The DCIT(OSD) RANGE-1, Ahmedabad V. Applitech Solutions Ltd., Ahmedabad

ITA 78/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94372 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 24-08-2015
• Assessment Year: 2000-2001
• Appeal Filed On: 12-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIBHA BHALLA
• Keywords: Bogus purchase; Depreciation; Wrong claim
• Section: 143(3)

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ./ ITA NO.78/AHD/2011 /BLOCK ASSTT. YEAR: 2000-2001 DCIT (OSD) RANGE-1, AHMEDABAD. VS APPLITECH SOLUTIONS LTD. 703, SHIKHAR BUILDING OPP: NAVRANGPURA POLICE STATION NAVRANGPURA, AHMEDABAD. PAN : AABCA 8332 P %& / (APPELLANT) '( %& / (RESPONDENT) REVENUE BY : SMT. VIBHA BHALLA, CIT-DR ASSESSEE BY : SHRI ANIL KSHATRIYA / DATE OF HEARING : 24/08/2015 / DATE OF PRONOUNCEMENT: /08/2015 )*/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF THE LD.CIT(A)-VI, AHMEDABAD DATED 26.11.2010 PASSED FOR THE ASSTT.YEAR 2000-01. 2. GROUND NO.1 IS THE SOLITARY GROUND OF APPEAL, WH ICH PROJECTS THE GRIEVANCE OF THE REVENUE AS UNDER: 1. THELD.CIT(A) ERRED IN LAW AND ON FACTS IN DELET ING THE ENTIRE PENALTY OF RS.2,10,48,200/- LEVIED U/S.271(1)(C) OF THE ACT BY THE AO INSTEAD OF CONFIRMING THE PORTION OF PENALTY REL EVANT TO THE CONFIRMED ADDITION U/S.80HHE OF RS.32,93,651/-. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED ITS RETURN OF INCOME ON 29.12.2000 DECLARING TOTAL INCOME OF RS.3 ,68,43,670/-. THE ITA NO.78/AHD/2011 2 ASSESSMENT ORDER WAS PASSED UNDER SECTION 143(3) OF THE ACT ON 28.3.2003 AND INCOME OF THE ASSESSEE WAS DETERMINED AT RS.12,04,93,829. DISSATISFIED WITH THE ADDITIONS, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD.FIRST APPELLATE AUTHORITY. AS PER THE PENALTY ORDER, THE LD.FIRST APPELLATE AUTHORITY HAS CONFIRMED THE FOLLOWING ADDITIONS: I) BOGUS CLAIM OF DEPRECIATION :RS.3,90,30,081/- II) INTEREST PAID AND BOGUS PURCHASE :RS.1,06,89,996/- III) FOREIGN TRAVELLING EXPS. :RS. 16,56,920/- IV) DEDUCTION U/S.80HHE :RS. 32,93,651/- 4. THE LD.AO HAS INITIATED PENALTY PROCEEDING UNDER SECTION 271(1)(C) OF THE ACT. AFTER HEARING THE ASSESSEE, THE AO HAS PASSED PENALTY ORDER DATED 29.3.2007 WHEREBY HE IMPOSED PE NALTY OF RS.2,10,48,200/-. 5. ON APPEAL, THE LD.FIRST APPELLATE AUTHORITY HAS DELETED PENALTY BY OBSERVING THAT ITAT HAS SET ASIDE THESE ISSUES TO T HE FILE OF THE AO VIDE ORDER DATED 15.10.2010. THEREFORE, PENALTY DOES NO T SURVIVE. 6. THE LD.DR SUBMITTED THAT THE ORDER OF THE TRIBUN AL IS FILED AT PAGE NOS.3 TO 6 OF THE PAPER BOOK. THE ASSESSEE DID NOT RAISE THE GROUND WITH REGARD TO COMPUTATION OF DEDUCTION ADMISSIBLE UNDER SECTION 80HHE. THEREFORE, QUA THAT AMOUNT PENALTY OUGHT TO BE CONFIRMED BY THE LD.CIT(A). THE LEARNED COUNSEL FOR THE ASSESSE E, ON THE OTHER HAND, SUBMITTED THAT THIS ISSUE WAS CONSIDERED BY THE LD. FIRST APPELLATE AUTHORITY AND IT WAS REVERTED BACK TO THE AO FOR RE COMPUTATION AFTER VERIFICATION. IN THE ORIGINAL DISALLOWANCE, THE AO HAS COMPUTED AN AMOUNT OF RS.2,73,22,363/- AND WHILE GIVING EFFECT TO THE CIT(A)S ORDER, HE WORKED OUT THE DISALLOWANCE OF RS.32,93,6 51/-. THE AO HAS PASSED A FRESH ASSESSMENT ORDER ON 30.12.2011 UNDER SECTION 143(3) ITA NO.78/AHD/2011 3 R.W.S SECTION 254. THIS ORDER HAS BEEN PASSED AFTE R PROCEEDINGS HAVE BEEN SET ASIDE TO THE AO BY THE ITAT. THE AO HAS A GAIN DETERMINED THE INCOME OF THE ASSESSEE AT RS.12,04,93,829. THE LD.COUNSEL FOR THE ASSESSEE PLACED ON RECORD COPY OF THE ORDER DATED 6 .5.2014 WHICH HAS BEEN PASSED BY THE AO WHILE GIVING EFFECT TO THE CI T(A)S ORDER IN THE SECOND ROUND. THE AO IN THE SECOND ASSESSMENT ORD ER AGAIN MADE DISALLOWANCE OF RS.2,73,22,363/- UNDER SECTION 80HH E. THIS ADDITION HAS BEEN DELETED BY THE CIT(A) IN THE SECOND ROUND. THUS, IT INDICATES THAT IN THE ORIGINAL ROUND, THE CIT(A) HAS SET ASID E THIS ISSUE TO THE FILE OF THE AO FOR RE-VERIFICATION AND DUE TO THAT REASO N, THE ASSESSEE DID NOT CHALLENGE IT BEFORE THE ITAT IN THE FIRST ROUND . 7. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. AFTER TAKING INTO CONSIDERATION THE ORDER OF THE AO DATED 6.5.2014 PASSED WHILE GIVING EFFECT TO THE TR IBUNALS ORDER DATED 15.10.2010 PASSED IN ITA NO.1507/AHD/2005 AND 1681/ AHD/2005 COUPLED WITH THE ORDER OF THE CIT(A) DATED 24.3.200 5, WE FIND THAT THE LD.FIRST APPELLATE TRIBUNAL IN THE ORDER DATED 24.3 .2005 AT PAGE NO.31 HAS REMITTED THIS ISSUE TO THE FILE OF THE AO FOR R E-VERIFICATION. THIS ASPECT WAS NOT CHALLENGED BY THE ASSESSEE BEFORE TH E TRIBUNAL, BECAUSE IT WAS NOT AGGRIEVED AND WHILE GIVING EFFECT TO THI S ORDER, THE LD.AO HAS HIMSELF SCALED DOWN THE DISALLOWANCE TO RS.32,93,65 1/-, FROM THE ORIGINAL DISALLOWANCE OF RS.2,73,22,363/-, MEANING THEREBY, ALL THE FOUR ADDITIONS MADE IN THE ORIGINAL ASSESSMENT HAD BEEN SET ASIDE EITHER BY THE CIT(A) OR BY THE ITAT. THEY DID NOT ATTAIN FI NALITY IN THE FIRST ROUND OF LITIGATION. SECOND ROUND IS STILL PENDING. 8. SECTION 271(1)(C) OF THE ACT HAS A DIRECT BEARIN G ON THE CONTROVERSY WHICH READS AS UNDER: '271. FAILURE TO FURNISH RETURNS, COMPLY WITH NOTIC ES, CONCEALMENT OF INCOME, ETC. (1) THE ASSESSING OFFICER OR THE C OMMISSIONER ITA NO.78/AHD/2011 4 (APPEALS) OR THE CIT IN THE OF COURSE OF ANY PROCEE DINGS UNDER THIS ACT, IS SATISFIED THAT ANY PERSON (A) AND (B) ** ** ** (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. HE MAY DIREC T THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY. (I)AND (INCOME-TAX OFFICER,)** ** ** (III) IN THE CASES REFERRED TO IN CLAUSE (C) OR CLA USE (D), IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM WHICH SHALL N OT BE LESS THAN, BUT WHICH SHALL NOT EXCEED THREE TIMES, THE AMOUNT OF TAX SOUGHT TO BE EVADED BY REASON OF THE CONCEALMENT OF PARTICULA RS OF HIS INCOME OR FRINGE BENEFIT THE FURNISHING OF INAC CURATE PARTICULARS OF SUCH INCOME OR FRINGE BENEFITS: 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 COMM ISSIONER (APPEALS) OR THE CIT 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 AND MAT ERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOT AL INCOME OR SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE PURP OSES OF CLAUSE (C) OF THIS SUB-SECTION, BE DEEMED TO REPRESENT THE INC OME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED.' 9. A PERUSAL OF SUB-CLAUSE (III) OF SECTION 271(1)( C) WOULD INDICATE THAT IN CASE AN ADDITION IS BEING MADE TO THE INCOM E OF AN ASSESSEE, AND IT IS ESTABLISHED THAT THE ASSESSEE HAS CONCEAL ED OR FURNISHED INACCURATE PARTICULARS QUA THAT ADDITION, THEN APART FROM TAX TO BE PAYABLE BY THE ASSESSEE, HE WOULD PAY AN AMOUNT EQU IVALENT TO THE TAX OR THREE TIMES OF THE TAX AS PENALTY UNDER SECTION 271(1)(C) OF THE ACT. MEANING THEREBY, THE PENALTY WOULD BE COMPUTED EQUI VALENT TO THE TAX THREE TIME, SOUGHT TO BE EVADED BY THE ASSESSEE ON THE ADDITIONS MADE TO HIS INCOME FOR WHICH HE HAS HELD GUILTY OF CONCE ALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN THE PRESENT CASE, THE ITA NO.78/AHD/2011 5 MOMENT, ASSESSMENT ORDER HAS BEEN SET ASIDE BY THE ITAT, THE VERY ADDITION ON WHICH THE AMOUNT OF TAX SOUGHT TO BE EV ADED WAS TO BE CALCULATED, HAS BEEN EXTINGUISHED. THEREFORE, THE ASSESSEE CANNOT BE CHARGED WITH ALLEGATION THAT HE HAS CONCEALED PARTI CULARS OR FURNISHED INACCURATE PARTICULARS OF THE ADDITIONS WHICH MADE TO HIS INCOME. IN THE SET ASIDE ASSESSMENT ORDER, IT IS YET TO BE DECIDED WHETHER ANY ADDITION IS TO BE MADE TO THE INCOME OF THE ASSESSEE OR NOT. IT WILL BE IN THE DISCRETION OF THE AO TO INITIATE OR NOT INITIATE PE NALTY PROCEEDINGS AFTER PASSING THE FRESH ASSESSMENT ORDER. IN VIEW OF THE ABOVE DISCUSSION, PENALTY IS NOT IMPOSABLE UPON THE ASSESSEE, BECAUSE , THE ADDITION IN PURSUANCE OF THE ASSESSMENT ORDER DID NOT ATTAIN FI NALITY THEY HAVE BEEN SET ASIDE FOR RE-ADJUDICATION. THUS, THE LD.F IRST APPELLATE AUTHORITY HAS RIGHTLY DELETED THE PENALTY. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE COURT ON 26 TH AUGUST, 2015 AT AHMEDABAD. SD/- SD/- (MANISH BORAD) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER