Mawana Sugars Ltd, New Delhi V. DCIT, New Delhi

ITA 4507/DEL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 4010 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 27-04-2010
• Assessment Year: 1996-1997
• Appeal Filed On: 27-11-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURENDER PAL
• Keywords: Set aside
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `E: NEW DELHI BEFORE SHRI G.E. VEERABHADRAPPA, VICE PRESIDENT AND SHRI C.L. SETHI, JM I.T. A. NO.4507/DEL OF 2009 ASSESSMENT YEAR: 1996-97 MAWANA SUGARS LTD., DY. COMMISSIONER OF INCOME- TAX, 5 TH FLOOR, KIRTI MAHAL, VS LARGE TAX PAYER UNIT, NBCC PLAZA, 19, RAJENDRA PLACE, PUSHP VIHAR, SAKET, NEW DEL HI. NEW DELHI. APPELLANT RESPONDENT APPELLANT BY: SHRI TARANDEEP SINGH RESPONDENT BY: SHRI SURENDER PAL ORDER PER C.L. SETHI, JM: THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT( A) DATED 24.9.2009 CONFIRMING THE PENALTY AMOUNTING TO RS.4,90,800/- L EVIED BY THE AO U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961 (THE ACT) FOR THE ASSTT. YEAR 1996-97. 2. IN THIS CASE, THE PENALTY U/S 271(1)(C ) HAS BEE N LEVIED BY THE AO IN RESPECT OF ADDITION OF RS.12,27,000/- MADE IN THE A SSESSMENT ON ACCOUNT OF DISALLOWANCE OF ASSESSEES CLAIM OF INTEREST PAYABL E. IN THE ACCOUNTS, THE ASSESSEE MADE A PROVISION OF INTEREST PAYABLE TO TH E EXTENT OF RS.12.27 LACS ON AMOUNT OF RS.170.20 LACS RELATING TO REALIZATION OF LEVY PRICE OF SUGAR. 2 THE ADDITION SO MADE BY THE AO WAS DELETED BY THE L EARNED CIT(A). THE CIT(A) HAS DISCUSSED THE FACTS OF THE CASE THAT ASS ESSEE HAD CREDITED AN AMOUNT OF RS.673.07 LACS, WHICH REPRESENTED THE AMO UNT REALIZED AND INTEREST THEREON ON ACCOUNT OF SUGAR SOLD AFTER 22. 2.74. THIS AMOUNT WAS BEING SHOWN IN THE SUNDRY CREDITORS UPTO 31.3.94 AN D WAS CREDITED TO THE PROFIT AND LOSS ACCOUNT AFTER THE DECISION OF THE S UPREME COURT. ACCORDING TO THE AO, THE ASSESSEE FURTHER REALIZED A SUM OF R S.98.80 LACS RELATING TO LEVY PRICE OF SUGAR PERTAINING TO THE SEASON 1982-8 3. THE TOTAL AMOUNT OF RS.170.20 LACS WAS RETAINED UNDER THE HEAD SUNDRY CREDITORS. IN THE ASSTT. YEAR 1995-96, THE ASSESSEE HAD OFFERED AN AMOUNT OF RS.12.27 LACS, BEING THE INTEREST PROVIDED FOR AN AMOUNT OF RS.170.20 LA CS AS INCOME IN ASSTT. YEAR 1995-96, BUT IN THE PRESENT ASSESSMENT YEAR I. E. ASSTT. YEAR 1996-97, THE ASSESSEE HAS NOT OFFERED SUCH INTEREST AS INCOM E. THE AO, THEREFORE, STATED THAT WHY THE ASSESSEE HAS NOT PROVIDED INTER EST AS INCOME INCURRED IN CURRENT YEAR. THE AO, THEREFORE, MADE ADDITION OF R S.12.27 LACS. THE CIT(A) DELETED THIS ADDITION BY SAYING THAT AS PER THE COURTS ORDER, THE HIGHER AMOUNT REALIZED BY THE ASSESSEE WAS LIABLE T O BE REFUNDED AND THE ASSESSEE HAD TO PROVIDE BANK GUARANTEE TO THE GOVER NMENT AND INTEREST AMOUNTING TO RS.12.27 LACS WAS PROVIDED AS A LIABIL ITY. THE CIT(A), THEREFORE, STATED THAT SINCE LIABILITY WAS PROVIDED AS PER THE COURTS ORDER, THE 3 DECISION OF SUPREME COURT IN THE CASE OF BHARAT EAR THMOVERS P. LTD., 245 ITR 48 (SC) WAS APPLICABLE. THE CIT(A), THEREFORE, DELETED THE ADDITION. HOWEVER, ON FURTHER APPEAL, THE TRIBUNAL RESTORED T HE AOS ORDER BY REVERSING THE CIT(A)S ORDER AND, THEREFORE, ADDITI ON MADE BY THE AO REMAINED SUSTAINED. 3. WE HAVE HEARD BOTH THE PARTIES AND HAVE CAREFULL Y GONE THROUGH THE MATERIAL ON RECORD. IT IS NOT IN DISPUTE THAT THE ADDITION MADE BY THE AO WAS DELETED BY THE CIT(A), WHICH GOES TO SHOW THAT THER E WAS DIVERGENCE OF OPINION AMONGST THE DEPARTMENTAL AUTHORITIES THEMSE LVES IN THE SENSE THAT CIT(A) HAS ACCEPTED THE ASSESSEES CLAIM AS AGAINST AOS ACTION IN NOT ACCEPTING THE ASSESSEES CLAIM. THE ADDITIONS MADE BY THE AO HAS BEEN RESTORED BY THE TRIBUNAL, WHICH ONLY SHOWS THAT THE ADDITIONS WERE MADE ONLY ON ACCOUNT OF DIVERGENT VIEWS TAKEN WITH REGAR D TO THE INTERPRETATION OF THE ASSESEES LIABILITY IN RESPECT OF THE AMOUNT CO LLECTED ON LEVY SUGAR. THEREFORE, IT IS NOT A FIT CASE WHERE PENALTY U/S 2 71(1)(C ) CAN BE LEVIED. 4. WITH REGARD TO THE AOS COMMENT THAT ASSESSEE HA S HIMSELF ADDED THE PROVISION OF INTEREST IN EARLIER ASSESSMENT YEAR BU T HAS NOT ADDED THE SAME IN THE ASSESSMENT YEAR UNDER CONSIDERATION, WHICH GOES TO SHOW THAT ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME, WE FIND THAT THE ASSESSEE HAS TAKEN DIFFERENT STAND IN DIFFERENT ASSESSMENT YEARS BECAUSE OF EVENT 4 SUBSEQUENTLY HAPPENED IN THE PRESENT CASE. WITH REG ARD TO THE CONTROVERSY ABOUT THE COLLECTION OF LEVY SUGAR, THE HONBLE SUP REME COURT PASSED AN ORDER DATE 20.9.1993 WHEREBY THE HONBLE SUPREME CO URT DIRECTED FOR RE- COMPUTATION OF LEVY SUGAR PRICE AND IN THE LIGHT OF THAT DIRECTION THE ASSESSEE ADDED THE PROVISION OF INTEREST AS INCOME IN THE AS STT. YEARS 1994-95 AND 1995-96. HOWEVER, SUBSEQUENTLY, THE SUPREME COURT PASSED ANOTHER ORDER DATED 20.2.96 WHEREIN IT WAS HELD THAT THE INTEREST ON PRICE REALIZED WAS PAYABLE. THE ASSESSEE, THEREFORE, MADE A PROVISION OF INTEREST PAYABLE AND CLAIMED THE SAME AS DEDUCTION IN THE ASSTT. YEAR 19 96-97. THEREFORE, ASSESSEES CONDUCT TAKING A ONE PARTICULAR VIEW IN ONE YEAR CANNOT SAID TO BE MALAFIDE SO AS TO LEVY A PENALTY U/S 271(1)(C ) OF THE ACT. IT IS ALSO NOT THE CASE WHERE THE AO HAS, AT ANY STAGE OF THE PROCEEDI NGS, STATED THAT ASSESSEE HAS NOT FURNISHED NECESSARY DETAILS AS TO THE CLAIM MADE. IT IS ALSO NOT THE CASE OF THE AO THAT ASSESSEE HAS SUPPRESSED THE MAT ERIAL FACTS RELATING TO THE CLAIM MADE BY IT. IT IS MERELY A CASE WHERE ASSESS EES CLAIM HAS BEEN DISALLOWED WITHOUT THERE BEING ANY EVIDENCE OR MATE RIAL ON RECORD TO SHOW THAT ASSESSEE HAD ANY MALAFIDE INTENTION TO EVADE P AYMENT OF TAXES. IT IS NO DOUBT TRUE THAT THE DEPARTMENT IS NOT SUPPOSED TO P ROVE MENS REA ON THE PART OF THE ASSESSEE BUT IT IS EQUALLY TRUE THAT IF THE ASSESSEE CAN ESTABLISH THAT HE MADE THE CLAIM IN BONAFIDE MANNER AND ALL PARTICULA RS RELATING THERETO HAVE 5 BEEN DISCLOSED, THE PENALTY U/S 271(1)(C ) SHALL NO T BE LEVIABLE. IN THE PRESENT CASE, AFTER CONSIDERING THE TOTALITY OF THE FACTS A ND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE ASSESSEE HAS BEEN ABLE TO PROVE AN D ESTABLISH THAT HIS CLAIM WAS BONAFIDE AND ALL THE PARTICULARS RELATING THERE TO WERE FURNISHED. WE, THEREFORE, HOLD THAT NO PENALTY U/S 271(1)( C) IS L EVIABLE. WE ACCORDINGLY, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND CANCE L THE PENALTY. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED, THIS DECISION WAS PRONOUNCED IN THE OPEN COURT ON 30 TH APRIL, 2010. (G.E. VEERABHADRAPPA) (C.L. SETH I) VICE PRESIDENT JUDICIAL MEMBER DATED: 30 TH APRIL , 2010 VIJAY COPY TO: 1. APPELLANT. 2. RESPONDENT. 3. CIT 4. CIT(A)-XI, NEW DELHI 5. DR ASSISTANT REGISTRAR