SHRENUJ & CO. LTD, MUMBAI V. DCIT 16(2), MUMBAI

ITA 6665/MUM/2009

• Counselvise Citation: 666519914 RSA 2009
• Duration Of Justice: 1 year(s) 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 07-07-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 31-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T T JACOB
• Keywords: Depreciation; Wrong claim

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH: MUMBAI BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO.6665/MUM /2009 (ASSESSMENT YEAR: 2003-04) M/S. SHRENUJ & CO. LTD. (EARLIER-M/S. SHRENUJ & CO), 405, DHARAM PALACE, 100/103, N.S. PARKAR MARG, MUMBAI -400 004 ....... APPELLANT VS DCIT 16(2), MATRU MANDIR, TARDEO, MUMBAI -400 034 ..... RESPONDENT PAN: AAACS 0690 P APPELLANT BY: APURVA SHAH RESPONDENT BY: SHRI T.T. JACOB DATE OF HEARING: 07.07.2011 DATE OF PRONOUNCEMENT: 29.07.2011 O R D E R PER R.S. PADVEKAR, JM IN THIS APPEAL THE ASSESSEE HAS CHALLENGED THE IMPU GNED ORDER OF THE LD. CIT (A)-27 MUMBAI DATED 20.11.2009 FOR T HE A.Y. 2003-04. THIS APPEAL IS ARISING OUT OF THE PENALTY LEVIED BY THE A.O. U/S.271(1)(C) OF THE ACT, WHICH HAS BEEN CONFIRMED BY THE LD. CIT (A). 2. BRIEFLY STATED THE FACTS ARE AS UNDER. THE ASSE SSEE HAS FILED THE RETURN OF INCOME FOR THE A.Y. 2003-04 ON 12.11.2003 DECLARING INCOME OF RS 3,72,140/-. THE ASSESSMENT WAS COMPLETED U/S .143(3) BY THE A.O. DETERMINING THE TOTAL INCOME AT RS 20,63,210/- . ITA 6665/MUM/2009 M/S. SHRENUJ & CO. LTD. 2 3. ONE OF THE ADDITIONS WAS IN RESPECT OF DEPRECIAT ION. IN THE PROFIT AND LOSS ACCOUNT THE ASSESSEE HAS CLAIMED THE DEPRE CIATION OF RS 8,08,749/- BUT IN THE COMPUTATION OF THE TOTAL INCO ME THE DEPRECIATION WAS CLAIMED AT RS 41,15,095/- U/S.32 O F THE I.T. ACT. THE ASSESSEES ASSESSMENT FOR THE A.Y. 2002-03 WAS ALSO COMPLETED U/S.143(3) AND DEPRECIATION IS WORKED OUT BY THE AS SESSEE WAS ALLOWED THEREON THE WDV OF BLOCK OF ASSET AS ON 1.4 .2002. AS PER THE STATEMENT FILED BY THE ASSESSE, IN THE OPINION OF T HE A.O. THE ADMISSIBLE DEPRECIATION WAS WORKED OUT AT RS 8,08,7 49/- ONLY AND NOT RS 41,15,095/- AS CLAIMED BY THE ASSESSEE IN THE CO MPUTATION STATEMENT. AS PER THE EXPLANATION OF THE ASSESSEE, IT HAS CLAIMED THE DEPRECIATION OF RS 41,15,095/- IN THE RETURN OF INC OME FOR THE A.Y. 2003-04, IN CONSISTENT WITH ITS STAND IN PAST TILL A.Y. 2002-03 AS CLAIMING DEPRECIATION WAS NOT COMPULSORY AND WAS OP TIONAL. IT WAS FURTHER CONTENTION OF THE ASSESSEE THAT AFTER CONSI DERING THE VARIOUS JUDICIAL PRONOUNCEMENTS, THE ASSESSEE CAME TO THE C ONCLUSION THAT THE STAND OF THE ASSESSEE MIGHT NOT BE ACCEPTED AND THEN THE ASSESSEE REVISED THE CALCULATION OF DEPRECIATION WHICH HAS A CTUALLY BEEN ALLOWED IN THE ASSESSEES TAX COMPUTATION FROM A.YS . 1996-97 TO 2001-02 AND THE ASSESSEE CLAIMED THAT THE CORRECT D EPRECIATION WOULD BE RS 17,70,547/- AND NOT RS 40,51,095/-. THE A.O. HAS RESERVATION IN RESPECT OF THE COMPUTATION OF THE DEPRECIATION M ADE BY THE ASSESSEE. THE A.O. TOOK INTO CONSIDERATION DWV OF THE BLOCK OF ASSET FOR A.Y. 2003-04 AND ACCORDINGLY CLAIM OF DEPRECIAT ION ALLOWANCE WAS FINALLY RESTRICTED TO RS 8,08,749/- AS AGAINST RS 4 1,15,095/-. THE A.O. TREATED THE EXCESS CLAIM OF DEPRECIATION AT RS 33,06,346/- AS FURNISHING OF INACCURATE PARTICULARS WITHIN THE MEA NING OF SEC. 271(1)(C) OF THE ACT. THE DISALLOWANCE OF THE DEPR ECIATION WAS ALSO CONFIRMED BY THE LD. CIT (A). THE A.O., THEREFORE, PROCEEDED TO LEVY THE PENALTY U/S.271(1)(C) FOR FURNISHING THE INACCU RATE PARTICULARS OF INCOME AND LEVIED THE PENALTY OF RS 11,57,222/-. T HE ASSESSEE CHALLENGED THE PENALTY ORDER BEFORE THE LD. CIT (A) BUT WITHOUT ITA 6665/MUM/2009 M/S. SHRENUJ & CO. LTD. 3 SUCCESS. THE LD. CIT (A) HAS GIVEN THE FOLLOWING R EASONS CONFIRMING THE PENALTY LEVIED BY THE A.O.:- 5. I HAVE GONE THROUGH THE REPLY OF THE APPELLANT . IT IS SEEN THAT THE REPLY OF THE APPELLANT DOES NOT HAVE ANY S UBSTANCE AND IS NOT VERY CONVINCING. THEY HAVE MADE A WRONG CLAIM OF DEPRECIATION WHICH HAS BEEN DISALLOWED EVERY YEA R. HOWEVER THEY STILL HAVE FILED CLAIMS OF DEPRECIATIO N BASED ON HIGHER WDV AND EVERY YEAR DURING THE COURSE OF ASSESSMENT PROCEEDINGS, DEPRECIATION HAS BEEN GRANT ED TO THEM AS PER WDV COMING AS PER I.T. RECORDS. THEY H AVE CLAIMED A HIGHER DEPRECIATION IN THIS YEAR THAN WHA T WAS ALLOWABLE TO THEM ON THE GROUNDS THAT DEPRECIATION HAS BEEN THRUST UPON THEM IN THE EARLIER YEARS. HOWEVE R, THE FACT REMAINS, THAT THEY WERE AWARE THAT THEY WERE S HOWING WRONG WDV AND CLAIMING HIGHER DEPRECIATION THAN WHA T WAS ALLOWABLE TO THEM ESPECIALLY WHEN THE ACT AND JUDICIAL PRONOUNCEMENTS HAD MADE IT CLEAR THAT DEPRECIATION WAS TO BE ALLOWED YEAR BY YEAR ON THE WDV AND IT WAS NOT THE APPELLANTS WISH TO CLAIM IT OR NOT. IT WAS TO BE ALLOWED AS PER RULES. THE MATTER WAS NOT DEBATABLE AND THEY HAVE FILED INACCURATE PARTICULAR S OF INCOME CLAIMING A HIGHER DEPRECIATION THAN WHAT WAS ALLOWABLE TO THEM ESPECIALLY THE FACT WAS THAT THE EARLIER YEARS APPEALS ALSO IT WAS ESTABLISHED THAT THEY HAV E MADE A WRONG CLAIM BUT THEY STILL PERSISTED IN FILING WR ONG PARTICULARS OF INCOME AND REDUCING THE TAXABLE LIAB ILITY. UNDER SUCH CIRCUMSTANCES THE ACTION OF THE AO IN IM POSING PENALTY U/S.271(1)(C) WAS CORRECT AND THIS ORDER IM POSING PENALTY IS UPHELD. 4. NOW, THE ASSESSEE IS IN APPEAL BEFORE US. ITA 6665/MUM/2009 M/S. SHRENUJ & CO. LTD. 4 5. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTI ES AND PERUSED THE RECORDS. THE LD. COUNSEL REITERATED THE SUBMIS SIONS MADE BEFORE THE LD. CIT (A) BY STATING THAT EARLIER IT WAS NOT OBLIGATORY TO CLAIM THE DEPRECIATION, BUT DEPRECIATION WAS FOISTED ON THE A SSESSEE. IT IS ARGUED THAT ALL THE PARTICULARS WERE ON RECORD AND NOTHING WAS CONCEALED. HE SUBMITS THAT, IN THE PROFIT AND LOSS ACCOUNT, AS PER THE WDV, THE ASSESSEE HAS CLAIMED THE DEPRECIATION. BU T, IN COMPUTATION, AS PER THE CONSISTENT STAND, THE HIGHE R DEPRECIATION WAS CLAIMED. IT IS, THEREFORE, PLEADED THAT THERE IS N O FURNISHING OF INACCURATE PARTICULARS OF INCOME AND NO PENALTY CAN BE LEVIED. HE RELIED ON THE FOLLOWING PRECEDENT:- I) ACIT VS. NUCHEM LTD. -6 ITR (TRIB) 429 (DEL) PER CONTRA, THE LD. D.R. SUPPORTED THE ORDERS OF TH E AUTHORITIES BELOW. 6. THE LIMITED CONTROVERSY IS ROWING AROUND TO WO RKING OF THE DEPRECIATION. IT IS NOT THE CASE OF THE A.O. THAT ANY PARTICULARS OF DEPRECIATIONS ARE CONCEALED. AS PER THE FACTS OF R ECORD, HE FIND THAT, IN THE PRECEDING YEAR, CONSISTENTLY THE ISSUE OF DEPRECIATION WAS IN CONTROVERSY. IT APPEARS THAT, IN SOME OF THE YEARS , ALL THE ASSESSEE DID NOT CLAIM THE DEPRECIATION IN THE COMPUTATION. IN THE ASSESSMENT PROCEEDINGS, FINALLY, THE ASSESSEE FILED THE COMPUT ATION STATEMENT SHOWING THE ALLOWABLE DEPRECIATION AT RS 17,70,547/ -. IN OUR OPINION, NOTHING IS THERE TO SUGGEST THAT THE ASSESSEE CONSC IOUSLY FURNISHED THE INACCURATE PARTICULARS OF INCOME AS CONTEMPLATE D UNDER SEC. 271(1)(C) OF THE ACT AS THE ISSUE OF THE DEPRECIATI ON WAS IN DEBATE IN THE PRECEDING YEAR ALSO. WE ARE OF THE OPINION THA T IT CANNOT BE SAID THAT THE ASSESSEE HAS FURNISHED THE INACCURATE PART ICULARS OF INCOME AS ALL THE PARTICULARS WERE ON RECORD. HENCE, THER E IS NO JUSTIFICATION TO LEVY THE PENALTY. WE, ACCORDINGLY, DELETE THE P ENALTY LEVIED BY THE A.O. 7. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ITA 6665/MUM/2009 M/S. SHRENUJ & CO. LTD. 5 ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 2 9TH JULY 2011. SD/- SD- ( P.M. JAGTAP ) ACCOUNTANT MEMBER ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI, DATE: 29TH JULY 2011 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A)27, MUMBAI. 4) THE CIT-7, MUMBAI. 5) THE D.R. H BENCH, MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T., MUMBAI *CHAVAN ITA 6665/MUM/2009 M/S. SHRENUJ & CO. LTD. 6 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 22.07.2011 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 27.07.2011 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER