M/s Amar Alloys Pvt. Ltd., Hisar V. ACIT, Hisar

ITA 2145/DEL/2011

• Counselvise Citation: 214520114 RSA 2011
• Duration Of Justice: 1 year(s) 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 25-10-2012
• Assessment Year: 1999-2000
• Appeal Filed On: 02-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANURADHA MISHRA
• Keywords: Bogus purchase; Deemed to accrue or arise in india
• Section: 115JB; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : A : NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI A.D. JAIN, JUDICIAL MEMBER ITA NO.2145/DEL/2011 ASSESSMENT YEAR : 1999-2000 AMAR ALLOYS PVT. LTD., INDUSTRIAL AREA, DELHI ROAD, HISAR. PAN : AABCA3460A VS. ACIT, HISAR. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K. SAMPATH, ADVOCATE REVENUE BY : SMT. ANURADHA MISHRA, CIT, DR ORDER PER A.D. JAIN, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 1999-2000 AGAINST THE ORDER DATED 21.02.2011 PASSED BY THE CIT (A), ROHTAK, CONFIRMING THE LEVY OF PENALTY OF ` 6,23,550/- U/S 271 (1)(C) OF THE IT ACT ON THE ASSESSEE. 2. THE FACTS ARE THAT THE ASSESSEE FILED RETURN OF INCOME F OR ASSESSMENT YEAR 1999-2000, DISCLOSING TOTAL TAXABLE INCOM E AT A LOSS OF ` 28,40,769/-, AFTER SETTING OFF BROUGHT FORWARD LOSS O F ` 34,82,351/-. THE ASSESSEE DECLARED INCOME UNDER MAT AT ` 11,415/-. A NOTICE U/S 148 OF THE ACT WAS ISSUED TO THE ASSESSEE ON THE GROUND T HAT THE ASSESSEE COMPANY HAD INDULGED IN MAKING BOGUS PURCHASES O F SCRAP FROM DIFFERENT PARTIES. VIDE ORDER DATED 29.03.2005 , PASSED U/S 143(3)/148 OF THE ACT, THE ASSESSMENT WAS COMPLETED AT A NET LOSS OF ` ITA NO.2145/DEL/2011 2 10,09,175/-. ADDITIONS TO THE TUNE OF ` 17,81,571/- REPRESENTING 25% OF THE PURCHASE VALUE, WERE MADE BY THE ASSESSING OFFICE R, BEING OF THE OPINION THAT THIS REPRESENTED BOGUS PURCHASES. ADMI NISTRATIVE EXPENDITURE WAS DISALLOWED. 3. VIDE ORDER DATED 28.09.2005, PASSED U/S 271(1)(C) OF T HE ACT, THE ASSESSING OFFICER LEVIED A PENALTY OF ` 6,23,550/- ON THE ASSESSEE, AS TAX SOUGHT TO BE EVADED ON THE AFORESAID ADDITIONS OF ` 17,81,571/-. IT WAS HELD THAT THE ASSESSEES INCOME HAD BEEN ASSESSED AT A LO SS ONLY AFTER ADJUSTING THE BROUGHT FORWARD LOSSES/DEPRECIATIO N OF EARLIER YEARS AGAINST THE INCOME FOR THE YEAR UNDER CONSIDERATION, COMPUTED AT THE TIME OF FINALIZATION OF ASSESSMENT TO THE TUNE OF ` 24,73,153/-; AND THAT THE INCOME OF THE ASSESSEE FOR THE YEAR WAS A POSITI VE FIGURE AND NOT A LOSS FIGURE. 4. BY VIRTUE OF THE IMPUGNED ORDER, THE LD. CIT (A) CONFIRMED THE PENALTY, BRINGING THE ASSESSEE IN APPEAL BEFORE US. 5. CHALLENGING THE IMPUGNED ORDER, THE LD. COUNSEL F OR THE ASSESSEE HAS CONTENDED THAT THE LD. CIT (A) HAS ERRED IN CONFI RMING THE PENALTY WRONGLY LEVIED ON THE ASSESSEE. DRAWING OUR ATTENTION TO PAGE 10 OF THE ASSESSMENT ORDER, THE LD. COUNSEL FOR THE ASSESSEE HAS SUB MITTED THAT UNDISPUTEDLY, THE ASSESSMENT WAS COMPLETED ON A MAT BASIS AND NOT ON A REGULAR BASIS; THAT IN CIT VS. NALWA SONS INV ESTMENTS LTD., 327 ITR 543 (DEL), IT HAS BEEN HELD THAT THE TOTAL INCOME OF THE ASSESSEE IS FIRST COMPUTED UNDER THE NORMAL PROVISIONS OF THE ACT AND TAX PAYABLE THEREON IS COMPARED WITH THE PRESCRIBED P ERCENTAGE OF THE BOOK PROFITS COMPUTED U/S 115JB OF THE ACT; THAT HIGH ER OF THE TWO AMOUNTS IS RECORDED AS THE TOTAL INCOME AND TAX IS PAYA BLE WITH REFERENCE TO SUCH TOTAL INCOME; THAT IF THE TAX PAYA BLE UNDER THE NORMAL PROVISIONS OF THE ACT IS HIGHER, SUCH AMOUNT IS THE TOTAL INCOME ITA NO.2145/DEL/2011 3 OF THE ASSESSEE, OTHERWISE, THE BOOK PROFITS ARE DEEMED A S THE TOTAL INCOME AS HIS TOTAL INCOME; THAT WHERE THE INCOME OF THE ASSESSEE IS ASSESSED U/S 115JB OF THE ACT AND NOT UNDER ITS NORMAL PR OVISIONS AND THE DEEMED INCOME ASSESSED U/S 115JB OF THE ACT, BEING H IGHER THAN THAT ASSESSED UNDER THE NORMAL PROVISIONS OF THE ACT, BEC OMES THE BASIS OF ASSESSMENT; THAT THE CONCEALMENT WOULD HAVE ITS REPERCUSSIONS ONLY IF THE ASSESSMENT WERE DONE UNDER THE N ORMAL PROCEDURE; AND THAT WHEN THE COMPUTATION WAS MADE U/ S 115JB OF THE ACT, THE CONCEALMENT WOULD HAVE NO ROLE TO PAY AND WOULD BE TOTALLY IRRELEVANT. 6. THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT TH E PRESENT CASE IS SQUARELY COVERED BY NALWA SONS (SUPRA) INASMUC H AS IN THE PRESENT CASE SINCE THE ASSESSMENT WAS MADE ON MAT BASIS AND N OT ON REGULAR BASIS, NO CONCEALMENT PENALTY IS LEVIABLE, IN KEEPING WITH THE SAID DECISION OF THE JURISDICTIONAL HIGH COURT. 7. ON THE OTHER HAND, THE LD. DR HAS STRONGLY RELIED ON THE IMPUGNED ORDER. HE HAS SUBMITTED THAT UNDISPUTEDLY, THERE IS CONCEALMENT/FURNISHING OF INACCURATE PARTICULARS OF INCOME IN THE PRESENT CASE; THAT IT WAS SUCH CONCEALMENT/FURNISHING OF INACCURATE PARTICULARS OF INCOME WHICH HAD THE EFFECT OF CONVER TING THE LOSS DECLARED IN ITS RETURN INTO INCOME, MEANING THAT THE TAX WOULD HAVE BEEN CHARGEABLE ON THE INCOME IN RESPECT OF WHICH PA RTICULARS HAD BEEN CONCEALED OR INACCURATE PARTICULARS HAD BEEN FU RNISHED, HAD SUCH INCOME BEEN THE TOTAL INCOME; THAT THIS BEING THE UN DISPUTED POSITION, EXPLANATION 4 TO SECTION 271 (1) IS SQUARELY APPLICA BLE AND WAS RIGHTLY APPLIED BY THE AUTHORITIES BELOW; THAT AS SUCH, THERE BEING NO MERIT IN THE APPEAL FILED BY THE ASSESSEE, THE SAME BE DISMISSED OUT RIGHT. ITA NO.2145/DEL/2011 4 8. WE HAVE HEARD THE PARTIES AND HAVE PERUSED THE MAT ERIAL ON RECORD. UNDISPUTEDLY, IN THE PRESENT CASE, THE ASSESSMEN T WAS MADE ON MAT BASIS, RATHER THAN ON THE REGULAR BASIS. NOW, I N NALWA SONS (SUPRA), IT HAS BEEN HELD, INTER ALIA, THAT :- 21. . UNDER THE SCHEME OF THE ACT, THE TOTAL INCOME OF THE ASSESSEE IS FIRST COMPUTED UNDER THE NORMAL PROVIS IONS OF THE ACT AND TAX PAYABLE ON SUCH TOTAL INCOME IS COMPARED WITH THE PRESCRIBED PERCENTAGE OF THE BOOK PROFITS C OMPUTED UNDER SECTION 115JB OF THE ACT. THE HIGHER OF THE TWO AMOUNTS IS REGARDED AS TOTAL INCOME AND TAX IS PAYABLE WITH REFERE NCE TO SUCH TOTAL INCOME. IF THE TAX PAYABLE UNDER THE NORMAL PROVISIONS IS HIGHER, SUCH AMOUNT IS THE TOTAL INCOME O F THE ASSESSEE, OTHERWISE, BOOK PROFITS ARE DEEMED AS THE TOTAL INCOME OF THE APPELLANT IN TERMS OF SECTION 115JB OF TH E ACT. 25. . NO DOUBT, THERE WAS CONCEALMENT BUT THAT HAD ITS REPERCUSSIONS ONLY WHEN THE ASSESSMENT WAS DONE U NDER THE NORMAL PROCEDURE. THE ASSESSMENT AS PER THE NORMA L PROCEDURE WAS, HOWEVER, NOT ACTED UPON. ON THE CONTRAR Y, IT IS THE DEEMED INCOME ASSESSED UNDER SECTION 115 JB OF THE ACT WHICH HAS BECOME THE BASIS OF ASSESSMENT AS IT WAS HIG HER OF THE TWO. TAX IS THUS PAID ON THE INCOME ASSESSED UNDER SECTION 115 JB OF THE ACT. HENCE, WHEN THE COMPUTATION WAS MADE UNDER SECTION 115 JB OF THE ACT, THE AFORESAID CONCEALM ENT HAD NO ROLE TO PLAY AND WAS TOTALLY IRRELEVANT. THEREFORE, THE CONCEALMENT DID NOT LEAD TO TAX EVASION AT ALL. 9. THE FACTS IN THE PRESENT CASE ARE IN PARI MATERIA WITH NALWA SONS (SUPRA). LIKE IN THAT CASE, HERE TOO, ASSESSMENT M ADE WAS ON MAT BASIS, RATHER THAN ON THE REGULAR BASIS. AS SUCH, C ONCEALMENT, IF ANY, WOULD HAVE NO EFFECT, AS IT IS THE DEEMED INCOME OF THE ASSESSEE, ASSESSED UNDER THE MAT PROVISIONS OF THE ACT, WHICH HAS B ECOME THE BASIS OF ASSESSMENT, BEING HIGHER THAN THE REGULAR ASSESSED I NCOME (IN THE REGULAR ASSESSMENT, THE ASSESSEE WAS ASSESSED AT A LOSS OF ` ITA NO.2145/DEL/2011 5 10,09,175/-, WHEREAS THE AMOUNT COMPUTED UNDER THE M AT PROVISIONS WAS OF ` 11,415/-). ACCORDINGLY, AS HELD IN NALWA S ONS (SUPRA), NO TAX EVASION WAS OCCASIONED BY THE CONCEALMENT, AS THE C ONCEALMENT HAD NO ROLE TO PLAY AND AS TOTALLY IRRELEVANT. THAT BEING SO, OBVIOUSLY, THE ASSESSEE CANNOT BE VISITED WITH THE PENALTY IN QUESTI ON. 10. IN VIEW OF THE ABOVE DISCUSSION, THE GRIEVANCE SOUG HT TO BE RAISED BY THE ASSESSEE IS FOUND TO BE JUSTIFIED AND IS ACC EPTED AS SUCH. HENCE, THE PENALTY IN QUESTION IS CANCELLED. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS AL LOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 23.11.20 12. SD/- SD/- [G.D. AGRAWAL] [A.D. JAIN] VICE PRESIDENT JUDICIAL MEMBER DATED, 23.11.2012. DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES ITA NO.2145/DEL/2011 6 1. DATE OF DICTATION 26.10.2012 ..... 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 02.11.2012.. OTHER MEMBER .. 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR . PS/PS . .... 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R.PS/PS ...... 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK ...... 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 8. THE DATE ON WHICH THE FILE GOES TO THE ASSTT. RE GISTRAR FOR SIGNATURE ON THE ORDER ..... 9. DATE OF DESPATCH OF THE ORDER . ...