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2024 (7) TMI 568
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....st take up the appeal filed by the revenue in ITA No.02/RPR/2023 for the assessment year 2016-17 wherein the impugned order has been assailed on the following grounds of appeal before us: "(1) On the facts and circumstances of the case whether the Id. CIT(A), National Faceless Appeal Centre was justified in deleting the penalty amount of Rs. 2,92,58,402/- made by the A.0 for furnishing inaccurate particulars/concealment of income. (2) The order of the Id. CIT(A), National Faceless Appeal Centre is erroneous both in law and on facts. (3) Any other ground which may be adduced at the time of hearing." On the other hand, the assessee company, as a cross-objector, has assailed the impugned order of the CIT(Appeals) on the following grounds of cross-objection (CO No.19/RPR/2023): "1. On facts and in the circumstances of the case, CIT(A) has erred in confirming penalty of Rs. 16,20,646/- levied by the AO u/s 271(1)(c) on disallowance of Rs. 49,01,692/- made u/s 36(1)(va). 2. That in any case and in any view of the matter, the action of CIT(A) in confirming the action of AO in imposing penalty of Rs. 16,20,646/- u/s 271(1)(c) is bad in law and against the facts and circumstances....
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.... which were revised by the assessee company in the assessment proceedings are culled out as follows: Particulars which are debited in profit and loss account As filed in (revised return of income) ( in Rs.) As disclosed during assessment proceedings ( in Rs.) Difference amount ( In Rs.) Any other rate, tax, duty or cess incl. STT and CTT 14,05,48,123/- 7,98,71,053/- (+) 6,06,77,070/- Electricity Expenses 8,89,71,315/- 8,71,00,455/- (+) 18,71,082/- Other expenses 46,71,61,966/- 44,12,17,233/- (+) 2,59,44,733/- Total addition on books profit 8,84,92,885/- The AO, based on the aforesaid revision in the expenses, made an addition of Rs. 8,84,92,885/- to the "book profit" disclosed by the assessee company in its revised return of income. Apart from that, the A.O made a further addition /disallowance of the delayed deposit by the assessee company of the employee's share of contribution towards labour welfare funds u/s. 36(1)(va) (sic.) of the Act amounting to Rs. 49,01,692/-. 6. The A.O., at the time of culminating the assessment, initiated penalty proceedings u/s. 271(1)(c) of the Act with respect to the aforesaid additions/disal....
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....of the appellant that "return data was corrected on the basis of information already available with assessing officer in form of 3CA, 3CD report, form 29B and audited annual account. On perusal of the assessment order dated 14.12.2019, page 3, based on the appellant's submission, the AO has made addition of Rs. 8,84,92,885/- for the reason that there is a difference in the MAT profit declared as there was a mistake on the part of the appellant while feeding expenses and income data in ITR. Also, it is seen from records that the appellant has filed Form No. 29B on 21.10.2019 vide which in Row no.18 - Book profit as computed is shown at Rs. 35,84,30,033/-. Further, the appellant has filed the tax audit reports in Form 3CA and 3CD on 23.12.2016. So, all the data were already available in different reports / forms filed online by the appellant with the amount requested to be corrected during the scrutiny assessment proceedings. As submitted by the appellant, it can be construed as a data transmission error. It is observed that, there is true element of bonafideness in the conduct of the assessee. The Hon'ble Apex Court in CIT Vs. Reliance Petro products 322ITR 158 (SC) has ....
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....d as of the date of filing of the return of income; therefore, the same was filed on the basis of the provisional financial statements on 29.11.2016. As is discernible from the records the accounts of the assessee company were audited on 15.12.2016, Pages 51-104 of APB. Thereafter, the assessee company filed a revised return of income on 26.03.2018, which, as stated by the Ld. AR was prompted by the difference between the "book profit" under the MAT provisions that was disclosed based on the provisional financial statements in the original return of income as against that computed as per the final audited financial statements. The Ld. A.R had failed to come up with any explanation that now when the accounts of the assessee company were finally audited on 15.12.2016 then why the filing of the revised return of income was kept in abeyance for a substantial period and was filed only as on 26.03.2018, i.e., after the lapse of one and half years. Apart from that, we find it incomprehensible that though the assessee company had filed a revised return of income on 26.03.2018, but after that, it had, on 06.12.2019, come up with a revision of certain expenses aggregating to Rs. 8.84 crore (....
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....s on an agreed basis. Accordingly, the CIT(Appeals) was of the view that there was no malafide intention of the assessee company, an entity working under the State Government of Chhattisgarh, in hiding/concealing its income and not properly disclosing the same. The CIT(Appeals), thus, was of the view that the A.O had made the addition of Rs.8.84 crore (supra) to the "book profit" disclosed by the assessee company in its revised return of income under the MAT provisions on account of certain bonafide mistakes of the latter that had crept in while feeding the data of income and expenditure in the return of income. Referring to the records, the CIT(Appeals) observed that the assessee company had filed Form 29B dated 21.10.2019, wherein it had, at Row No.18, disclosed the "book profit" at Rs. 35.84 crore (approx.). Also, the CIT(Appeals) observed that the assessee company had filed its tax audit report in Form 3CA and Form 3CD on 23.12.2016. Considering the aforesaid facts, the CIT(Appeals) was of the view that now, when all the data was already available in different reports/forms that were filed online by the assessee company, disclosing the amounts that were requested to be correcte....
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....he view taken by the A.O who had rightly saddled it with penalty u/s. 271(1)(c) of the Act. Although it is the claim of the assessee company that it had vide its letter dated 06.12.2019 filed in the course of the assessment proceedings sought for correction of its "book profit" under the MAT provisions and, thus, had brought to the notice of the AO that by mistake certain expenses aggregating to Rs. 8.84 crores (supra) were wrongly claimed in the "revised return of income" on the higher side, we are afraid that the said unsubstantiated claim of the assessee would not carry its case any further. We say so for the reason that the very claim of the assessee company that it had, due to a bonafide mistake, not disclosed its "book profit" for computing its tax liability under the MAT provisions in its "revised return of income," dated 26.03.2018 is in itself incomprehensible. Although the assessee company had in its finally audited financial statements dated 15.12.2016, Page 79 of APB disclosed its "Net profit" at Rs. 3,574.90 lacs but strangely it had while computing the "book profit" under the MAT provisions taken the same in its "revised return of income", dated 26.03.2018 at Rs. 2,68....
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....f Section 271(1)(c) of the Act. Apart from that, we are of the view that as the assessee company could have only revised its claim for deduction of expense by filing a revised return of income, which, it had failed to do; therefore, its letter dated 06.12.2019 (supra) wherein it had after being confronted by the AO sought to correct its wrong claim would not assist its case. Our aforesaid view is supported by the judgment of the Hon'ble Supreme Court in the case of Goetze (India) Ltd. Vs. CIT (2006) 284 ITR 323 (SC). The Hon'ble Apex Court, in its aforesaid order, had observed that an assessee is not vested with any right to raise a claim before the AO otherwise than by filing a revised return of income. In case the assessee company before us intended to seek a further correction of the "book profit" disclosed by it in its revised return of income by an amount of Rs. 8.84 crore (supra), then, the only remedy available with it was to have further filed a revised return of income, which, we find it had failed to do. 15. Apropos the view taken by the CIT(Appeals) that as the information that was sought by the assessee company to be corrected in the assessment proceedings vide its let....
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....dvertent and bonafide error and not intended to or attempted to conceal its income or furnished inaccurate particulars of income, penalty u/s. 271(1)(c) could not be imposed. As in the present case before us, it is not a case of bonafide mistake in raising a wrong claim of inflated expenses, i.e., not in conformity with those disclosed by the assessee company in its audited financial statements; therefore, the aforesaid judicial pronouncement would not assist the case of the assessee company. 17. Apropos the order of the ITAT, Mumbai, in the case of DCIT Vs. Reliance General Insurance Company Ltd. (2018) 52 CCH 375 (Mum) as had been relied upon by the Ld. AR, we find that the same, too, being distinguishable on facts, would not carry the case of the assessee any further. In the aforesaid case as the return of income filed by the assessee u/s. 148 of the Act was accepted by the A.O., who did not make any further disallowance; therefore, it was in the backdrop of the said facts, that the Tribunal had held that no penalty u/s. 271(1)(c) of the Act could be imposed on the assessee. On a similar footing, the order of the ITAT, Bilaspur, in the case of ACIT Vs. Agrawal Round Rolling Mil....
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..... We shall now deal with the captioned cross-objection filed by the assessee before us. As regards the addition/disallowance of Rs.49,01,692/- made by the A.O u/s. 36(1)(va)(sic) of the delayed deposit of employees' share of contribution towards labor welfare funds; we find substance in the claim of the Ld. AR that the assessee company was not liable to be visited with penalty u/s. 271(1)(c) of the Act as regards the aforesaid addition/disallowance. 21. Admittedly, as on the relevant point of time, i.e., at the stage of filing return of income/revised return of income by the assessee company, the allowability of the assessee's claim for deduction of delayed deposit of employee's share of contribution towards labor welfare funds there was a judgment of the Hon'ble Supreme Court in the case of Commissioner of Income Tax Vs. Alom Extrusions Limited, [2009] 319 ITR 306 (SC) [reversing the judgment of the Hon'ble High Court of Bombay in CIT Vs. Pamwi Tissues Ltd. (2009) 313 ITR 137 (Bom)] favoring the assessee. Also, there were certain Hon'ble High Courts that took a view in favor of the assessee's on the aforesaid issue. As the claim of the assessee company for deduction of the de....
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....gal and factual grounds. 3. That CIT(A) was justified in cancelling penalty of Rs. 2,17,52.860/- levied by the AO u/s. 270A on account of addition of Rs. 3,28,96,087/-." 26. Succinctly stated, the assessee company had e-filed its return of income for A.Y.2017-18 on 30.10.2017 declaring an income of Rs. Nil. Subsequently, the return of income was revised by the assessee company on 09.01.2018 at Rs. Nil. Once again, the assessee company filed a revised return of income on 31.03.2018 declaring an income of Rs. Nil. Thereafter, the case of the assessee company was selected for scrutiny assessment under CASS. 27. During the assessment proceedings, the A.O observed that the assessee company had filed its original return of income before completion of the audit, which, thereafter, was followed by various revised returns of income. The A.O further observed that the total gross receipts originally reported by the assessee company in its return of income was Rs. 9,91,25,36,835/- but the same was, thereafter, in the assessment proceedings offered at Rs. 9,94,09,89,590/-. Also, the A.O observed that the "book profit" for MAT purpose that was earlier disclosed by the assessee company vide i....
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....show cause as to why penalty may not be imposed u/s. 270A of the Act as was initiated in the "SCN" dated 24.12.2019. 31. The assessee company in compliance to the SCNs that were issued u/s. 274 r.w.s. 270A of the Act, filed its reply vide letter dated 03.01.2021 and 14.08.2021, wherein it tried to impress upon the A.O that no penalty under the aforesaid statutory provision was called for in its case with respect to both the issues, viz., (i) increase in the "book profit" for MAT purpose: Rs. 3,28,96,087/-; and (ii) disallowance of its claim for deduction of belated deposit of employees share of contribution towards labor welfare funds: Rs. 83,76,816/-. For the sake of clarity, the reply filed by the assessee company before the A.O is culled out as under (extract from the order u/s. 270A of the Act) : "In this case the assessee has filed the original return of income before the completion of audit and therefore the assessee has filed various revised returns. The total gross receipt reported in the return of income was Rs. 9,91,25,835/- but during the course of assessment proceeding the assessee has offered me gross receipt of Rs. 9,94,09,89,590/-. As per assessee submission the b....
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....ed total income reassessed as per the provisions of section 115JB or section 115JC, as the case may be, is greater than the deemed total income assessed or reassessed immediately before such reassessment; (g) the income assessed or reassessed has the effect of reducing the loss or converting such loss into income. ................................. (9) The cases of misreporting of income referred to in sub-section (8) shall be the following, namely:- (a) misrepresentation or suppression of facts; (b) failure to record investments in the books of account; (c) claim of expenditure not substantiated by any evidence; (d) recording of any false entry in the books of account; (e) failure to record any receipt in books of account having a bearing on total income; and (f) failure to report any international transaction or any transaction deemed to be an international transaction or any specified domestic transaction, to which the provisions of Chapter X apply. 5. The reply of the assessee has been carefully perused, however the same is not acceptable. It is pertinent to note that the assessee agreed to the addition made by the AO, once the same was raised by the AO durin....
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....., A.Y. 2017-18. Therefore, as per provisions of section 270A(9) of the Act, the penalty for misreporting of income shall be a sum equal to 200% of the amount of tax payable on mis-reported income of Rs. 4,12,72,903/-. In this case such amount of tax payable is Rs. 1,36,46,058/-. The amount of penalty has been computed as under:- 9. Accordingly, a penalty of Rs. 2,72,92,117/- of the tax sought to be evaded is, therefore, hereby imposed u/s. 270A of the Income Tax Act, 1961 for A.Y.2017-18." 32. The assessee company being aggrieved with the penalty imposed u/s. 270A of the Act carried the matter in appeal before the CIT(Appeals). The CIT(Appeals) was of the view that as the assessee company had revised and modified its return of income before completion of the assessment and had, after accepting the mistakes that had earlier crept in, offered the resulting amount for tax therefore, there was no justification for the A.O to have imposed penalty u/s. 270A of the Act. Also, the CIT(Appeals) finding favor with the claim of the assessee company was of the view that as the returned data was already available with the A.O in Form 3CA, 3CD report, Form 29B, and audited financial accounts....
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....on the part of the assessee being an entity working under the State Government of Chhattisgarh, in hiding/concealing the income in not properly showing/reflecting the information once incorporated in the audited statements and submitted before the Department for examination. It is worth to note the contention of the appellant that "return data was corrected on the basis of information already available with assessing officer in form of 3CA, 3CD report, form 29B and audited annual account. On perusal of the assessment order dated 24.12.2019, page 2, the AO has made addition of Rs. 3,28,96,087/- for the reason that the assessee had not disclosed the true and correct figure during filing of ROI. However, it is seen from records that the appellant has filed Form No. 29B on 31.12.2018 vide which in Row no.18 - Book profit as computed is shown at Rs. 67,38,09,917/-. Further, in the revised ROI filed on 29.03.2019, in the computation of total income the appellant has reflected the same amount against - Deemed total income u/s.115JB. It is observed that, there is true element of bonafideness in the conduct of the assessee. The Hon'ble Apex Court in CIT Vs. Reliance Petro products 3....
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....e Act was being initiated for "underreporting" or "misreporting" of income; therefore, he had wrongly assumed jurisdiction and imposed the same. The Ld. AR, to fortify his aforesaid contention, took us through the respective SCNs that were issued by the A.O u/w. 274 r.w.s. 270A of the Act, viz. (i) SCN dated 24.12.2019, Page 129 of APB; (ii) SCN dated 16.10.2020, Page 130 of APB; and (iii) SCN/reminder letter dated 27.07.2021, Page 131 of APB. The Ld. AR, referring to the aforesaid SCNs (supra), submitted that in the aforesaid notices, the A.O. had failed to specify the limb for which penalty u/s. 270A of the Act was sought to be imposed on the assessee company, viz., "under-reporting" or "misreporting" of income. The Ld. AR submitted that as there was no whisper in the aforesaid SCNs as to on which limb Section 270A of the Act was being triggered and as to how sub-section (9) of Section 270A was satisfied, thus, the A.O had wrongly assumed jurisdiction and saddled the assessee company with penalty under the aforesaid statutory provision. The Ld. AR, to fortify his aforesaid claim, had drawn support from the judgment of the Hon'ble Supreme Court in the case of Schneider Electric So....
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....f APB, r.w. computation of income (revised), Page 39 of APB, the Ld. AR submitted that it stood established beyond doubt that the net profit of Rs.67.38 crore (approx.) disclosed by the assessee company in its revised return of income (supra) was, in turn, based on the gross receipts (revised) of Rs. 994.09 crore (approx.). Based on the aforesaid facts, the Ld. AR submitted that even as per the general provisions of the Act the assessee company could not be visited with penalty as per the mandate of clause (a) of sub-section (2) to Section 270A of the Act. 37. Apropos the disallowance of the assessee's claim for deduction of delayed deposit of the employee share of contribution towards labor welfare funds of Rs. 83,76,816/-, the Ld. AR submitted that as of the date of filing of revised return of income dated 29.03.2019, the issue was highly debatable, wherein, as per the department, such delayed deposit of employees' share of contributions were liable to be disallowed u/s. 36(1)(va) of the Act, while the assessee's were of the view that as long as the said amounts were paid /deposited before the "due date" of filing of the return of income as prescribed in sub-section (1) of S....
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....ee company on 29.03.2019, the delayed deposit of the employees share of contribution towards labor welfare funds as per the judgment of the Hon'ble Apex Court in the case of Commissioner Of Income Tax Vs. Alom Extrusions Limited (supra) and other judicial pronouncements were not liable for disallowance u/s. 36(1)(VA) of the Act, and were allowable as a deduction as long as the same was deposited by the assessee before the "due date" of filing of its return of income as prescribed in sub-section (1) of Section 139 of the Act. As the aforesaid position of law was dislodged only pursuant to the judgment of the Hon'ble Supreme Court in the case of Checkmate Servies Pvt. Ltd. Vs. CIT-1 (supra)dated 12.10.2022, as per which the delayed deposit by an assessee of the employee's share of contribution towards labor welfare funds was liable for disallowance u/s. 36(1)(va) of the Act; therefore, we find substance in the claim of the Ld. AR that as at the relevant point of time, i.e., on 29.03.2019, the assessee's claim for deduction was supported by the judgment of the Hon'ble Apex Court in the case of Commissioner Of Income Tax Vs. Alom Extrusions Limited (supra) and a host of other judic....
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....s. 3,28,96,087/-[Rs. 67,38,09,917/- (-) Rs. 64,09,13,830/-] was duly considered by the assessee company and offered for tax in its revised return of income filed on 29.03.2019. As observed hereinabove, a conjoint reading of the "Profit and loss account" (revised), Page 70 of APB and the return of income (revised) on 29.03.2019, reveals that the "book profit" of Rs. 67.38 crore (approx.) disclosed by the assessee company in its return of income (revised on 29.03.2019) included the additional gross receipt of Rs. 3,28,96,087/- (supra). As is discernible from the order u/s. 144 of the Act, dated 24.12.2019, the A.O had failed to take cognizance of the return of income that the assessee company had revised on 29.03.2019, wherein the gross receipts were already raised to an amount of Rs. 994.09 Crore (supra). The aforesaid factual position can also be gathered from the fact that the A.O. vide his order u/ss. 154/144 of the Act dated 09.03.2023 had categorically admitted that a perusal of the records revealed that though the assessee company had filed its return of income disclosing normal income at Rs. Nil and "book profit" under the MAT income Rs. 67.38 Crore (supra), but the A.O while....