The ACIT, Central Circle-1(2), Ahmedabad V. Vimal MIcrons Ltd., Mehsana

ITSSA 147/AHD/2012

• Counselvise Citation: [2015] 122 COUNSELVISE.COM (IT) 0782 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 30 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 05-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 01-06-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 06-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P M MEHTA
• Section: 143(3); 153A; 37(1)

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI RAJPAL YADAV,JUDICIAL MEMBER IT (SS) A.NO.147/AHD/2012 / ASSESSMENT YEAR: 2002-03 ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIR.1(2), ROOM NO.305, 3 RD FLOOR, AAYAKAR BHAVAN, AHMEDABAD. VS VIMAL MICRONS LTD., 19, G.I.D.C., DEDIYASAN, MEHSANA. / (APPELLANT) / (RESPONDENT) PAN AAACV 6289M REVENUE BY : MR. NIMESH YADAV, SR.D.R. ASSESSEE BY : MR. P.M. MEHTA. / DATE OF HEARING : 01/06/2015 / DATE OF PRONOUNCEMENT: 05/06/2015 / O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER: IT(SS) A NO147/AHD/2012 ASSESSMENT YEAR 2002-03 2 THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-I, AHMEDABAD D ATED 2-12- 2011. 2. THE SOLE GROUND OF APPEAL TAKEN BY THE REVENUE I S THAT THE CIT (A) HAS ERRED IN DELETING THE PENALTY OF RS.3,80,95 7/- LEVIED U/S. 271(1)(C) OF THE INCOME TAX ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE A.O. IN THE ORDER PASSED U/S. 153A R.W.S. 143(3) OF THE I.T.ACT,1961 DISALL OWED ELECTRICITY EXPENSES OF RS.10,67,106/- ON THE GROUND THAT THE S AID AMOUNT WAS PAID ON ACCOUNT OF PENALTY CHARGED BY THE GUJARAT E LECTRICITY BOARD ON ALLEGED THEFT OF POWER AND THEREFORE THE EXPENDITUR E WAS NOT ALLOWABLE UNDER SECTION 37(1) OF THE ACT. 4. ON APPEAL, THE CIT (A) OBSERVED THAT ON PERUSAL OF THE LAST REVISED BILL DATED 29-6-2003 AFTER RE-HEARING THE C ASE AT THE DIRECTION OF THE HONBLE HIGH COURT, REVISED BILL WAS WORKED OUT ON THE BASIS OF EXCESS CONSUMPTION ESTIMATED AT 1,50,977 UNITS OF E LECTRICITY. THE CHARGING AT 2.5 TIMES MORE THAN REGULAR RATE OF CHA RGING FOR THE ESTIMATED EXTRA CONSUMPTION OF 1,50,977 UNITS WAS D ONE AS PER THE GEB RULES. ELECTRICITY DUTY @ 20% AND TSE @ 4% WAS ALSO CHARGED ON THIS. FROM THE PERUSAL OF THIS WORKING AND THE RULE S HE WAS OF THE VIEW THAT THE AMOUNT PAID BY THE ASSESSEE DOES NOT REPRE SENT ANY PENALTY LEVIED BUT ONLY A HIGHER LEVY AS PER THE RULES OF T HE GEB. THE EXTRA UNIT CONSUMPTION WAS WORKED OUT ON ESTIMATED BASIS AND A S PER THE RULES OF GEB., AND THE ENERGY CHARGES HAVE BEEN WORKED OUT A T HIGHER RATE, THEREFORE, THIS CANNOT BE TERMED AS A LEVY OF PENAL TY FOR BREAKING THE IT(SS) A NO147/AHD/2012 ASSESSMENT YEAR 2002-03 3 LAW. THIS IS AN EXPENDITURE CONNECTED WITH NORMAL B USINESS OPERATION AND IN ABSENCE OF ANY OTHER EVIDENCE AGAINST THE AS SESSEE, THERE WAS NOTHING TO HOLD THAT THERE WAS ANY INFRACTION/INFRI NGEMENT OF THE LAW. THEREFORE, HE DELETED THE ADDITION. 5. ON FURTHER APPEAL, THE TRIBUNAL REVERSED THE ORD ER OF THE CIT (A) AND RESTORED BACK THE ORDER OF THE ASSESSING OFFICE R. THEREAFTER, THE ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 271(1 )(C) OF THE ACT FOR LEVY OF PENALTY ON ACCOUNT OF FURNISHING INACCURATE PARTICULARS OF INCOME/CONCEALMENT OF INCOME. ASSESSING OFFICER OB SERVED THAT AS PER SECTION 37(1) ANY EXPENDITURE INCURRED BY THE ASSES SEE FOR ANY PURPOSE WHICH IS AN OFFENCE OR WHICH IS PROHIBITED BY LAW S HALL NOT BE DEEMED TO HAVE BEEN INCURRED FOR THE PURPOSE OF BUSINESS OR P ROFESSION AND NO DEDUCTION OR ALLOWANCE SHALL BE MADE IN RESPECT OF SUCH EXPENDITURE. THEREFORE, THE ADDITION WAS MADE AND PENALTY PROCEE DINGS WERE INITIATED ON THIS ISSUE. FROM THIS, IT IS CLEAR THA T THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME AND THER EBY CONCEALED HIS INCOME. ACCORDINGLY THE ASSESSING OFFICER LEVIED PE NALTY OF RS.3, 80,957/- BEING 100% OF THE TAX SOUGHT TO BE EVADED BY THE ASSESSEE. 6. ON APPEAL, THE CIT (A) DELETED THE PENALTY OBSER VING THAT THE ADDITION OF RS.10,67,106/- WAS MADE ON THE GROUND T HAT THE AMOUNT PAID BY THE ASSESSEE TO GEB REPRESENTED PENALTY. TH E ASSESSEE EXPLAINED THAT FOR THE ALLEGED UNAUTHORISED USAGE O F ENERGY, THE GEB AUTHORITIES HAD ESTIMATED EXTRA USAGE OF ELECTRICIT Y FOR WHICH CHARGE WAS LEVIED AND IT WAS NOT IN THE NATURE OF PENALTY. THIS WAS ACCEPTED BY THE CIT (A) ALSO. THUS THE ASSESSEES EXPLANATIO N WAS FOUND TO BE ACCEPTABLE BY THE CIT (A) AND THUS IT WAS THE POSSI BLE EXPLANATION AND WAS BONAFIDE. APART FROM THIS ADDITIONAL CHARGES S O LEVIED BY GEB WERE IT(SS) A NO147/AHD/2012 ASSESSMENT YEAR 2002-03 4 ON ESTIMATE BASIS. THEREFORE, THE CIT (A) HELD THAT THE ASSESSEE HAD GIVEN BONAFIDE EXPLANATION TO SUPPORT THE CLAIM AND THERE WAS NO JUSTIFICATION FOR LEVY OF PENALTY BY INVOKING EXPLA NATION -1 TO SECTION 271(1)(C ). HE ALSO RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. 322 ITR 128 (SC). 7. WE FIND THAT IN THE INSTANT CASE, THE ASSESSEE P AID RS.10,63,106/- TO GEB ON EXTRA USAGE OF ELECTRICITY. ASSESSING OFF ICER TREATED THE SAME AS AN AMOUNT OF PENALTY PAID TO GEB AND DISALLOWED THE DEDUCTION FOR THE SAME. 8. ON APPEAL, THE CIT (A) HELD TO BE USAGE CHARGES FOR EXTRA ELECTRICITY USED BY THE ASSESSEE AND DELETED THE AD DITION. 9. ON THE ABOVE FACT, WE FIND THAT TWO VIEWS WERE P OSSIBLE IN RESPECT OF THE ISSUE, IN THIS CASE AS EVIDENCED BY THE ORDE R OF THE CIT (A).THEREFORE, THE CLAIM OF THE ASSESSEE IN THE RET URN OF INCOME CANNOT BE HELD TO BE ABSURD OR MALAFIDE OR IMPOSSIBLE VIEW . 10. FURTHER, WE FIND THAT THE CIT (A) IN THE QUANTU M APPEAL DELETED THE ADDITION IN RESPECT OF WHICH PENALTY HAS BEEN L EVIED IN THE INSTANT CASE. THOUGH THE TRIBUNAL REVERSED THE ORDER OF TH E CIT (A) BUT THE FACT REMAINS THAT CIT (A) WAS OF THE VIEW THAT THE AMOUNT IN QUESTION WAS ALLOWABLE DEDUCTION TO THE ASSESSEE UNDER SECTI ON 37(1) OF THE ACT, WHICH WAS ALSO THE VIEW OF THE ASSESSEE. THUS, THE ORDER OF THE SUPERIOR AUTHORITY OF THE DEPARTMENT SHOWS THAT THE VIEW OF THE ASSESSEE WAS IT(SS) A NO147/AHD/2012 ASSESSMENT YEAR 2002-03 5 POSSIBLE VIEW OR ATLEAST A VIEW WHICH CANNOT BE SAI D TO BE A IMPOSSIBLE VIEW. ON SIMILAR FACT MUMBAI BENCH OF THE TRIBUNA L IN THE CASE OF SALMAN KHAN VS. ACIT IN ITA NO.2559/MUM/2013 & ITA NO.2560/MUM/2013 ORDER DATED 30-7-2014 HAS HELD AS UNDER:- THOUGH THE TRIBUNAL HAS REVERSED THE DECISION OF THE CIT (A) ON THIS ISSUE, THE FACT THAT THE CLAIM OF THE ASSES SEE WAS ACCEPTED BY THE CIT(A) ON MERIT CLEARLY SHOWS THAT THE SAID CLAIM MADE BY THE ASSESSEE WAS BASED ON A POSSIBLE VIEW OF THE MA TTER. IT ALSO SHOWS THAT THE CLAIM MADE BY THE ASSESSEE FOR DEDUC TION ON ACCOUNT OF LEGAL EXPENSES WAS A BONAFIDE VIEW. 11. WE THEREFORE, CONFIRM THE ORDER OF THE CIT (A) AND DISMISS THIS GROUND OF APPEAL OF THE REVENUE. IN THE RESULT, AP PEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON FRIDAY, THE 5 TH DAY OF JUNE,2015 AT AHMEDABAD. SD/- SD/- (RAJPAL YADAV) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD: DATED 05 /06 /2015 PATKI IT(SS) A NO147/AHD/2012 ASSESSMENT YEAR 2002-03 6 !'# $# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. !' ## , / DR, ITAT, 6. '$% & / GUARD FILE. % & ' / BY ORDER, ( / ' )* ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION- : 1-6-2015 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 1-6-2015 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S. - 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT .. 5. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 6. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 7. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 8. DATE OF DESPATCH OF THE ORDER