MUKAT TANKS & VESSELS LTD, MUMBAI V. DCIT CEN CIR 1(2), MUMBAI

ITSSA 5/MUM/2013

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 0497 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 22-12-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 11-12-2014
• Assessment Year: misc
• Appeal Filed On: 08-03-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S J SINGH
• Assessee Lawyers: SUNIL A DESAI
• Keywords: Depreciation

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BE NCH, MUMBAI , !' $ $ $ $ % & ' , !' ( BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ./I .T(SS)A. NO. 05/MUM/2013 BLOCK PERIOD : 1.4.1995 TO 21.3.2002 M/S.MUKAT TANKS & VESSELS LTD., SURINDRA HOUSE, SAFAID POOL, M.V. ROAD, ANDHERI (E), MUMBAI-400 072 / VS. THE DCIT 1(2), AAYAKAR BHAVAN, MUMBAI-400 020 ') ./ *+ ./ PAN/GIR NO. : AAACM 3917H ( ), / APPELLANT ) .. ( -.), / RESPONDENT ) ), / / APPELLANT BY: SHRI SUNIL A DESAI -.), 0 / / RESPONDENT BY: SHRI S.J. SINGH 0 %1 / DATE OF HEARING :11.12.2014 234 0 %1 / DATE OF PRONOUNCEMENT :22.12.2014 !& / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LD. CIT(A)-7, MUMBAI DT.7.12.2012 PERTAINING TO BLOCK P ERIOD 1.4.1995 TO 21.3.2002. 2. THE SOLE GRIEVANCE OF THE ASSESSEE IS THAT THE L D. CIT(A) ERRED IN CONFIRMING PENALTY OF RS. 3,75,000/- LEVIED U/S. 15 8BFA OF THE ACT. IT(SS)A NO. 05/M/2013 2 3. THE ASSESSMENT IN THIS CASE WAS MADE U/S. 158BC OF THE ACT VIDE ORDER DT. 31.3.2004. DURING THE COURSE OF THE ASSE SSMENT PROCEEDINGS, IT WAS NOTICED THAT THE ASSESSEE HAS SHOWN TRANSACTION OF SALE OF MACHINERY TO M/S. INFA ENGINEERS PVT. LTD. FOR RS. 61.50 LAKH S. IT WAS FURTHER NOTICED THAT M/S. INFA ENGINEERS PVT. LTD., SUBSEQU ENTLY SOLD THE MACHINERY TO M/S. MUKTANANDAN PIPES LTD. FOR RS. 89 .96 LAKHS. ON FINDING ENTIRE TRANSACTION BEING DUBIOUS, THE DIFFE RENCE BETWEEN THE SALE OF RS. 89.96 LAKHS AND RS. 61.50 LAKHS WAS TREATED AS UNDISCLOSED INCOME IN THE SALE TRANSACTION OF MACHINERY. PENALTY PROC EEDINGS U/S. 158 BFA WAS INITIATED. 4. DURING THE COURSE OF THE PENALTY PROCEEDINGS, IT WAS OBSERVED THAT AGAINST THE ORDER MADE U/S. 158BC, THE ASSESSEE PRE FERRED AN APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HELD THAT TH E ASSESSEE HAS SHOWN TO HAVE SOLD THE MACHINERY AT RS. 61.50 LAKHS AND T HE PURCHASER HAS SUBSEQUENTLY SOLD THE SAME MACHINERY FOR RS. 86.50 LAKHS, THEREFORE THE DIFFERENCE OF RS. 25 LAKHS WHICH IS THE UNDISCLOSED PART OF THE SALE PROFIT HAVE TO BE DEDUCTED FROM THE WRITTEN DOWN VALUE OF THE PLANT AND MACHINERY. ACCORDING TO THE LD. CIT(A), THE ASSESS EE HAS CLAIMED EXCESS DEPRECIATION ON THIS AMOUNT. AS PER THE L D. CIT(A) 25% OF 25 LAKHS I.E. PERCENTAGE OF DEPRECIATION ALLOWABLE IS TO BE TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE WHICH COMES TO R S. 6.25 LAKHS. 5. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE ITAT AND THE TRIBUNAL VIDE ITS ORDER DT. 24.6.2008 CONFIRMED THE FINDINGS OF THE LD. CIT(A). PENALTY HAS BEEN LEVIED FINALLY ON THE EXCESS CLAIM OF DEDUCTION OF RS. 6.25 LAKHS. THE AO LEVIED PENALTY OF RS. 3.75 LAKH S. IT(SS)A NO. 05/M/2013 3 6. AGGRIEVED BY THIS, THE ASSESSEE CARRIED THE MATT ER BEFORE THE LD. CIT(A) BUT WITHOUT ANY SUCCESS. 7. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT THE PROVISIONS OF SEC. 158BFA ARE DISCRETIONARY AND NOT MANDATORY THEREFORE THE REVENUE AUTHORITIES HAVE GROSSLY ERRED IN LEVYI NG PENALTY UNDER THE SAID SECTION. IN SUPPORT, THE LD. COUNSEL RELIED UP ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS DO DSAL LTD. 218 CTR 430. 8. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. IT IS THE SAY OF THE LD. DR THAT THE AO AND THE LD. CIT(A) HAVE RIGHTLY EXERCISED THE DE CISION TOWARDS LEVY OF PENALTY. 9. HAVING HEARD THE RIVAL SUBMISSIONS, WE HAVE CARE FULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW. WE HAVE ALSO CONS IDERED THE DECISION IN THE QUANTUM APPEAL. IN THE QUANTUM APPEAL, THE FIR ST APPELLATE AUTHORITY HAS CONSIDERED THE EXCESS DEPRECIATION AS THE UNDIS CLOSED INCOME OF THE ASSESSEE AND THE TRIBUNAL HAS CONFIRMED THIS FINDIN GS OF THE LD. CIT(A). LET US SEE THE CONDUCT OF THE ASSESSEE. THE ASSESS EE FIRST SOLD MACHINERY TO M/S. INFA ENGINEERS PVT. LTD. FOR A CONSIDERATIO N OF RS. 61.50 LAKHS. UNDISPUTEDLY, M/S. INFA ENGINEERS IS NOT A RELATED PARTY. HOWEVER, SUBSEQUENTLY, M/S. INFA ENGINEERS SOLD THE SAME MAC HINERY TO M/S. MUKTANANDAN PIPES LTD WHICH IS A RELATED PARTY OF T HE ASSESSEE FOR A CONSIDERATION OF RS. 89.96 LAKHS WHICH MEANS THAT T HE MACHINERYS WDV WAS AROUND RS. 61.50 LAKHS WHICH WERE ULTIMATELY SO LD TO THE RELATED PARTY AT RS. 89.96 LAKHS, ON WHICH THE RELATED PART Y MUST HAVE CLAIMED THE DEPRECIATION AND AVAILED LOAN FACILITIES FROM THE B ANK. THE ENTIRE IT(SS)A NO. 05/M/2013 4 SEQUENCE OF THE TRANSACTION CLEARLY SHOWS THAT THE INTENTIONS OF THE ASSESSEE WERE NOT BONAFIDE. THE FACTS CLEARLY SHOW THAT THE ASSESSEE HAS CLAIMED EXCESS DEPRECIATION WHICH IS NOTHING BUT TH E UNDISCLOSED INCOME OF THE ASSESSEE. WE, THEREFORE, DO NOT FIND ANY RE ASON TO DELETE THE PENALTY SO LEVIED. ORDER OF THE LD. CIT(A) IS CONF IRMED. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND DECEMBER, 2014 SD/- SD/- (AMIT SHUKLA ) (N.K. BILLAIYA) !' /JUDICIAL MEMBER !' / ACCOUNTANT MEMBER MUMBAI; 5! DATED : 22 ND DECEMBER, 2014 . . ./ RJ , SR. PS !& !& !& !& 0 00 0 -% -% -% -% 64% 64% 64% 64% / COPY OF THE ORDER FORWARDED TO : 1. ), / THE APPELLANT 2. -.), / THE RESPONDENT. 3. 7 ( ) / THE CIT(A)- 4. 7 / CIT 5. 89 -% , , / DR, ITAT, MUMBAI 6. 9: ; / GUARD FILE. !& !& !& !& / BY ORDER, .% -% //TRUE COPY// < << < / = = = = * * * * (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI