TaxTMI 
TaxTMI 
2011 (5) TMI 851
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.... of the Assessing Officer for imposition of penalty. (2) That the Commissioner of Income-tax (Appeals) erred on facts and in law in upholding the levy of penalty in respect of disallowance of deduction of Rs. 16,42,77,522 claimed under section 43B of the Act in respect of Modvat credit on components/CVD on inputs. (2.1) That the Commissioner of Income-tax (Appeals) erred on facts and in law in sustaining penalty levied in respect of aforesaid disallowance with out appreciating that (i) no inaccurate particulars of income or incorrect facts in respects thereof were furnished by the appellant ; (ii) the said issue was debatable on which two views are possible ; (iii) the disallowance was sustained simply on bona fide ; and (v) deduction therefore was, in any case, available in the succeeding year(s). (2.2) That the Commissioner of Income-tax (Appeals) erred on facts and in law in not appreciating that since substantial question of law in respect of the aforesaid disallowance had already been admitted by the hon'ble High Court penalty under section 271(1)(c) of the Act, was even otherwise, not sustainable. (2.3) That the Commissioner of Income-tax (Appeals) erred on facts a....
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....15,41,82,612 and Modvat credit from CVD at Rs. 1,00,94,910 total Rs. 16,42,77,522. The Assessing Officer had made one more disallowance under section 43B of Rs.23,14,628 on account of excise duty receivable but this disallowance was deleted by the Commissioner of Income-tax (Appeals) and the order of the Commissioner of Income-tax (Appeals) was confirmed by the Tribunal. In addition to this disallowance of Rs. 16,42,77,522, confirmed by the Commissioner of Income-tax (Appeals) and by the Tribunal for disallowance under section 43B, one more disallowance was made by the Assessing Officer of Rs. 2.28 lakhs on account of the provision for doubtful debts. On appeal, the Commissioner of Income-tax (Appeals) restricted the disallowance on account of provision for doubtful debts to the extent of Rs. 1.80 lakhs. The Assessing Officer initiated penalty proceedings under section 271(1)(c) for total disallowance confirmed up to the Tribunal level of Rs.16,44,57,522. The Assessing Officer was not satisfied with the explanation of the assessee and he imposed penalty of Rs. 5,75,60,132. Being aggrieved, the assessee carried the penalty matter in appeal before the learned Commissioner of Income-t....
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....return of income by the assessee and hence, it has to be accepted that the claim of the assessee is a bona fide legal claim and even if such claim is not allowed, penalty is not justified. Reliance was placed on the Tribunal decision rendered in the case of Modipon Ltd. It is submitted that in that case, it was held by the Tribunal that excise duty paid as advance by way of deposit in personal ledger account cannot be disallowed under section 43B. It is submitted that although the facts in the present case are slightly different because in the present case, deduction has been claimed by the assessee on account of Modvat credit in addition to balance in the profit and loss account and the claim of the assessee regarding balance in the profit and loss account was allowed whereas the claim of the assessee regarding Modvat credit was disallowed but since the money has gone out of the coffers of the assessee for Modvat credit also, it has to be accepted that the claim of the assessee although not allowed is bona fide claim of the assessee and penalty is not justified. It is also submitted that five Member Special Bench was created by the Tribunal in the case of Deputy CIT v. Gla....
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....ruary 4, 2010 and copy of this is available on pages 16 and 17 of the judgment paper book. It is submitted that in that case, it was held by the hon'ble High Court of Delhi that since the issue in dispute has travelled up to the hon'ble High Court of Delhi, it is therefore, clear that the issue was debatable and therefore, could not be disallowed while considering the matter under section 143(1)(a) of the Income-tax Act. It is submitted that the same logic will apply for imposition of penalty on those disallowances regarding which the appeal and substantial question of law has been admitted by the hon'ble High Court of Delhi. As against this, the learned Departmental representative supported the orders of authorities below. Reliance was placed by him on the following judgments : (a) CIT v. Atul Mohan Bindal [2009] 317 ITR 1 (SC) ; (b) CIT v. ECS Ltd. [2011] 336 ITR 162 (Delhi) ; (c) CIT v. Zoom Communication P. Ltd. [2010] 327 ITR 510 (Delhi) ; (d) CIT v. Escorts Finance Ltd. [2010] 328 ITR 44 (Delhi) ; 183 Taxman 453 ; (e) CIT v. Gurbachan Ltd. [2001] 250 ITR 157 (Delhi) ; and (f) CIT v. Kishorekumar Shamji [2000] 244 ITR 702 (Ker). He also submitted that page 46A in the pa....
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....o submitted that the order of the learned Commissioner of Income-tax (Appeals) in the case of Maruti Udyog Ltd. on which reliance was placed by the assessee for making this claim in the return of income is also an appellate order available at the time of filing of return of income and hence, it is not correct that no judicial decision was available in favour of the assessee at the time of filing of return of income by the assessee. It is also submitted that it was held by the hon'ble apex court in the case of CCE v. Dai Ichi Karkaria Ltd. reported in [1999] 7 SCC 448 that credit under the Modvat scheme was as good as tax paid and the same did not form part of the cost of excisable goods. It is submitted that although this decision of the hon'ble apex court is in excise matter but this finding of the hon'ble apex court is relevant that credit under the Modvat scheme was as good as tax paid and hence, it has to be accepted that the claim of the assessee for deduction under section 43B in respect of Modvat credit is a bona fide claim and therefore, penalty is not justified. It is also submitted that the claim of the assessee is tax neutral because to the extent of deduction claimed by....
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....tal representative for the Revenue is the correct copy. We do not appreciate this action of the assessee to submit a wrong copy of computation in the paper book and certifying the same as "true copy". It amounts to making an attempt to mislead the Bench by submitting a wrong copy of note submitted with the return of income and certified the same as true copy. This action of the assessee is highly deplored. But we feel that in spite of this action of the assessee of making an attempt to mislead the bench, the issue involved should be decided after considering the total facts and the correct copy of the computation of total income brought on record by the learned Departmental representative of the Revenue. When we consider the facts in its totality, we find that apart from an order of the learned Commissioner of Income-tax (Appeals) in the case of Maruti Udyog Ltd., no Tribunal order or decision of any High Court was available on this issue at the time of filing of return of income by the assessee. But subsequently, a Special Bench was constituted for deciding this issue. The decision of the Special Bench of the Tribunal is against the assessee, but the constitution of the Special ....
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.... this judgment is not applicable in the present case because the facts are different. In that case, the dispute was about allowability of deduction under section 80-O on gross income or net income. The assessee claimed deduction on gross income and the Assessing Officer allowed the same on net income and penalty was imposed on such partial disallowance of deduction under section 80-O. In paragraph 9 of this judgment, it is noted by the hon'ble Delhi High Court that there was an existing judgment of the hon'ble Delhi High Court, i.e., jurisdictional High Court to the effect that deduction had to be computed not on the basis of gross income but on the basis of net income. Hence, in that case, the issue was covered against the assessee by the binding judgment of the hon'ble jurisdictional High Court but in the present case, no adverse decision of any court or the Tribunal was available at the time of filing of return of income. Hence, this judgment is of no help to the Revenue in the present case. In our considered opinion, the judgment of the hon'ble Delhi High Court rendered in the case of Zoom Communication P. Ltd. [2010] 327 ITR 510 (Delhi) is also not applicable in the present c....
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....ection 271(1)(c), the assessee has to either substantiate his explanation or he has to establish that the explanation offered was bona fide and all facts relating to the same and material for the computation of his income has been disclosed by the assessee. It was also observed by the hon'ble Delhi High Court that the explanation of the assessee should be acceptable explanation and it should not be fantastic and fanciful one. It is also observed by the hon'ble Delhi High Court that the burden is on the assessee and if he fails to discharge that burden, the presumption that he has concealed the income or furnished inaccurate particulars thereof is available to be drawn. In that case, the assessee could neither substantiate his explanation nor could establish that the explanation was bona fide and under these facts the penalty was confirmed by the hon'ble Delhi High Court. In the present case, we have noted that the assessee has furnished full facts and particulars by way of giving a note in the computation of income. The expla nation of the assessee was not found to be false. The stand taken by the assessee is supported by an existing order of the learned Commissioner of Income-tax ....
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....nt case, the claim of the assessee is a legal claim and in the computation of income itself, the assessee has disclosed full particulars and this legal claim of the assessee was not accepted by the Revenue authorities and by this Tribunal in the quantum proceedings but this cannot be equated with a false claim by way of inflation of purchase price. Hence, in our considered opinion, this judg ment of the hon'ble Kerala High Court is of no help of the Revenue in the present case. As per the above discussion, we have noted that none of the decisions cited by the learned Departmental representative for the Revenue is of any help to the Revenue in the present case. We have also noted that full particulars were disclosed by the assessee in the computation of income enclosed with the return of income. We also noted that the stand taken by the assessee was supported by an existing order of the learned Commissioner of Income-tax (Appeals) rendered in the case of Maruti Udyog Ltd. and is also supported by a subsequent decision of the Tribunal rendered in the case of Honda Siel Power Products Ltd. [2001] 77 ITD 123 (Delhi). Subsequently, a Five Members Special Bench was constituted in the cas....