Ducat Agro Extracts Ltd., Baroda V. The DCIT.,Circle-1(1), Baroda

ITA 2464/AHD/2013

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9143 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 27-02-2017
• Assessment Year: 2004-2005
• Appeal Filed On: 18-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M K PATEL
• Keywords: Depreciation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 2464/AHD/2013 (ASSESSMENT YEAR: 2004-05) DUCAT AGRO EXTRACTS LTD. DURGA ESTATE, CHHANI ROAD, VADODARA-390002 V/S DCIT CIRCLE-1 (1), BARODA (APPELLANT) (RESPONDENT) PAN: AAACD8078Q APPELLANT BY : SHRI M.K. PATEL, AR RESPONDENT BY : SHRI ASHISH POPHARE, SR. D.R . ( )/ ORDER DATE OF HEARING : 27 -02-201 7 DATE OF PRONOUNCEMENT : 28 -02-2017 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST TH E ORDER OF THE LD. CIT(A)- I, BARODA DATED 08.07.2013 PERTAINING TO A.Y. 2004- 05. ITA NO. 2464 /AHD/2013 . A.Y.2004-05 2 2. THE ONLY GRIEVANCE OF THE ASSESSEE RELATES TO THE L EVY OF PENALTY U/S. 271(1)(C) OF THE ACT AMOUNTING TO RS. 16.69 LACS. 3. THE ROOTS FOR THE LEVY OF PENALTY LIE IN THE ASSESS MENT ORDER DATED 28.11.2006 MADE U/S. 143(3) OF THE ACT. 4. WHILE SCRUTINIZING THE RETURN OF INCOME AND ON PERU SAL OF THE DEPRECIATION CHART SUBMITTED BY THE ASSESSEE, THE A.O. NOTICED T HAT THE ASSESSEE HAS CLAIMED DEPRECIATION ON THE OPENING WDV OF RS. 5,97 ,03,161/- IN RESPECT OF PLANT AND MACHINERY. THE A.O. NOTICED THAT AS PER N OTES TO THE ACCOUNT, THE COMPANY HAS FILED A POLICE COMPLAINT AGAINST THE PR OFESSIONAL DIRECTOR WHO HAS CONNIVED WITH THE SUPPLIER OF MACHINERY TO HIS ADVANTAGE BY INFLATING THE PURCHASE INVOICES OF THE PLANT AND MACHINERY BY AN AMOUNT OF RS. 186 LACS. THE A.O. ACCORDINGLY REDUCED THE WDV BY 186 L ACS AND RE-COMPUTED THE DEPRECIATION AND ACCORDINGLY DISALLOWED THE EXC ESS DEPRECIATION OF RS. 46.50 LACS. 5. PENALTY PROCEEDINGS WERE SEPARATELY INITIATED. 6. WHILE COMPUTING THE PENALTY U/S. 271(1)(C) OF THE A CT AT RS. 16.69 LACS, THE A.O. OBSERVED THAT THE ASSESSEE WAS AWARE THAT THE ACTUAL COST OF MACHINERY HAD BEEN INFLATED BY RS. 186 LACS AND, TH EREFORE, IT IS A FIT CASE FOR LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT FOR F URNISHING INACCURATE PARTICULARS OF INCOME. ITA NO. 2464 /AHD/2013 . A.Y.2004-05 3 7. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) B UT WITHOUT ANY SUCCESS. 8. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE STATED THAT IN EARLIER ASSESSMENT YEARS ALSO, THE ASSESSEE HAD MADE IT CLEAR IN ITS N OTES TO ACCOUNT, THE ALLEGED POLICE COMPLAINT MADE BY THE ASSESSEE WITH THE POLICE DEPARTMENT IN RELATION TO THE ACT OF THE PROFESSIONAL DIRECTOR . IT IS THE SAY OF THE LD. COUNSEL THAT AT NO STAGE, THE ASSESSEE HAD CONCEALE D THIS FACT FROM THE REVENUE AND IN THE EARLIER ASSESSMENT YEARS ON IDEN TICAL DETAILS GIVEN IN NOTES TO ACCOUNT, THE A.O. HAD ALLOWED DEPRECIATION . THE LD. COUNSEL CONCLUDED BY SAYING THAT THE DEPRECIATION HAS BEEN DISALLOWED DURING THE YEAR UNDER CONSIDERATION BUT IT CANNOT BE SAID THAT THE ASSESSEE HAS FILED INACCURATE PARTICULARS OF INCOME FOR THE LEVY OF PE NALTY U/S. 271(1)(C) OF THE ACT. 9. PER CONTRA, THE LD. D.R. STRONGLY SUPPORTED THE FIN DINGS OF THE FIRST APPELLATE AUTHORITY. 10. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORD ERS OF THE AUTHORITIES BELOW. WE FIND THAT IN A.Y. 2002-03 IN THE NOTES T O ACCOUNTS UNDER SCHEDULE U OF THE AUDITED STATEMENT OF ACCOUNTS, TH E AUDITORS HAVE GIVEN THE FOLLOWING REMARKS:- (8) THE COMPANY HAS FILED A POLICE COMPLAINT AGAINS T THE PROFESSIONAL DIRECTOR WHO SEEMED TO HAVE SOME CONNECTION WITH THE SUPPLIE R OF MACHINERIES TO HIS ADVANTAGE. THE MATTER IS UNDER INVESTIGATION AND LE GAL ACTION WILL BE TAKEN IF NECESSARY IN FUTURE. THIS EVENT HAS OCCURRED AFTER BALANCE SHEET DATE. ITS FINANCIAL EFFECTS IS UNASCERTAINABLE ON THE BALANCE SHEET DAT E. ITA NO. 2464 /AHD/2013 . A.Y.2004-05 4 11. SIMILARLY, IN A.Y. 2003-04 UNDER SCHEDULE U WHICH IS NOTES FORMING PART OF ACCOUNTS, THE AUDITORS HAVE GIVEN THE FOLLOWING REM ARKS:- (6) THE COMPANY HAD FILED A POLICE COMPLAINT AGAINS T THE PROFESSIONAL DIRECTOR WHO SEEMED TO HAVE BEEN CONNECTION WITH THE SUPPLIE R OF MACHINERIES TO HIS ADVANTAGE. THE MATTER HAS BEEN UNDER INVESTIGATION. NO ACTION HAS BEEN TAKEN AGAINST THE SAID DIRECTOR BY THE COMPANY DURING THE YEAR UNDER AUDIT. ITS FINANCIAL EFFECTS IS UNASCERTAINABLE ON THE BALANCE SHEET DATE. 12. A SIMILAR REMARK WAS GIVEN BY THE AUDITORS IN THE N OTES FORMING ACCOUNTS FOR THE YEAR UNDER CONSIDERATION AND THE SAME READ AS UNDER:- VIII. THE COMPANY HAS FILED A POLICE COMPLAINT AGAI NST THE PROFESSIONAL DIRECTOR WHO SEEMED TO HAVE SOME CONNECTION WITH THE SUPPLIE R OF MACHINERIES TO HIS ADVANTAGE. THE MATTER HAS BEEN TAKEN AGAINST THE SA ID DIRECTOR BY THE COMPANY IN THE PAST. ITS FINANCIAL EFFECTS IS UNASCERTAINAB LE ON THE BALANCE SHEET DATE. 13. CONSIDERING THE DETAILS GIVEN IN EARLIER ASSESSMENT YEARS AND ALSO FOR THE YEAR UNDER CONSIDERATION, WE FAIL TO UNDERSTAND HOW THE ASSESSEE CAN BE HELD LIABLE FOR FILING INACCURATE PARTICULARS OF IN COME. THE A.O. HAD ALLOWED DEPRECIATION ON IDENTICAL REMARKS IN EARLIER ASSESS MENT YEARS BUT HAS TAKEN A DIFFERENT VIEW FOR THE YEAR UNDER CONSIDERATION B Y DISALLOWING THE CLAIM OF DEPRECIATION OF RS. 46.50 LACS. BE THAT AS IT MAY, THIS WOULD CERTAINLY NOT TRIGGER THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT. WE DO NOT FIND ANY BASIS FOR THE LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT. WE, ACCORDINGLY, SET ASIDE THE FINDINGS OF THE LD. CIT(A) AND DIRECT THE A.O. TO DELETE THE PENALTY OF RS. 16.69 LACS. ITA NO. 2464 /AHD/2013 . A.Y.2004-05 5 14. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 28 - 02- 20 17 SD/- SD/- (MAHAVIR PRASAD) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY ACCOUNTANT MEMBER AHMEDABAD: DATED 28 /02/2017 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD