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Income Tax Appellate Tribunal, VIRTUAL COURT
Before: SHRI C.N. PRASAD, HONBLE & SHRI M. BALAGANESH, HONBLE
O R D E R PER C.N. PRASAD (JM)
This appeal is filed by the revenue against the order of the Learned Commissioner of Income Tax (Appeals) – 2, Thane [hereinafter in short “Ld.CIT(A)”] dated 05.03.2019 for the A.Y. 2010-11.
Revenue has raised the following grounds in its appeal: - (A.Y: 2010-11) M/s. Evonik Catalysts India Pvt. Ltd., “1. On the facts and in the circumstances of the case, and in law, the Ld. CIT(A) has erred in not appreciating the fact that the assessee could not establish the genuineness of the purchases from the nonexistent vendors as per information received from Law enforcement agency of State Govt, of Maharashtra i.e. Sales Tax Department, and established by the Assessing Officer.
2. On the facts and in the circumstances of the case, and in law, the Ld.CIT(A) has erred in not appreciating the fact that the onus to justify the claim of expenses is on the assessee and the same has failed to discharge it in relation to the purchases made from the non- existent vendors.
3. On the facts and in the circumstances of the case, and in law, the Ld. CIT(A) has erred in ignoring, the fact that the assessee could not substantiate its claim of purchases from non-existent vendors by means of relevant supporting documents related to movement of goods, stock register, etc. to restrict the addition to 25% of bogus purchases from the non-existent vendors.
4. On the facts and in the circumstances of the case, and in law, the Ld. CIT(A) has erred in not appreciating the law correctly that once the purchases are unverifiable/not genuine/bogus, the same should have been disallowed in entirety, particularly in view of the ratio of the decision of the Hon'ble Gujarat High Court in Tax Appeal No, 242 of 2003 dated 20/06/2016 in the case of N. K. Proteins Ltd. against which the SLP was dismissed by the Hon'ble Apex Court.
5. It is humbly requested that present appeal is being filed in accordance with the CBDTs Instruction No. 3/2018 dated 11.07.2018 amended vide letter dtd. 20.08.2018 as per para 10(e) of the said circular. Therefore, the order of the CIT(A) may kindly be vacated and that of the AO may be restored.
6. The appellant craves leave to add, amend, alter or delete any ground of appeal.”
3. Assessee through letter dated 07.12.2020 submitted as under: - “We refer to hearing scheduled before the your Honour on 8th December 2020. In this regard, we wish to submit as under:
(A.Y: 2010-11) M/s. Evonik Catalysts India Pvt. Ltd., We are in the process of opting for remedy of dispute resolution for the captioned appeal under the Direct Tax Vivaad se Vishwas Act, 2020. Accordingly, we request your Honour to kindly grant us an adjournment and oblige.”
4. On a perusal of the above letter of the assessee it is noticed that assessee is in the process of opting for remedy of dispute resolution under the Direct Tax Vivaad se Vishwas Act, 2020. Therefore, since assessee is contemplating to settle litigation under Vivaad se Vishwas scheme no purpose would serve keeping this appeal pending.
5. The Hon'ble Madras High Court in the case of M/s. Nannusamy Mohan (HUF) v. ACIT in T.C.A. No. 372 of 2020 dated 16.10.2020 on an appeal by the assessee u/s. 260A of the Act, held as under: - “This appeal has been filed by the assessee under Section 260 A of the Income Tax Act, 1961 ('the Act' for brevity), challenging the order dated 03.12.2018 passed by the Income Tax Appellate Tribunal, Chennai, 'A' Bench ('the Tribunal' for brevity) in I.T.A.No.2576/CHNY/2017 for the Assessment Year 2011-12. The appeal is admitted on the following Substantial Questions of Law: “1. Whether on the facts and circumstances of the case, the Income Tax Appellate Tribunal was perverse in not considering all the grounds raised
in Cross Objection, viz. (1) claim of exemption in respect of sale of agricultural land (2) claim of deduction by way of cost inflation Index and cost of plot of land purchased in computing deduction u/s.54F of Income Tax Act?
2. Whether on the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in law in upholding the disallowance of cost of improvement in providing Modern Kitchen in the flats purchased?”
(A.Y: 2010-11) M/s. Evonik Catalysts India Pvt. Ltd., 2. We have heard Mr.M.P.Senthil Kumar, learned counsel appearing for the appellant/assessee and Mr.T.R.Senthil Kumar, learned Senior Standing counsel and M/s.K.G.Usha Rani, learned counsel for the respondent/Revenue.
The learned counsel for the appellant / assessee, on instructions, submitted that the appellant / assessee intends to avail the benefit of Vivad Se Vishwas Scheme ('VVS Scheme' for brevity) and in this regard, the assessee is taking steps to file the application / declaration in Form No.I.
It may not be necessary for this Court to decide the Substantial Questions of Law framed for consideration on account of certain subsequent developments. The Government of India enacted the Direct Tax Vivad Se Vishwas Act, 2020 (Act 3 of 2020) to provide for resolution of disputed tax and for matters connected therewith or incidental thereto. The Act of the Parliament received the assent of the President on 17th March 2020 and published in the Gazette of India on 17th March 2020.
In terms of the said Act, the assessee has been given an option to put an end to the tax disputes, which may be pending at different levels either before the First Appellate Authority or before the Tribunal or before the High Court or before the Hon'ble Supreme Court of India. Under Section 2(j) “disputed tax” has been defined. In terms of Section 3, where a declarant means a person, who files a declaration under Section 4 on or before the last date files a declaration to the designated authority in accordance with the provisions of Section 4 in respect of tax arrears, then, notwithstanding anything contained in the Income Tax Act or any other law for the time being in force, the amount payable by the declarant shall be determined in terms of Section 3(a-c) thereunder.
6. The First Proviso to Section 3 states that in case, where an Appeal or Writ Petition or Special Leave Petition is filed by the Income Tax authority on any issue before the Appellate Forum, the amount payable shall be one-half of the amount in the table stipulated in Section 3 calculated on such issue, in such a manner as may be prescribed. The second proviso deals with the cases, where the matter is before the Commissioner (Appeals) or before the Dispute Resolution Panel. The third proviso deals with cases, where the issue is pending before the Income Tax Appellate Tribunal. The filing of the declaration is as per Section 4 of the Act and the particulars to be furnished are also mentioned in the Sub Sections of Section 4. Section 5 of the Act deals with the time and manner of the payment and Section 6 deals with Immunity from initiation of proceedings in respect of offence and imposition of penalty in certain (A.Y: 2010-11) M/s. Evonik Catalysts India Pvt. Ltd., cases. Section 9 of the Act deals with cases, where the Act 3 of 2020 will not be applicable.
7. As observed, the assessee is given liberty to restore this appeal in the event the ultimate decision to be taken on the declaration to be filed by the assessee under Section 4 of the said Act is not in favour of the assessee. If such a prayer is made, the Registry shall entertain the prayer without insisting upon any application to be filed for condonation of delay in restoration of the appeal and on such request made by the assessee by filing a Miscellaneous Petition for Restoration, the Registry shall place such petition before the Division Bench for orders.
In the light of the above, We direct the appellant / assessee to file the Form No.I on or before 20.11.2020 and the competent authority shall process the application / declaration in accordance with the Act and pass appropriate orders as expeditiously as possible preferably within a period of six (6) weeks from the date on which the declaration is filed in the proper form.”
Following the above decision of the Hon'ble Madras High Court, this appeal is disposed off accordingly, with liberty to the revenue to file a miscellaneous application, in the event of the assessee not opting for Vivaad se Vishwas scheme as contemplated by it before the due date of the scheme in operation and the appeal shall be recalled by the Tribunal and restore the same for adjudication on merits. It is further made clear that if the revenue seeks to restore the appeal in the event assessee’s declaration made under Vivaad se Vishwas scheme is not accepted, the Registry shall not insist for filing of application for condonation of delay, if the Miscellaneous Application for recalling the order is filed beyond time on account of delayed communication of outcome under Vivaad se Vishwas scheme in view of the decision of the Hon'ble Madras High Court
(A.Y: 2010-11) M/s. Evonik Catalysts India Pvt. Ltd., in the case of M/s. Nannusamy Mohan (HUF) v. ACIT in T.C.A. No. 372 of 2020 dated 16.10.2020. With these observations this appeal is disposed off accordingly.
In the result, appeal of the Revenue is dismissed as observed above.
Order pronounced in the virtual court on 08.12.2020.