The Dy. Commissioner Income-tax, Jalandhar V. M/s. Bright Enterprises Pvt Ltd, Jalandhar

ITA 664/ASR/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0703 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 23-05-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 03-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMALENDU NATH MISRA
• Keywords: Depreciation; Question of law
• Section: 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER ITA NO.664(ASR)/2014 ASSESSMENT YEAR:2006-07 PAN: AAACB9469K DY. COMMR. OF INCOME TAX, VS. M/S. BRIGHT ENTERPRIS ES (P) LTD. CENTRAL CIRCLE-II, MBD HOUSE, RAILWAY ROAD, JALANDHAR. JALANDHAR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH.AMALENDU NATH MISRA, DR RESPONDENT BY: SH. SUDHIR SEHGAL, DATE OF HEARING: 23/05/2016 DATE OF PRONOUNCEMENT: 25/05/2016 ORDER PER A.D. JAIN, JM: THIS IS THE DEPARTMENTS APPEAL FOR THE ASSESSMENT YEAR 2006-07, AGAINST THE DELETION OF CONCEALMENT PENALTY OF RS.6 6,99,660/- BY THE LD. CIT(A), JALANDHAR. 2. THE FACTS AS PER RECORD ARE THAT THE ASSESSEE IN ITS RETURN OF INCOME, CLAIMED EXPENSES AT RS.3,35,67,415/-, AS RE PAIR AND MAINTENANCE EXPENSES. THE AO FOUND THESE EXPENSES T O BE CAPITAL IN NATURE, NOT ALLOWABLE AS CURRENT REPAIRS, AS CLAIME D BY THE ASSESSEE. THE AO, THEREFORE, CAPITALIZED THE AMOUNT AND AFTER AL LOWING THE PERMISSIBLE DEPRECIATION DISALLOWED THE REMAINING AMOUNT. THIS DISALLOWANCE WAS ITA NO.664(ASR)/2014 ASSESSMENT YEAR: 2006-07 2 CONFIRMED BY THE LD. CIT(A). THE PENALTY WAS IMPOSE D BY THE AO UNDER THE ASSUMPTION THAT THE DISALLOWANCE, AS CONFIRMED BY THE LD. CIT(A), WOULD SURVIVE BEFORE THE ITAT AS WELL. 3. BY VIRTUE OF THE IMPUGNED ORDER, THE LD. CIT(A) DELETED THE PENALTY. 4. THE LD. COUNSEL FOR THE ASSESSEE HAS PLACED STRO NG RELIANCE ON THE TRIBUNAL ORDER DATED 21.05.2014, IN ITA NO.531(ASR) /2009 AND 432(ASR)/2012 FILED BY THE ASSESSEE AND ITA NO.28( ASR)/2010 FILED BY THE DEPARTMENT, IN THE QUANTUM PROCEEDINGS AGAINST THE CONFIRMATION OF THE DISALLOWANCE BY THE LD. CIT(A). 5. ON THE OTHER HAND, THE LD. DR CONTENDED THAT THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY WITHOUT GOING INTO TH E MERITS OF THE ADDITION DELETED BY THE ITAT WITHOUT APPRECIATING THAT THE F ACTS OF THE PRESENT CASE ARE DISTINGUISHABLE FROM THOSE IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. 322 ITR 158 (SC), WHEREBY THE D ISALLOWANCE CONFIRMED ON THE BASIS OF THE LEVY OF PENALTY IN QUESTION WA S DELETED BY THE TRIBUNAL. 6. WE HAVE HEARD THE PARTIES AND HAVE PERUSED THE M ATERIAL ON RECORD. IT IS SEEN THAT WHILE DELETING THE PENALTY IN QUESTION, THE LD. CIT(A) HAS OBSERVED AS FOLLOWS: 7. I HAVE CONSIDERED THE FACTS OF THE CASE THE NAT URE OF DEDUCTION CLAIMED BY THE APPELLANT IN THE RETURN OF INCOME, THE ORDER OF THE CIT(A) CONFIRMING THE SAID DISALLOWANC E AND THE ORDER OF THE HON'BLE ITAT FURTHER CONFIRMING THE SAME. IT IS A MATTER OF FACT THAT THE IMPUGNED PAYMENT AS LEASE RENT HAVE B EEN FACTUALLY MADE IN THE YEAR UNDER CONSIDERATION TO THE NOIDA D EVELOPMENT AUTHORITY EVEN THOUGH THE ENTIRE AMOUNT OF LEASE RE NT AS PAID DID NOT PERTAIN TO THE YEAR UNDER CONSIDERATION. THE AS SESSING OFFICER ITA NO.664(ASR)/2014 ASSESSMENT YEAR: 2006-07 3 HAS ALLOWED THE PAYMENT PERTAINING TO THE EARLIER Y EARS IN THE YEAR UNDER CONSIDERATION AND THE SAID ALLOWANCE, HAS, BE EN CONFIRMED AS CORRECT BY THE CIT(A) AND HON'BLE BENCH AFTER CO NSIDERING THE ARGUMENTS OF THE DR THAT ONLY PAYMENT OF LEASE RENT PERTAINING TO THE YEAR UNDER CONSIDERATION COULD. BE ALLOWED IT IS ONLY WITH RESPECT TO THE PAYMENTS FOR NEXT THREE YEARS- THAT DISALLOWANCE HAS BEEN CONFIRMED. THE ASSESSEE HAVING MADE A LEGAL CL AIM IN HIS RETURN OF INCOME HAS NOT CONCEALED ANY FACTS PERTAI NING TO THE SAME AND IN THE PROCESS THE PAYMENT MADE IN THE UND ER CONSIDERATION HAS BEEN ALLOWED TO THE EXTENT OF 56, 32,540/-BY THE ASSESSING OFFICER AS WELL AS CIT(A) AND THE HONBLE ITAT. IN THE CIRCUMSTANCES MAKING IMPUGNED CLAIM IN THE RETURN O F INCOME WHICH HAS BEEN PARTIAL DISALLOWED BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT COULD NOT BE SAID TO BE BLATAN TLY WONG OR MALA FIDE. IN FACT IT IS QUITE APPARENT THAT IT WAS GENUINE LEGAL CLAIM WHICH HAS BEEN FOUND TO BE NOT ALLOWABLE TO T HE FULL EXTENT. THE JUDGMENT OF THE HON'BLE APEX COURT IN THE CASE OF RELIANCE PETRO PRODUCTS IS CLEARLY APPLICABLE TO THE FACTS O F THE CASE. THE HON'BLE APEX COURT IN THE SAID JUDGMENT HAS HELD AS UNDER:- 'A GLANCE AT THE PROVISIONS OF SECTION 271(L)(C) OF THE INCOME- TAX ACT, 1961 SUGGESTS THAT IN ORDER TO BE COVERED BY IT, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE APPELLANT. SECONDLY, THE APPELLANT MUST HAVE FURNISHED INACCUR ATE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD 'PARTICULARS' USED IN SECTION 271(L)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS F OUND TO BE INCORRECT OR INACCURATE, THE APPELLANT CANNOT BE HE LD GUILTY OF FURNISHING INACCURATE PARTICULARS. IN ORDER TO EXPO SE THE APPELLANT TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISH ING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THA T EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY THE APPELLANT , BECAUSE THAT IS ONLY DOCUMENT WHERE THE APPELLANT CAN FURNISH TH E PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO B E INACCURATE, THE LIABILITY WOULD ARISE. TO ATTRACT PENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE, NOT EXACT OR CORRE CT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE APPELLANT IN ITS RETURN ARE FOUND TO BE INCORRECT O R ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(L)(C). A MERE MAKING OF A CLAIM, WHICH IS NOT S USTAINABLE IN ITA NO.664(ASR)/2014 ASSESSMENT YEAR: 2006-07 4 LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACC URATE PARTICULARS REGARDING THE INCOME OF THE APPELLANT. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTI CULARS.' 8. FURTHER THE JUDGMENT OF HON'BLE JURISDICTIONAL H IGH COURT IN THE CIT-II, AMRITSAR MR. BALKISHAN DHAWAN HUF IS IN FACT IN FAVOUR OF THE ASSESSEE AND HON'BLE BENCH HAS REFER RED TO OBSERVATION OF THE CLT(A) AS UNDER: - 'IN THE CASE OF THE APPELLANT THE DEDUCTION U/S 80I B WAS REJECTED BY THE ASSESSING OFFICER FOR LATE FILING O F RETURN. THE VARIOUS CONTENTIONS RAISED BY THE APPELLANT WERE RE JECTED. THE HON'BLE ITAT, AMRITSAR HAS UPHELD THE DISALLOWA NCE FOR DEDUCTION U/S 80IB, BUT IT IS NOW JUDICIALLY WELL S ETTLED THAT A FINDING IN THE ASSESSMENT ORDER MAY CONSTITUTE GO OD EVIDENCE IN THE PENALTY PROCEEDINGS BUT SUCH FINDIN G CANNOT BE REGARDED AS CONCLUSIVE FOR THE PURPOSE OF PENALT Y AND RAISING A LEGAL CLAIM, EVEN IF IT IS ULTIMATELY FOU ND TO BE LEGALLY UNACCEPTABLE DOES AMOUNT TO FURNISHING OF I NACCURATE PARTICULARS OF INCOME. IT IS NOT A CASE WHERE THE C LAIM OF APPELLANT HAS BEEN FOUND BY THE ASSESSING OFFICER T O BE MALA FIDE. THE RAJASTHAN HIGH COURT IN THE CASE OF CIT V S. HARSHVARDHAN CHEMICALS & MINERAL LTD. REPORTED IN 2 59 ITR 212 (RAJASTHAN), ACCEPTED TRIBUNAL'S FINDING DELETI NG THE PENALTY HOLDING 'WHERE AN ARGUABLE, CONTROVERSIAL O R DEBATABLE DEDUCTION IS CLAIMED, THE CLAIM COULD NOT BE SAID TO BE FALSE, OTHERWISE IT WOULD BECOME IMPOSSIBLE F OR ANY APPELLANT TO RAISE ANY CLAIMS OR DEDUCTIONS WHICH M IGHT BE DEBATABLE, AND IT WAS NOT THE INTENTION OF THE LEGI SLATURE TO MAKE PUNISHABLE SUCH CLAIMS, IF THEY WERE NOT ACCEP TED.' THE HIGH COURT AFFIRMED THE DECISION OF ITAT AND HE LD THAT NO PENALTY WAS LEVIABLE. THE RAJASTHAN HIGH COURT IN THE CASE OF CHANDERPAL BAGGA VS. ITAT REPORTED AT 261 ITR 67, HELD THAT IF THE A PPELLANT CLAIMED ANY EXEMPTION AFTER DISCLOSING RELEVANT BASIC FACTS AND UNDER IGNORANCE OF THE PROVISIONS OF THE ACT HAD NOT OFFE RED AMOUNT OF TAX, PENALTY SHOULD NOT BE IMPOSED. IN SUCH CASES, IT IS THE DUTY OF THE ASSESSING OFFICER TO ASK FOR FURTHER DETAILS AN D TAX THE INCOME IF IT IS LIABLE TO TAX. THERE WAS NO CONCEALMENT OF INCOME AND PENALTY COULD NOT BE IMPOSED. AGAIN THE MADHYA PRAD ESH HIGH COURT IN THE CASE OF CIT VS. RAJIV UDYOG 227 ITR 20 9 (MP) HELD THAT WHERE THE APPELLANT CLAIMED THE DEDUCTION UNDE R CHAPTER VIA AND THE SAME WAS DISALLOWED BY THE ASSESSING OFFICE R, IT CANNOT BE SAID TO BE CONCEALMENT OF INCOME AS PER EXPLANATION 1 TO SECTION 271(L)(C). THE OTHER JUDICIAL DECISIONS RELIED UPON BY THE APPELLANT'S ITA NO.664(ASR)/2014 ASSESSMENT YEAR: 2006-07 5 COUNSEL AND REPRODUCED SUPRA ARE ALSO RELEVANT TO C ONCLUDE THAT AN ERRONEOUS CLAIM OF DEDUCTION MADE BY APPELLANT M AY BE A GOOD CASE FOR MAKING ADDITION SINCE CLAIM WAS ERRONEOUS BUT THAT BY ITSELF IS NOT SUFFICIENT FOR LEVY OF PENALTY U/S 27 1(1)(C). THE HON'BLE SUPREME COURT IN THE CASE OF RELIANCE P ETRO PRODUCTS PVT. LTD., REPORTED IN 352 ITR 158 (SC) HAD HELD' T HAT A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LA W, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REG ARDING THE INCOME OF THE APPELLANT. IF THIS CONTENTION IS ACCE PTED THEN IN CASE OF EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTE D BY THE ASSESSING OFFICER FOR ANY REASON, THE APPELLANT WIL L INVITE PENALTY U/S 271(L)(C). THAT IS CLEARLY NOT THE INTENDMENT O F THE LEGISLATURE. IN ORDER TO EXPOSE THE APPELLANT TO THE PENALTY UNL ESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROV ISION CANNOT BE INVOKED. BY ANY STRETCH OF IMAGINATION, MAKING AN I NCORRECT CLAIM IN LAW CANNOT TANTAMOUNT TO FURNISHING INACCURATE P ARTICULARS.' IN THE LIGHT OF RATIONALE LAID DOWN IN THE ABOVE JUDGM ENT BY THE HON'BLE SUPREME COURT, THE APPELLANT CANNOT BE HELD TO HAVE FURNISHED INACCURATE PARTICULARS OF INCOME AS THE R ELEVANT FACTS FOR THE CLAIM WERE DISCLOSED BY THE APPELLANT IN HIS RE TURN & THE MERE MAKING OF CLAIM BY APPELLANT WHICH IS NOT SUSTAINAB LE IN LAW WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS OF INCOME. HENCE THE APPELLANT IS NOT LIABLE TO PENALTY U/S 271(L)(C ) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF INCOME.' 9. THE HON'BLE BENCH HAS FURTHER REFERRED TO THE OBSER VATION OF THE HON'BLE ITAT IN THE SAID CASE AS UNDER:- 'WE ARE OF THE VIEW THAT THE FACTS AND CIRCUMSTANCE S OF THE CASE REPORTED IN 322 ITR 158 (SUPREME COURT) IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. ARE TOTALLY IDENT ICAL TO THE FACTS OF THE PRESENT CASE AND THE LEARNED FIRST APPELLATE AU THORITY HAS RIGHTLY DELETED THE PENALTY IN DISPUTE IN THE PRESE NT APPEALS. BY RESPECTFULLY FOLLOWING THE VARIOUS DECISIONS MENTIO NED IN THE IMPUGNED ORDER, THE ARGUMENTS ADVANCED BY LEARNED D .R. ARE NOT RELEVANT TO THE FACTS OF THE PRESENT CASE, THEREFOR E, THE SAME ARE REJECTED AND ON THE CONTRARY THE ARGUMENT ADVANCED BY LEARNED COUNSEL FOR THE ASSESSEE BEFORE US AS WELL AS ADVAN CED BEFORE LEARNED FIRST APPELLATE AUTHORITY ARE VERY MUCH REL EVANT ON THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF T HE PRESENT CASE AND THE IMPUGNED ORDER PASSED BY LEARNED FIRST APPE LLATE AUTHORITY ON THE BASIS OF DECISION OF HON'BLE SUPRE ME COURT OF INDIA IN CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. REPORTED IN 322 ITA NO.664(ASR)/2014 ASSESSMENT YEAR: 2006-07 6 ITR 158 (SUPREME COURT), WE ARE OF THE VIEW THAT N O INTERFERENCE IS REQUIRED IN THE WELL REASONED ORDER PASSED BY TH E LEARNED FIRST APPELLATE AUTHORITY, THEREFORE, WE UPHELD THE SAME BY DISMISSING THE APPEALS FILED BY THE REVENUE.' 10. HOWEVER IN VIEW OF THE ABOVE DETAILED OBSERVATION O F THE CIT(A) AND HON'BLE ITAT PROCEEDED TO OBSERVE AS UND ER:- WHILE CONSIDERING THE SCOPE AND AMBIT OF PENALTY L EVIED U/S 271(L)(C) OF THE ACT, THE HON'BLE SUPREME COURT HAS HELD IN RELIANCE PETRO PRODUCTS' CASE (SUPRA) THAT MERE RAI SING OF A CLAIM, EVEN IF NOT SUSTAINABLE IN LAW, IS NOT BY ITSELF, S UFFICIENT TO HOLD THAT IT DENOTES FURNISHING OF INACCURATE PARTICULAR S WITH AN INTENT AS WOULD INVITE A PENALTY. THE HON'BLE DELHI HIGH C OURT HAS HELD IN ZOOM COMMUNICATION PRIVATE LIMITED'S CASE (SUPRA ), THAT IF AN ASSESSEE IS UNABLE TO EXPLAIN AS TO IN WHAT CIRCUMS TANCES AND ON ACCOUNT OF WHOSE MISTAKE, DEDUCTIONS WERE CLAIMED, IT WOULD AMOUNT TO RAISING A MALA FIDE CLAIM THAT WOULD INVI TE PENALTY. WE CANNOT, BUT AGREE WITH THE OBSERVATIONS BY THE DELH I HIGH COURT, BUT, AS THE SITUATION, ON FACTS, IN THE PRESENT CAS E, IS ENTIRELY DIFFERENT, FIND NO REASON TO DEPART FROM THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN RELIANCE PETRO PRODUCTS' C ASE (SUPRA). THE DEDUCTIONS WERE CLAIMED IN A BONAFIDE EXERCISE OF THE RIGHT OF AN ASSESSEE TO CLAIM DEDUCTION. THE FACT THAT THIS CLAIM WAS REJECTED, DOES NOT RAISE INFERENCE OF A MALA FIDE A TTEMPT TO EVADE TAX. A PENALTY IS IMPOSED ONLY IF THE CLAIM IS MALA FIDE OR RAISED WITH INTENT TO EVADE TAX. IN THIS VIEW OF THE MATTE R, WE FIND NO MERIT IN THE APPEAL OR THE SUBSTANTIAL QUESTION OF LAW AND DISMISS THE APPEAL.' IN VIEW OF THE ABOVE DETAILED FACTS AND CIRCUMSTANC ES OF THE CASE AND ANALYSIS OF JUDICIAL VIEW ON THE SAME, THE PENA LTY IMPOSED BY THE ASSESSING OFFICER WITH REFERENCE TO ADDITION OF RS. 66,99,660/- IS DIRECTED TO BE DELETED. 7. THEREFORE, THE TRIBUNAL HAS DELETED THE DISALLO WANCE, WHICH IS THE VERY BASIS OF THE PENALTY IN QUESTION. THE SAID TRI BUNAL ORDER HAS NOT BEEN SHOWN TO HAVE BEEN UPSET OR EVEN STAYED ON APP EAL. THAT BEING SO, SINCE THE VERY BASIS OF THE IMPOSITION OF THE PENAL TY NO LONGER SURVIVES, ITA NO.664(ASR)/2014 ASSESSMENT YEAR: 2006-07 7 THE LD. CIT(A) CANNOT BE SAID TO HAVE ERRED IN DELE TING THE PENALTY. THUS, FINDING NO ERROR THEREIN, THE ORDER OF THE LD. CIT( A) IS CONFIRMED. 8. IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25/05/ 2016. SD/- SD/- (T.S. KAPOOR) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER /SKR/ DATED: 25/05/2016 COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. BRIGHT ENTERPRISES PVT. LTD. JALA NDHAR. 2. THE DCIT, CC-II, JALANDHAR. 3. THE CIT(A), JALANDHAR 4. THE CIT, JALANDHAR 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER