The DCIT, Bharuch Circle, Bharuch V. M/s. Hindustan M-I Swaco Ltd, Bharuch

ITA 2879/AHD/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68011 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 03-12-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 14-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J P JHANGID
• Keywords: Depreciation; Initiation of penalty proceedings

Judgement Text

, , , , , , , , IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C BENCH, AHMEDABAD , . .. . . .. . , , , , '# ' $ '# ' $ '# ' $ '# ' $ BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI T.R.MEENA, ACCOUNTANT MEMBER ./ I.T.A. NO.2879/AHD/2010 ( & ' (' & ' (' & ' (' & ' (' / / / / ASSESSMENT YEAR : 2005-06) DY.CIT BHARUCH CIRCLE BHARUCH & & & & / VS. M/S.HINDUSTHAN M-I SWACO LTD. ( FORMERLY KNOWN AS HINDUSTHAN MAGCOBAR CHEMICALS LTD. ) GIDC, PANOLI, DIST.BHARUCH ) '# ./*+ ./ PAN/GIR NO. : AAACH 5320 B ( ), / // / APPELLANT ) .. ( -.), / RESPONDENT ) ), / ' / APPELLANT BY : SHRI J.P.JHANGID, SR.DR -.), 0 / ' / RESPONDENT BY : SHRI HEMANT SUTHAR &1 0 # / / / / DATE OF HEARING : 03/12/2013 23( 0 # / DATE OF PRONOUNCEMENT : 05/12/2013 '4 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-VI, BARODA( CIT(A) FOR SHORT) DATED 21/07/2010 PERTAINING TO ASSESSMENT YEAR (AY) 2005-06. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1(I). ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN DELETING THE PENALTY OF RS.23,95 ,150/- LEVIED U/S.271(1)(C) OF THE ACT. 1(II). THE CIT(A) ERRED IN NOT APPRECIATING THE FAC T THAT THE ASSESSEE CLAIMED BAD DEBT OF RS.65,00,000/- WHICH WAS INDEED AN INTER-CORPORATE DEPOSIT OF RS.65,00,000/- TO VHEL INDUSTRIES LTD., WHICH THE ASSESSEE FOUND AS IRRECOVERABLE AND CLAIMED IT AS BAD DEBT, ALTHOU GH IT WAS IN THE NATURE OF CAPITAL LOSS. THEREFORE, THE CLAIM OF RS.65,00,000 /- AS BAD DEBT IS ITSELF WRONG AND THE PENALTY U/S.271(1)(C) WAS RIGHTLY LEVIED BY THE ASSESSING OFFICER FOR FURNISHING INACCURATE PARTICULARS OF ITS INCOME BY THE ASSESSEE. FURTHER, AS ITA NO.2879/AHD /2010 DY.CIT VS. M/S.HINDUSTHAN M-I SWACO LTD. ASST.YEAR 2005-06 - 2 - PER THE PROVISIONS OF SECTION 36(2) OF THE ACT, ONL Y THE PRINCIPAL AMOUNTS REPRESENTING MONEY LENT IN THE ORDINARY COURSE OF B ANKING OR MONEY LENDING IS ALLOWED TO BE DEDUCTED. AS THE ASSESSEE IS NOT COVERED UNDER THIS PROVISION, THE ASSESSEE CANNOT CLAIM THE PRINCIPAL AMOUNT AS B AD DEBT. MOREOVER, THERE ARE ENOUGH JUDGEMENTS IN FAVOUR OF REVENUE HOLDING THAT MENTIONING OF INITIATION OF PENALTY PROCEEDINGS AT THE END OF THE ASSESSMENT ORDER IS SUFFICIENT FOR INVOKING THE PENAL ACTION M. SAJJA NRAJ NAHAR & ORS. VS. CIT (MAD) 283 ITR 230, NAINU MAL HET CHAND VS. CIT (ALL ) 294 ITR 185. 2. THE APPELLANT CRAVES TO ADD TO, AMEND OR ALTER T HE ABOVE GROUNDS AS MAY BE DEEMED NECESSARY. 2. BRIEFLY STATED FACTS ARE THAT IN THIS CASE PENAL TY ORDER U/S.271(1)(C) WAS FRAMED, THEREBY THE AO LEVIED PENALTY OF RS.23,95,1 50/- ON THE AMOUNT OF RS.65,45,460/-. 2.1. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN QUANTUM PROCEEDINGS THIS ADDITION HAS BEEN DELETED BY THE HONBLE ITAT A BENCH, AHMEDABAD IN ITA NO.3774/AHD/2008 IN ASSESSEES OWN CASE FOR AY 2005-06 VIDE ORDER DATED 05/08/2011. 3. ON THE CONTRARY, LD.SR.DR SUPPORTED THE ORDER OF THE AO. HOWEVER, HE DID NOT DISPUTE THE FACT THAT THE HONBLE COORDINAT E BENCH IN ITA NO.3774/AHD/2008 IN ASSESSEES OWN CASE HAS HELD TH AT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION AS BAD DEBT FOR THE AMOUNT OF RS.65 L ACS WRITTEN OFF BY THE ASSESSEE IN THE PRESENT YEAR WHICH HAS BEEN ADVANCE D BY THE ASSESSEE AS ICD IN THE FINANCIAL YEAR 1995-96. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. WE FIND THAT THE APPEAL IS ARISING OUT OF THE ISSUE OF DELETION OF P ENALTY LEVIED ON BAD DEBT OF RS.65 LACS AND DEPRECIATION OF RS.45,460/-. THE LD .CIT(A) DELETED THE PENALTY ITA NO.2879/AHD /2010 DY.CIT VS. M/S.HINDUSTHAN M-I SWACO LTD. ASST.YEAR 2005-06 - 3 - LEVIED ON DISALLOWANCE OF RS.65 LACS AS BAD DEBT. SINCE IN THE QUANTUM APPEAL THE CLAIM OF THE ASSESSEE IS ALLOWED QUA THE BAD DE BT, THEREFORE IN OUR CONSIDERED VIEW, PENALTY ON THIS AMOUNT ALSO DOES N OT SURVIVE. HENCE, WE DO NOT FIND ANY MERIT IN THIS GROUND OF REVENUES APPE AL, THE SAME IS HEREBY REJECTED. 5. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED . ORDER PRONOUNCED IN COURT ON THE DATE MENTIONED HER EINABOVE AT CAPTION PAGE SD/- SD /- ( .. ) ( ) '# ( T.R. MEENA ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 05/12/2013 ..&, .&../ T.C. NAIR, SR. PS '4 0 -7 8'7( '4 0 -7 8'7( '4 0 -7 8'7( '4 0 -7 8'7(/ COPY OF THE ORDER FORWARDED TO : 1. ), / THE APPELLANT 2. -.), / THE RESPONDENT. 3. 9 / CONCERNED CIT 4. 9() / THE CIT(A)- 5. 7: -& , , / DR, ITAT, AHMEDABAD 6. :;' <1 / GUARD FILE. '4& '4& '4& '4& / BY ORDER, .7 - //TRUE COPY// = == =/ // / * * * * ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 3.12.13 (DICTATION-PAD 4-PAGE S ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 3.12.13 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S .. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH FAIR ORDER PLACED BEFORE OTHER MEMBER 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.5.12.13 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 5.12.13 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER