ACIT, Circle-26(1), New Delhi V. VAvasi Telegance P.Ltd, New Delhi

ITA 5049/DEL/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2246 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2009-2010
• Appeal Filed On: 04-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P RAKASH DUBEY SENIOR
• Keywords: Depreciation; Wrong claim; Unabsorbed depreciation; Set aside
• Section: 271(1)(c); 271B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G : NEW DELHI) BEFORE HONBLE N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER (THROUGH VIDEO CONFERENCE) ITA NO.5049/DEL./2017 (ASSESSMENT YEAR : 2009-10) ACIT, CIRCLE 26 (1), VS. M/S. VAVASI TELEGANCE PVT. LTD., NEW DELHI. A-32, 2 ND FLOOR, GENISIS BUILDING, MATHURA RAOD, NEW DELHI 110 044. (PAN : AABCV5624K) (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI PRAKASH DUBEY, SENIOR DR DATE OF HEARING : 21.06.2021 DATE OF ORDER : 30.06.2021 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, ACIT, CIRCLE 26 (1), NEW DELHI (HEREINAF TER REFERRED TO AS THE REVENUE) BY FILING THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 11.05.2017 PASSE D BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-33, NEW DELHI AFFIRMING THE PENALTY ORDER DATED 30.05.2012 PASSED U/S 271(1 )(C) OF THE ITA NO.5049/DEL./2017 2 INCOME-TAX ACT, 1961 (FOR SHORT THE ACT), QUA THE ASSESSMENT YEAR 2009-10 ON THE GROUND THAT :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) HAS ERRED IN DELETING THE PENALTY U /S 271(1)(C) ON THE GROUNDS THAT APPELLANT SHOULD NOT PENALIZED MERELY FOR SHOWING THE RECEIPT OF CONSULTANCY AS OTHER INCOME DESPITE THE FACT THAT THE AO HAS VERIFIED DURING THE ASSESSMENT THAT THE ASSESSEE DID NOT FURNISH ANY DOCUMENTS ON RECORD TO PROVE THAT THE ASSETS WERE PUT TO USE. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : ON THE BASIS OF ASSESSMEN T FRAMED UNDER SECTION 143 (3) OF THE INCOME-TAX ACT, 1961 (FOR SH ORT THE ACT), DISALLOWANCE OF DEPRECIATION CLAIMED AT RS.1,07,43, 586/- BY THE ASSESSEE, PENALTY PROCEEDINGS HAVE BEEN INITIATED U NDER SECTIONS 271(1)(C), 271B & 271 OF THE INCOME-TAX ACT, 1961 ( FOR SHORT THE ACT). DECLINING THE CONTENTIONS RAISED BY THE ASS ESSEE THAT THE ASSESSEE COMPANY HAD RECEIVED CONSULTANCY INCOME OF RS.4,79,51,780/- DURING THE YEAR UNDER ASSESSMENT W HICH WAS REFLECTED UNDER GROUPING OTHER INCOME, SCHEDULE 1 2 OF THE BALANCE SHEET AND ALSO WITHOUT APPRECIATING THE FAC T THAT THE ASSESSEE HAS BEEN MAINTAINING OFFICE OF 11,600 SQ.F T. AND HAVE EMPLOYED 60 EMPLOYEES APPROXIMATELY, PROCEEDED TO L EVY THE PENALTY FOR ADDITION OF RS.2,06,38,449/- FOR CONCEA LMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME. ITA NO.5049/DEL./2017 3 3. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT ( A) BY WAY OF FILING THE APPEAL WHO HAS DELETED THE PENALTY BY AL LOWING THE APPEAL. FEELING AGGRIEVED BY THE ORDER PASSED BY T HE LD. CIT (A), THE REVENUE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. 4. ASSESSEE HAS NOT PREFERRED TO PUT IN APPEARANCE DESPITE ISSUANCE OF THE NOTICE AND CONSEQUENTLY, WE PROCEED ED TO DECIDE THE PRESENT APPEAL WITH THE ASSISTANCE OF THE LD. D R AS WELL AS ON THE BASIS OF DOCUMENTS AVAILABLE ON THE FILE. 5. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIV E FOR THE REVENUE TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 6. UNDISPUTEDLY, ASSESSEE HAD FILED RETURN OF INCOM E AT A LOSS OF RS.2,06,38,450/-. IT IS ALSO NOT IN DISPUTE THAT THE PENALTY HAS BEEN LEVIED U/S 271(1)(C) OF THE ACT FOR ALLEGED INCORRE CT CLAIM OF THE BUSINESS LOSS FOR THE YEAR UNDER ASSESSMENT. IT IS ALSO NOT IN DISPUTE THAT THE AO HAS DISALLOWED THE DEPRECIATION CLAIMED BY THE ASSESSEE ON THE GROUND THAT SIMILAR DEPRECIATION WA S DISALLOWED IN AY 2008-09. IT IS ALSO NOT IN DISPUTE THAT THE ASS ESSEE HAD CLAIMED UNABSORBED DEPRECIATION OF THE YEAR 2008-09 AS BROU GHT FORWARD IN ITA NO.5049/DEL./2017 4 THE AY 2009-10 AND HAD NOT CLAIMED BROUGHT FORWARD BUSINESS LOSSES FOR AY 2008-09. 7. IN THE BACKDROP OF THE AFORESAID FACTS AND CIRCU MSTANCES OF THE CASE AND ARGUMENTS ADDRESSED BY THE LD. DR FOR THE REVENUE, THE SOLE QUESTION ARISES FOR DETERMINATION IN THIS CASE IS :- AS TO WHETHER THE ASSESSEE HAS CONCEALED PARTICULA RS OF INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF INCOME D URING ASSESSMENT PROCEEDINGS? 8. LD CIT (A) DELETED THE PENALTY LEVIED BY THE AO UNDER SECTION 271(1)(C) OF THE ACT BY RETURNING FOLLOWING FINDINGS :- 6. I HAVE CONSIDERED THE REASONING OF THE ASSESSI NG OFFICER AND THE SUBMISSIONS OF THE APPELLANT. 6.1 ALL THE GROUNDS OF APPEAL RELATE TO IMPOSITION OF PENALTY AMOUNTING TO RS.70,15,008/- U/S 271(1)( C). FROM IT EM NO.5 OF PARA 4 ABOVE ITS OBSERVED THAT EVEN THOUGH THE ASSE SSING OFFICER ACKNOWLEDGED THE SUBMISSIONS MADE BY THE AP PELLANT IN RESPONSE TO NOTICE U/S 271(1)(C) DATED 27.12.11, HE HAS REJECTED THE CONTENTION RAISED BY THE ASSESSEE WITH OUT EITHER REPRODUCING THE SAID CONTENTION IN HIS ORDER OR COM MENTING UPON IT. IT IS ALSO OBSERVED THAT THE ASSESSING OFF ICER MADE THE ADDITION AS WELL AS LEVIED THE PENALTY FOLLOWING TH E DISALLOWANCE OF CLAIM OF DEPRECIATION IN A.Y. 2008- 09 ON THE BASIS OF HIS CONCLUSION THAT ASSETS WERE NOT PUT TO USE. HIS CONCLUSION THAT THE ASSETS WERE NOT PUT TO USE ARE BASED ON HIS OBSERVATION THAT DURING THE YEAR THE APPELLANT HAS REFLECTED THE CONSULTANCY INCOME OF RS.4,79,51,780/- UNDER THE GR OUPING 'OTHER INCOME' AND THE P&L ACCOUNT OF THE ASSESSEE DOES NOT SHOW ANY RECEIPTS FROM ANY PROJECT. 6.2 THE ASSESSING OFFICER HAS ACKNOWLEDGED THAT TH E DEPRECIATION HAS BEEN CHARGED ON OPENING BALANCE OF SCHEDULE OF FIXED ASSETS AT PRESCRIBED RATE AS PER THE INCOM E TAX ACT. 6.3 WHILE DISALLOWING THE CLAIM OF DEPRECIATION THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE HA S ONLY 'OTHER INCOME' IN THE NATURE OF CONSULTANCY INCOME REPORTE DLY RECEIVED FROM OUTSIDE INDIA. ITA NO.5049/DEL./2017 5 6.4 THE APPELLANT'S CONTENTION THAT IT WAS MAINTAIN ING AN OFFICE OF ABOUT 11,600 SQUARE FEET AND EMPLOYED APP ROXIMATELY 60 PERSONNEL AND THERE WAS NO NEW ADDITION TO THE F IXED ASSETS OR COMPUTERS AND THE DEPRECIATION HAS BEEN CLAIMED ON ASSETS BROUGHT FORWARD FROM THE EARLIER YEAR VEHEMENTLY CH ALLENGE THE CONCLUSION DRAWN BY THE ASSESSING OFFICER THAT THE ASSETS WERE NOT PUT TO USE. 6.5. THE ASSESSEE'S APPEAL AGAINST THE QUANTUM ADDI TION WAS DISMISSED BY ME VIDE ORDER DATED 18.01.17 BECAUSE I DID NOT FIND SUFFICIENT REASONS TO CONDONE A DELAY OF 519 D AYS IN FILING THE APPEAL. CONSEQUENTLY, IN THE QUANTUM APPEAL THE ADDITION ON ACCOUNT OF DEPRECIATION WAS NOT CONSIDERED BY ME ON MERITS. 6.6 HOWEVER, GIVEN THAT SUBSTANTIAL CONSULTANCY REC EIPTS WERE EARNED BY THE APPELLANT THROUGH THE WORK DONE BY A LARGE NUMBER OF PEOPLE, IT IS NATURAL THAT THE ASSETS WOU LD HAVE BEEN PUT TO USE. I DO NOT INTEND TO PENALISE THE APPELLA NT MERELY FOR SHOWING THE RECEIPTS FOR CONSULTANCY AS OTHER INCOM E. THE PENALTY HAS TO BE DELETED. 7. AS REGARDS DENIAL OF BUSINESS LOSS CARRIED FORWA RD AMOUNTING TO RS.98,94,864/-, AGAIN, EVEN THOUGH THE MERITS OF THE ADDITION WERE NOT EXAMINED DURING THE QUANTUM A PPEAL AS YET THE RETURN OF INCOME WAS FILED LATE, THE BUSINE SS LOSS WAS NOT TO BE ALLOWED TO BE CARRIED FORWARD. 7.1 HOWEVER, IN VIEW OF APPELLANTS EXPLANATION THAT THE CLAIM OF CARRY FORWARD OF BUSINESS LOSS WAS INVOLUN TARY DUE TO SYSTEM CONSIDERATION IN RESPECT OF 'E' FILED RETURN AND THERE WAS NO INTENTION OF THE APPELLANT TO CLAIM CARRY FO RWARD OF BUSINESS LOSS, I DO NOT FIND THE PENALTY SUSTAINABL E. 8. ACCORDINGLY, I DELETE THE PENALTY LEVIED BY THE ASSESSING OFFICER. 9. PERUSAL OF THE IMPUGNED ORDER PASSED BY THE LD. CIT (A) GOES TO PROVE THAT IT DOES NOT SUFFER FROM ANY ILLE GALITY OR INFIRMITY BECAUSE IT IS A PROVED FACT ON RECORD THAT CARRY FO RWARD OF BUSINESS LOSS WAS NOT AN INTENTIONAL EXERCISE ON THE PART OF THE ASSESSEE RATHER IT WAS DUE TO ELECTRONIC SYSTEM OF E-FILING OF THE RETURN WHICH HAS GIVEN BENEFIT TO THE ASSESSEE. MOREOVER, WHEN THE ASSESSEE IS ITA NO.5049/DEL./2017 6 UNDISPUTEDLY MAINTAINING OFFICE SPACE OF 11,600 SQ. FT. HAVING 60 EMPLOYEES WITH NO NEW ADDITION TO THE FIXED ASSETS OR COMPUTER, THE DEPRECIATION HAS BEEN CLAIMED ON ASSETS BROUGHT FORWARD FROM EARLIER YEARS BECAUSE OF ELECTRONIC SYSTEM OF E-FIL ING OF THE RETURN. EVEN OTHERWISE, THERE IS NOT AN IOTA OF MATERIAL ON THE FILE TO PROVE THE FACT THAT THERE WAS CONCEALMENT OF INCOME OR FU RNISHING OF INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE. MERELY LODGING A WRONG CLAIM OF DEPRECIATION DOES NOT IPSO FACTO AMO UNT TO CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. 10. HONBLE SUPREME COURT IN A CASE CITED AS CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. 322 ITR 158 (SC) DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE. OPERATIVE PART OF WHICH IS REPRODUCED 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 H AS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS I NCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTION 2 71(1)(C) WOULD EMBRACE THE DETAIL OF THE CLAIM MADE. WHERE NO INF ORMATION GIVEN IN THE RETURN IS FOUND TO BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. IN ORDER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY CO VERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STR ETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISH ING INACCURATE 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 ASSESSEE CAN FURNISH THE PARTICULARS OF H IS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LI ABILITY WOULD ARISE. TO ATTRACT PENALTY, THE DETAILS SUPPLIED IN THE RET URN MUST NOT BE ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TH E TRUTH OR ERRONEOUS. ITA NO.5049/DEL./2017 7 WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIE D BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C). A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REG ARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN C ANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. 11. FURTHERMORE, ASSESSMENT ORDER PASSED IN THIS CA SE SHOWS THAT THE AO HAS FAILED TO RECORD A VALID SATISFACTION TO INITIATE THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT BECAUS E HE HAS MERELY RECORDED THAT, PENALTY PROCEEDINGS U/S 271(1)(C), U/S 271B AND 271F OF THE INCOME TAX ACT, 1961, HAVE BEEN INITIAT ED SEPARATELY , WITHOUT SPECIFYING IF THE ASSESSEE HAS FURNISHED CO NCEALMENT OF PARTICULARS OF INCOME OR HAS FURNISHED INACCURATE P ARTICULARS OF INCOME. 12. EVEN AT THE TIME OF PASSING OF PENALTY ORDER, A O WAS NOT CLEAR ENOUGH AS TO WHETHER HE IS GOING TO LEVY THE PENALTY FOR CONCEALMENT OF PARTICULARS OF INCOME OR HAS FURNISH ED INACCURATE PARTICULARS OF INCOME. AO WAS REQUIRED TO SATISFY HIMSELF AS TO UNDER WHICH LIMB OF SECTION 271(1)(C) OF THE ACT HE IS INITIATING THE PENALTY PROCEEDINGS AND ONLY THEREAFTER PENALTY CAN BE LEVIED. IN THE INSTANT CASE, AO WAS NEITHER SATISFIED/AWARE AT THE TIME OF RECORDING A SATISFACTION IN THE ASSESSMENT ORDER NO R HE WAS CLEAR ENOUGH AT THE TIME OF PENALTY PROCEEDINGS AS TO UND ER WHICH OF THE LIMB OF SECTION 271(1)(C) HE IS GOING TO LEVY THE P ENALTY. ITA NO.5049/DEL./2017 8 12. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, WE FI ND NO ILLEGALITY OR PERVERSITY IN THE IMPUGNED ORDER PASS ED BY THE LD. CIT(A) DELETING THE PENALTY LEVIED BY THE AO, HENCE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 30 TH DAY OF JUNE , 2021. SD/- SD/- (N.K. BILLAIYA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 30 TH DAY OF JUNE, 2021 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-33, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.