GOLDEN TOBACCO LTD ( FORMELRY GTC INDUSTRIES LTD), MUMBAI V. JCIT (OSD)8(1), MUMBAI

ITA 552/MUM/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 3125 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2015
• Appeal Filed By: Assessee
• Bench Allotted: G
• Next Hearing Date: 02-06-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 21-01-2013
• Court: TRIBUNAL
• Department Lawyers: A K KARDA M
• Assessee Lawyers: S C GUPRA
• Keywords: Depreciation; Additional evidence
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER I.T.A. NO. 552/M/2013 (AY: 2004 - 2005 ) M/S. GOLDEN TOBACCO LTD, (FORMERLY GTD INDUSTRIES LTD) TOBACCO HOUSE, S.V. ROAD, VILE PARLE (W), MUMBAI 400056. / VS. ACIT - 8(1), MUMBAI. ./ PAN : AAACG1421A ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI S.C. GUPRA, AR / RESPONDENT BY : SHRI A.K. KARDAM, DR / DATE OF HEARING : 30.07.2015 / DATE OF PRONOUNCEMENT :30 .09.2015 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 21.1.2013 IS AGAINST THE ORDER OF THE CIT (A) - 16, MUMBAI DATED 19.10.2012 FOR THE ASSESSMENT YEAR 2004 - 2005. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: THE CIT (A) HAS ERRED IN CONFIRMING THE LEVY OF PENALTY OF RS. 36,75,509/ - U/S 271(1)(C) OF THE ACT BY THE AO ON THE DISALLOWANCE OF DEPRECIATION CLAIMED ON INTANGIBLE ASSETS BEING TIME SHARING PROPERTY OF RS. 1,02,45,321/ - . IT IS SUBMITTED THAT IN THE ORIGINAL ASSESSMENT SUCH DEPRECIATION CLAIMED WAS ALLOWED, HOWEVER, SUCH CLAIM HA S BEEN DISALLOWED IN ASSESSMENT PROCEEDINGS U/S 143(3) R.W.S 263 OF THE ACT AND FURTHER SUCH ADDITION HAS BEEN CONFIRMED BY THE CIT (A) WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE AS ALSO WITHOUT CONSIDERING THE EXPLANATION PROVIDED BY APP ELLANT. REGARDING DISALLOWANCE OF DEPRECIATION, IT IS PRAYED THAT SAME HAS BEEN ALLOWED BY TAKING ALTERNATE VIEW ON THE SAME FACTS AND THEREFORE, LEVY OF PENALTY IS UNJUSTIFIED. ACCORDINGLY, IT IS PRAYED THAT THERE HAS BEEN NO CONCEALMENT OR FURNISHING O F INACCURATE PARTICULARS, AND THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT IS UNWARRANTED AND THE SAME SHOULD BE DELETED. 2. BEFORE US, LD COUNSEL FOR THE ASSESSEE FILED A LETTER DATED 16.1.2015 WITH A PRAYER FOR ADMITTING THE ADDITIONAL EVIDENCE IN VIEW OF ITS LEGAL NATURE AND RELIED ON VARIOUS DECISIONS IN SUPPORT OF THE SAID REQUEST. THE SAID ADDITIONAL GROUND IS EXTRACTED AS UNDER: 2 THE IMPUGNED PENALTY ORDER PASSED U/S 271(1)(C) OF THE ACT BY THE LD AO IS BAD AND VOID AB INITIO IN LAW AND ON FACTS AS THE JURISDICTIONAL CIT WHILE PASSING THE ORDER U/S 263 OF THE ACT NEITHER INITIATED HIMSELF NOR DIRECTED THE AO TO INITIATE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT AND HENCE, THE AO WAS NOT COMPETENT TO IMPOSE THIS PENALTY ON THE ADDITIONAL AMOUNT ASS ESSED AS INCOME ON THE DIRECTIONS CONTAINED IN THE ORDER U/S 263 OF THE ACT. 3. FROM THE ABOVE ADDITIONAL GROUND, WE FIND THE SAME IS LEGAL IN NATURE AND IT DOES NOT CALL FOR INVESTIGATION INTO THE FACTS FOR ADJUDICATION OF THE SAID GROUNDS. CONSIDERIN G THE JUDGMENTAL LAWS ON THIS ISSUE, WE ADMIT THE SAID ADDITIONAL GROUND FOR ADJUDICATION. 4. BEFORE US, IN CONNECTION WITH THE SAID ADDITIONAL GROUND, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF CIGAR ETTES AND PROCESSED TOBACCO. ASSESSEE FILED THE RETURN OF INCOME DECLARING THE TOTAL INCOME OF RS. 8,90,110/ - . THE SAID RETURN WAS SCRUTINISED BY THE AO AND MADE VARIOUS ADDITIONS IN ASSESSMENT. AS A RESULT OF THE SCRUTINY ASSESSMENT, ASSESSED INCOME IS DETERMINED AT RS. 1,18,68,270/ - . CIT - 8, MUMBAI INVOKED THE PROVISIONS OF SECTION 263 OF THE ACT AND PASSED A REVISION ORDER DATED 26.3.2009 AND HELD THAT THE ABOVE ASSESSMENT MADE BY THE AO IS CLEARLY AND PATENTLY ERRONEOUS AND PREJUDICIAL TO THE INTERES T OF REVENUE ON ACCOUNT OF DISALLOWANCE OF DEPRECIATION ON THE TIME SCHEDULE. ACCORDINGLY, HE SET ASIDE THE SAID ASSESSMENT WITH A DIRECTION TO DISALLOW THE DEPRECIATION AFTER VERIFICATION AS TO HOW MUCH OF DEPRECIATION IS INCLUDED IN THE CHART OF DEPR ECIATION PERTAINING TO THE TIME SCHEDULE. THE SAID ORDER OF THE CIT WAS AGITATED BEFORE THE TRIBUNAL. THE TRIBUNAL CONFIRMED THE SAID REVISION ORDER IN APPEAL ITA NO.3106/M/2009 (AY 2004 - 05), DATED 19.6.2013 AND THE APPEAL OF THE ASSESSEE WAS DISMISSED A CCORDINGLY. MEANWHILE, THE FRESH ASSESSMENT WAS MADE BY THE AO GIVING EFFECT TO THE ORDER OF THE CIT VIDE ORDER DATED 11.12.2009. IN THE SAID FRESH ASSESSMENT, AO MADE ADDITION OF RS. 1,02,45,321/ - . ON THIS ADDITION, AO INITIATED THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. FURTHER, AO LEVIED PENALTY OF RS. 36,75,509/ - IE 100% OF THE TAX TO BE EVADED ON THE ABOVE ADDITION VIDE THE ORDER PASSED U/S 271(1)(C) OF THE ACT, DATED 22.3.2012. AGGRIEVED, ASSESSEE CARRIED THE MATTER APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 5. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CIT (A) REJECTED THE ASSESSEES PLEA FOR DELETION OF 3 PENALTY AND THEREFORE, ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL W ITH THE ABOVE REFERRED GROUNDS / ADDITIONAL GROUND. 6. DURING THE PROCEEDINGS BEFORE US, AT THE OUTSET, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE GROUNDS AND SUBMITTED THAT THEY RELATE TO THE MERITS OF THE ADDITION. FURTHER, BRINGING OUR AT TENTION TO THE ADDITIONAL GROUND, HE SUBMITTED THAT THE ADDITIONAL GROUND IS LEGAL IN NATURE AND THE SAME MAY BE ADJUDICATED BY THE TRIBUNAL IN PREFERENCE TO THE GROUNDS ON MERITS. BRINGING OUR ATTENTION TO THE ADDITIONAL GROUND, LD COUNSEL FOR THE ASSESS EE MENTIONED THAT THE CIT - 8, MUMBAI HAS NOT GIVEN HIS SATISFACTION WHILE PASSING THE REVISION ORDER. IN THIS REGARD, HE BROUGHT OUR ATTENTION TO PARA 3 OF THE REVISION ORDER AND SUBMITTED THAT THE SAID ORDER DOES NOT CONTAIN ANY REFERENCE TO THE SATISF ACTION, WHICH IS REQUIRED FOR INITIATION OF THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. RELYING ON VARIOUS DECISIONS, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AUTHORITY, WHO IS MAKING AN ENHANCEMENT IN THE INCOME OF THE ASSESSEE, IS ALSO REQ UIRED TO GIVE SATISFACTION ABOUT THE CONCEALMENT OF INCOME AND THEREFORE, THE SAME IS REQUIRED TO BE MENTIONED IN WRITING BEFORE INITIATION OF THE PROCEEDINGS U/S 271(1)(C) OF THE ACT. FOR THIS PURPOSE, HE RELIED ON VARIOUS DECISIONS PLACED IN THE PAPER BOOK. TO START WITH, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO PAGE 39 OF THE PAPER BOOK IE THE JUDGMENT OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. SHGADIRAM BALMUKAND (84 ITR 183) AND ALSO THE JUDGMENT OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. ANAND BAZAR PATRIKA PVT LTD (116 ITR 416), COPY OF WHICH IS PLACED AT PAGE 42 OF THE PAPER BOOK, AND SUBMITTED THAT IN RESPECT OF THE ENHANCEMENT MADE BY THE FIRST APPELLATE AUTHORITY, ITO COULD NOT INITIATE AND LEVY PENAL TY FOR CONCEALMENT. FURTHER, HE BROUGHT OUR ATTENTION TO THE JUDGMENT OF THE HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS. PADMINI MISHRA [2014 - TIOL - 986 - HC - DEL - IT] AND SUBMITTED THAT THE SAID CASE WAS DELIVERED IN IDENTICAL CIRCUMSTANCES WHERE THE RE VISION ORDER WAS PASSED BY THE CIT U/S 263 OF THE ACT AND THE ASSESSING OFFICER INITIATED THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. ON THESE FACTS, HONBLE HIGH COURT HELD THAT THE AO COULD NOT HAVE LEVIED THE PENALTY WITHOUT ANY DIRECTION OR COMM UNICATION IN THE REVISION ORDER IN THIS REGARD. SUCH PENALTIES INITIATED AND LEVIED BY THE AO WITHOUT DIRECTION / COMMUNICATION BY THE CIT OF THE REVISION ORDER ARE HELD VOID. 4 7. PER CONTRA, LD DR FOR THE REVENUE RELIED HEAVILY ON THE ORDER OF THE AO AN D THE CIT (A) AND PRAYED FOR CONFIRMING THE PENALTY LEVIED BY THE AO. 8. WE HAVE HEARD BOTH THE PARTIES ON THE LEGAL ISSUE RAISED IN THE AD DITIONAL GROUND BY THE ASSESSEE. WE HAVE ALSO GONE THROUGH THE FACTS OF THE CASE AND THE CASE LAWS CITED BY THE LD C OUNSEL FOR THE ASSESSEE. WE FIND THERE IS NO DISPUTE ON THE FACT THAT THE CIT - 8, MUMBAI DID NOT MENTION OR GIVE ANY DIRECTION OR COMMUNICATION TO THE AO FOR INITIATION OR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. FURTHER, WE FIND THE FACTS OF THE PRESENT CASE ARE SQUARELY IDENTICAL TO THAT OF THE FACTS GIVEN IN THE CASE OF CIT VS. PADMINI MISHRA (SUPRA) ADJUDICATED BY THE HONBLE DELHI HIGH COURT. FOR THE SAKE OF COMPLETENESS OF THIS ORDER, WE FIND IT RELEVANT TO EXTRACT THE RELEVANT PORTION FROM THE SAI D JUDGMENT OF THE HONBLE DELHI HIGH COURT (SUPRA) AND THE SAME READS AS UNDER: ..........IT IS OPEN TO THE COMMISSIONER TO INITIATE THE PROCEEDINGS IN EXERCISE OF ITS POWERS UNDER SECTION 271 OR EVEN INDICATE THAT SUCH POWER WAS AVAILABLE TO THE AO, WHIL E WORKING OUT THE REVISION EFFECT. NOT HAVING DONE SO, THE AO COULD NOT HAVE IN THE FIRST INSTANCE, AFTER REMAND, WITHOUT ANY DIRECTION OR INDICATION IN THE REVISIONAL ORDER INITIATE THE PENALTY PROCEEDINGS AS WAS DONE IN THE PRESENT CASE. 9. CONSIDERING THE ABOVE SETTLED NATURE OF THE ISSUE ON FINDING THAT THERE IS NO CONTRARY DECISION BROUGHT TO OUR NOTICE BY THE LD DR FOR THE REVENUE, WE FIND THE ARGUMENT PUT FORWARD BY THE LD COUNSEL FOR THE ASSESSEE SHOULD BE ACCEPTED AND THE LEGAL ISSUE R AISED BY THE ASSESSEE IN THE ADDITIONAL GROUND SHOULD BE ALLOWED IN FAVOUR OF THE ASSESSEE . ACCORDINGLY, ADDITIONAL GROUND RAISED BY THE ASSESSEE IS ALLOWED . 10. HAVING DONE SO, REGARDING THE REGULAR GROUNDS ORIGINALLY FILED BY THE ASSESSEE ALONG WITH THE APPEAL MEMO, WE FIND THE ADJUDICATION OF THESE ISSUES BECOMES AN ACADEMIC EXERCISE. THEREFORE, WE ARE OF THE OPINION THE SAID GROUNDS SHOULD BE DISMISSED AS ACADEMIC . 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED . ORDER PRONOUNCED IN THE OP EN COURT ON 3 0 T H SEPTEMBER, 2015. S D / - S D / - (AMIT SHUKLA) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 3 0 .9 .2015 5 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI