Punjab State Electricity Board, Patiala V. ACIT, Patiala

ITA 278/CHANDI/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68591 (ITAT-CHANDIGARH)
• Duration Of Justice: 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 21-11-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 11-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AMARVEER SINGH
• Assessee Lawyers: K P BAJAJ
• Keywords: Bad and doubtful debts
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE SHRI T.R.SOOD ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.278/CHD/2013 ASSESSMENT YEAR : 2006-07 M/S PUNJAB STATE ELECTRICITY BOARD, VS THE A.C.I.T ., THE MALL, CIRCLE, PATIALA. PATIALA. PAN : AABCP7651E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.P.BAJAJ RESPONDENT BY : SHRI AMARVEER SINGH DATE OF HEARING : 21.11.2013 DATE OF PRONOUNCEMENT : 27.11.2013 ORDER PER SUSHMA CHOWLA, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(APPEALS) LUDHIANA DATED 08.01.2013 RELATING TO ASSESSMENT YEAR 2006-07 AGAINST THE ORDER PASSED UNDER SECTION 271( 1)(C) OF THE INCOME-TAX ACT, 1961 ( 'THE ACT' FOR SHORT). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE THE ID. CIT(A) IS NOT JUSTIFIED IN UPHOLDING THE LEVY OF PENALTY FOR CONC EALMENT OF INCOME ON THE BASIS OF DISALLOWANCE OF EXPENSES CLAIMED IN TH E BOOKS OF ACCOUNT. 2. THAT WITHOUT PREJUDICE TO ABOVE, AS A RESULT OF DECISION OF HON'BLE INCOME-TAX APPELLATE TRIBUNAL IN QUANTUM APPEAL VARIOUS ADDITIONS HAVE BEEN DELETED AND IN RESPECT OF OTHER S THE MATTER HAS BEEN SENT BACK TO THE ID. A.O., NOT JUSTIFYING THE UPHOLDING OF THE IMPUGNED PENALTY. 3. THAT WITHOUT FURTHER PREJUDICE TO ABOVE, THE PENALTY IMPOSED IS EXCESSIVE. 2 3. THE ISSUE RAISED IN THE PRESENT APPEAL IS AGAINS T THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 4. THE LD. AR FOR THE ASSESSEE, AT THE OUTSET POINT ED OUT THAT THE ADDITIONS IN THE HANDS OF THE ASSESSEE HAVE EITHER BEEN DELETED BY THE TRIBUNAL IN ASSESSEE'S OWN CASE IN THE QUANTUM APP EAL FOR THE YEAR UNDER CONSIDERATION AND SOME OF THE ADDITIONS HAVE BEEN SET ASIDE TO THE FILE OF THE ASSESSING OFFICER AND HENCE, THERE WAS NO MERIT IN THE PRESENT LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. HOWEVER, IN RESPECT OF ONE ITEM OF ADDITION I.E. ON ACCOUNT OF ADDITION OF FBT PAID BY THE ASSESSEE AMOUNTING TO RS. 4,39,65,017/- , IT WAS FAIRLY ADMITTED BY THE LD. AR FOR THE ASSESSEE THAT THE SA ID ADDITION WAS NOT CONTESTED. HOWEVER, IT WAS POINTED OUT BY THE LD. AR FOR THE ASSESSEE THAT THE COMPLETE DETAILS WERE FILED BEFORE THE AUT HORITIES BELOW AND THE SAID EXPENDITURE WAS CLAIMED ON ACCOUNT OF THE BENEFIT ALLOWED TO THE EMPLOYEES. 5. THE LD. DR FOR THE REVENUE POINTED OUT THAT THE FBT PAID IS AKIN TO TAX PAID AND IS NOT ALLOWABLE AS AN EXPENDITURE AND THE ADDITION MADE ON THIS ACCOUNT ATTRACTS LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. RELIANCE WAS PLACED ON THE RATIO LAID DOWN BY THE HON'BLE DELHI HIGH COURT IN ZOOM COMMUNICATIONS PVT. LTD. 3 27 ITR 510 (DEL). 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. AS AGAINST THE RETURN OF INCOME FILED AT NIL, THE AS SESSMENT IN THE CASE WAS COMPLETED UNDER SECTION 143(3) OF THE ACT AT RS . 13,67,87,892/-. CERTAIN RELIEFS WERE ALLOWED BY THE CIT(APPEALS) AN D CERTAIN ADDITIONS WERE UPHELD BY THE CIT(APPEALS). PURSUANT TO THE O RDER PASSED BY THE CIT(APPEALS) AND BEFORE THE ORDER PASSED BY THE TRI BUNAL, THE 3 ASSESSING OFFICER HELD THE ASSESSEE TO HAVE FURNISH ED INACCURATE PARTICULARS OF INCOME AND IMPOSED PENALTY UNDER SEC TION 271(1)(C) OF THE ACT AT RS. 540,634,242/-. 7. THE CIT(APPEALS) UPHELD THE LEVY OF PENALTY AS T HE ADDITIONS WERE UPHELD BY THE CIT(APPEALS) IN THE QUANTUM APPE AL. THE ASSESSEE FILED AN APPEAL BEFORE THE TRIBUNAL AGAINST THE QUA NTUM ADDITIONS AND APPEAL IS ALSO FILED BY THE REVENUE AGAINST THE REL IEFS ALLOWED BY THE CIT(APPEALS). THE TRIBUNAL IN ITA NO. 1127 & 1130/C HD/2009 VIDE ORDER DATED 31.01.2013 DELETED CERTAIN ADDITIONS AN D CERTAIN ISSUES WERE SET ASIDE TO THE FILE OF THE ASSESSING OFFICER TO DECIDE DENOVO. THE ISSUE ARISING IN THE PRESENT APPEAL IS AGAINST LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON SUCH ADDITIONS WHIC H WERE EARLIER MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT(APPEALS). 8. THE ASSESSING OFFICER WHILE LEVYING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT, HAD MADE VARIOUS ADDITIONS IN THE HANDS OF THE ASSESSEE. 9. THE ADDITIONS ON ACCOUNT OF SATELLITE EXPENSES R S. 29,28,651/-, SUNDRY EXPENSES RS. 43,23,462/-, DEFERRED COST EXPE NSES RS. 46,16,576/- AND LEASE RENTALS RS. 7,27,31,128/- HAV E BEEN DELETED BY THE TRIBUNAL VIDE ORDER DATED 31.01.2013. IN VIEW OF THE DELETION OF THE ADDITION IN THE HANDS OF THE ASSESSEE, THERE IS NO MERIT IN ANY LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON SU CH AMOUNTS. FURTHER ADDITIONS MADE ON ACCOUNT OF PROVISION FOR BAD AND DOUBTFUL DEBTS RS. 13,37,113/-, PRIOR PERIOD CHARGES RS. 101 ,63,20,171/- AND EXPENSES AS PER AUDIT OBSERVATIONS RS. 53,56,00,000 /- HAVE BEEN SET ASIDE TO THE FILE OF THE ASSESSING OFFICER TO BE CO NSIDERED DENOVO AND IN VIEW THEREOF, THERE IS NO MERIT IN ANY LEVY OF P ENALTY UNDER SECTION 4 271(1)(C) OF THE ACT AT THE PRESENT JUNCTURE. HOWE VER, THE ASSESSING OFFICER IS AT LIBERTY TO INITIATE THE PENALTY PROCE EDINGS UNDER SECTION 271(1)(C) OF THE ACT AFTER ADJUDICATING THE ISSUES SET ASIDE BY THE TRIBUNAL. FURTHER, AN ADDITION OF RS. 15,50,850/- WAS MADE ON ACCOUNT OF LATE DEPOSIT OF TDS WHICH WAS NOT CONSIDERED BY THE ASSESSING OFFICER WHILE DETERMINING THE CONCEALED INCOME OF T HE ASSESSEE AND AS SUCH NO PENALTY ON SUCH AMOUNT WAS LEVIED THOUGH TH E AMOUNT WAS ADDED AS INCOME OF THE ASSESSEE. 10. THE ONLY ISSUE REMAINING TO BE ADJUDICATED IS O N ACCOUNT OF THE ADDITION MADE OF RS. 4,39,65,017/- BEING FBT PAID. THE ASSESSEE HAD CLAIMED THE SAID PAYMENT AS AN EXPENDITURE AND SAID EXPENDITURE AS PER THE ASSESSEE WAS RELATABLE AS BENEFIT TO THE EM PLOYEES. HOWEVER, THE SAID EXPENDITURE WAS NOT ALLOWED IN THE HANDS O F THE ASSESSEE. THE SAID ADDITION WAS NOT CONTESTED IN APPEAL BY THE AS SESSEE. 11. THE ISSUE ARISING IN THE PRESENT APPEAL IS IN R ELATION TO LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON SUCH ADDITION OF FBT PAID OF RS. 4.39 CR. THE CASE OF THE ASSESSEE IS T HAT COMPLETE PARTICULARS WERE FURNISHED ALONGWITH THE RETURN OF INCOME AND THERE WAS NO CONCEALMENT AND HENCE, THERE IS NO MERIT IN LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. RELIANCE WAS PL ACED ON CIT VS MEHTA ENGINEERING LTD. 300 ITR 308 (P&H) BY THE LD. AR FOR THE ASSESSEE. 12. THE LD. DR FOR THE REVENUE, ON THE OTHER HAND, POINTED OUT THAT THE EXPLANATION OFFERED BY THE ASSESSEE HAS TO BE B ONAFIDE AND FURTHER IT HAS TO BE SUBSTANTIATED AND BOTH THESE CONDITION S WERE LACKING IN THE CASE OF THE ASSESSEE. RELIANCE WAS PLACED ON THE RA TIO LAID DOWN BY THE HON'BLE DELHI HIGH COURT IN ZOOM COMMUNICATIONS PVT . LTD (SUPRA). 5 13. PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS L EVIABLE WHERE THE ASSESSEE HAS CONCEALED ITS INCOME OR FURNISHED INAC CURATE PARTICULARS OF INCOME. HOWEVER, WHERE THE ASSESSEE HAS NOT CON CEALED ANY MATERIAL FACT OR THE FACTUAL INFORMATION GIVEN BY H IM HAS NOT BEEN FOUND TO BE INCORRECT, HE WILL NOT BE LIABLE TO IMP OSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT, EVEN WHERE THE CLAIM MADE BY HIM IS UNSUSTAINABLE IN LAW, PROVIDED THAT HE, EITHER S UBSTANTIATES THE EXPLANATION OFFERED BY HIM OR EVEN IF THE EXPLANATI ON IS NOT SUBSTANTIATED, THE SAME IS FOUND TO BE BONAFIDE. IF THE EXPLANATION IS NEITHER SUBSTANTIATED NOR SHOWN TO BE BONAFIDE, EXP LANATION (1) TO SECTION 271(1)(C) OF THE ACT COMES INTO PLEA AND TH E ASSESSEE IS LIABLE TO THE PENALTY FOR CONCEALMENT. SUCH WAS THE PROPO SITION LAID DOWN BY THE HON'BLE DELHI HIGH COURT IN CIT VS ZOOM COMM UNICATIONS PVT. LTD.(SUPRA). IN THE FACTS OF THE PRESENT CASE, THE ASSESSEE HAD CLAIMED EXPENDITURE ON ACCOUNT OF TAXES PAYABLE UNDER THE I .T. ACT. IN VIEW OF THE PROVISIONS OF THE ACT, SUCH TAXES COULD NOT BE CLAIMED AS A DEDUCTION AND THE CLAIM MADE BY THE ASSESSEE CANNOT BE SAID TO BE BONAFIDE. FURTHER, THE ASSESSEE HAS FAILED TO OFFE R AN EXPLANATION WHICH CAN BE SUBSTANTIATED. THE EXPLANATION OFFERED BY THE ASSESSEE CANNOT BE SAID TO BE BONAFIDE AS IT IS AGAINST THE EXPRESS PROVISIONS OF THE ACT. 14. WE FIND NO MERIT IN THE RELIANCE PLACED BY THE LD. AR FOR THE ASSESSEE ON THE RATIO LAID DOWN BY THE HON'BLE PUNJ AB & HARYANA HIGH COURT IN CIT VS MEHTA ENGINEERS PVT. LTD. (SUPRA) W HICH IS ON DIFFERENT FACTS. 15. IN VIEW OF THE RATIO LAID DOWN BY THE HON'BLE D ELHI HIGH COURT IN CIT VS ZOOM COMMUNICATIONS PVT. LTD. (SUPRA), WH EREIN THE ASSESSEE HAD CLAIMED EXPENDITURE ON ACCOUNT OF THE TAX PAID, THE 6 HON'BLE HIGH COURT HAD UPHELD THE LEVY OF PENALTY U NDER SECTION 271(1)(C) OF THE ACT. FOLLOWING THE RATIO LAID DOW N BY THE HON'BLE DELHI HIGH COURT IN CIT VS ZOOM COMMUNICATIONS PVT. LTD. (SUPRA), WE UPHOLD THE LEVY OF PENALTY UNDER SECTION 271(1)( C) OF THE ACT ON THE ADDITIONS MADE ON ACCOUNT OF THE DISALLOWANCE O F EXPENDITURE OF FBT PAID OF RS. 4.39 CR. THE ASSESSING OFFICER IS DIRECTED TO RECOMPUTE THE PENALTY UNDER SECTION 271(1)(C) OF TH E ACT IN VIEW THEREOF. THE GROUNDS OF APPEAL RAISED BY THE ASSES SEE ARE, THUS PARTLY ALLOWED. 16. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH NOVEMBER,2013. SD/- SD/- ( T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICI AL MEMBER DATED: 27 TH NOVEMBER,2013 POONAM COPY TO: THE APPELLANT / THE RESPONDENT/ THE CIT(A)/ THE CIT /THE DR ASSISTANT REGISTRAR ITAT,CHD.