IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES : "B" NEW DELHI
BEFORE SHRI T.S. KAPOOR, ACCOUNTANT MEMBER
AND
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
ORDER
PER T.S. KAPOOR, ACCOUNTANT MEMBER
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/-."
2
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
`veena'
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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
No.
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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