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PER PAWAN SINGH, JUDICIAL MEMBER;
This appeal by assessee under Section 253 of Income-tax Act is directed against the order of ld. CIT(A)-3, Mumbai dated 22.02.2017 for Assessment Year 2010-11. In the assessment order under section 143(3) dated 13.03.2013, the assessee has raised the following grounds of appeal:
1) Under the facts and circumstances the learned C.I.T. (Appeals) erred in confirming the addition of Rs. 991286/- made by the learned Assessing officer stating unexplained expenditure u/s. 69C.
1 (a)/ The learned CIT (Appeals) as well as the learned Assessing officer failed to appreciate that:- i/ Where income is assessed on the basis of Book Profit u/s. 115JB of the I.T. Act no addition can be made for disallowance of any expenses and / or unexplained expenditure etc.
Mum 2017-M/s Charbhuja Industries Pvt. Ltd. ii/ The appellants made purchase of machinery spare parts from M/s. Omkar Trading Co. for Rs.991286/- for which payment are made through proper banking channels via payees account cheques and the copies of purchase bill details of payments etc. filed before the Assessing Officer, 2) Under the facts and circumstances the learned C.I.T. (Appeals) erred in confirming the levy of interest of Rs. 2562457/- u/s. 234-B and Rs. 639706/- u/s. 234-C of I.T. Act as levied by the Assessing Officer whereas the assessment is completed on deeming provisions u/s. 115JB of I.T. Act. 2/ (a) Under the facts and circumstances the learned CIT (Appeals) failed to appreciate that Hon. ITAT Bench 'C' Mumbai in in the case of the appellant have decided that in view of decision of Hon'ble Supreme Court in the case of JCIT Vs. Rolta India Ltd., no advance tax was payable' on MAT computed u/s. 115JB and accordingly the interest u/s.234-B and 234-C cannot be levied.
Brief facts of the case are that the assessee is engaged in the business of manufacturing & value addition of Tree Bourne Oil Seeds, Refund Oil, Ground nut & Niger seeds etc., filed its return of income for Assessment Year 2010-11 on 06.10.2010 declaring same income but revising book profits under section 115JB of Rs. 7,51,20,838/-. The return of income was selected for scrutiny. The assessment was completed under section 143(3) on 13.03.2013. The Assessing Officer while passing the assessment order made a disallowance of Rs. 9,91,286/- on account of bogus purchases. The Assessing Officer made disallowance on account of bogus purchases holding that assessee is one of the beneficiary of hawala transaction. The Assessing Officer also levy the interest under section 234B of Rs. 25,62,457/- and interest under section 234C of Rs. 6,97,706/-.
On appeal before the ld. CIT(A), both the action of Assessing Officer was confirmed. Thus, further aggrieved by the order of ld. CIT(A), the assessee has filed the present appeal before us. 2 Mum 2017-M/s Charbhuja Industries Pvt. Ltd.
We have heard the submissions of ld. Authorized Representative (AR) of the assessee and learned Departmental Representative (DR) for the revenue and perused the material available on record. Ground No.1 relates to confirming the addition of Rs. 9,91,286/- added under section 69C. The ld. AR of the assessee submits that section 69C is not applicable. The assessee made purchases of spare parts of machineries from M/s Omkar Trading Company. The assessee made payment through banking channel.
The assessee furnished the sufficient documentary evidence. The material/spare parts purchased by assessee are consumable item and only depreciation was claimed. The assessee has not shown it in stock-in-trade and assessee has not claimed expenditure, only depreciation can be disallowed and not the whole addition to the fixed asset.
On the other hand, the ld. DR for the revenue supported the order of Assessing Officer/CIT(A).
5. We have considered the rival submission of the parties and have gone through the orders of authorities below. We have noted that the Assessing Officer issued a show-cause notice to the assessee on the basis of information received from Sales Tax Department that assessee is one of the beneficiary of hawala dealers, list of which is provided to the Income- tax Department. The assessee was asked to furnish the details of transportation of goods and the relevant entries about the receipt of goods in the premises of assessee. The assessee furnished ledger account of M/s 3 Mum 2017-M/s Charbhuja Industries Pvt. Ltd. Omkar Trading Company, purchase bill, delivery challan and proff of payments. The Assessing Officer not accepted the explanation furnished by Assessing Officer holding that assessee could not prove the delivery of goods and not produce the stock register. The Assessing Officer disallowed the cost of entire purchases. The ld. CIT(A) concurred with the finding of Assessing Officer holding that the assessee has not produce documentary evidence of transport bill, delivery challan and that nature of transaction is in doubt. We have noted that the assessee has filed tax invoices of purchase along with delivery challan and proof of payment through banking channels (page no. 41-43 of PB). The ld. AR of the assessee certified that all these documents were furnished to the lower authorities. The perusal of tax invoice dated 05.01.2010, whichclearly shows that the material was transported through Truck by road in Lorry/Truck bearing No. MH-04 CG-1396. The material was delivered to the assessee on 10.01.2010 at 12.30 PM. The assessee has further given ledger account of M/s Omkar Trading Company and the payment was made through RTGS vide transaction no. 26114 on 09.02.2010 of Rs. 9,91,286/-. We have noted that the lower authority have not given any finding on these documentary evidences. In our view, the assessee has substantiated by documentary evidence about the genuineness of purchases. Considering the documentary evidences, the addition made by Assessing Officer and confirmed by ld. CIT(A) is deleted. 4 ITA No. 2514 Mum 2017-M/s Charbhuja Industries Pvt. Ltd.
Ground No.2 relates to levy of interest under section 234B & 234C. The ld. AR of the assessee submits that this ground of appeal is covered in favour of assessee in assessee’s own case for Assessment Year 2008-09 & 2009-10 in & 6902/Mum/2012 dated 24.01.2014.
On the other hand, the ld. DR for the Revenue relied upon the order of authorities below.
We have considered the rival submission of the parties and have gone through the orders of authorities below. We have noted that similar issues arose in assessee’s case for Assessment Year 2008-09 and 2009-10 and on appeal before the Tribunal passed the following order:
We have considered the rival submissions as well as relevant material on record. There is no dispute regarding the fact that during the assessment years under consideration the settled law on the point was the decision of the Hon'ble Supreme Court in case of CIT Vs Kwality Biscuits Ltd. 284 ITR 434 as well as a number of other decisions including decisions of Hon'ble Jurisdictional High Court in case of Snowcem India Ltd. Vs DCIT 313 ITR 170 and in case of CIT Vs Natural Gems Ltd. 327 ITR 269 wherein it has been held that no advance MAT was payable by the company. Therefore, the assessee had no reason to belief or foresee a subsequent decision fastening the liability of payment of advance tax. Even otherwise the decision in case of JCIT Vs Rolta India Ltd. (supra) is a subsequent decision and therefore, the impossibilities at the relevant point of time cannot be thrashed upon the assessee. In the facts and circumstances as discussed above no fault can be found with the assessee in not depositing the advance tax of MAT in view of the decision of the Hon'ble Supreme Court as well as various decisions of the Hon'ble High Court. The assessee had the bonafide reason to believe that advance tax was not payable in respect of MAT u/s 115JB as it was settled law laid down by the Hon'ble Supreme Court and Hon'ble High Court which hold good till the subsequent decision of Hon'ble Supreme Court in case of JCIT Vs Rolta India Ltd. (supra). Therefore, prior to the decision of Hon'ble Supreme Court in case of JCIT Vs Rolta India Ltd. (supra) settled proposition of the law on the point was that no advance tax was payable on MAT computed u/s 115JB and accordingly, the interest u/s 234B and 234C cannot be levied for non-deposit of advance tax on MAT for the year under consideration. Hence, we delete the levy of interest u/s 234B and 234C in this case. 5 Mum 2017-M/s Charbhuja Industries Pvt. Ltd.
Considering the decision of Tribunal in assessee’s own case for AY 2008- 9 and 2009-10 on almost on similar facts wherein the Tribunal has deleted the identical levy of interest under section 234B and 234C. Therefore, considering the decision of Tribunal, the ground no.2 of the appeal filed by assessee is also allowed.
In the result appeal of the assessee is allowed.
Order pronounced in the open court on 26/09/2018.