The ITO, , Ward-8(4),, Ahmedabad v. M/s. Visat Oil Tech Ltd.,, Ahmedabad

ITA 1597/AHD/2010 | 2006-2007
Pronouncement Date: 13-08-2010 | Result: Dismissed

Appeal Details

RSA Number 159720514 RSA 2010
Assessee PAN AAACV6285H
Bench Ahmedabad
Appeal Number ITA 1597/AHD/2010
Duration Of Justice 3 month(s)
Appellant The ITO, , Ward-8(4),, Ahmedabad
Respondent M/s. Visat Oil Tech Ltd.,, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 13-08-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 13-08-2010
Date Of Final Hearing 06-08-2010
Next Hearing Date 06-08-2010
Assessment Year 2006-2007
Appeal Filed On 13-05-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'C' BEFORE SHRI T K SHARMA JUDICIAL MEMBER AND SHRI N S SAINI ACCOUNTANT MEMBER ITA NO.1597/AHD/2010 (ASSESSMENT YEAR:-2006-07) THE INCOME-TAX OFFICER WARD-8(4) AHMEDABAD V/S VISAT OIL TECH LIMITED 2-A SOLA SURYANARAYAN BUNGALOWS NR. SIDDH CHAKRA APARTMENT SABARMATI-KALOL STATE HIGHWAY SABARMATI AHMEDABAD PA NO. AAACV 6285 H [APPELLANT] [RESPONDENT] APPELLANT BY :- SHRI K M MAHESH SR. DR RESPONDENT BY:- SHRI SAKAR SHARMA AR O R D E R PER T K SHARMA (JM): THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER DATED 09-02-2010 OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-XIV AHMEDABAD [THE CIT(A)] FOR ASSESSM ENT YEAR (AY) 2006-07 CANCELING PENALTY OF RS.15 49 129/- LEVIED BY THE AO U/S 271(1)(C) OF THE INCOME-TAX ACT 1961 [THE ACT]. 2 BRIEFLY STATED THE FACTS ARE THE AO LEVIED PENAL TY ON THE BASIS OF DISALLOWANCE OF RS.2 13 35 764/- MADE UNDER CLAU SE (VII) OF EXPLANATION TO SECTION 115JB IN RESPECT OF SICK IN DUSTRIAL UNDERTAKING. DURING THE COURSE OF ASSESSMENT PROCE EDINGS THE AO ASKED THE ASSESSEE TO EXPLAIN AS TO HOW THE COMPANY WAS ELIGIBLE FOR DEDUCTION OF ITS PROFITS FOR THE PURPOSE OF WOR KING OF BOOK PROFIT U/S 115JB UNDER CLAUSE (VII) OF EXPLANATION TO THAT SECTION AND ALSO TO STATE THAT AS TO HOW THE COMPANY HAD BEEN CONSID ERED AS A SICK UNIT FOR THE PURPOSE OF SEC. 115JB OF THE ACT. THE ASSESSEE HOWEVER NEITHER FURNISHED ANY EXPLANATION NOR SUBMITTED ANY DETAILS IN THIS ITA NO.1597/AHD/2010 FOR AY 2006-07 VISAT OIL TECH LTD. 2 REGAD. ON FURTHER VERIFICATION OF THE P&L A/C. AND BALANCE SHEET OF THE ASSESSEE COMPANY THE A.O. FOUND THAT NET WORTH OF ASSESSEE COMPANY WAS EXCEEDING THE ACCUMULATED LOSSES AND TH EREFORE PRIMA FACIE THE COMPANY WAS NOT A SICK INDUSTRIAL COMPANY. THE A.O. FURTHER NOTICED THAT AS PER THE P&L A/C. THE ASSESSEE COMPANY HAD A BOOK PROFIT OF RS.2 13 35 764/- AND IN ITS CO MPUTATION OF TOTAL INCOME THE ASSESSEE FILED A WORKING OF BOOK PROFIT FOR THE PURPOSE OF SECTION 115JB OF THE I.T. ACT WHEREIN THE ENTIRE B OOK PROFIT HAD BEEN DEDUCTED UNDER CLAUSE (VII) OF THE EXPLANATION TO SEC. 115JB OF THE ACT ON THE COUNT THAT THE ASSESSEE COMPANY WAS A SICK UNIT. THE A.R OF THE COMPANY VIDE ORDER SHEET ENTRY DT: 3-7-0 8 WAS REQUESTED BY THE A.O. TO EXPLAIN AS TO HOW THE COMPANY AS ELI GIBLE FOR DEDUCTION OF ITS PROFITS FOR THE PURPOSE OF WORKING OF BOOK PROFIT U/S. 115JB OF THE ACT. AFTER CONSIDERING THE FACTS MENTI ONED ABOVE AND AFTER CONSIDERING THE REPLY OF THE ASSESSEE THE A. 0. DISALLOWED DEDUCTION OF AN AMOUNT OF RS.2 13 35 764/-. IN RESP ONSE TO NOTICE ISSUED U/S. 271(1)(C) OF THE ACT ON 24-11-08 THE A SSESSEE VIDE ITS REPLY DT: 10-02-09 SUBMITTED AS UNDER: - (I) THAT IT HAS NEITHER FURNISHED INACCURATE PARTIC ULARS NOR CONCEALED ANY INCOME. (II) THAT THEY WERE UNDER BONAFIDE BELIEF THAT THE NET WORTH OF THE COMPANY DOES NOT EXCEED THE ACCUMULATED LOSSES AND HENCE THEY MADE A CLAIM UNDER CLAUSE (VII) OF EXPLANATION TO SEC. 115JB. (III) THAT NO PENALTY CAN BE LEVIED U/S. 271(1)(C) IN ITS CASE AS ALL PARTICULARS RELATING TO COMPUTATION OF BOOK PRO FIT ARE ON RECORD AND THAT THE DIFFERENCE IN COMPUTATION AR ISES ON ACCOUNT OF GENUINE DISPUTE RELATING TO THE INTERPRETATION OF PROVISION OF LAW. THE A.O. FURTHER ISSUED A NOTICE U/S. 271(1)(C) ON 4-5-09 IN RESPONSE TO WHICH THERE WAS NO RESPONSE FROM THE AS SESSEE AND HENCE THE A.O. FINALISED THE PROCEEDINGS BY CONSIDE RING THE REPLY DT ITA NO.1597/AHD/2010 FOR AY 2006-07 VISAT OIL TECH LTD. 3 10-2-09. THE A.O. HAS NOT ACCEPTED THE SUBMISSIONS OF THE APPELLANT AND OBSERVED THAT THE ASSESSEE COULD NOT SUBSTANTIA TE ITS CLAIM WITH ANY EVIDENCE REGARDING IT'S SO CALLED BONAFIDE AND GENUINE BELIEF AND MERE STATEMENT OF THE ASSESSEE DOES NOT ESTABLI SH THAT THE CLAIM OF DEDUCTION WAS MADE OUT OF BONAFIDE AND GEN UINE BELIERF. IN FACT THE ASSESSEE WAS FULLY AWARE OF THE FACT THAT IT WAS NOT A SICK INDUSTRIAL COMPANY WITHIN THE MEANING OF SEC. 17(2) OF THE SICK INDUSTRIAL COMPANIES ACT. THE ASSESSEE ALSO DID NOT FILE ANY PETITION BEFORE THE BIFR FOR DECLARING IT HAS A SICK INDUSTR IAL COMPANY AND SECONDLY THE ACCOUNTS OF THE ASSESSEE COMPANY HAVE BEEN AUDITED BY CHARTERED ACCOUNTANT UNDER THE COMPANIES ACT AS WELL AS INCOME TAX ACT AND IN THE AUDIT REPORT FOR THE YEAR UNDER CONSIDERATION IT IS SEEN THAT THE AUDITORS HAVE NEVER POINTED OUT THAT THE COMPANY IS SICK INDUSTRIAL COMPANY. THEREFORE THE A.O OBSERVE D THAT IT CANNOT BE COMPREHENDED AS TO HOW THE ASSESSEE COMPANY HAS FORMED A SO CALLED BONAFIDE AND GENUINE BELIEF FOR ITSELF BEING A SICK COMPANY. THE A.O. PLACED RELIANCE ON THE DECISION OF HON. MA DHYA PRADESH HIGH COURT IN THE CASE OF STEEL INGOTS LTD V. CIT ( 2008) 296 ITR 228 (MP) AND STATED THAT THE RATIO OF DECISION OF M.P. HIGH COURT IS SQUARELY APPLICABLE IN THE CASE OF THE ASSESSEE. HE ACCORDINGLY LEVIED A PENALTY OF RS.15 49 129/-. 3 ON APPEAL THE LEARNED CIT(A) CANCELLED THE PENAL TY. WHILE CANCELING THE PENALTY THE LEARNED CIT(A) OBSERVED T HAT THE ASSESSEE CLAIMED THE DEDUCTION U/S 115JB WHICH WAS NOT ACCEP TED BY THE AO. THE SAID CLAIM WAS MADE AS PER ADVICE OF THE TAX AU DITORS. THEREFORE IT CANNOT BE SAID THAT THERE IS INACCURA CY IN FURNISHING OF ANY PARTICULARS OF INCOME ON THE PART OF THE ASSESS EE. AGGRIEVED BY THE ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL B EFORE US. ITA NO.1597/AHD/2010 FOR AY 2006-07 VISAT OIL TECH LTD. 4 4 AT THE TIME OF HEARING ON BEHALF OF THE REVENUE SHRI K M MAHESH SENIOR DR APPEARED AND RELYING ON THE REASO NING GIVEN BY THE AO IN THE PENALTY ORDER AND ASSESSMENT ORDER C ONTENDED THAT THE PENALTY WAS RIGHTLY LEVIED AND THE CIT(A) IS NO T JUSTIFIED IN CANCELING THE SAME. AS AGAINST THIS THE COUNSEL O F THE ASSESSEE FILED THE REPORT U/S 115JB OF THE ACT COMPUTING THE BOOK PROFIT OF THE COMPANY BY CHARTERED ACCOUNTANT IN PRESCRIBED FORM NO.29B. THE COUNSEL OF THE ASSESSEE SUBMITTED THAT IN THE RETUR N OF INCOME THE ASSESSEE CLAIMED THE DEDUCTION AND COMPUTED THE BOO K PROFIT U/S 115JB ON THE BASIS OF THE AFORESAID REPORT OF CHART ERED ACCOUNTANT. THEREFORE THE CIT(A) IS LEGALLY AND FACTUALLY CORR ECT IN CANCELING THE PENALTY. 5 RIVAL SUBMISSIONS WERE CONSIDERED. WE HAVE CAREFU LLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE REPORT OF THE CHARTERED ACCOUNTANT U/S 115JB OF THE ACT IN FO RM NO.29B. THE SAID REPORT WAS FURNISHED ALONG WITH THE RETURN OF INCOME. IT IS PERTINENT TO NOTE THAT THE ASSESSEE CLAIMED THE DED UCTION U/S 115JB AS PER THE SAID REPORT. IN THE ASSESSMENT ORDER TH E AO TOOK THE VIEW THAT THE ASSESSEE IS NOT ENTITLED TO DEDUCTION UNDER CLAUSE (VII) TO EXPLANATION TO SECTION 115JB BECAUSE THE ASSESSE E IS NOT A SICK INDUSTRIAL UNDERTAKING WITHIN THE MEANING OF SECTI ON 17(2) OF THE SICK INDUSTRIAL COMPANIES ACT. KEEPING IN VIEW THE EXPLANATION OF THE ASSESSEE WE ARE OF THE VIEW THAT THE BOOK PROF IT COMPUTED BY THE ASSESSEE U/S 115JB WAS BONAFIDELY BELIEVED TO B E CORRECT BECAUSE IT WAS AS PER THE AFORESAID REPORT OF THE A SSESSEES CHARTERED ACCOUNTANT. THEREFORE WE ARE OF THE VIEW THAT THE CIT(A) IS LEGALLY AND FACTUALLY CORRECT IN CANCELING THE P ENALTY LEVIED BY THE AO U/S 271(1)(C) OF THE ACT. WE ARE THEREFORE INC LINED TO UPHOLD THE ORDER OF THE CIT(A). ITA NO.1597/AHD/2010 FOR AY 2006-07 VISAT OIL TECH LTD. 5 6 IN THE RESULT THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE COURT TODAY ON 13-08-2010 SD/- SD/- (N S SAINI) ACCOUNTANT MEMBER (T K SHARMA) JUDICIAL MEMBER DATE : 13-08-2010 COPY OF THE ORDER FORWARDED TO: 1. VISAT OIL TECH LIMITED 2-A SOLA SURYANARAYAN B UNGALOWS NR. SIDDH CHAKRA APARTMENT SABARMATI-KALOL STATE HIGHWAY SABARMATI AHMEDABAD 2. THE ITO WARD-8(4) AHMEDABAD 3. CIT CONCERNED 4. CIT(A)-XIV AHMEDABAD 5. THE DR ITAT AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT AHMEDABAD