Punjab State Electricity Board, Patiala V. ACIT, Patiala

ITA 458/CHANDI/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77121 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 07-05-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 26-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR AMA RVEER SINGH
• Assessee Lawyers: K P BAJAJ
• Keywords: Bad and doubtful debts

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.458/CHD/2013 ASSESSMENT YEAR : 2007-08 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 : DR. AMARVEER SINGH, DR DATE OF HEARING : 07.05.2014 DATE OF PRONOUNCEMENT : 29.05.2014 ORDER PER SUSHMA CHOWLA, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), PATIALA DATED 21.01.2013 RELATING TO ASSESSMENT YEAR 2007-08 AGAINST THE PEN ALTY ORDER PASSED UNDER SECTION 271(1)(C) OF THE ACT. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL : 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 CLA IMED IN THE BOOKS OF ACCOUNT. 2. THAT WITHOUT PREJUDICE TO ABOVE, AS A RESULT OF DEC ISION OF HON'BLE INCOME-TAX APPELLATE TRIBUNAL IN QUANTUM APPEAL FOR THE ASSESSMENT YEAR 2006-07 VARIOUS ADDITIONS OF THE SA ME NATURE IN RESPECT OF WHICH THE PENALTY HAS BEEN IMPOSED WERE DELETED AND IN RESPECT OF OTHERS THE MATTER HAS BEEN SENT BACK TO THE ID. A.O., NOT JUSTIFYING THE UPHOLDING OF THE IMPUGNED PENALTY. 2 3. THE ONLY ISSUE RAISED IN THE PRESENT APPEAL IS AGAI NST THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE LD . AR FOR THE ASSESSEE AT THE OUTSET POINTED OUT THAT THE QUANTUM APPEAL IN THE CASE OF THE ASSESSEE HAD BEEN DECIDED BY THE TRIBUNAL IN ITA NO. 387/CHD/2011 VIDE ORDER DATED 25.09.2013 WHEREIN CE RTAIN ADDITIONS HAVE BEEN DELETED BY THE TRIBUNAL, SOME SET ASIDE A ND ONLY THE ADDITION ON ACCOUNT OF FBT TAX HAS BEEN CONFIRMED. HOWEVER, THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS LEVI ED ON THE BASIS OF THE ADDITIONS MADE IN THE ASSESSMENT ORDER. IT WAS FURTHER POINTED OUT BY THE LD. AR FOR THE ASSESSEE THAT THE ISSUE O F THE PENALTY LEVIABLE ON ACCOUNT OF ADDITION OF FBT WAS BEFORE T HE TRIBUNAL IN ITA NO. 278/CHD/2013 RELATING TO ASSESSMENT YEAR 20 06-07 UNDER WHICH THE SAID LEVY OF PENALTY FOR CONCEALMENT HAS BEEN UPHELD. 4. THE LD. DR FOR THE REVENUE FAIRLY PLACED RELIA NCE ON THE ORDER OF THE TRIBUNAL IN ASSESSEE'S OWN CASE RELATING TO ASSESSMENT YEAR 2006-07 WHERE SIMILAR PENALTY FOR CONCEALMENT UNDER SECTION 271(1)(C) OF THE ACT HAS BEEN UPHELD. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED THE RECORD. THE ASSESSMENT IN THE CASE WAS COMPLETED BY THE ASS ESSING OFFICER AND ADDITIONS WERE MADE ON VARIOUS ACCOUNTS WHICH A RE AS UNDER : NATURE OF THE ADDITION MADE AMOUNT PROVISION FOR BAD AND DOUBTFUL DEBTS 8,33,621/- SUNDRY EXPENSES 19,82,248/- FBT 4,55,55,824/- PRIOR PERIOD CHARGES 32,01,25,318/- DEFERRED COST EXPENSES 4,91,65,541/- EXPENSES AS PER AUDIT 353,79,00,000/- OBSERVATIONS 3 6. THE COMMISSIONER OF INCOME TAX (APPEALS) ALLOWED CERTAIN RELIEFS AND CERTAIN ADDITIONS WERE UPHELD BY COMMIS SIONER OF INCOME TAX (APPEALS). PURSUANT THERETO, THE ASSESSING OFF ICER LEVIED THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT AT RS. 1 31,61,08,265/-. THE TRIBUNAL VIDE ORDER DATED 25.09.2013 (SUPRA) DE LETED THE ADDITION ON ACCOUNT OF SUNDRY EXPENSES OF RS. 19,82 ,248/- VIDE PARA 10 AT PAGE 4 OF THE ORDER. FURTHER, THE ADDITION O N ACCOUNT OF PROVISION FOR BAD AND DOUBTFUL DEBTS AT RS. 833,621 /- WAS SET ASIDE TO THE FILE OF ASSESSING OFFICER WITH DIRECTIONS VIDE PARA7 AT PAGE 2 OF THE ORDER. SIMILARLY, THE ADDITION MADE ON ACCOUN T OF PRIOR PERIOD CHARGES OF RS. 32.01 CR WAS SET ASIDE TO THE FILE O F ASSESSING OFFICER VIDE PARA 13 AT PAGE 6 OF THE ORDER. ANOTHER ADDIT ION ON ACCOUNT OF DEFERRED COST EXPENSES OF RS. 4.91 CR WAS ALSO SET ASIDE VIDE PARA 19 AT PAGE 8 OF THE ORDER AND THE ADDITION ON ACCOUNT OF EXPENSES AS PER AUDIT OBSERVATIONS OF RS. 353.79 CR WAS ALSO SET AS IDE TO THE FILE OF ASSESSING OFFICER VIDE PARA 22 AT PAGES 9 AND 10 OF THE ORDER. HOWEVER, THE ADDITION ON ACCOUNT OF FBT TAX WAS NOT CONTESTED. 7. THE ADDITION MADE ON ACCOUNT OF SUNDRY EXPEN SES HAVING BEEN DELETED BY THE TRIBUNAL DOES NOT JUSTIFY ANY L EVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. FURTHER, THE A DDITIONS MADE ON ACCOUNT OF PROVISION FOR BAD AND DOUBTFUL DEBTS AT RS. 8,33,621/-, PRIOR PERIOD CHARGES OF RS. 32,01,25,318/-, DEFERRE D COST EXPENSES OF RS. 4,91,65,541/- AND EXPENSES DISALLOWED AS PER TH E AUDIT OBSERVATIONS AT RS. 353,79,00,000/- HAVE BEEN SET A SIDE TO THE FILE OF ASSESSING OFFICER TO BE CONSIDERED DENOVO. IN VIEW THEREOF, THERE IS NO MERIT IN ANY LEVY OF PENALTY UNDER SECTION 271(1 )(C) OF THE ACT AT THE PRESENT JUNCTURE. HOWEVER, THE ASSESSING OFFICE R IS AT LIBERTY TO 4 INITIATE THE PENALTY PROCEEDINGS UNDER SECTION 271( 1)(C) OF THE ACT AFTER ADJUDICATING THE ISSUES SET ASIDE BY THE TRIB UNAL. 8. THE ONLY ISSUE REMAINING TO BE ADJUDICATED IS O N ACCOUNT OF THE ADDITION MADE OF RS. 4,55,55,824/- BEING FBT PA ID. THE ASSESSEE HAD CLAIMED THE SAID PAYMENT AS AN EXPENDI TURE AS SAID EXPENDITURE AS PER THE ASSESSEE WAS RELATABLE AS BE NEFIT TO THE EMPLOYEES. HOWEVER, THE SAID EXPENDITURE WAS NOT A LLOWED IN THE HANDS OF THE ASSESSEE. THE SAID ADDITION WAS NOT CO NTESTED IN APPEAL BY THE ASSESSEE. PENALTY UNDER SECTION 271( 1)(C) OF THE ACT WAS LEVIED ON SUCH ADDITION. 9. WE FIND THAT IDENTICAL ISSUE OF LEVY OF PENALT Y UNDER SECTION 271(1)(C) OF THE ACT ON SIMILAR ADDITIONS ON ACCOUN T OF FBT PAID AROSE BEFORE THE TRIBUNAL IN ITA 278/CHD/2013 RELAT ING TO ASSESSMENT YEAR 2006-07 WHEREIN THE TRIBUNAL VIDE O RDER DATED 27.11.2013 HELD AS UNDER : 10. THE ONLY ISSUE REMAINING TO BE ADJUDICATED IS O N ACCOUNT OF THE ADDITION MADE OF RS. 4,39,65,017/- B EING FBT PAID. THE ASSESSEE HAD CLAIMED THE SAID PAYMEN T AS AN EXPENDITURE AND SAID EXPENDITURE AS PER THE ASSE SSEE WAS RELATABLE AS BENEFIT TO THE EMPLOYEES. HOWEVER , THE SAID EXPENDITURE WAS NOT ALLOWED IN THE HANDS OF TH E ASSESSEE. THE SAID ADDITION WAS NOT CONTESTED IN AP PEAL BY THE ASSESSEE. 11. THE ISSUE ARISING IN THE PRESENT APPEAL IS IN R ELATION TO LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE A CT ON SUCH ADDITION OF FBT PAID OF RS. 4.39 CR. THE CASE OF THE ASSESSEE IS THAT COMPLETE PARTICULARS WERE FURNISHE D 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. RELIANC E WAS PLACED 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 ASS ESSEE HAS TO BE BONAFIDE AND FURTHER IT HAS TO BE SUBSTAN TIATED AND BOTH THESE CONDITIONS WERE LACKING IN THE CASE OF THE ASSESSEE. RELIANCE WAS PLACED ON THE RATIO LAID DOW N BY 5 THE HON'BLE DELHI HIGH COURT IN ZOOM COMMUNICATIONS PVT. LTD (SUPRA). 13. PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS LEVIABLE WHERE THE ASSESSEE HAS CONCEALED ITS INCOM E OR FURNISHED INACCURATE PARTICULARS OF INCOME. HOWEVE R, WHERE THE ASSESSEE HAS NOT CONCEALED ANY MATERIAL F ACT OR THE FACTUAL INFORMATION GIVEN BY HIM HAS NOT BEEN F OUND TO BE INCORRECT, HE WILL NOT BE LIABLE TO IMPOSITION O F PENALTY UNDER SECTION 271(1)(C) OF THE ACT, EVEN WHERE THE CLAIM MADE BY HIM IS UNSUSTAINABLE IN LAW, PROVIDED THAT HE, EITHER SUBSTANTIATES THE EXPLANATION OFFERED BY HIM OR EVEN IF THE EXPLANATION IS NOT SUBSTANTIATED, THE S AME IS FOUND TO BE BONAFIDE. IF THE EXPLANATION IS NEITHER SUBSTANTIATED NOR SHOWN TO BE BONAFIDE, EXPLANATION (1) TO SECTION 271(1)(C) OF THE ACT COMES INTO PLEA AND THE ASSESSEE IS LIABLE TO THE PENALTY FOR CONCEALMENT. SUCH WAS THE PROPOSITION LAID DOWN BY THE HON'BLE DELHI HIGH COURT IN CIT VS ZOOM COMMUNICATIONS 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 TA XES COULD NOT BE CLAIMED AS A DEDUCTION AND THE CLAIM MADE BY THE ASSESSEE CANNOT BE SAID TO BE BONAFIDE. FURTHER, T HE ASSESSEE HAS FAILED TO OFFER AN EXPLANATION WHICH C AN BE SUBSTANTIATED. THE EXPLANATION OFFERED BY THE ASSES SEE 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 PUNJAB & HARYANA HIGH COURT IN CIT VS MEHTA ENGINEE RS PVT. LTD. (SUPRA) WHICH 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), WHEREIN THE ASSESSEE HAD CLAIMED EXPENDITU RE ON ACCOUNT OF THE TAX PAID, THE HON'BLE HIGH COURT HAD UPHELD THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. FOLLOWING THE RATIO LAID DOWN BY THE HON'BLE DELHI HIGH COURT IN CIT VS ZOOM COMMUNICATIONS PVT. LTD. (SUPRA), WE UPHOLD THE LEVY OF PENALTY UNDER SECTIO N 271(1)(C) OF THE ACT ON THE ADDITIONS MADE ON ACCOU NT OF THE DISALLOWANCE OF EXPENDITURE OF FBT PAID OF RS. 4.39 CR. THE ASSESSING OFFICER IS DIRECTED TO RECOMPUTE THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT IN VIEW THEREOF. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE, T HUS PARTLY ALLOWED. 10. THE ISSUE RAISED BEFORE US IS VIS--VIS LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON THE ADDITION MADE O N ACCOUNT OF FBT PAID IS IDENTICAL TO THE ISSUE BEFORE THE TRIBU NAL IN ITA 278/CHD/2013 AND FOLLOWING THE SAME PARITY OF REASO NING, WE 6 UPHOLD THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF EXP ENDITURE OF FBT TAX OF RS. 4.55 CR. THE ASSESSING OFFICER IS T HUS, DIRECTED TO RECOMPUTE THE PENALTY LEVIABLE UNDER SECTION 271(1) (C) OF THE ACT. IN VIEW THEREOF. THE GROUNDS OF APPEAL RAISED BY T HE ASSESSEE ARE THUS, PARTLY ALLOWED. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 8. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH MAY,2014. SD/- SD/- ( T.R.SOOD) (SUSHMA CHO WLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 29 TH MAY,2014 POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR ITAT,CHD.