ACIT CEN CIR 22, MUMBAI V. DEVELOPMENT CREDIT BANK LTD, MUMBAI

ITA 4815/MUM/2010

• Counselvise Citation: 481519914 RSA 2010
• Duration Of Justice: 1 year(s) 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2003-2004
• Appeal Filed On: 10-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR B SENTHIL KUMAR
• Keywords: Depreciation; Difference of opinion
• Section: 143(3); 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, D, MUMBAI BEFORE S/SHRI D.K.AGARWAL (JM) AND B.RAMAKOTAIAH (A .M ) ITA NO.4815/MUM/2010 (ASSESSMENT YEAR: 2003-04) ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-22, ROOM NO.403, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 M/S DEVELOPMENT CREDIT BANK LTD., 301, TRADE PLAZE 44, VEER SAVARKAR MARG, PRABHADEVI, MUMBAI-400025 PAN:AAACD1461F APPELLANT V/S RESPONDENT DATE OF HEARING : 17.8.2011 DATE OF PRONOUNCEMENT : APPELLANT BY : DR.B.SEN THIL KUMAR RESPONDENT BY : SHRI SATISH R.MODY O R D E R PER D.K.AGARWAL (JM) THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 31.3.2010 PASSED BY THE L D.CIT(A) FOR THE ASSESSMENT YEAR 2003-04. WITH THE CONSENT OF THE PARTIES THIS APPEAL IS HEARD AND BEING DISPOSED OF BY THIS ORDER. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE IS A BANKING COMPANY CARRYING ON BUSINESS OF BANKING ACTIVITIES IN INDIA FOR LAST MANY YEARS. THE RETU RN WAS FILED DECLARING LOSS OF RS.91,65,19,095/-. HOWEVER, THE ASSESSMENT WAS COMPLETED UNDER THE NORMAL PROVISI ONS OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) AT AN I NCOME OF ITA NO.4815/MUM/2010 (ASSESSMENT YEAR: 2003-04) 2 RS.27,50,56,620/- INCLUDING THE DISALLOWANCE OF DEP RECIATION ON LEASED ASSETS OF RS.2,07,07,250/- AND THE DISALL OWANCE OF EXEMPT DIVIDEND INCOME OF RS.4,63,59,643/- VIDE OR DER DATED 31.1.2006 PASSED UNDER SECTION 143(3) OF THE ACT. BEFORE THE LD.CIT(A) THE ASSESSEE FILED APPEAL CHAL LENGING THE VARIOUS DISALLOWANCES INCLUDING THE DISALLOWANC E OF DEPRECIATION BUT DID NOT CONTEST THE DISALLOWANCE OF EXEMPT DIVIDEND INCOME OF RS.4,63,59,643/-. THE LD.CIT( A) WHILE DELETING THE DISALLOWANCE OF DEPRECIATION ON THE LE ASED ASSETS RS.63,82,461/- OUT OF RS.2,07,07,250/- AND OTHER DISALLOWANCE, CONFIRMED THE OTHER ADDITIONS/ DISALL OWANCES AND ACCORDINGLY PARTLY ALLOWED THE APPEAL. 3. IN THE MEANWHILE, SINCE THE AO IN THE ASSESSMENT ORDER HAS INITIATED PENALTY PROCEEDINGS UNDER SECTION 271 (1)( C ), THE AO ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE AS TO WHY THE PENALTY UNDER SECTION 271(1)(C) SHOULD NOT BE IMPOSED. IN RESPONSE, IT WAS INTERALIA SUBMITTED BY THE ASSE SSEE THAT IN THE ASSESSMENT YEAR 1997-98, THE LD.CIT(A) DELE TED THE PENALTY LEVIED BY THE AO. SINCE, THE GROUNDS OF T HE PROPOSED LEVY OF PENALTY ARE SIMILAR, THEREFORE, T HE PENALTY PROCEEDINGS INITIATED BE DROPPED. IT WAS FURTHER S UBMITTED THAT THE EXCESS CLAIM OF EXEMPTION UNDER SECTION 10 (15) WAS BONAFIDE ERROR WHICH OCCURRED INADVERTENTLY AND UPO N BEING NOTED IT WAS RIGHTLY ACCEPTED AND RECTIFIED BY THE ASSESSEE, ITA NO.4815/MUM/2010 (ASSESSMENT YEAR: 2003-04) 3 THEREFORE, NO PENALTY IS LEVIABLE ON THIS ACCOUNT A LSO. THE RELIANCE WAS ALSO PLACED ON CERTAIN DECISIONS. HO WEVER, THE AO DID NOT ACCEPT THE ASSESSEES EXPLANATION. THE AO WAS OF THE VIEW THAT THE ASSESSEE HAS FURNISHED INACCU RATE PARTICULARS OF INCOME AND CONCEALED ITS INCOME. TH E AO BY APPLYING THE PROVISIONS OF SUB-SECTION (1B) IN SEC TION 271 HELD THAT THE ASSESSEE HAS FURNISHED INACCURATE PA RTICULARS OF INCOME ON BOTH THE ISSUES AND HENCE THE ASSESSEE IS LIABLE TO PENALTY UNDER SECTION 271(1)(C) AND ACCOR DINGLY HE IMPOSED MINIMUM PENALTY OF RS.2,46,47,083/- VIDE D ATED 18.3.2008 PASSED UNDER SECTION 271(1) (C) OF THE AC T. ON APPEAL, THE LD.CIT(A) FOLLOWING THE APPELLATE ORDER FOR THE ASSESSMENT YEAR 1999-2000 ON THE ISSUE OF DEPRECIA TION HELD THAT WITH REGARD TO THE CLAIM OF DEPRECIATIO N ON LEASED ASSETS THE PENALTY IS NOT LEVIABLE. WITH REGARD TO THE CLAIM OF DIVIDEND INCOME AS EXEMPT, THE LD.CIT(A) AFTER RELY ING ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F UNION OF INDIA V/S DHARMENDRA TEXTILE PROCESSORS 306 ITR 277(SC) HELD THAT THE MISTAKE IS NOT A BONAFIDE MI STAKE AND ACCORDINGLY, THE APPELLANT IS LIABLE TO PENALTY ON THE DIVIDEND INCOME WHICH WAS WRONGLY CLAIMED BY THE APPELLANT A S EXEMPT AND DIRECTED THE AO TO RE-WORK THE PENALTY UNDER SECTION 271(1)(C ) OF THE ACT AND ACCORDINGLY PARTL Y ALLOWED THE APPEAL. ITA NO.4815/MUM/2010 (ASSESSMENT YEAR: 2003-04) 4 4. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE US CHALLENGING IN ALL THE GROUNDS THE DELETION OF PENALTY ON THE DEPRECIATIO N OF LEASE HOLD ASSETS. 5. AT THE TIME OF HEARING, BOTH THE PARTIES HAVE AG REED THAT THIS ISSUE IS COVERED AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBUNAL IN ASS ESSEES OWN CASE IN DCIT V/S M/S DEVELOPMENT CREDIT BANK LT D. IN ITA NO.183/MUM/2009 (AY-1998-99) DATED 23.10.2009, FOLLOWED BY THE TRIBUNAL IN REVENUES APPEALS IN ITA NOS.3062, 3061 AND 3064/MUM/2010 FOR ASSESSMENT YEA RS 1999-2000 TO 2001-02, ORDER DATED 31.3.2011. IT WA S THEREFORE, SUBMITTED BY THE LEARNED COUNSEL FOR T HE ASSESSEE THAT FOLLOWING THE ABOVE ORDERS, THE ORDER PASSED BY THE LD.CIT(A) IN DELETING THE PENALTY BE UPHELD . 6. HAVING CAREFULLY HEARD THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSING THE MATERIAL AVAILABLE ON REC ORD WE FIND MERIT THAT ON THE SIMILAR FACTS, THE PENALTY LEVI ED BY THE AO FOR THE ASSESSMENT YEAR 1998-99 HAS BEEN DELETED BY THE LD.CIT(A) AND THE ORDER OF THE LD.CIT(A) WAS UPHELD BY THE TRIBUNAL IN DISMISSING THE APPEAL FILED BY THE REV ENUE VIDE FINDINGS RECORDED IN PARAGRAPH 3 OF ITS ORDER DATED 23.10.2009 WHICH ARE REPRODUCED BELOW:. ITA NO.4815/MUM/2010 (ASSESSMENT YEAR: 2003-04) 5 WE FIND THAT ALL THE MATERIAL FACTS HAVE BEEN DISC LOSED BY THE ASSESSEE AT THE TIME OF ASSESSMENT BEFORE TH E A.O. THE CIT (A) HAS RECORDED THE FINDING THAT THE ASSESSEE HAS DISCLOSED ALL RELEVANT DATA AND EXPLAN ATION / INFORMATION AND THAT THE DATA AND INFORMATION FUR NISHED BY THE ASSESSEE HAS BEEN BONAFIDE AND THERE HAS BEE N NO FINDING OF THE A.O. TO THE CONTRARY. THE CIT (A) HAS FURTHER RECORDED THAT THE DOCUMENTS FURNISHED ARE CUSTOMARY AND CREDIBLE. THE A.O. WAS DISALLOWED DEPRECIATION ON THE ASSETS LEASED OUT BY THE ASSESS EE TO CIMCO AND APSEB, HOLDING THE SAME TO BE FINANCE TRANSACTIONS. THE EXISTENCE OF THE ASSETS ON WHICH DEPRECIATION WAS CLAIMED BY THE ASSESSEE, HAS NOT B EEN DOUBTED BY THE A.O. THE ASSESSEE IS A BANK, WHICH I S SUBJECT TO THE REGULATORY SUPERVISION OF THE RBI AS WELL AS ITS STATUTORY AUDITORS. THE CIT (A) HAS RECORDED THAT THE A.O. HAS NOT FOUND ANY INFIRMITY IN THE DISCLO SURES OF THE ASSESSEE SO AS TO ESTABLISH ANY INSTANCE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME, OR ANY NEGLECT OR WILLFUL OMISSION ON THE PART OF THE ASSE SSEE. THE CIT (A) HAS FURTHER RECORDED THAT THERE WAS ALS O NO EVIDENCE OF ANY DISHONEST OR CONTUMACIOUS CONDUCT O N THE PART OF THE ASSESSEE, SO AS TO ATTRACT THE LEVY OF PENALTY. THE CIT (A) HAS CONCLUDED THAT IT IS A CAS E WHERE THE CONTENTIONS URGED BY THE ASSESSEE MAY NOT HAVE BEEN FOUND TO BE ACCEPTABLE, BUT THERE DOES NO T APPEAR TO BE ANYTHING TO SUGGEST THAT IT REFLECTED INACCURATE PARTICULARS OF INCOME OF THE ASSESSEE OR THE CONCEALMENT OF ITS TRUE PARTICULARS OF INCOME. THE CIT (A) HAS CITED CERTAIN JUDICIAL PRONOUNCEMENTS BY TH E HONBLE COURTS HOLDING THAT IF THE FACTS WERE DISCL OSED, BUT THE CLAIM FOR DEDUCTION WAS FOUND ERRONEOUS, TH ERE WAS NO CONCEALMENT OF INCOME AND PENALTY COULD NOT BE IMPOSED. WE FIND THAT THIS A CLEAR CASE OF HONEST DIFFERENCE OF OPINION BETWEEN THE ASSESSEE AND THE DEPARTMENT WITH REGARD TO THE ALLOWABILITY OF CERTA IN CLAIM OF DEDUCTION MADE BY THE ASSESSEE. THERE IS N O MATERIAL BROUGHT ON RECORD ON BEHALF OF THE REVENU E TO SUGGEST THAT THE EXPLANATION FILED BY THE ASSESSEE WAS NOT BONAFIDE. THE EXPLANATION OF THE ASSESSEE IS NO T WITHOUT ANY BASIS AND WAS SUBSTANTIATED AND, THEREF ORE, COULD BE CONSIDERED AS BONAFIDE AND ACCORDINGLY ACCEPTABLE. IN THESE FACTS OF THE CASE WE HOLD THAT THE PROVISION OF EXPLANATION- 1 TO SECTION 271(1)(C) OF THE ACT DOES NOT APPLY TO THE CASE OF THE ASSESSEE. IN THIS VIEW OF THE MATTER WE CONFIRM THE ORDER OF THE CIT (A) THAT THE ASSESSEES CLAIMS WERE NOT FRIVOLOUS OR IL L FOUND AND HAVE BEEN REJECTED DUE TO A DIFFERENCE OF OPINI ON ITA NO.4815/MUM/2010 (ASSESSMENT YEAR: 2003-04) 6 AND IN CANCELLING THE PENALTY / IMPOSED ON THE ASSE SSEE UNDER SECTION 271(1)(C) OF THE ACT. ACCORDINGLY, TH E GROUND OF APPEAL OF THE REVENUE IS DISMISSED. THE ABOVE ORDER OF THE TRIBUNAL HAS BEEN FOLLOWED BY THE TRIBUNAL IN THE APPEAL OF THE REVENUE FOR THE ASSE SSMENT YEARS 1999-2000 TO 2001-02, WHEREIN THE TRIBUNAL H AS DISMISSED THE APPEALS FILED BY THE REVENUE. IN THE ABSENCE OF ANY DISTINGUISHING FEATURE BROUGHT ON RECORD B Y THE REVENUE, WE RESPECTFULLY FOLLOWING CONSISTENT VIEW OF THE TRIBUNAL HOLD THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE PROVISIONS OF EXPLANATION 1 TO SECTION 2 71(1)( C ) DO NOT APPLY TO THE CASE OF THE ASSESSEE AND ACCOR DINGLY, WE ARE INCLINED TO UPHOLD THE FINDING OF THE LD.CI T(A) IN DELETING THE PENALTY IMPOSED BY THE AO . THE GROUN DS TAKEN BY THE REVENUE ARE, THEREFORE, REJECTED. 7. IN THE RESULT, THE REVENUES APPEAL STANDS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19TH AUG,2011. SD SD (B.RAMAKOTAIAH ) (D.K.AGARWAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 19TH AUGUST, 2011 SRL: ITA NO.4815/MUM/2010 (ASSESSMENT YEAR: 2003-04) 7 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH 6. GUARD FILE. BY ORDER TRUE COPY ASSTT. REGISTRAR, ITAT, MUMBAI