ASSOCIATED BREWERIES & DISTRILLERIES P. LTD, MUMBAI V. ITO WD 2(1)(1), MUMBAI

ITA 1409/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84189 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2014
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 05-11-2014
• Assessment Year: 1998-1999
• Appeal Filed On: 01-03-2012
• Court: TRIBUNAL
• Department Lawyers: SACHIDANAND DUBE
• Assessee Lawyers: AMO GH M GHAISAS
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A , MUMBAI BEFORE SHRI H.L. KARWA, PRESIDENT AND SHRI D. KARUNAKARA RAO, ACCOUNTAT MEMBER I.T.A.NO. 1409/M/2012 (AY: 1998 - 1999 ) ASSOCIATED BREWERIES & DISTILLERIES PVT LTD., 1 ST FLOOR, MEHER HOUSE, 15, CAWASJI PATEL STREET, FORT, MUMBAI 400 001. PAN:AAACA8876B VS. INCOME TAX OFFICER 2(1) (1), AAYAKAR BHAVAN, M.K. MARG, MUMBAI 400 02. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AMOGH M. GHAISAS RESPONDENT BY : SHRI SACHIDANAND DUBE DATE OF HEARING: 5.11.2014 DATE OF ORDER: 19 .11.2014 O R D E R PER D. KARUNAKARA RAO, AM : THIS APPEAL FILED BY THE ASSESSEE ON 1.3.2012 IS AGAINST THE ORDER OF THE CIT (A) - 5, MUMBAI DATED 13.1.2012 FOR THE ASSESSMENT YEAR 1998 - 1999. 2. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER : THE LD. CIT (A) HAS ERRED IN CONFIRMING THE LEVY OF PENALTY OF RS. 30,56,066/ - U/S 271(1)(C) OF THE ACT. THE APPELLANT SUBMITS THAT ONE THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, NO PENALTY IS LEVIABLE. ADDITIONAL GROUNDS OF APPEAL: 1. THE APPELLANT SUBMITS THAT THE RE - OPENING OF THE ORIGINAL ASSESSMENT COMPLETED UNDER SECTION 143 ( 3) BY ISSUING NOTICE U / S 148 WAS ITSELF ILLEGAL BECAUSE THERE W AS NO F R ESH MATERIA L BEFORE THE ASSESSING OFFICER TO RE - OPEN THE ASSESSMENT SO A S TO DISALLO W SALES TAX REFUND O F RS . 87 , 31 , 618 / - WHICH WAS NEITHER RECEIVED NOR ACCRUED DUR I NG THE RELEVANT PRE V IOUS YEA R . ALTHOUGH THE RE - OPENING OF THE ASSESSMENT W AS NOT CHALLENGED BY THE APPELLANT IN THE QUANTUM APPEAL AGAINST THE RE - ASSESSMENT ORDER BEFORE THE CIT(A ) OR BEFORE THE ITAT, W HO HA V E CONFMNED THE SAID ADDITION , TH E APPELLANT I S ENTITLED TO R A ISE THI S PLE A ABOUT THE ILLEG A LIT Y O F T HE REASSESSMENT PR O CE E DINGS F O R THE F IR S T TIM E IN T HE P RESE NT APP EA L . 2. THE APPELL AN T THE RE F OR E SUBMITS THAT W ITHOUT P R EJUD I CE TO THE FA CT TH A T T HERE H A S BEEN NO CONCEALMENT OF AN Y INCOME OR AN Y FURNISHING INACCURATE PARTICULARS O F INCOME ON THE PART OF THE APPELLANT THE CONCEALMENT PENALT Y OF RS.30 , 56 , 066 / - IS NOT JUSTIFIED BECAUSE THE RE - ASSESSMENT ORDER U / S 143 ( 3 ) READ W ITH SECTION 147 IS B Y I TSEL F ILLEGAL AND UNSUSTAINABLE IN LA W . 2 3. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN T HE BUSINESS OF MANUFACTURING OF MANUFACTURING AND SALE OF BEER. ASSESSEE FILED THE RETURN OF INCOME DECLARING THE TOT AL LOSS OF RS. 3,38,02,374/ - . RE - A SSESSMENT WAS COMPLETED U/S 143(3) R.W. S 147 OF THE ACT AND THE INCO ME WAS DETERMINED AT RS. NIL. DURING THE ASSESSMENT PROCEEDINGS, I N THE COMPUTATION OF INCOME, ASSESSING OFFICER NOTICED THAT THE ASSESSEE CLAIMED DEDUCTION OF PROVISION FOR SALES TAX REFUND AMOUNTING TO RS. 87,31,618/ - . AS SESS ING OFFICER IS OF THE OPINION THAT THE SAID AMOUNT SINCE QUANTIFIED BY THE ASSESSEE IN HIS OWN COMPUTATION THE SAME SHOULD HAVE BEEN CREDITED TO THE INCOME OF THE ASSESSEE IN THE YEAR UNDER CONSIDERATION . IN REPLY, THE ASSESSEE SUBMITTED THAT THE SALES TAX REFUND ACCRUES TO THE ASSESSEE ONLY WHEN THE SALES TAX ASSESSMENT IS FINALIZED QUANTIFYING THE REFUND PAYABLE TO ASSESSEE . BRINGING OUR ATTENTION TO THE DOCUMENTS ON RECORD PLACED BEFORE US, LD COUNSEL FOR THE ASSESS EE DEMONSTRATED THAT ASSESSEE IS CONSISTENTLY FOLLOWING THE SIMILAR METHOD OF ACCOUNTING IN THIS REGARD . THEREFORE, IT IS THE CLAIM OF THE ASSESSEE THAT ASSESSEE HAS RIGHTLY REDUCED THE SAID PROVISIONS FROM THE COMPUTATION. ASSESSING OFFICER DID NOT ACCE PT THE SAME AND PROCEEDED TO MAKE THE ADDITION IN THE ASSESSMENT. THIS VIEW OF THE ASSESSING OFFICER WAS CONFIRMED BY THE TRIBUNAL ALSO. HOWEVER, IN THE PENALTY PROCEEDINGS, THE ASSESSEE HAS ARGUED THAT THE ISSUE IN QUESTION IS DEBATABLE IN NATURE AND TH E PENALTY SHOULD NOT BE LEVIED ON SUCH DEBATABLE ISSUES. REJECTING THE SAME, THE ASSESSING OFFICER LEVIED THE PENALTY U/S 271(1)(C) OF THE ACT IN RESPECT OF THE SAID DISALLOWANCE. AGGRIEVED, ASSESSEE FILED AN APPEAL BEFORE THE CIT (A). 4. DURING THE PRO CEEDINGS BEFORE THE FIRST APPEAL, CIT (A) UPHOLD THE ORDER OF THE AO. AGGRIEVED WITH THE ABOVE, ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE ABOVE MENTIONED GROUNDS. 5. DURING THE PROCEEDINGS BEFORE US, ASSESSEE FILED ADDITIONAL GROUNDS AND QU ESTIONED THE REOPENING OF THE ORIGINAL ASSESSMENT FOR MAKING THE ABOVE REFERRED ADDITION IN THE REASSESSMENT. HOWEVER, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SAID ADDITIONAL GROUNDS ARE NOT PRESSED IF THE PENALTY PROCEEDINGS ARE HELD UNSUSTAINABLE IN LAW IN VIEW OF THEIR DEBATABLE NATURE OF THE ISSUE. LD COUNSEL ALSO MENTIONED THAT ASSESSEE IS CONSISTENTLY FOLLOWING THE MERCANTILE METHOD OF ACCOUNTING INVOLVING CREDITING OF THE SALES TAX REFUND AMOUNT TO THE INCOME OF THE 3 ASSESSEE BASED ON THE SAL ES TAX ASSESSMENT ORDER SHOWING THE YEAR OF CRISTALIZATION OF THE REFUND AMOUNTS. HE ALSO MENTIONED THAT MORE OFTEN, THE CLAIMS OF THE ASSESSEE ARE NOT DISTURBED BY THE SALES TAX AUTHORITIES. THEREFORE, ASSESSEES METHOD OF ACCOUNTING IS SUSTAINABLE IN L AW. 6. ON THE OTHER HAND, LD DR RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE RELEVANT MATERIAL PLACED BEFORE US. ON HEARING BOTH THE PARTIES AND ON PERU SAL OF THE ORDERS OF THE REVENUE, WE FIND THE DISPUTE RELATES TO THE YEAR OF ACCRUAL OF THE SAID SALES TAX REFUND. THERE ARE TWO POSSIBLE VIEWS AVAILABLE ON THIS ISSUE. IT IS THE CASE OF THE REVENUE THAT THE SALES TAX REFUND STANDS ACCRUED BASED ON THE C OMPUTATION OF INCOME FILED BY THE ASSESSE ALONG WITH THE RETURN OF INCOME. IT IS A FACT THAT THE AMOUNT SHOWN BY THE ASSESSEE IN THE COMPUTATION IS ALTERED CONSIDERING THE SALES TAX ASSESSMENT ORDERS AS AND WHEN SALES TAX AUTHORITIES PASS ORDERS . THE OTH ER VIEW IS ADOPTING THE QUANTIFICATION FIGURES AS DETERMINED BY THE SALES TAX AUTHORITIES AS AND WHEN ASSESSMENTS ARE MADE. THUS, THERE IS NO RULE OR LAW ON THIS ISSUE IF THE SALES TAX REFUND FIGURES SHOULD BE ADOPTED BASED ON THE COMPUTATION OF INCOME OF THE ASSESSEE OR OTHERWISE BASED ON ORDERS OF THE SALES TAX AUTHORITIES . IN OUR OPINION, THERE IS A CLEAR CUT DEBATE ON THIS ISSUE. CONSIDERING THE FACT THAT THE ISSUE IS DEBATABLE IN NATURE, WE ARE OF THE OPINION, THE CIT (A) ORDER IS NOT SUSTAINABLE LE GALLY. ACCORDINGLY, WE REVERSE THE ORDER OF THE CIT (A) AND ALLOW THE GROUND RAISED BY THE ASSESSEE. ACCORDINGLY, GROUND RAISED BY THE ASSESSEE IS ALLOWED. 8. REGARDING THE ADDITIONAL GROUNDS, CONSIDERING THE RELIEF GRANTED ON THE ISSUE RAISED BY THE ASS ESSEE, THE SAID ADDITIONAL GROUNDS ARE DISMISSED AS NOT PRESSED. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED. ORDER PRONOUN CED IN THE OPEN COURT ON 1 9 T H NOVEMBER, 2014. S D / - S D / - (H.L. KARWA) (D. KARUNAKARA RAO) PRESIDENT ACCOUNTANT MEMBER DATE: 1 9 .11.2014. AT :MUMBAI 4 OKK COPY TO : 1. APPELLANT 2. RESPONDENT 3. THE CIT (A), CONCERNED. 4. THE CIT CONCERNED. 5. THE DR A, BENCH, ITAT, MUMBAI. 6. GUARD FILE. // TRUE COP Y// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI