AGARWAL FERRO METALLIC P.LTD, UTTAR PRADESH V. DCIT CEN CIR 33, MUMBAI

ITA 578/MUM/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4536 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 11 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 11-01-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 30-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MANISH SANGHAVI
• Keywords: Depreciation
• Section: 133A; 148

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN , AM AND AMARJIT SINGH , JM ./ I.T.A. NO . 578 / MUM/ 201 2 ( / ASSESSMENT YEA R : 200 7 - 08 ) M/S AGARWAL F ERRO METALLIC PVT LTD., 7/103, MAM A BHANJA MITTAL ROAD, ALIGARH, UTTAR PRADESH - 202001 / VS. DY.COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 33, OLD CGO BUILDING, M K ROAD, MUMBAI - 400020 ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN. : AAFCA3655B / A SSESSEE BY SHRI MANISH SANGHAVI / RE VENUE BY SHRI GANESH BARE / DATE OF HEARING : 1 2 .1.20 16 / DATE OF PRONOUNCEMENT: 12 .1.2016 / O R D E R P ER B R BASKARAN,AM: THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 15.11.2011 PASSED BY THE LD.CIT(A) - 37 , MUMBAI CONFIRMING THE PENALTY OF RS.2,30,846/ - LEVIED BY THE AO U/S 2 71 (1)(C) OF THE INCOME TAX ACT, 1961. 2. THE LD. COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE DECLARED TOTAL LOSS OF RS.1.24 CRORES IN THE RETURN OF INCOME FILED BY IT. THE ASSESSEE DID NOT CLAIM DEPRECIATION IN THE RETURN OF INCOME. 578/M/ 2013 2 THE AO HELD THAT THE DEPRECIATION CLAIM IS MANDATORY AND ACCORDINGLY HE ALLOWED A SUM OF RS.48.19 LAKHS AS DEPRECIATION. BESIDES THE ABOVE, THE AO ALSO MADE AN ADDITION OF RS.7.36 LAKHS TOWARDS DIFFERENCE IN STOCK VALUE FOUND DURING THE COURSE OF SURVEY C ONDUCTED UNDER SECTION 133A OF THE ACT IN THE HANDS OF THE ASSESSEE ON 10.11.2006. ACCORDINGLY, THE AO DETERMINED TOTAL LOSS OF RS.1.64 CRORES , AS AGAINST RETURNED LOSS OF RS.1.24 CRORES. 3. THE LD. AR SUBMITTED THAT THE PENALTY U/S 271(1)(C) IS NOT LEVI ABLE SINCE THE AO HAS INCREASED THE LOSS RETURNED BY THE ASSESSEE. IN THIS REGARD, HE PLACED RELIANCE ON THE EXPLANATION 4 TO SECTION 271(1)(C) OF THE ACT. 4. ON THE CONTRARY, THE LD. DR PLACED RELIANCE ON THE ORDERS OF TAX AUTHORITIES. 5. WE HAVE HE ARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. IT IS AN ADMITTED POSITION THAT THE LOSS RETURNED BY THE ASSESSEE HAS BEEN INCREASED BY THE AO . UNDER SECTION 271(1)(C) THE PENALTY IS LEVIED ON THE AMOUNT OF TAX SOUGHT TO BE EVADED BY THE REASON OF C ONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF SUCH INCOME. EXPLANATION 4 TO SECTION 271(1)(C) DEFINES THE EXPRESSION THE AMOUNT OF TAX SOUGHT TO BE EVADED AS UNDER : EXPLANATION 4. FOR THE PURPOSES OF CLAUSE (III) OF THIS SUB - SECTION, THE EXPRESSION 'THE AMOUNT OF TAX SOUGHT TO BE EVADED', [(A) IN ANY CASE WHERE THE AMOUNT OF INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED OR INACCURATE PARTICULARS HAVE BEEN FURNISHED HAS THE EFFECT OF REDUCING THE LOSS DECLARE D IN THE RETURN OR CONVERTING THAT LOSS INTO INCOME, MEANS THE TAX THAT WOULD HAVE BEEN CHARGEABLE ON THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED OR INACCURATE PARTICULARS HAVE BEEN FURNISHED HAD SUCH INCOME BEEN THE TOTAL INCOME;] 578/M/ 2013 3 (B) I N ANY CASE TO WHICH EXPLANATION 3 APPLIES, MEANS THE TAX ON THE TOTAL INCOME ASSESSED 85 [AS REDUCED BY THE AMOUNT OF ADVANCE TAX, TAX DEDUCTED AT SOURCE, TAX COLLECTED AT SOURCE AND SELF - ASSESSME NT TAX PAID BEFORE THE ISSUE OF NOTICE UNDER SECTION 148 ]; (C) IN ANY OTHER CASE, MEANS THE DIFFERENCE BETWEEN THE TAX ON THE TOTAL INCOME ASSESSED AND THE TAX THA T WOULD HAVE BEEN CHARGEABLE HAD SUCH TOTAL INCOME BEEN REDUCED BY THE AMOUNT OF INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED OR INACCURATE PARTICULARS HAVE BEEN FURNISHED.] IF THE ABOVE SAID EXPLANATION IS APPLIED TO THE FACTS AVAILABLE IN THE PRESENT CASE, ONE CAN NOTICE THAT THE PRESENT CASE DOES NOT FIT INTO IN ANY OF THE THREE CLAUSES STA T ED ABOVE. ACCORDINGLY, WE FIND MERIT IN THE CONTENTION OF THE LD.AR THAT THE TAX SOUGHT TO BE EVADED CANNOT BE ASCERTAINED IN THE FACTS AND CIRCUMSTA NCES OF THE CASE, HENCE, NO PENALTY U/S 271(1) (1)( C ) CAN LEVIED , SINCE THE COMPUTATION PROVISION FAILS . 6 . FOR THE REASONS STATED ABOVE, WE SET ASIDE THE ORDER OF LD.CIT(A) AND DIRECT THE AO TO DELETE THE PENALTY. 7 . IN THE RESULT, THE APPEAL OF T HE ASSESSEE IS ALLOWED. PRONOUNCED ACCORDINGLY ON 12TH JAN UARY , 2016 . 12 TH JANUARY, 2016 SD SD ( AMARJIT SINGH ) ( B.R. BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 12TH JANUARY, 201 6 . . . ./ SRL , SR. PS 578/M/ 2013 4 / COPY OF THE ORDER FORWARDED T O : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI