SADHANA TEXTILE MILLS P. LTD, MUMBAI V. DCIT 7(2), MUMBAI

ITA 7681/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8577 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-10-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2003-2004
• Appeal Filed On: 14-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V KRISHNAMOORTHY
• Assessee Lawyers: S C TIWARI
• Keywords: Wrong claim; Difference of opinion; Revenue expenditure; Capital expenditure

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E MUMBAI . . , . / BEFORE SHRI B.R. MITTAL, JUDICIAL MEMBER / AND , . . SHRI RAJENDRA, ACCOUNTANT MEMBER . / ITA NO. 7681/M/2011 / ASSESSMENT YEAR 2003-04 SADHANA TEXTILE MILLS PVT. LTD., SADHANA HOUSE, 570, PANDURANG BUDHAKAR MARG, WORLI, MUMBAI-400 018. PAN: AAACS 0652 H VS. DY. COMMISSIONER OF INCOME TAX CIR. 7(2), MUMBAI. ( / APPELLANT ) ( ! / RESPONDENT ) ' / APPELLANT BY : SHRI S.C. TIWARI ! # ' /RESPONDENT BY : SHRI V. KRISHNAMOORTHY # $%& / DATE OF HEARING : 22-10-2012 '( # $%& / DATE OF PRONOUNCEMENT : 22-10-2012 )* / O R D E R PER RAJENDRA, AM THE APPELLANT HAS FILED THIS APPEAL AGAINST THE ORD ER DT. 22-06-2011 OF THE CIT(A)-13, MUMBAI ON THE FOLLOWING GROUNDS OF APPEA L: 1) THE LEARNED COMMISSIONER OF INCOME-TAX (A) ERRED IN CONFIRMING THE PENALTY ORDER PASSED BY ASSESSING OFFICER U/S. 271(1)(C ) OF I.T. ACT WITHOUT PROPER APPRECIATION OF FACTS AND THE CASE LAWS SUBMITTED BEFORE HIS HONOUR . 2) THE LEARNED COMMISSIONER OF INCOME-TAX (A) ERRED IN CONFIRMING THE PENALTY ORDER WHEN THE DISALLOWANCE WAS A RISING OUT OF DIFFERENC E IN OPINION WITHOUT ANY MOTIVE ON THE PART OF ASSESS TO CONCEAL THE INCOME. 3) THE LEARNED COMMISSIONER OF INCOME-TAX (A) ERRED IN IGNORING THE JUDGMENT OF HON.BLE ITAT FOR ASST. YEAR 2000-01 ON THE SAME POI NTS WHERE TRIBUNAL HAS CONCLUDED THAT 50% OF THE REPAIRS ALLEGED TO BE CAP ITAL EXPENDITURE IS REVENUE. 4) YOUR APPELLANT PRAYS, CRAVES, BEGS, SUBMITS TO A DD, DELETE, AMEND, ALTER, MODIFY ANY GROUNDS OF APPEAL. ITA NO. 7681/M/2011 SADHANA TEXTILE MILLS PVT. LTD., 2 2. IN THIS CASE, ASSESSMENT WAS COMPLETED U/S.143(3) O F THE INCOME TAX ACT,1961 (ACT) ON 28.11.2005 DETERMINING TOTAL INCOME AT RS. 25,15,273/- AS AGAINST THE RETURNED LOSS OF RS.29,94,390/-.DURING THE COURSE O F THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (AO) OBSERVED THAT THE APPELLANT HAD CLAIMED AN EXPENDITURE OF RS.74,60,921/- UNDER THE HEAD REPAIRS. ON EXAMINA TION OF THE DETAILS FURNISHED, IT WAS OBSERVED THAT THE APPELLANT HAD INCURRED THIS E XPENDITURE FOR CARRYING OUT RESTRUCTURING AND MODERNISING OF ITS OLD DILAPIDATE D FACTORY PREMISES. AO TREATED THE SAID EXPENDITURE AS CAPITAL EXPENDITURE, WHEREAS AS SESSES HAD CLAIMED IT AS REVENUE EXPENDITURE. DISALLOWANCE MADE BY THE AO WAS UPHEL D BY THE FAA AND THE ITAT. 2.1. PENALTY PROCEEDINGS U/S. 271(1) (C) OF THE ACT WERE INITIATED, FOR THE DISALLOWANCE MADE, BY THE AO AFTER ISSUING A NOTICE U/S.274 OF T HE ACT.AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE-COMPANY, AO IMPOSED PEN ALTY OF RS. 24.67 LAKHS VIDE HIS ORDER DT. 27-04-2010.PENALTY ORDER WAS CHALLENG ED BEFORE THE FAA BY THE ASSESSEE. INVOKING THE EXPLANATION 1 OF SECTION 270 (1)( C ), HE CONFIRMED THE ORDER OF THE AO. 3. BEFORE US, AUTHORISED REPRESENTATIVE (AR) SUBMITTED THAT ASSESSEE HAD FILED ALL THE DETAILS WITH REGARD TO REPAIRS AND MAINTENANCE OF T HE PREMISES-IN-QUESTION, THAT QUANTUM-ADDITION MADE BY THE AO AND UPHELD BY THE F IRST APPELLATE AUTHORITY (FAA) AND THE TRIBUNAL DID NOT PROVE THAT INACCURATE PART ICULARS WERE FILED BY THE ASSESSEE, THAT ASSESSEE HAD TREATED THE SAID EXPENDITURE AS R EVENUE, THAT THE SAID EXPENDITURE WAS FINALLY HELD TO BE CAPITAL IN NATURE DID NOT AT TRACT PENALTY PROVISIONS, THAT AO HAD NOT DISCUSSED AS WHAT WERE THE INACCURATE PARTICULA RS, THAT THERE WAS DIFFERENCE OF OPINION BETWEEN THE AO AND THE ASSESSEE ABOUT THE E XPENDITURE INCURRED, THAT IN THE ASSESSMENT YEAR (AY) 2000-01, ON THE SAME POINTS, T RIBUNAL HAD HELD THAT 50% OF THE REPAIRS WAS REVENUE EXPENDITURE. DEPARTMENTAL REPRESENTATIVE (DR) RELIED UPON THE ORDERS OF THE AO AND FAA. HE FURTHER SUBMITTED THAT QUANTUM APPEAL WAS CONFRONTED BY THE TRIBUNAL, THAT ASSESSEE HAD FILED INACCURATE PARTICULARS OF ITS INCOME. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PUT BEFORE US. THERE IS NO DOUBT THAT IN QUANTUM APPEAL EXPENDITURE AMOU NTING TO RS. 74.6 LAKHS HAD BEEN HELD TO BE CAPITAL IN NATURE, BUT THIS IN ITSELF IS NOT A CONCLUSIVE EVIDENCE TO DRAW THE INFERENCE THAT PARTICULARS FILED BY THE ASSESSEE WE RE INACCURATE. IT IS NOT THE CASE OF THE AO THAT ASSESSEE HAD NOT FILED DETAILS OF THE EXPEN DITURE. ASSESSEE HAS A RIGHT TO CLAIM PARTICULAR EXPENDITURE AS REVENUE EXPENDITURE THOUGH SAME MAY BE DISALLOWED BY THE AO IN ASSESSMENT PROCEEDINGS. IN OUR OPINION CLAIM MADE BY AN ASSESSEE SUPPORTED BY DOCUMENTARY EVIDENCES, DOES NOT INVITE THE INVOCATION OF PROVISIONS OF SECTION 271(1)(C) OF THE ACT FOR FILING INACCURATE PARTICULARS/CONCEALING THE PARTICULARS OF INCOME. COURTS ARE OF THE VIEW THAT QUANTUM PRO CEEDINGS DO NOT AUTOMATICALLY RESULT IN IMPOSING PENALTY FOR CONCEALMENT; IF A CL AIM MADE BY THE ASSESSEE IS REJECTED IN ASSESSMENT PROCEEDINGS. THERE IS A DIFFERENCE B ETWEEN A FALSE CLAIM AND A GENUINE CLAIM. IN THE FIRST CASE, THE FACT OF INCURRING OF EXPENDITURE IS MISSING, WHERE AS IN THE SECOND SITUATION, INCURRING OF EXPENDITURE IS NEVER IN DISPUTE. THE ONLY DISPUTE IS HOW TO TREAT THAT EXPENDITURE-REVENUE EXPENDITURE OR CA PITAL EXPENDITURE. IN OUR OPINION IN SUCH A CASES, PENALTY CANNOT BE IMPOSED U/S. 271(1) ( C ) OF THE ACT, AS STATED EARLIER. IN THE RECENT CASE, DELIVERED BY THE HONBLE SUPREM E COURT IN THE CASE OF RELIANCE PETRO PRODUCTS P. LTD (322 ITR 158),THE ISSUE OF CL AIMS MADE BY THE ASSESSEE WITH REGARD TO IMPOSITION OF PENALTY U/S.271(1)(C) HAS B EEN DEALT IN LENGTH. AS, IN CASE ITA NO. 7681/M/2011 SADHANA TEXTILE MILLS PVT. LTD., 3 UNDER CONSIDERATION, DETAILS OF EXPENDITURE INCURRE D WERE FURNISHED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS, SO, PE NALTY IMPOSED BY THE AO AND CONFIRMED BY THE FAA NEEDS TO BE DELETED. IT IS NEI THER A CASE OF FILING OF INACCURATE PARTICULARS NOR OF CONCEALING THE PARTICULARS. GRO UND NOS. 1 TO 4 ARE DECIDED IN FAVOUR OF THE ASSESSEE. AS A RESULT, APPEAL FILED BY THE ASSESSEE STANDS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND OCTOBER, 2012. SD/- SD/- ( . . / B.R. MITTAL ) ( / RAJENDRA ) )+ / JUDICIAL MEMBER & )+ / ACCOUNTANT MEMBER MUMBAI, ,) DATE: 22 ND OCTOBER, 2012 TNMM )* )* )* )* # ## # $- $- $- $- .-$ .-$ .-$ .-$ / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. THE CONCERNED CIT (A) 4. THE CONCERNED CIT 5. DR E BENCH, ITAT, MUMBAI 6. GUARD FILE !-$ $ //TRUE COPY// )* )* )* )* / BY ORDER, / // / / 0 0 0 0 DY./ASSTT. REGISTRAR , / ITAT, MUMBAI