The ACIT, GNR Circle,, Gandhinagar v. Raj Multiplex Pvt.Ltd.,, Gandhinagar

ITA 1467/AHD/2007 | 2003-2004
Pronouncement Date: 31-03-2010 | Result: Dismissed

Appeal Details

RSA Number 146720514 RSA 2007
Bench Ahmedabad
Appeal Number ITA 1467/AHD/2007
Duration Of Justice 2 year(s) 11 month(s) 18 day(s)
Appellant The ACIT, GNR Circle,, Gandhinagar
Respondent Raj Multiplex Pvt.Ltd.,, Gandhinagar
Appeal Type Income Tax Appeal
Pronouncement Date 31-03-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 31-03-2010
Date Of Final Hearing 23-03-2010
Next Hearing Date 23-03-2010
Assessment Year 2003-2004
Appeal Filed On 12-04-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD D BENCH (BEFORE S/SHRI G.D. AGARWAL VICE-PRESIDENT AND BHAVNESH SAINI JUDICIAL MEMBER) ITA.NO.1467/AHD/2007 ASSTT.YEAR : 2003-2004 ACIT GANDHINAGAR. VS. RAJ MULTIPLEX PVT. LTD PLOT NO.249 SECTOR 22 GANDHINAGAR. (APPELLANT) (RESPONDENT) REVENUE BY : SMT. NEETA SHAH ASSESSEE BY : NONE O R D E R PER G.D. AGARWAL VICE-PRESIDENT: THIS IS REVENUES APPEAL AGAINST ORDER OF THE CIT(A) GANDHINAGAR AHMEDABAD DATED 02-01-2007. 2. AT THE TIME OF HEARING BEFORE US NONE APPEARED O N BEHALF OF THE ASSESSEE THOUGH THE NOTICE WAS DULY SERVED BY REGISTERED POS T. THEREFORE WE PROCEED TO DISPOSE OF THE APPEAL EXPARTE QUA THE ASSESSEE. THE ONLY GROUND RAISED BY THE REVENUE IN THE APPEAL READS AS UNDER: 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE PENALTY LEVIED U/S.271(1)(C) OF THE AC T HOLDING THAT THE LEVY OF PENALTY IS NOT JUSTIFIED. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY WHICH IS RUNNING CINEMA THEATRE. FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE FURNISHED RETURN OF INCOME DECLARING BUSINESS LOSS OF RS.1 00 92 940/-. HOWEVER THE AO DETERMINED THE LOSS AT RS.63 31 606/-. THE LOSS WA S REDUCED ON ACCOUNT OF FOLLOWING TWO ADDITIONS: I) EXCESS CLAIM OF DEPRECIATION DISALLOWED : RS.37 11 454/- II) DEDUCTION UNDER SECTION 35D : RS.49 880/- ITA.NO.1467/AHD/2007 -2- THE AO ALSO LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON THE ABOVE ADDITION/DISALLOWANCE. ON APPEAL THE CIT(A) CANCE LLED THE PENALTY. 4. THE EXPLANATION OF THE ASSESSEE BEFORE THE CIT(A ) AS WELL AS THE FINDINGS OF THE CIT(A) READS AS UNDER: 2.1 THE APPELLANT OBJECTED TO THE LEVY OF PENALTY. IT WAS POINTED OUT THAT THE CLAIM OF DEPRECIATION @ 15% WAS A CLERICAL ERROR. THE WRITTEN DOWN VALUE OF BUILDING AND FURNITURE & FIXTURES WAS TAKEN AS SINGLE BLOCK AND DEPRECIATION WAS CLAIMED AT 15% AS AGAINS T 10% ALLOWABLE AS PER THE I.T. RULES. IT WAS ALSO POINTED OUT THA T IN THE EARLIER ASSESSMENT YEAR I.E. ASSESSMENT YEAR 2002-03 ITSELF THE DEPRECIATION WAS WRONGLY NOTED AT 15% BUT THE SAME WAS COMPUTED AND CLAIMED SEPARATELY AT 10%. THE RATE COLUMN WAS ERRONEOUSLY LEFT UN-RECTIFIED. THE RATE OF DEPRECIATION WAS NOT MODIFIED IN THE SU BSEQUENT YEARS BUT THE SAME CHART USED FOR IN ASSESSMENT YEAR 2002-03 WAS TAKEN INTO ACCOUNT IN THE PRESENT ASSESSMENT YEAR. THIS RESUL TED IN AN ERROR IN CLAIMING DEPRECIATION. ONCE THE ERROR WAS NOTICED MISTAKE WAS RECTIFIED IN SUBSEQUENT YEARS BY FILING REVISED RET URNS. IT WAS FURTHER POINTED OUT THAT THE COMPANY WAS RUNNING IN HEAVY L OSSES FOR THE PAST YEARS AND IT HAD ACCUMULATED UNABSORBED LOSES AND D EPRECIATION TO THE TUNE OF OVER RS.6 CRORES. THE COMPANY WAS ALSO N OT HAVING ANY TAXABLE INCOME AS PER SECTION 115. AS SUCH THE ERR OR WAS INADVERTENT AND THE COMPANY WAS NOT GOING TO DERIVE ANY MATERIA L BENEFIT ON ACCOUNT OF THE ERROR. COUNSEL FOR THE APPELLANT FU RTHER SUBMITTED THAT THE DEDUCTION U/S.35D WAS RELATING TO PREOPERATIVE EXPENSES INCURRED IN 1999-2000 AND SIMILAR CLAIMS WERE MADE AND ALLOWED IN EARLIER ASSESSMENTS. THE DISALLOWANCE OF THE CLAIM WAS MAD E AS THE APPELLANT COULD NOT PRODUCE THE EVIDENCE OF SUCH EXPENSES INC URRED IN THE PREOPERATIVE PERIOD. IN ANY CASE THERE IS NO JUST IFICATION FOR HOLDING THAT APPELLANT WAS GUILTY OF CONCEALMENT IN RESPECT OF THE CLAIM. 2.2 THE ISSUE HAS BEEN CONSIDERED. THE FACTS POINT ED OUT THAT THE APPELLANT HAD MADE A MISTAKE IN ADOPTING THE CORREC T RATE OF DEPRECIATION. THIS IS A MISTAKE APPARENT ON RECORD AND THE ASSESSMENT ORDER PASSED HAD ONLY MADE THE DISALLOWANCE BY CORR ECTING THE MISTAKE. THE MISTAKE WHICH IS BONAFIDE DID NOT AMOUNT TO CO NCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. CL ARIFICATION FURNISHED BY THE APPELLANT IN THIS REGARD IS FOUND TO BE GENU INE AND ACCORDINGLY EXPLANATION 1 TO SECTION 271(1)(C) DOES NOT APPLY. SO FAR AS THE DISALLOWANCE OF THE CLAIM OF DEDUCTION U/S.35D IT IS NOTICED THAT SIMILAR DEDUCTION IN RESPECT OF THE VERY SAME EXPENSES WAS ALLOWED IN EARLIER ASSESSMENT YEARS. THE MERE DISALLOWANCE OF THE CLA IM DID NOT AMOUNT ITA.NO.1467/AHD/2007 -3- TO CONCEALMENT OR FURNISHING OF INACCURATE PARTICUL ARS OF INCOME. IN THE ABOVE CIRCUMSTANCES THE LEVY OF PENALTY IS FOUND T O BE NOT JUSTIFIED. THE OBSERVATIONS OF THE HONBLE GUJARAT HIGH COURT IN T HE CASE OF NATIONAL TEXTILES VS. CIT (2001) REPORTED IN 249 ITR 125 ARE RELEVANT IN THIS CONTEXT. IN THE ABOVE CASE THE COURT OBSERVED AS FOLLOWS: IN ORDER TO JUSTIFY THE LEVY OF PENALTY TWO FACTO RS MUST CO-EXIST (I) THERE MUST BE SOME MATERIAL OR CIRCUMSTANCES LE ADING TO THE REASONABLE CONCLUSION THAT THE AMOUNT DOES REPRESEN T THE ASSESSEES INCOME. IT IS NOT ENOUGH FOR THE PURPOS E OF PENALTY THAT THE AMOUNT HAS BEEN ASSESSED AS INCOME AND (II ) THE CIRCUMSTANCES MUST SHOW THAT THERE WAS ANIMUS I.E. CONSCIOUS CONCEALMENT OR ACT OF FURNISHING OF INACCURATE PART ICULARS ON THE PART OF THE ASSESSEE. THE EXPLANATION HAS NO BEARI NG ON FACTOR NO.1 BUT IT HAS A BEARING ONLY ON FACTOR NO.2. T HE EXPLANATION DOES NOT MAKE THE ASSESSMENT ORDER CONCLUSIVE EVIDE NCE THAT THE AMOUNT ASSESSED WAS IN FACT THE INCOME OF THE ASSES SEE. NO PENALTY CAN BE IMPOSED IF THE FACTS AND CIRCUMSTANC ES ARE EQUALLY CONSISTENT WITH THE HYPOTHESIS THAT THE AMOUNT DOES NOT REPRESENT CONCEALED INCOME AS WITH THE HYPOTHESIS THAT IT DOE S. IF THE ASSESSEE GIVES AN EXPLANATION WHICH IS UNPROVED BUT NOT DISPROVED I.E. IT IS NOT ACCEPTED BUT CIRCUMSTANCES DO NOT LEAD TO THE REASONABLE AND POSITIVE INFERENCE THAT THE ASSE SSEES CASE IS FALSE THE EXPLANATION CANNOT HELP THE DEPARTMENT B ECAUSE THERE WILL BE NO MATERIAL TO SHOW THAT THE AMOUNT IN QUES TION WAS THE INCOME OF THE ASSESSEE. IN THE PRESENT CASE THE MAJOR DISALLOWANCE WAS ADMI TTED ON ACCOUNT OF A MISTAKE APPARENT ON RECORD. APPELLANT HAD FURNISHE D EXPLANATIONS REGARDING THE ADDITIONS MADE IN THE ASSESSMENT. SO FAR AS THE DISALLOWANCE OF THE CLAIM OF DEDUCTION U/S.35D ALSO THE EXPENSES WERE INITIALLY INCURRED IN EARLIER YEARS AND SIMILAR CLA IM OF DEDUCTION U/S.35D WERE ALREADY ALLOWED IN SUCH YEARS. THE APPELLANT COULD NOT PRODUCE THE FULL DETAILS OF EXPENSES INCURRED ORIGINALLY DU RING THE PRE-OPERATIVE PERIOD. THERE IS NOTHING TO SUGGEST THAT THE EXPLA NATIONS WERE INCORRECT OR FALSE. TAKING INTO ACCOUNT THE FACTS AND LEGAL POSITION DISCUSSED ABOVE IT IS HELD THAT THE LEVY OF PENALTY IS NOT JU STIFIED. THE SAME IS CANCELLED. 5. THE REVENUE IS AGGRIEVED WITH THE ABOVE ORDER OF THE CIT(A) AND IS IN APPEAL BEFORE US. 6. WE HAVE HEARD THE LEARNED DR AND PERUSED MATERIA L PLACED BEFORE US. AFTER CONSIDERING THE ORDERS OF THE LOWER AUTHORITI ES AS WELL AS THE ARGUMENTS OF ITA.NO.1467/AHD/2007 -4- THE LEARNED DR WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A). THE REDUCTION IN THE RETURNED LOSS WAS MAINLY ON ACCOUN T OF REDUCTION IN THE CLAIM OF DEPRECIATION. THE ASSESSEE HAD CLAIMED THE DEPR ECIATION ON THE CINEMA THEATRE AT 15% WHICH WAS IN FACT ALLOWABLE AT 10%. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE HIMSELF HAD FURNISHED THE REVISED CHART AND WORKED OUT THAT THE DEPRECIATION CLAIMED BY IT WAS HIGHER BY RS.37 11 454/-. THE EXPLANATION OF THE ASSESSEE GIVEN BEFORE THE CIT(A) THAT THE WDV OF BUILDING FURNITURE AND FIXTURES WAS TAKEN AS A SINGLE BLOCK BY MISTAKE AND DUE TO CLERICAL ERROR THE DEPRECIATION WAS CLAIMED AT 15% SEEMS PL AUSIBLE. IN THE YEAR UNDER APPEAL THE ASSESSEE HAD A LOSS OF MORE THAN RUPEES ONE CRORE AND EVEN AFTER THE DISALLOWANCE MADE BY THE AO ASSESSED LOSS IS AT RS .63.31 LAKHS. THE ASSESSEE ALREADY HAD CARRIED FORWARD BUSINESS LOSS AND DEPRE CIATION OVER RS.6 CRORES. IN THE ABOVE CIRCUMSTANCES THERE COULD NOT BE ANY MOT IVE TO CLAIM MORE DEPRECIATION. WE ALSO FIND THAT THE CIT(A) WHILE A LLOWING RELIEF TO THE ASSESSEE HAS RELIED UPON THE DECISION OF THE HONBLE JURISDI CTIONAL HIGH COURT IN THE CASE OF NATIONAL TEXTILES VS. CIT 249 ITR 125. I N OUR OPINION ON THE FACTS OF THE CASE THE ABOVE DECISION WAS APPLICABLE AND CONSIDERING THE TOTALITY OF THE FACTS AND THE ABOVE DECISION OF THE JURISDICTIO NAL HIGH COURT THE CIT(A) RIGHTLY CANCELLED THE PENALTY. IN VIEW OF THE ABOV E WE UPHOLD THE ORDER OF THE CIT(A) AND DISMISS THE APPEAL OF THE REVENUE. 7 . IN THE RESULT THE APPEAL OF THE REVENUE IS DISMI SSED. ORDER PRONOUNCED IN OPEN COURT ON 31 ST MARCH 2010. SD/- SD/- (BHAVNESH SAINI) JUDICIAL MEMBER (G.D. AGARWAL) VICE-PRESIDENT PLACE : AHMEDABAD DATE : 31-03-2010 ITA.NO.1467/AHD/2007 -5- VK* COPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR ITAT. BY ORDER DR ITAT AHMEDABAD