DCIT, New Delhi V. M/s. Michelin India Tyres Pvt. Ltd., New Delhi

ITA 5412/DEL/2014

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5669 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2005-2006
• Appeal Filed On: 07-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHEFALI SWAROOP
• Assessee Lawyers: SANDEEP KARAIL
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: E: NEW DELHI) BEFORE SHRI N.K SAINI, ACCOUNTANT MEMBER & SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO:- 5412 /DEL/2014, ( ASSESSMENT YEAR: 2005-06) THE DCIT CIRCLE 6(1), NEW DELHI. VS. M/S MICHELIN INDIA TYRES PVT. LTD. UNIT NO. 1120-21, 11 TH FLOOR, TOWER-A, DLF TOWERS JASOLA, JASOLA DISTRICT CENTRE, NEW DELHI-110025. PAN NO: AADCM8454G APPELLANT RESPONDENT REVENUE BY : SMT. SHEFALI SWAROOP (CIT/DR) ASSESSEE BY : SH. SANDEEP KARAIL (ADVOCATE) DATE OF HEARING : 11.06.2018. DATE OF PRONOUNCEMENT : 22/06/2018. ORDER PER: KULDIP SINGH, JM THE APPELLANT, DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE- 6(1), NEW DELHI. (HEREINAFTER REFERRED TO AS THE REVENUE) BY FILI NG THE PRESENT APPEAL, SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATE D 21.07.2014 QUA 2 ITA NO-5412/DEL/2014. MICHELIN INDIA TYRES PVT. LTD. ASSESSMENT YEAR 2005-06 PASSED BY LD. CIT(A)-IX, NE W DELHI, ON THE GROUNDS INTER ALIA THAT:- 1. WHETHER IN THE FACT AND CIRCUMSTANCES OF THE C ASE & IN LAW, THE LD. CIT(A) ERRED IN DELETING THE PENALTY IMPOSED LU /S 271(1)(C) AMOUNTING TO RS. 6355909/- BY THE AO BY GROSSLY IGN ORING THE REASONS ADVANCED BY THE ASSESSING OFFICER AND TOTAL LY RELYING UPON THE SUBMISSION OF THE ASSESSEE COMPANY? 2. THAT THE ORDER OF THE LD. CIT(A) IS ERRONEOUS A ND IS NOT TENABLE ON FACTS AND IN LAW. 3. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR FORGO ANY GROUND(S) OF THE APPEAL RAISED ABOVE AT THE TIME OF HEARING. 2. BRIEFLY STATED THE FACTS NECESSARY TO ADJUDICATE THE ISSUES AT HAND ARE: THE ASSESSEE IS INTO THE BUSINESS OF TRADING A ND MANUFACTURING OF ALL TYRES AND TUBES, FILED RETURN OF INCOME FOR THE YEA R UNDER ASSESSMENT DECLARING TOTAL LOSS OF RS. 7,81,94,190/- WHICH WAS COMPLETED U/S 143(3) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT) B Y REDUCING THE TOTAL LOSS CLAIMED BY THE ASSESSEE TO RS. 60,824,758/- BY MAKI NG ADDITIONS OF RS. 1,42,04,926/-, RS. 28,02,000/-, RS. 1,15,368/-, RS. 2,44,328/-, AND RS. 2,810/- ON ACCOUNT OF TECHNICAL FEE, ROC FEE, GRATU ITY, EMPLOYEE CONTRIBUTION TO EPF AND LOSS ON SALE OF FIXED ASSETS RESPECTIVELY. 3. ON THE BASIS OF ASSESSMENT FRAMED U/S 143(3) AND ADDITIONS MADE THEREUNDER AO INITIATED PENALTY PROCEEDING U/S 271( 1)(C) OF THE ACT FOR CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME. DECLINING THE CONTENTIONS MADE BY THE ASS ESSEE VIDE LETTER DATED 20 TH MARCH 2012 AND 30 TH MARCH 2013, AO PROCEEDED TO HOLD THAT THE ASSESSEE FILED INACCURATE PARTICULARS OF ITS IN COME AND EVADED TAX TO 3 ITA NO-5412/DEL/2014. MICHELIN INDIA TYRES PVT. LTD. THE TUNE OF RS. 17369432/- AND THEREBY IMPOSED PENA LTY OF RS. 6355909/- @ 100% U/S 271(1)(C) OF THE ACT. 4. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A ) BY WAY OF FILING THE APPEAL, WHO HAS CONFIRMED THE PENALTY LEVIED ON LOSS OF SALE OF FIXED ASSETS AMOUNTING TO RS. 2,830/- BY PARTLY ALLOWING THE APPEAL. FEELING AGGRIEVED, THE REVENUE HAS COME UP BEFORE THE TRIBU NAL BY WAY OF FILING THE PRESENT APPEAL. 5. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS RELIED UPON AND ORDER PASSED BY THE REVENUE AUTHORITIES BELOW IN THE LIGHT OF THE F ACTS AND CIRCUMSTANCES OF THE CASE . 6. UNDISPUTEDLY, THE CO-ORDINATE BENCH OF TRIBUNAL IN ITA NO. 3355/DEL/2011 IN THE CASE OF M/S MICHELIN INDIA TYR ES PVT. LTD. VS. DCIT, CIRCLE 6(1) VIDE ORDER DATED 30.10.2015 , ASSESSEES OWN CASE DELETED THE ENTIRE ADDITIONS MADE BY THE AO AN D CONFIRMED BY THE LD. CIT(A), EXCEPT ADDITION OF RS. 1,15,368/- AND R S. 2,810/- CLAIMED BY THE ASSESSEE AS PROVISIONS FOR PAYMENT OF GRATUITY BASED ON ACTUAL VALUATION AND LOSS ON SALE OF FIXED ASSETS RESPECTI VELY. 7. IT IS THE CASE OF THE ASSESSEE THAT IT HAS CLAIM ED AN AMOUNT OF RS. 1,15,368/- AND RS. 2,810/- RESPECTIVELY DUE TO BONA FIDE MISTAKE AND AS SUCH DOES NOT AMOUNT TO CONCEALMENT OF INCOME AND R ELIED UPON THE 4 ITA NO-5412/DEL/2014. MICHELIN INDIA TYRES PVT. LTD. DECISION RENDERED BY HONBLE SUPREME COURT OF INDIA IN THE CASE CITED AS PRICE WATERHOUSE COOPERS (P.) LTD. VS. COMMISSIONER OF INCOME- TAX 25 TAXMANN.COM 400. 8. UNDISPUTEDLY, THE ASSESSEE HAS MADE ITS ENTIRE C LAIMS FOR DEDUCTIONS /DISALLOWANCES ON THE BASIS OF ITS AUDITED FINANCIA L. ASSUMING THE CLAIM SET UP BY THE ASSESSEE FOR AN AMOUNT OF RS. 1,15,368/- ON ACCOUNT OF PROVISION FOR GRATUITY AS WRONG AND NOT SUSTAINABL E, THE SAME CANNOT BE PLACED IN THE CATEGORY OF FURNISHING THE INACCURAT E PARTICULARS OF INCOME TO EVADE THE TAX IN THE FACE OF THE AUDITED FINANCI AL RELIED UPON BY THE ASSESSEE. IT WAS DUTY OF THE ASSESSING OFFICER TO E XAMINE THE CLAIM IF ALLOWABLE OR NOT WITHIN THE PARAMETERS OF LAW. 9. HONBLE APEX COURT IN THE CASE OF PRICE WATERHOUSE COOPERS (P.) LTD. (SUPRA) DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSES SEE BY RETURNING THE FOLLOWING FINDINGS- THE CONTENTS OF THE TAX AUDIT REPORT SUGGEST THAT THERE IS NO QUESTION OF THE ASSESSEE CONCEALING ITS INCOME. TH ERE IS ALSO NO QUESTION OF THE ASSESSEE FURNISHING ANY INACCURATE PARTICULARS. IT APPEARS TO US THAT ALL THAT HAS HAPPENED IN THE PRE SENT CASE IS THAT THROUGH A BONA FIDE AND INADVERTENT ERROR, THE ASSE SSEE WHILE SUBMITTING ITS RETURN, FAILED TO ADD THE PROVISION FOR GRATUITY TO ITS TOTAL INCOME. THIS CAN ONLY BE DESCRIBED AS A HUMA N ERROR WHICH WE ARE ALL PRONE TO MAKE. THE CALIBER AND EXPERTISE OF THE ASSESSEE HAS LITTLE OR NOTHING TO DO WITH THE INADVERTENT ER ROR. THAT THE ASSESSEE SHOULD HAVE BEEN CAREFUL CANNOT BE DOUBTED , BUT THE ABSENCE OF DUE CARE, IN A CASE SUCH AS THE PRESENT DOES NOT MEAN THAT THE ASSESSED IS GUILTY OF EITHER FURNISHING IN ACCURATE PARTICULARS OR ATTEMPTING TO CONCEAL ITS INCOME . 5 ITA NO-5412/DEL/2014. MICHELIN INDIA TYRES PVT. LTD. 10. SO, WE ARE OF THE CONSIDERED VIEW THAT BOTH IN CASE OF CLAIMING DEDUCTION ON ACCOUNT OF PROVISIONS FOR GRATUITY AMO UNTING TO RS. 1,15,368/- AND CLAIMING DEDUCTION ON ACCOUNT OF LOS S ON SALE OF FIXED ASSETS OF RS. 2,810/- ARE PURELY ON ACCOUNT OF BONA FIDE AND INADVERTENT MISTAKE, WHEN THE ENTIRE CLAIM HAS BEEN EXPLAINED I N THE AUDIT REPORT AND CANNOT BE TREATED AS CONCEALMENT OF INCOME BY ANY S TRETCH ON IMAGINATION EVEN. SO, WE FIND NO LEGALITY OR PERVER SITY IN THE IMPUGNED ORDER PASSED BY THE LD. CIT(A), HENCE APPEAL FILED BY THE REVENUE IS HEREBY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22/6/2018. SD/- SD/- (N.K SAINI) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 22.06.2018 POOJA/- COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 6 ITA NO-5412/DEL/2014. MICHELIN INDIA TYRES PVT. LTD. DATE OF DICTATION 18/06/2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 20/6/2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER 7 ITA NO-5412/DEL/2014. MICHELIN INDIA TYRES PVT. LTD.