Asst. Commissioner of Income Tax, Circle- 1(1), Panaji V. M/s Dempo Industries Pvt. Ltd., Panaji

ITA 442/PAN/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93582 (ITAT-PANAJI)
• Duration Of Justice: 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 13-07-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 31-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANAND SHANKAR MARATHE
• Keywords: Depreciation; Bonafide belief

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI N.S. SAINI , HONBLE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER ITA NO. 442 /PNJ/201 4 (ASST. YEAR : 200 4 - 0 5 ) ACIT, CIRCLE - 1(1), PANAJI. VS. M/S. DEMPO INDUSTRIES P. LTD., DEMPO HOUSE, CAMPAL , PANAJI - GOA. PAN NO. AAACU 1705 F (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE . DEPARTMENT BY : SHRI ANAND SHANKAR MARATHE - DR DATE OF HEARING : 13 / 0 7 /2015 . DATE OF PRONOUNCEMENT : 13 / 0 7 /201 5 . O R D E R PER N.S. SAINI , ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) , PANAJI, DATED 1 0 / 1 0/201 4 . 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DELETING THE PENALTY LEVIED U/S. 271(1)(C) AS THE ASSESSEE DID NOT USE THE ASSETS AT ALL AND DELIBERATELY CLAIMED DEPRECIATION ON IT. 3. NOTICE OF HEARING WAS SENT TO THE RESPONDENT /ASSESSEE BY REGISTERED POST WITH ACKNOWLEDGMENT DUE ON 30/06/2015 AND THE SAME WAS SERVED ON THE ASSESSEE ON 03/07/2015 . NONE APPEARED ON BEHALF OF THE ASSESSEE WHEN THE CASE WAS CALLED FOR HEARING AND NEITHER ANY ADJOURNMENT APPLICATION WAS FILED. 2 ITA NO. 4 4 2/PNJ/2014 4 . BENCH PROCEEDED TO DISPOSE OF THE APPEAL AFTER CONSIDERING THE SUBMISSIONS OF THE DEPARTMENTAL REPRESENTATIVE AND THE MATERIALS AVAILABLE ON RECORD. 5. WE HAVE HEARD DEPARTMENTAL REPRESENTATIVE . 6. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS CLAIMED DEPRECIATION OF RS. 24,17,419/ - IN U NIVERSAL B EVERAGES ON PLANT AND MACHINERY FOR MANUFACTURING OF SOFT DRINKS , AERATED WATER AND OTHER BEVERAGES. THE ASSESSING OFFICER FOUND TH A T SINCE ASSESSMENT YEAR 2002 - 03 , THE PLANT WAS NOT FUNCTIONAL , THUS ASSESSEE HAS NOT USED THE PLANT AND MACHINERY FOR ITS BUSINESS AND WAS THEREFORE NOT ALLOWABLE DEPRECIATION ON IT. HE FURTHER OBSERVED THAT DISALLOWANCE MADE WAS CONFIRMED BY THE TRIBUNAL VIDE ORDER DATED 26/03/2007 PASSED IN I.T.A.NO. 225/PNJ/2006 - 07 . HE, THEREFORE , LEVIED PENALTY OF RS. 8,67,000/ - U/S. 271(1)(C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF ITS INCOME . 7. ON APPEAL, COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE PENALTY BY OBSERVING THAT THE AMOUNT OF DEPRECIATION WAS CORRECTLY CALCULATED AS PER THE RATES PRESCRIBED UNDER THE ACT . JUST BECAUSE CLAIM OF DEPRECIATION W AS DISALLOWED , IT DOES NOT AUTOMATICALLY BECOME CASE OF CONCEALMENT AND FURNISHING OF INACCURATE PARTICULARS . HE OBSERVED THAT THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROCHEMICALS PVT. LTD. REPORTED IN 322 ITR 158 (SC) HAS HELD THAT MERELY BECAUSE ASSESSEE CLAIMED DEDUCTION WHICH HAS NOT BE E N ACCEPTED BY THE REVENUE , PENALTY U/S. 271(1)(C) IS NOT ATTRACTED . THEREFORE, HE DELETED THE LEVY OF PENALTY. 8. BEING AG G RI E VED BY THIS ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) , THE REVENUE IS IN APPEAL BEFORE US. 3 ITA NO. 4 4 2/PNJ/2014 9. DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER OF THE ASSESSING OFFICER. 10. WE FIND THAT IN THE INSTANT CASE , THE ASSESSEE HAS CLAIMED DEPRECIATION ON PLANT AND MACHINERY , WHICH ACCORDING TO THE ASSESSING OFFICER WAS NOT USED BY THE ASSESSEE , DURING THE YEAR UNDER CONSIDERATION . FURTHER, THE COMMISSIONER OF INCOME TAX (APPEALS) HAS GIVEN A FINDING WHICH IS NOT DISPUTED BY THE R E VENUE THAT THE DEPRECIATION CLAIMED BY THE ASSESSEE IS THE RETURN OF INCOME WAS AS PER THE RATES PRESCRIBED UNDER THE INCOME TAX ACT. THE CLAIM OF THE ASSESSEE FOR DEPRECIATION WAS DISALLOWED BY THE ASSESSING OFFICER SIMPLY BECAUSE THE ASSESSEE HAD NOT USED THE PLANT AND MACHINERY FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE DURING TH E YEAR UNDER CONSIDERATION AND, THEREFORE , THE DEPRECIATION WAS NOT ALLOWABLE TO THE ASSESSEE. THE ASSESSEE CLAIMED THE DEPRECIATION UNDER A BONAFIDE BELIEF THAT WHEN THE PLANT AND MACHINERY WAS KEPT READY FOR USE, THE SAME AMOUNTS TO USE OF ASSETS FOR THE BUSINESS OF THE ASSESSEE AND HENCE, THE ASSESSEE IS ALLOWABLE DEPRECIATION ON THE SAME. NO INACCURATE PARTICULARS WERE FOUND BY THE ASSESSING OFFICER IN THE RETURN OF INCOME FILED BY THE ASSESSEE EXCEPT THAT CLAIM OF DEPRECIATION , WHICH WAS DISALLOWED BY THE ASSESSING OFFICER ON ACCOUNT OF THE FACT THAT THE PLANT AND MACHINERY WAS NOT UTILIZED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION . WE FIND THAT THE HONBLE SUPREME COURT IN THE CA S E OF RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA) HAS HELD AS UNDER: - WHETHER THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE F OUND TO BE INCORRECT OR ERRONEOUS OR FALSE 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 ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE . SUCH A CLA I M MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. 4 ITA NO. 4 4 2/PNJ/2014 11 . RESPECTFULLY FOLLOWING THE ABOVE QUOTED DECISION OF THE HONBLE SUPREME COURT , WE FIND NO INFIRMITY IN THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) WHICH IS CONFIRMED AND THE GR O UND OF APPEAL OF THE REVENUE IS DISMISSED. 12 . IN THE RESULT, APPEA L OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE HEARING ON MONDAY , THE 13 TH DAY OF JULY , 201 5 AT GOA . S D / - S D / - (GEORGE MATHAN) (N.S.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 13 TH JU LY , 201 5 . VR/ - COPY TO: 1 . THE ASSESSEE 2 . THE DEPARTMENT . 3 . THE CIT 4 . THE CIT(A) 5 . THE D.R 6 . GUARD FILE. BY ORDER ASSISTANT REGISTRAR I.T.A.T., PANAJI 5 ITA NO. 4 4 2/PNJ/2014 DATE INITIAL ORIGINAL DICTATION PAD IS ENCLOSED IN THE FILE 1. DRAFT DICTATED ON 13 .0 7 .2015 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 14 .07 .2015 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 14 /07 /2015 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 14 /0 7 /2015 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 14 /07 /2015 SR.PS 6. DATE OF PRONOUNCEMENT 13 /0 7 /2015 SR.PS 7. FILE SENT TO THE BENCH CLERK 14 /07 /2015 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER