DCIT, Hisar v. M/s United Textiles Ltd., Hisar

ITA 50/DEL/2010 | 2006-2007
Pronouncement Date: 30-04-2010 | Result: Dismissed

Appeal Details

RSA Number 5020114 RSA 2010
Assessee PAN AAACU2014M
Bench Delhi
Appeal Number ITA 50/DEL/2010
Duration Of Justice 3 month(s) 25 day(s)
Appellant DCIT, Hisar
Respondent M/s United Textiles Ltd., Hisar
Appeal Type Income Tax Appeal
Pronouncement Date 30-04-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted H
Tribunal Order Date 30-04-2010
Date Of Final Hearing 15-04-2010
Next Hearing Date 15-04-2010
Assessment Year 2006-2007
Appeal Filed On 05-01-2010
Judgment Text
ITA NO. 50/DEL/2010 A.Y. 2006-07 1 IN THE INCOMETAX APPELATE TRIBUNAL DELHI BENCH H: NEW DELHI BEFORE SHRI C.L. SETHI JUDICIAL MEMBER & SHRI SHAMIM YAHYA ACCOUNTANT MEMBER ITA NO. 50/DEL/2010 A.Y. : 2006-07 DY. COMMISSIONER OF INCOME TAX VS. M/S UNITED TEXTILES LTD. HISAR 7 TH KM BARWALA ROAD HISAR (PAN : AAACU2014M) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AMIT SODY CA DEPARTMENT BY : SHRI N.K. CHAND DR O R D E R PER SHAMIM YAHYA AM : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 23.10.20 09 AND PERTAINS TO ASSESSMENT YEAR 2006-07. 2. THE ISSUE RAISED IS THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DELETING THE PENALTY OF RS. 10 38 245/- IM POSED U/S 271(1)(C) OF THE IT ACT. 3. IN THIS CASE DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE WAS ASKED TO FURNISH THE STATEMENT OF COMPUTATION OF INCOME FOR THE ASSESSMENT YEAR 2006-07 ITA NO. 50/DEL/2010 A.Y. 2006-07 2 ALONGWITH COMPUTATION OF INCOME FOR THE LAST YEAR. IN RESPONSE ASSESSEE VIDE LETTER DATED 14.112.2008 SUBMITTED AS UNDER:- STATEMENT OF COMPUTATION OF INCOME FOR THE RELEVAN T ASSESSMENT YEAR IS ENCLOSED. PURSUANT TO RECTIFIC ATION ORDER PASSED US/ 154 OF THE IT ACT FOR THE ASSESSMENT YEAR 2003 -04 VIDE ORDER DATED 9.3.2006 BUSINESS LOSS WAS REDUCED BY RS. 18 319/- AND CARRIED FORWARD DEPRECIATION WAS REDUCED BY (RS. 46 980 + 1 2 041 = 59 021/-). THE B/F LOSS SHOULD HAVE BEEN TAKEN AFTE R SETTING OF THE INCOME FOR ASSESSMENT YEAR 2005-06 OF RS. 30 84 56 0/- AND AFTER REDUCING THE LOSS BY RS. 18 319/ BUT INADVERTENTLY THE SAME WAS WRONGLY TAKEN BEFORE SETTING OFF THE LOSS AGAINST I NCOME FROM ASSESSMENT YEAR 2005-06 OF RS. 30 84 507/-. BUT AF TER ADJUSTMENT RECTIFICATION PASSED U/S 154 FOR THE ASSESSMENT YEA R 2003-04. THE STATEMENT OF REVISED COMPUTATION OF INCOME IS F URNISHED YOU ARE THEREFORE REQUESTED TO CONSIDER THE RE VISED COMPUTATION AND RECTIFY THE MISTAKE APPARENT FROM RECORD OF THE RETURN PROCESSED US/ 143(1). 4. AFTER REVIEWING THE ABOVE SUBMISSION THE ASSE SSING OFFICER OBSERVED THAT IT WAS SEEN THAT EXCESS CARRIED FORWARD LOSS HAS BE EN CLAIMED DURING THE YEAR AND THE SAME IS REDUCED FROM RS. 71 94 381/- TO RS/. 4 1 28 193/- AND FOR THIS PENALTY PROCEEDINGS FOR FURNISHING OF INACCURATE PARTICULAR S WITH REGARD TO CARRY FORWARD LOSS AND DEPRECATION WAS INITIATED. ASSESSEES EX PLANATION IN THIS REGARD WAS THAT THERE WAS A CLERICAL ERROR WHICH WAS NOT ACCEPTED BY THE ASSESSING OFFICER . ITA NO. 50/DEL/2010 A.Y. 2006-07 3 ASSESSING OFFICER HELD THAT ASSESSEE HAD DELIBERAT ELY FURNISHED WRONG PARTICULARS WHICH REDUCED INCIDENCE OF TAXATION AND HENCE ELEME NT OF MENSREA IS CLEAR CUT EXISTENT IN THE INSTANT CASE. HE PROCEEDED TO LEVY OF PENALTY OF RS. 10 38 245/-. 5. BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEA LS) ASSESSEE SUBMITTED THAT THERE WAS A CLERICAL ERROR IN TAKING THE BROUG HT FORWARD LOSS. THE DETAILED POSITION OF BROUGHT FORWARD LOSS AND UNABSORBED DE PRECIATION WAS FURNISHED. IT WAS FURTHER SUBMITTED THAT PURSUANT TO RECTIFICATION ORDER PASSED U/S 154 OF IT ACT FOR ASSESSMENT YEAR 2003-04 VIDE ORDER DATED 9.3.2006 BUSINESS LOSS WAS REDUCED BY RS. 18319/- AND CARRIED FORWARD DEPRECA TION WAS REDUCED BY RS. 59021 (RS. 46980 + RS. 12041/-). THE BROUGHT FORWARD LOSS POSITION AS ON 1.4.2005 S HOULD HAVE BEEN TAKEN AFTER SETTING OFF THE INCOME FOR THE ASSESSMENT YEA R 2005-06 AND AFTER SETTING OFF THE EFFECT OF RECTIFICATION ORDER U/S 154 OF THE IT ACT 1961. BUT INADVERTENTLY THE SAME WAS TAKEN BEFORE SETTING OFF THE PROFIT FOR TH E YEAR ENDED 31.3.2005 BUT AFTER ADJUSTMENT OF RECTIFICATION ORDER PASSED U/S 1 54. THE MISTAKE COULD NOT HAVE OCCURRED IF THE EFFECT OF RECTIFICATION ORDER PASSED U/S 154 OF THE IT ACT 1961 COULD NOT HAVE BEEN TAKEN. FROM THE TABLE ENUME4RATED ABOVE THE BROUGHT FORW ARD LOSSES WAS INADVERTENTLY TAKEN FOR THE ASSESSMENT YEAR 2003-04 BEFORE SETTING OFF THE PROFIT FOR THE YEAR ENDED 31.3.2005 BUT AFTER RECTIFICATI ON EFFECT OF RS. 19319/- FOR THE ASSESSMENT YEAR 2003-04. AS THE RETURNS ARE E-FILE D IN SOFTWARE IN ASSESSES CASE THE RETURN IS FILED IN COMPUTAX SOFATWARE THE BROU GHT FORWARD FIGURES OF THE LAST YEAR ARE AUTOMATICALLY TAKEN IN SYSTEM. BUT SINCE THE EFFECT OF THE RECTIFICATION WAS TO BE TAKEN FOR ASSESSMENT YEAR 2003-04 AS PER RECTIFICATION ORDER PASSED ON 9.3.2006 OF RS. 18319/- THE SAME WAS MANUALLY FEED ED INADVERTENTLY AFTER TAKING ITA NO. 50/DEL/2010 A.Y. 2006-07 4 THE RECTIFICATION EFFECT BUT THE BROUGHT FORWARD LOSSES WAS TAKEN BEFORE ADJUSTMENT OF PROFIT FOR THE YEAR ENDED 31.3.2005. H ENCE THERE WAS A CLERICAL MISTAKE. 5.1 IT WAS FURTHER CLAIMED THAT THE MISTAKE WAS ON LY IN TAKING THE BROUGHT FORWARD LOSS AND THAT TOO WAS NOT MADE INTENTIONALL Y. HOWEVER IT WAS SUBMITTED THAT ASSESSEE HAD SUO-MOTU FILED THE REVISED COMPUT ATION OF INCOME TAKING INTO ACCOUNT THE NET BROUGHT FORWARD LOSS. IT WAS FURTH ER SUBMITTED THAT THE REVISED CLAIM WOULD BE VALID IN VIEW OF THE JUDGEMENT IN GOE TZE INDIA VS. COMMISSIONER OF INCOME TAX 284 ITR 323. IT WAS FURTHER CLAIMED THAT A MERE OMISSION AND NEGLIGENCE WOULD NOT CONSTITUTE A DELIBERATE ACT. F OR THIS PURPOSE A REFERENCE WAS MADE TO A CASE LAW IN THE CASE OF DILIP N. SHR OFF VS. COMMISSIONER OF INCOME TAX 2007 161 TAXMANN 222 (SC). IT WAS FURTHER CLA IMED THAT THERE WERE NUMBER OF JUDGEMENTS WHEREIN IT HAS BEEN HELD THAT A MISTA KE COMMITTED IF FOUND A BONAFIDE MISTAKE IN CLAIM OF DEDUCTION/EXEMPTION/AL LOWANCE FOUND DURING THE ASSESSMENT PROCEEDINGS WOULD NOT RISE TO QUESTION O F LEVY OF PENALTY U/S 271(1)(C). 5.2 CONSIDERING THE SUBMISSIONS LD. COMMISSIONER OF INCOME TAX (APPEALS) HELD AS UNDER:- THE ISSUE INVOLVED AND THE SUBMISSIONS MADE BY TH E APPELLANT HAVE BEEN CONSIDERED. IN VIEW OF THE FACTS AND CIRCUMST ANCES IT APPEARS TO BE A CASE OF CLERICAL MISTAKE IN THE SENSE THAT THE FIGURES OF BOTH THE ITEMS I.E. ACCUMULATED UNABSORBED DEPRECIATION AND ACCUMULATED UNABSORBED BUSINESS LOSS UPTO THE ASSESSMENT YEAR 2004-05 WERE NOT SET OFF AGAINST THE BUSINESS PROFITS OF THE ASS ESSMENT YEAR 2005- 06 AND WERE CARRIED FORWARD NEXT TO BE SET OFF AGA INST THE BUSINESS ITA NO. 50/DEL/2010 A.Y. 2006-07 5 PROFITS OF THE ASSESSMENT YEAR 2006-07. THERE DOES NOT APPEAR TO BE ANY MALAFIDE ON THE PART OF THE APPELLANT. APART FROM THE AFORESAID THE RATIO OF THE PRONOUNCEMENT OF THE HONBEL SURPE ME COURT IN THE CASE OF GOETZE INDIA VS. C.I.T. 284 ITR 323 CITED ABOVE BY THE APPELLANT IS APPLICABLE IN THE CASE OF THE APPELLAN T. THEREFORE THE PENALTY LEVIED BY THE ASSESSING OFFICER IS DELETED AND THE APPEAL OF THE APPELLANT IS ALLOWED. 6. AGAINST THIS ORDER THE REVENUE IS IN APPEAL BEFO RE US. 7. WE HAVE HEARD BOTH THE COUNSELS AND PERUSED THE RECORDS. LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE CAS E LAW OF GOETZE INDIA VS. C.I.T. CITED ABOVE IS NOT APPLICABLE IN THE FACTS O F THE CASE. LD. DEPARTMENTAL REPRESENTATIVE CLAIMED THAT IT WAS A CLEAR CASE OF CONCEALMENT AND FURNISHING OF INACCURATE PARTICULARS AND HE CLAIMED THAT HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF C.I.T. VS. ESCORTS FINANCE LTD. 183 TAXMAN 453 IS APPLICABLE. HENCE HE ARGUNED THAT THE LEVY OF PENALTY IS QUITE CORRECT I N THE FACTS OF THE CASE. 7.1 LD. AUTHORISED REPRESENTATIVE OF THE ASSESSEE ON THE OTHER HAND SUBMITTED THAT IT WAS CLEARLY A CLERICAL ERROR AND DURING THE COURSE OF ASSESSMENT THE ASSESSEE REALIZED THE SAME AND HE DULY FIND A REVISED COMPUTATION. SO THERE IS NO CASE OF FURNISHING OF INACCURATE PARTICULARS OR CONCEALMENT ON THE PART OF THE ASSESSEE. HE FURTHER CLAIMED THAT THE CORRECT FIGURE OF BROUGHT FORWARD LOSS AND DEPRECIATION WERE ALSO DULY DISCLOSED IN THE AU DIT REPORT SUBMITTED ALONGWITH THE RETURN. HENCE HE CLAIMED THAT IT WAS A MERE CLERICAL ERROR AND ASSESSEE NEVER HAD ANY CONTUMACIOUS INTENTION. 7.2 WE HAVE HEARD BOTH THE COUNSELS AND PERUSED THE RECORDS. WE FIND THAT SECTION 271(1(C) OF THE ACT POSTULATES IMPOSITION O F PENALTY FOR FURNISHING OF ITA NO. 50/DEL/2010 A.Y. 2006-07 6 INACCURATE PARTICULARS AND CONCEALMENT OF INCOME. IN THIS CASE WE FIND THAT THE ASSESSING OFFICER ASKED FOR DETAIL OF COMPUTATION OF INCOME FOR PRESENT AS WELL AS PRECEDING YEAR. WHILE PREPARING THESE DETAILS AS SESSEE REALIZED THAT THERE HAS BEEN AN ERROR IN COMPUTING THE BROUGHT FORWARD LOSS IN AS MUCH AS BROUGHT FORWARD LOSS WAS TAKEN FOR ASSESSMENT YEAR 2003-04 BEFORE SETTING OFF PROFIT FOR THE YEAR ENDING 31.3.2005. WHEN THIS WAS DISCOVERED ASSESSEE ITSELF REVISED ITS CLAIM & CORRECTED THE AMOUNT. HENCE THERE IS NO CA SE THAT ASSESSING OFFICER HAS DISCOVERED ANY ERROR. RATHER ASSESEE HIMSELF HAS SUBMITTED THE CORRECT AMOUNT. MOREOVER ASSESSEE IS DULY ENTITLED TO REVISE THE RETURN OF INCOME ON THE FACTS OF THE CASE. FURTHERMORE THE FIGURE OF BROUGHT FOR WARD LOSSES HAVE BEEN SAID TO HAVE BEEN CORRECTLY MENTIONED IN THE TAX AUDIT REPO RT. 7.3 IN THIS BACKGROUND IN OUR CONSIDERED OPINION T HERE IS NO VIOLATION OF SECTION 271(1)(C) WHICH MANDATES OF LEVY OF PENALTY FOR CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS. THE CASE LAW REFERRED BY THE LD. DEPARTMENTAL REPRESENTATIVE OF ESCORTS FINANCE LTD. (SUPRA) IS N OT APPLICABLE ON THE FACTS OF THE PRESENT CASE. THAT CASE WAS WITH REFERENCE TO AN EX-FACIE INADMISSIBLE CLAIM MADE BY THE ASSESSEE. 7.4 IN THIS REGARD WE FIND THAT HONBLE APEX COU RT HAS RECENTLY IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS LTD. IN CIVIL APP EAL NO. 2463 OF 2010 VIDE ORDER DATED 17.3.2010 HAS HELD THAT THE LAW LAID DOWN IN THE DILIP SHEROFF CASE 291 ITR 519 (SC) AS TO THE MEANING OF WORD CONCEALMENT AN D INACCURATE CONTINUES TO BE A GOOD LAW BECAUSE WHAT WAS OVERRULED IN THE DHA RMENDER TEXTILE CASE WAS ONLY THAT PART IN DILIP SHEROFF CASE WHERE IT WAS H ELD THAT MENSREA WAS A ESSENTIAL REQUIREMENT OF PENALTY U/S 271(1)(C). THE HONBLE APEX COURT ALSO OBSERVED THAT IF THE CONTENTION OF THE REVENUE IS ACCEPTED THEN I N CASE OF EVERY RETURN WHERE ITA NO. 50/DEL/2010 A.Y. 2006-07 7 THE CLAIM IS NOT ACCEPTED BY THE AO FOR ANY REASON THE ASSESSEE WILL INVITE THE PENALTY U/S 271(1)(C). THIS IS CLEARLY NOT THE INT ENDMENT OF LEGISLATURE. 7.5 IN THIS REGARD WE FURTHER PLACE RELIANCE OF TH E HONBLE APEX COURT DECISION IN THE CASE OF HINDUSTAN STEEL VS. STATE OF ORISSA IN 83 ITR 26 BY A BENCH COMPRISING 3 OF THEIR LORDSHIPS WHEREIN IT WAS HEL D THAT AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTORY OBLIGA TION IS THE RESULT OF A QUASI- CRIMINAL PROCEEDINGS AND PENALTY WILL NOT ORDINARI LY BE IMPOSED UNLESS THE PARTY OBLIGED EITHER ACTED DELIBERATELY IN DEFIANCE OF LA W OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST OR ACTED IN CONSCIOUS DI SREGARD OF ITS OBLIGATION. PENALTY WILL NOT ALSO BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENALTY SHOULD BE IMPOSED FOR FAILURE TO PERFORM A STATUTORY OBLIGATION IS A MATTER OF DISCRETION OF THE AUTHORITY TO BE EXERCISED JUDIC IALLY AND ON A CONSIDERATION OF ALL THE RELEVANT CIRCUMSTANCES. EVEN IF A MINIMUM PENA LTY IS PRESCRIBED THE AUTHORITY COMPETENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE P ROVISIONS OF THE ACT OR WHERE THE BREACH FLOWS FROM A BONAFIDE BELIEF THAT THE OF FENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRIBED BY THE STATUTE. ACCORDINGLY WE CONFIRM THE ORDER OF THE LD. CIT(A). ITA NO. 50/DEL/2010 A.Y. 2006-07 8 8. IN THE BACKGROUND OF THE AFORESAID DISCUSSION A ND PRECEDENT WE UPHOLD THE ORDER OF THE LD. CIT(A) AND DELETE THE LEVY OF PENALTY. 9. IN THE RESULT THE REVENUES APPEAL IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 30/04/2010 . SD/- SD/- [C.L. SETHI] [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 30/04/2010 SRB COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A)5. DR ITAT TRUE COPY DEPUTY REGISTRAR ITAT DELHI BENCHES