M/S TRIVENI QUALITY MINERALS PRIVATE LIMITED, JAIPUR V. INCOME TAX OFFICER, WARD-6-3, JAIPUR

ITA 531/JPR/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3706 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 9 day(s)
• Appeal Type: Income Tax (International Taxation) Appeal
• Pronouncement Date: 29-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 19-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: POONAM RAI DCIT DHK
• Assessee Lawyers: SUHANI MAMODIA
• Keywords: Business expenditure; Set aside
• Section: 271(1)(c); 43B; 14A

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKWO] U;KF;D LNL; ,O A JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA- @ ITA NO. 531/JP/2018 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2013-14. M/S. TRIVENI QUALITY MINERALS PVT. LTD., C/O MAHARWAL & ASSOCIATES, B-23/24, CITY CENTRE, S.C. ROAD, JAIPUR. CUKE VS. THE INCOME TAX OFFICER WARD 6(3), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AADCT 5495 Q VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : MS. SUHANI MAMODIA (CA) JKTLO DH VKSJ LS@ REVENUE BY : SMT. POONAM RAI (DCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 30.07.2018 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 01/08/2018. VKNS'K@ ORDER PER VIJAY PAL RAO, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 12 TH MARCH, 2018 ARISING FROM PENALTY ORDER PASSED UNDER SECTIO N 271(1)(C) OF THE IT ACT FOR THE ASSESSMENT YEAR 2013-14. THE ASSESSEE HAS RAISED TH E FOLLOWING GROUNDS :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, LD. ASSESSING OFFICER ERRED IN IMPOSING PENALTY OF RS. 1,72,000/- U/S 271(1)(C) OF THE I.T. ACT, 1961 AND THEREAFTER CIT (A) ERRED IN SUSTAINING SUCH PENALTY BEING ON THE DISALLOWANCE U/S 43B ON A CCOUNT FOR NON-PAYMENT OF VAT WHICH WAS FURTHER PAID IN NEXT F .Y. YEAR HENCE DISALLOWABLE IN THE YEAR BUT ALLOWABLE IN THE NEXT YEAR AS PER CASH PAYMENT BASIS THEREFORE THE DISALLOWANCE I S OF ACADEMIC NATURE AND THE PENALTY IS UNJUSTIFIED AND LIABLE TO BE QUASHED. 2 ITA NO. 531/JP/2018 M/S. TRIVENIQUALITY MINERALS PVT LTD., JAIPUR. 2. THE ASSESSEE FILED ITS RETURN OF INCOME ON 30 TH SEPTEMBER, 2013 DECLARING LOSS OF RS. 5,62,668/-. DURING THE SCRUTINY ASSESSMENT, THE AO NOTED THAT THE ASSESSEE HAS SHOWN VAT PAYABLE AT RS. 5,55,346/- AND ASSESSE E HAS NOT FILED THE PROOF OF PAYMENT OF THE SAME. ACCORDINGLY, THE AO ASKED THE ASSESSEE TO FURNISH THE DETAILS. IN RESPONSE, THE ASSESSEE FILED REVISED COMPUTATION OF INCOME DISALLOWING THE VAT PAYABLE OF RS. 5,55,346/- UNDER SECTION 43B OF THE ACT. THE AO COMPLETED THE ASSESSMENT BY MAKING AN ADDITION ON ACCOUNT OF DISA LLOWANCE UNDER SECTION 43B OF RS. 5,55,346/-. THE AO INITIATED THE PENALTY PROCE EDINGS UNDER SECTION 271(1)(C) AND LEVIED THE PENALTY OF RS. 1,72,000/- BEING 100% OF TAX SOUGHT TO BE EVADED VIDE ORDER DATED 27.06.2015. THE ASSESSEE CHALLENGED TH E ORDER OF THE AO PASSED UNDER SECTION 271(1)(C) BEFORE THE LD. CIT (A), HOWEVER, COULD NOT SUCCEED. 3. BEFORE US, THE LD. A/R OF THE ASSESSEE HAS SUBMI TTED THAT ON THE FIRST NOTICE ISSUED UNDER SECTION 143(2) THE ASSESSEE FOUND THAT VAT OUTSTANDING OF RS. 5,55,346/- WAS NOT DEPOSITED UPTO THE LAST DATE OF FILING OF THE RETURN UNDER SECTION 139(1), ACCORDINGLY THE ASSESSEE ITSELF SUO MOTO MA DE THE DISALLOWANCE OF THE SAID AMOUNT AND FILED THE REVISED COMPUTATION OF INCOME. THUS WHEN THE SAID AMOUNT WAS PAID IN THE SUBSEQUENT YEAR AND THE CLAIM WAS A LLOWED UNDER SECTION 43B IN THE SUBSEQUENT YEAR, THEN THERE IS NO REVENUE EFFECT BY MAKING THE DISALLOWANCE FOR THE YEAR UNDER CONSIDERATION. THE LD. A/R FURTHER SUBM ITTED THAT THE ASSESSEE DISCLOSED ALL THE RELEVANT FACTS AND DETAILS REGARDING THE VA T PAYABLE AS ON 31 ST MARCH, 2013. HOWEVER, THE DISALLOWANCE WAS MADE ONLY BECAUSE OF THE TECHNICAL REASON OF NON- PAYMENT OF THE SAME BEFORE THE DUE DATE OF FILING T HE RETURN OF INCOME AND CONSEQUENTLY THE PROVISIONS OF SECTION 43B WERE ATT RACTED. THUS THE LD. A/R HAS SUBMITTED THAT WHEN THE DISALLOWANCE WAS MADE BY TH E ASSESSEE VOLUNTARILY AND 3 ITA NO. 531/JP/2018 M/S. TRIVENIQUALITY MINERALS PVT LTD., JAIPUR. BEFORE IT WAS DETECTED BY THE AO, THEN THE CASE OF THE ASSESSEE WOULD NOT FALL UNDER THE CATEGORY OF CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. IN SUPPORT OF HER CONTENTION, SHE HAS RELI ED UPON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF MANU ENGINEERING REPORTED IN 122 ITR 306 (GUJ.) AS WELL AS THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF VIRGO MARKETING, 171 TAXMAN 156 (DELHI) AND SUBMITTED THAT ONCE THE ASSESSEE HAS DISCLOSED ALL THE RELEVANT FACTS AND DETAILS RELATING TO THE ISSUE AN D BOOKS OF ACCOUNTS WERE ACCEPTED BY THE AO WHICH WERE DULY AUDITED, THEN THE DISALLO WANCE MADE UNDER SECTION 43B WOULD NOT ATTRACT THE PENALTY PROCEEDINGS. THE LD. A/R HAS ALSO RELIED UPON THE DECISION OF KOLKATA BENCHES OF THE TRIBUNAL DATED 1 6.03.2016 IN THE CASE OF DCIT VS. BUDGE BUDGE JUTE LTD. IN ITA NO. 979/KOL/2013 AND S UBMITTED THAT IN IDENTICAL FACTS THE TRIBUNAL HAS CONFIRMED THE ORDER OF THE LD. CIT (A) DELETING THE PENALTY LEVIED UNDER SECTION 271(1)(C) ON ACCOUNT OF DISALLOWANCE MADE UNDER SECTION 43B OF THE ACT. 3.1 ON THE OTHER HAND, THE LD. D/R HAS SUBMITTED TH AT IT IS NOT A VOLUNTARY DISALLOWANCE MADE BY THE ASSESSEE BUT ONLY WHEN THE AO ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE THE ASSESSEE HAD FILED THE R EVISED COMPUTATION OF INCOME MAKING THE DISALLOWANCE UNDER SECTION 43B, BUT FOR THE SCRUTINY ASSESSMENT AND THE SHOW CAUSE NOTICE ISSUED BY THE AO, THE ASSESSEE WO ULD NOT HAVE OFFERED THE SAID INCOME TO TAX AND, THEREFORE, IT IS A CLEAR CASE OF FURNISHING INACCURATE PARTICULARS OF INCOME. SHE HAS RELIED UPON THE ORDERS OF THE AUTH ORITIES BELOW. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. THE AO DURING THE SCRUTINY ASSESSMENT NOTE D THAT ON PERUSAL OF DETAILS IT WAS FOUND THAT THE ASSESSEE HAS SHOWN VAT PAYABLE A T RS. 5,55,346/-. THUS IT IS 4 ITA NO. 531/JP/2018 M/S. TRIVENIQUALITY MINERALS PVT LTD., JAIPUR. CLEAR THAT THE ASSESSEE ITSELF IN THE AUDITED BOOKS OF ACCOUNT HAVE SHOWN THE SAID AMOUNT OF VAT AS PAYABLE AS ON 31 ST MARCH, 2013 AND IT IS NOT A CASE OF CLAIMING THE SAID AMOUNT AS PAID BY THE ASSESSEE. THEREFORE, ON CE ALL THE RELEVANT DETAILS WHICH WERE DISCLOSED BY THE ASSESSEE IN THE RETURN OF INC OME AND BOOKS OF ACCOUNT WERE FOUND TO BE CORRECT, THEN THE CASE WOULD NOT FALL I N THE CATEGORY OF FURNISHING INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME. IT IS ALSO NOT IN DISPUTE THAT THE VAT OF RS. 5,55,346/- WAS DUE AND PAYABLE AND, THEREFORE, THE SAME IS AN ALLOWABLE BUSINESS EXPENDITURE EXCEPT THE CONDITION UNDER SECTION 43B THAT THE ASSESSEE HAS TO PAY THE SAID AMOUNT ON OR BEFORE TH E DUE DATE OF FILING THE RETURN OF INCOME UNDER SECTION 139(1). ONCE THE CLAIM OF THE ASSESSEE IS NOT FOUND TO BE BOGUS OR FALSE BUT BECAUSE OF THE REASON THAT THE A SSESSEE COULD NOT PAY THE AMOUNT AS REQUIRED UNDER SECTION 43B, THE SAME WAS TO BE DISALLOWED. THE DISALLOWANCE UNDER SECTION 43B IS ONLY BECAUSE OF T ECHNICAL REASON OF NON PAYMENT OF THE AMOUNT AND NOT BECAUSE OF THE REASON THAT TH E CLAIM ITSELF IS NOT AN ALLOWABLE CLAIM. FURTHER, THE AO HAS NOT DISPUTED THE FACT T HAT THE ASSESSEE SUBSEQUENTLY PAID THE SAID AMOUNT AND CLAIMED THE SAME IN THE SU BSEQUENT YEAR WHICH WAS ALLOWED BY THE AO. THEREFORE, THERE WILL BE NO REVE NUE EFFECT DUE TO THE DISALLOWANCE MADE FOR THE YEAR UNDER CONSIDERATION AND THE CLAIM WAS ALLOWED IN THE SUBSEQUENT YEAR EXCEPT ON ACCOUNT OF INTEREST. THE KOLKATA BENCHES OF THE TRIBUNAL IN THE CASE OF DCIT VS. BUDGE BUDGE JUTE L TD. (SUPRA) WHILE CONSIDERING AN IDENTICAL ISSUE HAS HELD IN PARA 4-5 AS UNDER :- 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND FROM THE FACTS OF THE CASE THAT T HE ASSESSEE DURING THE COURSE OF 5 ITA NO. 531/JP/2018 M/S. TRIVENIQUALITY MINERALS PVT LTD., JAIPUR. ASSESSMENT PROCEEDINGS EXPLAINED THE CLAIM OF DEDUC TION U/S. 43B OF THE ACT ON ACCOUNT OF TAXES, CESS, PF AND ALSO FILED ALL THE R ELEVANT DETAILS. THE ASSESSEE HAS ALSO FURNISHED ALL THE NECESSARY PARTICULARS IN TAX AUDI T REPORT AND ALSO GIVEN NOTES IN ITS COMPUTATION OF TOTAL INCOME. WE FIND THAT NOW THIS ISSUE, IN THE GIVEN FACTS, IS COVERED BY THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. (2010) 322 ITR 158 (SC), W HEREIN HONBLE SUREMPE COURT HAS HELD AS UNDER: 'WE ARE NOT CONCERNED IN THE PRESENT CASE WITH THE MENS REA. HOWEVER, WE HAVE TO ONLY SEE AS TO WHETHER IN THIS CASE, AS A M ATTER OF FACT, THE ASSESSEE HAS GIVEN INACCURATE PARTICULARS. IN WEBSTER 'S DIC TIONARY, THE WORD 'INACCURATE' HAS BEEN DEFINED AS : 'NOT ACCURATE, NOT EXACT OR CORRECT; NOT ACCORDING TO TRUTH; ERRONEOUS; AS AN INACCURATE STATEMENT, COPY OR TRANSCRIPT. ' WE HAVE ALREADY SEEN THE MEANING OF THE WORD 'PARTI CULARS' IN THE EARLIER PART OF THIS JUDGMENT. READING THE WORDS IN CONJUNCTION, TH EY MUST MEAN THE DETAILS SUPPLIED IN THE RETURN, WHICH ARE NOT ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TRUTH OR ERRONEOUS. WE MUST HASTEN TO ADD HERE THAT IN THIS CASE, THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RE TURN WERE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE. SUCH NOT BEING THE CASE, THERE WOULD BE NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. A M ERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH CLAIM MA DE IN THE RETURN CANNOT AMOUNT TO THE INACCURATE PARTICULARS. IT WAS TRIED TO BE SUGGESTED THAT SECTION 14A OF TH E ACT SPECIFICALLY EXCLUDED THE DEDUCTIONS IN RESPECT OF THE EXPENDITURE INCURRED B Y THE ASSESSEE IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE ACT. IT WAS FURTHER POINTED OUT THAT THE DIVIDENDS FROM THE SHARES DID NOT FORM THE PART OF THE TOTAL INCOME. IT WAS, THEREFORE, REITERATED BEFORE US THA T THE ASSESSING OFFICER HAD CORRECTLY REACHED THE CONCLUSION THAT SINCE THE ASS ESSEE HAD CLAIMED EXCESSIVE DEDUCTIONS KNOWING THAT THEY ARE INCORRECT; IT AMOU NTED TO CONCEALMENT OF INCOME. IT WAS TRIED TO BE ARGUED THAT THE FALSEHOOD IN ACC OUNTS CAN TAKE EITHER OF THE TWO 6 ITA NO. 531/JP/2018 M/S. TRIVENIQUALITY MINERALS PVT LTD., JAIPUR. FORMS; AN ITEM OF RECEIPT MAY BE SUPPRESSED FRAUDUL ENTLY; (II) AN ITEM OF EXPENDITURE MAY BE FALSELY (OR IN AN EXAGGERATED AMOUNT) CLAIME D, AND BOTH TYPES ATTEMPT TO REDUCE THE TAXABLE INCOME AND, THEREFORE, BOTH TYPE S AMOUNT TO CONCEALMENT OF PARTICULARS OF ONE'S INCOME AS WELL AS FURNISHING O F INACCURATE PARTICULARS OF INCOME. WE DO NOT AGREE, AS THE ASSESSEE HAD FURNISHED ALL THE DETAILS OF ITS EXPENDITURE AS WELL AS INCOME IN ITS RETURN, WHICH DETAILS, IN THE MSELVES, WERE NOT FOUND TO BE INACCURATE NOR COULD BE VIEWED AS THE CONCEALMENT O F INCOME ON ITS PART. IT WAS UP TO THE AUTHORITIES TO ACCEPT ITS CLAIM IN THE RETUR N OR NOT. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH CLAIM W AS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT , IN OUR OPINION, ATTRACT THE PENALTY UNDER SECTION 271(1)(C). IF WE ACCEPT THE C ONTENTION OF THE REVENUE THEN IN CASE OF EVERY RETURN WHERE THE CLAIM MADE IS NOT AC CEPTED BY THE ASSESSING OFFICER FOR ANY REASON, THE ASSESSEE WILL INVITE PENALTY UN DER SECTION 271(1)(C). THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE. IN THIS BEHALF THE OBSERVATIONS OF THIS COURT MADE IN SREE KRISHNA ELECTRICALS V. STATE OF TAMIL NADU [2009} 23 VST 249 AS REGARDS THE PENA LTY ARE APPOSITE. IN THE AFOREMENTIONED DECISION WHICH PERTAINED TO THE PENA LTY PROCEEDINGS UNDER THE TAMIL NADU GENERAL SALES TAX ACT, THE COURT HAD FOUND THA T THE AUTHORITIES BELOW HAD FOUND THAT THERE WERE SOME INCORRECT STATEMENTS MAD E IN THE RETURN. HOWEVER, THE SAID TRANSACTIONS WERE REFLECTED IN THE ACCOUNTS OF THE ASSESSEE. THIS COURT, THEREFORE, OBSERVED (PAGE 251) : 'SO FAR AS THE QUESTION OF PENALTY IS CONCERNED THE ITEMS WHICH WERE NOT INCLUDED IN THE TURNOVER WERE FOUND INCORPORATED IN THE APPELLA NT'S ACCOUNT BOOKS. WHERE CERTAIN ITEMS WHICH ARE NOT INCLUDED IN THE TURNOVE R ARE DISCLOSED IN THE DEALER'S OWN ACCOUNT BOOKS AND THE ASSESSING AUTHORITIES INCLUDE S THESE ITEMS IN THE DEALER'S TURNOVER DISALLOWING THE EXEMPTION, PENALTY CANNOT BE IMPOSED. THE PENALTY LEVIED STANDS SET ASIDE. ' THE SITUATION IN THE PRESENT CASE IS STILL BETTER A S NO FAULT HAS BEEN FOUND WITH THE PARTICULARS SUBMITTED BY THE ASSESSEE IN ITS RETURN . THE TRIBUNAL, AS WELL AS, THE COMMISSIONER OF INCOM E-TAX (APPEALS) AND THE HIGH COURT HAVE CORRECTLY REACHED THIS CONCLUSION AND, T HEREFORE, THE APPEAL FILED BY THE REVENUE HAS NO MERITS AND IS DISMISSED. ' 7 ITA NO. 531/JP/2018 M/S. TRIVENIQUALITY MINERALS PVT LTD., JAIPUR. 5. IN VIEW OF THE ABOVE FACTS OF THE CASE THAT THE ASSESSEE HAS FILED COMPLETE PARTICULARS IN RESPECT TO CLAIM OF DEDUCTION U/S. 4 3B OF THE ACT AND WHEN ALL PARTICULARS WERE FILED IN THE TAX AUDIT REPORT AND ITS COMPUTATION OF INCOME ALONG WITH RETURN OF INCOME, IT CANNOT BE A CASE OF FURNI SHING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME. IT IS ONLY A CASE OF OPINION WHETHER THE DEDUCTION IS TO BE ALLOWED OR NOT. ONCE THIS IS THE CASE, THE ASSESSEE IS NOT LIABLE FOR PENALTY U/S. 271(1)(C) OF THE ACT. RESPECTFULLY FOLLOWING THE DE CISION OF HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS PVT. LTD. SUPRA , WE CONFIRM THE ORDER OF CIT(A) DELETING THE PENALTY. APPEAL OF REVENUE IS DISMISSE D. ACCORDINGLY, IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE WHEN ALL THE RELEVANT DETAILS AND FACTS WERE DISCLOSED BY THE ASSESSEE AN D AVAILABLE BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THEN THE MERE DISALLOWANCE UNDER SECTION 43B WOULD NOT AMOUNT TO CONCEALMENT OF INCOME OR FU RNISHING INACCURATE PARTICULARS OF INCOME ATTRACTING THE LEVY OF PENALTY UNDER SECT ION 271(1)(C). HENCE, WE DELETE THE PENALTY LEVIED BY THE AO ON THIS ACCOUNT. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 01/08/201 8. SD/- SD/- FOE FLAG ;KNO FOT; IKY JKWO (VIKRAM SINGH YADAV) ( VIJAY PAL RAO ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 01/08/2018. DAS/ 8 ITA NO. 531/JP/2018 M/S. TRIVENIQUALITY MINERALS PVT LTD., JAIPUR. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT-M/S. TRIVENI QUALITY MINERALS P. LTD. , JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- THE ITO WARD 6(3), JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 531/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR