Shri Dharam Vir Yadav, New Delhi V. ACIT, New Delhi

ITA 4928/DEL/2010

• Counselvise Citation: 492820114 RSA 2010
• Duration Of Justice: 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 27-07-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 11-11-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SURJANI MOHANTY SENIOR
• Assessee Lawyers: B L GUPTA ITP
• Keywords: Depreciation; Wrong claim; Revised return; Revenue expenditure
• Section: 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B : NEW DELHI) BEFORE SHRI C.L. SETHI, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.4928/DEL./2010 (ASSESSMENT YEAR : 2003-04) SHRI DHARAM VIR YADAV, VS. ACIT, CIRCLE 20 (1), H 4/9, MODEL TOWN, NEW DELHI. DELHI. (PAN : AAAPY1522F) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI B.L. GUPTA, ITP REVENUE BY : MS. SURJANI MOHANTY, SENIOR DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE CIT (APPEALS)-XXII, NEW DELHI DATED 06.09.2010 FOR THE ASSESSMENT YEAR 2003-04. THE GROUNDS OF APPEAL TAKEN BY THE ASSESSEE READ AS UNDER :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT (A) WAS INCORRECT AND UNJUSTIFIED IN UP HOLDING THE PENALTY LEVIED U/S 271(1)(C) ON ADDITION OF RS.1,02 ,641/-. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E IN LAW, THE LD. CIT (A) WAS INCORRECT AND UNJUSTIFIED IN SUSTAI NING THE AMOUNT OF PENALTY EVEN THOUGH THE CONDITION NECESSARY FOR LEV Y OF PENALTY HAS NOT BEEN SATISFIED. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT (A) WAS INCORRECT AND UNJUSTIFIED IN UP HOLDING THE LEVY OF PENALTY U/S 271(1)(C) WITHOUT PROVING ANY CONCEALME NT OR FILING OF ITA NO.4928/DEL./2010 2 ANY INACCURATE PARTICULARS OF INCOME WHICH ARE NECE SSARY FOR IMPOSITION OF SUCH PENALTY. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT (A) WAS INCORRECT AND UNJUSTIFIED IN UP HOLDING HE PENALTY WITHOUT SATISFYING THE CONDITIONS NECESSARY U/S 271 (1)(C) FOR IMPOSITION OF PENALTY. 2. IN THE ASSESSEES APPEAL, THE ONLY ISSUE INVOLVE D IS SUSTAINING THE PENALTY U/S 271(1)(C) ON THE ADDITION OF RS.1,02,641/-. LEARNE D AR SUBMITTED THAT THE PENALTY SUSTAINED BY THE CIT (A) ON THE ADDITION OF RS.1,02 ,641/- IS UNJUSTIFIED AND INCORRECT. THE CONDITIONS FOR LEVY OF PENALTY ARE NOT SATISFIED. HE ALSO PLEADED THAT THE CIT (A) HAS FAILED TO JUSTIFY IN UPHOLDING THE PENALTY WITHOUT PROVING ANY CONCEALMENT OR FILING OF INACCURATE PARTICULARS OF INCOME WHICH ARE NECESSARY CONDITIONS FOR IMPOSING PENALTY U/S 271(1)(C). HE SUBMITTED THAT THE DEPRECIATION WAS CLAIMED ON THE VEHICLE WHICH WAS READY TO USE A ND HE ALSO RELIED ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CI T VS. RELIANCE PETROPRODUCTS PVT. LTD., 322 ITR 158 (SC). 3. ON THE OTHER HAND, LEARNED DR SUBMITTED THAT THE ASSESSEE HAS CLAIMED THE DEPRECIATION ON THE CAR WHICH WAS NOT PUT TO USE. SHE ALSO PLEADED THAT THE ASSESSEE HAS FAILED TO ESTABLISH THAT THE CAR ON WHICH THE D EPRECIATION WAS CLAIMED WAS EVEN NOT READY TO USE. ASSESSEE IS RUNNING BUSINESS OF PROVIDING TAXIES AND SUCH CAR PUT TO RUN THE BUSINESS NEED PERMIT. NOTHING HAD BEEN PRODUCED IN THIS REGARD, THEREFORE, THE CLAIM OF ASSESSEE WAS PRIMA FACIE IN ADMISSIBLE. THEREFORE, THE CIT (A) HAS RIGHTLY SUSTAINED THE PENALTY ON THIS ISSUE . THE FACTS OF RELIANCE PETROPRODUCTS PVT. LTD. CITED BY AR WERE COMPLETELY DIFFERENT. SHE ALSO RELIED ON THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CAS E OF CIT VS. ZOOM ITA NO.4928/DEL./2010 3 COMMUNICATION PVT. LTD., 327 ITR 510 AND CIT VS. ES CORTS FINANCE LIMITED, 328 ITR 44. 4. WE HAVE HEARD BOTH THE SIDES AND WE FIND THAT TH E ASSESSEE HAS MADE A CLAIM OF DEPRECIATION WHICH IS PRIMA FACIE INADMISSIBLE A ND HAVE NO BONAFIDE TO MAKE A CLAIM. WE HAVE CONSIDERED ALL THE RELEVANT FACTS A ND CASE LAWS RELIED UPON BY BOTH SIDES. THE LEARNED DR RELIED UPON THE DECISION IN THE CASES OF ZOOM COMMUNICATION PVT. LTD. AND ESCORTS FINANCE LIMITED , CITED SUPRA. IN THE CASE OF ESCORTS FINANCE LIMITED, THE HON'BLE JURISDICTIONAL HIGH COURT HELD AS UNDER :- HELD, (I) THAT WHILE THE CLAIM WAS MADE BY THE ASSE SSEE AT 50 PER CENT. FOR ENTERTAINMENT EXPENSES THE ASSESSING OFFICER RE DUCED IT TO 35 PER CENT. THE COMMISSIONER (APPEALS) AS WELL AS THE TRI BUNAL RIGHTLY OBSERVED THAT THERE WAS NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS. THE ADDITION WAS ONLY ON AC COUNT OF DIFFERENCE IN ESTIMATE MADE BY THE ASSESSEE AND THE OTHER ESTI MATE MADE BY THE ASSESSING OFFICER. THEREFORE, IN SO FAR AS THIS CLA IM WAS CONCERNED, IF THE ASSESSING OFFICER REDUCED IT FROM 50 PER CENT. TO 35 PER CENT. THAT COULD NOT ATTRACT PENALTY. (II) THAT THE ASSESSEE HAD NOWHERE PLEADED THAT THE RETURN WAS FILED CLAIMING BENEFIT OF SECTION 35D OF THE ACT ON THE B ASIS OF THE OPINION OF THE CHARTERED ACCOUNTANTS. MERELY BECAUSE INFORM ATION WAS AVAILABLE IN THE TAX AUDIT REPORT THAT WOULD NOT AB SOLVE THE ASSESSEE. EVEN IF THERE WAS NO CONCEALMENT OF INCOME OR FURNI SHING OF INACCURATE PARTICULARS, BUT ON THE BASIS THEREOF TH E CLAIM WHICH WAS MADE WAS EX FACIE BOGUS, IT COULD ATTRACT PENALTY P ROVISION. IT WAS NOT A CASE WHERE TWO OPINIONS ABOUT THE APPLICABILITY O F SECTION 35D WERE POSSIBLE. THEREFORE, IT COULD NOT BE A CASE OF A BO NA FIDE ERROR ON THE PART OF THE ASSESSEE. THE RELIEF UNDER SECTION 35D OF THE ACT WAS CONFINED ONLY TO AN EXISTING INDUSTRIAL UNDERTAKING FOR EXTENSION OR FOR SETTING UP A NEW INDUSTRIAL UNIT. IT WAS, THUS, NOT A 'WRONG CLAIM'' PREFERRED BY THE ASSESSEE, BUT WAS A CLEAR CASE OF 'FALSE CLAIM'. THE MATTER WAS REMITTED BACK TO THE ASSESSING OFFICER F OR DETERMINING THE PENALTY AFRESH ATTRIBUTING THE CONDUCT RELATING TO CLAIM UNDER SECTION 35D OF THE ACT ONLY AS ATTRACTING PENALTY PROCEEDIN GS. (III) THAT AS FAR AS THE CLAIM OF CAPITAL LOSS WAS CONCERNED, THE ASSESSEE WAS ABSOLVED BY THE AUTHORITIES BELOW ON T HE GROUND THAT IT ITA NO.4928/DEL./2010 4 WAS AN INADVERTENT ERROR WHICH WAS CORRECTED BY THE ASSESSEE ITSELF BY FILING A REVISED RETURN AND OFFERING THE SAME DURIN G THE ASSESSMENT PROCEEDINGS. SINCE A FINDING F FACT REGARDING INAD VERTENT ERROR WAS RECEIVED BY THE TWO AUTHORITIES BELOW, AND WHILE IM POSING THE PENALTY THE ASSESSING OFFICER HAD NOWHERE CONTRADICTED THAT THE ERROR WAS NOT INADVERTENT, THE MATTER NEED NOT BE INTERFERED WITH . IN THE CASE OF ZOOM COMMUNICATION PVT. LTD., THE HO N'BLE JURISDICTIONAL HIGH COURT HAS HELD AS UNDER :- HELD, THAT ADMITTEDLY, IN VIEW OF THE PROVISIONS C ONTAINED IN SECTION 40(A)(II) OF THE ACT, THE AMOUNT OF INCOME-TAX COUL D NOT HAVE BEEN CLAIMED AS A DEDUCTION WHILE COMPUTING INCOME OF TH E ASSESSEE. AS REGARDS THE AMOUNT CLAIMED ON ACCOUNT OF UNUSABLE A ND DISCARDED ASSETS, THE TRIBUNAL, WAS ENTIRELY INCORRECT IN TAK ING THE VIEW THAT THE DEDUCTION CLAIMED BY THE ASSESSEE WAS ADMISSIBLE TO IT UNDER SECTION 32(1)(III). CLAUSE (I) OF SUB-SECTION (1) OF SECTIO N 32 RELATES TO ASSETS OF AN UNDERTAKING ENGAGED IN GENERATION AND/OR DIST RIBUTION OF POWER. ADMITTEDLY, THE ASSESSEE-COMPANY WAS NOT ENGAGED IN GENERATION AND FOR DISTRIBUTION OF POWER, DURING THE RELEVANT YEAR . THUS, THE PROVISIONS, OF CLAUSE (I) OF SUB-SECTION (1) OF SEC TION 32 WOULD NOT APPLY IN RESPECT OF THE ASSETS CLAIMED TO HAVE BECO ME UNUSABLE AND WRITTEN OFF. THEREFORE, THE ASSESSEE HAD NO JUSTIFI CATION TO CLAIM THIS AMOUNT OF RS.13,24,539 AS A REVENUE EXPENDITURE. IN FACT, THE ASSESSEE DID NOT CLAIM, EITHER BEFORE THE ASSESSING OFFICER OR BEFORE THE COMMISSIONER (APPEALS) THAT SUCH A DEDUCTION WA S PERMISSIBLE UNDER SECTION 32(L)(III). IT WAS ALSO NOT THE CASE OF THE ASSESSEE THAT IT WAS UNDER A BONA FIDE BELIEF THAT THESE TWO AMOUNTS COULD BE CLAIMED AS REVENUE EXPENDITURE. THE ASSESSEE WAS A COMPANY WHICH MUST BE HAVING PROFESSIONAL ASSISTANCE IN COMPUTATION OF IT S INCOME, AND ITS ACCOUNTS WERE COMPULSORILY SUBJECTED TO AUDIT. THE TRIBUNAL ERRED IN LAW IN DELETING THE PENALTY IN RESPECT OF THE AMOUN T OF RS. 1 LAKH CLAIMED AS DEDUCTION ON ACCOUNT OF PAYMENT OF INCOM E-TAX AND THE AMOUNT OF RS.13,24,539 DEBITED UNDER THE HEAD' EQUI PMENT WRITTEN OFF', IN THE PROFIT AND LOSS ACCOUNT OF THE ASSESSE E. THE ASSESSEE HAS COMPLETELY FAILED TO PRODUCE ANY E VIDENCE REGARDING THE FACT THAT THE CAR ON WHICH THE DEPRECIATION CLAIMED WAS READY TO PUT TO USE DURING THE RELEVANT PREVIOUS YEAR. THE ASSESSEE WAS RUNNING T HE VEHICLES AS TAXI, THEREFORE, THE REGISTRATION OF VEHICLE AND PERMIT TO RUN FOR TAXI PURPOSE IS THE BASIC AND NECESSARY ITA NO.4928/DEL./2010 5 REQUIREMENT. WITHOUT REGISTRATION OF CAR AND PERMI T TO RUN, IT CANNOT BE SAID THAT CAR WAS READY TO USE. ASSESSEES RELIANCE ON THE RELIA NCE PETROPRODUCTS PVT. LTD. IS ALSO OF NO HELP. THE RATIO DECIDED IN THAT CASE IS APPLICABLE WHEN ASSESSEE HAS NOT CONCEALED ANY MATERIAL FACT OR THE FACTUAL INFORMAT ION GIVEN BY ASSESSEE HAS NOT BEEN FOUND TO BE INCORRECT. THE CLAIM MADE BY ASSE SSEE IS UNSUSTAINABLE IN LAW BUT THE EXPLANATION OFFERED IS FOUND TO BE BONAFIDE. I N ASSESSEES CASE, THE CLAIM IS NEITHER SUBSTANTIATED NOR WAS IT FOUND BONAFIDE. SI NCE THE ASSESSEE HAS COMPLETELY FAILED TO PROVE THAT PERMIT WAS GRANTED AND THE CAR WAS REGISTERED DURING THE RELEVANT PREVIOUS YEAR, THEREFORE, IT IS ESTABLISHE D THAT THE ASSESSEE HAS MADE AN EX- FACIE BOGUS CLAIM. THE CLAIM IS NOT PERMISSIBLE AT ALL. AS DECIDED BY HON'BLE DELHI HIGH COURT IN THE CASE OF ESCORTS FINANCE LIMITED A ND ZOOM COMMUNICATIONS PVT. LIMITED, CITED SUPRA, SUCH EX-FACIE BOGUS CLAIM WHI CH IS NOT AT ALL PERMISSIBLE IN LAW SHALL AMOUNT TO FURNISH THE INACCURATE PARTICUL ARS OF INCOME. SUCH CLAIMS ARE ALSO NOT BONAFIDE CLAIMS. COMPLETELY UNJUSTIFIED C LAIM WHICH IS ABSOLUTELY LEGALLY UNTENABLE SHALL AMOUNT TO FILE INACCURATE PARTICULA RS OF INCOME. ASSESSEES CLAIM FALLS IN THIS CATEGORY. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, WE SUSTAIN THE ORDER OF CIT (A). 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 5 TH DAY OF AUGUST, 2011. SD/- SD/- (C.L. SETHI) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 5 TH DAY OF AUGUST, 2011 TS ITA NO.4928/DEL./2010 6 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XXII, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.