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Income Tax Appellate Tribunal, ‘D’ BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI A. MOHAN ALANKAMONY
आदेश /O R D E R
PER N.R.S. GANESAN, JUDICIAL MEMBER:
This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals)-III, Chennai, dated 28.06.2010 and pertains to assessment year 1996-97.
Sh. R. Vijayaraghavan, the Ld.counsel for the assessee, submitted that the Assessing Officer levied penalty under Section 271(1)(c) of the Income-tax Act, 1961 (in short 'the Act') by an order dated 28.03.2006 on the ground that the assessee has failed to make true and correct statement of income and concealed the particulars of its income by claiming bogus depreciation. The Ld.counsel further submitted that the assessee claimed for depreciation to the extent of `17,27,16,480/- being 50% depreciation on the asset which was purchased and leased out in the second half of the financial year 1995-96, which was disallowed.
The Assessing Officer has also disallowed depreciation on the asset relating to three more lease transactions which were entered into by the assessee during the relevant previous year with M/s Aban Lloyd Chiles Offshore Ltd., M/s A.V.S. Industries Ltd. and M/s Mid East Integrated Steel Ltd. to the extent of `4,95,00,000/-, `36,25,000/- and `7,30,59,000/- respectively.
According to the Ld. counsel for the assessee, the Assessing Officer further found that during the assessment year 1995-96, a similar transaction of purchase and lease back was entered in the case of 14 parties and the Assessing Officer found that the entire transactions in the assessment year 1995-96 were bogus. For the year under consideration also, the Assessing Officer on examination, found that no sale could have been made by the third party to the assessee-bank without the sanction of Tamil Nadu Electricity Board. According to the Ld. counsel, the assessee being a bank, has not verified the machineries which were purchased and leased out and acted upon the basis of invoices produced before it.
The Assessing Officer also found that the purchase and lease back arrangement is only a colourable device to reduce the tax liability of the assessee. According to the Ld. counsel, two of the three suppliers of the assets were not traceable. In fact, the bank account of the above said persons were attached by the CBI and criminal cases are pending against them. As far as the assessee is concerned, the Ld.counsel submitted that the copies of the invoices were produced before it. On the basis of the invoices, the assessee believed in good faith that the assets were owned by the respective persons. Accordingly, the assessee purchased the same and leased it back to the respective persons. Therefore, the claim of the assessee for depreciation cannot be construed as bogus. The assessee never intended any transaction with an intention to reduce the tax liability of the assessee. Therefore, according to the Ld. counsel, a mere claim of depreciation cannot be construed as furnishing of inaccurate particulars of income. The Ld.counsel placed his reliance on the judgment of Apex Court in Mak Data P.
Ltd. v. CIT (2013) 358 ITR 593 and submitted that merely because the assessee surrendered the claim of depreciation and offered the same for taxation, it cannot be construed that the assessee has furnished inaccurate particulars of income. Therefore, the CIT(Appeals) is not justified in confirming the penalty levied by the Assessing Officer under Section 271(1)(c) of the Act.
3. On the contrary, Dr. Milind Madhukar Bhusari, the Ld. Departmental Representative, submitted that the assessee claimed before the Assessing Officer that it purchased windmill and leased back the same to M/s Aban Lloyd Chiles Offshore Ltd. Similarly, the assessee has also claimed 14 transactions as sale and lease back in the assessment year 1995-96 and claimed depreciation. The Assessing Officer disallowed the claim of the assessee in the assessment year 1995-96. Some of the assets in these 14 transactions were acquired during the second half of the period relevant to assessment year 1995-96. Therefore, the assessee claimed 50% of depreciation on such transactions during the year under consideration. According to the Ld. D.R., the Assessing Officer has already come to a conclusion in the assessment year 1995-96 that the entire transactions were bogus and the transactions were considered to be finance transactions, therefore, the assessee is not entitled for depreciation.
Coming to the transaction with M/s Aban Lloyd Chiles Offshore Ltd. with reference to windmills, the Ld. D.R. submitted that the land on which the windmills were erected was not transferred to the assessee. The sanction for erection of windmills stands in the name of M/s Aban Lloyd Chiles Offshore Ltd. On examination, the Assessing Officer found that the invoices produced before the Revenue authorities are bogus and there was no purchase of windmills as claimed by the assessee. The Assessing Officer ultimately came to a conclusion that the assessee is not the owner of the windmills, therefore, the assessee is not entitled for depreciation. The Assessing Officer also found that in the case of transaction with A.V.S. Industries Ltd., out of the three suppliers two of them were found to be untraceable. With regard to M/s Mid East Integrated Steel Ltd., the Assessing Officer found that M/s Mid East Integrated Steel Ltd. purchased the assets earlier and thereafter forged the sale invoices by inserting the name of the assessee as buyer. The Assessing Officer examined the supplier and the supplier clarified during the course of examination that he has not issued any such invoice to the assessee as claimed before the Assessing Officer. Since the transaction was established as bogus, the assessee itself came forward by a letter dated 30.03.1999 claiming that the claim of depreciation would not be pressed. The Ld. D.R. further submitted that when the transactions between the assessee and other parties could not be treated as sale and lease back transactions, then it has definitely to be treated as finance transactions. Therefore, the claim before the Assessing Officer for depreciation on the basis of the bogus transaction would amount to concealment / furnishing inaccurate particulars of income of the assessee. Therefore, the Ld. D.R. submitted that the CIT(Appeals) has rightly confirmed the addition.
We have considered the rival submissions on either side and perused the relevant material available on record. The Assessing Officer disallowed the claim of depreciation on the windmill leased to M/s Aban Lloyd Chiles Offshore Ltd. to the extent of `4,95,00,000/-. Moreover, in respect of transactions with M/s A.V.S. Industries Ltd. and M/s Mid East Integrated Steel Ltd., the Assessing Officer himself allowed the claim of depreciation to the extent of `14,10,000/- and `52,00,514/-. We find that for eight sale and lease back transactions, this Tribunal remitted back the matter to the Assessing Officer for reconsideration. The enquiries conducted by the Revenue shows that the assets leased to M/s Mid East Integrated Steel Ltd. are forged one. In fact, the suppliers also clarified that no invoice was issued in the name of the assessee.
Accordingly, the CIT(Appeals) confirmed the addition made by the Assessing Officer on the basis of the enquiries conducted.
Now, the question arises for consideration is whether the assessee has furnished inaccurate particulars of its income or concealed the particulars of its income. The fact remains that the assessee is a banking company and claimed before the Assessing Officer that it entered into the sale and lease back transaction. The claim of the assessee that the asset was originally belonged to a particular person, was proved to be wrong. In fact, the invoices were forged in the name of the assessee. On examination, the suppliers of the asset confirmed that they did not issue any invoice in the name of the assessee. When the assessee was cornered on all the four corners and it was found to be a bogus transaction of sale and purchase of asset, the assessee withdrew the claim of depreciation. Therefore, it is not a case of making a claim after furnishing all the particulars of income. It is a case of making a claim on the basis of the so-called bogus transaction. The suppliers of the asset clarified that no transaction was entered into with the assessee. On identical set of facts, the Bangalore Bench of this Tribunal in Alliance Infrastructure Projects Pvt. Ltd. v. ACIT in I.T.A.
Nos.220 & 1043(Bng.)/2013 dated 12.09.2014, it was found that the assessee made a wrong claim of depreciation and thereby the assessee furnished inaccurate particulars. As observed earlier, it is a case of making false claim on the basis of the forged documents and when it was brought to the notice of the assessee, the assessee withdrew the claim of depreciation. Therefore, it is a clear case of furnishing inaccurate particulars in the form of forged invoices and thereby concealed the particulars of income of the assessee. Therefore, this Tribunal is of the considered opinion that the CIT(Appeals) has rightly confirmed the penalty levied by the Assessing Officer under Section 271(1)(c) of the Act. This Tribunal do not find any reason to interfere with the order of the lower authority. Accordingly, the order of the CIT(Appeals) is confirmed.
In the result, the appeal of the assessee is dismissed.
Order pronounced on 7th January, 2016 at Chennai.