DCIT, New Delhi v. M/s National Textile Corporation Ltd,, New Delhi

ITA 3325/DEL/2010 | 2006-2007
Pronouncement Date: 04-11-2011 | Result: Dismissed

Appeal Details

RSA Number 332520114 RSA 2010
Bench Delhi
Appeal Number ITA 3325/DEL/2010
Duration Of Justice 1 year(s) 3 month(s) 27 day(s)
Appellant DCIT, New Delhi
Respondent M/s National Textile Corporation Ltd,, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 04-11-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted E
Tribunal Order Date 04-11-2011
Date Of Final Hearing 24-10-2011
Next Hearing Date 24-10-2011
Assessment Year 2006-2007
Appeal Filed On 07-07-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E NEW DELHI) BEFORE G.E. VEERABHADRAPPA HON'BLE PRESIDENT AND SHRI RAJPAL YADAV: HONBLE JUDICIAL MEMBER ITA NO.3325/DEL/2010 ASSESSMENT YEAR: 2006-07 DEPUTY CIT VS. M/S. NATIONAL TEXTILES CIRCLE 13(1) CORPORATION LTD. NEW DELHI. CORE-4 SCOPE COMPEX LODHI ROAD COMPLEX NEW DELHI. (PAN: AACN2847D) (APPELLANT) (RESPONDENT) CROSS OBJ. NO. 284/DEL/2010 ( IN ITA NO.3325/DEL/2010) ASSESSMENT YEAR: 2006-07 M/S. NATIONAL TEXTILES VS. DEPUTY CIT CORPORATION LTD. CIRCLE 13(1) CORE-4 SCOPE COMPEX NEW DELHI. LODHI ROAD COMPLEX NEW DELHI. (PAN: AACN2847D) (CROSS-OBJECTOR) (RESPONDENT) DEPARTMENT BY: SHRI RS NEGI SR .DR RESPONDENT BY: SHRI MUKESH KAPO OR CA DATE OF HEARING : 24.10.2011 DATE OF PRONOUNCEMENT : 04.11.2011 ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF LEARNED CIT(APPEALS) DATED 19.05.2010 PASSED FOR ASSESSMENT YEAR 2006-07. ON RECEIPT OF NOTICE IN THE REVENUES APPEAL ASSESSEE HAS FILED CROSS-OBJECTION 2 BEARING NO.284/DEL/2010. THE SOLITARY GRIEVANCE OF THE REVENUE IS THAT LEARNED CIT(APPEALS) HAS ERRED IN DELETING THE PENA LTY OF RS.2 01 415 IMPOSED UNDER SEC. 271(1)(C) OF THE INCOME-TAX ACT 1961. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS WHOLLY OWNED PUBLIC SECTOR UNDERTAKING. IT IS MANAGING THE AFFAIRS OF S ICK TEXTILE UNDERTAKING TAKEN OVER BY THE GOVERNMENT OF INDIA. ITS SHARES A RE HELD FOR AND ON BEHALF OF THE PRESIDENT OF INDIA. IT HAS FILED ITS RETURN OF INCOME ON 28.11.2006 DECLARING A LOSS OF RS.9 41 18 720. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND AN ASSESSMENT ORDER UNDER S ECTION 143(3) WAS PASSED ON 8.8.2008. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON SCRUTINY OF THE ACCOUNTS IT REVEALED THAT ASSESSEE HAS DEBITED A SUM OF RS.5.98 LACS ON ACCOUNT OF BAD AND DOUBTFUL ADVANCE . ASSESSING OFFICER DIRECTED THE ASSESSEE TO EXPLAIN THE ALLOWABILITY O F SUCH AMOUNT VIDE HIS SHOW-CAUSE NOTICE DATED 14 TH JULY 2008. IN RESPONSE TO THE QUERY OF ASSESSING OFFICER ASSESSEE HAS SUBMITTED ITS REPLY ON 30.7.2008. IT CONTENDED THAT IN FACT IT IS A PROVISION WHICH WAS CLAIMED AS EXPENSES BY MISTAKE. IT SURRENDERED THE AMOUNT FOR TAXATION. IN THIS WAY ASSESSING OFFICER HAS DISALLOWED THE CLAIM OF ASSESSEE AND RE DUCED THE LOSS CLAIMED BY IT. THE INCOME OF THE ASSESSEE HAS BEEN DETERMINED AT A NEGATIVE FIGURE OF 3 RS.9 35 14 280 AS AGAINST RS. 9 41 18 720 DECLARED BY THE ASSESSEE. ASSESSING OFFICER HAS ISSUED A SHOW-CAUSE NOTICE UN DER SEC. 274 READ WITH SECTION 271(1)(C) OF THE ACT INVITING ASSESSEES EX PLANATION AS TO WHY PENALTY BE NOT IMPOSED QUA THE WRONG CLAIM OF RS.5 98 382 MADE BY THE ASSESSEE IN THE RETURN. IN RESPONSE TO THE SHOW-CAU SE NOTICE IT WAS CONTENDED BY THE ASSESSEE THAT ALL THE FACTS WERE D ULY DISCLOSED IN THE AUDITED BALANCE SHEET. IT WAS A PROVISION WHICH INA DVERTENTLY CLAIMED AS EXPENSE IN THE COMPUTATION OF INCOME. THE ASSESSEE POINTED OUT TO THE ASSESSING OFFICER THAT APART FROM THIS ONE ITEM TH ERE WERE OTHER PROVISIONS WHICH WERE RETURNED BACK AND ADDED BY THE ASSESSEE WHILE FILING THE RETURN. IT FAILED TO WRITE BACK THE PROVISION IN RESPECT OF BAD AND DOUBTFUL DEBTS. IT IS A BONA FIDE CLERICAL ERROR. THERE WAS NO INTENTION OF THE ASSESSEE TO WITHHOLD THE INFORMATION OR FURNISH ANY INACCURATE PARTICULA RS. ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE. HE IMPOSED A PENALTY OF RS.2 01 415 ON THE GROUND THAT ASSESSEE FAILED TO P RODUCE ANY MATERIAL WHICH INDICATES THAT IT WAS A BONA FIDE MISTAKE. 3. ON APPEAL LEARNED CIT(APPEALS) HAS DELETED THE PENALTY BY OBSERVING AS UNDER: 4 2.3 I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE AUTHORIZED REPRESENTATIVE OF THE APPELLANT COMPANY. FIRST OF A LL I HAVE LOOKED INTO THE APPELLATE ORDER DATED 21.01.2009 IN APPEAL NO.16/2008-09 FOR ASSESSMENT YEAR 2003-04 PASSED BY MY PREDECESSOR BU T THE FACTS AND CIRCUMSTANCES PREVAILING IN THAT YEAR ARE TOTALLY D ISTINGUISHABLE FROM THE FACTS OF THE PRESENT YEAR AND THIS BEING SO TH E DECISION RENDERED BY MY LEARNED PREDECESSOR IS NOT APPLICABLE HERE. H OWEVER IN MY CONSIDERED OPINION THE FACTS OF THE CASE FOR THE S UBJECT YEAR DO NOT MAKE THE APPELLANT COMPANY EXIGIBLE TO PENALTY FOR CONCEALMENT AS ALL THE FACTS ARE DISCLOSED IN THE RETURN OF INCOME FIL ED WITH THE DEPARTMENT. THE APPELLANT COMPANY IS A PUBLIC SECTO R UNDERTAKING WITH HUGE LOSSES AND SEEMINGLY THERE DOES NOT HAVE ANY REASON AND JUSTIFICATION FOR IT FOR NOT INCLUDING AND ADDING B ACK SUCH A PARTLY AMOUNT OF RS.5 98 382 IN ITS TOTAL INCOME WHICH AG AIN IS A LOSS EXCEPT ON ACCOUNT OF THE CLERICAL ERROR. HENCE I D O NOT SEE ANY JUSTIFICATION ON THE PART OF THE ASSESSING OFFICER TO INVOKE THE PENALTY PROVISIONS AND LEVYING PENALTY FOR CONCEALMENT THRO UGH THE IMPUGNED ORDER. 4. LEARNED DR RELIED UPON THE ORDER OF THE ASSESSIN G OFFICER WHEREAS LEARNED COUNSEL FOR THE ASSESSEE RELIED UPON THE OR DER OF THE LEARNED CIT(APPEALS). HE TOOK US THROUGH PAGE NOS. 27 AND 2 8 OF THE PAPER BOOK WHERE PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED ON 31.3.2006 HAS BEEN PLACED ON RECORD. IN THIS ACCOUNT HE POINTED OUT T HAT ASSESSEE HAS SPECIFICALLY SHOWN THE AMOUNT OF RS.5.98 LACS AGAIN ST THE BAD AND DOUBTFUL 5 ADVANCES. APART FROM THIS ONE ITEM THERE WERE CERT AIN OTHER ITEMS FOR WHICH ASSESSEE HAS MADE THE PROVISIONS BUT THOSE ITEMS HA VE BEEN WRITTEN BACK BY THE ASSESSEE. WITH REGARD TO THE PROVISIONS OF BAD AND DOUBTFUL DEBTS INADVERTENTLY IT WAS NOT WRITTEN BACK BY THE ASSESS EE AND ACCORDING TO THE ASSESSEE IT WAS A BONA FIDE ERROR BECAUSE IT HAS NOT MATERIALLY EFFECT THE ULTIMATE ASSESSABILITY OF ITS INCOME. IT IS SUFFERI NG HUGE LOSSES. THE LOSS WOULD MARGINALLY BE REDUCED. 5. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AN D GONE THROUGH THE RECORD CAREFULLY. WE FIND THAT LEARNED FIRST APPELL ATE AUTHORITY HAS CONSIDERED THE FACTS AND CIRCUMSTANCES IN RIGHT PER SPECTIVE. ACCORDING TO THE LEARNED CIT(APPEALS) THE FACTS OF THE PRESENT YEAR DO NOT INDICATE THAT ASSESSEE DESERVES TO BE VISITED WITH PENALTY. LEARN ED FIRST APPELLATE AUTHORITY HAS RECOGNIZED A POSSIBLE HUMAN ERROR. TH E ASSESSEE HAS BEEN SUFFERING LOSS OF MORE THAN RS. 9 CRORES. THIS SMAL L AMOUNT OF RS.5.98 LACS WOULD NOT MAKE ANY IMPACT ON THE TAXABILITY OF ITS INCOME WHICH SHOW THAT IT WAS NOT A DELIBERATE ATTEMPT OF CLAIMING THE DED UCTION OF PROVISIONS FOR BAD AND DOUBTFUL DEBTS. CONSIDERING ALL THESE ASPEC TS WE DO NOT FIND ANY ERROR IN THE ORDER OF THE LEARNED CIT(APPEALS). 6. THE CROSS-OBJECTION FILED BY THE ASSESSEE IS IN SUPPORT OF LEARNED CIT(APPEALS)S ORDER. SUB-SECTION (4) OF SECTION 25 3 OF THE INCOME-TAX ACT 6 1961 PROVIDES AN OPPORTUNITY TO THE RESPONDENT TO F ILE THE CROSS-OBJECTION ON RECEIPT OF NOTICE IN AN APPEAL FILED BY THE OTHER P ARTY. IN THE CROSS-OBJECTION THE CROSS-OBJECTOR HAS TO SPECIFY AGAINST WHICH PAR T OF THE ORDER IT IS AGGRIEVED. THE ASSESSEE IS UNABLE TO DEMONSTRATE AG AINST WHICH PART OF THE LEARNED CIT(APPEALS)S ORDER IT IS AGGRIEVED. THUS ITS CROSS-OBJECTION IS NOT MAINTAINABLE. HENCE IT IS REJECTED. 7. IN THE RESULT THE APPEAL AS WELL AS CROSS-OBJEC TION ARE DISMISSED. SD/- SD/- ( G.E. VEERABHADRAPPA) ( RAJPAL YAD AV ) PRESIDENT JUDICIAL MEMBER DATED: 04/11/2011 MOHAN LAL COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR