M/S Som Distilleries & Breweries Ltd., Bhopal V. The ACIT, Bhopal

ITA 340/IND/2010

• Counselvise Citation: 34022714 RSA 2010
• Duration Of Justice: 1 year(s) 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 1999-2000
• Appeal Filed On: 28-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARUN DEWAN
• Assessee Lawyers: R N GUPTA
• Keywords: Wrong claim; Revenue expenditure
• Section: 271(1)(c); 43B; 143(3); 80HHC; 68; 12

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER IT(SS)A NOS.323 AND 324/IND/2010 A.YS. 2000-01 AND 2001-02 ASSTT. COMMISSIONER OF INCOME TAX 1(2), BHOPAL APPELLANT VS M/S SOM DISTILLERIES & BREWERIES LTD. BHOPAL PAN AABCS-3374B RESPONDENT IT(SS)A NO. 340/IND/2010 A.Y. 1999-2000 M/S SOM DISTILLERIES & BREWERIES LTD. BHOPAL APPELLANT VS ASSTT. COMMISSIONER OF INCOME TAX 1(2), BHOPAL RESPONDENT 2 ASSESSEE BY : SHRI R.N. GUPTA DEPARTMENT BY : SHRI ARUN DEWAN, SR. DR DATE OF HEARING : 15.9.2011 DATE OF PRONOUNCEMENT : 18.10.2011 O R D E R PER JOGINDER SINGH OUT OF THESE THREE APPEALS, FIRST TWO APPEALS FOR THE ASSESSMENT YEAR 2000-01 AND 2001-02 ARE BY THE REV ENUE AND THE REMAINING ONE FOR THE ASSESSMENT YEAR 1999- 00 IS BY THE ASSESSEE CHALLENGING THE ORDER OF LEARNED COMMI SSIONER OF INCOME TAX (APPEALS) DELETING THE PENALTY OF RS.6,7 0,300/- AND RS.2,75,000/-, RESPECTIVELY, IMPOSED U/S 271(1)(C) OF THE ACT WHEREAS THE ASSESSEE IS AGGRIEVED BY THE ORDER OF L EARNED COMMISSIONER OF INCOME TAX (APPEALS) DATED 15.2.201 0 SUSTAINING THE PENALTY OF RS.9,80,000/-. 2. FIRST WE SHALL TAKE UP THE APPEALS OF THE REVENU E. THE CRUX OF ARGUMENTS ON BEHALF OF THE REVENUE IS THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE PE NALTY 3 WITHOUT ASSIGNING ANY REASON. OUR ATTENTION WAS IN VITED TO SECTION 43B BY SUBMITTING THAT THE SECOND PROVISION WAS VERY MUCH IN FORCE. CONSEQUENTLY, THERE WAS NO AMBIGUITY REGARDING DUE DATE. THE PENALTY WAS ARGUED TO BE RIGHTLY IMP OSED. 3. ON THE OTHER HAND, THE LD. COUNSEL FOR ASSESSEE INVITED OUR ATTENTION TO PAGE 1 OF THE PAPER BOOK WITH FURT HER SUBMISSIONS THAT ALL THE FACTS WERE DISCLOSED IN TH E TAX AUDIT REPORT AND AT THE RELEVANT TIME ALSO THERE WERE TWO VIEWS WHETHER BOTH CONTRIBUTION WERE ALLOWABLE OR ONE. T HE CLAIM WAS ARGUED TO BE BONAFIDE FOR WHICH RELIANCE WAS PL ACED ON THE DECISION OF THE HON'BLE APEX COURT IN CIT V. RELIAN CE PETRO PRODUCTS LIMITED; 322 ITR 158M AND ALSO 14 ITJ 133 (SC). 4. FOR ITA NO. 324/IND/2010 IT WAS SUBMITTED THAT THREE ADDITIONS WERE MADE BY THE DEPARTMENT OUT OF WHICH THE FIRST ADDITION WAS DELETED BY THE TRIBUNAL AND THE REMAIN ING TWO WERE SUSTAINED. ON SUSTAINED ADDITION, IT WAS SUBMI TTED THAT THAT FIRSTLY PENALTY PROCEEDINGS AND QUANTUM PROCEE DINGS ARE ALTOGETHER DIFFERENCE AND SECONDLY IT WAS CONTENDED THAT AS A 4 MATTER OF FACT THE ASSESSEE SHOULD HAVE CLAIMED IT AS EXPENSES AND NOT DEFERRED EXPENSES BUT IT WAS SUBMITTED THAT CLAIM WAS MADE BY MAKING A TRUE DISCLOSURE AND EVEN IF SUCH C LAIM IS NOT ALLOWABLE, AT LEAST NO PENALTY COULD BE IMPOSED IN VIEW OF THE DECISION IN THE CASE OF RELIANCE PETROCHEMICALS (SU PRA). HOWEVER, THE LEARNED SR. DR DEFENDED THE IMPOSITIO N OF PENALTY. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON FILE. FOR THE ASSESSMENT YEAR 2000-01 THE FACTS IN BRIEF ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF BEER AND BOTTLING OF INDIA MADE FOREIGN LIQUOR (IN SHORT IMFL). THE ASSESSEE DECLARED INCOME OF RS. 1,60,96,580/- IN ITS RETURN ON 30.11. 200 WHICH WAS COMPLETED U/S 143(3) DETERMINING TAXABLE INCOME AT RS.4,48,77,110/- VIDE ORDER DATED 31.3.2003. THE A SSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LEARNED COM MISSIONER OF INCOME TAX (APPEALS) WHEREIN CERTAIN RELIEF WAS PROVIDED TO THE ASSESSEE AND SOME ADDITIONS WERE CONFIRMED. THE ASSESSING OFFICER LEVIED PENALTY U/S 271(1)(C) ON T HE SUSTAINED 5 ADDITION OF RS.70,40,918/- AND WORKED OUT THE PENAL TY AT RS.6,70,300/-. THE MATTER WAS FURTHER CARRIED IN AP PEAL BEFORE THE TRIBUNAL WHEREIN VIDE ORDER DATED 29.12.2009 TH E ADDITION OF RS.15 LACS MADE U/S 68 WAS DELETED BUT CONFIRMED THE DISALLOWANCE OF RS.2,14,918/- ON ACCOUNT OF LATE P AYMENT OF EMPLOYEES CONTRIBUTION TOWARDS PF AND CLAIMED THAT THE SAME WAS DEPOSITED BEFORE THE DUE DATE OF FILING OF RETU RN. HE PLACED UPON RELIANCE ON THE OF THE HON'BLE APEX ALOM EXTRU SION (2010) 14 ITJ 133 (SC). IN VIEW OF THESE FACTS, WE ARE OF THE VIEW THAT, SO FAR AS THE ADDITION OF RS.15 LACS, D ELETED BY THE TRIBUNAL, IS CONCERNED, NO PENALTY COULD BE IMPOSED U/S 271(1)(C) OF THE ACT. AS REGARDS DISALLOWANCE MADE ON ACCOUNT OF LATE PAYMENT OF PF, ADMITTEDLY THE ASSESSEE DISC LOSED ALL MATERIAL FACTS AND THE EMPLOYEES CONTRIBUTION WAS C REDITED TO THE FUND BEFORE THE DUE DATE OF FILING OF RETURN, T HEREFORE, THERE IS NO CONCEALMENT OF INCOME OR FURNISHING OF INACCU RATE PARTICULARS OF INCOME, CONSEQUENTLY, ON THIS COUNT ALSO NO PENALTY IS LEVIABLE. EVEN OTHERWISE ON A PARTICULAR DATE WHEN TWO VIEWS ARE POSSIBLE, IN VIEW OF THE DECISION IN CIT V. 6 HARSHVARDHAN CHEMICALS & MINERALS LIMITED; 259 ITR 212 (RAJ), THERE IS FORCE IN THE CONTENTION OF THE ASSE SSEE. IT IS TO BE MENTIONED HERE THAT MERE ADDITION/DISALLOWANCES AUT OMATICALLY DO NOT LEAD TO PENALTY MORE PARTICULARLY WHEN TWO O PINIONS ON THE SAME FACTS ARE AVAILABLE. THE DECISION FROM TH E HON'BLE APEX COURT IN THE CASE OF RELIANCE PETRO PRODUCTS P RIVATE LIMTIED (SUPRA), WHEREIN IT WAS CLEARLY HELD THAT W HEN INFORMATION GIVEN IN RETURN WAS FOUND TO BE CORRECT THEN NO PENALTY COULD BE IMPOSED U/S 271(1)(C). IN VIEW OF THESE FACTS AND JUDICIAL PRONOUNCEMENTS, WE FIND NO INFIRMITY I N THE STAND OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS). THE SAME IS AFFIRMED. 6. SO FAR AS THE APPEAL OF THE REVENUE IN ITA NO. 3 24/IND/201 IS CONCERNED, THE DISALLOWANCE OF LATE PAYMENT OF P F OF RS.3,30,671/- WAS DELETED BY THE TRIBUNAL. THEREFOR E, THERE IS NO INFIRMITY IN THE STAND OF LEARNED COMMISSIONER O F INCOME TAX (APPEALS) SO FAR AS PENALTY TO THIS EXTENT IS C ONCERNED. AS REGARDS DEFERRED REVENUE EXPENDITURE OF RS.3,35,357 /- OUT OF LEASE RENT PAID PRIOR TO PUT TO USE THE MACHINERY T AKEN ON 7 LEASE, THERE IS A FACTUAL FINDING IN THE IMPUGNED O RDER THAT THE FACTS WERE FULLY DISCLOSED BY THE ASSESSEE AND THIS FINDING WAS NOT CONTROVERTED BY THE REVENUE. AS MENTIONED EARL IER, MERE DISALLOWANCE OR ADDITION (WHEN DULY DECLARED) DO NO T AUTOMATICALLY LEAD TO IMPOSITION OF PENALTY, THEREF ORE, ON THIS COUNT ALSO, WE DO NOT FIND ANY INFIRMITY IN THE IMP UGNED ORDER AS THE ISSUE OF EXCESS CLAIM OF DEDUCTION U/S 80HHC AMOUNTING TO RS. 1620/- HAS ALSO BEEN DEALT WITH IN THE REQUIRED MANNER AS THE CLAIM WAS MADE ON THE BASIS OF REPORT OF CHARTERED ACCOUNTANT AND ALL THE FACTS WERE ACCU RATELY DISCLOSED BY THE ASSESSEE. CONSEQUENTLY, THERE IS N O CONCEALMENT. IN THIS VIEW OF THE MATTER, BOTH THE APPEALS OF THE REVENUE HAVE NO MERIT. NOW WE SHALL TAKE UP THE APPEAL OF THE ASSESSEE FO R THE ASSESSMENT YEAR 1999-00 (ITA NO. 340/IND/2010). GRO UND NOS. 1 TO 3 IN THE GROUNDS OF APPEAL WERE NOT PRESSED BY THE LD. COUNSEL FOR ASSESSEE. THEREFORE, THE SAME ARE DISMI SSED AS NOT PRESSED. GROUND NOS. 4 TO 6 WERE PRESSED WHICH RELATE TO SUSTENANCE OF ADDITION OF RS.28 LACS RESULTING INTO LEVY OF 8 PENALTY OF RS.9,80,000/-. THE CRUX OF ARGUMENTS ON BEHALF OF THE ASSESSEE IS THAT THE ASSESSEE HAS NOT CONCEALED THE PARTICULARS OF INCOME NOR FURNISHED INACCURATE PART ICULARS OF INCOME AND EVEN THE ADDITIONS SO SUSTAINED DO NOT R EPRESENT THE CONCEALED INCOME OF THE ASSESSEE WITHIN THE MEA NING OF SECTION 271(1)(C) OF THE ACT. IT WAS SUBMITTED THA T SALES MADE TO THE PARTIES ARE REGULARLY DEBITED, THE GENUINENE SS OF TRANSACTION AND THE PARTIES INVOLVED ARE NOT IN DOU BT, SUBMISSIONS OF THE ASSESSEE WERE NOT FOUND TO BE FA LSE, IDENTITY AND CREDIT WORTHINESS IS NOT IN DOUBT AND EVEN THE AMOUNT OF RS.28 LAC IS OUTCOME OF GENUINE TRANSACTI ON. HENCE, THESE COULD NOT BE SAID TO UNEXPLAINED. THE PENALTY PROCEEDINGS AND QUANTUM PROCEEDINGS WERE ARGUED TO BE INDEPENDENT FOR WHICH OUR ATTENTION WAS INVITED TO THE DECISION OF THE MP HIGH COURT IN 141 ITR 290. RELIANCE WAS A LSO PLACED ON 322 ITR 158 (S.C.) (SUPRA). ON THE OTHER HAND, THE LEARNED SR. DR DEFENDED THE IMPOSITION OF PENALTY BY SUBMIT TING THAT IT WAS MANDATORY FOR THE ASSESSING OFFICER TO IMPOSE P ENALTY. 9 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIAL AVAILABLE ON FILE. THE FACTS, IN BRIE F, ARE THAT THE ASSESSEE DECLARED INCOME OF RS.1,05,53,990/-. THE CASE WAS SELECTED FOR SCRUTINY. THE ASSESSMENT WAS FRAMED A T TAXABLE INCOME OF RS.1,53,53,990/-. THE LEARNED ASSESSING O FFICER MADE ADDITION OF RS.28 LACS WHICH WAS SHOWN AS DEA LERSHIP DEPOSIT IN THE NAME OF SANDEEP TRADERS ON THE GROU ND THAT THE ASSESSEE COULD NOT ESTABLISH THE IDENTITY OF TH E DEPOSITOR, CREDIT WORTHINESS OF THE CREDITOR AND GENUINENESS O F THE TRANSACTION. THE MATTER WAS CARRIED UPTO THE LEVEL OF THE TRIBUNAL WHERE THE ADDITION WAS CONFIRMED. THE ADDI TION WAS MADE BY THE ASSESSING OFFICER ON THE GROUND THAT TH E ASSESSEE COULD NOT EXPLAIN SATISFACTORILY AND FURNISHED INAC CURATE PARTICULARS RESULTING INTO LEVY OF PENALTY OF RS.9, 80,000/- U/S 271(1)(C) OF THE ACT. THE STAND OF THE ASSESSEE IS THAT THE ASSESSEE ACCEPTED FRESH DEALERSHIP DEPOSIT. IT WAS CLAIMED THAT M/S SANDEEP TRADERS WAS A WHOLESALE DEALER OF LIQUOR AND WAS PURCHASING GOODS FROM THE ASSESSEE ON REGULAR B ASIS. OUR ATTENTION WAS INVITED TO LEDGER ACCOUNT IN THE BOOKS OF THE 10 ASSESSEE POINTING OUT THAT THERE WAS AN OPENING CRE DIT OF RS.12,400/- AND THE SAID PARTY PURCHASED GOODS WORT H RS.79,78,220/-. THE ASSESSEE ALSO RECEIVED RS.1,07 ,65,820/- AGAINST THE SUPPLIES. CONSEQUENT, THERE WAS CLOSING BALANCE OF RS.28 LACS IN THE ACCOUNT OF THAT PARTY WHICH WAS C LASSIFIED UNDER THE HEAD DEALERSHIP DEPOSIT IN THE BALANCE SHEET. NOW THE QUESTION ARISES WHETHER PENALTY COULD BE IMPOSE D U/S 271(1)(C) WHEN ALL PARTICULARS ARE DISCLOSED. THE OBVIOUS REPLY IS NO BECAUSE PENALTY U/S 271(1)(C) IS IMPOSABLE WH EN EITHER THE ASSESSEE HAS CONCEALED THE INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. THE ASSESSE E GETS SUPPORT FROM THE DECISION IN ACIT V. PORRITTS & SPENCER (A) LIMITED; 22 SOT 281 (DEL). EVEN OTHERWI SE, QUANTUM AND PENALTY PROCEEDINGS ARE ALTOGETHER DIFF ERENT. THERE IS A SITUATION WHEN IT MAY BE A GOOD CASE FOR QUANTUM ADDITION BUT MAY NOT BE FOR PENALTY PROCEEDINGS. EVEN THE ASSESSING OFFICER HAS NOT DISPUTED THE TRANSACTION OF PURCHASE AND SALE CARRIED OUT BY THE ASSESSEE. THE HON'BLE A PEX IN THE CASE OF RELIANCE PETRO PRODUCTS LIMITED (SUPRA) HEL D THAT WHEN 11 NO INFORMATION GIVEN IN THE RETURN IS FOUND TO BE I NCORRECT AND EVEN WHEN THERE IS INCORRECT CLAIM DOES NOT AMOUNT TO CONCEALMENT OF PARTICULARS. THE PENALTY IMPOSED WAS DELETED BY THE HON'BLE APEX COURT. WHILE COMING TO THIS CO NCLUSION, THE HON'BLE COURT DULY CONSIDERED THE DECISION IN DILIP N. SHROFF & JCIT; 291` ITR 519, SHRIKRISHNA ELECTRICAL S VS. STATE; 23 VST 249 (S.C.), CIT V. ATUL MOHAN BINDAL; 317 IT R 1 (SC) PARA 8 AND UNION OF INDIA V. DHARMENDRA TEXTILES PR OCESSORS; 306 ITR 277 (SC) (PARAS 8 AND 9) ALONG WITH THE DEC ISION IN UNION OF INDIA VS. RAJASTHAN SPINNING & WEAVING MIL LS (2010) 1 GSTR 66 (SC) (PARA 8). IN THE PRESENT APPEAL, EVEN IF IT IS PRESUMED THAT THE WRONG CLAIM WAS MADE BY THE ASSE SSEE AND SINCE IT WAS DULY DECLARED, IN VIEW OF THE AFOR ESAID DECISION OF THE HON'BLE APEX COURT, NO PENALTY COULD BE IMPO SED U/S 271(1)(C) OF THE ACT BECAUSE THE DOCTRINE OF APPROB ATE AND REPROBATE PROHIBITS THE REVENUE AUTHORITIES FROM BL OWING HOT AND COLD IN THE SAME BREATH ACCEPTING THE TRANSACTI ONS BETWEEN THE PARTIES AND ON THE OTHER HAND IMPOSING THE 12 PENALTY U/S 271(1)(C) OF THE ACT. THE BOOKS OF ACC OUNT BETWEEN THE PARTIES WERE ALSO NOT PROVED TO BE BOGUS BY THE REVENUE. IN VIEW OF THE ABOVE, WE ARE OF THE VIEW THAT NO P ENALTY IS LEVIABLE IN THIS CASE AND WE DELETE THE SAME. FINALLY, THE APPEALS OF THE REVENUE ARE DISMISSED AND THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH OCTOBER, 2011. SD/- SD/- (R.C.SHARMA) (JOGINDER SI NGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 18.10.2011 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, GU ARD FILE DN/-