The DCIT, Circle-4(1)(2), Ahmedabad V. M/s. Vini Cosmetic Pvt. Ltd., Ahmedabad

ITA 796/AHD/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1042 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 30-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B P SRIVASTAVA
• Assessee Lawyers: BHADRESH GANDHAKWAL
• Keywords: Depreciation; Wrong claim; Revised return; Unabsorbed depreciation; Bonafide mistake
• Section: 271(1)(c); 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER & MS. MADHUMITA ROY, JUDICIAL MEMBER I.T.A. NO.796/AHD/2017 (ASSESSMENT YEAR : 2012-13) DCIT, CIRLCE 4(1)(2), AHMEDABAD. VS. M/S. VINI COSMETICS PVT. LTD., JANKI HOUSE, 2, SUNRISE PARK SOCIETY, OPP. HIMALAYA MALL, DRIVE-IN-ROAD, BODAKDEV, AHMEDABAD 380 054. [ PAN NO. AADCV 1554 B ] ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI B. P. SRIVASTAVA, SR. D.R. RESPONDENT BY : SHRI ASHWIN SHAH AND BHADRESH GANDHAKWAL, A.R. DATE OF HEARING 31.12.2018 DATE OF PRONOUNCEMENT 15.03.2019 O R D E R PER MS. MADHUMITA ROY - JM: THE INSTANT APPEAL PREFERRED BY THE REVENUE IS AGA INST THE ORDER DATED 24.01.2017 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) 8, AHMEDABAD UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS TO THE ACT) ARISING OUT OF THE ORDER DATED 24.09.2015 PASSED BY THE DCIT, CIRCLE 4(1)(2), AHMEDABAD FOR THE ASSESSMEN T YEAR 2012-13. 2. THE ASSESSEE HAS FILED ITS RETURN OF INCOME ON 2 9.09.2012 DECLARING TOTAL LOSS OF RS. 21,76,48,367/-. THE REVISED RETURN OF I NCOME WAS FILED ON 28.09.2013 DECLARING TOTAL LOSS OF RS. 22,20,12,614 /-. UPON SCRUTINY U/S 143(3) ITA NO.796/AHD/2017 DCIT VS. VINI COSMETICS PVT. LTD. ASST. YEAR. 2012-13 - 2 - OF THE ACT, THE ASSESSMENT WAS FINALIZED ON 17.03.2 015 ASSESSING TOTAL LOSS AT RS.20,98,48,475/- DISALLOWED ON ACCOUNT OF CLAIM ON LOSS TO THE TUNE OF RS. 1,21,63,139/-. PENALTY PROCEEDING WAS INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME. 3. THE BRIEF FACTS LEADING TO THIS CASE IS THIS THA T VINI SALES AND DISTRIBUTIONS PVT. LTD. (VSDPL) WAS AMALGAMATED WIT H THE ASSESSEE COMPANY IN TERMS OF THE SCHEME OF ARRANGEMENT APPROVED BY T HE HONBLE GUJARAT HIGH COURT BY AND UNDER ITS ORDER DATED 23.03.2012 W.E.F . 01.04.2010. THE ASSESSEE INITIALLY CLAIMED BROUGHT FORWARD LOSS AND UNABSORB ED DEPRECIATION OF RS. 1,21,63,139/- AND RS. 5,90,37,630/- PERTAINS TO THE AMALGAMATING COMPANY NAMELY VINI SALES & DISTRIBUTION PVT. LTD. FOR A.Y. 2010-11 AND 2011-12 RESPECTIVELY. THE LEARNED AO WITH THE VIEW THAT THE ASSESSEE COMPANY WAS NOT LIABLE TO CARRY FORWARD LOSS AS PER THE PROVISI ON OF SECTION 72A(2) OF THE ACT AS AMALGAMATION COMPANY WAS NOT IN THE BUSINESS FOR A PERIOD OF THREE YEARS ASKED FOR EXPLANATION FROM THE APPELLANT. IN REPLY WHEREOF, THE ASSESSEE ACCEPTED THE LOSS OF THE SAID AMALGAMATING COMPANY VSDPL RELATING TO A.Y. 2010-11 OF RS. 1,21,63,139/- AS NOT ALLOWABLE. THE ASSESSEE THEREAFTER SUO MOTO WITHDREW THE CLAIM OF THE SAID AMOUNT OF RS. 1 ,21,63,139/-. A REVISED RETURN WAS ALSO FILED ON 28.09.2013 COPY WHEREOF IS ON RECORD BEFORE US. THE LEARNED AO WAS OF THE OPINION THAT ONLY UPON RAISIN G THE QUERY THE ASSESSEE HAS WITHDRAWN THE WRONG CLAIM OF SET OFF LOSS. HAD THERE BEEN NO SUCH SCRUTINY OF THE CASE OF ASSESSEE, THE ASSESSEE WOULD NOT HAV E GONE AWAY FROM THE EXCESS BENEFIT OF CARRY FORWARD OF LOSSES AMOUNTING TO RS. 1,21,63,139/- AND CONSEQUENT SHORT LEVY OF TAX. THE LEANED AO, THEREF ORE, CAME TO A FINDING THAT INACCURATE PARTICULARS OF INCOME WAS FURNISHED BY T HE ASSESSEE AND THUS PENALTY ITA NO.796/AHD/2017 DCIT VS. VINI COSMETICS PVT. LTD. ASST. YEAR. 2012-13 - 3 - PROCEEDING HAS BEEN INITIATED AND ULTIMATELY IMPOSE D PENALTY U/S 271(1)(C) OF THE ACT UPON BEING SATISFIED THAT THE ASSESSEE HAS COMMITTED DEFAULT OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. CON SEQUENTLY, PENALTY OF RS. 39,46,331/- WAS LEVIED. IN APPEAL, THE PENALTY WAS DELETED BY THE LEARNED CIT(A). HENCE, THE INSTANT APPEAL FILED BY THE REVE NUE BEFORE US. 4. AT THE TIME OF HEARING OF THE INSTANT APPEAL THE LEARNED COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED BEFORE US THAT WHILE IMPOSING PENALTY THE LEARNED AO NEEDS TO ESTABLISH BEYOND DOUBT THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME AND INACCURATE PARTICULAR S OF INCOME WERE FURNISHED DELIBERATELY. BUT IN THIS PARTICULAR CASE, THERE IS ONLY DISALLOWANCE OF BROUGHT FORWARD LOSS NOT AMOUNTING TO CONCEALMENT BY THE AS SESSEE. IN FACT, ALL THE MATERIAL FACTS IN THE FORM OF SCHEDULE RELATING TO BROUGHT FORWARD AND CARRIED FORWARD LOSSES AND COMPUTATION SHEET IN WHICH ALL T HE FACTS ARE CORRECTLY MENTIONED WAS DULY SUBMITTED BEFORE THE LEARNED AO. SUBSEQUENTLY, SUCH CLAIM OF BROUGHT FORWARD AND CARRIED FORWARD LOSSES OF AMALGAMATING COMPANY VSDPL HAS BEEN WITHDRAWN BY THE ASSESSEE. THEREFORE , IT IS NOT A CASE OF FURNISHING OF INACCURATE PARTICULARS NEITHER OF CON CEALMENT OF INCOME BY THE ASSESSEE. RATHER THIS IS ONLY AN EXCESS CLAIM ON BR OUGHT FORWARD AND CARRIED FORWARD LOSS MADE BY THE ASSESSEE DETAILS WHEREOF W AS FILED WITH THE RETURN BUT WITHOUT DISTURBING THE RETURNED LOSS. PENALTY THERE FORE, IS NOT SUSTAINABLE IN THE EYE OF LAW AS ARGUED BY THE LEARNED AR. HE, THUS, R ELIED UPON THE ORDER PASSED BY THE LEARNED CIT(A) DELETING SUCH PENALTY. ON THE OTHER HAND, LEARNED DR RELIED UPON THE ORDER PASSED BY THE LEARNED AO. ITA NO.796/AHD/2017 DCIT VS. VINI COSMETICS PVT. LTD. ASST. YEAR. 2012-13 - 4 - 5. WE HAVE HEARD THE REPRESENTATIVE OF THE RESPECTI VE PARTIES. WE HAVE ALSO PERUSED THE RELEVANT MATERIALS AVAILABLE ON RECORDS . IT APPEARS FROM THE RECORDS THAT THE ASSESSEE BY AND UNDER SUBMISSION DATED 17. 02.2015 BROUGHT TO THE NOTICE OF WITHDRAWING THE CLAIM OF OBSERVED BUSINES S LOSS AND UNOBSERVED DEPRECIATION OF VSDPL PRIOR TO THE APPOINTMENT DATE . THE CONTENT OF THAT SUBMISSION IS AS FOLLOWS: IN THE COURSE OF HEARING YOU HAVE INQUIRED ABOUT A S TO FULFILLMENT OF CONDITIONS FOR CARRIED FORWARD OF UNABSORBED BUSINE SS LOSS AND UNABSORBED DEPRECIATION OF THE AMALGAMATING COMPANY I.E. VINI SALES AND DISTRIBUTION PVT. LTD. (VSDPL) IN OUR CASE. IN THIS CONNECTION, IT MAY PLEASE BE NOTED THAT CON DITIONS TO FULFILLED WITH RESPECT TO UNABSORBED BUSINESS LOSS AND UNABSORBED DEPRECIATION (PRIOR TO 1 ST APRIL, 2010) ARE AS PER PROVISION OF SEC. 72A OF TH E ACT. THE FULFILLMENTS OF CONDITIONS ARE STIPULATED AS UNDER CONDITIONS TO BE FULFILLED IN CASE OF VSDPL REMARKS HAS BEEN ENGAGED IN THE BUSINESS, IN WHICH THE ACCUMULATED LOSS OCCURRED OR DEPRECIATION REMAINS UNABSORBED, FOR THREE OR MORE YEARS. THE COMPANY IS INCORPORATED ON 07.11.2009 AND HENCE THE CONDITION IS NOT FULFILLED HAS HELD CONTINUOUSLY AS ON THE DATE OF THE AMALGAMATION AT LEAST THREE-FOURTHS OF TH E BOOK VALUE AFFIXED ASSETS HELD BY IT TWO YEARS PRIOR TO THE DATE OF AMALGAMATION THE COMPANY I S INCORPORATED ON 07.11.2009. HENCE, THIS IS NOT APPLICABLE. IN VIEW OF THE ABOVE THE COMPANY HAS ALREADY WITHDR AWN THE CLAIM OF UNABSORBED BUSINESS LOSS AND UNABSORBED DEPRECIATIO N OF VSDPL PRIOR TO THE APPOINTED DATED VIDE OUR LETTER WHICH WAS SUBMITTED TO YOU ON 06.02.2015. THE COPY OF REVISED RETURN IS ALSO BEFORE US FILED BY THE ASSESSEE. HOWEVER, WITH THE FOLLOWING OBSERVATION THE LEARNED AO LEVIE D THE PENALTY: DISALLOWANCE OF CIAIRN OF LOSS U/S. 72A. M/S. VINI SALES & DISTRIBUTION PVT. LTD. (VSOPL) WA S AMALGAMATED WITH THE ASSESSEE COMPANY AS PER THE SCHEME OF ARRA NGEMENT OF AMALGAMATION SANCTIONED THE HON'BLE GUJARAT HIGH CO URT VIDE ORDER DATED 23.03.2012 W.E.F. 01.04.2010. WHILE MAKING THE ASSE SSMENT, THE A.O HAS NOTICED THAT THE ASSESSEE COMPANY ASSESSEE HAS CLAI MED BROUGHT FORWARD LOSS ITA NO.796/AHD/2017 DCIT VS. VINI COSMETICS PVT. LTD. ASST. YEAR. 2012-13 - 5 - AND UNABSORBED DEPRECIATION OF RS.1,21,63,139/- & R S. 5,90,37,630/- PERTAINING TO M/S. VINI SALES & DISTRIBUTION PVT. L TD. FOR A.Y. 2010-11 & 2011-12 RESPECTIVELY. IT WAS SEEN THAT THE ASSESSEE COMPANY WAS NOT LIABLE TO CARRY FORWARD THE LOSS AS PER THE PROVISION 72A(2) OF THE IT ACT AS THE AMALGAMATION COMPANY WAS NOT IN THE BUSINESS FOR TH E PERIOD OF AT LEAST THREE YEARS. ON THE QUERY BEING RAISED THE ASSESSEE ACCEP TED THAT THE LOSS OF VSDPL RELATING TO AY 2010-11 OF RS.1,21,63,139/- IS NOT ALLOWABLE. THE ASSESSEE FURTHER SUBMITTED THAT IT HAS SUO MOTO WIT HDREW THE CLAIM OF RS.1,21,63,139/- .WHICH WAS NOT CORRECT AS ONLY AFT ER THE RAISING THE QUERY THE ASSESSEE HAD WITHDRAWN THE WRONG CLAIM OF THE SET O FF LOSS. HAD THE CASE NOT BEEN SELECTED UNDER SCRUTINY THE ASSESSEE WOULD HAV E BEEN GONE AWAY WITH THE EXCESS BENEFIT OF CARRY FORWARD OF LOSS AMOUNTI NG TO RS.1,21,63,139/- AND CONSEQUENT SHORT LEVY .OF TAX. THUS, THESE FACTS CL EARLY ESTABLISHED THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF IN COME AS PER THE PROVISIONS OF ACT AND THE A.O HAS CORRECTLY INITIATED PENALTY PROCEEDINGS U/S 271(1)( C) OF THE ACT. 4. FURTHER, THE HON'BLE SUPREME COURT IN THE CASE O F UNION OF INDIA V/S. DHARMENDRA TEXTILE PROCESSORS [212 CTR 432 (SC)] HA S HELD THAT 'THE PENALTY U/S.27T(1)(C) IS A CIVIL LIABILITY AND ELEM ENT OF WILLFUL CONCEALMENT IS NOT ESSENTIAL INGREDIENT FOR ATTRACTING CIVIL LIABI LITY AS THE CASE IN THE MATTER OF PROSECUTION U/S.276C OF THE ACT. 5. IN VIEW OF THE ABOVE, I AM SATISFIED THAT THE A SSESSEE HAS COMMITTED DEFAULT OF FURNISHING OF INACCURATE PARTICULARS OF INCOME, WHICH ATTRACTS PENALTY PROVISIONS OF SECTION 271(1)(C) OF THE ACT. I AM SATISFIED THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF IN COME TO THE EXTENT OF RS 1,21,63,139/- THEREFORE, MINIMUM PENALTY LEVIABLE @ 100% OF TAX SOUGHT TO BE EVADED COMES TO RS.39,46,331/- AND MAXIMUM PENAL TY @300% OF TAX SOUGHT TO BE EVADED COMES TO RS.1,18,38,993/- THERE FORE, LOOKING TO THE FACTS OF THE CASE, I HEREBY DIRECT THE ASSESSEE TO PAY MI NIMUM PENALTY OF RS.39,46,331/- U/S.271(1)(C) OF THE ACT. WE HAVE ALSO CAREFULLY CONSIDERED THE ORDER PASSED BY THE LEARNED AO. IT APPEARS THAT THE ASSESSEE CLAIMED RS.1,21,63,139/- AS BROUGHT FORWARD LOSS FOR LAST YEAR OF THE AMALGAMATING COMPANY IN ITS RETURN OF INCOME FOR A.Y. 2010- 11. REALIZING THE MISTAKE THE ASSESSEE WITHDREW THE SAID WRONG CLAIM OF CARRY FORWARD LOSS OF A.Y. 2010-11 WHICH IS NOT DISPUTED BY THE LEARNED AO. SINCE THE RETURNED LOSS OF THE APPELLANT COMPANY HAS NOT CHANGED AS A LOSS OF ITA NO.796/AHD/2017 DCIT VS. VINI COSMETICS PVT. LTD. ASST. YEAR. 2012-13 - 6 - RS.1,21,63,139/- IN DISPUTE IS ONLY BROUGHT FORWARD AND CARRIED FORWARD LOSS. THIS DOES NOT AMOUNT TO TAX EVASION. IT IS ONLY THE PART OF SCHEDULE GIVING DETAILS OF THE BROUGHT FORWARD AND CARRY FORWARD LO SSES AND NOT THE PART OF THE RETURNED INCOME LOSS. IT IS A BONAFIDE MISTAKE AND SUBSEQUENTLY WITHDREW BY THE ASSESSEE, QUESTION OF IMPOSING PENALTY U/S 271( 1)(C) FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME THIS CANNOT ARISE AT ALL. THE LEARNED CIT(A) WHILE DELETING THE PENALTY RELIED UPON THE JUDGMENT PASSED BY THE HONBLE TRIBUNAL AT CHANDIGARH BENCH IN ITA NO.529/CHD/2014 FOR A.Y. 2007-08 IN THE MATTER OF DCIT-VS-THE BILASPUR DISTT. CO-OP MAR KETING AND CONSUMER FEDERATION LTD. MANDI WHERE IT HAS BEEN DECIDED THA T WHEN THE ASSESSEE HAS DISCLOSED ALL PARTICULARS RIGHTLY BEFORE THE LEARNE D AO DURING THE ASSESSMENT PROCEEDING AND NOWHERE IT WAS FOUND ANY CONCEALMENT OF ANY FACTS RELATING TO SUCH PARTICULARS OF INCOME OR FURNISHING OF INACCUR ATE PARTICULARS, PENALTY CANNOT BE IMPOSED. THE JUDGMENT CITED BY THE HONBL E SUPREME COURT IN THE MATTER OF PRICE WATER HOUSE COOPER PVT. LTD.-VS-CIT (2012) 348 ITR 306 (SC) WAS ALSO RELIED UPON. IT APPEARS FROM THE RECORDS THAT THE ASSESSEE EXPL AINED THE SITUATION TO THE BEST POSSIBLE MANNER PLEADED BONAFIDE. SUCH EXP LANATION WAS NOT FOUND FALSE BY THE LEARNED AO. THE MATERIALS RELATING TO RETURNED INCOME WAS DULY DISCLOSED BEFORE THE LEARNED AO. AT THAT RELEVANT P OINT OF TIME, THERE WAS NO IOTA OF EVIDENCE OF CONCEALMENT OF ANY FACT RELATIN G TO PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. MER ELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT, ATTRACT THE PENALTY U/S 271(1)(C) OF THE ITA NO.796/AHD/2017 DCIT VS. VINI COSMETICS PVT. LTD. ASST. YEAR. 2012-13 - 7 - ACT. IN THAT VIEW OF THE MATTER THE PENALTY ORDER W AS RIGHTLY DELETED BY THE LEARNED CIT(A). TAKING INTO CONSIDERATION THE ENTIRE ASPECT OF THE MATTER WE ARE OF THE VIEW THAT THE IMPUGNED ORDER SUFFERS FOR NO ILLEGAL ITY AND HENCE THE SAME IS HEREBY UPHELD. 6. IN THE RESULT, REVENUES APPEAL IS DISMISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 15/03/2019 SD/- SD/- ( WASEEM AHMED ) ( MS. MADHUMITA ROY ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 15/03/2019 PRITI YADAV, SR.PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. () / THE CIT(A)-8, AHMEDABAD. 5. , ! ', #$%% / DR, ITAT, AHMEDABAD 6. &' () / GUARD FILE. / BY ORDER, //TRUE COPY// / (DY./ASSTT.REGISTRAR) !, #$ / ITAT, AHMEDABAD