CIT vs Binani Metals Ltd.

In this appeal by the revenue for the assessment year 1996-97, the following questions have been proposed for our consideration.

(a) Whether on the facts and circumstance of the case and in law, the ITAT was justified in dismissing the departments miscellaneous petition without considering the fact that the additions made by the assessing officer are confirmed by the CIT(A) and further they have not been adjudication by the Tribunal?

(b) Whether on the facts and circumstance of the case and in law, the ITAT was justified in not considering the fact that the claim in the return of income of 100% depreciation on the Wind Turbine Generator leased to REPL Ltd. clearly indicates that there is mens rea on the part of the assessee to defraud the department and is clear cut concealment of particulars of income by way of wrong claim of depreciation?

Brief facts:

(a) On 7-3-2001, the assessing officer completed the assessment of the respondent for the assessment year 1996-97 u/s 143(3) of the Income Tax Act, 1961 (the Act) determining the total income at Rs. 61.81 lacs. The assessing officer rejected the respondents claim for 100% depreciation of Rs. 1.44 crores on Wind Turbine Generator costing Rs. 1.44 crores. The assessing officer also initiated proceeding u/s 271(1)(c) of the Act against the respondent for having claimed wrong depreciation.

(b) In appeal, the CIT(A) partly allowed the respondents appeal by deleting an addition of Rs. 20 lacs out of Rs. 1.44 crores claimed as depreciation. On further appeal, the Tribunal by its order dt. 4-5-2007 allowed the respondents appeal on merits and further deleted the addition of Rs. 1.25 crores as Rs. 20 lacs had already been deleted by the CIT(A). By the above order, the Tribunal also dismissed the revenues appeal on the above account against the order of the CIT(A).

(c) During the pendency of the above proceeding on quantum, by an order dated 29-3-2005, the assessing officer imposed a penalty of Rs. 66.70 lace upon the respondent u/s 271(1)(c) of the Act. In appeal, the CIT(A) by an order dt. 11-10-2005 allowed the respondents appeal. Thereafter, the Tribunal also by its order dt. 9-5-2008 upheld the order passed by the CIT(A). The revenue filed an appeal to the High Court against the order dt. 9-5-2008 of the Tribunal. The High Court set aside the order of the Tribunal dt. 9-5-2008 and restored the matter to the Tribunal for fresh consideration.

(d) Thereafter, the appellant-revenue filed an Misc. Application before the Tribunal being Misc. Application No. 823/Mum/2009 for an early hearing of the appeal in the penalty proceeding.

(e) On 28-1-2010, the Tribunal allowed the Misc. application filed by the revenue and heard the parties with regard to the imposition of penalty of Rs. 66.70 lacs upon the respondent-assessee by the assessing officer. The Tribunal held that in view of the fact that by its order dt. 4-5-2007 the addition of Rs. 1.45 crores had been deleted and the claim for depreciation was allowed. In view of the above, the penalty proceeding initiated for wrong claim of depreciation would not survive.

We find no fault with the order of the Tribunal taking a view that in view of deletion of the addition made in the quantum proceeding by the assessing officer, no occasion to impose any penalty can arise. In any event, the CIT(A) has cancelled the penalty on merits. In view of the above, no occasion to entertain question (b) can arise.

So far as question (a) is concerned, the Misc. Application for early hearing of the appeal was allowed. The Misc. Application as annexed to the appeal memo, is an application merely for early hearing and the same having been allowed question (a) as proposed does not arise from the order of the Tribunal. Accordingly, appeal dismissed with no order as to costs.