ACIT, New Delhi V. M/s. Tupperware India Pvt. Ltd., New Delhi

ITA 747/DEL/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65864 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 30-08-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 14-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS SHUMANA SEN
• Keywords: Difference of opinion
• Section: 115JB

Judgement Text

ITA NO.747/DEL/2012 ASSTT. YEAR: 2002-03 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H NEW DELHI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI CHNADRAMOHAN GARG, JUDICIAL MEMBER ITA NO. 747/DEL/2012 ASSTT. YEAR: 2002-03 ASSTT.COMMISSIONER OF INCOME TAX, VS TUPPERWARE INDIA PVT. LTD., CIRCLE 16(1), ROOM NO. 204-206, NEW DELHI. TOLSTOY HOUSE, 15, TOLSTOY MARG, NEW DELHI-110001 (PAN NO.AACT3770D) C.O. NO.156/DEL/2012 (IN ITA NO.747/DEL/2012) ASSTT. YEAR: 2002-03 TUPPERWARE INDIA PVT. LTD., VS ACIT, CIR CLE 16(1), NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: MRS. SHUMANA SEN, SR.DR RESPONDENT BY: SHRI K.M. GUPTA O R D E R PER CHANDRAMOHAN GARG, J.M. THIS APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAI NST THE ORDER OF CIT(A)-XIX, NEW DELHI DATED 15.12.2011 FOR AY 2002- 03 BY WHICH THE COMMISSIONER OF INCOME TAX(A) SET ASIDE THE ORDER O F DCIT, CIRCLE 16(1), ITA NO.747/DEL/2012 ASSTT. YEAR: 2002-03 2 NEW DELHI DATED 29.03.2010 PASSED U/S 271(1)(C) OF THE ACT (FOR SHORT THE ACT). 2. THE REVENUE RAISED THE FOLLOWING GROUNDS IN THIS APPEAL:- '1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE LEARNED CIT (A) ERRED IN DELETING THE PE NALTY OF RS. 13,53,417/- IMPOSED U/S 271(L)(C) OF THE INCOME ACT ACT, 1961.' '2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE LEARNED CIT (A) ERRED IN DELETING THE PE NALTY OF RS. 13,53,417/- IMPOSED U/S 271(L)(C) OF THE INCOME -TAX ACT, 1961 WITHOUT APPRECIATING THE FACT THAT THE PE NALTY WAS LEVIABLE ON THE ADDITIONS MADE TO THE RETURNED INCOME AS COMPUTED UNDER THE INCOME-TAX ACT AND IT HAD NO RELEVANCE WITH THE PAYMENT OF TAX U/S 115JB ON THE BOOK PROFITS.' 3. THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. NALWA SONS INVESTMENTS LTD. REP ORTED IN 327 ITR 543 (DELHI) HAS NOT BEEN ACCEPTED AS THE HON'BLE SUPREME COURT HAS BEEN PLEASED TO ISSUE NOT ICE IN SPECIAL LEAVE PETITION FILED BY THE DEPARTMENT INVO LVING THE SAME ISSUE.' 3. BRIEFLY STATED THE FACTS GIVING RISE TO THIS APP EAL ARE THAT THE ASSESSING OFFICER FINALIZED THE ASSESSMENT BY ASSESSMENT ORDE R DATED 30.03.2005 AT A TOTAL INCOME OF RS.52,67,550. THE ASSESSING OFFICE R MADE CERTAIN ADDITIONS PERTAINING TO PROVISIONS FOR WARRANTY EXPENSES, LOS S DUE TO RESTATEMENT OF FOREIGN EXCHANGE TRANSACTION AND DISALLOWED THE AMO UNT OF ADVANCES WRITTEN OFF BY THE ASSESSEE. THE ASSESSEE FILED AN APPEAL AGAINST THE ABOVE ASSESSMENT ORDER BUT HE STOOD WITHOUT SUCCESS. THE ASSESSING OFFICER ITA NO.747/DEL/2012 ASSTT. YEAR: 2002-03 3 INITIATED THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT AND THROUGH THE ORDER DATED 29.02.2010, THE ASSESSING OFFICER LEVIE D PENALTY OF RS.13,53,417. THE ASSESSEE FILED AN APPEAL AGAINST THE ABOVE PENALTY ORDER WHICH WAS ALLOWED BY THE IMPUGNED ORDER FOLLOWING T HE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT OF DELHI IN THE C ASE OF COMMISSIONER OF INCOME TAX VS NALWA SONS INVESTMENTS LTD. REPORT ED AS 327 ITR 543(DEL). NOW, THE REVENUE IS IN APPEAL BEFORE THIS TRIBUNAL. 4. WE HAVE HEARD RIVAL ARGUMENTS OF BOTH THE PARTIE S AND CAREFULLY CONSIDERED THE ORDERS OF THE AUTHORITIES BELOW PASS ED IN ORIGINAL ASSESSMENT AND PENALTY PROCEEDINGS. 5. AT THE OUTSET, THE ASSESSEES REPRESENTATIVE SUB MITTED A COPY OF ORDER VIDE DATED 04.05.2012 OF HONBLE SUPREME COURT PASS ED IN SLP(CIVIL) NO. 18564/2011 IN THE CASE OF COMMISSIONER OF INCOME TA X VS M/S NALWA SONS INVESTMENTS LTD. DISMISSING THE SPECIAL LEAVE PETITION OF THE REVE NUE, THE ASSESSEES REPRESENTATIVE ALSO SUBMITTED A COPY OF THE ORDER OF HONBLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF C OMMISSIONER OF INCOME TAX VS NALWA SONS INVESTMENT LTD. (2010) (327 ITR 5 43(DEL) . THE ASSESSEES REPRESENTATIVE ALSO SUBMITTED A COPY OF ORDER OF DELHI H BENCH PASSED IN ASSESSEES OWN CASE IN ITA NO.4051/DEL/20 09 FOR AY 2001-02 DATED 23.04.2010. ITA NO.747/DEL/2012 ASSTT. YEAR: 2002-03 4 6. THE ASSESSEES REPRESENTATIVE SUBMITTED THAT THE REVENUES SLP IN THE CASE OF M/S NALWA SONS (SUPRA) HAS BEEN DISMISSED B Y THE APEX COURT CONFIRMING THE ORDER OF HONBLE DELHI HIGH COURT IN RESPECT OF DELETION OF PENALTY. THE AR ALSO SUBMITTED THAT IN ASSESSEES OWN CASE FOR AY 2001-02 THE ITAT H BENCH UPHELD THE ORDER OF COMMISSIONER OF INCOME TAX(A) CONFIRMING THE ORDER OF DELETION OF PENALTY MADE BY THE ASSESSING OFFICER ON ACCOUNT OF PROVISION FOR WARRANTY EXPENSES. 7. LD. DR SUPPORTED THE PENALTY AND EXPRESSED HIS I NABILITY ABOUT THE KNOWLEDGE OF THE ORDER OF HONBLE SUPREME COURT IN THE CASE OF M/S NALWA SONS (SUPRA). 8. IN VIEW OF ABOVE, WE OBSERVE THAT THE COMMISSION ER OF INCOME TAX(A) RELIED ON THE JUDGMENT OF HONBLE JURISDICTI ONAL HIGH COURT OF DELHI PASSED IN THE CASE OF NALWA SONS (SUPRA). WE DECLI NE TO ACCEPT THE CONTENTION OF THE REVENUE THAT THE JUDGMENT OF HON BLE DELHI HIGH COURT HAS NOT REACHED FINALITY AS THEIR SLP IS PENDING BE FORE HONBLE SUPREME COURT. THIS APPEAL WAS FILED ON 13.02.2012 AND THE HONBLE SUPREME COURT HAS DISMISSED THE SLP ON 04.05.2012. NOW, THE JUDG MENT OF HONBLE DELHI HIGH COURT HAS REACHED FINALITY WHEREIN IT WAS HELD AS UNDER:- UNDER THE SCHEME OF THE INCOME-TAX ACT 1961, THE TOTAL INCOME OF THE ASSESSEE IS FIRST COMPUTED UNDER THE NORMAL PROVISIONS OF THE ACT AND TAX PAYABLE ON SUCH TOTAL INCOME IS COMPARED WITH THE PRESCRIBED PERCEN TAGE ITA NO.747/DEL/2012 ASSTT. YEAR: 2002-03 5 OF THE BOOK PROFITS COMPUTED UNDER SECTION 115JB OF THE ACT. THE HIGHER OF THE TWO AMOUNTS IS REGARDED AS T OTAL INCOME AND TAX IS PAYABLE WITH REFERENCE TO SUCH TO TAL INCOME. IF THE TAX PAYABLE UNDER THE NORMAL PROVIS IONS IS HIGHER, SUCH AMOUNT IS THE TOTAL INCOME OF THE ASSE SSEE, OTHERWISE, THE BOOK PROFITS ARE DEEMED AS THE TOTAL INCOME OF THE ASSESSEE IN TERMS OF SECTION 115JB OF THE ACT. WHERE THE INCOME COMPUTED IN ACCORDANCE WITH T HE NORMAL PROCEDURE IS LESS THAN THE INCOME DETERMINED BY LEGAL FICTION, NAMELY, THE BOOK PROFITS UNDER SECTI ON 115JB OF THE ACT AND THE INCOME OF THE ASSESSEE IS ASSESSED UNDER SECTION 115JB AND NOT UNDER THE NORM AL PROVISIONS, THE TAX IS PAID ON THE INCOME ASSESSED UNDER SECTION 115JB OF THE ACT. CONCEALMENT OF INCOME WOU LD HAVE NO ROLE TO PLAY AND WOULD NOT LEAD TO TAX EVAS ION. THEREFORE, PENALTY CANNOT BE IMPOSED ON THE BASIS O F DISALLOWANCES OR ADDITIONS MADE UNDER THE REGULAR PROVISIONS. 9. IN ASSESSEES OWN CASE ITAT, DELHI BENCH H, IN ITS ORDER IN ITA NO. 4051/DEL/2009 DATED 23 RD APRIL, 2010 HELD AS UNDER:- THE ACTUAL CLAIM IN AY 2000-01 WAS ONLY RS.2.23 LAKHS WHICH HAS RISEN TO RS.7.29 LAKHS IN AY 2001-0 2, TO RS.8.89 LAKHS IN AY 2002-03 TO RS.18.90 LAKHS IN AY 2003- 04 TO RS.29.04 1AKHS IN AY 2004-05 AND TO RS.35.03 LAKHS IN A Y 2005-06. THIS GOES TO SHOW THAT EVERY YEAR, THE QUANTUM OF ACTUAL EXPENSES IS RISING AND HENCE IT C ANNOT BE SAID THAT THE BASIS ADOPTED BY THE ASSESSEE COMP ANY TO MAKE PROVISION @ 1% OF GROSS SALES IS ARBITRARY OR UNREASONABLE. UNDER THESE FACTS, WE ARE OF THE CONS IDERED OPINION THAT HE EXPLANATION OFFERED BY THE ASSESSEE IN SUPPORT OF 1 % PROVISION IS BONA FIDE, AND THEREFOR E, EXPLANATION 1 TO SECTION 271(1)(C) IS NOT APPLICABL E IN THE PRESENT CASE AND HENCE, IN SPITE OF PART DISALLOWAN CE HAVING BEEN CONFIRMED BY THE TRIBUNAL ON ACCOUNT OF PROVISION FOR WARRANTY EXPENSES, WE FEEL THAT IT IS NOT A FIT CASE FOR LEVY OF PENALTY U/S 271 (1)(C) BECAUSE SUC H ITA NO.747/DEL/2012 ASSTT. YEAR: 2002-03 6 DISALLOWANCE OF PART EXPENSES DOES NOT TAKE THE CHA RACTER OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURAT E PARTICULARS OF INCOME BECAUSE OF BONA FIDE EXPLANAT ION FURNISHED BY THE ASSESSEE WHICH IS NOT FOUND TO BE FALSE AND ALTHOUGH THE ASSESSEE COULD NOT SUBSTANTIATE TH IS EXPLANATION, BUT IN OUR HUMBLE OPINION SUCH EXPLANA TION IS BONA FIDE AND ALL NECESSARY FACTS ARE DISCLOSED AND HENCE, THE SECTION 271 (1)(C) IS NOT APPLICABLE AND WE, TH EREFORE, FIND NO REASON TO INTERFERE IN THE ORDER OF CIT(A) AS PER WHICH HE HAS DELETED THE PENALTY. GROUND NO.1 10. APROPOS GROUND NO.1, IN VIEW OF ABOVE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN M/S NALWA SONS (SUPRA) AND THE JUDGMENT OF ITAT DELHI H BENCH IN ASSESSEES OWN CASE IN ITA NO. 4051/DEL/2009 (SUPRA), WE OBSERVE THAT THE ISSUE OF PENALTY LEVIE D ON THE ASSESSEE IS SQUARELY COVERED BY THE ABOVE JUDGMENT AND WE HAVE NO REASON TO INTERFERE WITH THE ORDER OF THE COMMISSIONER OF INCOME TAX(A) IN THIS REGARD. GROUND NO. 2& 3 11. APROPOS GROUND NO. 2 AND 3, WE HOLD THAT SINCE THE PRELIMINARY ISSUE OF LEGALITY OF LEVYING OF PENALTY ON THE ASSESSEE I S DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE APPELLANT, THESE G ROUNDS BECAME ACADEMIC AND IN VIEW OF DISMISSAL ORDER OF HONBLE APEX COUR T (SUPRA), THESE GROUNDS DO NOT SURVIVE FOR CONSIDERATION AND WE ALSO DISMIS S GROUNDS NO. 2 AND 3. ITA NO.747/DEL/2012 ASSTT. YEAR: 2002-03 7 CROSS OBJECTION NO.156/DEL/2012 OF THE ASSESSEE 12. THE ASSESSEE HAS ALSO FILED CROSS OBJECTION ON FOLLOWING GROUNDS:- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN NOT DELETING THE PENALTY UNDER SECTION 271(1)( C) OF THE ACT ON MERITS IN RE SPECT OF THE ADDITION OF PROVISION FOR WARRANTY, THOUGH THE IDEN TICAL ISSUE OF THE PENALTY ON PROVISION FOR WARRANTY WAS DELETE D BY THE CIT(A) AND HONBLE ITAT FOR ASSESSMENT YEAR 2002-03 . 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN NOT DELETING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON MERITS OF THE CASE IN RESPECT OF THE ADDITION OF ADVANCES WRITTEN OFF AS THE SAME WAS BONAFIDE CLAIM AND THE ADDITION IS MERELY BASED ON DIFFERENCE OF OPINION. 13. SINCE MAIN GROUND NO. 1 OF MAIN APPEAL OF THE R EVENUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE AND CONSEQUENTLY THE APPEAL OF THE REVENUE HAS BEEN HELD NOT ALLOWABLE, THEREFORE, GRO UNDS NO. 1 AND 2 OF CROSS OBJECTION BECOME ACADEMIC AND DO NOT SURVIVE FOR AD JUDICATION AND WE DISMISS THE SAME. 14. IN THE RESULT, THE APPEAL OF THE REVENUE AND CR OSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ITA NO.747/DEL/2012 ASSTT. YEAR: 2002-03 8 ORDER PRONOUNCED IN OPEN COURT ON 16.11.2012. SD/- SD/- (SHAMIM YAHYA ) (CHANDRAMOHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 16 TH NOVEMBER, 2012 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. COMMISSIONER OF INCOME TAX(A) 4. C.I.T. 5. DR BY ORDER ASSTT.REGISTRAR