2017 (2) TMI 123

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....d 01.02.2007 was liable as an expense and that it was covered by Section 43B of the Income Tax Act, 1961 [hereafter "the 1961 Act"]. 2. The assessee is engaged in the business of import and export of commodities, including edible oil, through a proprietory concern, i.e. M/s. Nova International. On 22.11.2006, a search was conducted by the Customs authorities in its premises; the assessee was arrested subsequently by the Directorate of Revenue Intelligence (DRI) on 05.12.2006 on the suspicion of evasion of payment of duties to the extent of more than Rs. 3 crores.   3. The assessee had approached this Court; in the course of proceedings, the Customs authorities had contended that the duty element payable was in excess of Rs. 3 crores ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....that undisputedly the assessee made payment of Rs. 70 lacs as per direction of Hon'ble High Court of Delhi given in the bail order dated 01.02.2007 which enlarged the assessee on bail in a criminal case of Custom Duty Evasion. At the time of payment the custom duty assessment was pending and yet to be completed in future. Obviously, when it is found that the assessee has evasioned custom duty then the penalty is obvious and leviable as per the relevant provisions of the Act but until and unless assessment is not completed the amount of custom duty/additional custom duty, interest thereon and penalty cannot be ascertained and in this situation impugned payment made by the assessee cannot be held as penalty or penal in nature at any stret....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....under Section 43B. It was submitted that even otherwise, the records would show that the later order of the Customs authorities substantiate the Revenue's contention in that the amounts directed to be paid were towards penalty. Learned counsel also relied upon the judgment of the Supreme Court in Indian Smelting and Refining Company Ltd. v. CIT 248 ITR 4 (SC). 6. This Court has carefully considered the submissions and gone through the records. The order of the Court, while enlarging the assessee on bail had categorically relied upon the Customs authorities' submissions that there was considerable evasion of duty in excess of Rs. 3 crores. Taking that into consideration, the Court had required deposit of certain amounts which were to be app....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ded provided further that the benefit of reduced penalty shall be available subject to the condition that the amount of penalty so determined has also been paid within the period of thirty days referred to above; viii) The amount of Rs. 70 lakhs voluntarily deposited by M/s Novus International towards differential duty during the course of the investigation is ordered to be appropriated towards payment of duty, interest and penalty." 7. So far as the AO's assumption that the amount was a penalty goes, this Court notices that the the said official appears to have either deliberately or for whatever reasons overlooked the plain language of the Principal Commissioner's order. So too, the learned counsel who argued that what was levied was "p....