M/s Kalani Industries Pvt. Ltd., V. The DCIT 1(1),

ITA 29/IND/2009

• Counselvise Citation: 2922714 RSA 2009
• Duration Of Justice: 2 year(s) 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 07-12-2010
• Assessment Year: 2000-2001
• Appeal Filed On: 02-02-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K MITRA
• Keywords: Depreciation; Wrong claim; Difference of opinion; Onus to prove
• Section: 143(3); 148

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO.29/IND/2009 A.Y. 2000-01 M/S. KALANI INDUSTRIES PVT. LTD. INDORE PAN AAACK-7074P APPELLANT VS DCIT-1(1), INDORE RESPONDENT APPELLANT BY : SHRI MANJEET SACHDEVA, ADVOCATE RESPONDENT BY : SHRI P.K. MITRA, SR. DR O R D E R PER JOGINDER SINGH, JUDICIAL MEMBER THIS APPEAL IS BY THE ASSESSEES AGAINST THE ORDER O F THE LEARNED CIT(A)-I, INDORE, DATED 31.12.2008 WITH REGARD TO C ONFIRMING THE PENALTY OF RS.29,34,000/- IMPOSED U/S 271(1)(C) OF THE I.T. ACT. 2. DURING HEARING OF THE APPEAL, WE HAVE HEARD SHRI MANJEET SACHDEVA, LD. COUNSEL FOR THE ASSESSEE AND SHRI P.K . MITRA, LEARNED SENIOR DEPARTMENTAL REPRESENTATIVE. THE CRUX OF ARG UMENTS ON BEHALF 2 OF THE ASSESSEE IS THAT THE PENALTY WAS LEVIED BY T HE ASSESSING OFFICER BROADLY ON THE DISALLOWANCE MADE U/S 80IA OF THE AC T IN RESPECT OF PROFIT AND GAINS OF A UNIT FOR POWER GENERATION NAMED KAL ANI WIND-FARM ON ACCOUNT OF ALLEGED EXCESS CLAIM OF DEPRECIATION OF RS. 73,21,324/- AND INTEREST OF RS. 2,02,408/-. IT WAS CONTENDED THAT THE RETURN WAS FILED ALONG WITH THE NECESSARY DOCUMENTS AND REPLY TO THE QUERIES RAISED BY THE ASSESSING OFFICER WERE DULY MADE. OUR ATTENTI ON WAS INVITED TO PAGE 24 OF THE PAPER BOOK. IT WAS SUBMITTED THAT EV ERYTHING WAS DISCLOSED AT THE TIME OF FILING OF RETURN AND NEITH ER ANY INCOME WAS CONCEALED NOR INACCURATE PARTICULARS WERE FURNISHED . IT WAS CLAIMED TO BE MERELY DIFFERENCE OF OPINION BETWEEN THE ASSESSI NG OFFICER AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS). RELIA NCE WAS PLACED UPON THE DECISION OF THE TRIBUNAL IN ITA NO. 30/IND /2009 IN THE CASE OF M/S FLEXITUFF INTERNATIONAL ORDER DATED 4 TH MAY, 2010 ALONG WITH THE DECISION IN CIT VS. RELIANCE PETRO PRODUCTS PVT. LT D. (2010) 322 ITR 158 (SC). ON THE OTHER HAND, THE LD. SR. DR STRONGLY DE FENDED THE IMPOSITION OF PENALTY BY CONTENDING THAT THE ASSESSEE DELIBERA TELY CLAIMED WRONG DEPRECIATION WHICH AMOUNTS TO FURNISHING INACCURATE PARTICULARS, THEREFORE, THE PENALTY WAS RIGHTLY LEVIED. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. REPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATER IAL AVAILABLE ON RECORD. BRIEF FACTS ARE THAT THE ASSESSEE IS A LIMI TED COMPANY DERIVES 3 INCOME FROM VARIOUS ACTIVITIES INCLUDING POWER GENE RATION. THE ASSESSEE DECLARED TOTAL INCOME OF RS.31,35,611/- INCLUDING L ONG TERM CAPITAL GAINS IN ITS RETURN WHICH WAS ACCOMPANIED BY TAX AUDIT RE PORT U/S 44AB OF THE ACT. THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 28.3.2003 AT THE TOTAL INCOME OF RS.37,27,040/-. THE CLAIMED DEDUCTION U/S 80IA ON ACCOUNT OF POWER GENERATION WAS ALLOWED. ON FURTHER APPEAL, THE LD. CIT(A) GRANTED PARTIAL RELIEF AT RS.4,95,432/-. NOT ICE U/S 154/155 WAS ISSUED TO THE ASSESSEE ON 24.2.2005 TO RECTIFY THE EXCESS CLAIM OF DEPRECIATION OF RS.73,21,324/- IN COMPUTATION OF PR OFIT OF POWER GENERATION AND INTEREST RECEIPT OF RS.2,02,408/-. N O ORDER WAS PASSED U/S 154/155 OF THE ACT. SUBSEQUENTLY, NOTICE U/S 14 8 WAS ISSUED TO THE ASSESSEE ON THE GROUND OF EXCESSIVE CLAIM OF DEPREC IATION. THE ASSESSMENT U/S 143(3)/148 WAS COMPLETED, DETERMININ G THE INCOME AT RS.1,07,55,343/- ON 23.3.2006. PENALTY WAS IMPOSED U/S 271(1)(C) ON THE GROUND THAT THE ASSESSEE CLAIMED EXCESS DEPRECI ATION. NOW, QUESTION ARISES, WHEN EVERYTHING WAS DISCLOSED EVEN BY MAKING A WRONG/EXCESS CLAIM, WHETHER PENALTY CAN BE IMPOSED U/S 271(1)(C) OF THE ACT. THE OBVIOUS REPLY IS NO BECAUSE PENALTY U/ S 271(1)(C) OF THE ACT IS MADE FOR CONCEALMENT OF INCOME OR FURNISHING INA CCURATE PARTICULARS. WE HAVE PERUSED THE DIRECTORS REPORT OF THE ASSESS EE COMPANY WHEREIN FINANCIAL RESULTS HAVE BEEN MENTIONED. ON THE NOTES FORMING OF ACCOUNTS FOR THE YEAR ENDED ON 31.3.2000, THE DEPRECIATION H AS BEEN CLAIMED BY 4 THE COMPANY ON S.L.M. RATES PRESCRIBED IN SCHEDULE XIV OF THE COMPANIES ACT, 1956 CLAIMED TO BE AS PER PRACTICE O F THE ASSESSEE COMPANY. ALL THESE FACTS/CLAIM OF DEPRECIATION WERE DULY MENTIONED IN THE RETURN BY THE ASSESSEE, THEREFORE, THE ASSESSEE NEITHER FURNISHED INACCURATE PARTICULARS NOR CONCEALED ITS INCOME, TH EREFORE, NO PENALTY IS LEVIABLE. THE ASSESSEE GETS SUPPORT FROM THE DECISI ON IN THE CASE OF M/S. FLEXITUFF INTERNATIONAL LTD. (SUPRA) ORDER DAT ED 4.5.2010, THE COPY OF THE SAME IS PLACED ON RECORD. FOR IMPOSITION PENALT Y U/S 271(1)(C), THERE MUST BE DEFINITE FINDING THAT EITHER THERE MUST BE CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS. THE DISALLOWA NCE OF DEPRECIATION WILL NOT PER SE AMOUNT TO FURNISHING INACCURATE PARTICUL ARS FOR WHICH RELIANCE CAN BE PLACED IN CIT VS. AJAIB SINGH & CO. (253 ITR 630) (P & H) WHERE NO INFORMATION, GIVEN IN THE RETURN, IS FOUND TO BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING IN ACCURATE PARTICULARS. A MERE MAKING OF CLAIM, WHICH IS NOT SUSTAINABLE IN L AW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULAR REGAR DING THE INCOME OF THE ASSESSEE. IN A LATER DECISION, ON THE ISSUE, THE HO NBLE APEX COURT IN CIT VS. RELIANCE PETRO PRODUCT PVT. LTD. (SUPRA) EV EN AFTER CONSIDERING THE OFFQUOTED DECISIONS LIKE DILIP N. SHROFF VS. JC IT (291 ITR 519) (SC), UNION OF INDIA VS. DHARMENDRA TEXTILES PROCESSORS ( 306 ITR 277) (SC) AND VARIOUS OTHER DECISIONS AS AVAILABLE AT PAGE 15 9 OF THE ORDER AFFIRMED THE DECISION OF THE HONBLE GUJRAT HIGH CO URT DATED 23.10.2007 5 (TAX APPEAL NO.4419/2007) CLEARLY HELD THAT MERELY BECAUSE ASSESSEE CLAIMED EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTED O R WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT ATTRACT PENALTY U/S 271(1) OF THE ACT. THE EXPRESSION HAS CONCEALED T HE PARTICULARS OF INCOME AND HAS FURNISHED INACCURATE PARTICULARS O F INCOME HAVE NOT BEEN DEFINED EITHER IN SEC. 271(1) OR ELSEWHERE IN THE ACT. ONE THING IS CERTAIN THAT THESE TWO CIRCUMSTANCES ARE NOT IDENTI CAL IN DETAILS ALTHOUGH THEY MAY LEAD TO SAME EFFECT, NAMELY, KEEPING OF A CERTAIN PORTION OF INCOME. THE FORMER IS DIRECT AND THE LATER MAY BE I NDIRECT IN ITS EXECUTION. THE WORD CONCEAL IS DERIVED FROM THE L ATIN WORD CONCOLARE WHICH IMPLIES TO HIDE. IN THE PRESENT APPEAL, EVEN IF A EXCESS DEPRECIATION HAS BEEN CLAIMED BY THE ASSESSEE ON TH E BASIS OF THE COMPANIES ACT DOES NOT MEAN THAT THE ASSESSEE HAD H IDDEN SOMETHING, THEREFORE, EVEN IF A WRONG CLAIM IS MADE, AUTOMATIC ALLY, DOES NOT TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. CO NCEALMENT REFERS TO A DELIBERATE ACT ON THE PART OF THE ASSESSEE. THE PRI MARY BURDEN OF PROOF IS ON THE REVENUE, BEFORE A PENALTY IS IMPOSED U/S 271(1) BECAUSE BY NO STRETCH OF IMAGINATION, MAKING A INCORRECT CLAIM , DOES NOT TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS, THEREFORE, KE EPING IN VIEW THE TOTALITY OF FACTS AND THE JUDICIAL PRONOUNCEMENTS, THAT TOO FROM THE HONBLE APEX COURT, NO PENALTY IS LEVIABLE ESPECIALLY WHEN THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN IS E RRONEOUS OR INCORRECT, 6 THEREFORE, MERE MAKING A EXCESS CLAIM IN ITSELF DOE S NOT INVITE IMPOSITION OF PENALTY U/S 271(1) BECAUSE THE SAME CANNOT AMOU NT TO FURNISHING INACCURATE PARTICULARS. WE DELETE THE PENALTY, SO I MPOSED, BY THE LD. ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(A). FINALLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST APRIL, 2011. (R.C.SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 21.4.2011 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, G UARD FILE !VYAS!