M/s. Avlon Syntex Pvt.Ltd., Surat V. The Dy.CIT.,Circle-1, Surat

ITA 85/AHD/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60404 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2004-2005
• Appeal Filed On: 11-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation

Judgement Text

, , , , C, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, C BENCH . .. . . .. . , !' !' !' !', , , , #$ %&'( #$ %&'( #$ %&'( #$ %&'(, , , , )* + ) )* + ) )* + ) )* + ) ' ' ' ' BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND ANIL CHATURVEDI, ACCOUNTANT MEMBER) ITA NO.85/AHD/2010 [ASSTT.YEAR : 2004-2005] M/S.AVLON SYNTEX PVT. LTD. 2 ND FLOOR, VISHWAKARMA CHAMBERS MAJURA GATE, RING ROAD SURAT. PAN : AACCA 0034 B. /VS. DCIT, CIR.1 SURAT. ( (( (-. -. -. -. / APPELLANT) ( (( (/0-. /0-. /0-. /0-. / RESPONDENT) 1& 2 3 )/ ASSESSEE BY : NONE + 2 3 )/ REVENUE BY : SHRI VINOD TANWANI 5 2 &(*/ DATE OF HEARING : 14 TH MAY, 2012 678 2 &(*/ DATE OF PRONOUNCEMENT : 1-06-2012 )9 / O R D E R PER G.C. GUPTA, VICE-PRESIDENT: THIS APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2004-2005 IS DIREC TED AGAINST THE ORDER OF THE LD CIT(A)-I, SURAT DATED 10.12.2009. ITA NO.85/AHD/2010 -2- 2. AT THE TIME OF HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS BEING DE CIDED EX PARTE QUA THE ASSESSEE-APPELLANT ON MERIT AFTER HEARING THE L EARNED DR. 3. THE ONLY ISSUE IN THIS APPEAL IS REGARDING VALID ITY OF PENALTY ON ADDITION OF RS.1,39,333/- UNDER SECTION 271(1)(C) O F THE I.T.ACT. THE LEARNED DR SUBMITTED THAT THE ASSESSEE WAS RIGHTLY VISITED WITH PENALTY UNDER SECTION 271(1)(C) OF THE ACT, AS IT W AS GUILTY FOR FURNISHING INACCURATE PARTICULARS OF INCOME SINCE I T HAS CLAIMED DEPRECIATION ON FACTORY BUILDING WHICH WAS NOT USED FOR ANY MANUFACTURING ACTIVITY. HE RELIED ON THE ORDERS OF THE AO AND THE CIT(A). 4. WE HAVE CONSIDERED SUBMISSIONS OF THE LEARNED DR AND HAVE PERUSED THE ORDERS OF THE AO AND THE CIT(A). WE FI ND THAT IN THIS CASE PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS IMPOSED ON TWO COUNTS, OUT OF WHICH ON ONE COUNT THE PENALTY WAS D ELETED BY THE CIT(A). THE OTHER ISSUE ON WHICH THE PENALTY UNDER SECTION 271(1)(C) WAS IMPOSED BY THE AO AND CONFIRMED BY THE CIT(A) W AS WITH RESPECT TO DISALLOWANCE OF DEPRECIATION ON FACTORY BUILDING. THE ASSESSEE WAS TRADER OF YARN AND WAS ALSO ENGAGED IN MANUFACTURING ACTIVITIES IN THE PAST. THE MANUFACTURING ACTIVITI ES WERE DISCONTINUED BY THE ASSESSEE AND DURING THE RELEVANT PERIOD THE ASSESSEE WAS ENGAGED IN TRADING OF SAME ITEMS AS WAS MANUFACTURE D BY THE ASSESSEE IN THE PAST YEARS. THE FACTORY BUILDING WAS UTILIS ED BY THE ASSESSEE AS GODOWN AND CLAIMED DEPRECIATION THEREON. THE AO DI SALLOWED 1/5 TH OF CLAIM OF THE DEPRECIATION AMOUNTING TO RS.1,39,3 33/- ON THE GROUND THAT THE ASSESSEE WAS ENGAGED IN TRADING ACTIVITIES AND THE FACTORY ITA NO.85/AHD/2010 -3- BUILDING WAS UTILISED FOR THE TRADING ACTIVITIES. WE FIND THAT THE ASSESSEE HAS DISCLOSED ALL THE MATERIAL FACTS RELEV ANT FOR ITS ASSESSMENT AT THE TIME OF ASSESSMENT ITSELF AND HAS MADE PROPE R CLAIM OF DEPRECIATION. IT IS AN UNDISPUTED FACT THAT THE FA CTORY BUILDING WAS UTILISED FOR THE BUSINESS PURPOSE OF THE ASSESSEE. MERELY BECAUSE THE ASSESSEE WAS NOT ENGAGED IN THE MANUFACTURING ACTIV ITIES DURING THE YEAR AND ON THIS COUNT 1/5 TH OF DEPRECIATION CLAIMED BY THE ASSESSEE WAS DISALLOWED, IS NO GROUND TO IMPOSE PENALTY UNDE R SECTION 271(1)(C) OF THE ACT ON THE ASSESSEE FOR CONCEALMEN T OF INCOME OR FILING OF INACCURATE PARTICULARS OF INCOME. IT IS A CLEAR CASE OF DISALLOWANCE OF CERTAIN CLAIM OF DEDUCTION MADE BY THE ASSESSEE AND DISALLOWANCE HAS RESULTED DUE TO DIFFERENCE OF OPIN ION BETWEEN THE ASSESSEE AND THE DEPARTMENT WITH REGARD TO ALLOWABI LITY OF THE CLAIM OF DEPRECATION MADE BY THE ASSESSEE. THE ISSUE IS COV ERED IN FAVOUR OF THE ASSESSEE WITH THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD., 322 IT R 158 (SC). ACCORDINGLY, WE HOLD THAT NO CASE OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT COULD BE MADE OUT BY THE DEPARTMENT, WHI CH IS ACCORDINGLY CANCELLED AND THE GROUND OF THE APPEAL OF THE ASSES SEE IS ALLOWED. 5. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( %&'( %&'( %&'( %&'( / ANIL CHATURVEDI) )* + )* + )* + )* + /ACCOUNTANT MEMBER ( . .. . . .. . /G.C. GUPTA) !' !' !' !' /VICE-PRESIDENT C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT.