TARANG TEXTILES P.LTD, MUMBAI V. ITO RG 4(3)(2), MUMBAI

ITA 4842/MUM/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100893 (ITAT-MUMBAI)
• Duration Of Justice: 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-09-2015
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2005-2006
• Appeal Filed On: 28-08-2015
• Court: TRIBUNAL
• Department Lawyers: A RAJHANS
• Assessee Lawyers: NAVEEN CHATURVEDI
• Keywords: Depreciation; Wrong claim; Unabsorbed depreciation
• Section: 143(3)

Judgement Text

, - , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC, MUMBAI , ! ' , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, ITA NO.4842/MUM/2015 ASSESSMENT YEAR: 2005-06 M/S TARANG TEXTILES PVT LTD. 2-A, VAGHYANE NIVAS, 1 ST FLOOR, 172, SITARAM PODDAR ROAD, PHANASWADI, MUMBAI-400002 / VS. INCOME TAX OFFICER, RANGE-4(3)(2), AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020 / ASSESSEE / REVENUE P.A. NO. AABCD1894N $ % & / ASSESSEE BY SHRI NAVEEN CHATURVEDI $ % & / REVENUE BY SHRI A. RAJHANS -DR / DATE OF HEARING 01/09/2016 & / DATE OF ORDER: 01/09/2016 & / O R D E R THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DATED 24/07/2015 OF THE LD. FIRST APPELLATE AUTHORI TY, MUMBAI. THE ONLY GROUND RAISED IN THE APPEAL PERTAI NS TO ITA NO.4842/MUM/2015 M/S TARANG TEXTILES PVT. LTD. 2 CONFIRMING PENALTY OF RS.6,78,005/-, IMPOSED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT). 2. DURING HEARING, THE LD. COUNSEL FOR THE ASSESSEE, SHRI NAVIN CHATURVEDI, CONTENDED THAT PEN ALTY IS NOT LEVIABLE IN THE PRESENT APPEAL AS THE ASSESS EE NEITHER CONCEALED ITS INCOME NOR FURNISHED INACCURA TE PARTICULARS OF SUCH INCOME BY PLEADING THAT BY MAKI NG A WRONG CLAIM IN ITSELF DOES NOT TANTAMOUNT TO CONCEA LMENT. RELIANCE WAS PLACED UPON THE DECISION IN RELIANCE P ETRO PRODUCT PVT. LTD. 322 ITR 158 (SC). 2.1. ON THE OTHER HAND, SHRI, A. RAJHANS, LD. DR, DEFENDED THE IMPOSITION AS WELL AS CONFIRMATION OF PENALTY. 2.2. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSI NESS OF MANUFACTURING/PROCESSING OF TEXTURISED, TWISTED YAR N /FABRICS AND ALSO TRADING IN YARN/CLOTHS. THE ASSES SEE DECLARED INCOME OF RS.5,89,994/- IN ITS RETURN FILE D ON 31/10/2005. THE ASSESSMENT WAS COMPLETED U/S 143(3) R.W.S 147 OF THE ACT VIDE ASSESSMENT ORDER DATED 30/11/2011 ASSESSING THE INCOME AT RS.18,57,850/- A FTER MAKING ADDITION TO THE EXTENT OF RS.15,34,981/- DISALLOWING THE CLAIM OF SET OFF OF BROUGHT FORWARD DEPRECIATION OF ASSESSMENT YEAR 1996-97 AMOUNTING T O RS.3,31,503/-. THE LD. ASSESSING OFFICER INITIATED PENALTY ITA NO.4842/MUM/2015 M/S TARANG TEXTILES PVT. LTD. 3 U/S 271(1)(C) OF THE ACT. ON APPEAL, BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEAL), THE PENALTY WA S CONFIRMED, AGAINST WHICH THE ASSESSEE IS IN FURTHER APPEAL BEFORE THIS TRIBUNAL. 2.3. IF THE OBSERVATION MADE IN THE ASSESSMENT ORDER/PENALTY ORDER, LEADING TO ADDITION/PENALTY MA DE TO THE TOTAL INCOME, CONCLUSION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MAD E BY THE LD. RESPECTIVE COUNSEL, IF KEPT IN JUXTAPOSITIO N AND ANALYZED, IT IS NOTED THAT THE LD. ASSESSING OFFICE R DISALLOWED SET OFF OF BROUGHT FORWARD OF UNABSORBED DEPRECIATION AMOUNTING TO RS.3,31,503/-, CLAIMED BY THE ASSESSEE. I AM OF THE VIEW, EVEN IF A WRONG CLAIM IS MADE BY THE ASSESSEE THAT IPSO FACTO CANNOT LEAD TO CONCEALMENT. IT IS THE DUTY OF THE ASSESSING OFFICE R TO TAKE A CORRECT DECISION. EVEN IF A WRONG CLAIM HAS BEEN MADE, IT MAY BE A GOOD CASE FOR QUANTUM ADDITION BUT CERT AINLY NOT FOR IMPOSING PENALTY U/S 271(1)(C) OF THE ACT. THIS PROPOSITION IS SHELTERED BY THE DECISION FROM HON'B LE APEX COURT IN THE CASE OF RELIANCE PETRO PRODUCTS PVT. L TD. 322 ITR 158 (SC) AND CIT VS AJAIB SINGH & COMPANY 253 I TR 630( P &H). WHILE COMING TO THIS CONCLUSION, THE HO N'BLE APEX COURT IN RELIANCE PETRO PRODUCTS PVT. LTD. (SU PRA) OBSERVED AS UNDER:- ITA NO.4842/MUM/2015 M/S TARANG TEXTILES PVT. LTD. 4 A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINAB LE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO THE INACCURATE PARTICULARS. 2.4. IN THE LIGHT OF THE ABOVE OBSERVATION, I ARE REPRODUCING HEREUNDER THE RELEVANT PORTION OF SECTI ON 271(1)(C) OF THE ACT FOR READY REFERENCE AND ANALYS IS:- SECTION 271(1)(C) IS AS UNDER:- '271(1) IF THE ASSESSING OFFICER OR THE COMMISSIONE R (APPEALS) OR THE COMMISSIONER IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT, IS SATISFIED THAT ANY P ERSON- (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME.' 2.5. A GLANCE AT THIS PROVISION WOULD SUGGEST THAT IN ORDER TO BE COVERED, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY , THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. PRESENT IS NOT THE CASE OF CONCEALMENT OF THE INCOME. THAT IS NOT THE CASE OF THE REVENUE EITHER. AS PER LAW LEXICON, THE MEANING OF THE WORD 'PARTICULAR' I S A DETAIL OR DETAILS (IN PLURAL SENSE); THE DETAILS OF A CLAIM, OR THE SEPARATE ITEMS OF AN ACCOUNT. THEREFORE, THE WO RD 'PARTICULARS' USED IN THE SECTION 271(1)(C) WOULD E MBRACE THE MEANING OF THE DETAILS OF THE CLAIM MADE. IT IS AN ADMITTED POSITION IN THE PRESENT CASE THAT NO INFOR MATION GIVEN IN THE RETURN WAS FOUND TO BE INCORRECT OR ITA NO.4842/MUM/2015 M/S TARANG TEXTILES PVT. LTD. 5 INACCURATE. IT IS NOT AS IF ANY STATEMENT MADE OR A NY DETAIL SUPPLIED WAS FOUND TO BE FACTUALLY INCORRECT. HENCE , AT LEAST, PRIMA FACIE, THE ASSESSEE CANNOT BE HELD GUI LTY OF FURNISHING INACCURATE PARTICULARS. THE WORDS ARE PL AIN AND SIMPLE. IN ORDER TO EXPOSE THE ASSESSEE TO THE PENALTY UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISIO N, THE PENALTY PROVISION CANNOT BE INVOKED. BY ANY STRETCH OF IMAGINATION, MAKING AN INCORRECT CLAIM IN LAW CANNO T TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. IN COMMISSIONER OF INCOME TAX, DELHI VS. ATUL MOHAN BINDAL [2009(9) SCC 589], WHERE HON'BLE APEX COURT WAS CONSIDERING THE SAME PROVISION, THE COURT OBSERVED THAT THE ASSESSING OFFICER HAS TO BE SATISFIED THAT A PE RSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHE D INACCURATE PARTICULARS OF SUCH INCOME. HON'BLE COUR T REFERRED TO ANOTHER DECISION OF THIS COURT IN UNION OF INDIA VS. DHARAMENDRA TEXTILE PROCESSORS [2008(13) SCC 36 9], AS ALSO, THE DECISION IN UNION OF INDIA VS.RAJASTHA N SPG. & WVG. MILLS [2009(13) SCC 448] AND REITERATED IN P ARA 13 THAT:- '13. IT GOES WITHOUT SAYING THAT FOR APPLICABILITY OF SECTION 271(1)(C), CONDITIONS STATED THEREIN MUST EXIST.' THEREFORE, IT IS OBVIOUS THAT IT MUST BE SHOWN THAT THE CONDITIONS UNDER SECTION 271(1)(C) MUST EXIST B EFORE THE PENALTY IS IMPOSED. THERE CAN BE NO DISPUTE THA T ITA NO.4842/MUM/2015 M/S TARANG TEXTILES PVT. LTD. 6 EVERYTHING WOULD DEPEND UPON THE RETURN FILED BECAU SE THAT IS THE ONLY DOCUMENT, WHERE THE ASSESSEE CAN F URNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULAR S ARE FOUND TO BE INACCURATE, THE LIABILITY WOULD ARISE. IN DILIP N. SHROFF VS. JOINT COMMISSIONER OF INCOME TAX, MUM BAI & ANR. [2007(6) SCC 329], HON'BLE COURT EXPLAINED T HE TERMS 'CONCEALMENT OF INCOME' AND 'FURNISHING INACC URATE PARTICULARS'. THE COURT WENT ON TO HOLD THEREIN THA T IN ORDER TO ATTRACT THE PENALTY UNDER SECTION 271(1)(C ), MENS REA WAS NECESSARY, AS ACCORDING TO THE COURT, THE W ORD 'INACCURATE' SIGNIFIED A DELIBERATE ACT OR OMISSION ON BEHALF OF THE ASSESSEE. IT WENT ON TO HOLD THAT CLA USE (III) OF SECTION 271(1) PROVIDED FOR A DISCRETIONARY JURI SDICTION UPON THE ASSESSING AUTHORITY, INASMUCH AS THE AMOUN T OF PENALTY COULD NOT BE LESS THAN THE AMOUNT OF TAX SO UGHT TO BE EVADED BY REASON OF SUCH CONCEALMENT OF PARTICUL ARS OF INCOME, BUT IT MAY NOT EXCEED THREE TIMES THEREOF. IT WAS POINTED OUT THAT THE TERM 'INACCURATE PARTICULARS' WAS NOT DEFINED ANYWHERE IN THE ACT AND, THEREFORE, IT WAS HELD THAT FURNISHING OF AN ASSESSMENT OF THE VALUE OF TH E PROPERTY MAY NOT BY ITSELF BE FURNISHING INACCURATE PARTICULARS. IT WAS FURTHER HELD THAT THE ASSESSEE MUST BE FOUND TO HAVE FAILED TO PROVE THAT HIS EXPLANATION IS NOT ONLY NOT BONA FIDE BUT ALL THE FACTS RELATING TO TH E SAME AND MATERIAL TO THE COMPUTATION OF HIS INCOME WERE NOT DISCLOSED BY HIM. IT WAS THEN HELD THAT THE EXPLANA TION MUST BE PRECEDED BY A FINDING AS TO HOW AND IN WHAT ITA NO.4842/MUM/2015 M/S TARANG TEXTILES PVT. LTD. 7 MANNER, THE ASSESSEE HAD FURNISHED THE PARTICULARS OF HIS INCOME. THE COURT ULTIMATELY WENT ON TO HOLD THAT T HE ELEMENT OF MENS REA WAS ESSENTIAL. IT WAS ONLY ON T HE POINT OF MENS REA THAT THE JUDGMENT IN DILIP N. SHR OFF VS. JOINT COMMISSIONER OF INCOME TAX, MUMBAI & ANR. WAS UPSET. IN UNION OF INDIA VS. DHARAMENDRA TEXTILE PROCESSORS (CITED SUPRA), AFTER QUOTING FROM SECTIO N 271 EXTENSIVELY AND ALSO CONSIDERING SECTION 271(1)(C), THE COURT CAME TO THE CONCLUSION THAT SINCE SECTION 271 (1)(C) INDICATED THE ELEMENT OF STRICT LIABILITY ON THE AS SESSEE FOR THE CONCEALMENT OR FOR GIVING INACCURATE PARTICULAR S WHILE FILING RETURN, THERE WAS NO NECESSITY OF MENS REA. THE COURT WENT ON TO HOLD THAT THE OBJECTIVE BEHIND ENA CTMENT OF SECTION 271(1)(C) READ WITH EXPLANATIONS INDICAT ED WITH THE SAID SECTION WAS FOR PROVIDING REMEDY FOR LOSS OF REVENUE AND SUCH A PENALTY WAS A CIVIL LIABILITY AN D, THEREFORE, WILLFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDIENT FOR ATTRACTING CIVIL LIABILITY AS WAS TH E CASE IN THE MATTER OF PROSECUTION UNDER SECTION 276-C OF TH E ACT. THE BASIC REASON WHY DECISION IN DILIP N. SHROFF VS . JOINT COMMISSIONER OF INCOME TAX, MUMBAI & ANR. (CITED SUPRA) WAS OVERRULED BY HON'BLE APEX COURT IN UNION OF INDIA VS. DHARAMENDRA TEXTILE PROCESSORS (CITED SUP RA), WAS THAT ACCORDING TO THE COURT THE EFFECT AND DIF FERENCE BETWEEN SECTION 271(1)(C) AND SECTION 276-C OF THE ACT WAS LOST SIGHT OF IN CASE OF DILIP N. SHROFF VS. JO INT COMMISSIONER OF INCOME TAX, MUMBAI & ANR. (CITED ITA NO.4842/MUM/2015 M/S TARANG TEXTILES PVT. LTD. 8 SUPRA). HOWEVER, IT MUST BE POINTED OUT THAT IN UNI ON OF INDIA VS. DHARAMENDRA TEXTILE PROCESSORS (CITED SUP RA), NO FAULT WAS FOUND WITH THE REASONING IN THE DECISI ON IN DILIP N. SHROFF VS. JOINT COMMISSIONER OF INCOME TA X, MUMBAI & ANR. (CITED SUPRA), WHERE THE COURT EXPLAI NED THE MEANING OF THE TERMS 'CONCEAL' AND INACCURATE'. IT WAS ONLY THE ULTIMATE INFERENCE IN DILIP N. SHROFF VS. JOINT COMMISSIONER OF INCOME TAX, MUMBAI & ANR. (CITED SUPRA) TO THE EFFECT THAT MENS REA WAS AN ESSENTIAL INGREDIENT FOR THE PENALTY UNDER SECTION 271(1)(C) THAT THE DECISION IN DILIP N. SHROFF VS. JOINT COMMISSIONER OF INCOME TAX, MUMBAI & ANR. (CITED SUPRA) WAS OVERRUL ED. I AM NOT CONCERNED IN THE PRESENT CASE WITH THE MENS REA. HOWEVER, I HAVE TO ONLY SEE AS TO WHETHER IN THIS C ASE, AS A MATTER OF FACT, THE ASSESSEE HAS GIVEN INACCURATE PARTICULARS. IN WEBSTER'S DICTIONARY, THE WORD 'INA CCURATE' HAS BEEN DEFINED AS:- 'NOT ACCURATE, NOT EXACT OR CORRECT; NOT ACCORDING TO TRUTH; ERRONEOUS; AS AN INACCURATE STATEMENT, COPY OR TRAN SCRIPT'. I HAVE ALREADY SEEN THE MEANING OF THE WORD 'PARTICULARS' IN THE EARLIER PART OF THIS ORDER. RE ADING THE WORDS IN CONJUNCTION, THEY MUST MEAN THE DETAILS SUPPLIED IN THE RETURN, WHICH ARE NOT ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TRUTH OR ERRONEOUS. I MUST HASTEN TO ADD HERE THAT IN THIS CASE, THERE IS NO F INDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RE TURN WERE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE. S UCH NOT ITA NO.4842/MUM/2015 M/S TARANG TEXTILES PVT. LTD. 9 BEING THE CASE, THERE WOULD BE NO QUESTION OF INVIT ING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. IN THE LIGHT OF THE FOREGOING DISCUSSION, I AM OF THE CONSIDERED OP INION THAT AT LEAST PENALTY IS NOT LEVIABLE, THEREFORE, T HE LD. ASSESSING OFFICER IS DIRECTED TO DELETE THE PENALTY . FINALLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. THIS ORDER WAS PRONOUNCED IN THE OPEN IN T HE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 01/09/2015. SD/- (JOGINDER SINGH) ! ' / JUDICIAL MEMBER MUMBAI; DATED : 01/09/2016 F{X~{T? P.S / ! & $ )!*+ ,&+-* / COPY OF THE ORDER FORWARDED TO : 1. '#$%& / THE APPELLANT 2. '(%& / THE RESPONDENT. 3. ) ) * / THE CIT, MUMBAI. 4. ) ) * / CIT- , MUMBAI 5. +,- ' , ) '#$ ' / , / DR, ITAT, MUMBAI 6. -0 1$ / GUARD FILE. & / BY ORDER, (+# ' //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI