DYNA HITECH POWER SYSTEMS LTD, MUMBAI V. JCIT (OSD), MUMBAI

ITA 1267/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9201 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-12-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 17-12-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 16-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A B KOLI
• Assessee Lawyers: KISHORE K PODDAR
• Keywords: Reasonable cause
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI SANJAY ARORA, ACCOUNTANT MEMBER ITA NO. : 1267/MUM/2010 ASSESSMENT YEAR: 2002-03 DYNA HITECH POWER SYSTEMS LTD. DYNA HOUSE, PLOT NO. A-57, MIDC, SECTOR 1, ANDHERI (EAST), MUMBAI 400 093. [PAN NO. AAACD 5391 A] VS. ACIT 8(1), AAYKAR BHAVAN, MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI KISHORE K. PODDAR RESPONDENT BY : SHRI A.B. KOLI DATE OF HEARING : 17.12.2012 DATE OF PRONOUNCEMENT : 26.12.2012 ORDER PER SANJAY ARORA, AM : THIS IS AN APPEAL BY THE ASSESSEE AGITATING THE ORD ER BY THE COMMISSIONER OF INCOME TAX (APPEALS)16, MUMBAI (CIT(A) FOR SHORT ) DATED 17.12.2009, CONFIRMING THE LEVY OF PENALTY U/S. 271(1)(C) OF THE INCOME TA X ACT, 1961 (THE ACT HEREINAFTER) AS LEVIED (AT RS.61,209/-) BY THE ASSESSING OFFICER (A .O.) FOR THE ASSESSMENT YEAR (A.Y.) 2002-03 VIDE HIS ORDER DATED 21.03.2007. 2. THE FACTS IN BRIEF ARE THAT DURING THE ASSESSME NT PROCEEDINGS, THE A.O. OBSERVED BELATED PAYMENTS OF THE EMPLOYEES AS WELL AS THE E MPLOYERS CONTRIBUTION TO THE EMPLOYEE WELFARE FUNDS, BEING THE EMPLOYEES PROVIDE NT FUND (EPF) AND THE EMPLOYEES STATE INSURANCE FUND (ESIF), BY THE ASSESSEE, AND W HICH EXCEED THE GRACE PERIOD OF FIVE DAYS, I.E., AS AVAILABLE UNDER THE PROVIDENT FUND A CT. ACCORDINGLY, A DISALLOWANCE WITH ITA NO. : 1267/MUM/2010 (AY: 2002-03) DYNA HITECH POWER SYSTEMS LTD. V. ACIT, MUMBAI 2 REFERENCE TO S.43B (B) (IN RESPECT OF THE EMPLOYER S SHARE) AND U/S. 2(24)(X) R.W.S. 36(1)(VA) OF THE ACT (IN RESPECT OF THE EMPLOYEES SHARE), AT AN AGGREGATE OF RS.1,71,454/- , WAS MADE AND, SIMULTANEOUSLY, PENALTY PROCEEDINGS IN ITS RESPECT INITIATED. IN THE SAID PROCEEDINGS, PENALTY STOOD LEVIED ON THE BASIS THA T THE ASSESSEE WAS UNABLE TO SHOW ANY REASONABLE CAUSE FOR HAVING MADE THE CLAIM DESPITE ADMITTEDLY NOT COMPLYING WITH THE PROVISIONS OF THE ACT, RELYING ON THE DECISIONS IN THE CASE OF CIT VS. JEEVAN LAL SHAH [1994] 205 ITR 244 (SC); CIT VS. MUSSADILAL RAM BHAROSE [1987] 165 ITR 14 (SC); AND CIT VS . STANDARD MERCANTILE CO. [1986] 160 ITR 613 (PATNA), HOLDING THAT THE INITIA L BURDEN TO DISCHARGE THE ONUS TO REBUT THE PRESUMPTI ON UNDER EXPLANATION 1 TO SECTION 271(1)(C) WAS ON THE ASSESSEE, AND WHICH HAD NOT BE EN MET BY IT. THE SAME STOOD CONFIRMED IN APPEAL BY THE LD. CIT(A), FOLLOWING TH E DECISION BY THE HON'BLE APEX COURT IN THE CASE OF UNION OF INDIA V. DHARMENDRA TEXTILE PROCESSORS & O THERS , 306 ITR 277 . 3. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERI AL ON RECORD. WE FIRSTLY OBSERVE THAT THE DELAY IN PAYMENT IN ALL THE CASES, WHICH I S IN RESPECT OF ONLY TWO MONTHS OF THE YEAR (TABULATED AT PARA 4.4 OF THE ASSESSMENT ORDER ), IS FOR NOMINAL PERIODS, VARYING FROM 7 DAYS AT THE MINIMUM TO A MAXIMUM OF 16 DAYS. THE PREMISE OF SEC. 43B IS TO LINK THE DEDUCTIBILITY OF THE SUMS SPECIFIED THERE-UNDER TO ACTUAL PAYMENT. THE SAME GOES FOR SECTION 36(1)(VA) AS WELL. THOUGH RESORT TO THE SAM E, WHERE THE LANGUAGE IS CLEAR, CAN NOT BE ORDINARILY MADE, IT NEEDS TO BORNE IN MIND THAT THE PRESENT PROCEEDINGS ARE QUA PENALTY, WHICH IS SAVED BY A REASONABLE CAUSE, SO T HAT ALL THAT IS REQUIRED IS A PLAUSIBLE AND HONEST EXPLANATION. IT IS HERE THAT THE ASSSESS EES CONDUCT OR BONA FIDES ASSUME SIGNIFICANCE. TOWARD THIS, WE FIND THAT THE MATTER STOOD DULY REPORTED BY THE ASSESSEE PER ITS TAX AUDIT REPORT, FILED ALONG WITH AND FORMING PART OF THE RETURN OF INCOME FOR THE YEAR. IT IS, THUS, QUIZZICAL AS TO WHAT PARTICULARS OF INCOME HAVE BEEN CONCEALED OR INACCURATELY FURNISHED BY THE ASSESSEE, EVEN CONSID ERING THAT THE DEDUCTION CLAIMED IN RESPECT OF THE SAME IS OR MAY NOT BE IN ACCORDANCE WITH THE LAW. THAT IS, COULD THE DEEMING OF EXPLANATION 1 APPLY WHERE THE PARTICULARS OF INCOME STAND, ON TH E FACE OF IT ITA NO. : 1267/MUM/2010 (AY: 2002-03) DYNA HITECH POWER SYSTEMS LTD. V. ACIT, MUMBAI 3 (RETURN), CORRECTLY AND UNAMBIGUOUSLY STATED ? WE DO NOT OF COURSE IMPLY TO MEAN THAT THE ASSESSEE COULD MAKE A CLAIM WITHOUT ANY BASIS, AND WOULD YET NOT BE LIABLE TO PENALTY, BUT ONLY THAT WHERE THE SAME (DISCLOSURE) IS COUPLE D WITH SOME REASONABLE BASIS OR GROUND THEREFOR, A WRONG OR INVALID CLAIM WOULD NOT ATTRACT PENALTY AS THE BASIC INGREDIENT OF THE PROVISION, I.E., CONCEALMENT OR FURNISHING I NACCURATE PARTICULARS OF INCOME, IS MISSING. TOWARD SUCH A BASIS OR GROUND, WE MAY C LARIFY THAT THERE HAS BEEN CONSIDERABLE DIFFERENCE OF JUDICIAL OPINION, WITH SECTION 43B(B) ALSO UNDERGOING AMENDMENT (VIDE FINANCE ACT, 2003, W.E.F. A.Y. 2004-05), SO THAT TH E DELAYED PAYMENT OF THE EMPLOYERS SHARE WOULD STAND TO BE ALLOWED WHERE THE PAYMENT I S MADE BY THE DUE DATE OF FILING OF THE RETURN OF THE INCOME FOR THE RELEVANT ASSESSMEN T YEAR, WHILE IN THE INSTANT CASE, THE DELAY IN PAYMENT IS ADMITTEDLY ONLY BY A FEW DAYS. THE MATTER STANDS FINALLY SETTLED BY THE APEX COURT IN THE CASE OF CIT V. ALOM EXTRUSIONS LTD. [2009] 319 ITR 306 (SC) , HOLDING THE SAID AMENDMENT, BY WAY OF OMISSION OF S ECOND PROVISO TO THE SECTION AND THE CORRESPONDING AMENDMENT IN THE FIRST PROVISO BY FIN ANCE ACT, 2003, TO BE CURATIVE AND, THUS, RETROSPECTIVE IN NATURE, DATING BACK TO AY 19 88-89. AS REGARDS THE EMPLOYEES SHARE, WHICH STANDS DISALLOWED U/S. 2(24)(X), R.W.S . 36(1)(VA), THERE HAS AGAIN BEEN CLEAVAGE IN JUDICIAL OPINION, WITH ONE VIEW BEING I N FAVOUR OF THE SAID PAYMENTS AS ALSO BEEN FALLING WITHIN THE PURVIEW OF SECTION 43B. TH E MATTER HAS AGAIN ATTAINED FINALITY WITH THE DECISION BY THE APEX COURT IN THE CASE OF ALOM EXTRUSIONS LTD. (SUPRA), HOLDING SO. AS SUCH, EVEN ON THE MERITS OF THE CLAIM FOR DE DUCTION, THE ASSESSEE HAD A REASONABLY GOOD CASE QUA BOTH THE PAYMENTS. TRUE, WE ARE AWARE THAT THE MAJ OR CONTROVERSY QUA THE SAID PROVISION AROSE SUBSEQUENT TO THE AMENDMENT PE R FINANCE ACT, 2003, W.E.F. 01/4/2004, BUT THEN THE LARGER QUESTION THAT ENGAGE D THE MINDS OF THE COURTS AND TRIBUNALS WAS WHETHER THE PROVISO COULD EXPAND THE SCOPE OF THE MAIN PROVISION, WHIC H CLEARLY WAS RESTRICTED TO CONFINING THE DEDUCTION TO THE YEAR O F ACTUAL PAYMENT, BY PROSCRIBING ANY DEDUCTION IN THE EVENT OF A DELAYED PAYMENT, EVEN B Y, AS WE OBSERVE IN THE INSTANT CASE, A FEW DAYS. IT IS THIS THAT FINALLY PREVAILED WITH TH E HONBLE APEX COURT IN HOLDING THE ITA NO. : 1267/MUM/2010 (AY: 2002-03) DYNA HITECH POWER SYSTEMS LTD. V. ACIT, MUMBAI 4 OMISSION OF CLAUSES IN PROVISO TO SEC. 43B PER FINANCE ACT, 2003 TO BE CLARIFICAT ORY AND, HENCE, RETROSPECTIVE BY THE APEX COURT. THESE QUEST IONS ASSUME VITAL SIGNIFICANCE IN THE CASE OF PENALTY PROCEEDINGS, SO THAT THE ASSESSEES CONDUCT OR BONA FIDES IN THE MATTER ARE EXTREMELY RELEVANT. TOWARD THIS, WE HAVE ALREADY NO TED THAT THE INFORMATION REGARDING NON-COMPLIANCE WITH THE STRICT LANGUAGE OF THE RELE VANT PROVISIONS STOOD FURNISHED PER THE ASSESSEES RETURN ITSELF. NO CASE FOR THE LEVY OF PENALTY, UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, IS MADE OUT, AND FOR WHI CH WE DRAW SUPPORT AND PLACE RELIANCE, INTER ALIA , ON THE DECISION IN THE CASE OF CIT V. RELIANCE PETRO PRODUCTS PVT . LTD . REPORTED AT [2010] 322 ITR 158 (SC). WE DECIDE ACCORDINGLY. 4. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED ON THIS 26 TH DAY OF DECEMBER, 2012 SD/- SD/- - (D. MANMOHAN) (SANJAY ARORA) VICE PRESIDENT ACCOUNTANT MEMBER MUMBAI, DATE: 26.12.2012 COPY FORWARDED TO: 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE C.I.T. 4. CIT (A) 5. THE DR D BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI ROSHANI