M/s Rai Industrial Power Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 4862/DEL/2013

• Counselvise Citation: 486220114 RSA 2013
• Duration Of Justice: 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2009-2010
• Appeal Filed On: 13-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R K KAPOOR
• Keywords: Depreciation; Wrong claim; Difference of opinion
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEMBER AND SHRI T.S.KAPOOR, ACCOUNTANT MEMBER I.T.A .NO.-4862/DEL/2013 (ASSESSMENT YEAR- 2009-10) RAI INDUSTRIAL POWER PVT. LTD., 302-303, COMPETENT HOUSE, F-14, CONNAUGHT PLACE, NEW DELHI. PAN-AAACR5116M (APPELLANT) VS DCIT, CIRCLE-15(1), NEW DELHI (RESPONDENT) APPELLANT BY SH.R.K.KAPOOR, CA RESPONDENT BY MS. MEENAKSHI VOHRA, SR. DR ORDER PER DIVA SINGH THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 17.07.2013 OF CIT(A)-XVIII, NEW DELHI PERTAINING TO 2009-10 ASSES SMENT YEAR ON THE FOLLOWING GROUNDS:- 1. THAT THE LEARNED CIT(A) HAS ERRED IN LAW, ON FA CTS AND IN THE CIRCUMSTANCES OF THE CASE IN UPHOLDING THE ACTION O F THE AO IN LEVYING PENALTY U/S 271(1)(C) AMOUNTING TO RS.2,51,440/- ON WHOLLY ERRONEOUS, ILLEGAL AND UNTENABLE GROUNDS. 2. THE RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSE E DECLARED AN INCOME OF RS.1,54,72,370/- WHEREIN THE AO MADE ADDITIONS OF R S.7,32,022/- AND RS.9,666/- U/S 14A AND ON EXCESS DEPRECIATION CLAIMED RESPECTI VELY. 2.1. A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT Q UA THE DIVIDEND INCOME OF RS.63,24,951/- CLAIMED EXEMPT U/S 10(34) OF THE ACT , THE AO APPLYING RULE 8D MADE A DISALLOWANCE OF RS.8,46,019/-. AS A RESULT OF THIS THE DISALLOWANCE WORKED 2 I.T.A .NO.-4862/DEL/2013 OUT BY THE ASSESSEE AT RS.1,12,997/- WAS HELD AS I NADEQUATE AND AN ADDITION OF RS.7,32,022/-. 2.2. SIMILARLY THE CLAIM OF DEPRECIATION ON ACCOUNT OF UPS AND PRINTER CLAIMED AT 60% WAS DISALLOWED AND LIMITED BY THE AO TO 15% RE SULTING IN A DISALLOWANCE OF RS.9,666/-. 3. IT IS A MATTER OF RECORD THAT THE ADDITIONS WERE NOT CHALLENGED IN QUANTUM PROCEEDINGS BY THE ASSESSEE. A PERUSAL OF THE PENA LTY ORDER SHOWS THAT IN RESPONSE TO THE NOTICE AS TO WHY PENALTY ON ACCOUNT OF THE ABOVE ADDITIONS MADE BY WAY OF DISALLOWANCES BE NOT SUBJECTED TO PENALTY U/S 271(1)(C), THE ASSESSEE IS FOUND TO HAVE GIVEN THE FOLLOWING REPLY:- 2. IT HAS BEEN SUBMITTED BY THE ADDITION MADE U/S 14A OF THE ACT IS DUE TO DIFFERENCE OF OPINION AND THERE IS NO CONCEALMENT O R FURNISHING OF INACCURATE PARTICULARS. THE ASSESSEE HAD RELIED UPON CERTAIN CASE LAWS. WITH REGARD TO DISALLOWANCE OF EXCESS DEPRECIATION IT HAS BEEN CLA IMED THAT THE SAME IS CONTRARY TO THE DECISION OF DELHI HIGH COURT IN THE CASE OF CIT VS. BSES YAMUNA POWER LTD. 3.1. HOWEVER THE EXPLANATION OF THE ASSESSEE WAS NO T FOUND TO BE ACCEPTABLE AND PENALTY OF RS.2,51,430/- WAS IMPOSED. 4. IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY, THE ASSESSEE ASSAILED THE PENALTY ORDER CONTENDING THAT THERE IS NO EVIDENCE ON RECORD TO SUGGEST THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF IT S INCOME IN ITS RETURN OR IN ANY STATEMENT FURNISHED IN THE COURSE OF THE ASSESSMENT PROCEEDINGS. RELIANCE WAS PLACED UPON THE FOLLOWING DECISIONS:- 1. CIT VS RELIANCE PETRO PRODUCTS PVT. LTD. (2010) 322 ITR 158 (SC); 2. CIT VS S. DHARAMPAL (2009) 309 ITR 268 (DEL); 3. CIT VS DHARAMPAL PREMCHAND LTD. (2010) 329 ITR 5 72(DEL); 4. KARAN RAGHAV EXPORTS PVT. LTD. V. CIT (2012) 349 ITR 112 (DEL); 5. GEETA PRINGS (P) LTD. VS. ASSTT. CIT (2012) 247 CTR (GUJ.) 620. 4.1. NOT CONVINCED BY THE SAID EXPLANATION THE PENA LTY ORDER WAS UPHELD ON THE FOLLOWING REASONING:- 3 I.T.A .NO.-4862/DEL/2013 4.2. IN THIS REGARD, I HAVE GONE THROUGH THE FINDI NG OF THE ASSESSING OFFICER IN PENALTY ORDER AND IT IS FOUND THAT PENALTY HAS B EEN LEVIED ON THE ADDITION MADE IN THE ASSESSMENT ORDER, AGAINST WHICH NO APPE AL HAS BEEN FILED WHICH CLEARLY SHOWS THAT APPELLANT HAD NO GRIEVANCE AGAIN ST THE ADDITION MADE. HOWEVER, SINCE PENALTY HAS BEEN LEVIED, APPELLANT H AS FILED THE APPEAL. IN THIS REGARD, AFTER CONSIDERING THE ISSUE IN DETAIL AND I N TOTALITY, IT IS FOUND THAT WHEN PENALTY HAS BEEN LEVIED ON THE ADDITION MADE W HICH HAS BEEN ACCEPTED BY APPELLANT, THERE SHOULD NOT BE ANY GRIEVANCE AGAINS T THE PENALTY BECAUSE ASSESSING OFFICER HAS ARRIVED AT THE CONCLUSION THA T THERE WERE ITEMS WHICH WERE NOT ACCEPTABLE BY THE ASSESSING OFFICER AT THE TIME OF ASSESSMENT PROCEEDINGS. 5. AGGRIEVED BY THIS THE ASSESSEE IS IN APPEAL BEFO RE THE TRIBUNAL. THE LD. AR REITERATES THE SUBMISSIONS ADVANCED BEFORE THE TAX AUTHORITIES. APART FROM THAT IT WAS ALSO HIS SUBMISSION THAT SIMPLY BECAUSE THE ASS ESSEE ACCEPTED THE ADDITION, IT CANNOT BE FURTHER PENALIZED. IT WAS HIS ARGUMENT T HAT LOOKING AT THE RETURNED INCOME OF OVER RS.1.54 CRORE THE VARIATION IN THE R ETURNED INCOME BY RS.7,41,688/- ODD WAS CONSIDERED NOT RELEVANT FOR F URTHER CHALLENGE BUT THE FACT REMAINS THAT HAD THE ASSESSEE DONE SO THE ASSESSEE HAD AN ARGUABLE CASE. ADDRESSING THE CLAIM OF HIGHER DEPRECIATION AS PER THE JURISDICTIONAL HIGH COURT WOULD HAVE BEEN DECIDED IN ASSESSEES FAVOUR AND SI MILARLY QUA THE DIVIDEND INCOME IT WAS SUBMITTED THAT NO DOUBT THAT DISALLO WANCE MADE BY THE ASSESSEE WAS HELD TO BE INADEQUATE HOWEVER THERE CAN BE NO F INDING THAT RELEVANT INFORMATION WAS WITHHELD INACCURATE PARTICULARS WE RE FILED. IT WAS HIS ARGUMENT THAT THE DEPARTMENT HAS NOT CARED TO CONSIDER THE EXPLANATION OFFERED ON BEHALF OF THE ASSESSEE WHICH IT WAS DUTY BOUND TO DO SO. IT WAS HIS SUBMISSION THAT IT IS SETTLED LEGAL PROPOSITION THAT ASSESSMENT PROCEEDIN GS AND PENALTY PROCEEDINGS ARE SEPARATE AND DISTINCT AND MERELY BECAUSE THE ADDITI ON IS NOT CHALLENGED, THERE IS NO REASON TO MECHANICALLY IMPOSE PENALTY. 5.1. IN THE FACTS OF THE PRESENT CASE IT WAS SUBMIT TED THAT ALL NECESSARY FACTS HAVE BEEN BROUGHT ON RECORD AND MERELY BECAUSE THE DISA LLOWANCE BY THE ASSESSEE U/S 14A ACCORDING TO THE AO WAS NOT SUFFICIENT AND HE H AS CARRIED OUT HIS OWN CALCULATION WHICH THE ASSESSEE DID NOT CHALLENGE TH E FACT REMAINS IT WAS ARGUED THAT 4 I.T.A .NO.-4862/DEL/2013 THIS ISSUE IS FREQUENTLY CHALLENGED AND IS A SUBJEC T MATTER OF DEBATE AND MERELY BECAUSE THE WORKING OF THE ASSESSEE WAS NOT ACCEPTE D BY THE AO AND THE ASSESSEE HAS NOT BEEN CHALLENGED, IT DOES NOT MEAN THAT THER E IS SOME INACCURATE PARTICULARS FILED. IT WAS HIS ARGUMENT THAT MAY BE HAD THE ASS ESSEE CHALLENGED THE ADDITION, HE COULD HAVE GOT RELIEF. QUA THE ISSUE OF DEPRECIATI ON OF COMPUTER PERIPHERALS, IT WAS HIS SUBMISSION THAT EVEN ON THAT THERE ARE JUDG EMENTS IN FAVOUR OF THE ASSESSEE AND A HIGHER CLAIM OF DEPRECIATION WOULD HAVE BEEN ALLOWED HAD THE ASSESSEE CHOSEN TO AGITATE. IN THESE CIRCUMSTANCES IT WAS P RAYED THAT THE PENALTY DESERVES TO BE QUASHED. THE DECISIONS RELIED UPON BEFORE THE C IT(A) WERE HEAVILY RELIED UPON. 6. SR. DR ON THE OTHER HAND PLACED HEAVY RELIANCE U PON THE IMPUGNED ORDER SPECIFIC PARA 4.2 OF THE IMPUGNED ORDER WAS RELIED UPON. SINCE THE SAME HAS BEEN REPRODUCED IN THE EARLIER PART OF THIS ORDER THE FI NDINGS ARE NOT REPEATED. IT WAS HIS SUBMISSION THAT IT IS AN ACCEPTED FACT THAT THE AD DITIONS HAVE NOT BEEN CHALLENGED AND THIS FACT CLEARLY PROVES THAT THE ASSESSEE HAS ACCEPTED THAT IT HAD MADE A WRONG CLAIM AS SUCH THE PENAL PROVISIONS ARE ATTRACTED. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ON A CAREFUL CONSIDERATION OF THE ENTIRE F ACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT IN THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE, THE PENALTY ORDER DESERVES TO BE QUASHED. SIMPLY BECAUSE THE ADDITIONS MADE WERE NOT CHALLENGED BY THE ASSESSEE THIS FACT BY IT SELF IS NOT A GOOD ENOUGH REASON TO CONFIRM OR IMPOSE PENALTY. THERE CAN BE MANY RE ASONS WHICH MAY PREVAIL ON THE MIND OF AN ASSESSEE ON ACCOUNT OF WHICH THE AS SESSEE MAY NOT CHALLENGE THE ADDITIONS IN A CERTAIN YEAR. THE MERE FACT OF ACCE PTING THE ADDITIONS IPSO FACTO DOES NOT LEAD TO THE CONCLUSION THAT THE ASSESSEE H AS NOTHING TO SAY. IN THE FACTS OF THE PRESENT CASE IT IS A MATTER OF RECORD THAT THE ASSESSEE HAS BEEN CRYING HOARSE RIHGT FOR THE PENALTY PROCEEDINGS ITSELF THAT ON ME RITS HAD THE ASSESSEE CHOSEN TO 5 I.T.A .NO.-4862/DEL/2013 AGITATE THE CLAIM OF HIGHER DEPRECIATION THE CLAIM WOULD HAVE BEEN ALLOWED. WE FIND NO REASON LET ALONE A GOOD REASON AS TO WHY TH E SAID EXPLANATION WAS NOT CONSIDERED BY THE AUTHORITY. WE ALSO FIND THAT QUA THE 14A DISALLOWANCE THE ASSESSEE HAS PLEADED THAT THERE WAS FULL DISCLOSURE AND IT IS ONLY A CASE THAT DISALLOWANCE MADE BY THE ASSESSEE WAS FOUND TO BE INADEQUATE WHICH ISSUE HAD THE ASSESSEE CHOSEN TO CHALLENGE MAY HAVE RESULTED IN RELIEF. THE SAID EXPLANATION TOO WARRANTED A CONSIDERATION. IT IS A SETTLED LEG AL POSITION THAT QUANTUM PROCEEDINGS AND PENALTY PROCEEDINGS ARE SEPARATE AN D DISTINCT. THE EXPLANATION OFFERED IN THE PENALTY PROCEEDINGS NECESSARILY HAS TO BE CONSIDERED JUDICIOUSLY WITHIN THE STATUTORY FRAMEWORK. IN THE AFORE-MENTI ONED PECULIAR FACTS AND CIRCUMSTANCES WE FIND THAT THE IMPUGNED ORDER DESER VES TO BE SET ASIDE AND THE PENALTY ORDER DESERVES TO BE QUASHED AS THE EXPLANA TION OF THE ASSESSEE DESERVES TO BE ACCEPTED. THE CONSISTENT VIEW OF THE JURISDICTIO NAL HIGH COURT IN THE CASE OF BSES RAJDHANI YAMUNA AMONGST OTHERS WOULD HAVE OPER ATED IN ASSESSEES FAVOUR EVEN IN QUANTUM PROCEEDINGS HAD THE ASSESSEE CHOSEN TO AGITATE THE ISSUE. AS FAR AS THE PENALTY PROCEEDINGS ARE CONSIDERED THE PENAL ACTION ON THIS COUNT HAS TO BE QUASHED. QUA THE SECOND ISSUE OF 14A DISALLOWANCE, WE DO NOT FIND HOW THE FINDING OF FILING INACCURATE PARTICULARS OR CONCEA LMENT OF FACTS CAN BE FASTENED ON THE ASSESSEE WHERE ADMITTEDLY FULL FACTS WERE DISC LOSED AND THE DISALLOWANCE SUO MOTO MADE BY THE ASSESSEE WAS HELD TO INADEQUATE. HAD THE ASSESSEE CHOSEN TO AGITATE THE ISSUE THE ASSESSEE MAY HAVE HAD AN ARGU ABLE CASE, HOWEVER AS FAR AS THE PENAL ACTION IS CONCERNED THE SAME CANNOT BE UPHELD . ACCORDINGLY WE HOLD THE EXPLANATION CONSISTENTLY OFFERED BY THE ASSESSEE B EFORE THE AUTHORITIES OUGHT TO HAVE BEEN ACCEPTED. ACCORDINGLY FOR THE REASONS GIV EN HEREINABOVE, WE ARE OF THE VIEW BEING SATISFIED WITH THE EXPLANATION OFFERED T HAT THE IMPUGNED ORDER BE SET ASIDE AND THE PENALTY ORDER DESERVES TO BE QUASHED. THE SAID ORDER WAS 6 I.T.A .NO.-4862/DEL/2013 PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ITSELF IN THE PRESENCE OF THE PARTIES. 8. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLO WED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 04 TH OF APRIL 2014. SD/- SD/- (T.S.KAPOOR) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:- 04/04/2014 *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGI STRAR ITAT NEW DELHI