THE DCIT, CIRCLE-1,, AHMEDABAD vs. M/S. BHAGWATI BANQUETS & HOTELS LTD.,, AHMEDABAD

The revenue has raised following grounds of appeal:-

In this case, return of income declaring income of Rs. 2,99,70,540/- was filed on 30th October , 2007. The assessment u/s. 143(3) of the act was made on 21st December, 2009.The assessing officer has made addition of Rs. 52,83,602/- on account of non- payment of service tax u/s. 43B of the act . The assessing officer has also noticed during the course of assessment that assessee has claimed set off of brought forward loss for assessment year 2004-05 to the amount of Rs. 33,94,240/- whereas as per the assessment records, the assessing officer has noticed that the brought forward unabsorbed depreciation was only to the amount of Rs. 22,24,903/-. Consequently, the assessing officer has restricted the claim of set off of brought forward loss/depreciation to the amount of Rs. 22,24,903/- The ld. CIT(A) has confirmed the disallowances made in the case of the assessee.. On both the disallowances the assessing officer has initiated penalty u/s. 271(1)(c) of the act for furnishing of inaccurate particulars of income. The assessing officer observed that had the assessee’s case not been selected for scrutiny, the assessee could have been benefited by filing inaccurate particulars of income. Consequently, the assessing officer has levied penalty of Rs. 25,27,362/- for furnishing inaccurate particulars of income.

Aggrieved against the decision of the assessing officer, the assessee preferred appeal before the ld. CIT(A). The ld. CIT(A) has deleted the penalty levied by the assessing officer by observing as under:- “3.2 Impugned penalty was levied w.r.t. two disallowances. My findings issue-wise are as under: : (i) Disallowance u/s 43B of Rs. 52,83,602/-: In the assessment order A.O. observed that perusal of Form 3CD report showed that the auditor had not mentioned the dates of payments against certain items of service tax totaling to Rs. 52,83,602/-; appellant produced details of payment of these items, on perusal of which it was seen that the payments were made after the due date for filing the return of income and therefore the said amount was being disallowed u/s 43B. Appellant did not prefer appeal against the said disallowance. The contentions of the Id. A.R. are that all the necessary details were furnished in the tax audit report; wherever the payments were not made, the date of payment was left blank in the audit report; by inadvertent mistake, the said amount was not added back in the computation of income; appellant company claimed deduction of the said amount in the succeeding assessment year 2008-09 in the revised return filed; the said claim of deduction was allowed; thus there was no loss of revenue and therefore , levy of penalty was not warranted. I have considered the facts of the matter. As seen from the assessment order the disallowance was based on the Form No. 3CD report and the subsequent furnishing of dates of payment by the appellant. The amount disallowed during the year was claimed and allowed in the succeeding assessment year. Appellant cannot be said to have furnished inaccurate particulars or concealed income. I am of the view that levy of penalty is not in accordance with law. Reliance is placed in this regard on the case of Price Waterhouse Coopers (P) Ltd. Vs. CIT. [2012] 11 SCO 316. (ii) Disallowance of brought forward depreciation of Rs. 11,69,337/-: In the assessment order A.O observed that appellant had claimed set off of brought forward loss of Rs. 33,94,240/-; however perusal of the \/ assessment records showed that the brought forward loss was only Rs. 22,24,903/- and therefore the excess set off claimed was being disallowed. No appeal was preferred by the appellant on this issue. The contentions of the Id. A.R. are that both the returned losses and the assessed losses of earlier years were part of the record with the A.O; the losses and depreciation keep on changing as a result of assessment and appellate proceedings and therefore appellant could not be said to have furnished inaccurate particulars. The contentions of the Id. A.R. are cogent and tenable. A.O. is duty-bound to consider the correct figures of brought forward unabsorbed losses/depreciation w.r.t. the assessment records. Levy of penalty on this issue is not in accordance with law. Reliance is placed in this regard on the Allahabad Tribunal Judgement in the case of ACIT. Vs. A.H. Wheelers & Co.(P) Ltd. [2011] (142 TTJ 112). 3.3 To sum up impugned penalty order is cancelled. These grounds of appeal are allowed.”

During the course of appellate proceedings before us, ld. departmental representative contended that assessee has furnished inaccurate particulars of income in respect of unpaid service tax and

We have heard both the sides and perused the material on record. The assessee has furnished the details showing that payment of these service tax was made after the due date for filing the return of income. We observed that the necessary details were furnished in the tax audit report but the date of payment was left blank in the audit report; by inadvertent mistake and the assessee has claimed deduction of the said amount in the succeeding assessment year 2008-09 in the revised return filed. Regarding brought forward unabsorbed losses/depreciation the Ld. Counsel has submitted that assessee has not furnished inaccurate particulars as both the returned losses and the assessed losses of earlier years were part of the assessment record. After considering the facts as above and the findings of the Ld.CIT(A) we observed that that it cannot be said that assessee has furnished inaccurate particulars or

In the result, the appeal of the revenue is dismissed.