METAL TUBE & ROLLING MILLS, MUMBAI V. ITO 20(2)(2), MUMBAI

ITA 8711/MUM/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70620 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 23-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARESH JOHRI DR
• Assessee Lawyers: M SUBRAMANIAN
• Keywords: Depreciation
• Section: 143(3); 32

Judgement Text

B IN THE INCOME TAX APPELLATE TRIBUNAL B BENC H, MUMBAI !' , $ % BEFORE SHRI I.P. BANSAL, JM AND SHRI KARUNAKARA RAO , AM ./I.T.A. NO.8711/M/2011 ( & ' (' / ASSESSMENT YEAR :2006-2007) METAL TUBE & RO L LING MILLS , MAROL MAROSHI RD, MAROL VILLAGE, NAKA, ANDHERI (E), MUMBAI 400 059. & / VS. ITO - 20(2)(2), PIRAMAL CHAMBERS, LALBAUG, MUMBAI. ) $ ./PAN : AAEFM 9353 N ( )* /APPELLANT) .. ( +,)* / RESPONDENT) )* - . / APPELLANT BY : SHRI M. SUBRAMANIAN +,)* - . / RESPONDENT BY : SHRI PARESH JOHRI, DR & - /$ /DATE OF HEARING : 4.7.2013 01( - /$ /DATE OF PRONOUNCEMENT : 2.8.2013 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 23.12.2011 IS AGAINST THE ORDER OF CIT (A)-31, MUMBAI DATED 9.11.2011 FOR THE ASSESSMENT Y EAR 2006-2007. 2. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GRO UND WHICH READS AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD CIT (A) ERRED IN CONFIRMING THE PENALTY OF RS. 2,62,108/-. THE PENALTY LEVIED MADE IS BAD IN LAW, INVALID AND AGAINST THE NATURAL LAW OF JUSTICE. 3. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE TH AT THE ASSESSEE IS A FIRM ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADIN G OF METAL ALLOYS. ASSESSEE FILED THE RETURN DECLARING THE TOTAL INCOME OF RS. NIL. ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT AND THE ASSESSED INCOME OF THE AS SESSEE WAS DETERMINED AT RS. 45,467/- AFTER SETTING OFF OF PREVIOUS YEARS BUSIN ESS AND DEPRECIATION LOSSES OF RS. 59,09,534/-. DURING THE ASSESSMENT PROCEEDINGS, AO OBSERVED THAT THE ASSESSEE CLAIMED DEPRECIATION AT HIGHER RATES THAN WHAT IS A LLOWABLE U/S 32(1) OF ACT. ACCORDINGLY, AO WORKED OUT THE DEPRECIATION ALLOWAB LE AT RS. 12,77,574/- AS AGAINST 2 A SUM OF RS. 20,56,271/- CLAIMED BY THE ASSESSEE. EX CONSEQUNTI, AO DISALLOWED THE EXCESS DEPRECIATION CLAIMED BY THE ASSESSEE OF RS 7 ,78,697/- AND INITIATED THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT, WHICH IS THE SUBJECT MATTER IN THE DISPUTE. AGGRIEVED, ASSESSEE FILED AN APPEAL BEFOR E THE FIRST APPELLATE AUTHORITY. 4. DURING THE FIRST APPELLATE AUTHORITY, CIT (A) CO NSIDERED THE SUBMISSIONS MADE BY THE ASSESSEE AND DISMISSED THE APPEAL. AGGRIEVE D, ASSESSEE FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL BY RAISING THE ABOVE MEN TIONED GROUNDS. 5. DURING THE PROCEEDINGS BEFORE US, SHRI M. SUBRAM ANIAN, LD COUNSEL FOR THE ASSESSEE MENTIONED THAT THE ONLY ISSUE INVOLVED IN THIS APPEAL IS AGAINST THE ORDER OF CIT (A) IN CONNECTION WITH LEVY OF PENALTY U/S 271( 1)(C) OF THE ACT. IN THIS REGARD, LD COUNSEL MENTIONED THAT IN THE RETURN OF INCOME, ASS ESSEE CLAIMED EXCESS DEPRECIATION WHICH HAPPENED DUE TO THE WRONG RATES APPLIED WHILE COMPUTING THE ALLOWABLE DEPRECIATION U/S 32 OF THE ACT. FURTHER, HE MENTIONED THAT THE RATES WERE AMENDED PROVIDING LESSER RATES OF DEPRECIATION W.E. F 2007-2008 ONWARDS, WHEREAS ASSESSEE MECHANICALLY AND MISTAKENLY APPLIED OLD RA TES WHICH ARE APPLICABLE TO THE AY 2006-2007. IN CONNECTION WITH THE PENALTY PROCE EDINGS, LD COUNSEL MENTIONED THAT THERE IS NO CONCEALMENT OF PARTICULARS AND IT IS A MISTAKE OF THE ASSESSEE TO FOLLOW MECHANICALLY THE EARLIER DEBTS WHICH ARE INA PPLICABLE TO THE CURRENT YEARS. THE AMENDMENT OF THE RULES WAS NOT IN THE KNOWLEDGE OF THE PEOPLE WHO PREPARED THE RETURNS AND THE MISTAKE WAS RECTIFIED DURING TH E ASSESSMENT PROCEEDINGS. 6. ON THE OTHER HAND, LD DR RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE O RDERS OF THE REVENUE AUTHORITIES AND EXAMINED THAT IF THIS IS A FIT CASE FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. IT IS AN ADMITTED FACT THAT THERE IS NO CON CEALMENT OF FACTS AND PARTICULARS REQUIRED FOR MAKING OF THE ASSESSMENT. OF COURSE, I T IS THE DUTY OF THE AO TO MAKE AN ASSESSMENT IN ACCORDANCE WITH THE LAW AND THE RU LES AND DISCOVERY OF THE DEFECT IN CALCULATION IS ATTRIBUTABLE TO HIS DUTIES. IT IS ALSO A FACT THAT THERE WAS CHANGE IN THE RULES RELATING TO DEPRECIATION RATES APPLICABLE TO THE CURRENT ASSESSMENT YEAR 2006-2007. IT IS ALSO AN UNDISPUTED FACT THAT THE A SSESSEE RECTIFIED A MISTAKE WHICH APPEARS TO BE PRIMA FACIE RECTIFIABLE ONE IN NATURE. CONSIDERING THE FACT TH AT IT IS 3 MERELY A CASE OF MISTAKEN APPLICATION OF INAPPLICABLE RATES OF DEPRECIATION, WE ARE OF THE OPINION THAT IT IS NOT A FIT CASE FOR LEVY O F PENALTY. WITH CONSTANT OF CHANGE IN RULES RELATING TO RATES OF DEPRECIATION, SUCH MISTA KES ARE EXPECTED TO HAPPEN. SUCH MISTAKES MUST NOT ATTRACT PENALTY U/S 273(1)(C) OF THE ACT. ACCORDINGLY, GROUND RAISED BY THE ASSESSEE IS ALLOWED . 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 2.8.2013. SD/- SD/- ( I.P. BANSAL) (D. KARUNAKARA RAO ) / JUDICIAL MEMBER $ / ACCOUNTANT MEMBER MUMBAI; 2& 2.8.2013 . & . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. )* / THE APPELLANT 2. +,)* / THE RESPONDENT. 3. 3/ ( ) / THE CIT(A)- 4. 3/ / CIT 5. 4 56 +/& , , / DR, ITAT, MUMBAI 6. 6!' 7 / GUARD FILE. ,4/ +/ //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI