DCIT, CC-XXVII, Kolkata, Kolkata V. M/s Harbanslal Malhotra & Sons Pvt. Ltd., Kolkata

ITA 855/KOL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1840 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2017
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2004-2005
• Appeal Filed On: 05-05-2014
• Court: TRIBUNAL
• Department Lawyers: PINAKI MUKHERJEE JCITLD
• Assessee Lawyers: V N PUROHIT FCA LD
• Keywords: Depreciation; Additional evidence; Corroborative evidences
• Section: 143(3); 142(1)

Judgement Text

1 ITA NO. 855/KOL/2014 M/S. HARBANSLAL MALHOTRA & SONS PVT.LTD IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA BEFORE: SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIA L MEMBER I.T.A NO. 855/KOL/2014 A.Y: 2004-05 D.C.I.T , C.C XXVII VS. M/S. HARBANSLAL MALHO TRA KOLKATA & SONS PVT. LTD PAN:AAACH 6617F [ APPELLANT] [RESPONDENT] FOR THE APPELLANT : SHRI PINAKI MUKHERJEE, JCIT, LD. SR.DR FOR THE RESPONDENT : SHRI V.N PUROHIT, FCA, LD.AR DATE OF HEARING : 01-03-2017 DATE OF PRONOUNCEMENT : 05-05-2017 ORDER SHRI S.S.VISWANETHRA RAVI, JM: THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER DATE D 27-02-2014 OF CIT(A), CENTRAL-II, KOLKATA FOR THE ASSESSMENT YEAR 2004-05, WHEREIN HE CANCELLED THE IMPUGNED PENALTY IMPOSED BY THE AO U/ S. 271(1)(C) OF THE ACT. 2. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLO WING GROUNDS OF APPEAL:- 01. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING THE CREDIT OF TDS, WHEN THE DIFFERENCE OF RECEIPTS AS PER TDS CERTIFICATE VIS-A- VIS THOSE AS PER ACCOUNTS WAS NOT SHOWN AS INCOME I N THE RETURN FILED. 02. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE ASSESSEE HAD NEITHER CONCEALED ITS INCOME NOR FURNISHED INACCURATE PARTICULARS OF INCOME. 03. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE PENALTY U/S 27L(1)(C ) CANNOT B E LEVIED BECAUSE ALL FACTS AND FIGURES WERE AVAILABLE BEFORE THE A.O. 04. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT IT IS A FIT CASE FOR IMPOSITION OF PENALTY U/S 27L(L)(C) OF THE ACT. 05. THAT THE DEPARTMENT CRAVES LEAVE TO ADD, MODIFY OR ALTER ANY OF THE ABOVE GROUND(S) OF APPEAL AND/OR ADDUCE ADDITIONAL EVIDENCE AT THE TIME OF HEARING OF THE CASE. 3. THE ONLY ISSUE IN THIS APPEAL IS TO BE DECIDED B Y US AS TO WHETHER THE CIT-A JUSTIFIED IN CANCELLING THE IMPUGNED PENA LTY OF RS.11,78,385/- 2 ITA NO. 855/KOL/2014 M/S. HARBANSLAL MALHOTRA & SONS PVT.LTD IMPOSED BY THE AO U/S.271(1)(C) OF THE ACT IN THE F ACTS AND CIRCUMSTANCES OF THE CASE. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A COMPANY AND FILED ITS RETURN OF INCOME FOR THE A.Y UNDER CONSI DERATION DISCLOSING A TOTAL INCOME OF RS.9,643,69,300/-. UNDER SCRUTINY THE NOT ICES U/S. 143(2) AND 142(1) OF THE ACT WERE ISSUED. THE LD.AR OF THE AS SESSEE APPEARED AND PRODUCED BOOKS OF ACCOUNT AND OTHER DETAILS IN SUPP ORT OF ITS RETURN AS FILED. AFTER THROUGH DISCUSSION IN THE ASSESSMENT O RDER THE AO PASSED HIS ORDER U/S. 143(3) OF THE ACT ON 27-12-2006 BY MAKI NG TWO ADDITIONS I.E I) IN RESPECT OF NON EXPLANATION OF SHORT CREDIT RE CEIPTS AS PER TDS CERTIFICATES A SUM OF RS.28,30,098/- AND II) IN RES PECT OF NON FILING OF ANY SUPPORTING EVIDENCE TO SUBSTANTIATE THE CLAIM OF DEPRECIATION OF RS.4,54,600/- ON MACHINERY PUT TO USE BY 31-03-2004 . THESE TWO ADDITIONS WERE ADDED BACK TO THE TOTAL INCOME OF TH E ASSESSEE. THIS ACTION OF THE AO WAS CONFIRMED BY THE CIT-A IN THE FIRST A PPELLATE PROCEEDING. 5. THEREAFTER, THE AO INITIATED PENALTY PROCEEDINGS BY ISSUING STATUTORY NOTICE U/SEC. 274 R.W.S 271(1)(C) OF THE ACT FOR FU RNISHING IN ACCURATE PARTICULARS OF INCOME AT THE TIME OF FILING OF RETU RN OF INCOME. IN RESPONSE TO SUCH NOTICE ISSUED, THE ASSESSEE SUBMITTED THAT THE CLAIMS WERE UNINTENTIONAL AND WITHOUT ANY MALAFIDE AND URGED T HE AO TO DROP THE PENALTY PROCEEDINGS. THE AO IMPOSED PENALTY OF RS.1 1,78,385/- U/S. 271(1)(C) OF THE ACT BY HOLDING THAT THE ASSESSEE F URNISHED INACCURATE PARTICULARS OF INCOME AND BY OBSERVING AS UNDER:- THEREFORE THE DETAILS SUPPLIED IN THE RETURN WERE N OT ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TRUTH OR ERRONEOUS. THE A BOVE SUBMISSION IS NOTHING BUT AN AFTERTHOUGHT TO AVOID PENAL ACTION. THE ONUS IS ON THE ASSESSEE TO EXPLAIN HIS CASE BUT THE ASSESSEE FAILED TO DISCHARGE HIS ONUS. THE ASSE SSEE WAS NOT ABLE TO SUBSTANTIATE AND FAILED TO PROVE THAT ALL THE FACTS RELATING TO THE SAME AND MATERIALS TO THE COMPUTATION OF ITS TOTAL INCOME WERE DISCLOSED. IT IS THEREFORE HE LD THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME DELIBERATELY KNOWI NG THAT THIS ACTION WAS AGAINST LAW. 6. THE ASSESSEE CHALLENGED THE SAME BEFORE THE CIT- A. BEFORE HIM THE ASSESSEE SUBMITTED THAT ALL THE FACTS AND FIGURES WITH REFERENCE TO THE 3 ITA NO. 855/KOL/2014 M/S. HARBANSLAL MALHOTRA & SONS PVT.LTD DISALLOWANCE OF DEPRECIATION OF RS.4,54,600/- WERE SUBMITTED BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. BUT WITHOUT CONSIDERING THE SAME THE AO DISALLOWED THE DEPRECIATION CLAIM A ND ADDED THE SAME TO THE TOTAL INCOME OF ASSESSEE. THE LD.AR OF THE ASSE SSEE FURTHER SUBMITTED THAT THERE WAS NEITHER CONCEALMENT OF INCOME NOR FU RNISHING OF INACCURATE PARTICULARS OF INCOME IN THE ASSESSMENT PROCEEDINGS . IT IS ALSO SUBMITTED BEFORE HIM THAT THE MACHINE/MACHINERY IN QUESTION W AS PUT TO USE IMMEDIATELY ON ITS ARRIVAL AT THE PREMISES OF ASSE SSEE ON 28-03-2004 AND IT NEVER NEEDED DEEP FOUNDATION ETC. REGARDING THE ADDITION OF RS.28,30,098/-, THE LD. AR SUBMITTED THAT THE ASSES SEE HAD SHOWN SHORT CREDIT OF RECEIPTS IN ITS BOOKS OF ACCOUNT. THUS, T HERE WAS NEITHER CONCEALMENT OF INCOME NOR FURNISHING OF INACCURATE PARTICULARS OF INCOME IN THE ASSESSMENT PROCEEDINGS. IN SUPPORT OF ITS CONTENTIONS, HE RELIED ON VARIOUS CASE LAWS BEFORE THE ORDER OF THE CIT-A. THE CIT-A AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE AND GIVING THROUGH DISCUSSION IN HIS ORDER DIRECTED THE AO TO DELETE THE IMPUGNED PE NALTY BY OBSERVING AS UNDER:- 6. I HAVE CONSIDERED THE SUBMISSION OF THE APPELLAN T AND PERUSED THE PENALTY ORDER. I HAVE ALSO GONE THROUGH THE DOCUMENTARY EVI DENCES SUBMITTED BY THE APPELLANT IN SUPPORT OF ITS CLAIM AS WELL AS THE REMAND REPOR T SUBMITTED BY THE AO. IN THIS CASE, IT IS OBSERVED THAT PRIMARILY THE ADDITION TO THE INCO ME WAS MADE BY THE AO FOR THE REASON THAT THE INTEREST INCOME AS PER THE TDS CERTIFICATE S WAS NOT CREDITED TO THE BOOKS OF ACCOUNT OF THE YEAR UNDER APPEAL IN ITS ENTIRETY. O N THE OTHER HAND, THE CLAIM OF APPELLANT WAS THAT PART OF THE INTEREST RECEIVED BY THE COMPANY WAS DECLARED FOR TAXATION IN THE EARLIER YEARS ON ACCRUAL BASIS BECA USE THE APPELLANT COMPANY FOLLOWS THE MERCANTILE SYSTEM OF ACCOUNTING. IT IS OBSERVED THA T IN THE COURSE OF REMAND PROCEEDINGS THE AO CALLED FOR INFORMATION AND DOCUMENTS FROM TH E APPELLANT AND AFTER VERIFICATION HE FOUND THAT THE CLAIM OF THE APPELLANT IS CORRECT TH AT IN THE CASES OF BANK THE APPELLANT HAD OFFERED PART OF THE INTEREST INCOME IN EARLIER YEARS ON ACCRUAL BASIS. THE CLAIM OF THE APPELLANT WITH REFERENCE TO INTEREST ON LAND COMPEN SATION WAS ALSO FOUND TO BE CORRECT. AGAIN, THE EXPLANATION OF THE APPELLANT IN RESPECT TO TDS CERTIFICATES ISSUED BY THE STATE BANK OF INDIA WAS ALSO FOUND CORRECT. UNDER THE CIR CUMSTANCES, I AM OF THE OPINION THAT EVEN THOUGH THE AO HAD MADE ADDITION IN THE ORDER U /S 143(3) OF THE ACT AND THE APPEAL IS PENDING BEFORE THE ITAT, BUT AS FAR AS THE PENAL TY U/S 271(1)(C) IT CONCERNED, IT CANNOT BE SAID THAT THE APPELLANT HAD EITHER CONCEA LED ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF THE INCOME. MOREOVER, AS MENTIONED A BOVE, DURING THE REMAND PROCEEDINGS THE AO DID NOT DRAW ANY ADVERSE INFEREN CE IN RESPECT TO CLAIM MADE BY THE APPELLANT IN THE COURSE OF APPELLATE PROCEEDING. AS FAR AS THE DISALLOWANCE OF DEPRECIATION IS CONCERNED, I AM OF THE OPINION THAT THE PENALTY U/S. 271(1) ( C) CANNOT BE LEVIED ON THE SAME BECAUSE ALL FACTS AND FIGURES WE RE AVAILABLE BEFORE THE AO. HOWEVER, IN RESPECT OF CLAIM OF THE ASSESSEE THAT THE AO SH OULD HAVE KEPT THE PENALTY PROCEEDINGS IN ABEYANCE TILL THE DISPOSAL OF APPEAL BY THE ITAT, I AM OF THE OPINION THAT THE AO WAS JUSTIFIED IN COMPLETING THE PENALTY PROC EEDINGS IN ACCORDANCE WITH LAW. IN VIEW OF ABOVE, I AM OF THE OPINION THAT ON FACTS AN D IN LAW, IT IS NOT A FIT CASE FOR IMPOSITION OF PENALTY U/S. 271(1) ( C) OF THE ACT. THE AO IS DIRECTED TO DELETE THE PENALTY. THE GROUND NO.1(I) IS DISMISSED AND GROUND NO.1(I) AND 2 ARE ALLOWED. 4 ITA NO. 855/KOL/2014 M/S. HARBANSLAL MALHOTRA & SONS PVT.LTD 7. BEFORE US THE LD.DR HAS RELIED ON THE ORDER OF T HE AO IN IMPOSING THE IMPUGNED PENALTY. ON THE OTHER HAND, THE LD. AR OF THE ASSESSEE PLACED HIS RELIANCE ON THE ORDER DT. 04-12-2015 IN ASSESSEES OWN CASE IN QUANTUM APPEAL (COPY OF THE SAME IS AVAILABLE ON RE CORD ) AND ARGUED THAT THE TRIBUNAL VIDE ITS ORDER DT. 04-12-2015 IN ASSESSEES OWN CASE IN QUANTUM PROCEEDINGS IN ITA NO. 421/KOL/2013 HAS DEL ETED THE ADDITION MADE ON ACCOUNT OF TDS. THUS, HE SUBMITS THAT WHEN THE ADDITION IS DELETED BY THE CIT-A/TRIBUNAL, IMPOSING OF PENALTY DOES NOT STAND AND URGED TO DISMISS THE APPEAL OF REVENUE. 8. HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE PENALTY PROCEEDINGS WERE I NITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME IN RESPECT OF UNEX PLAINED SHORT CREDIT OF RECEIPTS AS PER TDS CERTIFICATE AND FOR NON SUBMISS ION OF ANY EVIDENCE TO SUBSTANTIATE THE CLAIM OF DEPRECIATION ON MACHINERY , WHICH WAS PUT TO USE BY 31-03-2004. WE FIND THAT THE CIT-A DELETED THE I MPUGNED PENALTY BY OBSERVING THAT ALL THE FACTS AND FIGURES WERE AVAIL ABLE BEFORE THE AO IN THE ASSESSMENT PROCEEDINGS IN RESPECT OF DEPRECIATION C LAIMED ON MACHINERY AND THERE WAS NEITHER CONCEALMENT OF INCOME NOR FUR NISHING OF ANY INACCURATE PARTICULARS OF INCOME, BUT, HOWEVER, CON FIRMED THE ADDITION IN RESPECT OF SHORT CREDIT FOUND AS PER TDS CERTIFICAT ES. 9. WE FURTHER FIND THAT IN THE QUANTUM APPEAL IN IT A NO.421/KOL/2013 FOR THE A.Y 2004-05 VIDE ORDER DT. 04-12-2015 THE TRIBUNAL DELETED THE ADDITION MADE ON ACCOUNT OF SHORT CREDIT. THEREFORE , THE ADDITIONS MADE BY THE AO IN RESPECT OF DEPRECIATION CLAIMED ON MAC HINERY AND ON ACCOUNT OF SHORT CREDIT OF TDS WERE DELETED BY THE CIT-A AN D TRIBUNAL RESPECTIVELY IN QUANTUM PROCEEDING, THEREFORE, THE IMPOSITION OF PENALTY DOES NOT STAND AS RIGHTLY POINTED OUT BY THE LD.AR OF THE AS SESSEE BEFORE US. THEREFORE, TAKING INTO CONSIDERATION THE FINDING OF THE TRIBUNAL IN ASSESSEES OWN CASE SUPRA IN THE QUANTUM PROCEEDING , WE CANCEL THE IMPUGNED PENALTY OF RS. 11,78,385/- AS IMPOSED BY T HE AO. THEREFORE, 5 ITA NO. 855/KOL/2014 M/S. HARBANSLAL MALHOTRA & SONS PVT.LTD WE UPHOLD THE ORDER OF THE CIT-A AND GROUNDS RAISE D BY THE REVENUE ARE DISMISSED. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 05-05-2017 SD/- SD/- J. SUDHAKAR REDDY S.S. VISWANETHRA RAVI ACCOUNTANT MEMBER JUDICIAL MEMBER DATED :05-05-2017 PP(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT THE D.C.I.T, C.C XXVII, AAYKAR BHAVAN P OORVA, 5 TH FLOORM ROOM NO. 510, 110 SHANTIPALLY, KOLKATA. 2 RESPONDENT M/S. HARBANSLAL MALHOTRA & SONS PVT. L TD. MALHOTRA HOUSE, P-12, NEW CIT ROAD, KOLKATA-73. 3 . THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER ASSTT. REGISTRAR