Principal Commissioner Of Income Tax - 1, Kolkata v. M/S. Beekay Steel Industries Limited

Form No. (J2) IN THE HIGH COURT AT CALCUTTASPECIAL JURISDICTION (INCOME TAX)ORIGINAL SIDE P R E S E N T: THE HON’BLE JUSTICE T.S. SIVAGNANAMA N DTHE HON’BLE JUSTICE HIRANMAY BHATTACHARYYA ITAT/177/2021IA NO.GA/1/2021 PRINCIPAL COMMISSIONER OF INCOME TAX - 1, KOLKATAVS.M/S. BEEKAY STEEL INDUSTRIES LIMITED ITAT/177/2021IA NO.GA/2/2021 PRINCIPAL COMMISSIONER OF INCOME TAX - 1, KOLKATAVS.M/S. BEEKAY STEEL INDUSTRIES LIMITED Appearance : Mr. Saumen Bhattacharya, Adv.… for the appellant Mr. Subhas Agarwal, Adv...for the respondent Heard on : 25.01.2022 Judgment on : 25.01.2022 T.S. SIVAGNANAM, J. :- We have heard Mr. SoumenBhattacharyya, learned standing counsel for the appellant/revenueand Mr. Subhas Agarwal, learned counsel appearing for therespondent/assessee. It appears that there is a delay of 985 days in filing thisappeal. We have perused the affidavit filed in support of the petitionfor condonation delay and we find that there is no satisfactoryexplanation for condoning such huge delay. Nevertheless, the learnedcounsel for the parties were agreeable to argue the main appeal, itself,therefore, we exercise discretion and condone the delay. Accordinglythe delay in filing the appeal is condoned. The petition for condonation of delay is allowed and disposed of. ITAT 177 of 2021 This appeal by the revenue filed under Section 260A of theIncome Tax Act, 1961 (the Act) is directed against the order dated 20[th]November, 2018 passed by the Income Tax Appellate Tribunal “C”Bench, Kolkata (Tribunal) in ITA/954/Kol/2017 for the assessmentyear 2012-13. The revenue has raised the following substantial questionsof law for consideration : 1.Whether the Learned ITAT has committed substantialerror in law in not considering that under theprovision of Section 43B of the Income Tax Act, 1961certain payment should be allowed to be claimed as anexpenses only in the year in which they have been paidand not in the year in which the liability to pay suchsums was incurred.error in law in not considering that under theprovision of Section 43B of the Income Tax Act, 1961certain payment should be allowed to be claimed as anexpenses only in the year in which they have been paidand not in the year in which the liability to pay suchsums was incurred. 2.Whether the Learned ITAT erred in law and failed toappreciate the term, object and purpose of theprovisions contained in Section 263 of the Income TaxAct, 1961, by passing the impugned order.appreciate the term, object and purpose of theprovisions contained in Section 263 of the Income TaxAct, 1961, by passing the impugned order. We have heard Mr. Soumen Bhattacharyya, learnedstanding counsel for the appellant/revenue and Mr. Subhas Agarwal,learned counsel appearing for the respondent/assessee. The question before the Tribunal was whether the PrincipalCommissioner of Income Tax – 1, Kolkata was justified in invoking itspower under Section 263 of the Act. The assessee was issued a show-cause notice under Section 263 of the Act calling upon them toexplain as to why the assessment order should not berevised/modified or set aside on the ground that a certain sum ofmoney had been debited towards excise duty of finished goods and thesame amount had been shown under the head “Short Term Provision”in the balance sheet as on 31[st] March, 2012. Further it was stated We have heard Mr. Soumen Bhattacharyya, learnedstanding counsel for the appellant/revenue and Mr. Subhas Agarwal,learned counsel appearing for the respondent/assessee. The question before the Tribunal was whether the PrincipalCommissioner of Income Tax – 1, Kolkata was justified in invoking itspower under Section 263 of the Act. The assessee was issued a show-cause notice under Section 263 of the Act calling upon them toexplain as to why the assessment order should not berevised/modified or set aside on the ground that a certain sum ofmoney had been debited towards excise duty of finished goods and thesame amount had been shown under the head “Short Term Provision”in the balance sheet as on 31[st] March, 2012. Further it was stated that as per annexure –X, the Tax Audit Report shows payment ofexcise duty to the extent of only Rs.30,45,000/- before the due datefor submitting the return. Therefore, the Commissioner proposed thatthe remaining amount of Rs.5,43,76,924/- was required to be paidback. The assessee submitted reply dated 20[th] February, 2017.However, the Commissioner was not satisfied with the reply andconfirmed the proposal in the show-cause notice issued under Section263 of the Act, consequently set aside the assessment order dated 30[th]March, 2015 and directed the assessing officer to pass a freshassessment order. Pursuant to such direction the assessing officergave effect to the direction by passing an assessment order dated 17[th]July, 2017. The learned standing counsel for the appellant/revenuewould draw our attention to the giving effect of the order dated 17[th]July, 2017 and submits that the excise duty liability cannot beallowed as deduction since it was not actually paid by the assesseeduring the relevant year. The assessee challenged the order passed bythe CIT by filing an appeal before the Tribunal. The Tribunal took noteof the submission that the assessee has made provision for exciseduty or closing stock of finished goods in respect of various divisionsand proceeded to examine the central excise returns and not stoppingwith the certificate issued by the Tax Auditor in the Audit Report. Thisexercise was done by the Tribunal to satisfy itself as to whetherpayments have been effected or adjusted against the available input credit of the respective division. This finding of the Tribunal would berelevant. “From the said excise returns, we find that the totalexcise duty payable on closing stock of finished goods inthe sum of Rs.5,74,21,924/- minus sums paid to theextent of Rs.30,45,000/- i.e. Rs.5,43,76,924/- gotadjusted with available input credit in the respectivedivisions which effectively tantamount to constructivepayment made by the assessee in the next financial yearbut before the due date of filing return of income u/s139(1) of the Act.” After noting the factual issue, the Tribunal also consideredas to whether the CIT was justified in observing as to whether theassessing officer failed to conduct any enquiry. The Tribunalconsidered the paper book filed by the assessee and found that theassessing officer had issued a questionnaire dated 11[th] November,2014 along with the notice under Section 142(1) of the Act and soughtfor calculation of valuation of closing stock and the relevant detailswere furnished by the assessee along with the letter dated 13[th]February, 2015 and thereafter the assessing officer having beenconvinced on the said working, did not make any addition ordisallowance under Section 43(B) of the Act on the subject issue.Thus, we find that the Tribunal has rightly taken note of the CentralExcise returns and noted that one of the units of the assessee wasengaged only in job work activity and therefore, not entitled for benefit of input credit and after taking note of the sum paid on the saidaccount, the Tribunal also found that the balance amount wasadjusted with the available input credit in the respective divisionswhich undoubtedly would tantamount to actual payment of exciseduty. Thus, we find that the Tribunal rightly granted relief to theassessee and the order does not call for any interference. In the result the appeal filed by the revenue is dismissed andthe substantial questions of law are answered against the revenue. (T. S. SIVAGNANAM, J.) I agree. (HIRANMAY BHATTACHARYYA, J.)