The ITO, Ward-1, Bharuch V. M/s. Tirupati Construction Co., Bharuch

ITSSA 128/AHD/2011

• Counselvise Citation: [2014] 121 COUNSELVISE.COM (IT) 9956 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 10-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 13-12-2013
• Assessment Year: 2003-2004
• Appeal Filed On: 18-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Assessee Lawyers: S N DIVETIA
• Keywords: Depreciation; Wrong claim
• Section: 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI T.R. MEENA, ACCOUNTANT MEMBER IT(SS)A NO.128/AHD/2011 THE ITO, WARD-1, BANK OF BARODA BUILDING, STATION ROAD, BHARUCH. V/S. M/S. TIRUPATI CONSTRUCTION, , BHAGYODAYA ESATATE, ZADESHWAR ROAD, BHARUCH. PAN: AACFT 9517H (APPELLANT) (RESPONDENT) REVENUE BY : S/SHRI P.L. KUREEL, SR.D.R. ASSESSEE(S) BY : SHRI S.N. DIVETIA, A.R. / DATE OF HEARING : 20/12/2013 / DATE OF PRONOUNCEMENT: 10/01/2014 / O R D E R PER SHRI MUKUL KUMAR SHRAWAT, J.M. THIS IS AN APPEAL FILED BY THE REVENUE ARISING FROM THE ORDER OF LEARNED CIT(A)-IV, AHMEDABAD, DATED 30 TH OF NOVEMBER, 2010. THE SUBSTANTIVE GROUND RAISED BY THE REVENUE IS REP RODUCED BELOW: 1(A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) ERRED IN DELETING THE PENALTY U/S.271(1)(C) ON THE DISALLOWANCE OF DEPRECIATION OF RS.9,59,197/- CLAIMED AT HIGHER RAT E. 1(B) THE CIT(A) FAILED TO APPRECIATE THAT THE ASSES SEE IS IN THE BUSINESS OF ROAD CONSTRUCTION AND THEREFORE, HIGHER DEPRECIATION @ 40% IS NOT ALLOWABLE IN THE ASSESSEES CASE OWING T O THE FACT THAT THE ASSESSEE COULD NOT SPECIFY THE VEHICLES WHICH WERE LEASED OUT AT WHAT TERMS AND CONDITIONS. THE ASSESSEE ALSO COULD NOT B E BIFURCATE THE INCOME DERIVED FROM THE LEASED VEHICLES, THEREBY, F AILING TO SUBSTANTIATE THE CLAIM OF HIGHER RATE OF DEPRECIATI ON WITH SUPPORTING DOCUMENTARY EVIDENCE. THUS, THE INCORRECT CLAIM OF DEPRECIATION DEEMED TO REPRESENT THE INCOME OF WHICH PARTICULARS WERE CONCEALED AS ENVISAGED AS PER EXPLANATION 1 BELOW SECTION 271 OF THE ACT. FURTHER, AS HELD BY THE HON. ITAT (ALL) IN THE CASE OF ITO VS. GEEP IT(SS)A NO.128/AHD/2011 ITO WARD- 1, BHARUCH VS. M/S. TIRUPATI CONSTRUCTION - 2 - INDUSTRIAL SYNDICATE LTD., 23 ITD 448, WRONG CLAIM OF DEPRECIATION WILL AMOUNT TO FURNISHING OF INACCURATE PARTICULARS . 2. AN ASSESSMENT U/S. 153A(B) R.W.S 143(3), DATED 3 1.12.2008 WAS MADE ON THE ASSESSEE FIRM WHO IS IN THE BUSINES S OF ROAD CONSTRUCTION. IT WAS NOTED BY THE AO THAT THE ASSES SEE HAD CLAIMED HIGHER DEPRECIATION OF 40% ALTHOUGH THE ELIGIBLE RA TE OF DEPRECIATION WAS @ 20% ONLY. AGAINST THE SAID DISAL LOWANCE OF DEPRECIATION IN QUANTUM ASSESSMENT THE MATTER WAS C ARRIED BEFORE LEARNED CIT(A)-IV, AHMEDABAD WHO HAD VIDE AN ORDER DATED 25 TH OF SEPTEMBER, 2009 HAD AFFIRMED THE DISALLOWANCE OF HIGHER CLAIM U/S. 271(1)(C) WAS IMPOSED VIDE AN ORDER DATED 3 RD OF DECEMBER, 2009 ON THE GROUND THAT THE ASSESSEE HAD FILED INAC CURATE PARTICULARS OF INCOME BY ADOPTING HIGH RATE OF DEPR ECIATION. WHILE LEVYING THE IMPUGNED PENALTY, THE AO HAS ALSO HELD THAT THE ASSESSEE HAD FAILED TO SUBSTANTIATE THE HIGHER RATE OF DEPRECIATION WITH SUPPORTING DOCUMENTARY EVIDENCE. THE SAID PENA LTY ORDER WAS CHALLENGED BEFORE LEARNED CIT(A) AND IN THE IMPUGNE D ORDER IT WAS HELD AS UNDER: 2.1 THE ASSESSING OFFICER HAD INITIATED PENALTY PROCEED INGS DURING THE COURSE OF ASSESSMENT U/S. 153A OF THE ACT ON TH E ENHANCED OF RS.5,87,968/- DECLARED INCOME IN 153A RETURN AS COM PARED TO THE INCOME OF RS.5,88,966/- DECLARED IN 139(1) RETURN A ND ON THE DISALLOWANCE OF DEPRECIATION OF RS.9,59,197/-. THE ASSESSING OFFICER HAD ISSUED SHOW CAUSE NOTICE FOR PENALTY AFTER THE DECISION OF THE CIT(A) IN QUANTUM PROCEEDINGS. THERE WAS NO RESPONS E ALLEGED TO BE FROM THE ASSESSEE. THE ASSESSING OFFICER HAD THEREF ORE, IMPOSED THE PENALTY OF RS.5,42,000/- UPON THE APPELLANT FOR CON CEALING THE PARTICULARS OF INCOME BY FURNISHING INACCURATE PART ICULARS OF INCOME. 2.2 THE FIRST AND THIRD GROUNDS OF APPEAL ARE RELAT ING TO THE LEVY OF PENALTY OF RS.5,42,000/- ON THE DIFFERENCE BETWEEN THE INCOME DISCLOSED IN THE RETURN FILED U/S 153A AND IN THE R ETURN FILED U/S 139(1) AMOUNTING TO RS.5,87,968/- AND ON DISALLOWANCE OF H IGHER RATE OF DEPRECIATION OF RS.9,59,197/-. THE ASSESSING OFFICE R HAD DISCUSSED THIS ISSUE IN PARA-3 TO PARA-10 OF THE PENALTY ORDER . IT(SS)A NO.128/AHD/2011 ITO WARD- 1, BHARUCH VS. M/S. TIRUPATI CONSTRUCTION - 3 - 2.5 APART FROM IT, THE CLAIM OF THE APPELLANT WAS B ONAFIDE. THE APPELLANT HAD EARNED CARTING RECEIPTS OF RS.15,66,3 43/- ON MOTOR VEHICLES GIVEN ON LEASE TO DIFFERENT PARTIES AND IT WAS ALSO SHOWN IN THE P&L A/C IN ADDITION TO THE ROAD CONSTRUCTION RE CEIPTS. IT WILL BE NOTICED FROM THE PERUSAL OF LEDGER A/C. TITLED CAR TING INCOME TRANSPORT FOR THIS YEAR ENCLOSED IN THE PAPER BOOK THAT THROUGH OUT THE YEAR, THERE WERE CARTING RECEIPTS AND EVEN THE NARRATION GIVEN UNDER EACH ACCOUNTING ENTRY SHOWS THE NUMBER OF TRI PS, NATURE OF GOODS TRANSPORTED AND RENT PER TRIP. THEREFORE, THE CLAIM MADE BY THE APPELLANT FIRM THAT MOTOR VEHICLES WERE GIVEN ON HI RE CANNOT BE SAID TO BE UNTRUE OR FALSE. EVEN, NONE OF THE AUTHORITIES H AVE HELD, MUCH LESS CONTENDED THAT THE CLAIM WAS BOGUS. ON THE CONTRARY , THE EXPLANATION FURNISHED BY THE APPELLANT THAT MOTOR VEHICLES WERE GIVEN ON HIRE IS SUPPORTED BY NECESSARY EVIDENCE AND EVEN THE EXPLAN ATION OFFERED BY IT HAS BEEN FOUND TO BE BONAFIDE. ALL THE FACTS MAT ERIAL TO COMPUTATION OF TOTAL INCOME HAVE BEEN BONAFIDELY DISCLOSED TO T HE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE JU RISDICTIONAL AHMEDABAD TRIBUNAL SO ALSO THE HONBLE GUJARAT HIG H COURT IN GUPTA GLOBAL (P) LTD. WERE IN FAVOUR OF THE STAND T AKEN BY THE APPELLANT. THUS, THERE IS NO GROUND FOR LEVY OF PEN ALTY FOR A BONAFIDE CLAIM OF DEPRECIATION. THE DISALLOWANCE ON ACCOUNT OF CERTAIN REASONS CANNOT BE GROUND FOR LEVYING PENALTY UNLESS IT COME S IN THE AMBIT OF EXPLANATION-1 TO SEC. 271(1)(C) OF THE ACT. THE PEN ALTY LEVIED ON THE DISALLOWANCE OF HIGHER RATE OF DEPRECIATION IS ACCO RDINGLY DELETED. 3. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, WE ARE OF THE CONSIDERED OPINION THAT THE PENALTY BEING IMPOS ED IN RESPECT OF THE HIGHER CLAIM OF DEPRECIATION WHICH WAS A CONTEN TIOUS MATTER AT THAT TIME; HENCE, LEARNED CIT(A) HAS HELD THAT THE CLAIM OF THE ASSESSEE WAS BASED UPON AN UNDERSTANDING THAT THE V EHICLES IN QUESTION WAS ELIGIBLE FOR THE HIGHER RATE OF DEPREC IATION, HOWEVER, IT WAS NOT AN ALTOGETHER BOGUS OR UNTRUE CLAIM; HEN CE, WE HEREBY AFFIRM THE DELETION OF PENALTY. 4. IN THE RESULT, WE FIND NO FORCE IN THIS GROUND O F THE REVENUE AND THE SAME IS HEREBY DISMISSED. SD/- SD/- (T.R. MEENA) (MUKUL KR. SHRAWAT) ACCOUNTANT MEMBER JUD ICIAL MEMBER AHMEDABAD; DATED 10 /01/2014 PRABHAT KR. KESARWANI, SR. P.S. TRUE COPY TRUE COPY TRUE COPY TRUE COPY IT(SS)A NO.128/AHD/2011 ITO WARD- 1, BHARUCH VS. M/S. TIRUPATI CONSTRUCTION - 4 - / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A)-III, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE. / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD