ASST CIT 10(1), MUMBAI V. MAHARAHSTRA STATE ELECTRICITY DISTRIBUTION CO LTD, MUMBAI

ITA 331/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88632 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 12-03-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 10-01-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Revised return; Revenue expenditure; Capital expenditure
• Section: 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BE NCH, MUMBAI . , ! ' ' ' ' #$ %&'( , #) *+ # ! BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ./I .T.A. NOS. 330 & 331/MUM/2013 ( , , , , / ASSESSMENT YEARS : 2007-08 & 2009-190 THE DCIT-10(1), AAYAKAR BHAVAN, MUMBAI-400 020 / VS. M/S. MAHARASHTRA STATE ELECTRICITY DISTRIBUTION CO. LTD., PRAKASHGAD, A.K. MARG, STATIONAL ROAD, BANDRA ($E), MUMBAI-400 051 +- #) ./ ./ ./ PAN/GIR NO. : AAECM 2933K ( -0 / APPELLANT ) .. ( 12-0 / RESPONDENT ) -0 3 # / APPELLANT BY: SHRI S.J. SINGH SHRI K.K. VED 4 5) / DATE OF HEARING :12.03.2015 6, 4 5) / DATE OF PRONOUNCEMENT :18.03.2015 *#7 / O R D E R PER N.K. BILLAIYA, AM: THESE TWO APPEALS BY THE REVENUE ARE DIRECTED AGAI NST TWO SEPARATE ORDERS OF THE LD. CIT(A)-21, MUMBAI PERTAI NING TO ASSESSMENT YEARS2007-08 AND 2009-10. BOTH THESE APPEALS WERE HEARD TOGETHER AND DISPOSE OF BY THIS COMMON ORDER FOR THE SAKE OF CON VENIENCE. ITA NO. 330 & 331/M/2013 2 ITA NO. 330/M/2013- A.Y. 2007-08 2. THE SOLE GRIEVANCE OF THE REVENUE IS THAT THE LD . CIT(A) ERRED IN DELETING THE PENALTY LEVIED BY THE AO AMOUNTING TO RS. 455. 34 CRORES U/S. 271(1)(C) OF THE ACT. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT DU RING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFI CER NOTICED THAT THE ASSESSEE HAS PAID A SUM OF RS. 1351.62 CRORES TO M/ S. POWER GRID CORPN. OF INDIA LTD. AND M/S. MAHARASHTRA STATE ELECTRICIT Y DISTRIBUTION CO. LTD. FOR USE OF THEIR ELECTRICITY TRANSMISSION NETWORK, PURSUANT TO A BULK POWER TRANSMISSION AGREEMENT EXECUTED BETWEEN THE PARTIES. THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHETHER ANY TAX HAS BEEN DEDUCTED AT SOURCE ON SUCH PAYMENT. IT WAS EXPLAINED THAT THE ASSESSEE WAS NOT LIABLE TO DEDUCT ANY TAX AT SOURCE. THE EXPLANATION OF TH E ASSESSEE DID NOT FIND ANY FAVOUR FROM THE AO WHO DISALLOWED RS. 1351.62 C RORES U/S. 40(A)(IA) OF THE ACT. 4. THE MATTER TRAVELLED UPTO THE TRIBUNAL. THE TRI BUNAL IN ITA NO. 2276/M/2011 AND 2405/M/2011 DELETED THE ADDITION MA DE U/S. 40(A)(IA) OF THE ACT THEREFORE TO THIS EXTENT, WE DO NOT FIND ANY ERROR IN THE FINDINGS OF THE LD. CIT(A). THE LD. CIT(A) HAS CORRECTLY H ELD THAT NO PENALTY CAN BE LEVIED AS THE QUANTUM ADDITIONS HAVE BEEN DE LETED BY THE TRIBUNAL. 4.1. PROCEEDING FURTHER, DURING THE COURSE OF THE A SSESSMENT PROCEEDINGS, THE AO FOUND THAT THE ASSESSEE HAS CLA IMED RS. 1,15,07,000/- AS REVENUE EXPENDITURE ON ACCOUNT OF METER EQUIPMENT. THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE EXC ESS CLAIM OF ITA NO. 330 & 331/M/2013 3 EXPENDITURE AS POINTED OUT BY THE CAG IN HIS REPORT SHOULD NOT BE DISALLOWED. THE ASSESSEE EXPLAINED THAT NECESSARY RECTIFICATION ENTRIES HAVE BEEN PASSED IN THE SUBSEQUENT YEARS THEREFORE NO DISALLOWANCE SHOULD BE MADE. PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT HAS BEEN INITIATED BY THE AO. 4.2. DURING THE COURSE OF THE PENAL PROCEEDINGS, TH E ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE PENALTY SHOULD NOT BE LEVI ED ON METER EQUIPMENT CHARGES CLAIMED AS REVENUE EXPENDITURE. IT WAS EXP LAINED THAT THE ASSESSEE HAD MADE COMPLETE DISCLOSURE IN THE STATEM ENT OF ACCOUNTS THEREFORE THERE IS NO QUESTION OF ANY CONCEALMENT. 4.3. AFTER CONSIDERING THIS EXPLANATION OF THE ASSE SSEE, THE AO OBSERVED THAT DURING THE COURSE OF AUDIT BY THE CAG PARTY, I T CAME TO THE NOTICE THAT THE ASSESSEE INSTEAD OF CAPITALIZING THE EXPEN DITURE INCURRED ON COST OF NEW METERS CLAIMED THE SAME AS REVENUE THEREFORE THERE WAS OVERSTATEMENT OF REVENUE EXPENDITURE . THE AO WAS CONVINCED THAT THE ASSESSEE HAS CLAIMED A WRONG EXPENDITURE, THEREFORE , LIABLE FOR PENALTY U/S. 271(1) OF THE ACT FOR FURNISHING INACCURATE P ARTICULARS OF INCOME. THE AO ACCORDINGLY LEVIED THE PENALTY. 5. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A) AND REITERATED ITS CLAIM RELYING UPON THE DECISION OF T HE PRICE WATERHOUSE COOPERS PVT. LTD VS CIT IN CIVIL APPEAL NO. 6924/20 12. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS, IN THE L IGHT OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF PRICE WA TERHOUSE COOPERS PVT. LTD(SUPRA), THE LD. CIT(A) DELETED THE PENALTY SO LEVIED. 6. AGGRIEVED BY THIS, THE REVENUE IS BEFORE US. ITA NO. 330 & 331/M/2013 4 7. IN SO FAR AS THE DELETION OF PENALTY ON DISALLOW ANCE MADE U/S. 40(A)(IA) IS CONCERNED, THE LD. DEPARTMENTAL REPRES ENTATIVE FAIRLY CONCEDED THAT THE QUANTUM ADDITIONS HAVE BEEN DELET ED BY THE TRIBUNAL, THEREFORE THERE IS NO BASIS FOR THE LEVY OF PENALTY . IN SO FAR AS THE LEVY OF PENALTY ON OVERSTATEMENT OF EXPENDITURE IS CONCERNE D, THE DR STRONGLY SUPPORTED THE ASSESSMENT ORDER. IT IS THE SAY OF T HE LD. DR THAT BY CLAIMING CAPITAL EXPENDITURE AS REVENUE EXPENDITURE , THE ASSESSEE HAS CLEARLY FILED INACCURATE PARTICULARS OF ITS INCOME, THEREFORE, THE AO HAS RIGHTLY LEVIED THE PENALTY U/S. 271(1)(C) OF THE AC T. 8. PER CONTRA, THE LD. COUNSEL FOR THE ASSESSEE STR ONGLY CONTENDED THAT THE PENALTY CANNOT BE LEVIED BECAUSE THE ASSESSEE H AS NOT FILED ANY INACCURATE PARTICULARS. ALL THE MATERIAL FACTS WER E DISCLOSED IN THE STATEMENT OF ACCOUNTS ITSELF. IT IS THE SAY OF THE LD. COUNSEL THAT THE ASSESSEE IS A GOVERNMENT COMPANY AND THEREFORE THER E CANNOT BE ANY CONCEALMENT OF PARTICULARS. IN SUPPORT OF HIS CLAI M, THE ASSESSEE RELIED UPON THE DECISION OF THE TRIBUNAL IN THE CASE OF GU RBUX KAUR SANDHU VS INSPECTING ACIT 15 TTJ (CHD)128, MUMBAI BENCH IN TH E CASE OF DENA BANK IN ITA NOS. 6336 TO 6339/M/1983. THE LD. COUN SEL ALSO RELIED UPON THE DECISION OF THE HONBLE CALCUTTA HIGH COUR T IN THE CASE OF SMT. BANI ROY CHOUDHARY 131 ITR 578 AND ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CEMENT MARKETING CO. 1 24 ITR 15. 9. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTH ORITIES BELOW. LET US FIRST SEE THE CONDUCT OF THE ASSESSEE. THE ASSES SMENT ORDER MADE U/S. 143(3) OF THE ACT IS DT. 31.12.2009. THE RETURN WA S FILED ON 30.10.2007. THE CAG REPORT IS DT. 17.5.2008. THIS MEANS THAT O N 17.5.2008 THE ASSESSEE WAS WELL AWARE OF THE QUALIFIED REMARKS MA DE BY THE CAG IN SO FAR AS THE CLAIM OF EXPENDITURE AS REVENUE EXPENDIT URE IN RESPECT OF METER ITA NO. 330 & 331/M/2013 5 EQUIPMENT IS CONCERNED. THE ASSESSEE DID NOT CARE T O REVISE ITS RETURN. NOT ONLY THE ASSESSEE DID NOT FILE ANY REVISED RETU RN OF INCOME BUT THE ASSESSEE AT THE SAME TIME CONTESTED THE DISALLOWANC E MADE BY THE AO IN THE APPEAL FILED BEFORE THE LD. CIT(A). THE LD. CI T(A) CONFIRMED THE DISALLOWANCE MADE BY THE AO. 10. THE ASSESSEE CARRIED THE MATTER BEFORE THE TRIB UNAL THOUGH DID NOT PRESS THE GROUND RELATING TO THIS DISALLOWANCE BUT THE FACT OF THE MATTER IS THAT THE ASSESSEE DID CONTESTED THIS DISALLOWANCE BEFORE THE TRIBUNAL. THIS CONDUCT OF THE ASSESSEE CLEARLY DISTINGUISHES THE FACTS OF THE PRESENT CASE WITH ALL THE CASES RELIED UPON BY THE ASSESSEE . 10.1. MOREOVER IN THE CASE OF PRICE WATERHOUSE COOP ERS PVT. LTD(SUPRA), ONCE THE MISTAKE WAS POINTED OUT TO THE ASSESSEE, T HE ASSESSEE IMMEDIATELY FILED A REVISED RETURN AND THE MATTER E NDED THEN AND THERE ONLY. ON THESE PECULIAR FACTS, THE HONBLE SUPREME COURT DELETED THE LEVY OF PENALTY. THE LD. CIT(A) HAS ERRONEOUSLY RE LIED UPON THIS DECISION OF THE HONBLE SUPREME COURT ON THE FACTS NARRATED HEREINABOVE. 10.2. IN OUR CONSIDERED OPINION, THE CONDUCT OF TH E ASSESSEE SPEAKS FOR ITSELF. WE, THEREFORE, SET ASIDE THE FINDINGS OF T HE LD. CIT(A) AND UPHOLD THE LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT IN SO FAR AS IT RELATES TO THE CLAIM OF CAPITAL EXPENDITURE AS REVENUE EXPENDITURE . 11. SINCE THE LEVY OF PENALTY IS DELETED IN RESPECT OF DISALLOWANCE MADE U/S. 40(A)(IA) OF THE ACT, WE RESTORE THIS ISSUE TO THE FILE OF THE AO WITH A DIRECTION TO RECOMPUTE THE PENALTY IN RESPECT OF TH E CLAIM OF CAPITAL EXPENDITURE AS REVENUE EXPENDITURE. WE ORDER ACCOR DINGLY. ITA NO. 330 & 331/M/2013 6 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ITA NO. 331/M/2013-A.Y. 13. THE SOLE GRIEVANCE OF THE REVENUE IS THAT THE L D. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 7,95,16,000/- ON ACCOU NT OF UNDER STATEMENT OF REVENUE. 14. AT THE VERY OUTSET, THE LD. COUNSEL FOR THE ASS ESSEE STATED THAT THE ISSUE RAISED BY THE REVENUE HAS BEEN DECIDED BY THE TRIBUNAL IN EARLIER ASSESSMENT YEARS IN FAVOUR OF THE ASSESSEE AND AGAI NST THE REVENUE. THE LD. COUNSEL FOR THE ASSESSEE PLACED THE ORDER OF TH E TRIBUNAL FOR A.Y. 2007-08 AND 2008-09 IN ITA NOS. 2276 , 2405, 7539 & 8572/M/2011. 15. THE LD. DEPARTMENTAL REPRESENTATIVE POINTED OUT THAT THE FACTS ARE TOTALLY DIFFERENT AND THEREFORE THE ISSUES CANNOT B E TAKEN AS COVERED IN FAVOUR OF THE ASSESSEE. 16. THE LD. COUNSEL FOR THE ASSESSEE REBUTTING TO T HE STATEMENT MADE BY THE LD. DR, DREW OUR ATTENTION TO THE FINDINGS O F THE LD. CIT(A) POINTING OUT THAT THE LD. CIT(A) HAS FOLLOWED THE O RDER OF THE TRIBUNAL FOR EARLIER ASSESSMENT YEAR, THEREFORE IT CANNOT BE SAID THAT THE ISSUE IS NOT COVERED BY THE EARLIER ORDER OF THE TRIBUNAL. 17. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUT HORITIES BELOW. WE HAVE ALSO CONSIDERED THOUGHTFULLY THE DECISION OF T HE TRIBUNAL FOR EARLIER ASSESSMENT YEARS PLACED BEFORE US BY THE LD. COUNSE L. ITA NO. 330 & 331/M/2013 7 17.1. LET US FIRST UNDERSTAND THE FACTS RELATING TO THE ADDITION OF RS. 7,95,16,000/-. THIS FIND PLACE AT PARA 5.1 ON PAGE -2 OF THE ASSESSMENT ORDER WHICH READS AS UNDER: ADDITION ON ACCOUNT OF UNBILLED REVENUE THE CAG IN ITS COMMENTS ON REVENUE FROM SALE OF POW ER HAS STATED AS UNDER: THE ABOVE IS UNDERSTATED DUE TO A) NON-ACCOUNTAL OF SUPPLEMENTARY BILLS ON INTRODUCTIO N OF NEW TARIFF CATEGOPRY HT-II COMMERCIAL AT RASTAPETH- RS.644.71 LAKHS B) NON-CONSIDERATION OF UNBILLED REVENUE FOR RELIABILI TY CHARGES FOR ZERO LOAD SHEDDING IN PUNE CITY AT RAST APETH AND AT GANESH KHIND-RS. 150.45 LAKHS. IN REPLY TO THE COMMENT OF THE CAG, THE ASSESSEES MANAGEMENT HAS REPLIED AS UNDER (PG. 45 OF THE ANNU AL REPORT.) THE NECESSARY RECTIFICATION ENTRY HAS BEEN PASSED DURING THE FINANCIAL YEAR 2009-10 17.2. IN THE EARLIER ASSESSMENT YEAR I.E. 2007-08, THE TRIBUNAL HAD THE OCCASION TO CONSIDER THE FOLLOWING FACTS BEFORE IT WHICH FIND PLACED AT PARA 10.1 OF THE ORDER WHICH READS AS UNDER: THE FACTS RELATING TO A.Y. 2007-08 ARE THAT FROM T HE AUDIT OF THE ASSESSEE BY THE CAG U/S. 619(4) OF THE COMPANIE S ACT, IT WAS NOTED THAT THE ASSESSEE DID NOT RECOGNIZE THE U NBILLED REVENUE (REVENUE FOR ENERGY SUPPLIED AND BILLS NOT ISSUED TILL MARCH, 2007) TO THE EXTENT OF RS. 36.95 CRORES RESU LTED IN THE UNDERSTATEMENT OF REVENUE, WHICH WAS ADDED TO THE I NCOME OF THE ASSESSEE. ITA NO. 330 & 331/M/2013 8 THUS IT CAN BE SEEN THAT THE FACTS BEFORE THE TRIB UNAL IN EARLIER ASSESSMENT YEARS WERE TOTALLY DIFFERENT FROM THE FA CTS OF THE YEAR UNDER CONSIDERATION AS MENTIONED HEREINABOVE. 17.3 IT APPEARS THAT THE FIRST APPELLATE AUTHORITY HAS BEEN SIMPLY CARRIED AWAY BY THE SUBMISSIONS MADE BY THE ASSESSEE THAT T HE ISSUE IS COVERED BY THE EARLIER ORDER OF THE TRIBUNAL. IT IS CLEAR THAT THE LD. CIT(A) HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE WITHOUT UNDERSTANDING THE FACTS OF THE CASE AND WITHOUT COMPARING IT WITH THE FACTS OF THE EARLIER ASSESSMENT YEAR. THIS MAKE THE ORDER OF THE LD. CI T(A) ERRONEOUS. 18. IN THE INTEREST OF JUSTICE AND FAIR PLAY, WE RE STORE THIS ISSUE TO THE FILE OF THE LD. CIT(A) TO BE DECIDED AFRESH ON THE PECULIAR FACTS FOR THE YEAR UNDER CONSIDERATION AND NOT TO BE CARRIED AWAY BY THE DECISION OF THE TRIBUNAL IN EARLIER ASSESSMENT YEARS. THE LD. CIT( A) IS DIRECTED TO DECIDE THIS ISSUE AFRESH AFTER GIVING A REASONABLE AND SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 19. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE FOR ITA NO. 330/M/13 FOR A.Y. 2007-08IS PARTLY ALLOWED AND ITA NO. 331/M /13 FOR A.Y. 2009- 10 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH MARCH, 2015 SD/- SD/- (D.MANMOHAN ) (N.K. BILLAIYA) ! / VICE PRESIDENT #) *+ / ACCOUNTANT MEMBER MUMBAI; 8* DATED : 18 TH MARCH, 2015 . . ./ RJ , SR. PS . . ./ RJ , SR. PS ITA NO. 330 & 331/M/2013 9 *#7 *#7 *#7 *#7 4 44 4 15% 15% 15% 15% 9#%,5 9#%,5 9#%,5 9#%,5 / COPY OF THE ORDER FORWARDED TO : 1. -0 / THE APPELLANT 2. 12-0 / THE RESPONDENT. 3. : ( ) / THE CIT(A)- 4. : / CIT 5. %;< 15 , , / DR, ITAT, MUMBAI 6. < = / GUARD FILE. *#7 *#7 *#7 *#7 / BY ORDER, 2%5 15 //TRUE COPY// / . . . . (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI