IN THE INCOME TAX APPELLATE TRIBUNAL
BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER
AND
SHRI C.M. GARG, JUDICIAL MEMBER
I.T.A. Nos. 4518 & 4519/Del/2011
A.YRS.: 1996-97 & 1997-98
M/s Tony Electronics Ltd.
(Presently merged with M/s Super
Cassettes Industries Ltd.),
Super Cassettes Industries Ltd.,
Plot No. 1, Film Centre,
Sector-16A, Noida – 201 301 (UP)
(PAN: AABCS4712P)
(Appellant)
Vs.
Deputy Commissioner of Income Tax,
Circle 9(1),
Room No. 163, CR Building, I.P.
Estate,
(Respondent)
AND
I.T.A. NOS. 4895 & 4896/Del/2011
A.YRS. 1996-97 & 1997-98
Joint Commissioner of Income Tax, (OSD),
Circle 9(1),
Room No. 163, CR Building,
(Appellant)
Vs.
M/s Tony Electronics Ltd.,
(Merged with Super Cassettes
Industries Ltd.), Plot No. 3 & 3A,
Sector -16-A,
(Respondent)
Assessee by: Sh.
Department by: S
ORDER
PER BENCH
These cross appeals by the Revenue and Assessee emanate out of orders of the Ld. Commissioner of Income Tax (A) for the assessment years 1996-97 and 1997-98.
1. The issues raised in Assessee’s I.T.A. No. 4518/Del/2011 for A.Y. 1996-97 read as under:-
“1. That on the facts and in the circumstances of the case and in law, the Ld. Commissioner of Income Tax (A) erred in confirming the penalty levied by the Assessing Officer on account of disallowance of maintenance expenses amounting to ` 7236/- and Depreciation of ` 35671/- claimed in the profit and loss account, pertaining to Flat at 21-F-2, Magnum Tower, Mumbai.
That the appellant craves to add, alter, amend or modify any of the above grounds of appeal or take up any additional grounds of appeal at the time of hearing or earlier.”
2. The issues raised in Assessee’s I.T.A. No. 4519/Del/2011 for A.Y. 1997-98 read as under:-
“1. That on the facts and in the circumstances of the case and in law, the Ld. Commissioner of Income Tax (A) erred in confirming the penalty levied by the Assessing Officer on account of disallowance of maintenance expenses amounting to `7886/- and Depreciation of `35618/- claimed in the profit and loss account, pertaining to Flat at 21-F-2, Magnum Tower, Mumbai.
That the appellant craves to add, alter, amend or modify any of the above grounds of appeal or take up any additional grounds of appeal at the time of hearing or earlier.”
3. The issues raised in Revenue’s I.T.A. No. 4895/Del/2011 for A.Y. 1996-97 read as under:-
“1. The Ld. Commissioner of Income Tax (A) erred in law and on the facts of the case in cancelling the penalty of `8,14,435/- imposed by the Assessing Officer u/s. 271(1)(c) of the I.T. Act.
2. The appellant craves to amend modify, alter, add or forego any ground of appeal at any time
before or during the hearing of this appeal.”
4. The issues raised in Revenue’s I.T.A. No. 4896/Del/2011 for A.Y. 1997-98 read as under:-
“1. The Ld. Commissioner of Income Tax (A) erred in law and on the facts of the case in cancelling the penalty of ` 6,92,611/- imposed by the Assessing Officer u/s. 271(1)(c) of the I.T. Act.
2. The appellant craves to amend modify, alter, add or forego any ground of appeal at any time
before or during the hearing of this appeal.”
5. For Assessment year 1997-98 the penalty of ` 711276/- was levied for furnishing of inaccurate particulars of income to the extent of ` 16,54,129/- on account of the following:-
i) Under valuation of closing stock of WIP ` 8,12,456/-,
ii) Deduction u/s. 80HHC on Namoli Unit ` 3,73,454/-,
iii) Deduction u/s. 80I on Namoli Unit ` 4,24,815/-,
iv) Expenses for maintenance of Flat at F-21,
v) Depreciation of Flat at F-21 Magnum Tower ` 35,618/-
Similarly, for assessment year 1996-97 the penalty of ` 834172/- was levied for furnishing of inaccurate particulars of income to the extent of ` 1813417/- on account of the following:-
i) Under valuation of closing stock of WIP ` 3,18,000/-,
ii) Deduction u/s. 80HH on Namoli Unit ` 5,46,337/-,
iii) Deduction u/s. 80I on Namoli Unit ` 6,82,921/-,
iv) Deduction u/s. 80IA on Malanpur unit ` 80,033/-.
v) Deduction u/s. 80HHC on Unit –II ` 1,43,219/-,
vi) Expenses for maintenance of Flat at F-21,
vii) Depreciation of Flat at F-21 Magnum Tower ` 35,671/-.
6. Upon assessee’s appeal Ld. Commissioner of Income Tax (A) deleted the penalty pertaining to under valuation of closing stock; deduction u/s. 80HHC, deduction u/s. 80I. However, Ld. Commissioner of Income Tax (A) confirmed the levy of penalty on account of disallowance of maintenance expenses and depreciation claimed in the profit and loss account pertaining to Flat at 21-F/2,
7. Against the above order the assessee and Revenue are in cross appeals before us.
8. We have heard the rival contentions in light of the material produced and precedent relied upon. Ld. Counsel of the assessee submitted that the issues in the appeal are squarely covered by the decision of the ITAT vide order of the tribunal in the case of the sister concern Super Cassettes Industries Ltd. in I.T.A. No. 4893-4894 for assessment year 1997-98 vide orders dated 23.3.2012 and further vide order of this tribunal passed in I.T.A. No. 5376 for assessment year 1995-96 and in I.T.A. No. 4520 and 4521 for assessment years 1997-98 and 1998-99.
9. Ld. Departmental Representative on the other hand could not controvert the above submissions of the ld. Counsel of the assessee. We have carefully considered the submissions. We find that on the issue of penalty for valuation of closing stock lying in Work in Progress (WIP), deduction u/s. 80HHC and deduction u/s. 80IA, the tribunal in I.T.A. No. 4893 and 4894 has followed the orders of this tribunal in I.T.A. No. 991/Del/2008 for assessment year 2001-02. The tribunal has held as under in concluding part:-
“We have heard the rival submissions and perused the material available on record. On a careful consideration of the same we find ourselves unable to come to a contrary view. Qua the penal action on account of estimated addition of closing stock lying in WIP the impugned order is supported by the order of the Coordinate Bench. The facts and circumstances have not been shown to be different in the year under consideration as such no infirmity in the said issue can be found in the impugned order.
Qua the issue of 80-IA deduction the view of the assessee had legal backing as is evident from the judgements referred in the impugned order. No doubt the addition was sustained but the assessee’s claim cannot be said to be false as held by the
Similarly the view of the C.I.T.(A) in regard to foreign exchange fluctuation loss also finds support from the above two decisions. As such being satisfied by the reasoning and finding of the C.I.T.(A) the departmental grounds are dismissed.”
10. On the issue of penalty on account of disallowance of expenses pertaining to Flat No. F-21-A, Magum Tower, the tribunal in I.T.A. No. 788/Del/2011 for A.Y. 1996-97 in the case of Super Cassettes Industries Ltd. vs. DCIT vide order dated 30.11.2011 has held as under:-
“In our considered view, the assessee’s explanation cannot be held to be lacking in bona-fides. The expenditure incurred has been detailed above and there is no expenditure which indicates maintaining any facilities which can be strictly termed as a guest house. The expenses debited are electricity, repairs, society maintenance and telephone. The regular features of a guest house i.e. expenditure relating to cooking, messing, salary of caretaking staff is not claimed. This is further corroborated by the fact that the tax audit reports did not consider this accommodation as a guest house in nature as contemplated under disallowable section 37(4). In our view, if the tax auditors failed to qualify this expenditure, it amounts to professional advise about the belief of the assessee. It has not been disputed that the assessee disclosed all the facts about this claim in the return of income which was subject to legal debate and later settled by Hon’ble Supreme Court in the case of Britannia Industries Ltd. (Supra). Looking at the entirely of facts and circumstances, nature of expenses and the fact that the auditors did not disallow this expenditure in the audit report, we hold the assessee’s explanation to be bona-fide. The same is not to be termed as malafide and is to be held as bonafide. In view thereof, respectfully following the Hon’ble Supreme Court judgement in the case of Reliance Petroproducts Pvt. Ltd. (Supra), we delete the penalty.”
11. In light of the aforesaid tribunal decision, we find that on all these issues where penalty has been levied, the penalty was deleted by the tribunal in assessee’s own case / case of sister concern. Hence, we direct that the penalty levied in these cases on all account is liable to be deleted. Hence, in light of the aforesaid appeals filed by the Revenue stand dismissed and appeals filed by the Assessee stand allowed.
12. In the result, both the revenue’s appeal are dismissed and both the assessee’s appeals are allowed.
Order pronounced in the open court on
Sd/- Sd/-
[C.M. GARG] [SHAMIM YAHYA]
JUDICIAL MEMBER ACCOUNTANT MEMBER
Date:- 07/9/2012
SRBhatnagar
Copy forwarded to: -
1. Appellant
2. Respondent
3. CIT
4. CIT (A)
5. DR, ITAT
TRUE COPY
By Order,
Assistant Registrar,
ITAT,
