MITCO MANAGEMENT SERVICES P.LTD, MUMBAI V. ITO 1(2)(3), MUMBAI

ITA 4953/MUM/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88442 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-03-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 10-03-2014
• Assessment Year: 1997-1998
• Appeal Filed On: 01-08-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIVEK BATRA
• Keywords: Depreciation
• Section: 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BE NCH, MUMBAI . , ! ' ' ' ' #$ %&'( , #) *+ # ! BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ./I .T.A. NO. 4953/MUM/2012 ( , , , , / ASSESSMENT YEAR : 1997-98 M/S. MITCO MANAGEMENT SERVICES PVT. LTD., 414, REWA CHAMBERS, SIR V.T. MARG, NEW MARINE LINES, MUMBAI-400 020 / VS. THE ITO 1(2)(3), AAYAKAR BHAVAN, MUMBAI +- #) ./ ./ ./ PAN/GIR NO. : AACCM 1587B ( -0 / APPELLANT ) .. ( 12-0 / RESPONDENT ) -0 3 # / APPELLANT BY: NONE 12-0 4 3 # / RESPONDENT BY: SHRI VIVEK BATRA 4 5) / DATE OF HEARING :10.03.2015 6, 4 5) / DATE OF PRONOUNCEMENT :10.03.2015 *#7 / O R D E R PER N.K. BILLAIYA, AM: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-2, MUMBAI DT. 3.5.2012 PERTAINING TO ASS ESSMENT YEAR 1997- 98. ITA NO. 4953/M/2012 2 2. THE SOLE GRIEVANCE OF THE ASSESSEE IS THAT THE L D. CIT(A) ERRED IN UPHOLDING THE LEVY OF PENALTY OF RS. 6,56,524/- U/S . 271(1)(C) OF THE ACT. 3. THE ROOTS FOR THE LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT LIE IN THE ASSESSMENT ORDER DT. 29.12.2006 MADE U/S. 143(3) R. W. SEC. 254 OF THE ACT. IN THIS CASE THE ORIGINAL ASSESSMENT WAS COMP LETED U/S. 143(3) OF THE ACT VIDE ORDER DT. 30.3.2000. THE TOTAL INCOME ASSE SSED WAS AT RS. 20,80,231/-. IN THE ORIGINAL ASSESSMENT, THE CLAIM OF DEPRECIATION ON AUTOMATIC LOAN MONITORING SYSTEM CLAIMED TO HAVE BE EN PURCHASED AND LEASED BACK TO M/S. ASIAN ELECTRONICS WAS DISALLOWE D BY TREATING THE LEASE TRANSACTION AS A FINANCIAL TRANSACTION. THE AMOUNT OF DEPRECIATION DISALLOWED WAS RS. 15,26,800/-. THE MATTER TRAVELL ED UPTO THE TRIBUNAL AND THE TRIBUNAL VIDE ORDER DT. 18.5.2004 IN ITA NO . 2020/M/01 SET ASIDE THE ISSUE TO THE FILE OF THE AO FOR A FRESH DETERMI NATION IN ACCORDANCE WITH LAW ON MERITS AND AFTER CONSIDERING THE RATIO OF THE ITAT MUMBAI C SPECIAL BENCH IN THE CASE OF M/S. MID EAST PORT FOLIO MANAGEMENT LTD. VS DCIT 87 ITD 537. 4. AFTER CONSIDERING THE FACTS OF THE ASSESSEE VIS- -VIS FACTS IN THE CASE OF M/S. MID EAST PORTFOLIO MANAGEMENT LTD.(SUPRA), THE AO CAME TO THE CONCLUSION THAT THE FACTS IN THE CASE OF THE ASSESS EE AND THE FACTS DISCUSSED IN THE CASE OF M/S. MID EAST PORTFOLIO MA NAGEMENT LTD. ARE SIMILAR. THE AO FURTHER OBSERVED THAT IN THE CASE OF M/S. MID EAST PORTFOLIO MANAGEMENT LTD., THE TRIBUNAL HAS UPHELD THE DISALLOWANCE OF DEPRECIATION. THE AO FURTHER OBSERVED THAT IN THIS CASE, IT HAS BEEN PROVED BEYOND DOUBT THAT THE TRANSACTION OF SO CALL ED LEASE ENTERED INTO BETWEEN THE ASSESSEE AND M/S. ASIAN ELECTRONICS IS ACTUALLY A FINANCE TRANSACTION. THE CLAIM OF DEPRECIATION WAS ONCE AG AIN DISALLOWED AND THE PENALTY PROCEEDINGS U/S. 271(1)(C) WERE INITIATED. ITA NO. 4953/M/2012 3 5. THE ASSESSEE WAS GIVEN AN OPPORTUNITY TO EXPLAIN WHY PENALTY U/S. 271(1)(C) OF THE ACT SHOULD NOT BE LEVIED IN VIEW O F THE ORDER OF THE FIRST APPELLATE AUTHORITY CONFIRMING THE DISALLOWANCE MAD E BY THE AO IN HIS ORDER U/S. 143(3) R.W. SEC. 254 OF THE ACT. VIDE R EPLY DT. 18.3.2010, THE ASSESSEE CONTENDED THAT IT HAS NEITHER CONCEALED AN Y PARTICULARS NOR FURNISHED ANY UNTRUE PARTICULARS OF ITS INCOME. IT WAS POINTED OUT THAT THE DISALLOWANCE SHOULD NOT HAVE BEEN MADE AS THE CLAIM OF THE ASSESSEE WAS BONAFIDE. IT WAS FURTHER POINTED OUT THAT AGAINST THE ORDER OF THE LD. CIT(A), THE ASSESSEE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL AND THE APPEAL HAS BEEN ADJOURNED BECAUSE A SPECIAL BENCH H AS BEEN CONSTITUTED IN THE CASE OF M/S. INDUSIND BANK LTD. IN ITA NO. 6 566/M/02 & 606/M/03. AFTER CONSIDERING THE FACTS AND THE SUBM ISSIONS, THE AO OBSERVED THAT UNDER THE FACTS AND THE CIRCUMSTANCES , THE SALE OF LEASE BACK TRANSACTION IS NOT AT ALL A GENUINE TRANSACTION. I N THE OPINION OF THE AO, THE ASSESSEES CONTENTION THAT IT HAS NOT FILED ANY UNTRUE PARTICULARS IS NOT CORRECT. DRAWING SUPPORT FROM THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF DHARMENDRA TEXTILES PROCESSOR S & OTHERS 306 ITR 277, THE AO CONCLUDED BY LEVYING PENALTY OF RS. 6,5 6,524/-. 6. AGGRIEVED BY THIS, THE ASSESSEE CARRIED THE MATT ER BEFORE THE LD. CIT(A) AND REITERATED ITS CLAIM AND RELIED UPON THE DECISION OF THE TRIBUNAL IN THE CASE OF CABLE CORPORATION OF INDI A LTD. IN ITA NOS. 2366, 2416 & 3433/M/2000. AFTER CONSIDERING THE FA CTS AND THE SUBMISSIONS, THE LD. CIT(A) HELD AS UNDER: AFTER EXAMINING THE FACTS AND CIRCUMSTANCES OF THE CASE, I FIND THAT THE APPELLANT COMPANY HAS FURNISHED INACC URATE PARTICULARS OF INCOME BECAUSE THE A APPELLANT COM PANY HAS TRIED TO CLAIM DEPRECIATION OF RS.15,26,800/- ON 88 MACHI NES EACH COSTING RS.34,700/- WITHOUT ESTABLISHING THE FACTS THAT THESE MACHINES WERE ACTUALLY SOLD BY ASIAN ELECTRONICS L TD. ON 31.03.1 ITA NO. 4953/M/2012 4 97 TO THE APPELLANT COMPANY AND ON THE SAME DATE, I .E. 31.03.1997 THE APPELLANT COMPANY HAD DELIVERED BACK THE SAME E QUIPMENTS TO M/S ASIAN ELECTRONICS LTD. AT SILVASSA AND THESE MA CHINERIES WERE INSTALLED AND PUT TO USE ON 31.03.1997. ALL THESE T RANSACTIONS ARE HIGHLY UNBELIEVABLE AND DOES NOT APPEAR TO BE GENUI NE. MY PREDECESSOR CIT (A) WHILE DISPOSING OFF THE QUANTUM APPEAL HAVE GIVEN ENOUGH REASONS TO SHOW THAT INTENTION OF THE APPELLANT COMPANY WAS TO CLAIM EXCESSIVE DEPRECIATION WITH A VIEW TO REDUCE ITS TAXABLE PROFIT AND, THEREFORE, ADDITION WAS CONFIRMED IN THIS CASE. THE ARGUMENT OF THE AUTHORIZED REPRESENT ATIVE THAT THE PENALTY MAY BE DELETED IN VIEW OF THE DECISION OF I TAT, MUMBAI IN THE CASE OF JCIT, SPL RANGE 54 VS CABLE CORPORATION OF INDIA LTD. IS TOTALLY UNACCEPTABLE BECAUSE FACTS AND CIRCUMSTA NCES IN THAT CASE WERE TOTALLY DIFFERENT. FURTHER, THAT DECISION DOES NOT DEAL WITH IMPOSITION OF PENALTY U/S.271(1) (C ) OF THE I NCOME-TAX ACT ON BOGUS TRANSACTIONS. SINCE IT IS A CLEAR CASE OF FUR NISHING INACCURATE PARTICULARS OF INCOME BY THE APPELLANT FIRM, I DO N OT FIND ANY REASON TO INTERFERE WITH THE PENALTY ORDER PASSED B Y THE ASSESSING OFFICER. THE PENALTY IMPOSED BY THE ASSESSING OFFIC ER U/S 271(1)(C) OF THE INCOME-TAX ACT IS CONFIRMED. THESE GROUNDS A PPEAL HAVE NO MERIT AND ACCORDINGLY, STAND DISMISSED. 7. NONE APPEARED ON BEHALF OF THE ASSESSEE. WE FIND THAT ON EARLIER OCCASION, THE ASSESSEE SOUGHT ADJOURNMENT VIDE LETT ER DT. 6.9.2014, ACCORDINGLY, THE CASE WAS ADJOURNED FOR THIS DAY. THIS WAS IN THE KNOWLEDGE OF THE ASSESSEE, THEREFORE, WE DECIDE TO PROCEED EX PARTE. 8. THE LD. DR STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 9. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTH ORITIES BELOW. IN THE FIRST ROUND OF LITIGATION AGAINST THE QUANTUM A DDITION WHICH WAS DISALLOWANCE OF DEPRECIATION, THE TRIBUNAL HAS DIRE CTED THE AO TO DECIDE THE ISSUE AFRESH IN THE LIGHT OF THE DECISION OF TH E SPECIAL BENCH IN THE CASE OF M/S. MID EAST PORTFOLIO MANAGEMENT LTD. (SU PRA). THE AO HAS RIGHTLY FOLLOWED THE DECISION OF THE TRIBUNAL IN TH E CASE OF M/S. MID EAST PORTFOLIO MANAGEMENT LTD. HAVING DISALLOWED THE DE PRECIATION, ONCE AGAIN PENALTY PROCEEDINGS WERE INITIATED. WE FIND THAT THE ASSESSEE WAS ITA NO. 4953/M/2012 5 GIVEN SUFFICIENT OPPORTUNITY TO EXPLAIN ITS CASE AN D THE ASSESSEE DID RESPOND DURING THE PENAL PROCEEDINGS STATING THAT I T HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL AGAINST THE ORDER OF THE LD. CIT(A) WHICH IS PENDING FOR DISPOSAL SUBJECT TO THE OUTCOME OF THE SPECIAL BENCH CONSTITUTED IN THE CASE OF INDUSIND BANK (SUPRA). HOWEVER, WE DO NOT FIND ANY ORDER OF THE TRIBUNAL ON RECORD IN THE CAS E OF THE ASSESSEE. IN ALL FAIRNESS, THE ISSUE RELATING TO THE CLAIM OF DEPREC IATION ON SALE AND LEASE BACK TRANSACTION IS SOMEWHAT SETTLED BY THE DECISIO N OF THE HONBLE SUPREME COURT IN THE CASE OF ICDS LTD (2013) 29 TAX MANN.COM 129. HOWEVER, THE RATIO OF THE DECISION OF THE HONBLE S UPREME COURT IS APPLICABLE ONLY IN THE CASE OF GENUINE SALE AND LEA SE BACK TRANSACTION. 9.1. IN THE CASE IN HAND, WE FIND THAT THE ADDITION S HAVE BEEN MADE ON FINDING THAT THE SO CALLED LEASE ENTERED INTO BETWE EN THE ASSESSEE AND ASIAN ELECTRONICS IS ACTUALLY A FINANCE TRANSACTION . THE FACTUAL MATRIX AS ELABORATELY DISCUSSED BY THE LD. CIT(A) AT PARA-2.3 OF HIS ORDER (SUPRA) CLEARLY ESTABLISHES THAT NOT ONLY THE CLAIM OF DEPR ECIATION IS NOT ALLOWABLE BUT ALSO THE ASSESSEE HAS FURNISHED INACCURATE PART ICULARS. WE, THEREFORE, DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDIN GS OF THE LD. CIT(A). 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ON 10 TH MARCH, 2015 SD/- SD/- (D.MANMOHAN ) (N.K. BILLAIYA) ! / VICE PRESIDENT #) *+ / ACCOUNTANT MEMBER MUMBAI; 8* DATED : 10 TH MARCH, 2015 . . ./ RJ , SR. PS . . ./ RJ , SR. PS ITA NO. 4953/M/2012 6 *#7 *#7 *#7 *#7 4 44 4 15% 15% 15% 15% 9#%,5 9#%,5 9#%,5 9#%,5 / COPY OF THE ORDER FORWARDED TO : 1. -0 / THE APPELLANT 2. 12-0 / THE RESPONDENT. 3. : ( ) / THE CIT(A)- 4. : / CIT 5. %;< 15 , , / DR, ITAT, MUMBAI 6. < = / GUARD FILE. *#7 *#7 *#7 *#7 / BY ORDER, 2%5 15 //TRUE COPY// / . . . . (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI