JCIT (OSD), New Delhi V. M/s. SMS India Pvt. Ltd., New Delhi

ITA 5662/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58674 (ITAT-DELHI)
• Duration Of Justice: 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-02-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2007-2008
• Appeal Filed On: 16-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S MOHANTHY
• Keywords: Depreciation; Revised return; Unabsorbed depreciation
• Section: 143(3); 80HHC; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : G : NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI K.D. RANJAN, ACCOUNTANT MEMBER ITA NO.5662/DEL/2011 ASSESSMENT YEAR : 2007-08 JCIT (OSD), CIRCLE 9 (1), ROOM NO.163, CR BUILDING, NEW DELHI. VS. SMS INDIA PVT. LTD., B-402, SOMDUTT CHAMBER-1, 5, BHIKAJI CAMA PLACE, NEW DELHI. PAN : AAPCS8348B (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI S. MOHANTHY, DR ORDER PER I.P. BANSAL, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DIRECT ED AGAINST THE ORDER PASSED BY THE CIT (A) DATED 28 TH SEPTEMBER, 2011 FOR ASSESSMENT YEAR 2007-08. THE GROUNDS OF APPEAL READ AS U NDER:- 1. THE LD. CIT (A) ERRED IN CANCELING THE PENAL TY OF ` 70,10,010/- IMPOSED BY THE A.O U/S 271(1)(C) OF THE I T ACT, 1961. 2. THE APPELLANT CRAVES TO AMEND MODIFY, ALTER, ADD OR FOREGO ANY GROUND OF APPEAL AT ANY TIME BEFORE OR DUR ING THE HEARING OF THIS APPEAL. 2. THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF ENGINEERING AND DESIGN, SUPPLY OF EQUIPMENTS AND PROVI DING ERECTION AND COMMISSIONING, TESTING AND OTHER SERVICES TO STEEL IN DUSTRY IN ITA NO.5662/DEL/2011 2 INDIA. FOR ASSESSMENT YEAR 2007-08, THE ASSESSEE FILED IT S RETURN OF INCOME AS FOLLOWS:- PARTICULARS INCOME UNDER NORMAL PROVISIONS BOOK PROFITS U/S 115JB OF THE ACT. ORIGINAL RETURN FILED ON 31 ST OCTOBER, 2007 5,42,17,151 34,99,04,801 REVISED RETURN FILED ON 19 MARCH 2008 3,39,21,639 34,99,04,801 REVISED RETURN FILED ON 3 SEPTEMBER 2008 7,57,64,19 0 34,99,04,801 3. THE ASSESSMENT WAS COMPLETED U/S 143(3) VIDE ORDER DAT ED 22 ND NOVEMBER, 2010 WHEREIN TOTAL INCOME OF THE ASSESSEE AS D ETERMINED AT ` 9,65,90,200/- AFTER MAKING DISALLOWANCE OF ` 2, 08,25,931/- IN RESPECT OF SET OFF OF BROUGHT FORWARD LOSSES AND UNABSORB ED DEPRECIATION. ON SUCH ASSESSMENT PENALTY U/S 271(1)(C) H AS BEEN IMPOSED VIDE IMPUGNED PENALTY ORDER DATED 30 TH MAY, 2011 BY HOLDING THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF ITS INCOME BY CLAIMING EXCESS LOSS TO THE EXTENT OF ` 2,08,25,931/- A ND, ACCORDINGLY, CONCEALMENT PENALTY OF ` 70,10,010/- HAS BEEN IMPOSED U/S 271(1)(C) OF THE ACT. DURING THE COURSE OF PENALTY PROCEEDING S IT WAS SUBMITTED BY THE ASSESSEE THAT THE CLAIM OF SET OFF OF BROUGHT FOR WARD LOSSES AND UNABSORBED DEPRECIATION IS BASED ON LOSSES AND UNABSORBED DEPRECIATION CARRIED FORWARD IN THE EARLIER YEARS AN D, ACCORDINGLY, NO INACCURATE PARTICULARS WERE FURNISHED. IT WAS ALSO SUBM ITTED THAT BROUGHT FORWARD LOSSES AND UNABSORBED DEPRECIATION OF E ARLIER YEARS WERE REDUCED CONSEQUENT TO DISALLOWANCES IN THE ASSESSMENT OF EARLIER YEARS FOR WHICH DISPUTES WERE BEING RAISED. RELIANCE WA S ALSO PLACED INTER ALIA ON THE DECISION OF JURISDICTIONAL HIGH COU RT IN THE CASE OF CIT VS. NALWA SONS INVESTMENT LTD. 327 ITR 543 (DEL) TO CO NTEND THAT IN A CASE WHERE INCOME COMPUTED UNDER NORMAL PROVISIONS IS L ESS THAN INCOME DETERMINED U/S 115JB AND THE ASSESSEE HAVING BEEN ASSESSED U/S 115JB, CONCEALMENT PENALTY COULD NOT BE IMPOSED A ND DISALLOWANCES ON ACCOUNT OF PF CONTRIBUTION MADE BELA TEDLY, DEDUCTION CLAIMED U/S 80HHC AND DEPRECIATION CLAIMED ON MACHIN ERY PURCHASED ITA NO.5662/DEL/2011 3 ON THE LAST DAY OF THE YEAR, ETC. LEARNED CIT (A) , AFTER ACCEPTING SUCH SUBMISSIONS OF THE ASSESSEE AND MAINLY RELYING UPON THE AFOREMENTIONED DECISION OF JURISDICTIONAL HIGH COURT, HAS DELETED THE PENALTY. THE DEPARTMENT IS AGGRIEVED, HENCE, IN APP EAL. 4. NOTICE OF HEARING WAS SENT TO THE ASSESSEE, HOWEVER, N ONE WAS PRESENT ON THE FIXED DATE OF HEARING. THEREFORE, WE PROCEEDED TO DECIDE THE PRESENT APPEAL OF THE DEPARTMENT EX PARTE QUA THE ASSESSEE. 5. THE LEARNED DR, RELYING UPON THE PENALTY ORDER, PLEADED THAT THE PENALTY WAS RIGHTLY IMPOSED BY THE ASSESSING OFFICER AND IT HAS WRONGLY BEEN DELETED BY THE LEARNED CIT (A). 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE L EARNED DR. WE HAVE ALSO GONE THROUGH THE PENALTY ORDER AS WELL A S THE ORDER PASSED BY THE LEARNED CIT (A). THE IMPUGNED PENALTY HAS BEEN IMPOSED BY THE ASSESSING OFFICER FOR CLAIMING EXCESS LOSS OF ` 2,08,25,931/- AND THE ASSESSING OFFICER OBSERVED THAT TH IS IS RESULT OF FURNISHING INACCURATE PARTICULARS BY THE ASSESSEE OF ITS I NCOME. THE AFOREMENTIONED DECISION OF HONBLE DELHI HIGH COURT WAS CITED BEFORE THE ASSESSING OFFICER, BUT, HE HAS IGNORED THIS DECISION SI MPLY ON THE BASIS THAT THE SAID DECISION OF HONBLE HIGH COURT CANN OT BE A GROUND TO HOLD THAT THE NORMAL INCOME HAVING NOT BEEN ASSESSED , PENALTY U/S 271(1)(C) CANNOT BE IMPOSED. IN OUR OPINION, THIS OB SERVATION OF THE ASSESSING OFFICER IS CONTRARY TO JUDICIAL DISCIPLINE. AC CORDING TO THE AFOREMENTIONED DECISION, PENALTY CANNOT BE IMPOSED IN A CASE WHERE ASSESSABLE INCOME DEPEND UPON SECTION 115JB BEING HIGHE R OF THE INCOME ASSESSED UNDER THE NORMAL PROVISIONS. IN THE PRESEN T CASE ASSESSING OFFICER HAS CHOSEN TO ASSESS THE INCOME OF THE ASSESSEE NOT ON THE BASIS OF NORMAL PROVISIONS OF THE IT ACT, BUT, H E HAS ASSESSED ITA NO.5662/DEL/2011 4 THE INCOME OF THE ASSESSEE UNDER SECTION 115JB AS THE IN COME ASSESSABLE UNDER THE NORMAL PROVISIONS IS ONLY A SUM OF RS.9,65,90,200/- AS AGAINST ASSESSABLE U/S 115JB OF RS.34,99 ,04,801/-. THE INCOME ASSESSABLE UNDER NORMAL PROVISIONS BEING LESSER THAN THE INCOME ASSESSABLE U/S 115JB, THE RATIO OF AFOREMENTIONED DECISION OF HONBLE HIGH COURT WILL BE APPLICABLE AS THE TAX HAS NOT BEEN CHARGED ON THE ADDITION MADE IN THE COMPUTATION UNDER THE N ORMAL PROVISIONS. BECAUSE, EVEN IF IT IS CONCEALMENT IT DOES NOT HAVE RO LE TO PLAY, AS SUCH, CONCEALMENT DID NOT LEAD TO TAX EVASION AT ALL. THE RELEVANT PORTION OF THIS DECISION HAS BEEN REPRODUCED IN THE IM PUGNED PENALTY ORDER AS WELL AS IN THE ORDER OF LEARNED CIT (A). TH E DELETION OF PENALTY BY THE LEARNED CIT (A) BEING IN ACCORDANCE WITH THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT, WE DECLINE TO INTERFERE I N THE DELETION OF PENALTY. THE ORDER PASSED BY THE LD. CIT (A) IS UPHEL D AND THE DEPARTMENTAL APPEAL IS DISMISSED. 7. IN THE RESULT, THE APPEAL FILED BY THE DEPARTMENT IS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 16.02.20 12. SD/- SD/- [K.D. RANJAN] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 16.02.2012. DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT ITA NO.5662/DEL/2011 5 TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES