Commissioner Of Income Tax – 10, Mumbai v. M/S.stoll India Private Limited

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL (L) NO.166 OF 2013 Commissioner of Income Tax – 10, Mumbai..Appellant. Versus M/s.Stoll India Private Limited..Respondent. Mr.Suresh Kumar for the appellant.None for the respondent. CORAM : J.P. Devadhar &M.S. Sanklecha, JJ. DATE : 19[th] March 2013 P.C. : Office objections waived. 2.In this appeal by the Revenue for assessment year 2006-07, following questions of law have been proposed for our consideration. “a)Whether on the facts and in the circumstances of the case, the Tribunal was justified in confirming the deletion of the penalty under Section 271(1)(c) of the Income Tax Act, 1961 ? b)Whether on the facts and in the circumstances of the case, the Tribunal was justified in coming to the conclusion that the assessee was under the bona fide belief that the WDV to be claimed was as per the Company's Act and not the Income Tax Act ? c)Whether on the facts and in the circumstances of the case, the order of the Tribunal was justified in ignoring the pleading of the Revenue that these inaccurate particulars were subsequently revised only when these were discovered by the AO during the course of assessment ?” 3.The respondent – assessee had during the assessment year 2006-07 converted its capital asset into stock-in-trade and in that process debited a sum of Rs.1.83 crores to its profit and loss account. During the course of assessment proceedings, the assessing officer held that the written down value of the capital asset was Rs.1.52 crores and not Rs.1.83 crores. Consequently, an amount of Rs.30.65 lakhs was added to the income of the assessee in quantum proceedings and penalty proceedings were also initiated. 4.The respondent – assessee pointed out that by mistake they have computed the book value of the asset as per the Companies Act instead of computing the same under the Income Tax Act, 1961 ('Act' for short). The respondent – assessee also pointed out that there was no intention to suppress income and/or evade taxes. However, the assessing officer did not accept the same and levied penalty under Section 271(1)(c) of the Act. On appeal, the Commissioner of Income Tax (A) deleted the penalty. 5.On further appeal by the Revenue, the Tribunal while upholding the order of the Commissioner of Income Tax (A) records a finding of fact that the respondent – assessee had in fact shown all particulars of fixed assets being converted into stock-in-trade in its financial statements, tax audit report and audit report of the company. The Tribunal further held that there was a bona fide belief on the part of the respondent – assessee in arriving at the written down value of the assets and the same has not been found to be false by the Revenue. Further the Tribunal also records the fact that as the machinery was converted into stock-in-trade at book value, there was no short term capital gain or loss in such transaction. Hence, the mistake was genuine and bona fide. The Tribunal placed reliance upon the decision of the Apex Court in the matter of Commissioner of Income Tax V/s. Reliance Petroproducts Private Limited reported in (2010) 322 ITR 158 (SC) and held that the penalty in these facts is not justifiable, as there was no concealment of income or furnishing of inaccurate particulars of income on the part of the respondent – assessee. 6.In view of the fact that the impugned order is based on finding of fact, we see no reason to entertain the proposed questions of law. Accordingly, the appeal is dismissed with no order as to costs. (M.S. Sanklecha, J.) (J.P. Devadhar, J.)