Muktanandan Pipes Ltd, Mumbai vs Assessee

1 M/s Mukatanandan Pipes Ltd ITA 4847/M/2013

आयकर अपीलीय अिधकरण "बी" यायपीठ मुब ं ई म। IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH "B", MUMBAI ी िवजय पाल राव, याियक सद य एवं ी एन. के . िबलै या, लेखा सद य के सम । BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI N K BILLAIYA, ACCOUNTANT MEMBER

ITA No. : 4847/Mum/2013 (Assessment year: 2008-09) M/s Mukatanandan Pipes Ltd, Vs Income Tax Officer-1(1)(3), Surindra House, 605, 6th Floor, C-10, Safaid Pool, M V Road, Pratyaksh Kar Andheri (East), Bhavan, Bandra Kurla Complex, Mumbai -400 072 Bandra (East), Mumbai -400 051 थयी लेखा सं.:PAN: AACCM 2676 D अपीलाथ (Appellant) यथ (Respondent) Appellant by : Shri Sunil A Desai Respondent by : Shri N Padmanaban

सुनवाई क तारीख /Date of Hearing : 24-03-2015 घोषणा क तारीख /Date of Pronouncement : 24-03-2015

आदेश ORDER ी एन. के . िबलै या, ले स: PER N K BILLAIYA, AM:

This is an appeal by the assessee directed against the order of the CIT(A) 20, Mumbai, dated 29.05.2013 pertaining to AY 2008-

09.

2. The sole grievance of the assessee is that the CIT(A) erred in confirming the penalty u/s 271(1)(c) amounting to Rs. 2,73,540/-.

3. Briefly stated the facts of the case are that, during the course of assessment proceedings, the AO observed that no business activity is carried on during the year as the company is inoperative since many years. The AO disallowed the operational expenses amounting to Rs. 4,85,831/-. The AO further disallowed depreciation of Rs. 8,85,242/-. The assessee do not prefer any appeal against these disallowances. Penalty proceedings u/s 2 M/s Mukatanandan Pipes Ltd ITA 4847/M/2013 271(1)(c) of the Act were initiated on account of disallowance of depreciation of Rs. 8,85,242/-.

4. During the course of the penalty proceedings, the assessee explained that it's banker has put the loan account of the assessee under Non Performing Assets (NPAs) thereby stopping all the finances of the assessee. In view of the non-availability of fund, the assessee company could not continue the production. Though the assessee was maintaining its plant & machinery, the claim of depreciation does not amount to furnishing inaccurate particulars of income nor there is any concealment of income. The submissions of the assessee did not find any favour from the AO who proceeded by levying the penalty u/s 271(1)(c) of the Act amounting to Rs. 2,73,540/-.

5. Aggrieved by this, the assessee carried the matter before the CIT(A), but without any success.

6. Before us, the Counsel for the assessee stated that it has been claiming depreciation in earlier years also wherein the claim of depreciation has been accepted by the Department though the assessments has been made u/s 143(1) of the Act. It is the say of the Counsel by following the past history of the assessee, the assessee had claimed depreciation for the year under consideration also, but, once the claim was denied in the assessment proceedings, the assessee did not prefer any appeal and accepted the assessment order. Therefore, it cannot be said that the assessee has filed inaccurate particulars. The Counsel relied upon the decision of the Hon'ble P&H High Court in the case of Hindustan Hydraulics 369 ITR 255.

7. Per contra, the DR supported the orders of the authorities below. The DR relied upon the decision of the Tribunal in the case of M/s Times Guaranty Ltd in ITA No. 1681/Mum/2007.

8. After giving a thoughtful consideration to the rival submissions, we have carefully perused the orders of the 3 M/s Mukatanandan Pipes Ltd ITA 4847/M/2013 authorities below. The undisputed fact is that, in the assessment order the AO disallowed the claim of operational expenses and also depreciation. It is also an undisputed fact that the assessee accepted the assessment order. There is no denial that this is not the first year of the claim of depreciation, the assessee has been claiming depreciation in earlier years also on same set of facts relating to the business condition of the assessee. Therefore, it cannot be said that the assessee has made any false claim. Further, we find that the AO has levied penalty only for the claim of depreciation and not levying penalty on disallowances of operational expenses thereby admitting that the claim of operational expenses does not tantamount to filing of inaccurate particulars. On the same set of facts, the AO has taken two different views, which are contradictory to each other.

9. Considering all these facts in totality, we do not find this case to be fit for levy of penalty, we accordingly set aside the finding of the CIT(A) and direct the AO to delete the penalty levied u/s 271(1)(c) of the Act.

10. In the result, appeal of the assessee stands allowed.

Order pronounced in the open court on 24th March, 2015.

Sd/- Sd/- (िवजय पाल राव) (एन. के . िबलै या) याईक सद य लेखा सद य (VIJAY PAL RAO) (N K BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER

Mumbai, Date: 24th March, 2015

त/Copy to:-

1) अपीलाथ /The Appellant. 2) यथ /The Respondent. 3) The CIT(A) -20, Mumbai. 4) The CIT-1, Mumbai. 4 M/s Mukatanandan Pipes Ltd ITA 4847/M/2013

5) िवभागीय ितिनिध "बी", आयकर अपीलीय अिधकरण, मुंबई/ The D.R. "B" Bench, Mumbai.

6) गाड फाईल Copy to Guard File.

आदे शानस ु ार/By Order / / True Copy / /

उप/सहायक पंजीकार आयकर अपील य अ धकरण, मब ुं ई Dy./Asstt. Registrar I.T.A.T., Mumbai

*च हान व.िन.स *Chavan, Sr.PS