M/s. Shivriem Megamarts Private Limited, New Delhi V. DCIT, New Delhi

ITA 5724/DEL/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3402 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2007-2008
• Appeal Filed On: 22-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAUSHLENDRA TIWARI
• Keywords: Depreciation; Question of law; Wrong claim; Difference of opinion

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G, NEW DELHI BEFORE SH. G.D.AGARWAL, PRESIDEN T AND SH. KUL BHARAT, JUDICIAL M EMBER ITA NO. 5724/DEL./2014 : A SSTT. YEAR : 2007-08 SHIVRIEM MEGAMARTS PRIVATE LIMITED W-10/15, WESTERN AVENUE, SAINIK FARMS NEW DELHI PAN : AAGCS4968N VS DCIT CIRCLE-8(1) NEW DELHI (APPELLANT) (RESPONDENT) APPELLANT BY : SH. SA TYAJIT GOEL, ADV. RESPONDENT BY : SH. KAUSHLENDRA TIW ARI, SR. DR DATE OF HEARING : 22.02.2018 DATE OF PRONOUNCEMENT : 23.02.2018 ORDER PER KULBHARAT, J.M. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) XI, NEW DEL HI DATED 19.08.2014 PERTAINING TO ASSESSMENT YEAR 2007-08. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL :- 1.THAT THE ORDER OF THE LEARNED APPELLATE AUTHORIT Y IS ARBITRARY AND AGAINST LAW AND FACTS OF THE CASE. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS )-XI HAS WRONGLY, ARBITRARILY AND WITHOUT APPRECIATING T HE FACTS OF THE ITA NO.5724/DEL/2014 2 CASE, CONFIRMED THE PENALTY U/S 271(1)(C) OF THE AC T ON ADDITION OF RS. 28,48,615/- BY ESTIMATED INCREASE OF GROSS PROF IT @ 10% ON TRADING RESULTS OF THE COMPANY. 3. THE ONLY EFFECTIVE GROUND IS AGAINST CONFIRMITY THE PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED T O AS THE ACT). IN RESPECT OF ADDITION MADE ON THE BASIS OF ESTIMATION OF GROSS P ROFIT @ 10% ON TRADING RESULTS OF THE COMPANY. 4. FACTS IN BRIEF ARE THAT THE ASSESSMENT U/S 143(3 ) OF THE INCOME TAX ACT, 1961 OF THE ACT BY FRAMING THE ASSESSMENT. THE ASSE SSING OFFICER MADE ADDITIONS IN RESPECT OF ESTIMATION GROSS PROFIT DIS ALLOWANCE OF DEPRECIATION DISALLOWANCE OF CONTRIBUTION OF EMPLOYEES PROVIDENT FUND AND THE EXPENSES PAYABLE. ON APPEAL TO THE LD. CIT(A) CONFIRMED THE ADDITION ON ACCOUNT OF GROSS PROFIT OF RS. 29,48,615/-. IN RESPECT OF DEPR ECIATION ON ACCOUNT OF EXPENSES PAYABLE OF RS. 7,64,593/-. THE ASSESSING O FFICER IMPOSED PENALTY ON THIS ADDITIONS SUSTAINED BY THE LD. CIT(A). 5. AGGRIEVED BY THIS THE ASSESSEE PREFERRED AN APPE AL BEFORE THE LD. CIT(A) WHO AFTER CONSIDERING THE SUBMISSIONS PARTLY ALLOWE D THE APPEAL THEREBY THE LD. CIT(A) DELETED THE PENALTY IN RESPECT OF DISALLOWAN CE OF DEPRECIATION AND EPF. AGGRIEVED BY THIS, THE ASSESSEE HAS PREFERRED PRESE NT APPEAL. 6. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE PENALTY HAS BEEN SUSTAINED ON THE ADDITION MADE ON ESTIMATED BASIS. LD. COUNSEL SUBMITTED THAT UNDER THE IDENTICAL FACTS THE HONBLE HIGH COURT OF DELHI DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. ON THE CONTRARY, LD. DEPART MENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE AUTHORITIES BELOW AND RE ITERATED THE SUBMISSIONS AS MADE IN THE WRITTEN SUBMISSION. 7. WE HAVE HEARD THE RIVAL CONTENTIONS PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. THE REVENUE HAS ITA NO.5724/DEL/2014 3 NOT DISPUTED THE FACTS THAT THE PROFIT OF THE ASSES SEE WAS ESTIMATED AND PENALTY IS SUSTAINED ON THIS AMOUNT OF PROFIT ESTIMATED BY THE ASSESSING OFFICER. LD. COUNSEL FOR THE ASSESSEE HAS PLACED RELIANCE OF THE JUDGMENT OF HONBLE DELHI HIGH COURT RENDERED IN CASE OF COMMISSIONER OF INCO ME TAX VS. AERO TRADERS PVT. LTD. (2010)322 ITR316 (DELHI) FURTHER THE HON BLE HIGH COURT IN THE CASE OF CIT VS. NOKIA INDIA PVT. LTD. (SUPRA) HAS HELD A S UNDER :- 6. IT MAY BE NOTED THAT IN THE NEXT ASSESSMENT YEA R 2001-02, THE TOTAL AMOUNT CLAIMED BY THE ASSESSEE UNDER THE HEAD PROVISION FOR OBSOLESCENCE OF INVENTORY WAS RS. 35,575/-. WHILE THE ASSESSING OFFICER DISALLOWED THE ENTIRE AMOUNT, THE COMMISSIO NER OF INCOME-TAX (APPEALS) REDUCED THE DISALLOWANCE TO 25 PER CENT, THEREOF, AMOUNTING TO RS. 8,894/-. THE S AID DISALLOWANCE HAS BEEN AFFIRMED BY THE INCOME-TAX APPELLATE TRIBUNAL AND THE HIGH COURT. 7. THE TRIBUNAL, WHILE DEALING WITH THE QUESTION OF PENALTY UNDER SECTION 271(1)(C) ON THE G ROUND OF OBSOLESCENCE, HAS HELD AS UNDER (PAGE 801 OF 10 ITR (TRIB) : 'WE HAVE HEARD BOTH THE PARTIES AND HAVE CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. 4 IT IS NOT IN DISPUTE THAT DISALLOWANCE HAS BEEN MA DE BY THE REVENUE ONLY TO THE EXTENT OF 25 PER CENT, OF THE T OTAL CLAIM ON ACCOUNT OF PROVISION FOR OBSOLESCENCES OF INVENTORY AMOUNTING TO RS.4,94,66,656. IN OTHER WORDS, THE ASSESSING OFFIC ER HAS ALLOWED 75 PER CENT, OF THE CLAIM AND DISALLOWED ONLY 25 PE R CENT, THEREOF. THE ASSESSING OFFICER HAS DISALLOWED 25 PET CENT, O F THE CLAIM ON THE GROUND THAT THE OLD MODEL COULD EASILY BE SOLD IN THE MARKET TO THE CUSTOMERS SINCE THE CUSTOMERS OF THIS LINE ALSO PURCHASED OLD MODEL EVEN AFTER LAUNCHING NEW MODEL IN THE MARKET. THIS MAKES IT CLEAR THAT THE ASSESSEE'S CLAIM HAS NOT BEEN FUL LY REJECTED. IT IS ONLY ON ESTIMATE THAT THE ASSESSING OFFICER HAS DIS ALLOWED 25 PER ITA NO.5724/DEL/2014 4 CENT. OF THE TOTAL CLAIM. THE ASSESSING OFFICER HAS NOT GIVEN ANY SUCH FINDING THAT THE ASSESSEES CLAIM WAS OTHERWIS E A FALSE CLAIM. THE ADDITION MADE BY THE ASSESSING OFFICER COULD AT BEST BE CONSIDERED DUE IN DIFFERENCE OF OPINION BETWEEN THE ASSESSEE AND THE DEPARTMENT BUT CANNOT BE SAID TO BE A CLAIM OF SUCH A NATURE WHICH COULD BE CONSIDERED TO BE FALSE AND IN RESPEC T OF WHICH THE PENALTY UNDER SECTION 271(L)(C) IS TO BE LEVIED. WE , THEREFORE, UPHOLD THE ORDER OF THE LEARNED COMMISSIONER OF INC OME-TAX (APPEALS) IN DELETING THE PENALTY ON THIS ITEM ALSO .' 8. LOOKING AT THE REASONING GIVEN BY THE INCOME-TAX APPELLATE TRIBUNAL, NATURE OF DISALLOWANCE AND THE FINDING OF THE ASSESSING OFFICER/COMMISSIONER OF INCOME-TAX (APPEA LS) MAKING AD HOC DISALLOWANCE OF 25 PER CENT., WE DO NOT THIN K ANY SUBSTANTIAL QUESTION OF LAW ARISES IN THE PRESENT A PPEALS AND THE SAME ARE ACCORDINGLY DISMISSED . 8. WE, THEREFORE, RESPECTFULLY FOLLOWING THE SAME, DIRECT THE ASSESSING OFFICER TO DELETE THIS PENALTY. 9. IN THE RESULT, THE GROUNDS OF THE ASSESSEES AP PEAL ARE ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 23/0 2/2018). SD/- SD/- (G.D.AGARWAL) (KUL BHARAT) PRESIDENT JUDICIAL MEMBER DATED: 23/ 02/2018 *BINITA* COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(APPEALS) 5.DR: ITAT ASSISTANT REGIS TRAR ITA NO.5724/DEL/2014 5 DATE INITIAL 1. DRAFT DICTATED ON 22.02.2018 2. DRAFT PLACED BEFORE AUTHOR 22.02.2018 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 5. APPROVED DRAFT COMES TO THE SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 23.02.2018 7. FILE SENT TO THE BENCH CLERK 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.