WANKSONS CHEMICAL INDS. P.M LTD, MUMBAI v. ITO RG 8(3)(4), MUMBAI

ITA 2381/MUM/2009 | 2005-2006
Pronouncement Date: 15-03-2010 | Result: Allowed

Appeal Details

RSA Number 238119914 RSA 2009
Assessee PAN AAACW0791R
Bench Mumbai
Appeal Number ITA 2381/MUM/2009
Duration Of Justice 11 month(s)
Appellant WANKSONS CHEMICAL INDS. P.M LTD, MUMBAI
Respondent ITO RG 8(3)(4), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 15-03-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted G
Tribunal Order Date 15-03-2010
Assessment Year 2005-2006
Appeal Filed On 15-04-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G MUMBAI BEFORE SHRI. J.SUDHAKAR REDDY (A.M.) AND SHRI. R.S. PADVEKAR (J.M.) ITA NO.2381/MUM/2009 ASSESSMENT YEAR : 2005-2006 M/S. WANKOSONS CHEMICAL INDS. PVT.LTD. 9 SHREEPAL COMPLEX SUREN RD. NR. CINEMAGIC CINEMA ANDHERI (E) MUMBAI 400 093. PAN : AAACW0791R VS. INCOME-TAX OFFICER RANGE-8(3)(4) RM NO.260 2 ND FLR. AAYAKAR BHAVAN M.K. RD. MUMBAI 400 020. (APPLICANT) (RESPONDENT) APPLICANT BY : SHRI F.V. IRANI RESPONDENT BY : SHRI MOHD. USMAN O R D E R PER R.S. PADVEKAR J.M. THIS APPEAL IS FILED BY THE ASSESSEE CHALLENGING T HE IMPUGNED ORDER OF THE LEARNED CIT(A)-XXIX MUMBAI DATED 15.01.2009 FO R THE ASSESSMENT YEAR 2005-2006 AND THIS APPEAL IS ARISING OUT OF THE PEN ALTY ORDER PASSED BY THE ASSESSING OFFICER U/S.271(1)(C) OF THE I.T. ACT DAT ED 26.06.2008. THE ONLY ISSUE WHICH ARISES FOR OUR CONSIDERATION IS WHETHER THE LEARNED CIT(A) JUSTIFIED IN CONFIRMING THE PENALTY OF RS.6 02 189/ - WHICH WAS LEVIED BY THE ASSESSING OFFICER U/S.271(1)(C) OF THE ACT VIDE ORD ER DATED 26.06.2008. 2. THE FACTS WHICH REVEAL FROM THE RECORD ARE AS UN DER. THE ASSESSEE IS MANUFACTURER OF CHEMICALS. THE ASSESSEE COMPANY FI LED ITS RETURN OF INCOME ON 30.10.2005 IN WHICH THE TOTAL INCOME UNDER THE N ORMAL PROVISIONS OF THE ACT WAS DECLARED AT RS. NIL BUT AS PER THE PROVISIO NS OF SECTION 115JB THE ASSESSEE HAS WORKED OUT THE BOOK PROFIT AT RS.85 18 309/-. THE ASSESSEES ASSESSMENT WAS COMPLETED U/S.143(3) OF THE ACT IN WHICH TOTAL INCOME UNDER THE NORMAL PROVISIONS OF THE ACT WAS DETERMIN ED BY ASSESSING OFFICER AT RS.6 72 110/- AS AGAINST DECLARED AT NIL BY THE ASSESSEE. HOWEVER AS THE PROVISIONS OF SECTION 115JB ARE APPLICABLE TO THE A SSESSEES COMPANY THE ITA NO.2381/MUM/2009 A.Y.: 2005-2006 2 TOTAL INCOME OF THE ASSESSEE WAS DETERMINED U/SEC.1 15JB OF THE ACT ACCEPTING THE BOOK PROFIT WORKED OUT AND AS DECLARE D BY THE ASSESSEE OF RS.85 18 309/-. WHILE DETERMINING THE TOTAL INCOM E OF THE ASSESSEE UNDER THE NORMAL PROVISIONS OF THE ACT IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS CLAIMED DEPRECIATION TO THE EXTENT OF RS.5 85 759/- AND RS.10 59 906/- RESPECTIVELY ON THE FACTORY BUILDIN G WHICH WAS UNDER CONSTRUCTION AND PLANT & MACHINERY WHICH WAS UNDER INSTALLATION. THE ASSESSEE ADMITTED THAT THROUGH OVERSIGHT AND BY MIS TAKE THE DEPRECIATION ON THE BUILDING UNDER CONSTRUCTION AND PLANT & MACH INERY WAS CLAIMED. THE ASSESSEE ALSO CONTENDED THAT AS THE ASSESSEES INCO ME IS DETERMINED U/S.115JB AND THERE WAS NO REDUCTION IN THE TAX LIA BILITY DUE TO THE WRONG CLAIM OF THE DEPRECIATION. THE ASSESSING OFFICER INITIATED THE PENALTY PROCEEDING AGAINST THE ASSESSEE FOR WRONGLY CLAIMIN G THE DEPRECIATION ON THE FACTORY BUILDING WHICH WAS UNDER CONSTRUCTION AND P LANT & MACHINERY WHICH WAS UNDER INSTALLATION. THE ASSESSING OFFICER WAS OF THE OPINION THAT IN VIEW OF THE AMENDMENT TO EXPLANATION (4) TO SECT ION 271(1)(C) W.E.F. 01.04.2003 THE ASSESSEE HAS TO FACE PENAL CONSEQUEN CES EVEN IF THERE WAS NOT EFFECT ON THE TAX LIABILITY OF THE ASSESSEE FOR THE WRONG CLAIM OF THE DEPRECIATION. THE ASSESSING OFFICER WAS THE VIEW THAT IF THE ASSESSEES INCOME WOULD HAVE BEEN DETERMINED UNDER THE NORMAL PROVISIONS OF THE ACT THEN HE WOULD HAVE CARRIED FORWARD THE SAID DEPRECI ATION AND CLAIM IN THE FUTURE. FINALLY ASSESSING OFFICER LEVIED THE PENALT Y OF RS. 6 02 189/- U/S.271(1)(C) OF THE ACT. THE ASSESSEE CHALLENGED THE PENALTY LEVIED BY THE ASSESSING OFFICER BEFORE THE CIT(A) BUT WITHOUT SUC CESS. 3. NOW THE ASSESSEE IS IN APPEAL BEFORE US. WE HAV E GIVEN ANXIOUS CONSIDERATION TO THE RIVAL SUBMISSIONS OF THE PARTI ES AND ALSO PERUSED THE RECORD. THE LEARNED COUNSEL FOR THE ASSESSEE MADE TWO FOLD ARGUMENTS. FIRSTLY IT IS ARGUED THAT THE ASSESSEE HAS DISCLOS ED ALL THE PARTICULARS AND FACTS IN THE RETURN OF INCOME IN RESPECT OF THE BUI LDING AS WELL AS PLANT & MACHINERY AND HENCE NO FACTS WERE CONCEALED OR SUPP RESSED BY THE ASSESSEE. THE LEARNED COUNSEL REFERRED TO THE PAP ER BOOK MORE PARTICULARLY ON PG.NO.2 & 3 AND SUBMITTED THAT IN THE WORKING OF THE DEPRECIATION THE ASSESSEE HAS SPECIFIED THAT THE FACTORY BUILDING WA S UNDER CONSTRUCTION AND ITA NO.2381/MUM/2009 A.Y.: 2005-2006 3 PLANT & MACHINERY WAS UNDER INSTALLATION. HE THER EFORE PLEADED THAT ALL THE FACTS WERE PLACED BEFORE THE ASSESSING OFFICER AT THE TIME OF FILING OF THE RETURN ITSELF HENCE IT CANNOT BE SAYS THAT THE ASSE SSEE HAS CONSISTENTLY MADE THE WRONG CLAIM AND WHICH WAS BONAFIDE MISTAKE AND HENCE NO PENALTY IS LEVIABLE U/S.271(1)(C) OF THE ACT. IT IS ALSO ARGUE D THAT ASSESSEE HAS NOT FURNISHED ANY INACCURATE PARTICULAR OF ANY INCOME. THE SECOND LIMB OF THE ARGUMENT OF THE LEARNED COUNSEL IS THAT ASSESSEES TAX LIABILITY IS DETERMINED UNDER THE PROVISION OF SECTION 115JB AND NOT UNDER THE NORMAL PROVISIONS OF THE ACT. IT IS ARGUED THAT THE WRONG CLAIM OF THE DEPRECIATION HAS NO EFFECT IN FINAL DETERMINATION OF THE TAX LIABILITY OF THE ASSESSEE AS SAME IS NOT DETERMINED UNDER THE NORMAL PROVISIONS OF THE A CT AND INCOME DECLARED BY THE ASSESSEE IS FINALLY ACCEPTED BY THE A.O. IT IS ARGUED THAT EFFECT OF WRONG CLAIM OF THE DEPRECIATION IS ONLY WHEN THE TO TAL INCOME OF THE ASSESSEE IS DETERMINED UNDER THE NORMAL PROVISIONS. THE LEARNED COUNSEL ALSO RELIED ON DECISION OF I.T.A.T. DELHI BENCH IN THE CASE OF JAYCO INDIA (P.) LTD. VS. ITO (152 TAXMAN-ITAT 154) AND SUBMITTED TH AT THE PRINCIPLES LAID DOWN BY THE ITAT DELHI BENCH IN THE CASE OF JAYCO I NDIA (P.) LTD.(SUPRA) ARE SQUARELY APPLICABLE TO THE ASSESSEES CASE AND THE PENALTY MAY BE DELETED. WE HAVE ALSO HEARD THE LEARNED D.R. WHO SUPPORTED T HE ORDER OF THE AUTHORITIES BELOW. 4. WE HAVE GIVEN OUR ANXITIOUS CONSIDEATION TO THE RIVAL SUBMISSIONS OF THE PARTIES AS WELL AS PERUSED THE RECORD. IN THIS CASE IT IS NOT IN DISPUTE THAT ASSESEES INCOME IS DETERMINED UNDER MAT PROVI SIONS OF SECTION 115JB OF THE ACT. IT IS ALSO NOT IN DISPUTE THAT ASSESSEE MADE THE WRONG CLAIM OF DEPRECIATION IN RESPECT OF THE FACTORY BUILDING AS WELL AS PLANT & MACHINERY. WHEN THE BUILDING WAS UNDER CONSTRUCTION NOT USED F OR THE BUSINESS THE SAME WAY THE PLANT & MACHINERY WAS UNDER INSTALLATI ON. THE ASSESSEE ITSELF ADMITTED THE WRONG CLAIM. WE FIND FORCE IN THE AR GUMENTS OF THE LEARNED COUNSEL THAT ALL PARTICULARS WERE DISCLOSED BY THE ASSESSEE AS IT IS CLEAR ON THE PERUSAL OF PG. NO.2 OF THE P/BOOK. IT IS SEEN T HAT IN THE DEPRECIATION CHART THOUGH THE DEPRECIATION IS CLAIMED ON THE BUI LDING AND PLANT & MACHINERY THE ASSESSEE HAS CLARIFIED THAT THE BUILD ING WAS UNDER CONSTRUCTION AND PLANT & MACHINERY WAS UNDER INSTAL LATION. APART FROM ITA NO.2381/MUM/2009 A.Y.: 2005-2006 4 THAT ASSESSEES INCOME IS DETERMINED UNDER THE MAT PROVISIONS OF SECTION 115 JB IN THE CASE OF JAYCO INDIA (P.) LTD.(SUPRA). THE ASSESSEE COMPANY WAS DETERMINED U/S.115JB NOT UNDER THE NORMAL PROVI SIONS OF THE ACT ON THE IDENTICAL SET OF FACTS IT IS HELD AS UNDER: IT WAS FOUND THAT IN THE ASSESSMENT YEAR 2001-02 THE PROFITS DECLARED BY THE ASSESSEE UNDER SECTION 115 JB HAD BEEN ACCEPTED BY THE REVENUE. WHATEVER HAD BEEN DO NE BY THE ASSESSING OFFICER IN REDUCING THE ALLOWABLE DEDUCTI ON U/S.80- IB THEREFORE BECAME ACADEMIC. READING OF THE PR OVISIONS OF SECTION 115JB SHOWS THAT THE BOOK PROFITS SHALL BE DEEMED TO BE THE TOTAL INCOME OF THE ASSESSEE. THERE COULD NOT BE ANY CONCEALMENT IN THE INSTANT CASE SINCE WHATEVER HAD BEEN DECLARED BY THE ASSESSEE AS BOOK PROFITS WAS ACCEPT ED BY THE REVENUE. THEREFORE THERE COULD NOT BE ANY COMPLAI NT OF CONCEALMENT. THE DEEMING PROVISION OF SECTION 115J B DEEMING THE BOOK PROFITS AS TOTAL INCOME WILL ALSO APPLY F OR DETERMINING IF THERE WAS ANY CONCEALMENT OR NOT. THE ITAT DEL HI BENCH IN THE CASE OF JINDAL POLYSTER & STEEL LTD. (IT A NO.6 412/(DELHI) OF 1992) HAS TAKEN THE VIEW THAT WHEN THE INCOME IS RE TURNED AS PER PROVISION OF SECTION 115JB WHICH IS ACCEPTED AD DITION TO THE INCOME UNDER THE NORMAL PROVISION OF THE ACT WOULD NOT BE OF ANY SIGNIFICANCE GIVING RISE TO IMPOSITION OF PENAL TY U/S.271(1)(C). EVEN ON THIS GROUND THE PENALTY IM POSED IN THE ASSESSMENT YEAR 2001-2002 WAS CANCELLED. 5. IN THE PRESENT CASE THE FACTS ARE IDENTICAL WIT H THAT OF JAYCO INDIA (P.) LTD.(SUPRA). IN THIS CASE ALSO THE ASSESSEE FILED THE RETURN DECLARING THE TOTAL INCOME AS PER THE PROVISIONS OF SECTION 115JB WHICH WAS ACCEPTED WITHOUT ANY ADJUSTMENT. SO FAR AS WRONG CLAIM OF TH E DEPRECIATION IS CONCERNED IT IS HAVING EFFECT ONLY FOR DETERMINING THE TOTAL INCOME UNDER NORMAL PROVISIONS OF THE ACT. WE ARE THEREFORE O F THE OPINION THAT THE PRINCIPLES LAID DOWN BY THE ITAT DELHI BENCH IN TH E CASE OF JAYCO INDIA (P.) LTD. (SUPRA) ARE SQUARELY APPLICABLE TO THE FACTS O F THE ASSESSEES CASE AND HENCE THE ASSESSING OFFICER WAS NOT JUSTIFIED IN L EVYING THE PENALTY. WE ALLOW THE APPEAL OF THE ASSESSEE FOR THE REASONS ST ATED ABOVE. WE DO NOT CONSIDER IT NECESSARY TO ADJUDICATE ALTERNATE THE A RGUMENT OR PLEA. WE ACCORDINGLY CANCEL THE PENALTY LEVIED BY THE ASSES SING OFFICER U/S.271(1)(C) OF THE ACT. 6. IN THE RESULT ASSESSEES APPEAL IS ALLOWED. ITA NO.2381/MUM/2009 A.Y.: 2005-2006 5 ORDER PRONOUNCED ON THIS DAY OF 15 TH MARCH 2010. SD/- (J. SUDHAKAR REDDY) (ACCOUNTANT MEMBER) SD/- (R.S. PADVEKAR) (JUDICIAL MEMBER) MUMBAI DATED 15 TH MARCH 2010. JANHAVI COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)- XXIX MUMBAI 4. COMMISSIONER OF INCOME TAX CITY- XXIX MUMBAI 5. DEPARTMENTAL REPRESENTATIVE BENCH G MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR ITAT MUMBAI ITA NO.2381/MUM/2009 A.Y.: 2005-2006 6 DATE INITIALS 1. DRAFT DICTATED ON 04-03-10 PS 2. DRAFT PLACED BEFORE AUTHOR 05-03-10 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER AM/JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/J M 5. APPROVED DRAFT COMES TO THE SR. PS PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER