Mann Pharmaceuticals Ltd., Ahmedabad V. The Dy.CIT., Circle-4, Ahmedabad

ITA 3493/AHD/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5905 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 09-06-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 16-08-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C K MISHRA
• Assessee Lawyers: SUNIL H TALATI
• Keywords: Depreciation; Revenue expenditure
• Section: 271(1)(c); 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD D BENCH (BEFORE S/SHRI G.D. AGARWAL, VICE-PRESIDENT AND MAHAVIR SINGH, JUDICIAL MEMBER) ITA.NO.3493/AHD/2007 ASSTT.YEAR : 2003-2004 MANN PHARMACEUTICALS LTD. 107, HARIKRUPA CHAMBERS ASHRAM ROAD, AHMEDABAD. VS. DCIT, CIR.4 AHMEDABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SUNIL H. TALATI REVENUE BY : SHRI C.K.MISHRA O R D E R PER G.D. AGARWAL, VICE-PRESIDENT: THIS IS ASSESSEES APPEAL AGAINST THE ORDER OF THE CIT(A)-VII, AHMEDABAD DATE D 25.01.2007 FOR A.Y.2003-2004 ARISING OUT OF THE ORDER OF THE ASSES SING OFFICER PASSED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. 2. THE APPEAL OF THE ASSESSEE IS DELAYED BY 127 DAY S. THE ASSESSEE HAS FILED THE CONDONATION PETITION WHICH IS DULY SUPPOR TED BY THE AFFIDAVIT OF THE ACCOUNTS MANAGER, SHRI SATISHBHAI J. MAVADA. AFTER CONSIDERING THE ASSESSEES EXPLANATION, THE AFFIDAVIT OF THE ACCOUN TS MANAGER AND THE ARGUMENTS OF BOTH THE SIDES, WE DEEM IT PROPER TO C ONDONE THE DELAY. ACCORDINGLY, THE DELAY IS CONDONED AND THE APPEAL O F THE ASSESSEE IS ADMITTED FOR ADJUDICATION ON MERIT. 3. THE ONLY GROUND RAISED IN THIS APPEAL IS AGAINST LEVY OF PENALTY OF RS.7,26,879/- IMPOSED UNDER SECTION 271(1)(C) OF TH E IT ACT. AT THE TIME OF HEARING BEFORE US, IT IS SUBMITTED BY THE LEARNED C OUNSEL THAT THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS LEVIED IN RESPECT OF THE FOLLOWING ADDITIONS/ DISALLOWANCES: ITA.NO.3493/AHD/2007 -2- 1) DELAYED PAYMENT OF PF & ESIC : RS.49,344 2) DEFERRED REVENUE EXPENSES : RS.3,38,559 3) DEPRECIATION : RS.15,40,000 HE SUBMITTED THAT THE FACTS RELATING TO ALL THE ABO VE ADDITIONS WERE DULY FURNISHED AND THERE WAS NEITHER ANY CONCEALMENT OF FACT NOR FURNISHING OF ANY INACCURATE PARTICULARS. HE ALSO STATED THAT THE IS SUE UNDER APPEAL IS SQUARELY COVERED BY THE DECISION OF HONBLE APEX COURT IN TH E CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. HE FURTHER POINTED OUT THA T THE ASSESSEE HAD CLAIMED DEPRECIATION AT THE RATE OF 40% ON THE TEMPORARY ST RUCTURE WHICH THE ASSESSING OFFICER ALLOWED AT 10% CONSIDERING THE TEMPORARY ST RUCTURE TO THE BUILDING. HE SUBMITTED THAT ON TEMPORARY STRUCTURE 100% DEPRECIA TION IS ALLOWABLE. FURTHER, IT IS SUBMITTED THAT MERELY BECAUSE THE AO ALLOWED THE DEPRECIATION AT A RATE LESSER THAN THE RATE OF DEPRECIATION CLAIMED BY THE ASSESSEE THAT DOES NOT AMOUNT TO CONCEALMENT OF INCOME. SIMILARLY, THE DI SALLOWANCE OF PF UNDER SECTION 43B OR DEFERRED REVENUE EXPENDITURE ALSO DO ES NOT AMOUNT TO CONCEALMENT OF INCOME. THE AO NOWHERE STATED THAT THERE WAS CONCEALMENT OF ANY FACT BY THE ASSESSEE. HE THEREFORE STATED THA T THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT MAY BE CANCELLED. 4. THE LEARNED DR ON THE OTHER HAND RELIED UPON THE PENALTY ORDER AS WELL AS THE ORDER OF THE CIT(A). 5. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE SIDES AND PERUSED MATERIALS PLACED BEFORE US. AFTER CONSIDER ING THE ARGUMENTS OF BOTH THE SIDES AND FACTS OF THE CASE, IN OUR OPINION, TH E DECISION OF THE HONBLE APEX COURT IN THE CASE OF RELIANCE PETROPRODUCTS PVT. LT D. (SUPRA) WOULD BE SQUARELY APPLICABLE, WHEREIN, THEIR LORDSHIPS 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, T HERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICU LARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTI ON 271(1)(C) WOULD ITA.NO.3493/AHD/2007 -3- EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO IN FORMATION GIVEN IN THE RETURN IS FOUND TO BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. IN ORDER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY CO VERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STR ETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISH ING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHI NG WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS T HE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INC OME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LIABILI TY WOULD ARISE. TO ATTRACT PENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE, NOT EXACT OR CORRECT, NO 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 ERRONEOUS OR FA LSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271( 1)(C). A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITS ELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INC OME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FU RNISHING INACCURATE PARTICULARS. IN THE CASE OF THE ASSESSEE ALSO THE DEDUCTION FOR CERTAIN CLAIM OF EXPENSES IS NOT ACCEPTED BY THE ASSESSING OFFICER. SIMILARLY, THE DEPRECIATION ON THE STRUCTURE IS ALLOWED AT A RATE LESSER THAN WHAT IS CLAIMED BY THE ASSESSEE. HOWEVER, IN VIEW OF THE DECISION OF THE HONBLE APE X COURT SUPRA, THAT CANNOT BE SAID TO BE CONCEALMENT OF INCOME OR FURNISHING O F INACCURATE PARTICULARS. THE REVENUE HAS NOT POINTED OUT ANY INSTANCE OF FUR NISHING OF INACCURATE PARTICULARS BY THE ASSESSEE. IN VIEW OF THE ABOVE, WE RESPECTFULLY RELYING UPON THE DECISION OF THE HONBLE APEX COURT SUPRA, CANCE L THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT. 6. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 18 TH JUNE, 2010. SD/- SD/- (MAHAVIR SINGH) JUDICIAL MEMBER (G.D. AGARWAL) VICE-PRESIDENT ITA.NO.3493/AHD/2007 -4- PLACE : AHMEDABAD DATE : 18-06-2010 VK* COPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER AR, ITAT, AHMEDABAD