MANGALAM DRUGS & ORGANICS LTD, MUMBAI V. ACIT 4(2), MUMBAI

ITA 3196/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88218 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 05-02-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 26-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LOVE KUMAR
• Assessee Lawyers: M SUBRAMANIAN
• Keywords: Depreciation; Onus to prove
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUM BAI , BEFORE SHRI D. MANMOHAN, VP AND SHRI SANJAY ARORA, AM I.T.A. NO. 3196/MUM/2013 ( / ASSESSMENT YEAR: 2005-06) MANGALAM DRUGS & ORGANICS LTD. 292, PRINCESS STREET, SECOND FLOOR, NEAR FLYOVER, MUMBAI-400 002 VS. ASST. CIT-4(2), M. K. MARG, MUMBAI-400 020 ! ./PAN/GIR NO. AAACM 7880 P ( ' /APPELLANT ) : ( #$ ' / RESPONDENT ) '%& / APPELLANT BY : SHRI M. SUBRAMANIAN #$ '%& / RESPONDENT BY : SHRI LOVE KUMAR ' ()%*+ / DATE OF HEARING : 05.02.2015 ,-.%*+ / DATE OF PRONOUNCEMENT : 10.02.2015 /0 O R D E R PER SANJAY ARORA, A. M.: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-8, MUMBAI (CIT(A) FOR SHO RT) DATED 12.02.2013, CONTESTING THE LEVY OF PENALTY U/S.271(1)(C) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMENT YEAR (A.Y.) 2005-06 VIDE ORDER DATED 20.03.2012. 2. THE ONLY ISSUE ARISING IN THIS APPEAL IS VALIDIT Y OR OTHERWISE IN LAW OF THE LEVY OF PENALTY ON THE ASSESSEE U/S. 271(1)(C) OF THE ACT I N THE SUM OF RS.20,888/-, SINCE CONFIRMED BY THE LD. CIT(A), IN THE FACTS AND CIRCU MSTANCES OF THE CASE. 2 ITA NO. 3196/MUM/2013 (A.Y. 2005-06) MANGALAM DRUGS & ORGANICS LTD. VS. ASST. CIT 3. EXPLAINING THE FACTS OF THE CASE, IT WAS SUBMITT ED BY THE LD. AUTHORIZED REPRESENTATIVE (AR), THE ASSESSEES COUNSEL, THAT T HE ONLY DISALLOWANCE MADE WHILE FRAMING THE ASSESSMENT U/S. 143(3) ON 11.12.2007 BY THE ASSESSING OFFICER (A.O.), I.E., ON WHICH PENALTY HAS BEEN LEVIED, IS THE CLAIM FOR DEPRECIATION ON ELECTRICAL FITTINGS; HAVING BEEN CLAIMED @ 25%, AS AGAINST THE ELIGIBLE RATE OF 15%. THIS WAS CLEARLY AN OMISSION, AND THEREFORE THE MISTAKE ADMITTED ON THE DISCREPANCY BEING POINTED OUT BY THE A.O. IN THE ASSESSMENT PROCEEDINGS, EXPLAINING THE UNDERLYING REASON. PRIOR TO A.Y. 2003-04, ELECTRICAL FITTINGS WERE ELIGIBLE FOR DEPR ECIATION AT THE GENERAL RATE APPLICABLE TO PLANT AND MACHINERY, AND WHICH AMENDMENT WAS LOST S IGHT OF WHILE PREPARING THE RETURN OF INCOME FOR THE CURRENT YEAR. IN FACT, HE WOULD F URTHER SUBMIT, THE FIGURE OF DEPRECIATION AS WORKED OUT BY THE TAX AUDITORS WAS ADOPTED, SO T HAT THE MISTAKE HAD IN FACT OCCURRED AT THE END OF THE AUDITORS THEMSELVES. A CASE OF BONA FIDE MISTAKE, THEREFORE, OUGHT TO EXCLUDE PENALTY. ON FURTHER ENQUIRY BY THE BENCH, H E HOWEVER CONFIRMED THAT THIS ISSUE HAD ALSO ARISEN IN THE ASSESSEES CASE FOR A.Y. 200 3-04, WHEREAT THE TRIBUNAL HAD CANCELLED THE PENALTY, ALLOWING THE ASSESSEE THE BE NEFIT OF DOUBT IN-AS-MUCH AS THAT WAS THE FIRST YEAR OF THE AMENDMENT, WHICH THEREFORE HA D ESCAPED NOTICE. THE LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTHER H AND, WOULD SUBMIT THAT THE FOREGOING ITSELF PROVES THAT THE ASSESSEE HAD MADE A CONSCIOUS CLAIM, OR, IN ANY CASE, HAD NOT ACTED WITH DILIGENCE, NOT CORRECTING ITSELF EVE N AFTER ITS ASSESSMENT FOR THE EARLIER YEAR. 4. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. IN OUR VIEW, THE PROTECTION WITH REGARD TO A GENUIN E MISTAKE, WHICH THE LAW PROVIDES FOR U/S.273B, AND WHICH WAS GRANTED BY THE TRIBUNAL WHILE DECIDING THE ASSESSEES APPEAL FOR A.Y. 2003-04, SHALL APPLY FOR THE CURRENT YEAR ONLY WHERE THE DETECTION OF THE DISCREPANCY BY THE A.O. DURING THE ASSESSMENT PROCEEDINGS FOR A.Y. 2003-04 WAS SUBSEQUENT TO THE DATE OF FILING THE RE TURN FOR THE CURRENT YEAR, I.E., 29.10.2005. THE DISCREPANCY HAVING BEEN SURFACED AT THAT TIME, NO PLEA WITH REGARD TO A GENUINE MISTAKE OR AN OMISSION COULD BE TAKEN BY TH E ASSESSEE SUBSEQUENTLY. RATHER, THAT SHOULD HAVE OPERATED AS A WAKE-UP CALL FOR BEING MO RE ATTENTIVE AND ADOPTING A MORE 3 ITA NO. 3196/MUM/2013 (A.Y. 2005-06) MANGALAM DRUGS & ORGANICS LTD. VS. ASST. CIT CAREFUL APPROACH IN PREPARING ITS TAX RETURN, I.E., EVEN GENERALLY. AS REGARDS THE PLEA OF A MISTAKE BY THE TAX AUDITORS, THE SAME CANNOT IN O UR VIEW BE TAKEN IN A GENERALIZED MANNER, ABSOLVING THE ASSESSEE; THE RETURNS IN ALMO ST CASES BEING, OR COULD BE SAID TO BE, PREPARED BY THE TAX CONSULTANTS. THE VERIFICATION T O THE RETURN IS OF THE ASSESSEE AND, BESIDES, THE NATURE OF THE DISCREPANCY AND THE ATTE NDANT CIRCUMSTANCES ARE RELEVANT FACTORS, SO THAT THE MATTER BECOMES FACTUAL AND NO PROPOSITION, APART FROM A SAVING FOR A HONEST MISTAKE, WOULD OBTAIN. ON SUCH A VIEW BEING EXPRESSED BY THE BENCH DURING HEARING, THE LD. AR WOULD SUBMIT THAT THE RELEVANT DATE I.E., WHEN THE DISCRE PANCY WAS DETECTED FOR THE FIRST TIME IN THE ASSESSEES ASSESSMENT FOR A.Y. 2003-04, IS NOT AT HAND, AND SHALL BE SUPPLIED LATER. THE COPY OF ASSESSMENT ORDER, SUBMITTED SUBSEQUENTL Y, HOWEVER, DOES NOT THROW LIGHT IN THE MATTER, I.E., AS TO THE DATE OF THE SAID DETECT ION. THE BASIS OF OUR DECISION BEING CLEAR, WANT OF RELEVANT MATERIAL SHOULD NOT DETAIN US FURT HER. ACCORDINGLY, IN OUR CLEAR VIEW, THE ASSESSEE WOULD BE ENTITLED TO AN ACCEPTANCE OF ITS PLEA OF A GENUINE MISTAKE AS BEING RESPONSIBLE FOR FURNISHING INACCURATE PARTICULARS O F INCOME AND, THUS, SAVING FROM THE IMPUGNED PENALTY, IF THE STATED ERROR HAD COME TO L IGHT, ADMITTEDLY DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN ITS CASE FOR A.Y. 2003-04 , SUBSEQUENT TO THE DATE OF THE FILING THE RETURN, I.E., 29.10.2005. THE ONUS TO PROVE THE SAME SHALL BE ON THE ASSESSEE, WHO SHALL BE GIVEN DUE OPPORTUNITY TO EXPLAIN ITS CASE ON THIS PARAMETER BEFORE THE A.O., WHO SHALL DECIDE ACCORDINGLY, ISSUING A DEFINITE FINDIN G/S OF FACT, ONE WAY OR THE OTHER. WE DECIDE ACCORDINGLY. 5. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 1.*23451*% 6% 789:( ; *%*< ORDER PRONOUNCED IN THE OPEN COURT ON FEBRUARY 10, 2015 SD/- SD/- (D. MANMOHAN) (SANJAY ARORA) / VICE PRESIDENT / / ACCOUNTANT MEMBER ' =) MUMBAI; >/ DATED : 10.02.2015 4 ITA NO. 3196/MUM/2013 (A.Y. 2005-06) MANGALAM DRUGS & ORGANICS LTD. VS. ASST. CIT (3 ROSHANI , SR. PS ! ' #$%& ' &$ COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT 2. #$ ' / THE RESPONDENT 3. ' ?* @ A / THE CIT(A) 4. ' ?* / CIT - CONCERNED 5. B(CD#3*3E4 +E4. ' =) / DR, ITAT, MUMBAI 6. D5F) GUARD FILE ! ( / BY ORDER, )/(* + (DY./ASSTT. REGISTRAR) , ' =) / ITAT, MUMBAI