Namaste Voyages (P) Ltd., New Delhi v. ITO, New Delhi

ITA 858/DEL/2010 | 2005-2006
Pronouncement Date: 14-05-2010 | Result: Allowed

Appeal Details

RSA Number 85820114 RSA 2010
Assessee PAN AACCA3337K
Bench Delhi
Appeal Number ITA 858/DEL/2010
Duration Of Justice 2 month(s) 12 day(s)
Appellant Namaste Voyages (P) Ltd., New Delhi
Respondent ITO, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 14-05-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted F
Tribunal Order Date 14-05-2010
Date Of Final Hearing 04-05-2010
Next Hearing Date 04-05-2010
Assessment Year 2005-2006
Appeal Filed On 03-03-2010
Judgment Text
ITA NO. 858/DEL/2010 A.Y. 2005-06 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DELHI BEFORE SHRI RAJPAL YADAV JUDICIAL MEMBER AND SHRI SHAMIM YAHYA ACCOUNTANT MEMBER I.T.A. NO. 858/DEL/2010 (A.Y. 2005-06) M/S NAMASTE VOYAGES (P) LTD. VS. INCOME TA X OFFICER 25 ANAND LOK WARD 13(1) CR BUILDING NEW DE LHI NEW DELHI 110049 (PAN: AACCA3337K) [APPELLANT] (RESPONDENT) ASSESSEE BY : SH. RAJAN BHATIA CA DEPARTMENT BY : MS. BANITA DEVI NAREON SR. DR PER SHAMIM YAHYA: AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDERS OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 18.1.200 9 AND PERTAINS TO ASSESSMENT YEAR 2005-06. 2. THE ISSUE RAISED IS THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN UPHOLDING THE IMPOSITION OF PENALTY U/S 27 1(1)(C) OF THE IT ACT AMOUNTING TO RS. 60 000/-. ITA NO. 858/DEL/2010 A.Y. 2005-06 2 3. THE BRIEF FACTS OF THE CASE LEADING TO THE INITI ATION OF PENALTY PROCEEDINGS AND ASSESSEES REPLY THEREOF AS EMANATING OUT OF PE NALTY ORDER ARE AS UNDER:- THE ASSESSEE COMPANY DURING THE YEAR UNDER CONSIDE RATION CLAIMED DEPRECIATION ON BUILDING HOWEVER IT WAS NOTICED TH AT THE VALUE OF LAND ON WHICH THE BUILDING WAS STANDING WAS NOT REDUCED FOR THE PURPOSE OF COPULATION OF DEPRECIATION. THERE WAS NO LAND APPE ARING IN THE DEPRECIATION CHART. WHEN POINTED OUT THE ABOVE TH E ASSESSEE CONCEDED THE POSITION OF LAW THAT DEPRECIATION COULD NOT HAVE BE EN ALLOWED ON THE LAND UNDERNEATH THE BUILDING. ACCORDINGLY VALUE OF THE LAND AND BUILDING WAS BIFURCATED ON THE BASIS OF VALUATION REPORT OF A RECOGNISED VALUER. ON THE BASIS OF SAID VALUATION REPORT IT WAS ASCERTAINED T HAT EXCESS DEPRECIATION TO THE TUNE OF RS. 94 347/- WAS CLAIMED AND ALLOWED D URING THE YEAR UNDER CONSIDERATION. SECONDLY IT WAS NOTICED THAT THE CHART FILED BY T HE ASSESSEE ON MOVEMENT AND UTILIZATION OF 80HHD RESERVE ACCOUNT T HAT AN AMOUNT OF RS. 76 474/- WERE NOT UTILIZED FOR THE PURPOSES SPECIFI ED IN SECTION 80HHD(4) OF THE ACT. THE ASSESSEE SUBMITTED THAT IT HAD PUR CHASED MOTORCYCLES FOR TOURIST PURPOSES. HOWEVER AS PER THE SAID SUBSECT ION ONLY NEW MOTOR CARS AND COACHES QUALIFY FOR THE AVOWED PURPOSE. THE A SSESSEE HOWEVER DID NOT ADD BACK THE AMOUNT REMAINED UNUTILIZED OR NOT UTILIZED FOR SPECIFIC PURPOSES. THE ASSESSEE IN ITS WRITTEN REPLY FILED IN THE CU RRENT PROCEEDINGS SUBMITTED THAT IT DID NOT OCCUR TO THE ASSESSEE TO BREAK UP THE COST AS THE BUILDING WAS PURCHASED FOR A COMPOSITE AMOUNT. THE MISTAKE WAS WHOLLY INADVERTENT AND WAS NOT DELIBERATE OR MALA FIDE IN ANY WAY. IT HAD NOT INTENTION OF EVADE TAX BY CLAIMING EXCESS DEPRECIAT ION. IT ALSO POINTED OUT A DECISION OF PUNJAB HIGH COURT IN THE CASE OF C.I.T. VS. ALPS THEATRE TO STATE THAT THE ISSUE OF CLAIMING DEPRECIATION ON BUILDING INCLUSIVE OF LAND WAS HELD ALLOWABLE AND THUS THE ISSUE IS NOT FREE FROM CONT ROVERSY. VARIOUS CASE LAWS ARE ALSO CITED TO ARGUE THAT MALAFIDE INTENT OF TH E ASSESSEE IS A MUST OF LEVY OF PENALTY. ON THE ISSUE OF NOT ADDING BACK THE AMOUNT NOT UTI LIZED FOR SPECIFIED PURPOSES AS PER THE PROVISIONS OF SECTION 80HHD TH E ASSESSEE SUBMITTED ITA NO. 858/DEL/2010 A.Y. 2005-06 3 THAT IT WAS OF THE BONA FIDE BELIEF THAT VEHICLES P URCHASED FOR TOUR OPERATIONS WERE ELIGIBLE U/S 80HHD(4)(B). THE ACT OF THE ASSESSEE WAS NEITHER DELIBERATE NOR WAS WITH AN INTENTION TO EV ADE TAX. 4. ASSESSING OFFICER DID NOT ACCEPT THE ASSESSEE S CONTENTIONS AND PROCEEDED TO LEVY PENALTY U/S 271(1)(C) OF THE IT ACT AMOUNTI NG TO RS. 60 000/-. 5. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOM E TAX (APPEALS) CONFIRMED THE ADDITION BY INTER-ALIA REFERRING INTE RFERING TO THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF UOI VS. DHARMEND RA TEXTILE PROCESSORS (2008) 306 ITR 277 (SC). 6. AGAINST THIS ORDER THE ASSESSEE IS IN APPEAL BEF ORE US. 7. WE HAVE HEARD BOTH THE COUNSELS AND PERUSED THE RECORDS. WE FIND THAT THE FIRST ADDITION IN THIS CASE IS MADE ON ACCOUNT OF DEPRECIATION CLAIMED ON COMPONENT OF LAND IN RESPECT OF BUILDING. ASSESSING OFFICER HAS NOTED THAT ASSESSEE HAD CLAIMED DEPRECIATION OF RS. 1 43 707/- IN RESPECT OF THE BUILDING @5% ON THE TOTAL VALUE ON THE OPENING WDV OF RS. 2 8 74 131/- OF LAND BUILDING WHEN THE MATTER OF LAND BEING INCLUDED IN THE VALUE OF THE BUILDING WAS POINTED OUT TO THE ASSESSEE THE ASSESSEE GOT THE VALUATIO N OF THE PROPERTY DONE BY THE REGISTERED VALUER. ON THE BASIS OF VALUATION OF LA ND AND BUILDING DONE BY THE VALUER THE DEPRECIATION PERTAINING TO LAND COMPONE NT AMOUNTING TO RS. 94 347/- ITA NO. 858/DEL/2010 A.Y. 2005-06 4 WAS IDENTIFIED. ASSESSEE IN THIS REGARD ALSO GAVE THE FIGURE OF DEPRECIATION CLAIMED ON LAND FROM ASSESSMENT YEARS 2002-03 2003 -04 AND 2004-05 AND STATED THAT IT WAS READY TO PAY THE TAX. IN THIS REGARD HOWEVER ASSESSING OFFICER HELD THAT THIS WOULD NOT BE LEGALLY CORRECT. HENCE DEPRE CIATION RELATABLE TO THE YEAR ONLY UNDER CONSIDERATION WHICH IS RS. 94 347/- IS D ISALLOWED. 7.1 NOW HERE WE FIND THAT IT IS NOT THE CASE THAT A SSESSEE HAD MADE ANY CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME FOR THE CURRENT YEAR. THE FIGURE OF LAND AND BUILDING WAS SHOWN AS COMPOSITE FIGURE AND DEPRECIATION IN THAT REGARD WAS CLAIMED AND ALLOWED SINCE THE PAST THREE YEARS. THE ASSESSEE DURING THE YEAR HAS ALSO COOPERATED AND HAS GOT THE VALUATION DONE HIMSELF AND IDENTIFIED THE PORTION OF DEPRECIA TION ATTRIBUTABLE TO THE LAND PORTION IN THE FIGURE OF LAND OF BUILDING AND OFFER ED THE SAME FOR TAXATION. 7.2 NOW AS REGARDS THE CLAIM OF DEDUCTION U/S 80HHD THE TOTAL UTILIZATION IN THAT REGARD UPTO 31.3.2005 SHOULD HAVE BEEN RS. 1 2 73 384/- BUT THE ASSESSING OFFICER FOUND THAT ASSESSEE ACTUALLY UTILIZED RS. 11 96 910/- ONLY BY PURCHASE OF NEW CAR AND NEW COACHES. ASSESSEE HAS ALSO CLAIME D RS. 76 474/- IN THIS REGARD BY PURCHASE OF MOTOR CYCLES. THIS CLAIM WAS DISALLO WED BY THE ASSESSING OFFICER AS HE HELD THAT PURCHASING MOTOR CYCLES CANNOT TANT AMOUNT TO UTILIZATION FOR THE ITA NO. 858/DEL/2010 A.Y. 2005-06 5 PURPOSE SPECIFIED AS MENTIONED AS SECTION 80HHD(4) . HOWEVER THIS CLAIM WAS DISALLOWED BY THE ASSESSING OFFICER HOLDING THAT T HE CLAIM WAS ADMISSIBLE ONLY FOR NEW CAR AND NEW COACHES. 7.3 NOW IN THIS BACKGROUND WE HAVE TO SEE WHETHER T HE ASSESSEE IS GUILTY OF PENALTY U/S 271(1)(C) OF THE ACT. WE FIND THAT SEC TION 271(1(C) OF THE ACT POSTULATES IMPOSITION OF PENALTY FOR FURNISHING OF INACCURATE PARTICULARS AND CONCEALMENT OF INCOME. IN OUR CONSIDERED OPINION O N THE FACTS OF THE PRESENT CASE AS REGARDS THE DEPRECIATION IT WAS AN INADVER TENT MISTAKE WHICH WAS COMING FOR THE LAST 3 YEARS. AS REGARDS THE ISSUE OF UT ILIZATION FOR THE PURPOSE OF DEDUCTION U/S 80HHD THE ASSESSEE WAS UNDER THE BON AFIDE BELIEF THAT PURCHASE OF NEW MOTOR CYCLES WILL AMOUNT TO UTILIZATION FOR THE PURPOSE SPECIFIED U/S 80HHD. IN OUR CONSIDERED OPINION IN THIS BACKGRO UND IT CANNOT BE SAID THAT ASSESSEE WAS GUILTY OF CONCEALMENT OR FURNISHING O F INACCURATE PARTICULARS U/S 271(1)(C) OF THE IT ACT. IN THIS REGARD WE PLACE R ELIANCE FROM THE APEX COURT DECISION RENDERED BY A LARGER BENCH COMPRISING OF THREE OF THEIR LORDSHIPS IN THE CASE OF HINDUSTAN STEEL VS. STATE OF ORISSA IN 83 ITR 26 WHEREIN IT WAS HELD THAT AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTORY OBLIGATION IS THE RESULT OF A QUASI-CRIMINAL PROCEEDINGS AND PENALTY WILL NOT ORDINARILY BE IMPOSED UNLESS THE PARTY OBLIGED EITHER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY ITA NO. 858/DEL/2010 A.Y. 2005-06 6 OF CONDUCT CONTUMACIOUS OR DISHONEST OR ACTED IN C ONSCIOUS DISREGARD OF ITS OBLIGATION. PENALTY WILL NOT ALSO BE IMPOSED MEREL Y BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENALTY SHOULD BE IMPOSED FOR FAILURE TO PE RFORM A STATUTORY OBLIGATION IS A MATTER OF DISCRETION OF THE AUTHORITY TO BE EXERC ISED JUDICIALLY AND ON A CONSIDERATION OF ALL THE RELEVANT CIRCUMSTANCES. E VEN IF A MINIMUM PENALTY IS PRESCRIBED THE AUTHORITY COMPETENT TO IMPOSE THE P ENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY WHEN THERE IS A TECHNIC AL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT OR WHERE THE BREACH FLOWS FR OM A BONAFIDE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRI BED BY THE STATUTE. 7.4 AS REGARDS THE DECISION OF THE HONBLE APEX CO URT IN THE CASE OF DHARMENDRA TEXTILE PROCESSORS WE FIND THAT THE SAM E IS NOT APPLICABLE IN THE PRESENT CASE AS IN THE PRESENT CASE WE DO NOT FIND THERE IS ANY CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS BY ASSESSEE. T HE INTERPOLATION OF THIS CASE LAW BY THE LD. DR IS MISPLACED. WE FURTHER FIND THAT THE HONBLE APEX COURT IN THE CASE OF CIT VS. ATUL MOHAN BINDAL 317 ITR 1 HAS ITSELF EXPLAINED THE RATIO OF THE DECISION AS UNDER IN PARA 23 PAGE 13. 23. THE DECISION IN DHARMENDRA TEXTILE MUST THERE FORE BE UNDERSTOOD TO MEAN THAT THOUGH THE APPLICATION OF SECTION 11AC WOULD DEPEND ITA NO. 858/DEL/2010 A.Y. 2005-06 7 UPON THE EXISTENCE OR OTHERWISE OF THE CONDITIONS E XPRESSLY STATED IN THE SECTION ONCE THE SECTION IS APPLICABLE IN A CA SE THE CONCERNED AUTHORITY WOULD HAVE NOT DISCRETION IN QUANTIFYING THE AMOUNT AND PENALTY MUST BE IMPOSED EQUAL TO THE DUTY DETERMINE D UNDER SUB- SECTION (2) OF SECTION 11A. THAT IS WHAT DHARMENDR A TEXTILE DECIDES. 7.5 WE WOULD ALSO LIKE TO REFER TO THE HONBLE AP EX COURT DECISION IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS LTD. IN CIVIL APPEAL NO. 2463 OF 2010 VIDE ORDER DATED 17.3.2010 HAS HELD THAT THE LAW LAID DO WN IN THE DILIP SHEROFF CASE 291 ITR 519 (SC) AS TO THE MEANING OF WORD CONCEAL MENT AND INACCURATE CONTINUES TO BE A GOOD LAW BECAUSE WHAT WAS OVERRU LED IN THE DHARMENDER TEXTILE CASE WAS ONLY THAT PART IN DILIP SHEROFF CA SE WHERE IT WAS HELD 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 R EVENUE IS ACCEPTED THEN IN CASE OF EVERY RETURN WHERE THE CLAIM IS NOT ACCEPTED BY THE AO FOR ANY REASON THE ASSESSEE WILL INVITE THE PENALTY U/S 271(1)(C). TH IS IS CLEARLY NOT THE INTENDMENT OF LEGISLATURE. 8 IN THE BACKGROUND OF THE AFORESAID DISCUSSION AN D PRECEDENT WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE LEVY OF PENALY OF RS. 60 000/-. ITA NO. 858/DEL/2010 A.Y. 2005-06 8 9. IN THE RESULT THIS APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14/05/2010. SD/- SD/- [RAJPAL YADAV] [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE 14/05/2010 SRB COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR ITAT TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT DELHI BENCHES