DCIT, New Delhi V. M/s Metro Tyres Pvt. Ltd., Delhi

ITA 2873/DEL/2016

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 0527 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 20-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: JAGDISH SINGH
• Keywords: Depreciation; Question of law; Set aside
• Section: 271(1)(c); 143(3); 14A; 143(1); 274; 143(2); 73

Judgement Text

1 ITA NO. 2873/DEL/2016 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: C NEW DELHI BEFORE MS SUCHITRA KAMBLE, JUDICIAL MEM BER, AND SHRI B. R. R. KUMAR, ACCOUNTA NT MEMBER ITA NO. 2873/DEL/2016 ( A.Y 2008-09) DCIT CENTRAL CIRCLE-5, ROOM NO. 361, 3 RD FLOOR, ARA CENTRE, JHANDEWALAN EXTN, NEW DELHI (APPELLANT) VS METRO TYRES PVT. LTD. 101, JYOTI BHAWAN, DR. KUMHARJI NAGAR, COMMERCIAL COMPLEX DELHI AAACM3394A (RESPONDENT) APPELLANT BY SH. SALIL KAPOOR, ADV RESPONDENT BY SH. JAGDISH SINGH, SR. DR ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER DATED 28/03/2016 PASSED BY CIT(A)-24, NEW DELHI FOR ASSESSMENT YEAR 2008-09. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. THE ORDER OF LD.CIT(A) IS NOT CORRECT IN LAW AN D ON FACTS. 2. THAT THE LD.CIT(A) HAS CANCELLED THE PENALTY U/S 271(1)(C) WITHOUT PROPERLY APPRECIATING THE FACT THAT THE QUANTUM OF ADDITIONS WERE CONFIRMED WHICH TANTAMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE. 3. THE RETURN OF INCOME IN THIS CASE WAS FILED ON 3 0/09/2008 DECLARING TOTAL INCOME OF RS. 7,28,42,461/-. THE RETURN WAS PROCESSED U/S 143(1) OF THE DATE OF HEARING 15.06.2020 DATE OF PRONOUNCEMENT 17.06.2020 2 ITA NO. 2873/DEL/2016 ACT. THE CASE WAS SELECTED FOR SCRUTINY AND STATUT ORY NOTICE U/S 143(2) DATED 3/8/2009 WAS ISSUED AND DULY SERVED UPON THE ASSESS EE. THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE INCOME TAX ACT, 1961 ON 10/05/2010 AT AN INCOME OF RS. 9,23,84,310/- AND ADDITIONS WERE MADE AS UNDER:- (I) DISALLOWANCE U/S 14A RS. 71,97,560/- (II) DISALLOWANCE ON DEPRECIATION ON NON COMPETE F EES OF RS. 1,23,4,688/- (III) DISALLOWANCE OF REPAIR AND MAINTENANCE EXPENS ES OF RS. 39,600/-. THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) AN D THE CIT(A) VIDE ORDER DATED 29/1/2013 DISMISSED THE APPEAL OF THE ASSESSE E. IN THE MEANWHILE, THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) BY ISSUING NOTICE DATED 10/5/2010 FOR HEARING ON 16/6/2010. FURTHER, NOTICE DATED 6/3/2014 WAS ALSO ISSUED. THE ASSESSEE DID NOT FILE REPLY A ND THEREFORE, THE ASSESSING OFFICER IMPOSED PENALTY OF RS.66,42,274/- THEREBY HOLDING THAT THE ASSESSEE EVADED TAX ON INCOME OF RS. 1,95,41,848/-. 4. BEING AGGRIEVED BY THE PENALTY ORDER, THE ASSESS EE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) PARTLY ALLOWED THE APPEAL OF TH E ASSESSEE. 5. THE LD. DR SUBMITTED THAT THE CIT(A) WAS NOT CO RRECT IN CANCELLING THE PENALTY U/S 271(1)(C) AS THE QUANTUM OF ADDITIONS W ERE CONFIRMED WHICH TANTAMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE. THEREFORE, THE ORDER OF THE CIT(A) BE SET ASIDE AND THE PENALTY ORDER BE SUSTAINED. THE LD. DR RELIED UPON THE DECISION OF T HE HONBLE DELHI HIGH COURT IN CASE OF NEW HOLLAND TRACTORS INDIA PVT. LTD. VS. CIT 49 TAXMAN.COM 573. 6. THE LD. AR SUBMITTED THAT THE ASSESSEE HAS FILE D APPLICATION UNDER RULE 27 OF THE INCOME TAX RULES, 1962, THEREBY STATING T HAT THE NOTICE ISSUED TO THE ASSESSEE U/S 274 IS BAD IN LAW AS THE AUTHORITIES H AS NOT GIVEN THE SPECIFIC CHARGES EITHER IN THE NOTICE DATED 10/05/2010 AS WE LL AS IN THE ASSESSMENT ORDER. THEREFORE, THE APPEAL OF THE REVENUE BE DIS MISSED AND THE ORDER OF THE 3 ITA NO. 2873/DEL/2016 CIT(A) BE SUSTAINED. THE LD. AR RELIED UPON THE DE CISION OF THE HONBLE KARNATAKA HIGH COURT IN CASE OF CIT(A) VS. M/S MANJ UNATHA AND GINNI FACTORY AND ORS 359 ITR 565. THE ABOVE PRINCIPAL WAS FURTH ER AFFIRMED BY THE APEX COURT IN CASE OF CIT(A) VS. M/S SSA EMERALD MEADOW S. THE LD. AR ALSO RELIED UPON THE DECISION OF THE HONBLE DELHI HIGH COURT I N CASE OF PRI. CIT VS. SAHARA INDIA LIFE INSURANCE COMPANIES LIMITED 2019 (8) EMI 409. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. IT IS PERTINENT TO NOTE THAT THERE IS NO C ONCEALMENT IN THE PRESENT CASE. THE ASSESSEE FILED ALL THE DETAILS DURING THE REGUL AR ASSESSMENT PROCEEDINGS. FROM THE NOTICE DATED 10.05.2010 PRODUCED BY THE LD . AR DURING THE HEARING, IT CAN BE SEEN THAT THE ASSESSING OFFICER WAS NOT S URE UNDER WHICH PROVISIONS OF SECTION 271 OF THE INCOME TAX ACT, 1961, THE ASS ESSEE IS LIABLE FOR PENALTY. THE ISSUE IS SQUARELY COVERED BY THE DECISION OF TH E HON'BLE SUPREME COURT IN CASE OF M/S SSA EMERALD MEADOWS. THE EXTRACT OF TH E HONBLE KARNATAKA HIGH COURT IN M/S. SSA EMERALD MEADOWS ARE AS UNDER WHI CH WAS CONFIRMED BY THE HONBLE APEX COURT: 3. THE TRIBUNAL HAS ALLOWED THE APPEAL FILED BY TH E ASSESSEE HOLDING THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SE CTION 274 READ WITH SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT) TO BE BAD IN LAW AS IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(1)(C) OF THE ACT, THE PENALTY PROCEEDINGS HAD BEEN INITIATED I.E., WHETHE R FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME. THE TRIBUNAL, WHILE ALLOWING THE APPEAL OF THE ASSESSEE , HAS RELIED ON THE DECISION OF THE DIVISION BENCH OF THIS COURT RENDER ED IN THE CASE OF COMMISSIONER OF INCOME TAX -VS- MANJUNATHA COTTON A ND GINNING FACTORY (2013) 359 ITR 565. 4. IN OUR VIEW, SINCE THE MATTER IS COVERED BY JUDG MENT OF THE DIVISION BENCH OF THIS COURT, WE ARE OF THE OPINION, NO SUBS TANTIAL QUESTION OF LAW 4 ITA NO. 2873/DEL/2016 ARISES IN THIS APPEAL FOR DETERMINATION BY THIS COU RT. THE APPEAL IS ACCORDINGLY DISMISSED. SINCE IN THE INSTANT CASE ALSO THE INAPPROPRIATE WO RDS IN THE PENALTY NOTICE HAS NOT BEEN STRUCK OFF AND THE NOTICE DOES NOT SPECIFY AS TO UNDER WHICH LIMB OF THE PROVISIONS, THE PENALTY U/S 271(1)(C) HAS BEEN INITIATED, THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT THE PENALTY LEVIED U/S 271(1)(C) IS NOT SUSTAINABLE AND HAS TO BE DELETED. ALTHOUGH THE LD. DR SUBMITT ED THAT MERE NON-STRIKING OFF OF THE INAPPROPRIATE WORDS WILL NOT INVALIDATE THE PENALTY PROCEEDINGS, HOWEVER, THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF SSAS EMERALD MEADOWS (SUPRA) WHERE THE SLP FILED BY THE REVENUE HAS BEEN DISMISSED IS DIRECTLY ON THE ISSUE CONTESTED HEREIN BY THE ASSESSEE. FURTHER, WHEN THE NOTICE IS NOT MENTIONING THE CONCEALMENT O R THE FURNISHING OF INACCURATE PARTICULARS, THE RATIO LAID DOWN BY THE HONBLE HIGH COURT IN CASE OF M/S. SAHARA INDIA LIFE INSURANCE COMPANY LTD. (SUPR A) WILL BE APPLICABLE IN THE PRESENT CASE. THE HONBLE DELHI HIGH COURT HELD AS UNDER: 21. THE RESPONDENT HAD CHALLENGED THE UPHOLDING OF THE PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT, WHICH W AS ACCEPTED BY THE ITAT. IT FOLLOWED THE DECISION OF THE KARNATAKA HIGH COURT I N CIT V. MANJUNATHA COTTON & GINNING FACTORY 359 ITR 565 (KAR) AND OBSE RVED THAT THE NOTICE ISSUED BY THE AO WOULD BE BAD IN LAW IF IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(1)(C) THE PENALTY PROCEEDINGS HAD BEEN INITIATED UNDER I.E. WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE KARNATAKA HIG H COURT HAD FOLLOWED THE ABOVE JUDGMENT IN THE SUBSEQUENT ORDER IN COMMISSIO NER OF INCOME TAX V. SSAS EMERALD MEADOWS (2016) 73 TAXMAN.COM 241(KAR) , THE APPEAL AGAINST WHICH WAS DISMISSED BY THE SUPREME COURT OF INDIA I N SLP NO. 11485 OF 2016 BY ORDER DATED 5 TH AUGUST, 2016. 22. ON THIS ISSUE AGAIN THIS COURT IS UNABLE TO FIN D ANY ERROR HAVING BEEN COMMITTED BY THE ITAT. NO SUBSTANTIAL QUESTION OF LAW ARISES. 5 ITA NO. 2873/DEL/2016 FURTHER, THE CASE LAW REFERRED BY THE LD. DR THAT O F NEW HOLLAND TRACTOR INDIA (SUPRA) WILL NOT BE APPLICABLE IN THE PRESENT CASE AS IN THAT CASE THE PARTICULAR CHARGE OF SECTION 271 (1)(C) THAT OF CON CEALMENT OF INCOME WAS MENTIONED, BUT IN PRESENT CASE THAT IS NOT THE CASE . THUS, NOTICE UNDER SECTION 271(1)(C) R.W.S. 274 OF THE ACT ITSELF IS BAD IN LA W. THE CIT(A) RELYING UPON THE DECISION OF THE HONBLE APEX COURT IN CASE OF CIT V S. RELIANCE PETRO PRODUCTS PVT. LD. 322 ITR 328 (SC) HELD THAT IT IS NOT THE A SSESSING OFFICERS CASE THAT THE DETAILS SUPPLIED IN THE RETURN ARE INACCURATE. MERELY BECAUSE THE ASSESSEE CLAIMED THE EXPENDITURE BY VIRTUE OF A CHANGE OF HE AD OF INCOME AND THE CLAIM WAS NOT ACCEPTABLE TO THE ASSESSING OFFICER CANNOT PER SE ATTRACT PENALTY U/S 271(1)(C) OF THE ACT. THUS, THE CIT(A) HAS RIGHTLY DELETED THE PENALTY. THE APPEAL OF THE REVENUE IS DISMISSED. 8. IN RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH JUNE, 2020 SD/- SD/- (B. R. R. KUMAR) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 17/06/2020 R. NAHEED COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 6 ITA NO. 2873/DEL/2016 DATE OF DICTATION 16.06.2020 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 16.06.2020 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDE R IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 18 .06.2020 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 18 .06.2020 DATE ON WHICH THE FILE GOES TO T HE BENCH CLERK 18 .06.2020 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER