NRI Investments Ltd., New Delhi V. DCIT, New Delhi

ITA 423/DEL/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6205 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 07-01-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 24-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA
• Assessee Lawyers: P K MISHRA
• Keywords: Business income; Depreciation
• Section: 143(3); 153A; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SHRI J.S. REDDY, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 423/DEL/2014 AY: 20 08-09 NRI INVESTMENTS LTD., VS DY.COMMISSIONER OF INCOME TAX, 802, SANTOSHA COMPLEX, CENTRAL CIRCLE-8, BANBDAR BAGICHA, NEW DELHI. PATNA 80001 (BIHAR) (PAN: AABCN8207E) (APPELLANT) (RESPONDENT ) APPELLANT BY : SHRI P.K. MISHRA, CA RESPONDENT BY : SHRI P. DAMKANUNJNA, SR. DR DATE OF HEARING: 07.01.2016 DATE OF PRONOUNCEMENT: 31/03/2016 ORDER PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE IMPUGNED ORDER DATED 29.11.2013 PASSED BY THE LD. C IT(A)- XXXII, NEW DELHI, CONFIRMING IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT FOR ASSESSMENT YEAR 2008-09. 2. THE FACTS LEADING TO THE IMPOSITION OF PENALTY A RE THAT THE ASSESSMENT IN THIS CASE WAS COMPLETED IN TERMS OF O RDER DATED 29.12.2011 PASSED U/S 153C READ WITH SECTION 153A/1 43(3) OF I.T.A. NO. 423/D/2014 ASSESSMENT YEAR 2008-09 2 THE INCOME TAX ACT, 1961 AT A TOTAL INCOME OF RS. 1 8,61,810/- AS AGAINST NIL INCOME DECLARED BY THE ASSESSEE IN ITS RETURN OF INCOME FILED IN RESPONSE TO NOTICE ISSUED U/S 153C READ WITH SECTION 153A OF THE ACT. DURING THE ASSESSMENT PRO CEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD SET OFF THE BROUGHT FORWARD BUSINESS LOSSES OF RS. 18,61,812/- OF ASSESSMENT YEAR 2005-06 AGAINST THE TOTAL BUSINESS INCOME OF RS. 18,61,812/- WHICH RESULTED IN THE DECLARATION O F NIL INCOME. THE ASSESSING OFFICER ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE, THE CONTENTS OF WHICH ARE EXTRACTED BELOW:- 'IN THE COMPUTATION OF INCOME. YOUR INCOME BEFORE T HE SET OFF OF LOSSES OF A Y. 2005-06 WAS RS. 18,61,811.99/- A 0. IN THE ORDER PASSED U/S 147 R. W. S. 143(3) FOR THE A Y. 2004-05 NOT ALLOWED THE LOSS ES TO BE CARRIED FORWARD AND FOR THE A Y. 2005-06 REDUCED THE LOSSES. ALL THE AVAILABLE BUSINESS LOSSES AND DEPRECIATION HAD BEEN SET OFF FROM THE INCOME OF A Y. 2007-08. HENCE NO BUSINESS LOSS AND DEPRECIATION IS AVAILABLE WITH THE ASSESSEE TO SET OFF THE LOSSES F ROM DIE INCOME THERE IS A SHOW CAUSE WHY THE LOSSES CLAIMED AND SET OFF FROM THE INCOME SHOULD NOT BE DISALLOWED'. IN RESPONSE TO THE SHOW CAUSE NOTICE, VIDE LETTER D ATED NIL, THE ASSESSEE SUBMITTED AS UNDER: 'THAT IN THE YEAR UNDER CONSIDERATION BROUGHT FORWA RD LOSSES SHOWN BY THE ASSESSEE IN THE RETURN OF INCOM E IS RS.19,44,373.18/- AND SET OFF OF THE SAME WAS CLAIM ED AGAINST INCOME OF RS 18,61,812/-. THAT AN ADDITION OF RS. 28,34,648/- WAS MADE IN THE A Y. 2005-06 AGAINS T WHICH THE ASSESSEE HAS FILED AN APPEAL AND THEREFOR E THE CLAIM B/F LOSSES MADE BY THE ASSESSEE IN THE I.T.A. NO. 423/D/2014 ASSESSMENT YEAR 2008-09 3 RETURN IS WITHOUT ACCEPTING THE ADDITION OF RS. 28,34,648/- MADE IN THE A Y. 2005-06.' 3. HOWEVER, THE ASSESSING OFFICER WAS OF THE OPINIO N THAT ALL THE AVAILABLE BUSINESS LOSSES AND DEPRECIATION HAD BEEN SET OFF AGAINST THE INCOME OF ASSESSMENT YEAR 2007-08 AND H ENCE, THERE WAS NOTHING REMAINING TO BE SET OFF AGAINST THE INC OME OF THE YEAR UNDER CONSIDERATION I.E. ASSESSMENT YEAR 2008- 09. HENCE, THE SET OFF OF BROUGHT FORWARD BUSINESS LOSSES AMOU NTING TO RS. 18,61,812/- OF ASSESSMENT YEAR 2005-06 AGAINST THE BUSINESS INCOME OF ASSESSMENT YEAR 2008-09 WAS ADDED BACK TO THE INCOME OF THE ASSESSEE AND THE ASSESSMENT WAS COMPL ETED AT THE TAXABLE INCOME OF RS. 18,61,812/-. SUBSEQUENTLY, T HE ASSESSING OFFICER IMPOSED A PENALTY OF RS. 5,75,300/- U/S 271 (1)( C) OF THE ACT FOR CONCEALMENT OF INCOME AND FILING INACCURATE PARTICULARS OF INCOME. 4. ON APPEAL, THE LD. CIT(A) CONFIRMED THE IMPOSITI ON OF PENALTY BUT REDUCED IT TO RS.3,83,695/-. THE RELEV ANT PARA OF THE LD. CIT(A) ORDER IS PARA 5 WHICH IS BEING REPRODUCE D FOR READY REFERENCE AS UNDER:- I H A V E CONSIDERED THE FACTS OF THE CASE, AND THE I.T.A. NO. 423/D/2014 ASSESSMENT YEAR 2008-09 4 WRITTEN SUBMISSIONS OF THE APPELLANT. IN THE INSTAN T CASE I FIND THAT WHEN THE APPELLANT FILED ITS RETUR N OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION IN RESPONSE TO NOTICE U/S 153C R.W.S. 153A ON 14.10.2011, ITS ASSESSMENT U/S 147 R.W.S. 143(3) HA D ALREADY BEEN COMPETED VIDE ORDER DATED 28.12.2007 AND THE LOSS TO BE CARRIED FORWARD WAS DETERMINED A T RS.1,63,200/- AS AGAINST THE RETURNED LOSS OF RS.29,97,850/-. THUS, WHEN THE RETURN OF INCOME IN RESPONSE TO NOTICE U/S 153C R.W.S. 153A OF THE I.T. ACT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION WAS FIL ED ON 14.10.2011, IT WAS IN THE KNOWLEDGE OF THE APPELLANT THAT ITS LOSS OF THE ASSESSMENT YEAR 2005 -06 WHICH WAS TO BE BROUGHT FORWARD WAS DETERMINED AT RS.1,63,200/-. THEREFORE, IT WAS THE DUTY OF THE APPELLANT TO MAKE A CORRECT AND COMPLETE DISCLOSURE OF PARTICULARS OF BROUGHT FORWARD LOSSES WHILE FILING ITS RETURN FOR THE ASSESSMENT YEAR UNDER CONSIDERATION IN RESPONSE TO NOTICE U/S 153C R.W.S. 153A ON THE BASI S OF LOSS DETERMINED IN TERMS OF ORDER U/S 147 R.W.S. 14 3(3) FOR THE ASSESSMENT YEAR 2005-06. THE APPELLANT FAIL ED IN ITS DUTY BY NOT DISCLOSING THE CORRECT PARTICULA RS OF BROUGHT FORWARD LOSSES OF ASSESSMENT YEAR 2005-06. BY DOING SO THE APPELLANT COMMITTED A BREACH OF ITS DUTY, WHICH ENTAILS THE PENAL CONSEQUENCES CONTEMPLATED UNDER SECTION 271(1)(C) OF THE I.T. AC T, 1961. THEREFORE, THE ASSESSING OFFICER WAS JUSTIFIE D IN HOLDING THE APPELLANT TO BE IN DEFAULT WITHIN THE MEANING OF SECTION 271(1)(C) OF THE I.T. ACT, 1961 AND IMPOSING PENALTY UNDER THE SAID SECTION. ACCORDINGL Y, THE ASSESSING OFFICERS ACTION IN IMPOSING PENALTY U/S 271(1)(C) IS UPHELD. HOWEVER, I AGREE WITH THE ARS OF THE APPELLANT THAT THE TAX SOUGHT TO BE EVADED IN T HIS I.T.A. NO. 423/D/2014 ASSESSMENT YEAR 2008-09 5 CASE SHOULD HAVE BEEN RS.3,83,695/- WHICH IS THE ADDITIONAL TAX LIABILITY THAT HAS BEEN CROPPED UP D UE TO THE ASSESSMENT FRAMED U/S 153C OF THE I.T. ACT, 196 1. THE TAX LIABILITY AS PER THE RETURN OF INCOME ON TH E BOOK PROFIT UNDER MAT PROVISIONS WAS RS.1,91,604/- AND T HE ASSESSED TAX LIABILITY DETERMINED IN THIS CASE WAS RS. 5,75,299/-. THEREFORE, THE ADDITIONAL TAX LIABILIT Y DETERMINED IN TERMS OF ORDER U/S 153C R.W.S. 153A/143(3) WAS RS.3,83,6695/- WHICH COULD ONLY BE ATTRIBUTED TO THE TAX SOUGHT TO BE EVADED. THEREFOR E, THE ASSESSING OFFICER IN DIRECTED TO MODIFY THE QUANTUM OF PENALTY IMPOSED U/S 271(1)(C) AND RESTRICT THE SAME TO RS.3,83,695/-. THE APPELLANT THUS GETS A RELIEF OF RS. 1,91,605/-. 5. NOW, THE ASSESSEE IS IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS:- 1. THAT THE ORDER OF LEARNED COMMISSIONER OF INCOM E-TAX (APPEALS) IS BAD IN LAW AND ON FACTS OF THE CASE. 2. THAT THE LEARNED COMMISSIONEROF INCOME-TAX(APP EALS) ERRED IN SUSTAINING THE PENALTY IMPOSED U/S 271(1) (C) O F THE INCOME TAX ACT, 1961 TO THE TUNE OF RS.3,83,695/- HOLDING THAT THE ASSESSEE HAS SOUGHT TO EVADE TAX. 3. THAT THE LEARNED COMMISSIONEROF INCOME-TAX (APPEALS) ERRED IN HOLDING THAT 'THE ASSESSEE HAS FAILED IN ITS DU TY FOR NOT DISCLOSING CORRECT PARTICULARS OF BROUGHT FORWARD L OSSES FOR ASSESSMENT YEAR 2005-06' IGNORING THE EVIDENCES AND SUBMISSIONS ADDUCED BY THE APPELLANT DURING ASSESSM ENT AND PENALTY PROCEEDINGS. 4. THE ABOVE GROUNDS OF APPEAL ARE WITHOUT PREJUD ICE TO EACH OTHER. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEN D AND/OR MODIFY THE ABOVE GROUNDS OF APPEAL. I.T.A. NO. 423/D/2014 ASSESSMENT YEAR 2008-09 6 6. THE LD. AR SUBMITTED THAT IN THIS CASE, THE RETURN WAS FILED U/S 153C AND IN THE RETURN OF INCOME, THE BROUGHT F ORWARD LOSS OF RS. 18,61,812/- (REMAINING AFTER SET OFF OF RS. 9,80,699/-) FOR ASSESSMENT YEAR 2005-06 WAS CLAIMED ON THE BASIS OF RETURNED LOSS OF RS. 29,97,850/-. THE ASSESSMENT FOR ASSESS MENT YEAR 2005-06 WAS COMPLETED U/S 147 READ WITH SECTION 143 (3) VIDE ORDER DATED 28.12.2007 AT A LOSS OF RS.1,63,200/- A S AGAINST THE RETURNED LOSS OF RS. 29,97,850/-. IT WAS SUBMITTED THAT THE ASSESSEE HAD CHALLENGED THE ASSESSMENT ORDER BEFORE THE FIRST APPELLATE AUTHORITY AND NOW THE ISSUE HAS BEEN DECI DED IN FAVOUR OF THE ASSESSEE. HE DREW OUR ATTENTION TO PAGE 16 TO 19 OF THE PAPER BOOK WHICH CONTAIN A COPY OF THE ORDER OF THE FIRST APPELLATE AUTHORITY I.E. THE LD. CIT(A)-I, PATNA WH EREIN VIDE HIS ORDER DATED 04.07.2014, THE LD. CIT(A) HAS DELETED THE ADDITION OF RS. 27,47,526/- FOR ASSESSMENT YEAR 2005-06. IT WA S FURTHER SUBMITTED THAT AS A CONSEQUENCE OF THE DELETION, TH E CARRIED FORWARD LOSSES FOR ASSESSMENT YEAR 2005-06 WILL BE INCREASED TO THE TUNE OF RS.27,47,526/- WHICH WILL BE MORE THAN SUFFICIENT TO OFFSET THE SURPLUS FOR ASSESSMENT YEAR 2008-09. IT WAS SUBMITTED THAT IN VIEW OF THE ORDER OF THE FIRST AP PELLATE I.T.A. NO. 423/D/2014 ASSESSMENT YEAR 2008-09 7 AUTHORITY FOR ASSESSMENT YEAR 2005-06, THE PENALTY OUGHT TO BE DELETED. IT WAS FURTHER SUBMITTED THAT AS ON DATE, THE BROUGHT FORWARD LOSSES OF A.Y. 2005-06 ARE AGAIN AVAILABLE TO THE ASSESSEE AS CLAIMED IN THE RETURN OF INCOME AND CONSEQUENTIA L EFFECT OF THE SAME WILL BE THAT THE ASSESSED INCOME FOR A.Y. 2008 -09 WILL AGAIN BE REDUCED TO THE BOOK PROFIT TAXABLE UNDER MAT PRO VISIONS (AS RETURNED BY THE ASSESSEE) HENCE, THERE WAS NO CONCE ALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME AS T HE ASSESSEE HAD MADE A BONA FIDE CLAIM IN THE RETURN OF INCOME WHICH WAS REJECTED AND IT HAD DISCLOSED ALL THE PARTICULARS O F INCOME. 7. THE LD. DR RELIED ON THE ORDER OF THE LOWER AUTH ORITIES. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS SEEN THAT INITI ALLY DURING THE ASSESSMENT PROCEEDINGS, ADDITION WAS MADE BY THE AS SESSING OFFICER BECAUSE AS PER HIM, THE BROUGHT FORWARD LOS SES WERE INSUFFICIENT TO COVER THE BUSINESS PROFITS FOR ASSE SSMENT YEAR 2008-09. HOWEVER, WITH THE FIRST APPELLATE AUTHORI TY ALLOWING THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2005 -06, THE BUSINESS LOSSES TO BE SET OFF AGAINST THE INCOME FO R ASSESSMENT YEAR 2008-09 HAVE AGAIN INCREASED SO AS TO REDUCE T HE BUSINESS I.T.A. NO. 423/D/2014 ASSESSMENT YEAR 2008-09 8 INCOME FOR ASSESSMENT YEAR 2008-09 TO NIL. IN OU R CONSIDERED VIEW, THE STARTING POINT OF DETERMINING CONCEALMENT FOR IMPOSING PENALTY IS THE RETURN OF INCOME. IN THE PRESENT AP PEAL, THE ASSESSING OFFICER HAS NOT FOUND ANY DISCREPANCY, IN ACCURACY OR CONCEALMENT IN THE RETURN. THE ASSESSING OFFICERS VIEW IS TOTALLY MISPLACED AND DE HORS ANY MERIT AS SECTION 271(1)(C ) OF THE INCOME TAX ACT, 1961 EMPOWERS THE ASSESSING OFFICER TO IMPOSE PENALTY ON THE ASSESSEE WHEN SUCH ASSESSEE HAS CONC EALED THE PARTICULARS OF HIS INCOME OR HAS FURNISHED INACCURA TE PARTICULARS. HOWEVER, IN THE PRESENT APPEAL, THERE IS NOTHING ON RECORD TO HOLD THAT THE ASSESSEE HAS EITHER CONCEALED THE PARTICUL ARS OF ITS INCOME OR FURNISHED ANY INACCURATE PARTICULARS THER EOF. WE ACCORDINGLY DECIDE THE ISSUE IN FAVOUR OF THE ASSES SEE AND DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY. 8. IN RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST OF MARCH, 2016. SD/- SD/- (J.S. REDDY) (SUDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICI AL MEMBER DATED: THE 31 ST OF MARCH, 2016 GS I.T.A. NO. 423/D/2014 ASSESSMENT YEAR 2008-09 9 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT BY ORDER ASSTT. REGISTRAR