TaxTMI 
TaxTMI 
2024 (4) TMI 1417
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....rom job work of mixing of rubber at Rs. 34,19,894 was not the business receipts/income and in confirming the same was income from other sources. 3. On the facts and in the circumstances of the case, the honourable CIT(A) was not justified in confirming the disallowance of expenses of Rs. 42,65,430 towards expenses of Power & Fuel . 4. The appellant craves leave to add, to alter and/ or to modify the grounds of appeal on or before the date of hearing." 2. Ground no.1 is regarding validity of reopening of the assessment. 2.1 Ld. AR of the assessee has submitted that the assesse is engaged in the business of manufacturing and trading of Bicycle/Rickshaw tubes and rubber mixing and trading and export of tyre & tube. For the assessment year 2008-09 the assesse filed its return of income on 30.09.2008 declaring loss of Rs.1,89,50,337/- . Initially the scrutiny assessment u/s 143(3) was completed on 20.12.2010 and income of the assessee was assessed at loss of Rs.1,80,10,110/- thereafter, the AO reopened the assessment by issuing notice u/s 148 on 19.02.2013. Ld. AR has referred to the reason recorded by the AO for reopening of the assessment and submitted that the....
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.... f. CIT vs. Eicher Ltd. 294 ITR 310 2.3 Thus, Ld. AR submitted that though in the assessment order u/s. 143(3), the Id.AO did not discuss the said matter however, that would not permit the AO to review the order. In CIT vs Eicher Ltd. 294 ITR 310 (Del.), it was held that even if the AO did not apply his mind on matter submitted before him the assessee cannot be made to suffer the consequences of that lapse. Reopening was not justifiable. He has also relied upon the following decisions: (i) KLM Royal Dutch Airlines 292 ITR 49 (Del.), (ii) CLT vs Goetze (India) Ltd. 229 CTR 167 (Del.) 2.4 He has further submitted that there is only one electricity meter in both units. The genuineness of the total electricity expenses is not disputed. Unit-II though 100% export Oriented Unit (EOU) yet no deduction u/s 10B is claimed as the assessee has declared loss therefore, it cannot be said to be a case of diversion of profit to eligible unit. Ld. AR has pointed out that the AO has given the reasons for making disallowance of power and fuel expenses by treating the income of mixing work as income from other sources however, the expenditure incurred for earning the s....
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.... knowledge of the AO after completing assessment u/s 143(3). Therefore, it is a clear case of change of opinion to reopen the assessment based on the same facts and records available with the AO. The Hon'ble Supreme Court in case of CIT vs. Kelvinator of India ltd. (supra) has upheld the judgment of Hon'ble Delhi High Court on this issue. Similar view has been taken by the Hon'ble Supreme Court in case of ITO vs. Tech Span P. Ltd. (supra). By considering all these decisions the Hon'ble Delhi High Court in case of CIT vs. Eicher Ltd. (supra) has analysed and decided this issue in para 10 to 18 as under: "10. The Tribunal noted the fact that for the earlier assessment years 1988- 89 to 1991-92, the revenue had accepted the decision arrived at by the Assessing Officer. Adverting to the letter sent by the assessee on 8-11-1995, the Tribunal came to the conclusion that the assessee had disclosed all relevant material facts at the time when the original order of assessment was made and in the letter dated 8-11-1995, the assessee had explained its stand regarding non-taxability of the amount. Since there was a full and true disclosure by the assessee, there was no....
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....utch Airlines v. Asstt. Director of Income-tax [2007] 159 Taxman 191. The Division Bench noted the conflict between the decision of the Full Bench and the Division Bench of this Court and quite naturally concluded that since the view expressed by the Division Bench cannot be reconciled with the view of the Full Bench, it must be held that the Division Bench did not lay down the correct law. Following the view expressed in KLM Royal Dutch Airlines' case (supra), we are of the view that it would not be correct on our part to overlook the decision of the Full Bench in Kelvinator of India Ltd.'s case (supra) and rely upon the decision of the Division Bench in Consolidated Photo & Finvest Ltd.'s case (supra). That would be subversive of judicial discipline. 15. In Hari Iron Trading Co. v. CIT [2003] 263 ITR 437, a Division Bench of Punjab and Haryana High Court observed that an assessee has no control over the way an assessment order is drafted. It was observed that generally, the issues which are accepted by the Assessing Officer do not find mention in the assessment order and only such points are taken note of on which the assessee's explanations are rejected ....
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....ot a case of inflating the expenditure or claiming bogus expenditure as a power and fuel expenses are all supported by undisputed facts and record of consumption of power. Even otherwise if the income from mixing work is considered as income from other sources the expenditure incurred on power and fuel for doing mixing work is allowable claim u/s 57 of the Act or at least the claim of the assessee is bona fide claim on a debatable issue. Therefore, once the AO has allowed this claim in the scrutiny assessment u/s 143(3) then reopening of the assessment to disallow the said claim without any new facts or record is not permissible being change of opinion. Hence, we hold that the reopening of the assessment is not valid and the same is quashed. Since the reopening of the assessment is quashed therefore, the issues raised by the assessee on merits becomes infructuous. 6. For A.Y.2009-10 the assessee has raised following grounds of appeal: "1. On the facts and in the circumstances of the case, the honourable CIT(A) was not justified in confirming the penalty order u/s. 271E passed by the AO, which was illegal, invalid and untenable-in-law. 2.On the facts and in the ....
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....hed. He has also relied upon following decisions: (i) Mohd. Atiq vs Income-Tax Officer, 46 ITR 452 (All.) (ii) Jagdish Chandra Suwalka vs JCIT [2023] 154 taxmann.com 504 (Jaipur - Trib.) (iii) JCIT v. Jitendra Singh Rathore [2013] 352 ITR 327(Raj) (iv) CIT v. Hissaria Brothers [2016] 386 ITR 719 (SC) (v) Omec Engineers vs CIT [2008] 294 Taxman 599 (Jharkhand) (vi) CIT v. Ratna Agencies [2006] 284 ITR 609 (vii) CIT vs Lakshmi Trust Co. 303 ITR 99 (Mad.). (viii) Shreenath Builders v. Dy. CIT [2000] 111 Taxman 142 (Mag.) 7.1 Thus, Ld. AR has submitted that even otherwise when the repayment was through RTGS the same is through banking channel and cannot be held as a violation of section 269T of the Act. He has pointed out that this mode of payment was included subsequently vide amendment however, it is only a technical and venial breach. He has relied upon the judgment of Hon'ble Jharkhand High Court in case of Omec Engineers vs. CIT 294 taxman 599 and submitted that the penalty cannot be imposed merely on technical mistake by the assessee which has not resulted for any loss of revenue. Further when the tran....
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....he loans are through account payee cheques and RTGS then though the payment through RTGS may not be a mode which is prescribed u/s 271E r.w.s 269T of the Act at the relevant point of time however, that is not less than mode of account payee cheques as provided u/s 269T of the Act. That is why the, electronic mode of transfer of money through the bank is subsequently inserted by Finance Act 2014 w.e.f 01.04.2014. Therefore, this mode of transfer of money prior to 01.04.2014 can equally be regarded as compliance of provisions of section 269T of the Act. Hence, once this fact was brought before the AO as well as CIT(A) that the payment were made either through cheques or through RTGS then the penalty in respect of the payment made through banking channel is not leviable. Even otherwise these facts and records establish that these are genuine transactions and there is no scope of any evasion of tax or loss of revenue as all the transactions are duly reflected in the bank account of the recipients and therefore, the same would fall in the ambit of reasonable explanation provided in section 273B of the Act. 9.3 As regards the validity of the penalty for want of satisfaction we find th....
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.... levied. These appeals are, accordingly, dismissed." 9.4 Further this tribunal in case of Shri Umakant Sharma vs. JCIT(supra) has considered an identical issue in para 8 to 11 as under: "8. We have considered rival submissions and carefully perused the relevant material on record. There is no dispute that the assessee has not filed any return of income for the assessment year under consideration. The penalty u/s 271D of the Act has been levied on 23.01.2017 which is after 8 years from the end of the assessment year under consideration. The limitation for the penalty levied under chapter XXI has been provided in section 275 of the Act which reads as under: "275. ^1 Bar of limitation for imposing penalties (1)^ 2 ] No order imposing a penalty under this Chapter shall be passed- (a) ^3 in a case where the relevant assessment or other order is the subject- matter of an appeal to the Deputy Commissioner (Appeals) or the Commissioner (Appeals) under section 246 or an appeal to the Appellate Tribunal under section 253, after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been....
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....hancing or reducing or cancelling penalty or dropping the proceedings for the imposition of penalty may be passed on the basis of assessment as revised by giving effect to such order of the Commissioner (Appeals) or, the Appellate Tribunal or the High Court, or the Supreme Court or order of revision under section 263 or section 264: Provided that no order of imposing or enhancing or reducing or cancelling penalty or dropping the proceedings for the imposition of penalty shall be passed- (a) unless the assessee has been heard, or has been given a reasonable opportunity of being heard; (b) after the expiry of six months from the end of the month in which the order of the Commissioner (Appeals) or the Appellate Tribunal or the High Court or the Supreme Court is received by the "[Principal Chief Commissioner or] Chief Commissioner or the "[Principal Commissioner or] Commissioner or the order of revision under section 263 or section 264 is passed; Provided further that the provisions of sub-section (2) of section 274 shall apply in respect of the order imposing or enhancing or reducing penalty under this sub-section] 2. The provisions of this section as they s....
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....far as penalty under Section 271E is concemed, it was without any satisfaction and, therefore, no such penalty could be levied." 10. Thus, the Hon'ble Supreme Court has affirmed the view of the Hon'ble High Court that in absence of satisfaction recorded regarding the penalty proceedings u/s 271E of the Act the order of levy of penalty is not valid. The Ahmedabad Bench of the Tribunal in case of Vijayaben G. Zalavadia vs. JCIT (supra) has considered an identical issue as under: "6. We have heard the respective parties and also perused the relevant materials available on record. 7. We find that on the identical set of facts the Punjab and Haryana High Court was pleased observe the following while upholding quashing of penalty by the Tribunal: "3. We have heard learned counsel for the appellant. 4. The only point for consideration in this appeal is whether the assessee had contravened the provisions of Section 269T of the Act by making repayment of loan/ deposits of Smt. Kusum Lata Thakral, through account payee cheque or account payee drafts to M/s. Babyloan Builders Put. Ltd., Gurgaon and, therefore, penalty under Section 271E was levia....
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....re. The explanation being plausible one, it cannot be said that there was no reasonable cause within the meaning of Section 273B of the Act. No substantial question of law arises in this appeal. 8. We find substances in the submissions made by the Ld. A.R. particularly after considering the order passed by the Hon'ble Punjab and Haryana High Court as cited hereinabove. In fact, on the identical set of facts the penalty under Section 271E was deleted by the Tribunal and further upheld by the Hon'ble High Court. 9. Having regard to the facts and circumstances of the case and the ratio laid down in the order passed by the Punjab and Haryana High Court we do not hesitate to hold that the impugned penalty under Section 271E is not permissible in the absence of regular assessment framed against the assessee by the Revenue. Hence, the same is not found to be sustainable in the eye of law and, thus, quashed. The appeal preferred by the assessee is, therefore, allowed." 11. Therefore, it is pre-requisite condition that the initiation of penalty 271D/271E of the Act, there must be assessment proceedings or proceeding arising from assessment order are pending in the ....
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.... other provisions of the Act. 52. When Parliament introduced section 43B, what was on the statute book, was only employer's contribution (Section 34(1)(iv). At that point in time, there was no question of employee's contribution being considered as part of the employer's earning. On the application of the original principles of law it could have been treated only as receipts not amounting to income. When Parliament introduced the amendments in 1988-89, inserting section 36(1)(va) and simultaneously inserting the second proviso of section 43B, its intention was not to treat the disparate nature of the amounts, similarly. As discussed previously, the memorandum introducing the Finance Bill clearly stated that the provisions - especially second proviso to Section 43B - was introduced to ensure timely payments were made by the employer to the concerned fund (EPF, ESI, etc.) and avoid the mischief of employers retaining amounts for long periods. That Parliament intended to retain the separate character of these two amounts, is evident from the use of different language. Section 2(24)(x) too, deems amount received from the employees (whether the amount is received fr....
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....on, since it is the deduction from the employees' income and held in trust by the employer. This marked distinction has to be borne while interpreting the obligation of every assessee under section 43B. 54. In the opinion of this Court, the reasoning in the impugned judgment that the non-obstante clause would not in any manner dilute or override the employer's obligation to deposit the amounts retained by it or deducted by it from the employee's income, unless the condition that it is deposited on or before the due date, is correct and justified. The non-obstante clause has to be understood in the context of the entire provision of Section 43B which is to ensure timely payment before the returns are filed, of certain liabilities which are to be borne by the assessee in the form of tax, interest payment and other statutory liability. In the case of these liabilities, what constitutes the due date is defined by the statute. Nevertheless, the assessees are given some leeway in that as long as deposits are made beyond the due date, but before the date of filing the return, the deduction is allowed. That, however, cannot apply in the case of amounts which are held i....