H.M.Brothers Ltd., CHENNAI V. ACIT, CHENNAI

ITA 331/CHNY/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9445 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 1996-1997
• Appeal Filed On: 12-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR MILIND MADHUKAR BHUSARI
• Assessee Lawyers: K S RAGHUNATHAN
• Keywords: Depreciation; Wrong claim
• Section: 143(3); 144

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI . , . , ! [ BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ] ./ I.T.A.NO.331/MDS/2014 # # / ASSESSMENT YEAR : 1996-97 M/S H.M BROTHERS LTD. 13, ERRABALU STREET CHENNAI VS. THE ASST. COMMISSIONER OF INCOME-TAX COMPANY CIRCLE II(2) CHENNAI [PAN AAACH 2180 B ] ( / APPELLANT) ( /RESPONDENT) & ' / APPELLANT BY : SHRI K.S. RAGHUNATHAN, CA )*& ' /RESPONDENT BY : DR. MILIND MADHUKAR BHUSARI, CIT ' - / DATE OF HEARING : 27 - 04 - 2016 ' - / DATE OF PRONOUNCEMENT : 29 - 04 - 2016 / O R D E R PER A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER:- THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINS T THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-II, CHENNA I, IN I.T.A.NO.482/2013-14 DATED 28.10.2013 PASSED UNDER SECTION 271(1)(C) R.W.S 250 OF THE ACT, FOR THE ASSESSMENT YEAR 1996-97. ITA NO. 331/14 :- 2 -: 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN ITS APPE AL, HOWEVER, THE CRUX OF THE ISSUE IS THAT THE LEARNED CIT (A) HAS ERRED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER WHO H AD INITIATED AND LEVIED PENALTY U/S. /271(1)(C) OF THE ACT WHICH IS AB-INITO VOID. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A LIMITED COMPANY ENGAGED IN THE BUSINESS OF TRADING IN BALL BEARINGS. INITIALLY, ASSESSMENT WAS COMPLETED U/S. 144 OF THE ACT ON 19. 3.1999 WHEREIN THE LEARNED ASSESSING OFFICER MADE ADDITION WITH RE SPECT TO INTEREST INCOME WHICH WAS NOT SHOWN SEPARATELY IN THE RETURN OF INCOME AMOUNTING TO ` 92,378/-, AND DISALLOWED THE CLAIM OF DEPRECIATION OF ` 51,96,263/- AND THE CLAIM OF LOSS ON SALE OF CAR AM OUNTING TO ` 1,12,000/- AND THEREBY ASSESSED ` 54,33,860/- AS THE TAXABLE INCOME OF THE ASSESSEE AGAINST THE LOSS DISCLOSED IN THE R ETURN OF ` 33,214/-. THE LEARNED A.R SUBMITTED THAT THE LEARNED ASSESSIN G OFFICER HAS NOT INITIATED PENALTY PROCEEDINGS TOWARDS THE ADDITIONS MADE IN THE AFORESAID ASSESSMENT ORDER DATED 19.3.1999. THE LEA RNED A.R FURTHER SUBMITTED THAT THE ASSESSEE APPEALED AGAINST THE OR DER OF THE LEARNED ASSESSING OFFICER DATED 19.3.1999 AND THE LEARNED C IT(A) IN I.T.A.NO.140/1999-2000/A.III VIDE ORDER DATED 18.7. 2000 REMITTED THE MATTER BACK TO THE LEARNED ASSESSING OFFICER WITH A DIRECTION TO PROVIDE AN OPPORTUNITY TO THE ASSESSEE IN ORDER TO PLACE BE FORE HIM ALL THE ITA NO. 331/14 :- 3 -: INFORMATION RELATING TO THE ACCOUNTING OF THE INTER EST INCOME AND ALSO THE CLAIM OF DEPRECIATION AND LOSS ON SALE OF CAR. THE LEARNED CIT(A) HAD ALSO DIRECTED THE ASSESSING OFFICER TO CONSIDER ALL THE MATERIALS PRESENTED BEFORE HIM AND THEREAFTER PASS SPEAKING O RDER. FOLLOWING THESE DIRECTIONS OF THE LEARNED CIT(A), THE LEARNED ASSESSING OFFICER PASSED ORDER U/S 143(3) R.W.S 250 DATED 5.3.2001 WH EREIN ADDITIONS WERE RESTRICTED TOWARDS DISALLOWANCE OF DEPRECIATIO N ON MACHINERY TO THE EXTENT OF ` 48,65,360/- AND NO ADDITIONS WERE MADE TOWARDS INTEREST INCOME OR ON LOSS ON SALE OF CAR. HOWEVER , THE LEARNED ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S . 271(1)(C) OF THE ACT AND THEREAFTER LEVIED PENALTY OF ` 22,22,791/- BEING 100% OF TAX SOUGHT TO BE EVADED FOR MAKING BOGUS CLAIM OF DEPRE CIATION. ON APPEAL, THE LEARNED CIT(A) CONFIRMED THE ORDER OF T HE LEARNED ASSESSING OFFICER AGGRIEVED BY WHICH THE ASSESSEE I S NOW IN APPEAL BEFORE US. 4. AT THE OUTSET, THE LEARNED A.R SUBMITTED BEFORE US THAT THE LEARNED CIT(A) BY HIS ORDER DATED 18.7.2000(CITED S UPRA), HAD ONLY REMITTED THE MATTER BACK TO THE FILE OF THE LEARNED ASSESSING OFFICER WITH A SPECIFIC DIRECTION TO RE-CONSIDER THE ADDI TION MADE BY THE LEARNED ASSESSING OFFICER EARLIER AND THEREBY PROVI DED AN OPPORTUNITY TO THE ASSESSEE OF BEING HEARD. IN THE EARLIER PRO CEEDINGS, THE LEARNED ITA NO. 331/14 :- 4 -: ASSESSING OFFICER HAS NOT INITIATED ANY PENALTY PRO CEEDINGS U/S. 271(1)(C) OF THE ACT. THEREFORE, THE LEARNED ASSESS ING OFFICER OUGHT TO HAVE ONLY DECIDED THE MATTER ACCORDING TO THE DIREC TION OF THE LEARNED CIT(A) AND HAD NO SCOPE TO TRAVEL BEYOND THE ORDER OF THE LEARNED CIT(A) AND LEVY PENALTY ON THE ASSESSEE INVOKING SE CTION 271(1)(C) OF THE ACT. IT WAS THEREFORE PLEADED THAT THE PENALTY IMPOSED ON THE ASSESSEE MAY BE DELETED. 5. ON THE OTHER HAND THE LD. DEPARTMENTAL REPRESENTATI VE ARGUED IN SUPPORT OF THE ORDERS OF THE REVENUE. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY P ERUSED THE MATERIALS ON RECORD. THE ABOVE MENTIONED FACTS ARE CONCEDED BY BOTH THE PARTIES AND THERE IS NO DISPUTE REGARDING THE SAME. THEREFORE, IT IS EVIDENT THAT IN THE SECOND ROUND THE LEARNED ASSESSING OFFICER HAS EXCEEDED THE DIRECTIONS OF THE LEARNED CIT(A) AND WENT A STEP AHEAD BY INVOKING THE PROVISIONS OF SECTION 2 71(1)(C) OF THE ACT. IN THE INITIAL ASSESSMENT PROCEEDINGS, THOUGH ADDIT IONS WERE MADE MORE THAN WHAT ADDITIONS WAS MADE IN THE SECOND ROU ND, PENALTY PROCEEDING WAS NOT INITIATED. ON APPEAL, LEARNED CI T(A) HAD ONLY PROVIDED ONE MORE OPPORTUNITY TO THE ASSESSEE TO PR ESENT ITS CASE BEFORE THE LEARNED ASSESSING OFFICER AND THE ASSESS EE WAS ABLE TO CONVINCE THE LEARNED ASSESSING OFFICER REGARDING IT S CLAIM ON LOSS ON ITA NO. 331/14 :- 5 -: SALE OF CAR AND INTEREST INCOME WHEREBY NO ADDITION WAS MADE ON THE SAME. ONLY THE ADDITION WITH RESPECT TO DEPRECIATIO N WAS CONFIRMED WITH RESPECT TO BEARING MOUNTING AND DISMOUNTING H EATERS AMOUNTING TO ` 48,65,360/- DOUBTING THE PURCHASE OF THE MACHINERY THOUGH THE PURCHASE CONSIDERATION WAS PAID BY CHEQU E. FURTHER, THE DEPRECIATION WAS ALLOWED ON THE COMPUTER, MOTOR CAR AND TWO-WHEELER WHICH WERE DISALLOWED ON THE EARLIER OCCASION. IN T HIS SITUATION, WE ARE OF THE CONSIDERED VIEW THAT THE LEARNED ASSESSING O FFICER HAS EXCEEDED HIS POWER BY TRAVELLING BEYOND THE SCOPE OF THE ORD ER OF LEARNED CIT(A) BECAUSE THE ISSUE UNDER CONSIDERATION WAS ON LY WITH RESPECT TO ADDITIONS AND NOT LEVY OF PENALTY. RATHER THE QUES TION OF LEVYING PENALTY WAS DISPENSED WITH IN THE INITIAL ASSESSMEN T PROCEEDINGS ITSELF. MOREOVER, IN THE RELEVANT CASE BEFORE US PENALTY IS LEVIED MAINLY DUE TO THE FINDING OF THE LEARNED ASSESSING OFFICER THA T THE ASSESSEE COMPANY HAD PAID CHEQUE TO M/ R.B ENTERPRISES PVT. LTD., FOR THE PURCHASE OF THE MACHINERY AND SHRI. GOPAL DAMANI WI THDREW THIS AMOUNT TO BE HANDED OVER TO SHRI B.K.BAGDI, THE DIR ECTOR OF THE ASSESSEE-COMPANY. THIS FINDING OF THE REVENUE IS N OT SUPPORTED WITH ANY COGENT EVIDENCE. THEREFORE CONCEALMENT OF INCOM E IS NOT ESTABLISHED BEYOND DOUBT. IN THESE CIRCUMSTANCES, W E DO NOT FIND IT APPROPRIATE ON THE PART OF THE LEARNED ASSESSING OF FICER TO LEVY PENALTY U/S. 271(1)(C) OF THE ACT. THEREFORE, WE HEREBY DIR ECT THE LEARNED ITA NO. 331/14 :- 6 -: ASSESSING OFFICER TO DELETE THE PENALTY LEVIED BY H IM OF ` 22,22,791/- WHICH IS FURTHER CONFIRMED BY THE LEARNED CIT(A). 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH APRIL, 2016, AT CHENNAI. SD/ - SD/ - ( . ) ( DUVVURU RL REDDY ) / JUDICIAL MEMBER ( . ) (A. MOHAN ALANKAMONY) / ACCOUNTANT MEMBER / CHENNAI 2 / DATED: 29 TH APRIL, 2016 RD ' )45 65 / COPY TO: 1 . & / APPELLANT 4. 7 / CIT 2. )*& / RESPONDENT 5. 5 ): / DR 3. 7 () / CIT(A) 6. # / GF