M/s. ACL Wireless Ltd., New Delhi V. ITO, New Delhi

ITA 6418/DEL/2012

• Counselvise Citation: 641820114 RSA 2012
• Duration Of Justice: 1 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 08-09-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 27-12-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR
• Keywords: Depreciation; Wrong claim

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A, NEW DELHI) BEFORE SMT. DIVA SINGH , JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.6418 /DEL/2012 ASSESSMENT YEAR : 2003-04 M/S. ACL WIRELESS LTD., VS. ITO, WARD 1(2), 104-107, HEMKUNT TOWER, NEW DELHI 98, NEHRU PLACE, NEW DELHI-110 019 GIR / PAN:AACA7370G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R S SINGHVI, AND SHRI SATYAJEET GOEL, CA RESPONDENT BY : SHRI Y KAKKAR, DR ORDER PER T.S. KAPOOR, AM: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT(A) DATED 23.10.2012. THE ONLY GROUND RAISED IN THE AP PEAL IS AGAINST THE ACTION OF LD. CIT(A) BY WHICH HE HAD CONFIRMED THE PENALTY IMPOSED BY A.O. U/S 271(1)(C) OF THE ACT. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED RETURN OF INCOME DECLARED LOSS OF RS.4,41,56,069/-. THE A.O. MADE T HE FOLLOWING ADDITIONS: A. CAPITALIZATION OF PRODUCT IMPROVEMENT EXPENSES RS.63,26,444/- B. ENHANCED DEPRECIATION CLAIMED ON PRODUCT DEVELOPMENT EXP. RS.10,79,337/- C. CAPITALIZATION OF CERTAIN GENERAL EXPENSES RS.15,81,206/- D. INCOME NOT OFFERED TO TAX RELATING TO TDS CLAIM RS. 3,35,310/- 2 ITA NO.6418/DEL/2012 E. INTEREST ON DELAYED PAYMENTS OF TDS RS. 49,615/- F. ROC FILLING FEE RS. 15,000/- THEREAFTER, THE A.O. PROCEEDED WITH THE IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT FOR CONCEALMENT OF PARTICULARS OF INCOME AND IMPOSED PENALTY OF RS.35,00,000/-. AGAINST THE ORDER U/S 271(1)(C), T HE ASSESSEE FILED APPEAL BEFORE LD. CIT(A) AND LD. CIT(A), ON THE BASIS OF C ERTAIN DELETIONS BY INCOME TAX APPELLATE TRIBUNAL, REDUCED THE AMOUNT O F PENALTY TO RS.5,43,627/- ON THE BASIS OF FOLLOWING CONFIRMED A DDITIONS: A. ENHANCED DEPRECIATION CLAIMED ON PRODUCT DEVELOPMENT EXP. RS.10,79,337/- B. INCOME NOT OFFERED TO TAX RELATING TO TDS CLAIM RS. 3,35,310/- C. ROC FILLING FEE RS. 15,000/- D. INTEREST ON DELAYED PAYMENTS OF TDS RS. 49,6 15/- THEREFORE, THE ASSESSEE IS IN APPEAL BEFORE US AGAI NST THE CONFIRMATION OF PART PENALTY. 3. AT THE OUTSET, LD. A.R. SUBMITTED THAT FULL PART ICULARS WERE DISCLOSED ON ALL THE ISSUES WHERE ADDITIONS WERE MADE AND PEN ALTY WAS IMPOSED MERELY ON THE BASIS OF DISALLOWANCES AND THERE IS N O FINDING THAT THE ASSESSEE HAD MADE ANY FALSE OR BOGUS CLAIM. IT WAS SUBMITTED THAT EXPENSE CLAIMED WERE GENUINE EXPENSES WHICH WERE CLAIMED ON THE BAS IS OF AUDITED ACCOUNTS AND CLAIM OF EXPENSES WERE BONA FIDE. IT WAS FURTH ER SUBMITTED THAT THE ASSESSMENT WAS ALSO AT LOSS AND, THEREFORE, THERE W AS NO CASE OF ANY REVENUE IMPLICATION AS NO TAX WAS INVOLVED AND THEREFORE TH ERE WAS NO TAX WHICH THE ASSESSEE TRIED TO EVADE. LD. A. R. SUBMITTED THAT PENALTY PROCEEDINGS ARE 3 ITA NO.6418/DEL/2012 INDEPENDENT PROCEEDINGS AND THEREFORE, ADDITIONS IN THE ASSESSMENT ORDER ITSELF CANNOT LEAD TO IMPOSITION OF PENALTY. THE R EVENUE HAS TO ESTABLISH THAT ADDITIONS IN THE ASSESSMENT ORDER REPRESENTED INCOM E OF THE ASSESSEE. RELIANCE IN THIS RESPECT WAS PLACED ON THE FOLLOWIN G CASE LAWS: I) CIT VS KHODAY ESWARA AND SONS 83 ITR 370 (S.C.) II) ANANTHARAM VEERA SINGHAIAH & CO. VS CIT 123 ITR 457 (S.C.) 4. ARGUING UPON MERITS OF THE ADDITIONS, LD. A.R. S UBMITTED THAT MERELY BECAUSE OF DISALLOWANCE OF CLAIM OF DEPRECIATION, T HERE CAN BE NO PRESUMPTION OF ANY CONCEALMENT OR FURNISHING OF INA CCURATE PARTICULARS. IT WAS FURTHER SUBMITTED THAT THE EXPENSES INCURRED WE RE BONA FIDE EXPENSES AND GENUINENESS OF EXPENSES WAS NOT IN DISPUTE. IT WAS SUBMITTED THAT A BONA-FIDE CLAIM EVEN IF NOT PERMISSIBLE AS DEDUCTIO N, CANNOT ATTRACT THE IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF TH E ACT. RELIANCE IN THIS RESPECT WAS PLACED ON THE FOLLOWING CASE LAW: I) CIT VS RELIANCE PETRO-PRODUCTS PVT. LTD. 322 ITR 158 (S.C.) II) PRICE WATER HOUSE COOPERS PVT. LTD. VS CIT 348 ITR 306 III) KARAN RAGHAV EXPORTS P. LTD. VS CIT 349 ITR 11 2 IV) CIT VS DCM LTD. 359 ITR 101 V) MEREDIAN IMPEX VS ACIT 107 DTR (RAJKOT)(TRIB)92 VI) CIT VS NALIN P. SHAH (H.C.BOM.) I.T.A.NO.(LOD)N O.49 OF 2013 5. LD. D.R. ON THE OTHER HAND SUBMITTED THAT THE CL AIM OF EXPENSES SUCH AS INTEREST ON DELAYED PAYMENT OF TDS ROC FILLING FEE WERE NOT ALLOWABLE UNDER THE PROVISIONS OF INCOME TAX ACT, 1961 AND MO REOVER, ASSESSEE HAD NOT DISCLOSED INCOME OF RS.3,35,310/- IN THE RETURN OF INCOME WHEREAS TDS WAS DEDUCTED ON THIS INCOME. IT WAS SUBMITTED THAT AUDITED ACCOUNTS DOES 4 ITA NO.6418/DEL/2012 NOT MEAN THAT AUDITORS HAD CERTIFIED THAT THE EXPEN SES ARE TO BE ALLOWABLE UNDER THE INCOME TAX ACT, 1961. RELIANCE IN THIS R ESPECT WAS PLACED ON THE FOLLOWING CASE LAWS: I) 327 ITR 510 CIT VS ZOOM COMMUNICATION PVT. LTD . II) 313 ITR 397 CIT VS R.M.P. PLASTO PVT. LTD. (S. C.) III) UNION OF INDIA & OTHERS VS DHARMENDRA TEXTILE S PROCESSORS AND OTHERS 306 ITR 277 6. LD. A.R. IN HIS REJOINDER SUBMITTED THAT THE CAS E LAW OF ZOOM COMMUNICATIONS AND DHARMENDER TEXTILES, AS RELIED U PON BY THE LD. D.R. HAS BEEN DEALT WITH IN THE THIRD MEMBER CASE OF M/S . MEREDIAN IMPEX VS ACIT 107 DTR 92. LD. A.R. FURTHER SUBMITTED THAT T HE DISALLOWANCE OF DEPRECIATION CAN NEVER BE SAID TO BE CONCEALMENT OF INCOME. 7. WE HAVE HEARD RIVAL PARTIES AND HAVE GONE THROUG H THE MATERIAL PLACED ON RECORD. WE FIND THAT THE AMOUNT OF PENALTY WAS REDUCED BY LD. CIT(A) ON THE BASIS OF PART RELIEF ALLOWED BY ITAT. THE C ONFIRMED ADDITIONS RELATE TO ENHANCED DEPRECIATION CLAIM, ROC FILLING FEE, IN TEREST ON DELAYED PAYMENT OF TDS AND INCOME NOT OFFERED TO TAX RELATI NG TO TDS CLAIM. AS REGARDS ENHANCED DEPRECIATION CLAIMED ON TOTAL DEVE LOPMENT EXPENSES, WE FIND THAT THE ASSESSEE HAD FILED FULL PARTICULARS R ELATING TO CLAIM OF DEPRECIATION AND PARTIAL DISALLOWANCE BY REVENUE CA NNOT LEAD TO AN INFERENCE THAT ASSESSEE HAD CONCEALED THE PARTICULARS OF INCO ME. HON'BLE SUPREME COURT IN THE CASE OF CIT VS RELIANCE PETRO PRODUCTS PVT. LTD. 322 ITR 158 HAS HELD THAT MERE INCORRECT CLAIM MADE BY ASSESSEE CANNOT TANTAMOUNT TO FURNISHING OF INACCURATE PARTICULARS. THEREFORE, I N OUR OPINION, THE PENALTY 5 ITA NO.6418/DEL/2012 IMPOSED FOR CONFIRMATION OF ADDITION ON ACCOUNT OF ENHANCED DEPRECIATION IS NOT JUSTIFIED. 8. AS REGARDS ADDITION ON ACCOUNT OF INCOME NOT OFF ERED TO TAX, RELATING TO TDS CLAIM, WE FIND THAT THE ASSESSEE HAD SUBMITT ED THAT INCOME RELATING TO TDS CLAIM WAS OFFERED TO TAX IN EARLIER ASSESSME NT YEAR 2002-03. HOWEVER, THIS CLAIM OF ASSESSEE HAS NOT BEEN ACCEPT ED BY EITHER LD. CIT(A) ON ITAT. THOUGH LD. A. R. HAS NOT FILED COPY OF IT AT ORDER OR CIT(A)S ORDER IN QUANTUM PROCEEDINGS BUT IN HIS BRIEF SYNOP SIS FILED BEFORE US, HE HAS CLAIMED THAT LD. CIT(A) HAD CONFIRMED THE PENALTY P ARTIALLY ON THE CONFIRMATION OF ADDITIONS UNDER THESE HEADS. THERE FORE, WE HOLD THAT THE AMOUNT OF INCOME OF RS.3,35,310/- WAS UNDISCLOSED I NCOME OF THE ASSESSEE, WHICH ASSESSEE HAD NOT DECLARED IN ITS RETURN OF IN COME AND THEREFORE, PROVISIONS OF SECTION 271(1)(C) ARE SQUARELY APPLIC ABLE FOR THIS AMOUNT. THE CLAIM OF EXPENSES SUCH AS ROC FILLING FEE FOR INCRE ASE IN AUTHORIZED CAPITAL AND FURTHER INTEREST ON DELAYED PAYMENTS OF TDS ARE CLEARLY NOT ALLOWABLE EXPENSES. HOWEVER, THE FACT REMAINS THAT ASSESSEE HAD INCURRED THESE EXPENSES AND HAD NOT ADDED BACK THE SAME TO ITS COM PUTATION OF INCOME. THE NON-ADDITION TO ITS COMPUTATION OF INCOME SEEMS TO BE A BONA FIDE MISTAKE AS THE AMOUNT OF THESE EXPENSES IS VERY SMA LL AS COMPARED TO RETURNED LOSS. WE OBSERVE THAT BY MAKING WRONG CL AIM OF THESE EXPENSES, THE ASSESSEE WOULD NOT HAVE SAVED ANY TAXES AS THE RETURN OF INCOME WAS FILED FOR A HUGE LOSS OF RS.4,41,56,069/- AND THE A MOUNT OF EXPENSES WRONGLY CLAIMED IS ABOUT RS.60,000/- ONLY WHICH IS INSIGNIFICANT. 9. THE HON'BLE SUPREME COURT IN THE CASE OF PRICE W ATER HOUSE COOPERS (P) LTD. VS CIT 348 ITR 306, HAS HELD THAT ABSENCE OF DUE CARE IN FILLING OF 6 ITA NO.6418/DEL/2012 ITR DOES NOT MEAN THAT THE ASSESSEE IS GUILTY OF EI THER FURNISHING OF INACCURATE PARTICULARS. IN THAT CASE, THE ASSESSEE HAD NOT ADDED BACK PROVISION OF GRATUITY IN THE COMPUTATION OF INCOME WHICH WAS NOT CLEARLY ALLOWABLE AND THEREFORE, A.O. HAD IMPOSED PENALTY U /S 271(1)(C) OF THE ACT. HOWEVER, THE HONBLE COURT HELD THAT ASSESSEE HAD M ADE A COMPUTATION ERROR IN ITS RETURN OF INCOME WHICH HAD HAPPENED TH ROUGH A BONA FIDE AND INADVERTENT ERROR. 10. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, T HE ONLY ITEM OF ADDITION WHICH ATTRACTED PROVISIONS OF SECTION 271( 1)(C) IS NON DISCLOSURE OF INCOME OF RS.3,35,310/-. THEREFORE, IN VIEW OF THE ABOVE, A.O. IS DIRECTED TO RECALCULATE THE AMOUNT OF PENALTY ONLY ON 3,35,3 10/-. 11. IN VIEW OF THE ABOVE, THE APPEAL FILED BY ASSES SEE IS PARTLY ALLOWED. 12. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH OCT., 2014. SD./- SD./- (DIVA SINGH ) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 17 TH OCT., 2014 SP COPY FORWARDED TO:- THE APPELLANT THE RESPONDENT THE CIT THE CIT (A)-, NEW DELHI. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). 7 ITA NO.6418/DEL/2012 S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR. PS/PS 6 KEPT FOR PRONOUNCEMENT SR. PS/PS 7 FILE SENT TO BENCH CLERK SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER