Raasi Refractories Limited , Hyderabad V. Dy. Commissioner of Income Tax , Circle-3(1), Hyderabad

ITA 931/Hyd/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 7057 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 03-08-2021
• Assessment Year: 2015-2016
• Appeal Filed On: 31-05-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N. ESTHER
• Keywords: Reasonable cause; TDS
• Section: 271(1)(c); 43B; 143(3); 274; 13

Judgement Text

ITA NO 931 OF 2019 RAASI REFRACTORIES LTD HYDERAB AD PAGE 1 OF 8 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD (THROUGH VIDEO CONFERENCING) BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER ITA NO.931/HYD/2019 ASSESSMENT YEAR: 2015-16 RAASI REFRACTORIES LTD HYDERABAD PAN:AABCR0333H VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE 3(1) HYDERABAD (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI A.V. RAGHU RAM REVENUE BY : SMT. N. ESTHER, DR DATE OF HEARING: 03/08/2021 DATE OF PRONOUNCEMENT: 30/08/2021 ORDER PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y 2015-16 AGAIN ST THE ORDER OF THE CIT (A)-3, HYDERABAD, DATED 7.2.20 19 CONFIRMING THE PENALTY ORDER PASSED BY THE ASSESSING OFFICER U /S 271(1)(C) OF THE ACT. 2. AT THE OUTSET, IT IS SEEN THAT THERE IS A DELAY OF 16 DAYS IN FILING OF THE APPEAL BEFORE THE TRIBUNAL AND THE ASSESSEE HAS FILED AN APPLICATION EXPLAINING THE REASONS FOR THE DELAY AND SOUGHT CONDONATION OF DELAY. THE CONTENTS OF THE AF FIDAVIT FILED IN SUPPORT OF THE SAID APPLICATION ARE AS UNDER: 1. I, S.SUBRAHMANYA SASTRY, S/O LATE S.A SARMA, AG ED 56 YEARS R/O H.NO.1-6-18/4, ROAD NO.35, CHAITANYAPURI, HYDERABAD, OCCUPATION MANAGER, ACCOUNTS IN M/S. RAA SI REFRACTORIES LTD., HYDERABAD DO SOLEMNLY AFFIRM AND STATE AS FOLLOWS. ITA NO 931 OF 2019 RAASI REFRACTORIES LTD HYDERAB AD PAGE 2 OF 8 2. APPELLATE ORDER DATED 07-02-2019 PASSED BY C.I.T (APPEALS)-3, HYDERABAD U/S.250 OF THE LT ACT, '61, IN ITANO:10131/DCIT,-CIR.3(1)/HYD/CIT(A)-3,HYDERABAD 2018-19 IN THE CASE OF M/S.RAASI REFRACTORIES LTD., WAS RECEIVED ON 16-3-2019. I INFORMED MY EMPLOYER WHO INSTRUCTED ME TO CONTACT THE TAX CONSULTANT AND GET THE APPEAL PAPERS READY FOR FILING APPEAL BEFORE THE HO N'BLE INCOME TAX APPELLATE TRIBUNAL, HYDERABAD. THE ADMINISTRATIVE OFFICE OF M/S.RAASI REFRACTORIES AT HYDERABAD IS BEING MANAGED WITH SKELETON STAFF AND DUE TO RUSH OF WORK I COULD NOT GET THE WORK OF PREPARA TION OF APPEALS PAPERS DOME IMMEDIATELY. DUE TO YEAR END WO RK AND ATTENDANT MATTERS AND FINALISATION OF ACCOUNTS FOR SUBMISSION TO BSE, I HAD TO GO AROUND THE CITY ON M Y MOTORCYCLE IN THE SUMMER MONTHS OF MARCH AND APRIL CONSEQUENT TO WHICH I WAS AFFECTED BY SEVERE SUN ST ROKE AND MALFUNCTIONING OF KIDNEYS DUE TO DEHYDRATION. I WAS UNABLE TO MOVE OR UNDERTAKE WORK DURING THE MONTH O F MAY STARTING FROM 5TH MAY 2019. I COULD ATTEND TO WORK FROM THE 29 TH OF MAY, 2019. IMMEDIATELY THE TAX CONSULTANT WAS CONTACTED AND THE APPEAL PAPERS HAVE BEEN PREPARED. APPEAL BEFORE THE HON'BLE INCOME TAX APPELLATE TRIB UNAL, HYDERABAD IS BEING FILED ON AI' MAY, 2019. 3. WHAT IS STATED ABOVE IS TRUE TO THE BEST MY KNOW LEDGE. SD/- DEPONENT. 3. AFTER HEARING THE LEARNED DR, WE ARE SATISFIED T HAT THE ASSESSEE WAS PREVENTED BY A REASONABLE CAUSE FROM F ILING OF THE APPEAL BEFORE THE TRIBUNAL IN TIME. THE DELAY IS AC CORDINGLY CONDONED. 4. AS REGARDS THE MERITS OF THE CASE, BRIEF FACTS A RE THAT THE ASSESSEE COMPANY, WHICH IS IN THE BUSINESS OF M ANUFACTURE OF REFRACTORY BRICKS AND MORTAR, E-FILED ITS RETURN IF INCOME ON 30.09.2015 DECLARING LOSS OF RS.16,16,39,883/-. THE CASE WAS TAKEN UP FOR SCRUTINY UNDER CASS AND DURING THE ASS ESSMENT PROCEEDINGS U/S 143(3) OF THE ACT, THE ASSESSEE WAS REQUIRED TO FILE CERTAIN DETAILS. THE ASSESSEE FILED SUCH DETAI LS. ITA NO 931 OF 2019 RAASI REFRACTORIES LTD HYDERAB AD PAGE 3 OF 8 5. ON PERUSAL OF THE BALANCE SHEET OF THE ASSESSEE, THE ASSESSING OFFICER NOTICED THAT THERE WERE OUTSTANDI NG STATUTORY LIABILITIES OF RS.4,84,43,411/-. THEREFORE, THE DET AILS OF THE PAYMENTS MADE AGAINST SUCH STATUTORY LIABILITIES WE RE CALLED FOR. AFTER PERUSAL OF THE DETAILS FILED BY THE ASSESSEE, THE ASSESSING OFFICER OBSERVED THAT IN ITS COMPUTATION OF INCOME, THE ASSESSEE HAD ADDED BACK ONLY A SUM OF RS.10,86,618/- U/S 43B OF THE ACT AND FURTHER THAT THE BALANCE STATUTORY LIABILITIES WHICH COMES TO RS.4,73,56,793/- WERE NOT PAID BEFORE THE DUE DATE OF FILING OF THE RETURN OF INCOME. HE ACCORDINGLY BROUGHT IT TO TAX . 6. FURTHER, THE ASSESSING OFFICER ALSO NOTICED THAT THE ASSESSEE HAS RECEIVED INTEREST INCOME OF RS.23,98,3 70/-, WHICH WAS NOT TAKEN INTO A/C WHILE COMPUTING THE INCOME O F THE ASSESSEE. WHEN ASKED TO EXPLAIN, THE ASSESSEE SUBMI TTED THAT THE MANAGEMENT ERRONEOUSLY OMITTED TO CONSIDER THE SAME IN ITS COMPUTATION OF INCOME AND THEREFORE, THE ASSESSEE H AS NO OBJECTION TO THE ADDITION. ACCORDINGLY, THE SUM OF RS.23,98,370/- WAS ALSO BROUGHT TO TAX. 7. THEREAFTER, THE ASSESSING OFFICER INITIATED PENA LTY PROCEEDINGS U/S 271(1)(C) OF THE ACT BY ISSUANCE OF NOTICE U/S 274 R.W.S 271(1)(C) OF THE ACT. THE ASSESSEE SUBMIT TED ITS REPLY. WITH REGARD TO THE ADDITION OF RS.4,73,56,793/-, TH E ASSESSEE SUBMITTED THAT THE ENTIRE AMOUNT DOES NOT PERTAIN T O THE RELEVANT A.Y AND DUE TO THE CHANGE IN THE MANAGEMENT OF THE COMPANY, CERTAIN OMISSIONS HAVE TAKEN PLACE IN THE PREPARATI ON OF THE COMPLIANCES TO THE STATUTORY OBLIGATIONS. THE ASSES SEE ALSO SUBMITTED THAT MERE REVISION OF THE FIGURES DOES NO T AUTOMATICALLY AMOUNT TO FURNISHING OF ANY INACCURATE PARTICULARS OF INCOME. ITA NO 931 OF 2019 RAASI REFRACTORIES LTD HYDERAB AD PAGE 4 OF 8 WITH REGARDS TO THE ADDITION OF RS.23,98,370/-, THE ASSESSEE DID NOT FURNISH ANY EXPLANATION. 8. THE ASSESSING OFFICER, OBSERVING THAT THE ASSESS EE HAD AGREED FOR THE ADDITIONS OF RS.23,98,370/- AND DID NOT COME UP WITH ANY EXPLANATION FOR NOT ADDING THE UNPAID STAT UTORY LIABILITIES TO THE INCOME, WHILE COMPUTING THE TOTA L INCOME, OPINED THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICUL ARS OF INCOME. SIMILARLY, WITH REGARD TO THE ADDITION OF RS.23,98, 370/- THE ASSESSING OFFICER HELD THAT BUT FOR THE SCRUTINY, T HE SAME WOULD NOT HAVE COME OUT AND THE ASSESSEE HAS SOUGHT TO AV OID THE PAYMENT OF TAX. THUS OBSERVING, HE LEVIED THE MINIM UM PENALTY OF RS.1,61,43,100/- BEING 100% OF THE TAX SOUGHT TO BE AVOIDED. 9. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE CIT (A) WHO CONFIRMED THE ORDER OF THE ASSESSING OF FICER AND THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE LEARNED CIT (A) IS AGAINST LAW, WEIGHT OF EVIDENCE AND PROBABILITIES OF THE CASE. 2. THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THE SUBMISSIONS MADE BY THE ASSESSEE AND SOUGHT TO HAVE HELD THAT THE PENALTY PROCEEDINGS U/S 271(1)(C) WER E NOT VALIDLY INITIATED IN THE CASE OF THE ASSESSEE AND CONSEQUENTLY, THE LEARNED CIT (A) OUGHT TO HAVE QUA SHED THE IMPUGNED ORDER PASSED U/S 271(1)(C) OF THE ACT. 3. THE LEARNED CIT (A) ERRED IN NOT ACCEPTING THE SUBMISSION OF THE ASSESSEE THAT MOST OF THE AMOUNTS OF OUTSTANDING STATUTORY LIABILITIES PERTAINED TO EARL IER YEARS AND WERE NOT LIABLE TO BE DISALLOWED EVEN WHILE COMPLETING THE ASSESSMENT AND AS SUCH THE LEVY OF PENALTY BY TAKING INTO A/C SUCH LIABILITIES OF EARL IER YEARS WAS NOT CORRECT BOTH LEGALLY AND ALSO ON THE FACTS OF THE ASSESSEES CASE. 4. THE LEARNED CIT (A) ERRED IN NOT APPRECIATING TH E SUBMISSIONS MADE BY THE ASSESSEE THAT THE OMISSION TO DISALLOW OUTSTANDING LIABILITIES AND TO INCLUDE INT EREST ITA NO 931 OF 2019 RAASI REFRACTORIES LTD HYDERAB AD PAGE 5 OF 8 INCOME WHILE COMPUTING LOSS WERE BONAFIDE OMISSIONS AND CONSEQUENTLY THE LEVY OF PENALTY WAS NOT VALID IN T HE LIGHT OF EXPLANATION 1 TO SECTION 271(1)(C) OF THE ACT. 5. FOR THE ABOVE GROUNDS AND SUCH OTHER GROUNDS THA T MAY BE URGED AT THE TIME OF HEARING, THE APPELLANT PRAYS THAT THE APPEAL BE ALLOWED. THE APPELLANT CRAVES LE AVE TO ADD TO, AMEND OR MODIFY THE ABOVE GROUNDS OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING OF THE APPE AL, IF IT IS CONSIDERED NECESSARY. 10. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND S UBMITTED THAT THE ASSESSEE HAD FILED AN EXPLANATION BEFORE T HE ASSESSING OFFICER WHICH HAS NOT BEEN FOUND TO BE INCORRECT AN D THEREFORE, THE PENALTY SHOULD NOT HAVE BEEN LEVIED BY THE ASSE SSING OFFICER. HE FURTHER SUBMITTED THAT THE NOTICE U/S 274 R.W.R 271(1)(C) IS ALSO NOT VALID BECAUSE THE ASSESSING OFFICER DID NO T STRIKE OFF THE IRRELEVANT PORTION OF THE NOTICE FOR LEVY OF PENALT Y. IN SUPPORT OF HIS CONTENTIONS THAT WHERE THE NOTICE IS NOT VALID, THE CONSEQUENT PENALTY IS NOT SUSTAINABLE, HE PLACED RELIANCE UPON THE DECISION OF THE HON'BLE ANDHRA PRADESH HIGH COURT IN THE CASE O F PR. CIT VS. SMT. BAISETTY REVATHY IN I.T.T.A. NO.684 OF 2016, D ATED 13 TH JULY, 2017. AS REGARDS THE MERITS OF THE ISSUE,, HE SUBMI TTED THAT THE SUM OF RS.4,73,53,793/- WHICH IS SHOWN TO BE OUTSTA NDING IN THE FINANCIAL YEAR 2015-16, CONSISTS THE STATUTORY LIAB ILITIES OF THE EARLIER YEARS AND THEREFORE, THEY OUGHT NOT TO HAVE BEEN DISALLOWED IN THE RELEVANT ASSESSMENT YEAR. IN SUPP ORT OF SUCH CONTENTION, HE DREW OUR ATTENTION TO PAGE 111 OF TH E PAPER BOOK FILED BY THE ASSESSEE TO SHOW THAT THE OUTSTANDING DUES WERE FOR THE PERIODS (I) APRIL, 2004 TO MARCH,2008, (II) JUN E, 2008 TO SEPTEMBER, 2009, (III) JULY 2005 TO SEPTEMBER, 2006 , (IV) MAY 2007 TO SEPTEMBER, 2007 AND (V) 2003 TO DECEMBER, 2 007. SIMILARLY, THE SERVICE TAX WAS ALSO DUE DURING THE FINANCIAL YEARS 2003 TO 2010. THEREFORE, ACCORDING TO HIM, THEY WER E NOT ITA NO 931 OF 2019 RAASI REFRACTORIES LTD HYDERAB AD PAGE 6 OF 8 PERTAINING TO THE RELEVANT A.Y AND HENCE NO DISALLO WANCE U/S 43B OUGHT TO HAVE BEEN MADE DURING THE RELEVANT A.Y. CO NSEQUENTLY, AND THE PENALTY U/S 271(1)(C) IS ALSO NOT LEVIABLE. 11. FURTHER, IN RESPONSE TO THE DIRECTION OF THE TR IBUNAL DURING THE COURSE OF HEARING ON 3.8.2021, TO FURNIS H THE DETAILS OF PAYMENTS OF THESE STATUTORY LIABILITIES, THE ASSESS EE HAS FILED THE FOLLOWING DETAILS: THE HON'BLE TRIBUNAL DURING THE COURSE OF HEARING HAS DIRECTED THE COUNSEL FOR THE APPELLANT TO FURNISH T HE PAYMENTS MADE BY THE APPELLANT IN THE SUBSEQUENT PE RIOD OUT OF THE AMOUNT DISALLOWED OF RS.4,73,56,793/-. T HE APPELLANT IS HEREWITH SUBMITTING THE FOLLOWING INFO RMATION WHICH IS READILY AVAILABLE IN RESPECT OF THE PAYMEN TS MADE DURING FINANCIAL 2015-16 OUT OF THE AMOUNT DISALLOW ED U/S 43B OF THE ACT. DETAILS CLOSING BALANCE AS ON 31.3.2015 (RS.) PAYMENTS MADE DURING FINANCIAL YEAR 2015-16 (RS.) MODE OF PAYMENT CST PAYABLE 2014 - 15 2,55,162 2,38,087 INDIAN OVERSEAS B ANK (IOB) ESI COS CONTRIBUTION 20,35,363 27,04,920 ISSUED POSTED DATED CHEQUES EXCISE PROVISION ON CLOSING STOCKS 40,09,107 40,09,107 REVERSED PROFESSIONAL TAX 42,345 1 6,350 CASH TDS EMPLOYEES 32,760 36,000 IOB TDS CONTRACTORS 53,036 57,401 IOB TDS ON PROFESSIONAL 52,609 55,805 IOB TDS ON RENT 80,677 90,1 62 IOB TOTAL 65,61,059 72,07,832 IT IS RESPECTFULLY SUBMITTED THAT EXCISE PROVISION ON CLOSING STOCK AS ON 31.03.2015 WAS A PROVISION AND HENCE TH E SAME IS REVERSED AS ON 1.4.2015. EXCEPT THAT , THES E ARE THE ONLY PAYMENTS MADE BY THE APPELLANT DURING FINANCIA L YEAR 2015-16, FROM OUT OF THE AMOUNT OUTSTANDING OF RS.4,73,56,793/-. IT IS PRAYED THAT THE APPEAL MAY BE ALLOWED BY DELE TING THE PENALTY OF RS.1,61,43,100/-. 12. THUS, THE ASSESSEE PRAYED FOR DELETING THE PENA LTY LEVIED U/S 274 R.W.S 271(1)(C). ITA NO 931 OF 2019 RAASI REFRACTORIES LTD HYDERAB AD PAGE 7 OF 8 13. THE LEARNED DR, ON THE OTHER HAND, RELIED UPON THE ORDERS OF THE ASSESSING OFFICER AND SUBMITTED THAT THE ASSESSEE HAD NOT FILED ITS RETURN OF INCOME FOR THE RELEVANT A.Y DISCLOSING ITS INCOME AND BUT FOR THE SCRUTINY, THE ABOVE ISSUES W OULD NOT HAVE COME TO THE NOTICE OF THE DEPARTMENT AND THEREFORE, IT IS A CLEAR CASE OF CONCEALMENT OF INCOME AS WELL AS FURNISHING OF INACCURATE PARTICULARS. THEREFORE, HE JUSTIFIED THE NON-STRIKI NG OFF OF IRRELEVANT PORTION IN THE NOTICE U/S 274 R.W.S. 271 (1)(C) OF THE ACT. FURTHER, HE ALSO SUBMITTED THAT THE ASSESSEE HAS NO T DISCLOSED THE INTEREST INCOME OF RS.23,98,370/- AND NO EXPLAN ATION WAS OFFERED BY THE ASSESSEE FOR NON SUCH DISCLOSURE AND HENCE, ACCORDING TO HIM PENALTY ON THIS A/C IS ALSO JUSTIF IED. 14. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT AS FAR AS THE FIRST ISSUE O F VALIDITY OF NOTICE U/S 274 R.W.S 271 (1)(C) FOR NON-STRIKING OFF OF TH E IRRELEVANT PORTION OF THE NOTICE IS CONCERNED, THE ASSESSING O FFICER HAS STRUCK OF PARAS 2 & 3 OF THE NOTICE WHICH ARE IRREL EVANT TO THE ISSUE AND SINCE ACCORDING TO THE ASSESSING OFFICER, THE ASSESSEE CONCEALED THE INCOME AND ALSO FURNISHED INACCURATE PARTICULARS OF INCOME, HE DID NOT STRIKE OFF ANY PORTION OF SUCH P ARA. THEREFORE, THE SAID GROUND OF APPEAL NO.2 OF THE ASSESSEE IS N OT SUSTAINABLE. IT IS ACCORDINGLY DISMISSED. 15. AS REGARDS THE MERITS OF THE ISSUE, WE FIND THA T THE ASSESSEE HAS NOT OFFERED THE INTEREST INCOME TO TAX AND THEREFORE, THE PENALTY ON SUCH ADDITION IS SUSTAINABLE. HOWEV ER, WITH REGARD TO THE DISALLOWANCE OF RS. 4,73,56,793/- ON WHICH THE PENALTY IS LEVIED, WE FIND SOME STRENGTH IN THE ARGUMENT OF TH E ASSESSEE THAT THESE ARE PERTAINING TO THE EARLIER A.YS. WHEN THEY DID NOT PERTAIN ITA NO 931 OF 2019 RAASI REFRACTORIES LTD HYDERAB AD PAGE 8 OF 8 TO THE RELEVANT A.Y, THE PENALTY ON SUCH DISALLOWAN CE IS NOT SUSTAINABLE. IN VIEW OF THE SAME, WE DIRECT THE ASS ESSING OFFICER TO VERIFY THE STATUTORY LIABILITIES WHICH PERTAIN TO T HE EARLIER YEARS AND ON SUCH ITEMS, NO PENALTY U/S 271(1)(C) OF THE ACT SHALL BE LEVIED. 16. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH AUGUST, 2021. SD/- SD/- (LAXMI PRASAD SAHU) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 30 TH AUGUST, 2021. VINODAN/SPS COPY TO: S.NO AD DRESSES 1 RAASI REFRACTORIES LTD, H.NO.15-145/9, KONDANDRAM NAGAR, NEAR SHARADA TALKIES, SAROORNAGAR, HYDERABAD 500060 2 DY.CIT, CIRCLE 3(1) HYDERABAD 3 CIT (A) - 3, HYDERABAD 4 PR. CIT - 3, HYDERABAD 5 DR, ITAT HYDERABAD BENCHES 6 GUARD FILE BY ORDER