Income Tax Appellate Tribunal - Chennai
Acit, Chennai vs Crn Investments P. Ltd., Chennai on 28 February, 2017
आयकर अपीलीय अिधकरण, 'ए' यायपीठ, चे ई
IN THE INCOME TAX APPELLATE TRIBUNAL
'A' BENCH, CHENNAI
ी एन.आर.एस. गणेशन, याियक सद य एवं
ी िड.एस. सु दर सह, लेखा सद य के सम
BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND
SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER
आयकर अपील सं./ITA No. 2662/Mds/2004
िनधा रण वष / Assessment Year : 1996-97
The Asstt. Commissioner of M/s. CRN Investments P. Ltd.,
Income Tax, v. 10, Karpagambal Nagar,
Company Circle - I(3), Luz, Chennai - 4.
Chennai - 600 034.
PAN : AAACC3114A
(अपीलाथ /Appellant) (!"यथ /Respondent)
अपीलाथ क# ओर से/Appellant by : Shri Shiva Srinivas, JCIT
!"यथ क# ओर से/Respondent by : Shri T.N. Seetharaman, Advocate
सुनवाई क# तारीख/Date of Hearing : 12.01.2017
घोषणा क# तारीख/Date of Pronouncement : 28.02.2017
आदेश /O R D E R
PER N.R.S. GANESAN, JUDICIAL MEMBER:
This appeal of the Revenue is directed against the order of the Commissioner of Income Tax (Appeals) - III, Chennai, passed under Section 154 of the Income Tax Act, 1961 (in short 'the Act') for the assessment year 1996-97.
2 I.T.A. No. 2662/Mds/2004
2. Shri Shiva Srinivas, the Ld. Departmental Representative submitted that the CIT (Appeals) by placing reliance on the judgment of the Supreme Court in CIT v Prithipal Singh & Co. 249 ITR 670 set aside his earlier order by way of rectification and deleted the penalty. According to the Ld. D.R., the judgment of the Supreme Court in Prithipal Singh & Co. (supra) is very much available on the date of passing of the original order on 17.03.2004. The amendment brought in by way of explanation 4(a) by Financial Act 2002 is only to clarify the existing position of law. Therefore it would apply retrospectively. According to the Ld. D.R., the levy of penalty is debatable in nature. Therefore, the CIT (Appeals) ought not to have deleted the penalty in a proceeding under Section 154 of the Act.
3. Shri T.N. Seetharaman, the Ld. counsel for the assessee submitted that for the assessment year under consideration, the Assessing Officer levied penalty under Section 271(1) of the Act. The CIT (Appeals) by an order dated 17.03.2004 initially confirmed the penalty levied by the Assessing Officer. Subsequently, the judgment of the Apex court in Prithipal Singh & Co. supra was brought to the notice of the CIT (Appeals). The CIT (Appeals) by 3 I.T.A. No. 2662/Mds/2004 placing reliance on the judgment of the Apex court in Prithipal Singh & Co case supra found that there was a prima facie error in the order. Accordingly, the penalty levied by the Assessing Officer was deleted. Against that order of the CIT (Appeals) passed under Section 154 of the Act, the Revenue filed the present appeal.
4. In the earlier round of litigation, this Tribunal found that the judgment of the Apex court in Prithipal Singh & Co case (supra) was available on the date of passing of order by the CIT(Appeals). Therefore, there was no mistake in the original order which is apparent from the record. Accordingly, the penalty levied by the Assessing Officer was confirmed by this Tribunal.
5. The assessee carried the matter before the High Court in Tax case (Appeal) No.155 of 2007. The High Court by judgment dated 13.02.2014 found that the CIT (Appeals) has rightly entertained the application under Section 154 of the Act and rectified the error solely on the ground that as per law, which holds the field, at the relevant point of time, no penalty was imposable when a loss has been incurred by the assessee. Referring to the judgment of the Madras High Court more particularly at para 10, the 4 I.T.A. No. 2662/Mds/2004 Ld. counsel for the assessee submitted that the Madras High Court concurred with the submission of the counsel for the assessee that there was a mistake in the order of the CIT(Appeals). Accordingly, the same was rectified. However, in the last paragraph, the matter was remitted back to the file of the Tribunal to take up the appeal on merit. Since the High Court has already found that the CIT (Appeals) has rightly rectified the error under Section 154 of the Act and deleted the penalty, the further observation of the High Court in remitting back the matter to the file of this Tribunal is infructuous. The Ld. counsel has also submitted that the assessee has already filed a review petition before the High Court which is not listed so far for hearing.
6. We have considered the rival submissions on either side and perused the material available on record. Admittedly, the penalty levied by the Assessing Officer under Section 271(1)(c) of the Act was confirmed by the CIT (Appeals) by an order dated 17.03.2004. The CIT (Appeals) in a proceeding under Section 154 of the Act, by placing reliance on the judgment of the Supreme Court in the case of Prithipal Singh & Co (supra) rectified the order dated 17.03.2004 and deleted the penalty. The question arises for consideration is 5 I.T.A. No. 2662/Mds/2004 whether the order of the CIT (Appeals) dated 17.03.2004 can be rectified subsequently. In the earlier round of litigation, this Tribunal found that the judgment of the Apex court in Prithipal Singh & Co (supra) is very much available on 17.03.2004. Therefore it is not a debatable issue. Accordingly, this Tribunal confirmed the penalty levied by the Assessing Officer by an order dated 31.08.2006. On further appeal by the assessee, the Madras High Court found that the term 'income' under Section 271(1)(c) of the Act was interpreted to mean positive income. The assessee in this case, disclosed loss to be carried forward. Therefore, by placing reliance on the judgment in Honda Seil Power Products Limited v CIT, (2007), 295 ITR 466 (SC), the High court hold that Commissioner was justified in entertaining the application filed by the assessee under Section 154 of the Act and rectified the mistake. In fact, the Madras High Court has observed as follows at para 10:
Para 10: Admittedly, the miscellaneous application filed under Section 154 of the Act to rectify the mistake in the order of the first appellate authority dated 17.3.2004 was based on the decision of the Supreme Court in the case of Prithipal Singh, (supra). It is not in dispute that on the date when the first appellate authority passed order dated 17.3.2004, the decision in the case of Prithipal Singh, (Supra), was very much available. Therefore, the first appellate authority rightly entertained the application under Section 154 and 6 I.T.A. No. 2662/Mds/2004 rectified the error solely on the ground that as per the law, which holds the land, at the relevant point of time, no penalty was imposable when a loss has been incurred by the assessee. In other words, the term income "income" in Section 271(1)(c) was interpreted to mean "prospective income". As far as the present case is concerned, the assessment order disclose loss to be carried forward. Therefore, by applying the decision in Honda Seil Power Products Limited (supra), the Commissioner was justified in entertaining the application and rectifying the mistake. To that extent we agree with the submission made by the learned counsel for the assessee.
7. Subsequently, at para 11 of the judgment, the High Court found that the order of the Tribunal has to be set aside and restore the appeal before the Tribunal for a decision on the question of levy of penalty on merit. We have carefully gone through the provision 154 of the Act. Section 154 of the Act provides for rectification of error, which is apparent on the face of the record. The High Court accepted the argument of the assessee and found that the Commissioner was justified in entertaining the application and rectifying the mistake in his order dated 17.03.2004. However, subsequently the High Court directed the Tribunal to decide the question of levy of penalty on merit. Since this is a specific direction from the High Court, this Tribunal may not go beyond the direction 7 I.T.A. No. 2662/Mds/2004 of the High Court. Therefore, we have examined the merit in compliance to the direction of the High Court.
8. For the assessment year 1996-97, the assessee originally declared loss of ₹13,70,284/- . The assessee claimed unabsorbed depreciation of ₹13,70,284/- to be carried forward to the subsequent year. The loss included the depreciation of ₹10,48,450/- claimed on the steel roller. The Assessing Officer found that the assessee claimed depreciation on the steel roll to the extent of ₹10,48,450/- for the assessment year 1995-96 and the balance of ₹10,48,450/- for the next year. Now, the Ld. counsel for the assessee claims before this Tribunal that for the assessment year 1995-96, the penalty levied by the Assessing Officer was confirmed. The unabsorbed depreciation of loss was carried forward for the assessment year 1996-97. Therefore, the assessee was penalized for the assessment year 1995-96. Hence, there cannot be any further penalty for the assessment year 1996-97. The Ld. counsel placed his reliance on the decision of this Tribunal in Dr. Bapuji Cherukuri v DCIT [2013] 21 ITR (Trib) 714 (Chennai) and submitted that when the penalty was levied for the assessment year 1995-96, the assessee cannot be penalized for the assessment year 1996-97 8 I.T.A. No. 2662/Mds/2004 on the same set of facts. The Ld. counsel further submitted that the Tribunal by applying the doctrine of continuity found that the penalty has to be levied only in the first year of assessment. Accordingly, the penalty levied for the subsequent year was cancelled. In this case the penalty levied by the Assessing Officer for claiming depreciation was confirmed by this Tribunal up to the year 1995-96 and therefore for subsequent years, there cannot be any levy of penalty.
9. The question arises for consideration is when the assessee claims depreciation for the assessment year 1996-97 which was disallowed by the Assessing Officer can there be a levy of penalty under Section 271(1)(c) of the Act. This Tribunal is of the considered opinion that claim of depreciation is a statutory claim. Merely because the assessee made a statutory claim in the return of income which was disallowed by the Assessing Officer, that cannot be a reason for levying penalty under Section 271(1)(c) of the Act. A mere wrong claim under the statutory provisions of the Income Tax Act cannot be considered to be concealment of income or furnishing any inaccurate particulars of income. The Apex court in the case of Reliance Petroproducts Pvt. Ltd., 322 ITR 158 9 I.T.A. No. 2662/Mds/2004 examined this issue and found that when an assessee makes a claim by furnishing all the particulars and the Assessing Officer disallowed the same cannot be a reason to conclude that the assessee has furnished any inaccurate particulars. This Tribunal is of the considered opinion that levy of penalty for the assessment year 1996-97 is not justified. Accordingly, the order of the CIT (Appeals) is confirmed.
10. In the result, the appeal of the Revenue stands dismissed.
Order pronounced on 28th February, 2017 at Chennai.
Sd/- Sd/-
(िड.एस. सु दर सह) (एन.आर.एस. गणेशन)
(D.S. Sunder Singh) (N.R.S. Ganesan)
लेखा सद य/Accountant Member याियक सद य/Judicial Member
चे ई/Chennai,
दनांक/Dated, the 28 February, 2017.
th
JR.
आदेश क# !ितिलिप अ%ेिषत/Copy to:
1. अपीलाथ /Appellant
2. !"यथ /Respondent
3. आयकर आयु' (अपील)/CIT(A)-III
4. आयकर आयु'/CIT
5. िवभागीय !ितिनिध/DR
6. गाड फाईल/GF.