VIP CLOTHING LIMITED (FORMERLY KNOWN AS MAXWELL INDUSTRIES LTD.), THANE V. ACIT, CIRCLE- 1, KALYAN

ITA 6322/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 3393 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2011-2012
• Appeal Filed On: 02-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAMATHA MULLAMUDI
• Assessee Lawyers: SUBODH RATNAPARKHI
• Keywords: Depreciation
• Section: 271(1)(c); 201; 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F, MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER AND SHRI G. MANJUNATHA , ACCOUNTANT MEMBER ITA NO. 6322 /MUM/201 8 : A.Y : 201 1 - 1 2 VIP CLOTHING LIMITED (FORMERLY KNOWN AS MAXWELL INDUSTRIES LTD.) VIP COMPOUND, KON VILLAGE, BHIWANDI - KALYAN ROAD, BHIWANDI, DIST. THANE 421 302. PAN : AABC M1549A (APPELLANT) VS. AC IT , CIRCLE 1, KALYAN (RESPONDENT) APPELLANT BY : SHRI SUBODH RATNAPARKHI RESPONDENT BY : SMT. SAMATHA MULLAMUDI DATE OF HEARING : 13/11/2019 DATE OF PRONOUNCEMENT : 15 /11/2019 O R D E R PER VIKAS AWASTHY , JUDICIAL MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 2, PUNE (HEREINAFTER REFERRED TO AS CIT(A)) DATED 12.07.2018 FOR ASSESSMENT YEAR 2011 - 12, CONFIRMING LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 2 VIP CLOTHING LTD. ITA NO. 6322/MUM/2018 2. SHRI SUBODH RATNAPARKHI APPEARING FOR THE ASSESSEE /APPELLANT SUBMITTED THAT ASSESSEE IS ENGAGED IN MANUFACTURING OF COTTON HOSIERY GARMENTS AND OTHER RELATED ACTIVITIES. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS CLAIMED EXCESS DEPRECIATION ON PLANT AND MACHINERY AND THUS , DISALLOWED EXCESS DEPRECIATION OF RS.8,92,675/ - . P ENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT W ERE INITIATED. THE ASSESSING OFFICER VIDE ORDER DATED 28.08.2014 LEVIED PENALTY OF RS.2,67,802/ - ON THE AFORESAID AD DITION. THE CIT(A) UPHELD THE ORDER CONFIRMING LEVY OF PENALTY. THE LEARNED AR SUBMITTED THAT ASSESSEE HAS INADVERTENTLY CHARGED DEPRECIATION @ 50% INSTEAD OF 15% ON P LANT AND MACHINERY IN BLOCK - A. THE LEARNED AR REFERR ED TO WORKING OF DEPRECIATION IN C OMPUTATION OF TOTAL INCOME AT PAGE 8 OF THE PAPER BOOK AND POINTED THAT DEPRECIATION ON PLANT AND MACHINERY IN BLOCK - A IS MENTIONED AT 50% , WHEREAS , DEPRECIATION ON PLANT AND MACHINERY IN BLOCK - B IS CORRECTLY MENTIONED AS 15%. THE MISTAKE IN MENTIONING TH E RATE OF DEPRECIATION @ 50% IS A BONA FIDE MISTAKE AND HENCE , NO PENALTY UNDER SECTION 271(1)(C) OF THE ACT SHOULD BE LEVIED. TO SUPPORT THIS CONTENTION, THE LEARNED AR PLACED RELIANCE ON THE FOLLOWING DECISION S : (I) PRICEWATERHOUSE C OOPERS (P) LTD. VS CIT, 348 ITR 306 (SC) ; (II) PCIT VS BUNGE INDIA (P) LTD. , 407 ITR 225 (BOM.) . 3. PER CONTRA , SMT. SAMATHA MULLAMUDI REPRESENTING THE DEPARTMENT VEHEMENTLY DEFENDED THE IMPUGNED ORDER AND PRAYED FOR CONFIRMING THE LEVY OF PENALTY. 3 VIP CLOTHING LTD. ITA NO. 6322/MUM/2018 4. WE HAVE HEARD T HE SUBMISSIONS MADE BY REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW. THE ASSESSEE IN APPEAL HAS ASSAILED THE ACTION OF CIT(A) IN CONFIRMING PENALTY OF RS.2,67,802/ - LEVIED UNDER SECTION 271(1)(C) OF THE ACT , IN RESPECT O F DISALLOWANCE OF EXCESS DEPRECIATION CLAIMED UNDER SECTION 32 OF THE ACT. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE IS ENTITLED TO CLAIM DEPRECIATION @ 15% ON PLANT AND MACHINERY , WHEREAS , WHILE COMPUTING THE SAME, ASSESSEE HAS CHARGED 50% DEPRECIATION IN RESPECT OF PLANT AND MACHINERY IN BLOCK - A. SO FAR AS DEPRECIATION ON PLANT AND MACHINERY IN BLOCK - B IS CONCERNED, THE RATE OF DEPRECIATION CHARGED IS 15%. THE CONTENTION OF THE ASSESSEE IS THAT IT IS A BONA FIDE MISTAKE. AFTER EXAMINING THE DOCUMENTS ON RECORD, WE ARE CONVINCED THAT THE HIGHER DEPRECIATION CHARGED BY THE ASSESSEE IS ON ACCOUNT OF INADVERTENT BONA FIDE MISTAKE. THE EXPLANATION FURNISHED BY THE ASSESSEE FOR WRONGLY CLAIMI NG HIGHER DEPRECIATION APPEARS TO BE BONA FIDE AND HENCE, ACCEPTED . THEREFORE, WE ARE OF THE VIEW THAT IT IS NOT A FIT CASE FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 5. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF PCIT VS BUNGE INDIA (P) LT D. (SUPRA), IN A SOMEWHAT SIMILAR CASE, UPHELD THE DECISION OF TRIBUNAL , WHEREIN THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT WAS DELETED FOR INADVERTENTLY CLAIMING HIGHER RATE OF DEPRECIATION. 6. THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF PRICEWATERHOUSECOOPERS (P) LTD. (SUPRA) HAS HELD THAT IN CASE OF BONA FIDE / SILLY MISTAKES IMPOSITION OF PENALTY IS NOT JUSTIFIED. 4 VIP CLOTHING LTD. ITA NO. 6322/MUM/2018 7. THUS, IN VIEW OF THE PECULIAR FACTS OF THE CASE AND THE JUDGEMENTS DISCUSSED ABOVE, WE FIND MERIT IN THE APPEAL OF THE AS SESSEE. THE IMPUGNED ORDER IS SET - ASIDE AND APPEAL OF THE ASSESSEE IS ALLOWED. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON F R I D A Y , THE 1 5 T H DAY OF NOVEMBER, 2019. SD/ - SD/ - (G. MANJUNATHA) ACCOUNTANT MEMBER (VIKAS AWASTHY) JUDICIAL MEMBER MUMBAI, DATE : 1 5 T H NOVEMBER, 2019 *SSL* COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, F BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, MUMBAI