MANGALORE REFINERY AND PETROCHEMICALS LTD., V. ADDITIONAL DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION), RANGE-3,

MA 2/MUM/2011

• Counselvise Citation: [2011] 123 COUNSELVISE.COM (IT) 7059 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 30 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 02-09-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 03-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K B MENON
• Assessee Lawyers: M D INAMDAR; R MURLIDHAR
• Keywords: Non-deduction of tax; Reasonable cause; Competent authority

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B : MUMBAI BEFORE SHRI D. MANMOHAN, V.P. AND SHRI R. K. PANDA, A.M. MA NO.02/MUM/2011 ARISING OUT OF ITA NO.3715/MUM/2007 ASSESSMENT YEAR: 2003-04 M/S. MANGALORE REFINERY & PETROCHEMICALS LTD. PAN NO: AAACM5132A VS ADDL. DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION), RANGE 3, MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R. MURLIDHAR & SHRI M. D. INAMDAR RESPONDENT BY : SHRI P.K. B. MENON ORDER PER R. K. PANDA (AM) : THIS MISCELLANEOUS APPLICATION FILED BY THE ASSES SEE IS DIRECTED AGAINST THE ORDER DATED 23.12.2010 PASSED BY THE TR IBUNAL IN ITA NO.3715/MUM/2007 FOR THE ASSESSMENT YEAR 2003-04. 2. THROUGH THIS MISCELLANEOUS APPLICATION THE ASSES SEE REQUESTS THE TRIBUNAL TO RECTIFY THE ORDER PASSED BY IT, IN SO F AR AS IT RELATES TO THE DECISION AS REGARD TO LEVY OF PENALTY ON LATE PAYME NT CHARGES FOR CRUDE PURCHASES AMOUNTING TO RS.67,17,151/-. 3. THE MISCELLANEOUS APPLICATION FILED BY THE ASSES SEE READS AS UNDER :- M.A. NO: 02/M/2011 M/S. MANGALORE REFINERY & PETROCHEMICALS LTD. 2 THE APPLICANT RESPECTFULLY REQUESTS FOR A RECTIFIC ATION OF THE ORDER OF THE HON'BLE TRIBUNAL IN ITA NO.3715/MUM/07, FOR THE ASSESSMENT YEAR 2003-04, DATED MARCH 30, 2009 IN SO FAR AS IT RELATES TO THE DECISION AS REGARD TO LEVY OF PENALT Y ON LATE PAYMENT CHARGES FOR CRUDE PURCHASES AMOUNTING TO RS .67,17,151. IN THE REGARD, THE FACTS OF THE ISSUE ARE AS UNDER: THE APPLICANT HAD FILED AN APPEAL AGAINST THE ORDER OF THE ADDITIONAL DIRECTOR OF INCOME TAX (INTERNATIONAL TA XATION), RANGE 3, MUMBAI (THE AO) PASSED UNDER SECTION 271C OF T HE ACT DATED 30.03.2005. THE AO HAD LEVIED PENALTY ON THE FOLLOWING : PARTICULARS TAX U/S. 201 DEMAND PENALTY U/S.271C A. REMITTANCE TO TOYTO PHASE II DESIGN NCCR 400,257,550 400,257,550 PHASE II DESIGN CCR 66,983,383 66,983,383 B. LATE PAYMENT CHARGES FOR CRUDE PURCHASES 67,17,151 67,17,151 TOTAL 473,958,084 473,958,084 THE HON'BLE BENCH HAS RECORDED THE AFORESAID IN PAR A 7 AT PAGE 4 OF THE ORDER. FURTHER, THE PENALTY LEVIED BY THE AO WAS RESTRICTED TO RS.12,30,05,676/- BY THE LD. CIT(A) WHICH WAS RECOR DED BY THE HON'BLE BENCH IN END OF PARA 11 AT PAGE 8 OF THE OR DER. THE HON'BLE BENCH WAS PLEASED TO ISSUE DIRECTIONS A S REGARD TO LEVY OF PENALTY RELATED TO REMITTANCE MADE TO TOYO FOR PHASE II AT PARA 23 AT PAGE 16 OF THE ORDER AS UNDER : 23. TAKING THE TOTALITY OF THE FACTS AND CIRCUMSTA NCES OF THE CASE INTO CONSIDERATION, WE ARE OF THE VIEW THAT IN RESPECT OF PAYMENTS IN PHASE II, WHICH ARE SIMILAR IN NATURE T O THE PAYMENTS MADE IN PHASE I, IN RESPECT OF WHICH NO OBJECTION C ERTIFICATE WAS ISSUED BY THE ASSESSING OFFICER, WOULD SATISFY THE TEST OF REASONABLE CAUSE FOR NON-DEDUCTION OF TAX AT SOURCE . THE MERE FACT THAT THE PAYMENT WAS MADE TO ANOTHER PARTY MAY NOT, IN OUR VIEW CLOUD THE ISSUE. THE RELEVANT CONSIDERATION WOULD B E AS TO WHETHER THE NATURE OF PAYMENT IN RESPECT OF WHICH N O OBJECTION CERTIFICATE WAS ISSUED PERTAINING TO PHASE I WAS SA ME IN RESPECT OF PAYMENTS MADE UNDER PHASE II. THIS ASPECT CAN BE VERIFIED SO M.A. NO: 02/M/2011 M/S. MANGALORE REFINERY & PETROCHEMICALS LTD. 3 AS TO AVOID ANY AMBIGUITY IN RESPECT OF THE CLAIM. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) AS WELL AS THAT O F THE ASSESSING OFFICER AND RESTORE THE ISSUE TO THE FILE OF THE AS SESSING OFFICER FOR THE PURPOSE OF VERIFICATION OF THE PAYMENTS MADE UN DER PHASE II IN RESPECT OF WHICH PENALTY UNDER SECTION 271C HAS BEE N SUSTAINED BY THE CIT(A). THE PENALTY IN RESPECT OF SUCH PAYME NTS WHICH ARE SIMILAR IN NATURE IN RESPECT OF WHICH NO OBJECTION CERTIFICATE WAS ISSUED BY THE ASSESSING OFFICER PERTAINING TO PHASE I SHALL STAND DELETED. SO HOWEVER, IN RESPECT OF SUCH PAYMENTS, W HICH ARE NOT OF SIMILAR NATURE IN RESPECT OF WHICH NO OBJECTION CERTIFICATE WAS ISSUED UNDER PHASE I, PENALTY UNDER SECTION 271C OF THE ACT SHALL STAND CONFIRMED. NEEDLESS TO SAY THAT THIS WOULD BE SUBJECT TO THE DECISION OF THE HON'BLE HIGH COURT OR ANY OTHER SUP ERIOR COURT RELATING TO THE CLAIM OF THE ASSESSEE THAT THERE WA S NO OBLIGATION TO DEDUCT TAX AT SOURCE. IN CASE THE HON'BLE HIGH C OURT OR SUPREME COURT HOLDS THAT THE ASSESSEE WAS NOT REQUIRED TO D EDUCT TAX AT SOURCE, THEN THE ENTIRE PENALTY HAS GOT DELETED AS A CONSEQUENCE THEREOF. SO HOWEVER, TILL SUCH A DECISION IS TAKEN BY ANY COMPETENT AUTHORITY, WE DIRECT THE ASSESSING OFFICE R TO RECOMPUTED THE PENALTY ON THE BASIS OF OUR DIRECTIO NS CONTAINED IN THIS ORDER. THUS, IT IS EVIDENT FROM THE ABOVE CONCLUDED PARA T HAT THE HON'BLE BENCH HAD GIVEN DIRECTIONS TO AO AS REGARD TO PENAL TY LEVIED ON PAYMENTS MADE FOR PHASE II ONLY ON THE BASIS OF NO OBJECTION CERTIFICATES ISSUED FOR PHASE I AND NO DIRECTIONS W ERE GIVEN AS REGARD TO PENALTY LEVIED ON LATE PAYMENT CHARGES F OR CRUDE PURCHASES OF RS.67,17,151/-. THUS, ISSUE RELATED TO PENALTY OF RS.67,17,151 AS R EGARD TO LATE PAYMENT CHARGES WAS OMITTED TO BE DECIDED. UNDER THESE CIRCUMSTANCES, THE APPLICANT PRAYS THAT THE ORDER MAY BE KINDLY RECALLED AND THE ISSUE RELATED TO PEN ALTY ON LATE PAYMENT CHARGES BE DELETED. THE APPLICANT SHALL EVE R REMAIN GRATEFUL FOR THIS ACT OF KINDNESS. 4. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES AND PERUSED THE RECORDS. WE FIND, THE TRIBUNAL, INADVER TENTLY OMITTED TO CONSIDER THE ISSUE RELATING TO PENALTY OF RS.67,17,151/- ON ACCOUNT OF LATE PAYMENT CHARGES FOR CRUDE PURCHASES. IN THE GROUNDS OF APPE AL, THE ASSESSEE HAS CHALLENGED THE LEVY OF PENALTY OF RS.12,30,05,676/- U/S. 271C OF THE ACT. THE M.A. NO: 02/M/2011 M/S. MANGALORE REFINERY & PETROCHEMICALS LTD. 4 ABOVE AMOUNT OF RS.67,17,151/- IS A PART OF RS.12,3 0,05,676/-. UNDER THESE CIRCUMSTANCES, WE ARE OF THE OPINION THAT A MISTAKE HAS CREPT IN THE ORDER OF THE TRIBUNAL WHICH REQUIRES RECTIFICATION. WE, THER EFORE, RECALL THE ORDER OF THE TRIBUNAL FOR THE LIMITED PURPOSE OF DECIDING TH E LEVY OF PENALTY OF RS.67,17,151/- U/S.271C ON LATE PAYMENT CHARGES FOR CRUDE PURCHASES. THE REGISTRY IS DIRECTED TO FIX THE HEARING OF THE APPE AL IN NORMAL COURSE. WE HOLD AND DIRECT ACCORDINGLY. THE MISCELLANEOUS APPLICATI ON FILED BY THE ASSESSEE IS ALLOWED. 5. IN THE RESULT, THE MISCELLANEOUS APPLICATION FIL ED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 02 ND DAY OF SEPTEMBER, 2011. SD/- SD/- (D. MANMOHAN) (R. K. PANDA) VICE PRESIDENT ACCOUNTANT MEMBER MUMBAI, DT: 02/09/2011 COPY FORWARDED TO : 1. THE APPELLANT, 2. THE RESPONDENT, 3. THE C.I.T. 4. CIT (A) 5. THE DR, B - BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI ROSHANI