M/S ANIK INDUSTRIES LTD., Mumbai V. DY. CIT CC 7 (2), Mumbai

ITA 4948/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 6832 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 26-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BRAJENDRA KUMAR
• Keywords: Depreciation; Additional depreciation; Assessment record; Reason to believe; Reassessment proceedings; Set aside
• Section: 271(1)(c); 143(3); 142(1); 14A; 32(1)(iia); 143(1); 250; 143(2); 148

Judgement Text

INTHEINCOMETAXAPPELLATETRIBUNAL MUMBAI BENCHA MUMBAI BEFORE SHRI SHAMIMYAHYA ACCOUNTANTMEMBERAND SHRI PAVANKUMARGADALE JUDICIALMEMBER ITANO. 4948/MUM/2019 ASSESSMENTYEAR:2008-09 M/S ANIKINDUSTRIES LTD., 610, TULSIANI CHAMBERS, NARIMAN POINT,MUMBAI-400021. VS. THE DEPUTYCOMMISSIONER OFINCOME TAX CENTRAL CIRCLE-7(2), 6 TH FLOOR, AAYAKARBHAVAN, M.K. ROAD-400020. PAN NO.AAACM 2696 K APPELLANT RESPONDENT ASSESSEE BY : NONE REVENUE BY : MR. BRAJENDRA KUMAR, DR DATE OF HEARING : 15/07/2021 DATE OF PRONOUNCEMENT : 26/07/2021 ORDER PERPAVANKUMARGADALE, J.M. THE ASSESSEE HAS FILED THE APPEAL AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-49, MUMBAI PASSED U/S 271(1)(C) AND 250 OF THE INCOME TAX ACT, 1961. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1) THAT THE LEARNED CIT (A) 49 ERRED AND CONFIRM THE PENALTY U/S 271(1)(C)OF THE ACT AT RS.628424/-ISQUITE ILLEGAL,ARBITRARYUNWARRANTED, UNJUSTIFIEDANDBADIN LAW. 2) THAT THE LEARNED CIT (A) 49 ERRED AND NOT CONSIDERING THE FACTS PROPERLY OF THE CASE. 3) THAT THE LEARNED CIT (A) 49 ERRED AND NOT CONSIDERING THE FACTS THAT THE NO NORMAL DEPRECIATION DISALLOWED IN QUANTUM APPEAL AND HENCE ADDITIONAL DEPRECIATION DISALLOWED BY THE ASSESSING OFFICER IS WITHOUT ANY BASIS AND LEVY OF PENALTY ON SUCH DISALLOWANCE ISQUITEARBITRARY. M/SANIK INDUSTRIESLTD. ITANO.4948/MUM/2019 2 4) THAT THE APPELLANT FURTHER CRAVE, LEAVE,TO ADD, TO ALTER AND OR TO AMEND ANY OF THE AFORESAIDGROUNDSOFAPPEALASANDWHEN NECESSARY. 2. THE BRIEF FACTS OF THE CASE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MILK PROCESSING AND FILED THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008-09 ON 27.09.2008 WITH THE TOTAL INCOME OF RS.35,31,50,805/- AND THE RETURN OF INCOME WAS PROCESSED U/S 143(1) OF THE ACT. SUBSEQUENTLY, NOTICE U/S 143(2) AND 142(1) OF THE ACT WAS ISSUED. IN COMPLIANCE, THE LD. AR OF THE ASSESSEE APPEARED FROM TIME TO TIME AND THE CASE WAS DISCUSSED. THE ASSESSING OFFICER CONSIDERING THE FACTS OF INVESTMENTS AS PER THE BALANCE SHEET OBSERVED THAT SOME ADMINISTRATIVE EXPENSES ARE INCURRED BY THE ASSESSEE AND MADE DISALLOWANCE U/S 14A R.W.R.8D(2)(III) OF RS.52,862/-AND ASSESSED THE TOTAL INCOME OF RS.35,32,03,667/- AND PASSED ORDER U/S 143(3) OF THE ACT DATED 30.12.2010. SUBSEQUENTLY, THE ASSESSING OFFICER ON PERUSAL OF THE ASSESSMENT RECORD FOUND THAT THE ASSESSEE HAS CLAIMED DEPRECATION ON THE BLOCK OF PLANT AND MACHINERY AT 15% WHICH INCLUDES DEPRECIATION CLAIMED FOR THE PERIOD OCTOBER TO MARCH AMOUNTING TO RS.17771428/- AS AGAINST ALLOWABLE DEPRECIATION OF RS.7857402/-. THEREFORE, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS CLAIMED EXCESS DEPRECIATION AND HAS REASON TO BELIEVE THAT THE INCOME HAS ESCAPED ASSESSMENT AND ISSUED NOTICE U/S 148 OF THE ACT. THE ASSESSEE HAS FILED THE RETURN OF INCOME ON 11.06.2013 WITH THETOTALINCOMEOFRS.35,32,03,667/-. 3. THE ASSESSING OFFICER HAS ISSUED NOTICE U/S 143(2) AND 142(1) OF THE ACT AND ALSO REASONS RECORDED WERE PROVIDED. THE ASSESSEE HAS SUBMITTED WRITTEN SUBMISSIONS IN THE REASSESSMENT PROCEEDINGS REFERRED AT PARA 5 OF THE ORDER. THE ASSESSEE HAS SUPPORTED THE STAND OF CLAIM OF DEPRECIATION WITH THE EVIDENCES. WHEREAS, THE ASSESSING OFFICER HAS DEALT ON THE M/SANIK INDUSTRIESLTD. ITANO.4948/MUM/2019 3 DISPUTED ISSUE AND OBSERVED THAT THE ASSESSEE HAS CLAIMED ADDITIONAL DEPRECIATION TO THE EXTENT OF RS.18,48,850/- WHICH IS NOT ALLOWABLE AND WAS DISALLOWED AND ASSESSED THE TOTAL INCOME OF RS.35,90,04,660/- AND PASSED ORDER U/S 143(3) R.W.S 147 DATED 24.02.2014. SUBSEQUENTLY, THE ASSESSING OFFICER HAS INITIATED PENALTY PROCEEDINGS. IN THE PENALTY PROCEEDINGS, THE ASSESSING OFFICER CONSIDERED THE FINDINGS OF THE SCRUTINY ASSESSMENT AND THE EXPLANATIONS SUBMITTED BY THE ASSESSEE. FURTHER IT WAS BROUGHT TO THE KNOWLEDGE OF ASSESSING OFFICER THAT THE CIT(A) IN RESPECT OF ADDITION MADE U/S 143(3) R.W.S. 147 HAS ALLOWED DEPRECIATION TO THE EXTENT OF RS.39,52,136/- AND SUSTAINED ADDITIONAL DEPRECIATION CLAIM OF RS.18,48,850/-.THE ASSESSING OFFICER IN THE PENALTY PROCEEDINGS HAS CALLED FOR EXPLANATIONS AND THE ASSESSEE HAS FILED THE DETAILS ON 18.03.2017.THE ASSESSING OFFICER HAVING CONSIDERED THE FACT THAT THE ASSESSEE HAS CLAIMED THE EXCESS DEPRECIATION AND ALSO THE ASSESSEE HAS FILED INACCURATE PARTICULARS OF INCOME. THEREFORE, THE A.O. HAS LEVIED A PENALTY OF RS.6,28,424/- AND PASSED ORDERU/S271(1)(C) OFTHEACT ON29.03.2017. 4. AGGRIEVED BY THE ORDER, THE ASSESSEE HAS FILED APPEAL WITH THE CIT(A) WHEREAS THE CIT(A) HAS CONFIRMED THE ACTION OF ASSESSING OFFICER IN LEVYING THE PENALTY AND DISMISSED THE ASSESSEES APPEAL. AGGRIEVED BY THE ORDER OF CIT(A) THE ASSESSEE HAS FILED APPEAL BEFORE THE HONBLE TRIBUNAL. AT THE TIME OF HEARING NON-APPEARED ON BEHALF OF THE ASSESSEE AND THE LD. DR SUBMITTEDTHATTHE ASSESSING OFFICERWASCORRECTINLEVYINGTHE PENALTY AND SUPPORTEDTHE PENALTY ORDER. 5. WE HAVE HEARD THE LD. DRS SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. PRIMA FACIE THE ASSESSING OFFICER HAS LEVIED THE PENALTY FOR THE EXCESS CLAIM OF DEPRECIATION DISALLOWED IN THE ORDER U/S 143(3) R.W.S. 147 OF THE ACT. THE LD. DRS CONTENTIONS ARE THAT THE ASSESSEE HAS FILED M/SANIK INDUSTRIESLTD. ITANO.4948/MUM/2019 4 INACCURATE PARTICULARSOFINCOME THEREFORE, THEPENALTY WASCORRECTLYLEVIED. WE ON PERUSAL OF THE FACTS AND THE ASSESSMENT ORDER AT PAGE 5 PARA 7 FIND THE OBSERVATIONS OF THE A.O. CONSIDERING THE PROVISIONS OF SECTION 32(1)(IIA) OF THE ACT AND THE ELIGIBILITY CRITERIA. WHEREAS THE ASSESSEE HAS ADOPTED ONE OF THE POSSIBLE CLAIMS AT THAT POINT OF TIME IN THE FINANCIAL STATEMENTS.WE ARE OF THE OPINION THAT, THE ADDITION MADE IN THE ASSESSMENT ORDER CANNOT BE THE BASIS FOR LEVYING THE PENALTY AND EVERY ADDITION MADE IN THE ASSESSMENT PROCEEDINGS CANNOT BE GATEWAY FOR INITIATION OF PENALTY. WE RELY ON THE RATIO OF THE DECISION OF HONBLE SUPREME COURT IN CIT V. RELIANCE PETROPRODUCTS (P.) LTD. (2010) 189 TAXMAN 322 (SC). THE MERE MAKING OF CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. FURTHER IN THE PRESENT CASE, MERELY BECAUSE THE ASSESSEE HAD CLAIMED ADDITIONAL DEPRECIATION WHICH WAS NOT ACCEPTED BY THE REVENUE ITSELF WOULD NOT ATTRACT PENALTY U/S 271(1)(C) OF THE ACT. ACT. WE CONSIDERING THE FACTS, CIRCUMSTANCES AND RATIO OF THE JUDICIAL DECISION ARE OF THE OPINION THAT THE ASSESSEE CANNOT BE LIABLE FOR PENALTY. ACCORDINGLY, WE SET ASIDE THE ORDER OF CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY AND ALLOW THE GROUNDS OF APPEAL OFTHEASSESSEE. 6.IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE ISALLOWED. ORDERPRONOUNCEDIN THE OPEN COURT ON 26/07/2021. SD/- SD/- ( SHAMIM YAHYA ) (PAVANKUMAR GADALE) ACCOUNTANTMEMBER JUDICIAL MEMBER MUMBAI; DATED:26/07/2021 RAHUL SHARMA, SR. P.S. M/SANIK INDUSTRIESLTD. ITANO.4948/MUM/2019 5 COPY OFTHEORDERFORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR) ITAT, MUMBAI