ACIT, New Delhi V. M/s ELEL Hotels and Investments Ltd., Mumbai

ITA 5062/DEL/2013

• Counselvise Citation: 506220114 RSA 2013
• Duration Of Justice: 2 year(s) 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 27-10-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 01-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KESANG Y SHIRPA
• Keywords: Depreciation; Wrong claim
• Section: 143(3); 153A; 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B, NEW DELHI) BEFORE SHRI N. K. SAINI, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER I.T.A. NO.5062 /DEL/2013 ASSESSMENT YEAR : 2006-07 ACIT, CC-13, VS M/S. ELEL HOTELS AND NEW DELHI INVESTMENTS LTD., MANDLIK HOUSE, MANDLIK ROAD, COLABA MUMBAI GIR / PAN:AAACE2846D (APPELLANT) (RESPONDENT) APPELLANT BY : MS. KESANG Y SHIRPA, SR. DR RESPONDENT BY : SHRI AJAY WADHWA, ADV. DATE OF HEARING : 27.10.2015 DATE OF PRONOUNCEMENT : 30.10.2015 ORDER PER KULDIP SINGH, JM: THE APPELLANT, ACIT, CENTRAL CIRCLE 13, NEW DELHI, BY FILING THE PRESENT APPEAL UNDER INCOME TAX ACT, 1961 (HEREINAF TER TO BE REFERRED AS THE ACT) SOUGHT TO SET ASIDE THE ORDER DATED 03.0 6.3013 PASSED BY LD. CIT(A) I, NEW DELHI FOR THE ASSESSMENT YEAR 2006-07 ON THE GROUND THAT:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW IN DELETING THE PENALTY U/S 271(1)(C) AMOUNTING TO RS.1,58,73,261/- IMPOSED BY A.O. ON ACCOUNT OF EXCE SS/ INADMISSIBLE CLAIM OF DEPRECIATION OF RS.4,69,63,944/- ON HOTEL BUILDING. ITA NO.5062/DEL/2013 2 2. BRIEFLY STATED, THE FACTS OF THIS CASE ARE: DURI NG THE ASSESSMENT YEAR 2006-07, THE ASSESSEE COMPANY FILED ITS RETURN OF I NCOME U/S 139 OF THE ACT DECLARING A LOSS UNDER THE ACT AT RS.39,39,710/- AN D THE APPELLANT COMPANY BEING COVERED U/S 115JB, PAID AGGREGATE TAX OF RS.9 ,15,785/- ON THE BOOK PROFIT. A SEARCH OPERATION WAS CONDUCTED U/S 132 O F THE ACT IN THE GROUP CASES OF SURESH NANDA ON 28.02.2007 AND THE PREMISE S OF ASSESSEE WERE ALSO COVERED U/S 132 OF THE ACT AND CONSEQUENTLY, THE CA SE OF THE ASSESSEE COMPANY WAS REOPENED U/S 153A OF THE ACT AND IN RES PONSE THERETO, THE ASSESSEE FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2006-07 DECLARING A LOSS OF RS.5,08,73,700/-. THE DIFFERENCE IN THE RE TURN OF INCOME (LOSS) FILED IN RESPONSE TO NOTICE U/S 153A OF THE ORIGINAL RETU RN IS CLAIMED TO BE ON ACCOUNT OF DEPRECIATION. IN THE ORIGINAL RETURN OF INCOME, DEPRECIATION WAS CLAIMED FOR RS.3,08,93,616/- WHEREAS IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/S 153A IT WAS CLAIMED AT RS.7, 78,27,608/-. SO, THE ORDER U/S 143(3) READ WITH SECTION 153A WAS PASSED ON 31.12.2008 ASSESSING THE TOTAL INCOME AT RS.2,85,42,450/- AS AGAINST THE RETURNED LOSS OF RS.5,08,73,700/-. 3. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF HOTEL AND HOSPITALITY AND DURING THE ASSESSMENT PROCEEDINGS, ADDITION ON ACCOUNT OF DISALLOWANCE OF DEPRECIATION OF RS.7,78,27,608/- ON HOTEL BUILDING WAS MADE ON THE GROUND THAT REPLY OF THE ASSESSEE WAS CONSID ERED AND FOUND UNACCEPTABLE AS THE COMPANY HAD NOT CARRIED OUT ANY BUSINESS ACTIVITY ITSELF DURING THE YEAR UNDER CONSIDERATION NOR THE ASSETS HAVE BEEN USED FOR THE PURPOSE OF BUSINESS ACTUALLY AND CONSTRUCTIVELY. C ONSEQUENTLY, THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT WERE INITIATED DURING ASSESSMENT PROCEEDINGS AND AFTER ISSUANCE OF NUMEROUS NOTICES, REPLY DATED 19.04.2012 WAS FILED IN THE OFFICE ON 20.04.2012 ON THE ISSUE OF DISALLOWANCE OF ITA NO.5062/DEL/2013 3 DEPRECIATION OF RS.7,78,27,608/- ON HOTEL BUILDING ON ACCOUNT OF PAYMENT MADE TO ITC FOR TERMINATION OF OPERATOR AGREEMENT. THE ASSESSEE FILED APPEAL BEFORE LD. CIT(A), WHO VIDE ORDER IN APPEAL NO.301/2008-09 DATED 30.12.2009, CONFIRMED THE DECISION OF A.O. ON ACCOU NT OF DISALLOWANCE OF DEPRECIATION ON ACCOUNT OF HOTEL BUILDING ON ACCOUN T OF PAYMENT MADE TO ITC FOR TERMINATION OF OPERATOR AGREEMENT TO THE EX TENT OF RS.4,69,63,944/- AND ALLOWED THE RELIEF BY DELETING THE ADDITION OF RS.3,08,63,664/- AND THE HONBLE TRIBUNAL ON APPEAL OF THE ASSESSEE COMPANY VIDE ORDER IN I.T.A.NO.1047/DEL/2010 AND I.T.A. NO. 918/DEL/2010 DATED 05.08.2011, UPHELD THE DECISION OF LD. CIT(A). SINCE THE ASSES SEE COMPANY HAS FURNISHED INACCURATE PARTICULARS OF INCOME IN THIS REGARD, THE A.O. CAME TO THE CONCLUSION THAT HE IS SATISFIED THAT ASSESSEE H AS FURNISHED INACCURATE PARTICULARS OF INCOME THEREBY CONCEALED ITS INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT AND THUS IMPOSED PENAL TY OF RS.1,58,08,063/- FOR FURNISHING INACCURATE PARTICULARS OF INCOME BY WAY OF CONCEALMENT OF INCOME IN RESPECT OF WRONG CLAIM OF DEPRECIATION OF RS.4,69,63,944/- ON HOTEL BUILDING ON ACCOUNT OF PAYMENT MADE TO ITC FO R TERMINATION OF OPERATOR AGREEMENT. 4. FEELING AGGRIEVED, THE ASSESSEE AGITATED THE MAT TER BEFORE LD. CIT(A) WHO HAS ALLOWED THE APPEAL. NOW, THE REVENUE HAS C OME UP BEFORE THE TRIBUNAL BY CHALLENGING THE IMPUGNED ORDER. 5. LD. D.R. CHALLENGING THE ORDER UNDER APPEAL CONT ENDED THAT SINCE THE ASSESSEE HAS CONCEALED THE INCOME AND HAS PUT FORTH INCORRECT AND FALSE FACTS BEFORE THE REVENUE AUTHORITIES, LD. CIT(A) HAS ERRE D IN DELETING THE PENALTY AND RELIED UPON THE ORDER PASSED BY THE A.O. 6. HOWEVER, ON THE OTHER HAND, LD. A.R. BY RELYING UPON THE IMPUGNED ORDER PASSED BY LD. CIT(A) CONTENDED INTER ALIA THA T PENALTY FOR ITA NO.5062/DEL/2013 4 CONCEALMENT IS NOT IMPOSABLE WHEN THERE ARE TWO VIE WS ON THE ISSUE; THAT APPARENTLY, THERE IS NO CONCEALMENT OF FACTS AND PU TTING FORTH FALSE FACTS BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS, REL IED UPON THE JUDGEMENTS CITED AS CIT VS RELIANCE PETRO PRODUCTS PVT. LTD. 322 ITR 15 8 (S.C.), CIT VS BRAHMAPUTRA CONSORTIUM LTD. 348 ITR 339 (DEL .), CIT VS MAHANAGAR TELEPHONE NIGAM LTD. I.T.A. NO. 626/2011 (DEL.), VINOD BHARGAVA VS CIT 367 ITR 122 (A.P.) AND CIT VS HARSH VARHAN CHEMICALS & MINERALS LT. 259 ITR 212 (RAJ.). 6. WE HAVE HEARD LD. AUTHORIZED REPRESENTATIVES OF BOTH THE PARTIES AND HAVE GONE THROUGH THE MATERIAL PLACED ON RECORD IN THE LIGHT OF FACTS AND CIRCUMSTANCES OF THE CASE. 7. UNDISPUTEDLY, PENALTY PROCEEDINGS AS WELL AS ASS ESSMENT PROCEEDINGS ARE TO BE DECIDED INDEPENDENTLY AND THE PENALTY PRO CEEDINGS ARE NOT TO BE INFLUENCED BY THE ASSESSMENT PROCEEDINGS; THAT INIT IALLY AT THE TIME OF FILING OF ORIGINAL RETURN, THE ASSESSEE CLAIMED DEPRECIATI ON @ 10% ON THE AMOUNT OF RS.30.84 CRORES PAID TO ITC LTD. IN LIEU OF TERM INATION OF HOTEL OPERATING AGREEMENT BUT AT THE TIME OF FILING OF RETURN IN RE SPONSE TO THE ASSESSMENT PROCEEDINGS U/S 153A, DEPRECIATION CLAIMED WAS REVI SED FROM 10% TO 25% ON THE AMOUNT OF RS.30.84 CRORES AS ACQUISITION OF INTANGIBLE ASSETS. 8. THE A.O. WHILE MAKING ASSESSMENT U/S 153A OF THE ACT, DISALLOWED THE ENTIRE CLAIM OF DEPRECIATION OF RS.7,78,27,608/ - AGAINST WHICH APPEAL WAS FILED AND DEPRECIATION TO THE EXTENT OF RS.3,08 ,63,664/- I.E. 10% HAS BEEN ALLOWED BY THE HONBLE TRIBUNAL VIDE ORDER DAT ED 05.08.2011. THE FINDINGS OF HONBLE TRIBUNAL IN DISALLOWING THE REV ISED DEPRECIATION OF 25% HAVE ATTAINED FINALITY. 9. NOW, THE SOLITARY QUESTION ARISES FOR DETERMINAT ION IN THIS CASE IS, AS TO WHETHER CLAIMING REVISED DEPRECIATION FROM 10% T O 25% ON THE AMOUNT OF ITA NO.5062/DEL/2013 5 RS.30.84 CRORES DURING THE ASSESSMENT PROCEEDINGS U /S 153A AMOUNTS TO CONCEALMENT OF FACTS AND FILING OF FALSE FACTS BEFO RE THE ASSESSING AUTHORITY. 10. A BARE PERUSAL OF THE PROVISIONS CONTAINED U/S 271(1)(C) OF THE ACT GOES TO PROVE THAT TO IMPOSE PENALTY UPON THE ASSES SEE UNDER THE RELEVANT PROVISIONS OF THE ACT, TWO CONDITIONS ARE REQUIRED TO BE FULFILLED ONE: THAT THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF INCOME AND TWO: THE ASSESSEE MUST HAVE CONCEALED PARTICULARS OF INCOME FROM THE TAX AUTHORITIES. 11. COMING TO THE CASE AT HAND, THE ASSESSEE HAS IN ITIALLY CLAIMED DEPRECIATION @ 10% ON THE AMOUNT OF RS.30.84 CRORES AT THE TIME OF FILLING ORIGINAL RETURN OF INCOME STATED TO HAVE PAID TO IT C LTD IN LIEU OF TERMINATION OF HOTEL OPERATION AGREEMENT BETWEEN TH E ASSESSEE AND ITC LTD. AND AT THE TIME OF FILING OF RETURN PURSUANT TO ASS ESSMENT PROCEEDINGS U/S 153A, HE HAS RAISED DEPRECIATION FROM 10% TO 25% ON THE SAME AMOUNT OF RS.30.84 CRORES AS ACQUISITION OF INTANGIBLE ASSETS . NO DOUBT, ASSESSEE HAS CHANGED THE NATURE OF DEPRECIATION AND HAS ENHANCED THE QUANTUM OF DEPRECIATION FROM 10% TO 25% AT THE TIME OF FILING OF SECOND RETURN IN RESPONSE TO NOTICE U/S 153A OF THE ACT, BUT IT DOES NOT AMOUNT TO CONCEALMENT OF PARTICULARS OF INCOME NOR IT AMOUNTS TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE ASSESSEE HAS SIMPLY PUT FORTH HIS BONAFIDE CLAIM FOR PERUSAL AND SCRUTINY BY THE TAX AUTHORIZES WHO ARE TO PROCEED IN ACCORDANCE WITH LAW FOR MAKING THE ASSES SMENT. 12. HON'BLE SUPREME COURT IN A CASE CITED AS RELIAN CE PETROPRODUCTS PVT. LTD. (SUPRA) HAS DECIDED THE ISSUE IN CONTROVERSY A ND OPERATIVE PART OF WHICH IS REPRODUCED AS UNDER: A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) O F THE I. T. ACT, 1961 SUGGESTS THAT IN ORDER TO BE COVERED BY IT, TH ERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURA TE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTION ITA NO.5062/DEL/2013 6 271(1)(C) WOULD EMBRACE THE DETAIL OF THE CLAIM MAD E. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND TO BE INCO RRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING IN ACCURATE PARTICULARS. IN ORDER TO EXPOSE THE ASSESSEE TO PE NALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENA LTY PROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKIN G AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULA RS. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RE TURN FILED BY THE ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE T HE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH P ARTICULARS ARE FOUND TO BE INACCURATE, THE LIABILITY WOULD ARISE. TO ATTRACT PENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCU RATE, NOT EXACT OR CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. 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. 13. EVEN OTHERWISE BY MAKING CLAIM OF DEPRECIATION AT HIGHER RATE IN THE YEAR UNDER ASSESSMENT WHERE THE STATE EXCHEQUER WAS AT LOSS, THE ASSESSEE HAS NOT BEEN BENEFITED IN ANY MANNER. THE ASSESSEE HAS BONAFIDELY FURNISHED ALL THE RELEVANT PARTICULARS OF HIS INCOM E BY CLAIMING HIGHER DEPRECIATION WHICH ACCORDING TO THE TAX AUTHORITIES , WAS NOT ADMISSIBLE UNDER THE ACT, IT DOES NOT AND CANNOT AMOUNT TO FUR NISHING OF INACCURATE PARTICULARS OF INCOME SUFFICIENT TO ATTRACT PENALTY PROCEEDINGS. EVEN MAKING OF INCORRECT CLAIM FOR EXPENDITURE DOES NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. RELIANCE IN THIS RESPECT IS PLACED ON THE JUDGEMENT CITED AS MAHANAGAR TELEPHONE NIGAM LTD (S UPRA). 14. THE FACTS AND CIRCUMSTANCES OF THE CASE APPAREN TLY LEAD TO THE CONCLUSION THAT DISALLOWANCE IN THIS CASE ON ACCOUN T OF DEPRECIATION HAS BEEN MADE BY THE TAX AUTHORITIES ON THE BASIS OF DIFFERE NT INTERPRETATION THAN THE ITA NO.5062/DEL/2013 7 VIEW OF THE ASSESSEE, IT CANNOT BE SAID THAT THE PA RTICULARS OF INCOME HAVE BEEN CONCEALED. SO, MERE REJECTION OF ANY CLAIM OF THE ASSESSEE BY RELYING UPON THE DIFFERENT INTERPRETATION REGARDING CLAIM O F DEPRECIATION, DOES NOT AMOUNT TO CONCEALMENT OF PARTICULARS OF INCOME OR F URNISHING OF INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE. 15. SO AS A SEQUEL TO THE ABOVE DISCUSSION, WE ARE OF THE CONSIDERED VIEW THAT LD. CIT(A) HAS RIGHTLY CONCLUDED THAT HERE IS NO CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME BY THE ASSESSEE RATHER IT IS A CASE OF MAKING A CLAIM OF A N ALLOWANCE OF BENEFIT UNDER THE LAW UNDER BONA FIDE BELIEF. SO, FINDING NO ILLEGALITY OR PERVERSITY IN THE FINDINGS RETURNED BY LD. CIT(A) IN THE IMPUG NED ORDER, PRESENT APPEAL IS HEREBY DISMISSED. 16. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH OCT., 2015. SD./- SD./- ( N. K. SAINI) (KULDIP SIN GH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 30.10. 2015 SP COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). ITA NO.5062/DEL/2013 8 S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 28/10 SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR 28,29,30,30 SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS 30/10 SR. PS/PS 6 KEPT FOR PRONOUNCEMENT 30/10 SR. PS/PS 7 FILE SENT TO BENCH CLERK 30/10 SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER