Assistant Commissioner of Income-tax, V. M/s. Golden Oil Industries (I) Pvt. Ltd., Nanded

ITA 980/PUN/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9164 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 26-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: KAMLESH KAPADIA
• Keywords: Depreciation; Initiation of penalty proceedings; Unabsorbed depreciation
• Section: 143(3); 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 980 /P U N/201 5 / ASSESSMENT YEAR : 20 0 7 - 0 8 THE ASST . COMMISSIONER OF INCOME TAX, NANDED CIRCLE , NANDED . / APPELLANT VS. M/S. GOLDEN OIL INDUSTRIES (I) PVT. LTD., PLOT NO.B - 13, MIDC, NANDED, DIST. NANDED . / RESPONDENT PAN: AA BCG2330D / APPELLANT BY : SHRI AJAY MODI / RESPONDENT BY : SHRI KAMLESH KAPADIA / DATE OF HEARING : 25 .0 7 . 2017 / DATE OF PRONOUNCEMENT: 26 . 0 7 .201 7 / ORDER PER SUSHMA CHOWLA, J M : TH E APPEAL FILED BY THE REVENUE IS AGAINST THE ORDER OF CIT (A) - 16 , MUMBAI , DATED 16 .0 3 .201 5 RELATING TO ASSESSMENT YEAR 20 0 7 - 0 8 IN DELETING PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . ITA NO. 980 /P U N/20 1 5 M/S. GOLDEN OIL INDUSTRIES PVT. LTD. 2 2 . THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - I) ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) - 16, MUMBAI HAS ERRED IN CANCELLING PENALTY OF RS.12,97,050/ - IMPOSED U/S 271(1)(C) OF THE ACT. II) ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) - 16, MUMBAI HAS ERRED IN NOT APPRECIATING THE FACT THAT THE CLAIM WAS FOUND INCORRECT ONLY AFTER VERIFICATION. AS SUCH, THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRO DUCTS LTD. IS NOT APPLICABLE. III) ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) - 16, MUMBAI HAS ERRED IN HOLDING THAT THE MISTAKE WAS INADVERTENT AND BONAFIDE. ON THE OTHER HAND, THE CLAIM WAS MADE DELIBERATELY TO AVOID TAX. 3. THE ISS UE RAISED IN THE PRESENT APPEAL FILED BY THE REVENUE IS AGAINST DELETION OF PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT AT RS.12,97,050/ - . 4. THE ASSESSEE DURING THE COURSE OF HEARING HAS RAISED THE ISSUE OF NON - RECORDING OF SATISFACTION BY THE ASSE SSING OFFICER AS HE FAILED TO RECORD PROPER SATISFACTION IN INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. IN THIS REGARD, HE PLACED RELIANCE ON THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. SHRI SAMSON PERINCHERY IN INCOME TAX APPEAL NO.1154 OF 2014 WITH OTHER INCOME TAX APPEALS NOS.953 OF 2014, 1097 OF 2014 AND 1226 OF 2014, JUDGMENT DATED 05.01.2017 . 5. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE HAD FILED THE RETURN OF INCOME DECLARING NIL INCOME BOTH UNDER THE NORMAL PROVISIONS AND UNDER SECTION 115JB OF THE ACT. THE ASSESSING OFFICER NOTED THAT AGAINST NET PROFIT OF RS.1.60 CRORES, THE ASSESSEE HAD REDUCED BROUGHT FORWAR D BOOK LOSSES AT RS.3.57 CRORES. THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF BRO UGHT FORWARD LOSSES AND IT TRANSPIRED THAT BROUGHT FORWARD BUSINESS LOSS WAS TO THE TUNE OF RS.3.13 CRORES AND UNABSORBED DEPRECIATION WAS TO THE EXTENT OF RS.45,11,805/ - . THE ASSESSEE WAS SHOW CAUSED TO EXPLAIN AS TO WHY ONLY ITA NO. 980 /P U N/20 1 5 M/S. GOLDEN OIL INDUSTRIES PVT. LTD. 3 BOOK DEPRECIATION OF RS.45,1 1,805/ - SHOULD NOT BE REDUCED AS AGAINST THE CLAIM OF SET OFF OF BROUGHT FORWARD LOSSES OF RS.1.60 CRORES. THE ASSESSING OFFICER IN VIEW OF CLAUSE (III) TO EXPLANATION 1 TO SECTION 115JB OF THE ACT, RE - COMPUTED THE BOOK PROFITS UNDER SECTION 115JB OF THE ACT AT RS.1.15 CRORES. THE ASSESSING OFFICER ALSO INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND CONCEALMENT OF INCOME. THEREAFTER, THE ASSESSING OFFICER PASSED ORDER UNDER SECTION 271 (1)(C) OF THE ACT HOLDING THE ASSESSEE TO HAVE FURNISHED INACCURATE PARTICULARS OF INCOME AND LEVIED PENALTY AT RS.12,97,050/ - . 6. THE CIT(A) DELETED PENALTY AFTER CONSIDERING THE ISSUE AS TO WHETHER THE ASSESSEE HAS CONCEALED INCOME OR FURNISHED INACCURA TE PARTICULARS OF INCOME. THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT WAS DELETED BY THE CIT(A) IN TURN, RELYING ON THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN CIT VS. RELIANCE PETRO PRODUCTS LTD. (2010) 322 ITR 158 (SC) AND PRICEWATERHO USECOOPERS PVT. LTD. VS. CIT & ANR. IN CIVIL APPEAL NO.6924 OF 2012, JUDGMENT DATED 25.09.2012. 7. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 8. THE ASSESSEE HAS ALSO RAISED AN ALTERNATE PLEA BEFORE US AS TO NON - RECORDING OF SATISFACTION BY TH E ASSESSING OFFICER WHILE COMPLETING ASSESSMENT UNDER SECTION 143(3) OF THE ACT. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE RAISED BY THE ASSESSEE UNDER RULE 27 OF THE ITAT RULES IN SUPPORTING THE ORDER OF CIT(A) ON THE GROU ND OTHER THAN THE ISSUE DECIDED BY THE CIT(A) DOES NOT INVOLVE ANY INVESTIGATION OF FACTS AND HENCE, THE SAME IS ADMITTED. ITA NO. 980 /P U N/20 1 5 M/S. GOLDEN OIL INDUSTRIES PVT. LTD. 4 10. THE PERUSAL OF ASSESSMENT ORDER REFLECTS THAT THE ASSESSING OFFICER WHILE RE - COMPUTING THE BOOK PROFITS UNDER SECTION 115JB OF T HE ACT HAD RECORDED SATISFACTION FOR INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT ON BOTH THE COUNTS I.E. CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE REQUIREMENT OF SECTION 271(1)(C) OF THE ACT IS THAT PENALTY FOR CONCEALMENT CAN BE LEVIED EITHER FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE ASSESSING OFFICER BEFORE INITIATING THE SAID PENALTY PROCEEDINGS SHOULD COME TO A FINDING AS TO WHICH LIMB THE ASSESSEE HAS NOT SATISFIED AND IN THE ABSENCE OF THE SAME, PENALTY PROCEEDINGS INITIATED ARE IN CONTRAVENTION OF LAW AND THE COURTS HAVE HELD THAT THE SAME HAVE BEEN INITIATED WITHOUT ANY BASIS. 11. THE PUNE BENCH OF TRIBUNAL IN VARIOUS CASES INCLUDING IN KANHAIYALA L D. JAIN VS. ACIT IN ITA NOS.1201 TO 1205/PN/2014, RELATING TO ASSESSMENT YEARS 2003 - 04 TO 2007 - 08, ORDER DATED 30.11.2016 HAS DELETED THE PENALTY ON SIMILAR ISSUE OF NON - RECORDING OF SATISFACTION AND CONSEQUENTLY PENALTY ORDER PASSED UNDER SECTION 271(1) (C) OF THE ACT WAS HELD TO BE NOT VALID . THE TRIBUNAL IN SIMILAR CIRCUMSTANCES, HAS DELETED PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT VIDE PARAS 13 TO 27 OF THE ORDER. FOR THE SAKE OF BREVITY, THE SAME ARE BEING REFERRED TO BUT ARE NOT BEING REPR ODUCED. 12. THE HONBLE BOMBAY HIGH COURT IN CIT VS. SHRI SAMSON PERINCHERY (SUPRA) HELD THAT WHERE INITIATION OF PENALTY IS ON ONE LIMB AND THE LEVY OF PENALTY IS ON OTHER LIMB, THEN IN THE ABSENCE OF PROPER SHOW CAUSE NOTICE TO THE ASSESSEE, THERE IS NO MERIT IN LEVY OF PENALTY. 13. IN THE TOTALITY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES, WE HOLD THAT THERE IS NO MERIT IN LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT FOR NON - ITA NO. 980 /P U N/20 1 5 M/S. GOLDEN OIL INDUSTRIES PVT. LTD. 5 RECORDING OF PROPER SATISFACTION WHILE INITIATING PENALTY PROCEEDINGS BY THE ASSESSING OFFICER. WE UPHOLD THE DELETION OF PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT ON A GROUND OTHER THAN THE GROUND DECIDED BY THE CIT(A). CONSEQUENTLY, THE GROUNDS OF APPEAL RAISED BY THE REVENUE DO NOT STAND AND THE SAME ARE DISMISS ED. 1 4 . IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED ON THIS 26 TH DAY OF JU LY , 201 7 . SD/ - SD/ - (ANIL CHATURVEDI ) (SUSHMA CHOWLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 26 TH JU LY , 201 7 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPEL LANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - 16 , MUMBAI ; 4. / THE CIT - 9, MUMBAI; 5. , , / DR B , ITAT, PUNE; 6. / GUARD FILE . / B Y ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE