ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-2, JALANDHAR V. MESERS DANIK SAVERA NEWS AND MEDIA NETWORK, JALANDHAR

ITA 788/ASR/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7085 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 07-01-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 27-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHAVANI SHANKAR
• Assessee Lawyers: J S BHASIN
• Keywords: Depreciation; Bonafide belief; Wrong claim; Bonafide mistake
• Section: 271(1)(c); 143(3)

Judgement Text

PAGE | 1 ITA NO.788/ASR./2017 A.Y. 2013-14 THE ASSTT. COMMISSIONER OF INCOME TAX VS. M/S DAINIK SAVERA NEWS AND MEDIA NETWORK IN THE INCOME TAX APPELLATE TRIBUNAL CAMP BENCH AT JALANDHAR BEFORE SHRI N.K. SAINI, VICE PRESIDENT AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO.788/ASR./2017 (ASSESSMENT YEARS: 2013-14) THE ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-2, JALANDHAR. VS. M/S DAINIK SAVERA NEWS AND MEDIA NETWORK, S-4 INDUSTRIAL AREA, JALANDHAR. PAN AAIFC9224B (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI BHAVANI SHANKAR, D.R RESPONDENT BY: SHRI J. S. BHASIN, A.R. DATE OF HEARING: 07.01.2019 DATE OF PRONOUNCEMENT: 15.01.2019 O R D E R PER RAVISH SOOD, JM THE PRESENT APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A)-1, JALANDHAR, DATED 03.10.2017, WHICH IN TURN ARISES FROM THE ORDER PASSED BY THE A.O UNDER SEC. 271(1)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT I.T ACT), DATED 18.08.2016 FOR A.Y. 2013-14. THE REVENUE ASSAILING THE ORDER OF THE CIT(A) HAS RAISED BEFORE US THE FOLLOWING GROUNDS OF APPEAL: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW IN DELETING THE PENALTY U/S 271(1)(C) OF THE ACT LEVIED ON THE ASSESSEE BY THE A.O OF RS.22,64,194/- FOR FURNISHING INACCURATE PARTICULARS OF INCOME. 2. THE LD. CIT(A) HAS ERRED IN IGNORING THE AOS FINDING THAT THE ASSESSEE FIRM CANNOT SHOW IN IGNORANCE OF THE PROVISIONS OF THE CT REGARDING CLAIMING DEPRECIATION. THE CLAIM OF THE ASSESSEE CANNOT BE HELD TO BE UNDER A BONAFIDE BELIEF THAT DEPRECIATION WAS ALLOWABLE FOR THE FULL YEAR AS HAS BEEN HELD BY THE LD. CIT(A) WHO HAS GROSSLY ERRED IN ACCEPTING IT AS A PLAUSIBLE EXPLANATION. PAGE | 2 ITA NO.788/ASR./2017 A.Y. 2013-14 THE ASSTT. COMMISSIONER OF INCOME TAX VS. M/S DAINIK SAVERA NEWS AND MEDIA NETWORK 3. WHILE OBSERVING THAT THE ASSESSEE HAD SUBSEQUENTLY REVISED THE DEPRECIATION CHART FOR THE A.Y. 2015-16, THE LD. CIT(A) IGNORED THE FACT THAT THE SAME WERE NOT DISCLOSED IN THE RETURN OF INCOME. THE FACT OF DATES WHEN THE ASSETS WERE ACTUALLY PUT INTO USE, WERE NOT AVAILABLE IN THE RETURN OF INCOME FILED; BUT CAME TO THE NOTICE ONLY DURING SCRUTINY ASSESSMENT PROCEEDINGS. THE ASSESSEE HAD OFFERED THE EXCESS CLAIM FOR TAXATION ONLY AFTER IT WAS CONFRONTED WITH THE DETAILS. 4. IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED. 5. THAT THE APPELLANTS REQUEST FOR LEAVE TO ADD OR AMEND OR ALTER THE GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD AND DISPOSED OFF. 2. BRIEFLY STATED, THE ASSESSEE FIRM WHICH IS ENGAGED IN THE BUSINESS OF PUBLISHING AND PRINTING OF NEWSPAPERS HAD FILED ITS RETURN OF INCOME FOR A.Y 2013-14 ON 29.04.2013, DECLARING TOTAL LOSS OF (-)RS.4,90,91,075/- (INCLUDING DEPRECIATION LOSS OF RS.1,45,90,250/-). ASSESSMENT UNDER SEC. 143(3) WAS FRAMED AT A TOTAL LOSS OF (-)RS. 2,71,05,701/-, VIDE ORDER DATED 29.02.2016. 3. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS IT WAS OBSERVED BY THE A.O THAT THE ASSESSEE HAD CLAIMED DEPRECIATION ON PLANT AND MACHINERY, AIR CONDITIONER, COMPUTER AND FURNITURE AT FULL RATE, DESPITE THE FACT THAT THE ADDITIONS TO THE SAID FIXED ASSETS WERE MADE ONLY DURING THE SECOND HALF OF THE FINANCIAL YEAR. ON BEING CONFRONTED WITH THE AFORESAID FACTS, THE ASSESSEE SUBMITTED A REVISED DEPRECIATION CHART AND RESTRICTED ITS ENTITLEMENT TOWARDS CLAIM OF DEPRECIATION TO RS.72,95,125/-, AS AGAINST ITS EARLIER CLAIM OF RS.1,45,90, 250/-. IT WAS SUBMITTED BY THE ASSESSEE THAT THE EXCESS CLAIM OF DEPRECIATION WAS INADVERTENTLY RAISED BY COMPUTING THE SAME FOR THE COMPLETE YEAR. THE A.O RESTRICTED THE ENTITLEMENT OF THE ASSESSEE TOWARDS CLAIM OF DEPRECIATION AT RS.72,95,125/- AND ACCORDINGLY, DISALLOWED THE BALANCE AMOUNT OF DEPRECIATION AS PER THE PROVISIONS OF SEC.32 OF I.T. ACT. THE A.O WHILE CULMINATING THE ASSESSMENT ALSO INITIATED PENALTY PROCEEDINGS UNDER SEC. 271(1)(C) FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. 4. AFTER THE CULMINATION OF THE ASSESSMENT PROCEEDINGS, THE A.O CALLED UPON THE ASSESSEE TO SHOW CAUSE AS TO WHY PENALTY UNDER SEC. 271(1)(C) MAY NOT BE IMPOSED ON IT IN RESPECT OF THE EXCESS CLAIM OF DEPRECIATION OF PAGE | 3 ITA NO.788/ASR./2017 A.Y. 2013-14 THE ASSTT. COMMISSIONER OF INCOME TAX VS. M/S DAINIK SAVERA NEWS AND MEDIA NETWORK RS.72,95,125/- THAT WAS RAISED IN THE RETURN OF INCOME. THE ASSESSEE SUBMITTED ITS REPLY AND THEREIN TRIED TO IMPRESS UPON THE A.O THAT NO PENALTY UNDER SEC. 271(1)(C) WAS LIABLE TO BE IMPOSED IN ITS HANDS. HOWEVER, THE A.O NOT BEING PERSUADED TO SUBSCRIBE TO THE EXPLANATION FURNISHED BY THE ASSESSEE, THEREIN IMPOSED A PENALTY OF RS.22,64,194/- ON IT. 5. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). THE CIT(A) AFTER DELIBERATING AT LENGTH ON THE CONTENTIONS ADVANCED BY THE ASSESSEE DID FIND FAVOUR WITH THE SAME. IT WAS OBSERVED BY THE CIT(A) THAT THE YEAR UNDER CONSIDERATION WAS THE FIRST YEAR OF THE SETTING UP OF THE BUSINESS OF THE ASSESSEE. FURTHER, IT WAS OBSERVED BY HIM THAT THOUGH THE FACTS AS REGARDS THE EXCESS CLAIM OF DEPRECIATION BY THE ASSESSEE WERE SUFFICIENT TO RESTRICT ITS ENTITLEMENT TOWARDS THE CLAIM OF DEPRECIATION AND THEREIN MAKE A CONSEQUENTIAL ADDITION OF THE EXCESS CLAIM IN THE COURSE OF THE ASSESSMENT PROCEEDINGS, HOWEVER, THE SAME FELL SUFFICIENTLY SHORT FOR LEVYING PENALTY UNDER SEC.271(1)(C). IT WAS NOTICED BY HIM THAT THOUGH THE UNIT HAD COMMENCED ITS OPERATIONS IN THE SECOND HALF OF THE YEAR, HOWEVER, AS THE PLANT AND MACHINERY HAD BEEN SUBSTANTIALLY INSTALLED AND TESTED DURING THE YEAR, THEREFORE, THE ASSESSEE REMAINED UNDER A BONAFIDE BELIEF THAT DEPRECIATION WAS ALLOWABLE FOR THE FULL YEAR. APART THEREFROM, IT WAS OBSERVED BY THE CIT(A) THAT THE ASSESSEE ON BEING CONFRONTED WITH THE AFORESAID IRREGULARITY IN ITS CLAIM OF DEPRECIATION HAD REVISED THE SAME. ON THE BASIS OF THE AFORESAID DELIBERATIONS THE CIT(A) DELETED PENALTY IMPOSED BY THE A.O UNDER SEC. 271(1)(C) IN RESPECT OF THE AFORESAID EXCESS CLAIM OF DEPRECIATION THAT WAS RAISED BY THE ASSESSEE. 6. THE REVENUE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAS CARRIED THE MATTER IN APPEAL BEFORE US. THE LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D.R) AT THE VERY OUTSET SUBMITTED THAT AS THE ASSESSEE HAD RAISED A WRONG CLAIM OF DEPRECIATION, THUS THE A.O HAD RIGHTLY IMPOSED PENALTY UNDER SEC.271(1)(C). IT WAS VEHEMENTLY SUBMITTED OF THE LD. D.R THAT THE CIT(A) WAS IN ERROR IN QUASHING THE PENALTY IMPOSED BY THE A.O. PAGE | 4 ITA NO.788/ASR./2017 A.Y. 2013-14 THE ASSTT. COMMISSIONER OF INCOME TAX VS. M/S DAINIK SAVERA NEWS AND MEDIA NETWORK 7. PER CONTRA, THE LD. AUTHORIZED REPRESENTATIVE (FOR SHORT A.R) SUBMITTED THAT AS THE EXCESS CLAIM OF DEPRECIATION WAS PROMPTED BY A BONAFIDE MISTAKE ON THE PART OF THE ASSESSEE, THUS THE CIT(A) HAD RIGHTLY QUASHED THE PENALTY IMPOSED IN THE HANDS OF THE ASSESSEE. 8. WE HAVE HEARD THE AUTHORIZED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. THE ISSUE INVOLVED IN THE PRESENT APPEAL LIES IN A NARROW COMPASS I.E AS TO WHETHER IN THE BACKDROP OF THE FACTS OF THE CASE, PENALTY IMPOSED BY THE A.O UNDER SEC. 271(1)(C) IN RESPECT OF THE EXCESS CLAIM OF DEPRECIATION BY THE ASSESSEE FIRM WAS RIGHTLY VACATED BY THE CIT(A), OR NOT. ADMITTEDLY, THE ASSESSEE FIRM IN ITS RETURN OF INCOME HAD CLAIMED EXCESS DEPRECIATION OF RS.72,95,125/- ON THE FIXED ASSETS THAT WERE PURCHASED DURING THE YEAR. ON A PERUSAL OF THE RECORDS, WE FIND THAT THE AFORESAID INFIRMITY LEADING TO AN EXCESS CLAIM OF DEPRECIATION HAD EMERGED FOR THE REASON THAT THE ASSESSEE FIRM WHICH HAD PUT TO USE CERTAIN NEW ASSETS OF A VALUE AGGREGATING TO RS. 7,43,10,623/- FOR LESS THAN 180 DAYS DURING THE YEAR, AND WAS THUS ENTITLED FOR DEPRECIATION @ 50% OF THE NORMAL RATES ON THE SAME, HAD HOWEVER CLAIMED THE SAME AT THE FULL RATES. IN OUR CONSIDERED VIEW, THE EXPLANATION OF THE ASSESSEE THAT THOUGH THE NEW ASSETS WERE INSTALLED AND PUT TO USE IN THE SECOND HALF OF THE FINANCIAL YEAR, BUT AS THE SAME WERE SUBSTANTIALLY INSTALLED AND TESTED DURING THE YEAR, THEREFORE, IT HAD REMAINED UNDER A BONAFIDE BELIEF THAT IT WAS ENTITLED FOR DEPRECIATION ON THE SAME FOR THE FULL YEAR, IS A PLAUSIBLE EXPLANATION WHICH EXPLAINS FOR THE RAISING OF THE CLAIM OF DEPRECIATION AT THE FULL RATES ON ITS PART. BE THAT AS IT MAY, WE ARE OF A STRONG CONVICTION THAT WHERE AN ASSESSEE IN ITS RETURN OF INCOME HAD CLAIMED DEPRECIATION IN EXCESS OF ITS STATUTORY ENTITLEMENT, WHICH HOWEVER DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS WAS CORRECTED BEFORE THE A.O, THE SAME CAN SAFELY BE CHARACTERISED AS A BONAFIDE MISTAKE AND WILL NOT ENTAIL LEVY OF ANY PENALTY UNDER SEC.271(1)(C). OUR AFORESAID VIEW IS FORTIFIED BY THE JUDGMENT THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. SOMANY EVERGREEN KNITS LTD. (2013) 352 ITR 592 (BOM) . APART THEREFROM, WE ARE OF THE CONSIDERED VIEW THAT EVEN OTHERWISE AS THE COMPLETE PAGE | 5 ITA NO.788/ASR./2017 A.Y. 2013-14 THE ASSTT. COMMISSIONER OF INCOME TAX VS. M/S DAINIK SAVERA NEWS AND MEDIA NETWORK DETAILS OF THE ASSETS IN RESPECT OF WHICH THE EXCESS CLAIM OF DEPRECIATION WAS RAISED BY THE ASSESSEE WERE FURNISHED BY THE ASSESSEE ALONGWITH ITS RETURN OF INCOME AND NO PART OF THE SAME IS FOUND TO BE INCORRECT, THEREFORE, MERELY BECAUSE THE RATE ON THE BASIS OF WHICH THE CLAIM OF DEPRECIATION WAS WORKED OUT BY THE ASSESSEE WAS NOT FOUND TO BE CORRECT WOULD NOT LEAD TO IMPOSITION OF PENALTY ON THE ASSESSEE UNDER SEC.271(1)(C). WE FIND THAT OUR AFORESAID VIEW IS SUPPORTED BY THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCT (P) LTD. (2010) 322 ITR 158 (SC) , WHEREIN THE HONBLE APEX COURT HAD OBSERVED AS UNDER: MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT, IN OUR OPINION, ATTRACT THE PENALTY UNDER S. 271(1)(C). IF WE ACCEPT THE CONTENTION OF THE REVENUE THEN IN CASE OF EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTED BY AO FOR ANY REASON, THE ASSESSEE WILL INVITE PENALTY UNDER S. 271(1)(C). THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE. 9. WE THUS, IN TERMS OF OUR AFORESAID OBSERVATIONS FINDING NO INFIRMITY IN THE ORDER OF THE CIT(A), THUS UPHOLD THE DELETION OF THE PENALTY OF RS.22,64,194/- THAT WAS IMPOSED BY THE A.O UNDER SEC. 271(1)(C) OF THE I.T ACT. 10. THE APPEAL OF THE REVENUE DOES NOT MERIT ACCEPTANCE AND IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON .01.2019 SD/- SD/- ( N.K. SAINI) (RAVISH SOOD) VICE PRESIDENT JUDICIAL MEMBER PLACE: JALANDHAR; DATE: 15. 01.2019 PS. ROHIT PAGE | 6 ITA NO.788/ASR./2017 A.Y. 2013-14 THE ASSTT. COMMISSIONER OF INCOME TAX VS. M/S DAINIK SAVERA NEWS AND MEDIA NETWORK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)- 4. / CIT 5. , / DR, ITAT, CAMP BENCH, JALANDHAR. 6. [ / GUARD FILE. //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) /ITAT, CAMP BENCH, JALANDHAR. SR.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS/PS 15.1.19 SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON 15.1.19 SR.PS/PS 7 FILE SENT TO THE BENCH CLERK 16.1.19 SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE ON WHICH FILE GOES TO THE AR 10 DATE OF DISPATCH OF ORDER