The ACIT, Circle-8, Ahmedabad V. Vaghani Techno Build Limited, Ahmedabad

ITA 3092/AHD/2011

• Counselvise Citation: 309220514 RSA 2011
• Duration Of Justice: 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 04-04-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 07-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ILAVARASI
• Assessee Lawyers: S N DIVETIA
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, C BENCH, AHMEDABAD BEFORE SHRI A. K. GARODIA, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER I.T.A. NO. 3092/ AHD/2011 (ASSESSMENT YEAR 2007-08) ACIT, CIRCLE 8, AHMEDABAD VS. M/S. VEGHANI TECHNO BUILD PVT. LTD., 4, 1 ST FLOOR, NARAYAN COMPLEX, NEAR SWASTIC CROSS ROAD, NEAR PIZZA HUT, NAVRANGPURA, AHMEDABAD PAN/GIR NO. : AAACD7725J (APPELLANT) .. (RESPONDENT) APPELLANT BY: MS. ILAVARASI, SR DR RESPONDENT BY: SHRI S N DIVETIA, AR DATE OF HEARING: 04.04.2012 DATE OF PRONOUNCEMENT: 04.04.2012 O R D E R PER SHRI A. K. GARODIA, AM:- THIS IS REVENUES APPEAL DIRECTED AGAINST THE ORD ER OF LD. CIT(A) XIV, AHMEDABAD DATED 02.09.2011 FOR THE ASSESSMENT YEAR 2007-08. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: 1) THE LD. CIT(A) XIV, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE PENALTY OF RS.9,72,576/- LEVI ED U/S 271(1)(C) OF THE ACT. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) XIV, AHMEDABAD OUGHT TO HAVE UPHELD THE ORDE R OF THE A.O. 3) IT IS THEREFORE, PRAYED THAT THE ORDER OF THE LD . CIT(A) XIV, AHMEDABAD MAY BE SET ASIDE AND THAT OF THE ORDER OF THE A.O. BE RESTORED. I.T.A.NO.3092 /AHD/2011 2 2. LD. D.R. OF THE REVENUE SUPPORTED THE PENALTY OR DER WHEREAS THE LD. A.R. SUPPORTED THE ORDER OF LD. CIT(A). 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. THIS ISSUE HAS BEEN DECIDED BY LD. CIT(A) AS PER PARA 2.3 OF H IS ORDER WHICH IS REPRODUCED BELOW: 2.3 DECISION : I HAVE CAREFULLY PERUSED THE FINDINGS OF THE ASSESS ING OFFICER AND SUBMISSIONS MADE BY THE LD. AR. THE APPELLANT IS CO NSTRUCTING A COMPOSITE AGRO PARK IN DHOLKA DISTRICT, AHMEDABAD. THE LAND WAS ALLOTTED FOR THE AGRO PARK BY THE GUJARAT GOVERNMEN T AND THE APPELLANT IS CREATING AN INFRASTRUCTURE FOR RESEARC H AND DEVELOPMENT CENTRE, COLD STORAGE, COMMON WAREHOUSE, TRADING AND TESTING, PRODUCT DEVELOPMENT CENTRE ETC. AND OTHER COMMON FA CILITIES. THE APPELLANT WAS TO CREATE THESE FACILITIES AND ALLOT THE PLOTS TO DIFFERENT PERSONS BY WAY OF SALE. IN THE AGROPARK, CERTAIN FACILITY WAS TO BE CREATED AS COMMON FACILITY AND THE REST O F THE LAND WAS TO BE DIVIDED IN PLOTS AND SOLD TO VARIOUS USERS. T HE COMMON FACILITIES WERE TO BE OWNED BY THE APPELLANT FOR TH E USE BY BUYERS OF PLOTS. IT APPEARS THAT THE A. O. HAS NOT UNDERST OOD THE BASIC PURPOSE OF THE APPELLANT'S BUSINESS. THE APPELLANT HAS ALSO SUBMITTED THAT SINCE THE COMMON FACILITIES OR INFRA STRUCTURE WERE OWNED BY THE APPELLANT, THEREFORE, THE DEPRECIATION WAS CLAIMED BY THE APPELLANT DURING THE CURRENT YEAR. THE APPELLAN T DID NOT FILE ANY APPEAL AGAINST THE ORDER OF THE A. O. AS THERE WERE HUGE CARRY FORWARD LOSSES IN THE BUSINESS AND THERE WAS NO EFF ECT ON THE TAX. THE APPELLANT HAS FURTHER SUBMITTED AND SHOWN THAT IT HAS ALSO MADE A SALE OF PLOT TO ONE N. K. FOOD PRODUCTS PVT. LTD. FOR RS.L6,50,000/-. IN VIEW OF THE ABOVE FACTS, I AM IN CLINED TO ACCEPT THE SUBMISSION OF THE APPELLANT THAT NO PENALTY SHO ULD BE LEVIED AS THE CLAIM OF DEPRECIATION BY THE APPELLANT WAS CORR ECT AND THERE WAS NO MALAFIDE INTENTION IN THE CLAIM. THE APPELLA NT HAS GIVEN ALL THE FACTS RELATED TO THE CLAIM OF DEPRECIATION AND HAS ALSO DEMONSTRATED THAT THE BUSINESS OF THE APPELLANT HAS STARTED AS IT HAS SOLD ONE PLOT DURING THE YEAR. IT IS ALSO SEEN FROM THE APPELLANTS SUBMISSION THAT IN THE EARLIER YEAR, THE APPELLANT HAS CLAIMED DEPRECIATION-AND THE SAME HAS BEEN ALLOWED IN-THE E ARLIER YEARS BY THE DEPARTMENT ALSO. THEREFORE., IT IS A CASE OF CLA IM OF CERTAIN ALLOWANCE BY THE APPELLANT. IN MY OPINION THE APP ELLANT HAD GIVEN I.T.A.NO.3092 /AHD/2011 3 ALL THE PARTICULARS REGARDING THE CLAIM IN THE R ETURN OF INCOME AND THE ACCOUNTS WERE ALSO PRESENTED BEFORE THE ASSESSI NG OFFICER. IT WAS A MERE CLAIM BY HIM WHICH HE CONSIDERED TO BE A DMISSIBLE. THE ASSESSING OFFICER DID NOT ALLOW THE CLAIM. TH E DISALLOWANCE MADE BY THE ASSESSING OFFICER DOES NOT MAKE THE CAS E FIT FOR IMPOSITION OF PENALTY. THE APPELLANT DID NOT FURNIS H ANY INACCURATE PARTICULARS OR MISREPRESENTED ANY FACT IN HIS RETUR N OF INCOME. HE MADE A CLAIM GIVING ALL THE FACTS. THEREFORE, THERE IS NO FURNISHING OF INACCURATE PARTICULARS ON THE PART OF THE APPELL ANT AND IN THE CIRCUMSTANCES THE DECISION OF HONOURABLE SUPREME CO URT IN THE CASE OF RELIANCE PETRO PRODUCTS PVT. LTD REPORTED I N 322 ITR 158 IS CLEARLY APPLICABLE. ACCORDING TO THE DECISION, WHER E THERE IS NO FINDING THAT ANY DETAILS WERE SUPPLIED BY THE ASSES SEE IN ITS RETURN OF INCOME FOUND TO BE INCORRECT OR ERRONEOUS OR FAL SE THERE WAS NO QUESTION OF INVOKING THE PENALTY UNDER SECTION 271( 1)(C). MERE MAKING OF CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, B Y ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDI NG THE INCOME OF THE ASSESSEE. CONSIDERING THE ABOVE FACTS AND CIRCUMSTANCES, THE PENALTY IMPOSED BY THE ASSESSING OFFICER IN RESPECT OF THE CLAIM OF DEPRECIATION IS DELETED. TH E APPELLANT HAS NOT GIVEN ANY EXPLANATION REGARDING THE IMPOSITION OF PENALTY IN RESPECT OF CLAIM OF DEDUCTION OF RS. 1800/- PAID BY THE APPELLANT AS PENALTY ON SALES TAX DURING THE YEAR. SINCE THE APP ELLANT HAS NOT GIVEN ANY EXPLANATION, THE PENALTY IMPOSED BY THE A . O. IN RESPECT OF THE AMOUNT OF RS.1800/-. 4. WE FIND THAT THE PENALTY HAS BEEN IMPOSED BY THE A.O. BY FOLLOWING THE JUDGMENT OF HONBLE APEX COURT RENDER ED IN HE CASE OF UNION OF INDIA AND OTHERS VS DHARMENDRA TEXTILES AS REPORTED IN 306 ITR 277. AS PER THIS JUDGMENT, IT WAS HELD BY HE HONB LE APEX COURT THAT MENS REA IS NOT ESSENTIAL ELEMENT FOR IMPOSING PENA LTY BUT STILL IT HAS TO BE ESTABLISHED THAT THERE IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME AND THEN ONLY, PEN ALTY CAN BE IMPOSED U/S 271(1)(C) OF THE ACT. IN THE PRESENT CASE, IT IS NOTED BY THE A.O. IN THE ASSESSMENT ORDER IN PARA 4 THAT DEPRECIATION WAS AL LOWED IN THE PRECEDING YEAR BUT ON THIS BASIS THAT THE PRINCIPLE OF RES JU DICATA IS NOT APPLICABLE IN THE INCOME TAX PROCEEDINGS, THE A.O. HAS DISALLOWED CLAIM OF I.T.A.NO.3092 /AHD/2011 4 DEPRECIATION IN THE PRESENT YEAR BUT FOR THE PURPOS E OF LEVY OF PENALTY, IT HAS TO BE ESTABLISHED THAT THERE IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME AND MERELY BECAUSE SOME EXPENSES OR CLAIM HAS BEEN DISALLOWED, ALTHOUGH THE SAME WAS AL LOWED IN THE PRECEDING YEAR, IT CANNOT BE SAID THAT THERE IS CON CEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. HE NCE, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF LD. CIT(A). HE NCE, WE DECLINE TO INTERFERE IN HIS ORDER. 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. 6. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE M ENTIONED HEREINABOVE. SD./- SD./- (KUL BHARAT) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER SP COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD 1. DATE OF DICTATION 4/4 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 4/4.OTHER MEMBER 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 4/4 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.10/4 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 11/4 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. .