Newton Engineering & Chemicals Ltd., Baroda V. The ACIT, Circle-4, Baroda

ITA 225/AHD/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8103 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-11-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2003-2004
• Appeal Filed On: 28-01-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V K SINGH

Judgement Text

, *MH *MH*MH *MH* ** * IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD IZEKSN DQEKJ IZEKSN DQEKJ IZEKSN DQEKJ IZEKSN DQEKJ BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER I.T.A. NO.225/AHD/2015 ( / ASSESSMENT YEAR : 2003-04) NEWTON ENGG. & CHEMICALS LTD. 864, B-4, GIDC ESTATE, MAKARPURA, BARODA 390 010 VS. ACIT, CIRCLE 4, BARODA ! PAN/GIR NO. : AAACH 5319 Q ( ' / APPELLANT ) .. ( #' RESPONDENT ) '$ APPELLANT BY : SHRI URVASHI SODHAN, A.R. #' %$ / RESPONDENT BY : SHRI V. K. SINGH, SR. D.R. & ' (%) * / DATE OF HEARING 13/11/2017 +,-. %) * / DATE OF PRONOUNCEMENT 24/11/2017 / O R D E R PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER : THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE OR DER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-III, BARODA, DA TED 28/10/2014 FOR THE ASSESSMENT YEAR (AY) 2003-04, ON THE FOLLOW ING GROUNDS: I. LD. CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING ACTION OF AO LEVYING PENALTY OF RS.28,71,100/- INVOKING PROVISIO NS OF SEC 271(1)(C) OF THE ACT. LD. CIT(A) OUGHT TO HAVE DELE TE PENALTY LEVIED BY AO WHEN APPELLANT NEITHER CONCEALED INCOM E NOR FURNISHED INACCURATE OF INCOME. IT BE SO HELD NOW. II. LD. CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING PENALTY LEVIED ON DISALLOWANCE OF CLAIM MADE BY THE APPELLANT DISC HARGING INITIAL ONUS CAST UNDER LAW BY SUBMITTING DETAILED EXPLANATION ITA NO.225/AHD/ 2015 NEWTON ENGG. & CHEMICALS LTD. VS. ACIT ASST.YEAR 2003-04 - 2 - WITH DOCUMENTARY EVIDENCE. LD. CIT (A) OUGHT NOT TO HAVE HELD EXPLANATION 1 TO SECTION APPLICABLE TO FACTS OF THE CASE FOR CONFIRMING PENALTY. IT BE SO HELD NOW. III. LD. CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING PENALTY LEVIED NOT APPRECIATING THAT CLAIM DISALLOWED DUE TO NON A CCEPTANCE OF EXPLANATION OF THE APPELLANT CANNOT BE SUBJECTED TO AUTOMATIC LEVY OF PENALTY IN ABSENCE OF COGENT EVIDENCE OF CO NCEALMENT OF INCOME BROUGHT ON RECORD BY AO. LD. CIT (A) OUGHT T O HAVE DELETED PENALTY LEVIED BY AO. IT BE SO HELD NOW. IV. LD. CIT (A) ERRED IN LAW AND ON FACTS IN NOT APPREC IATING THAT DISALLOWANCE U/S 35D DUE TO DIFFERENT METHOD ADOPTE D, ADDITION OF INTEREST OMITTED IN COMPUTATION, ADDITION OF EST IMATED INTEREST & MOBILIZATION ADVANCE TREATED AS CONTRACTUAL RECEI PT BY AO NEED NOT MAKE APPELLANT GUILTY OF FURNISHING INACCU RATE PARTICULARS OR CONCEALING INCOME. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- IN THIS CASE, ASSESSEE HAD FILED ITS RETURN OF IN COME ON 01.12.2013 DECLARING TOTAL LOSS AT RS.3,33,11,290/-. THEREAFTE R, THE CASE WAS SELECTED FOR SCRUTINY AND AN ASSESSMENT WAS FINALIZED U/S.14 3(3) OF THE ACT VIDE ORDER DATED 31.03.2006 DETERMINING THE TOTAL LOSS A T RS.1,92,58,800/-. IN THE ASSESSMENT, THE ASSESSING OFFICER HAS INITIATED PENALTY PROCEEDINGS ON FOLLOWING ADDITIONS/DISALLOWANCE: I. EXCESS CLAIM U/S.35D OF RS.83,560/-. II. SUPPRESSION OF OTHER INCOME OF RS.10,25,700/-. III. NON-DISCLOSURE OF TRADING INCOME OF RS.10,000/-. IV. SUPPRESSION OF CONTRACT RECEIPTS OF RS.66,93,121/-. 3. THEREAFTER, PENALTY NOTICE U/S.274 R.W.S. 271(1) (C) OF THE I.T. ACT WAS ISSUED TO THE LD. AO ON 31.03.2006. ON FURTHER APPEAL BEFORE THE LD. ITA NO.225/AHD/ 2015 NEWTON ENGG. & CHEMICALS LTD. VS. ACIT ASST.YEAR 2003-04 - 3 - CIT(A), THE LD. CIT(A) VIDE HIS ORDER DATED 13.06.2 011 UPHELD THE FOLLOWING ADDITIONS ON WHICH PENALTY PROCEEDINGS WE RE INITIATED. I. EXCESS CLAIM U/S.35D OF RS.83,560/-. II. SUPPRESSION OF OTHER INCOME OF RS.10,25,700/-. III. NON-DISCLOSURE OF TRADING INCOME OF RS.10,000/-. IV. SUPPRESSION OF CONTRACT RECEIPTS OF RS.66,93,121/-. 4. ACCORDINGLY, THE ASSESSEE WAS GIVEN AN OPPORTUNI TY OF BEING HEARD BY THE AO FOR LEVYING OF PENALTY AND ASSESSEE FILED ITS REPLY AS UNDER: WE HAVE ALREADY SUBMITTED OUR CONTENTIONS IN WRITI NG TO YOUR KIND OFFICE ON 20 TH MARCH, 2012, WE ARE ONCE AGAIN SUBMITTING A COPY O F THE SAME FOR YOUR REFERENCE. 5. BUT LD. AO WAS NOT CONVINCED WITH THE REPLY FILE D BY THE ASSESSEE, HENCE, HE LEVIED THE PENALTY. 6. AGAINST THE SAID ORDER ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A) WHO CONFIRMED THE ACTION OF THE LD. AO. 7. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMP UGNED ORDER. SO FAR AS EXCESS CLAIM U/S.35D OF RS.83,560/- IS CONCE RNED. IN THE ASSESSMENT, THE AO HAD DISALLOWED EXCESS CLAIM OF D EDUCTION U/S.35D OF AMOUNTING TO RS.83,560/- AFTER NOTING THAT, 'THE AS SESSEE HAS CLAIMED AN AMOUNT OF RS.2,67,760/- U/S.35D OF THE IT ACT, UNDE R THE HEAD PRELIMINARY EXPENSES WRITTEN OFF. IN THIS REGARD, T HE ASSESSING OFFICER IN HIS ORDER U/S.143(3) DATED 29.03.2005 RELATING TO A .Y 2002-03 HAS QUANTIFIED THE DEDUCTION ADMISSIBLE U/S.35D OF THE ACT AT RS.1,04,200/-. A PERUSAL OF-THE BALANCE SHEET SHOWS THAT THE CAPIT AL EMPLOYED BY THE ITA NO.225/AHD/ 2015 NEWTON ENGG. & CHEMICALS LTD. VS. ACIT ASST.YEAR 2003-04 - 4 - ASSESSEE COMPANY IS OF RS.7,36,80,249/- THE BIFURCA TION OF WHICH IS AS UNDER: EQUITY SHARES RS.3,88,81,000/- SECURED LOANS RS.3,47,99,249/- RS.7,36,00,249/- THE ASSESSES HAS INCURRED PRELIMINARY EXPENSES PRIO R TO THE PERIOD 01.04.1998 HENCE, THE QUALIFYING AMOUNT FOR DEDUCTI ON U/S.35D IS RESTRICTED TO 2.5% OF CAPITAL EMPLOYED I.E. 2.5% OF RS.7,36,80,250/- WHICH WORKS OUT TO RS.18,42,006/-. THIS IS TO BE AL LOWED OVER OF PERIOD OF TEN YEARS IN EQUAL AMOUNT RS.1,84,200/-. THEREF ORE, THE EXCESS CLAIM OF RS.83,560/- IS DISALLOWED AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE COMPANY.' SINCE THE ASSESSEE HAD NOT PRESSED THIS GROUND BEFO RE THE LD. CIT(A) THEREFORE, AN AMOUNT OF RS.83,560/- ADDED BA CK TO THE TOTAL INCOME OF THE ASSESSEE. IN THE LIGHT OF THE ORDER P ASSED BY THE CIT(A), AS GROUND WAS NOT PRESSED BEFORE HIM MEANING THEREBY, ASSESSEE HAS ACCEPTED THE ADDITION OF RS.83,560/-. THEREFORE, WE ARE NOT INCLINE TO INTERFERE IN THE ORDER PASSED BY THE LD. CIT(A) FOR CONFIRMING THE ADDITION OF RS.83,560/-. IN THE RESULT, PENALTY OF RS.83,560 /- IS CONFIRMED. 8. SO FAR AS SUPPRESSION OF OTHER INCOME OF RS.10,2 5,700/- IS CONCERNED. DURING ASSESSMENT PROCEEDINGS, TDS CERTI FICATE ATTACHED WITH THE RETURN OF INCOME, THE ASSESSING OFFICER OBSERVE D THAT HAD RECEIVED INTEREST OF RS.20,27,050/- FROM THE BANKS ON FDRS, HOWEVER IN P&L A/C. THE ASSESSEE HAD SHOWN INTEREST INCOME OF RS.12,16, 456/-. THE ASSESSEE ITA NO.225/AHD/ 2015 NEWTON ENGG. & CHEMICALS LTD. VS. ACIT ASST.YEAR 2003-04 - 5 - HAD SUBMITTED DETAILS OF RS.12,16,456/- AND AFTER V ERIFYING THE DETAILS, ASSESSING OFFICER HAD FOUND THAT, THE ASSESSEE HAS NOT SHOWN INTEREST OF RS.10,15,050/- IN RETURN OF INCOME. DURING THE COUR SE OF ASSESSMENT PROCEEDINGS ASSESSEE HAS VOLUNTARILY ACCEPTED ON IT S FIRST SUBMISSION THE MISTAKE OF OMISSION TO OFFER AS INCOME THE INTEREST AMOUNT EARNED ON THE FIX DEPOSIT AND NSCS AS APPEARING IN THE FINANCIAL STATEMENT. IN THE CASE OF K.C. BUILDERS VS. ASSTT. CIT(2004) 265 ITR 562, 569 (SC) HONBLE APEX COURT HELD: MERE OMISSION FROM THE RETURN OF AN ITEM OF ACCRUED RECEIPT DOES NOT AMOUNT TO CONCEALMENT NOR DELIBERA TE FURNISHING INACCURATE PARTICULARS ON INCOME IN VIEW OF THE SU PREME COURT JUDGMENT, WE DELETE THE PENALTY OF RS.10,25,700/-. 9. SO FAR AS NON-DISCLOSURE OF TRADING INCOME OF RS .10,000/- IS CONCERNED. THE ASSESSEE HAD FURNISHED THAT DURING T HE YEAR, THERE IS NO SALE OF INVESTMENT AND HENCE, THERE IS NO CAPITAL GAIN AND ASSESSING OFFICER HAD ESTIMATED THE PROFIT ON SALE OF UNQUOTE D SHARES OF RS.10,000/- . SINCE ASSESSEE HAS ACCEPTED THE ADDITION OF RS.10 ,000/- AND HAS NOT PRESSED BEFORE THE LD.CIT(A). THUS, WE CONFIRM THE PENALTY OF RS.10,000/-. 10. SO FAR AS SUPPRESSION OF CONTRACT RECEIPTS OF R S.66,93,121/- IS CONCERNED. LD.AR CITED AN ORDER OF THIS COORDINATE BENCH IN ITA NO.2124/AHD/2011 IN QUANTUM PROCEEDINGS IN ASSESSEE S OWN CASE. THIS MATTER WAS SET ASIDE BY THE CO-ORDINATE BENCH AND S ENT BACK TO THE AO. THEREFORE, WE SEND THIS MATTER BACK TO THE FILE OF THE AO AND AO WILL DECIDE THE PENALTY ALONG WITH QUANTUM PROCEEDINGS. ITA NO.225/AHD/ 2015 NEWTON ENGG. & CHEMICALS LTD. VS. ACIT ASST.YEAR 2003-04 - 6 - 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 24/11/2017 SD/- SD/- IZEKSN DQEKJ IZEKSN DQEKJ IZEKSN DQEKJ IZEKSN DQEKJ EGKOHJ IZLKN EGKOHJ IZLKN EGKOHJ IZLKN EGKOHJ IZLKN YKS[KK LN YKS[KK LN YKS[KK LN YKS[KK LNL; L; L; L; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; (PRAMOD KUMAR) ( MAHAVIR PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 24/11/2017 PRITI YADAV, SR.PS !'# $#! COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT 2. #' / THE RESPONDENT. 3. 012) & 3) / CONCERNED CIT 4. & 3) 45 / THE CIT(A)-III, BARODA. 5. 67 8)'12 *12. 0 / DR, ITAT, AHMEDABAD 6. 8 9: ( GUARD FILE. % & / BY ORDER, # 6)) //TRUE COPY// '/& () ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION 13/11/2017 (DICTATION-PAD 4 PA GES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 14/11/2017 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER