The DCIT, Circle-5,, Ahmedabad v. Rasna Ltd.,, Ahmedabad

ITA 3301/AHD/2008 | 2004-2005
Pronouncement Date: 24-12-2010 | Result: Dismissed

Appeal Details

RSA Number 330120514 RSA 2008
Assessee PAN AABCR5577P
Bench Ahmedabad
Appeal Number ITA 3301/AHD/2008
Duration Of Justice 2 year(s) 2 month(s) 23 day(s)
Appellant The DCIT, Circle-5,, Ahmedabad
Respondent Rasna Ltd.,, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 24-12-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 24-12-2010
Date Of Final Hearing 21-12-2010
Next Hearing Date 21-12-2010
Assessment Year 2004-2005
Appeal Filed On 01-10-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL : B BENCH : AHMEDABAD (BEFORE HONBLE SHRI T.K. SHARMA J.M. & HON' BLE SHRI N.S. SAINI A.M. ) I.T.A. NOS. 3300 & 3301/AHD./2008 ASSESSMENT YEARS : 2003-2004 & 2004-2005 DEPUTY COMMISSIONER OF INCOME TAX -VS.- RAS NA LIMITED AHMEDABAD CIRCLE-5 AHMEDABAD (PAN : AABCR 5577 P) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K. MADHUSUDAN S R. D.R. RESPONDENT BY : SHRI P.F. JAIN O R D E R PER SHRI T.K. SHARMA JUDICIAL MEMBER : THESE TWO APPEALS FILED BY THE REVENUE ARE AGAINST TWO SEPARATE ORDERS OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-XI AHMEDABAD CANCELLING THE PENALTY OF RS.42 20 508/- AND RS.30 90 014/- LEVIED BY THE ASS ESSING OFFICER UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT 1961 FOR THE ASSESSMENT YEARS 2003- 04 & 2004-05 RESPECTIVELY. 2. BRIEF FACTS ARE THAT THE ASSESSEE IS A COMPANY E NGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF SOFT DRINK CONCENTRATE. THE ASSESSEE CLAIMED DEPRECIATION OF RS.86 13 281/- ON NON-COMPETE TERRITORY RIGHTS. THESE NON-COMPETE TER RITORY RIGHTS WERE SHOWN IN THE BLOCK OF ASSETS OF THE COMPANY FOR THE FIRST TIME IN THE ASS ESSMENT YEAR 2002-03 ON WHICH DEPRECIATION OF RS.65 62 500/- WAS CLAIMED BY THE ASSESSEE. ON SCRU TINY OF THE ANNEXURE-C OF CLAUSE 14 OF THE PARTICULARS OF DEPRECIATION ALLOWANCE THE ASSESSIN G OFFICER NOTICED THAT NO DETAILS/ PARTICULARS HAD BEEN FURNISHED FOR THE CLAIM OF DEPRECIATION OF INTANGIBLE ASSETS. ON THIS BASIS THE ASSESSING OFFICER REOPENED THE ASSESSMENT FOR THE ASSESSMENT YEAR 2002-03. THE ASSESSEE FILED SPECIAL LEAVE PETITION NO. 375 OF 2005 BEFORE THE HON'BLE G UJARAT HIGH COURT CHALLENGING THE LEGALITY AND JURISDICTION OF ISSUANCE OF NOTICE UNDER SECTIO N 148 OF THE ACT FOR THE ASSESSMENT YEAR 2002- 03. THE HON'BLE GUJARAT HIGH COURT PASSED THE ORDER DATED 1.2.2005 ADMITTING THE ASSESSEES SLP AND GRANTED INTERIM RELIEF AS PRAYED BY THE ASS ESSEE BY DIRECTING TO STAY IMPLEMENTATION OPERATION OF THE NOTICE AND STAY FURTHER PROCEEDING S FOR THE ASSESSMENT YEAR 2002-03 PENDING FURTHER ORDERS OR TILL DISPOSAL OF THE PETITION. S INCE THE DEPARTMENT HAS NOT ACCEPTED THE 2 ITA NOS . 3300 & 3301-AHD-2008 ASSESSEES CLAIM OF DEPRECIATION IT WAS DISALLOWED IN THE ASSESSMENT YEAR 2003-04 AND ALSO DISALLOWED FOR THE ASSESSMENT YEAR 2004-05. THE ASS ESSING OFFICER ALSO MENTIONED THAT CONSEQUENTIAL EFFECT WOULD BE GIVEN ON THIS ISSUE IF REQUIRED AS PER THE DECISION OF THE HON'BLE HIGH COURT OF GUJARAT. THE ASSESSING OFFICER ALSO O BSERVED THAT NEITHER THE HON'BLE HIGH COURT NOR THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS FINALLY DELETED THE DISALLOWANCE OF DEPRECIATION FOR THE ASSESSMENT YEARS 2003-04 & 200 4-05 AS UNDER :- ASSESSMENT YEAR DEPRECIATION 2003-04 RS.1 14 84 375/- 2004-05 RS. 86 13 381/- 3. SUBSEQUENTLY THE ASSESSING OFFICER LEVIED THE P ENALTY UNDER SECTION 271(1)(C) FOR BOTH THE ASSESSMENT YEARS BY INVOKING THE EXPLANATION 1 TO SECTION 271(1)(C). THE PENALTIES AMOUNTING TO RS.42 20 508/- AND RS.30 90 014/- WERE LEVIED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT 1961 FOR T HE ASSESSMENT YEARS 2003-04 & 2004-05 RESPECTIVELY. 4. ON APPEAL IN THE IMPUGNED ORDER THE LEARNED COM MISSIONER OF INCOME TAX (APPEALS) CANCELLED THE PENALTIES FOR BOTH THE ASSESSMENT YEA RS FOR THE IDENTICAL REASON. FOR THE SAKE OF CONVENIENCE THE REASON GIVEN BY THE LEARNED COMMIS SIONER OF INCOME TAX (APPEALS) IN PARA 2.2.1 FOR CANCELLING THE PENALTY FOR THE ASSESSMENT YEAR 2002-03 READS AS UNDER :- 2.2.1. IT IS SEEN THAT THE APPELLANT HAS GIVEN AL L THE DETAILS WITH REGARD TO DEPRECIATION CLAIM MADE BY IT. HOWEVER T HE A.O. HAS MADE THE ADDITION BASED ON THE DECISION TAKEN FOR AY 2002-03 . AS IT COULD BE SEEN THAT THE ISSUE PERTAINING TO AY 2002-03 IS BEFORE T HE HON'BLE GUJARAT HIGH COURT THEREFORE IT CANNOT BE SAID THAT DISAL LOWANCE MADE BY THE A.O. IS A CONCEALED INCOME. THE DISALLOWANCE MADE B Y THE A.O. IS NOT CONFIRMED BY THE CIT(A.) ALSO SINCE THE MATTER IS T O BE DECIDED BY THE HON'BLE GUJARAT HIGH COURT FOR THE AY 2002-03. THE A.O. IS AWARE OF THE SITUATION HOWEVER BASED ON THE ADDITION MADE FOR THE AY 2002-03 THE ADDITION FOR THE RELEVANT ASSESSMENT YEAR IS MADE P ROTECTIVELY THOUGH THE SAME IS NOT CONFIRMED BY THE CIT(A.) IN VIEW OF THE FACT THAT THE SAID ISSUE IS BEFORE HIGH COURT. THE A.O. HOWEVER HAS LEVIED THE PENALTY ON THE SAID ADDITION. 3 ITA NOS . 3300 & 3301-AHD-2008 AGGRIEVED WITH THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) THE REVENUE IS IN APPEALS BEFORE THE TRIBUNAL. 5. AT THE TIME OF HEARING BEFORE US ON BEHALF OF R EVENUE SHRI K. MADHUSUDAN LD. SR. D.R. APPEARED AND CONTENDED THAT THE ASSESSEE HAS FURNIS HED INACCURATE PARTICULARS OF ITS INCOME THEREFORE BY VIRTUE OF EXPLANATION 1 TO SECTION 27 1(1)(C) PENALTY UNDER SECTION 271(1)(C) IS LEVIABLE. FOR BOTH THE ASSESSMENT YEARS THE ASSESS ING OFFICER HAS LEVIED THE MINIMUM PENALTY THEREFORE LEARNED COMMISSIONER OF INCOME TAX (APPE ALS) OUGHT TO HAVE CONFIRMED THE PENALTY LEVIED BY THE ASSESSING OFFICER UNDER SECTION 271(1 )(C) FOR BOTH THE ASSESSMENT YEARS UNDER APPEALS. 6. ON THE OTHER HAND SHRI P.F. JAIN LD. COUNSEL A PPEARING ON BEHALF OF THE ASSESSEE CONTENDED THAT THE ASSESSEE WAS OF THE BONA FIDE BE LIEF THAT DEPRECIATION ON NON-COMPETE TERRITORY RIGHTS BEING INTANGIBLE ASSETS IS ALLOWABLE. HE FUR THER SUBMITTED THAT THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCT S PVT. LTD. REPORTED IN 322 ITR 158 (SC) IS SQUARELY APPLICABLE TO THE FACTS OF ASSESSEES CASE BECAUSE IN THAT CASE ALSO IT WAS HELD THAT NO PENALTY UNDER SECTION 271(1)(C) IS LEVIABLE WHEN TH E ASSESSEE BONAFIDELY CLAIMED THE DEPRECIATION. HE ACCORDINGLY SUBMITTED THAT IRRESPE CTIVE OF OUTCOME OF THE JUDGMENT OF THE HON'BLE HIGH COURT IN THE ASSESSMENT YEAR 2002-03 IT MAY BE HELD THAT PENALTY UNDER SECTION 271(1)(C) IS NOT LEVIABLE. IN REJOINDER THE LD. COU NSEL OF THE ASSESSEE SUBMITTED THAT SINCE THE ISSUE REGARDING ALLOWANCE OF DEPRECIATION OF NON-COMPETE TERRITORY RIGHTS BEING INTANGIBLE ASSETS IS STILL PENDING BEFORE THE HON'BLE GUJARAT HIGH COURT IN AS SESSEES OWN CASE FOR THE ASSESSMENT YEAR 2002-03 THEREFORE IT MAY BE HELD THAT AFTER MODIF YING BOTH THE ASSESSMENT ORDERS AS PER THE JUDGMENT OF THE HON'BLE GUJARAT HIGH COURT IN THE A SSESSMENT YEAR 2002-03 THE ASSESSING OFFICER MAY CONSIDER THE LEVY OF PENALTY UNDER SECT ION 271(1)(C) AFRESH IN ACCORDANCE WITH LAW. 7. AFTER HEARING BOTH THE SIDES WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT IN BOTH THE ASS ESSMENT ORDERS THE ASSESSING OFFICER HAS MENTIONED THAT DEPARTMENT HAS NOT YET ACCEPTED THE ASSESSEES CLAIM OF DEPRECIATION FOR THE ASSESSMENT YEAR 2002-03 THEREFORE IN BOTH THE ASS ESSMENT YEARS I.E. 2003-04 & 2004-05 IT IS DISALLOWED WITH THE RIDER THAT CONSEQUENTIAL EFFECT WOULD BE GIVEN ON THIS ISSUE IF REQUIRED AS 4 ITA NOS . 3300 & 3301-AHD-2008 PER JUDGMENT OF THE HON'BLE GUJARAT HIGH COURT IN T HE ASSESSMENT YEAR 2002-03. IT IS ALSO PERTINENT TO NOTE THAT FOR BOTH THE ASSESSMENT YEAR S UNDER APPEALS THE ASSESSEE CLAIMED DEPRECIATION ON THE BASIS OF WRITTEN DOWN VALUE IN THE ASSESSMENT YEAR 2002-03/ FOR DISALLOWANCE OF DEPRECIATION PENALTY UNDER SECTION 271(1)(C) IS NOT LEVIABLE AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS PVT. LTD. REPORTED IN 322 ITR 158 (SC). IN THIS JUDGMENT THE HON'BLE SUPREME COURT H ELD THAT WHILE CANCELLING THE PENALTY HELD THAT MAKING INCORRECT CLAIM DOES NOT AMOUNT TO CONC EALMENT OF PARTICULARS OF INCOME. THE HEAD-NOTES OF THE SAID DECISION READS AS UNDER :- A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE INCOME TAX ACT 1961 SUGGESTS THAT IN ORDER TO BE COVERED BY IT THERE H AS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTION 271(1)(C) WOULD EMBRA CE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS F OUND TO BE INCORRECT OR INACCURATE THE ASSESSEE CANNOT BE HELD GUILTY OF F URNISHING INACCURATE PARTICULARS. IN ORDER TO EXPOSE THE ASSESSEE TO PEN ALTY UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION THE PENALTY PROVISION CAN NOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOUN T TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHIN G WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE BECAUSE THAT IS THE ONLY DOC UMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PA RTICULARS ARE FOUND TO BE INACCURATE THE LIABILITY WOULD ARISE. TO ATTRACT P ENALTY THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE NOT EXACT OR CORRECT NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIE D BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FA LSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C). A MER E MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. S UCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS . THEREFORE IN OUR CONSIDERED OPINION THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS PVT. LTD. IS SQUARELY APPLI CABLE TO THE FACTS OF THE ASSESSEES CASE THEREFORE IN OUR OPINION THIS IS NOT A FIT CASE T O LEVY THE PENALTIES UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT 1961 FOR BOTH THE ASSESSMENT YEARS UNDER APPEALS. 7.1. KEEPING IN VIEW THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF RELIANC E PETRO PRODUCTS PVT. LTD. (SUPRA) WE UPHOLD THE ORDERS OF LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) CANCELLING THE PENALTIES OF 5 ITA NOS . 3300 & 3301-AHD-2008 RS.42 20 508/- AND RS.30 90 014/- LEVIED BY THE ASS ESSING OFFICER UNDER SECTION 271(1)(C) OF THE ACT FOR THE ASSESSMENT YEARS 2003-04 AND 2004-05 RE SPECTIVELY. 8. IN THE RESULT BOTH THE APPEALS FILED BY THE DEP ARTMENT ARE DISMISSED. THE ORDER WAS PRONOUNCED IN THE COURT ON 24.12.20 10 SD/- SD/- (N.S. SAINI) (T.K. SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 24/ 12 / 2010 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT(A.) CONCERNED (4) CIT CONCERNED (5) D.R. ITAT AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGI STRAR ITAT AHMEDABAD LAHA/SR.P.S.