ITO 9(2)-3, MUMBAI V. MAREDIA TEX P. LTD, MUMBAI

ITA 2501/MUM/2011

• Counselvise Citation: 250119914 RSA 2011
• Duration Of Justice: 4 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2015
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 19-05-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 30-03-2011
• Court: TRIBUNAL
• Keywords: Depreciation; Difference of opinion

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B , BENCH MUMBAI . . , , BEFORE SHRI G.S.PANNU , A M & SHRI SANJAY GARG , J M ./ ITA NO. 2501 / MU M/20 1 1 ( / ASSESSMENT YEAR : 20 07 - 08 ) ITO - 9(2) - 3, MUMBAI - 20 VS. M/S MAREDIA TEX PVT. LTD., PLOT NO. 34 , AMLI INDUSTRIAL ESTATE, SILVASSA, DADRA & NAGAR HAVELI - 396230 ./ ./ PAN/GIR NO. : A A CCM 5119 R ( / APPELLA NT ) .. ( / RESPONDENT ) /REVENUE BY : SHRI YOGESH KAMAT /ASSESSEE BY : NONE / DATE OF HEARING : 19 /0 5 / 2015 / DATE OF PRONOUNCEMENT 22/07 /2015 / O R D E R PER SANJAY GARG, JUDICIAL MEMBER THE REVENUE HAS PREFERRED THIS APPEAL AGAINST THE ORDER DATED 18 - 1 - 2011, PASSED BY THE CIT(A) - 20 , MUMBAI , RELATING TO THE ASSESSMENT YEAR 20 07 - 08, WHEREBY THE CIT(A) DELET ED THE PENALTY INITIATED AGAINST THE ASSESSEE U/ S.271(1)(C) OF THE I.T. ACT. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE IN SPITE OF SERVICE OF NOTICE, THEREFORE, THE BENCH DECIDED TO DISPOSE OFF THE APPEAL AFTER CONSIDERING THE SUBMISSIONS OF LD. DR. 3. FACTS GIVING RISE TO THE PRESENT APPEAL ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF TEXTURISING YARN. THE ASSESSEE HAS CLAIMED DEPRECIATION OF RS.19,99,616/ - . DURING THE ITA NO. 2501 /1 1 2 ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT THE ASSESSEE DID NOT CARRY OUT ANY MANUFACTURING ACTIVIT Y DURING THE YEAR AND ASKED THE ASSESSEE TO FURNISH THE DETAILS OF ADDITION TO FIXED ASSETS AND TO JUSTIFY THE CLAIM OF DEPRECIATION. THE ASSESSEE SUBMITTED THE REQUIRED DETAILS, H OWEVER, THE AO WAS NOT CONVINCE D WITH THE EXPLANATION OFFERED BY THE ASSESSE E AND , THEREFORE, DISALLOWED THE CLAIM OF DEPRECIATION ON ASSETS OF ASSESSEE OF RS. 18,75,833/ - AS EXCESS AND LEVIED MINIMUM PENALTY OF RS. 6,31,405/ - . 4. AGGRIEVED THEREBY, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) , WHEREIN THE CIT(A) DELETED THE PEN ALTY SO IMPOSED BY THE AO AFTER OBSERV ING AS UNDER : - 3. I HAVE CONSIDERED THE ISSUE.ILN C.I.T. V ATUL MOHAN BINDAL, 317 I.T.R. 1 (S.C.), THE APEX COURT HELD THAT FOR APPLICABILITY OF SECTION 271(1)(C ) THE CONDITIONS STATED THEREIN MUST EXISTS. THE CONDI TIONS ARE THAT THE ASSESSEE SHOULD HAVE CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME BEFORE THE PENALTY U/S 271 (1 )(C ) COULD BE LEVIED. THIS HAS BEEN REITERATED IN A RECENT DECISION OF THE APEX COURT IN C.I.T. V RELIANCE PETRO PRODUCTS P. LTD, 322 I.T.R. 158, WHEREIN HON'BLE APEX COURT INTERPRETED THE MEANING OF THE EXPRESSIONS, 'CONCEALMENT', 'INACCURATE', AND 'PARTICULARS' USED IN CLAUSE (C) OF SECTION 271(1) AND HELD THAT EVERYTHING WOULD DEPEND UPON THE RETURN OF INCOME FILED BECAUSE THAT WAS THE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF INCOME. THE APEX COURT HELD THAT WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE THE LIABILITY OF PENALTY WOULD .ARISE. READING THE WORDS 'PARTICULARS' I N CONJUNCTION WITH THE WORD 'INACCURATE', THE APEX COURT HELD THAT THEY ONLY MEAN THAT THE DETAILS SUPPLIED IN THE RETURN WHICH WERE NOT ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TRUTH OR ERRONEOUS, AND UNLESS THERE IS A FINDING THAT ANY DETAILS SUP PLIED BY THE ASSESSEE IN THE RETURN WERE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE, THERE WOULD BE NO QUESTION OF INVITING TH E PENALTY U/S 271 (1)( C). THE APEX COURT FURTHER HELD THAT MERE MAKING OF THE CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS OF INCOME OF THE ASSESSEE, AND SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO INACCURATE PARTICULARS. THE APEX COURT HELD THAT IF THE ASSESSEE HAS FURNISHED ALL THE DETAILS OF ITS EXPENDITURE AS WELL AS INC OME IN ITS RETURN, WHICH DETAILS, IN THEMSELVES, WERE NOT FOUND TO ITA NO. 2501 /1 1 3 BE INACCURATE NOR COULD BE VIEWED AS THE CONCEALMENT OF. INCOME ON ITS PART, IT WAS UP TO THE AUTHORITIES TO ACCEPT ITS CLAIM IN THE RETURN OR NOT. MERELY BECAUSE THE CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT ATTRACT THE PENALTY U/S.271(1)(C) . THE APEX COURT WENT ON TO HOLD THAT IF THE CONTENTION OF THE REVENUE IS ACCEPTED THEN IN CASE OF EVERY RETURN WH ERE THE CLAIM MADE IS NOT ACCEPT ABLE BY THE A O FOR ANY REASON, THE ASSESSEE WILL INVITE PENALTY U/S.271 (1 )(C ). 4. IN THE INSTANT CASE THE APPELLANT HAS NOT CONCEALED ANY INCOME. IT C L AIMED DEDUCTION OF DEPRECIATION ON FIXED ASSETS ON THE GROUND THAT THEY WERE USED IN TRIAL PRODUCTION COMMENCED I N THE LAST MONTH OF THE YEAR. IT FURTHER CLAIMED THA T RAW MATERIALS WERE CONSUMED FOR THE PURPOSE AS EVIDENT FROM THE QUANTITATIVE DETAILS SHOWN IN THE AUDIT REPORT. THE AO DID NOT ACCEPT THE CLAIM MAI NLY FOR THE REASON THAT NO SALES HAD BEEN CREDITED IN T HE P&L A /C FOLLOWING ANY PRODUCTION IN THE YEAR THE AO HAS NOT STATED THAT THE APPELLANT HAD FURNISHED INACCURATE OR FALSE PARTICULARS OF CONSUMPTION OF RAW MATERIALS. IT IS A CASE OF MERE DIFFERENCE OF OPINION. THE PARTICULARS OF CLAIM WERE NOT FOUND TO BE INACCURATE, INCORRECT OR FALSE AND ONLY THE DEDUCTION WAS SAID TO BE NOT PERMISSIBLE UNDER THE LAW. AS HELD IN THE CASE OF RELIANCE PETRO(SUPRA) A MERE MAKING OF THE CLAIM WHICH IS NOT SUSTAINABLE IN LAW WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICU LARS OF INCOME. THE CONDITIONS PRESCRIBED IN SECTION 271(1)(C) DO NOT EXIST IN THIS CASE. I, THEREFORE, CANCEL THE PENALTY IMPOSED OF RS. 6,31,405/ - . 5. NOW, THE REVENUE IS IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE CIT(A). 6. AFTER CONSIDE RING THE SUBMISSIONS MADE BY THE LD. DR AS WELL AS THE ORDERS OF THE AUTHORITIES BELOW, WE F I ND THAT THE ASSESSEE HAD CLAIMED DEDUCTION OF DEPRECIATION ON FIXED ASSETS ON THE PLEA THAT THEY WERE USED IN TRIAL PRODUCTION WHICH COMMENCED IN THE LAST MONTH OF THE YEAR AND THAT THE RAW MATERIAL W AS CONSUMED FOR THE SAME WHICH WAS EVIDENT FROM THE QUANTITATIVE DETAILS SHOWN IN THE AUDIT REPORT. THE LD. CIT(A) HELD THAT IT COULD BE A CASE OF DIFFERENCE OF OPINION BUT NOT A CASE OF FURNISHING OF INACCURATE PARTICU LARS OF INCOME. HE, THEREFORE, DELETED THE PENALTY SO IMPOSED AFTER RELYING THE DECISION OF HONBLE SUPREME COURT IN THE CASE ITA NO. 2501 /1 1 4 OF RELIANCE PETRO PR O DUCTS PVT. LTD., 322 ITR 158. WE DO NOT FIND ANY REASON TO INTERFERE IN THE FINDINGS RECORDED BY THE CIT(A) A ND THE SAME ARE HEREBY UPHELD. 7 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 22/07 / 201 5 . SD/ - SD/ - ( . . ) ( G.S.PANNU ) ( ) ( SANJAY GARG ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED 22/07 /201 5 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY//