VALSON INDUSTRIES LTD, MUMBAI v. DCIT 8(3), MUMBAI

ITA 4472/MUM/2010 | 2004-2005
Pronouncement Date: 14-09-2011 | Result: Allowed

Appeal Details

RSA Number 447219914 RSA 2010
Assessee PAN AAACV2416J
Bench Mumbai
Appeal Number ITA 4472/MUM/2010
Duration Of Justice 1 year(s) 3 month(s) 13 day(s)
Appellant VALSON INDUSTRIES LTD, MUMBAI
Respondent DCIT 8(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 14-09-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted F
Tribunal Order Date 14-09-2011
Date Of Final Hearing 30-08-2011
Next Hearing Date 30-08-2011
Assessment Year 2004-2005
Appeal Filed On 01-06-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F MUMBAI BEFORE SHRI J. SUDHAKAR REDDY A.M. AND SHRI V. DUR GA RAO J.M. ITA NO. 4472/MUM/2010 ASSESSMENT YEAR : 2004-05 M/S VALSON INDUSTRIES PVT. LTD. APPELLA NT 28 SANJAY BUILDING NO. 6 MITTAL INDUSTRIAL ESTATE MV ROAD ANDHERI (EAST) MUMBAI 400 059 (PAN AAACV2416J) VS. DY. COMMISSIONER OF INCOME-TAX RESPONDENT CIRCLE 8(3) MUMBAI. APPELLANT BY : MR. JAYESH DADIA RESPONDENT BY : MR. SHANTAM BOSE DATE OF HEARING : 06/09/2011 DATE OF PRONOUNCEMENT : 14/09 /2011 ORDER PER V. DURGA RAO J.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGA INST THE ORDER OF CIT(A)-18 MUMBAI PASSED ON 20/04/2010 FOR THE ASSESSMENT YEAR 2004-05 WHEREIN THE ASSESSEE HAS RAISED THE FOLLOWI NG GROUND OF APPEAL:- THE CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THE ACTION OF THE AO IN LEVYING PENALTY OF RS. 77 140/- U/S 271(1)(C) OF THE ACT. THE ACTION IS UNJUSTIFIED AND ARBITRARY AND WITHOUT CONSIDERING THE RATIO LAID DOWN BY THE HONBLE APEX COURT HIGH COURTS AND VARIOUS TRIBUNALS ACROSS THE COUNTRY. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF ART SILK SYNTHETIC YARN. IT HAD 4 UNITS. UNIT NO. 1 AND UNIT NO. 2 ARE AT SILVASA THIRD UNIT AT VAPI AND FOURTH UNIT AT MUMB AI. THE AO NOTICED ITA NO.4472 /MUM/2010 M/S VALSUN INDUSTRIES LTD. 2 THAT THE HO DEPRECIATION OF RS. 12 11 248/- WAS NOT ALLOCATED TO THE UNITS THEREFORE HE ALLOCATED THE HO DEPRECIATION TO ALL UNITS IN PROPORTION TO THE TURNOVER OF THE UNITS TO THE TOTA L TURNOVER. THE ASSESSEE HAD CLAIMED 80IB DEDUCTION ON SILVASA UNIT 1 & 2 OF RS. 28 47 245/- WHICH WAS REDUCED TO RS. 26 32 230/- A FTER ALLOCATION OF HEAD OFFICE DEPRECIATION OF RS. 2 15 015/-. THE AO THEREFORE HELD THAT THE ASSESSEE HAD CLAIMED EXCESS DEPRECIATION F OR THE UNITS I & II RS. 2 98 929/- WHICH IS NOT ALLOWABLE AND THE SAME WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE COMPANY. ON APPEAL TH E CIT(A) CONFIRMED THE ACTION OF THE AO. THEREAFTER THE AO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT ON THE GROUND THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME. THE AO AFTER DISCUSSING THE ISSUE WITH VARIOUS CASE LAWS CONCLUD ED THAT THE ASSESSEE FILED INACCURATE PARTICULARS AND SOUGHT TO EVADE TAX ON RS. 2 15 015/- AND LEVIED PENALTY OF RS. 77 140/- U/S 271(1)(C) OF THE ACT. AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). 3. BEFORE THE CIT(A) THE ASSESSEE SUBMITTED AS UND ER:- A) THAT THE REDUCTION IN 80IB RELIEF IS ENTIRELY DU E TO DIFFERENCE OF OPINION IN ALLOCATION OF DEPRECIATION BETWEEN TH E HO AND ELIGIBLE UNIT. B) THAT THE CLAIM OF 80IB IN THE RETURN WAS CERTIF IED BY STATUTORY AUDITORS IN FORM 10CCB C) THAT THERE IS NO MENS-REA AND MALAFIDE INTENTIO N TO DEFRAUD THE REVENUE. D) THAT THERE IS NO CONCEALMENT NOR FILING OF INACC URATE PARTICULARS. E) THAT THE DISPUTE OF ALLOCATION OF DEPRECIATION CANNOT BE TERMED AS FILING OF INACCURATE PARTICULARS BECAUSE THE AL LOCATION IS ALWAYS ON ESTIMATE BASIS. THIS IS NOT A CASE WHERE THE ASSESSEE HAD CLAIMED WRONG DEPRECIATION OR CLAIMED EXCESS DE PRECIATION. 4. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSE E THE CIT(A) CONFIRMED THE PENALTY LEVIED BY THE AO BY HOLDING T HAT IT IS A CLEAR LAPSE ON THE PART OF THE ASSESSEE NOT TO ALLOCATE T HE DEPRECIATION TO THE 80IB UNIT ALSO THEREFORE THE ASSESSEE IS SQUA RELY COVERED BY (III) ITA NO.4472 /MUM/2010 M/S VALSUN INDUSTRIES LTD. 3 OF EXPLANATION (1) TO SECTION 271(1)(C) OF THE ACT. STILL AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS MADE BEFORE THE CIT(A) AND SUBMITTED THAT THE ACTION OF THE CIT(A) IS UNJUSTIFIED AND ARBITRARY AND WITH OUT CONSIDERING THE RATIO LAID DOWN BY THE HONBLE APEX COURT. HE FURTH ER SUBMITTED THAT THE DISPUTE OF ALLOCATION OF DEPRECIATION CANNOT BE TERMED AS FILING OF INACCURATE PARTICULARS BECAUSE THE ALLOCATION IS A LWAYS ON ESTIMATE BASIS. THIS IS NOT A CASE WHERE THE ASSESSEE HAD CL AIMED WRONG DEPRECIATION OR CLAIMED EXCESS DEPRECIATION LEADIN G TO CONCEALMENT OF PARTICULARS OF ITS INCOME. THE LEARNED COUNSEL RELI ED UPON THE JUDGMENT OF THE APEX COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. [2010] 322 ITR 158 (SC). 6. ON THE OTHER HAND THE LEARNED DR HAS RELIED UPO N THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT SINCE THE ASSESSEE HAS NOT PROPERLY ALLOCATED THE DEPRECIATION AMONG ALL THE U NITS THE AO HAS RIGHTLY ALLOCATED THE SAME AND LEVIED PENALTY U/S 2 71(1)(C) ON THE GROUND THAT THE ASSESSEE MADE A CONSCIOUS ATTEMPT T O EVADE TAXES BY FURNISHING INACCURATE PARTICULARS OF INCOME. HE FUR THER SUBMITTED THAT SIMPLY BECAUSE THE AUDITORS ACCEPTED THE COMPU TATION OF INCOME AND SIGNED THE SAME CANNOT BE SAID THAT IT IS CORRE CT. THE LEARNED DR HAS RELIED UPON THE JUDGMENT OF THE HONBLE DELHI H IGH COURT IN THE CASE OF CIT VS. ZOOM COMMUNICATION P. LTD. [2010] 327 ITR 510(DELH) IN SUPPORT OF REVENUES CASE. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE RECORD AS WELL AS GONE THROUGH THE ORDERS OF THE AU THORITIES BELOW. IT IS OBSERVED THAT SINCE THE ASSESSEE HAS NOT PROPERL Y ALLOCATED THE DEPRECIATION AMONG THE UNITS THE AO ALLOCATED THE SAME AND MADE AN ADDITION OF RS. 2 15 015/- ON THIS COUNT. THEREFOR E AS RIGHTLY SUBMITTED BY THE LEARNED COUNSEL FOR THE ASSESSEE T HAT THIS IS NOT A ITA NO.4472 /MUM/2010 M/S VALSUN INDUSTRIES LTD. 4 CASE WHERE THE ASSESSEE HAD CLAIMED WRONG DEPRECIAT ION OR CLAIMED EXCESS DEPRECIATION LEADING TO CONCEALMENT OF PART ICULARS OF ITS INCOME BUT IT IS A DISPUTE OF ALLOCATION OF DEPRE CIATION THEREFORE CANNOT BE TERMED AS FILING OF INACCURATE PARTICULAR S BECAUSE THE ALLOCATION IS ALWAYS ON ESTIMATE BASIS. IN THIS CON NECTION WE REFER TO THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CA SE OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. [2010] 322 ITR 15 8 (SC) WHEREIN IT WAS HELD 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 HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INC OME OF THE ASSESSEE. SECONDLY THE ASSESSEE MUST HAVE FURNISHE D INACCURATE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTION 271(1)(C) WOULD EMBRACE 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 HEL D GUILTY OF FURNISHING INACCURATE PARTICULARS. IN ORDER TO EXPO SE THE ASSESSEE TO PENALTY UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRE TCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOUN T TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY TH E ASSESSEE BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSE E CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH P ARTICULARS ARE FOUND TO BE INACCURATE THE LIABILITY WOULD ARISE. TO ATTRACT PENALTY THE DETAILS SUPPLIED IN THE RETURN MUST NO T BE ACCURATE NOT EXACT OR CORRECT NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C). A MERE MAKING OF A CLAIM WHICH IS NOT S USTAINABLE IN LAW BY ITSELF WILL NOT AMOUNT TO FURNISHING INACC URATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. S UCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INAC CURATE PARTICULARS. 8. THE CASE LAW RELIED UPON BY THE LEARNED DR IN TH E CASE OF ZOOM COMMUNICATION P. LTD. (SUPRA) IS DISTINGUISHABLE ON FACTS OF THE PRESENT CASE AS IN THAT CASE THE HONBLE DELHI HIG H COURT HELD THAT THE CLAIM FOR DEDUCTION IS NOT A BONAFIDE ONE THER EFORE IT AMOUNTS CONCEALMENT OF INCOME U/S 271(1)(C) OF THE ACT. THE REFORE IN VIEW OF THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF ITA NO.4472 /MUM/2010 M/S VALSUN INDUSTRIES LTD. 5 RELIANCE PETROPRODUCTS LTD. (SUPRA) WE SET ASIDE T HE ORDER OF THE CIT(A) AND HEREBY CANCEL THE PENALTY OF RS. 77 140 /- U/S 271(1)(C) BY THE AO ON ACCOUNT OF ALLOCATION OF DEPRECIATION AMO NG THE UNITS. 9. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED . PRONOUNCED IN THE OPEN COURT ON THIS 14 TH DAY OF SEPTEMBER 2011.. SD/- SD/- (J. SUDHAKAR REDDY) (V. DURGA RAO) ACCOUNTANT MEMBER JUDI CIAL MEMBER MUMBAI DATED: 14 TH SEPTEMBER 2011 KV COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE F BENCH I.T .A.T. MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR I.T.A.T. MUMBAI.