M/s. Liberty Group Marketing Division, Karnal V. ACIT, Karnal

ITA 2272/DEL/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7000 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 31-12-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 17-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA
• Keywords: Audit objection; Reassessment proceedings

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : D : NEW DELHI BEFORE SHRI J.S. REDDY , ACCOUNTANT MEMBER, AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER ITA NO. 2272 /DEL /20 13 ASSESSMENT YEAR : 20 0 6 - 0 7 M/S LIBERTY GROUP MARKETING DIVN VS. A.C.I.T RAILWAY ROAD, KARNAL KARNAL CIRCLE, KARNAL PAN : AAAFL 5273 E [APPELLANT] [RESPONDENT] DATE OF HEARING : 31 . 1 2 . 2015 DATE OF PRONOUNCEMENT : 22 . 0 2 .201 6 APPELLANT BY : SHRI SATISH GOEL, ADV RESPONDENT BY : SHRI P. DAM KANUNJNA ORDER PER CHANDRA MOHAN GARG, JUDICIAL MEMBER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A) , KARNAL , DATED 19 / 0 2 /20 13 FOR A.Y 200 6 - 0 7 . 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL IN ITS APPEAL: 2 ITA NO. 2272 /DEL/20 13 2 1. THAT THE LD. CIT(A) LD. CIT(A) IS AGAINST LAW AND FACTS. 2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CA S E OF THE APPELLANT FIRM THE ORDER OF THE LD. CIT(A) IN UPHOLDING THE VALIDITY OF REASSESSMENT PROCEEDINGS INITIATED U/S 147/148 ON THE BASIS OF AUDIT OBJECTIONS AND RECONSIDERATION OF ISSUE OF ADMISSIBILITY OF ESI EXPENSES FOR WHICH ALL FACTS WERE FULLY AND TRULY DISCLOSED BEFORE TH E AO WHILE FRAMING ORIGINAL ASSESSMENT IS HIGHLY ARBITRARY, ILLEGAL, VOID AND UNCALLED FOR. 3. THAT, IN THE FACTS AND CIRCUMSTANCES OF THE CASE OF THE APPELLANT FIRM THE ORDER OF THE LD. CIT(A) IN CONFIRMING THE ORDER OF THE ACIT IN INFERRING UNDER RE ASS ESSMENT PROCEEDINGS THAT ESI LIABILITY OF RS. 17,33,331/ - WAS NOT ASCERTAINED LIABILITY DEMAND IS ALTOGETHER ARBITRARY, ILLEGAL, VOID AND UNCALLED FOR. 2. GROUND NO.1 BEING GENERAL IN NATURE REQUIRED NO ADJUDICATION AT OUR END. GROUND NO. 2 HAS NOT BE EN PRESSED BY THE LD. AR. HENCE GROUND NO. 2 STANDS DISMISSED. 3 ITA NO. 2272 /DEL/20 13 3 3. BRIEFLY STATED, THE FACTS GIVING RISE TO THIS GROUND AS NOTED BY THE LD. CIT(A) AT PARA 4 PAGE 2 ARE THAT THE A S PER DETAILS FURNISHED BY THE ASSESSEE IT WAS NOTICED THAT THE JOINT DIRECTOR ESIC, AMBALA CITY RAISED A DEMAND OF RS.34,32,576/ - AGAINST THE ASSESSEE ON ACCOUNT OF ESI WHICH IS DISPUTED. THE ASSESSEE FILED A SUIT AGAINST THIS DEMAND BEFORE THE CJ(SD), KA RNA L DENYING ITS LIABILITY. THE LD. CJ(SD), KARNAL VIDE HIS ORDER DATE D 12.12.2005 DIRECTED THE ASSESSEE TO DEPOSIT THE 50% OF AMOUNT TILL THE FINAL DECISION OF THE CASE WITH THE OBSERVATION THAT THE AMOUNT WILL BE PAID BACK TO THE ASSESSEE IF THE CASE IS DECIDED IN HIS FAVOUR. IT HAS BEEN OBSERVED BY THE AO THAT THE AMOUNT IN QUESTION IS DISPUTED AMOUNT AND T HE LIABILITY IS, THEREFORE, NOT AN ASCERTAINED LIABILITY AND THE SAME IS NOT ALLOWABLE. HENCE , 50% OF RS.34,25,576/ - I.E. RS. 17,16,288/ - WHICH IS THE AMOUNT DEPOSITED BY THE ASSESSEE UNDER THE DIRECTION OF THE COURT CAN NOT BE TREATED AS EXPENDITURE FOR THE YEAR UNDER CONSIDERATION AND REQUIRED TO BE ADDED BACK TO THE INCOME OF THE ASSESSE E. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) BUT REMAINED EMPTY HANDED AS THE APPEAL OF THE ASSESSEE WAS DISALLOWED ON ALL THREE GROUNDS. NOW THE ASSESSEE IS BEFORE THE TRIBUNAL IN THIS SEC O ND APPEAL WITH THE GROUNDS AS REPRODUCED HEREINABOVE 4 ITA NO. 2272 /DEL/20 13 4 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND CAREFULLY PERUSED THE RELEVANT MATERIAL PLACED ON RECORD BEFORE US. THE LD. AR HAS DRAWN OUR ATTENTION TOWARDS WRITTEN SUBMISSIONS OF THE ASSESSEE AVAILABLE AT PAGES 1 TO 9 OF THE PAPER BOOK AND CONTENDED THAT THE ASSESSEE DEPOSITED THE SAID AMOUNT UNDER THE DIRECTIONS OF THE COURT AND CLAIMED THE SAME WITH AN UNDERTAKING THAT IF THE DEMAND IS VACATED BY THE CIVIL COURT, THEN EXPENDITURE CLAIMED WILL BE ADDED BACK TO THE INCOME OF THE ASSESSEE SUO MOTO. THE LD. AR FURTHER POINTED OUT THAT THE CIVIL COURT HAS DECIDED THE CASE AGAINST THE ASSESSEE AND THE ASSESSEE HAS DEPOSITED REMAINI NG 50% AMOUNT WHICH HAS ALS O BEEN ALLOWED BY THE AO. THE LD. COUNSEL VEHEMENTLY CONTENDED THAT IN THIS SITUATION, THE CLAIM OF THE ASSESSEE SHOULD BE ALLOWED IN THE YEAR WHEREIN IT WAS ACTUALLY INCURRED. 5. THE LD. DR STRONGLY SUPPORTED THE ACTION OF THE AO AS WELL AS THE IMPUGNED ORDER. HOWEVER, HE DID NOT OBJECT TO THIS FACT THAT THE ASSESSEE LOST THE CASE IN CIVIL COURT AND HAS DEPOSITED REMAINING 50% AMOUNT WHICH HAS BEEN ALLOWED BY THE AO IN THIS YEAR OF PAYMENT. 5 ITA NO. 2272 /DEL/20 13 5 6. ON CAREFUL CONSIDERATION OF THE A BOVE FROM WRITTEN SUBMISSIONS OF THE ASSESSEE PLACED BEFORE THE AO [PAGE 2 OF ASSESSEE S PAPER BOOK] IT IS CLEAR THAT THE PAYMENT WAS MADE UNDER THE ORDERS OF THE CIVIL COURT. THE RELEVANT PART READS AS UNDER: ESI DEMAND PAID RS. 1733331.50 THE DIRECTOR OF EMPLOYEES STATE INSURANCE COVERED PERSONS DOING PRODUCTION OF FOOTWEAR AT THEIR OWN PREMISES UNDER ESI ACT FOR THE PERIOD JULY 1989 TO 1992 AND 1997 TO NOV 1999 ON THE BASIS OF PRODUCTION CHARGES PAID AND RAISED ESI DEMAND OF RS 3432576.00. THE ASSESSEE WENT IN APPEAL IN THE COURT AGAINST IMPUGNED ORDER AND FOR STAY OF SAID DEMAND. THE CHIEF JUDICIAL MAGISTRATE GRANTED STAY SUBJECT TO DEPOSIT OF 50% OF DEMANDED AMOUNT OF RS 3432576.00 . WE UNDERTAKE THAT IF THE DEMAND IS VACATED COURT, THEN THE E XPENDITURE CLAIMED WILL BE IN OUR INCOME SUO - MOTO . COPIES OF ORDER OF THE DIRECTOR, ESI ALONGWITH NOTICE COURT STAY ORDER AND COPY OF CHALLAN FOR PAYMENT OF RS. 1733331.50 ARE ENCLOSED. 5. AT THE OUTSET, WE NOTE THAT THE LD. D R HAS NOT CONTROVERTED THIS FACT AS PLACED BY THE LD. AR THAT THE COURT HAS SETTLED THE CASE AGAINST THE ASSESSEE AND REMAINING 50% HAS ALSO BEEN 6 ITA NO. 2272 /DEL/20 13 6 DEPOSITED AND ALLOWED BY THE REVENUE IN THE SUBSEQUENT YEARS. HENCE, THERE IS NO GOOD REASON TO DISALLOW THE SA ME IN THE YEAR WHEREIN IT WAS DEPOSITED UNDER CIVIL COURT ORDER . ACCORDINGLY, GROUND NO. 3 IS ALLOWED AND THE AO IS DIRECTED TO DELETE THE SAME . 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED ON GROUND NO. 3 ONLY . THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 22 . 0 2 .201 6 . SD/ - SD/ - ( J.S. REDDY ) (C.M. GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 22 ND FEBRUARY, 2016 VL/ COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR ASST. REGISTRAR, ITAT, NEW DELHI