ITO, Ambala Cantt. V. M/s Rishab Cargo, Ambala Cantt.

ITA 669/CHANDI/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95469 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 02-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Bonafide mistake

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES SMC CHANDIGARH BEFORE SHRI H.L. KARWA, HONBLE VICE PRESIDENT ITA NO.669/CHD/2015 ASSESSMENT YEAR:2009-10 THE ITO VS. M/S RISHAB CARGO W-3 NORTON HOUSE, RAI MARKET, AMBALA CANTT, AMBALA CANTT PAN NO. AFSPM4366A (APPELLANT) (RESPONDENT) APPELLANT BY : SH. VIVEK NANGIA RESPONDENT BY : SH. JASPAL SHARMA DATE OF HEARING : 12/08/2015 DATE OF PRONOUNCEMENT : 14/08/2015 ORDER PER H.L.KARWA, VP THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A), PANCHKULA, DT. 15/05/2015, DELETING THE PENALTY UND ER SECTION 271(1)(C) OF THE ACT LEVIED BY AO. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED ITS RETURN OF INCOME FOR AY 2009-10 AS ON 14-09-2009 DECLARING LOSS OF R S. 29,63,662/-. THE AO DURING THE ASSESSMENT PROCEEDINGS NOTED FROM THE CLAIM OF DEPRECIATION ON TRUCKS THAT THE OPENING WDV OF TRUCKS AS ON 01/04/2008 WAS SHO WN AT RS. 1,58,32,416.81/- WHEREAS AS PER DEPRECIATION CHART FOR AY 2008-09, T HE CLOSING WDV OF THE TRUCKS AS ON 31/03/2008 WAS RS. 1,23,94,751.40. THUS THERE WAS A DIFFERENCE OF RS. 34,41,705.41 BETWEEN THE CLOSING & OPENING BALANCE OF WDV OF TRUCKS. THE DEPRECIATION ON TRUCKS WAS CLAIMED @ 30% ON 1,58,32 ,456.81. WHILE IT WAS 2 ALLOWABLE ONLY @ 30% ON 1,23,94,751.40. WHEN CONFRO NTED THE ASSESSEE EXPLAINED THAT WHILE COMPUTING THE DEPRECIATION A C LERICAL MISTAKE APPEARED AND DEPRECIATION @ 30% WAS COMPUTED ON A FIGURE OF 1,58,32,456.81 WHICH WAS THE WDV AS PER THE BOOKS OF THE ASSESSEE IN PLACE O F 30% ON 1,23,94,751.40 WHICH WAS THE WDV AS PER INCOME TAX ACT. THE AO DIS ALLOWED THE EXCESS CLAIM OF DEPRECIATION OF RS. 10,32,511 AND ADDED IT TO TH E INCOME OF THE ASSESSEE. THE ASSESSEE ACCEPTED THE SAME AND DID NOT FILE ANY APP EAL AGAINST THE ORDER OF THE AO. 3. PENALTY PROCEEDINGS WERE INITIATED U/S 271(1)(C) OF THE ACT. DURING THE PENALTY PROCEEDINGS THE ASSESSE SUBMITTED THAT THE DISALLOWANCE WAS MERELY DUE TO CLERICAL ERROR AND IT WAS NOT A CASE OF SUBM ISSION OF INACCURATE PARTICULARS. THE NATURE OF ERROR CLEARLY INDICATED THAT ERROR OCCURRED DUE TO MAINTENANCE OF TWO SCHEDULES OF FIXED ASSETS, ONE A S PER BOOKS OF ACCOUNT AND ANOTHER FOR THE PURPOSES OF INCOME TAX ACT. IT WAS ALSO SUBMITTED THAT DUE TO CHANGE IN TAX CONSULTANT THE SCHEDULE OF FIXED ASSE TS AS PER BOOKS HAS BEEN INADVERTENTLY TAKEN AS THE BASIS FOR CLAIMING DEPRE CIATION UNDER THE INCOME TAX ACT. RELIANCE WAS PLACED ON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. ( 2010) 322 ITR 158 (SC) AND HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. BRA HMAPUTRA CONSORTIUM LTD.(2012) 348 ITR 339(DELHI). AFTER CONSIDERING TH E REPLY OF THE ASSESSEEE, THE AO FOUND THAT THE ASSESSEES CLAIM OF BONAFIDE MISTAKE IS NOT ACCEPTABLE. FURTHER, AS ONLY ABOUT THREE PERCENT OF CASES ARE SELECTED F OR SCRUTINY AND THERE WOULD HAVE PROBABILITY FOR ESCAPEMENT OF THE EXCESS CLAIM OF DEPRECIATION, HE IMPOSED A PENALTY OF RS. 3,28,617/- BEING 100% OF T HE TAX SOUGHT TO BE EVADED, UNDER SECTION 271(1)(C) OF THE ACT. 4. THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). D URING THE APPELLATE PROCEEDINGS THE ASSESSEE REITERATED THE SUBMISSION MADE BEFORE THE AO DURING 3 THE PENALTY PROCEEDINGS. AFTER CONSIDERING THE SAME , THE CIT(A) DELETED THE PENALTY HOLDING AS FOLLOWS: 5.1 AFTER CONSIDERING THE FACTS AND THE SUBMISSION, IT IS FOUND THAT THE MISTAKE IN THE CALCULATION OF DEPRECIATION OCCURRED DUE TO DIFFERENT FIGURE PICKED UP FROM THE SCHEDULE OF DEPRECIATION PREPARED FOR THE BOOKS OF ACCOUNT. THE MISTAKE WAS DONE BY THE AUDITOR WHICH THE ASSESSEE ADMITTED AT THE TIME OF ASSESSMENT BEFORE THE AO. IN VIEW OF THE FACTS OF THE CASE, I AM IN AGREEMENT WITH THE APPELLANT SUBMISSION THAT THE MISTAKE OCCURRED DUE TO CLERICAL ERROR BY THE AUDITOR WAS A BONAFIDE MISTAKE WHICH MAY NOT WARRAN T THE APPELLANT TO BE PENALIZED. THE DECISION RELIED UPON BY THE APPELLAN T IN THE CASE OF DEENA KAK (SUPRA) AND BHARAMPUTRA CONSORTIUM LTD. (SUPRA) ARE APPLICABLE IN THE INSTANT CASE. THEREFORE, IN VIEW OF THE FACTS AND JUDICIAL PRONOUNCEMENT, I FIND THAT THE AO WAS NOT JUSTIFIED IN IMPOSITION OF PENALTY FOR T HE BONAFIDE MISTAKE OF THE APPELLANT. THEREFORE THE PENALTY OF RS. 3,28,617/- IS CANCELLED. THE GROUNDS OF APPEAL ARE ALLOWED. 5. NOW THE DEPARTMENT HAS CAME IN APPEAL BEFORE THE TRIBUNAL, AGAINST THE ABOVE SAID ORDER OF THE CIT(A), RAISING THE FOLLOWI NG GROUNDS OF APPEAL. 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN CANCELING THE PENALTY IMPOSED BY THE ASSESSING OFFI CER U/S 271(1)(C) OF I.T. ACT, 1961 AMOUNTING TO RS. 3,28,617/- FOR FURNISHING THE INACCURATE PARTICULARS OF INCOME ON ACCOUNT OF EXCESS DEPRECIATION CLAIMED. 2. IT IS PRAYED THAT THE ORDER OF THE LD. CIT(APPEAL) BE SET-ASIDE AND THAT OF THE A.O. BE RESTORED. 6. BEFORE ME, THE LD. DR ARGUED THAT THE CIT(A) HAS ERRED IN CANCELLING THE PENALTY IMPOSED BY THE AO, AS IT IS A CLEAR CASE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME ON ACCOUNT OF EXCESS DEPRECIA TION CLAIMED. IT WAS PRAYED THAT THE ORDER OF CIT(A) BE SET ASIDE AND THE ORDER OF AO MAY BE RESTORED. 7. LD. COUNSEL FOR THE ASSESSEE IN REPLY AGAIN REIT ERATED THE SUBMISSIONS MADE BEFORE THE AO IN PENALTY PROCEEDINGS AND BEFOR E CIT(A) IN APPELLATE PROCEEDINGS. IT WAS PRAYED THAT IN VIEW OF THE FACT THAT THE CASE IS OF AN INADVERTENT MISTAKE COMMITTED BY THE ACCOUNTANTS AN D THE ASSESSEE HAVING ACCEPTED THE ASSESSMENT AND DUE TAXES HAVING BEEN P AID, PENALTY SHOULD NOT BE SUSTAINED. 8. I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED T HE MATERIAL ON RECORD. FROM THE PERUSAL OF DEPRECIATION CHARTS BOTH AS PER BOOKS AND MAINTAINED FOR INCOME TAX PURPOSES FOR THE YEAR ENDING 31/03/2007 AND ALSO FOR YEAR ENDED 4 31/03/2008, AS FILED BY THE AR DURING THE COURSE OF HEARING, IT IS QUITE APPARENT THAT WHILE COMPUTING THE DEPRECIATION AS PER INCOME TAX ACT, THE OPENING BALANCE OF THE TRUCKS CONSIDERED IS AS PER BOOKS IN PLACE OF AS PER INCOME TAX CHART. IT WAS SEEN THAT THE OPENING BALANCE AS PER BOOKS W AS 1,58,36,456.81, WHILE FOR INCOME TAX PURPOSES, IT WAS 1,23,94,751.40. AFTER C ONSIDERING THE SALE OF RS. 1,59,000/- DURING THE YEAR, THE DEPRECIATION WAS TO BE COMPUTED @ 30% ON 1,22,35,751.40( 1,23,94,751.40 1,59,000.00), WHIL E IT WAS WRONGLY COMPUTED @ 30% ON 1,56,77,456.81 (1,58,36,456.81 1,59,000.00 ). THE CLAIM OF DEPRECIATION MADE BY THE ASSESSEE WAS EXACTLY THE AMOUNT CALCULA TED WRONGLY TAKING THE OPENING BALANCE AS PER BOOKS. 9. IN VIEW OF THESE FACTS, IT APPEARS TO BE A CLEAR CASE OF INADVERTENT ERROR COMMITTED ON THE PART OF THE ASSESEE. IT IS NOT A C ASE OF CONCEALMENT OF INCOME AS THE AO HIMSELF HAS PICKED UP ALL THE FACT S AND FIGURES FROM THE RETURN OF INCOME AND OTHER DETAILS FILED BY THE ASSESSEE. IT IS A CASE WHERE AN EXCESS CLAIM WAS MADE BY THE ASSESSEE, THAT TOO BY COMMITT ING A BONAFIDE MISTAKE. EVERY DISALLOWANCE OR ADDITION CANNOT BE THE SOLE B ASIS FOR IMPOSING PENALTY. THE ASSESSEE HAS PLEADED BONAFIDE, WHICH GETS STREN GTHENED BY THE FACT THAT THE AMOUNT CLAIMED IS EXACTLY THE AMOUNT COMPUTED O N THE BASIS OF OPENING BALANCE WRONGLY AS PER BOOKS IN PLACE OF BALANCE AS PER INCOME TAX, TO BE TAKEN. 10. ON A SIMILAR ISSUE, THE HONBLE SUPREME COURT I N THE CASE OF PRICE WATERHOUSE COOPERS PVT. LTD. VS. CIT AND ANOTHER(20 12) 348 ITR 306 (SC) HELD AS UNDER: 19. THE CONTENTS OF THE TAX AUDIT SUGGEST THAT THE RE IS NO QUESTION OF THE ASSESSEE CONCEALING ITS INCOME. THERE IS ALSO NO QU ESTION OF THE ASSESSE FURNISHING ANY INACCURATE PARTICULARS. IT APPEARS TO US THAT A LL THAT HAS HAPPENED IN THE PRESENT CASE IS THAT THROUGH A BONA FIDE AND INADVE RTENT ERROR, THE ASSESSEE WHILE SUBMITTING ITS RETURN, FAILED TO ADD THE PROVISION FOR GRATUITY TO ITS TOTAL INCOME. THIS CAN ONLY BE DESCRIBED AS A HUMAN ERROR WHICH WE ARE ALL PRONE TO MAKE. THE CALIBRE AND EXPERTISE OF THE ASSESSEE HAS LITTLE OR NOTHING TO DO WITH THE INADVERTENT ERROR. THAT THE ASSESSEE SHOULD HAVE BE EN CAREFUL CANNOT BE 5 DOUBTED, BUT THE ABSENCE OF DUE CARE, IN A CASE SUC H AS THE PRESENT, DOES NOT MEAN THAT THE ASSESSE IS GUILTY OF EITHER FURNISHIN G INACCURATE PARTICULARS OR ATTEMPTING TO CONCEAL ITS INCOME. 20. WE ARE OF THE OPINION, GIVEN THE PECULIAR FACTS OF THIS CASE, THAT THE IMPOSITION OF PENALTY ON THE ASSESSEE IS NOT JUSTIFIED. WE ARE SATISFIED THAT THE ASSESSEE HAD COMMITTED AN INADVERTENT AND BONA FIDE ERROR AND HA D NOT INTENDED TO OR ATTEMPTED TO EITHER CONCEAL ITS INCOME OR FURNISH I NACCURATE PARTICULARS. 11. IN THE PRESENT CASE ALSO THE CLAIM OF EXCESS DE PRECIATION IN ON ACCOUNT OF INADVERTENT AND BONAFIDE ERROR NOT INTENDING TO CON CEAL INCOME OR TO FURNISH INACCURATE PARTICULARS OF INCOME. MY VIEW ALSO GETS STRENGTHEN BY THE JUDGMENT OF APEX COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS (P) LTD. (2010) 322 ITR 158 (SC), WHEREIN IT HAS BEEN HELD AS UNDER: AS THE ASSESSEE HAD FURNISHED ALL THE DETAILS OF ITS EXPENDITURE AS WELL AS INCOME IN ITS RETURN, WHICH DETAILS, IN THEMSELVES, WERE NOT FOUND TO BE INACCURATE NOR COULD BE VIEWED AS THE CONCEALMENT O F INCOME ON ITS PART. IT WAS UP TO THE AUTHORITIES TO ACCEPT ITS CLAIM IN THE RE TURN OR NOT. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH CLAIM W AS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT, IN OUR OPINION, ATTRACT THE PENALTY UNDER SECTION 271(1)(C). IF WE ACCEPT THE C ONTENTION OF THE REVENUE THEN IN CASE OF EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTED BY ASSESSING OFFICER FOR ANY REASON, THE ASSESSEE WILL INVITE PE NALTY UNDER SECTION 271(1)(C). THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATU RE. 12. AS HELD EARLIER, THIS IS ONLY A CASE OF WRONG C LAIM, THEREFORE PENALTY IS NOT LEVIABLE. IN VIEW OF THE ABOVE, I DO NOT FIND ANY I NFIRMITY IN THE ORDER OF THE CIT(A) THE PENALTY U/S 271(1)(C) IMPOSED BY THE AO WAS COR RECTLY DELETED BY CIT(A). 13. IN THE RESULT APPEAL FILED BY THE DEPARTMENT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14/08/2015 SD/- (H.L. KARWA) VICE PRESIDENT DATED: 14/08/2015 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR