AML Steel Limited, CHENNAI V. ACIT, CHENNAI

ITA 2193/CHNY/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7737 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2016
• Appeal Filed By: Assessee
• Bench Allotted: D
• Assessment Year: 2008-2009
• Appeal Filed On: 28-08-2014
• Court: TRIBUNAL
• Department Lawyers: M BHUSARICIT
• Assessee Lawyers: VIJARAGHAVAN
• Keywords: Depreciation; Wrong claim; Condonation of delay
• Section: 115JB

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI , ! ' #! ' $ . %& ' () BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I.T.A.NO.2193 /MDS./2014 ( / ASSESSMENT YEAR :2008-09) M/S.AML STEEL LIMITED , NO.9,6 TH STREET, GOPALPURAM, CHENNAI 600 086. VS. ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE 1(1), CHENNAI. PAN AAACA 4304 Q ( *+ / APPELLANT ) ( ,-*+ / RESPONDENT ) / APPELLANT BY : MR.VIJARAGHAVAN,ADVOCATE / RESPONDENT BY : MR.M.BHUSARI,CIT, D.R / DATE OF HEARING : 03.03.2016 ! /DATE OF PRONOUNCEMENT : 18.03.2016 . / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(A)- I, CHENNAI DATED 25.02.2014 PERTAINING TO THE ASSESSMENT YEAR 2008-09 . ITA NO.2193/MDS/2014 2 2.2 THE ASSESSEE HAS RAISED THE GROUNDS WITH REGAR D TO LEVY OF PENALTY U/S.271(1)(C) OF THE ACT. 2.2. THERE WAS A DELAY OF 58 DAYS IN FILING THE AP PEAL. THE ASSESSEE FILED A PETITION FOR CONDONATION OF DELAY STATING THAT THE PERSON, WHO IS HANDLING APPEAL PAPERS, I.E. MR.P.VI SWANATHAN, MANAGER, ACCOUNTS OF THE COMPANY, SUFFERED FROM LEP TOSPIROSIS FEVER AND HE WAS NOT AVAILABLE TO TAKE UP THE CASE WITH T HE ASSESSEES COUNSEL AND THAT CAUSE FOR DELAY. TO THIS EFFECT, THE ASSESSEE ALSO FILED THE MEDICAL CERTIFICATE DATED 16.08.2014 F ROM KERALA AYURVEDIC TREATMENT CENTER, ANNA NAGAR WEST, CHENNAI-40. WE H AVE GONE THROUGH THE CONDONATION PETITION FILED BY THE ASSES SEE. REASONS SHOWN ARE JUSTIFIED AND HENCE, DELAY IS CONDONED AN D APPEAL ADMITTED. 3.1 THE BRIEF FACTS OF THE CASE ARE THAT THE FILED ITS RETURN OF INCOME ADMITTING ITS INCOME OF ` 15,76,990/- UNDER NORMAL COMPUTATION AFTER CLAIMING DEDUCTION U/S.80-IB OF THE ACT. THE LD. AS SESSING OFFICER COMPLETED THE ASSESSMENT U/S.143(3) OF THE ACT ON 31.12.2010 ITA NO.2193/MDS/2014 3 WHEREIN HE ADDITIONS WERE MADE ON VARIOUS ISSUES BE ING DISALLOWANCES U/S.14A, U/S.40(A)(IA) AND ALLOWED U /S.80IB OF THE ACT ONLY ` 15,37,473/- AGAINST THE CLAIM OF ASSESSEE ` 95,33,528/-. HOWEVER, SINCE THE TAXABLE INCOME U/S.115JB WAS MOR E THE ASSESSEE WAS TAXED AS PER 115JB OF THE ACT. THE EX CESS CLAIM OF S.80IB WAS DUE TO NON-ADOPTION OF DEPRECIATION AS P ER I.T RULES. THE DEPRECIATION CLAIMED AS PER BOOKS (COMPANIES ACT) W AS ` 70,64,166 WHEREAS AS PER IT RULES IT IS ` 3,55,77,075/-. BY CLAIMING LESSER DEPRECIATION THE ASSESSEE HAS SHOWN MORE ELIGIBLE P ROFITS U/S.80IB OF THE ACT. AGAINST THIS THE ASSESSEE WAS IN APPEAL B EFORE THE LD.CIT(A). THOUGH THE ASSESSEE HAD NOT PREFERRED A NY APPEAL ON THIS QUANTUM DISALLOWANCES. HOWEVER, THE ASSESSEE C AME BEFORE THE LD.CIT(A) ON THE PENALTY LEVIED U/S.271(1)(C) OF T HE ACT BY THE AO FOR THIS WRONG CLAIM OF DEPRECIATION AND THE RESULT WRO NG CLAIM OF 80IB, MORE THAN THE AMOUNT ELIGIBLE BY THE ASSESSEE. THE LD.CIT(A) HAD GONE THROUGH THE PROVISIONS OF S.271(1)(C) WHICH READ AS UNDER : 271. (1) IF THE ASSESSING OFFICER OR THE COMMISSIONER (APPE ALS) OR THE COMMISSIONER IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT, IS SATISFIED THAT ANY PERSON (A) ITA NO.2193/MDS/2014 4 (B) (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME OR 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 C OMMISSIONER (APPEALS) OR THE COMMISSIONER TO BE FALSE, OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS N OT ABLE TO SUBSTANTIATE [AND FAILS TO PROVE THAT SUCH EXPLANATION IS BONA F IDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATIO N OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING T HE TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE PURPOSES OF CLAUSE (C) OF THIS SUB-SECTION, BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHI CH PARTICULARS HAVE BEEN CONCEALED. FROM THE ABOVE PROVISIONS AND THE EXPLANATION, IT I S INTERESTING TO NOTE THAT THE LEGISLATORS HAVE NOT LIMITED THE OFFE NCE FOR ANY SPECIFIC YEAR OR A SPECIFIC METHOD OF COMPUTATION LIKE NORMA L PROVISIONS OR 11 5JB PROVISIONS. THE ACT OF CONCEALMENT OF PARTICU LARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME WILL ITSELF ATTRACT PROVISIONS OF S.271(1)(C). IT IS ALSO CLEAR FROM TH E EXPLANATION THAT THE WRONG FACTS WILL MATTER TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON, BUT IT HAS NOTHING TO DO WITH ANY PARTICUL AR YEAR OR METHOD OF COMPUTATION. IN OTHER WORDS, THE FURNISHING OF WRONG FACTS WITH REGARD TO PARTICULARS OF INCOME PER SE WILL BE SUFF ICIENT FOR ATTRACTING ITA NO.2193/MDS/2014 5 PROVISIONS OF S.271 (1 )(C). THE DEPRECIATION CLAIM ED BY THE APPELLANT IN THE INSTANT CASE AS PER COMPANIES ACT AND NOT BY THE INCOME-TAX ACT, THEREBY LEADING TO EXCESS CLAIM OF DEDUCTION U /S 801B MAY NOT ALTER THE TAX LIABILITY OF THE APPELLANT WHO HAS OF FERED THE INCOME FOR TAXATION U/S 11 5JB, BUT IT WILL DEFINITELY HAVE AN EFFECT ON THE RESERVES & SURPLUSES OF THE YEAR AND SUBSEQUENT YEA RS. FURTHER, THE IMPACT MAY ALSO ACCENTUATE IF THE APPELLANT OFFERS THE INCOME FOR TAXATION IN THE SUBSEQUENT YEARS UNDER NORMAL COMPU TATION INSTEAD OF I I5JB. THEREFORE, CIT(A) WAS OF THE OPINION, TH E GLORIFIED RESERVES & SURPLUSES IN THE SUBSEQUENT YEARS WHICH HAVE ARIS EN OUT OF WRONG CLAIM OF DEPRECIATION AND THE RESULTANT DEDUCTION A RE NOT ACCEPTABLE UNDER THE PROVISIONS OF THE LAW. A WRONG CLAIM SHOU LD NOT BECOME THE BASE FOR THE BUSINESS RESERVES OF A COMPANY. 3.2 FURTHER THE LD.CIT(A) OBSERVED THAT WITH REGAR D TO EXPLANATION TO S.271(1)(C), THE APPELLANT HAS FURNISHED THE EXP LANATION BUT IT IS NOT SATISFACTORY. THE APPELLANT HAS NOT GIVEN ANY REASO N WHY THE DEPRECIATION WAS NOT WORKED OUT AS PER L.T. RULES A ND NOT CLAIMED EVEN THOUGH KNOWING FULLY WELL THAT IT IS ELIGIBLE FOR HIGHER QUANTUM OF ITA NO.2193/MDS/2014 6 DEPRECIATION. THE APPELLANT IS AWARE THAT CLAIMING OF MORE QUANTUM OF ELIGIBLE DEPRECIATION WILL REDUCE THEIR ELIGIBLE DEDUCTION U/S 8OLB, THEREFORE, IT HAS CLAIMED ONLY A LESSER QUANTUM OF DEPRECIATION PER COMPANIES ACT. THIS SHOWS WILLFUL ATTEMPT TO CLAIM MORE DEDUCTION. THE APPELLANT HAS FURNISHED AN EXPLANATION WHICH IT IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATI ON IS BONAFIDE AS PER EXPLANATION I TO S.271(I)(C). THE APPELLANTS B ALD EXPLANATION, THAT CLAIM OF DEPRECIATION IS NOT MATERIAL IN ITS CASE S INCE PROFITS WERE OFFERED FOR TAXATION U/S II5JB, IS NOT CONVINCING A S WRONG DISPLAY OF PROFITS WILL HAVE AN IMPACT ON RESERVE & SURPLUS OF THE ASSESSEE DURING THIS YEAR AND THE SUBSEQUENT YEARS. 3.3 IN VIEW OF THE ABOVE, THE SUBMISSION OF INACC URATE PARTICULARS OF INCOME DURING THE YEAR HAS A CASCADING EFFECT ON TH E SUBSEQUENT YEARS IN THE FORM OF SHOWING HIGHER RESERVES ON WRO NG FOOTING, AND THEREFORE WILL ATTRACT PENALTY PROVISIONS U/S 271(I )(C). FURTHER, THE EMPHASIS ON THE PARTICULAR ACTION OF SUBMISSION O F INACCURATE PARTICULARS OF INCOME IRRESPECTIVE OF THE YEAR IN W HICH SUCH SUBMISSION OF INACCURATE PARTICULARS HAVE ARISEN WI LL ALSO SUBSCRIBE TO ITA NO.2193/MDS/2014 7 THE ABOVE PENALTY PROVISIONS. THEREFORE, THE PENALT Y LEVIED BY THE AO IS UPHELD BY THE LD.CIT(A). AGAINST THIS THE ASSES SEE IS IN APPEAL BEFORE US. 4. LD.A.R PLEADED BEFORE US THAT IN VIEW OF DECIS ION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. NALWA SONS INVESTMENTS LTD., REPORTED IN [2010] 327 ITR 543 WHEREIN HELD T HAT WHEN THE TAX PAYABLE ON INCOME COMPUTED UNDER NORMAL PROCEDURE I S LESS THAN TAX PAYABLE UNDER THE DEEMED PROVISIONS OF THE SECT ION 115JB OF THE ACT, THEN PENALTY U/S.271(1)(C) OF THE ACT COULD NO T BE IMPOSED WITH REFERENCE TO ADDITIONS/DISALLOWANCES MADE UNDER TH E NORMAL PROVISIONS AND FOR THIS PURPOSE, HE ALSO RELIED ON THE CIRCULAR OF THE CBDT CIRCULAR NO.25/15/ F.NO.279/140/2015/ITJ DATED 31.12.2015. FURTHER, WE COME ACROSS THE DECISION OF THE JURISDI CTIONAL HIGH COURT IN THE CASE OF M/S.SRI GOKULAM HOTELS INDIA PVT. LT D., REPORTED IN 232 TAXMANN 487(MDS.) WHEREIN CONFIRMED THE FINDINGS OF THE TRIBUNAL BY OBSERVING THAT IN AN ADMITTED CASE OF 'NIL' RETURN, WITHOUT COMPLYING WITH THE PROVISIONS OF SECTION 115 JB, WHERE THE AS SESSEE IS LIABLE TO PAY MAT AND THE NON-COMPLIANCE THEREOF RESULTS IN I MPOSITION OF PENALTY IN TERMS OF SECTION 271(1)(C), IS CORRECT. THE TRIBUNAL ALSO ITA NO.2193/MDS/2014 8 FOUND THAT ONLY ON ACCOUNT OF THE ASSESSING OFFICER 'S ENDEAVOUR, THE MAT LIABILITY CAME TO BE NOTICED. THEREFORE, THERE WAS A CLEAR CASE OF THE ASSESSEE FAILING TO FURNISH PARTICULARS NECESSA RY FOR THE ASSESSMENT AND THE CASE OF THE DEPARTMENT THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS FOR THE PURPOSE OF DETERMINING THE TAX UNDER SECTION 115 JB STANDS ESTABLISHED. AS A RESUL T, PENALTY HAS TO BE LEVIED AS PER THE PROVISIONS OF SECTION 271(1)(C ) AND THE AO WAS JUSTIFIED IN IMPOSING SUCH PENALTY. 5. IN THE PRESENT CASE ALSO THE ASSESSEE HAS WRONG LY COMPUTED THE DEDUCTION U/S.80-IA OF THE ACT BY SHOWING THE W RONG DEPRECIATION. HAD THE ASSESSING OFFICER NOT VERIFIED IT, IT WOULD HAVE GONE OUT OF THE TAXATION. BEING SO, IN THE PRESENT CASE IN HAND AL SO THERE IS FURNISHING OF INACCURATE PARTICULARS OF INCOME AS I N THE CASE BEFORE THE JURISDICTIONAL HIGH COURT CITED SUPRA. FURTHE R, THE JUDGEMENT RELIED BY THE ASSESSEES COUNSEL IN THE CASE OF CIT VS. NALWA SONS INVESTMENTS LTD.(327 ITR 543)(DEL.), WHICH IS RELAT ING TO THE ASSESSMENT YEAR 2001-02 AND THEREAFTER BY FINANCE A CT, 2003, THERE WAS AN INSERTION OF EXPLANATON-4 TO SEC.271(1)(C) O F ACT WITH EFFECT ITA NO.2193/MDS/2014 9 FROM 01.04.2003, AS SUCH THE JUDGEMENT OF DELHI HI GH COURT CANNOT BE APPLIED. ACCORDINGLY, WE ARE INCLINED TO CONFIR M THE LEVY OF U/S.271(1)(C) OF THE ACT. 6. IN THE RESULT, THE APPEAL OF ASSESSEE IS DISMISS ED. ORDER PRONOUNCED ON FRIDAY, THE 18 TH OF MARCH ,2016 AT CHENNAI. SD/- SD/- ' # $ . % & ' ( DUVVURU RL REDDY ) ) ( ( ( ) * + ) ) ' CHANDRA POOJARI ', JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 18 TH MARCH,2016 . K S SUNDARAM. -.,, /0,10 /COPY TO: , 1. /APPELLANT 2. /RESPONDENT 3. , 2,'' /CIT(A) 4. , 2 /CIT 5. 034, 5 /DR 6. 4,6 /GF