Smt. Malathi Lakshmikumaran, New Delhi V. DCIT, New Delhi

ITA 6013/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97530 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 14-09-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 07-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA
• Assessee Lawyers: SALIL MEHTA
• Keywords: Depreciation
• Section: 148; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : E : NEW DELHI BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI KULDI P SINGH, JUDICIAL MEMBER ITA NO . 6013 /DEL/ 2013 ASSESSMENT YEAR: 2006 - 07 SMT. MALATHI LAKSHMIKUMARAN VS. DEPUTY COMMISSIONER OF B - 6/10, SAFDARJUNG ENCLAVE, INCOME TAX, CIRCLE - 37(1), NEW DELHI NEW DELHI. (PAN: AAIPM0421B ) (APPELLANT) (RESPONDENT) APPELLANT BY : SH. AJAY VOHRA, SR. ADV. & SH. SALIL MEHTA, CA RESPONDENT BY : SH. P. DAM KANUNJNA, SR. DR DATE OF HEARING: 15.09.2015 DATE OF PRONOUNCEMENT: 30.09.2015 ORDER PER INTURI RAMA RAO, A.M. : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A) - XXVIII, NEW DELHI, DATED 8 TH AUGUST, 2013 PASSED FOR THE ASSESSMENT YEAR 2006 - 07. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL: THE APPELLANT IS FILING THE PRESENT APPEAL ON THE FOLLOWING GROUNDS WHICH ARE INDEPENDENT AND WITHOUT PREJUDICE TO EACH OTHER: I. THAT THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) - XXVIII, NEW DELHI (HEREIN AFTER REFERRED TO AS THE LD. FIRST APPELLATE COMMISSIONER) HAS ERRED IN CONCLUDING THAT SECTION 271(1)(C) AND 274 IS APPLICABLE IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. II. THAT THE LD. COMMISSIONER (APPEALS) HAS COMPLETELY ERRED IN HOLDING THAT THE PRESENT CASE IS A CLEAR CUT CASE OF FURNISHING INACCURATE PARTICULARS OF INCOME BASED ON THE FACT THAT THE A PPELLANT FILED THE REVISED COMPUTATION OF ONLY AFTER RECEIVING THE NOTICE U/S 148. 2 III. THAT THE LD. COMMISSIONER (APPEALS) HAS COMPLETELY ERRED IN HOLDING THAT THE ASSESSING OFFICER HAS FORMED AN OPINION REGARDING FURNISHING INACCURATE PARTICULARS OF INCOME WH EN IN FACT NO SUCH OPINION WAS FORMED BASED ON ANY MATERIAL BY THE ASSESSING OFFICER. IV. THAT THE LD. COMMISSIONER (APPEAL) HAS ERRED IN NOT APPRECIATING THE CONTENTION OF THE APPELLANT THAT THE CLAIM OF DEPRECIATION FOR THE ENTIRE BUILDING WAS A PURELY BONA FIDE MISTAKE AND MALA FIDE AND HENCE NO PENALTY IS IMPOSABLE UNDER SECTION 271(1)(C) AND 274. V. THAT THE LD. COMMISSIONER (APPEAL) HAS ERRED IN LAW IN NOT APPRECIATING THE WELL SETTLED LEGAL POSITION THAT MERE CLAIM OF DEDUCTION WHICH IS HELD INELIGIBLE BY THE AUTHORITIES DOES NOT CALL FOR ANY PENALTY UNDER SECTION 271(1)(C) AND 274. THE APPELLANT FURTHER CRAVES LEAVE TO RAISE OTHER GROUNDS IN THE COURSE OF THE PROCEEDINGS BEFORE THIS HON BLE TRIBUNAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL. SHE FILED HER RETURN OF INCOME FOR THE ASSESSMENT YEAR 2006 - 07, DECLARING TOTAL INCOME OF RS. 34,56,750/ - ON 30 TH OCTOBER, 2009. THE CASE WAS NOT SELECTED FOR SCRUTINY ASSESSMENT . SUBSEQUENTLY, ON COMING TO KNOW THAT DEPRECIATION ON BUI LDING, BEARING ADDRESS, B - 6/10, SAFDARJUNG ENCL AVE, NEW DELHI, DISALLOWED FOR THE ASSESSMENT YEARS 2008 - 09 AND 2009 - 10 ON THE GROUND THAT THE BUILDING WAS NOT IN EXCLUSIVE USE FOR BUSINESS PURPOSES. THE ASSESSMENT WAS REOPENED BY ISSUING NOTICE UNDER SECTION 148 OF THE INCOME - TAX ACT, 1961 (FOR SHORT THE ACT ) , DATED 07.05.2010. IN RESPONSE TO THE SAID NOTICE, THE APPELLANT HAD WITHDRAWN THE CLAIM OF DEPRECIATION ON THE SAID BUILDING. ACCORDINGLY, THE REASSESSMENT WAS COMPLETED UNDER SECTION 143 (3) R.W.S 147 OF THE ACT VIDE ORDER DATED 23.12.2011 AND THUS THE ASSESSMENT REACHED THE PENALTY. WHILE THE MATTER STOOD THUS THE LEARNED ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS UNDER SECTION 3 271(1)(C) OF THE ACT. IN RES PONSE TO THE SHOW CAUSE NOTICE, IT WAS SUBMITTED THAT THE CLAIM OF DEPRECIATION IS ALWAYS A MATTER OF INTERPRETATION AND THE DEPRECIATION WAS SOUGHT TO BE DISALLOWED BY THE ASSESSING OFFICER ONLY ON ACCOUNT OF ADOPTING DIFFERENT INTERPRETATION ON THE ASPEC T OF THE USE OF THE BUILDING. THE ASSESSEE HAD AGREED FOR ADDITION , MERE FACT THAT THE ASSESSEE HIMSELF AGREED FOR THE ADDITION OR WITHDRAWN THE CLAIM FOR DEPRECIATION , DOES NOT IPSO FACT ATTRACT THE PENALTY. THE ASSESSING OFFICER, BRUSHING ASIDE THE EXPLA NATION OFFERED BY THE ASSESSEE, PROCEEDED TO LEVY THE PENALTY OF RS. 7,88,742/ - UNDER SECTION 271(1)(C) OF THE ACT VIDE ORDER DATED 26 TH JUNE, 2012. BEING AGGRIEVED BY THIS ORDER, AN APPEAL WAS PREFERRED BEFORE THE LD. CIT(A) WHO VIDE ORDER DATED 8 TH AUG UST, 2013 CONFIRMED THE ORDER OF PENALTY FOLLOWING THE DECISION S OF THE HON BLE DELHI HIGH COURT IN THE CASE S OF CIT VS. ESCORT FINANCE LTD., 328 ITR 44 (DEL); COMMISSIONER OF INCOME - TAX VS. ZOOM COMMUNICATION P. LTD. [2010] 327 ITR 510 (DEL) AND CIT VS. M AK DATA LTD., ITA NO. 415/2012, DT. 22.01.2013 . HENCE, THE ASSESSEE IS BEFORE US WITH THE PRESENT APPEAL. 3. LD. SENIOR COUNSEL SUBMITTED THAT IN THE ASSESSEE S OWN CASE ON THE SAME ISSUE FOR THE ASSESSMENT YEAR 2007 - 08 AND 2005 - 06, THIS HON BLE TRIBUNAL DELETED THE PENALTY IN ITA NO. 4748/DEL/2011 (A.Y. 2007 - 08) AND ITA NO. 945/DEL/2013 (A.Y. 2005 - 06) . THEREFORE, HE SUBMITTED THAT THE ISSUE IN APPEAL IS COVERED BY THE DECISION OF THIS TRIBUNAL. 4 4. ON THE OTHER HAND, LD. SR. DR PLACED RELIANCE O N THE ORDERS OF THE LOWER AUTHORITIES. 5. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATER IAL AVAILABLE ON RECORD. WE HAVE ALSO GONE THROUGH THE ORDER OF THE TRIBUNAL QUOTED BEFORE US. THE TRIBUNAL RENDERED THE FINDINGS ON THE MERITS OF THE ISSUE VIDE PARA S 12 & 15 OF THE ORDER AS UNDER: 12. THERE IS NO DISPUTE ON THE FACT THAT THE ASSESSEE IS THE OWNER OF TWO BUILDINGS SI TUATED AT B - 6/10 AND B - 4/158, SAFDURJUNG ENCLAVE, NEW DELHI. IT IS ALSO NOT DISPUTED THAT THE ASSESSEE IS CARRYING ON HER PROFESSION OF CONSULTANCY WHICH INCLUDES PREPARING, FILING AND PROCESSING OF PATENT APPLICATIONS BOTH IN INDIA AND ABROAD. SHE IS A PH. D. IN THE FIELD OF MOLECULAR BIOLOGY AND HAS BEEN WORKING IN THE FIELD OF INTELLECTUAL PROPERTY RIGHTS/PATENT MATTERS SINCE 2003. SHE STARTED TECHNICAL CONSULTATION RELATING TO IPAS AND PATENT AND IS ALSO ATTACHED TO THE LAW FIRMS NAMELY M/S LAKSHMIKUMARAN AND SHRIDHARAN AND INDIVIDUAL MR. V. LAKSHMIKUMARA, ADVOCATE, WHO HAPPENS TO BE HER HUSBAND AND SHE DERIVES INCOME FROM BOTH OF THEM. UNDER THESE CIRCUMSTANCES, THE ASSESSEE IS ENTITLED DEPRECATION AS THE TWIN CONDITION OF O WNERSHIP AND THE USE FOR THE PURPOSE OF PROFESSION ARE COMPLIED WITH. 15. EVEN OTHERWISE, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE HAS MADE A BONA - FIDE CLAIM. THE EXPENDITURE GIVEN BY THE ASSESSEE IS NOT FALSE. MERE DISALLOWANCE OF THE CLAIM DOE S NOT WARRANT LEVY OF PENALTY EITHER ON THE GROUND THAT THERE IS FURNISHING OF INACCURATE PARTICULAR OR ON THE GROUND THAT THIS IS CONCEALMENT OF INCOME. IN FACT IN THIS CASE, THE ASSESSEE HAS DISCLOSED ALL PARTICULAR IN THE RETURN OF INCOME. MERELY BECAUS E THE ASSESSEE HAS NOT FILED AN APPEAL AGAINST THE DISALLOWANCE, THE ASSESSING OFFICER CANNOT CONCLUDE THAT THE CLAIM IS WRONG OR ILLEGAL. THE REASONS GIVEN BY THE ASSESSEE THAT AN APPEAL WAS NOT FILED TO SAVE HERSELF OF THE MENTAL AGONY OF LITIGATION IS A POSSIBLE EXPLANATION. THE TRIBUNAL FINALLY PLACING RELIANCE ON THE DECISION OF HON BLE PUNJAB AND HARYANA HIGH COURT IN THE CASE CIT VS. RAJIV GARG & ORS., 313 ITR 256 (P&H), DELETED PENALTY. 5 6. WE ARE OF THE CONSIDERED OPINION THAT WHEN THE VERY ADDITION TO THE RETURNED INCOME IS UNDER CLOUD AND ESPECIALLY WHEN THIS TRIBUNAL HELD THAT THE CLAIM IS CLEARLY ALLOWABLE THE MERE FACT THAT THE ASSESSEE HIMSELF OFFERED ITEM TO TAX, DOES NOT IPSO FACT LEAD TO LEVY OF PENALTY. THE LD. SR. DR HAS NOT POINTE D OUT ANY FALLACY IN THE REASON ING ADOPTED BY THE TRIBUNAL WHILE DELETING THE PENALTY. RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL ORDER FOR THE ASSESSMENT YEAR 2005 - 06 AND 2007 - 08 , WE DELETE THE PENALTY OF RS. 7,88,742/ - LEVIED FOR THE ASSESSMENT YEAR 2006 - 07. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED IN FULL. THE DECISION IS PRONOUNCED IN THE OPEN COURT ON 30 TH SEPTEMBER , 2015. SD/ - SD/ - ( KULDI P SINGH ) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 30 TH SEPTEMBER , 2015. RK/ - COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI