TaxTMI 
TaxTMI 
2015 (2) TMI 728
X X X X Extracts X X X X
X X X X Extracts X X X X
.... appeals are being decided by this common order. However, the facts are being taken of DB ITA No. 104 of 2012 for the assessment year 1995-96 as the Income-tax Appellate Tribunal has also chosen to take facts of the assessment year 1995-96. 2. These appeals were listed on August 13, 2014, and on the said date, one Mr. Ashvini Chaturvedi, representative of the appellant, appeared in person and the matter was argued by him at some length but he sought further time to prepare the matter and considering his request, the matter was adjourned for today, however, no one appeared on behalf of the appellant. 3. Since no one is putting appearance on behalf of the appellant despite being aware of the matter being listed today and the lawyer representing the appellant is also aware of listing of matter today but lawyers are also abstaining from attending the court without any cogent reason. We have heard the officer, appearing on behalf of the respondents and perused the impugned order so also the material available on record. 4. The salient features of the case are that the appellant-assessee is a 100 per cent. subsidiary of M/s. Punsumi India Ltd. The appellant-assessee was formed f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e to the conclusion that the agreement, as entered into by and between the two companies, i.e., the appellant with the 100 per cent. holding company of the appellant being Punsumi India Ltd., was a transaction only on papers and in fact everything was being shown by way of book adjustments. Finding the aforesaid being a paper transaction, a specific query was raised by the Assessing Officer to the appellant-company as to whether the appellant-assessee is entitled to claim of depreciation on this count. However, it was submitted on behalf of the appellant-assessee that they have shown the royalty income in pursuance of the agreement amounting to Rs. 7,98,915 as also job charges to the extent of Rs. 6,47,837 against which depreciation to the tune of Rs. 1,22,50,341 was claimed. In furtherance of the query, so raised by the Assessing Officer, the Assessing Officer desired justification/genuineness of job work and the Assessing Officer, during the course of investigation, recorded statements of Shri Narendra Singh Negi and Shri Kewal Kishan and it was found by the Assessing Officer that they were employees of Punsumi India Ltd. prior to their working with the appellant and they have be....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... appeal was preferred before this court and, thus, the disallowance of depreciation in all the assessment years attained finality. 7. Consequent to order of the Income-tax Appellate Tribunal, the Assessing Officer issued show-cause notice under section 271(1)(c) of the Income-tax Act requiring the appellant-assessee to substantiate its claim that the depreciation was rightly claimed by it particularly on the basis of the order of the Commissioner of Income-tax (Appeals) as well as the Income-tax Appellate Tribunal, who had sustained the disallowance of depreciation and when the said issue attained finality. No adequate reply was submitted on the instant issue by the assessee and it was merely submitted that the issue may be decided after disposal of the rectification application. It has been observed by the Assessing Officer that the assessee did not place any material during the course of the penalty proceedings and after considering the order of the Income-tax Appellate Tribunal where the disallowance of depreciation was sustained and by observing the material already placed on record, the penalty under section 271(1)(c) of the Act was imposed for all the assessment years. The....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... is no question to acquire this technical know- how from this company because this technical know-how was originated by M/s. Punsumi India Ltd. and they were having the monopoly over the technical know-how. It was not patented technical know-how. In other words, M/s. Punsumi India Ltd. was having that technical know-how so far as the business interest and they have sold it to the assessee and might be to other legal entities. It was not sold with the patent rights. In fact, this technology was not patented as the same was simple technology which is very common. No special significance or patent material was ever submitted or claimed by the assessee. In these circumstances, it is surprising how and why the so- called technology again was taken on royalty basis which was earlier sold. This is nothing. This is merely a paper transaction. In fact, no technical know-how was acquired by the assessee in the absence of the plant and machinery. No resolution was passed by the board of directors. No document has been executed except the memorandum of understanding. This shows that there was colourable device. In plant and machinery, the technical know-how was of no use. It may be mentioned t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ntum proceedings may not hold good but then it was for the appellant- assessee to have submitted material contrary to which the Income-tax Appellate Tribunal placed reliance at the time of passing of the order dated May 26, 2005. We have gone through the reasoning of the Assessing Officer in the penalty proceedings and the Assessing Officer observes that the appellant-assessee have not filed a proper explanation/reply and merely stated to grant further time, it is observed by the Assessing Officer in this regard as under : "A show cause, vide the notice dated November 9, 2005, has been issued and duly been served. The assessee was required to file its reply by December 28, 2005. In compliance with the above, the asses see, vide its letter dated December 19, 2005, stating therein that this issue may be decided after the disposal of rectification application on deletion of the addition made by Assessing Officer on protective basis in respect of job charges." 11. Thus, despite of an adequate opportunity having been granted to the appellant-assessee by the Assessing Officer, the appellant-assessee simply wan....
X X X X Extracts X X X X
X X X X Extracts X X X X
....able at one-sixth for 6 years so as to justify its claim that in any case it was allowable, we are afraid the assessee has wrongly put in the said claim when a passing reference has been made by the Assessing Officer. The assessee nowhere raised such a plea or claim nor any basis was forthcoming on the part of the assessee in any of the explanation before any of the authorities neither at the time of regular assessment nor during the penalty proceedings. The assessee appears to be taking the benefit of the Assessing Officer's passing reference in the assessment order which reads "without prejudice to the above, if at all the claim of the assessee is right, then it should have been claimed under section 35AB to which one-sixth of the total cost is allowable for 6 years". In our view, no claim was before the Assessing Officer but the Assessing Officer, on his own has observed this fact without at all, any issue or claim on behalf of the assessee and the same cannot be said to be view of the Assessing Officer that it was admitted by the Assessing Officer and rejected by the Income-tax Appellate Tribunal. 13. One more question has been framed that the order of penalty passed on ....