TaxTMI 
TaxTMI 
2020 (3) TMI 114
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....nt commission orders dated 15.09.2015 u/s 245D(4) for AYs 2011-12 to 2013-14 and u/s 245D(6B) for the said former three AYs dated 25.03.2016, Central Excise Settlement Commission order u/s 32E of the Central Excise Act, 1944 for Units I & II alongwith copies of challans for payment of excise duty as well as compilation of various judicial precedents running into 125 and 84 page(s) coupled with taxpayer's additional paper book containing DCIT, Central Circle-3(1), order dated 27.11.2015 for AYs 2011-12 and 2012-13 followed by reconciliation of book profits stand perused. 2. We advert to the basic relevant facts. The assessee-company manufactures sponge iron and TMT bars / rods. It filed its return on 26.09.2014 stating loss of Rs.3,89,72,058/-. The Assessing Officer completed his regular assessment on 02.11.2016. He discussed relevant issue of "exceptional items" involving a sum of Rs.85,15,999/-. We notice from para-3(ii) page-2 of the assessment order dated 02.11.2016 that the assessee inter alia submitted break-up of said sum. It explained to have filed petition(s) before settlement commission disclosing the corresponding additional income(s) assessable in assessment years 201....
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....er years now allowable" as per details given below: Total excise duty paid in respect of settlement period Rs. 10,52,58,034/- Interest paid on excised duty Rs. 46,10,764/- Rs. 10,98,68,798/- Less: already claimed u/s. 43B in earlier years Rs. 4,70,00,000/- Rs. 6,28,68,798/- However, from the order of the Settlement Commission dated 15.09.2015, it was seen hat total non-remittance of Excise duty for the settlement period (AY 2011-12 to 2013-14) was Rs. 7,70,50,738/- out of which Rs. 4,70,00,000/- had already been claimed. Thus, only Rs. 3,00,50,738/- was available for deduction in AY 2014-15 on actual payment basis. Deduction of Excise duty of Rs. 6,28,68,798/- on payment basis instead of available unpaid excise duty of Rs. 3,00,50,738/- has resulted in underassessment of income of Rs. 3,28,18,060/- having potential undercharge of tax of Rs. 1,0647,819/- (under normal provision)." 4. The PCIT therefore issued his sec. 263 notice dated 04.10.2018. The assessee filed its detailed reply dated 20.11.18 contesting the PCIT's foregoing twin reasoning. Its explanation qua the former issue of prior period income of Rs.11,04,19,703/-....
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....onal Income". Further, an amount of Rs. 1,52,50,000/- was debited to Profit and Loss A/c, being expenses incurred in AY 2010-11 to AY 2013-14 but not claimed in the Settlement Application. In this regard, further note that the said income of Rs. 12,56,69,703/- and expense Rs. 1,52,50,000/- were not incorporated in the accounts of the respective years since the assessee had filed the settlement application offering its undisclosed income on 21-03-2014 i.e. after the close of those financial years. In other words, the accounts for the period AY 2010-11 to AY 2013-14 were audited and these audited accounts were already submitted before the Registrar of Companies and therefore no amendments to the said accounts were possible. Accordingly, the income of Rs. 12,56,69,703/- and expenses of Rs. 1,52,50,000/- was incorporated in the audited books of the current year. Here, please refer to the Statement of the Profit and Los A/c enclosed at page 7 and Note 29 of the audited accounts, refer page 19. Copy of the accounts is enclosed at page 1-22. On perusal of Note 29, it can be seen that an amount of Rs.(85,15,11/-) was shown as net expenses (Expenses / Losses Rs. 1....
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....n the additional income disclosed by the assessee in the settlement application filed u/s.245D(1) of the Act and the additions made by the Hon'ble Settlement Commission in the order passed u/s. 245D(4) of the Act is added to the net profits in computation of taxable income under both normal provisions and MAT provisions under section 115JB of the Act. The said computations prepared by the assessee are in line with the computation of taxable income determined in the settlement order passed u/s 245(6B) of the Act. The said order is enclose at page 71-86. Here, please note that since tax liability was more under normal provisions than MAT provisions, the assessee paid tax on such additional income under normal provisions as per the requirement of law. Entire tax computed by the Hon'ble Settlement Commission was duly paid and the same is evident from the settlement order passed u/s 246D(6B) of the Act and the computation of income prepared by the assessee. The assessee has duly substantiated with the help of glaring evidences that the net income of Rs. 11,04,19,703/- is a tax paid income. In continuation to the above, the assessee further submits that since th....
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....sis instead of the alleged eligible sum of Rs.300,50,738/- the assessee's detailed reply read as follows:- "Ground 2 - Deduction of Excise Duty of Rs. 6,28,68,798/- on payment basis instead of available excise duty of Rs. 3,00,50,738/-. Your goodself has observed that the assessee has deducted an amount of Rs. 6,28,68,798/- from income as payment of excise duty in respect of earlier years now allowable. However, form the order of the Settlement Commission dated 15-09-2015 it was seen that total remittance of excise duty for the settlement period (AY 2011-12 to 2013-14) was Rs. 7,70,50,738/- out of which the sum of Rs. 4,70,00,000/- had already been paid. Thus only Rs. 3,00,50,738/- was available for deduction in the current year. Deduction of excise duty of Rs. 6,28,68,789/- on payment basis instead of available unpaid excise duty of Rs. 3,28,18,060/- has resulted in underassessment of income having potential undercharge of interest. In this regard, please note that the assessee had made an application before the Hon'ble Customs and Central Excise Settlement Commission, Kolkata on 19-11-2013 for the period December 2009 to July 2011 for Unit-2 admitti....
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....he same was determined as short payment of excise duty in the current year and therefore the company filed two settlement applications for its two Units separately before Hon'ble Customs and Central Excise Settlement Commissions admitting liability on account of non-payment of excise duty and interest thereon. However, out of Rs. 6,28,68,792/-, the sum of Rs. 5,82,58,034/- was paid in the current year and only the sum of Rs. 46,10,764/- was paid against interest liability on 01-07-2014 i.e. before the date of filing the return and thus was claimed u/s. 43B of the Act. As such, since the entire liability of Rs. 6,28,68,792/- was crystallized during the current year, therefore the assessee has rightly claimed the deduction of excise duty inclusive of interest paid during the year. Here, please note that the assessee has duly submitted before the learned AO the deduction claimed Rs. 3,07,03,929/-, being excise duty payment made during the year and no discrepancy was found in this regard. The same is evident from the copy of the submissions filed before the learned AO. Hence, this case is clearly not a case of lack of enquiry on the part of the AO and as already discussed ....
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....section and can be exercised only if the circumstances specified therein exist. Two circumstances must exist to enable the Commissioner to exercise the power of revision under this sub-section, viz., (i) the order should be erroneous; and (ii) by virtue of the order being erroneous prejudice must have been caused to the interests of the Revenue.' 6. The PCIT's revision directions under challenge decline the assessee's foregoing detailed averments as follows:- 5. I have considered the facts of the case and submission of the assessee. Two issues were raised in the show-cause notice, which are considered as under: (i) Prior period income of Rs. 11,04,19,703/- which is not admissible u/s. 115JB of the Income Tax Act, 1961. It is seen that the assessee had deducted net credit amount of Rs. 4,1l,53,335/- i.e. Rs. 11,04,19,703/-less Rs. 6,92,66,368/- to arrive at book profit. The figure of Rs. 11,04,19,703/- has been arrived at by the assessee by deducting an expenditure of Rs.l,52,50,000/- from the total additional income of Rs. 12,56,69,703/- offered by the assessee for AY 2010-11, AY 2011-12 & AY 2012-13 before the Hon'ble Settlement Commission. Hence,....
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....3,07 ,03,929/- paid during the year. However, the fact of the matter is that the Hon'ble Settlement Commission (custom and excise) had determined unpaid excise duty of Rs. 7,91,64,869/- for A.Ys. 2010- 11,2011-12 and 2012-13. So after allowing Rs. 4,70,00,000/- already claimed, the balance works out to Rs. 3,00,50,738/-, which becomes allowable only on actual payment basis. Thus there is a glaring need to reconcile the excise duty liabilities as offered by assessee before the Settlement Commission (C&E) and what was the enhancement if any. Furthermore assessee states that the application for AY 2010-11 relating to the unpaid duty of Rs. 47,26,402/- was not considered by the Settlement Commission (C&E) as no proceeding was pending on that date. Copy of the order of Settlement Commission (C&E). was not provided by assessee as already stated. In fact both issues raised in this show cause notice will have a bearing on each other. The assessee has questioned the present proceedings. It need not be emphasised that the assessing officer should have ascertained the facts before mechanically accepting the contentions of the assessee for the role of AO is not only as an....
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....lained by Hon'ble Delhi High Court in the case of Gee Vee Enterprise v. Addl. CIT [1975] 99 ITR 375 in the following para:- "It is not necessary for the Commissioner to make further inquiries before cancelling the assessment order of the Income-tax Officer. The Commissioner can regard the order as erroneous on the ground that in the circumstances of the case the Income-tax Officer should have made further inquiries before accepting the statements made by the assessee in his return. The reason is obvious. The position and function of the Income-tax Officer is very different from that of civil court. The statements made in the pleading proved by the minimum amount of evidence may be adopted by a civil court in the absence of any rebuttal. The civil court is neutral. It simply gives decision on the basis of the pleading and evidence which come before it. The Income-tax Officer is not only an adjudicator but also an investigator. He cannot remain passive in the face of a return which is apparently in order but calls for further inquiry. It is his duty to ascertain the truth of the facts stated in the return when the circumstances of the case are such as to provoke an inqui....
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....s instant appeal seeks to reverse the PCIT's assumption of revision jurisdiction vested u/s 263 of the Act. 7. We have given our thoughtful consideration to rival contentions against and in support of the PCIT's impugned revision action direction. The PCIT admittedly quotes a catena of case law including their lordships' landmark decision in Malabar Industrial Co. Pvt. Ltd. (supra) as well as sec. 263 Explanation-2 inserted vide Finance Act, 2015 w.e.f. 01.06.2015 to involve his statutory revision jurisdictions. There is no dispute between the parties that about the settled legal proposition that before the learned CIT or the PCIT seeks to exercise his revision jurisdiction vested u/s. 263 of the Act, the assessment concerned ought to be both erroneous as well as prejudicial to the interest of the Revenue. ; simultaneously. And that each and every case causing loss to the Revenue need not come under the purview of revision jurisdiction in case the assessing authority concerned adopts one of the two possible views. Both the learned representatives are ad idem during the course of hearing that whether or not the various judicial precedents quoted in the PCIT's revision directio....
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....al position is stated to be no different for the remaining three assessment year's 2011-12 to 2013-14 as well as per the assessee's computation(s) in pages 44 to 46 sufficiently indicating that its income in normal computation included MAT as per the Settlement Commission order(s). We are of the opinion in these facts and circumstances that once the assessee had declared additional income of Rs.12.56 crores in earlier assessment year(s) 2010-11 to 2013-14 in due compliance of the Settlement Commission and got the same assessed under normal scheme than MAT assessment, there is hardly any scope left of under-assessment on impugned prior period income going by the PCIT's observations. We wish to re-emphasise here that PCIT has raised the issue of prior period income of Rs.11,04,19,703/- for sec. 115JB computation only relating to the relevant previous year. We thus are of the opinion that once the said prior period income stood assessed under normal provisions in the corresponding earlier assessment year(s) 2010-11 to 2013-14, The Assessing Officer's alleged inaction in not disallowing the very sum(s) as prior period income for the purposes of MAT computation could neither be termed a....
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.... in sec. 263 vide the Finance Act, 2015 w.e.f 01.06.2015 does not ifso facto mean that every regular assessment could be revised even in those cases wherein the action of the Assessing Officer satisfies normal "prudence" test in scrutiny. We accordingly hold that the PCIT's revision directions qua this former issue of prior period income's sec. 115JB MAT computation is not substantive. The same is accordingly reversed. 13. We proceed further a notice that the factual position is no different qua the latter issue of deduction of excise duty amounting to Rs.628,68,798/- on payment basis instead of the available excise duty of Rs.30,05,078/-as well. It is not in dispute that the assessee had actually paid the impugned excise duty of Rs.628,68,798/- as per the corresponding challens (pages 109 to 125 of the paper book). We find that apart from all other technical aspects, sec. 43B makes it clear such a deduction of excise duty under sub-sec.1 thereof is allowable only on actual payment irrespective of previous year in which the liability to pay the same as arose to the assessee as per the method of accounting regularly employed. The Revenue's stand questioning liability of assessee'....