Income Tax Appellate Tribunal - Kolkata
Carnation Industries Ltd., Kolkata vs Department Of Income Tax on 7 July, 2015
I . T. A . N o. 7 95 / KOL ./ 20 1 2
Ass es sm e nt ye a r: 2 00 3- 2 00 4
Page 1 of 5
IN THE INCOM E TAX APPELLATE TRIB UNAL,
KOLKATA 'B' BENCH, KOLKATA
Before Shri P.K. Bansal, Accounta nt M em be r
and Shri Maha vir Singh, Judicial Member
I.T .A. No . 795 /KOL/ 2 0 12
Assess ment year : 2003 -2 00 4
Income Ta x Office r,........ .............................. ........ ............. ...Ap p ella nt
Wa rd -3(1), Kolka ta,
8/2, Esp la nad e Ea st,
Dwa rli House, Grou nd Floor,
Kol ka ta -700 069
-Vs.-
M/s. Ca rna tion Ind ustrie s Limited ,....................................Re sp ond e nt
222 , A .J.C. Bose Roa d,
Kol ka ta -700 017
[PA N : AA BCC 0379 E]
Appeara nces by :
Shri R.P. Nag , JCIT, Sr. D.R., for th e Departm ent
Shri J. M. Thar d, Advocate, f or the ass es s ee
Dat e of concluding t he hearin g : Jun e 18 , 201 5
Dat e of pr onouncing th e order : July 07, 2015
O R D E R
Per P.K. Bansal:
This app eal h as b een filed by the Revenue again st the ord er o f ld. Commissioner of Inco me Tax (App eal s )-I, Kolkata dated 20. 02.2012 for the a ss ess men t year 2003-04, by which the CIT(Ap p eal s) del eted th e pen alty i mposed on the as sesse e under section 271(1)(c ) of the Income Tax Act, 1961.
2. Brief fact s o f the case a re tha t assessment unde r section 1 43(3) was co mplet ed on 20.03.2006 on an income of Rs.1,21,79,646/-. Th e Assessin g Officer n oted d u rin g the co urse of the as se ssment that th e as se sse e h ad adjusted dep reci ation loss to the tun e of Rs. 36,42,927/- to arrive at a gross total inco me of Rs.82,63,453 /- and the s ame amo unt has b een claimed as d eductio n unde r sec tio n 80HHC. The A ssessing Office r disallowed the clai m of the as ses see. The Assessi ng Of ficer n oted that in I . T. A . N o. 7 95 / KOL ./ 20 1 2 Ass es sm e nt ye a r: 2 00 3- 2 00 4 Page 2 of 5 the a ss ess ment y ear 2000-01, when the gro ss total inco me was Rs. 1,29,95,43 5/-, the assessee did no t set off brou ght forward loss of dep reci ation amounting to R s.71, 77,448/-, but carried fo rwa rd the sa me to be set off in futu re. The unabso rbed brought forward d epreci ation of Rs. 71,77,448/- was set off by the asse ss ee during the asses sment yea r 2002-03 and, there fore, there remai ns no un abso rbed brought fo rwa rd dep reci ation loss. When questioned, th e a ss ess ee filed the rectifi cation app lication und er section 154 for the asses sment y ear 2002-03 and claimed only a sum of R s.31,76,333/- as s et off of the unabso rbed dep reci ation out of th e p rofit of the ass essee available afte r clai min g the ded uction under section 80HHC amount ing to Rs.95,58 ,506/- and carried forward unab sorbed dep reci ation to th e extent of R s. 40,01,115/-. The Assessing Of ficer rejected the applicati on of the asses se e. The Ass essin g Officer di s allowed th e set off of un absorbed d ep reciation and too k the view that there was no actual b roug ht forward d ep reci ation and the unabsorbed d ep reciatio n got exhaus te d up to assessmen t yea r 2002-03. The assessee want ed to take ad vantage of deduction available unde r sect ion 80HHC and, therefo re, the A ssessin g Offi ce r initiated th e penalty proce edin gs u nd er section 271(1)(c) and ultimately impo sed the p enalty being 100% of t ax sou ght to be ev ad ed on the as ses see amounting to Rs. 12,75,015/- by observing as under:-
"Fro m th e above discussion, it can be s een that th e assess ee comp any, on one ha nd, has furnished inaccurate particulars by claiming maladjustment o f depreciation to the tun e o f Rs.36,4 2,927/- in the rel evant assessmen t y ear 2003-0 4. On th e other hand, th e asses see- co mpany after r eceiving a notice under s ectio n 142(1) seekin g explanation for such ma ladjustment of d eprecia tion has filed a rectifi cation petition in pla ce of reply in o rder to take a chance. All this act of the ass es see co mpany shows that it has consciously fu rnished inaccurate pa rti culars. Therefo re, p ena lty under s ection 271(1)(c) of clause (iii) is called for an imp osition of pen alty a s decided in the case law of K.C. Bu ild ers - vs.- CIT (20 04) 135 Taxman 4 61 (SC).
Thus, after dis cu ssing the abov e facts an d cir cu ms tan ces of th e cas e, I am of th e opinio n th at this is a fit case for impo sing penalty under section 271(1)(c) o f the I.T. Act, 1961 . Qua ntu m of penalty is d etermin ed @ 100 % I . T. A . N o. 7 95 / KOL ./ 20 1 2 Ass es sm e nt ye a r: 2 00 3- 2 00 4 Page 3 of 5 on the tax sou ght to be evaded which is Rs.12,75,015/- i.e. @ 100% on Rs.36,42,927 /-.
Penalty under s ection 27 1(1 )(c) of th e I.T. Act, 196 1 is imposed at Rs.12,75,015 /- being 100% o f tax sought to have been evaded.
This penalty o rder is pass ed with th e prio r approval of the learn ed Ad ditio nal CIT, Rang e-1, K olkata ".
3. The assessee went in appeal befo re th e CIT(Appeals). The CIT(App eals) delet ed the pen alty imposed on the ass es see by observing as und er:-
"4. I have ca refully con sidered th e obs er vation of the AO as w ell submission of the appellant. The ap pellant is a n exporter and claimed deductio n u/s 80HHC of the Income Tax Act, 1961. The main issue involved in this case is that whether p enalty u/s 271(1)(c) can be imp osed for claiming deduction u/s 80HHC first without setting off of unabsorbed brought forward depr ecia tion allowa nce.
The app ellant h ad claimed d eductio n un der s ectio n 80HHC befo re setting off brought forward d epreciatio n allowances during the asses sment years 2001 -01 and 20 01- 02, however during the ass es sment year 2002 -0 3 by mistake it ha d first set off the unabsorbed brought forward depreciation allowance for which a rectification p etitio n was filed within time.
In making such claim, appella nt has relied on the judgment in the case of CIT -vs.- Shrike Const ructio n Equipments Limited 246 ITR 42 9 (Mu m.). Later on, the Hon'ble Apex Cour t in the case IPCA Labo ratories -vs.- CIT of 266 ITR 521 rev ers ed , th e decisi on of the Shirke Con stru ction Equipments Limited a nd held that deductio n u/s 80 HHC cannot b e allowed befor e setting off of the unabsorbed dep reciation and bro ught forward losses o f th e previo us yea rs. This decision of the Hon'ble Apex Court came mu ch la ter than the retu rn filed by the app ellant. So , it canno t be sa id tha t app ellant wa s aware of the order of the Hon'ble Apex Court as it wa s not at all available at that time.
In view of above and a lso by placing relian ce o n th e Hon'ble Delhi High Cou rt decision in the case of CIT -vs.- Siclair Exports Ltd. ITA 352/2 010 I am of the o pinion that on the fa cts and circum stances of the cas e, it can not be said that th e appellant, having placed reliance on th e decision of th e And hra Pradesh High Court, th e appellant had concealed any pa rticula rs or ha d furnished inaccu rate particulars of income".
I . T. A . N o. 7 95 / KOL ./ 20 1 2 Ass es sm e nt ye a r: 2 00 3- 2 00 4 Page 4 of 5
4. We hav e heard the rival submission s and ca refully conside red th e same alo n g with the ord er of tax authoriti es b elow. We noted th at when the as se ssee mad e th e clai m fo r carry fo rwa rd of unab sorbed dep reci ation in the earlier year and set it off afte r clai min g the deduction under section 8 0HHC out of the curre nt year p rofit. The claim m ade by the as seses e was d uly supported by the decision of the Hon'ble Bombay High Cou rt in the case of CIT -vs.- Shirk e Con struction Equipment s Limited report ed in 246 ITR 429 (Bo m.), but subsequen tly the said decision was reversed by th e Ho n'ble Supreme Co urt in the c as e of IPCA Lab orato ries Li mited repo rted in 26 6 ITR 521. Therefo re, the clai m m ade by the ass ess ee was duly support ed at the tim e by the deci sion of the Hon'ble Bomb ay High Cou rt and, theref ore, th e same can be rega rd ed to be a bonafide clai m. In o ur opinion, p enalty canno t be imposed und er sect ion 271(1)(c) m erely on the basis th at the clai m made by the asse ss ee has been di sallo wed . Merely the cl ai m of the asses see unde r section 80HHC, which was duly supported at the tim e by the decisio n of the Hon'ble Bomb ay High Court, not acc ept ed by the R even ue will not make the clai m made by th e a sse ss ee to be penalty holding the as se ss ee as furnished in accu rat e pa rticula rs of inc ome. Our aforesaid view is duly support ed by the deci sion of th e Ho n'ble Sup reme Court in the case of Relianc e Petro-Produ cts Pvt. Ltd. reported in 322 ITR 158 ( SC). We acco rdingly confi rm the o rder of CIT(Ap peals).
5. In the result, the appeal filed by the R evenue stands dismissed.
Orde r p ronounced in th e open Co urt on July 0 7, 2015.
Sd/- Sd/-
Mahav ir Singh P.K. Bansa l
(Judi cial Member) (A ccounta nt M ember)
Kolkata, th e 7 t h day of July, 2015
Co pies to : (1) Income Ta x Office r,
Wa rd -3(1), Kolka ta,
8/2, Esp la nad e Ea st,
Dwa rli House, Grou nd Floor,
Kol ka ta -700 069
I . T. A . N o. 7 95 / KOL ./ 20 1 2
Ass es sm e nt ye a r: 2 00 3- 2 00 4
Page 5 of 5
(2) M/s. Ca rna tion Ind ustrie s Limited ,
222 , A .J.C. Bose Roa d,
Kol ka ta -700 017
(3) Comm iss ioner of Income-tax (Appeal s) (4) Com mis sioner of Incom e Tax (5) The Depar tmental R epr es entative (6) Guard Fil e B y order Assistant Registrar Income Tax App ellate Tribunal Kolkata Ben ch es, Kolkata Laha/Sr. P.S.