The ACIT, Circle-1, Bhavnagar V. M/s. Investment and Precision Casting Ltd., Bhavnagar

ITA 3368/AHD/2009

• Counselvise Citation: 336820514 RSA 2009
• Duration Of Justice: 2 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 07-11-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 23-12-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D K SINGH
• Assessee Lawyers: M K PATEL
• 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. 3368/ AHD/2009 (ASSESSMENT YEAR 2004-05) ACIT, CIRCLE 1, BHAVNAGAR VS. INVESTMENT & PRECISION CASTING LTD., NARI ROAD, BHAVNAGAR PAN/GIR NO. : AAACI4650D (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI D.K.SINGH, SR. DR RESPONDENT BY: SHRI M K PATEL, AR DATE OF HEARING: 07.11.2012 DATE OF PRONOUNCEMENT: 07.12.2012 O R D E R PER SHRI A. K. GARODIA, AM:- THIS IS REVENUES APPEAL DIRECTED AGAINST THE ORDE R OF LD. CIT(A) XX, AHMEDABAD DATED 25.09.2009 FOR THE ASSESSMENT Y EAR 2004-05. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: 1. THE LD. CIT(A)-XX, AHMEDABAD HAS ERRED IN LAW A ND ON FACTS IN DELETING THE PENALTY OF RS.31,35,6707- IMPOSED B Y THE AO U/S. 271(1 )(C) OF THE I.T. ACT, WITHOUT PROPERLY APPREC IATING THE FACTS OF THE CASE AND THE MATERIAL BROUGHT ON RECORD BY T HE ASSESSING OFFICER. 1.2 IN DOING SO, THE LD. CIT(A) HAS ERRED IN LAW AN D ON FACTS IN NOT APPRECIATING THAT THE ASSESSEE HAD FURNISHED INACCU RATE PARTICULARS OF ITS INCOME BY CLAIMING 100% DEPRECIATION IN RESP ECT OF PLANT & MACHINERY OF RS.27,19,7497- BEING AIR CONDITIONING PLANT BY WRONGLY CLAIMING THE SAME TO BE AN ENERGY SAVING MA CHINERY. 1.3 IN DOING SO, THE LD. CIT(A) HAS ERRED IN LAW AN D ON FACTS IN NOT APPRECIATING THAT THE ASSESSEE FAILED TO SUBSTANTIA TE ITS CLAIM OF 100% DEPRECIATION ON THE SAID AIR CONDITIONING PLAN T WHILE THE I.T.A.NO.3368 /AHD/2009 2 AIR CONDITIONING PLANT FINDS NO MENTION IN THE LIST OF ENERGY SAVING DEVICES GIVEN UNDER PLANT & MACHINERY AGAINS T ITEM 111(8) (IX) OF APPENDIX-1 OF THE DEPRECIATION TABLE, 1.4 IN DOING SO, THE LD. CIT(A) HAS ERRED IN LAW AN D ON FACTS IN NOT APPRECIATING THAT THE ASSESSEE'S CLAIM OF DEDUCTION U/S, 35 OF RS.76,84,1807-WAS FOUND TO BE INACCURATE BY THE AO ON THE BASIS OF INQUIRIES CONDUCTED BY HIM WHICH REVEALED THAT T HE MACHINERY INVOLVED WAS CLEARLY A PART OF THE PRODUCTION PROCE SS AND THE SAME WAS NOT BEING UTILIZED IN REALITY FOR ANY RESEARCH ACTIVITY. 1.5 IN DOING SO, THE LD. CIT(A) HAS ERRED IN TAW AN D ON FACTS IN NOT APPRECIATING THAT, SINCE THE ASSESSEE COULD NOT SUB STANTIATE ITS EXPLANATION IN RESPECT OF THE AFORESAID INACCURATE CLAIMS AND FAILED TO PROVE THAT ITS EXPLANATION WAS BONAFIDE AND ALL THE RELEVANT FACTS RELATING TO THE SAME HAD BEEN DISCLOSED BY IT, THE SAID PENALTY WAS RIGHTLY IMPOSED BY THE AO U/S. 271 (1)(C) READ WITH EXPLANATION 1 (B) OF THE SAID SECTION. 1.6 IN DOING SO, THE LD. CIT(A) HAS ERRED IN LAW AN D ON FACTS IN DELETING THE SAID PENALTY BY HOLDING THAT THE ASSES SEE HAD NOT FURNISHED INACCURATE PARTICULARS WITH ANY MALAFIDE INTENTION, WITHOUT APPRECIATING THE RATIO OF THE DECISION OF T HE HON'BLE SUPREME COURT IN THE CASE OF UNION OF INDIA & OTHER S VS. DHARAMENDRA TEXTILE PROCESSORS & OTHERS REPORTED IN 306ITR 277 IN WHICH THE HON'BLE APEX COURT HAS HELD THAT WILLF UL .CONCEALMENT IS NOT AN ESSENTIAL INGREDIENT FOR LEV Y OF PENALTY U/S. 271(1)(C). 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT (A)-XX, AHMEDABAD OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. 3. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE CIT(A)-XX, AHMEDABAD BE SET ASIDE AND THAT OF A.O. BE RESTOR ED TO THE ABOVE EXTENT. 2. LD. D.R. SUPPORTED THE PENALTY ORDER WHEREAS, IT WAS SUBMITTED BY THE LD. A.R. THAT THE TRIBUNAL ORDER IN QUANTUM PRO CEEDINGS IN I.T.A.NO. 798 & 852/AHD/2008 DATED 28.01.2011 IS SUBMITTED AS PER WHICH, THE TRIBUNAL HAS RESTORED BACK ONE QUANTUM ADDITION TO THE FILE OF LD. CIT(A) FOR FRESH DECISION WHEREAS ONE MORE ISSUE HAS BEEN RESTORED BACK TO THE A.O. FOR FRESH DECISION. HE SUBMITTED THAT UNDER THESE FACTS, THE PENALTY I.T.A.NO.3368 /AHD/2009 3 IMPOSED BY THE A.O. DOES NOT SURVIVE. LD. D.R. SUP PORTED THE ORDERS OF AUTHORITIES BELOW. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDER OF AUTHORITI ES BELOW AND THE TRIBUNAL DECISION IN ASSESSEES OWN CASE IN QUANTUM PROCEEDINGS. WE FIND THAT THE PENALTY WAS IMPOSED BY THE A.O. IN RE SPECT OF DISALLOWANCE OF RS.76,84,180/- PERTAINING TO DISALLOWANCE OF R & D EXPENSES AND IMPOSED PENALTY ALSO FOR DISALLOWANCE OF RS.10,56,3 55/- PERTAINING TO EXPENSES CLAIMED IN THE NAME OF ENERGY SAVING DEVIC E. AS PER PARA 7 OF THE TRIBUNAL ORDER IN QUANTUM PROCEEDINGS, WE FIND THAT THE ISSUE REGARDING DISALLOWANCE OF EXPENDITURE CLAIMED ON PU RCHASE OF MACHINERY ALLEGED TO BE NOT DIRECTLY RELATED TO R&D ACTIVITY, WAS RESTORED BACK BY THE TRIBUNAL TO THE FILE OF THE A.O. FOR A FRESH DE CISION AND HENCE, THE PENALTY IMPOSED BY THE A.O. AND CONFIRMED BY LD. CI T(A) IN RESPECT OF THIS ADDITION, DOES NOT SURVIVE. HOWEVER, IF THE A .O. MAKES THE ADDITION AGAIN IN SET ASIDE PROCEEDINGS, THEN THE A.O. IS AT LIBERTY TO INITIATE PENALTY PROCEEDINGS AGAIN IF HE FEELS SO. 4. REGARDING THE SECOND ISSUE I.E. ADDITION OF RS.1 4,08,475/-, W4E FIND THAT AS PER PARA 8 OF THE TRIBUNAL ORDER IN QU ANTUM PROCEEDINGS, THE ISSUE HAS BEEN RESTORED BACK TO THE FILE OF LD. CIT (A) FOR A FRESH DECISION AND HENCE, THE ISSUE REGARDING PENALTY ON THIS ADDI TION IS ALSO RESTORED BACK TO THE FILE OF LD. CIT(A) FOR A FRESH DECISION SIMULTANEOUSLY WITH HIS DECISION IN QUANTUM PROCEEDINGS. IN CASE, HE HAS A LREADY PASSED THE ORDER IN QUANTUM PROCEEDINGS, THEN HE SHOULD DECIDE THE PENALTY ISSUE ON THIS ADDITION AFRESH IN LINE WITH HIS FRESH DECISIO N IN QUANTUM PROCEEDINGS. 5. IN VIEW OF ABOVE DISCUSSION, THE PENALTY APPEAL OF THE REVENUE STANDS DISPOSED OF AND THE SAME IS PARTLY ALLOWED F OR STATISTICAL PURPOSES I.T.A.NO.3368 /AHD/2009 4 BECAUSE IN THE FACTS OF THE PRESENT CASE, WE DO NOT FIND ANY REASON TO CONFIRM ANY PENALTY AT THIS STAGE. IN RESPECT OF P ENALTY FOR THE ADDITION OF RS.14,08,475/-, WE HAVE RESTORED BACK THE MATTER TO THE FILE OF LD. CIT(A) FOR FRESH DECISION AND HENCE, TO THIS EXTENT, THE A PPEAL OF THE REVENUE STANDS ALLOWED FOR STATISTICAL PURPOSE. 6. IN THE RESULT, APPEAL OF THE REVENUE STANDS PART LY ALLOWED FOR STATISTICAL PURPOSES. 7. 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 03.12.12 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 04.12.12.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 07/12/12 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.7/12 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 07/1 2/2012 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. .