ITO, Jalgaon V. Shri Pradeep Rajkumar Agrawal, Jalgaon

ITA 711/PUN/2010

• Counselvise Citation: 71124514 RSA 2010
• Duration Of Justice: 1 year(s) 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 01-03-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 07-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANN KAPTHUAMA
• Keywords: Opportunity of being heard
• Section: 234B; 37(1); 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE BEFORE SHRI I.C. SUDHIR JUDICIAL MEMBER AND SHRI G.S. PANNU ACCOUNTANT MEMBER ITA NO.711/PN/2010 (ASSTT. YEAR : 2006-07 ) INCOME TAX OFFICER, WARD 1 (3) ... APPELLANT B.J. MARKET, JALGAON (MS) V. SHRI PRADEEP RAJKUMAR AGRAWAL RESPONDENT PROP. METRANS TRANSPOWERS, K-37, MIDC AREA, JALGAON PAN : AFHPA8632C C.O . NO.53/PN/2011 (ARISING OUT OF ITA NO.711/PN/2010) ( ASSTT. YEAR : 2006-07 SHRI PRADEEP RAJKUMAR AGRAWAL CROSS OBJECTOR PROP. METRANS TRANSPOWERS, K-37, MIDC AREA, JALGAON PAN : AFHPA8632C V. INCOME TAX OFFICER, WARD 1 (3) ... RESPONDENT B.J. MARKET, JALGAON (MS) ASSESSEE BY : SHRI. SUNIL GANOO DEPARTMENT BY : MS. ANN KAPTHUAMA DATE OF HEARING :01/3/12 DATE OF PRONOUNCEMENT : -3-12 ORDER PER I.C. SUDHIR, JM ITA NO.711/PN/2011 THE REVENUE HAS QUESTIONED FIRST APPELLATE ORDER B ASICALLY ON THE GROUND THAT THE LD CIT(A) HAS ERRED IN DELETING AD DITION OF RS. 9,60,000/- MADE BY THE A.O ON ACCOUNT OF PAYMENT OF PENALTY BY THE ITA . NO.771/PN/2010 & C.O. 53/PN/2011 SHRI PRADEEP RAJKUMAR AGRWAL,, A.Y. 2006-07 PAGE OF 5 2 ASSESSEE TO MAHARASHTRA STATE ELECTRICITY BOARD (MS EB) FOR THE OFFENCE COMMITTED BY HIM. 2. THE RELEVANT FACTS ARE THAT BURNING OF ELECTRIC METER INSTALLED IN THE FACTORY PREMISES OF THE ASSESSEE ON 25 TH DECEMBER 2005 WAS REPORTED BY THE ASSESSEE TO THE EXECUTIVE ENGINEER, MSEB, MI DC UNIT, JALGAON. ON THE BASIS OF SAID REPORT, THE METER WAS REMOVED AND NECESSARY ENQUIRIES WERE CONDUCTED. THE MSEB AUTHORITIES COLLECTED AN AMOUNT OF RS.11,75,399/- TREATING THE ASSESSEE COMMITTED OFF ENCES U/S. 135 AND 138 OF THE ELECTRICITY ACT, 2003. THE SAID AMOUNT INCLUDED RS.9,60,000/- AS COMPOUNDING FEES. THE A.O WAS OF THE VIEW THAT AS PER NARRATION OF THE SAID AMOUNT INDICATES AN OFFENCE CONDUCTED BY THE ASSESSEE TO SLOW DOWN THE METER BY TAMPERING IT. ACCORDINGLY, HE I NVOKED THE PROVISION OF EXPLANATION TO SECTION 37 OF THE ACT AND DISA LLOWED AN AMOUNT OF RS.9,60,000/- . AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE LD CIT(A) HAS DELETED THE DISALLOWANCE WITH THIS OBSE RVATION THAT THE COMPOUNDING OF THE SAID OFFENCE AMOUNTS TO ACQUITTA L AND CANNOT BE TREATED THAT ASSESSEE HAS COMMITTED AN OFFENCE. 3. IN SUPPORT OF THE GROUND, THE LD. D.R. SUBMITTED THAT THE LD CIT(A) HAS FAILED TO APPRECIATE THAT AS PER EXPLANATION T O SEC. 37(1), ANY EXPENDITURE INCURRED BY AN ASSESSEE FOR THE PURPOSE WHICH IS OFFENCE AND WHICH IS PROHIBITED BY LAW WILL NOT BE DEEMED TO HA VE BEEN INCURRED FOR THE PURPOSE OF BUSINESS OR PROFESSION AND NO DEDUC TION OR ALLOWANCE WILL BE MADE IN RESPECT OF SUCH EXPENDITURE. ADMITTEDLY , THE ASSESSEE HAS NOT INCURRED THE SAID EXPENSES OF RS. 9,60,000/- FO R CARRYING OUT HIS BUSINESS AND SUCH EXPENSES ARE NOT ALLOWABLE DEDUCT ION UNDER THE INCOME TAX ACT. ITA . NO.771/PN/2010 & C.O. 53/PN/2011 SHRI PRADEEP RAJKUMAR AGRWAL,, A.Y. 2006-07 PAGE OF 5 3 4. THE LD. D.R. ON THE OTHER HAND TRIED TO JUSTIFY THE FIRST APPELLATE ORDER WITH THIS SUBMISSION THAT THE COMPOUNDING FE E CHARGED BY MSEB CANNOT BE TREATED AS PENALTY OR FINE FOR INVOKING T HE EXPLANATION TO SEC. 37(1) OF THE ACT. HE HAS ALSO FILED THE TRUE EXTR ACTS OF THE PROVISIONS OF SEC. 135, 138 AND 152 OF THE ELECTRICITY ACT, 2003. 5. HAVING GONE THROUGH THE PROVISIONS LAID DOWN U/S . 152 OF THE ELECTRICITY ACT 2003, WE FIND THAT THIS SECTION IS UNDER THE HEADING COMPOUNDING OF OFFENCES. SUB-SECTION (3) TO SEC. 152 OF THE ELECTRICITY ACT READS AS UNDER : (3) THE ACCEPTANCE OF THE SUM OF MONEY FOR COMPOUN DING AN OFFENCE IN ACCORDANCE WITH SUB-SECTION (1) BY THE A PPROPRIATE GOVERNMENT OR AN OFFICER EMPOWERED IN THIS BEHALF S HALL BE DEEMED TO AMOUNT TO ACQUITTAL WITHIN THE MEANING OF SECTIO N 300 OF THE CODE OF CRIMINAL PROCEDURE, 1973 (2 OF 1974). THE VERY READING OF THE ABOVE SUB-SECTION MAKES IT CLEAR THAT THE ACCEPTANCE OF THE SUM OF MONEY FOR COMPOUNDING AN O FFENCE BY THE APPROPRIATE OR AN OFFICER EMPOWERED IN THIS BEHALF SHALL BE DEEMED TO AMOUNT TO ACQUITTAL WITHIN THE MEANING OF SEC. 300 OF THE CODE OF CRIMINAL PROCEDURE, 1973. THERE IS NO REASON TO DO UBT THE FINDING OF THE LD CIT(A) IN THIS REGARD THAT THE COMPOUNDING OF TH E SAID OFFENCE AMOUNTS TO ACQUITTAL AND CAN NOT BE TREATED THAT TH E ASSESSEE HAD COMMITTED AN OFFENCE. CERTAIN MATERIAL FACT IN THE PRESENT CASE ARE ALSO TO BE NOTED THAT THE BURNING OF METER WAS VOLUNTARI LY REPORTED BY THE ASSESSEE TO THE ELECTRICITY AUTHORITY AND THE OBSER VATIONS OF THE JUNIOR ENGINEER IN HIS REPORT WERE BASED ON MECHANICAL FIN DING AND OTHER PRESUMPTIONS. UNDER THESE CIRCUMSTANCES, WE DO NOT FIND INFIRMITY IN THE FIRST APPELLATE ORDER WHEREBY THE LD CIT(A) DELETED THE DISALLOWANCE. WITH THIS FINDING THAT THE AMOUNT PAID IS OF COMPEN SATORY IN NATURE AND ITA . NO.771/PN/2010 & C.O. 53/PN/2011 SHRI PRADEEP RAJKUMAR AGRWAL,, A.Y. 2006-07 PAGE OF 5 4 INVOCATION OF EXPLANATION TO SEC. 37(1) OF THE ACT FOR DISALLOWING THE AMOUNT OF RS.9,60,000/- WAS NOT WARRANTED. WE THU S UPHOLD THE FIRST APPELLATE ORDER ON THE ISSUE. THE GROUND IS ACCOR DINGLY REJECTED. 6. IN RESULT, APPEAL IS DISMISSED. C.O. NO. 53/PN/2011 7. THE SOLE OBJECTION RAISED BY THE ASSESSEE AGAINS T THE FIRST APPELLATE ORDER REGARDING NON-ADJUDICATION OF GROUND NO. 2 RA ISED AGAINST CHARGING OF INTEREST U/S. 234B AT RS. 32,705/- BY THE LD. CI T(A). 8. HAVING GONE THROUGH THE FIRST APPELLATE ORDER ES PECIALLY THE MEMO OF APPEAL CONTAINING THE GROUNDS, WE FIND THAT GROU ND NO. 2 ON THE ISSUE WAS RAISED BEFORE THE LD CIT(A), BUT ADJUDICATION T HEREOF HAS NOT BEEN DONE. WE THUS IN THE INTEREST OF JUSTICE SET ASIDE THE MATTER TO THE FILE OF THE LD CIT(A) TO ADJUDICATE THE SAME AFTER AFFORDIN G OPPORTUNITY OF BEING HEARD TO THE PARTIES. THE CROSS OBJECTION IS THUS A LLOWED FOR STATISTICAL PURPOSES. 9. IN RESULT, APPEAL PREFERRED BY THE REVENUE IS DI SMISSED AND C.O. FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL P URPOSES. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 28TH MARCH 2012. SD/- SD/- ( G.S. PANNU ) ACCOUNTANT MEMBER ( I.C. SUDHIR ) JUDICIAL MEMBER PUNE, DATED THE 28TH MARCH, 2012 ITA . NO.771/PN/2010 & C.O. 53/PN/2011 SHRI PRADEEP RAJKUMAR AGRWAL,, A.Y. 2006-07 PAGE OF 5 5 US COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CENTRAL, PUNE 4. THE CIT(A)-IV, PUNE 4. THE D.R. A BENCH, PUNE 5. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE