High Polymers Labs., V. DCIT Circle 12 (1),

ITA 4239/DEL/2006

• Counselvise Citation: 423920114 RSA 2006
• Duration Of Justice: 4 year(s) 9 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 18-10-2011
• Assessment Year: 1996-1997
• Appeal Filed On: 19-12-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K MONGADR
• Assessee Lawyers: MANISH KUMARARS; SSHRIR K MEHRA
• Keywords: Wrong claim; Difference of opinion
• Section: 43B; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI F BENC H BEFORE SHRI R.P. TOLANI, JM & SHRI A.N. PAHUJA, AM ITA NO.4239/D/2006 ASSESSMENT YEAR: 1996-97 M/S. HIGH POLYMER LABS LTD, 803, VISHAL BHAWAN, 95, NEHRU PLACE, NEW DELHI V/S . DY. C.I.T., CIRCLE-12(1), NEW DELHI [PAN:20 - H] (APPELLANT) (RESPONDENT) ASSESSEE BY S/SHRIR.K. MEHRA & MANISH KUMAR,ARS REVENUE BY SHRI A.K. MONGA,DR DATE OF HEARING 18-10-2011 DATE OF PRONOUNCEMENT 18-10-2011 O R D E R A.N.PAHUJA:- THIS APPEAL FILED ON 19.12.2006 BY THE ASSESSEE AG AINST AN ORDER DATED 16 TH NOVEMBER, 2006 OF THE LEARNED CIT(A)-XV, NEW DELHI , RAISES THE FOLLOWING GROUNDS:- 1 THAT THE APPELLATE ORDER PASSED BY THE LEARNED CIT(A) IS ILLEGAL AND AGAINST THE FACTS OF THE CASE. 2 THAT THE LEARNED CIT(A) HAS GROSSLY ERRED IN UPHO LDING THE PENALTY LEVIED BY THE ASSESSING OFFICER INSPITE OF THE FACT THAT THE INITIATION OF THE PENALTY PROCEEDINGS DOES NOT TANTAMOUNT TO SATISFACTION WITHIN THE MEANING OF THE PROVISION S OF THE ACT. THE PENALTY IMPOSED IS UNLAWFUL AND IS LIABLE TO BE QUASHED. 3 THAT THE LEARNED CIT(A) HAS GROSSLY ERRED IN TOTA LLY IGNORING THE CASE LAWS CITED BY THE ASSESSEE WHICH WERE DULY RELEVANT CONSIDERING THE FACTS OF THE CASE, THAT IS , THE CLAIM OF THE ASSESSEE WAS MADE IN ACCORDANCE WITH THE PRO VISION OF LAW. IF ON ACCOUNT OF DIFFERENCE OF OPINION IN THE INTERPRETATION OF THE STATUTE, SOME ADDITIONS ARE M ADE, THEY DO NOT TANTAMOUNT TO FURNISHING OF INACCURATE PARTI CULARS OF INCOME OR CONCEALING PARTICULARS OF INCOME. AS THE ASSESSEE HAS EXPRESSLY CLAIMED IT SEPARATELY, THE RE WAS I.T.A. NO.4239/D/2006 2 NOTHING TO HIDE TO COME IN THE DEFINITION OF CONCEA LMENT. THE PENALTY HAS BEEN IMPOSED AGAINST ALL CANOUS OF LAW AND AGAINST THE FACTS AND IT IS PRAYED THAT THE SAME BE DELETED. 4 THAT THE PENALTY BEING QUASY-CRIMINAL IN NATURE, THE RATIO OF THE JUDGMENT LAID DOWN BY THE APEX COURT IN THE LEV Y OF PENALTY ARE APPLICABLE TO THE CASE AND IN VIEW OF T HE BONAFIDES OF THE APPELLANTS CASE, THE PENALTY IS P RAYED TO BE DELETED. 5 THAT THE VARIOUS FINDINGS AND OBSERVATIONS MADE B Y THE LEARNED CIT(A) IN THE BODY OF THE APPELLATE ORDER B EING ABSOLUTELY ILLEGAL AND AGAINST THE FACTS OF THE CAS E, THE SAID APPELLATE ORDER NEEDS TO BE QUASHED IN TOTO. 6 THAT THE APPELLANT CRAVES YOUR HONORS LEAVE TO AD D, DELETE OR MODIFY ANY GROUNDS OF APPEAL DURING THE COURSE OF H EARING. 2. ADVERTING FIRST TO GROUND NOS.1 TO 5 IN THE APPE AL, FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT ASSESSMENT IN THIS CASE WA S COMPLETED ON 4 TH JANUARY, 1999 ON AN INCOME OF ` 75,57,288/- U/S 143(3) OF THE INCOME-TAX ACT, 1961 (HEREINABOVE REFERRED TO AS THE ACT) IN PURSUANCE T O THE RETURN DECLARING INCOME OF ` ` 51,28,450/- FILED ON 30 TH NOVEMBER, 1996. INTER ALIA, AN AMOUNT OF ` `23,58,934/- ON ACCOUNT OF EXCISE DUTY WAS DISALLOW ED IN TERMS OF PROVISIONS OF SECTION 43B OF THE ACT AND PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT WERE ALSO INITIATED. ON APPEAL, THE LD. CIT(A) ,VIDE HIS ORD ER DATED 12 TH MARCH, 1999, SUSTAINED THE DISALLOWANCE. ON FURTHER APPEAL, THE ITAT VIDE THEIR ORDER DATED 28.04.2005 IN I.T.A. NO.2036/D/99 UPHELD THE FINDIN GS OF THE LD. CIT(A). SUBSEQUENTLY IN RESPONSE TO A SHOW CAUSE NOTICE BEF ORE LEVY OF PENALTY, THE ASSESSEE SUBMITTED A DETAILED REPLY. HOWEVER, THE ASSESSING OFFICER DID NOT ACCEPT THE SUBMISSIONS OF THE ASSESSEE AND LEVIED A PENALTY OF ` 9,49,470/- @100% OF THE TAX SOUGHT TO BE EVADED IN RELATION TO THE AFORESAID DISALLOWANCE OF ` `23,58,934/-, RELYING INTER ALIA ON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN CIT VS. GURBACHAN LAL (250 ITR 157)(DELHI) ON THE GROUND THAT THE ASSESSEE FURNISHED INACCURATE PARTICULARS OF INCOME . I.T.A. NO.4239/D/2006 3 3. ON APPEAL, THE LEARNED CIT(A) UPHELD THE LEVY OF PENALTY, RELYING, INTER ALIA, ON THE DECISIONS IN CASE OF CIT VS. DASS JEWE LLERS 258 ITR 668 (DELHI); ELECTRICAL ENGG. CORPORATION VS. CIT 253 ITR 659 (D ELHI), AND K.P. MADUSUDAN VS. CIT 251 ITR 99 (SC). 4. ON FURTHER APPEAL, THE ITAT CANCELLED THE PENAL TY VIDE THEIR ORDER DATED 17.8.2007 ON THE GROUND THAT IN THE ABSENCE OF REQU ISITE SATISFACTION HAVING BEEN RECORDED BY THE AO IN THE ASSESSMENT ORDER, THE INI TIATION OF PENALTY PROCEEDINGS ITSELF WAS BAD IN LAW. ON APPEAL BY THE REVENUE, TH E HONBLE HIGH COURT VIDE THEIR ORDER DATED 23.7.2008 IN ITA NO. 614/2008 REM ANDED THE APPEAL BACK TO THE ITAT FOR CONSIDERATION ON MERITS IN VIEW OF INSERTI ON OF SUB-SECTION (1B) IN SECTION 271 OF THE ACT BY THE FINANCE ACT,2008 W.E.F 1.4.19 89 5. IN THE LIGHT OF THE AFORESAID DECISION OF THE HONBLE HIGH COURT, APPEAL WAS FIXED FOR HEARING FOR CONSIDERATION ON MERITS OF TH E LEVY OF THE PENALTY. AT THE OUTSET, THE LEARNED AR ON BEHALF OF THE ASSESSEE WH ILE INVITING OUR ATTENTION TO A DECISION DATED 23 RD JANUARY, 2009 OF THE ITAT IN THE CASE OF THE ASSES SEE FOR THE ASSESSMENT YEAR 1995-96 IN I.T.A. NO.4238/D/2006 CO NTENDED THAT ON SIMILAR FACTS, PENALTY HAVING BEEN CANCELLED, THE PENALTY M AY BE CANCELLED IN THE YEAR UNDER CONSIDERATION ALSO. THE LD. DR DID NOT OPPOSE THESE SUBMISSIONS ON BEHALF OF THE ASSESSEE. 6. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. INDISPUTABLY, THE PENALTY OF ` 4,57,324/- WAS IMPOSED IN THE AY 1995-96 IN RELATION TO A SIMILAR DISALLOWANCE OF ` 11,36,211/- U/S 43B OF THE ACT. THOUGH THE LEARNED CIT(A) HAD UPHELD THE LEVY OF PENALTY IN TH AT YEAR, THE ITAT VIDE THEIR AFORESAID ORDER DATED 23.01.2009 IN I.T.A. NO.4238/ DEL./2006 CANCELLED THE PENALTY IN THE FOLLOWING TERMS:- 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND AL SO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT TH E CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 43B ON ACCOUNT OF AVAILA BLE MODVAT CREDIT WAS DISALLOWED BY THE AO ON THE GROUND THAT THE AMOUNT SO I.T.A. NO.4239/D/2006 4 AVAILABLE WAS ACTUALLY PAID TO THE SUPPLIERS IN RES PECT OF RAW MATERIAL PURCHASED FROM THEM AND IT WAS, THEREFORE, NOT A PAYMENT MADE BY THE ASSESSEE ON ACCOUNT OF EXCISE DUTY TO T HE EXCISE DEPARTMENT. IT WAS ALSO HELD BY THE AO THAT THE LIA BILITY ON ACCOUNT OF THE SAID DUTY WAS ACTUALLY PAYABLE TO THE EXCISE DEPARTMENT BY THE CONCERNED SUPPLIERS AND THE SAME, THEREFORE, DI D NOT REPRESENT THE LIABILITY OF THE ASSESSEE. ALTHOUGH THE DISALLO WANCE MADE BY THE AO ON THIS ISSUE HAS BEEN CONFIRMED EVEN BY THE TRI BUNAL, IT IS OBSERVED THAT THE BASIS GIVEN BY THEM WHILE CONFIRM ING THE DISALLOWANCE WAS DIFFERENT INASMUCH AS IT WAS HELD BY THE TRIBUNAL IN, THIS CONTEXT THAT THERE WAS ONLY AN ADVANCE PAY MENT OF EXCISE DUTY BY THE ASSESSEE AND THE LIABILITY ON ACCOUNT O F THE SAID DUTY HAD NOT BECOME DUE DURING THE YEAR UNDER CONSIDERAT ION. THE FACTUM AND QUANTUM OF THE SAID LIABILITY THUS WAS A CCEPTED BY THE TRIBUNAL AS WELL AS THE PAYMENT THEREOF BY THE ASSE SSEE. THE ASSESSEE, HOWEVER, WAS STILL HELD TO BE NOT ENTITLE D FOR DEDUCTION U/S 43B IN RESPECT OF THE SAID LIABILITY PAID IN TH E YEAR UNDER CONSIDERATION BECAUSE THE SAME, ACCORDING TO THE TR IBUNAL, HAD NOT BECOME DUE IN THE YEAR UNDER CONSIDERATION. IT WAS ALSO HELD BY THE TRIBUNAL THAT THE ASSESSEE WAS ENTITLED TO CLAIM TH E DEDUCTION ON ACCOUNT OF UNUTILIZED MODVAT CREDIT ONLY WHEN IT GO T ADJUSTED AGAINST THE LIABILITY TOWARDS EXCISE DUTY ON MANUFA CTURING OF FINAL PRODUCTS. THE ASSESSEE THUS WAS HELD TO BE ENTITLED FOR DEDUCTION FOR THE AMOUNT IN QUESTION ON ACCOUNT OF UNUTILIZED MODVAT CREDIT BY THE TRIBUNAL NOT IN THE YEAR UNDER CONSIDERATION BU T IN THE YEAR IN WHICH THE SAID CREDIT WAS FINALLY ADJUSTED AGAINST THE EXCISE-LIABILITY ON MANUFACTURE OF FINAL PRODUCT. 8. THE DISPUTE WHICH FINALLY EMERGED THUS WAS ONL Y RELATING TO THE YEAR IN WHICH THE AMOUNT IN QUESTION WAS ALLOWA BLE TO THE ASSESSEE AS DEDUCTION. IN THIS REGARD, THE STAND OF THE ASSESSEE WAS THAT THE PAYMENT HAVING BEEN MADE IN THE YEAR U NDER CONSIDERATION, IT WAS UNDER A BELIEF THAT THE DEDUC TION WAS ALLOWABLE IN THAT YEAR IN ACCORDANCE WITH THAT PROV ISIONS OF SECTION 43B AND ALTHOUGH THAT SAID BELIEF HAS TURNED OUT TO BE A MISTAKEN BELIEF AS A RESULT OF THE DECISION OF THE TRIBUNAL HOLDING THAT THE CORRESPONDING LIABILITY ITSELF HAD NOT BECOME DUE I N THE YEAR UNDER CONSIDERATION, WE ARE OF THE VIEW THAT THE SAID BEL IEF WAS A BONA- FIDE BELIEF INASMUCH AS THE DEDUCTION WAS CLAIMED B Y THE ASSESSEE ON THE BASIS OF A POSSIBLE VIEW OF THE MATTER. MORE OVER, ALL THE RELEVANT PARTICULARS RELATING TO THE SAID CLAIM WER E DULY FURNISHED BY THE ASSESSEE WHICH IS QUITE EVIDENT FROM THE FACT T HAT THE DISALLOWANCE OF THE SAID CLAIM WAS MADE BY THE AO O RT THE BASIS OF THESE VERY PARTICULARS. THE AMOUNT IN QUESTION THUS WAS TREATED AS PAID BY THE ASSESSEE TOWARDS EXCISE DUTY AND THE SA ME WAS ALSO HELD TO BE DEDUCTIBLE BY THE TRIBUNAL BUT ONLY IN T HE SUBSEQUENT I.T.A. NO.4239/D/2006 5 YEAR ON ADJUSTMENT OF THE MODVAT CREDIT AGAINST THE EXCISE DUTY PAYABLE ON MANUFACTURE OF FINAL PRODUCTS AND NOT IN THE YEAR UNDER CONSIDERATION. IN OUR OPINION, IT WAS THUS NOT A CA SE OF AN ALTOGETHER WRONG CLAIM MADE BY THE ASSESSEE FOR DEDUCTION, BUT THE DISPUTE AS FINALLY TURN OUT TO BE WAS ONLY ABOUT THE YEAR I N WHICH THE SAID DEDUCTION WAS ALLOWABLE AND SINCE THE CLAIM OF THE ASSESSEE FOR THE SAID DEDUCTION IN THE YEAR UNDER CONSIDERATION WAS BASED ON A BONA-FIDE BELIEF, THE DISALLOWANCE THEREOF CANNOT T ANTAMOUNT TO CONCEALMENT AS ENVISAGED IN SECTION 271 (1)( C) TO ATTRACT THE LEVY OF PENALTY. AS SUCH, CONSIDERING ALL THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT IT WAS NOT A FIT CASE TO IMPOSE PENALTY U/S 271(1)(C) AND THE LEARNED CIT(A) WAS NO T JUSTIFIED IN CONFIRMING THE SAME. IN THAT VIEW OF THE MATTER, WE CANCEL THE PENALTY IMPOSED BY THE AO AND CONFIRMED BY THE LEAR NED CIT(A) AND ALLOW THIS APPEAL OF THE ASSESSEE. 6.1 WE FIND THAT THE HON'BLE APEX COURT IN CIT V. RELIANCE PETROPRODUCTS (P.) LTD. [2010] 322 ITR 158/ 189 TAXMAN 322, AFTER CONS IDERING VARIOUS DECISIONS INCLUDING DILIP N. SHROFF V. JT. CIT [2007] 291 ITR 519/ 161 TAXMAN 218 (SC) AND UNION OF INDIA V. DHARMENDRA TEXTILE PROCESSORS [20 08] 306 ITR 277 / 174 TAXMAN 571 (SC) CONCLUDED THAT A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO F URNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. SIMILA R VIEW WAS TAKEN IN CIT VS. SIDHARTHA ENTERPRISES (2010) 322 ITR 80 (P&H) AND C IT VS. SHAHABAD CO-OP. SUGAR MILLS LTD. (2010) 322 ITR 73( P&H). IN THE LIGHT OF VIEW TAKEN IN THESE DECISIONS, ESPECIALLY WHEN THE FACTS AND CIRCUMSTANCES IN THE YEAR UNDER CONSIDERATION ARE P ARALLEL TO THE FACTS IN THE PRECEDING ASSESSMENT YEAR, FOLLOWING THE VIEW TAKEN BY A CO-ORDINATE BENCH IN THEIR AFORESAID DECISION DATED 23.1.2009 IN THE PR ECEDING AY 1995-96, WE HAVE NO ALTERNATIVE BUT TO CANCEL THE PENALTY OF ` .9,49,470/- UPHELD BY THE LD. CIT(A) IN THE YEAR UNDER CONSIDERATION. THEREFORE, GROUND NO S. 1 TO 5 IN THE APPEAL ARE ALLOWED. 7. NO ADDITIONAL GROUND HAS BEEN RAISED BEFORE US I N TERMS OF RESIDUARY GROUND NO.6 IN THE APPEAL, ACCORDINGLY, THIS GROUN D IS DISMISSED. I.T.A. NO.4239/D/2006 6 8.. IN RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT SD/- SD/- (R.P. TOLANI) (A.N. PAHU JA) JUDICIAL MEMBER ACCOUNTANT MEMBER NS COPY OF THE ORDER FORWARDED TO :- 1. M/S HIGH POLYMER LABS LTD., 803, VISHAL BHAWAN, 95, NEHRU PLACE, NEW DELHI-19. 2. DCIT, CIRCLE-12(1), NEW DELHI 3. CIT (APPEALS)-XV, NEW DELHI 4. THE CIT CONCERNED. 5. THE DR, ITAT,F BENCH, NEW DELHI 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, DELHI