M/s Kanyaka Parameswari Cold Storage Pvt Ltd., Guntur, Visakhapatnam V. The ITO, Ward-1 (1), Guntur

ITA 289/VIZ/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 50275 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 19-04-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 14-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D S SUNDER SINGH
• Keywords: Depreciation
• Section: 80IB; 27

Judgement Text

ITA NO 289 OF 2010 KANYAKA PARAMESWARI COLD STORAGE P LTD GUNTUR PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO.289/VIZAG/2010 ASSESSMENT YEAR:2005-06 M/S. KANYAKA PARAMESWARI COLD STORAGE (P) LTD., GUNTUR VS. ITO WARD-1(1) GUNTUR (APPELLANT) PAN NO: AACCK 4473A (RESPONDENT) APPELLANT BY: SHRI G.V.N. HARI, CA RESPONDENT BY: SHRI D.S. SUNDER SINGH, SR.DR ORDER PER SHRI B. R. BASKARAN, ACCOUNTANT MEMBER: THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 26.02.2010 PASSED BY LEARNED CIT (A), GUNTUR AND IT RELATES TO THE ASSESSMENT YEAR 2005-06. 2. THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF TH E ACT, HAVING BEEN PARTIALLY CONFIRMED BY THE LEARNED CIT (A), THE ASS ESSEE IS IN APPEAL BEFORE US. 3. THE FACTS RELATING TO THE ISSUE ARE STATED IN BR IEF. THE ASSESSEE COMPANY IS OPERATING A COLD STORAGE. IT FILED ITS R ETURN OF INCOME RETURNING NIL INCOME AFTER CLAIMING DEDUCTION UNDER SECTION 80 IB OF THE ACT. IN THE SCRUTINY PROCEEDINGS, THE ASSESSING OFFICER PARTIAL LY DISALLOWED THE CLAIM OF DEDUCTION UNDER SECTION 80IB. THE DEPRECIATION CLAI M MADE BY THE ASSESSEE WAS ALSO DISALLOWED PARTIALLY. THE ASSESSE E HAD CLAIMED DEDUCTION IN RESPECT OF EXPENDITURE RELATING TO MISSING CHILL I BAGS. THE ASSESSING ITA NO 289 OF 2010 KANYAKA PARAMESWARI COLD STORAGE P LTD GUNTUR PAGE 2 OF 4 OFFICER WAS NOT SATISFIED WITH THE SAID CLAIM AND H ENCE DISALLOWED THE SAME. IN RESPECT OF ALL THESE THREE ADDITIONS, THE ASSESSI NG OFFICER INITIATED PENALTY PROCEEDINGS AND LEVIED A MINIMUM PENALTY OF RS.4,04 ,142/-. IN THE APPEAL PREFERRED BY THE ASSESSEE, THE LEARNED CIT (A) DELE TED PENALTY PERTAINING TO THE EXCESS CLAIM OF DEDUCTION UNDER SECTION 80IB OF THE ACT. HOWEVER, THE FIRST APPELLATE AUTHORITY CONFIRMED THE PENALTY IN RESPECT OF OTHER TWO ADDITIONS. STILL AGGRIEVED, THE ASSESSEE IS IN APP EAL BEFORE US. 4. THE LEARNED AUTHORISED REPRESENTATIVE, BY PL ACING RELIANCE ON THE ORDER DATED 25-01-2011 PASSED BY THIS BENCH IN THE CASE OF M/S DOLPHIN MILK PRODUCTS PVT. LTD, SUBMITTED THAT THE DISALLOW ANCE OF EXPENDITURE CLAIMS MADE BY THE ASSESSEE WOULD NOT GIVE RISE TO PENALTY UNDER SECTION 271(1)(C) OF THE ACT. ON THE OTHER HAND, THE LEARN ED DEPARTMENTAL REPRESENTATIVE STOOD BY THE ORDER PASSED BY THE LEA RNED CIT(A). 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULL Y PERUSED THE RECORD. AS STATED EARLIER, THE PENALTY HAS BEEN CO NFIRMED IN RESPECT OF EXCESS CLAIM OF DEPRECIATION AND ALSO IN RESPECT OF DISALLOWANCE OF EXPENDITURE CLAIMED UNDER THE HEAD MISSING CHILLE BAGS. ACCORDING TO THE ASSESSEE, THERE WAS A MISTAKE IN THE DEPRECIATI ON WORKINGS MADE BY THE ASSESSEE. THE ASSESSING OFFICER HAS CORRECTED THE S AID MISTAKE DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THE SAME HAS R ESULTED IN WITHDRAWAL OF EXCESS OF CLAIM OF DEPRECIATION. IN RESPECT OF O THER DISALLOWANCE, IT WAS SUBMITTED THAT THE ASSESSEE, BEING CUSTODIAN OF THE STOCKS KEPT IN THE COLD STORAGE, HAS TO COMPENSATE ITS CUSTOMERS FOR THE DA MAGE OCCURRED TO THE STOCK. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER DISALLOWED THE SAID EXPENDITURE AS HE WAS NOT SATIS FIED WITH THE EXPLANATIONS FURNISHED IN RESPECT OF SAID CLAIM. ITA NO 289 OF 2010 KANYAKA PARAMESWARI COLD STORAGE P LTD GUNTUR PAGE 3 OF 4 6. NOW THE QUESTION THAT ARISES IS WHETHER THE DISALLOWANCE OF CLAIMS MADE BY THE ASSESSEE WOULD BE EXIGIBLE FOR PENALTY UNDER SECTION 271(1)(C) OF THE ACT. IT IS A WELL SETTLED PROPOSITION THAT THE ADDITIONS MADE IN THE ASSESSMENT PROCEEDINGS WOULD NOT AUTOMATICALLY GIVE RISE TO PENALTY. DURING PENALTY PROCEEDINGS, THE EXPLANATIONS OF THE ASSESSEE HAVE TO BE EXAMINED INDEPENDENTLY WITHOUT BEING INFLUENCED BY THE DECISION TAKEN DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE F INDINGS RECORDED IN THE ASSESSMENT ORDER CONSTITUTE GOOD EVIDENCE IN PENALT Y PROCEEDINGS BUT THOSE FINDINGS CANNOT BE REGARDED AS CONCLUSIVE WHI LE DEALING WITH THE ADDITIONS IN THE PENALTY PROCEEDINGS. IF THE EXPLAN ATIONS APPEAR TO BE PLAUSIBLE, THEN, IN OUR VIEW, THERE IS NO NECESSITY OF LEVYING PENALTY. 7. IN THE INSTANT CASE, THE CLAIM MADE UNDER THE HEAD MISSING CHILLIE BAGS WAS DISALLOWED, SINCE THE ASSESSING OFFICER W AS NOT SATISFIED WITH THE EXPLANATIONS FURNISHED BY THE ASSESSEE. OTHERWISE T HE ASSESSEE HAS FURNISHED FULL DETAILS IN RESPECT OF THAT CLAIM. S IMILARLY, THE SITUATION FOR DISALLOWANCE OF DEPRECIATION HAS OCCURRED DUE TO CE RTAIN MISTAKES COMMITTED BY THE ASSESSEE WHILE WORKING OUT THE DEP RECIATION. THUS, IT IS SEEN THAT, IN BOTH THE CASES, THERE IS NO CONCEALME NT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME. THE HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCT S (P) LTD (2010)(322 ITR 158) HAS HELD THAT THE PENALTY UNDER SECTION 27 1(1)(C) IS NOT LEVIABLE IN RESPECT OF DISALLOWANCES OF CLAIMS MADE BY THE ASSE SSEE. THUS, BY FOLLOWING THE DECISION OF HON'BLE APEX COURT CITED ABOVE, WE HOLD THAT THE PENALTY CANNOT BE LEVIED IN RESPECT OF THE TWO ADDI TIONS CITED ABOVE. ACCORDINGLY, WE SET ASIDE THE ORDER OF LEARNED CIT( A) AND DIRECT THE ITA NO 289 OF 2010 KANYAKA PARAMESWARI COLD STORAGE P LTD GUNTUR PAGE 4 OF 4 ASSESSING OFFICER TO DELETE THE PENALTY UNDER SECTI ON 271(1)(C) LEVIED IN RESPECT OF TWO ADDITIONS CITED ABOVE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLO WED. PRONOUNCED IN THE OPEN COURT ON 16 TH JUNE, 2011. SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM, DATE:16-06-2011 COPY TO 1 M/S. KANYAKA PARAMESWARI COLD STORAGE (P) LTD., C /O SHRI G.V.N. HARI, CHARTERED ACCOUNTANT,30-14-11 2 ND FLOOR, DABBERU MANSIONS, DABA GARDENS, VISAKHAPATNAM 530 020 2 THE ITO WARD-1(1) GUNTUR 3 4. THE CIT GUNTUR THE CIT(A), GUNTUR 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM