Taxap/1210/2014 Of Commissioner Of Income Tax Iv v. Shree Rama Multitech Limited

O/TAXAP/1210/2014 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 1210 of 2014With TAX APPEAL NO. 1211 of 2014 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE KS JHAVERI Sd/- andHONOURABLE MR.JUSTICE K.J.THAKERSd/-================================================================1 Whether Reporters of Local Papers may be allowed to see Nothe judgment ?2 To be referred to the Reporter or not ?No3 Whether their Lordships wish to see the fair copy of the Nojudgment ?4 Whether this case involves a substantial question of law as Noto the interpretation of the Constitution of India, 1950 or any order made thereunder ?5 Whether it is to be circulated to the civil judge ?No================================================================COMMISSIONER OF INCOME TAX IV....Appellant(s)VersusSHREE RAMA MULTITECH LIMITED....Opponent(s)================================================================Appearance:MR NITIN K MEHTA, ADVOCATE for the Appellant(s) No. 1================================================================ CORAM: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER Date : 13/11/2014 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1.By way of these Appeals, the appellant has challenged the judgment and order of the Income Tax Appellate Tribunal as per the following details :-challenged the judgment and order of the Income Tax Appellate Tribunal as per the following details :- Tax AppealITA No.Assessment Year1210/2014898/Ahd/20112003-20041211/2014899/Ahd/20112003-2004 2.The appellant has raised the following substantial questions of law :-“In Tax Appeal No.1210/2014substantial questions of law :-“In Tax Appeal No.1210/2014 [A] Whether on facts and in the circumstances of the case, the Tribunal was right in law in deleting the penalty of levied u/s. 271(1)(c) of the Act of Rs.1,97,28,812/- for A.Y. 2003-2004? [A] Whether on facts and in the circumstances of the case, the Tribunal was right in law in deleting the penalty of levied u/s. 271(1)(c) of the Act of Rs.1,44,00,283/- for A.Y. 2004-2005?” 3.The above Appeals pertain to Disallowance of bad debts and Disallowance of Public issue bad debts and Disallowance of Public issue O/TAXAP/1210/2014 JUDGMENT expenses. The Assessing Office had made disallowance of public issue expenses. The expenses were claimed under Section 35D which comprised of certain expenses which, according to the AO were not qualifying for being amortised under Section 35D. He accordingly reduced those items from the total amount eligible for prorate deduction under Section 35D. 4.However, the view taken by the Income Tax Appellate Tribunal is reflected in Paragraphs 7, 8 and 9 of its order which reads as under :- “7. In view of the above paragraphs reproduced from the order of the Tribunal for A.Y. 2003-04 pronounced while deciding the quantum additions we have noted that either the impugned additions on which the penalty in question has been levied were restored back for consideration or decided in assessee's favour. Likewise, for A.Y. 2004-05 in ITA No.1511&1982/Ahd/2009vide paragraph 70 page 51 the issue of disallowance of depreciation on tangible assets was restored back to the file of the AO to be directed as per the directions given in A.Y. 2002-03. Further, we have noted that the issue of bogus purchases has also been decided by the Tribunal in A.Y. 2004-05 at page 50 paragraph 61/68 in favour of the assessee following an order of the Tribunal for A.Y. 2003-04. The entire disallowance was deleted. In respect of third O/TAXAP/1210/2014 JUDGMENT addition on which the penalty in question u/s. 271(1)(c) has been levied pertained to “public issues expenses”, which has also been decided in A.Y. 2004-05 by the Tribunal (supra) at page 50 vide paragraph 69 by holding that a view already taken in A.Y. 2003-04 in assessee's own case should be followed for this year as well. Meaning thereby, the matter was restored back to the file of the AO to be decided as per law. 8. Apart from the above legal position that the impugned have either been allowed or restored back for consideration at the stage of the AO by the Tribunal in quantum appeal, we have also noted that the learned CIT(A) has deleted the impugned penalty after the considering the merits of each addition. In respect of disallowance of depreciation, it was held that the claim was made on the basis of certain documentary evidences and on that basis an explanation was offered which was not a false explanation, therefore, out of the purview of the concealment penalty. In respect of disallowance of bad debt, learned CIT(A) has expressed that the addition was made by AO on the pretext that no efforts were made to recover the bad debts. As far as the onus on the assessee was concerned for the purpose of levy of penalty, according to learned CIT(A) all the relevant particulars were disclosed and there as no concealment of facts and the bad debts was erroneously disallowed; hence, he has directed to delete the penalty. Likewise in respect of bogus purchases, learned CIT(A) has given his finding on merit that various evidences were furnished before the First Appellate Authority and in remand proceedings the AO had not found those evidences as false or bogus evidences. According to learned CIT(A) there were evidences through which the suppliers have confirmed the transactions. By citing certain case laws, learned CIT(A) has deleted the penalty. Finally, in respect of “public issue expenses” he has held that the appellant had a bonafide belief that the claim would be allowed in terms of Section 35D of the IT Act. The AO had a different view about the eligibility of the deduction. However, facts relating to the “public issue expenses” were disclosed by the assessee. By placing reliance on certain case laws penalty was deleted. 9. Therefore, under the totality of the facts and circumstances of the case that on one hand the quantum additions have not been confirmed by the Tribunal and on the other hand the learned CIT (A) had discussed the merits of each addition, while disposing off the penalty issue, we hereby confirm the deletion of penalty. We find no force in the grounds raised by the Revenue; hence hereby dismiss.” 5.Learned Counsel Mr. Nitin Mehta for the appellant has strenuously argued that the view taken by the Tribunal is wrong and contrary to law. 6.We have heard learned Advocates for the O/TAXAP/1210/2014 JUDGMENT parties and have gone through the records of the case. However, in view of the concurrent finding of facts, we are not inclined to interfere with the view taken by both the authorities and hence, both the Appeals stand dismissed. Sd/-(K.S. JHAVERI, J.) CAROLINE Sd/-(K.J. THAKER, J)