/S 40A(7) INDICATES THAT THE ASSESSEE MA DE A COMPUTATION ERROR IN ITS RETURN OF INCOME. APART FROM THE ASSESSEE, EVEN THE AO WHO FRAMED THE ORIGINAL ASSES SMENT ORDER MADE A MISTAKE IN OVERLOOKING THE CONTENTS OF THE T AX AUDIT REPORT. THE CONTENTS OF THE TAX AUDIT REPORT SUGGES T THAT THERE IS NO QUESTION OF THE ASSESSEE CONCEALING ITS INCOME. THERE IS ALSO NO QUESTION OF THE ASSESSEE FURNISHING ANY INACCURATE PARTICULARS . ALL THAT HAPPENED IN THE PRESENT CASE IS THAT THROU GH A BONA FIDE AND INADVERTENT ERROR FAILED TO ADD THE PROVISION FOR GRATUITY TO ITS TOTAL INCOME. THIS CAN ONLY BE DESCRIBED AS A HUMAN ERROR WHICH WE ARE ALL PRONE TO MAKE. THE CALIBRE AND EXPERTISE OF THE ASSESSEE HAS LITTLE OR NOTHING TO DO WITH THE INADVERTENT ERROR . THAT THE ASSESSEE SHOULD HAVE BEEN CAREFUL CANNOT B E DOUBTED, BUT THE ABSENCE OF DUE CARE , IN A CASE SUCH AS THE PRESENT, DOES NOT MEAN THAT THE ASSESSEE IS GUILTY OF EITHER FURNISHING INACCURATE PARTICULARS OR ATTEMPTING TO CONCEAL ITS INCOME. CO NSEQUENTLY, GIVEN THE PECULIAR FACTS OF THIS CASE, THE IMPOSITI ON OF PENALTY ON THE ASSESSEE IS NOT JUSTIFIED. 7.2 SINCE THE FACTS OF THE IMPUGNED CASE ARE IDENTI CAL TO THE CASE DECIDED BY THE HONBLE SUPREME COURT CITED (SUPRA) AND CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE, WE ARE OF THE CO NSIDERED OPINION THAT THIS IS NOT A FIT CASE FOR LEVY OF PENALTY. WE ACCORDIN GLY SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO CANC EL THE PENALTY. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS THE 23 RD DAY OF SEPTEMBER 2013 SD/- SD/- (SHAILENDRA KUMAR YADAV) (R.K. PAN DA) JUDICIAL MEMBER ACCOUNT ANT MEMBER PUNE DATED: 23 RD SEPTEMBER 2013 SATISH 6 COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. CIT(A)-V, PUNE 4 CIT-V, PUNE 5. THE D.R, B PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY ITAT, PUNE BENCHES, PUNE