FINANCIAL TECHNOLOGIES (INDIA ) LTD, MUMBAI V. ACIT CEN CIR 46, MUMBAI

ITA 4377/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3456 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2001-2002
• Appeal Filed On: 20-06-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K DHONDIAL
• Assessee Lawyers: CHETAN A KARIA
• Keywords: Depreciation; Search and seizure; Opportunity of being heard; Difference of opinion; Scheme of amalgamation; Change of opinion
• Section: 153A; 32; 147; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F, MUMBAI BEFORE SHRI JASON P BOAZ, ACCOUNTANT MEMBER & SHRI SANDEEP GOSAIN, JUDICIAL MEMBER ITA NO.4377, 4378 & 4379/MUM/2014 ASSESSMENT YEAR : 2001-02, 2002-03, 2003-04 FINANCIAL TECHNOLOGIES (INDIA) LTD. FTIL TOWER, CTH NOS. 256-257, SUREN ROAD, CHAKALA, ANDHERI (E) MUMBAI 400 093 PAN AAACF5737C VS. DCIT CENT. CIR. 46 MUMBAI (APPELLANT) RESPONDENT) APPELLANT BY : SHRI CHETAN A KARIA RESPONDENT BY : SHRI A K DHONDIAL DATE OF HEARING : 0 3 .0 8 .201 6 DATE OF PRONOUNCEMENT : 19 .0 8 . 201 6 O R D E R PER JASON P BOAZ, ACCOUNTANT MEMBER THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE CONSOLIDATED ORDER OF THE CIT(A)- 38, MUMBAI, DATED 07.04.2014 DISMISSING THE ASSESSEES APPEALS FOR A.YS. 2001-02 TO 2003-04, THEREBY CONFIRMING THE LE VY OF PENALTY U/S. 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). SIN CE COMMON ISSUES ARE INVOLVED, THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DIS POSED OFF BY WAY OF THIS COMMON ORDER. ITA NO.4377 TO 4379/MUM/2014 FINANCIAL TECHNOLOGIES (INDIA) LTD. 2 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS UNDER: 2.1 ASSESSMENT YEAR 2001-02 1. THE LEARNED CIT (APPEAL) ERRED IN CONFIRMING TH E PENALTY LEVIED U/S 271(1)(C) BY THE AO AT RS. 1,94,91,444/- ON FOLLOWING ADDITION/DISALLOWANCES:- I)DEFERMENT OF INCOME ON ACCOUNT OF AM C CHARGES OF RS. 42, 67,660/- II) DISALLOWANCE OF DEPRECIATION ON IPR RS.4,50,15,385/- 2. THE LEARNED CIT (APPEAL) ERRED IN HOLDING THAT I N GROUNDS OF APPEAL BEFORE HIM THE APPELLANT HAS NOT RAISED ANY GROUND RELATING TO LEVY OF CONCEALMENT PENALTY ON ISSUE OF DEFERMENT O F INCOME OIL OF AMC CHARGES OF RS. 42,67,660/- IGNORING THE GROUND NO. 1, 2,6,7,8 AND 9 WHICH WERE COMMON GROUND COVERING BOTH THE IS SUES AND ALSO FAILED TO APPRECIATE THE DETAILED SUBMISSION MADE I N THIS REGARD. 3. THE LEARNED CIT (APPEAL) FAILED TO APPRECIATE TH AT THE APPELLANT HAS EITHER CONCEALED ANY INCOME NOR SUBMI TTED ANY INACCURATE PARTICULAR OF INCOME. 4. THE LEARNED CIT (APPEAL) FAILED TO APPRECIATE TH AT IN THE QUANTUM ORDER THE HON'BLE ITAT HELD THAT IT CANNOT BE SAID THAT THE ASSESSEE DERIVES ANY ADVANTAGE BY FOLLOWING THE MET HOD OF ACCOUNTING WHICH IS IN DISPUTE IN THIS APPEAL IN RE SPECT OF DEFERMENT OF INCOME ON ACCOUNT OF AMC CHARGES. ACCORDINGLY THE A PPELLANT NEITHER CONCEALED ANY INCOME NOR SUBMITTED ANY INACCURATE P ARTICULARS OF INCOME IN THIS RESPECT. 5. THE LEARNED CIT(APPEAL) FAILED TO APPRECIATE THA T THE APPELLANT HAVE MADE FULL DISCLOSURE OF FACT IN RESP ECT OF AMC CHARGES. 6. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE ADDITIONS OIL OF AMC CHARGES WERE MADE DUE TO DIFFE RENCE OF OPINION, THE ISSUE WAS DEBATABLE ONE AS VARIOUS JUD GMENTS RELIED BY THE APPELLANT WERE IN FAVOUR, ACCORDINGLY NO PENALT Y U/S 271(1)(C ) SHOULD HAVE BEEN LEVIED. 7. THE LEARNED CIT (APPEAL) ERRED IN HOLDING THAT T HE WITHDRAWAL OF CLAIM OF DEPRECIATION ON IPR WAS NOT VOLUNTARY. 8. THE LEARNED CIT (APPEAL) ERRED IN HOLDING THAT D EPRECIATION IPR WAS NOT A BONAFIDE CLAIM AND FURTHER ERRED IN HOLDI NG THE EXISTENCE OF IPR WAS ITSELF IN QUESTION. ITA NO.4377 TO 4379/MUM/2014 FINANCIAL TECHNOLOGIES (INDIA) LTD. 3 9. THE LEARNED CIT (APPEAL) ERRED IN CONVENIENTLY I GNORING THE FACT THAT IN THE QUANTUM ORDER THEN CIT (APPEAL ) HAS ALREADY ALLOWED THE DEPRECATION CLAIM ON IPR RELYING ON SUB MISSION MADE BY THE APPELLANT, THUS THE ISSUE WAS DEBATABLE ONE ON WHICH NO PENALTY CAN BE IMPOSED. 10. THE CIT (APPEAL) FAILED TO APPRECIATE THAT APPE LLANT HAS MADE FULL DISCLOSURE ABOUT THE CLAIM OF DEPRECIATION ON IPR ACCORDINGLY NO CONCEALMENT PENALTY IS LEVYBLE. 11. THE LEARNED CIT(APPEAL) ERRED IN INVOKING THE P ROVISION OF EXPLANATION 5A OF SECTION 271(1) AND ALSO FAILED TO APPRECIATE THAT THE AO HAS NOT INVOKED THE PROVISION OF EXPLANATION 5A OF SECTION 271(1) AND NO SEPARATE NOTICE WAS GIVEN BY HIM FOR INVOKING THE PROVISION OF EXPLANATION 5A TO THE APPELLANT. 12. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT TH E PENALTY U/S 271 (1)(C) WAS INITIATED IN THE ORDER PASSED U/S 14 3(3) READ WITH SECTION 147 AND NO ORDER U/S 153A WAS PASSED AND AS SUCH APPLICATION OF EXPLANATION 5A OF SECTION 271(L) WAS BAD IN LAW. 13. THE APPELLANT CRAVES LEAVE TO ADD, DELETE, AMEN D, ALTER, MODIFY OR SUBSTITUTE ANY OF THE ABOVE GROUND AS AN WHEN AD VISED 2.2 ASSESSMENT YEAR 2002-03 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW: - 1. THE LEARNED CIT (APPEAL) ERRED IN CONFIRMING TH E PENALTY LEVIED U/S 271(1)(C) BY THE AU AT RS. 20,14,673- O IL ADDITION MADE FOR DEFERMENT OF INCOME ON ACCOUNT OF AMC CHARGES O F RS.60,44,673/- 2. THE LEARNED CIT (APPEAL) ERRED IN HOLDING THAT I N GROUNDS OF APPEAL BEFORE HIM THE APPELLANT HAS NOT RAISED ANY GROUND RELATING TO LEVY OF CONCEALMENT PENALTY ON ISSUE OF DEFERMENT O F INCOME ON ACCOUNT OF AMC CHARGES OF RS. 60,44,673/- IGNORING THE GROUND NO 1, 2,3, 6,7,8 ,9 AND 10 AND ALSO FAILED TO APPRECIATE THE DETAILED SUBMISSION MADE IN THIS REGARD. 3. THE LEARNED CIT (APPEAL) FAILED TO APPRECIATE TH AT THE APPELLANT HAS NEITHER CONCEALED ANY INCOME NOR SUBM ITTED ANY INACCURATE PARTICULAR OF INCOME. 4. THE LEARNED CIT (APPEAL) FAILED TO APPRECIATE TH AT IN THE QUANTUM ORDER THE HON'BLE ITAT HELD THAT IT CANNOT BE SAID THAT THE ASSESSEE DERIVES ANY ADVANTAGE BY FOLLOWING THE MET HOD OF ACCOUNTING WHICH IS IN DISPUTE IN THIS APPEAL IN RE SPECT OF DEFERMENT OF INCOME ON ACCOUNT OF AMC CHARGES. ACCORDINGLY TH E APPELLANT NEITHER ITA NO.4377 TO 4379/MUM/2014 FINANCIAL TECHNOLOGIES (INDIA) LTD. 4 CONCEALED ANY INCOME NOR SUBMITTED ANY INACCURATE P ARTICULARS OF INCOME IN THIS RESPECT. 5. THE LEARNED CIT(APPEAL) FAILED TO APPRECIATE THA T THE APPELLANT HAVE MADE FULL DISCLOSURE OF FACT IN RESPECT OF AMC CHARGES. 6. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE ADDITIONS ON ACCOUNT OF AMC CHARGES WERE MADE DUE TO DIFFERENCE OF OPINION, THE ISSUE WAS DEBATABLE ONE AS VARIOUS JUDGMENTS RELIED BY THE APPELLANT WERE IN FAVOUR, ACCORDINGLY NO PENALTY U/S 271(1)(C ) SHOULD HAVE BEEN LEVIED. 7. THE APPELLANT CRAVES LEAVE TO ADD, DELETE, AMEND , ALTER, MODIFY OR SUBSTITUTE ANY OF THE ABOVE GROUND AS AN WHEN AD VISED. 2.3 ASSESSMENT YEAR 2003-04 1. THE LEARNED CIT (APPEAL) ERRED IN CONFIRMING TH E PENALTY LEVIED U/S 271(1)(C) BY THE AO AT RS. 93,31,784/- O N FOLLOWING ADDITION/DISALLOWANCES:- I DEFERMENT OF INCOME ON ACCOUNT OF AMC CHARGES OF RS. 71,458/- II. DISALLOWANCE OF DEPRECIATION ON IPR RS. 2,53,21 ,154/- 2. THE LEARNED CIT (APPEAL) ERRED IN HOLDING THAT I N GROUNDS OF APPEAL BEFORE HIM THE APPELLANT HAS NOT RAISED ANY GROUND RELATING TO LEVY OF CONCEALMENT PENALTY ON ISSUE OF DEFERMENT O F INCOME ON ACCOUNT OF AMC CHARGES OF RS. 71,458/- IGNORING THE GROUND NO. 1, 2,6,7.8 AND 9 WHICH WERE COMMON GROUND COVERING BOT H THE ISSUES AND ALSO FAILED TO APPRECIATE THE DETAILED SUBMISSI ON MADE IN THIS REGARD. 3. THE LEARNED CIT (APPEAL) FAILED TO APPRECIATE T HAT THE APPELLANT HAS NEITHER CONCEALED ANY INCOME NOR SUBM ITTED ANY INACCURATE PARTICULAR OF INCOME. 4. THE LEARNED CIT (APPEAL) FAILED TO APPRECIATE TH AT IN THE QUANTUM ORDER THE HON'BLE ITAT HELD THAT IT CANNOT BE SAID THAT THE ASSESSEE DERIVES ANY ADVANTAGE BY FOLLOWING THE MET HOD OF ACCOUNTING WHICH IS IN DISPUTE IN THIS APPEAL IN RE SPECT OF DEFERMENT OF INCOME ON ACCOUNT OF AMC CHARGES. ACCORDINGLY THE A PPELLANT NEITHER CONCEALED ANY INCOME NOR SUBMITTED ANY INACCURATE P ARTICULARS OF INCOME IN THIS RESPECT. 5. THE LEARNED CIT(APPEAL) FAILED TO APPRECIATE THA T THE APPELLANT HAVE MADE FULL DISCLOSURE OF FACT IN RESP ECT OF AMC CHARGES. 6. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE ADDITIONS ON ACCOUNT OF AMC CHARGES WERE MADE DUE TO DIFFEREN CE OF OPINION, THE ISSUE WAS DEBATABLE ONE AS VARIOUS JUDGMENTS RE LIED BY THE ITA NO.4377 TO 4379/MUM/2014 FINANCIAL TECHNOLOGIES (INDIA) LTD. 5 APPELLANT WERE IN FAVOUR, ACCORDINGLY NO PENALTY U/ S 271 (1)(C ) SHOULD HAVE BEEN LEVIED. 7. THE LEARNED CIT (APPEAL) ERRED IN HOLDING THAT T HE WITHDRAWAL OF CLAIM OF DEPRECIATION ON IPR WAS NOT VOLUNTARY. 8. THE LEARNED CIT (APPEAL) ERRED IN HOLDING THAT D EPRECIATION IPR WAS NOT A BONA FIDE CLAIM AND FURTHER ERRED IN HOLD ING THE EXISTENCE OF IPR WAS ITSELF IN QUESTION. 9. THE LEARNED CIT (APPEAL) ERRED IN CONVENIENTLY I GNORING THE FACT THAT IN THE QUANTUM ORDER THEN CIT (APPEAL ) HAS ALREADY ALLOWED THE DEPRECATION CLAIM ON IPR RELYING ON SUBMISSION MADE BY THE APPELLANT, THUS THE ISSUE WAS DEBATABLE ONE ON WHICH NO PENALTY CAN BE IMPOSED. 10. THE CIT (APPEAL) FAILED TO APPRECIATE THAT APPE LLANT HAS MADE FULL DISCLOSURE ABOUT THE CLAIM OF DEPRECIATION ON IPR ACCORDINGLY NO CONCEALMENT PENALTY SHOULD HAVE BEEN LEVIED. 11. THE LEARNED CIT(APPEAL) ERRED IN INVOKING THE P ROVISION OF EXPLANATION 5A OF SECTION 271(1) AND ALSO FAILED TO APPRECIATE THAT THE AO HAS NOT INVOKED THE PROVISION OF EXPLAN ATION 5A OF SECTION 271(1) AND NO SEPARATE NOTICE WAS GIVEN BY HIM FOR INVOKING THE PROVISION OF EXPLANATION 5A TO THE APPELLANT. 12. THE APPELLANT CRAVES LEAVE TO ADD, DELETE, AMEN D, ALTER, MODIFY OR SUBSTITUTE ANY OF THE ABOVE GROUND AS AN WHEN ADVISED. 3. AT THE OUTSET, THE LEARNED AR FOR THE ASSESSEE S UBMITTED THAT THE ASSESSEE IS ONLY PRESSING GROUNDS AT SERIAL NOS. 1 AND 2 IN ALL THE THREE APPEALS. IN THESE CIRCUMSTANCES, ALL THE OTHER GROUNDS, AT SR.NOS. 3 TO 15 FOR A.Y. 2001-02, GROUNDS AT SR. NOS. 3 TO 7 FOR A.Y. 2002-03 AND GROUNDS AT SR. NOS. 3 TO 12 FOR A.YS. 2003- 04 , NOT BEING PRESSED OR URGED IN THESE APPEALS, T HE SAME ARE RENDERED INFRUCTUOUS AND ACCORDINGLY DISMISSED. ITA NO.4377 TO 4379/MUM/2014 FINANCIAL TECHNOLOGIES (INDIA) LTD. 6 4. GROUND NO.1(II) FOR A.YS 2001-02 AND 2003-04: DISAL LOWANCE OF DEPRECIATION ON IPR. 4.1 IN THIS GROUND, THE ASSESSEE HAS ASSAILED THE A CTION OF THE LEARNED CIT(A) IN CONFIRMING THE LEVY OF PENALTY U/S. 271(1)(C) OF TH E ACT BY THE AO ON THE ASSESSEES CLAIM FOR DEPRECIATION ON IPRS U/S. 32(1)(II) OF T HE ACT AS INTANGIBLE ASSETS FOR BOTH THE ASSESSMENT YEARS 2001-02 AND 2003-04. AT THE O UTSET, THE LEARNED AR FOR THE ASSESSEE SUBMITTED THAT THIS ISSUE OF LEVY OF PENAL TY U/S. 271(1)(C) OF THE AAT IN RESPECT OF THE ASSESSEES CLAIM OF DEPRECIATION OF IPRS U/S. 32(1)(II) OF THE ACT IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE ASSESSEES OWN CASE IN ITA NO. 7015 TO 7018/MUM/2011 DATED 04.03.2015 FOR A.YS. 2002-03 AND 2004-05 TO 2006-07 , WHEREIN THE CO-ORDINATE BENCH HAS CANCELLED THE LEVY OF PENALTY U/S. 271(1) (C) OF THE ACT ON THIS ISSUE. THE LEARNED AR CONTENDS THAT IN VIEW OF THE AFORESAID O RDER OF THE CO-ORDINATE BENCH (SUPRA), THE PENALTY LEVIED U/S. 271(1)(C) OF THE A CT FOR A.Y. 2001-02 AND 2003-04 ARE TO BE CANCELLED. 4.2 PER CONTRA, THE LEARNED DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW, BUT FAIRLY CONCEDED THAT THE ISSUE IN QUESTION I.E., TH E LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT IS COVERED IN FAVOUR OF THE ASSESSEE BY THE AFORESAID DECISION OF THE CO- ORDINATE BENCH OF THE TRIBUNAL IN THE ASSESEES OWN CASE (SUPRA). 4.3.1 WE HAVE HEARD BOTH PARTIES AND HAVE CAREFULLY CONSIDERED THE MATERIAL ON RECORD; INCLUDING THE JUDICIAL PRONOUNCEMENTS CITED . AS AGREED BY BOTH THE LEARNED AR FOR THE ASSESSEE AND THE LEARNED DR FOR THE REVE NUE, WE FIND THAT THE ISSUE OF LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT ON THE AS SESSEES CLAIM FOR DEPRECIATION ON ITA NO.4377 TO 4379/MUM/2014 FINANCIAL TECHNOLOGIES (INDIA) LTD. 7 IPRS U/S. 32(1)(II) OF THE ACT HAS BEEN CONSIDERED AND HELD IN FAVOUR OF THE ASSESSEE IN THE DECISION OF THE CO-ORDINATE BENCH I N THE ASSESSEES OWN CASE FOR A.YS 2002-03 AND 2004-05 TO 2006-07 IN ITS ORDER IN ITA NOS. 7015 TO 7018/MUM/2011 DATED 04.03.2015 (SUPRA). AT PARAS 1 7 TO 31 THEREOF, THE CO- ORDINATE BENCH HAS HELD AS UNDER: 17. WE HAVE HEARD THE ARGUMENTS AND HAVE PURSUED T HE ORDERS OF THE REVENUE AUTHORITIES AND THE PLETHORA OF CASE LA WS CITED BEFORE US. THE FOLLOWING ARE THE UNDISPUTED FACTS: THE ASSESSEE CLAIMED THE IPRS AS ONE OF THE BENEFIT S OF THE AWARD OF ARBITRATION, SUSTAINED BY THE HONBLE MADR AS HIGH COURT AND HONBLE BOMBAY HIGH COURT WITHIN THE SCHEME OF AMALGAMATION. THE ASSESSEE CLAIMED DEPRECIATION ON THE IPRS AS PE R THE PROVISIONS OF SECTION 32(1)(II), IPRS BEING INTANGI BLE ASSETS. THE DISALLOWANCE OF DEPRECIATION ON IPRS BY THE AO IN REGULAR ASSESSMENT PROCEEDINGS WAS ALLOWED BY THE CIT(A). THE DIRECTOR MR. JIGNESH SHAH WITHDREW THE CLAIM OF DEPRECIATION IN THE STATEMENT UNDER SECTION 132(4) DURING THE CO URSE OF SEARCH AND SEIZURE OPERATIONS UNDERTAKEN ON THE ASS ESSEE. IN 153A PROCEEDINGS, THE AO ONCE AGAIN ADDED THE SA ME BUT IN THESE PROCEEDINGS, THE CIT(A) SUSTAINED THE ORDER O F THE AO. THE AO AS A CONSEQUENCE OF THE ORDERS IN 153A PROCEEDIN GS INITIATED AND LEVIED THE PENALTY UNDER SECTION 271(1)(C). 18. ON THE ABOVE FACTS, WE HAVE TO ASCERTAIN, AS T O WHETHER AT ALL PENALTY IS LEVIABLE ON THE ASSESSEE, ON THE UNDISPU TED AND UNDISTURBED FACTS AND FIGURES, ALREADY WITHIN THE KNOWLEDGE OF THE REVENUE AUTHORITIES. 19. WE FIND THAT ON THE DATE OF SEARCH, WHEN MR. JI NGNESH SHAH DIRECTOR OF THE ASSESSEE COMPANY WITHDREW THE CLAIM OF DEPRE CIATION ON IPRS, THE CLAIM WAS ALREADY ALLOWED BY THE CIT(A), BUT WAS SU B JUDICE BEFORE THE ITAT IN REGULAR ASSESSMENT PROCEEDINGS. 20. IN SUCH A SITUATION, THE ISSUE COULD NOT HAVE B EEN MADE THE SUBJECT MATTER OF ASSESSMENT UNDER SECTION 153A READ WITH S ECTION 143(3), BECAUSE THAT PROVISION CONTEMPLATES, ASSESSMENT OF MATERIAL FOUND DURING THE COURSE OF SEARCH ALONG WITH THE ORIGINAL INGREDIENTS OF THE ORIGINAL RETURN. THE IMPORTANT QUALIFICATION IS THA T THE MATERIAL MUST BE ITA NO.4377 TO 4379/MUM/2014 FINANCIAL TECHNOLOGIES (INDIA) LTD. 8 INCRIMINATING AND FOUND DURING THE SEARCH, AND WHIC H MAY HAVE THE CHARACTER OF INCREASING THE INCOME DECLARED IN ORIG INAL ROI. 21. IN THE INSTANT CASE, IT IS NOT THE CASE OF DEPA RTMENT THAT THERE WAS SOMETHING WHICH WAS CONCEALED BY THE ASSESSEE, WHIL E FILING ITS ORIGINAL RETURN OR THE RETURN IN RESPONSE TO SECTION 153A. I N SUCH A CASE INCIDENCE OF PENALTY AT ALL CANNOT BE COMPREHENDED. 22. REVERTING OUR ATTENTION TOWARDS THE APPLICABILI TY OF EXPLANATION 5A OF SECTION 271(1)(C). AS MENTIONED EARLIER IN THE ORDE R, THE EXPLANATION USES THE EXPRESSIONS, WHERE, IN THE COURSE OF A SEARCH INITIATED UNDER S ECTION 132 ON OR AFTER THE 1ST DAY OF JUNE, 2007, THE ASSESSEE IS FOUND TO BE THE OWNER OF (I) ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING (HEREAFTER IN THIS EXPLANATION REFERRED TO AS ASSET S) AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILISING (WHOLLY OR IN PART) HIS INCOME FOR ANY PR EVIOUS YEAR; OR (II) ANY INCOME BASED ON ANY ENTRY IN ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS AND HE CLAIMS THAT SUCH ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACT IONS REPRESENTS HIS INCOME (WHOLLY OR IN PART) FOR ANY P REVIOUS YEAR, WHICH HAS ENDED BEFORE THE DATE OF SEARCH AND, (A) WHERE THE RETURN OF INCOME FOR SUCH PREVIOUS YE AR HAS BEEN FURNISHED BEFORE THE SAID DATE BUT SUCH INCOME HAS NOT BEEN DECLARED THEREIN; OR (B) THE DUE DATE FOR FILING THE RETURN OF INCOME FO R SUCH PREVIOUS YEAR HAS EXPIRED BUT THE ASSESSEE HAS NOT FILED THE RETURN, THEN, NOTWITHSTANDING THAT SUCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOME FURNISHED ON OR AFTER THE DATE OF SEARCH, HE SHALL, FOR THE PURPOSES OF IMPOSITION OF A PENALTY UNDER CLAUSE (C) OF SUB-SECTION (1) OF THIS SECTION, BE DEEMED TO HA VE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURA TE PARTICULARS OF SUCH INCOME. 23. WHEN WE ANALYZE THE EXPRESSIONS USED IN CLAUSE (I) TO EXPLANATION 5A, WE FIND THAT THE EXPRESSIONS USED A RE DEFINITE TO USE THE WORDS ANY MONEY, BULLION, JEWELLERY OR OTHER VALUA BLE ARTICLE OR THING (HEREAFTER IN THIS EXPLANATION REFERRED TO AS ASSET S) AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM B Y UTILISING (WHOLLY OR IN PART) HIS INCOME FOR ANY PREVIOUS YEAR. IN THE INSTANT CASES, NO ADDITION/DISALLOWANCE HAD BEEN MADE ON ANY MONEY, B ULLION, JEWELLERY OR OTHER ARTICLE OR THING FOUND IN THE SEARCH. FACTUAL LY, IS NOT THE CASE OF THE REVENUE AS WELL, BECAUSE NONE OF THE ABOVE EXPRESSI ONS WAS A RESULT OF THE SEARCH OR HAVE BEEN POINTED OUT BY THE REVENUE AUTHORITIES. ITA NO.4377 TO 4379/MUM/2014 FINANCIAL TECHNOLOGIES (INDIA) LTD. 9 24. EVEN WHEN WE ANALYZE EXPRESSIONS USED IN CLAUS E (II) TO EXPLANATION, ANY INCOME BASED ON ANY ENTRY IN ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS AND HE CLAIMS THAT SUCH ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS REPRESENTS HIS INCOME (WHOLLY OR IN PART) FOR ANY PREVIOUS YEAR ..., WE FIND THAT EVEN THIS SHALL NOT APPLY FOR THE FOLLOWING REASONS, (A) IPRS WERE ACQUIRED AS A SCHEME AWARDED BY THE T WO HONBLE HIGH COURTS & (B) THE WITHDRAWAL OF THE CHARGE OF DEPRECIATION WA S A SUO MOTO DECISION TO AVOID LITIGATION. (C) THE IMPUGNED ISSUE IS DOES NOT PERTAIN TO INCOM E BUT, IT WAS A LEGAL CHARGE ON THE INTANGIBLE ASSETS, AS ACQUIRE D BY THE ASSESSEE. 25. IN SO FAR AS DEPRECIATION IS CONCERNED, IT IS AN ALLOWABLE LEGAL CHARGE, WHICH HAD BEEN ACCEPTED AND ALLOWED BY THE CIT(A) IN REGULAR ROUND OF PROCEEDINGS. SINCE IT HAS BEEN DISALLOWED NOW, IT FALLS WITHIN THE PRECINCT OF (I) CHANGE OF OPINION, AND (II) IN CASE OF A LEGAL CLAIM OF A LEGAL CHARGE. 26. A LEGAL CLAIM AND CHANGE OF OPINION BY THE REV ENUE AUTHORITIES ON A GIVEN SUBJECT, CANNOT PARTAKE THE CHARACTER OF CONCEALMENT AND/OR FURNISHING OF INACCURATE PARTICULARS OF INCOME, HEN CE PENALTY IS NOT EXIGIBLE. 27. EVEN WHEN WE TRY TO EXAMINE THE CORRECTNESS OF LEVY OF PENALTY THROUGH THE WINDOW OF QUANTUM, THE INSTANT CASE OF LEVY OF PENALTY IS A RESULT OF SUO MOTO WITHDRAWAL OF DEPRECIATION OF AN INTANGIBLE ASSET, WHICH ARE, PATENTS, COPYRIGHTS, TRADEMARKS ETC., WH ICH ALREADY FIND PLACE IN THE INTANGIBLE ASSET PORTION OF SECTION 32 ON WH ICH THE DEPRECIATION WOULD HAVE BEEN ALLOWED. 28. IN ANY CASE DEPRECIATION IS NOT BASED ON BOOK ENTRY BUT ON THE BASIS OF PROVISION OF THE ACT. 29. COMING TO THE CORRECTNESS OF ADDITION, BASED O N STATEMENT UNDER SECTION 132(4), WE ARE IN AGREEMENT WITH THE SUBMIS SIONS OF THE AR, THAT ADDITION ITSELF CANNOT BE SUSTAINED SIMPLY ON THE B ASIS OF STATEMENT UNDER SECTION 132(4), AS HELD IN THE CASE OF RAJ PAL BHAT IA (SUPRA). 30. WE ALSO AGREE THAT THE RATIO LAID DOWN BY THE HONBLE MADRAS HIGH COURT IN THE CASE OF SMJ HOUSING (SUPRA) THAT EXPLANATION 5 CANNOT BE INVOKED, AS NO INCRIMINATING MATERIAL IS FOUND F ROM THE SEARCH. ALL THE FACTS WERE ON RECORD, WHICH HAS NOT BEEN DISPROVED BY THE REVENUE AUTHORITIES OR OTHERWISE PROVED TO BE ILLEGAL, EVEN IF THE CLAIM WAS NON ITA NO.4377 TO 4379/MUM/2014 FINANCIAL TECHNOLOGIES (INDIA) LTD. 10 ALLOWABLE. NON-ALLOWABLE CLAIM CANNOT, BY ITSELF IN VITE PENALTY, AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS REL IANCE PETRO PRODUCTS PVT. LTD., REPORTED IN 322 ITR 158 (SC). 31. UNDER THESE CIRCUMSTANCES, WE SET ASIDE THE OR DERS OF THE CIT(A), SUSTAINING THE PENALTIES UNDER SECTION 271( 1)(C) IN ASSESSMENT YEARS 2002-03, 2004-05, 2005-06 AND 2006-07 AND DIR ECT THE AO TO CANCEL THE FOLLOWING PENALTIES, AS LEVIED. 4.3.2 FOLLOWING THE AFORESAID DECISION OF THE CO-OR DINATE BENCH IN THE ASSESSEES OWN CASE FOR A.Y. 2002-03 AND 2004-05 TO 2006-07, W E SET ASIDE AND CANCEL THE IMPUGNED ORDER OF THE LEARNED CIT(A) UPHOLDING THE PENALTY LEVIED U/S. 271(1)(C) OF THE ACT FOR THE ASSESSMENT YEARS 2001-02 AND 2003-0 4 ON THE ISSUE OF THE ASSESSEES CLAIM FOR DEPRECIATION ON IPRS U/S. 32( 1)(II) OF THE ACT. WE HOLD AND DIRECT ACCORDINGLY. 5. GROUND NO. 1(I) AND 2 FOR A.YS. 2001-02 AND 2003-04 DEFERMENT OF INCOME ON ACCOUNT OF AMC CHARGES 5.1.1 IN THESE GROUNDS THE ASSESSEE ASSAILS THE DEC ISION OF THE LEARNED CIT(A) IN HOLDING THAT THE ASSESSEE HAS NOT RAISED ANY SPECIF IC GROUNDS RELATING TO THE LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT ON THE ISSUE OF D EFERMENT OF INCOME ON ACCOUNT OF AMC CHARGES, IGNORING THE FACT THAT THE GROUNDS RAI SED BEFORE HIM AT SR. NO. 1, 2, 6, 7, 8 AND 9 WERE COMMON GROUNDS COV ERING BOTH THE ISSUES ON WHICH PENALTY WAS LEVIED. IT WAS FURTHER SUBMITTED THAT AT PARA 3.2 OF THE IMPUGNED ORDER IT IS EVIDENT THAT THE LEARNED CIT(A) ADMITTEDLY BR USHED ASIDE AND DID NOT CONSIDER THE SUBMISSIONS MADE BY THE ASSESSEE ON THIS ISSUE BY REFUSING TO ADJUDICATE THEREON SINCE NO SPECIFIC GROUND WAS RAISED BY THE ASSESSEE BEFORE HIM. 5.1.2 THE LEARNED AR SUBMITS THAT EVEN THOUGH A SPE CIFIC GROUND MAY NOT HAVE BEEN RAISED ON THIS ISSUE, THE ISSUE WAS SPECIFICAL LY RAISED AND URGED IN ARGUMENTS/SUBMISSIONS ADMITTEDLY MADE BEFORE THE LE ARNED CIT(A). IN THIS CONTEXT, ITA NO.4377 TO 4379/MUM/2014 FINANCIAL TECHNOLOGIES (INDIA) LTD. 11 THE LEARNED AR SUBMITTED THAT THE HONBLE BOMBAY HI GH COURT IN THE CASE OF BABY SAMUEL VS. ACIT (2003) 262 ITR 385 (BOM) HAD CONSID ERED A SIMILAR ISSUE. IN THIS CASE, THE FACTS WERE THAT AT THE TIME OF FINAL HEAR ING BEFORE THE TRIBUNAL, THE ASSESSEE HAD FILED A CHART ELABORATING VARIOUS GROU NDS TAKEN, AND ADDITIONALLY MADE SUBMISSIONS/OBJECTIONS WITH REGARD TO THE ADDITION MADE IN RESPECT OF UNSECURED ADVANCES FOR WHICH NO SPECIFIC GROUND WAS RAISED. THEIR LORDSHIP HELD THAT THE ASSESSEE CANNOT BE DENIED RIGHT TO CLAIM ADJUDICATI ON ON AN ISSUE OR MERITS WHEN THE ISSUE WAS SPECIFICALLY RAISED BY THE ASSESSEE A T THE TIME OF APPEAL. THE LEARNED AR PRAYS THAT IN THE LIGHT OF THE DECISION OF THE H ONBLE BOMBAY HIGH COURT, THE ISSUE OF LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT ON DEFERMENT OF INCOME ON ACCOUNT OF AMC CHARGES BE RESTORED TO THE FILE OF THE LEARN ED CIT(A) FOR ADJUDICATION OF THIS ISSUE ON MERITS. 5.2 IN CONTRA, THE LEARNED DR FOR THE REVENUE RELIE D ON THE DECISION OF THE LEARNED CIT(A) IN THE IMPUGNED ORDER. 5.3.1 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. ADMITTEDLY, THE ASSESSEE H AD NOT RAISED A SPECIFIC GROUND AGAINST THE LEVY OF PENALTY U/S. 271(1)(C) OF THE A CT. HOWEVER, AS NOTED BY THE LEARNED CIT(A), AT PARA 3.2 OF THE IMPUGNED ORDER, THE ASSESSEE HAD IN FACT FILED WRITTEN SUBMISSIONS FOR ALL THE THREE ASSESSMENT YE ARS 2001-02 TO 2003-04 ON THE ISSUE OF LEVY OF PENALTY ON DEFERMENT OF INCOME ON ACCOUNT OF AMC CHARGES AND ON WHICH THE LEARNED CIT(A) REFUSED TO ADJUDICATE ON T HE MERITS OF THE ISSUE SINCE NO SPECIFIC GROUND WAS RAISED BY THE ASSESSEE IN THIS REGARD. ON A CAREFUL PERUSAL THEREOF, WE FIND THAT THE HONBLE BOMBAY HIGH COURT IN THE CASE OF BABY SAMUEL VS. ACIT (2203) 262 ITR 385 (BOM) HAD, WHILE CONSIDERIN G A SIMILAR ISSUE OF REFUSAL TO ITA NO.4377 TO 4379/MUM/2014 FINANCIAL TECHNOLOGIES (INDIA) LTD. 12 ADJUDICATE AN ISSUE BY THE TRIBUNAL WHERE SUBMISSIO NS WERE MADE BY THE ASSESSEE ON THE GROUNDS THAT NO SPECIFIC GROUND WAS RAISED, HELD THAT THE ASSESSEE CANNOT BE DENIED THE RIGHT TO CLAIM ADJUDICATION ON AN ISSUE ON MERITS WHEN THE ISSUE WAS SPECIFICALLY RAISED/URGED BY THE ASSESSEE AT THE TI ME OF THE APPEAL. WE ARE OF THE VIEW THAT THE AFORESAID DECISION OF THE HONBLE BOM BAY HIGH COURT (SUPRA), WOULD APPLY SQUARELY TO THE CASE ON HAND. IN THIS VIEW O F THE MATTER, WE RESTORE THE ISSUE OF LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT IN RES PECT OF THE DEFERMENT OF INCOME ON ACCOUNT OF AMC CHARGES TO THE FILE OF THE LEARNED C IT(A) FOR CONSIDERATION AND ADJUDICATION THEREON, FOR ALL THE THREE A.YS 2001-0 2 TO 2003-04, AFTER AFFORDING THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD AND TO FILE DETAILS/SUBMISSIONS IN THIS REGARD. WE HOLD AND DIRECT ACCORDINGLY. 6. IN THE RESULT, THE ASSESSEES APPEALS FOR A.YS 2 001-02 AND 2003-04 ARE PARTLY ALLOWED AND THE APPEAL FOR A.Y. 2002-03 IS PARTLY A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 1 9 TH AUGUST 2016. SD/- SD/- (SANDEEP GOSAIN) (JASON P BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED : 19 TH AUGUST, 2016. SA ITA NO.4377 TO 4379/MUM/2014 FINANCIAL TECHNOLOGIES (INDIA) LTD. 13 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. THE CIT 5. THE DR, F BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, MUMBAI