Deputy Commissioner of Income Tax, Hyderabad V. M/s Neocure Therapeutics Limited, Hyderabad

ITA 782/HYD/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53516 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2004-2005
• Appeal Filed On: 29-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURESH BATINI
• Assessee Lawyers: MURALI MOHAN RAO
• Keywords: Depreciation; Wrong claim
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ITA NO.782/HYD/2011 ASSESSMENT YEAR 2004-05 THE DCIT, CIRCLE 16(1), HYDERABAD VS M/S NEOCURE THERAPEUTICS LTD., 6-4-8, SEIE KATTEDAN, HYDERABAD (PAN AAA CN 1652 N) APPELLANT RESPONDENT APPELLANT BY : SHRI SURESH BATINI RESPONDENT BY : SHRI MURALI MOHAN RAO ORDER PER CHANDRA POOJARI, A.M. THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A), HYDERABAD D ATED 15.2.2004 AND PERTAINS TO THE ASSESSMENT YEAR 2004- 05. 2. BRIEF FACTS OF THE FACTS CASE ARE THAT FOR THE ASSESSMENT YEAR 2004-05 THE ASSESSEE FILED ITS RETU RN OF INCOME ON 21.10.2004 DECLARING A LOSS OF RS.91,75,0 52/-. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S 143(3) OF THE ACT DETERMINING THE TOTAL INCOME OF THE ASSE SSEE AT RS.3,607/- BY DISALLOWING THE DEPRECIATION AMOUNTIN G TO RS.47,71,053 AS THE ASSESSEE DID NOT CARRY ON ANY B USINESS DURING THE YEAR AND ALSO INITIATED THE PENALTY PROC EEDINGS U/S 271(1)( C) OF THE ACT FOR MAKING WRONG CLAIM OF DEPRECIATION. SUBSEQUENTLY, THE ASSESSING OFFICER ISSUED SHOW CAUSE NOTICE ASKING THE ASSESSEE TO FILE ITS O BJECTIONS, IF ANY AS TO WHY PENALTY U/S 271 (1) (C ) SHOULD NO T BE LEVIED. AFTER CONSIDERING THE EXPLANATION OF THE A SSESSEE, ITA NO.782/HYD/2011 M/S NEUCURE THERAPEUTICS LTD., HYDERABAD 2 THE ASSESSING OFFICER LEVIED A MINIMUM PENALTY U/S 271(1) (C ) OF THE ACT AT RS.32,90,692/-. 3. ON APPEAL THE CIT(A) DELETED THE PENALTY. AGA INST THIS THE REVENUE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THIS CASE, THE A SSESSEE HAS CLAIMED DEPRECIATION WHICH ARE AT RS.91,78,659/ - AND THE SAME WAS DISALLOWED BY THE ASSESSING OFFICER ON THE REASONS THAT THE ASSESSEE HAS NOT CARRIED ON THE BU SINESS DURING THE YEAR UNDER CONSIDERATION. IN OUR OPINIO N, THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD THE FAC TS OF NOT KEPT READY THE ASSETS FOR USE. IF THE ASSESSEE ONC E KEPT READY THE ASSETS FOR USE AND THOUGH NOT ACTUALLY US ED THE ASSETS, THEN THE ASSESSEE IS ENTITLED FOR DEPRECIAT ION. IN OTHER WORDS, PASSIVE USAGE OF THE ASSETS IS ALSO EN TITLED THE ASSESSEE FOR DEPRECIATION. ON THE OTHER HAND, EVEN DISALLOWANCE OF EXPENDITURE ITSELF IS NOT LIABLE FO R PENALTY. THERE SHOULD BE CONSCIOUS CONCEALMENT OR ACT OF FUR NISHING INACCURATE PARTICULARS OF INCOME ON THE PART OF ASS ESSEE. PENALTY CANNOT BE IMPOSED ON THE HYPOTHETICAL REASO N THAT THE ASSESSEE HAS CONCEALED THE INCOME. THERE SHOUL D BE CONCLUSIVE PROOF THAT THE ASSESSEE HAS CONCEALED TH E INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOM E. NOTHING HAS BEEN BROUGHT ON RECORD THAT THE ASSESSE E HAS FURNISHED ANY FALSE DETAILS OF CLAIM OF DEPRECIATIO N OR THERE IS A GROSS WILFUL NEGLECT ON THE PART OF THE ASSESS EE TO DEFRAUD THE REVENUE, THEN PENALTY COULD BE LEVIED. AS HELD IN THE CASE IF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. ( 322 ITR 158) ( SC ) WHEREIN IT HAS BEEN HELD THAT: ITA NO.782/HYD/2011 M/S NEUCURE THERAPEUTICS LTD., HYDERABAD 3 A GLANCE AT THE PROVISIONS OF SECTION 271 (1) (C ) OF THE IT ACT, 1961 SUGGESTS THAT IN ORDER TO BE COVERED BY I T, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INC OME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISH ED INACCURATE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTION 271(1) (C ) WOUL D EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATIO N GIVEN IN THE RETURN IS FOUND TO BE INCORRECT OR INACCURAT E, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCU RATE PARTICULARS. IN ORDER TO EXPOSE THE ASSESSEE TO PE NALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISIO N, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOUN T TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE T HE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS FOUND TO BE INACCURATE, THE LIABIL ITY WOULD ARISE. TO ATTRACT PENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE, NOT EXACT OR CORRECT, NOT ACC ORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENAL TY U/S 271 (1) (C) . A MERE MAKING OF A CLAIM, WHICH IS NOT S USTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING IN ACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHIN G INACCURATE PARTICULARS. 5. IN VIEW OF THE ABOVE DISCUSSION, WE ARE OF THE OPINION THAT THIS CASE IS NOT FIT FOR LEVY OF PENALTY U/S 2 71 (1) (C ) OF THE ACT. ACCORDINGLY WE ARE OF THE OPINION THAT TH E DELETION OF PENALTY BY THE CIT(A) IS JUSTIFIED. ITA NO.782/HYD/2011 M/S NEUCURE THERAPEUTICS LTD., HYDERABAD 4 6. IN THE RESULT, THE REVENUE APPEAL STANDS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT 11. 8.2011 SD/ - G.C. GUPTA SD/ - CHANDRA POOJARI VICE PRESIDENT ACCOUNTANT M EMBER DATED THE 11 TH AUGUST, 2011 COPY FORWARDED TO: 1. THE DCIT, CIRCLE 16(1), HYDERABAD 2. M/S NEOCURE THERAPEUTICS LTD., 6-4-8, SEIE, KATTEDAN, HYDERABAD 3. THE CIT(A) V, HYDERABAD 4. THE CIT, HYDERABAD 5. THE DR, ITAT, HYDERABAD NP/