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Income Tax Appellate Tribunal, BENCH ‘A’ KOLKATA
Before: Hon’ble Shri N.V.Vasudevan, JM & Shri M.Balaganesh, AM ]
ORDER PER N.V.VASUDEVAN, JM:
This is an appeal by the Assessee against the order dated 04.09.2014 of CIT(A)-XXXIII, Kolkata, relating to AY 2006-07.
Grounds of appeal
raised by the assessee as follows :-
1. That on the facts and in the circumstances of the case, Ld. C.I.T (A) is wrong in holding that payment of Excide Duty was made after the due date of filing of return without proper appreciation of facts and / or relying on irrelevant considerations.
2. That on the facts and in the circumstances of the case, Ld. CIT(A) is wrong and unjustified in confirming the action of Assessing Officer who failed to allow Excide Duty liability of Rs. 50,00,000/- for which a post dated cheque No. 992221 dated 15.09.2009 was handed over to Excise Department on 21.07.2009.
3. That the appellant craves leave to add, alter, adduce any ground or grounds on or before the date of hearing. '"
3. The Assessee is a company engaged in the manufacture of components of Air Pre-heater Baskets and Electro Static precipitators required by Thermal Power plants. In the course of assessment proceedings for A.Y.2009-10 the AO noticed that the M/s Imeco Ltd. A.Y.2009-10 2 assessee had claimed a sum of Rs.2 crores in the profit and loss account as deduction in computing the business income towards excise duty which remained unpaid during the year but paid subsequently. In the course of assessment proceedings it transpired that the assessee had given post dated cheques to Excise department towards excise duty payable. There is no dispute that a sum of Rs.1.5 crores was paid by the assessee to the Central Excise Department on or before 30.09.2009 which was the due date of filing the return of income by the assessee for A.Y.2009-10. Therefore this sum was to be allowed as deduction in view of the proviso to section 43B of the Act. However, with regard to the sum of Rs.50,00,000/-, the AO noticed that the assessee had given a cheque dated 15.09.2009 to the Assistant Director, Directorate of Central Excise Intelligence, Kolkata Zonal Unit, Kolkata and this cheque was encashed only on 06.10.2009. Since the excise duty in question had not been obtained on or before the due date for filing the return of income u/s 139(1) of the Act namely 30.09.2009 the AO disallowed the claim of the assessee for deduction of a sum of Rs.50,00,000/- and added the same to the total income of the assessee.
4. Before CIT(A) the assessee submitted that as early 21.07.2009 the assessee had deposited post dated cheque to the Excise department. The cheque for Rs.50,00,000/- dated 15.09.2009 was also delivered on 21.07.2009. The Excise department had not encashed the cheque immediately and the cheque was ultimately cleared for payment only 06.10.2009. The assessee pointed out that the delay or default is not attributable to the assessee and therefore disallowance u/s 43B of the Act cannot be made. The assessee also submitted that since the cheque for Rs.50,00,000/- is dated 15.09.2009 though it was encashed on 06.10.2009, the date of payment should be considered as the date of the cheque i.e.15.09.2009. If so considered, no disallowance u/s 43B could have been made by the revenue authorities. The assessee in this regard primarily placed reliance on the decision of the Hon’ble Supreme Court in the case of CIT vs M/s.CIT vs M/s. Ogale Glass Works Ltd. 1955(1), SCR page 185 (SC) wherein it was held that when the cheque issued is honoured the date of payment of the cheque should be treated as the date on which the cheque was given. This decision was again reiterated by the Hon’ble Supreme Court in the case of D.I.T.(Exemption), New Delhi M/s Imeco Ltd. A.Y.2009-10 3 vs Raunaq Education Foundation in Civil Appeal No.90 of 2013 judgment dated 07.01.2013.
5. The argument on behalf of the assessee was rejected by CIT(A) for the reason that it was not known as to whether the assessee had sufficient funds in the bank account between 15.09.2009 and 30.09.2009. According to CIT(A) the assessee was in financial difficulty and there is every reason to believe that it would not have had sufficient funds between 15.09.2009 and 30.09.2009. Therefore the date of cheque cannot be taken as date of payment. CIT(A) accordingly confirmed the order of AO.
6. Aggrieved by the order of CIT(A) the assessee has preferred the present appeal before the Tribunal.
We have heard the rival submissions. The ld. Counsel for the assessee apart from reiterating the stand of the assessee as was put forth before CIT(A) further placed reliance on the decision of Hon’ble Punjab & Haryana High Court in the case of CIT vs Hindustan Wire Products Ltd. 253 ITR 299 (P&H) wherein it was held that when there is failure of a statutory corporation to encash a cheque before the due date contemplated u/s 43B of the Act and when a cheque was issued prior to the due date u/s 43B of the Act, no disallowance u/s 43B of the Act can be made. The ld. DR relied on the order of CIT(A).
We have considered the rival submissions. The factual aspects are not in dispute. The only aspect that needs consideration is the question as to whether between 15.09.2009 and 30.09.2009 the assessee had sufficient funds in his bank account. The ld. Counsel for the assessee submitted before us that the assessee was having cash credit account and therefore the cheque for Rs.50,00,000/- would have been cleared if it had been presented for payment between 15.09.2009 and 30.09.2009. This aspect has not been verified by the revenue authorities. In our view the date of cheque can be considered as date of payment only when in a situation where an assessee has sufficient balance to honour the cheque between the date of cheque and date on which it was encashed. Since this aspect has not been examined, the parties before us agreed that the issue can be remanded to the AO to verify this aspect and if the contention of M/s Imeco Ltd. A.Y.2009-10 4 the assessee is found correct then the disallowance u/s 43B of the Act should be deleted. We therefore set aside the order of CIT(A) on this issue and remand the issue to the AO for the purpose of verification of the factual aspect stated above. The AO will afford opportunity of being heard to the assessee in the set aside proceedings. Accordingly the appeal of the assesse is treated as allowed for statistical purposes.
In the result the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the Court on 18.08.2017.