Abhishek Engineers Pvt. Ltd., Ahmedabad V. The Dy. CIT, Circle-1(1)(1), Ahmedabad

ITA 56/AHD/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2416 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 06-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH MEENA
• Keywords: Depreciation; Wrong claim
• Section: 148

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMEBR ./ I.T.A. NO. 56/AHD/2017 ( ASSESSMENT YEAR : 2007-08) ABHISHEK ENGINEERS PVT. LTD. ABHISHEK HOUSE, 5, SHRIMALI SOCIETY, NR. JAIN DERASAR, NAVRANGPURA, AHMEDABAD 380009 / VS. THE DY. C.I.T., CIRCLE - 1(1)(1), AHMEDABAD 3 RD FLOOR, PRATYAKSHKAR BHAVAN, PANJARA POLE, AMBAWADI, AHMEDABAD ./ ./ PAN/GIR NO. : AAACA9827E ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI RAJESH SHAH, A.R. / RESPONDENT BY : SHRI RAJESH MEENA, SR. D.R. DATE OF HEARING 09/08/2018 !'# / DATE OF PRONOUNCEMENT 04/09/2018 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF I NCOME TAX (APPEALS)-1, AHMEDABAD (CIT(A) IN SHORT), DATED 2 4.11.2016 ARISING IN THE PENALTY ORDER DATED 31.08.2015 PASSE D BY THE ITA NO. 56/AHD/17 [ABHISHEK ENGINEERS PVT. LTD. VS. THE DCIT] AY 2007-08 - 2 - ASSESSING OFFICER (AO) UNDER S. 271(1)(C) OF THE IN COME TAX ACT, 1961 (THE ACT) CONCERNING ASSESSMENT YEAR 2007-08. 2. WHEN THE MATTER WAS CALLED FOR HEARING, THE LEAR NED AR FOR THE ASSESSEE SUBMITTED THAT THE CIT(A) HAS MISDIREC TED HIMSELF IN LAW AS WELL AS ON FACTS IN CONFIRMING THE ACTION OF THE AO IN IMPOSING THE PENALTY. 3. THE LEARNED DR FOR THE REVENUE, ON THE OTHER HAN D, RELIED UPON THE PENALTY ORDER PASSED BY THE AO UNDER S.271 (1)(C) WHICH WAS ENDORSED BY THE CIT(A). 4. WE HAVE CAREFULLY PERUSED THE ASSESSMENT ORDER, THE PENALTY ORDER AS WELL AS THE ORDER OF THE CIT(A). THE SHOR T QUESTION FOR ADJUDICATION IS MAINTAINABILITY OF PENALTY UNDER S. 271(1)(C) OF THE ACT AMOUNTING TO RS.2,46,728/- IN THE FACTS OF THE CASE. AS STATED, THE ASSESSEE IN THE INSTANT CASE WRONGLY CLAIMED DE PRECIATION ON FIXED ASSETS ALREADY SOLD AMOUNTING TO RS.7,33,000/ - DURING THE YEAR UNDER CONSIDERATION. THUS, THE TAXABLE INCOME WAS UNDER- REPORTED TO THIS EXTENT. THEREAFTER, THE CASE WAS RE-OPENED UNDER S.147 OF THE ACT IN PURSUANCE OF NOTICE UNDER S.148 OF THE ACT. THE ASSESSEE FILED ANOTHER RETURN OF INCOME WHEREIN THE ASSESSEE SUO MOTU WITHDREW THE AFORESAID WRONG CLAIM OF DEPR ECIATION MADE IN THE ORIGINAL RETURN. THE RE-ASSESSMENT PRO CEEDINGS WERE ACCORDINGLY COMPLETED AND PENALTY WAS IMPOSED ON TH E AFORESAID WRONG CLAIM OF DEPRECIATION MADE EARLIER. THE ARGU MENT ON BEHALF OF THE ASSESSEE FOR NON-IMPOSITION OF PENALT Y ARE TWO FOLD; (I) THE ASSESSEE ITSELF HAS SUO MOTU DECLARED AND C ONCEDED THE WRONG CLAIM WITHOUT THE SAME BEING BROUGHT TO ITS N OTICE BY THE ITA NO. 56/AHD/17 [ABHISHEK ENGINEERS PVT. LTD. VS. THE DCIT] AY 2007-08 - 3 - REVENUE & (II) THE AO HAD INITIATED THE PENALTY PRO CEEDINGS ON THE GROUNDS OF CONCEALMENT OF PARTICULARS OF INCOM E WHEREAS THE PENALTY WAS ULTIMATELY CONFIRMED BY THE AO ALLEGING FURNISHING OF INACCURATE PARTICULARS OF INCOME. IT WAS THUS CLAIMED BY THE ASSESSEE THAT THE BASIS OF SATISFACTION HAS UNDER GONE SUBSTANTIVE CHANGE AND THEREFORE, THE PENALTY IMPOSED IS NOT SU STAINABLE IN LAW. IN THIS REGARD, WE TAKE COGNIZANCE OF SECOND PLEA FIRST. THE IDENTICAL ISSUE AROSE IN THE CASE OF HATISH PRABHUD AS CHAUDHARY VS. ITO IN ITA NO. 3557/AHD/2016 ORDER DATED 19.06. 2018. THE RELEVANT OPERATIVE PART OF THE ORDER OF THE CO-ORDI NATE BENCH IS REPRODUCED HEREUNDER: 9. WE HAVE CAREFULLY CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE ASSESSMENT ORDER, PENALTY ORDER AND THE FIRST A PPELLATE ORDER IN PENALTY PROCEEDINGS. THE MATERIAL REFERRED IN T HE COURSE OF HEARING WAS ALSO PERUSED. AS NOTED ABOVE, THE CONT ROVERSY REVOLVES AROUND THE MAINTAINABILITY OF PENALTY ON I NCOME BY WAY OF SHORT TERM CAPITAL GAIN NOT INCLUDED IN THE RETU RN OF INCOME BUT OFFERED FOR TAXATION IN THE COURSE OF SCRUTINY PROC EEDINGS. IN THIS REGARD, IT IS NOTED THAT THE ASSESSEE HAS READILY O FFERED THE INCOME ON SALE IN THE COURSE OF ASSESSMENT PROCEEDINGS AND PAID TAXES THEREON. NO DOUBT, IT IS THE BOUNDEN DUTY OF AN AS SESSEE TO OFFER THE INCOME CHARGEABLE TO TAX IN THE RETURN OF INCOM E ITSELF. THE ASSESSEE HAS FILED REVISED COMPUTATION AFTER THE IS SUANCE OF SCRUTINY NOTICE SEEKING PERTINENT DETAILS INCLUDING BANK STATEMENT WHICH COULD HAVE EASILY UNEARTHED THE CAPITAL GAINS NOT OFFERED THUS FAR. HOWEVER, THIS BY ITSELF WILL NOT, IN OUR VIEW, PROPEL A REASONABLE PERSON TO DRAW AN INFLEXIBLE INFERENCE T HAT OMISSION WAS DELIBERATE. THE TOTALITY OF CIRCUMSTANCES IS R EQUIRED TO BE GAUGED. THE INTENTION REQUIRES TO BE SEEN FROM THE CONDUCT OF THE ASSESSEE. THE ASSESSEE HEREIN IS A TECHNICAL PERS ON AND MAY NOT NECESSARILY KNOW THE COMPLICATED TAX LAWS. A PERUS AL OF LAND SALE AGREEMENT SUGGESTS THAT THE LAND WAS IN THE NATURE OF AGRICULTURAL LAND THE GAIN ON SALE OF WHICH, UNDER THE POPULAR B ELIEF, IS NOT TAXABLE. HOWEVER, ON OBJECTIVE CONSIDERATION, IT W AS FOUND THAT SUCH AGRICULTURAL LAND WAS ALSO REQUIRED TO UNDERGO AGRICULTURAL OPERATIONS, WHICH WAS MISSING IN THE PRESENT CASE. IN THESE CIRCUMSTANCES, THE ASSESSEE ACTING ON LEGAL ADVICE, READILY CAME FORWARD AND OFFERED THE CAPITAL GAINS WITHOUT RESOR TING TO LITIGATION. ON WEIGHING THE CIRCUMSTANCES, WE ARE OF THE VIEW THAT ITA NO. 56/AHD/17 [ABHISHEK ENGINEERS PVT. LTD. VS. THE DCIT] AY 2007-08 - 4 - THE ONUS OF BONAFIDE THEREFORE, IN OUR VIEW, IS BRO ADLY DISCHARGED. THE STRICT PROVISIONS OF SECTION 271(1)(C) OF THE A CT SHOULD NOT APPLY IN THESE FACTS. COUPLE WITH THIS, WE SIMULTA NEOUSLY NOTICE THAT THE ACTION OF THE AO IS QUITE VAGUE. THE SAT ISFACTION IN THE COURSE OF THE ASSESSMENT WAS FORMED FOR ALLEGED FU RNISHING OF INACCURATE PARTICULARS OF INCOME. THE PENALTY NOT ICE DOES NOT SPECIFY THE NATURE OF DEFAULT AND THUS SUFFERS FROM VICE OF AMBIGUITY. THE AO, HOWEVER, IN DEPARTURE WITH THE SATISFACTION FORMED IN THE ASSESSMENT PROCEEDINGS, WENT ON TO IM POSE PENALTY ON A DIFFERENT GROUND I.E. CONCEALMENT OF PARTICULA RS OF INCOME. OSTENSIBLY, THE ORIGINAL BASIS OF INITIATION OF PEN ALTY HAS BEEN ALTERED IN A SIGNIFICANT WAY BY THE AO HIMSELF BY I MPOSING THE PENALTY. THE BASIS FOR FORMATION OF SATISFACTION, THUS, WAS ALTERED AND RENDERED NONEXISTENT. HENCE, IN THE ABSENCE OF CONTINUITY IN THE SATISFACTION OF THE AO AT THE QUANTUM STAGE VIS --VIS PENALTY STAGE, THE PENALTY ORDER PASSED BY THE AO IS LIABLE TO BE STRUCK DOWN ON THIS GROUND ALSO. FOR SUCH A VIEW, WE MAY USEFULLY REFER TO THE DECISION OF THE HONBLE GUJARAT HIGH COURT I N THE CASE OF NEW SORATHIA ENGINEERING CO. (SUPRA) AS WELL AS ANO THER DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CI T VS. MANU ENGINEERING WORKS (1980) 122 ITR 306 (GUJ). THUS, IN TOTALITY, PENAL ACTION UNDER S.271(1)(C) OF THE ACT IS NOT SU STAINABLE IN LAW. IN THE LIGHT OF THE AFORESAID DECISION, THE PENALT Y UNDER S.271(1)(C) OF THE ACT IS NOT SUSTAINABLE WHERE THE EDIFICE OF SATISFACTION HAS UNDERGONE FUNDAMENTAL CHANGE. T HUS, IN PARITY, THE PENALTY IS REQUIRED TO BE CANCELLED ON THIS GRO UND ALONE. WE ALSO FIND MERIT IN THE FIRST PLEA OF THE ASSESSEE A S WELL. THE ASSESSEE HAS SHOWN ITS BONAFIDE BY CONCEDING THE MI STAKE IN THE SECOND RETURN FILED IN PURSUANCE OF NOTICE UNDER S. 148 OF THE ACT. SIGNIFICANTLY, THE REASONS RECORDED UNDER S. 148(2) OF THE ACT WERE NOT MADE AVAILABLE TO THE ASSESSEE AT THAT STA GE. THEREFORE, THE PLEA OF THE ASSESSEE THAT REVISION OF INCOME WA S MADE SUO MOTO WITHOUT ANY KNOWLEDGE OBTAINED FROM THE AO IN THIS REGARD DESERVES TO BE ACCEPTED. NEEDLESS TO SAY, THE PENA LTY UNDER S. 271(1)(C) OF THE ACT IS NOT AUTOMATIC CONSEQUENCE O F ANY AND EVERY TYPE OF MISTAKE COMMITTED BY AN ASSESSEE. TH E FACTS IN THE ITA NO. 56/AHD/17 [ABHISHEK ENGINEERS PVT. LTD. VS. THE DCIT] AY 2007-08 - 5 - INSTANT CASE PROVE THE BONAFIDES REASONABLY. THUS, THE PENALTY IS NOT MAINTAINABLE ON EITHER COUNT. CONSEQUENTLY, THE PENALTY IMPOSED BY THE AO IS DIRECTED TO BE CANCELLED. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . SD/- SD/- (MAHAVIR PRASAD) (PRADIP KUMA R KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 04/09/2018 TRUE COPY S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- &. / REVENUE 2. / ASSESSEE (. )*+ , / CONCERNED CIT 4. ,- / CIT (A) /. 012 33*+4 *+#4 56) / DR, ITAT, AHMEDABAD 7. 289 : / GUARD FILE. BY ORDER / 4 /5 *+#4 56) THIS ORDER PRONOUNCED IN OPEN COURT ON 04/09/201 8