Esskay Pharmaceuticals Ltd., Ahmedabad V. The Dy.CIT.,Circle-1, Baroda

ITA 2787/AHD/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9667 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 29-01-2016
• Assessment Year: 1995-1996
• Appeal Filed On: 09-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: BHAVAIN MARFATIA
• Keywords: Depreciation; Period of limitation; Revised return; Capital expenditure

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV , JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ./ ITA NO . 2787 / AHD/ 20 1 1 [ [ / ASS TT. YEAR : 1995 - 1996 ESSKAY PHARMACEUTICALS LTD. OFFICIAL LIQUIDATOR JIVABHAI CHAMBERS ASHRAM ROAD, AHMEDABAD. PAN : AAACE 4224 B VS DCIT, CIR.1 BARODA. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI BHAVAIN MARFATIA REVENUE BY : SHRI RAJDEEP SINGH, SR.DR / DATE OF HEARING : 29 / 01 /201 6 / DATE OF PRONOUNCEMENT: 08 / 02 /201 6 / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER : THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE ORDER OF THE LD.CIT(A) - I, BARODA D A T E D 26.9.2011 PASSED FOR THE ASSTT.YEAR 1995 - 96. 2. SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING THE PENALTY AMOUNTING TO RS.40,56,375/ - IMP OSED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT. 3. BRIEF FACTS OF THE C ASE ARE THAT THE ASSESSEE HAS FIELD ITS RETURN OF INCOME ON 31.3.1997 SH OWING NIL INCOME. THIS RETURN WAS REVISED ON 24.1.1996 FOR ADJUSTMENT OF CERTAIN CLAIMS , B UT POSITION OF INCOME REMAINED NIL ONLY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS , IT WAS NOTICED FROM THE STATEMENT OF INCOME ENCLOSED THAT THE ASSESSEE ITA NO . 2787 /AHD/2011 2 HAS SHOWN NET PROFIT AS PER AUDITED ACCOUNTS AT RS.1,01,51,442/ - . THE ASSESSEE HAS CLAIMED DEPRECIATION AND AMOR TIZATION UNDER SECTION35D. AS P E R THE REVISED RETURN, ALL THESE DEDUCTIONS WERE TOTALLED UP TO RS.1,01,21,210/ - . THE ASSESSEE HAS WORKED OUT THE INCOME OF RS.9,97,663/ - WHICH WAS CLAIMED EXEMPT UNDER SECTION 80HHC. I N THIS WAY, THE INCOME DECLARED BY TH E ASSESSEE WAS NIL. ON SCRUTINY OF THE ACCOUNTS, IT REVE A LED TO THE AO THAT THE ASSESSEE HAS CLAIMED A SUM OF RS.56,38,059/ - BEING CAPITAL EXPENDITURE INCURRED ON SCIENTIFIC RESEARCH. THIS CLAIM WAS FOUND TO BE BOGUS AND FRAUDULENT. HENCE, PENALTY PROCE EDINGS WERE INITIATED . THE LD.AO AFTER HEARING THE ASSESSEE HAS IMPOSED PENALTY OF RS.40,56,375/ - . THE LAST TWO PARAGRAPHS OF THE PENALTY ORDER READS AS UNDER: ANOTHER ISSUE ON WHICH PROCEEDINGS FOR CONCEALMENT OF INCOME WERE INITIATED BY THE A.O WAS I N RESPECT OF EXCESS CLAIM OF DEPRECIATION ON FACTORY BUILDING. IN THE ORIGINAL ASSESSMENT ORDER, THE A.O. FOUND THAT THE EXCESS CLAIM OF DEPRECIATION WAS MADE BY THE ASSESSEE TO THE EXTENT OF RS. 2,50,000/ - . THE ISSUE HAS BEEN DISCUSSED AT LENGTH IN PARA 5 OF THE ASSESSMENT ORDER. IN APPEAL THIS ISSUE WAS RESTORED BACK TO THE FILE OF THE A.O AND A.O HAS PASSED FRESH ORDER DTD. 29.9.99 GIVING EFFECT WITH THE DIRECTIONS OF THE CIT (A). IN THIS ORDER THE A.O HAS WORKED OUT EXCESS CLAIM OF DEPRECIATION TO THE E XTENT OF RS. 2,40,7547 - . THE ASSESSEE HAS NOT PREFERRED FURTHER APPEAL ON THIS ISSUE ' AND AS SUCH THE ASSESSEE HAS ACCEPTED THE FINDING OF THE A.O THAT EXCESS CLAIM OF DEPRECIATION AMOUNTING TO RS. 2,40,754/ - WAS MADE. IN VIEW OF THE ABOVE DISCUSSION AND LEGAL PROVISIONS 1 FIND THAT THE ASSESSEE IS GUILTY OF CONCEALMENT OF INCOME AND ALSO OF FURNISHING OF INACCURATE PARTICULARS VIZ. THE CLAIM OF AMOUNTING TO RS. 56,38,059/ - BEING CAPITAL EXPENSES ON SCIENTIFIC RESEARCH AND DEVELOPMENT AND RS. 2,40,754/ - F OR DEPRECIATION. THEREFORE, PENALTY U/S. 271(L)(C) IS LEVIED ON THE ASSESSEE. MOREOVER, KEEPING IN MIND THE VANCHOO COMMITTEE OBSERVATION THAT THE PURPOSE OF PENALTY SHOULD BE ONLY TO BEND AND NOT BREAK THE TAX PAYER. AS SUCH ASSESSEE COMPANY IS LIABLE FOR PENALTY U/S. 271(1)(C) OF THE I.T.ACT. 4 . APPEAL TO THE CIT(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE. ITA NO . 2787 /AHD/2011 3 5 . BEFORE US, THE LD.COUN S EL FOR THE A SSESSEE, AT THE VERY OUTSET SUBMITTED THAT THE PENALTY ORDER WAS TIME BARRED. THOUGH THE ASSESSEE FAILED TO TAKE THIS PLEA BEFORE THE CIT(A), BUT BEING A LEGAL PLEA, IT CAN BE RAISED AT ANY STAGE. IN ORDER TO BUTTRESS HIS ARGUMENT THAT THE PENALTY ORDER IS TIME BARRED, THE LD.COUSNEL FOR THE ASSESSEE HAS PLACED ON RECORD, THE DETAILS IN TABULAR FORM. IT READS AS UNDER: PARTICULARS DATE ORIGINAL RETURN FILED ON 30.11.1995 FIRST REVISED RETURN FILED BY THE ASSESSEE ON 24.01.1996 SURVEY U/S.133A CARRIED OUT ON 3.01.1997 SECOND REVISED R E TURN WAS FILED ON 29.01.1997 ASSESSMENT ORDER U/S.143(3) WAS PASSED ON 31.3.1997 CIT(A) ORDER WAS PASSED ON 15.07.1997 ORDER GIVING EFFECT TO CIT(A) ORDER PASSED BY THE AO ON 29.09.1999 PENALTY ORDER U/S.27 1(1)(C) WAS REQUIRED TO BE PASSED BY SECTION 275(1)(A) 31.03.2000 PENALTY U/S.271(1)(C) WAS PASSED ON 30.07.2002 6 . THE LD.COUN S EL FOR THE ASSESSEE TOOK US THROUGH SECTION 275 OF THE INCOME TAX ACT, WHICH PROVIDES THE PERIOD OF LIMITATION FOR PASSING A PENALTY UNDER ORDER SECTION 271(1)(C) OF THE ACT. ACCORDING THE LD.COUNS E L FOR THE ASSESSEE, SUB - SECTION (1) OF SECTION 275 OF THE ACT CONTEMPLATES THAT THE ORDER OF THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT CAN BE PASSED IN A SITUATION WHE RE THE RELEVANT ASSESSMENT ORDER OR OTHER ORDER IS THE SUBJECT MATTER OF APPEAL TO THE CIT(A) OR ITAT, WITHIN A PERIOD BEFORE EXPIRY OF THE FINANCIAL YEAR IN WHICH THE PROCEEDINGS, IN THE COURSE OF WHICH ACTION FOR THE IMPOS I TION OF PENALTY HAS BEEN INITIATED, ARE COMPLETED, OR SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE ORDER OF THE CIT(A) OR THE TRIBUNAL IS RECEIVED BY THE CHIEF COMMISSIONER OF THE COMMISSIONER WHICHEVER PERIOD IS LATER. HE POINTED OUT THAT PROCEEDING S IN THIS CASE WERE FINALIZED ON 15.7.1997 WHEN THE CIT(A) HAS PASSED THE ORDER. THIS ORDER WAS NOT CHALLENGE D IN FURTHER APPEAL . THE AO HAS GIVEN EFFECT TO THE ORDER OF THE CIT(A) ON 29.9.1999. THE PENALTY PROCEEDINGS WERE IN I TIATED ON ITA NO . 2787 /AHD/2011 4 31.3.1997. THE PENALTY ORDER HAS BEEN PASSED ON 30.7.2002. ACCOR DING TO THE LD.COUN S EL FOR THE ASSESSEE, THE PENALTY ORDER OUGHT TO HAVE BEEN PASSED BEFORE THE END OF THE FINANCIAL YEAR 31.3.2000 I.E. DATE OF 29.9.1999 FALLS IN THIS FINANCI A L YEAR OR THIS ORDER SHOULD H AVE BEEN PASSED WITHIN SIX MONTHS FROM THE RECEIPT OF THE ORDER OF THE CIT(A) BY THE COMMISSIONER OR THE CHIEF COMMISSIONER . THIS ORDER, ACCORDING TO THE LD.COUN S EL FOR THE ASSESSEE, MUST HAVE BEEN RECEIVED BEFORE 29.9.1999, BECAUSE ON THIS DATE, EFFECT H AS BEEN GIVEN TO THE ORDER OF THE CIT(A) BY THE AO. IN ORDER TO BUTTRESS THE AUTHENTICITY OF THESE DATES, HE MADE REFERENCE TO THE PENALTY ORDER , WHERE THE AO HAS RECORDED THESE DATES. 7 . ON THE OTHER HAND, THE LD.DR CONTENDED THAT AT THIS STAGE HE IS NOT IN A POSITION TO MAKE CATEGORICAL STATEMENT ABOUT THESE DATES. THE ORDER OF THE CIT(A) MIGHT HAVE BEEN RECEIVED IN THE OFFICE OF THE CHIEF COMMISSIONER OR THE COMMISSIONER SUBSEQUENT TO THESE DATES. THEREFORE, SUBJECT TO THE VERIFICATION OF THE DATES , THE APPEAL OUGHT TO BE DISPOSED OF. 8 . WE HAVE DULY CONSIDER E D RIVAL CONTENTIONS AND GONE THROUGH THE RECORD CAREFULLY. ON PE RUSAL OF SECTION 275 OF THE INCOME TAX ACT, IT REVE A LS THAT THE PENALTY ORDER UNDER SECTION 271(1)(C) OF THE ACT OUGHT TO B E PASSED BEFORE THE EXPIRY OF THE FINANCIAL YEAR IN WHICH THE PROCEEDINGS , IN THE COURSE OF WHICH , ACTION FOR IMPOSITION OF PENALTY HAS BEEN INITIATED ARE COMPL E TED, OR SIX MONTHS FROM THE END OF THE MONTH IN WHICH OR D ER OF THE CIT(A) OR THE TRIBUNAL IS RE CEIVED BY THE CHIEF COMMISSIONER OR THE CIT. IN OTHER WORDS, IN THE PR ESENT CASE, THE PROCEEDINGS GIVEN RISE TO THE PENALTY WERE COMPLETED ON 15.7.1997 WHEN THE CIT(A) HAS PASSED THE ORDER. THIS ORDER HAS BEEN GIVEN EFFECT ON 29.9.1999. MEANING THEREBY, THE ORDER MUST HAVE BEEN RECEIVED BY THE AUTHORITIES. THE TIME LIMIT TO PASS THE PENALTY ORDER IN THIS CASE WAS BEFORE 31.3.2000, BECAUSE THE DATE OF 29.9.1999 FALLS WITHIN THE ITA NO . 2787 /AHD/2011 5 FINANCIAL YEAR STARTED FROM 1.4.1999 AND ENDS ON 31.3.2000. OTHER TIME LIMIT COULD BE SIX MONTHS FROM THE DATE OF RECEIPT OF THE ORDER, THAT HAS ALSO EXPIRED. EVEN FOR ABUNDANT PRECAUTI ON, WE OBSERVE THAT IN CASE ON RE - VERIFICATION AT THE END OF THE A|O IT EME R GES OUT THAT THE PENALTY IS WITHIN THE LIMITATION AND THERE IS SOME COMMUNICATION GAP BETWEEN MENTIONING OF THESE DATES, THEN, THE REVENUE WILL BE AT LI B ERTY TO APPROACH THE TRIBUN AL TO RECALL THIS ORDER. SUCH AN APPLICATION SHOULD BE FILED WITHIN THE TIME LIMIT AVAILABLE UNDER THE INCOME TAX ACT. WITH THE ABOVE REMARKS, THE APPEAL OF THE ASSESSEE IS ALLOWED AND PENALTY IS DELETED. 9 . IN RESULT, THE APPEAL OF THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN THE COURT ON 8 T H FEBRUARY , 201 6 AT AHMEDABAD. S D / - S D / - ( ANIL CHATURVEDI ) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 0 8 / 02 /201 6 T R U E C O P Y / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , / DR, ITAT, 6. [ / GUARD FILE . / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD