DCIT, Circle - 4, Kolkata, Kolkata V. M/s. S V M Cera Tea Build Ltd, Kolkata

ITA 780/KOL/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70453 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2003-2004
• Appeal Filed On: 20-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA
• Assessee Lawyers: P K SANGHAI PER SHRI
• Keywords: Bonafide belief
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA [BEFORE SHRI SHAMIM YAHYA, A.M. & SHRI GEORGE MATHA N, J.M. ] I.T.A. NO.780/KOL/2011 ASSESSMENT YEAR : 2003-04 DCIT, CIRCLE-4, KOLKATA .. ( APPELLANT) -VS- M/S. S V M CERA TEA BUILD LTD.,KOL. .. ( RESPONDENT ) PAN : AADCS 7266C DATE OF CONCLUDING THE HEARING : 19.12.2013 DATE OF PRONOUNCING THE ORDER : 23.12.2013 APPEARANCES : FOR THE APPELLANT :SHRI P. DAM KANUNJNA, JCIT, SR.DR : FOR THE RESPONDENT :SHRI P. K. SANGHAI O R D E R PER SHRI SHAMIM YAHYA, A.M. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A) DATED 29 TH NOVEMBER, 2010 PASSED UNDER SECTION 271(1)(C) OF TH E I.T. ACT AND PERTAINS TO THE ASSESSMENT YEAR 2003-04. 2. THE ISSUE RAISED IS THAT CIT(A) ERRED IN DELETIN G PENALTY OF RS.15,84,157/- UNDER SECTION 271(1)(C) OF THE I.T.ACT. 3. IN THIS CASE, AO NOTED, AS PER ANNEXURE E AND G IN RELATION TO TAX AUDIT REPORT FURNISHED ALONG WITH THE RETURN OF INCOME, T HAT AN AMOUNT OF RS.20,20,348/- AND RS.20,90,283/- ON ACCOUNT OF EPF AND DLI CONTRI BUTION WAS NOT PAID BY THE ASSESSEE COMPANY. AS SUCH A SUM OF RS.43,10,631/- W AS DISALLOWED AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE UNDER SECTION 43B OF THE I.T. ACT. THE PENALTY ITA NO.780/K/11 M/S.S V M CERA TEA BUILD LTD. 2 PROCEEDINGS UNDER SECTION 271(1)(C) OF THE I.T.ACT WERE ALSO INITIATED. THE AO OBSERVED THAT DISALLOWANCES POINTED OUT IN THE TAX AUDIT REPORT WAS TOTALLY IGNORED BY THE ASSESSEE IN COMPUTING THE TOTAL INCOME WHILE FI LING THE RETURN BEFORE THE IT AUTHORITIES. ACCORDINGLY, THE AO IMPOSED A PENALTY OF RS.15,84,157/- UNDER SECTION 271(1)(C) OF THE I.T. ACT. 4. BEFORE THE LD. CIT(A), THE LD. COUNSEL OF THE AS SESSEE ARGUED THAT THE WHOLE DETAILS OF THE DEDUCTION WITH DATE AND AMOUNT ETC. WERE DULY GIVEN IN THE TAX AUDIT REPORT WHICH WAS AS PER BOOKS OF ACCOUNTS OF THE AS SESSEE. WHILE FILING RETURN OF THE INCOME IN THE COMPUTATION OF INCOME THE AFORESAID A MOUNT OF P.F. DEDUCTION AND CONTRIBUTION TOTALING TO RS. 43,10,631/- COULD NOT BE REDUCED FROM THE TOTAL LOSS DUE TO THE FACT THAT THE COMPANY HAD APPROACHED TO THE P.F . AUTHORITIES AND ALSO TO THE KOLKATA HIGH COURT FOR EXTENSION OF TIME FOR PAYMENT OF THE P.F. AND WAS UNDER BONAFIDE IMPRESSION THAT ONCE EXTENDED TIME GRANTED THERE WO ULD NOT BE ANY DISALLOWANCE UNDER THE LT.ACT 1961 . HE FURTHER STATED THAT THERE WAS NO CONCEALMENT OF THE INCOME OR FACTS NOR THERE WAS ANY STATEMENT WHICH WAS HELD TO BE UNTRUE OR THERE WAS NO INACCURATE PARTICULAR. A COPY OF THE TAX AUDIT REPO RT AND RELEVANT WRIT PAPERS FOR INSTALLMENT FOR P.F. WERE FILED. HE ALSO EXPLAINED THAT THIS IS STATUTORY ADDITION WHICH HAS TO BE MADE AS PER LAW AND MOREOVER IF THE ASSES SEE WAS UNDER BONAFIDE IMPRESSION THAT THE EXTENSION OF TIME BY P.F. AUTHORITIES WILL ENTITLE EXTENSION UNDER LT.LAW ALSO THE PENALTY CAN NOT BE IMPOSED FOR DIFFERENCE OF OP INION. 5. CONSIDERING THE ABOVE, THE LD. CIT(A) DELETED TH E PENALTY BY OBSERVING AS UNDER: 3. I HAVE CONSIDERED THE FACTS OF THE CASE AND PER USED THE ORDER AS ALSO THE RELEVANT PAPERS SUBMITTED BY THE APPELLANT. THE MATTER OF CALCULATION OF AMOUNT OF PENALTY HAS TO BE ON THE BASIS OF TAX SOUGHT TO BE AVOIDED AND IN THIS CASE OF TEA MANUFACTURING UNIT RULE 8 S HOULD HAVE BEEN FOLLOWED. HOWEVER IT IS TRUE THAT COMPLETE DETAILS OF PROVIDENT FUND ARE AVAILABLE IN THE TAX AUDIT REPORT BASED ON WHICH AD DITIONS IN THE ASSESSMENT HAVE BEEN MADE. NONE OF THE PARTICULARS WERE FOUND TO BE ITA NO.780/K/11 M/S.S V M CERA TEA BUILD LTD. 3 INACCURATE OR INCORRECT. ALL THE FACTS RELATING TO THE COMPUTATION WERE SUBMITTED. APART FROM THAT THE APPELLANT CONTENDED THAT IN VIEW OF THE TIME EXTENSION FOR DEPOSIT OF P.F. DUES MATTER BY T HE COURTS OF LAW WAS ALSO A FACTOR FOR BONAFIDE BELIEF FOR NON DISALLOWA NCE AND FOR THAT MATTER IT DID NOT APPEAR IN THE COMPUTATION ALTHOUGH FULL DETAILS WERE SUBMITTED. SINCE THE DISALLOWANCE OF P.F. HAS NOT BEEN AGITATE D FURTHER, PENALTY DOES NOT FOLLOW AUTOMATICALLY I FIND THAT THE EXPLANATIO N HAS BEEN OFFERED BY THE APPELLANT AND SUBSTANTIATED AND THE SAME IS NOT FALSE OR UNTRUE. I AM OF THE OPINION THAT THE FACTS AND CIRCUMSTANCES OF THE CASE THEREFORE DO NOT JUSTIFY THE IMPOSITION OF THE PENALTY AND DIREC T THE A.O. TO DELETE THE PENALTY SO IMPOSED. 6. AGAINST THE ABOVE ORDER, THE REVENUE IS IN APPEA L BEFORE US. 7. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED TH AT PENALTY UNDER SECTION 271(1)(C) IN THIS CASE HAS BEEN RIGHTLY IMPOSED BY THE AO. DESPITE THE MENTION IN THE TAX AUDIT REPORT THAT EPF AND DLI CONTRIBUTION WAS LIABLE TO BE DISALLOWED UNDER SECTION 43B OF THE I.T. ACT, THE SAME WAS NOT ADDED BACK IN THE COMPUTATION OF INCOME. HE SUBMITTED THAT THE LD. CIT(A) ERRED IN D ELETING THE PENALTY IN THIS REGARD. 8. THE LD. COUNSEL OF THE ASSESSEE, ON THE OTHER HA ND, SUBMITTED THAT THE FACT THAT EPF AND DLI AMOUNTS WERE NOT PAID AND WERE LIABLE T O BE DISALLOWED WAS DISCLOSED IN THE TAX AUDIT REPORT. HENCE, HE CLAIMED THAT IT CAN NOT BE SAID THAT THERE WAS ANY CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME ON THE PART OF THE ASSESSEE. HE SUBMITTED THAT THE ASSESSEE WAS ORIGIN ALLY UNDER A BONA FIDE BELIEF THAT THERE WILL BE EXTENSION OF DATE OF DEPOSITS OF P.F AND DLI. HE FURTHER EXPLAINED THAT THIS WAS A MISTAKE ON THE PART OF THE AUDITOR FOR W HICH THE ASSESSEE CANNOT BE VISITED WITH RIGOUR OF PENALTY UNDER SECTION 271(1)(C) IN T HIS REGARD. HE PLACED RELIANCE UPON THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF PRICE WATERHOUSE COOPERS PVT. LTD.-VS- CIT IN CIVIL APPEAL NO.6924 OF 2012 DECIDE D ON SEPTEMBER 25,2012. THE LD. COUNSEL PLEADED THAT IN THE AFORESAID DECISION DEAL T WITH BY THE HONBLE APEX COURT, THERE WAS A SIMILAR DISALLOWANCE NOTED IN THE TAX A UDIT REPORT WITH RESPECT OF PAYMENT OF GRATUITY NOT ALLOWABLE. THE ASSESSEE HAS FAILED TO ADD BACK THE ITA NO.780/K/11 M/S.S V M CERA TEA BUILD LTD. 4 DISALLOWANCE IN THE COMPUTATION OF INCOME. PENALTY UNDER SECTION 271(1)(C) WAS IMPOSED. THE HONBLE APEX COURT PROCEEDED TO DELETE THE PENALTY UNDER SECTION 271(1)(C) BY CONCLUDING AS UNDER: THE CONTENTS OF THE TAX AUDIT REPORT SUGGEST THAT T HERE IS NO QUESTION OF THE ASSESSEE CONCEALING ITS INCOME. THERE IS ALSO N O QUESTION OF THE ASSESSEE FURNISHING ANY INACCURATE PARTICULARS. IT APPEARS TO US THAT ALL THAT HAS HAPPENED IN THE PRESENT CASE IS THAT THROU GH A BONA FIDE AND INADVERTENT ERROR, THE ASSESSEE WHILE SUBMITTING IT S RETURN, FAILED TO ADD THE PROVISION FOR GRATUITY TO ITS TOTAL INCOME. THI S CAN ONLY BE DESCRIBED AS A HUMAN ERROR WHICH WE ARE ALL PRONE TO MAKE. TH E CALIBER AND EXPERTISE OF THE ASSESSEE HAS LITTLE OR NOTHING TO DO WITH THE INADVERTENT ERROR. THAT THE ASSESSEE SHOULD HAVE BEEN CAREFUL C ANNOT BE DOUBTED, BUT THE ABSENCE OF DUE CARE, IN A CASE SUCH AS THE PRES ENT, DOES NOT MEAN THAT THE ASSESSEE IS GUILTY OF EITHER FURNISHING INACCUR ATE PARTICULARS OR ATTEMPTING TO CONCEAL ITS INCOME. 9. WE HAVE CONSIDERED THE CONTENTIONS OF BOTH THE C OUNSELS AND PERUSED RECORDS. WE FIND THAT SECTION 271(1)(C) POSTULATES LEVY OF P ENALTY FOR CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN THIS CASE, CERTAIN AMOUNTS WERE DISALLOWABLE UNDER SECTION 43B OF THE I.T. ACT ON ACCOUNT OF PF AND DLI DUES, WHICH WERE NOT DEPOSITED WITHIN THE PRESCRIBED TIME. THIS FACT WAS DULY DISCLOSED IN THE TAX AUDIT REPORT. HOWEVER, THE ASSESSEE FAILED TO ADD BACK TH E SAID DISALLOWANCES IN THE COMPUTATION OF INCOME. THE PLEA BEFORE THE LD. CIT( A) WAS THAT THE SAME WAS NOT REDUCED FROM THE TOTAL LOSS DUE TO THE FACT THAT CO MPANY HAD APPROACHED TO PF AUTHORITIES AND ALSO TO THE KOLKATA HIGH COURT FOR EXTENSION OF TIME FOR PAYMENT OF PF AND WAS UNDER A BONA FIDE IMPRESSION THAT ONCE TIME WAS GRANTED, THERE WOULD NOT BE ANY DISALLOWANCE UNDER THE I.T. ACT, 1961. IN VIEW OF THE AFORESAID EXPLANATION, IT CAN BE SAID THAT THE ASSESSEE WAS UNDER A BONA FIDE BELIEF THAT THE DISALLOWANCES WOULD NOT MATERIALIZE. HENCE, IN OUR CONSIDERED OPINION, THE ASSESSEE SHOULD NOT BE VISITED WITH RIGOUR OF PENALTY. THE ASSESSEES CONDUCT CANNOT BE SAID TO BE CONTUMACIOUS SO AS TO WARRANT LEVY OF PENALTY. IN THIS REGARD, WE DRAW SU PPORT FROM THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF CIT-VS- RELIANCE PETROPRODUCTS PVT. LTD. 322 ITR ITA NO.780/K/11 M/S.S V M CERA TEA BUILD LTD. 5 158. IN THIS CASE, IT WAS HELD THAT A MERE MAKING O F THE CLAIM WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING IN ACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETU RN CANNOT AMOUNT TO THE INACCURATE PARTICULARS. SIMILARLY, WE FIND THAT IN THE CASE OF PRICE WATERHOUSE COOPERS PVT. LTD. ( SUPRA ), THE HONBLE COURT HAS HELD THAT WHEN THE MATTER IS ALREADY REPORTED IN THE TAX AUDIT REPORT, THERE IS NO QUESTION OF THE ASSESSEE CONCEALING ITS INCOME AND HENCE, THERE IS NO QUESTION OF FURNISHING ANY INACCURATE P ARTICULARS OF INCOME BY THE ASSESSEE. HENCE, IN THE BACKGROUND OF THE AFORESAID DISCUSSIO N AND PRECEDENTS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A). ACCOR DINGLY, WE UPHOLD THE SAME. 10. IN THE RESULT, THIS APPEAL FILED BY THE REVENUE STANDS DISMISSED. THIS ORDER IS PRONOUNCED IN THE OPEN COURT ON 23 RD DECEMBER, 2013. SD/- SD/- (GEORGE MATHAN) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 23 RD DECEMBER, 2013 COPY OF THE ORDER FORWARDED TO: 1. M/S. S V M CERA TEA BUILD LTD., 2, B.T.M. SARANI, 2 ND FLOOR, KOLKATA- 700 069 2 DCIT, CIRCLE-4, KOLKATA 3. THE CIT(A), 4. CIT, 5. DR, TRUE COPY, BY ORDER, ASSTT. REGISTRAR , ITAT, KOLKATA TALUKDAR(SR.P.S.)