Jhaveri Infotech Pvt.Ltd., Baroda V. The Income tax Officer,Ward-1(4), Baroda

ITA 2833/AHD/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60229 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-04-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 22-03-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 16-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L YADAV SRDR
• Assessee Lawyers: NIKITA BRAHMBHATT
• Keywords: Depreciation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE SHRI, A.K.GARODIA, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ITA NO.2833/AHD/2011 ASSESSMENT YEAR :2004-05 M/S. JHAVERI INFOTECH PVT. LTD. C/O SHRI ASHISH TANDON, 304, RADHE APATMENT, PASHABHAI PARK, VADODHARA 390 001 PAN NO.AAACJ5887B V/S . INCOME TAX OFFICER, WARD-(1)(4), AAYAKAR BHAVAN, RACE COURSE, VADODARA, (APPELLANT) .. (RESPONDENT) /BY APPELLANT MISS. NIKITA BRAHMBHATT, AR /BY RESPONDENT SHRI B.L. YADAV, SR-DR /DATE OF HEARING 22-03-2012 /DATE OF PRONOUNCEMENT 13-04-2012 O R D E R PER KUL BHARAT, JUDICIAL MEMBER:- THE PRESENT APPEAL IS FIELD BY THE ASSESSEE AGAINS T THE ORDER OF THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-IV, BARODA DAT ED 02-09-2011 FOR ASSESSMENT YEAR 2004-05, WHEREBY THE PENALTY ORDER AS PASSED BY THE ASSESSING OFFICER HAS BEEN CONFIRMED. THE ASSESSEE FEELING AGGRIEVED BY THE SAME HAS PREFERRED THE PRESENT APPEAL ON THE FOLLOW ING GROUNDS OF APPEAL BEFORE THIS TRIBUNAL:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN FACT AND IN LAW IN CONFIRMING THE ACTION OF THE ASSESSIN G OFFICER AND LEVYING PENALTY OF RS.55,000/-. 2. YOUR APPELLANT CRAVES A RIGHT TO ADD TO OR AMEND , ALTER, SUBSTITUTE, DELETE OR WITHDRAW ALL OR ANY OF THE GROUNDS OF APP EAL. ITA NO.2833/AHD/2011 A.Y. 2004-05 M/S JHAVERI INFOTECH PVT. LTD. V. ITO WD(1)(4) BRD PAGE 2 2. THE FACTS IN BRIEF ARE THAT THE CASE WAS SELECTE D FOR SCRUTINY AND ASSESSMENT PROCEEDING WAS COMPLETED U/S 143(3) OF T HE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE OR DER DATED 18-12-2006, WHEREBY THE ASSESSING OFFICER DID NOT ALLOW THE EXP ENDITURE OF RS.1,51,248/- AS CLAIMED BY THE ASSESSEE ON THE GROUND THAT THE A SSESSEE HAS NOT CARRIED OUT ANY BUSINESS ACTIVITY DURING THE RELEVANT YEAR. THEREAFTER, THE AO INITIATED PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT SEPA RATELY AND AN ORDER LEVYING PENALTY OF RS.54,260/- WAS PASSED ON 26-06-2007. THE ASSESSEE FEELING AGGRIEVED BY THE ORDER OF ASSESSING OFFICER DATED 2 6.06.2007 CARRIED THE MATTER BEFORE THE LD. CIT(A) WHO ALSO CONFIRMED THE LEVY OF PENALTY. 3. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSE E BEFORE US SUBMITTED THAT THE ASSESSEE HAS BEEN CARRYING OUT BUSINESS BU T IN THE YEAR UNDER CONSIDERATION NO BUSINESS ACTIVITY WAS CARRIED OUT, HOWEVER, THE EXPENSES CLAIMED ARE ON ACCOUNT OF THE ADMINISTRATIVE EXPENS ES I.E. AUDIT FEE, CONSULTANCY FEE, DIRECTORS REMUNERATION, RENT RATE S AND TAXES, BANK CHARGES AND DEPRECIATION ETC. LD. A.R. CONTENDED SUCH EXPEN SES ARE ALLOWABLE EVEN IN THE EVENT OF NO BUSINESS ACTIVITY WAS CARRIED OU T DURING THE YEAR UNDER CONSIDERATION. SHE FURTHER ARGUED THAT IT WAS NOT T HE CASE OF CONCEALMENT OF ANY INCOME OR FURNISHING INACCURATE PARTICULARS AND RELIED UPON VARIOUS JUDGMENTS IN SUPPORT OF HER CONTENTION. 4. ON THE CONTRARY, LD SR-DEPARTMENTAL REPRESENTATI VE FOR THE REVENUE SUPPORTED THE ORDERS PASSED BY THE AUTHORITIES BELO W AND ARGUED THAT ORDER PASSED BY LD. CIT(A) IS JUSTIFIED AND VEHEMENTLY AR GUED THAT NO INTERFERENCE IS CALLED FOR IN THE IMPUGNED ORDER AS THE ASSESSEE CAN NOT CLAIM 6. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL ON RECORD AND THE JUDGEMENTS CITED BY THE LEARNED AUTHORISED REPRESENTATIVE. ADMITTEDLY, THE EXPENSES AS CLAIMED BY THE ASSESSEE IS ON ACCOUNT OF MAINTENANCE AND ADMINISTRATION OF THE OFFICE AND IT IS ALSO NOT DISPUTED THAT IN ITA NO.2833/AHD/2011 A.Y. 2004-05 M/S JHAVERI INFOTECH PVT. LTD. V. ITO WD(1)(4) BRD PAGE 3 THE EARLIER YEARS, THE ASSESSEE HAS BEEN CARRYING O UT BUSINESS ACTIVITY. LD. A.R. HAS RELIED UPON THE DECISION RENDERED IN THE M ATTER OF CIT VS NEW SAVAN SUGAR & GUR REFINING CO. LTD. 185 ITR 564(CAL) WHER EIN IT HAS BEEN HELD THAT A LIMITED COMPANY EVEN IF IT DOES NOT CARRY ON BUSI NESS EVEN IF IT DERIVES INCOME ONLY FROM OTHER SOURCES, HAS TO MAINTAIN I TS ESTABLISHMENT SO LONG AS IT IS IN OPERATION AND ITS NAME IS NOT STRUCK OFF T HE REGISTER OR UNTIL COMPANY IS DISSOLVED WHICH MEANS CESSATION OF ALL CORPORATE AC TIVITIES OF THE COMPANY. FURTHER, LEARNED AUTHORISED REPRESENTATIVE HAS ALS O PLACED RELIANCE ON CIT VS RAMPUR TIMBER & TURNERY CO. LTD. 129 ITR 58(ALL ) WHEREIN THE HONBLE HIGH COURT OF ALLAHABAD HAS AFFIRMED THE DECISION O F THE TRIBUNAL THAT THE EXPENSES INCURRED ON ACCOUNT OF KEEPING THE COMPANY ALIVE ARE ALLOWABLE. THE ASSESSEE BEING COMPANY DULY INCORPORATED UNDER THE COMPANIES ACT, THEREFORE, RESPECTFULLY FOLLOWING THE RATIO AS LAID IN THE CIT VS NEW SAVAN SUGAR & GUR REFINING CO. LTD (SUPRA) AND ALSO IN CI T VS RAMPUR TIMBER & TURNERY CO. LTD., WE ARE OF THE CONSIDERED VIEW THA T THIS IS NOT A CASE OF CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME SO AS TO ATTRACT THE PENALTY. WE THEREFORE, HOLD THAT THE IMPUGNED O RDER OF LD. CIT (A) IS NOT JUSTIFIED AND DIRECT THE ASSESSING OFFICER TO DELET E THE PENALTY AS LEVIED VIDE ORDER DATED 26.06.2007. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE. SD/- SD/- (A.K.GARODIA) (KUL BHARAT) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) *DKP/SP ! ! ! ! '! '! '! '! / COPY OF ORDER FORWARDED TO:- ITA NO.2833/AHD/2011 A.Y. 2004-05 M/S JHAVERI INFOTECH PVT. LTD. V. ITO WD(1)(4) BRD PAGE 4 1. / APPELLANT 2. / RESPONDENT 3. '(' ) * / CONCERNED CIT 4. *- / CIT (A) 5. !./ ), ) , 12( / DR, ITAT, AHMEDABAD 6. /45 67 / GUARD FILE. BY ORDER/ , 8/ 1 ': ) , 12( ;