DCIT (OSD) 8(2), MUMBAI V. INTERSIL INDIA P. LTD, MUMBAI

ITA 5363/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88231 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 20-01-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 02-08-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: JITENDRA NAHAR
• Section: 147; 148

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, M UMBAI BEFORE S/SHRI N. K. BILLAIYA, (AM) AND AMIT SHUKL A, (JM) . . , , , ./I.T.A. NO.5363/MUM/2013 ( !' #! / ASSESSMENT YEAR 2005-06) DY.COMMISSIONER OF INCOME TAX (OSD), 8(12), ROOM NO.218, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 / VS. M/S INTERSIL INDIA PVT.LTD. UNIT A4, UDYUOG SADAN NO.03, MIDC, ANDHERI (E), MUMBAI-400093 ( $% / APPELLANT) .. ( &' $% / RESPONDENT) $ ./ () ./PAN/GIR NO. :AAACI0954Q $% * / REVENUE BY SHRI ASGHAR ZAIN V P &' $% + * / ASSESSEE BY SHRI JITENDRA NAHAR + , / DATE OF HEARING : 2.2.2015 -.#' + , /DATE OF PRONOUNCEMENT : 6.2.2015 / O R D E R PER N. K. BILLAIYA (AM) THIS IS AN APPEAL BY THE REVENUE PREFERRED AGAINST THE ORDER OF THE LD. CIT(A)-17, MUMBAI DATED 14.5.2013 PERTAININ G TO ASSESSMENT YEAR 2005-06, SUM AND SUBSTANCE OF THE GRIEVANCE OF THE REVENUE IS THAT THE LD. CIT(A) ERRED IN DELETING THE PENALTY OF RS.9,69,889/- LEVIED U/S 271(1)( C ) OF THE INCOME TAX CT, 1961 (THE ACT). 2. THE REASONS FOR THE LEVY OF PENALTY LIE IN THE ASSESSMENT ORDER DATED 31.12.2009 MADE UNDER SECTION 147 R.W.S143(3) OF THE ACT. 5363/MUM/2013 2 3. PRIOR TO THIS, THE ORIGINAL RETURN WAS FILED ON 21.10.2005 DECLARING TOTAL INCOME AT RS.2,71,17,770/- WHICH WA S PROCESSED UNDER SECTION 143(1) OF THE ACT. THE SAID RETURN W AS RE-OPENED AND PROCEEDINGS UNDER SECTION 147 OF THE ACT WERE INITI ATED AGAINST THE ASSESSEE. THE ASSESSMENT WAS REOPENED BECAUSE THE AO FOUND THAT THE ASSESSEE HAS CLAIMED DEDUCTION ON ACCOUNT OF OBSOLETE STORE/SPARES WRITTEN OFF/CONSUMED AMOUNTING TO RS.1 2,75,872/- WHICH ACCORDING TO AO WAS CAPITAL IN NATURE AND THE SECON D REASON FOR REOPENING OF THE ASSESSMENT WAS THAT THE AO FOUND T HAT THE ASSESSEE CLAIMED DEDUCTION ON ACCOUNT OF LOSS ON AS SETS SOLD /DISCOUNTED AMOUNTING TO RS.14,27,654/- WHICH ACCOR DING TO THE AO WAS CAPITAL IN NATURE. SO FAR AS THE CLAIM OF LOS S OF RS.14,27,654/- WAS CONCERNED, THE ASSESSEE ADMITTED AN ERROR AND A CCEPTED THE DISALLOWANCE WITHOUT FILING THE APPEAL BEFORE THE L D. CIT(A). THE CLAIM OF DEDUCTION OF RS.12,75,872/- WAS TREATED AS CAPI TAL EXPENDITURE BY THE AO. THE MATTER TRAVELLED UP TO THE TRIBUNAL. THE TRIBUNAL IN THE CASE OF M/S INTERSIL (INDIA) PRIVATE LIMITED V/ S DCIT IN ITA NO.8370/MUM/2010(AY-2005-06) DATED 15.1.2014 HAS CO NSIDERED THIS ISSUE IN PARA 5.1 AT PAGE 4 OF ITS ORDER AND V IDE PARA 5.2 SET ASIDE THE ISSUE TO THE FILE OF THE AO TO VERIFY THE CLAIM OF THE ASSESSEE WHETHER THE STOCK HAS BECOME OBSOLETE/DESTROYED. 5363/MUM/2013 3 4. THE PENALTIES U/S 271(1)( C ) OF THE ACT HAS BE EN LEVIED ON THESE TWO DEDUCTIONS I.E. RS.14,27,654/- AND RS.12 ,75,872/- CLAIMED BY THE ASSESSEE IN ITS RETURN OF INCOME. IN SO FAR AS THE CLAIM OF LOSS OF RS.14,27,654/- AS MENTIONED HEREINABOVE, THE MA TTER HAS BEEN RESTORED TO THE FILE OF THE AO FOR FRESH ADJUDICAT ION. WE, THEREFORE, SET ASIDE THE LEVY OF PENALTY ON THIS AMOUNT TO THE FILE OF THE AO. THE AO IS DIRECTED TO DECIDE THIS ISSUE AFRESH AFTER D ECIDING THE QUANTUM AS PER DIRECTION OF THE TRIBUNAL. SINCE, QUANTUM I S RESTORED TO THE FILE OF AO, THE PENALTY LEVIED TO THIS EXTENT IS DELETED . 5. IN SO FAR AS THE LEVY OF PENALTY TO THE DEDUCTIO N OF RS.12,75,875/-, THE UNDISPUTED FACT IS THAT THE ASS ESSEE CLAIMED THE SAME WITHOUT ADDING IT BACK TO ITS COMPUTATION OF I NCOME. IT IS ALSO UNDISPUTED FACT THAT EVEN IN THE RETURN FILED IN RE SPONSE TO THE NOTICE U/S 148 OF THE ACT, THE SAID DEDUCTION WAS CLAIMED ONLY WHEN THE AO POINTED OUT DURING THE COURSE OF RE-ASSESSMENT PROC EEDINGS, THE ASSESSEE AGREED FOR THE DISALLOWANCE. IN THE PENAL TY PROCEEDINGS THROUGHOUT, THE ASSESSEE CLAIMED THAT DUE TO INADVE RTENT, IT FAILED TO ADD BACK THE SAID AMOUNT IN ITS COMPUTATION OF INCO ME. FOR SUCH INADVERTENCE, NO PENALTY SHOULD BE LEVIED U/S 271(1 )(C) OF THE ACT. RELIANCE IS PLACED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF PRICE WATERHOUSE COOPERS (P.) LTD. V/S CIT (2012) 25 TAXMANN.COM 400 (SC) AND THE DECISION OF HONBLE JU RISDICTIONAL 5363/MUM/2013 4 HIGH COURT IN THE CASE OF CIT V/S SOMANY EVERGREE KNITS LTD. IN ITA NO.1332 OF 2011 DATED 21.3.2013. 6. BEFORE US, THE LD. DR SUPPORTED THE PENALTY OR DER AND RELIED UPON THE DECISION OF THE HONBLE DELHI HIGH COURT I N THE CASE OF CIT V/S ZOOM COMMUNICATION (P.) LTD.(2010] 191 TAXMAN 1 79 (DELHI). 7. IN OUR CONSIDERED OPINION, THE ASSESSEE HAD TWO OPPORTUNITIES TO ADD BACK THIS AMOUNT TO ITS RETURNED INCOME. FI RST WHEN IT FILED THE RETURN OF INCOME, THE ASSESSEE COULD HAVE REVISED T HE RETURN OF INCOME AND SECONDLY, WHEN IT FILED RETURN OF INCOME IN PURSUANCE TO THE NOTICE U/S 148 OF THE ACT. THE ASSESSEE AGREE D FOR THE ADDITION ONLY WHEN IT WAS POINTED OUT BY THE AO DURING THE C OURSE OF RE- ASSESSMENT PROCEEDINGS REGARDING ITS CLAIM IN RESPE CT OF A CAPITAL LOSS. MERELY BECAUSE, THE ASSESSEE DID NOT PREFERR ED ANY APPEAL AGAINST THE SAID DISALLOWANCE DOES NOT MAKE IT AN I NADVERTENT MISTAKE. RELIANCE PLACED BY THE ASSESSEE ON THE DEC ISION OF THE HONBLE SUPREME COURT (SUPRA) AND IN THE CASE OF J URISDICTIONAL HIGH COURT (SUPRA) IS MISPLACED AS IN THESE CASE S THE ASSESSEE ADMITTED ITS MISTAKES AT THE VERY FIRST INSTANCE W HEN IT WAS POINTED OUT BY THE AO TO IT. HOWEVER, IN THE PRESENT CASE , IN SPITE OF HAVING GOT OPPORTUNITIES TO ADD BACK THE AMOUNT, THE ASSES SEE STILL CLAIMED DEDUCTION. IN OUR OPINION, AND AFTER UNDERSTANDING THE FACTS, THIS CANNOT BE CONSIDERED AS AN INADVERTENT ERROR. IT AP PEARS THAT THE 5363/MUM/2013 5 ASSESSEE WAS TAKING A CHANCE WHETHER ITS RETURN WOU LD BE SELECTED FOR SCRUTINY ASSESSMENT OR NOT. ONCE, THE RETURN WA S ACCEPTED U/S 143(1) OF THE ACT, THE ASSESSEE TOOK A SIGH OF RE LIEF WITHOUT REALIZING THAT ITS RETURN CAN BE TO BE RE-OPENED U/S 147 OF THE ACT. EVEN AFTER RECEIVING NOTICE U/S 148, THE ASSESSEE CONTINUED TO TAKE A CHANCE BUT THIS TIME COULD NOT GET ANY SUCCESS. THE RATIO LAID DOWN BY THE HONBLE DELHI HIGH COURT IN THE CASE OF ZOOM COMMUN ICATION (P) LTD (SUPRA) SQUARELY FITS THE FACT OF THE CASE WHEREIN, THE HONBLE DELHI HIGH COURT HAS HELD : IF ASSESSEE MAKES A CLAIM WHICH IS NOT ONLY INCOR RECT IN LAW, BUT IS ALSO WHOLLY WITHOUT ANY BASIS AND EXPLANATIO N FURNISHED BY HIM FOR MAKING SUCH A CLAIM IS NOT FOUND TO BE B ONA FIDE, EXPLANATION 1 TO SECTION 271(1)(C) WOULD COME INTO PLAY AND ASSESSEE WILL BE LIABLE TO PENALTY RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE DELHI HIGH COURT, WE DIRECT THE AO TO RESTRICT THE LEVY OF PENALTY O N THE AMOUNT OF RS.14,27,654/- ONLY. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S PARTLY ALLOWED FOR STATISTICAL PURPOSES. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 6TH FEB, 2015. -.#' / 0 1 6TH FEB, 2015 . + 2 3 SD SD ( / AMIT SHUKLA ) ( . . / N. K. BILLAIYA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI: 6TH FEB,2015. 5363/MUM/2013 6 . . ./ SRL , SR. PS ! '#$% &%'# / COPY OF THE ORDER FORWARDED TO : 1. $% / THE APPELLANT 2. &' $% / THE RESPONDENT. 3. 6 ( ) / THE CIT(A)- CONCERNED 4. / CIT CONCERNED 5. 78 2 &9 , , 9 ' , / DR, ITAT, MUMBAI CONCERNED 6. 2 :! ; / GUARD FILE. / BY ORDER, TRUE COPY < ( (ASSTT. REGISTRAR) , 9 ' , /ITAT, MUMBAI