LAXMI VENTRUES (INDIA) P.LTD, MUMBAI V. ASST CIT RG 6(3), MUMBAI

ITA 5412/MUM/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9453 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2004-2005
• Appeal Filed On: 23-11-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SAURABH DESH
• Keywords: Depreciation
• Section: 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE HONBLE S/SHRI JOGINDER SINGH (JM), AND RAJESH KUMAR, ( AM ) ./ I.T.A. NO . 5 412 / MUM/20 1 5 ( / ASSESSMENT YEAR : 20 0 4 - 0 5 ) M/S LAXMI VENTURES (INDIA) PVT.LTD., 36/40, MAHALAXMI BRIDGE, ARCADE, MAHALAXMI, MUMBAI - 400034 / VS. ASSTT. COMMISSIONER OF INCOME TAX - RANGE 6(3), MUMBAI. ( / APPELLANT ) .. ( / RESPONDENT ) ./PAN NO. : AA ACL10 82G / APPELLANT BY: SHRI HARIDAS BHAT / RESPONDENT BY SHRI SAURABH DESHPANDE / DATE OF HEARING : 28.8. 201 7 / DATE OF PRONOUNCEMENT : 18. 9. 201 7 / O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AND IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) - 2 1 , MUMBAI D A T ED 22.9.2015 PERTAINING TO A.Y. 20 04 - 05 . 2. THE ASSESSMENT, IN THIS CASE WAS COMPLETED U/ S 143(3) ON 28.11.2006 AT AN INCOME OF RS.4,67,13,230/ - AGAINST THE RETURNED INCOME OF RS.26,64,360/ - FILED BY THE ASSESSEE BY MAKING VARIOUS ADDITIONS INTER - ALIA O N ACCOUNT OF ESTIMATION OF INCOME OF BHILAI PLANT AND TEDESSARA UNIT AMOUNTING TO RS. 10, 00,000 / - AND DISALLOWANCE OF RS. 3,50,000/ - ON ACCOUNT OF DEPRECIATION IN RESPECT OF FREEHOLD LAND. IN THE QUANTUM PROCEEDINGS THE LD. CIT(A) DIRECTED THE AO TO RESTRICT THE INCOME AT 5% OF SALES OF THE SAID ITA NO . 5 412 / M/1 5 2 TWO UNITS BESIDE CONFIRM ING THE ADDITION OF RS.3,00,893/ - . I N THE FURTHER APPEAL BEFORE THE ITAT, THE DISALLOWANCE OF DEPRECIATION WAS CONFIRMED. ACCORDINGLY, THE AO ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE U/S 271(1)(C) ON 4.1.2010 FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND FINALLY THE PENALTY OF RS.2,27,813/ - WAS LEVIED OF THE 100% OF THE TAX SOUGHT TO BE EVADED BY AN ORDER DATED 23.3.2010 PASSED UNDER SECTION 271(1)( C ) OF THE ACT. 3. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE BY OBSERVING AND HOLDING AS UNDER : 8. I HAVE CONSIDERED THE FACTS OF THE CASE, THE ASSESSMENT AND THE APPELLATE O RDERS , TH E PENALTY ORD E R AND THE SUBMISSIONS OF THE A R CAREFULLY. THERE CAN BE NO GENERAL PRINCIPLE THAT NO PENALTY CAN BE LEVIED WHERE INCOME IS ASSESS ED BASED ON ESTIMAT E. 9. IN THE CASE OF DY.C IT VS. SUSHMADEVI AGARWAL (2012) 67 DTR (KOL) (TM) (TRIB.) 430, HON'BLE THIRD MEMBER OF B EN CH OF KOLKATTA TRIBUNAL HAS HELD THAT THERE IS NO RULE THAT PENALTY FOR CONCEALMENT U/S. 271 (1) (C) CANNOT BE IMPOSED W HERE INCOME IS ESTIMATED . THE LEV Y OF PENALTY U/S. 271 ( 1 )(C) DEPENDS ON THE FACTS AND CIRCUMSTANCES OR EACH CASE. WHERE THE CONCEALMENT OF INCOME IS APPARENT FROM RECORD , THERE IS NO REASON WHY THE PENALTY U/S 271(1)( C ) CANNOT BE IMPOSED FOR CONCEALME NT OF INCOME, RELIANCE IN THIS REGARD IS ALSO PLACED ON THE FOLLOWING: I) C I T VS KRISHNAS WAMY AND SONS (MAD) 219 ITR 157 I ) SA M SUNDAR BHAN SADH VS. C IT 188 ITR 638(ALL ) . III) VIDYA SAGAR O SWAL VS. CITR 108 IT R 861 ( P&H). IV) CIT VS. HANDLOORN EMPORIUM 282 ITR 431 (ALL) V) CIT VS. MAHABIT PRASAD BAJAJ 298 ITR 109 (JHARKHAND) FURTHE R, IF THE VIEW THAT PENALTY CANNOT BE LEVIED WHERE INCOME IS COMPUTED BASED ON ESTIMATION IS FOLLOWED IT WILL LEND A PREMIUM TO EVASION B Y ASSESSEE WHO DO N OT MAINTAIN ANY RECORDS AND DO NOT OFFER THEIR INCOME TO LAX BECAUSE IN SUCH CASES THE INCOME CANNOT BE ITA NO . 5 412 / M/1 5 3 ASSESSED WITHOUT ESTIMA TION BASED ON SUCH EVIDENCE AS IS UNEARTHED BY THE ASSESSING OFFICER. 9. AS REGARDS THE CLAIM 01 DEPRECIATION ON LAND, IT IS PATENTLY NOT ALLOWABLE. FURTHER, THE DEPRECIATION IS CL AIMED YEAR AFTER YEAR. IF THE ARGUMENT OF THE AR IS TAKEN TO ITS LOGICAL END IT WOULD REQUIRE PENALTY TO BE LEVIED EACH YEAR BASED ON THE DEPRECIATION CLAIMED. 10. KEEPING IN VIEW THE FACTUAL MATRIX OBTAINING I N THIS CASE AND RELYING ON THE DECISIONS CITED SUPRA, I AM SATISFIED THAT LD.AO HAD RIGHTLY IMPOSED PENALTY U/S. 271 (1)( C ) OF THE ACT. 11. IN THE RESULT THE APPEAL IS DISMISSED 4 . WE HAVE CAREFULLY CONSIDERED T HE SUBMISSIONS OF THE RIVAL PAR TIES AND PERUSED THE MATERIAL PLACED BEFORE US INCLUDING THE ORDERS OF AUTHORITIES BELOW. WE FIND FROM THE RECORD BEFORE US THAT THE PENALTY WAS IMPOSED BY THE AO ON THE INCOME ESTIMATED AT THE RATE OF 5% WHICH WAS WORKED OUT TO RS.3,00,893/ - AND DEPRECIATION FO R RS.3,50,000/ - TOWARDS FREE HOLD LAND. IN RESPECT OF FIRST ITEMS OF ESTIMATION OF INCOME, WE ARE OF T HE V IEW TH A T NO PENALTY CAN BE LEVIED IN THE CASE OF ESTIMAT ION OF INCOME AS IT IS PURELY GUESSWORK AND THEREFORE, WE ARE NOT IN AGREEMENT WITH T HE FIND INGS OF THE LD. CIT(A) ON THIS ISSUE THAT E VEN ON ESTIMATION OF INCOME PENALTY IS LEVIABLE. WITH REGARD TO THE SECOND ITEM ON WHICH THE PENALTY WAS IMPOSED, WE FIND THAT THE DEPRECIATION ON FREEHOLD LAND ISSUE UNDER THE HEAD FACTORY AND BUILDINGS, THE FAC TS WERE FULLY DISCLOSED IN THE ACCOUNTS IN THE RETURNED FILED BY THE ASSESSEE. IN THE PRESENT CASE, THE ASSESSEE HAS NOT FILED ANY INACCURATE PARTICULARS OF INCOME OR FURNISHED ANY INACCURATE PARTICULATES . IN THIS CASE, IT HAS BEEN STATED BY THE LD.AR TH AT THE MISTAKE HAS HAPPENED DUE ITA NO . 5 412 / M/1 5 4 TO LITIGATION BEFORE THE COMPANY LAW BOARD. THE LD. AR SUBMITTED THAT FIXED ASSETS OF BHILAI PLANT AND TEDESSARA UNIT HAVE BEEN INCORPORATED IN THESE ACCOUNT ON THE BASIS OF LAST YEAR ACCOUNT RECEIVED FROM THE RESPECTI VE UNITS. HOWEVER, DUE TO INQUIRY PENDING BEFORE THE COMPANY LAW BOARD THE INFORMATION WAS NOT AVAILABLE WITH THE HEAD O FFICE. THESE FACTS HAS ALSO INFORMED TO THE DEPARTMENT ACCORDINGLY. IN OUR OPINION, ALL THESE INFORMATION WAS NOT AVAILABLE BEFORE ASS ESSING ASSESSEE DUE LITIGATION PENDING BEFORE THE COMPANY LAW BOARD AND UN AUDITED ACCOUNT OF BHILAI AND TEDEWARA PLANT WERE NOT INCORPORATED IN THE ACCOUNTS WHICH HAS BEEN RESULTED INTO THE SAID MISTAKE . I N OUR VIEW IT WOULD BE FAIR AND MEET THE ENDS OF JUSTICE IF THE PENALTY IS DELETED IN SUCH TYPE OF CASES WHERE THE ASSESSEE IS NOT HAVING CORRECT INFORMATION DUE TO COURT CASE. ACCORDINGLY , THE PENALTY IS DELETED . T HE APPEAL OF THE ASSESSEE IS ALLOWED. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD.CIT (A) AND DIRECT THE AO TO DELETE THE PENALTY. 5. IN THE RES U LT THE APPEAL OF THE ASSESSEE IS ALLOWED . THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 18TH SEPT , 2017 . 18TH SE PT. 2017 S D SD (JOGINDER SINGH ) ( RAJESH KUMAR ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 18 . 9. 2017 . . ./ SRL , SR. PS ITA NO . 5 412 / M/1 5 5 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. 6. , , / DR, ITAT, MUMBAI CONCERNED / GUARD FILE. / BY ORDER, T RUE COPY (ASSTT. REG ISTRAR) , /ITAT, MUMBAI