9911796707
TMI Blog2015 (5) TMI 1147X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the year but that does not alter the fact that the assessee had deliberately diverted the charging of interest from non taxable income to taxable income to reduce its taxable income and thereby evade payment of due taxes. 2.2 The decision of Hon'ble Punjab & Haryana High Court in the case of Harigopal Singh [258 ITR 85) is not applicable as the same is distinguishable on facts. 3. The Ld. CIT (A) has erred in deleting penalty amounting to Rs. 5,84,188/- on account of capitalization of Web & Software Development expenses ignoring the fact that there is no ambiguity on the issue and further in view of the decision of Hon'ble High Court of Delhi in the case of CIT Vs Zoom Communication Pvt. Ltd. (2010) 327 ITR 510 penalty is leviable in such cases where the provision of the Act have not been deliberately followed. 4. The Ld. CIT (A) has erred in deleting penalty amounting to Rs. 89,81,947/- ignoring the fact that the assessee has miserably failed to substantiate the allocation of expenses made by it as the same was made with an intent to divert income to a non taxable source and evade taxes. 5. The Ld. CIT (A) has erred in deleting penalty amounting to Rs. 1,20,88,016/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer or the Commissioner (Appeals) or the Commissioner to be false, or (B) such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bonafide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, then, the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of clause (c) of this sub-section, be deemed to represent the income in respect of which particulars have been concealed." 5.1 Thus, when the assessee has concealed particulars of his income or furnished inaccurate particulars, applicability of conditions laid down in Explanation-1 (supra) have to be examined. The various issues on which penalty have been levied, explanation of the appellant and my findings on these issues are as under: (a) Penalty levied on disallowance of interest debited in the Dera Bassi unit on account of diversion of funds Brief facts of the issue are that the Assessing Officer had noticed that 'Baddi Manufacturing Account' in the books of Dera Bassi unit had huge debit balances throughout the year. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n account of web and software development expenses in the books of Dera Bassi unit. The Assessing Officer treated this expenditure as capital expenditure and allowed depreciation at the rate of 60%. The disallowance worked out to Rs. 5,84,188/-. The penalty for concealment has been levied on this addition. During the course of the appellate proceedings, the Ld, Counsel for the appellant has submitted that the expenditure was mainly on account of upgradation of the website and proper implementation of ERP and included traveling expenses of consultancy firm's employees. The expenditure was capitalised by the Assessing Officer in view of the new Appendix-I and the argument of the appellant that software become obsolete in view of the rapid technology advancement was not accepted on the ground that for this reason only, a very high of depreciation rate of 60% was allowed. The appellant had claimed this expenditure as revenue expenditure because in its opinion, it was an allowable expenditure being on account of upgradation of the website. Be as it may, as it was on account of difference of opinion that the appellant had claimed this expenditure as revenue expenditure and so penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and by Hon'ble ITAT, Chandigarh in the case of Perfect Forgings (143 TTJ 117). Hence, the penalty for concealment levied on this issue is also cancelled. d) Penalty levied on reduction of deduction u/s 80IC Brief facts of the issue are that the appellant had claimed deduction u/s 80IC to the tune of Rs. 3,43,67,266/- in the computation of income. The Assessing Officer noticed that the allowable deduction u/s 80IC as certified in form No. 10CCB was of Rs. 2,81,22,849/- and so the excess deduction of Rs. 62,44,417/- (3,43,67,266 - 2,81,22,849) had been claimed by the appellant. The Assessing Officer worked out the deduction u/s 80IC in the assessment order at Rs. 1,61,20, 563/- by reducing Rs, 31,06,069/- on account of reallocation of interest expenses and Rs. 89,81,947/- on account of reallocation of common expenses. The Assessing Officer has also levied penalty for concealment on difference of deduction u/s 80IC as claimed in the computation of income and as per form No. 10CCB. In nutshell, the deduction u/s 80IC had been reduced by the Assessing Officer by the following amounts i) Reallocation of interest expenses Rs. 31,06,069/- ii) Reallocation of common expenses Rs. 89, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y basis and the explanation furnished by him for making such a claim is not found to be bona fide, it would be difficult to say that he would still not be liable to penalty-under section 271(l)(c) of the Act. If we take the view that a claim which is wholly untenable in law and has absolutely no foundation on which it could be made, the assessee would not be liable to imposition of penalty, even if he was not acting bona fide while making a claim of this nature, that would give a licence to unscrupulous assessees to make wholly untenable and unsustainable claims without there being any basis for making them, in the hope that their return would not be picked up for scrutiny and they would be assessed on the basis of self-assessment under section 143(1) of the Act and even if their case is selected for scrutiny, they can get away merely by paying the tax, which in any case, was payable by them. The consequence would be that the persons who make claims of this nature, actuated by a mala fide intention to evade tax otherwise payable by them would get away without paying the tax legally payable by them, if their cases are not picked up for scrutiny. This would take away the deterr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rent year's depreciation was absorbed in the current year itself and the appellant was not entitled to any claim of carry forward of depreciation. Thus, the mistake committed by the appellant in the computation of income was wiped out because of the additions. Moreover, penalty for concealment had already been levied by the Assessing Officer in respect of various additions and so the same would have taken care of the depreciation loss also. In view of this discussion, it is held that the Assessing Officer was not right in imposing penalty for concealment on account of impugned wrong claim of current year's depreciation and the penalty levied on this account is cancelled. 4.1 In view of the above, the Assessing Officer is directed to recompute the penalty for concealment. The grounds of appeal taken by the appellant are partly allowed. 5. In the result, the appeal is partly allowed. 6. After considering rival submissions, we do not find any merit in the departmental appeal and also do not find any justification for ld. CIT(Appeals) to sustain part penalty against the assessee. The ld. CIT(Appeals) discussed various issues in the appellate order for canceling the penalty. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ld. CIT(Appeals) noted that he has already cancelled the penalty on account of re-allocation of the expenses. Therefore, for re- allocation of interest expenses under section 80IC, he has cancelled the penalty, however, noted that assessee has claimed more than the deduction under section 80IC of the Act as per the report of the Auditor, therefore on the amount of Rs. 62,44,417/-, penalty was confirmed on which assessee is in Cross Objection. 11. The ld. counsel for the assessee filed the copy of the computation of income alongwith calculation after giving appeal effect on quantum by the ld. CIT(Appeals) as well as by the ITAT. According to ld. counsel for the assessee, same Calculation Sheet filed on record, the income assessed by the Assessing Officer under section 143(3) was Rs. 3,42,84,619/- after making several additions on which penalty was imposed by the Assessing Officer. After giving part relief by the ld. CIT(Appeals) on quantum totally in a sum of Rs. 1,15,41,049/-, the balance assessed income after the order of ld. CIT(Appeals), comes to Rs. 2,27,43,570/-. The ITAT, Chandigarh Bench further allowed relief to the assessee on various heads in a sum of Rs. 1,56,62,264/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra) dismissed the departmental appeal, copy of the order is placed on record. The ld. counsel for the assessee, therefore, submitted that on this reason alone, the entire penalty may be deleted. However, ld. DR relied upon order of the Assessing Officer. 13. Considering the facts of the case and calculation sheet filed by the ld. counsel for the assessee, which is not in dispute, we find that issue is squarely covered in favour of the assessee by judgement of Hon'ble Delhi High Court in the case of Nalwa Sons Investment Ltd. (supra) which is also followed by Hon'ble Punjab & Haryana High Court in the case of CIT Vs M/s Vardhman Acrylics Ltd., Ludhiana (supra). Therefore, penalty cannot be levied against the assessee on all the additions maintained even after giving appeal effect of the order of ld. CIT(Appeals) and the Tribunal. We, accordingly set aside the order of ld. CIT(Appeals) and delete penalty even on the addition maintained in a sum of Rs. 62,44,417/-. This ground of appeal of the revenue is dismissed, however, Cross Objection of the assessee is allowed. 14. The last item in the departmental appeal on which penalty has been cancelled is disallowance of carr ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
