Dr. Geeta Shroff, New Delhi V. DCIT, New Delhi

ITA 6534/DEL/2014

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 0798 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 02-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HAUTHANG
• Assessee Lawyers: D V TANEJA
• Keywords: Depreciation; Bonafide belief
• Section: 143(3)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER I.T.A. NO. 6 5 3 4 /DEL/201 4 A.Y. : 2010 - 11 DR. GEETA SHROFF, 487, HARDEV PURI, NEAR FATHER ANGEL SCHOOL, GAUTAM NAGAR, NEW DELHI 110 049 (PAN: AATPS8326G) VS. DCIT, CIRCLE 37(1), NEW DELHI (ASSESSEE) (RESPONDENT) ASSESSEE BY : SH. D.V. TANEJA, CA REVENUE BY : SH. HAUTHANG, SR. DR. ORDER PER H.S. SIDHU : JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-XXVIII, NEW DELHI DATED 2 01.10.2014 PERTAINING TO ASSESSMENT YEAR 2010-11 ON THE FOLLOWING GROUNDS:- 1. LD.CIT (A) ERRED IN FACTS AND IN CONFIRMING PENALTY IMPOSED U/S 271 (1) (C) AT RS.3,35,850/- BY LD. A.O. 2. LD. CIT (A) COMPLETELY OVERLOOKED THE FACT. A. THE MISTAKE IN CLAIMING DEPRECIATION ON LAND WAS NEVER INTENTIONAL. IT WAS A BONAFIDE AND INADVERTENT ERROR. B. ASSESSEE HAD FURNISHED ALL THE PARTICULARS IN RETURN FILED. C. ASSESSEE NEVER CONCEALED THE PARTICULARS OF INCOME NOR SUBMITTED FALSE INFORMATION. D. ASSESSEE HAD COOPERATED WITH LD. A.O DURING THE ASSESSMENT PROCEEDINGS AND SUBMITTED THE INFORMATION AND DOCUMENTS AS ASKED FOR:- 3 E. ASSESSEE HAD VOLUNTARILY COMPUTED AND SURRENDERED THE DEPRECIATION CLAIMED ON LAND AND GAVE COMPLETE WORKING TO ARRIVE AT COST OF LAND. IN FACT, THE ASSESSING OFFICER DID NOT EVEN CONTRADI CT THE PLEA OF THE ASSESSEE THAT EXCESS CLAIM OF DEPRECIATION WAS AN INADVERTENT ERROR. THAT PART, OTHER ELEMENT PRESENT IN THE INSTANT CASE GAVE A STRONG INDICATION THAT THE ERROR WAS GENUINE AND BONAFIDE AND THUS LEVY OF PENALTY IS BAD IN LAW. 3. THAT LD.CIT (A) CONFIRMED LEVY OF PENALTY BY COMPLETELY OVERLOOKING DECIDED CASE LAWS CITED AND THUS PENALTY IMPOSED IS BAD IN LAW. 4. THAT PENALTY CONFIRMED AND CONSEQUENT TAX DEMAND IS BAD IN LAW. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSING O FFICER MADE DISALLOWANCE OF DEPRECIATION ON PROPERTY NO. H-8, G REEN PARK EXTN., NEW DELHI. THIS PROPERTY WAS PURCHASED BY THE ASSE SSEE ON 16.3.2007 FOR A TOTAL CONSIDERATION OF RS. 6 CRORES AFTER EXECUTION OF TWO PURCHASE DEEDS. THE ASSESSEE HAD AT THE TIME OF PURCHASE OF 4 PROPERTY ALSO PURCHASED THE LAND RIGHTS THEREIN. THE BUILDING COMPRISE OF GROUND FLOOR, FIRST FLOOR, SECOND FLOOR, THIRD F LOOR, TERRACE AND BASEMENT ALONGWITH FIXTURES. THE ASSESSEE HAS CLAIM ED DEPRECIATION ON THE ENTIRE VALUE OF LAND AND BUILDING. A SHOW C AUSE NOTICE WAS ISSUED BY THE AO WITH REGARD TO NON-ALLOWABILITY OF DEPRECIATION ON THE VALUE OF LAND INCLUDED IN THE TOTAL CONSIDERATION. THE ASSESSEE IN RESPONSE TO SHOW CAUSE ENCLOSED A SHEET SHOWING THE EXPENSE DEPRECIATION CLAIMED. FOR THE RELEVANT YEAR THE AMOUNT OF EXCESS DEPRECIATION WORKED OUT TO RS. 10,86,880/-. THE AO ADDED RS. 10,86,880/- TOWARDS DISALLOWANCE OF DEPRECIATIO N ON LAND AND RS. 3,00116/- TOWARDS CAPITALIZATION OF PATENTS, BE SIDES MAKING OTHER DISALLOWANCES. THEREAFTER, PENALTY PROCEEDINGS WERE I NITIATED FOR DISALLOWANCE OF DEPRECIATION ON LAND AND CAPITALIZA TION OF PATENTS. IN RESPONSE THERETO, THE ASSESSEE SUBMITTED ITS REPLY A ND AFTER CONSIDERING THE REPLY OF THE ASSESSEE THE AO WAS NOT SATISFIED WITH THE ASSESSEES THAT THE ASSESSEE HAD VOLUNTARILY AGREED TO SURRENDER THE TAX ON VALUE OF THE DEPRECIATION WRONGLY TAKEN ON L AND AND ACCORDINGLY, THE PENALTY OF RS. 3,35,850/- WAS LEVI ED UPON THE ASSESSEE BY THE AO VIDE HIS ORDER DATED 20.09.2013 U/S. 271(1) OF THE I.T. ACT. 5 3. AGAINST THE ABOVE PENALTY ORDER DATED 20.9.2013 PASSED BY THE ASSESSING OFFICER, ASSESSEE APPEALED BEFORE THE LD. FIRST APPELLATE AUTHORITY, WHO VIDE HIS IMPUGNED ORDER DATED 01.10.2 014 DISMISSED THE APPEAL OF THE ASSESSEE BY CONFIRMING THE PENALT Y IMPOSED BY THE AO. 4. AGAINST THE IMPUGNED ORDER OF THE LD. CIT(A) DATED 01.10.2014, ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. LD. COUNSEL OF THE ASSESSEE REITERATED THE CONT ENTS OF GROUNDS OF APPEAL AND SUBMITTED THAT THE ASSESSEE IS A PROF ESSIONAL AND SENIOR LADY GYNE DOCTOR AND FILED INCOME TAX RETURN AT RS. 10,58,44,690/- FOR ASSESSMENT YEAR 2010-11. IT WAS FURTHER SUBMITTED THAT THE ACCOUNTS WERE AUDITED AND FORM 3CD WAS FILED BY THE CHARTERE D ACCOUNTANT AND INCOME TAX RETURN WERE FILED ON THE ADVICE OF THE C HARTERED ACCOUNTANT. THE BONAFIDE/INADVERTENT ERROR ON CLAIMI NG DEPRECIATION ON COMPOSITE VALUE OF BUILDING PURCHASED FOR MEDICA L PROFESSION AS NO BIFURCATION OF LAND AND BUILDING WAS AVAILABLE. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE ON THE ADVICE OF CHARTERED ACCO UNTANT AND AUDITOR CARRIED OUT BIFURCATION COST OF LAND AND COST OF BUI LDING AND SURRENDERED EXCESS DEPRECIATION CLAIMED AT RS. 10,86,8 80/- ON LAND WITH AND PAID TAX THEREON. HOWEVER, ASSESSEE HAD F URNISHED ALL THE 6 PARTICULARS IN RETURN FILED AND NEVER CONCEALED THE PARTICULARS OF INCOME NOR SUBMITTED FALSE INFORMATION. IT WAS THE FURTHER SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE ASSES SE VOLUNTARILY AGREED TO SURRENDER THE TAX ON VALUE OF DEPRECIATION W RONGLY TAKEN ON LAND AND THE THIS MISTAKE WAS NEVER INTENTIONAL. I T WAS FURTHER SUBMITTED THAT THE ASSESSEE HAS VOLUNTARILY BIFURCA TED THE VALUE OF LAND AND BUILDING AND SURRENDERED THE VALUES OF DEPRE CIATION ON LAND. IN VIEW OF PECULIAR FACTS OF THE CASE, LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT IMPOSITION OF PENALTY IS NOT JUSTIFI ED. HE FURTHER SUBMITTED THAT WHERE DECLARATION WAS MADE BY THE AS SESSEE UNDER THE ADVICE OF CHARTERED ACCOUNTANT AND SUBSEQUENTLY, THE SAME WAS RECTIFIED, IT WAS NOT A CASE OF WILLFUL CONCEALMENT WARRANTING PENALTY U/S. 271(1) OF THE ACT. TO SUPPORT HIS AFORESAID CO NTENTIONS, HE RELIED UPON THE JUDGMENT OF THE HONBLE SUPREME C OURT OF INDIA DATED 25.9.2012 IN THE CASE OF PRICE WATERHOUSE COO PERS PVT. LTD. VS. CIT, KOLKATA PASSED IN CIVIL APPEAL NO. 6924 OF 20 12; JUDGEMENT OF THE HONBLE SUERME COURT OF INDIA IN THE CASE OF DHA RMENDRA TEXTILE PROCESSORS (2008) 322 ITR 158 AND THE HONBLE GUJ ARAT HIGH COURT DECISION IN THE CASE OF ITO VS. SILK CITY PETROFILE S CO. LTD. REPORTED 396 ITR 191 (GUJARAT). 7 6. LD. DEPARTMENTAL REPRESENTATIVE CONTROVERTED THE ARGUMENTS ADVANCED BY THE LD. COUNSEL OF THE ASSESSEE AND HE RELIED UPON THE ORDERS OF THE REVENUE AUTHORITIES AND THE CASE LAWS DISCUSSED THEREIN. HE SUBMITTED THAT THE EXPLANATION FURNISHED BY THE ASSESSEE BEFORE THE AO WAS NOT SUBSTANTIATED BY IT BY BRINGING ANY EVIDENCE. HE FURTHER SUBMITTED THAT THE ASSESSEE HAS CONCEALED H IS INCOME AND HAS FURNISHED INACCURATE PARTICULARS BY CLAIMING UNALLO WABLE DEPRECIATION ON LAND. IT WAS FURTHER SUBMITTED THAT IN THE SAID CASE, HAD THE SCRUTINY OF THE CASE NOT TAKEN PLACE THE CONCEALMEN T OF SUCH INCOME WOULD NOT HAVE SURFACED. IT IS AS A RESULT OF THE S CRUTINY PROCEEDINGS AND ANALYSIS OF THE AO THAT THE VEIL ON CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE OF PARTICULARS COULD BE TAK EN OFF AND HENCE, THE CONCEALMENT IS UNEARTHED BY THE DEPARTMENT BY I TS OWN EFFORTS. IT WAS FURTHER SUBMITTED THAT THE IT IS CLEAR THAT THE INTENTION OF THE ASSESSEE IS MALICIOUS AND NOT TO OFFER ITS FULL INC OME FOR TAXATION BY TAKING ALL PROBABLE ESCAPE ROUTES AND THERE IS A CL EAR OF CONCEALMENT OF INCOME BY FURNISHING INACCURATE PARTICULARS OF I NCOME. HENCE, THE AO HAS RIGHTLY IMPOSED THE PENALTY AND LD. CIT(A) H AS RIGHTLY CONFIRMED THE SAME. 8 7. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE ORD ERS PASSED BY THE LOWER AUTHORITIES AS WELL AS THE CASE LAWS C ITED BEFORE US. WE FIND THAT ASSESSEE IS A PROFESSIONAL AND SENIOR LAD Y GYNE DOCTOR AND FILED INCOME TAX RETURN AT RS. 10,58,44,690/- FOR A SSESSMENT YEAR 2010-11. THE ACCOUNTS WERE AUDITED AND FORM 3CD WA S FILED BY THE CHARTERED ACCOUNTANT AND INCOME TAX RETURN WERE FIL ED ON THE ADVICE OF THE CHARTERED ACCOUNTANT. THE BONAFIDE/INADVERTEN T ERROR ON CLAIMING DEPRECIATION ON COMPOSITE VALUE OF BUILDIN G PURCHASED FOR MEDICAL PROFESSION AS NO BIFURCATION OF LAND AND BU ILDING WAS AVAILABLE. HOWEVER, ON THE ADVICE OF CHARTERED ACCOUNTANT AND AUDITOR, THE ASSESSEE CARRIED OUT BIFURCATION COST OF LAND AND C OST OF BUILDING AND SURRENDERED EXCESS DEPRECIATION CLAIMED AT RS. 10,86,8 80/- ON LAND WITH AND PAID TAX THEREON. THE ASSESSEE VOLUNTARILY AGREED TO SURRENDER THE TAX ON VALUE OF DEPRECIATION WRONGLY TA KEN ON LAND AND THE THIS MISTAKE WAS NEVER INTENTIONAL. THE ASSESS EE HAS VOLUNTARILY BIFURCATED THE VALUE OF LAND AND BUILDING AND SURREN DERED THE VALUES OF DEPRECIATION ON LAND AND THE ACT OF THE ASSESSEE UND ER THE BONAFIDE BELIEF. WE FURTHER FIND THAT ASSESSEE HAD FURNISHED ALL THE PARTICULARS IN RETURN FILED AND NEVER CONCEALED THE PARTICULARS OF INCOME NOR SUBMITTED FALSE INFORMATION. WE ALSO NOTE THAT DEPR ECIATION ON FULL VALUE WAS ALLOWED IN AY 2008-09 U/S. 143(1) OF THE A CT AND FURTHER 9 DEPRECIATION WAS ALLOWED ON FULL VALUE IN AY 2009-10 UNDER SECTION 143(3) OF THE ACT. HOWEVER, DURING THE ASSESSMENT PROCEEDINGS FPR AY 2010-11 U/S. 143(3) OF THE ACT, ASSESSEE WAS ASKE D TO SEGREGATE THE VALUE OF LAND AND BUILDING AND ACCORDINGLY, THE ASSESSEE SEGREGATED THE VALUE OF LAND BASED UPON CIRCLE RATE. IN VIEW OF ABOVE, DISCUSSIONS, WE FIND THAT PENALTY IMPOSED BY THE AO AND CONFIRMED BY THE LD. CIT(A) IS NOT TENABLE. OUR AFORESAID VIEW IS FORTIFIED BY THE FOLLOWING CASE LAWS:- - HONBLE SUPREME COURT JUDGMENT DATED 25.9.2012 IN THE CASE OF PRICE WATERHOUSE COOPERS PVT. LTD. VS. CIT, KOLKATA PASSED IN CIVIL APPEAL NO. 6924 OF 2012 WHEREIN THE HONBLE COURT HAS HELD THA T WE ARE SATISFIED THAT THE ASSESSEE HAD COMMITTED A N INADVERTENT AND BONAFIDE ERROR AND HAD NOT INTENDED TO OR ATTEMPTED TO EITHER CONCEAL ITS INCOME OR FURNISH INACCURATE PARTICULARS. - HONBLE SUERME COURT OF INDIA IN THE CASE OF DHARMENDRA TEXTILE PROCESSORS (2008) 322 ITR 158 HAS HELD THAT THAT MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH CLAIM WAS NOT 10 ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE THAT BY ITSELF WOULD NOT ATTRACT THE PENALTY UNDER SECTI ON 271 (1)( C). - HONBLE GUJARAT HIGH COURT DECISION IN THE CASE OF ITO VS. SILK CITY PETROFILES CO. LTD. REPORTED 3 96 ITR 191 (GUJARAT) HAS HELD FOR CONCEALMENT OF INCOME (DISALLOWANCE OF CLAIM EFFECT OF) WHERE DECLARATION WAS MADE BY ASSESSEE UNDER ADVICE OF CHARTERED ACCOUNTANT AND SUBSEQUENTLY, SAME WAS RECTIFIED, IT WAS NOT A CASE OF WILLFUL CONCEALMENT WARRANTING PENALTY UNDER SECTION 271(1) (IN FAVOUR OF ASSESSEE) (HEAD NOTES ONLY) 7.1 IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS AND RESPECTFULLY FOLLOW THE PRECEDENTS, AS AFORESAID, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE HAS NEITHER CONCEALED THE INCOME NOR FURNISHED INACCURATE PARTICULARS OF INCOME AND THERE ARE NO FI NDINGS OF THE ASSESSING OFFICER AND THE LD. CIT (APPEALS) THAT THE DETAILS FURNISHED BY THE ASSESSEE IN HIS RETURN ARE FOUND TO BE INCOR RECT OR ERRONEOUS OR FALSE. UNDER THESE CIRCUMSTANCES, IN OUR VIEW THE P ENALTY IN DISPUTE IS TOTALLY UNWARRANTED AND DESERVE TO BE DELETED. ACC ORDINGLY, WE DELETE 11 THE PENALTY OF RS. 3,35,858/- MADE U/S. 271(1)(C) OF THE I.T. ACT AND QUASHED THE ORDERS OF THE AUTHORITIES BELOW ON THE I SSUE IN DISPUTE. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED ON 05/10/2018. SD/- SD/- [ANADEE NATH MISSHRA] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 05/10/2018 SRBHATNAGAR COPY FORWARDED TO: - 1. ASSESSEE - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHE S