Sakal Paper Ltd., V. Deputy Commssioner of Income-tax,

ITA 348/PUN/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5357 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 16-05-2018
• Assessment Year: 2008-2009
• Appeal Filed On: 01-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ASHOK N KOTHARY
• Keywords: Depreciation; Unabsorbed depreciation; Capital expenditure
• Section: 143(3); 14A; 27

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NOS.347 AND 348/PUN/2015 / ASSESSMENT YEAR : 2007-08 AND 2008-09 SAKAL PAPERS LTD., 595, BUDHWAR PETH, PUNE 411 002. PAN : AACCS7605Q. . / APPELLANT V/S ASST.COMMISSIONER OF INCOME TAX, CIRCLE 6, PUNE. . / RESPONDENT . / ITA NO.397/PUN/2015 / ASSESSMENT YEAR : 2007-08 ASST.COMMISSIONER OF INCOME TAX, CIRCLE 6, PUNE. . / APPELLANT V/S SAKAL PAPERS LTD., 595, BUDHWAR PETH, PUNE 411 002. PAN : AACCS7605Q. . / RESPONDENT ASSESSEE BY : SHRI ASHOK N. KOTHARY REVENUE BY : SHRI AJAY MODI, JCIT. / ORDER PER ANIL CHATURVEDI, AM : 1. THESE TWO APPEALS FILED BY THE ASSESSEE ARE EMANATING OUT O F THE CONSOLIDATED ORDER OF COMMISSIONER OF INCOME TAX (A)-4, PU NE DT. / DATE OF HEARING : 16.05.2018 / DATE OF PRONOUNCEMENT: 18 .07.2018 2 15.01.2015 FOR THE ASSESSMENT YEARS 2007-08 AND 2008-0 9 AND REVENUE HAS FILED CROSS-APPEAL AGAINST THE ORDER OF COMMI SSIONER OF INCOME TAX (A)-4, PUNE FOR A.Y. 2007-08. 2. BEFORE US, AT THE OUTSET, BOTH THE PARTIES SUBMITTED THAT THOUGH THE APPEALS ARE FOR TWO DIFFERENT ASSESSMENT YEARS BUT T HE FACTS AND ISSUES INVOLVED IN BOTH THE APPEALS ARE IDENTICAL EXCEPT FOR THE ASSESSMENT YEAR AND THE AMOUNTS INVOLVED AND THEREFO RE THE SUBMISSIONS MADE BY THEM WHILE ARGUING ONE APPEAL WOULD BE EQUALLY APPLICABLE TO THE OTHER APPEAL ALSO AND THUS, BOTH THE A PPEALS CAN BE HEARD TOGETHER. IN VIEW OF THE AFORESAID SUBMISSIONS OF BOTH THE PARTIES, WE, FOR THE SAKE OF CONVENIENCE, PROCEED TO DISPOS E OF BOTH THE APPEALS BY A CONSOLIDATED ORDER BUT HOWEVER, PROCEED W ITH NARRATING THE FACTS FOR ASSESSMENT YEAR 2007-08. 3. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RE CORD ARE AS UNDER :- 3.1 ASSESSEE IS A COMPANY STATED TO BE ENGAGED IN THE BUSINESS OF PRINTING AND PUBLISHING OF NEWSPAPERS AND PERIODICALS. ASSES SEE ELECTRONICALLY FILED ITS RETURN OF INCOME FOR A.Y. 2007-08 ON 12.11.2007 DECLARING TOTAL INCOME OF RS.10,20,49,650/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT VIDE ORDER DT.15.12.2009 AND THE TOTAL INCOME WAS DETERMINED AT RS.13,70,91,085/- INTER-ALIA BY MAKING ADDITION S / DISALLOWANCES OF RS.2,67,00,519/- ON ACCOUNT OF LONG TERM CAP ITAL GAINS, RS.61,15,826/- ON ACCOUNT OF DEDUCTION U/S 80IA OF THE ACT, RS.23,05,985/- ON ACCOUNT OF CAPITAL EXPENDITURE AND RS.1 ,24,000/- 3 ON ACCOUNT OF DEDUCTION U/S 14A OF THE ACT. AO VIDE O RDER DT.22.03.2013 LEVIED PENALTY U/S 271(1)(C) OF THE ACT OF RS.98,44.900/- ONLY ON ADDITIONS ON ACCOUNT OF LONG TERM CAPITAL GAINS AND WITHDRAWAL OF DEDUCTION CLAIMED U/S 80IA(4) OF T HE ACT. FOR A.Y. 2008-09 THE DETAILS OF INCOME OFFERED BY THE ASSESSEE , ADDITIONS MADE AND PENALTY LEVIED ARE AS UNDER : A.Y. RETURNED INCOME IN RS. ADDITIONS TOTAL INCOME ASSESSED U/S 143(3) IN RS. PENALTY LEVIED 2008-09 60,60,21,360/- 1,41,60,820/- (LONG TERM CAPITAL GAINS) RS.1,71,353/- (DISALLOWANCE U/S 14A) 62,02,28,533/- RS.42,48,246/- ON LONG TERM CAPITAL GAINS . AGGRIEVED WITH THE PENALTY ORDER, ASSESSEE CARRIED THE M ATTER BEFORE LD.CIT(A), WHO VIDE CONSOLIDATED ORDER DT.15.01.2015 (IN APPEA L NO.PN/CIT(A)-4/CIR.6/103/13-14) 430/09-10) GRANTED PARTI AL RELIEF TO THE ASSESSEE FOR A.Y. 2007-08 AND DISMISSED THE APPEAL O F THE ASSESSEE FOR A.Y. 2008-09. AGGRIEVED BY THE ORDER OF LD.C IT(A), ASSESSEE AND REVENUE ARE NOW IN APPEAL BEFORE US. THE GROUNDS RAISED BY THE ASSESSEE IN A.Y. 2007-08 ARE AS UNDER : ON THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CA SE THE LEARNED ASSESSING OFFICER AND CIT APPEALS ERRED IN : 1. HOLDING THAT THE ASSESSEE CONCEALED THE INCOME A ND /OR CONCEALED THE PARTICULARS OF INCOME AND/OR FURNISHED INACCURA TE PARTICULARS OF INCOME ATTRACTING PROVISIONS OF SEC . 271(1)(C) OF THE INCOME TAX ACT , 1961 AND LEVYING THE PENALTY OF RS .80,10,156/-. THIS ACTION BEI N G BAD IN LAW IT IS PRAYED THAT THE PENALTY OF RS.80 ,10,156/- BE DELETED . 2. I NVOKING THE PROVISIONS OF SEC. 271(1) (C) AND LEVYI NG PENALTY OF RS. 80,10,156/ -. THE ACTION BEING BAD IN LAW IT IS SUBMITTED THAT TH AT THE PENALTY BE DELETED . 3.2. THE GROUND RAISED BY THE REVENUE IN APPEAL NO.397/P UN/2015 READS AS UNDER : 4 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE PENALTY LEVIED U/S 271(1)(C) OF THE I.T. ACT, 1961 BY THE ASSESSING OFFICER. ASSESSEE HAS CLAIMED DEDUCTION U/S 80IA(4) WITHOUT SETTING OFF THE UNABS ORBED DEPRECIATION AND LOSSES OF EARLIER YEARS WHICH IS NOT INTENDED B Y SECTION 80IA(5). IF UNABSORBED DEPRECIATION / LOSSES OF EARLIER YEARS O F 80IA UNIT ARE SET OFF THERE WOULD BE NO PROFIT FOR A.Y. 2007-08 TO BE CLAIMED U/S 80IA(4). SINCE ASSESSEE HAS CLAIMED INELIGIBLE DEDUCTION U/S 80IA(4), PENALTY PROCEEDINGS U/S 271(1)(C) ARE CLEARLY ATTRACTED FOR FURNISHING INACCURATE PARTICULARS OF INCOME. 3.3. SIMILAR GROUNDS HAVE BEEN RAISED BY ASSESSEE IN ITA NO.348/PUN/2015 FOR A.Y. 2008-09. 4. BEFORE US, LD.A.R. SUBMITTED THAT HE WOULD LIKE TO RAISE ADDITIONAL GROUND TO THE EFFECT THAT THE SATISFACTION RECOR DED BY THE AO WHILE INITIATING PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT WAS NOT CORRECT AS THE PENALTY PROCEEDINGS WAS INITIATED FOR CONCEALME NT OF INCOME AND FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME . HE SUBMITTED THAT THOUGH NO SPECIFIC GROUND WITH RESPECT TO NON- RECORDING OF SATISFACTION HAS BEEN TAKEN BY THE ASSESSEE BUT RULE 11 OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 1963 PERMITS TH E ASSESSEE TO RAISE ANY GROUND WHICH WAS NOT SET FORTH IN THE MEMORANDUM OF APPEAL FOR THE FIRST TIME BEFORE THE TRIBUNAL. HE THEREFORE PRAYED THAT THE SAME BE ADMITTED FOR ADJUDICA TION AS IT WAS A LEGAL ISSUE. THE LD.D.R. OBJECTED TO IT AND SUBMITTED THA T NO SUCH GROUND WAS URGED BY THE ASSESSEE BEFORE LD.CIT(A). 5. ON THE ISSUE OF ADDITIONAL GROUNDS RAISED BEFORE US BY ASSESSEE, WE HAVE HEARD THE RIVAL SUBMISSIONS. IT IS AN UNDISPUTED FA CT THAT IN THE MEMO OF APPEAL, ASSESSEE HAS NOT RAISED ANY GROUND WITH RESPECT TO NON-RECORDING OF SATISFACTION BY AO BUT BEFORE US, LD.A.R . HAS 5 RELIED ON RULE 11 OF INCOME TAX (APPELLATE TRIBUNAL) RULES 19 63 IN SUPPORT OF RAISING THE ORAL GROUND ON THIS ISSUE. A PERU SAL OF RULE 11 REVEALS THAT THERE IS NO BLANKET BAR ON THE APPELLANT R AISING ADDITIONAL GROUND NOT SET FORTH IN THE MEMORANDUM OF APPEAL PROVIDE D THAT THE LEAVE OF THE TRIBUNAL IS REQUIRED TO BE OBTAINED AND FURTHE R THE AFFECTED PARTY MUST BE GIVEN A SUFFICIENT OPPORTUNITY OF BEIN G HEARD IN THAT ISSUE. IN THE PRESENT CASE, WE FIND THAT THOUGH TH E ASSESSEE HAS NOT RAISED THE ADDITIONAL GROUND (WHICH IS URGED BEFORE US ORALLY) IN THE MEMORANDUM OF APPEAL WHEREBY HE IS CHALLENGING THE VA LIDITY OF PENALTY ORDER, WE HAVE NO OBJECTION IN ITS ADMISSIONS AS IT IS A LEGAL GROUND. WE THEREFORE ADMIT THE ADDITIONAL GROUND ON VALIDIT Y OF PENALTY ORDER. 6. BEFORE US, LD.A.R. SUBMITTED THAT THE PENALTY ORDER PAS SED BY AO IS BAD IN LAW AND THEREFORE BE SET ASIDE. HE SUBMITT ED THAT WHILE PASSING THE ASSESSMENT ORDER AO WITH RESPECT TO ADD ITIONS OF RS.2,67,00,519/- ON ACCOUNT OF LONG TERM CAPITAL GAINS AND ON ACCOUNT OF DEDUCTION U/S 80IA OF THE ACT OF RS.61,15,826/ - HAS RECORDED THAT ASSESSEE HAD FURNISHED INACCURATE PARTICU LARS OF INCOME / CONCEALED THE INCOME. BUT WHILE PASSING THE PENALTY ORD ER U/S 271(1)(C) OF THE ACT ON 22.03.2013 AO HAD LEVIED PENALTY FOR FURNISHING INACCURATE PARTICULARS OF INCOME. IN SUPPORT OF HIS AFORESAID CONTENTION, HE POINTED TO THE FINDINGS OF AO IN TH E BOTH THE ORDERS. HE THEREFORE SUBMITTED THAT WHILE RECORDING SATIS FACTION FOR LEVY OF PENALTY IN THE ASSESSMENT ORDER THE AO HAS RECO RDED SATISFACTION FOR LEVYING PENALTY BE INVOKING BOTH THE LIMBS O F SEC.271(1)(C) OF THE ACT VIZ. CONCEALMENT OF INCOME AS WELL AS 6 FURNISHING INACCURATE PARTICULARS OF INCOME, SHOWS THAT THE RE WAS AMBIGUITY IN THE MIND OF AO WITH RESPECT TO CHARGE FOR WHIC H THE PENALTY IS TO BE LEVIED. HE THEREFORE RELYING ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SAMSON PERINCHE RY REPORTED IN (2017) 392 ITR 4 (BOM) SUBMITTED THAT IN THE ABSENCE OF PROPER SHOW CAUSE NOTICE TO ASSESSEE, PENALTY U/S 271(1 )(C) CANNOT BE LEVIED AND THEREFORE URGED THAT PENALTY LEVIED BY AO BE DELETED. LD.D.R. ON THE OTHER HAND, SUPPORTED THE ORDER OF LOWER AUTHORITIES. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE M ATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPEC T TO LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. IN THE PRESENT CASE IN A .Y. 2007-08 PENALTY OF RS.98,44,900/- HAS BEEN LEVIED U/S 271(1)(C) OF T HE ACT ON ADDITION ON ACCOUNT OF LONG TERM CAPITAL GAINS AND FOR WITHD RAWAL OF DEDUCTION CLAIMED U/S 80IA(4) OF THE ACT. FOR A.Y. 2008-09 PENALTY OF RS.61,15,826/- WAS LEVIED ON ADDITION MADE ON ACCOUNT OF WITHDRAWAL OF DEDUCTION CLAIMED U/S 80IA(4) OF THE ACT. THE PERUSAL OF ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT REVEALS THAT IN THE ASSESSMENT ORDER AO HAD RECORDED SATISFACTION FOR CONC EALMENT OF INCOME / FILING INACCURATE PARTICULARS OF INCOME. THEREAFTER, IN THE PENALTY ORDER PASSED U/S 271(1)(C) OF THE ACT, AO HAD LEVIE D PENALTY FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IT IS A SETTLED LAW THAT WHILE LEVYING PENALTY FOR CONCEALMENT OF INCOME / FURN ISHING OF INACCURATE PARTICULARS OF INCOME, THE AO HAS TO RECORD SA TISFACTION AND THEREAFTER COME TO A FINDING IN RESPECT OF ONE OF THE LIMBS, WHICH IS SPECIFIED UNDER SECTION 271(1)(C) OF THE ACT. THE FIRST STEP IS TO RECORD SATISFACTION WHILE COMPLETING THE ASSESSMENT AS TO WHETHER THE 7 ASSESSEE HAD CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. THEREAFTER, NOTICE U/S 274 READ WITH SECTION 27 1(1)(C) OF THE ACT IS TO BE ISSUED TO THE ASSESSEE. THE ASSESSIN G OFFICER THEREAFTER HAS TO LEVY PENALTY UNDER SECTION 271(1)(C) OF TH E ACT FOR NON-SATISFACTION OF EITHER OF THE LIMBS. WHILE COMPLETING THE ASSESSMENT, THE ASSESSING OFFICER HAS TO COME TO A FINDING AS TO WHETHER THE ASSESSEE HAS CONCEALED ITS INCOME OR FURNIS HED INACCURATE PARTICULARS OF INCOME. THE HONBLE BOMBAY HIGH C OURT IN CIT VS. SHRI SAMSON PERINCHERY (SUPRA) HAS HELD THAT WHER E INITIATION OF PENALTY IS ONE LIMB AND THE LEVY OF PENALTY IS ON OTHER LIMB, THEN IN THE ABSENCE OF PROPER SHOW CAUSE NOTICE TO THE ASSESS EE, THERE IS NO MERIT IN LEVY OF PENALTY. 8. CONSIDERING THE FACTS OF THE PRESENT CASE IN THE LIGHT O F THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF SAMS ON PERINCHERY (SUPRA), WE ARE OF THE VIEW THAT IN THE PRESENT CASE, THE BASIC CONDITION FOR LEVY OF PENALTY HAS NOT BEEN FULFILLED AND T HAT THE PENALTY ORDER SUFFERS FROM NON-EXERCISING OF JURISDICTION PO WER AND THEREFORE PENALTY ORDER CANNOT BE UPHELD. WE ACCORDIN GLY SET ASIDE THE PENALTY ORDER PASSED BY AO. THUS, THE GROUND OF ASSESSEE IS ALLOWED FOR A.YS. 2007-08 AND 2008-09. 9. IN THE RESULT, BOTH THE APPEALS OF ASSESSEE ARE ALL OWED. 10. NOW WE TAKE UP REVENUES APPEAL IN A.Y. 2007-08. 8 10.1. SINCE THE PENALTY LEVIED IN A.Y. 2007-08 ON ACCOUNT O F DEDUCTION U/S 80IA OF THE ACT HAS BEEN QUASHED BY US WHILE DECIDING THE APPEAL OF ASSESSEE HEREINABOVE, THE ADJUDICATION OF GR OUNDS RAISED BY THE REVENUE BECOME ACADEMIC AND THEREFORE REQUIRES NO ADJUDICATION AND THEREFORE THE GROUNDS OF REVENUE A RE DISMISSED. 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. 12. TO SUM UP, BOTH THE APPEALS OF THE ASSESSEE ARE ALL OWED AND THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON 18 TH DAY OF JULY, 2018. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) ! / JUDICIAL MEMBER '! / ACCOUNTANT MEMBER PUNE; DATED : 18 TH JULY, 2018. YAMINI #$%&'('% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(A)-4, PUNE. CIT-III, PUNE. '#$ %%&',) &', / DR, ITAT, A PUNE; $,-./ GUARD FILE. / BY ORDER // TRUE COPY // /01%2&3 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE.