Rock and Arch Constructions (India) Private Limited, CHENNAI V. ITO, Erode

ITA 534/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8116 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 09-08-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 08-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V NANDA KUMAR
• Assessee Lawyers: S SRIDHAR
• Keywords: Depreciation; Bonafide belief; Wrong claim
• Section: 131

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B B ENCH, CHENNAI . . . , . , & BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.534/MDS/2016 ( / ASSESSMENT YEAR: 2009-10) M/S. ROCK & ARCH CONSTRUCTIONS (INDIA) PVT.LTD., 72, MUDALI THOTTAM VEERAPPAN CHATRAM POST ERODE-638 004. VS THE INCOME TAX OFFICER, WARD-I(4), ERODE. PAN: AADCR4438D ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. S.SRIDHAR, ADVOCATE /RESPONDENT BY : MR. V.NANDAKUMAR, JCIT /DATE OF HEARING : 16 TH AUGUST,2016 /DATE OF PRONOUNCEMENT : 8 TH NOVEMBER , 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM: THIS APPEAL IS FILED BY THE ASSESSEE AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS)- 3, COIMBATORE DATED 29.12.2015 IN ITA NO.136/14-1 5 (A)1 PASSED UNDER SECTION 271(1)(C) R.W.S 250(6) OF THE ACT. 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN ITS APPEAL, HOWEVER, THE CRUX OF THE ISSUE IS AS FOLLOW S:- I) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN SUSTAINING THE ORDER OF THE LEARNED ASSESSING OFFICER WHO HAD LEVIED MINIMUM PENALTY OF ` 20,42,523/- BEING 100% OF 2 ITA NO.534/MDS/2016 THE INCOME-TAX UNDER SECTION 271(1)(C) OF THE ACT TOWARDS CONCEALMENT OF INCOME OF ` 54,60,280/- 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF UNDERTAK ING CIVIL CONTRACT WORKS FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-10 ON 30.09.2009 DECLARING INCOME OF ` 60,37,970/- . THE CASE WAS TAKEN UP FOR SCRUTINY A ND NOTICE UNDER SECTION 143(2) WAS ISSUED TO THE ASSESSEE ON 13.09.2010 AND THEREAFTER THE ASSESSMENT WAS COMP LETED UNDER SECTION 143(3)OF THE ACT ON 31.12.2011 WHEREI N THE LEARNED ASSESSING OFFICER MADE CERTAIN DISALLOWANCE S AMONGST WHICH ONE OF THEM WAS DEDUCTION UNDER SECTI ON 80IA OF THE ACT FOR ` 48,62,960/-. SUBSEQUENTLY, MINIMUM PENALTY OF ` 20,42,523/- BEING 100% OF THE TAX WAS LEVIED BY THE LEARNED ASSESSING OFFICER UNDER SECTION 271(1)( C) OF THE ACT FOR FURNISHING OF INACCURATE PARTICULARS OF INC OME BY THE ASSESSEE TOWARDS : I) DEDUCTION CLAIMED UNDER SECTION 80IA OF THE ACT RS.48,62,960 II) EXCESS CLAIM OF DEPRECIATION OF RS. 2,02,865 III) UNPROVEN CREDITS M/S. ULTRA READYMIX CONCRET E RS.3,13,770 M/S. SKRC TRANSPORTS RS. 34,452 3 ITA NO.534/MDS/2016 MURUGAN ROADWAYS RS.46,233 TOTAL RS.54,60,280 THE LEARNED ASSESSING OFFICER HAD LEVIED PENALTY AG AINST THE ABOVE MENTIONED ADDITIONS BECAUSE OF THE FOLLOWING REASONS:- I) WRONG CLAIM UNDER SECTION 80IA OF THE ACT: THE ASSESSEE COMPANY HAD UNDERTAKEN VARIOUS INFRASTRUCTURE DEVELOPMENT PROJECTS IN TAMIL NADU A ND EARNED REVENUE AGAINST WHICH DEDUCTION UNDER SECTIO N 80IA WAS CLAIMED. THE LEARNED ASSESSING OFFICER WAS OF T HE VIEW THAT THE ASSESSEE IS NOT ENTITLED FOR THE BENEFIT O F SECTION 80IA OF THE ACT BECAUSE THE ASSESSEE COMPANY WAS FO RMED BY TAKING OVER ALL THE PLANT & MACHINERY FROM ANOTH ER ENTITY. ONLY OLD PLANTS & MACHINERIES SUCH AS TIPPERS OF TH E ERSTWHILE FIRM HAVE BEEN USED BY THE ASSESSEE COMPANY. FURTHE R, THE ASSESSEE COMPANY HAS SUB-CONTRACTED CERTAIN WORK TO M/S. V.N.V. BUILDERS. MOREOVER THE WORK UNDERTAKEN BY TH E ASSESSEE COMPANY IS ONLY WORK CONTRACT. FURTHER THE ASSESSEE COMPANY HAD UNDERTAKEN CERTAIN WORKS AGAIN ST WHICH THE DEDUCTION IS NOT AVAILABLE AND HAD NOT MA INTAINED 4 ITA NO.534/MDS/2016 SEPARATE BOOKS OF ACCOUNTS WITH RESPECT TO ELIGIBLE PROFIT AND INELIGIBLE PROFIT FOR CLAIMING DEDUCTION. II) EXCESS CLAIM OF DEPRECIATION RS.2,02,865/-:- THE ASSESSEE HAD CLAIMED DEPRECIATION ON TIPPER @ 3 0% WHILE AS THE ELIGIBLE DEPRECIATION IS ONLY 15%. III) UNPROVEN CREDITS : 1. ULTRA READYMIX CONCRETES: THERE WAS A DISCREPANCY OF RS.3,13,770/- AS OBSERVED FROM THE CONFIRMATION STATEMENT OBTAINED FROM THE SUNDRY CREDITORS AND THE BOOKS OF ACCOUNTS OF THE ASSESSEE. 2. SKRC TRANSPORT : THERE WAS A CREDIT BALANCE OF RS.34,452/- IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. FOR VERIFYING THE SAME, SUMMON UNDER SECTION 131 WAS ISSUED WHICH WAS RETURNED UNSERVED. 3. M/S.MURUGAN ROADWAYS : THERE WAS A CREDIT BALANCE OF RS.46,233/- IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. FOR VERIFYING THE SAME, SUMMON 5 ITA NO.534/MDS/2016 UNDER SECTION 131 WAS ISSUED WHICH WAS RETURNED UNSERVED. 4. ON APPEAL, THE LEARNED COMMISSIONER OF INCOM E TAX (APPEALS) CONFIRMED THE ORDER OF THE LEARNED ASSESS ING OFFICER BY RELYING IN THE DECISION OF THE CHENNAI B ENCH OF THE TRIBUNAL IN THE CASE OF RATTHA CITADANES BOULEVARD IN ITA NO.243/MDS/2015. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) WAS OF THE VIEW THAT IN THE PRESENT CASE ALSO THE QUANTUM ADDITION IS NOT ON ACCOUNT OF DIFFERENT VIE WS BEING TAKEN ON THE SAME SET OF FACTS, BUT ON ACCOUNT OF P LAIN WORDS OF THE STATUTE WHEREIN THERE IS NO AMBIGUITY AS OBS ERVED BY THE TRIBUNAL IN THE DECISION OF THE CASE CITED SUPR A. 5. BEFORE US, THE LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE ASSESSEE WAS OF THE BONAFIDE BEL IEF THAT IT IS ENTITLED FOR THE DEDUCTION UNDER SECTION 80IA OF THE ACT AND THEREFORE CLAIMED THE DEDUCTION. HE FURTHER ARGUED STATING THAT THE ASSESSEE WAS ALSO UNDER THE GENUINE BELIEF THAT IT WAS ENTITLED TO CLAIM DEPRECIATION @ 30% WITH RESPE CT TO THE TIPPERS; HOWEVER THE REVENUE HAD ALLOWED ONLY 15%. THE 6 ITA NO.534/MDS/2016 LEARNED AUTHORIZED REPRESENTATIVE FURTHER SUBMITTED THAT THE ASSESSEE HAD MAINTAINED ITS BOOKS OF ACCOUNTS ACCUR ATELY AND THE DISCREPANCIES WITH RESPECT TO CREDITORS WER E NOT DUE TO THE FAULT OF THE ASSESSEE. HENCE IT WAS PRAYED T HAT THE PENALTY LEVIED BY THE LEARNED ASSESSING OFFICER AND FURTHER CONFIRMED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) MAY BE DELETED. 6. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESENTATIVE ARGUED IN SUPPORT OF THE ORDERS OF T HE REVENUE. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE MATERIALS ON RECORD. FROM THE FACTS OF THE CASE, WE ARE OF THE CONSIDERED OPINION THAT THE CLAIM OF THE ASSESSEE WAS DUE TO THE BONAFIDE BELIEF THAT IT WAS ENTITLED FOR SUCH CLAIMS. THE ASSESSEE HAS ALSO FURNISHED EXPLANATIONS FOR MAKING SUCH CLAIM. IN THIS SITUAT ION, WE ARE OF THE CONSIDERED VIEW THAT THE DECISION RENDERED B Y THE HONBLE APEX COURT IN THE CASE CIT VS.RELIANCE 7 ITA NO.534/MDS/2016 PETROPRODUCTS PVT.LTD. REPORTED IN 322 ITR 158 WOUL D BE APPLICABLE. IN THAT DECISION, THE HONBLE APEX COUR T HELD AS FOLLOWS:- A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961,SUGGESTS THAT IN ORDER TO BE COVERED BY IT, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY , THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTION 271(1)(C) WOULD EMBRA CE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND TO BE INCORRECT OR INA CCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. IN ORDER TO EXPOSE THE ASSE SSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKING AN INCORRECT C LAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. TH ERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS T HE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS AR E FOUND TO BE INACCURATE, THE LIABILITY WOULD ARISE. TO ATTRACT PENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDIN G TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORREC T 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 REGARDI NG THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN TH E RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. 8. IN THE PRESENT CASE ALSO, THE ASSESSEE HAS NOT CONCEALED ANY PARTICULARS OF INCOME OR FURNISHED IN CORRECT 8 ITA NO.534/MDS/2016 PARTICULARS OF SUCH INCOME. IT HAS ONLY MADE A CLAI M UNDER BONAFIDE BELIEF. THERE WAS ALSO NO INTENTION ON THE PART OF THE ASSESSEE TO CONCEAL INCOME OR FURNISH INACCURATE PA RTICULARS. THEREFORE, FOLLOWING THE DECISION OF THE HONBLE SU PREME COURT IN THE CASE CIT VS. RELIANCE PETROPRODUCTS PV T.LTD., CITED SUPRA, WE HEREBY DIRECT THE LEARNED ASSESSING OFFICER TO DELETE THE PENALTY LEVIED BY HIM FOR ` 20,42,523/-. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 8 TH NOVEMBER, 2016 SD/- SD/- ( . . . ) ( . ) (N.R.S.GANESAN) ( A.M OHAN ALANKAMONY ) # % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER # /CHENNAI, ( /DATED 8 TH NOVEMBER, 2016 SOMU *+ ,+ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF .