M/s Imeco Ltd., Kolkata V. DCIT, CIR-2, KOLKATA, Kolkata

ITA 1166/KOL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1696 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 15-09-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K SINHA
• Assessee Lawyers: MANISH TIWARI
• Keywords: Business income; Opportunity of being heard
• Section: 43B

Judgement Text

ITA NO.1166/KOL/2015 M/S IMECO LTD. A.Y.2009-10 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH A KOL KATA [BEFORE HONBLE SHRI N.V.VASUDEVAN, JM & SHRI M.B ALAGANESH, AM ] ITA NO.1166/KOL/2015 ASSESSMENT YEAR : 2009-10 M/S. IMECO LTD. -VERSUS- D.C.I.T., CIRCLE- 2, KOLKATA KOLKATA (PAN: AAACI 6301 B) (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI MANISH TIWARI, FCA FOR THE RESPONDENT: SHRI A.K.SINHA, ADDL. CIT DATE OF HEARING : 02.08.2017. DATE OF PRONOUNCEMENT : 18.08.2017. ORDER PER N.V.VASUDEVAN, JM: THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 04.09.2014 OF CIT(A)-XXXIII, KOLKATA, RELATING TO AY 2006-07. 2. GROUNDS OF APPEAL RAISED BY THE ASSESSEE AS FOL LOWS :- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, LD. C.I.T (A) IS WRONG IN HOLDING THAT PAYMENT OF EXCIDE DUTY WAS MADE AFT ER THE DUE DATE OF FILING OF RETURN WITHOUT PROPER APPRECIATION OF FACTS AND / O R RELYING ON IRRELEVANT CONSIDERATIONS. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, LD. CIT(A) IS WRONG AND UNJUSTIFIED IN CONFIRMING THE ACTION OF ASSESSI NG OFFICER WHO FAILED TO ALLOW EXCIDE DUTY LIABILITY OF RS. 50,00,000/- FOR WHICH A POST DATED CHEQUE NO. 992221 DATED 15.09.2009 WAS HANDED OVER TO EXCISE D EPARTMENT ON 21.07.2009. 3. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, A DDUCE ANY GROUND OR GROUNDS ON OR BEFORE THE DATE OF HEARING. '' 3. THE ASSESSEE IS A COMPANY ENGAGED IN THE MANU FACTURE OF COMPONENTS OF AIR PRE-HEATER BASKETS AND ELECTRO STATIC PRECIPITATORS REQUIRED BY THERMAL POWER PLANTS. IN THE COURSE OF ASSESSMENT PROCEEDINGS FOR A.Y.200 9-10 THE AO NOTICED THAT THE ITA NO.1166/KOL/2015 M/S IMECO LTD. A.Y.2009-10 2 ASSESSEE HAD CLAIMED A SUM OF RS.2 CRORES IN THE P ROFIT AND LOSS ACCOUNT AS DEDUCTION IN COMPUTING THE BUSINESS INCOME TOWARDS EXCISE DUT Y WHICH REMAINED UNPAID DURING THE YEAR BUT PAID SUBSEQUENTLY. IN THE COURSE OF AS SESSMENT PROCEEDINGS IT TRANSPIRED THAT THE ASSESSEE HAD GIVEN POST DATED CHEQUES TO E XCISE DEPARTMENT TOWARDS EXCISE DUTY PAYABLE. THERE IS NO DISPUTE THAT A SUM OF RS. 1.5 CRORES WAS PAID BY THE ASSESSEE TO THE CENTRAL EXCISE DEPARTMENT ON OR BEFORE 30.09 .2009 WHICH WAS THE DUE DATE OF FILING THE RETURN OF INCOME BY THE ASSESSEE FOR A.Y .2009-10. THEREFORE THIS SUM WAS TO BE ALLOWED AS DEDUCTION IN VIEW OF THE PROVISO T O SECTION 43B OF THE ACT. HOWEVER, WITH REGARD TO THE SUM OF RS.50,00,000/-, THE AO NO TICED THAT THE ASSESSEE HAD GIVEN A CHEQUE DATED 15.09.2009 TO THE ASSISTANT DIRECTOR, DIRECTORATE OF CENTRAL EXCISE INTELLIGENCE, KOLKATA ZONAL UNIT, KOLKATA AND THIS CHEQUE WAS ENCASHED ONLY ON 06.10.2009. SINCE THE EXCISE DUTY IN QUESTION HAD N OT BEEN OBTAINED ON OR BEFORE THE DUE DATE FOR FILING THE RETURN OF INCOME U/S 139(1) OF THE ACT NAMELY 30.09.2009 THE AO DISALLOWED THE CLAIM OF THE ASSESSEE FOR DEDUCT ION OF A SUM OF RS.50,00,000/- AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 4. BEFORE CIT(A) THE ASSESSEE SUBMITTED THAT AS EARLY 21.07.2009 THE ASSESSEE HAD DEPOSITED POST DATED CHEQUE TO THE EXCISE DEPARTMEN T. THE CHEQUE FOR RS.50,00,000/- DATED 15.09.2009 WAS ALSO DELIVERED ON 21.07.2009. THE EXCISE DEPARTMENT HAD NOT ENCASHED THE CHEQUE IMMEDIATELY AND THE CHEQUE WAS ULTIMATELY CLEARED FOR PAYMENT ONLY 06.10.2009. THE ASSESSEE POINTED OUT THAT THE DELAY OR DEFAULT IS NOT ATTRIBUTABLE TO THE ASSESSEE AND THEREFORE DISALLOWANCE U/S 43B OF THE ACT CANNOT BE MADE. THE ASSESSEE ALSO SUBMITTED THAT SINCE THE CHEQUE FOR R S.50,00,000/- IS DATED 15.09.2009 THOUGH IT WAS ENCASHED ON 06.10.2009, THE DATE OF P AYMENT SHOULD BE CONSIDERED AS THE DATE OF THE CHEQUE I.E.15.09.2009. IF SO CONSID ERED, NO DISALLOWANCE U/S 43B COULD HAVE BEEN MADE BY THE REVENUE AUTHORITIES. THE ASSE SSEE IN THIS REGARD PRIMARILY PLACED RELIANCE ON THE DECISION OF THE HONBLE SUPR EME COURT IN THE CASE OF CIT VS M/S.CIT VS M/S. OGALE GLASS WORKS LTD. 1955(1), SCR PAGE 185 (SC) WHEREIN IT WAS HELD THAT WHEN THE CHEQUE ISSUED IS HONOURED THE DA TE OF PAYMENT OF THE CHEQUE SHOULD BE TREATED AS THE DATE ON WHICH THE CHEQUE W AS GIVEN. THIS DECISION WAS AGAIN REITERATED BY THE HONBLE SUPREME COURT IN THE CASE OF D.I.T.(EXEMPTION), NEW DELHI ITA NO.1166/KOL/2015 M/S IMECO LTD. A.Y.2009-10 3 VS RAUNAQ EDUCATION FOUNDATION IN CIVIL APPEAL NO.9 0 OF 2013 JUDGMENT DATED 07.01.2013. 5. THE ARGUMENT ON BEHALF OF THE ASSESSEE WAS REJE CTED BY CIT(A) FOR THE REASON THAT IT WAS NOT KNOWN AS TO WHETHER THE ASSESSEE HAD SUF FICIENT FUNDS IN THE BANK ACCOUNT BETWEEN 15.09.2009 AND 30.09.2009. ACCORDING TO CIT (A) THE ASSESSEE WAS IN FINANCIAL DIFFICULTY AND THERE IS EVERY REASON TO B ELIEVE THAT IT WOULD NOT HAVE HAD SUFFICIENT FUNDS BETWEEN 15.09.2009 AND 30.09.2009. THEREFORE THE DATE OF CHEQUE CANNOT BE TAKEN AS DATE OF PAYMENT. CIT(A) ACCORDIN GLY CONFIRMED THE ORDER OF AO. 6. AGGRIEVED BY THE ORDER OF CIT(A) THE ASSESSEE HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE LD. COUNSEL FOR THE ASSESSEE APART FROM REITERATING THE STAND OF THE ASSESSEE AS WAS PUT FO RTH BEFORE CIT(A) FURTHER PLACED RELIANCE ON THE DECISION OF HONBLE PUNJAB & HARYAN A HIGH COURT IN THE CASE OF CIT VS HINDUSTAN WIRE PRODUCTS LTD. 253 ITR 299 (P&H) W HEREIN IT WAS HELD THAT WHEN THERE IS FAILURE OF A STATUTORY CORPORATION TO ENCA SH A CHEQUE BEFORE THE DUE DATE CONTEMPLATED U/S 43B OF THE ACT AND WHEN A CHEQUE WAS ISSUED PRIOR TO THE DUE DATE U/S 43B OF THE ACT, NO DISALLOWANCE U/S 43B OF THE ACT CAN BE MADE. THE LD. DR RELIED ON THE ORDER OF CIT(A). 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE FACTUAL ASPECTS ARE NOT IN DISPUTE. THE ONLY ASPECT THAT NEEDS CONSIDERATION IS THE QUE STION AS TO WHETHER BETWEEN 15.09.2009 AND 30.09.2009 THE ASSESSEE HAD SUFFICIE NT FUNDS IN HIS BANK ACCOUNT. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE US TH AT THE ASSESSEE WAS HAVING CASH CREDIT ACCOUNT AND THEREFORE THE CHEQUE FOR RS.50,0 0,000/- WOULD HAVE BEEN CLEARED IF IT HAD BEEN PRESENTED FOR PAYMENT BETWEEN 15.09.200 9 AND 30.09.2009. THIS ASPECT HAS NOT BEEN VERIFIED BY THE REVENUE AUTHORITIES. I N OUR VIEW THE DATE OF CHEQUE CAN BE CONSIDERED AS DATE OF PAYMENT ONLY WHEN IN A SITUAT ION WHERE AN ASSESSEE HAS SUFFICIENT BALANCE TO HONOUR THE CHEQUE BETWEEN THE DATE OF CHEQUE AND DATE ON WHICH IT WAS ENCASHED. SINCE THIS ASPECT HAS NOT BEEN EXA MINED, THE PARTIES BEFORE US AGREED THAT THE ISSUE CAN BE REMANDED TO THE AO TO VERIFY THIS ASPECT AND IF THE CONTENTION OF ITA NO.1166/KOL/2015 M/S IMECO LTD. A.Y.2009-10 4 THE ASSESSEE IS FOUND CORRECT THEN THE DISALLOWANCE U/S 43B OF THE ACT SHOULD BE DELETED. WE THEREFORE SET ASIDE THE ORDER OF CIT(A) ON THIS ISSUE AND REMAND THE ISSUE TO THE AO FOR THE PURPOSE OF VERIFICATION OF THE FA CTUAL ASPECT STATED ABOVE. THE AO WILL AFFORD OPPORTUNITY OF BEING HEARD TO THE ASSES SEE IN THE SET ASIDE PROCEEDINGS. ACCORDINGLY THE APPEAL OF THE ASSESSE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. O RDER PRONOUNCED IN THE COURT ON 18.08.2017. SD/- SD/- [M.BALAGANESH] [ N.V.VASUDEVAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 18.08.2017. [RG PS] COPY OF THE ORDER FORWARDED TO: 1.M/S. IMECO LIMITED, 26, R.N.MUKHERJEE ROAD, 4 TH FLOOR, KOLKATA-700001. 2. D.C.I.T., CIRCLE-2, KOLKATA. 3. C.I.T.(A)- 6, KOLKATA 4. C.I.T-1, KOLKATA 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER, SENIOR PRIVATE SECRETARY HEAD OF OFFICE/D.D.O, ITAT KOLKATA BENCHES