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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.
2 I.T.A. No.1589/Mds/10
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
3 I.T.A. No.1589/Mds/10
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.
4 I.T.A. No.1589/Mds/10
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.
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
5 I.T.A. No.1589/Mds/10
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
6 I.T.A. No.1589/Mds/10
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
7 I.T.A. No.1589/Mds/10
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
8 I.T.A. No.1589/Mds/10
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.
9 I.T.A. No.1589/Mds/10
In the result, the appeal of the assessee is dismissed.
Order pronounced on 7th January, 2016 at Chennai.
sd/- sd/- (ए. मोहन अलंकामणी) (एन.आर.एस. गणेशन) (A. Mohan Alankamony) (N.R.S. Ganesan) लेखा सद�य/Accountant Member �या�यक सद�य/Judicial Member
चे�नई/Chennai, �दनांक/Dated, the 7th January, 2016.
Kri.
आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��यथ�/Respondent 3. आयकर आयु�त (अपील)/CIT(A)-III, Chennai 4. आयकर आयु�त/CIT, Chennai-I, Chennai 5. �वभागीय ��त�न�ध/DR 6. गाड� फाईल/GF.