Sh. Tarun Arora, Delhi V. ACIT, New Delhi

ITA 4989/DEL/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5215 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 8 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2010-2011
• Appeal Filed On: 20-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SULEKHA VERMA
• Assessee Lawyers: ASHISH JHAM
• Keywords: Depreciation; Wrong claim; Corroborative evidences; Revised return; TDS
• Section: 271(1)(c); 43B; 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI L.P. SAHU, ACCOUNTANT MEMBER I.T.A. NO.1154/DEL/2019 ASSESSMENT YEAR: 2014-15 M/S. VALLEY IRON & STEEL CO. LTD., EXCHANGE STORE BUILDING, SHAM NATH MARG, CIVIL LINES, NEW DELHI. V. ACIT, CENTRAL CIRCLE-5, NEW DELHI. TAN/PAN: AAACV 4632N (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI ABHIMANYU JHAMBA, ADV., MS. HEMLATA RANGA, ADV. & SHRI ASHISH JHAM, ADV. RESPONDENT BY: SMT. SULEKHA VERMA, CIT-D.R. DATE OF HEARING: 02 05 2019 DATE OF PRONOUNCEMENT: 24 05 2019 O R D E R PER AMIT SHUKLA, JM: THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE IMPUGNED ORDER DATED 19.12.2018, PASSED BY LD. COMMISSIONER OF INCOME TAX (APPEALS)-XXIV, NEW DELH I, IN RELATION TO THE PENALTY PROCEEDINGS U/S.271(1)(C) F OR THE ASSESSMENT YEAR 2014-15. THE ASSESSEE IS MAINLY AGG RIEVED BY LEVY OF PENALTY U/S. 271(1)(C) FOR A SUM OF RS.14,31,07,613/- ON ACCOUNT OF DISALLOWANCE MADE U /S.43B. 2. THE FACTS IN BRIEF QUA THE LEVY OF PENALTY ARE T HAT, ASSESSEE IS A MANUFACTURER OF STAINLESS STEEL, SS F LATS, SSHR I.T.A. NO.1154/DEL/2019 2 COIL, SSCR COIL & SS PIPES ETC FROM THE PLANT LOCAT ED IN UTTARAKHAND. IT HAD BEEN STATED FROM THE RECORDS TH AT ASSESSEE HAVE BEEN INCURRING HUGE LOSSES YEAR AFTER YEAR AND THERE WERE CARRY FORWARD LOSSES AND DEPRECIATION CO MING FROM THE ASSESSMENT YEAR 2012-13 WHICH AGGREGATED TO RS. 155.35 CRORES. THE ASSESSEE HAD AVAILED VARIOUS CREDIT FAC ILITIES FROM FINANCIAL INSTITUTIONS AND BANKS FOR SETTING UP OF THE BUSINESS AND FOR OPERATIONS. UNFORTUNATELY, THERE WAS A SEVE RE FLOOD IN FACTORY AREA IN AUGUST, 2011 DUE TO CLOUD BURST AND SINCE THEN ASSESSEE HAD SUFFERED HUGE LOSSES AS OPERATION COULD NOT BE CARRIED OUT AND CONSEQUENTLY THE ASSESSEE WAS NO T IN A POSITION TO PAY THE INSTALLMENT OF THE LOAN AND INT EREST ON THE LOAN BORROWED BY IT. THEREAFTER ASSESSEE COMPANY HA D APPLIED FOR RESTRUCTURING OF LOAN UNDER CORPORATE DEBT RESTRUCTURE SCHEME (CDR) WITH BANKS AND FINANCIAL INSTITUTIONS UNDER WHICH INTEREST ON THE EXISTING L OAN WAS TO BE FUNDED FROM FUND INTEREST TERM LOAN (FITL) AND INTEREST ON FITL WAS ONLY REMAINED PAYABLE BY THE ASSESSEE. ACCORDINGLY, ALL BANKS SANCTIONED FITL FOR THE PAYM ENT OF INTEREST ON THE ORIGINAL LOAN. IN THE AUDITED BALAN CE-SHEET AND P&L ACCOUNT FOR THE YEAR ENDING 31 ST MARCH, 2014, SIGNED ON 28.11.2014, THE ASSESSEE-COMPANY HAD DISCLOSED THIS FACT REGARDING THE STATUS OF PAYMENT OF INTEREST IN THE FOLLOWING MANNER:- AS PER CDR SCHEME OVERDUE/IRREGULAR BALANCE OF WOR KING CAPITAL LOAN HAS BEEN CONVERTED INTO WORKING CAPITAL TERM LOAN (WCTL) AND INTEREST ON TERM LOAN, CASH CREDIT AND WCTL FOR THE PERIOD HAS BEEN CONVERTED INTO FUNDED INTEREST TERM LOAN (FITL) I.T.A. NO.1154/DEL/2019 3 3. THE TOTAL INTEREST DEBITED IN THE P&L ACCOUNT WA S RS.50,87,83,083/- ON ORIGINAL LOAN, OUT OF WHICH SU M OF RS.48,18,93,419/- WAS REMAINED UNPAID AND IT WAS PA ID FROM FITL SANCTIONED BY THE BANKS. THE ASSESSEE HAD PAID INTEREST ON FITL AMOUNTING TO RS.6,08,64,843/-. IN THE AUDIT REPORT, THE AUDITORS HAVE OPINED THAT INTEREST TO THE EXTEN T PAYABLE ON FITL WAS TO BE DISALLOWED AND ACCORDINGLY, AUDIT ORS HAVE QUALIFIED SUM OF RS.6,08,64,843/- FOR THE DISALLOWA NCE U/S.43B OF THE INCOME TAX ACT, 1961. BASED ON THIS AUDIT REPORT, THE ASSESSEE HAD FILED ITS RETURN OF INCOME ON 30.11.2014 BY WAY OF E-FILING. THEREAFTER, NOTICE U /S. 143(2) WAS ISSUED ON 28.08.2015 AND FURTHER NOTICE U/S. 14 2(1) WAS ISSUED ON 06.04.2016 AND 02.08.2016. ON 26.08.2016 AUDITORS REVISED THE TAX AUDIT REPORT AND UPLOADED THE SAME ON THE INCOME TAX SITE, WHEREIN THEY HAD DISALLOWED THE AMOUNT REPORTED IN THE AUDIT REPORT AT RS.48,18,93, 419/- IN PLACE OF PREVIOUSLY REPORTED DISALLOWANCE OF RS.6,0 8,64,813/-. THE REASON FOR REVISING ORIGINAL REPORT IN 3CD DATE D 26.08.2016 WAS REPORTED AS UNDER: REVISED/ORIGINAL REVISED REASON 1 CHANGE IN INTERPRETATION E.G. CBDT CIRCULA R, JUDGMENT ETC. REASON 2 OTHERS DESCRIPTION AS PER SECTION 43B(D)/(E) EXEMPTION 3D WHOLE AMOUNT OF INTEREST REMAIN UNPAID SHOULD HAVE BEEN DISALLOWED BUT IN ORIGINAL REPORT INTEREST ON FITL AND CORRESPONDING INSTALLMENT UNPAID WERE REPORTED AS DISALLOWED. I.T.A. NO.1154/DEL/2019 4 4. BASED ON THIS AUDIT REPORT, THE ASSESSEE HAS FIL ED REVISED RETURN AND FURNISHED THE REVISED RETURN MANUALLY BE FORE THE ASSESSING OFFICER, BECAUSE ONLINE RETURN WAS NOT PE RMITTED. THE SAID REVISED RETURN WAS FILED ON 01.09.2016. LD . ASSESSING OFFICER IN THE ASSESSMENT ORDER BASED ON SUCH REVISION OF AUDIT REPORT AND THE REVISED RETURN HEL D THAT THE RETURN FILED BY THE ASSESSEE WAS NOT PROPER AND HAS NOT CORRECTLY SHOWN THE PARTICULARS OF INCOME, BECAUSE IN THE ORIGINAL RETURN ASSESSEE HAS NOT OFFERED THE INCOME OF RS.42,10,28,576/- FOR TAXATION AND THE REVISED RETU RN IS NOT VALID. THE AUDIT REPORT HAS BEEN REVISED ONLY AFTER NOTICE U/S. 143(2). BASED ON THIS, HE HAS MADE THE DISALLOWANCE U/S. 43B(E) OF RS.42,10,28,576 AND ACCORDINGLY, THE ASSE SSED LOSS WAS REDUCED TO RS.11,86,66498/-. 5. NOW ON SUCH DISALLOWANCES, PENALTY HAS BEEN LEVI ED BY THE ASSESSING OFFICER ON THE GROUND THAT, FIRSTLY , RETURN HAS NOT BEEN REVISED IN TIME ALLOWED U/S.139(5) AND; SECONDLY , THE ASSESSEE HAS MADE A WRONG CLAIM OF EXPENSES OF RS.42,10,28,576/- IN THE ORIGINAL RETURN OF INCOME. HENCE, ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF IN COME. 6. AFTER CONSIDERING ASSESSEES EXPLANATION AND REL YING UPON VARIOUS DECISIONS, HE HAS FINALLY LEVIED THE P ENALTY OF RS.14,31,07,613/- BEING 100% OF THE AMOUNT OF TAX S OUGHT TO BE EVADED. 7. LD. CIT (APPEALS) TOO HAS CONFIRMED THE SAID PEN ALTY HOLDING THAT ASSESSEE HAS REVISED THE AUDIT REPORT AND THE I.T.A. NO.1154/DEL/2019 5 RETURN AFTER RECEIPT OF NOTICES U/S. 143(2) AND 142 (1). HE FURTHER HELD THAT THE REASONING AND EXPLANATION GIV EN BY THE ASSESSEE FOR REDUCING THE COMPUTATION OF INCOME IN THE COURSE OF ASSESSMENT PROCEEDINGS ON THE BASIS OF OB SERVATION OF THE TAX AUDIT REPORT IS NOT CONVINCING. THE FACT OF FUNDED INTEREST TERM LOAN WAS WELL WITHIN THE KNOWLEDGE OF THE ASSESSEE COMPANY AND THE FINANCIAL INSTITUTION/BANK THROUGH RE-STRUCTURED DEBT LOAN AND OFFERED TERM LOAN TO TH E ASSESSEE TO TAKE CARE OF UNPAID INTEREST. SUCH DEBT RESTRUCT URING WAS ACCEPTED BY THE ASSESSEE TO ENABLE TO TAKE CARE OF UNPAID INTEREST THROUGH TERM LOAN ON CONDITION OF PAYMENT OF FITL. THUS, ASSESSEE-COMPANY WAS WELL AWARE OF THE FACT O F THE ACTUAL STATUS OF INTEREST PAYMENT TO THE BANKS, AND THEREFORE, IT CANNOT DENY THE OBLIGATION TO MAKE DISALLOWANCE OF RS.48,18,93,419/- U/S.43B(E) OF THE ACT. HE HAS ALS O REJECTED THE ASSESSEES EXPLANATION THAT THERE WAS A BONA FIDE MISTAKE. ACCORDINGLY, HE HAS CONFIRMED THE ACTION OF THE ASS ESSING OFFICER. 8. BEFORE US, LD. COUNSEL FOR THE ASSESSEE AFTER NA RRATING THE ENTIRE FACTS AND BACKGROUND OF THE CASE SUBMITT ED THAT BEFORE REVISING OF THE AUDIT REPORT AND FILING OF T HE RETURN OF INCOME, NO SPECIFIC QUERY OR ISSUE OF 43B OR QUANTU M OF DISALLOWANCE WAS RAISED BY THE ASSESSING OFFICER IN ANY OF THE NOTICES U/S. 143(2) OR U/S. 142(1). HE DREW OUR ATT ENTION, FIRST OF ALL, TO NOTICE DATED 28.08.2015 ISSUED U/S. 143( 2) WHEREIN IT WAS IN A PRINTED FORM WITH NO SPECIFIC ISSUE OR QUERY RAISED. THEREAFTER, IN THE NOTICES DATED 06.04.2016 AND 28. 08.2016 I.T.A. NO.1154/DEL/2019 6 AGAIN THERE WAS NO QUERY WITH REGARD TO THE CLAIM O F SECTION 43B. THUS, HE POINTED OUT THAT ONLY FOLLOWING ISSUE S WERE RAISED IN NOTICE U/S. 142(1) DATED 06.04.2016, WHIC H READS AS UNDER: 1. COPY OF INCOME TAX RETURN FOR ASSESSMENT YEAR 2 014-15 ALONG WITH COMPUTATION OF INCOME. 2. POWER OF ATTORNEY IN FAVOUR OF AUTHORIZED REPRE SENTATIVE, IF ANY. 3. PROOFS REGARDING PAYMENT OF TAXES. 4. COPY OF AUDIT REPORT IN FORM 3CD AND AS PER COMP ANIES ACT, 2013 ALONG WITH ALL THE ANNEXURES, IF ANY. 5. TDS CERTIFICATE, IF ANY. SIMILARLY, A NOTICE DATED 02.08.2016 WHICH WAS A GENERAL QUERY IN A PRINTED FORM WHEREIN CLAUSE (B) AND (C) HAS BEEN TICKED WHICH READ AS UNDER: (B) ** PRODUCE OF CAUSE TO BE PRODUCED BEFORE MA AT MY OFFICE .. ON THE ACCOUNTS AND/OR DOCUMENTS SPECIFIED BELOW/OVERLEAF. (C) ** FURNISH IN WRITING AND VERIFIED IN THE PRESC RIBED MANNER THE FOLLOWING INFORMATION (I) COPY OF ITR FOR ASSES SMENT YEAR 2014-15, (II) COPY OF AUDIT REPORT ALONGWITH ALL TH E ANNEXURES, (III) PROOF REGARDING PAYMENT OF TAXES, (IV) TDS CERTIFICATE, IF ANY AND (V) POWER OF ATTORNEY IN FA VOUR OF AUTHORIZED REPRESENTATIVE. THE INFORMATION CALLED FOR SHOULD BE FURNISHED TO M Y OFFICE AT ROOM NO.361, 3 RD FLOOR, ARA CENTRE, E-2, JHANDEWALAN EXTN., NEW DELHI BY 09.08.2016 AT 11.30 AM. THIS IS ALSO AN INTIMATION FOR THE CHANGE OF INCUMB ENT. I.T.A. NO.1154/DEL/2019 7 9. THUS, FROM A BARE PERUSAL OF THE AFORESAID NOTIC ES, IT CAN BE SEEN THAT AT NO POINT OF TIME, THE ASSESSING OFF ICER HAS RAISED ANY QUERY WITH REGARD TO CLAIM OF DISALLOWAN CE U/S.43B. HE FURTHER DREW OUR ATTENTION TO THE GUIDA NCE NOTE FOR REVISING THE TAX AUDIT REPORT AND POINTED OUT T HAT AUDITORS HAVE GIVEN THE EXPLANATION ON DISALLOWANCE OF INTER EST. HE POINTED OUT THAT THERE WAS A BONA FIDE BELIEF AT THE TIME OF ORIGINAL TAX AUDIT REPORT THAT, ONCE THE ACCOUNT OF THE ASSESSEE WAS RESTRUCTURED UNDER CDR UNDER WHICH THE INTEREST ON EXISTING LOAN WAS TO BE PROVIDED BY FIT L, THEN THE INTEREST OF FITL WAS ONLY REMAIN PAYABLE AND THE IN TEREST OF THE EARLIER LOAN WAS TO BE PAID BY FITL AND THUS, I T WAS IN THIS BACKGROUND THE AUDITORS HAD CLARIFIED THAT ONLY DIS ALLOWANCE U/S.43B FOR INTEREST PAYABLE ON FITL WAS TO BE DISA LLOWED WHICH WAS RS.6,08,64,843/-. HE SUBMITTED THAT THERE WERE CERTAIN DECISIONS OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF GUJARAT CYPROMET LTD . WHICH HAS NOW BEEN REVERSED BY THE HON'BLE SUPREME COURT IN FEBRUARY, 2019, REPORTED I N (2019) 262 TAXMAN 93 (SC). THUS, AT THAT TIME, THERE WERE DECISIONS IN FAVOUR OF THE ASSESSEE WITH REGARD TO THE CLAIM. HE FURTHER SUBMITTED THAT THE CO-ORDINATE BENCH OF HON'BLE DEL HI ITAT IN THE CASE OF ITO VS. M.M. AQUA TECHNOLOGIES LTD. REPORTED IN (2005) 143 TAXMANN 143 (DEL.) (MAG) THIS ISSUE WAS DECIDED IN FAVOUR. THUS, PRIOR TO THE HON 'BLE SUPREME COURT JUDGMENT THERE WERE CERTAIN DECISIONS PRECISELY ON THE SAME ISSUE WHICH WERE IN FAVOUR OF THE ASSESSEE. THUS, ASSESSEES CLAIM IN THE ORIGINAL RE TURN OF I.T.A. NO.1154/DEL/2019 8 INCOME CAN BE SAID TO BE BONA FIDE CLAIM. LATER ON, THE REVISED DISALLOWANCE WAS DONE SUO MOTU AND VOLUNTARILY WITHOUT ANY SPECIFIC QUERY RAISED BY THE ASSESSING OFFICER DURI NG THE COURSE OF THE ASSESSMENT PROCEEDINGS. THUS, NO PENA LTY CAN BE LEVIED ON SUCH A REVISED CLAIM. IN SUPPORT, HE A LSO RELIED UPON FOLLOWING JUDGMENTS:- 1. PRICE WATERHOUSE COOPERS (P) LTD. VS. CIT, REPO RTED IN (2012) 348 ITR 306 (SC). 2. CIT VS. RELIANCE PETROPRODUCTS P. LTD. REPORTED IN (2010) 322 ITR 158 (SC). 3. CIT VS. COMPRO TECHNOLOGIES P. LTD. REPORTED IN (2015) 232 TAXMAN 392 (DELHI). 4. PCIT VS. CONTROL & SWITCHGEAR CONTRACTORS LTD. R EPORTED IN (2015) 377 ITR 215 (DELHI). 5. ALP OVERSEAS PVT. LTD. VS. DCIT. (ITAT) (DEL) 10. ON THE OTHER HAND, LD. CIT-DR POINTED OUT THAT HERE IN THIS CASE THE ASSESSEE HAD FILED A RETURN OF INCOME ON 28.11.2014 AND THE REVISION OF THE AUDIT REPORT WAS CARRIED OUT ON 26.08.2016. THUS, THERE WAS A HUGE GAP BETWE EN THE ORIGINAL RETURN OF INCOME AND REVISED AUDIT REPORT AND THE REVISED RETURN OF INCOME WAS FILED ONLY ON 01.05.20 16. SUCH REVISED RETURN OF INCOME WAS BEYOND THE TIME LIMIT OF SECTION 139(5). THE ASSESSEES CASE WAS SELECTED FOR SCRUTI NY MUCH EARLIER. AS PER THE LAW, ASSESSEE NEEDS TO SUBSTANT IATE ITS CLAIM IN THE RETURN OF INCOME AND IF ANY SUCH CLAIM HAS BEEN REVISED AFTER THE SCRUTINY PROCEEDINGS HAVE BEEN IN ITIATED, THEN IT CANNOT BE TERMED AS VOLUNTARY. EVEN AT THE TIME OF I.T.A. NO.1154/DEL/2019 9 RESTRUCTURING OF LOAN THE MANAGEMENT WAS INVOLVED, AND THEREFORE, IT CANNOT BE HELD THAT ASSESSEE WAS NOT AWARE AND HAS SIMPLY RELIED UPON THE AUDITORS NOTE AND OPINI ON GIVEN IN THE ORIGINAL AUDIT REPORT. THUS, THIS FACT WAS IN T HE KNOWLEDGE OF THE ASSESSEE AND ASSESSEE CANNOT TAKE THE SHELTE R THAT IT HAS ACTED UPON THE END OF THE AUDITORS. IN THE WRIT TEN SUBMISSION, SHE HAS STRONGLY RELIED UPON THE DECISI ON OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. MAK DATA PVT. LTD., 358 ITR 593 WHEREIN THE HON'BLE SUPREME COURT HAS HELD AS UNDER: THE ASSESSING OFFICER, SHALL NOT BE CARRIED AWAY B Y THE PLEA OF THE ASSESSEE LIKE 'VOLUNTARY DISCLOSURE', 'BUY PEACE', 'AVOID LITIGATION', 'AMICABLE SETTLEMENT', ETC. TO EXPLAIN AWAY ITS CON DUCT. THE QUESTION IS WHETHER THE ASSESSEE HAS OFFERED ANY EXPLANATION FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISH ING INACCURATE PARTICULARS OF INCOME. EXPLANATION TO SECTION 271(1 ) RAISES A PRESUMPTION OF CONCEALMENT, WHEN A DIFFERENCE IS NO TICED BY THE ASSESSING OFFICER, BETWEEN REPORTED AND ASSESSED IN COME. THE BURDEN IS THEN ON THE ASSESSEE TO SHOW OTHER WISE, BY COGENT AND RELIABLE EVIDENCE. WHEN THE INITIAL ONUS PLACED BY THE EXPLANATION, HAS BEEN DISCHARGED BY HIM, THE ONUS SHIFTS ON THE REVENUE T O SHOW THAT THE AMOUNT IN QUESTION CONSTITUTED THE INCOME AND NOT O THERWISE. [PARA 7] ASSESSEE HAS ONLY STATED THAT HE HAD SURRENDERED THE ADDITIONAL SUM WITH A VIEW TO AVOID LITIGATION, BUY PEACE AND TO CHANNELIZE THE ENERGY AND RESOURCES TOWARDS PRODUCTIVE WORK AND TO MAKE AMICABLE SETTLEMENT WITH THE INCOME TAX DEPARTMENT. STATUTE DOES NOT RECOGNIZE THOSE TYPES OF DEFENCE UNDER THE EXPLANATION 1 TO SECTION 271(1)(C). IT IS TRITE LAW THAT THE VOLUNTARY I.T.A. NO.1154/DEL/2019 10 DISCLOSURE DOES NOT RELEASE THE ASSESSEE FROM THE M ISCHIEF OF PENAL PROCEEDINGS UNDER SECTION 271(1)(C). THE LAW DOES N OT PROVIDE THAT WHEN AN ASSESSEE MAKES A VOLUNTARY DISCLOSURE OF HI S CONCEALED INCOME, HE HAS TO BE ABSOLVED FROM PENALTY. [PARA 7 ] THE SURRENDER OF INCOME ON THIS CASE IS NOT VOLUN TARY IN THE SENSE THAT THE OFFER OF SURRENDER WAS MADE IN VIEW OF DET ECTION MADE BY THE ASSESSING OFFICER IN THE SEARCH CONDUCTED IN TH E SISTER CONCERN OF THE ASSESSEE. IN THAT SITUATION, IT CANNOT BE SAID THAT THE SURRENDER OF INCOME WAS VOLUNTARY. THE SURVEY WAS CONDUCTED MORE THAN 10 MONTHS BEFO RE THE ASSESSEE FILED ITS RETURN OF INCOME. HAD IT BEEN TH E INTENTION OF THE ASSESSEE TO MAKE FULL AND TRUE DISCLOSURE OF ITS IN COME, IT WOULD HAVE FILED THE RETURN DECLARING AN INCOME INCLUSIVE OF THE AMOUNT WHICH WAS SURRENDERED LATER DURING THE COURSE OF TH E ASSESSMENT PROCEEDINGS. CONSEQUENTLY, IT IS CLEAR THAT THE ASSESSEE HAD N O INTENTION TO DECLARE ITS TRUE INCOME. IT IS THE STATUTORY DUTY O F THE ASSESSEE TO RECORD ALL ITS TRANSACTIONS IN THE BOOKS OF ACCOUNT , TO EXPLAIN THE SOURCE OF PAYMENTS MADE BY IT AND TO DECLARE ITS TR UE INCOME IN THE RETURN OF INCOME FILED BY IT FROM YEAR TO YEAR. THE ASSESSING OFFICER, HAS RECORDED A CATEGORICAL FINDING THAT HE WAS SATISFIED THAT THE ASSESSEE HAD CONCEALED TRUE PARTICULARS OF INCOME AND IS LIABLE FOR PENALTY PROCEEDINGS UNDER SECTION 271, READ WITH SECTION 274. [PARA 9] THE ASSESSING OFFICER HAS TO SATISFY WHETHER THE PENALTY PROCEEDINGS BE INITIATED OR NOT DURING THE COURSE O F THE ASSESSMENT PROCEEDINGS AND THE ASSESSING OFFICER IS NOT REQUIR ED TO RECORD HIS SATISFACTION IN A PARTICULAR MANNER OR REDUCE IT IN TO WRITING. [PARA 10] IN VIEW OF ABOVE, IMPUGNED PENALTY ORDER PASSED BY THE HIGH COURT DESERVED TO BE CONFIRMED. I.T.A. NO.1154/DEL/2019 11 11. SHE HAS FURTHER RELIED UPON THE DECISION OF HON 'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. ZOOM COMMUNICATION PVT. LTD. REPORTED IN (2010) 327 ITR 510 (DEL ) AND ALSO THE DECISION IN THE CASE OF JIVANLAL AND SONS VS. ACIT REPORTED IN (2019) 103 TAXMANN.COM 208 (SC) GIVEN BY THE HON'BLE SUPREME COURT DISMISSING THE SLP OF THE ASSESSEE WH EREIN THE HON'BLE HIGH COURT HAS CONFIRMED THE PENALTY ON THE ASSESSEES EXPLANATION THAT IT HAS CLAIMED DEDUCTIO N IN RESPECT OF TAX PAID ON THE BASIS OF WRONG ADVICE GI VEN BY THE CHARTERED ACCOUNTANT. LASTLY, SHE RELIED UPON THE D ECISION OF HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF HAMIRPUR DISTRICT CO-OPERATIVE BANK LTD. VS. CIT WHEREIN THE HON'BLE HIGH COURT HAS HELD THAT WHERE ASSESSING OFFICER HA VING NOTICED THAT ASSESSEE, A CO-OPERATIVE BANK, HAD DEB ITED AMOUNT OF ADVANCE TAX PAID UNDER HEAD OTHER EXPENDI TURE AND IT HAD ALSO DEBITED A CERTAIN AMOUNT IN PROFIT AND LOSS ACCOUNT AS LOSS FROM SALE OF OR DEALING WITH NONBA NKING BUSINESS EVEN THOUGH IT WAS NOT AN EXPENSE BUT AN APPROPRIATION OF PROFIT DISALLOWED SAID AMOUNTS AND INCLUDED SAME IN INCOME OF ASSESSEE AND ALSO IMPOSED PENALTY UPON IT UNDER SECTION 271(1)(C), PENALTY WAS RIGHTLY IMPOSE D. THUS, THE PENALTY LEVIED BY THE ASSESSING OFFICER SHOULD BE CONFIRMED. 12. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E RELEVANT FINDINGS GIVEN IN THE IMPUGNED ORDERS AS W ELL AS MATERIAL REFERRED TO BEFORE US. FROM THE FACTS AS D ISCUSSED ABOVE, IT CAN BE SEEN THAT ASSESSEE HAD TO PAY HUGE INTEREST I.T.A. NO.1154/DEL/2019 12 ON VARIOUS LOAN AND CREDIT FACILITIES TAKEN FROM TH E FINANCIAL INSTITUTIONS AND BANKS ON THE LOAN TAKEN FOR SETTIN G UP OF BUSINESS AND OPERATION OF BUSINESS. DUE TO HEAVY LO SSES FROM UNFORTUNATE NATURAL CALAMITY ASSESSEE WAS UNABLE TO CARRY OUT ITS OPERATION AND CONSEQUENTLY IT HAD INCURRED HUGE LOSSES OVER THE YEARS. SINCE, ASSESSEE WAS NOT IN A POSITION TO PAY THE INSTALLMENTS OF LOAN AND INTEREST, THEREFOR E, IT HAD APPLIED FOR RESTRUCTURING OF LOAN UNDER CORPORATE D EBT RESTRUCTURE SCHEME UNDER WHICH THE INTEREST ON EXIS TING LOAN WAS TO BE FUNDED TROUGH INTEREST TERM LOAN (FITL). IN THE ORIGINAL AUDIT REPORT, THE AUDITORS HAVE TAKEN A VI EW THAT ONLY THE INTEREST ON FITL WHICH REMAIN PAYABLE AT THE EN D OF YEAR WILL ALONE QUALIFY FOR DISALLOWANCE U/S.43B AND ACC ORDINGLY, AUDITORS HAVE QUALIFIED AMOUNT OF RS.6,08,64,843/- FOR THE DISALLOWANCE WHICH WAS THE INTEREST PAYABLE ON FITL SANCTIONED BY THE BANK. LATER ON, THE AUDITORS HAVE REVISED THE AUDIT REPORT WHERE THEY HAVE OPINED THAT IN PLA CE OF DISALLOWANCE OF RS.6,08,64,813/-, ENTIRE INTEREST P AYABLE ON EARLIER LOAN AMOUNTING TO RS.48,18,93,419/- SHOULD BE DISALLOWED U/S.43B. THE REASON FOR REVISING THE ORI GINAL LOAN HAS ALREADY BEEN INCORPORATED ABOVE. IN THE LIGHT O F SUCH REVISED TAX AUDIT REPORT, ASSESSEE HAD REVISED THE RETURN OF INCOME ON 29.08.2016 WHICH WAS FILED MANUALLY BEFOR E THE ASSESSING OFFICER ON 01.09.2016. FROM THE PERUSAL O F NOTICES ISSUED PRIOR TO THE REVISING OF THE TAX AUDIT REPOR T, IT IS SEEN THAT NOWHERE THE ASSESSING OFFICER HAS RAISED ANY Q UERY WITH REGARD TO THE DISALLOWANCE U/S.43B OR THE WRONG CLA IM MADE I.T.A. NO.1154/DEL/2019 13 BY THE ASSESSEE WHICH IS EVIDENT FROM THE CONTENTS OF THE QUESTIONNAIRE AND QUERIES RAISED BY THE ASSESSING O FFICER AS INCORPORATED ABOVE. THUS, PRIOR TO THE OFFERING OF REVISED DISALLOWANCE U/S.43B, ASSESSING OFFICER HAS NOT CON FRONTED THIS ISSUE AT ALL TO THE ASSESSEE. ONLY VIDE NOTICE DATED 21.11.2016, WHICH WAS AFTER THE REVISED TAX AUDIT R EPORT ASSESSING OFFICER HAS RAISED THIS QUERY IN NOTICE U /S. 142(1). THE RELEVANT POINTS IN THIS REGARD WERE AS UNDER: 25. PLEASE PROVIDE DETAIL OF STATUTORY PAYMENTS CO VERED BY 43B AND STATE IF SUCH PAYMENTS HAVE BEEN MADE BEFORE TH E DUE DATE FOR FILING OF RETURN, PLEAS FURNISH PROOF OF THE SAME, IF NOT ALREADY FILED WITH THE RETURN. 28. FURNISH THE AUDITORS REPORT WITH COMMENTS/QUAL IFICATION OF THE AUDITORS FOR THE AUDIT DATED 26.08.2016. 29. EXPLAIN THE CIRCUMSTANCES AND THE FACTS OF REVI SING THE AUDIT REPORT ON 26.08.2016 ALONGWITH SUPPORTING EVIDENCES TO JUSTIFY THE REASONABILITY FOR DOING SO. 30. THE FACTS OF REVISION IN THE AUDIT REPORT ITSEL F PROVE THAT THE AUDIT OF THE COMPANY MADE BY THE AUDITORS ON 29.11. 2014 WAS NOT PROPER AND NOT VALID. HENCE, THE SAME CANNOT BE TRE ATED AS VALID AUDIT AS PER THE PROVISIONS OF LAW. THUS, THERE IS FAILURE ON THE PART OF YOUR COMPANY TO GET THE ACCOUNTS OF THE COMPANY WITHIN THE SPECIFIED DATE IN A PROPER MANNER U/S.44AB OF THE I NCOME TAX ACT, 1961. THEREFORE, YOU ARE REQUIRED TO EXPLAIN WHY PR OCEEDINGS MAY NOT BE INITIATED AS PER PROVISIONS OF SECTION 271B OF THE ACT FOR IMPOSITION OF PENALTY. 13. FROM THE CONTENT OF THE ABOVE QUESTIONNAIRES RA ISED, IT TRANSPIRES THAT IT WAS ONLY WHEN THE ASSESSEE HAD R EVISED THE TAX AUDIT REPORT OFFERING HIGHER DISALLOWANCE U/S.4 3B THE I.T.A. NO.1154/DEL/2019 14 ASSESSING OFFICER HAS RAISED THE QUERY. THUS, IT CA NNOT BE HELD THAT REVISING OF THE TAX AUDIT REPORT AND OFFE RING OF HIGHER AMOUNT OF DISALLOWANCE U/S.43B WAS NOT VOLUNTARILY OR THE SAME WAS OFFERED WHEN ASSESSEE WAS CORNERED BY THE ASSESSING OFFICER AT ANY POINT OF TIME. MOREOVER, P RIOR TO THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. GUJARAT CYPROMET LTD. VIDE JUDGMENT AND ORDER DATED 21 ST FEB, 2019 , THERE WERE MANY JUDGMENTS OF THE HON'BLE HIGH COURTS TAKING DIFFERENT VIEWS. THIS CONTROVERSY WAS SET AT REST ONLY BY THE HON'BLE APEX COURT IN FEBRUARY, 2019. T HOUGH IN THE WAKE OF JUDGMENT OF HON'BLE SUPREME COURT, THE L AW HAS TO BE INTERPRETED RETROSPECTIVELY, HOWEVER, IF THER E WERE CERTAIN JUDICIAL PRECEDENCE IN FAVOUR OF THE ASSESSE E AT THE TIME OF FILING ORIGINAL RETURN OF INCOME, THEN IT C ANNOT BE SAID THAT ASSESSEE WAS NOT UNDER A BONA FIDE BELIEVE WHILE MAKING ANY CLAIM OR OFFERING ANY DISALLOWANCE. THUS, UNDER THESE FACTS AND CIRCUMSTANCES OF THE CASE, IT CANNOT BE H ELD THAT ASSESSEES OFFER FOR HIGHER DISALLOWANCE U/S.43B IS NOT VOLUNTARY. 14. COMING TO THE JUDGMENT OF HON'BLE SUPREME COU RT IN THE CASE OF CIT VS. MAK DATA PVT. LTD. (SUPRA) AS R ELIED UPON BY THE LD. DR, IT IS SEEN THAT, IN THAT CASE SURREN DER OF INCOME WAS NOT FOUND TO BE VOLUNTARILY BECAUSE OFFE R OF SURRENDER WAS MADE IN VIEW OF DETECTION MADE BY THE ASSESSING OFFICER IN THE COURSE OF SEARCH CONDUCTED IN THE CASE OF SISTER CONCERN AND IT WAS WHEN ASSESSEE WAS CORNERED ASSESSEE HAD CAME FORWARD TO SURRENDER OF INCOME. S IMILARLY, I.T.A. NO.1154/DEL/2019 15 IN THE CASE OF HAMIRPUR DISTRICT CO-OPERATIVE PVT. LTD. ALSO THERE WAS A CLEAR CUT FINDING OF FACT THAT ASSESSIN G OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAS SPE CIFICALLY NOTICED THAT THE ASSESSEE HAS CLAIMED THE TAX CREDI T IN RESPECT OF ADVANCE TAX WHICH HAS BEEN INCLUDED IN THE EXPEN SES OF THE ASSESSEE. IT WAS ONLY WHEN ASSESSEE WAS CONFRON TED WITH THE ASSESSING OFFICER IT HAD PLEADED THE IGNORANCE OF THE PROVISION OF THE LAW WHICH WAS REJECTED. THUS, RATI O AND PRINCIPLE LAID DOWN IN THESE CASES CANNOT BE HELD T O BE APPLICABLE IN THE FACTS OF THE PRESENT CASE. THUS, PENALTY LEVIED BY THE ASSESSING OFFICER AND CONFIRMED BY TH E LD. CI T(A) IS DIRECTED TO BE DELETED. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH MAY, 2019. SD/- SD/- [L.P. SAHU] [AMIT SHUKLA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 24 TH MAY, 2019 PKK: