ASHOK SSK LTD, Ahmednagar V. CIT(A) -1, Pune

ITA 886/PUN/2006

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49839 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 10 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 27-04-2011
• Assessment Year: 1998-1999
• Appeal Filed On: 18-08-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARESHWAR SHARMA
• Assessee Lawyers: S N DOSHI
• Keywords: Opportunity of being heard; Principle of natural justice; Additional evidence; Reasonable cause; Wrong claim; Revised return
• Section: 139(5); 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE BEFORE SHRI I.C. SUDHIR JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO ACCOUNTANT MEMBER ITA NO.886/PN/2006 (ASSTT. YEAR : 1998-99) ASHOK S.S.K LTD., APPELLANT ASHOKNAGAR TAL. SHRIRAMPUR AHMEDNAGAR PAN : AACCA3452B VS. ACIT, AHMEDNAGAR CIRCLE RESPONDENT AHMEDNAGAR APPELLANT BY : SHRI S.N. DOSHI RESPONDENT BY : SHRI HARESHWAR SHARMA ORDER PER D. KARUNAKARA RAO AM THIS IS THE APPEAL BY THE ASSESSEE AGAINST THE ORD ER OF THE CIT(A) DATED 26.7.2006. THE GROUND IN THE APPEAL READS AS UNDE R : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT(A) HAS ERRED IN SUSTAINING THE PENALTY OF RS. 14000000 /- DESREGARDING THE FACT THAT BOTH THE RETURN INCOME AND FINALY ASSESSED INCOME IS NEGATIVE THAT IS LOSS. 2. THE RELATED FACTS OF THE CASE ARE THAT ASSESSEE FILED RETURN OF LOSS ON 31.10.1998 CONFIRMING THE LOSS OF RS.5,86,83,000/-. THE SAID RETURN WAS REVISED ON 27.12.2000 ON THE REVISED LOSS AT RS.1,56,65,100/-. ON FINDING CERTAIN OTHER PROBLEMS IN MAKING THE CLAIMS, YET ANOTHER REVISED RETURN OF INCOME WAS FILED ON 29.12.2000 AND THE REVISED LOSS IS RS. 1,46,01,100/ -. ON FINDING THESE REVISED RETURNS WERE FILED BEYOND THE TIME LIMITS SPECIFIED UNDER THE PROVISIONS OF SECTION 139(5), A.O TREATED THEM AS NON-EST AND PROCEEDED TO ACT ON THE ORIGINAL RETURN FILED ON 31.10.98. IN THE REVISED RETURN, ASSESSEE WITHDREW THE EXCESS AMOUNT OF EXPENDITURE DEBITED TO THE PROFIT & LOSS ACCOUNT AM OUNTING TO RS. 3,90,52,618 /-. IN THE ASSESSMENT PROCEEDINGS, ASSESSEE SUBMITTED T HE SAID EXCESS CLAIMS OF EXPENDITURE WERE MADE IN THE PROFIT & LOSS ACCOUNT BASED ON SOME RANDOM DATA WITH REGARD TO A COUPLE OF HEAD OF EXPENDITURE I.E . (I) SUGAR CANE PRICE AND (II) H & T CONTRACTORS COMPRISING OF 12 ITEMS. A.O. COMPA RED THE SAID CLAIMS WITH THE PRINTED ANNUAL REPORTS AND FOUND THE CLAIMS MADE I N P& L ACCOUNT FILED IN THE RETURN OF INCOME DID NOT TALLY WITH THE PRINTED ACC OUNT REPORT FIGURES. RELEVANT DETAILS AS PER THE SAID DOCUMENTS ARE AS UNDER : ITA NO. 886/PN/2006 AS HOK S.S.K. LTD. A.Y. 19 98-99 2 SN HEAD OF EXPENDITURE AM T SHOWN IN ORIGINAL RETURN AM T AS PER ANNUAL REPORT DIFFERENCE 1. CANE PRICE RS.14,04,82,080/ - RS.12,51,26,531/ - RS.1,53,55,549/ - 2. H & T CONTRACTORS RS. 5,39,73,298/ - RS.3,02,77,229/ - RS.2,36,96,069/ - R S.3,90,51,618/ - 3. ASSESSEES SUBMISSION IN THIS REGARD IS AS UNDER : IN RESPONSE TO THE OPPORTUNITY GIVEN, IT IS EXPLA INED BY THE COUNSEL OF THE ASSESSEE THAT THE DIFFERENCE IN DEBITING EXCES S AMOUNT OF CANE PRICE IN THE ORIGINAL RETURN IS DUE TO ADOPTING CANE PRICE A T RANDOM AT RS.700/-PMT. AFTER RECEIPT OF CANE PRICE APPROVED BY THE GOVERN MENT THESE ACCOUNTS ARE REVISED BY TAKING THE CORRECT AMOUNT OF CANE PRICE. ON ASKING ABOUT THE DISCREPANCY IN H & T EXPENSES A T RS.2,36,96,069/-, IT IS EXPLAINED THAT THE DIFFEREN CE IN H & T EXPENSES IS ONLY DUE TO KHODKI CHARGES AND CANE DEVELOPMENT EXPEN SES. REGARDING KHODKI CHARGES, IT IS EXPLAINED THAT PROV ISION IN THE BOOKS OF ACCOUNT HAS BEEN MADE FOR PAYMENT OF KHODKI CHARGE S FOR MEMBERS AND NON-MEMBERS AT RS. 50/- PMT. BUT AFTER RECEIPT OF GOVT. ORDERS THE KHODKI CHARGES HAVE BEEN DETERMINED BY THE GOVT. AT RS. 35 /- PMT AND FOR THE MEMBERS ONLY. HENCE, THIS DIFFERENCE ARISES. IN T HE ORIGINAL RETURN, KHODKI CHARGES HAS BEEN DEBITED AT RS. 97.76 LAKHS BY ADOP TING THE RATE OF KHODKI CHARGES AT RS. 50/- PMT. RATE OF KHODKI CHARGES DE TERMINED BY THE GOVT. AT RS. 35/- PMT IS ONLY FOR MEMBERS AND SUCH KHODKI CH ARGES HAS BEEN REVISED AT RS. 47.12 PMT. REGARDING DIFFERENCE IN CANE DEVELOPMENT EXPENSES I NCLUDED IN H & T EXPENSES IT IS EXPLAINED THAT SOCIETY WAS EXPECTING EXPENDITURE ON CANE DEVELOPMENT EXPENSES AT RS. 252.04 LAKHS. SUCH EST IMATION OF EXPENDITURE IS NOT PERMITTED BY THE GOVT. WHILE FIXING THE CANE PRICE. THEREFORE, ACTUAL EXPENDITURE OF RS. 65.70 LAKHS HAS BEEN DEBITED IN THE PRINTED ANNUAL REPORT . ON ASKING FOR DOCUMENTARY EVIDENCE TO SUPPORT THE E XPENDITURE CLAIMED ASSESSEE IS NOT ABLE TO FURNISH ANY EVIDENC E. IT IS ONLY STATED BY THE COUNSEL OF THE ASSESSEE SOCIETY THAT IN THE AUDIT R EPORT IN FORM-3CA & 3CB THAT AS CANE PRICE HAS BEEN FIXED BY THE STATE GOVT . IN TERMS OF BYE-LAWS 64 KARKHANA HAS NOT YET RECEIVED THE CANE PRICE BY THE GOVT. THESE ACCOUNTS ARE PREPARED BY ADOPTING THE CANE PRICE FIXED BY THE BO ARD OF DIRECTORS WHICH IS SUBJECT TO GOVT. APPROVAL. ON RECEIPT OF CANE PRICE ORDER THE ACCOUNT SHOULD BE REVISED IF NECESSARY. IT IS FURTHER SUBMITTED THAT ASSESSEE FILED REVISED RETURN ON 27/12/2000 AND 29/12/2000 TO ELIMINATE THESE DISCREPANCIES. THE ADDITION TRAVELLED TO THE CIT(A) WHEREIN CIT(A) DISMISSED THE RELAVANT GROUNDS AS INFRUCTUOUS IN VIEW OF THE ASSESSEES REVISION O F THE CLAIMS BY WAY OF THE INVALIDLY REVISED RETURNS. SAID ISSUES WER NOT SUBJECT MATTER IN THE APPEAL BEFORE THE TRIBUNAL VIDE IT NO. 708/PN/2005 DT. 16.12.2005. THUS, THE QUANTUM APPEAL ATTAINED FINALITY. HOWEVER, THE AO INITIATED THE PENALTY PR OCEEDINGS U/S 171(1)(C) OF THE ACT ON THIS ADDITION OF RS. 3,90,51,618/- AS PER THE P ROCEDURES RELEVANT FOR THE PENALTY ITA NO. 886/PN/2006 AS HOK S.S.K. LTD. A.Y. 19 98-99 3 PROCEEDINGS. DURING THE PROCEEDINGS, IT IS SUBMITTE D THAT THE SAID DISCREPANCY HAS TWO SEGMENTS, (I) ON ACCOUNT OF SUGAR CANE PRICE AND (II) ON ACCOUNT OF H & T CONTRACTORS. THE LATER ONE HAS NUMBER OF SUB ITEMS RUNNING IN TO NEARLY 12 ITEMS AND THESE ARE LISTED IN PAGE 1 OF THE PAPER BOOK. 4. AS FAR AS EXCESS CLAIM RELATING TO THE SUGAR CAN E PRICE IS CONCERNED, THE ASSESSEE HAS ADOPTED CANE PRICE AT RANDOM AT THE RA TE OF RS. 700/- PER M.T. AND THE SAME WAS CLAIMED IN THE RETURN OF INCOME AMOUNTING TO RS. 14,04,82,080/-. THIS FIGURE WAS BELATEDLY AND INVALIDLY REVISED AND KEPT AT RS. 12,51,26,531/- AND THE SAME WAS DONE MUCH AFTER LAPSE OF 22 MONTHS AFTER RECEIPT OF THE CANE PRICE APPROVAL OF THE GOVERNMENT. THE CANE PRICE ORDER O F THE COMMISSIONER OF SUGARCANE WAS DATED 3 RD MARCH 1999. THE RETURNS WERE REVISED ON 27.12.200 0 AND 29.12.2000 IN SUCCESSION MUCH AFTER THE RETURN OF I NCOME/LOSS WAS TAKEN UP FOR SCRUTINY AND ALSO AFTER ISSUE OF NUMBER OF STATUTOR Y NOTICES AND RELATED QUESTIONNAIRES. 5. REGARDING THE DISCREPANCY IN H&T EXPENSES (12 ITEMS OF ACCOUNTS), ASSESSEE EXPLAINED THAT THE SAID DISCREPANCY IS DUE TO KHODKI CHARGES, CANE DEVELOPMENT EXPENSES ETC. ASSESSEE ADOPTED KHODKI CHARGES AT RS PER M.T. AS AGAINST THE GOVERNMENTS RATE FIXED AT RS. 35/- PER M.T. REGARDING THE CANE DEVELOPMENT EXPENSES, THE ASSESSEE CLAIMED EXPENDIT URE OF RS. 252.04 LAKHS AS AGAINST THE PERMITTED SUM OF RS. 65.7 LAKHS AS MENT IONED IN THE PRINTED ANNUAL REPORT. DURING THE PENALTY PROCEEDINGS, IN CONNECT ION WITH THE EXCESS CLAIM OF EXPENDITURE ON ACCOUNT OF THE SUGAR CANE PRICE, T HE ASSESSEE MENTIONED THAT THE ORIGINAL RETURN OF INCOME WAS FILED WITH A NOTE IN THE NOTE TO THE ACCOUNTS THAT THE SAID CLAIMS ARE SUBJECTED TO THE GOVERNMENT APPROVA LS, THEREFORE, THE CLAIMS MADE IN THE RETURN ARE SUBJECTED TO REVISION AND THE ASS ESSEE IS NOT DEFAULTER OF DISCLOSURE OF RELEVANT INFORMATION TO THE DEPARTMENT. HOWEVER, THE A.O DID NOT ACCEPT THE ASSESSEES VERSION STATING THAT WITH REGARD TO THE CANE PRICE, THE ORDER OF THE COMMISSIONER OF SUGAR IS DATED 3 RD MARCH 1999 AND ASSESSEE DID NOT REVISE THE RETURN IMMEDIATELY AND THE REVISION WAS MADE ONLY ON 27.12.2000 AND 29/12/2000 IE 22 MONTHS DELAY. DUE DATE FOR FILING REVISED RETURN OF INCO ME/LOSS IS OCTOBER 1999. THE ASSESSEE DID NOT CHOOSE TO REVIS E THE SAME WHEN THERE WAS SUFFICIENT TIME FOR SUCH EXPECTED REVISION. A.O CA ME TO THE CONCLUSION THAT THE ASSESSEES FAILURE TO FILE REVISED RETURN FROM MARC H 99 TO DECEMBER 99 IS INTENTIONAL TO MAKE AN INACCURATE CLAIM OF EXPENDITURE, THEREFO RE, IT IS A DEEMED CONCEALMENT OF INCOME ATTRACTING THE PROVISIONS OF SECTION 271( 1)(C ) OF THE ACT. FINALLY, THE A.O GAVE THE REASONABLE OPPORTUNITY TO THE ASSESSEE AT VARIOUS TIMES AND FINALLY HELD ITA NO. 886/PN/2006 AS HOK S.S.K. LTD. A.Y. 19 98-99 4 THAT ASSESSEE CONCEALED THE PARTICULARS OF INCOME A ND FURNISHED INACCURATE PARTICULARS OF INCOME TO THE EXTENT OF RS.3,90,51,6 18/- AND LEVIED PENALTY OF RS. 1.4 CRORES WHICH IS SLIGHTLY MORE THAN 100% OF THE TAX SOUGHT TO BE EVADED (RS.1,36,64,066/-). 5. AGGRIEVED WITH THE ABOVE LEVY OF PENALTY, ASSESS EE FILED THE APPEAL BEFORE THE CIT(A). ASSESSEE SUBMITTED BEFORE HIM THAT THE CAN E PURCHASE PRICE PAYABLE TO MEMBERS AND NON-MEMBERS WAS PROVIDED AT RS. 745/- PER M.T. AND OTHER PAYMENTS WAS PROVIDED AT RS. 755/- PER M.T. AGAINST THE PRICE ORDER OF THE DIRECTORATE OF SUGAR FEDERATION AT RS. 648/- PER M .T. AND RS. 850/- PER M.T. RESPECTIVELY. ASSESSEE RELIED ON THE VOLUNTARY NAT URE OF THE REVISED RETURNS FILED BEFORE THE A.O. HE ARGUED THAT ASSESSEE IS FREE F ROM ANY GUILT AS HE HAS ALREADY INTIMATED THE ACTUAL PRICE BEFORE THE REVENUE BOTH BY WAY OF PRINTED ANNUAL ACCOUNTS AS WELL AS THE REVISED RETURNS. CIT(A) CO NSIDERED THE ABOVE SUBMISSIONS AND CONCURRED WITH THE A.O ON THE ISSUE THAT THE R ETURNS WHICH ARE FILED BEYOND TIME HAVE TO BE TREATED AS NON-EST, THEREFORE, THE Y ARE NEVER FILED IN THE EYE OF LAW. FURTHER, CIT(A) DISCUSSED THE PROVISIONS OF SEC. 13 9(5) AND MENTIONED THAT THE REVISION MADE IN THE REVISED RETURNS ARE OUTSIDE TH E SCOPE OF OMISSION OR WRONG STATEMENTS. HE ALSO REASONED THE FAILURE TO REVI SE THE RETURN VALIDLY UNDER THE PROVISIONS OF SECTION 139(5) OF THE ACT IMMEDIATELY ON RECEIPT OF THE ORDER OF THE SUGAR COMMISSIONER TILL DECEMBER 2000 CONSTITUTE CO NCEALMENT. FACTUALLY, THE A.O ISSUED QUESTIONNAIRE ON 5.7.2000 AND FOLLOWED BY OT HER NOTICES WERE ALSO ISSUED ON 29.8.2000 AND 23.11.2000. THEREFORE, TILL THE A.O ISSUED NOTICES ON QUESTIONNAIRES, THE ASSESSEE FAILED TO FILE THE REVISED RETURNS TIL L DECEMBER 2000. 6. PARA 5.2 TO 5.5 OF CIT(A)S ORDER ARE RELEVANT AND THE SAME ARE REPRODUCED BELOW : 5.2 ON GIVEN FACTS, IT IS HELD THAT IT IS A CASE W HERE PRESUMPTION OF CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME AS CONTAINED IN EXPLANATION 1 WAS CLEARLY ATTRACTED. ON FACTS OF THE CASE, IT IS HELD THAT THE APPELLANT HAS OFFERED AN EXPLANATION WHICH IT HAS NOT BEEN ABLE TO SUBSTANTIATE AND HAS FAILED TO PROVE THAT SUCH E XPLANATION IS BONAFIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIA L TO THE COMPUTATION OF ITS TOTAL INCOME HAVE BEEN DISCLOSED BY THE APPELLANT. THE DISCLOSURE BY THE APPELLANT IN THE AUDIT REPORT WHICH HAS BEEN REFERRED TO IN THE APPELLANTS REPLY, IS REPRODUCED AS UNDER : THE CANE PRICE HAS TO BE FIXED BY THE STATE GOVT. IN TERMS OF BYE- LAWS 64. KARKHANA HAS NOT YET RECEIVED THE CANE PR ICE FROM THE GOVT. THESE ACCOUNTS HAVE BEEN PREPARED BY TAKING CANE PR ICE AS PREPARED BY THE BOARD OF DIRECTORS WHICH IS SUBJECT TO GOVT. APPROVAL ON RECEIPT OF CANE PRICE ORDER THESE ACCOUNTS WILL BE REVISED, IF NECESSARY. ITA NO. 886/PN/2006 AS HOK S.S.K. LTD. A.Y. 19 98-99 5 ON THE FACTS OF THE CASE, IT CANNOT BE SAID THAT TH IS DISCLOSURE, WHICH IS A PARTIAL DISCLOSURE, DISCLOSES ALL THE FACTS MATERIA L TO COMPUTATION OF TOTAL INCOME. THIS DISCLOSURE IS NOT GENERAL NATURE. IF THE APPELLANT WOULD HAVE MENTIONED IN THE AUDIT REPORT THAT BECAUSE OF METHO D ADOPTED BY THE APPELLANT, THE INCOME OF THE APPELLANT HAS GONE DOW N BY SPECIFIED AMOUNT BECAUSE OF MAKING EXCESSIVE CLAIM, ONLY THEN THERE WOULD BE FULL DISCLOSURE WHITHIN THE MEANING OF SUB CLAUSE B TO EXPLANATION 1 OF SECTION 271(1)(C ) OF THE INCOME TAX ACT, 1961. IT IS FURTHER NOTABLE TH AT THE NOTE IN THE AUDIT REPORT IS ONLY IN RESPECT OF CANE PRICE AND NOT IN RESPECT OF H&T CONTRACTOR EXPENSES AT RS.2,36,96,069/- 5.3 IF THE CANE PRICE ORDER WAS NOT RECEIVED BY THE APPELLANT, THEN THE APPELLANT WAS TO CLAIM THE CANE PRICE ON THE BASIS OF THE LAST YEARS ORDER AND ANY AMOUNT IN EXCESS OF LAST YEARS ORDER WAS TO BE CLAIMED AS CONTINGENT LIABILITY. ON FACTS OF THE CASE, IT IS HELD THAT TH E EXCESS AMOUNT CLAIMED BY THE APPELLANT ON ACCOUNT CANE PRICE AND HARVESTING & TR ANSPORT CONTRACTORS AMOUNTING TO RS. 1,53,55,549/- AND RS.2,36,96,069/- WAS AT BEST IN NATURE OF CONTINGENT LIABILITY. BY CLAIMING THIS LIABILITY T O THE EXTENT OF RS.3,90,51,618/- IN THE RETURN OF INCOME FILED U/S. 139 WHICH IS AT BEST IN THE NATURE OF CONTINGENT LIABILITY AS ACCRUED LIABILITY, THE APPE LLANT HAS FURNISHED INACCURATE PARTICULARS OF INCOME IN THE RETURN FILED U/S. 139( 1) OF THE INCOME TAX ACT, 1961 AND, THEREFORE, ACTION U/S. 271(1)(C ) WAS CLE ARLY ATTRACTED. 5.4 THE APPELLANT HAS PLACED RELIANCE ON THE CASE O F K.C. BUILDERS DECIDED BY HON. SUPREME COURT AND REPORTED IN 265 ITR 562 I N SUPPORT OF ITS CONTENTION THAT MENSREA OF DELIBERATENESS IS REQUIR ED FOR THE ACT OF CONCEALMENT OF INCOME. IN THIS REGARD, IT MAY BE MENTIONED THAT THE CASE OF THE APPELLANT IS CLEARLY DISTINGUISHABLE ON FACTS F ROM THOSE IN THE CASE OF K.C. BUILDERS IN AS MUCH AS IT IS HELD THAT IN CASE OF T HE APPELLANT EXPLANATION 1 TO SECTION 271(1)(C ) OF THE INCOME TAX ACT, 1961 WAS CLEARLY ATTRACTED BECAUSE THE APPELLANT HAS FAILED TO REBUT THE PRESUMPTION O F CONCEALMENT AS CONTAINED IN EXPLANATION 1 TO SECTION 271(1)(C ) OF THE INCOME TAX ACT, 1961. 5.5 IN VIEW OF THE FOREGOING DISCUSSION, IT IS HELD THAT THE APPELLANT HAS FURNISHED INACCURATE PARTICULARS OF INCOME BY CLAIM ING EXCESSIVE DEDUCTION OF RS.1,53,55,549/- ON ACCOUNT OF CANE PRICE AND RS.2, 36,96,069/- ON ACCOUNT OF H&T CONTRACTOR CHARGES IN THE RETURN OF INCOME FIL ED U/S. 139(1) OF THE INCOME TAX ACT, 1961. THE SUBMISSION OF THE APPELL ANT THAT THERE IS NO TAX PAYABLE BECAUSE DESPITE THIS ADDITION, THE LOSS IS ASSESSED AT RS.1,59,00,642/- IS HELD TO BE DEVOID OF MERIT IN V IEW OF DECISION OF HON. MUMBAI HIGH COURT IN THE CASE OF CIT VS. CHEMIEQUIP LTD. AS REPORTED IN 265 ITR 265(BOM) WHEREIN THE RELEVANT ASSESSMENT YEAR W AS A.Y. 1988-89. IT WAS HELD IN THIS CASE THAT EVEN IN CASES OF REDUCED LOSS, LEVY OF PENALTY U/S. 271(1)(C ) OF THE INCOME TAX ACT, 1961 IS JUSTIFIED . SUCH IS ALSO THE RATIO DECIDENDI OF DECISION OF DELHI HIGH COURT IN THE CA SE OF CIT VS. USHABH METALS LTD. (DEL) AS REPORTED IN 201 CTR PART II VOL. 10 P AGE 85. FINALLY, THE CIT(A) CONFIRMED THE LEVY OF PENALTY OF RS.1.4 CRORES ON ACCOUNT OF FURNISHING OF INACCURATE PARTICULARS BY CLAIMING DE DUCTION ON ACCOUNT OF EXCESS DEDUCTION OF RS. 1,53,55,549/- ON ACCOUNT OF SUGAR CANE PRICE AND RS.2,36,96,069/- ON ACCOUNT OF H&T CONTRACT CHARGE S CLAIMED IN THE RETURN OF INCOME. ITA NO. 886/PN/2006 AS HOK S.S.K. LTD. A.Y. 19 98-99 6 6. AGGRIEVED WITH THE ABOVE, ASSESSEE FILED THE PRE SENT APPEAL BEFORE US. AT THE VERY OUTSET, LD COUNSEL FOR THE ASSESSEE BROUGHT TO OUR NOTICE A PAPER BOOK CONTAING 56 PAGES AND MENTIONED THAT IT CONTAINS FR ESH EVIDENCES WHICH ARE REQUIRED TO BE ADMITTED AS THEY GO INTO THE ROOT OF THE MATTER AND SUBSTANTIATE THE REASONS FOR THE IMPUGNED EXCESS CLAIMS. INITIATING THE ARGUMENTS, LD. COUNSEL FOR THE ASSESSEE REFERRED TO A LEGAL ARGUMENT STATING T HAT THIS IS A CASE OF REDUCTION OF LOSS TO LOSS, THEREFORE, THE PENALTY IS NOT LEVIABL E IN VIEW OF THE AMENDED EXPLANATION. LD COUNSEL ALSO REFERRED TO AN EXPRESS ION ANY VIS A VIS IF USED IN THE SAID EXPLANATION AND MENTIONED THAT THE SAID EXPLAN ATION IS NOT CLARIFICATION IN OPERATION. FURTHER, THE LD. COUNSEL ATTEMPTED TO DI STINGUISH THE JUDGMENT OF THE APEX COURT IN THE CASE OF GOLD COIN HEALTH PVT. LTD ., 304 ITR 308. ON CONSIDERING THE ARGUMENTS OF THE COUNSEL, WE PROCEED TO DISMISS THE ARGUMENT OF THE COUNCIL IN VIEW OF THE BINDING NATURE OF THE SAID JUDGMENT. FU RTHER, EMPHASIZING ON THE VOLUNTARY ACT OF REVISING THE RETURN BY THE ASSESSE E FOR WITHDRAWING THE EXCESS EXPENDITURE CLAIMS, LD. COUNSEL ARGUED THAT THE SAI D ACT INDICATES THE INTENTION OF THE ASSESSEE IN DISCLOSURE OF THE FACTS TO THE DEPA RTMENT. THE DISCLOSURE OF INFORMATION IN THE PRINTED ANNUAL ACCOUNT ALSO SUBS TANTIATES THE VOLUNTARY DISCLOSURE OF INFORMATION. REFERRING TO THE AUDIT REPORTS, THE COUNSEL READ OUT THE NOTES IN CONVEYING THE ASSESSEES INTENTION TO REVISE THE CL AIMS OF SUGAR CANE PRICE IN THE RETURNS ON RECEIPT OF THE ORDERS OF THE GOVERNMENT IN THIS REGARD. FURTHER, THE LD. COUNSEL RELIED ON VARIOUS DECISIONS TO MENTION THAT THIS IS NOT A FIT CASE FOR LEVY OF PENALTY. 7. ON THE OTHER HAND, LD. D.R. FOR THE REVENUE MENT IONED THAT THE RETURN OF INCOME IS THE STARTING POINT FOR DETERMINING THE CO NCEALMENT. IN THIS CASE, ASSESSEE MADE A WRONG CLAIM IN THE RETURN BY MAKING AN EXCES SIVE DEDUCTION OF EXPENDITURE ON ACCOUNT OF CANE PRICE, KHODKI CHARGES AND CANE D EVELOPMENT EXPENSES. SO FAR AS THE CANE PURCHASE PRICE IS CONCERNED, THE SUGAR COMMISSIONERS ORDER DATED 3 RD MARCH 1999 IS AVAILABLE, BUT THE ASSESSEE CHOSE NOT TO REVISE RETURN TILL DECEMBER 2000 I.E. THE PERIOD OF 22 MONTHS. THE ASSESSEE DID NOT REVISE THE RETURN SUE MOTTO PRIOR TO THE TAKING UP THE RETURN FOR SCRUTINY OR P RIOR TO THE ISSUE OF QUESTIONNAIRE BY THE AO ON 5.7.2000 OR WITHIN THE REASONABLE PERIOD. FURTHER, LD DR MADE OUT THAT THE ASSESSEE HAS NO REASONABLE CAUSE FOR THE SAID D ELAY OF 22 MONTHS. THE PERIOD OF ELECTION, THE REASONS FOR THE DELAY AS PER THE ASSE SSEE, DOES NOT LAST FOR 22 MONTHS AND THIS REASONA DOES NOT EXPLAIN THE INORDINATE DE LAY IN REVISING THE CLAIMS OF EXCESS EXPENDITURE. FURTHER, LD DR MENTIONED THAT T HE ORDER OF THE COMMISSIONER OF SUGAR EXPLAINS THE DELAY UPTO 3.3.1999 AND IT D OES NOT EXPLAINS THE POST MARCH 99 DELAY. REGARDING THE OTHER EXCESS CLAIMS, LD DR MENTIONED THAT THE THERE IS NO ITA NO. 886/PN/2006 AS HOK S.S.K. LTD. A.Y. 19 98-99 7 REASON WHAT SO EVER BEFORE THE AO AND CIT(A) TO EXP LAIN THE REQUIREMENT OF THE REVISIONS. REFERRING TO THE ADDITIONAL EVIDENCES FILED BEFORE THE TRIBUNAL, LD DR IS CRITICAL OF SUCH A MOVE AT THIS POINT OF TIME AND O PPOSED THE ADMITTANCE OF THE SAME. AS PER THE DR IF ADMITTED, THE WHOLE PROCEEDI NGS HAS TO BE SET ASIDE TO THE FILES OF THE AO IN VIEW OF THE PRINCIPLES OF NATURA L JUSTICE. AT THE END, LD DR SUMMED STATING THAT ALL THESE FACTS DISCUSSED ABOVE SUGGES T THAT FILING OF INVALID REVISED RETURNS CANNOT CONSTITUTE A VOLUNTARY ACT. REGAR DING THE OTHER EXCESS CLAIMS IE OTHER THAN THE SUGAR CANE PRICE, THE DR MENTIONED THERE IS NOTHING IN THE ORIGINAL RETURN TO INDICATE THE REQUIREMENT OF REVISION OF T HE RETURNS WITHDRAWING THE EXCESS CLAIMS. REGARDING THE LEGAL ARGUMENTS RAISED BY T HE ASSESSEE ABOUT THE LOSS TO LOSS ASSESSMENT, THE SAME SHOULD BE DISMISSED IN VIEW OF THE SETTLED NATURE OF THE ISSUE AT THE LEVEL OF THE LARGER BENCH OF THE HONBLE SUP REME COURT. 8. WE HAVE HEARD THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AND PAPER BOOK FILED BY ASSESSEE IN THIS REGARD. WE HAVE ALSO GONE THROUGH THE ADDITIONAL/ SUPORTIVE EVIDENCES FILED FOR THE FIRST TIME BEFORE US. THE CASE OF THE ASSESSEE IS THAT ASSESSEE INFORMED TO THE DEPARTMENT VIDE THE A UDIT REPORT INDICATING THE REQUIREMENT OF THE REVISION RELATING TO THE CLAIMS OF EXPENDITURE RELATING TO THE SUGAR CANE PRICE; ASSESSEE HAS VOLUNTARILY REVISE D RETURN OF INCOME WITHDRAWING THE EXCESS CLAIMS; THE ADDITIONAL EVIDENCES IF ADMITTED WILL DEMONSTRATE THE GENUINENESS OF THE CLAIMS UNDER THE HEAD H&T EXPENSES -12 SUB ACCOUNTS ETC. IN SUCH CIRCUMSTANCES, PENALTY CANNOT BE LEVIED U/S. 271(1) (C ) OF THE ACT. ON THE OTHER HAND, THE CASE OF THE REVENUE IS THAT THE NOTE IN T HE AUDIT REPORT APPENDED TO THE ORIGINAL RETURN OF INCOME/LOSS COVERS ONLY THE CLA IMS RELATING TO SUGAR CANE PRICE AND NOT H&T EXPENSES -12 OTHER ITEMS; THE THER IS N O REASONABLE CAUSE FOR THE DELAY IN REVISING THE RETURN RELATING TO SUGAR CANE PRICE FOR THE PERIOD LATER TO MARCH 1999 ETC. REVENUE IS OF THE OPINION THAT THE ASSESSEE H AS NO REASON TO FILE THE REVISED RETURN AFTER LAPSE OF 22 MONTHS COMMENCING FROM 3 RD MARCH 1999, THE DATE OF THE LETTER OF THE SUGAR COMMISSIONER. FURTHER, . THERE IS NO INFORMATION AS TO WHAT MADE THE ASSESSEE TO REVISE THE CLAIM ON ACCOUNT OF KHODKI DEVELOPMENT EXPENSES AND CANE DEVELOPMENT EXPENSES. THE EXPLANATION OF T HE ASSESSEE DOES NOT MEET THE REQUIREMENTS, THEREFORE, THE LEVY OF PENALTY U/ S. 271(1)(C ) IS JUSTIFIED IN THIS CASE. 9. WE HAVE CONSIDERED THE ABOVE DIVERGENCE OF VIEWS OF THE PARTIES ON THE ISSUE. REGARDING THE ADMITTANCE OF THE ADDITIONAL E VIDENCES TO SUPPORT THE REASONS FOR CLAIM OF EXCESS EXPENDITURE, WE FIND THAT THE D OCUMENTS RELATES TO THE REASONS ITA NO. 886/PN/2006 AS HOK S.S.K. LTD. A.Y. 19 98-99 8 THAT LED TO THE CLAIM OF EXCESS EXPENDITURE RELATIN G TO H&T EXPENDITURE AND 12 OTHER ITEMS. CONSIDERING THE IMPORTANCE OF THE SAME AND IN VIEW OF THE PRINCIPLES OF NATURAL JUSTICE, WE PROCEED TO ADMIT THE SAME AND R EMAND TO THE FILES OF THE AO FOR FRESH DECISION IN THE MATTER AFTER AO GRANTING THE REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, THE PENALTY RE LATABLE TO THE ADDITION ON ACCOUNT OF H&T EXPENSES AND 12 OTHER ITEMS IS SET ASIDE TO THE FILES OF THE AO. ASSESSEE IS DIRECTED TO THE SAID ADDITIONAL DOCUMENTS AND ANY O THER PAPERS TO SUBSTANTIATE THE EXCESS CLAIMS OF EXPENDITURE ON THESE ACCOUNTS. REGARDING, THE PENALTY RELATABLE TO THE ADDITION ON ACCOUNT OF THE EXCESS CLAIM OF EXPENDITURE RELATING TO SUGAR CANE PRICE , CONSIDERING THE ISSUE OF THE ORDER OF THE COMMISSIONER OF SUGAR DT 3.3.1999 R W THE NO TE OF THE AUDITOR ON THE AUDIT REPORT, WE FIND THAT THE DELAY UPTO 3.3.1999 IS JUS TIFIED AND HOWEVER, WE HAVE SOME RESERVATIONS ABOUT THE REASONABLE CAUSE FOR THE DEL AY OF 22 MONTHS. THERE IS NEED FOR THE AO TO EXAMINE CRITICALLY THE REASONS FOR TH E SAID DELAY OF 22 MONTHS. IN OUR OPINION, THE NOTE ONLY SUGGEST THE LIKELY REVISION OF THE CANE PRICES AND IT IS TOO GENERAL. AO NEEDS TO EXAMINE IF THE SAID NOTE AMOUN TS TO THE DISCLOSURE AND IF IT VINDICATES THE ASSESSEE FROM THE CHARGE OF FAILURE OF DISCLOSURE /FURNISHING OF RELEVANT INFORMATION. ACCORDINGLY, WE SET ASIDE THI S PART OF THE ORDER OF THE CIT(A) AND REMAND THE MATTER TO THE FILES OF THE AO FOR FR ESH ON THE MATTER. AO IS DIRECTED TO EXAMINE THE NOTE OF THE AUDITOR LEFT IN THE AUDI TOR REPORT TO DECIPHER THE TWIN ASPECTS OF THE INTENTION AND THE DISCLOSURE OF THE PARTICULARS, WHICH ARE THE TWO EYES OF THE PENALTY PROCEEDINGS, EXAMINE THE REASONS FOR DELAY UP 3.3.1999 AND ALSO THE DELAY FROM 3.3.1999 UPTO THE DATE OF FILING OF INVA LID REVISED RETURNS, EXAMINE THE SUFFICIENCY OF THE REASONS FOR NOT COMPILING WITH T HE PROVISIONS OF SECTION 139(5) OF THE ACT DESPITE THE AVAILABILITY OF THE ORDER OF THE COMMISSIONER OF SUGAR ON 3.3.1999 ETC AND PASS A SPEAKING ORDER IN THE MATTE R. HE SHALL ALSO ATTEND TO THE SAID LEGAL ARGUMENTS RAISED BY THE COUNSEL BEFORE U S. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR THE STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 22ND JUNE 2011. SD/- SD/- ( I.C. SUDHIR ) JUDICIAL MEMBER ( D. KARUNAKARA RAO) ACCOUNTANT MEMBER PUNE: DATED: 22ND JUNE, 2011 ITA NO. 886/PN/2006 AS HOK S.S.K. LTD. A.Y. 19 98-99 9 US COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT I, PUNE 4. THE CIT(A)- I, PUNE 4. THE D.R. ITAT, A BENCH, PUNE 5. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE