The DCIT, Circle-1, Surat V. M/s. HIMSON TEXTILE ENGG. IND.PVT.LTD., Surat

ITA 2523/AHD/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80256 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 11 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 22-07-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 17-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Assessee Lawyers: K N VEPARI
• Keywords: Depreciation; Wrong claim; Assessment record
• Section: 14A

Judgement Text

, , , , D, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, D BENCH . .. . . .. . , !' !' !' !', , , , #$ %&'( #$ %&'( #$ %&'( #$ %&'(, , , , )* + ) ' )* + ) ' )* + ) ' )* + ) ' BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND ANIL CHATURVEDI, ACCOUNTANT MEMBER) ITA NO.2523/AHD/2010 WITH CO NO.286/AHD/2010 [ASSTT.YEAR : 2005-2006] THE DCIT, CIR.1 SURAT. /VS. M/S.HIMSON TEXTILE ENGG. IND. PVT. LTD. HIRALAL COLONY A.K. ROAD, SURAT. PAN : AAACH 5825 K ( (( (-. -. -. -. / APPELLANT) ( (( (/0-. /0-. /0-. /0-. / RESPONDENT) + 1 2 )/ REVENUE BY : SMT. SONIA KUMAR, SR.DR 4& 1 2 )/ ASSESSEE BY : SHRI K.N. VEPARI 5 1 &(*/ DATE OF HEARING : 22 ND JULY, 2014 678 1 &(*/ DATE OF PRONOUNCEMENT : 08/08/2014 )9 / O R D E R PER G.C. GUPTA, VICE-PRESIDENT: THIS APPEAL BY THE REVENUE AND THE CO BY THE ASSESSEE FOR ASSTT.YEAR 2005-2006 ARE DIRECTED AGAINST THE ORDER OF THE CIT(A). THESE ARE BEING DISPOSE D OF WITH THIS CONSOLIDATED ORDER. ITA NO.2523/AHD/2010 (REVENUES APPEAL) 2. THE ONLY GROUND OF THE APPEAL OF THE REVENUE IS AS UNDER: ITA NO.2523/AHD/2010 WITH CO -2- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE PENALTY IMPOSED BY THE AO IN RESPECT OF ADDITIONS OF RS.3,23,892/-, RS.29,378/-, RS.36,22,957/-, RS.3,27,254/- AND RS.2,88,400/- MADE ON ACCOUNT OF DISALLOWANCE OF DEPRECIATION IN RESPECT OF SUBSIDY AMOUNT RECEIVED TOWARDS PLANT & MACHINERIES, ADDITION ON ACCOUNT OF LATE PAYMENT OF PF & ESI, DISALLOWANCE U/S.40(A)(IA), DISALLOWANCE ON ACCOUNT OF PRIOR PERIOD EXPENSES AND DISALLOWANCE U/S.14A RESPECTIVELY. 3. THE LEARNED DR RELIED ON THE ORDER OF THE AO. T HE LEARNED COUNSEL FOR THE ASSESSEE HAS RELIED ON THE ORDER OF THE CIT (A). HE HAS FILED A CHART AND SUBMITTED THAT THE PENALTY UNDER SECTION 271(1) (C) OF THE ACT WAS IMPOSED ON DISALLOWANCES MADE DUE TO VARIOUS REASON S, AND ALL THE MATERIAL FACTS WERE DISCLOSED BY THE ASSESSEE AT TH E TIME OF FILING OF THE RETURN ITSELF. 4. WE HAVE CONSIDERED RIVAL SUBMISSION AND PERUSED THE ORDERS OF THE AO AND THE CIT(A). WE FIND THAT THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS IMPOSED ON CERTAIN ITEMS OF DISALLOWANC E MADE BY THE REVENUE. WE FIND THAT THE FIRST ITEM ON WHICH PENAL TY WAS IMPOSED WAS ON ACCOUNT OF DISALLOWANCE OF DEPRECIATION ON THE AMOU NT OF SUBSIDY AND THE CIT(A) HAS DELETED THE SAME BY RECORDING THAT THE P ENALTY ON THE SAME ISSUE WAS DELETED IN THE EARLIER ASSTT.YEAR 2003-04 BY THE CIT(A). THE DEPARTMENT COULD NOT CONTROVERT THE FINDINGS OF THE CIT(A). IN THESE FACTS OF THE CASE, WE ARE OF THE VIEW THAT NO PENALTY FOR CONCEALMENT COULD BE LEVIED ON THE ASSESSEE ON THIS AMOUNT. SECOND ITEM OF DISALLOWANCE OF PF & ESI, THE CIT(A) HAS DELETED THE PENALTY BY OBSERVING THAT THIS IS A DEBATABLE I SSUE, AND THEREFORE, THE PENALTY IS NOT LEVIABLE. WE FIND THAT ALL THE MATE RIAL FACTS ON THIS ISSUE WERE DISCLOSED BY THE ASSESSEE, AND BEING A DEBATAB LE ISSUE, THE PENALTY WAS RIGHTLY DELETED BY THE CIT(A). ITA NO.2523/AHD/2010 WITH CO -3- WITH REGARD TO PENALTY IMPOSED ON ACCOUNT OF DISALL OWANCE UNDER SECTION 40(A)(IA), THE CIT(A) HAS DELETED THE PENAL TY BY FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT IN CIT VS. RE LIANCE PETROPRODUCTS PVT. LTD., 322 ITR 158 (SC), AS THE ASSESSEE HAS NO T FURNISHED ANY INACCURATE PARTICULARS OF INCOME NOR HAS CONCEALED ITS INCOME. THE CIT(A) HAS RECORDED THAT THE AO HAS NOT BROUGHT ANY MATERIAL ON RECORD TO SHOW THAT THE SUBMISSIONS OF THE ASSESSEE WAS FOUND TO BE NOT BONA FIDE . WE FIND THAT THE CIT(A) HAS RIGHTLY DELETED THE PEN ALTY BY FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT CITED SUPRA, AS THE ASSESSEE HAS DISCLOSED ALL THE MATERIAL FACTS AT THE TIME OF ASS ESSMENT, AND THERE IS NOTHING ON RECORD TO SUGGEST THAT THE ASSESSEE HAS CONCEALED ITS INCOME OR HAS FILED INACCURATE PARTICULARS OF ITS INCOME OR T HAT THE EXPLANATION OF THE ASSESSEE WAS WRONG OR NOT BONA FIDE . ACCORDINGLY, THE ORDER OF THE CIT(A) ON THIS ISSUE IS CONFIRMED. WITH REGARD TO OTHER AMOUNT OF PRIOR PERIOD EXPENSE S DISALLOWED BY THE REVENUE, WE FIND THAT THE ONLY DISPUTE IN THIS CASE WAS WHETHER THE PRIOR PERIOD EXPENSES WERE CRYSTALLIZED DURING THE RELEVANT PERIOD OR NOT. THE EXPLANATION OF THE ASSESSEE WAS FOUND TO BE BONA FIDE AND THE MATERIAL FACTS WERE DISCLOSED BY THE ASSESSEE AT THE TIME OF ASSESSMENT ITSELF. IN THESE FACTS OF THE CASE, WE CONFIRM THE ORDER OF TH E CIT(A) DELETING THE PENALTY LEVIED BY THE AO. WITH REGARD TO PENALTY IMPOSED ON DISALLOWANCE UNDE R SECTION 14A, WE FIND THAT THE CIT(A) HAS DELETED THE PENALTY BY RECORDING THAT THIS IS A MATTER OF ESTIMATION OF DISALLOWANCE AND IN THE ABS ENCE OF RULE 8D WHICH HAS COME INTO FORCE AFTER THE CURRENT YEAR, AND THE REFORE, THERE WAS NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME. ITA NO.2523/AHD/2010 WITH CO -4- THEREFORE, THERE BEING NO MISTAKE IN THE ORDER OF T HE CIT(A) ON THIS ISSUE, AS THE ASSESSEE HAS DISCLOSED ALL THE MATERIAL FACT S AT THE TIME OF ASSESSMENT ITSELF, AND DISALLOWANCE UNDER SECTION 14A HAS BEEN MADE BY WAY OF ESTIMATE ONLY, WE CONFIRM THE ORDER OF THE CIT(A) O N THIS ISSUE. ACCORDINGLY, THE GROUND OF THE APPEAL OF THE REVENU E IS DISMISSED. CO NO.286/AHD/2010 (ASSESSEES CO) 5. THE ONLY GROUND OF THE CO OF THE ASSESSEE IS AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD.CIT(A) HAS ERRED IN CONFIRMING PENALTY IN RESPEC T OF DISALLOWANCE OF DEPRECIATION ON SOLD OUT MACHINERY TO THE TUNE O F RS.65,498/- WHEN THE MATTER WAS DISMISSED BY CIT(A)S IN QUANTU M APPEAL. 6. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE PENALTY ON DISALLOWANCE OF DEPRECIATION ON SOLD OUT MACHINERY AMOUNTING TO RS.65,498/- WAS LEVIED BY THE AO, ALTHOUGH, ALL THE MATERIAL FACTS WERE DISCLOSED BY THE ASSESSEE AT THE TIME OF ASSESSMENT . HE FURTHER SUBMITTED THAT THE ASSESSEE HAS EXPLAINED THAT THESE ADJUSTME NTS WERE MADE IN THE EARLIER YEARS, AND THE DEPARTMENT WAS IN THE KNOWLE DGE OF THE FIGURES OF EARLIER YEARS WDV, AND THEREFORE, IT IS NO CASE OF CONCEALMENT OF INCOME OR FILING OF INACCURATE PARTICULARS OF INCOME. THE LEARNED DR HAS RELIED ON THE ORDERS OF THE AO AND THE CIT(A). 7. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND HAVE PE RUSED THE ORDERS OF THE AO AND THE CIT(A). WE FIND THAT THE ADJUSTM ENT ON THIS ISSUE WAS MADE IN THE EARLIER YEARS AND THE DEPARTMENT HAD TH E RELEVANT FIGURES IN ITS ASSESSMENT RECORD, AND THAT NO PRUDENT ASSESSEE SHA LL ENDEAVOUR TO MAKE FALSE CLAIM OF DEPRECIATION OF RS.65,498/-. THERE IS NOTHING BROUGHT ON RECORD TO SUGGEST THAT THE CONDUCT OF THE ASSESSEE WAS NOT BONA FIDE AND WE FIND THAT THE MISTAKE OF THE ASSESSEE WAS BONA FIDE . IN THESE FACTS OF THE ITA NO.2523/AHD/2010 WITH CO -5- CASE, WE ARE OF THAT VIEW THAT THE DISALLOWANCE WAS CORRECTLY MADE BY THE DEPARTMENT, BUT, THE FACTS DID NOT JUSTIFY THE IMPO SITION OF PENALTY ON THIS ISSUE, WHICH IS ACCORDINGLY DELETED AND THE GROUND OF THE CO OF THE ASSESSEE IS ALLOWED. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D AND THE CO OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( %&'( %&'( %&'( %&'( / ANIL CHATURVEDI) )* + )* + )* + )* + /ACCOUNTANT MEMBER ( . .. . . .. . /G.C. GUPTA) !' !' !' !' /VICE-PRESIDENT C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD