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DCIT Circle-11(1), Room No. 312, C.R. Building New Delhi. Vs. Ezentech India (P) Ltd. 216-B/6, Gautam Nagar New Delhi.
August, 19th 2015
                        DELHI BENCHES : "B" NEW DELHI

                  SHRI C.M. GARG, JUDICIAL MEMBER

                                 ITA No: 2861/Del/2013
                                   Asstt. year 2005-06

                   DCIT                      vs. Ezentech India (P) Ltd.
                   Circle-11(1), Room No. 312,    216-B/6, Gautam Nagar
                   C.R. Building                  New Delhi.
                   New Delhi.                   (Pan AABCE3184F)

                   (Appellant)                    (Respondent)

                       Appellant by  : Smt. Parvinder Kaur, Sr. DR
                       Respondent by :Shri Ashish Goel
                     Date of Hearing  :18.8.2015
               Date of pronouncement :18.8.2015



      This is an appeal filed by the revenue against the order of Ld. CIT(A) dated

1.3.2013. The revenue is aggrieved with the action of Ld. CIT(A) by which he has

deleted the penalty amounting to Rs. 52,80,395/- imposed by AO u/s 271(1)(c) of

the Act.

2.     At the outset Ld. AR invited our attention to an order of Hon'ble Tribunal

dated 21.10.2014 in the case of assessee itself and submitted that the addition

which was subjected to penalty has already been deleted by Hon'ble Tribunal and

therefore the penalty does not survive. Ld. DR however supported the orders of AO .

3.    We have heard rival submissions and have gone through the material available

on record. We find that the assesee is a private Ltd. Co. and a 100% subsidiary of
                                                          ITA No. 2861/Del/2013
                                                    DCIT vs. Ezentech India (P) Ltd.

Ezendech Co. Ltd. , Korea and is engaged in the manufacturing of sheet metal parts

of refrigerator, air conditioners etc. For assessment year 2005-06, the assessee filed

a return of income declaring a loss of Rs. 1,44,31,247/- consisting of business loss to

the extent of Rs. 8,09,383/- and depreciation to the tune of Rs. 1,36,21,869/-. The

AO during assessment proceedings disallowed the loss claimed by assessee holding

that the assessee had not carried out any manufacturing activity and consequently

penalty u/s 271(1)(c) was imposed vide order dated 31.3.2011. The relevant

findings of Assessing Officer as contained in penalty order are reproduced below:-

       "5. The total disallowance of Rs. 1,44,31,252/- as discussed above was
      upheld by the CIT(A) and appeal of the assessee was dismissed.
      6.      In the light of above stated facts and circumstances, it is established
      beyond doubt that the assesee has furnished inaccurate particulars of income
      to the extent of Rs. 1,44,31,252/-. Further, the assesee company, even
      during the course of penalty proceedings, could not produce any cogent reply
      /evidence to justify non imposition of penalty. This is important in view of the
      judgment of CIT vs. Lal Chand Tirath Ram (1997) 225 ITR 675 (P & H),
      wherein , it has been observed that :-
             "To avoid burden of penalty, the assessee should produce cogent and
             reliable evidence."
4.    We further find that the Hon'ble Tribunal vide order dated 21st October, 2014

has deleted the additions confirmed by Ld. CIT(A). The relevant findings as

contained in para 2 & para 6.1 to 6.2 are reproduced below :-

      "Para 2.     The assessee is a private Ltd. Co. and a 100% subsidiary of
      Ezendech Co. Ltd., Korea (`ECL') and is engaged in the manufacture of sheet
      metal parts of refrigerator, air conditioners etc., it has tied up for dedicated
      supply of components to OEM customers such as L.G. India and Samsung
      India. For the assessment year 2005-06 the assessee filed a return of income
      on 25.10.2005 declaring a loss of Rs. 1,44,31,247/-. The AO vide his order
      dated 28.12.2007 passed u/s 143(3) of the Act determined the total income
      at Nil interalia rejecting the claim of the assessee for business loss to the
      extent of Rs. 8,09,383/- and depreciation to the tune of Rs. 1,36,21,869/-."

                                                              ITA No. 2861/Del/2013
                                                        DCIT vs. Ezentech India (P) Ltd.

          "Para 6.1 In the case on hand the Revenue is not disputing the fact that the
          assessee has sold goods worth Rs. 698.70 on 28.3.2005. The assessee has
          filed both excise records as well as sales tax records, as evidence of sale. This
          evidence is not controverted by the Ld. DR except for some that these are
          self-serving documents. In our view the assessee has effectively replied to the
          issues raised by Ld. AO . Records were produced to demonstrate payments
          made to the contractors for construction of the building. It was also
          demonstrated that the assessee had two large generators of 500 KVA and
          that these generators were run for substantive number of hours and that
          there was substantial consumption of fuel. There is no denying of the fact
          that the trial run production was carried out by the assessee. There was a
          pilot lot of goods produced by the assessee and there was also a sale of
          goods produced by the assessee. Except for finding fault with the evidences
          produced by the assessee, there is no material with Revenue to controvert
          the stand of the assessee."
          Para 6.2    Thus in our considered view, once we have come to a conclusion
          that the assessee's business was set up prior to 31st March, 2005 and that the
          plant and machinery were ready to use and that the trial run has been carried
          out, we have to accept the contention of the assessee that the disallowance
          of depreciation and business loss by the AO, as confirmed by the First
          Appellate Authority is erroneous."

5.        From the above facts and circumstances we find that the subject matter of

penalty has been decided in favour of assessee and therefore penalty does not

survive and therefore the appeal filed by the revenue is dismissed.

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

            Order pronounced in the open court on 18th August, 2015.

                 sd/-                               sd/-
               (C.M. GARG)                       (T.S. KAPOOR)
             JUDICIAL MEMBER                   ACCOUNTANT MEMBER

Dated: the      18th   August, 2015

                                                                  ITA No. 2861/Del/2013
                                                            DCIT vs. Ezentech India (P) Ltd.

Copy of the Order forwarded to:

1.    Appellant
2.    Respondent
3.    CIT
4.    CIT(A)
5.    DR
6.    Guard File                              By order
                                                         Dy. Registrar

Sl.                    Description                        Date

 1.   Date of dictation by the Author                18.8..2015

 2.   Draft placed before the Dictating Member       18.8.2015

 3.   Draft placed before the Second Member

 4.   Draft approved by the Second Member

 5.   Date of approved order comes to the Sr. PS

 6.   Date of pronouncement of order

 7.   Date of file sent to the Bench Clerk

 8.   Date on which file goes to the Head Clerk

 9.   Date of dispatch of order

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