Petronet VK Ltd., JAMNAGAR V. The Assistant Commissioner of Income Tax, Circle-2, JAMNAGAR

ITA 342/RJT/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2275 (ITAT-RAJKOT)
• Duration Of Justice: 4 year(s) 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 19-01-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 08-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: YOGESH PANDEY
• Assessee Lawyers: VIMAL DESIA
• Keywords: Depreciation; Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH , RAJKOT BEFORE: S H RI PRAMOD KUMAR , ACCOUNTANT MEMBER AND SHR I S. S. GODARA , JUDICIAL MEMBER [CONDUCTED THROUGH E - COURT AT AHMEDABAD] PETRONET VK LIMITED, PLOT 11/2, DEV PARK, B/H. ATUL PETROL PUMP, MEHULNAGAR, JAMNAGAR - 361006 PAN: AABCP6350J (APPELLANT) VS THE ACIT, CIRCLE - 2, JAMNAGAR (RESPONDENT ) REVENUE BY : S H RI YOGESH PANDEY , CIT - D . R. ASSESSEE BY: S H RI VIMAL DESIA , A.R. DATE OF HEARING : 19 - 01 - 2 016 DATE OF PRONOUNCEMENT : 26 - 02 - 2 016 / ORDER P ER : S. S. GODARA , JUDICIAL MEMBER : - THI S ASSESSEE S APPEAL FOR A.Y. 2004 - 05 , AR ISES FROM ORDER OF THE CIT(A), JAMNAGAR DATED 30 - 06 - 2011 IN APPEAL NO. CIT(A)/JAM/321// 10 - 11/150 , UPHOLDING PENALTY OF RS. 1,55,57,140/ - IMPOSED BY THE ASSESSIN G OFFICER IN PENALTY ORDER DATED 28 - 02 - 2011, I T A NO . 342 / RJT /20 1 1 A SSESSMENT YEAR 200 4 - 05 I.T.A NO. 342 /RJT /20 11 A.Y. 2004 - 05 PAGE NO PETRONET VK LTD VS. ACIT 2 IN PROCEEDINGS UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. WE COME TO RELEVANT FACTS. THE ASSESSEE IS A PUBLIC LIMITED COMPANY TRANSPORTING PETROLEUM THROUGH PIPELINES. THE A SSESSING OFFICER COMPLETED A REGULAR ASSESSMENT IN ITS CASE ON 30 - 11 - 2006 DISALLOWING DEPRECIATION ON PIPELINE AND TELECOM SYSTEM OF RS. 2,10,93,750/ - AND RS. 2,22,71,117/ - ; RESPECTIVELY. HE ALSO INITIA TED THE IMPUGNED SECTION 271(1)(C) PE NAL TY PROCEEDING S ALLEGING CONCEALMENT AND FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE CIT(A) CONFIRMED BOTH THESE QUANTUM DISALLOWANCES IN HIS ORDER DATED 24 - 09 - 2007. A CO - ORDINATE BENCH OF THE TRIBUNAL IN ITA 531/RJT/2007 DECIDED ON 08 - 06 - 2010 REJECTED ASSESSE E S CORRESPONDING GROUNDS. QUANTUM PROCEEDINGS SEEM TO HAVE FINALITY IN THIS BACKDROP OF FACTS. 3. WE COME TO THE IMPUGNED PENALTY PROCEEDINGS. THE FIRST COMPONENT PERTAINS TO DISALLOWANCE OF DEPRECATION CLAIM ON PIPELINE . THE ASSESSEE HAD CAPITALIZ ED A SUM OF RS. 20 CRORES EACH PAYABLE TO KANDLA PORT TRUST AND GUJARAT MARITIME BOARD TOWARDS FACILITATION CHARGES OF ITS PIPELINES PASSING THROUGH THEIR BORDERS IN A SSESSMENT YEAR 2001 - 02. THIS IS STOOD DISALLOWED AS THE SAME DID NOT FORM ACTUAL C O ST O F ASSETS OR PIPELINES AND THERE WAS NO AGREEMENT FOUND TO HAVE BEEN EXECUTED BETWEEN THESE PARTIES. THE ASSESSING OFFICER DISALLOWED 25% OF THE ABOVE STATED CHARGES COMING TO RS. 5 CRORES. THE VE RY COURSE OF ACTION FOLLOWED IN ASSESSMENT YEAR 2002 - 03. T HE I.T.A NO. 342 /RJT /20 11 A.Y. 2004 - 05 PAGE NO PETRONET VK LTD VS. ACIT 3 ASSESSEE CLAIMED SIMILAR RELIEF OF DEPRECIATION IN THE IMPUGNED ASSESSMENT YEAR AS WELL WITHOUT REVISING ITS CLAIM IN VIEW OF THE ABOVE STATED DEVELOPMENT . THE ASSESSING OFFICER RECOMPUTED WRITTEN DOWN VALUE RIGHT FROM THE BEGINNING AND ARRIVED AT THE IMPUGNED DEPRECIATION ALLOWANCE OF RS. 2,10,93,750/ - . THE ASSESSING OFFICER REJECTED ASSESSEE S CORRESPONDING EXPLANATION BY HOLDING THAT ITS DEPRECIATION AMOUNTED TO FILING OF INACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C). HE WENT ON TO MAKE A VERY LENGTHY DISCUSSION IN PENALTY ORDER ON THIS ASPECT. THE ASSESSEE S CORRESPONDING ARGUMENT CHALLENGING ASSESSING OFFICER S ACTION STANDS DECLINED IN LOWER APPELLATE PROCEEDINGS AS WELL. 4 . LD. AUTHORIZED REPRESENTATIVE PRODUCES BE FORE US A COPY OF THE TRIBUNAL S ORDER ITA 53 1 /RJT/2007 DECIDED ON 01 - 06 - 2010 DELETING PENALTY IMPOSED QUA THE ABOVE STATED DEPRECIATION CLAIM ON PIPELINE. HE SUBMITS THAT RELEVANT FACTS QUA THIS QUESTION ARE IDENTICAL SINCE THIS ISSUE CAME UP FOR THE FIR ST TIME IN ASSESSMENT YEAR 2001 - 02. HIS CASE IS THAT THE IMPUGNED ASSESSMENT YEAR DOES NOT INV OLV E ANY NEW CLAIM OF DEPRECATION SINCE ASSESSEE S ACTION IN SEEKING THIS RELIEF IS AN OFFSHOOT OF THE PAST DEVELOPM ENTS. MERELY CONSEQUENT IAL IS IN NA T U RE IN O THER WORDS. THE REVENUE FAILS TO CONTROVERT THIS FACTUAL POSITION . WE DRAW SUPPORT FROM ABOVE STATED CO - ORDINATE BENCH DECISION AND DELETE THE IMPUGNED PENALTY OF RS. 75,67,425/ - ARISING FROM DISALLOWANCE ON DEPRECATION OF RS. 2,10,93,750/ - CLAIMED ON PI PELINES IN QUESTION. ASSESSEE S FORMER ARGUMENTS SUCCEED. I.T.A NO. 342 /RJT /20 11 A.Y. 2004 - 05 PAGE NO PETRONET VK LTD VS. ACIT 4 5 . THIS LEAVES US WITH LATTER PENALTY COMPONENT OF RS. 79,89,715/ - QUA DISALLOWANCE ON DEPRECIATION ON TELECOM SYSTEM OF RS. 2,22,70,117/ - MADE RIGHT FROM ASSESSMENT UP TO THE TRIBUNAL. THE ASSESS ING OFFICER NOTICED THAT THIS TELECOM SYSTEM HAD NOT BEEN INSTALLED AND PUT TO USE FOR THE PURPOSE OF BUSINESS . THE ASSESSEE FILED INDIAN OIL CORPORATION LETTER DATED 24 - 11 - 2006 IN SUPPORT. THE ASSESSING OFFICER OBSERVED THAT THE SAME PROVED MERE COMPLET ION OF WORK AND NOT INSTALLATION OF SYSTEM AND USES THEREOF FOR BUSINESS PURPOSE . HE ACCORDINGLY DISALLOWED THE IMPUGNED DEPRECATION CLAIM. HE TREATS THE SAME TO BE AN INSTANCE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME AND LEVIED THE IMPUGNED PEN ALTY . 6 . WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO THE ISSUE. THERE CAN BE NO DISPUTE ABOUT THE SETTLED LAW THAT QUANTUM AND PENALTY ARE TWO SEPARATE PROCEEDINGS AND EACH EVERY DISALLOWANCE DOES NOT IPSO - FACTO RESULT IN AN INSTANT OF CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME AS HELD BY HON BLE APEX COURT IN CIT VS. RELIANCE PETRO - CHEMICALS 322 IT R 158. WE KEEP IN MIND THIS FINE DISTINCTION BETWEEN QUANTUM AND PENALTY PROCEEDINGS AND PROCEED TO DEAL WITH FACTS OF THE INSTANT CASE . IT ALREADY STANDS NARRATED THAT THE ASSESSEE HAS ALREADY FILED ALL NECESSARY PARTICULARS IN SUPPORT OF ITS D EPRECATION CLAIM RAISED ON TELE COM SYSTEM INSTALLATION. THE ASSESSING AUTHORITY ITSELF RECORDS THIS FACT IN ASSESSMENT ORDER. PAGE 24 OF PAPER BOOK COMPRISE S OF INDIAN OIL C OMPORATI ON TO THE EFFECT THAT TELECOM SYSTEM INSTALLATION WORK HAS BEEN COMPLETED AS PER SPECIFICATIONS AND DRAWINGS. THE ASSES SING OFFICER S REASONING I.T.A NO. 342 /RJT /20 11 A.Y. 2004 - 05 PAGE NO PETRONET VK LTD VS. ACIT 5 READS THAT THE SAME HAD NOT BEEN PUT TO USE AS THE RELEVANT DATE FOR THIS PURPOSE 30 - 09 - 2004 RELEVANT FOR ASSESSMENT YEAR 2005 - 06 AND NOT IN ASSESSMENT YEAR 2004 - 05 IN QUESTION. WE OBSERVE IN THESE FACTS THAT ASSESSEE S CLAIM WAS BASED ON THE FACT OF HAVING COMPLETED TELECOM SYSTEM INSTALLATION AWAITING AFTER SATISFYING ALL SP ECIFICATIONS. WE ARE OF THE VIEW THAT THE SAME DOES NOT IN ANY WAY AMOUNT TO FURNISHING OF INACCURATE PA RTICULARS OF INCOME U/S. 271(1)(C) AS NO INFORMATION HAD BEEN FOUND IN THE RELEVANT SUPPORTING EVIDENCE FILED SO FAR AS THEIR PARTICULARS ARE CONCERNED . WE ACCEPT ASSESEE S ARGUMENTS AND REJECT THOSE RAISED AT REVENUE S BEHEST SUPPORTING THE IMPUGNED PENALTY. 7 . THIS ASSESSEE S APPEAL IS ALLOWED. ORDER PR ONOUNCED IN THE OPEN C OUR T ON 26 - 02 - 201 6 SD/ - SD/ - (PRAMOD KUMAR ) ( S. S. GO DARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 26 /02 /2016 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, RAJKOT