CHAMBAL FERTILISERS AND CHEMICALS LIMITED, Kota V. ACIT, Kota

ITA 621/JPR/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2026 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 06-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VARINDER MEHTA DHK
• Assessee Lawyers: P J PARDIWALLA; M L PATODI
• Keywords: Capital asset; Depreciation; Wrong claim
• Section: 143(3); 10

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS [KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LA-@ ITA. NO. 621/JP/16 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 M/S CHAMBAL FERTILISERS & CHEMICALS LIMITED GADEPAN, DISTRICT-KOTA. CUKE VS. THE ACIT, CIRCLE-2, KOTA. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAACC9762A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI M.L. PATODI & SHRI P.J. PARDIWALLA JKTLO DH VKSJ LS@ REVENUE BY : SHRI VARINDER MEHTA LQUOKBZ DH RKJH[K@ DATE OF HEARING : 30/ 06/2017 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 25/09/2017 VKNS'K@ ORDER PER SHRI VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A), KOTA DATED 15.03.2016 CONFIRMING THE LEVY OF PENALT Y U/S 271(1)(C) OF THE ACT WHEREIN THE ASSESSEE HAS TAKEN THE FOLLOWING SOLE G ROUND OF APPEAL: THAT THE LD. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 2, KOTA ERRED IN IMPOSING THE PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT AND THAT THE LD CIT (APPEALS) KOTA ERRED IN MAINTAINING THE PENALTY OF RS. 31,84,461/- UNDER THE FACTS AND CIRCUMSTANCES OF TH E CASE. HENCE THE PENALTY OF RS. 31,84,461/- IMPOSED U/S 271(1)(C) OF THE INCOME TAX ACT SHOULD BE SET ASIDE. ITA NO. 621/JP/16 M/S CHAMBAL FERTILISERS & CHEMICALS LTD. VS. ACIT, C-2, KOTA 2 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SMENT PROCEEDINGS IN THIS CASE WAS COMPLETED U/S 143(3) OF THE ACT WHEREIN TH E AO MADE ADDITION IN RELATION TO PREVIOUS YEAR EXPENSES (PRIOR PERIOD EX PENSES) AMOUNTING TO RS. 25,00,816/- AND REDUCED THE DEPRECIATION CLAIM AMOU NTING TO RS. 68,68,000/- AMONG OTHER ADDITIONS/DISALLOWANCES. SEPARATELY, T HE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT WERE INITIATED SEPARATELY FOR FURNISHING INACCURATE PARTICULARS OF INCOME. SUBSEQUENTLY, THE ASSESSEE C ARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO SUSTAINED THE AFORESAID A DDITIONS. THEREAFTER, THE AO ISSUED A FRESH SHOW CAUSE ON 06.01.2014. DURING THE COURSE OF PENALTY PROCEEDINGS, IN RESPECT OF PRIOR PERIOD EXPENSES, T HE ASSESSEE SUBMITTED THE BREAKUP OF THE EXPENSES WHICH ARE DULY RECORDED IN THE BOOKS OF ACCOUNT AND SUBMITTED THAT UNDER NO STRETCH OF IMAGINATION, THE SAME CAN BE CONSIDERED AS FURNISHING INACCURATE PARTICULARS OF INCOME. THE AO DIDNT ACCEPT THE SAID EXPLANATION OF THE ASSESSEE AND HAS HELD THAT EXPEN SES SHOULD HAVE BEEN CHARGED ON ACCRUAL BASIS OF ACCOUNTING AND CHARGING EXPENSES OF ONE FINANCIAL YEAR IN ANOTHER FINANCIAL YEAR IS NOTHING BUT FURNI SHING INACCURATE PARTICULARS OF INCOME. REGARDING DEPRECIATION CLAIM, THE AO NOT ED THAT THE MAIN ARGUMENT OF THE ASSESSEE IS THAT THIS ADDITION HAS BEEN MADE AT THEIR OWN REQUEST AND THEREFORE, NO PENALTY SHOULD IMPOSED U/ S 271(1)(C) OF THE ACT. THE AO, HOWEVER, DIDNT ACCEPT THE SAID EXPLANATION AS THE ASSESSEE COULD HAVE REVISED ITS RETURN OF INCOME WHICH IT HAS FAIL ED TO DO SO. FURTHER, AS PER AO, IF THE RETURN OF INCOME FOR THIS YEAR WAS NOT S ELECTED FOR SCRUTINY, THEN THE ASSESSEE MAY NOT HAVE CORRECTED THIS FAULTY CLA IM OF DEPRECIATION AT ALL. IT WAS ACCORDINGLY HELD THAT THE ASSESSEE HAS FURNISHE D INACCURATE PARTICULARS OF INCOME IN RELATION TO EXCESS CLAIM OF DEPRECIATION. AFTER CONSIDERING THE REPLY OF THE ASSESSEE BUT NOT ACCEPTING THE EXPLANATION S O OFFERED, THE AO LEVIED PENALTY OF RS. 31,84,461/- IN RELATION TO AFORESAID ADDITIONS SO SUSTAINED BY THE LD. CIT(A). ITA NO. 621/JP/16 M/S CHAMBAL FERTILISERS & CHEMICALS LTD. VS. ACIT, C-2, KOTA 3 3. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) AND HAS SUBMITTED THE FOLLOWING EXPLANAT ION REGARDING PREVIOUS YEAR EXPENSES AS WELL AS REDUCTION IN DEPRECIATION CLAIM. DURING THE COURSE OF HEARING, THE LD. AR DRAWN OUR ATTENTION TO THE EXPL ANATION SO OFFERED OF THE ASSESSEE FURNISHED BEFORE THE LD. CIT(A). IT WOULD THEREFORE BE RELEVANT TO REFER TO THE EXPLANATION OF THE ASSESSEE WHICH IS R EPRODUCED AS UNDER:- A) PREVIOUS YEAR EXPENSES-ADDITION SUSTAINED OF RS . 25,00,816/-: THE ASSESSEE HAD CONTENDED THAT THE EXPENSES WERE F INALLY SETTLED AND CRYSTALLIZED DURING THE YEAR UNDER CONSIDERATION. T HE DETAILS OF PREVIOUS YEARS EXPENSES ARE AS UNDER: INCOME OF CO-MARKETER ARRANGEMENT EXCESS BOOKED IN AY 2008-09 REVERSED IN AY 2009-10 RS 9,43,693 /- WAREHOUSING PENALTY PAID TO NAFED NOT WAIVED DESPITE REQUEST RS 11,50,279/- TRAVEL BILL FINAL ADJUSTMENT RS 2,67,780/- EXPENSES RELATING TO RENT & SALARY OF EARLIER YEARS RS 1,39,064/- RS 25,00,816/- FURTHER PARTICULARS RELATING TO THE MAJOR EXPENSES ARE AS UNDER: 1. RS. 9,43,693:- THE INCOME OF CO-MARKETER ARRANGE MENT WAS BY OVERSIGHT, BOOKED IN EXCESS VIDE DOCUMENT NO. 100247242 DT. 31 .03.2008 IN THE FINANCIAL YEAR 2007-08 AND THE ERROR WAS NOTICED BY US IN NEXT FINANCIAL YEAR I.E. FY 2008-09 AND THE SAME WAS CORRECTED THROUGH DOCUMENT NO. 100105008 DT. 30.09.2008. THIS WAS NOTHING BUT A RE VERSAL OF EXCESS INCOME ITA NO. 621/JP/16 M/S CHAMBAL FERTILISERS & CHEMICALS LTD. VS. ACIT, C-2, KOTA 4 CREDITED IN THE EARLIER YEAR (HAVING SUFFERED TAX T HEREON IN THE PREVIOUS YEAR) AND IS NOT REALLY AN EXPENSE RELATING TO THE EARL IER YEAR. 2. RS. 11,50,279:- DUE TO SOME QUALITY ISSUES, THE ASSESSEE DID NOT LIFT THE MATERIAL FROM THE WAREHOUSE OF NATIONAL AGRICULTURA L COOPERATIVE MARKETING FEDERATION OF INDIA LTD. (NAFED) AND SENT A REQUES T TO NAFED TO WAIVE OFF THE PENAL GODOWN RENT FOR SUCH PERIOD. THE ASSESSE E WAS HOPEFUL OF SUCH WAIVER. HOWEVER, NAFED DID NOT ACCEPT THE REQUEST A ND THE SAME WAS KNOWN TO THE ASSESSEE ONLY AFTER CLOSURE OF THE FINANCIA L YEAR, HENCE THE EXPENSES WERE ACCOUNTED FOR IN FY 2008-09 THROUGH DOCUMENT NO. 100107966 DT. 15.10.2008. 3. RS. 2,67,780:- DURING THE FINANCIAL YEAR 2007-08 THE ASSESSEE ARRANGED A TOUR FOR ITS BUSINESS ASSOCIATES THROUGH M/S LIONEL HOLDINGS. INITIALLY AN ADVANCE OF RS. 8,71,600/- WAS GIVEN TO M/S LIONEL H OLIDAYS AND THE BALANCE AMOUNT WAS TO BE SETTLED AFTER RECEIPT OF FINAL BIL L. BUT THE FINAL BILL WAS MISPLACED AND WAS FINALLY TRACED IN DECEMBER 2008 A ND THE SAME WAS PROCESSED THROUGH DOCUMENT NO. 100135535 DT. 31.12. 2008. AS CAN BE SEEN FROM THE NATURE OF EXPENSES/REVERSAL OF INCOMES, ALL THE EXPENSES WERE ROUTINE ONES HAVE A PERFECTLY REASO NABLE EXPLANATION. FURTHER, IN THE LARGER SCHEME OF THINGS, THE EXPENS E ONLY FORMS 0.013% OF THE TOTAL EXPENDITURE (EXCLUDING PURCHASES & RAW MATERI AL) OF THE ASSESSEE AND DESERVES TO BE EXCUSED ON THE BASIS OF MATERIALITY ALONE. IT MAY BE POINTED OUT THAT AT NO POINT HAS THERE BEEN ANY DOUBT THAT THE EXPENDITURE WAS BOGUS OR NOT AN ALLOWABLE ONE. THE ONLY POINT OF DISPUTE IS THAT BELONGED TO EARLIER YEARS. B) REDUCTION IN DEPRECIATION CLAIM ADDITION SUSTAIN ED AT RS. 68,68,000/- THE ASSESSEES INTERMEDIATE PRODUCT IS AN EXCISABLE ONE. ASSESSEE PAYS EXCISE DUTY ON ITS INTERMEDIATE PRODUCT VIZ AMMONIA, WHICH IS GENERALLY PAID THROUGH ITA NO. 621/JP/16 M/S CHAMBAL FERTILISERS & CHEMICALS LTD. VS. ACIT, C-2, KOTA 5 CENVAT CREDIT. AS PER RULE 4(2) OF THE CENVAT CREDI T RULES, 2004, CENVAT CREDIT OF EXCISE DUTY PAID ON CAPITAL GOODS CAN BE AVAILED FOR AN AMOUNT NOT EXCEEDING 50% OF THE DUTY PAID ON SUCH CAPITAL GOOD S IN THE FINANCIAL YEAR IN WHICH THE CAPITAL GOODS ARE RECEIVED IN THE PLANT A ND THE BALANCE OF CENVAT CREDIT MAY BE TAKEN IN ANY FINANCIAL YEAR SUBSEQUEN T TO THE FINANCIAL YEAR IN WHICH THE CAPITAL GOODS WERE RECEIVED IN THE PLANT. IN VIEW OF ABOVE PROVISION, THE ASSESSEE WANTED TO AVAIL CENVAT CREDIT OF RS. 3,92,45,717/- OF EXCISE DUTY PAID ON CAPITAL GOODS RECEIVED AT THE PLANT IN THE FINANCIAL YEAR 2008-09 (ASSESSMENT YEAR 2009-10). S UCH EXCISE DUTY FORMED PART OF THE CAPITAL COST OF THE ASSETS CAPITALIZED IN THE BOOKS OF ACCOUNTS. THE ASSESSEE HAD NOT AVAILED CENVAT CREDIT ON SUCH CAPI TAL GOODS IN THE YEAR OF RECEIPT IN THE PLANT OR THEREAFTER. HOWEVER, LOOKIN G TO THE LIKELY EXCISE LIABILITY ON THE INTERMEDIATE PRODUCT, THE ASSESSEE DECIDED T O AVAIL SUCH CREDIT. NATURALLY, THE BENEFIT OF DEPRECIATION COULD NOT AL SO BE TAKEN ON SUCH EXCISE DUTY COMPONENT. THUS THE ASSESSEE, MADE A REDUCTION IN CLAIM OF DEP RECIATION BY RS. 68,68,000/- BEING DEPRECIATION (INCLUDING ADDITIONA L DEPRECIATION) ON THE AMOUNT OF CENVAT CREDIT BEING AVAILED OF EXCISE DUT Y PAID ON CAPITAL GOODS. THE FOLLOWING POINTS MAY KINDLY BE NOTED. THERE WAS NEVER ANY DISPUTE ABOUT THE PAYMENT MADE IN RESPECT OF CENTRAL EXCISE. THE WITHDRAWAL OF CLAIM OF DEPRECIATION ON CENTRAL EXCISE COMPONENT WAS VOLUNTARY AND BEFORE THE COMPLETION OF ASSESSME NT. THE TWO LEGALLY CORRECT OPTIONS WERE AVAILABLE TO T HE ASSESSEE AND THERE WAS MERELY A CHANGE IN THE OPTION OPTED FOR BY THE ASSESSEE. THERE WAS NO CONCEALMENT OF INCOME OR PROVISION OF INACCURATE PARTICULARS BY THE APPELLANT. ITA NO. 621/JP/16 M/S CHAMBAL FERTILISERS & CHEMICALS LTD. VS. ACIT, C-2, KOTA 6 FROM THE ABOVE IT IS EVIDENT THAT THE ADDITION DOES NOT WARRANT THE LEVY OF PENALTY. WE PLACE RELIANCE ON THE FOLLOWING CASES:- C.I.T VS. RELIANCE PETROPRODUCTS (P) LTD. (2010) 32 2 ITR 158 (SC) IN THIS CASE IT WAS CONCLUDED THAT MERELY BECAUSE T HE ASSESSEE CLAIMED DEDUCTION OF INTEREST EXPENDITURE, WHICH HAS NOT BE EN ACCEPTED BY THE REVENUE, PENALTY U/S 271(C) IS NOT ATTRACTED. MERE MAKING A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. CIT VS DURR INDIA PRIVATE LTD (2014) 97 DTR 160 (MA D) IT WAS HELD THAT WHERE THERE WAS NOTHING ON RECORD TO SHOW THAT THE ASSESSEE HAD CONCEALED INCOME WITH A DISHONEST INTENTION OR FURNISHED INACCURATE PARTICULARS EITHER DELIBERATELY OR AS A RESULT OF G ROSS NEGLIGENCE WHICH WAS NOT CAPABLE OF BEING REGARDED AS AN INNOCENT ACT, LEVY OF PENALTY U/S 271(1)(C) WAS NOT JUSTIFIED. CIT VS. AJAIB SINGH & CO. 253 ITR 630 ( PUJ. & HAR .) DISALLOWANCE OF EXPENSES PER SE CANNOT MEAN THAT TH E ASSESSEE HAS FURNISHED INCORRECT PARTICULARS OF ITS INCOME. CIT VS. INDEN BISLERS 240 ITR 943 (MAD.) MERE DISALLOWANCE OF EXPENDITURE DOES NOT WARRANT L EVY OF PENALTY. KIRAN ELECTRICALS V/S STATE OF TAMIL NADU- 11 VAT R EPORTER 159 WHERE TRANSACTION DISCLOSED IN THE BOOKS OF ACCOUNT S AND CLAIMED EXEMPTION- PENALTY NOT LEVIABLE. ITA NO. 621/JP/16 M/S CHAMBAL FERTILISERS & CHEMICALS LTD. VS. ACIT, C-2, KOTA 7 RAMLAKSHMI SPINNERS (P) LTD VS INCOME TAX OFFICER DISALLOWANCE OF CLAIM OF DEPRECIATION, INVESTMENT A LLOWANCE AND ERECTION CHARGES IN A PARTICULAR YEAR (WHICH IS ALLOWED IN A NOTHER YEAR) WOULD NOT AUTOMATICALLY LEAD TO THE CONCLUSION THAT THE ASSES SEE HAD FURNISHED INACCURATE PARTICULARS WITH REGARD TO SUCH CLAIM TO ATTRACT PENALTY UNDER SECTION 271(1)(C). CONSIDERING THE ABOVE SUBMISSIONS AND FACTS ON RECO RD, IT IS SUBMITTED THAT THE ASSESSEE COMPANY IS NOT COVERED UNDER THE PENAL TY PROVISIONS OF SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961. 4. THE LD. CIT(A) HOWEVER DIDNT ACCEPT THE SAID EX PLANATION OF THE ASSESSEE AND HAS CONFIRMED THE LEVY OF PENALTY. THE LD. CIT(A) HAS REFERRED TO THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF MAK DATA (P.) LTD. AND DECISION OF COORDINATE BENCH IN CASE OF ASIA PACIFI C PERFORMANCE SICAV AND HAS GIVEN THE FOLLOWING FINDING WHILE CONFIRMING TH E LEVY OF PENALTY WHICH IS REPRODUCED AS UNDER:- WHAT HAS NOT BEEN DONE BY THE A.O. IS REACHING AUT OMATIC CONCLUSION BASED ON APPELLATE ORDER, BUT HE HAS EXAMINED THE I SSUE INDEPENDENTLY AND REASONED WHY THE CLAIMS WERE INADMISSIBLE. THE USE OF WORDS LIKE OVERSIGHT, MISPLACED BILLS, QUALITY ISSUES LA TER ON LEADING TO PENAL AMOUNT BEING IMPOSED IN THE ASSESSEES SUBMISSIONS SHOW THAT THESE WERE INTENTIONAL WRONG CLAIMS IN THE ACCOUNTS WHICH THE ASSESSEE HAS TRIED TO JUSTIFY BY STATING THAT THESE FORMED MEREL Y 0.13% OF THE TOTAL EXPENSES AND SHOULD BE EXCLUDED FROM PENALTY ON THE BASIS OF MATERIALITY ALONE. FURTHER THE WRONG CLAIM OF DEP RECIATION EVEN IF MADE AT ASSESSEES OWN REQUEST GETS SQUARELY COVER ED BY THE JUDGMENT OF APEX COURT IN MAK DATA REFERRED ABOVE. THE ASSESSEE OFFERED THE WRONG CLAIM OF DEPRECIATION TO BE REVER SED ONLY AFTER THE MATTER WAS BEING EXAMINED IN THE SCRUTINY PROCEEDIN GS U/S 143(2). HENCE THE EXPLANATION WOULD NOT FALL UNDER THE CATE GORY OF A BONAFIDE ONE. ITA NO. 621/JP/16 M/S CHAMBAL FERTILISERS & CHEMICALS LTD. VS. ACIT, C-2, KOTA 8 THUS IN A TOTALITY OF CIRCUMSTANCES IN VIEW OF THE FACTS AND THE LEGAL PRECEDENTS AS REPLIED UPON ABOVE, I AM OF THE OPINI ON THAT THE ACTION OF THE ASSESSEE IN MAKING CERTAIN CLAIMS WHICH WERE NO T ALLOWABLE WITH FULL KNOWLEDGE AND LATER OFFERING SOME OF THEM FOR TAXAT ION IN THE COURSE OF ASSESSMENT PROCEEDINGS WERE MALAFIDE AND THEREFORE SUFFICIENT FOR ATTRACTING PENAL PROCEEDINGS. THE PENALTY OF RS. 31 ,84,461/- LEVIED U/S 271(1)(C) IS ACCORDINGLY SUSTAINED. 5. THE LD. DR HAS VEHEMENTLY ARGUED THE MATTER AND SUPPORTED THE ORDER OF THE LOWER AUTHORITIES. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. FIRSTLY, REGARDING PRIOR PERIOD EXPENSES ON WHICH PENALTY HAS BEEN LEVIED, IT IS NOTED THAT IT COMPRISES OF REVERSAL O F PRIOR PERIOD INCOME OF RS 9,43,693 RELATING TO INCOME UNDER THE CO-MARKETER A RRANGEMENT WHICH WAS BOOKED IN EXCESS IN THE PREVIOUS FINANCIAL YEAR AND NOW BEEN REVERSED DURING THE CURRENT FINANCIAL YEAR. IT IS THUS NOT AN EXPE NSE BUT A REVERSAL OF INCOME EXCESS BOOKED EARLIER AND NOW BEEN RECTIFIED DURING THE YEAR UNDER CONSIDERATION. THE OTHER EXPENSE RELATES TO GODOWN RENT OF RS 11,50,279 FOR WHICH A REQUEST WAS MADE BY THE ASSESSEE TO NAFED F OR WAIVE OFF IN THE PREVIOUS FINANCIAL YEAR HOWEVER, THE FINAL DECISION OF NAFED WAS RECEIVED BY THE ASSESSEE DURING THE SUBJECT FINANCIAL YEAR WHER EIN NAFED REFUSED TO WAIVE OFF THE RENT. SINCE THE ASSESSEE DIDNT LIFT THE MATERIAL FROM THE GODOWN OF NAFED DURING THE PREVIOUS FINANCIAL YEAR, IT WAS CONTESTING ITS LIABILITY TO PAY THE GODOWN RENT WHICH WAS FINALLY CRYSTALLISED DURING THE YEAR UNDER CONSIDERATION AND ACCORDINGLY, THE SAME WAS C LAIMED. REGARDING TRAVEL BILL OF RS 267,780, THE SAME WAS FINALLY TRACED AND PROCESSED IN DECEMBER 2008. REGARDING EACH OF THESE CLAIMS/REVERSALS, TH E ASSESSEE HAS OFFERED THE NECESSARY EXPLANATION WHICH IS NOT PROVED TO BE FAL SE AND ALL THE FACTS RELATING TO THE SAME INCLUDING APPROPRIATE DOCUMENTATION HAS BEEN DISCLOSED BY IT. IN VIEW OF THE SAME, WE ARE OF THE VIEW THAT THE ADDIT IONS SO MADE BY THE AO ITA NO. 621/JP/16 M/S CHAMBAL FERTILISERS & CHEMICALS LTD. VS. ACIT, C-2, KOTA 9 DURING THE QUANTUM PROCEEDINGS DOESNT LEAD TO FURN ISHING OF INACCURATE PARTICULARS OF INCOME AND CONSEQUENT LEVY OF PENALT Y. 7. NOW COMING TO THE ISSUE OF LEVY OF PENALTY ON R EDUCTION IN DEPRECIATION CLAIM OF RS 68,68,000. DURING THE COURSE OF ASSESS MENT PROCEEDINGS, THE ASSESSEE HAS SUBMITTED VIDE ITS LETTER DATED 24.11. 2011 THAT IT HAD PAID EXCISE DUTY ON CAPITAL GOODS WHICH HAS BEEN CAPITALISED AS PART OF COST OF CAPITAL ASSETS AND A DECISION HAS BEEN TAKEN NOW (DURING TH E PENDENCY OF THE ASSESSMENT PROCEEDINGS) TO AVAIL CENVAT CREDIT OF E XCISE GOODS SO PAID ON THE CAPITAL ASSETS. ACCORDINGLY, THE ACTUAL COST O F THE ASSET SO CAPITALISED WAS REDUCED AND A REDUCTION IN TOTAL DEPRECIATION CLAIM OF RS 68,68,000 WAS SUBMITTED DURING THE COURSE OF ASSESSMENT PROCEEDIN GS. HERE, ITS RELEVANT TO NOTE THE FINDINGS OF THE AO WHERE HE SAYS, AS REQUESTED BY THE ASSESSEE, CLAIM OF DEPRECIATION MADE BY THE ASSESSEE WILL BE REDUCED BY RS 68.68 LAKHS. AS PER PROVISIONS OF SECTION 43 READ WITH EXPLANATI ON 9, IT IS PROVIDED THAT WHERE AN ASSET HAS BEEN ACQUIRED BY THE ASSESSEE, T HE ACTUAL COST OF THE ASSET SHALL BE REDUCED BY THE AMOUNT OF DUTY OF EXC ISE IN RESPECT OF WHICH A CLAIM OF CREDIT HAS BEEN MADE AND ALLOWED UNDER THE CENTRAL EXCISE RULES, 1944. 8. IN LIGHT OF ABOVE, IT IS CLEAR THAT A DECISION TO AVAIL CENVAT CREDIT WAS MADE DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT SELF AND THERE WAS NO OCCASION FOR THE ASSESSEE TO REVISE ITS RETURN OF I NCOME AT ANY EARLIER OCCASION. SECONDLY, FROM THE PERUSAL OF ASSESSMENT ORDER, IT NOWHERE APPEARS THAT THE AO HAS RAISED ANY SPECIFIC QUERY A ND IN RESPONSE, THE ASSESSEE HAS REVISED ITS CLAIM OF DEPRECIATION, RAT HER IT IS A CASE WHERE THE AO HAS ACCEPTED THE REQUEST SO MADE BY THE ASSESSEE WH ERE THE ASSESSEE HAS SUBMITTED A REDUCTION IN ITS DEPRECIATION CLAIM. T HE AO HAS NOT DISPUTED THE ITA NO. 621/JP/16 M/S CHAMBAL FERTILISERS & CHEMICALS LTD. VS. ACIT, C-2, KOTA 10 EXPLANATION SO OFFERED BY THE ASSESSEE DURING THE C OURSE OF ASSESSMENT PROCEEDINGS. RATHER, IT SHOWS THE BONAFIDE ON PART OF THE ASSESSEE WHO HAS COME FORWARD AND SUBMITTED A REDUCTION IN ITS DEPRE CIATION CLAIM IN VIEW OF ITS DECISION TO AVAIL CENVAT CREDIT ON EXCISE DUTY SO P AID AND IN DUE COMPLIANCE TO THE PROVISIONS OF SECTION 43 READ WITH EXPLANATI ON 9 THERETO. FURTHER, THE NECESSARY FACTS AND FIGURES AND RELATED DOCUMENTATI ON RELATING TO CENVAT CREDIT HAS BEEN SUBMITTED AND DULY DISCLOSED BY THE ASSESSEE. IN VIEW OF THE SAME, WE ARE OF THE VIEW THAT THE REDUCTION IN THE DEPRECIATION CLAIM SO MADE BY THE AO DURING THE QUANTUM PROCEEDINGS DOESNT LE AD TO FURNISHING OF INACCURATE PARTICULARS OF INCOME AND CONSEQUENT LEV Y OF PENALTY. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25/09/2017. SD/- SD/- DQY HKKJR FOE FLAG ;KNO (KUL BHARAT) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR DATED:- 25 /09/2017 SANTOSH* VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S CHAMBAL FERTILISERS & CHEMICALS LIMITED GADEPAN, DISTRICT-KOTA. 2. IZR;FKHZ@ THE RESPONDENT- ACIT, CIRCLE-2, KOTA. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDRVIHY@ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, 6. XKMZ QKBZY@ GUARD FILE (ITA NO.621/JP/2016) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT REGISTRAR.