BHAVANI GEMS, MUMBAI V. ACIT 19(1), MUMBAI

ITA 5006/MUM/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8802 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 08-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR LD
• Assessee Lawyers: REEPAL G TRALSHAWALA LD
• Keywords: Depreciation; Additional depreciation
• Section: 143(3)

Judgement Text

ITA.NO.5006/MUM/2015 BHAVANI GEMS ASSESSMENT YEAR-2008-09 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI . . , , BEFORE SHRI D.T. GARASIA, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.5006/MUM/2015 ( / ASSESSMENT YEAR: 2008-09) BHAVANI GEMS DC 3100, D TOWER, 3 RD FLOOR, BHARAT DIAMOND BOURSE, BLOCK G, BANDRA KURLA COMPLEX MUMBAI-400 051 / VS. ASSISTANT COMMISSIONER OF INCOME TAX 19(1) MUMBAI ! ./ ./PAN/GIR NO. AAAFB-2302-G ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) ASSESSEE BY : REEPAL G TRALSHAWALA , LD.AR REVENUE BY : SUMAN KUMAR, LD. DR / DATE OF HEARING : 25/10/2017 / DATE OF PRONOUNCEMENT : 01/11 /2017 ITA.NO.5006/MUM/2015 BHAVANI GEMS ASSESSMENT YEAR-2008-09 2 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2008-09 ASSAILS THE ORDER OF THE LD. COMMISSIONER O F INCOME-TAX (APPEALS)-30 [CIT(A)], MUMBAI, APPEAL NO. CIT(A)- 30/ACIT.19(1)/294/14-15 DATED 31/07/2015 QUA CONFIRMATION OF PENALTY U/S 271(1)(C) FOR RS.35 LACS. THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED U/S 143(3) BY LD. DEPUTY COMMISSIONER OF INCOME TAX-16(3) ON 23/12/2010 WHEREAS PENALTY WAS LEVIED BY LD. ASSISTANT COMMISSIONER OF INCOME TAX-16(3) VIDE PENALTY ORDER DATED 26/06/ 2014. THE EFFECTIVE GROUNDS OF APPEAL RAISED BY ASSESSEE READS AS FOLLO WS:- 1. IN LAW & IN THE FACTS AND IN THE CIRCUMSTANCES O F THE APPELLANTS CASE, THE HONBLE CIT(A) ERRED IN CONFIRMING THE PENALTY U/S 271(1)(C) OF RS.35,00,000/- LEVIED ON ACCOUNT OF DISALLOWANCE OF CLAIM OF ADDIT IONAL DEPRECIATION OF THE APPELLANT FIRM MISINTERPRETING THE PROVISIONS OF SE CTION 271(1)(C) AND HENCE THE SAME IS UNJUSTIFIED/UNWARRANTED/ILLEGAL AND DESERVE S TO BE CANCELLED 2. IN LAW & IN THE FACTS AND IN THE CIRCUMSTANCES O F THE APPELLANTS CASE, THE HONBLE CIT(A) FAILED TO APPRECIATE THAT, MERE ADDI TION TO TOTAL INCOME WILL NOT ATTRACT PENAL PROVISION AND THERE MUST BE EITHER CONCEALMENT OR FURNISHING INACCURATE PARTICULARS OF INCOME BY THE APPELLANT FOR LEVY OF PENALTY. HENCE, THE ORDER LEVYING PENALTY MUST BE ANNULLED. 3. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE THE HONBLE CIT(A), MISINTERPRETED THE LAW LAID DOWN BY HONBLE APEX COURT OF IN CASE CIT VS RELIANCE PETRO PRODUCTS LTD. (2010) 230 CTR320(S C) AND HAD FURTHER DISREGARDED VARIOUS OTHER JUDICIAL PRONOUNCEMENT RE LIED UPON BY THE APPELLANT. THE ORDER PASSED CONFIRMING PENALTY U/S 271(1)(C), OVERLOOKING THE JUDICIAL DECISIONS IS UNJUST/UNWARRANTED AND MUST BE DELETED . 2.1 FACTS LEADING TO THE SAME ARE THAT THE ASSESSEE BEING RESIDENT FIRM ENGAGED AS MANUFACTURER AND EXPORTER OF CUT & POLISHED DIAMOND S WAS ASSESSED FOR IMPUGNED AY U/S 143(3). THE ASSESSEE C LAIMED ADDITIONAL DEPRECIATION @20% AMOUNTING TO RS.116.17 LACS OVER AND ABOVE NORMAL DEPRECIATION OF 15% ON CERTAIN PLANT & MACHI NERY. HOWEVER, LD. AO, RELYING ON THE DECISION OF HONBLE APEX COURT I N CIT VS. GEM INDIAN ITA.NO.5006/MUM/2015 BHAVANI GEMS ASSESSMENT YEAR-2008-09 3 MANUFACTURING CO. [249 ITR 347] CONCLUDED THAT THE ACTIVITIES CARRIED OUT BY ASSESSEE DID NOT CONSTITUTE MANUFACTURING ACTIVI TY AND HENCE THE ASSESSEE WAS NOT ENTITLED TO CLAIM ADDITIONAL DEPRE CIATION. THE STAND OF LD. AO WAS CONFIRMED BY LD. CIT(A) AS WELL AS THIS TRIBUNAL. 2.2 CONSEQUENTLY, PENALTY PROCEEDINGS WERE INITIATE D DURING QUANTUM ASSESSMENT PROCEEDINGS AND FINALLY THE ASSESSEE HAS BEEN SADDLED WITH PENALTY OF RS.35 LACS U/S 271(1)(C) FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME VIDE PENALTY ORDER DATED 26/0 6/2014. THE SAME, UPON CONFIRMATION BY LD. CIT(A), HAS BEEN CONTESTED BEFORE US. 3. THE LD. COUNSEL FOR ASSESSEE [AR] DREW OUR ATTEN TION TO THE FACT THAT THE NATURE OF QUANTUM ADDITION DOES NOT JUSTIF Y IMPOSITION OF PENALTY SINCE THERE WAS NO FURNISHING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME. IN FACT, THE ASSESSEE MADE A CLAIM WITH FULL DISCLOSURE, WHICH WAS NOT ACCEPTED BY THE LOWER AUT HORITIES. NEVERTHELESS, THE CLAIM WAS GENUINE WHICH IS SUBSTA NTIATED BY THE FACT THAT SUBSEQUENTLY THE TRIBUNAL IN ASSESSEES OWN CA SE FOR AYS 2006-07, 2007-08, 2010-11 & 2011-12 UPHELD THE STAND OF ASSE SSEE AND CONCLUDED THAT THE ASSESSEES ACTIVITIES AMOUNTED T O MANUFACTURING AND HENCE, THE ASSESSEE WAS ENTITLED FOR ADDITIONAL DEP RECIATION. THE ORDERS OF THE TRIBUNAL FOR THESE YEARS HAVE BEEN PLACED ON RECORD. PER CONTRA, LD. DR WHILE PLACING RELIANCE ON THE STAND OF LOWER AUTHORITIES CONCEDED THE FACTUAL POSITION AND COULD NOT BRING ON RECORD ANY CONTRARY MATERIAL. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED RELEVANT MATERIAL ON RECORD INCLUDING CITED ORDERS OF TRIBUNAL IN ASS ESSEES CASE FOR DIFFERENT YEARS. UPON PERUSAL OF THE SAME, WE FIND STRENGTH IN THE ARGUMENT OF LD. AR SINCE THE ASSESSEES CLAIM FOR A DDITIONAL ITA.NO.5006/MUM/2015 BHAVANI GEMS ASSESSMENT YEAR-2008-09 4 DEPRECIATION HAS BEEN ALLOWED IN SUBSEQUENT ORDERS OF THE TRIBUNAL FOR PRECEDING AS WELL AS SUCCEEDING YEARS. EVEN OTHERWI SE, WE FIND THAT THE PROVISIONS OF SECTION 271(1)(C) ARE NOT ATTRACTED S INCE THERE WAS NO FURNISHING OF INACCURATE PARTICULARS OF INCOME OR C ONCEALMENT OF INCOME BY THE ASSESSEE. RATHER THE ASSESSEE MADE A CLAIM W ITH FULL DISCLOSURE WHICH IS NOT ACCEPTED BY THE REVENUE. THESE FACTS D O NOT JUSTIFY IMPOSITION OF PENALTY IN VIEW OF THE JUDGMENT OF HO NBLE APEX COURT RENDERED IN CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. [322 ITR 1 58]. THEREFORE, FINDING ASSESSEES EXPLANATION A PLAUSIB LE ONE, WE ARE INCLINED TO DELETE THE IMPUGNED PENALTY. 5. RESULTANTLY, THE ASSESSEES APPEAL STANDS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 01 ST NOVEMBER, 2017. SD/- SD/- (D.T. GARASIA) (MANOJ KUMAR AGGARW AL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 01.11 .2017 SR.PS:- THIRUMALESH ! / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $%!# / THE RESPONDENT 3. + ( ) / THE CIT(A) 4. + / CIT CONCERNED 5. $'- , - , / DR, ITAT, MUMBAI 6. . / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI