The Deputy Commissioner of Income tax, Amritsar. V. M/s. Ajnala Coop. Sugar Mills Ltd., Amritsar.

ITA 733/ASR/2013

• Counselvise Citation: 73320914 RSA 2013
• Duration Of Justice: 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-03-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 05-03-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 13-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PADAM BAHL
• Keywords: Reasonable cause; Wrong claim
• Section: 43B; 273B; 143(3); 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P. JAIN, ACCOUNTANT MEMBER I.T.A. NO. 733(ASR)/2013 ASSESSMENT YEAR: 2007-08 PAN: AAAAT0924F DEPUTY COMMISSIONER OF VS. M/S AJNALA CO. OP. SUG AR MILLS INCOME TAX, CIRCLE-IV, LTD., BHALLA PIND, TEH.- AJNALA, AMRITSAR AMRITSAR (APPELLANT) (RESPONDENT) APPELLANT BY: SH. TARSEM LAL, DR RESPONDENT BY: SH. PADAM BAHL, CA DATE OF HEARING: 05.03.2014 DATE OF PRONOUNCEMENT: 06.03.2014 ORDER PER BENCH 1. THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST THE IMPUGNED ORDER DATED 09.10.2013 PASSED BY LEARNED CIT(A), AM RITSAR, FOR THE ASSESSMENT YEAR 2007-08, ON THE FOLLOWING GROUNDS: I. WHETHER THE LEARNED CIT(A) IS CORRECT IN LAW IN DEL ETING THE PENALTY U/S 271(1)(C) BY RELYING UPON THE RATIO OF DECISION OF HON'BLE SUPREME COURT DELIVERED IN RELIANCE PETRO P RODUCTS LTD. 230 CTR 320, WHEREAS THE FACTS OF THE PRESENT CASE ARE DISTINGUISHABLE. IN THE PRESENT CASE, THE ASSESSEE, BY CLAIMING DEDUCTIONS WHICH WERE PATENTLY AND LEGALLY NOT AVAI LABLE TO IT, HAS FURNISHED INACCURATE PARTICULARS OF ITS INCOME. 2 I.T.A. NO. 733(ASR)/2013 ASSESSMENT YEAR: 2007-08 II. WHETHER THE LEARNED CIT(A), IS CORRECT IN LAW IN HO LDING THAT THE CASE OF THE ASSESSEE WAS COVERED UNDER THE SAVING P ROVISION OF SECTION 273 OF THE I.T. ACT, 1961 WHEREAS THESE PRO VISION ARE NOT APPLICABLE IN THE CASES WHERE PENALTY IS LEVIABLE U NDER THE PROVISIONS OF SECTION 271(1)(C) OF THE I.T. ACT. III. APPELLANT CRAVES LEAVE TO AMEND OR ADD ANY OR MORE GROUNDS OF APPEAL. 2. THE ASSESSEE FILED ITS RETURN OF INCOME ON 31.10 .2007 DECLARING AN INCOME OF RS. 4,84,27,957/- AND THE SAME WAS PRO CESSED UNDER SECTION 143(1) OF THE INCOME-TAX ACT, 1961 (IN SHOR T THE ACT). LATER ON THE ASSESSING OFFICER COMPLETED THE ASSESSMENT UNDE R SECTION 143(3) VIDE ORDER DATED 31.12.2009 WHEREBY LOSS WAS ASSESS ED AT RS. 4,73,11,828/- AGAINST RETURN LOSS OF RS. 4,84,27,95 7/- AND VARIOUS ADDITIONS/DISALLOWANCES WERE MADE AS MENTIONED IN T HE ORDER DATED 29.06.2010 PASSED UNDER SECTION 271(1)(C) OF THE AC T. THE ASSESSING OFFICER ALSO INITIATED THE PENALTY PROCEEDINGS BY I SSUING A NOTICE DATED 31.12.2009. IN RESPONSE TO THE SAME, THE ASSESSEE F ILED HIS WRITTEN REPLY ON 28.06.2010, THE CONTENTS OF THE SAME IS REPRODUC ED AS UNDER: THE ASSESSEE HAS SUBMITTED THAT FOR THE FOLLOWING R EASONS PENALTY SHOULD NOT BE LEVIDED IN THEIR CASE:- (1) THE ASSESSEE IS A CO-OPERATIVE SUGAR MILL AN D IS RUNNING INTO HEAVY LOSSES FOR A LONG TIME AND THERE IS NO LIKELI HOOD OF IMPROVEMENT OF THIS SCENARIO. 3 I.T.A. NO. 733(ASR)/2013 ASSESSMENT YEAR: 2007-08 (2) THE ADMINISTRATIVE PART OF THE BUSINESS IS BEI NG HANDLED BY THE EMPLOYEES WHO ARE NEITHER TO GET ANY SHARE IN PROFI TS NOR TO BEAR LOSSES. THE ACCOUNTS ARE PREPARED AND FINALIZED BY THE STAF F. (3) EVEN AFTER THE ADDITIONS, ETH FACTS REMAINS T HAT THERE IS NO TAX LIABILITY AND THIS ADDITION HAS NO EFFECT PARTICULA R WHEN HUGE UNABSORBED LOSSES ARE BEING WASTED DUE TO THE EXPIRY OF THE PE RIOD DURING WHICH LOSSES CAN BE SET OFF OF CARRY FORWARD. (4) IN A RECENT JUDGMENT OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF BUDHEWAL CO-OPERATIVE SUGAR MI LLS LTD. , DEDUCTION U/S 80P OF THE INCOME TAX ACT, 1961 IS AL LOWABLE TO THE EXTENT OF ENTIRE INCOME. THE DEDUCTION WAS NOT CLAIMED IN THE RETURN AS IT WAS A CASE OF LOSS. IF THERE IS NO TAX ON INCOME BECAUSE OF SECTION 80P , IT CANNOT BE EVADED CONCEALED TOO . (5) THE ACCOUNTS OF ETH MILLS ARE AUDITED U/S 44A B OF THE INCOME TAX ACT, 1961. NO SUCH DISALLOWANCE WAS SUGGESTED B Y THE CHARTERED ACCOUNTANT. (6) THE CLAIMS WERE MADE BONA-FIDELY WITHOUT ANY M ALA-FIDE. HAD THE CHARTERED ACCOUNTANT PROPOSED THE DISALLOWANCES , THE ASSESSEE WOULD HAVE SUO MOTU ADDED THE SUMS. THE RETURN WAS FILED CONSIDERING THE REPORT OF ETH CHARTERED ACCOUNTANT. (7) THE ADDITION ON ACCOUNT OF SUSPENSE ACCOUNT RE LATES TO A.Y. 2001-02 AND THE ADDITION, IF ANY, WAS NOT CALLED FO R IN A.Y. 2007-08 AS THE SAME RELATED TO A.Y. 2001-02. 3. THE ASSESSING OFFICER CONSIDERED THE REPLY FILED BY THE ASSESSEE AND DID NOT AGREE WITH THE EXPLANATION GIVEN BY THE ASSESSEE AND WAS OF THE VIEW THAT THE ASSESSEE UNDER THE GARB THAT THER E IS LOSS IN THE CASE HAS CLAIMED INELIGIBLE DEDUCTION IN CONTINUATION OF EXP LICIT PROVISIONS OF LAW AND HELD THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME 4 I.T.A. NO. 733(ASR)/2013 ASSESSMENT YEAR: 2007-08 BY CLAIMING WRONG DEDUCTIONS AND THE CASE OF THE AS SESSEE IS FIT FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. HE F URTHER HELD THAT THE ASSESSEE IS GUILTY OF FURNISHING INACCURATE PARTICU LARS OF INCOME BY CLAIMING WRONG DEDUCTIONS, AND IMPOSE PENALTY OF RS . 3,94,378/- BY PASSING THE ORDER DATED 29.06.2010 UNDER SECTION 27 1(1)(C) OF THE ACT. 4. AGGRIEVED WITH THE ORDER DATED 29.06.2010, PASSE D UNDER SECTION 274 R/W SECTION 271(1)(C) OF THE ACT, THE A SSESSEE FILED AN APPEAL BEFORE THE LEARNED FIRST APPELLATE AUTHORITY, WHO V IDE IMPUGNED ORDER DATED 09.10.2013, DELETED THE PENALTY IN DISPUTE BY ALLOWING THE APPEAL FILED BY THE ASSESSEE. NOW, THE REVENUE IS AGGRIEVE D WITH THE IMPUGNED ORDER PASSED THE PRESENT APPEAL. 5. AT THE TIME OF HEARING LEARNED DR RELIED UPON TH E ORDER PASSED BY THE ASSESSING OFFICER AND STATED THAT THE ASSESS EE HAS CLAIMED INELIGIBLE DEDUCTION FOR WHICH THE ASSESSEE IS NOT ENTITLED. THEREFORE, THE PENALTY IN DISPUTE HAS RIGHTLY BEEN LEVIED BY THE A SSESSING OFFICER AND WRONGLY BEEN DELETED BY THE LEARNED FIRST APPELLATE AUTHORITY. 6. ON THE CONTRARY, THE LEARNED FIRST APPELLATE AUT HORITY CONTROVERTED THE ARGUMENT ADVANCED BY LEARNED DR AN D HE RELIED UPON THE IMPUGNED ORDER PASSED BY LEARNED FIRST APPELLAT E AUTHORITY. IN 5 I.T.A. NO. 733(ASR)/2013 ASSESSMENT YEAR: 2007-08 ADDITION TO HIS ARGUMENT, HE ALSO STATED THAT NON-P AYMENT OF CANE CESS OF RS. 6.62 LACS, BONUS RS. 26,875/- AND EMPLOYEES CON TRIBUTION TO SOCIAL WELFARE FUNDS OF RS. 23,700/-, RESULTING INTO DISAL LOWANCE OF RS. 7,12,585/-. SECONDLY, ADD BACK OF RS. 3,52,848/- MA DE TOWARD SUSPENSE ACCOUNT IN THE BALANCE-SHEET WHEREAS THIS SUSPENSE ACCOUNT WAS INITIALLY CAME INTO EXISTENCE W.E.F. A.Y. 2001-02 AND THIS SU SPENSE ACCOUNT DOES NOT PERTAIN TO A.Y. 2007-08 AND LASTLY THE DEDUCTIO N OF FBT OF RS. 50,706/- CLAIMED IN THE P&L ACCOUNT WAS NOT SUO MOT U ADDED BACK AS IT IS NOT AN ADMISSIBLE DEDUCTION. HE STATED THAT THE ASSESSEES ENTIRE INCOME IS OTHERWISE EXEMPT U/S 80-P BEING A CASE OF CO-OP. SOCIETY. SECONDLY, THE ABOVE BONA-FIDE ERRORS HAS OCCURRED M ERELY ON THE BASIS OF ITS AUDITORS REPORT U/S 44AB OF THE ACT, FOR WHICH THE ASSESSEE CANNOT BE HELD DEFAULTER FOR AN ACT OF OMISSION AND COMMISSIO N OF THIRD PARTY. HE REQUESTED THAT KEEPING IN VIEW THE DECISION OF HON' BLE SUPREME COURT AS WELL AS THE HON'BLE HIGH COURT MENTIONED BY THE LEA RNED FIRST APPELLATE AUTHORITY IN THE IMPUGNED ORDER, THE APPEAL FILED B Y THE REVENUE MAY BE DISMISSED. 7. WE HAVE HEARD BOTH THE PARITIES AND WE ARE OF TH E CONSIDERED VIEW THAT THE LEARNED FIRST APPELLATE AUTHORITY PAS SED THE IMPUGNED AND 6 I.T.A. NO. 733(ASR)/2013 ASSESSMENT YEAR: 2007-08 DELETED THE PENALTY IN DISPUTE BY GIVING FINDINGS I N THE IMPUGNED ORDER. FOR THE SAKE OF CONVENIENCE, THE RELEVANT FINDINGS OF PARA NOS. 5 TO 5.5 (PAGE NOS. 5 TO 7), ARE REPRODUCED AS UNDER:- 5. I HAVE CONSIDERED THE SUBMISSIONS OF LEARNED COUNSEL FOR THE APPELLANT, FINDINGS GIVEN IN THE CASE LAWS RELIED U PON AND GONE THROUGH FINDINGS OF THE A.O. AS CONTAINED IN HIS IMPUGNED P ENALTY ORDER. THE LEARNED COUNSEL FOR THE APPELLANT HAS AGITATED AGAI NST THE LEVY OF CONCEALMENT PENALTY ON ACCOUNT OF THE SHORT ASSESSM ENT CAUSED DUE TO FOLLOWING POINTS:- (1) NON-PAYMENT OF CANE CESS OF RS. 6.62 LACS, BON US RS. 26,875/- AND EMPLOYEES CONTRIBUTION TO SOCIAL WELFARE FUNDS OF RS. 23,700/-, RESULTING INTO DISALLOWANCE OF RS. 7,12,585/-. (2) ADD-BACK OF RS. 3,52,848/- MADE TOWARDS SUSPEN SE ACCOUNT IN THE BALANCE-SHEET WHEREAS THIS SUSPENSE ACCOUNT WAS INITIALLY CAME INTO EXISTENCE W.E.F. A.Y. 2001-02 AND THIS SUSPENSE ACC OUNT DOES NOT PERTAIN TO A.Y. 2007-08. (3) DEDUCTION OF FBT OF RS. 50,706/- CLAIMED IN TH E P&L ACCOUNT WAS NOT SUO MOTU ADDED BACK AS IT IS NOT AN ADMISSI BLE DEDUCTION. 5.1 IT IS ALL ALONG BEEN THE APPELLANTS SUBMISSIO NS THAT THE FIRSTLY, ITS ENTIRE INCOME IS OTHERWISE EXEMPT U/S 80-P BEIN G A CASE OF COOP. SOCIETY. SECONDLY, THE ABOVE BONAFIDE ERRORS HAS OC CURRED MERELY ON THE BASIS OF ITS AUDITORS REPORT U/S 44B, FOR WHICH TH E APPELLANT CANNOT BE HELD DEFAULTER FOR AN ACT OF OMISSION AND COMMISSIO NER OF THIRD PARTY. THIRDLY, THE DISALLOWANCE/ADD BACK TOWARDS SUSPEN SE ACCOUNT OF RS. 3,52,848/- HAS BEEN WRONGLY MADE IN THE ASSESSMENT YEAR 2007-08 UNDER CONSIDERATION, WHEREAS THIS SUSPENSE ACCOUNT PERTAI NED TO A.Y. 2001-02 WHEN IT WAS INITIALLY CAME INTO EXISTENCE. 5.2 THE APPELLANT HAS NOT AGITATED THE MATTER IN Q UANTUM APPEAL, AS ULTIMATELY ITS ENTIRE INCOME WAS EXEMPT U/S 80-P IN VIEW OF THE TERRITORIAL 7 I.T.A. NO. 733(ASR)/2013 ASSESSMENT YEAR: 2007-08 HON'BLE PUNJAB & HARYANA HIGH COURTS DECISION IN T HE CASE OF BUDHEWAL COOP. SUGAR MILLS LTD. AND HENCE, THERE WA S NO TAX LIABILITY AT ALL. 5.3 THAT LEARNED COUNSEL HAS PLACED HEAVY RELIANCE ON THE RULINGS OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. RE LIANCE PETRO PRODUCTS LTD. REPORTED IN 230 CTR (SC) 320/322 ITR 158 (SC) WHEREIN IT WAS HELD THAT BY ANY STRETCH OF IMAGINATION, MA KING AN INCORRECT CLAIM IN LAW CANNOT TANTAMOUNT TO FURNISHING INACCURATE P ARTICULARS. A MERE MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW B Y ITSELF WILL NOT AMOUNT OF FURNISHING INACCURATE PARTICULARS. 5.4 THUS IT CAN BE SEEN THAT ADDITION HAS BEEN MAD E BY MERE DISALLOWANCE ON CANE CESS NOT PAID U/S 43B, BONUS N OT PAID U/S 43B AND FBT DEBITED TO P&L A/C. DISALLOWANCE DOES NOT MEAN FURNISHING INACCURATE PARTICULARS OR CONCEALING PARTICULARS OF INCOME. SIMILARLY, ADDITION ON ACCOUNT OF SUSPENSE A/C DOES NOT PERTAI N TO YEAR UNDER CONSIDERATION, SO ISSUE A LEVY OF PENALTY DOES NOT ARISE ON THIS ISSUE WELL. 5.5 RESPECTFULLY FOLLOWING THE ABOVE RULING OF THE HIGHER JUDICIAL AUTHORITIES INCLUDING THE HON'BLE SUPREME COURT, AN D UNDER THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE, DISCUSSED SUPR A, I AM OF THE CONSIDERED OPINION THAT IT IS NOT A FIT CASE FOR LE VY OF CONCEALMENT PENALTY AS IT NOT COVERED BY ANY OF THE EXPLANATION GIVEN B ELOW THE PROVISIONS OF SECTION 271(1)(C) OF I.T. ACT, 1961. RATHER, THE CA SE IS COVERED UNDER THE SAVING PROVISIONS OF SECTION 273B OF THE I.T. ACT, 1961, AS THE APPELLANT HAS BEEN ABLE TO SUCCESSFULLY AND SATISFACTORILY EX PLAINED THE REASONABLE CAUSE WHICH PREVENTED THE APPELLANT CAUSING THE BON A-FIDE OMISSION, AS THE CASE MAY BE. ACCORDINGLY, THE CONCEALMENT PENAL TY LEVIED AT RS. 3,94,378/- @ 100% OF THE TAX SOUGHT TO BE EVADED U/ S 271(1)(C) FOR THE A.Y. 2007-08 IN THE ABOVE MENTIONED CASE IS HEREBY CANCELLED. 8. WE HAVE THOROUGHLY GONE THROUGH THE AFORESAID FI NDINGS GIVEN BY THE LEARNED FIRST APPELLATE AUTHORITY ALONG WITH THE ARGUMENTS ADVANCED BY BOTH THE PARTIES AS WELL AS THE ORDER P ASSED BY THE REVENUE 8 I.T.A. NO. 733(ASR)/2013 ASSESSMENT YEAR: 2007-08 AUTHORITY ALONG WITH A DECISION OF I.T.A.T., CHANDI GARH A BENCH, CITED BY LEARNED DR IN THE CASE OF HARDEEP ENGINEERS VS. DEPUTY COMMISSIONER OF INCOME TAX, REPORTED IN (2006) 99 T TJ (CHD.) 447, WE ARE OF THE CONSIDERED VIEW THAT THE LEARNED FIRST A PPELLATE AUTHORITY HAS PASSED A WELL REASONED ORDER BY RESPECTFULLY FOLLOW ING THE ORDER OF HON'BLE SUPREME COURT IN THE CASE OF CIT V. RELIANC E PETRO PRODUCTS LTD. REPORTED IN 230 CTR (SC) 320/322 ITR 158 (SC), WHEREIN IT WAS HELD THAT BY ANY STRETCH OF IMAGINATION, MAKING AN INCORRECT CLAIM IN LAW CANNOT TANTAMOUNT TO FURNISHING INACCURATE PARTICUL ARS. A MERE MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF W ILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. IN THE PRESENT CASE ALSO THE ASSESSEE HAS ACCEPTED THE ADDITION MADE BY THE REVENUE AUTHO RITY AND MADE THE PAYMENT OF TAX ALSO BUT AS REGARDS TO THE PENALTY I N DISPUTE, WHICH IS NOT LEVIABLE, IN VIEW OF THE RULING OF HON'BLE SUPREME COURT OF INDIA IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS LTD. (SUPRA ), WHEREIN THE HON'BLE SUPREME COURT HAS HELD THAT THE ASSESSEE HA S NOT FILED ITS FALSE CLAIM IN THE RETURN OF INCOME IT MAY BE INCORRECT C LAIM BUT NOT FALSE CLAIM. THEREFORE, THE PENALTY IN DISPUTE IS NOT SUS TAINABLE IN THE EYE, AS DISCUSSED BY THE LEARNED FIRST APPELLATE AUTHORITY IN THE IMPUGNED ORDER. 9 I.T.A. NO. 733(ASR)/2013 ASSESSMENT YEAR: 2007-08 9. IN VIEW OF ABOVE DISCUSSION, WE ARE OF THE VIEW THAT THE LEARNED FIRST APPELLATE AUTHORITY HAS PASSED A WELL REASONE D ORDER AND ACCORDINGLY WE DISMISS THE APPEAL FILED BY THE REVENUE AND UPHO LD THE IMPUGNED ORDER DATED 09.10.2013 PASSED BY LEARNED CIT(A), AM RITSAR. 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH MARCH, 2014 SD/./- SD/./- (B.P. JAIN) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 6 TH MARCH, 2014 /RK/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: M/S AJNALA CO. OP. SUGAR MILLS LTD., BHALLA PIND, TEH.- AJNALA, AMRITSAR 2. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-IV, AMRIT SAR 3. THE CIT(A), 4. THE CIT, 5. THE SR DR, I.T.A.T., TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.