ACIT, New Delhi V. M/s. National Textile Corporation Ltd., New Delhi

ITA 5759/DEL/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69316 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 27-05-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 12-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANOJ ANAND
• Assessee Lawyers: MRS A S AWASHTI
• Keywords: Bonafide belief; Revised return
• Section: 37(1); 148; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E: NEW DELHI) BEFORE SHRI S.V.MEHROTRA,ACCOUNTANT MEMBER VS. SHRI I.C. SUDHIR, JUDICIAL MEMBER ITA NO.5759 /DEL/ 2012 (ASSESSMENT YEAR :2006-07) ACIT VS. NATIONAL TEXTILE CORPORATION LTD. CIRCLE-13(1), ROOM NO. 406, IN RESPECT OF ERSTWHIL E SUBSIDIARY COMPANY C.R. BUILDING, I.P. ESTATE E.E. NATIONAL TEXTILE COMPANY (MP) NEW DELHI LTD. CORE-4, SCOPE COMPLEX-7, LODHI R OAD NEW DELHI AAACN2847D (APPELLANT) (RESPONDENT) ASSESSEE BY :MRS. A.S. AWASHTI, SR. D.R REVENUE BY : SHRI MANOJ ANAND, CA ORDER PER I. C. SUDHIR, JUDICIAL MEMBER: THE REVENUE HAS QUESTIONED FIRST APPE LLATE ORDER ON THE FOLLOWING GROUNDS:- 1. WHETHER ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN DELETING PENALTY U/S 271(1 )(C) OF RS.82,08,357/- IN THE LIGHT OF THE FACTS THAT THOUG H THE ASSESSEE HAD NOT MADE THE CONCEALMENT WILLFULLY, BU T BEING A GOVERNMENT ESTABLISHMENT IT WAS THE DUTY OF THE ASS ESSEE TO BE CAREFUL IN FILING THE CORRECT FIGURES IN THE RET URN OF INCOME. 2. WHETHER ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS FAILED TO APPRECIATE THE FACTS DISC USSED IN DETAIL, THE ASSESSMENT ORDER IN LIGHT OF THE FACT T HAT THE ITA NO. 4559.DEL.2012 2 ASSESSEE HAS NOT FILED ANY APPEAL AGAINST THE ADDIT ION MADE DURING THE ASSESSMENT PROCEEDINGS. 3. WHETHER ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN GIVING RELIEF TO THE ASSESS EE BY IGNORING THE FACT THAT THE RETURN WAS REVISED ON 26 /8/2010, ONLY AFTER ISSUE OF NOTICE U/S 148 DATED 15/3/2010. 4. WHETHER ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN DELETING THE PENALTY IN TH IS A.Y ON THE BASIS THAT IN THE IMMEDIATELY PRECEDING YEAR, CONCEALMENT PENALTY LEVIED BY THE AO WAS DELETED BY HER PREDECESSOR CIT(A), IN THE LIGHT OF THE FACT THAT E VERY CASE HAS ITS OWN FACTS AND CONDITIONS, WHICH MAY BE DIFF ERENCE FROM EACH OTHER. 5. WHETHER ON THE FACTS & IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A) HAS ERRED IN GIVING RELIEF TO THE ASSESS EE AFTER RELYING ON THE DECISION IN THE CASE OF K.C. BUILDER S VS. ACIT, BY IGNORING THE FACT THAT THE DEDUCTION OF IN TEREST CLAIMED BY THE ASSESSEE AMOUNTING RS.2,43,86,089/- WAS NOT MERE OMISSION FROM THE RETURN OF AN ITEM OF RECEIP T, INSTEAD IT WAS TAX EVASION AS NO RECEIPT WAS OMITTED BUT EX CESS EXPENSES WERE CLAIMED. 6. WHETHER ON THE FACTS & IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY OF RS.82,08,357/- BY NOT APPRECIATING THE FACT THAT TH E ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME OF RS.2,43,86,089/- ON ACCOUNT OF INTEREST ON LATE PAY MENT O F PF/ESIC WRONGLY CLAIMED IN THE ORIGINAL RETURN WITH IN THE MEANING OF EXPLANATION 1 TO SEC. 271(1)(C) OF THE A CT. 2. WE HAVE HEARD AND CONSIDERED THE ARGUM ENTS ADVANCED BY THE PARTIES AND IN VIEW THEREOF HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW, MATERIAL AVAILABLE ON RECORD AND THE DECISIONS RELI ED UPON. ITA NO. 4559.DEL.2012 3 3. THE RELEVANT FACTS ARE THAT THE ASSESS EE COMPANY CONTROLLED BY THE MINISTRY OF TEXTILE, CENTRAL GOVT. OF INDIA IS ENGA GED IN THE BUSINESS OF MANUFACTURING OF COTTON YARN AND FABRICS. THE ACCO UNTS OF COMPANY ARE AUDITED AND ALSO APPROVED BY THE CONTROLLER AND AUDITOR GEN ERAL OF INDIA. THE ASSESSEE HAS BEEN REGISTERED AS A SICK COMPANY WITH BIFR. D URING THE YEAR, IT RETURNED DECLARED LOSS OF RS.34,73,85,267/- AND ASSESSMENT W AS FRAMED AT A LOSS OF RS.34,51,39,650/-. THEREAFTER NOTICE UNDER SECTION 148 WAS ISSUED AND ASSESSMENT WAS RE-FRAMED U/S 147/143 (3) OF THE ACT AT THE LOSS OF RS.32,07,53,361/-. ADDITION OF INTEREST ON DELAYED PAYMENT OF PF/ESIC AMOUNTING TO RS.2,43,86,089/- WAS MADE. PENALTY PR OCEEDINGS U/S 271(1)(C) WAS INITIATED AND BEING NOT SATISFIED WITH THE EXPLANAT ION OF THE ASSESSEE, THE A.O LEVIED PENALTY OF RS.82,08,357/- @ 100% OF THE TAX SOUGHT TO BE EVADED AT RS.2,43,86,089/- BY FURNISHING INACCURATE PARTICULA RS OF INCOME. THE CONCEALED INCOME WAS WORKED OUT AT RS.82,08,357/-. THE LD. C IT (A) HAS, HOWEVER, DELETED THE PENALTY AFTER DISCUSSING THE ISSUE IN D ETAIL AND PLACING RELIANCE ON SEVERAL DECISIONS. THIS ACTION OF THE LD. CIT(A) H AS BEEN QUESTIONED BY THE REVENUE BEFORE US. 4. IN SUPPORT OF THE GROUND, THE LD. DR H AS BASICALLY PLACED RELIANCE ON THE PENALTYORDER PASSED U/S 271(1)(C) OF THE ACT AND TH E ASSESSMENT ORDER. HE PLACED RELIANCE ON THE FOLLOWING DECISIONS:- ITA NO. 4559.DEL.2012 4 CIT VS. ZOOM COMMUNICATION PVT. LTD (2010 ) 327 ITR 510 DELHI CIT VS. ESCORTS FINANCE LTD.(2010) 328 IT R 44(DELHI). 5. THE LD. AR ON THE OTHER HAND HAS TR IED TO JUSTIFY THE FIRST APPELLATE ORDER. HE REITERATED THE EXPLANATION FURNISHED BEF ORE THE AUTHORIZES BELOW THAT ALL THE MATERIAL FACTS RELATING TO THE CLAIMED LOSS WERE DISCLOSED BY THE ASSESSEE TO THE AO, HENCE IT WAS NEITHER A CASE OF CONCEALMENT OF PARTICULARS OF INCOME NOR FURNISHING INACCURATE PARTICULARS THEREOF ON THE PA RT OF THE ASSESSEE TO JUSTIFY THE PENAL ACTION. HE ALSO CITED THE DECISIONS RELIED U PON BY THE ASSESSEE BEFORE THE AUTHORITIES BELOW. THE LD. AR ALSO PLACED RELIANCE ON SOME LATER DECISIONS OF HONBLE JURISDICTIONAL DELHI HIGH COURT, MENTIONED BELOW:- CIT VS. SOCIETEX, ITA NO. 1190/2011, DECI SION DATED 19/7/2012. CIT VS. HARSH TALWAR ITA NO. 1579/2010, D ECISION DATED 23/5/2011. ASTRA HOUSING AND INVESTMENT P. LTD VS. CIT, ITA NO . 622/2008 DECISION DATED 19/5/2011. CIT VS. SUMANGAL OVERSEAS LTD. ITA NO. 174 /2011, DECISION DATED 18/11/2011. 6. ON PERUSAL OF THE ORDERS OF THE AUTHO RITIES BELOW, WE FIND THAT THE QUANTUM ADDITION WHICH REMAINED THE SUBJECT MATTER OF LEVY OF PENALTY IN QUESTION WAS MADE AGAINST THE INTEREST OF RS.2.43 C RORES PAID ON THE DEPOSIT OF ESIC & PF AS PER BIFR ORDER DATED 21/3/2002. THERE IS NO DISPUTE THAT THE ASSESSEE IS A SICK COMPANY AND REHABILITATION SCHEM E WAS SANCTIONED BY BIFR REQUIRING PAYMENT OF ESIC & PF ALONG WITH INTEREST AS ALL THE PENALTIES AND DAMAGES WERE WAVED OFF. THE INTEREST PAID AS PER B IFR SCHEME IS ALLOWABLE ITA NO. 4559.DEL.2012 5 EXPENSES U/S 37(1) BUT THE ASSESSEE DISALLOWED IT O N ITS OWN AS SUBMITTED BY THE ASSESSEE IN ITS REVISED RETURN FILED VOLUNTARILY TO BUY THE PEACE WITH THE DEPARTMENT AND UNDER THE BONAFIDE BELIEF THAT IT WI LL HAVE NIL TAX LIABILITY DUE TO HUGE UNABSORBED LOSSES OF RS.6,237.04 CRORES. WE F IND THAT THE ASSESSING OFFICER HAD LEVIED THE PENALTY RELYING ON THE DECIS ION OF HONBLE DELHI HIGH COURT IN THE CASE OF ZOOM COMMUNICATION(P) LTD (SUP RA) FACTS OF WHICH IN OUR VIEW ARE DISTINGUISHABLE FROM THE FACTS OF THE PRES ENT CASE. IN THAT CASE BEFORE THE HONBLE HIGH COURT PENALTY WAS IMPOSED ON THE BASIS THAT ASSESSEE HAD MADE INCORRECT CLAIM WITHOUT ANY BASIS AND EXPLANATION F URNISHED BY THEM WAS FOUND TO BE NOT BONAFIDE AS THE ASSESSEE HAD NOT DISALLOW ED EXPENSES FOR INCOME TAX AND TREATED EXPENSES FOR UNUSABLE AND DISCARDED ASS ETS AS REVENUE EXPENSES. WHEREAS IN THE PRESENT CASE PENALTY HAS BEEN IMPOSE D DUE TO NON-DISALLOWANCE OF INTEREST ON LATE DEPOSIT OF ESIC AND PF AS PER BIFR SCHEME. IN THE PRESENT CASE BEFORE US THE IMPUGNED EXPENSE WAS ALLOWABLE U/S 37 (1) BUT THE ASSESSEE DISALLOWED IT VOLUNTARILY IN ITS REVISED RETURN TO BUY PEACE WITH THE DEPARTMENT. THERE IS NO REASON TO DOUBT THIS EXPLANATION OF THE ASSESSEE THAT THE DISALLOWANCE IN ITS REVISED RETURN WAS MADE VOLUNTARILY UNDER BO NAFIDE BELIEF THAT NO TAX LIABILITY SHALL ARISE DUE TO HUGE UNABSORBED LOSSES OF RS.6,237.04 CRORES. THE HONBLE DELHI HIGH COURT IN ITS LATER DECISION IN T HE CASE OF CIT VS. SOCIETEX (SUPRA) HAS BEEN PLEASED TO OBSERVE THAT DECISION I N THE CASE OF ZOOM ITA NO. 4559.DEL.2012 6 COMMUNICATION P. LTD (SUPRA) IS PREMISED ON THE FOO TING THAT EVEN IF INADVERTENT BY PARTICULARS ARE NOT GIVEN, IF THE AUTHORITY FIND S THAT THE EXPLANATION GIVEN IS NOT BONAFIDE, PENALTY U/S 271(1) (C) WOULD BE WARRANTED . IN THE CASE OF CIT VS. SUMANGAL OVERSEAS LTD (SUPRA) BEFORE THE HONBLE DE LHI HIGH COURT, PENALTY LEVIED U/S 271 (1) (C) OF THE ACT WAS DELETED, CONS IDERING THE FACTS OF THAT CASE WITH THIS OBSERVATION THAT THE CLAIM WAS NEITHER MA LAFIDE NOR FALSE AND IT WAS A BONAFIDE CLAIM PREFERRED BY THE ASSESSEE, WHO HAD A LSO DISCLOSED ALL THE FACTS RELATING TO AND MATERIAL TO THE COMPUTATION OF HIS INCOME. BESIDES IN THE PRESENT CASE THERE IS NOTHING IN THE PENALTY ORDER TO ESTAB LISH THAT INACCURATE PARTICULARS, IF ANY WERE FURNISHED TO EVADE TAXES. THE ASSESSEE IS A GOVERNMENT OF INDIA ENTERPRISES AND THE EXPENSES INCURRED WERE DISALLOW ED BY ITSELF VOLUNTARILY IN THE REVISED RETURN UNDER BONAFIDE BELIEF. CONSIDERING THESE MATERIAL ASPECTS IN TOTALITY, WE ARE OF THE VIEW THAT THE LD. CIT(A) HA S RIGHTLY DELETED THE PENALTY. THE SAME IS THUS UPHELD. THE GROUNDS INVOLVING THE ISSUES ARE THUS REJECTED. 7. CONSEQUENTLY, APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 30/9/2013. SD/- SD/- (S.V.MEHROTRA) (I.C. SUDHIR) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) DATED THE 30 TH DAY OF SEPTEMBER , 2013 R. NAHEED ITA NO. 4559.DEL.2012 7 COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. CIT(ITAT), NEW DELHI. AR,ITAT NEW DE LHI.