The DCIT, Circle-1(1), Baroda V. M/s. Gujarat State Forest Development Corporation Ltd., Baroda

ITA 3294/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6442 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 17-06-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 11-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: J P SHAH
• Keywords: Depreciation; Wrong claim; Capital expenditure
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, B BENCH (BEFORE S/SHRI G.D. AGARWAL, VICE-PRESIDENT AND T.K. SHARMA, JUDICIAL MEMBER) ITA NO.3294/AHD/2009 [ASSTT. YEAR : 2004-2005] DCIT, CIR.1(1) BARODA. VS. M/S.GUJARAT STATE FOREST DEVELOPMENT CORPORATION LTD. 78, VANGANGA, ALKAPURI, BARODA. PAN : AACG 8432 H (APPELLANT) (RESPONDENT) REVENUE BY : SHRI SAMIR TEKRIWAL ASSESSEE BY : SHRI J.P. SHAH O R D E R PER G.D. AGARWAL, VICE-PRESIDENT : THIS IS REVENUES APPEAL AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-I, BARODA DATED 29.09.2009 FOR A.Y.2004-2 005 ARISING OUT OF THE ORDER OF THE AO UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. 2. THE ONLY GROUND IN THIS APPEAL BY THE REVENUE RE ADS AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD.CIT(A) ERRED IN DELETING THE PENALTY OF RS.6 ,65,000/- LEVIED U/S.271(1)(C) OF THE IT ACT ON THE CONCEALED INCOME OF RS.18,45,585/- BY CLAIMING DEPRECIATION ON THE CAPI TAL ASSETS WITHOUT REDUCING THE SUBSIDY RECEIVED ON THE CAPITA L ASSETS. 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL PLACED BEFORE US. WE FIND THAT THE AO LEVIED THE PENALTY ON THE ASSESSEE ON THE GROUND THAT THE ASSESSEE CLAIMED EXCESSIVE DEPRECIA TION TO THE EXTENT OF ITA NO.3294/AHD/2009 -2- RS.18,45,585/-. AS PER THE AO, THE ASSESSEE HAD RE CEIVED SUBSIDY FOR THE CAPITAL EXPENDITURE FROM THE GOVERNMENT OF INDIA WH ICH SHOULD HAVE REDUCED FROM THE COST OF THE PLANT & MACHINERY AND ON THE BALANCE, THE DEPRECIATION SHOULD HAVE BEEN CLAIMED. SINCE THE S UBSIDY RECEIVED FROM THE GOVERNMENT WAS NOT REDUCED FROM THE COST OF THE ASSETS, AS PER THE AO, THE ASSESSEE MADE EXCESSIVE CLAIM OF DEPRECIATI ON OF RS.18,45,585/- ON WHICH HE LEVIED PENALTY UNDER SECTION 271(1)(C). 4. ON APPEAL, THE CIT(A) CANCELLED THE PENALTY ON T HE GROUND THAT THE DEPRECIATION CLAIMED BY THE ASSESSEE MIGHT BE INCOR RECT, BUT IT DID NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OR C ONCEALMENT OF INCOME. HE ALSO OBSERVED THAT THE ASSESSEE IS A GOVERNMENT COMPANY AND IT CANNOT BE PRESUMED THAT IT DELIBERATELY CONCEALED I TS INCOME. THE REVENUE AGGRIEVED WITH THE ORDER OF THE CIT(A) IS I N APPEAL BEFORE US. 5. HAVING CONSIDERED THE ARGUMENTS OF THE BOTH SIDE S, WE FIND THAT THE ISSUE UNDER CONSIDERATION IS SQUARELY COVERED BY TH E DECISION OF THE HONBLE APEX COURT IN THE CASE OF CIT VS. RELIANCE PETROPR ODUCTS PVT. LTD., 322 ITR 158 (SC) WHEREIN THEIR LORDSHIP HELD AS UNDER: A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961, SUGGESTS THAT IN ORDER TO BE COVERED BY IT, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURA TE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD 'PARTICULARS ' USED IN SECTION 271(1)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND T O BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY O F FURNISHING INACCURATE PARTICULARS. IN ORDER TO EXPOSE THE ASSE SSEE TO PENALTY, ITA NO.3294/AHD/2009 -3- UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISI ON, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGI NATION CAN MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. (EMPHASIS ADDED) THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY TH E ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSE E CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULAR S ARE FOUND TO BE INACCURATE, THE LIABILITY WOULD ARISE. TO ATTRAC T PENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE , NOT EXACT OR CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOU S OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 2 71(1)(C). A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REG ARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RE TURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. FROM THE ABOVE IT IS EVIDENT THAT THEIR LORDSHIPS H AVE CLEARLY LAID DOWN THAT MERELY AN INCORRECT CLAIM WAS MADE BY THE ASSE SSEE, IT WOULD NOT TANTAMOUNT TO FURNISHING OF INACCURATE PARTICULARS SO AS TO MAKE THE ASSESSEE LIABLE FOR PENALTY UNDER SECTION 271(1)(C) . IN THE PRESENT, THERE IS NO DISPUTE THAT ALL THE FACTS HAVE BEEN DISCLOSE D BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS, AND THE ONLY DISPUTE IS WITH REGARD TO CLAIM OF DEPRECIATION. WHILE CALCULATING THE DEPRECIATION THE ASSESSEE HAS TAKEN ONE VIEW AND THE DEPARTMENT HAS TAKEN ANOTHER VIEW. THIS WILL NOT AMOUNT TO CONCEALMENT OF INCOME OR FURNISHING OF TH E INACCURATE PARTICULARS. IT IS SETTLED PROPOSITION OF THE LAW T HAT A MISCONCEIVED OR WRONG CLAIM FOR DEDUCTION OR EXEMPTION DOES NOT AUT OMATICALLY ATTRACT PENALTY UNDER SECTION 271(1)(C). THEREFORE, IN SUC H SITUATION NO PENALTY CAN BE LEVIED UNDER SECTION 271(1)(C). IN VIEW OF THE ABOVE, WE RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE APEX COURT IN THE CASE ITA NO.3294/AHD/2009 -4- OF RELIANCE PETROPRODUCTS LTD. (SUPRA) UPHOLD THE O RDER OF THE CIT(A) ON THIS ISSUE AND DISMISS THE APPEAL OF THE REVENUE. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED ORDER PRONOUNCED IN OPEN COURT ON 17 TH JUNE, 2011 SD/- SD/- (T.K. SHARMA) JUDICIAL MEMBER (G.D. AGARWAL) VICE-PRESIDENT PLACE : AHMEDABAD DATE : 17-06-2011 C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD