RayBan Sun Optics India Ltd., Rajasthan V. DCIT, New Delhi

ITA 4921/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5136 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 22-06-2017
• Assessment Year: 2003-2004
• Appeal Filed On: 08-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AFIQ AHMAD SENIOR
• Assessee Lawyers: ARUN BANSAL
• Keywords: Business income; Depreciation; Difference of opinion; Unabsorbed depreciation; Change of opinion
• Section: 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F : NEW DELHI) BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.4921/DEL./2014 (ASSESSMENT YEAR : 2003-04) M/S. RAYBAN SUN OPTICS INDIA LIMITED, VS. DCIT, SP 810-811, RIICO INDUSTRIAL AREA, CIRCLE 15 (1), PHASE II, ROAD NO.20, NEW DELHI. BHIWADI 301 019 (RAJASTHAN). (PAN : AABCR8209G) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ARUN BANSAL, CA REVENUE BY : SHRI AFIQ AHMAD, SENIOR DR DATE OF HEARING : 09.08.2017 DATE OF ORDER : 17.08.2017 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, M/S. RAYBAN SUN OPTICS INDIA LIMITED (HEREINAFTER REFERRED TO AS THE ASSESSEE), BY FIL ING THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 24.06.2014 PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS)- XVIII, NEW DELHI, AFFIRMING THE PENALTY ORDER DATED 27.12.2013 PASSED U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961 (FOR SHORT T HE ACT), QUA THE ASSESSMENT YEAR 2003-04 ON THE GROUNDS INTER ALIA T HAT :- ITA NO.4921/DEL./2014 2 (I) THE CIT (APPEAL)-XVIII HAS ERRED BOTH ON THE LAW AS WELL AS ON THE FACTS OF THE CASE WHILE CONFIRMING THAT THE AO HAS RIGHTLY IMPOSED THE PENALTY OF RS.9,036,750/- WHICH IS RELATING TO NOT SETTING OFF OF UNABSORBED DEPRECIATION OF RS.2,45,89,800/- WITH 'INCOME FROM OTHER SOURCES' AND SETTING OFF ONLY UNDER THE HEAD 'INCOME FROM BUSINESS & PROFESSION'. (II) THE CIT(A)-XVIII HAS NOT APPRECIATED THAT THE APPELLANT HAS NEITHER CONCEALED THE FACTS NOR FURNISHED ANY FALSE PARTICULARS AND THE ADDITIONS WERE MADE DUE TO CHANGE OF OPINION ONLY SINCE THE APPELLANT WAS REGULARLY SETTING OFF UNABSORBED DEPRECIATION WITH BUSINESS INCOME ONLY AND NOT WITH INCOME FROM OTHER SOURCES. (III) THE CIT (APPEAL)-XVIII AS WELL AS AO HAS NOT APPRECIATED THAT THE ORIGINAL ASSESSMENT ORDER AS WELL AS EARLIER ORDERS HAS BEEN PASSED ACCEPTING THE SET OFF MADE BY THE APPELLANT COMPANY I.E. UNABSORBED DEPRECIATION HAS BEEN SET OFF WITH INCOME FROM BUSINESS & PROFESSION ONLY & THERE WAS NO CONCEALMENT OF INCOME BY THE APPELLANT COMPANY. (IV) THE CIT (APPEAL)-XVIII AS WELL AS AO HAS NOT APPRECIATED THAT THERE IS NIL TAX IMPACT EVEN AFTER THE AFORESAID ADJUSTMENT. THE APPELLANT COMPANY HAS PAID TAX IN ADVANCE ON 'INCOME FROM OTHER SOURCES' BY NOT ADJUSTING UNABSORBED DEPRECIATION WITH 'INCOME FROM OTHER SOURCES' TO AVOID LITIGATION, IF ANY. THERE IS NO LOSS TO REVENUE. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : ON THE BASIS OF THE COMPL ETED ASSESSMENT UNDER SECTION 143 (3) / 147 OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT) AFTER SETTING OFF OF BROUGHT FORWARD UNA BSORBED ITA NO.4921/DEL./2014 3 DEPRECIATION OF RS.2,45,89,800/- AGAINST INCOME FRO M OTHER SOURCES, ASSESSEE HAD BOOKED PROFIT OF RS.5,57,00, 170/- U/S 115JB OF THE ACT AND CONSEQUENTLY, PENALTY PROCEEDINGS U/ S 271(1)(C) OF THE ACT WERE INITIATED. AO, AFTER DISMISSING THE S UBMISSIONS MADE BY THE ASSESSEE, PROCEEDED TO CONCLUDE THAT THE TRE ATMENT GIVEN BY THE ASSESSEE TO THE UNABSORBED DEPRECIATION IS CLEA RLY AGAINST THE PROVISIONS OF LAW WHICH PROVIDES THAT BALANCE OF UN ABSORBED DEPRECIATION AFTER ADJUSTMENT UNDER CURRENT YEAR BU SINESS INCOME HAS TO BE SET OFF AGAINST THE INCOME FROM OTHER SOU RCES, BUT THE ASSESSEE HAS NOT SET OFF THE BALANCE OF UNABSORBED DEPRECIATION AGAINST THE INCOME FROM OTHER SOURCES AND THEREBY F AILED TO DISCLOSE MATERIAL FACTS TRULY AND FULLY WITH INTENT ION TO EVADE TAX. SINCE THE ASSESSEE HAS EVADED TAX BY FILING INACCUR ATE PARTICULARS IN ORDER TO CONCEAL INCOME OF RS.2,45,89,,800/- ON WHI CH TAX IS CALCULATED AT RS.90,36,752/-, THE AO IMPOSED PENALT Y TO THE TUNE OF RS.90,36,752/- @ 100% U/S 271(1)(C) OF THE ACT. 3. ASSESSEE CHALLENGED THE PENALTY ORDER BY WAY OF AN APPEAL BEFORE THE LD. CIT (A) WHO HAS DISMISSED THE APPEAL . FEELING AGGRIEVED, THE ASSESSEE HAS COME UP BEFORE THE TRIB UNAL BY CHALLENGING THE PENALTY ORDER PASSED U/S 271(1)(C) OF THE ACT. 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ITA NO.4921/DEL./2014 4 ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. PENALTY PROCEEDINGS WERE INITIATED BY ISSUING A NOTICE U/S 271(1)(C) OF THE ACT. ASSESSEE FILED REPLY. FINDI NG THE SUBMISSIONS MADE BY THE ASSESSEE NOT TENABLE PENALT Y TO THE TUNE OF RS.90,36,752/- HAS BEEN IMPOSED BY MAKING FOLLOWING OBSERVATIONS:- IT IS A CASE OF ATTEMPT TO EVADE TAXES BY THE MEANS AS STATED ABOVE. THE ASSESSEE HAS EVADED TAX BY FILING INACCURATE PARTICULARS THEREBY CONCEALING ITS INCOME OF RS.2,45,89,800/- ON WHICH TAX SOUGHT TO BE EVADED WORKS OUT TO RS.90,36,752/-. AS PER PROVISIONS OF SECTION 271(1)(C) OF THE ACT, A PENALTY EQUIVALENT TO MINIMUM @ 100% OF TAX SOUGHT TO BE EVADED I.E. RS.90,36,752/- AND A MAXIMUM @ 300% OF TAX SOUGHT TO BE EVADED I.E. RS.2,45,89,800/- IS IMPOSABLE. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, A PENALTY OF RS.90,36,752/- U/S 271(1)(C) IS IMPOSED. AS THE AMOUNT OF PENALTY IMPOSED U/S 271(1)(C) IS MORE THAN RS.20,000/- THEREFORE, PENALTY HAS BEEN IMPOSED AFTER OBTAINING NECESSARY PRIOR APPROVAL OF THE ADDL.CIT, RANGE 15, NEW DELHI VIDE OFFICE LETTER NO.F.NO.CIT/R-15/PENALTY APPROVAL/2013- 14/1327 DATED 27.12.2013. 6. LD. AR FOR THE ASSESSEE CHALLENGING THE IMPUGNED ORDER CONTENDED INTER ALIA THAT THE PENALTY PROCEEDINGS H AVE BEEN INITIATED WHICH IS ON THE BASIS OF DISALLOWANCES MA DE BY THE AO AND CONFIRMED BY THE LD. CIT (A) CLAIMED BY THE ASS ESSEE ON ACCOUNT OF INCORRECT SET OFF OF MAT CREDIT OF RS.49 ,36,856/- AS THE ITA NO.4921/DEL./2014 5 ASSESSEE WAS LIABLE TO PAY TAX UNDER MAT OF RS.43,8 6,389; THAT THE AO HAS WRONGLY AND ILLEGALLY SET OFF BROUGHT FORWAR D DEPRECIATION OF RS.10,24,93,252/- AGAINST THE CURRENT YEAR BUSIN ESS OF INCOME OF RS.3,95,73,577/- AND FROM OTHER SOURCES OF RS.2,45, 89,800/- AND ALLOWED REST OF THE AMOUNT OF RS.3,83,29,875/- TO B E CARRIED FORWARD; THAT THE AO AS WELL AS CIT (A) HAVE NOT SA TISFIED THEMSELVES BEFORE INITIATING THE PENALTY PROCEEDING S RATHER PROCEEDED ON THE BASIS OF THE FINDINGS RETURNED BY AO IN THE ASSESSMENT ORDER AS WELL AS CIT (A) IN QUANTUM APPE AL THAT THERE IS NO FILING OF INACCURATE PARTICULARS OF CONCEALMENT OF INCOME BY THE ASSESSEE AND RELIED UPON THE JUDGMENTS OF CIT VS RELIANCE PETRO PRODUCTS PVT. LTD. 322 ITR 158 (S.C.), CIT VS BRAHM APUTRA CONSORTIUM LTD. 348 ITR 339 (DEL.), CIT VS MAHANAGA R TELEPHONE NIGAM LTD. I.T.A. NO. 626/2011 (DEL.), VI NOD BHARGAVA VS CIT 367 ITR 122 (A.P.) AND CIT VS HARSH VARHAN CHEMICALS & MINERALS LT. 259 ITR 212 (RAJ.). HOWEVER, ON THE OTHER HAND, LD. DR RELIED UPON THE ASSESSMENT ORDER PASSED BY AO, QUANTUM ORDER PASSED BY CIT (A), PENALTY ORDER AND PENALTY ORDER AFFIRMED BY LD. CIT (A). 7. UNDISPUTEDLY, QUANTUM PROCEEDINGS HAVE BEEN TERM INATED AGAINST THE ASSESSEE. IT IS ALSO NOT IN DISPUTE TH AT THE ASSESSEES CLAIM FOR SETTING OFF BROUGHT FORWARD UNABSORBED DE PRECIATION ITA NO.4921/DEL./2014 6 AGAINST INCOME FROM OTHER SOURCES WERE DISALLOWED A ND CONSEQUENTLY PENALTY PROCEEDINGS WERE SOUGHT TO BE INITIATED; THAT AS PER BOARD CIRCULAR NO.25/2015 DATED 31.12.2015, WHEN THE INCOME-TAX PAYABLE ON THE TOTAL INCOME AS COMPUTED UNDER THE NORMAL PROVISIONS OF THE ACT IS LESS THAN THE TAX P AYABLE ON THE BOOK PROFIT U/S 115JB OF THE ACT, THEN PENALTY U/S 271(1)(C) OF THE ACT IS NOT ATTRACTED. 8. IN THE BACKDROP OF THE AFORESAID FACTS AND CIRCU MSTANCES OF THE CASE, THE SOLE QUESTION ARISES FOR DETERMINATIO N IN THIS CASE IS:- AS TO WHETHER THE ASSESSEE HAS CONCEALED PARTICULA RS OF INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF INCOME DURING ASSESSMENT PROCEEDINGS? 9. HONBLE SUPREME COURT IN A CASE CITED AS RELIANCE PETRO PRODUCTS PVT. LTD. (SUPRA) DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE. OPERATIVE PART OF WHICH IS REPRODUCE D FOR READY REFERENCE AS UNDER :- A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE I.T. ACT, 1961 SUGGESTS THAT IN ORDER TO BE COVERED BY IT, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF T HE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUS T HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME . THE MEANING OF THE WORD PARTICULARS USED IN SECTI ON 271(1)(C) WOULD EMBRACE THE DETAIL OF THE CLAIM MAD E. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND T O BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HEL D GUILTY OF FURNISHING INACCURATE PARTICULARS. IN OR DER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CAN NOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKIN G ITA NO.4921/DEL./2014 7 AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCUR ATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHI NG WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSE E CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SU CH PARTICULARS ARE FOUND TO BE INACCURATE, THE LIABILI TY WOULD ARISE. TO ATTRACT PENALTY, THE DETAILS SUPPL IED IN THE RETURN MUST NOT BE ACCURATE, NOT EXACT OR CORRE CT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE IS NO QUESTIO N OF INVITING THE PENALTY UNDER SECTION 271(1)(C). A ME RE 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 CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. 10. BARE PERUSAL OF THE PENALTY ORDER SHOWS THAT SA ME HAS BEEN BASED UPON THE SOLE FINDING THAT, THE TREATMENT GIVEN BY THE ASSESSEE TO THE UNABSORBED DEPRECIATION IN THIS CAS E IS CLEARLY AGAINST THE PROVISIONS OF LAW, WHICH PROVIDES THAT BALANCE OF UNABSORBED DEPRECIATION AFTER ADJUSTMENT OF CURRENT YEARS INCOME HAS TO BE SET OFF AGAINST THE INCOME FROM OTHER SOU RCES, BUT THE ASSESSEE HAS NOT SET OFF BALANCE OF UNABSORBED DEPR ECIATION AGAINST THE INCOME FROM OTHER SOURCES. WHEN WE EXAMINE THIS FACT IN THE LIGHT OF THE UNDISPUTED FACT AND LAW TH AT THE ASSESSEE IS TO PAY TAX UNDER MAT WHICH IS LESS THAN THE TAX PAY ABLE ON THE ITA NO.4921/DEL./2014 8 BOOK PROFIT U/S 115JB OF THE ACT, THEN THE PENALTY IS NOT ATTRACTED IN VIEW OF CIRCULAR NO.25/2015 ISSUED BY THE CBDT. 11. FURTHERMORE, HONBLE SUPREME COURT IN CASE OF RELIANCE PETRO PRODUCTS PVT. LTD. (SUPRA) HAS CATEGORICALLY HELD THAT WHEN THERE IS NO FINDING ON THE PART OF THE REVENUE AUTH ORITIES THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN FOUN D TO BE INCORRECT OR ERRONEOUS OR FALSE BUT THE REVENUE AUTHORITIES H AS MERELY DISALLOWED THE CLAIM OF THE ASSESSEE BEING NOT SUST AINABLE OR CLAIMED UNDER ERRONEOUS BELIEF THAT THE SAME IS SUS TAINABLE, THE ENTIRE ISSUE IS TO BE EXAMINED BY THE REVENUE IF TH E SAME IS SUSTAINABLE OR NOT. 12. MERE CLAIM OF DEPRECIATION DOES NOT AMOUNT TO C ONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS O F INCOME IN ANY MANNER WHATSOEVER. MOREOVER, IT IS BROUGHT TO THE NOTICE OF THE BENCH THAT IN THE SUBSEQUENT YEARS, THE CLAIM OF TH E ASSESSEE FOR SET OFF ON ACCOUNT OF UNABSORBED DEPRECIATION HAS BEEN ALLOWED AND IN THESE CIRCUMSTANCES, NO PENALTY CAN BE IMPOSED. FU RTHERMORE, WHEN THE TAX UNDER MAT IS MORE THAN THE TAX COMPUTE D UNDER NORMAL PROVISIONS OF THE ACT, PROVISIONS CONTAINED U/S 271(1)(C) OF THE ACT ARE NOT ATTRACTED TO IMPOSE PENALTY UNDER B OARD CIRCULAR NO. 25/2015. ITA NO.4921/DEL./2014 9 13. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, WE AR E OF THE CONSIDERED VIEW THAT THE AO HAS FAILED TO MAKE OUT THE CASE OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF SUCH INCOME BY THE ASSESSEE RATHER IT IS A CASE OF MISINTERPRETATION OF THE LAW PREVAILING TO ASSESS THE INCOME UNDER MA T PROVISIONS. CONSEQUENTLY, WE HEREBY DELETE THE PENALTY OF RS.90 ,36,752/- IMPOSED U/S 271(1)(C) OF THE ACT BY ALLOWING THE AP PEAL FILED BY THE ASSESSEE. ORDER PRONOUNCED IN OPEN COURT ON THIS 17 TH DAY OF AUGUST, 2017. SD/- SD/- (N.K. SAINI) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 17 TH DAY OF AUGUST, 2016 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XVIII, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.