The ITO, Ward-8(4), Ahmedabad V. Yeast Alco Enzymes Pvt.Ltd., Ahmedabad

ITA 747/AHD/2007

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0178 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2009
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 30-10-2009
• Assessment Year: 2001-2002
• Appeal Filed On: 15-02-2007
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M C PANDIT
• Assessee Lawyers: A P NANAVATI
• Keywords: Retrospective amendment; Capital expenditure

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, C-BENCH, AHMEDABAD. BEFORE: SHRI T K SHARMA, JUDICIAL MEMBER, AND SHRI D.C.AGRAWAL, ACCOUNTANT MEMBER. ITA NO.747/AHD/2007 (ASSESSMENT YEAR 2001-2002) ITO, WD.8(4), AHMEDABAD. VERSUS YEAST ALCO ENZYMES PVT LTD 1 ST FLOOR, DIVYA APPTTS, NR MITHAKALI UNDER BRIDGE, NAVRANGPURA, AHMEDABAD. (APPELLANT) (RESPONDENT) PAN: AAACY 0844 K FOR THE APPELLANT: SHRI M.C. PANDIT, SR. DR. FOR THE RESPONDENT SHRI A.P. NANAVATI ORDER PER D C AGRAWAL (ACCOUNTANT MEMBER): THIS IS AN APPEAL FILED BY THE REVENUE AGAINST CANCELING THE PENALTY OF RS. 16,70, 408/- LEVIED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C). THE ASS ESSING OFFICER HAD LEVIED PENALTY IN RESPECT OF FOLLOWING ADDITIONS: (I) ADDITION ON A/C. OF PROVISIONS FOR DOUBTFUL DE BTS. RS.35,71,275/- (II) DISALLOWANCE OF MISC. EXPENDITURE RS. 4, 57,454/- (III)DISALLOWANCE OF CAPITAL EXPENDITURE RS. 1 ,46,590/- THESE ADDITIONS WERE CONFIRMED BY THE LD. COMMISSIO NER OF INCOME TAX(APPEALS). THE LD. COMMISSIONER OF INCOME TAX(A PPEALS) CANCELLED THE PENALTY ON THE GROUND THAT RETURNED INCOME AS W ELL AS ASSESSED INCOME ARE LOSS. AS PER FACTS CULLED OUT FROM THE ORDER OF THE ASSESSING OFFICER, WE NOTICE THAT THE RETURNED INCOME AS WELL AS ASSESSED INCOME WERE NIL AS A RESULT OF SET OF EARLIER YEARS LOSSE S AGAINST ADDITIONS MADE BY THE ASSESSING OFFICER. THE LD. COMMISSIONER OF INCOME TAX(APPEALS) WHILE CANCELLING THE PENALTY REFERRED TO THE DECISIONS OF 2 ITA NO.747/AHD/2007 (ASSESSMENT YEAR 2001-2002) ITAT, AHMEDABAD BENCH IN THE CASE OF ACIT VS. APSAR A PROCESSORS PVT. LTD. ITA NO. 284/AHMEDABAD/2004 FOR THE ASSESSMENT YEAR 1996-1997 AND IN THE CASE OF CIT VS. PRUTHVIPAL SINGH 249 ITR 670 (SC), WHEREIN IT IS HELD THAT NO PENALTY FOR CONCEALMENT OF INCOME W OULD BE LEVIABLE IF RETURNED INCOME AS WELL AS ASSESSED INCOME EVEN AFT ER ADDITIONS PROPOSED WAS A LOSS. 2. THE LEARNED DR POINTED OUT THAT SUBSEQUENTLY, HO N'BLE SUPREME COURT IN CIT VS. GOLD COIN HEALTH FOOD PRIVATE LTD. (2008) 304 ITR 308 (SC) HELD THAT EXPLANATION 4 AND SECTION 271(1) (C)(III) ARE CLARIFICATORY IN NATURE AND THEREFORE RETROSPECTIV E. IN THIS REGARD WE REFER TO FOLLOWING HEAD NOTES FROM THAT JUDGMENT: EXPLANATION 4 TO SECTION 271(1)(C)(III) OF THE INC OME-TAX ACT, 1961, REGARDING THE IMPOSITION OF PENALTY EVEN IF T HE RETURNED INCOME IS A LOSS, IS CLARIFICATORY AND NOT SUBSTANT IVE. IT APPLIES EVEN TO ASSESSMENT YEARS PRIOR TO APRIL 1, 2003, THE DAT E ON WHICH IT WAS BROUGHT INTO FORCE. WHAT THE FINANCE ACT, 2002, INT ENDED WAS TO MAKE THE POSITION EXPLICIT WHICH OTHERWISE WAS IMPL IED. VIRTUAL SOFT SYSTEMS LTD. V. CIT [2007] 289 ITR 83 (SC) OVERRULED. A COMBINED READING OF THE RECOMMENDATIONS OF THE WA NCHOO COMMITTEE AND CIRCULAR NO. 204 DATED JULY 24, 1976, MAKES THE POSITION CLEAR THAT EXPLANATION 4(A) TO SECTION 271 (1)(C)(III) INTENDED TO LEVY PENALTY NOT ONLY IN A CASE WHERE A FTER ADDITION OF CONCEALED INCOME, A LOSS RETURNED, AFTER ASSESSMENT BECOMES POSITIVE INCOME, BUT ALSO IN A CASE WHERE ADDITION OF CONCEALED INCOME REDUCES THE RETURNED LOSS AND FINALLY THE AS SESSED INCOME IS ALSO A LOSS OR A MINUS FIGURE. THEREFORE, EVEN DURI NG THE PERIOD BETWEEN APRIL 1, 1976 AND APRIL 1, 2003, THE POSITI ON WAS THAT PENALTY WAS LEVIABLE EVEN IN A CASE WHERE ADDITION OF CONCEALED INCOME REDUCES THE RETURNED LOSS. THE CIRCUMSTANCES UNDER WHICH AN AMENDMENT WAS BROU GHT INTO EXISTENCE AND THE CONSEQUENCES OF THE AMENDMENT WIL L HAVE TO BE 3 ITA NO.747/AHD/2007 (ASSESSMENT YEAR 2001-2002) TAKEN CARE OF WHILE DECIDING WHETHER THE AMENDMENT WAS CLARIFICATORY OR SUBSTANTIVE IN NATURE AND WHETHER IT WILL HAVE RETROSPECTIVE EFFECT OR IT WAS NOT SO. CIT V. PODAR CEMENT P. LTD. [1997] 226 ITR 625 (SC ) RELIED ON. IF IT IS A NECESSARY IMPLICATION FROM THE LANGUAGE EMPLOYED THAT THE LEGISLATURE INTENDED A PARTICULAR SECTION TO HAVE R ETROSPECTIVE OPERATION, THE COURTS WILL GIVE IT SUCH AN OPERATIO N. DECISION OF THE GUJARAT HIGH COURT REVERSED. 3. SINCE THE LD. COMMISSIONER OF INCOME TAX(APPEALS ) HAS CANCELLED THE PENALTY THROUGH A CRYPTIC ORDER RELYING ON THE DECISION IN PRITHVIPAL SINGHS CASE (SUPRA) WHICH IS NOW OVERRULED BY THE SUBSEQUENT DECISION IN GOLD COIN HEALTH FOOD PRIVATE LIMITEDS CASE, IT IS NECESSARY FOR THE LD. COMMISSIONER OF INCOME TAX(APPEALS) TO DISPOSE OF THE ISSUE REGARDING LEVY OF PENALTY ON MERITS. WE, ACCORDING LY RESTORE THE APPEAL TO THE FILE OF LD. COMMISSIONER OF INCOME TAX(APPEA LS) TO DECIDE THE LEVY OF PENALTY ON MERITS IN RESPECT OF VARIOUS ADD ITIONS PROPOSED BY THE ASSESSING OFFICER. 4. AS A RESULT, THIS APPEAL OF THE REVENUE IS ALLOW ED, BUT FOR STATISTICAL PURPOSES. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DATED 30T H OCTOBER, 2009. SD/- SD/- (T.K. SHARMA) (D.C. AGRAWAL) JUDICIAL MEMBER ACCOUNTA NT MEMBER AHMEDABAD; DATED: 30/10/2009 ANKIT* COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 4 ITA NO.747/AHD/2007 (ASSESSMENT YEAR 2001-2002) 3. THE CIT(A) CONCERNED 4. THE CIT, 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, ASSTT. REGISTRAR/ DEPUTY REGISTRAR ITAT, AHMEDABAD BENCHES, AHMEDABAD.