Brijbasi Art Press Ltd., New Delhi V. ACIT, New Delhi

ITA 5939/DEL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8107 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 06-04-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 06-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K K JAISWAL
• Assessee Lawyers: SA TYAM SETH; A J PANDA
• Keywords: Depreciation; Opportunity of being heard; Additional evidence; Wrong claim; Revised return
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SH. N. K. SAINI, AM AND SH. KULDIP SINGH, JM ITA NO. 5939/DEL./2013 : ASSTT. YEAR : 2009-10 BRIJBASI ART PRESS LTD. E-46/11, OKHLA INDUSTRIAL AREA, PHASE-II NEW DELHI VS ACIT CIRCLE 3(1) NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. AAACB0044L APPELLANT BY : SH. SA TYAM SETH, ADV. & A.J.PANDA, ADV. RESPONDENT BY : SH. K.K.JAI SWAL, DR DATE OF HEARING : 06.04.2016 DATE OF PRONOUNCEMENT : 29.04.2016 ORDER PER N.K. SAINI, A.M. THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 11/09/2013 OF THE LD. CIT(A) VI, NEW DELHI. THE O NLY GRIEVANCE OF THE ASSESSEE IN THIS APPEAL RELATES TO THE CONFIRMATION OF PENALTY LEVIED BY THE AO U/S 271(1) (C) OF THE INCOME TAX ACT, 1961 ((HEREINAFTER REFERRED AS THE ACT). ITA NO.5939/DEL/2013 BRIJBASI ART PRESS LTD. 2 2. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSES SEE FILED ITS RETURN OF INCOME ON 30.09.2009 DECLARING AN INCOME OF RS. 1,31,77,350/- WHICH WAS PROCESSED U/S 143(1) OF THE ACT, LATER ON THE CASE WAS SELECTED FOR SCRUTINY. THE AO FRAMED THE ASSESSMENT AT AN INCOME OF RS. 1,49,70,220/- B Y MAKING THE VARIOUS ADDITIONS ON ACCOUNT OF LONG TERM CAPIT AL GAIN INTEREST ON FBT AND DEPRECIATION ON COMPUTER PERIPH ERAL. THE AO ALSO INITIATED THE PENALTY PROCEEDINGS U/S 2 71(1)(C) OF THE ACT. 3. THE SUBMISSIONS OF THE ASSESSEE BEFORE THE AO WERE AS UNDER : THE ASSESSEE UNDER THE BONA FIDE BELIEF DEDUCTED T HE WHOLE AMOUNT OF CONSIDERATION FROM THE BLOCK. AS SO ON AS THE ASSESSEE CAME TO KNOW, IT OFFERED THE LONG TERM CAP ITAL GAIN ON THE VALUE OF LAND TO BE INCLUDED IN ITS INCOME. NOTHING HAS EITHER BEEN CONCEALED NOR INACCURATE PARTICULARS HA VE BEEN FURNISHED BY THE ASSESSEE. BY DEDUCTING THE FULL VALUE OF CONSIDERATION OF RS . 46,00,000/- THE ASSESSEE HAS ALSO FORGONE THE DEPRE CIATION CLAIM ON THE VALUE OF FACTORY BUILDING AMOUNTING TO RS. 264078 BEING 10% OF RS. 2640787/-. THUS THE ASSESSEE COMPANY HAS PROVIDED FULL PARTIC ULARS OF INCOME IN ITS RETURN OF INCOME TO THE BEST OF IT S BELIEF. ITA NO.5939/DEL/2013 BRIJBASI ART PRESS LTD. 3 THE RELIANCE WAS PLACED IN THE JUDGMENT OF TH E HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. REPORTED AT (2010) 322 ITR 15 8. THE AO HOWEVER, DID NOT FIND ANY MERIT IN THE SUBMISSIONS OF THE ASSESSEE AND CONSIDERED RS. 17,64,915/- ADDED BY TH E AO ON ACCOUNT OF LONG TERM CAPITAL GAIN AS CONCEALED INCO ME AND ACCORDINGLY PENALTY OF RS. 5,99,895/- WAS LEVIED U/ S 271(1)(C) OF THE ACT. 4. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTE R TO THE LD. CIT(A) AND SUBMITTED THAT THE ASSESSEE WAS CLAIMING DEPRECIATION ON THE TOTAL COST OF THE FACTORY LAND AND BUILDING, AS IT WAS NOT POSSIBLE TO SEGREGATE THE C OST OF LAND FROM TOTAL COST BUT THE AO HELD AND ASSUMED THAT 70 % OF THE TOTAL VALUE WAS THAT OF THE LAND AND REMAINING 30% WAS OF THE FACTORY BUILDING, THOUGH THERE WAS NO SEPARATE VALUE IN THE SALE DEED OF THE LAND & FACTORY BUILDING. IT WA S FURTHER SUBMITTED THAT THE FACTORY WAS SOLD SUBSEQUENTLY AN D THE ASSESSEE REDUCED THE AMOUNT OF RS. 46,00,000/- FROM THE WDV BLOCK OF FACTORY BUILDINGS, THEREBY REDUCING TH E WDV OF THE BLOCK AS THE VALUE OF THE FACTORY WAS INCLUD ED IN THE BLOCK OF FACTORY BUILDING AND THE PROFIT EARNED ON THE SALE OF FACTORY BUILDING WAS SHOWN AS INCOME UNDER THE HEAD OTHER ITA NO.5939/DEL/2013 BRIJBASI ART PRESS LTD. 4 INCOME. IT WAS FURTHER SUBMITTED THAT DURING THE C OURSE OF REGULAR ASSESSMENT, THE ASSESSEE SEGREGATED THE COS T OF LAND AND BUILDING ON THE BASIS OF FORMULA ADOPTED BY THE AO AND OFFERED THE CAPITAL GAIN TAX, ON THE VALUE OF LAND ACCORDINGLY THE AO MADE THE ADDITION OF RS. 17,69,915/- ON ACCO UNT OF LONG TERM CAPITAL GAIN. IT WAS FURTHER SUBMITTED TH AT THE ASSESSEE WAS UNDER THE BONA FIDE BELIEF THAT THE AM OUNT WAS DEDUCTIBLE FROM THE BLOCK OF FACTORY BUILDINGS AS I T CONTAINED THE VALUE OF LAND AS WELL AS VALUE OF FACTORY BUILD ING. ACCORDINGLY THE ASSESSEE CLAIMED DEPRECIATION ON TH E VALUE REDUCED BY RS. 46,00,000/-. IT WAS FURTHER SUBMITTE D THAT THE TIME TO FILE THE REVISED RETURN OF INCOME HAD ALREA DY EXPIRED BUT THE ASSESSEE FURNISHED FULL PARTICULARS IN RESP ECT OF THE SALE OF FACTORY IN ITS RETURN OF INCOME, PROFIT & L OSS ACCOUNT AND BALANCE SHEET. THEREFORE, NOTHING HAD BEEN CONC EALED NOR INACCURATE PARTICULARS WERE FURNISHED IN THE RE TURN OF INCOME AND THE MISTAKE WAS AN INADVERTENT ONE NOT W ITH THE MOTIVE TO DEFRAUD THE REVENUE. THE ASSESSEE ALSO PO INTED OUT MISTAKE IN CALCULATION OF THE TAX AND THE PENAL TY. 5. THE LD. CIT, HOWEVER, DID NOT FIND MERIT IN THE SUBMISSIONS OF THE ASSESSEE AND SUSTAINED THE PENAL TY LEVIED BY THE AO. NOW THE ASSESSEE IS IN APPEAL AND HAD FU RNISHED AN APPLICATION UNDER RULE 29 OF THE INCOME TAX APPE LLATE ITA NO.5939/DEL/2013 BRIJBASI ART PRESS LTD. 5 TRIBUNAL RULES, 1963 FOR ADMISSION OF ADDITIONAL EV IDENCES STATING THEREIN AS UNDER : MAY IT PLEASE VOUR HONOURS 1. THE PRESENT APPEAL ARISES OUT OF ORDER OF THE COMM ISSIONER OF INCOME TAX (APPEALS)-VI, NEW DELHI DATED 11.9.2013, WHEREB Y, THE CIT(A) HAS UPHELD THE ORDER LEVYING PENALTY OF RS.5,99,895/- UNDER SE CTION 271(L)(C). 2. THE APPELLANT IS ENGAGED IN THE BUSINESS OF PRINTI NG OF POSTERS, CALENDARS & RELIGIOUS PICTURES. THE APPELLANT HAS I TS FACTORIES AT (I) A-81, SECTOR-5, NOIDA, UP, (II) GREATER NOIDA, UP AND (II I) SHIVAKASI, TAMILNADU. DURING THE YEAR, THE APPELLANT HAD SOLD ITS FACTORY BUILDING AND THE LAND AT SHIVAKASI, TAMILNADU FOR A CONSIDERATION OF RS.46,0 0,000/-. THE APPELLANT HAD PURCHASED THIS PROPERTY IN THE ASSESSMENT YEAR 1994 - 95 FOR RS.9,25,055/-. 3. FOR THE ASSESSMENT YEAR 2009-10, RETURN DECLARING INCOME OF RS. 1,31,77,350/- WAS FILED ON 30.9.2009, WHICH WAS COM PUTED AS UNDER: NET PROFIT AS PER P&L A/C 2,26 ,08,586 ADD : DEPRECIATION AS PER BOOKS 2,42,68,289 DONATION 43,706 GRATUITY 14,96,551 ROC FEES 2,07,118 2,60,15,664 4,86,24,250 LESS : DEPRECIATION AS PER RULES 3,06,42,870 GRATUITY PAID 6,81,449 PROFIT ON SALES OF FIXED ASSETS 41,22,579 3,54,46,898 TOTAL INCOME 1,31,77,350/- 4. SINCE THE APPELLANT HAS BEEN CLAIMING DEPRECIATI ON ON THE ENTIRE COST OF FACTORY BUILDING AND LAND AT SHIVAKASI, TAMILNADU, THEREFORE, ON SALE OF THE FACTORY, THE ENTIRE CONSIDERATION OF RS.46,00,000/- WAS REDUCED FROM THE BLOCK OF FIXED ASSETS (BUILDING). 5.THE ASSESSMENT U/S 143(3) WAS MADE AT AN INCOME O F RS. 1,49,70,219/-. IN ITA NO.5939/DEL/2013 BRIJBASI ART PRESS LTD. 6 COMPUTING THE INCOME, THE PROFIT ON SALE OF FACTORY AT SHIVAKASI WAS ASSESSED AS LONG TERM CAPITAL GAIN, WHICH WAS COMPUTED AT RS . 17,64,915/-. 6. THE ASSESSING OFFICER LEVIED PENALTY OF RS.5,99, 895/- U/S 271(L)(C), FOR THE REASON THAT THE CAPITAL GAIN WAS NOT SHOWN IN THE R ETURN AND ONLY AFTER THE QUERY, THE SAME WAS OFFERED TO TAX UNDER THE HEAD ' CAPITAL GAIN'. 7. IN FIRST APPEAL, THE CIT(A) UPHELD THE LEVY OF PENALTY FOR THE REASON THAT IN ASSESSMENT YEARS 2003-04 TO 2008-09, APPELLANT CLAI MED DEPRECIATION ON THE FACTORY BUILDING INCLUDING ON LAND AND THAT THE PEN ALTY IMPOSED THEREIN WAS UPHELD IN APPEAL AND THAT DURING THE YEAR UNDER CON SIDERATION, THE APPELLANT DID NOT REFLECT CAPITAL GAIN ON SALE OF THE FACTORY INCLUDING THE LAND SITUATED AT SHIVAKASI. REASON FOR FILING ADDITIONAL EVIDENCE 8. IT IS SUBMITTED THAT THE REASON THAT THE APPELLA NT DID NOT SHOW CAPITAL GAIN ON SALE OF THE FACTORY INCLUDING THE LAND SITUATED AT SHIVAKASI IS TO BE SEEN IN THE CONTEXT OF THE FACT THAT THE APPELLANT HAD REDU CED THE ENTIRE SALE CONSIDERATION OF RS.46,00,000/- FROM THE WDV OF BLO CK OF ASSETS. NON DECLARATION OF CAPITAL GAIN IS NOT TO BE SEEN IN-IS OLATION. IT IS SUBMITTED THAT THOUGH THE NON DECLARATION OF CAPITAL GAIN ON SALE OF FACTORY BUILDING WITH LAND WAS INCORRECT BUT THE QUESTION IS WHETHER THE CONDUCT OF THE APPELLANT WAS BONAFIDE. 9.THE BONAFIDE OF THE APPELLANT IS EVIDENT FROM THE FACT THAT NOT ONLY WDV OF THE FACTORY BUILDING WAS REDUCED BY THE CONSIDERATI ON OF RS.46,00,000/- IN THE YEAR IN QUESTION BUT IN THE LATER ASSESSMENT YE ARS I.E. 2010-11, 2011-12, 2012-13, 2013-14 AND 2014-15 ALSO THE DEPRECIATION ON THE FACTORY BUILDING WAS CLAIMED ON THE REDUCED WDV. TO SUBSTANTIATE THA T EVEN IN LATER YEARS, THE APPELLANT CLAIMED DEPRECIATION ON THE BLOCK AS REDUCED BY RS.46,00,000/-, THE COMPUTATION OF INCOME FOR ASSES SMENT YEAR 2010-11 TO 2014-15 WITH BALANCE SHEETS AND THE ASSESSMENT ORDE RS FOR THE RESPECTIVE YEARS ARE BEING FILED AT PAGES 10 TO 63 OF THE PAPE R BOOK. . THE ASSESSMENT ORDERS FOR ASSESSMENT YEARS 2010-11, 2011-12 AND 20 12-13 WOULD SHOW THAT THE APPELLANT HAS FORGONE THE DEPRECIATION IN THE LATER YEARS. 10. THAT THE POSITION THAT EMERGES IS THAT BY REDUC ING THE BLOCK OF ASSET OF FACTORY BUILDING BY THE AMOUNT OF SALE CONSIDERA TION OF RS.46,00,000/- ITA NO.5939/DEL/2013 BRIJBASI ART PRESS LTD. 7 , THE APPELLANT INCREASED ITS INCOME FOR ALL TIMES TO COME. THUS SEEN IN TOTALITY, THE ACTION OF THE APPELLANT OF NOT DECLAR ING CAPITAL GAIN WAS NOT MOTIVATED TO CONCEAL THE INCOME / EVADE TAX BUT THE ACTION WAS THE RESULT OF PAST WRONG. SINCE THE APPELLANT IN PAST HAS BEEN CLAIMING DEPRECIATION ON THE COST OF FACTORY BUILDING INCLUD ING LAND COST, THEREFORE, THE APPELLANT WAS UNDER THE IMPRESSION T HAT HAVING CLAIMED DEPRECIATION ON THE ENTIRE COST, THE ENTIRE SALE CO NSIDERATION HAS TO BE REDUCED FROM THE BLOCK. 11. THAT THE APPELLANT ON ACCOUNT OF WRONG CLAIM IN PAST HAS SUFFERED FROM ALL SIDES. IN THE ASSESSMENT YEARS EARLIER TO THE SALE OF FACTORY BUILDING I.E. 2003-04 TO 2008-09 DEPRECIATION WAS N OT ALLOWED ON THE ENTIRE COST AND YEAR OF SALE I.E. 2009-10, CAPITAL GAIN WAS CHARGED ON THE SALE OF FACTORY AND IN THE YEARS SUBSEQUENT TO SALE OF FACTORY I.E. 2010-11 TO 2014-15, DEPRECIATION WAS CLAIMED AND AL LOWED ON THE REDUCED WDV. 12. APPELLANT SUBMITS THAT THOUGH IT MADE A WRONG C LAIM BUT THE COMPLETE PARTICULARS WERE FURNISHED, INASMUCH AS, I N THE COMPUTATION OF INCOME, PROFIT ON SALE OF FIXED ASSETS WAS SEPARATE LY SHOWN (PAGE 2 OF THE PAPER BOOK) . MOREOVER, IN THE DEPRECIATION CHART ENTIRE SALE CONSIDERATION OF RS.46,00,000/- WAS SHOWN UNDER THE HEAD 'DELETION' AND ACCORDINGLY, THE BLOCK WAS REDUCED (PAGE 9 OF T HE PAPER BOOK) . 13. THAT THE ADDITIONAL EVIDENCE BY WAY OF COMPUTAT ION OF INCOME FOR THE ASSESSMENT YEARS 2010-11 TO 2014-15 WITH BALANC E SHEETS AND THE ASSESSMENT ORDERS ARE VITAL TO DECIDE THE ISSUE OF LEVY OF PENALTY U/S 271(L)(C) OF THE ACT. THE EVIDENCE BEING FILED IS O N THE RECORD OF THE ASSESSING OFFICER BUT FOR THE LATER ASSESSMENT YEAR S. ADMISSION OF ADDITIONAL EVIDENCE WOULD NOT CAUSE ANY PREJUDICE T O THE DEPARTMENT, RATHER, IT WOULD ADVANCE THE CAUSE OF JUSTICE. IN VIEW OF THE ABOVE, IT IS SUBMITTED THAT IN THE I NTEREST OF JUSTICE AND TO ENABLE THIS HON'BLE TRIBUNAL TO ARRIVE AT A JUST DE CISION, THE ADDITIONAL EVIDENCE MAY BE ADMITTED AND BE ADJUDICATED UPON. ITA NO.5939/DEL/2013 BRIJBASI ART PRESS LTD. 8 IT IS SUBMITTED ACCORDINGLY. FOR : BRIJBASI ART PRESS LTD. 6. DURING THE COURSE OF HEARING THE LD. COUNSEL F OR THE ASSESSEE REITERATED THE CONTENTS OF THE AFORESAID A PPLICATION AND REQUESTED TO ADMIT THE ADDITIONAL EVIDENCES. IN HIS RIVAL SUBMISSIONS, THE LD. DR OPPOSED THE ADMISSION OF TH E ADDITIONAL EVIDENCES AND SUBMITTED THAT THE ASSESSE E DID NOT FURNISH THESE DOCUMENTS EITHER BEFORE THE LD. CIT(A ) OR THE AO, THEREFORE, THESE SHOULD NOT BE ADMITTED. HE, FU RTHER, SUBMITTED THAT THE ASSESSEE CONCEALED THE INCOME AN D FURNISHED INACCURATE PARTICULARS OF INCOME. THEREFO RE, PENALTY U/S 271(1)(C) OF THE ACT WAS RIGHTLY LEVIED BY THE AO AND SUSTAINED BY THE LD. CIT. 7. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE O N THE RECORD. IN THE PRESENT CASE, IT APPEARS THAT THE A SSESSEE WAS CLAIMING DEPRECIATION ON THE ENTIRE COST OF FACTORY BUILDING AND LAND AT SIVAKASHI, TAMILNADU. LATER ON WHEN THE FACTORY WAS SOLD, ITS VALUE WAS REDUCED FROM THE BLOCK OF F IXED ASSETS AND NO LONG TERM CAPITAL GAIN WAS SHOWN ON THE LAND. THE ASSESSEE FURNISHED ADDITIONAL EVIDENCES BY WAY OF COMPUTATION OF INCOME FOR THE ASSESSMENT YEARS 2010 -11 TO ITA NO.5939/DEL/2013 BRIJBASI ART PRESS LTD. 9 2014-15 WITH BALANCE SHEET AND THE ASSESSMENT ORDER S. THESE DOCUMENTS ARE VITAL TO DECIDE THE ISSUE UNDER CONSI DERATION AND GO TO THE ROOT OF THE MATTER, THEREFORE, THESE ARE ADMITTED. HOWEVER, SINCE THESE DOCUMENTS WERE NOT AVAILABLE TO THE LD. CIT(A) FOR HIS CONSIDERATION, WE, THEREFORE, DEEM IT APPROPRIATE TO SET ASIDE THIS IS SUE BACK TO THE FILE OF THE LD. CIT(A) TO BE ADJUDICATED AFRESH IN ACCORDANCE WITH LAW, AFTER CONSIDERING THE ADDITION AL EVIDENCE FURNISHED BY THE ASSESSEE FIRST TIME BEFOR E THE ITAT AND BY PROVIDING DUE & REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. (ORDER PRONOUNCED IN THE COURT ON 29/04/2016). SD/- SD/- (KULDIP SINGH) (N. K. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 29/ 04/2016 *B.RUKHAIYAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITA NO.5939/DEL/2013 BRIJBASI ART PRESS LTD. 10 DATE INITIAL 1. DRAFT DICTATED ON 27.04.2016 2. DRAFT PLACE D BEFORE AUTHOR 27.04.2016 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 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.