M/s Spectra Punjab Ltd., Chandigarh V. DCIT, Chandigarh

ITA 408/CHANDI/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5101 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 03-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Cost of acquisition; Valuation report

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE MS. DIVA SINGH, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.408/CHD/2017 (ASSESSMENT YEAR : 2009-10) M/S SPECTRA PUNJAB LTD., VS. THE D.C.I.T., HOUSE NO.2119, SECTOR 38C, CIRCLE 4(1), CHANDIGARH. CHANDIGARH. PAN: AAECS8115R (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PARIKSHIT AGGARWAL RESPONDENT BY : MS.CHANDER KANTA, ADDL.CIT, DR DATE OF HEARING : 23.05.2017 DATE OF PRONOUNCEMENT : 07.06.2017 O R D E R PER ANNAPURNA GUPTA, A.M . : THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINS T THE ORDER OF CIT(APPEALS)-2, CHANDIGARH DATED 16.12 .2016 RELATING TO ASSESSMENT YEAR 2009-10, UPHOLDING THE LEVY OF PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT). 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE WORTHY CIT(A) IN APPEAL NO. 85/2015-16 DATED 16.12.2016 HAS ERRED IN PASSING THAT ORDER IN CONTRAVENTION OF THE PROVISIONS OF SECTION 250(6) OF THE INCOME TAX ACT, 1961. 2. THAT ON THE FACTS, CIRCUMSTANCES AND LEGAL POSIT ION OF THE CASE, THE WORTHY CIT(A) HAS ERRED IN CONFIRMI NG THE ACTION OF LD. AO WHEREBY HE WAS UNJUSTIFIED TO PENALTY OF RS. 12,62,913/- U/S 271(L)(C ) OF THE AC T FOR FURNISHING INACCURATE PARTICULARS OF INCOME. 2 3. THAT THE APPELLANT CRAVES LEAVE FOR ANY ADDITION , DELETION OR AMENDMENT IN THE GROUNDS OF APPEAL ON O R BEFORE THE DISPOSAL OF THE SAME. 3. BRIEF FACTS RELATING TO THE CASE ARE THAT THE ASSESSEE COMPANY WAS WORKING WITH THE OBJECT OF LAY ING OUT A FIBER OPTIC CABLE AND COPPER NETWORK FOR PROVIDIN G INTERNET SERVICES IN THE STATE OF PUNJAB. THE ASSES SING OFFICER NOTED FROM THE BALANCE SHEET THAT THE ASSES SEE HAS SHOWN CAPITAL WORK IN PROGRESS AS ON 31.3.2001 AT RS.6,33,17,626/- WHICH WAS REDUCED TO RS.5,98,26,24 5/- AS ON 31.03.2002 AND THIS FIGURE CONTINUED TILL 31.03. 2008. DURING THE RELEVANT YEAR, IT WAS NOTICED THAT THE A SSESSEE SOLD THIS CAPITAL WORK IN PROGRESS TO M/S CITYGROUP VIDE AN AGREEMENT DATED 18.06.2008 AND HAD SHOWN CAPITAL LO SS ON THIS TRANSACTION AS UNDER:- SALE CONSIDERATION DATE OF SALE AMOUNT 31.05.2008 RS.6,85,46,638/- INDEXED COST AT ACQUISITION YEAR OF ACQUISITION FOR F. Y. 2001- 2002 CWIP RS. 5,98,26,245/- LIABILITY WRITTEN BACK RS. 5,37,750/- TOTAL ACQUISITION COST RS. 5,92,88,495/- INDEXATION RS. 8,09,99,775/- LT.... CAPITAL LOSS RS. 1,24,53,137/- 4. DURING ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH EVIDENCE IN S UPPORT OF CAPITAL WORK IN PROGRESS AND TO PRODUCE RELEVANT BI LLS AND VOUCHERS AND EXPENSE AND SOURCE THEREOF. HOWEVER, T HE ASSESSEE FAILED TO FURNISH ANY EVIDENCE BEFORE THE ASSESSING OFFICER. IN THE ABSENCE OF ANY EVIDENCE, THE ASSES SING OFFICER DID NOT ALLOW THE BENEFIT OF INDEXATION AND COMPUTED LONG TERM CAPITAL GAIN OF RS.92,58,143/-. AS THE AS SESSEE CONCEALED PARTICULARS OF INCOME OR FURNISHED INACCU RATE 3 PARTICULARS, THE ASSESSING OFFICER INITIATED AND IM POSED A PENALTY OF RS.12,62,913/- U/S 271(1)(C) OF THE ACT, BEING 100% OF TAX SOUGHT TO BE EVADED. 5. THE MATTER WAS CARRIED IN APPEAL BEFORE THE LD.CIT(APPEALS) WHO UPHELD THE PENALTY LEVIED HOLDI NG THAT THE CLAIM OF THE ASSESSEE WAS NOT BONAFIDE AND THAT IT WAS UNSUBSTANTIATED ALSO. THE LD.CIT(APPEALS) HELD THA T THE CLAIM OF THE ASSESSEE WAS WHOLLY INCORRECT ON FACTS , NOT ADMISSIBLE UNDER LAW AND THUS HIT BY EXPLANATION 1 TO SECTION 271(1)(C) OF THE ACT. THE LD.CIT(APPEALS) HELD THAT THE ASSESSEE HAD, THEREFORE, CONCEALED PARTICULARS OF INCOME AND THE PENALTY LEVIED WAS THUS UPHELD. 6. BEFORE US, THE LD. COUNSEL FOR ASSESSEE POINTED OUT THAT THE APPEAL OF THE ASSESSEE AGAINST THE ORD ER PASSED IN QUANTUM PROCEEDINGS BEFORE THE I.T.A.T., WHEREIN THE SAID ADDITION MADE HAD BEEN CHALLENGED, HAD BEEN AL LOWED VIDE THEIR ORDER IN ITA NO.660/CHD/2014 DATED 19.5. 2017. THE LD. COUNSEL FOR ASSESSEE, THEREFORE, SUBMITTED THAT SINCE THE VERY BASIS FOR LEVY OF PENALTY HAD BEEN D ELETED, THERE WAS NO CASE FOR LEVY OF PENALTY AT ALL. COPY OF THE ORDER OF THE I.T.A.T. WAS PLACED BEFORE US. 7. THE LD. DR CONCEDED THAT THE I.T.A.T. HAD DELET ED THE ADDITION MADE IN ITS ORDER PASSED IN QUANTUM PROCEEDINGS AS STATED ABOVE BY THE LD. COUNSEL FOR ASSESSEE. 8. WE HAVE HEARD BOTH THE PARTIES AND HAVE ALSO GONE THROUGH THE ORDER OF THE I.T.A.T. IN THE CASE OF THE 4 ASSESSEE IN QUANTUM PROCEEDINGS PASSED IN ITA NO.660/CHD/2014 DATED 19.5.2017. ON PERUSING THE S AME, WE FIND THAT THE I.T.A.T. HAD ALLOWED THE ASSESSEE S APPEAL DIRECTING THE ASSESSING OFFICER TO ALLOW THE ASSESS EE THE BENEFIT OF INDEXATION OF COST AS PER THE PROVISIONS OF LAW HOLDING THAT ONCE THE COST OF ACQUISITION CLAIMED B Y THE ASSESSEE HAS BEEN ACCEPTED, HE COULD NOT HAVE DENIE D THE BENEFIT OF INDEXATION AS PER THE PROVISIONS OF SECT ION 48 R.W.S. 55 OF THE ACT. THE RELEVANT FINDINGS OF THE I.T.A.T. AT PARA 7 OF THIS ORDER ARE AS UNDER: 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALS O GONE THROUGH THE RECORD. NO DOUBT THE INITIAL BURD EN WAS ON THE ASSESSEE TO PROVE THE COST OF ACQUISITION. T HE ASSESSEE, HOWEVER, COLD NOT PRODUCE THE BILLS AND VOUCHERS IN THIS RESPECT. THE ASSESSEE HAS RELIED U PON THE BALANCE SHEET FROM THE ASSESSMENT YEAR 2001-02 ONWA RDS AND HAS SUBMITTED THAT THE SAME WORK IN PROGRESS WA S CARRIED FORWARD UP TO 31.3.2008 BECAUSE THE PROJECT HAS STOPPED. HOWEVER, THE SAID CAPITAL WORK IN PROGRES S WAS SOLD OUT IN ASSESSMENT YEAR 2009-10 VIDE AGREEMEN T DATED 18.6.2008. THE ASSESSEE HAS ALSO SUBMITTED TO THE ASSESSING OFFICER THE REPORT OF THE REGISTERED VALU ER REGARDING THE COST OF ACQUISITION OF THE SOLD ASSET S. NO DOUBT THE ASSESSEE HAD NOT GIVEN SUFFICIENT EVIDENCE REGARDING THE COST INCURRED FOR THE ACQUIS ITION OF THE ABOVE CAPITAL WORK IN PROGRESS BUT IT IS ALS O NOT THE CASE OF THE ASSESSING OFFICER THAT THE SAID CAP ITAL WORK IN PROGRESS WAS ACQUIRED BY THE ASSESSEE WITHO UT ANY COST. ADMITTEDLY, THE PROJECT WAS STARTED AS A JOINT VENTURE. THE ASSESSEE HAS ALSO PRODUCED ON FILE THE COPIES OF ITS AGREEMENT WITH PSEB AND PSEDPL DATED 14.6.2000. THIS AGREEMENT WITH GOVERNMENT UNDERTAKI NGS IS EVIDENCE REGARDING THE COMMENCEMENT OF THE PROJE CT AND REGARDING THE PERIOD OF THE ACQUISITION OF THE ASSETS. SO FAR AS THE COST OF ACQUISITION IS CONCERNED, THE ASSESSEE HAS PRODUCED THE VALUATION REPORT OF THE REGISTERED VALUER. ONCE THESE EVIDENCES PRODUCED WE RE ON THE FILE, THE BURDEN GOT SHIFTED ON THE ASSESSING O FFICER TO MAKE ENQUIRES FOR THE PURPOSE OF VERIFICATION OF TH E COST OF THE ASSETS. THE ASSESSING OFFICER INSTEAD OF MAK ING ANY INDEPENDENT VERIFICATION OR ENQUIRY, SURPRISINGLY, HAS ADOPTED THE COST OF ACQUISITION OF THE ASSETS AS CL AIMED 5 BY THE ASSESSEE. ONCE THE COST OF ACQUISITION OF AS SETS HAVE BEEN ACCEPTED BY THE ASSESSING OFFICER, HE WAS SUPPOSED TO GIVE THE ASSESSEE THE BENEFIT OF INDEXA TION AS PER THE PROVISIONS OF SECTION 48 READ WITH SECTION 55 OF THE INCOME TAX ACT. WE DO NOT FIND ANY JUSTIFICATIO N ON THE PART OF THE LOWER AUTHORITIES IN DENYING THE AS SESSEE THE BENEFIT OF INDEXED COST OF ACQUISITION ONCE THE LOWER AUTHORITIES HAD TAKEN AND ADMITTED THE COST OF ACQU ISITION OF ASSETS. WE, THEREFORE, DIRECT THE ASSESSING OFFI CER TO ALLOW THE ASSESSEE THE BENEFIT OF INDEXATION OF COS T AS PER THE PROVISIONS OF LAW. 9. AS IS EVIDENT FROM THE ABOVE THE ADDITION MADE IN THE IMPUGNED CASE, BY DENYING BENEFIT OF INDEXATION TO THE ASSESSEE ON THE COST OF ACQUISITION OF THE ASSETS, HAS BEEN DELETED BY THE I.T.A.T. AND SINCE PENALTY HAS BEEN LEVIED ON ACCOUNT OF ADDITION MADE OF THIS BENEFIT DENIED TO THE ASSESSEE, WE FIND THAT THE VERY BASIS FOR LEVY OF P ENALTY DOES NOT REMAIN. IN VIEW OF THE SAME, THE PENALTY LEVIE D U/S 271(1)(C) OF THE ACT IS DIRECTED TO BE DELETED AND THE APPEAL OF THE ASSESSEE IS THUS ALLOWED IN ABOVE TERMS. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (DIVA SINGH) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 7 TH JUNE, 2017 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH 6