DCIT, New Delhi V. M/s. Taneja Developers and Infrastructure Ltd., New Delhi

ITA 5166/DEL/2010

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 7073 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 14-10-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 22-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B R R KUMAR
• Keywords: Depreciation; Bonafide belief

Judgement Text

ITA NO. 5166/DEL/2010 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H NEW DELHI BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 5166/DEL/2010 A.Y. : 2006-07 DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-18, ROOM NO. 327, ARA CENTRE, E-2, JHANDEWALAN EXTN., NEW DELHI 110 055 VS. M/S TANEJA DEVELOPERS AND INFRASTRUCTURE LTD., 9, K.G. MARG, NEW DELHI 110001 (PAN/GIR NO. : AABCT 3582A) (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSEESSEE BY : SH. SALIL AGGARWAL, ADV., DEPARTMENT BY : SH. B.R.R. KUMAR, SR. D.R. ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 13.8.2 010 PERTAINING TO ASSESSMENT YEAR 2006-07. 2. THE GROUNDS RAISED READ AS UNDER:- (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LA W AND ON FACTS IN DELETING THE PENALTY OF ` 4,00,000/- IMP OSED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE INCOME TAX ACT. (II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LA W AND ON FACTS IN HOLDING THAT EXCESSIVE CLAIM OF DEPRECIA TION ITA NO. 5166/DEL/2010 2 WHICH WAS NOT MAINTAINABLE IN LAW DOES NOT AMOUNT T O FURNISHING INACCURATE PARTICULARS WITHIN THE MEAN ING OF SECTION 271(1)(C) OF THE INCOME TAX ACT. (III) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR A MEND ANY / ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURS E OF THE HEARING OF THE APPEAL. 3. IN THIS CASE ASSESSING OFFICER NOTED THAT IN THE COMPUTATION OF INCOME, ASSESSEE HAS VOLUNTARILY CAPITALIZED 90% D EPRECIATION, AS PER THE COMPANIES ACT, CHARGED TO P&L ACCOUNT. HOWEVER, DEPRECIATION UNDER IT RULES HAS BEEN CLAIMED IN FULL. ASSESSING OFFICER OPINED THAT THIS IS NOT IN AGREEMENT WITH THE PRACTICE ADOPTED BY THE ASSESSEE COMPANY ITSELF. HE OBSERVED THAT WHEN THE ASSESSEE COMPANY IS EFFECTIVELY ADDING 10% OF THE COMPANIES ACT DEPRECIA TION, THEN IT SHOULD HAVE CLAIMED THE DEPRECIATION UNDER IT RULES @10% OF THE ALLOWABLE DEPRECIATION. ACCORDINGLY, ASSESSING OFF ICER HELD THAT EXCESS CLAIM OF DEPRECIATION AMOUNTING TO ` 6,49,278 /- WAS DISALLOWED AND ADDED BACK TO TAXABLE INCOME. PENALTY U/S 271 (1)(C) WAS ALSO IMPOSED IN THIS REGARD. 4. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE PENALTY. 5. AGAINST THIS ORDER THE REVENUE IS IN APPEAL BEFO RE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. WE FIND THAT IN THIS CASE THE ASSESSEES CLAIM OF DEPRECIATION WAS DULY DISCLOSED. THERE WAS NO CONCEALMENT IN THIS REGARD. IT WAS CLAIM OF THE ASSES SEE WHICH HAS BEEN NEGATIVED BY THE ASSESSING OFFICER. IN OUR C ONSIDERED OPINION, IN ITA NO. 5166/DEL/2010 3 THESE CIRCUMSTANCES, PENALTY U/S 271(1)(C) IS NOT AT TRACTED. WE FIND THAT SECTION 271(1)(C) OF THE INCOME TAX ACT POSTULA TES THE LEVY OF PENALTY FOR FURNISHING OF INACCURATE PARTICULARS O R CONCEALMENT OF INCOME. THIS IS NOT THE CASE HERE. 6.1 IN THIS REGARD, WE WOULD LIKE TO REFER TO THE HONBLE APEX COURT DECISION IN THE CASE OF CIT VS. RELIANCE PETRO PRODU CTS LTD. IN CIVIL APPEAL NO. 2463 OF 2010. IN THIS CASE VIDE ORDER D ATED 17.3.2010 IT HAS BEEN HELD THAT THE LAW LAID DOWN IN THE DILIP SH EROFF CASE 291 ITR 519 (SC) AS TO THE MEANING OF WORD CONCEALMENT AN D INACCURATE CONTINUES TO BE A GOOD LAW BECAUSE WHAT WAS OVERRU LED IN THE DHARMENDER TEXTILE CASE WAS ONLY THAT PART IN DILIP SHEROFF CASE WHERE IT WAS HELD THAT MENSREA WAS A ESSENTIAL REQU IREMENT OF PENALTY U/S 271(1)(C). THE HONBLE APEX COURT ALSO OBSERVE D THAT IF THE CONTENTION OF THE REVENUE IS ACCEPTED THEN IN CASE OF EVERY RETURN WHERE THE CLAIM IS NOT ACCEPTED BY THE AO FOR ANY R EASON, THE ASSESSEE WILL INVITE THE PENALTY U/S 271(1)(C). TH IS IS CLEARLY NOT THE INTENDMENT OF LEGISLATURE. 6.2 WE WOULD ALSO LIKE TO REFER THE DECISION OF TH E HONBLE APEX COURT RENDERED BY A LARGER BENCH COMPRISING OF THREE OF T HEIR LORDSHIPS IN THE CASE OF HINDUSTAN STEEL VS. STATE OF ORISSA IN 83 ITR 26 WHEREIN IT WAS HELD THAT AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTORY OBLIGATION IS THE RESULT OF A QUASI-CRIMIN AL PROCEEDINGS, AND PENALTY WILL NOT ORDINARILY BE IMPOSED UNLESS THE PA RTY OBLIGED EITHER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST, OR ACTED IN CONSCIOUS DI SREGARD OF ITS OBLIGATION. PENALTY WILL NOT ALSO BE IMPOSED MERELY B ECAUSE IT IS LAWFUL TO DO SO. WHETHER PENALTY SHOULD BE IMPOSED FOR FAI LURE TO PERFORM A ITA NO. 5166/DEL/2010 4 STATUTORY OBLIGATION IS A MATTER OF DISCRETION OF T HE AUTHORITY TO BE EXERCISED JUDICIALLY AND ON A CONSIDERATION OF ALL T HE RELEVANT CIRCUMSTANCES. EVEN IF A MINIMUM PENALTY IS PRESCRIBE D, THE AUTHORITY COMPETENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY, WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT, OR WHERE THE BREACH FLOWS FROM A BONAFIDE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRI BED BY THE STATUTE. 7. IN THE BACKGROUND OF THE AFORESAID DISCUSSION AND PRECEDENTS, WE UPHOLD THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING THE LEVY OF PENALTY. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28/10/2011. SD/- SD/- [ [[ [A.D. JAIN A.D. JAIN A.D. JAIN A.D. JAIN] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 28/10/2011 SRB COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES