ITO 9(3)(3), MUMBAI vs. FOURCEE EQUIPMENTS & SERVICES P.LTD, MUMBAI

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ITA 4420/MUM/2015Status: DisposedITAT Mumbai09 May 2017AY 2011-125 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the decision of the First Appellate Authority, agreeing that advances received from customers cannot be treated as deposits for the purposes of Section 269T. The penalty was deleted as there was no infirmity in the lower appellate authority's conclusion.

What were the facts?

The assessee received an advance of Rs. 83,10,968/- from a customer for the supply of molasses. The customer later rejected the quality, and the advance was refunded. A penalty was levied under Section 271E for allegedly repaying Rs. 15 lakh of this advance in cash.

What were the issues?

Whether an advance received from a customer for supply of goods can be considered a deposit for the purpose of Section 269T, and if a penalty under Section 271E is leviable for its repayment.

Which sections of the Income-tax Act were involved?

Section 271E,Section 269T

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, MUMBAI BENCHES “F”, MUMBAI

Before: Shri Joginder Singh, & Shri Ashwani Taneja

Hearing: 09/05/2017

आदेश / O R D E R

Per Joginder Singh (Judicial Member) The Revenue is aggrieved by the impugned order dated 24/03/2015 of the ld. First Appellate Authority, Mumbai, by deleting penalty of Rs.15 lakh imposed u/s 271E of the Income Tax Act, 1961 (hereinafter the Act) holding that the amount received by the assessee was not in the nature of loan or deposit, ignoring lack of evidence brought on record to evidence that the amount was received as advance.

2.

During hearing, none was present for the assessee for the assessee. This appeal was filed by the Revenue on 23/07/2015 for which registered notices of hearing were sent to both sides on 06/04/2017, the appeal was adjourned for today and both the parties were informed. Today, at the time of hearing, the assessee neither presented itself nor moved any adjournment petition. It seems that the assessee has nothing to say and the appeal cannot be kept pending indefinitely, therefore, we have no option but to proceed ex-parte, qua the assessee and tend to dispose of this appeal on the basis of material available on record. Shri B.S. Bist Ld. DR, defended the imposition of penalty by advancing arguments, which is identical to the ground raised.

1.

2.1. We have considered the arguments of the ld. DR and perused the material available on record. The facts, in 3 M/s Fourcee Equipments & Services Pvt. Ltd. brief, are that M/s Dhananjay Containers, at the relevant time, was the customer of the assessee company and was purchasing Molasses. The assessee company was holding certain stock of molasses, as on 01/04/2009, being left out of its procurement for export and it was decided to sale the same in domestic market. The assessee received Rs.83,10,968/- as advanced, for supply of molasses from M/s Dhananjay Containers. However, the customer rejected the quality of existing stock as the same was not found to be suitable to the end user/customers. Thus, the said advance was refunded back in the Financial Year 2010-11 and the payment of Rs.15 lakh was part of such repayment, received as advanced by the assessee company. However, the Ld. Assessing Officer held the assessee guilty of violation of section 269T of the Act. As per the Revenue, the assessee had shown the repaid amount to M/s Dhananjay Container in cash, therefore, penalty u/s 271E of the Act, amounting to Rs.15 lakh, was levied.

2.2. On appeal, before the Ld. Commissioner of Income Tax (Appeal), the submissions of the assessee were considered and finally it was found from the balance sheet and tax audit report that the sum of Rs.83,10,968.90/- was received by the assessee as advance from its customers M/s Dhananjay Containers and from this advance, the amount of Rs.15 lakh was repaid on 03/06/2010. The Ld. Commissioner of Income Tax (Appeal) considered the decision in Chaubey Overseas Corporations

4 M/s Fourcee Equipments & Services Pvt. Ltd. vs CIT (2008) 170 taxman 9 along with the decision from Hon'ble Gujarat High Court CIT vs Madhav Enterprises (P.) Ltd. (2013) 356 ITR 588 (Guj.) and held that advances received from customers cannot be treated as deposits for the purposes of section 269T of the Act. The penalty was deleted. The Revenue is aggrieved and is in appeal before this Tribunal. On perusal of record and after hearing the submissions of Ld. DR, we are in agreement with the uncontroverted finding that the Department has accepted that the sum of Rs.83,10,968/- was received as advance from customers in earlier years, therefore, we find no infirmity in the conclusion of the Ld. Commissioner of Income Tax (Appeal) as the First Appellate Authority has duly considered the aforesaid decisions from Hon'ble High Courts. No adverse material was brought to our notice by the Revenue in support of its claim, therefore, the stand of the Ld. Commissioner of Income Tax (Appeal) is affirmed.

Finally, the appeal of the Revenue is dismissed.

Order pronounced in the open court on 09/05/2017

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