The DCIT, Circle-9, Ahmedabad V. M/s. L.G. Chaudhary, Ahmedabad

ITA 3205/AHD/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5866 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 09-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Reasonable cause; Tax effect; Revised return
• Section: 273B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH AHMEDABAD BEFORE, SHRI N. K. BILLAIYA , ACCOUNTANT MEMBER AND SHRI S. S. GODARA, JUDICIAL MEMBER ITA NO. 3205/AHD/2015 (ASSESSMENT YEAR : 2009-10) THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE 2(2), 1 ST FLOOR, C.U.SHAH BLDG., ASHRAM ROAD, AHMEDABAD-380009 APPELLANT VS. M/S. L.G.CHAUDHARY, 6/64, GOKUL APARTMENT, SOLA ROAD, NARANPURA, AHMEDABAD-380063 RESPONDENT PAN: AACFL5043L / BY REVENUE : SHRI PRASOON KABRA, SR. D.R. / BY ASSESSEE : SHRI S. N. SOPARKAR WITH SHRI PARIN SHAH, A.R. /DATE OF HEARING : 20.03.2018 /DATE OF PRONOUNCEMENT : 23.03.2018 ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS REVENUES APPEAL FOR ASSESSMENT YEAR 2009-10 A RISES AGAINST THE CIT(A)-4, AHMEDABADS ORDER DATED 08.09.2015, IN CA SE NO. CIT(A)- 4/274/CIR.9/14-15, REVERSING THE ASSESSING OFFICER S ACTION IMPOSING PENALTY OF RS.82,99,170/-, IN PROCEEDINGS U/S. 271(1)(C) OF TH E INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH THE PARTIES. CASE FILE PERUSED. ITA NO.3205/AHD/15 [DCIT VS. M/S. L.G.CHAUDHARY ] A.Y. 2009-10 - 2 - 2. WE ADVERT TO THE RELEVANT FACTS. THIS ASSESSEE CARRIES OUT CONSTRUCTION WORK MAINLY FOR GOVERNMENT CORPORATIONS AND THE STATE GO VERNMENT. THERE IS NO DISPUTE THAT HE CLAIMED THE EXPENDITURE IN QUESTION AMOUNTI NG TO RS.5,34,84,609/- AS AGAINST THE ONE INCURRED AFTER DEDUCTING / PAYING T DS AMOUNTING TO RS.3,34,84,609/-. THE DIFFERENTIAL SUM BETWEEN TWO AMOUNTS CAME TO RS.2,37,69,641/- REGARDING WHICH ALTHOUGH THE ASSES SEE HAD MADE THE PAYMENTS BUT WITHOUT DEDUCTING TDS. THE ASSESSEE THEN APPEARS T O HAVE FILED A LETTER DATED 08.11.2011 CLAIMING THAT ITS ABOVE DIFFERENTIAL AMO UNT OF RS.2,37,69,641/- TURNED OUT TO BE AN EXCESS CLAIM. THE ASSESSING OFFICER T HEN FRAMED CONSEQUENTIAL ASSESSMENT ON 30.09.2009. HE FURTHER INITIATED THE IMPUGNED PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT. 3. WE NOW ADVERT TO THE PENALTY PROCEEDINGS IN QUES TION. THE ASSESSING OFFICER PLACED A HEAVY RELIANCE ON THE ABOVE QUANTU M DEVELOPMENTS TO CONCLUDE IN HIS ORDER DATED 26.03.2014 THAT THE ASSESSEES ACT AND CONDUCT IN CLAIMING EXCESS AMOUNT OF RS.2,37,69,641/- IS AN INSTANCE OF CONCEA LMENT OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) EXPLANATION 5A. ALL T HIS MADE HIM TO LEVY PENALTY IN QUESTION OF RS.82,99,170/-. 4. THE CIT(A) REVERSES THE IMPUGNED PENALTY AS FOLL OWS: 5. I HAVE CAREFULLY GONE THROUGH THE FACTS OF THE CASE, THE SUBMISSION OF APPELLANT AND CASE LAWS RELIED ON. THE A.O. MADE TH E ADDITIONS STATING AS UNDER: 'FURTHER, THE ASSESSEE VIDE ITS SUBMISSION DATED 08 /11/2011 FURNISHED THAT BY MISTAKE FOLLOWING EXCESS DEDUCTION UNDER THIS HEAD HAVE BEEN CLAIMED:- FOR A.Y. 2006-07 RS.3,45,42,000/- FOR A.Y. 2007-08 RS. 2,27,12,250/- TOTAL RS. 5,34,84,609/- LESS: ACTUAL ALLOWABLE RS. 3,34,84,609/- EXCESS CLAIMED RS. 2,37,69,641/- ITA NO.3205/AHD/15 [DCIT VS. M/S. L.G.CHAUDHARY ] A.Y. 2009-10 - 3 - THE FACTS HAVE BEEN VERIFIED FROM THE RECORDS OF TH E ASSESSEE AND IT IS NOTICED THAT ASSESSES HAS MADE EXCESS CLAIM OF RS. 2,37,69,641/- U/S.40(A)(IA) OF THE I.T. ACT AND THE SAME IS DISALLOWED U/S.40(A)(IA) O F THE I.T. ACT AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. HENCE, THE DIFFERENCE OF RS.97,14,968/- IS ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. PENALTY PROCE EDINGS U/S.271(L)(C) OF THE I.T. ACT IS INITIATED ON THIS ISSUE.' 5.1 ON GOING THROUGH THE ASSESSMENT ORDER, VIDE WHICH PENALTY PROCEEDINGS U/S 271(1)(C) WERE INITIATED, IT IS FOU ND THAT: I) DURING THE ASSESSMENT PROCEEDINGS, THE APPELLAN T SUO-MOTO BROUGHT THE MISTAKE OF EXCESS CLAIM OF RS.2,37,69,641/- U/S 40( A)(IA) TO THE NOTICE OF THE AO VIDE LETTER DATED 08-11-2011. THIS MISTAKE HAS NOT BEEN DETECTED BY THE AO. EVEN THE A.O. COMMITTED AN ERROR IN THE SECOND LAST LINE WHERE THE ADDITIONS WERE MADE OF RS.97,14,968/- IN PLACE OF RS.2,37,69,641/- II) THE AO SIMPLY WRITES THAT PENALTY PROCEEDINGS U /S 271 (1)(C) IS INITIATED BUT DID NOT MENTION THE REASON FOR INITIATING THE PENAL TY PROCEEDINGS. WHETHER IT WAS FOR CONCEALMENT OF INCOME OR IT WAS FOR FURNISHING INACCURATE PARTICULARS OF INCOME OR BOTH. III) THE APPELLANT MADE INCORRECT CLAIM FOR THE REA SON THAT THE ACCOUNTANT WHO USED TO LOOK AFTER ALL THESE MATTERS WERE VERY SICK DURING THE TIME OF FILING THE RETURN AND HE EXPIRED ON 31-01-2010. THE APPELLANT FILED DOCUMENTARY EVIDENCE TO SUBSTANTIATE THIS CONTENTION. IV) IT IS EVIDENT THAT THE APPELLANT FILED RETURN O F INCOME SHOWING LOSS OF RS.4,99,22,757/- AND EVEN AFTER DISALLOWING OF WRON G CLAIM OF TDS CREDIT, THE INCOME OF THE APPELLANT REMAINED NEGATIVE, WHICH PR OVES, THERE CANNOT BE ANY MOTIVE TO EVADE TAX, AS THERE WAS NO TAX EFFECT EVE N AFTER DISALLOWANCE OF THIS AMOUNT. 5.2 SECTION 273B OF THE ACT HAS PROVISIONS AS UND ER: ' 273B . NOTWITHSTANDING ANYTHING CONTAINED IN THE PROVISI ONS OF 40 [CLAUSE (B) OF SUB-SECTION (1) OF] 41 [SECTION 271, SECTION 271 A, 42 [SECTION 271AA,] SECTION 271B 42 [, SECTION 271BA], 43 [SECTIORL 271BB,] SECTION 271C, [SECTION 271CA,] SECTION 271D, SECTION 271E, 45 [SECTION 271F, [ SECTION 271FA ,] [ SECTION 271FAB ] 47 [ SECTION 271FB ,] 48 [ SECTION 271G ,]] [ SECTION 271GA ,] 49 [ SECTION 271H,] SECTION 271-I,] CLAUSE (C) OR CLAUSE (D) OF SUB-SECTION OR SUP-SECTION (1) OR SUB-SECTION (2) OF SECTION 272A, SUB-SECTION (1) OF SECTION 272AA] OR 50 [ SECTION 272B OR ], 51 [SUB- SECTION (1 ) 52 [ OR SUB-SECTION (1A)] OF SECTION 272BB OR ] 53 [ SUB-SECTION (1) OF SECTION 272BBB OR] CLAUSE (B) OF SUB-SECTION (1) OR CLAUSE (B) OR CLAUSE (C) OF SUB- SECTION (2) OF SECTION 273, NO PENALTY SHALL BE IMP OSABLE ON THE PERSON OR THE ASSESSEE, AS THE CASE MAY BE, FOR MY FAILURE REFERR ED TO IN THE SAID PROVISIONS IF HE PROVES THAT THERE WAS REASONABLE CAUSE FOR THE SAID FAILURE.]' 5.3 THE FACT THAT THE APPELLANT SUO-MOTO CORRECTED THE MISTAKE, THERE WAS NO INTENTION TO EVADE TAX AND REASON FOR COMMITTING MI STAKE IS DEATH OF THE PERSON RESPONSIBLE TO MANAGE SUCH AFFAIRS ARE SUFFICIENT T O PROVE THAT THE APPELLANT HAS ITA NO.3205/AHD/15 [DCIT VS. M/S. L.G.CHAUDHARY ] A.Y. 2009-10 - 4 - REASONABLE CAUSE TO COMMIT SUCH DEFAULT, AND THE SA ME IS COVERED BY THE PROVISIONS OF SECTION 273B OF THE ACT. IN SUCH CASES, PENALTY IS NOT LEVIABLE AND THE APPELLANT'S CASE IS CLEARLY COVERED BY THE PROVISIONS OF SECTIO N 273B OF THE ACT. 6. IN THE CASE OF PRICE WATER HOUSE COOPERS P LTD VS CIT 348 ITR 306 (SC) IT IS HELD BY APEX COURT THAT EVEN IN A CASE OF EXP ERT FIRM, WHEN THERE WAS A SILLY MISTAKE OF NOT DISALLOWING THE GRATUITY PROVISION THOUGH SO REPORTED BY AUDITORS, NO PENALTY WAS LEVAIABLE AS MISTAKE COULD OCCUR BON AFIDELY AND INADVERTENTLY. THE SUPREME COURT OBSERVED THAT: '....THAT THE ASSESSEE SHOULD HAVE BEEN CAREFUL CAN NOT BE DOUBTED, BUT THE ABSENCE OF DUE CARE, IN A CASE SUCH AS THE PRESENT DOES NOT MEAN THAT THE ASSESSED IS GUILTY OF EITHER FURNISHING INACCURATE PARTICULARS OR ATTE MPTING TO CONCEAL ITS INCOME.' 6.1 IN THE CASE OF SRI SARADHA TEXTILE PROCESSORS ( P.) LTD. [2006] 286 ITR 499 (MAD.) HIGH COURT OF MADRAS HELD AS UNDER: 'SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961 - PE NALTY - FOR CONCEALMENT OF INCOME -ASSESSMENT YEAR 1990-91 - FOR RELEVANT YEAR , ASSESSEE CLAIMED DEPRECIATION AND INVESTMENT ALLOWANCE ON MACHINERY WHICH WAS RECEIVED ON 4-4- 1990, I.E., AFTER RELEVANT PREVIOUS YEAR HAD ENDED ON 31-3-1990 - WHEN MISTAKE WAS POINTED OUT, ASSESSEE WITHDREW ITS CLAIM AND FI LED A REVISED RETURN - HOWEVER, ASSESSING OFFICER LEVIED PENALTY UNDER SECTION 271( L)(C) FOR FALSELY CLAIMING DEPRECIATION AND ALLOWANCES WITH AN INTENTION TO EV ADE TAXES - WHETHER ACTION OF ASSESSEE IN WITHDRAWING ITS CLAIM AND FILING REVISED RETURN SHOWED ITS BONA FIDES FOR WHICH NO PENALTY COULD BE LEVIED - HELD, YES FACTS FOR THE ASSESSMENT YEAR 1990-91, THE ASSESSEE-COMPA NY CLAIMED DEPRECIATION AND INVESTMENT ALLOWANCE ON THE MACHINERY, WHICH WAS RE CEIVED ON 4-4-1990, I.E. AFTER THE PREVIOUS YEAR ENDED ON 31-3-1990. WHEN THIS WAS POINTED OUT BY THE ASSESSING OFFICER, THE ASSESSEE WITHDREW THE CLAIMS. BUT THE ASSESSING OFFICER, LEVIED PENALTY UNDER SECTION 271(1)(C) FOR FALSELY CLAIMING DEPREC IATION AND ALLOWANCES WITH AN INTENTION TO EVADE TAXES. ON APPEAL, THE COMMISSION ER (APPEALS) DELETED THE LEVY OF PENALTY. ON REVENUE'S APPEAL, THE TRIBUNAL HELD THA T THE FACT THAT THE ASSESSEE HAD FILED REVISED RETURNS WITHDRAWING THE CLAIM, WHEN I T WAS POINTED OUT, SHOWED ITS BONA FIDES AND NO PENALTY WAS LEVIABLE. ON REVENUE'S APPEAL HELD WHILE CONSIDERING A SIMILAR QUESTION, OF COURSE UND ER THE WEALTH-TAX ACT, THE GUJARAT HIGH COURT IN THE DECISION IN CWT V. HASMUK HLAL GANDALAL [2003] 264 ITR 42, HELD THAT THE PENALTY CAN BE IMPOSED ONLY W HEN THE REVENUE COMES TO THE CONCLUSION THAT THE ASSESSEE HAD A MALA FIDE INTENT ION AND THAT AS TO WHETHER THE ASSESSEE HAD MALA FIDE INTENTION, IS A QUESTION OF FACT. THAT IS A CASE, WHERE THE CONCURRENT FINDINGS OF THE AUTHORITIES BELOW WERE C HALLENGED BEFORE THE HIGH COURT AND THE HIGH COURT HELD AS UNDER (HEADNOTE): 'THE DEPUTY COMMISSIONER (APPEALS) HAD COME TO A CO NCLUSION THAT THE ASSEJSEE HAD NO INTENTION TO FURNISH INACCURATE PARTICULARS AND THE SAID FINDING HAD BEEN CONFIRMED BY THE TRIBUNAL. THEREFORE, IT COULD NOT BE PRESUMED THAT THE ASSESSEE ITA NO.3205/AHD/15 [DCIT VS. M/S. L.G.CHAUDHARY ] A.Y. 2009-10 - 5 - HAD A MALA FIDE INTENTION TO FURNISH INACCURATE PAR TICULARS. SINCE THE ASSESSEE HAD REVEALED THE CORRECT VALUATION OF THE PROPERTY BEFO RE THE ASSESSMENT PROCEEDINGS HAD BEEN COMPLETED, IT COULD NOT BE SAID THAT THE A SSESSEE HAD FURNISHED INACCURATE PARTICULARS OF THE PROPERTY.' IN THE PRESENT CASE ALSO THE AUTHORITIES BELOW HAVE CONCURRENTLY HELD THAT WHEN THE MISTAKE WAS POINTED OUT, THE ASSESSEE HAD WITHDRAWN HIS CLAIM FOR DEPRECIATION AND INVESTMENT ALLOWANCE ON THE MACHINERY AND FILED A REVISED RETURN AND THIS ACTION OF THE ASSESSEE SHOWS THEIR BONA FIDES. IT I S ALSO NOT THE CASE OF THE REVENUE THAT THE ASSESSEE HAD THE MALA FIDE INTENTION OF FU RNISHING INACCURATE PARTICULARS WITH A VIEW TO FALSELY CLAIMING DEPRECIATION AND AL LOWANCES TO EVADE TAXES. THE ABOVE FINDING OF THE TRIBUNAL WAS BASED ON THE WHIC H WE ARE NOT INCLINED TO INTERFERE. IN THIS VIEW OF THE MATTER, WE ANSWER THE QUESTIONS IN THE AFFIRMATIVE AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE, HOLDING THAT THE TRIBUNAL HAD ENOUGH MATERIALS TO HOLD THAT THE CLAIM FOR DEPRECIATION A ND INVESTMENT ALLOWANCE ON MACHINERY WAS ONLY DUE TO BONA FIDE MISTAKE AND THA T THE TRIBUNAL WAS RIGHT IN QUASHING THE PENALTY UNDER SECTION 271(1)(C) OF THE INCOME-TAX ACT. ACCORDINGLY, THE APPEALS ARE DISMISSED.' 6.2 IN THE CASE OF ACIT VS. RAJ MULTIPLEX (P.) LTD. [2011] 44 SOT 53 (AHD.) (URO) THE HON'BLE ITAT AHMEDABAD BENCH 'D' HELD AS UNDER: SECTION 271(1)(C), READ WITH SECTION 32, OF THE INC OME-TAX ACT,1961 - PENALTY - FOR CONCEALMENT OF INCOME - ASSESSEE FILED ITS RETURN D ECLARING LOSS - IN SAID RETURN ASSESSEE HAD CLAIMED DEPRECIATION AT RATE OF 15 PER CENT - ASSESSING OFFICER ALLOWED SAME AT RATE OF 10 PERCENT AND, ACCORDINGLY , REDUCED AMOUNT OF LOSS - HE ALSO IMPOSED PENALTY UNDER SECTION 271(1)(C) ON ACC OUNT OF EXCESS DEPRECIATION CLAIMED BY ASSESSEE - ON APPEAL, . COMMISSIONED APP EALS) SET ASIDE PENALTY ORDER - ON REVENUE'S APPEAL, IT WAS NOTED THAT ASSESSMENT PROCEEDINGS, ASSESSEE ITSELF HAD FURNISHED REVISED CHART AND WORKED OUT THAT DEP RECIATION CLAIMED BY IT WAS HIGHER - ASSESSEE'S EXPLANATION BEFORE COMMISSIONER (APPEA LS) WAS THAT WRITTEN DOWN VALUE OF BUILDING, FURNITURE AND FIXTURES WAS TAKEN AS A SINGLE BLOCK BY MISTAKE AND, IT WAS ONLY DUE TO CLERICAL ERROR THAT DEPRECIATION WAS 15 PER CENT - IT WAS NOTICED THAT ASSESSEE HAD A LOSS OF MORE THAN R UPEES ONE CRORE AND EVEN AFTER DISALLOWANCE MADE BY ASSESSING OFFICER, ASSESSED LO SS WAS AT RS.63.31 LAKHS BESIDES, ASSESSEE ALREADY HAD CARRIED FORWARD BUSIN ESS LOSS AND DEPRECIATION OF OVER RS. 6 CRORES AND, IN SUCH CIRCUMSTANCES, THERE COULD NOT BE ANY MOTIVE TO CLAIM HIGHER DEPRECIATION WHETHER IN AFORESAID CIRCUMSTANCES, IT COULD BE CON CLUDED THAT ASSESSEE HAD NOT CONCEALED ITS PARTICULARS OF INCOME OR HAD FURNISHED INACCURATE P ARTICULARS OF INCOME AND, COMMISSIONER (APPEALS) WAS JUSTIFIED IN SETTING ASIDE PENALTY ORDER - HELD, YES 6.3 LOOKING TO THESE FACTS AND THE CASE LAWS CITED AS MENTIONED ABOVE, THE PENALTY IMPOSED BY THE AO IN THIS CASE IS NOT JUSTI FIED. THEREFORE, IT IS DELETED. THIS GROUND OF APPEAL IS ALLOWED. ITA NO.3205/AHD/15 [DCIT VS. M/S. L.G.CHAUDHARY ] A.Y. 2009-10 - 6 - 5. HEARD RIVAL CONTENTIONS STRONGLY REITERATING BOT H THE PARTIES RESPECTIVE STANDS IN FAVOUR AND AGAINST THE IMPUGNED PENALTY. LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY CONTENDS THAT THE ASSESSI NG OFFICER HAD RIGHTLY IMPOSED THE IMPUGNED PENALTY SINCE THE ASSESSEE HAD MADE SU O MOTTO DISALLOWANCE ONLY AFTER THE ASSESSING OFFICER HAD NOTICED IT TO HAVE MADE EXCESS CLAIM OF EXPENDITURE. HE FAILS TO DISPUTE THE FACT THAT THERE IS NO QUEST ION OF GENUINENESS OF THE IMPUGNED EXPENDITURE TO HAVE BEEN INCURRED SINCE IT IS AN IN STANCE OF NON DEDUCTION OF TDS. WE FIND THAT THE CIT(A) HAD DELETED A SIMILAR PENAL TY IN ASSESSMENT YEAR 2006-07 AS UPHELD IN A CO-ORDINATE BENCHS DECISION IN ITA NO.228/AHD/2010 DECIDED ON 16.03.2012 IN ASSESSEES CASE ITSELF. WE THUS ADOP T JUDICIAL CONSISTENCY IN THE GIVEN FACTS TO AFFIRM THE CIT(A)S FINDINGS DELETING THE IMPUGNED PENALTY. 6. THIS REVENUES APPEAL IS DISMISSED. [PRONOUNCED IN THE OPEN COURT ON THIS THE 23 RD DAY OF MARCH, 2018.] SD/- SD/- ( N. K. BILLAIYA ) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIA L MEMBER AHMEDABAD: DATED 23/03/2018 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )*+ ,--. . /0 / DR, ITAT, AHMEDABAD 1 +23 / GUARD FILE. BY ORDER / . // . /0