THE DCIT, Khandwa V. M/s Nepa Limited, Burhanpur

ITA 683/IND/2013

• Counselvise Citation: 68322714 RSA 2013
• Duration Of Justice: 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2003-2004
• Appeal Filed On: 26-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRI
• Assessee Lawyers: R A VERMA
• Keywords: Depreciation; Wrong claim; Bad and doubtful debts; Unabsorbed depreciation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE P.K. BANSAL, ACCOUNTANT MEMBER AND SHRI MUKU L KR. SHRAWAT, JUDICIAL MEMBER PAN NO. AAACN9961C ITA NO. 683/IND/2013 A.Y. : 2003-04 DY. CIT, KHANDWA VS. M/S.NEPA LIMITED, NEPANAGAR, DISTT. BURHANPUR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R.A.VERMA, SR. DR REVENUE BY : SHRI PANKAJ SHAH AND SHRI G.J. SHAH, CAS / // / DATE OF HEARING :12.09.2014 /DATE OF PRONOUNCEMENT: 13/10/2014 / O R D E R PER P.K.BANSAL, A.M. THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER OF CIT(A) DATED 30.09.2013, CANCELLING THE PENALTY IMPOSED U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961. 2. THE ASSESSING OFFICER MADE AN ADDITION WHILE COMPLE TING THE ASSESSMENT U/S 143(3) OF SUM OF RS.60,17,733/- ON ACCOUNT OF PROVISIONS FOR BAD AND DOUBTFUL DEBTS. HE INITIA TED PENALTY PROCEEDINGS U/S 271(1)(C) WITHOUT MENTIONING WHETHE R THE PENALTY HAS BEEN INITIATED FOR CONCEALING THE PARTI CULARS OF M/S.NEPA LIMITED, NEPANAGAR, DISTT. BURHANPUR. I.T.A.NO. 683/IND/2013- A.Y. 2003-04. 2 INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME AND ULTIMATELY VIDE ORDER DATED 24.12.2012 AFTER GIVING THE OPPORTUNITY TO THE ASSESSEE, THE ASSESSING OFFICER TOOK THE VIEW THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICUL ARS OF INCOME AND THE CASE IS COVERED BY THE EXPLANATION TO SECTI ON 271(1)(C) AND, THEREFORE, HE IMPOSED THE PENALTY U/S 271(1)(C ) BY OBSERVING AS UNDER : 5. THUS, IT IS CLEAR THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF HIS INCOME AND THE CASE IS COVERED BY THE EXPLANATION TO THE SECTI ON 271(1)( C). THEREFORE, I AM SATISFIED THAT THIS IS A FIT CASE FOR IMPOSITION OF PENALTY. 3. THE ASSESSEE IS IN APPEAL BEFORE THE CIT(A). THE LD . CIT(A) NOTED THAT THE ASSESSEE HAS DEBITED THE PROVISION O N ACCOUNT OF BAD DEBTS AMOUNTING TO RS. 60,17,733/- IN THE PROFI T AND LOSS ACCOUNT AND SAME WAS OMITTED TO BE INCLUDED IN THE INCOME OF THE ASSESSEE IN COMPUTATION. WHEN THE ASSESSEE WAS CONFRONTED BY THE ASSESSING OFFICER, THE ASSESSEE REALIZED THE MISTAKE AND IMMEDIATELY WITHDRAWN THE CLAIM. THE ASSESSING OFFI CER ALSO NOTED IN THE PENALTY ORDER DATED 24.12.2012 UNDER P ARA 4 THAT THE ASSESSEE COMMITTED MISTAKE WHILE SHOWING THE PR OVISIONS FOR BAD AND DOUBTFUL DEBTS AND IN TURN NOT ADDING IT BA CK IN THE COMPUTATION OF INCOME. ON THE BASIS OF THESE OBSERV ATIONS, THE M/S.NEPA LIMITED, NEPANAGAR, DISTT. BURHANPUR. I.T.A.NO. 683/IND/2013- A.Y. 2003-04. 3 LD. CIT(A) TOOK THE VIEW THAT IT IS A CLEAR CASE OR PRIMA FACIE MISTAKE ON THE PART OF THE ASSESSEE NOT TO ADD BACK THE PROVISIONS FOR BAD AND DOUBTFUL DEBTS IN THE COMPUT ATION OF INCOME. THE ASSESSING OFFICER COULD HAVE POINTED OU T AND DEALT WITH THIS MISTAKE U/S 143(1) OF THE ACT WHILE PROC ESSING THE RETURN. THE ASSESSING OFFICER HAS OMITTED TO RECTIF Y THE MISTAKE. THEREFORE, HE DID NOT AGREE WITH THE OBSERVATIONS O F THE ASSESSING OFFICER THAT IF THE ASSESSMENT WAS NOT DONE UNDER S CRUTINY, THE ASSESSEE WOULD HAVE SUCCEEDED IN GETTING THE WRONG CLAIM. ULTIMATELY, THE LD. CIT(A) TOOK THE VIEW THAT WHEN THERE IS NO MOTIVE TO CLAIM EXCESS DEDUCTION, IT CANNOT BE CONS IDERED AS CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME, ESPECIALLY WHEN THERE WERE CARRIED FORWARD BUSINESS LOSSES AND UNABSORBED DEPRECIATION RUNNING INTO CRORES IN THE CASE OF THE ASSESSEE. THE LD. CIT(A), THUS, CANCELLED THE PENAL TY RELYING ON THE FOLLOWING DECISIONS :- 1) LAXMI VILAS BANK , 303 ITR 428 (MAD). 2) CIT VS. RELIANCE PETRO PRODUCTS, 322 ITR 158 ( S. C.) 4. BEFORE US, THE LD. AUTHORIZED REPRESENTATIVE REITER ATED THE SUBMISSION MADE BEFORE THE CIT(A) AND CONTENDED THAT THE ASSESSEE WAS INCURRING HEAVY LOSSES, SINCE THE LAST MORE THAN 20 M/S.NEPA LIMITED, NEPANAGAR, DISTT. BURHANPUR. I.T.A.NO. 683/IND/2013- A.Y. 2003-04. 4 YEARS AND CARRIED FORWARD LOSSES ARE BEING LEFT BEY OND EIGHT YEARS SINCE LAST MANY YEARS. THE ASSESSEE HAD INADVERTENT LY LEFT TO ADD BACK THE PROVISIONS OF DOUBTFUL DEBTS. EVEN HE RELI ED ON THE DECISION OF THE VIJAYA BANK VS. CIT, 323 ITR 166 ( S.C.) WHEREIN IT WAS CATEGORICALLY HELD THAT IN THE CASE OF COMPANIE S THE PROVISIONS FOR DOUBTFUL DEBTS CAN BE ALLOWED AS A D EDUCTION U/S 36(1)(VII) OF THE ACT. IN VIEW OF THE CARRIED FORWA RD LOSSES, HE CONTENDED THAT THERE WAS NOT MOTIVE OF EXCESS CLAIM . IN THIS REGARD, HE RELIED ON THE FOLLOWING DECISIONS :- (I) ACIT VS. RAJ MULTIPLEX , 44 SOT 53 (HAD) (II) AMRUTA ORGANICS PVT.LTD. VS. DCIT( I.T.A.NO. 1121 /PN/2011 ) HE ALSO CONTENDED THAT NO PENALTY CAN BE LEVIED, ON CE THE MISTAKE IS NOTICED AND THE ASSESSEE HAS AGREED TO W ITHDRAW THE CLAIM. FOR THIS RELIANCE WAS PLACED ON THE FOLLOWIN G DECISIONS: (A) CIT VS. LAKSHMI VILAS BANK, 303 ITR 428. (B) CIT VS. SHRI SHARDHA TEXTILE PROCESSORS (P) LTD., 286 ITR 499. IT IS MERELY A CLAIM WHICH IS NOT SUSTAINABLE IN LA W. THEREFORE, NO PENALTY CAN BE LEVIED. RELIANCE WAS PLACED IN THIS REGARD ON THE DECISION OF THE CIT VS. RELIANCE PETRO PRODUCTS LIM ITED, 322 ITR M/S.NEPA LIMITED, NEPANAGAR, DISTT. BURHANPUR. I.T.A.NO. 683/IND/2013- A.Y. 2003-04. 5 158 ( S.C.). LASTLY, HE CONTENDED THAT NO PENALTY O N MAKING AN ERRONEOUS CLAIM CAN BE LEVIED. IN THIS REGARD, HE R ELIED ON THE FOLLOWING DECISIONS :- (A) CIT VS. SOCIETEX, I.T.A.NO. 1497/20 06 (DEL). (B) CIT VS. MAHANAGAR TELEPHONE NIGAM LIMITED, (2011 ) 63 DTR 87. (C) PRICE WATERHOUSE COOPERS PVT.LTD. VS. CIT, 348 ITR 306 ( S. C.) (D) INDIAN PESTICIDES V. ITO, 16 TTJ 101 (CHD) (E) ACIT VS A.H. WHEELER, 132 ITD 34 (ALL). (F) CIT VS. S.P.K.STEELS, 270 ITR 156 (MP) 5. THE LD. SENIOR DR CONTENDED BEFORE US THAT IT IS NO T A CASE WHERE THE ASSESSEE HAS VOLUNTARILY WITHDRAWN T HE CLAIM. THE CLAIM HAS BEEN WITHDRAWN ONCE IT HAS BEEN BROU GHT TO THE KNOWLEDGE OF THE ASSESSEE BY THE ASSESSING OFFICER. RELIANCE WAS PLACED IN THIS REGARD ON THE DECISION OF HON'BLE DE LHI HIGH COURT IN THE CASE OF CIT V. HARPARSHAD AND COMPANY LTD, ( 2010)328 ITR 53(DEL) 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME ALONGWITH THE ORDERS OF THE TAX AUTHORITIES BELOW. WE HAVE ALSO GONE THROUGH THE CASE LAWS AS H AVE BEEN M/S.NEPA LIMITED, NEPANAGAR, DISTT. BURHANPUR. I.T.A.NO. 683/IND/2013- A.Y. 2003-04. 6 RELIED ON BEFORE US. THE PROVISIONS OF SECTION 271( 1)(C) OF THE INCOME-TAX ACT, 1961, READS AS UNDER :- 271. (1) IF THE ASSESSING OFFICER OR THE COMMISSIO NER (APPEALS)] OR THE PRINCIPAL COMMISSIONER OR] COMMIS SIONER] IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT, IS SATISFIED THAT ANY PERSON (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF 61[SUCH INCOME, HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY, III) IN THE CASES REFERRED TO IN CLAUSE (C) OR CLAU SE (D)], IN ADDITION TO TAX, IF ANY, PAYABLE] BY HIM, A SUM WHI CH SHALL NOT BE LESS THAN, BUT WHICH SHALL NOT EXCEED THREE TIMES, THE AMOUNT OF TAX SOUGHT TO BE EVADED BY REASON OF THE CONCEALMENT OF PARTICULARS OF HIS INCOME OR FRINGE BENEFITS] OR THE FURNISHING OF INACCURATE PARTICULARS OF SUCH IN COME OR FRINGE BENEFITS]. 73[* * *] EXPLANATION 1.WHERE IN RESPECT OF ANY FACTS MATERI AL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT, (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OF FERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) OR THE PRINCIPAL COMMISSIONE R OR] COMMISSIONER TO BE FALSE, OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS N OT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATI ON IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AN D MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DI SCLOSED BY HIM], THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING T HE TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHALL, FO R THE PURPOSES OF CLAUSE (C) OF THIS SUB-SECTION, BE DEEM ED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULAR S HAVE BEEN CONCEALED. M/S.NEPA LIMITED, NEPANAGAR, DISTT. BURHANPUR. I.T.A.NO. 683/IND/2013- A.Y. 2003-04. 7 7. FROM THE SAID PROVISION, IT IS APPARENT THAT IF THE ASSESSING OFFICER IN THE COURSE OF ANY PROCEEDINGS IS SATISFIED THAT ANY PERSON HAS CONCEALED THE PARTICULARS OF HI S INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME, TH EN HE MAY LEVY THE PENALTY ON THE ASSESSEE. THUS, THERE ARE T WO DIFFERENT CHARGES I.E. THE CONCEALMENT OF PARTICULARS OF INCO ME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE PENALTY CAN BE IMPOSED FOR A SPECIFIC CHARGE. FURNISHING OF INA CCURATE PARTICULARS MEANS WHEN THE ASSESSEE HAS NOT DISCLOS ED THE PARTICULARS CORRECTLY OR THE PARTICULARS DISCLOSED BY THE ASSESSEE ARE INCORRECT. CONCEALMENT OF PARTICULARS OF INCOME MEANS WHEN THE ASSESSEE HAS CONCEALED THE INCOME AND HAS NOT S HOWN THE INCOME IN ITS RETURN OR IN ITS BOOKS OF ACCOUNTS. 8. EXPLANATION (1) IS A DEEMING PROVISION AND IT IS AP PLICABLE WHEN AN AMOUNT IS ADDED OR DISALLOWED IN COMPUTATIO N OF TOTAL INCOME IS DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. EXPLANATION (1) IS NOT APPLICABLE IN THIS CASE OF FURNISHING INACCURATE PARTICULARS O F INCOME. IN THIS CASE, WE NOTED THAT THE ASSESSING OFFICER HAS INITI ATED PENALTY PROCEEDINGS U/S 271(1)(C) WITHOUT POINTING OUT WHET HER THE M/S.NEPA LIMITED, NEPANAGAR, DISTT. BURHANPUR. I.T.A.NO. 683/IND/2013- A.Y. 2003-04. 8 ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME. T HE PENALTY ULTIMATELY WAS LEVIED ON THE ASSESSEE FOR FURNISHIN G INACCURATE PARTICULARS BY OBSERVING THAT THE CASE OF THE ASSES SEE IS COVERED BY THE EXPLANATION TO SECTION 271(1)(C). WE MAY OBS ERVE THAT IN THE CASE OF FURNISHING INACCURATE PARTICULARS OF IN COME, THE ONUS IS ON THE REVENUE TO, PROVE THAT THE ASSESSEE HAD F URNISHED THE INACCURATE PARTICULARS, WHILE IN THE CASE OF CONCEA LMENT OF PARTICULARS OF INCOME, WHERE THE EXPLANATION (1) IS APPLICABLE, THE ONUS IS ON THE ASSESSEE TO PROVE THAT HE HAS NOT CO NCEALED THE PARTICULARS OF INCOME. AS IS APPARENT FROM THE EXPL ANATION, THIS EXPLANATION CLEARLY STATES WHERE IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF TOTAL INCOME OF ANY PERSON SU CH PERSON FAILS TO OFFER AN EXPLANATION OR OFFERS EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER TO BE FALSE OR SUCH PERSON OFFERS AN EXPLANATION, WHICH HE IS NOT ABLE TO SUBSTANTIATE O R FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND WITH ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM. THIS IS NOT DENIED THAT THE PARTICULARS OF PROVISIONS OF DOUBTFUL DEBTS HAVE DU LY BEEN SHOWN BY THE ASSESSEE AND DEBITED IN THE AUDITED PROFIT A ND LOSS ACCOUNT. IT IS ALSO NOT DENIED THAT THE ASSESSEE HA S SUBMITTED THE M/S.NEPA LIMITED, NEPANAGAR, DISTT. BURHANPUR. I.T.A.NO. 683/IND/2013- A.Y. 2003-04. 9 EXPLANATION IN REPLY TO SHOW CAUSE NOTICE ISSUED BY THE ASSESSING OFFICER. EVEN THOUGH THE ASSESSING OFFICER, IN OUR OPINION, FAILED TO DISCHARGE HIS ONUS AS HE WAS NOT SURE AT THE INI TIATION OF PENALTY U/S 271(1)(C) FOR WHICH SPECIFIC CHARGE PEN ALTY HAS BEEN INITIATED BY THE ASSESSING OFFICER. EVEN WHILE LEVY ING THE PENALTY ALSO, THE ASSESSING OFFICER SIMPLY RELIED ON THE EX PLANATION TO SECTION 271(1)(C) EVEN THOUGH HE LEVIED THE PENALTY FOR FURNISHING THE INACCURATE PARTICULARS OF INCOME. THIS IS APPAR ENT FROM THE PROVISIONS OF SECTION 271(1)(C) THAT EXPLANATION OF SECTION 271(1)(C) IS NOT APPLICABLE IN CASE INACCURATE PART ICULARS ARE FURNISHED. THEREFORE, IN OUR OPINION, THE BASIS OF LEVY OF PENALTY ITSELF IS NOT CORRECT. IN THIS REGARD, WE RELY ON THE DECISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. N EW SORATHIA ENGINEERING CO. VS. CIT, (2006) 282 ITR 642 (GUJ), IN WHICH IT WAS HELD (HEAD NOTE):- IT IS INCUMBENT UPON THE ASSESSING OFFICER TO STAT E WHETHER PENALTY WAS BEING LEVIED FOR CONCEALMENT OF PARTICULARS OF INCOME BY THE ASSESSEE OR WHETHER AN Y INACCURATE PARTICULARS OF INCOME HAD BEEN FURNISHED BY THE ASSESSEE. M/S.NEPA LIMITED, NEPANAGAR, DISTT. BURHANPUR. I.T.A.NO. 683/IND/2013- A.Y. 2003-04. 10 9. RESPECTFULLY FOLLOWING THE DECISION OF THE HON'BLE GUJARAT HIGH COURT, WE QUASH THE PENALTY LEVIED BY THE ASSE SSING OFFICER. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. SD/- SD/- (MUKUL KR. SHRAWAT) (P. K. BANSAL) JUDICIAL MEMBER ACCOUNTANT M EMBER INDORE; DATED :13/10/2014 CPU*SPS / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. '# ! / THE RESPONDENT. 3. $%$&' # # ( / CONCERNED CIT 4. # # ( ( ) / THE CIT(A), INDORE 5. +,# &' , # # &' , -.% / DR, ITAT, INDORE 6. ,/0 1 / GUARD FILE. / BY ORDER, -# -# -# -# $2 $2 $2 $2 (ASSTT.REGISTRAR) ITAT, IN DORE 1. DATE OF DICTATION- 17.09.2014 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER .09.2014 M/S.NEPA LIMITED, NEPANAGAR, DISTT. BURHANPUR. I.T.A.NO. 683/IND/2013- A.Y. 2003-04. 11 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S. .. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT .. 5. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 6. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 7. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 8. DATE OF DESPATCH OF THE ORDER