DCIT.CENT. CIR 22, MUMBAI v. DEVELOPMENT CREDIT BANK LTD, MUMBAI

ITA 3062/MUM/2010 | 1999-2000
Pronouncement Date: 31-03-2011 | Result: Dismissed

Appeal Details

RSA Number 306219914 RSA 2010
Assessee PAN AAACD1461F
Bench Mumbai
Appeal Number ITA 3062/MUM/2010
Duration Of Justice 11 month(s) 11 day(s)
Appellant DCIT.CENT. CIR 22, MUMBAI
Respondent DEVELOPMENT CREDIT BANK LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 31-03-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 31-03-2011
Assessment Year 1999-2000
Appeal Filed On 19-04-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: MUMBAI BEFORE SHRI R.S. PADVEKAR JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH ACCOUNTANT MEMBER ITA NOS.3062 3061 AND 3064/MUM/2010 (ASSESSMENT YEARS: 1999-2000 2000-01 AND 2001-02) THE DY. COMMISSIONER OF INCOME-TAX CENTRAL CIR-22 ROOM NO.415 4TH FLOOR AAYAKAR BHAVAN M.K. ROAD MUMBAI -400 020 .REVENUE VS M/S. DEVELOPMENT CREDIT BANK LTD. 204 RAHEJA CENTRE NARIMAN POINT MUMBAI -400 021 .ASSESSEE PAN: AAACD 1461 F ASSESSEE BY: SHRI SATISH R. MODY REVENUE BY: SHRI JITENDRA YADAV O R D E R PER R.S. PADVEKAR JM THESE BATCH OF THREE APPEALS ARE FILED BY THE REVEN UE CHALLENGING THE IMPUGNED RESPECTIVE ORDERS OF THE LD. CIT (A)-1 9 MUMBAI AND THESE APPEALS PERTAINS TO THE ASSESSMENT YEARS 1999-2000 2000-01 AND 2001- 02. ALL THESE APPEALS ARE ARISING OUT OF THE PENAL TY LEVIED BY THE A.O. U/S.271(1)(C) WHICH WAS DELETED BY THE LD. CIT (A). THE FACTS ARE IDENTICAL AND HENCE THESE APPEALS ARE DISPOSED OFF BY THIS COMMON ORDER. 2. WE FIRST TAKE APPEAL FOR THE A.Y. 1999-2000 BEIN G ITA NO.3062 OF 2010. ITA NOS.3062 3061 AND 3064/MUM/2010 M/S. DEVELOPMENT CREDIT BANK LTD. 2 3. IN THIS CASE THE ASSESSMENT WAS COMPLETED U/S.14 3(3) ON 25.2.2002 DETERMINING THE TOTAL INCOME OF THE ASSES SEE OF ` 24 20 19 242/- AS AGAINST DECLARED BY THE ASSESSEE AS AGAINST DECLARED INCOME OF ` 2 08 85 930/-. THE A.O. MADE THE ADDITIONS AS UNDE R:- (I) DISALLOWANCE OF DEPRECIATION CLAIM ON THE LEASE TRANSACTIONS FOR A.YS. 1998-99 1999-2000 ` 14 56 90 735/- (II) DISALLOWED THE ASSESSEES CLAIM OF COMPENSATION ` 3 15 900/- --------------------- TOTAL ` 14 60 06 635/- ============== 4. THE A.O. DISALLOWED THE ASSESSEES CLAIM OF COMP ENSATION OF ` 39 00 000/- PAID DURING THE PREVIOUS YEAR 1995-96 F OR TAKING BACK THE POSSESSION OF THE PROPERTY WHICH WAS CAPITALIZED IN THE BOOKS. THE A.O. HELD THAT THE SUCH COMPENSATION PAID DOES NOT AMOUN T TO ACQUISITION OF ANY CAPITAL ASSET AND THEREFORE NO DEPRECIATION C OULD BE ALLOWED. IN THE APPEAL BEFORE THE LD. CIT (A) THE ADDITION IN RESP ECT OF DEPRECIATION OF LEASE ASSETS IN A.Y. 1996-97 AND 1997-98 WAS DELETE D HOWEVER THE CIT (A) CONFIRMED THE DISALLOWANCE FOR THE A.YS. 1998-9 9 AND 1999-2000. WITH REGARD TO THE SALE OF THE LEASE BACK TRANSACTI ON WITH ANDHRA PRADESH ELECTRICITY BOARD (APSEB) AND SIMCO AMOUNTI NG TO ` 5 89 37 184/- BOTH THE A.O. AND LD. CIT (A) HELD THAT THOSE WERE FINANCIAL TRANSACTIONS AND NO DEPRECIATION WAS ALL OWABLE. THE A.O. INITIATED THE PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT AND HELD THAT THE SAID TRANSACTION CLAIMED BY THE ASSESSEE WAS WI TH A CLEAR INTENT TO ADDITIONAL DEDUCTION OF DEPRECIATION WHICH WAS NOT DUE AND TO EVADE TAX. TO THE EXTENT OF ` 5 89 37 184/- THE A.O. HELD THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS BY CLAIMING BOGUS DEPRECIATION. SO FAR AS THE DEPRECIATION ON COMPENSATION IS CONCERNED T HE A.O. OBSERVED THAT THERE IS NO DISPUTE THAT AMOUNT OF ` 39 LAKHS WAS PAID TO TAKE BACK THE POSSESSION OF OWN PROPERTY BUT CERTAINLY SUC H COMPENSATION DOES ITA NOS.3062 3061 AND 3064/MUM/2010 M/S. DEVELOPMENT CREDIT BANK LTD. 3 NOT GO TO ENHANCE THE VALUE OF EXISTING ASSET OR AC QUISITION OF ANY NEW CAPITAL ASSET. THE A.O. FURTHER HELD THAT DEPREC IATION CLAIMED TO THE EXTENT OF ` ` 3 15 000/- WAS NOT LEGALLY DUE TO IT AND HENCE TO T HAT EXTENT THE ASSESSEE HAS FURNISHED THE INACCURATE PARTICULA RS OF INCOME OF ` 3 15 000/-. THE A.O. THEREFORE LEVIED THE PENALT Y ON BOTH THE AMOUNTS U/S.271(1)(C) OF THE ACT TO THE EXTENT OF ` 2 07 37 580/-. 5. IN THE SAME WAY IN THE A.Y. 2000-01 ON IDENTIC AL SET OF FACTS AND REASON THE A.O. LEVIED THE PENALTY ON THE FOLLOWING AMOUNTS:- (I) DEPRECIATION ON COMPENSATION ` 2 84 310/- (II) DEPRECIATION ON LEASE ASSET ` 4 42 02 989/- --------------------- TOTAL ` 4 44 87 199/- ============== AND IN THE A.Y. 2001-02 THE A.O. LEVIED THE PENAL TY ON THE FOLLOWING ITEMS:- (I) DEPRECIATION ON COMPENSATION OF ` 2 55 880/- (II) DEPRECIATION ON LEASE ASSET ` 3 34 50 815/- --------------------- TOTAL ` 3 37 06 695/- ============== 6. THE A.O. THEREFORE LEVIED THE PENALTY OF ` 1 71 27 571/- IN THE A.Y. 2000-01 AND ` 1 33 30 999/- IN THE A.Y. 2001-02. THE ASSESSEE CHALLENGED THE SAID PENALTY ORDERS BEFORE THE LD. C IT (A). THE LD. CIT (A) FOLLOWED HIS PREDECESSORS ORDER FOR THE A.Y. 1998- 99 WHICH WAS CONFIRMED BY THE ITAT AND DELETED THE PENALTY. NOW THE REVENUE IS IN APPEAL BEFORE US IN ALL THE THREE ASSESSMENT YEARS. 7. WE HAVE HEARD THE PARTIES. THE LD. COUNSEL SUBM ITS THAT ON IDENTICAL SET OF FACTS THE PENALTY LEVIED BY THE A .O. IS DELETED BY THE CIT (A) AND ORDER OF THE CIT (A) WAS CONFIRMED BY THE T RIBUNAL DISMISSING THE APPEALS FILED BY THE REVENUE. THE LD. COUNSEL FIL ED THE COPY OF THE ITA NOS.3062 3061 AND 3064/MUM/2010 M/S. DEVELOPMENT CREDIT BANK LTD. 4 TRIBUNAL ORDER IN ASSESSEES OWN CASE FOR THE A.Y. 1998-99 IN ITA NO.183/MUM/2009 DATED 23.10.2009. WE HAVE ALSO HEA RD THE LD. D.R. WE HAVE PERUSED THE ORDER. THERE SHOULD NOT BE ANY QUARREL THAT THE FACTS ARE IDENTICAL IN THE A.Y. 1998-99 AND THE TRI BUNAL DISMISSED THE APPEAL FIELD BY THE DEPARTMENT AND OPERATIVE PART O F THE TRIBUNAL ORDER READS AS UNDER:- WE FIND THAT ALL THE MATERIAL FACTS HAVE BEEN DISC LOSED BY THE ASSESSEE AT THE TIME OF ASSESSMENT BEFORE THE A.O. THE CIT (A) HAS RECORDED THE FINDING THAT THE ASSESSEE HAS DISCLOSE D ALL RELEVANT DATA AND EXPLANATION / INFORMATION AND THAT THE DAT A AND INFORMATION FURNISHED BY THE ASSESSEE HAS BEEN BONA FIDE AND THERE HAS BEEN NO FINDING OF THE A.O. TO THE CONTRARY. T HE CIT (A) HAS FURTHER RECORDED THAT THE DOCUMENTS FURNISHED ARE C USTOMARY AND CREDIBLE. THE A.O. WAS DISALLOWED DEPRECIATION ON THE ASSETS LEASED OUT BY THE ASSESSEE TO CIMCO AND APSEB HOLDING THE SAME TO BE FINANCE TRANSACTIONS. THE EXISTENCE OF THE ASSETS ON WHICH DEPRECIATION WAS CLAIMED BY THE ASSESSEE HAS NOT B EEN DOUBTED BY THE A.O. THE ASSESSEE IS A BANK WHICH IS SUBJECT TO THE REGULATORY SUPERVISION OF THE RBI AS WELL AS ITS STATUTORY AUD ITORS. THE CIT (A) HAS RECORDED THAT THE A.O. HAS NOT FOUND ANY INFIRM ITY IN THE DISCLOSURES OF THE ASSESSEE SO AS TO ESTABLISH ANY INSTANCE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME OR ANY NEGLECT OR WILLFUL OMISSION ON THE PART OF THE ASSESSEE. THE CIT (A) HAS FURTHER RECORDED THAT THERE WAS ALSO NO EVIDENCE OF ANY DIS HONEST OR CONTUMACIOUS CONDUCT ON THE PART OF THE ASSESSEE S O AS TO ATTRACT THE LEVY OF PENALTY. THE CIT (A) HAS CONCLUDED THA T IT IS A CASE WHERE THE CONTENTIONS URGED BY THE ASSESSEE MAY NOT HAVE BEEN FOUND TO BE ACCEPTABLE BUT THERE DOES NOT APPEAR T O BE ANYTHING TO SUGGEST THAT IT REFLECTED INACCURATE PARTICULARS OF INCOME OF THE ASSESSEE OR THE CONCEALMENT OF ITS TRUE PARTICULARS OF INCOME. THE CIT (A) HAS CITED CERTAIN JUDICIAL PRONOUNCEMENTS B Y THE HONBLE COURTS HOLDING THAT IF THE FACTS WERE DISCLOSED BU T THE CLAIM FOR ITA NOS.3062 3061 AND 3064/MUM/2010 M/S. DEVELOPMENT CREDIT BANK LTD. 5 DEDUCTION WAS FOUND ERRONEOUS THERE WAS NO CONCEAL MENT OF INCOME AND PENALTY COULD NOT BE IMPOSED. WE FIND T HAT THIS A CLEAR CASE OF HONEST DIFFERENCE OF OPINION BETWEEN THE AS SESSEE AND THE DEPARTMENT WITH REGARD TO THE ALLOWABILITY OF CERTA IN CLAIM OF DEDUCTION MADE BY THE ASSESSEE. THERE IS NO MATERI AL BROUGHT ON RECORD ON BEHALF OF THE REVENUE TO SUGGEST THAT THE EXPLANATION FILED BY THE ASSESSEE WAS NOT BONAFIDE. THE EXPLANATION OF THE ASSESSEE IS NOT WITHOUT ANY BASIS AND WAS SUBSTANTIATED AND THEREFORE COULD BE CONSIDERED AS BONAFIDE AND ACCORDINGLY ACC EPTABLE. IN THESE FACTS OF THE CASE WE HOLD THAT THE PROVISION OF EXPLANATION- 1 TO SECTION 271(1)(C) OF THE ACT DOES NOT APPLY TO T HE CASE OF THE ASSESSEE. IN THIS VIEW OF THE MATTER WE CONFIRM TH E ORDER OF THE CIT (A) THAT THE ASSESSEES CLAIMS WERE NOT FRIVOLOUS O R ILL FOUND AND HAVE BEEN REJECTED DUE TO A DIFFERENCE OF OPINION A ND IN CANCELING THE PENALTY / IMPOSED ON THE ASSESSEE UNDER SECTION 271(1)(C) OF THE ACT. ACCORDINGLY THE GROUND OF APPEAL OF THE REVE NUE IS DISMISSED. 8. AS FACTS ARE IDENTICAL IN ALL THE THREE YEARS W E THEREFORE FOLLOWING THE ORDER OF THE TRIBUNAL IN THE ASSESSEES OWN CAS E CONFIRM THE ORDERS OF THE LD. CIT (A) AND DISMISS ALL THE APPEALS FILED B Y THE REVENUE. 9. IN THE RESULT ALL THE APPEALS OF THE REVENUE AR E DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 3 1ST MARCH 2011. SD/- SD/- ( B. RAMAKOTAIAH) ACCOUNTANT MEMBER ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI DATE: 31ST MARCH 2011 COPY TO:- ITA NOS.3062 3061 AND 3064/MUM/2010 M/S. DEVELOPMENT CREDIT BANK LTD. 6 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) 39 MUMBAI. 4) THE CIT CENTRAL-II MUMBAI. 5) THE D.R. D BENCH MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T. MUMBAI *CHAVAN ITA NOS.3062 3061 AND 3064/MUM/2010 M/S. DEVELOPMENT CREDIT BANK LTD. 7 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 31.03.2011 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 31.03.2011 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER