JUDGMENT
S.H. Kapadia, J.
1. Being aggrieved by the order passed by the Tribunal, dt. 11th Sept. 2000, the Department has come in appeal under Section 260A of the IT Act. By the impugned order, the Tribunal has set aside penalty of Rs. 5,69,798 under Section 271(1)(c) of the IT Act, 1961, for the asst. yr. 1992-93.
Facts
2. Assessee is a private limited company engaged in the business of manufacture of non-ferrous alloys. During the course of assessment, the AO noticed that an amount of Rs. 9,90,953 was collected by the assessee. However, it was not credited to P&L a/c. In reply to a query, the assessee submitted that it had maintained a separate account for sales-tax collected, and therefore, Rs. 9,90,953 was not credited to P&L a/c. It was further argued by the assessee that by maintaining separate account for sales-tax collected, the P&L a/c was not affected. This argument of the assessee was rejected by the AO who made an addition of Rs. 9,90,953. Based on this addition, the AO initiated penalty proceedings under Section 271(1)(c). Consequently, the AO levied the minimum penalty of Rs. 5,69,796. When the matter came before the Tribunal, it took the view that in the case of Allied Motors (P) Ltd. v. CIT , one of the issues was whether sales-tax collected during a particular accounting period would be a trading receipt even though the assessee maintains a separate account for the same without crediting the same to P&L a/c. The Tribunal took the view that this was a disputed point and in the circumstances, it cannot be said that the assessee had concealed the income or had furnished inaccurate particulars.
Consequently, the penalty was set aside. Being aggrieved, the Department has filed this appeal under Section 260A of the IT Act.
Arguments
3. Mr. R.V. Desai, learned senior counsel appearing on behalf of the Department, contended that the judgment of the Supreme Court in Allied Motors” case (supra) had no application to the facts of this case. Secondly, he contended that in this case, Section 43B of the IT Act, which was the subject-matter of the judgment in Allied Motors, did not apply to the facts of this case as in this case, the assessee had concealed the trading receipt and it was not a case of disallowance under Section 43B, but it was a case of concealment of trading receipt. As stated above, none appeared for the assessee though served.
Findings
4. We find merit in this appeal. Firstly, Section 43B of the IT Act deals with disallowance. That section has no application to the present case. In the present case the assessee, having collected sales-tax, failed to pay the same. Secondly, in the case of Allied Motors (supra), the facts were as follows. For the asst. yr. 1984-85, the assessee filed the return, declaring an income of Rs. 1.91 lakhs. The ITO disallowed deduction of Rs. 5.78 lakhs, which was on account of sales-tax collected by the assessee for the last quarter of the relevant accounting year ending 30th June, 1983. The amount was payable within 30 bays from end of the quarter. The deduction claimed by the assessee was disallowed under Section 43B, which was inserted in the statute w.e.f. 1st April, ,1984. The assessee filed an appeal to the CIT(A) against the disallowance. That appeal was dismissed. The Tribunal also dismissed the appeal following the judgment of the Delhi High Court in the case of Sanghi Motors v. Union of India and Ors. (1991) 187 ITR 703 (Del) and in the case of Escorts Ltd. v. Union of India and Ors. (1991) 189 ITR 81 (Del). It was held by the Supreme Court that in view of the proviso to Section 43B of the IT Act, any sum payable by way of tax or duty, etc., liability for which was incurred in the previous year, was allowable as deduction if it was actually paid by the due date of filing the returns under Section 139(1) of the IT Act. The Supreme Court found, on facts, that the assessee had actually paid the tax collected before the due date of furnishing the returns under Section 139(1) of the IT Act. This fact is very important. In the present case, the said proviso to Section 43B is not applicable as the assessee has not paid the tax before the due date. In the circumstances, the judgment of the Supreme Court in Allied Motors’ case (supra) has no application. In the present case, the assessee had concealed the trading receipt.
There was no question of disallowance. There was no question of applicability of Section 43B. On facts, Section 271(1)(c) was applicable.
5. Accordingly, we answer the following question :
Question : “Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in deleting the penalty of Rs. 5,69,798 levied under Section 27(1)(c) of the IT Act, 1961, by the AO and sustained by the CIT(A) in respect of an amount of sales-tax of Rs. 9,90,953 collected by the assessee but not credited to the P&L a/c as the assessee had maintained a separate accounting for sales-tax collected and thus concealed the particulars of its income and furnished inaccurate particulars?”
Answer
6. For the reasons given hereinabove, we answer the above question in the negative, i.e., in favour of the Department and against the assessee.
7. Accordingly the appeal is allowed. No order as to costs.