TMI Blog2021 (2) TMI 395X X X X Extracts X X X X X X X X Extracts X X X X ..... . passed by the ld. CIT(A) in all appeals is set aside. - Decided in favour of assessee. - I.T.A Nos.2257 to 2263/Kol/2019 - - - Dated:- 16-12-2020 - Shri Waseem Ahmed, AM And Ms. Madhumita Roy, JM For the Appellant : None For the Respondent : Shri Dhrubajyoti Roy, JCIT ORDER PER MS. MADHUMITA ROY: The instant seven appeals filed by the assessee are against the order dated 08.08.2019arising penalty order passed by the Commissioner of Income Tax (Appeals)-21, Kolkata for the assessment years 2010-11 to 2016-17 u/s 271(1B)of the Income Tax Act, 1961 (hereinafter referred to as the Act ). 2. None appeared on behalf of the assessee at the time of hearing of the matter and therefore we have heard the ld. DR and perused the relevant materials available on record before us. 3. The imposition of penalty of ₹ 10,000/- u/s 271(1B) of the Act has been challenged by the assessee for non-compliance of the notice u/s 142(1) of the Act dated 28.11.2017 as it appears from the record and also submitted by the ld. DR that in the course of assessment proceedings, notice u/s 142(1) of the Act along with detailed questionnaire was issued and duly served upon t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute. Those in charge of the affairs of the Company in failing to register the Company as a dealer acted in the honest and genuine belief that the Company was not a dealer. Granting that they erred, no case for imposing penalty was made out. Liability to pay sales tax is imposed by s. 4 of the Act. Every dealer whose gross annual turn over exceeds ₹ 10,000/is liable to pay tax during the ten quarters in question. The expression dealer wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court observed: It is the Stores Department of the company as a whole which deals with the purchase, storage and sale of all the goods required both for acquisition and issue of materials to be used for the construction and operation work of the Company ......... the. Company had to construct not only the buildings but also roads, railways, etc., acquire machinery and perform other multifarious activities connected with the establishment of steel plants and construction of the township. There is nothing in the statement to show that the Company had at any time even contemplated the allocation of the total expenditure incurred for the maintenance of its Stores Department between the expenditure incurred in respect of the goods namely bricks, cement, steel etc. and other goods. If such allocation was not even contemplated, it will be unreasonable to say that when these goods were sold to the building contractors at the prices mentioned above, the intention of the Company was merely to utilise the difference in price to meet the overhead charges in respect of these articles and that there was no profit making motive. It is unfortunate that in submitting the statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e office to have this done before he completes and delivers his tender. Then follow the conditions of contract of which condition No. 10 is material; it states--- If the specification or estimates of the work provides for the use of any special description of materials to be supplied from the Engineer-in-Charge's store, or if it is required that the contractor shall use certain stores to be provided by the Engineer- in-Charge (such materials or stores, and the prices to be charged therefor as hereinafter mentioned being so far as practicable for the convenience of the contractor, but not so as in any way to control the meaning or effect of this contract specified in the schedule or memorandum hereto annexed), the contractor shall be supplied with such materials and stores as required from time to time to be used by him for the purpose of the contract only, and the value of the full quantity of materials and stores so supplied at the rates specified in the said schedule or memorandum may be set off or deducted from any sums then due, or thereafter to become due to the contractor under the contract, or otherwise or against or from the security deposit. All materials s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny was not carrying on the business of selling cement and structural steel. There is of course no statement in the schedule that the price charged by the Company in excess of the price paid by the Company to its contractors for bricks was in respect of storage charges. But neither the Tribunal nor the High Court has referred to this important piece of evidence and we are unable to decide these appeals unless we have an additional statement of facts in the light of the relevant evidence as to whether the excess charged over and above the price which the Company paid for procuring cement and steel (expressly called storage charge) and bricks was intended to be profit. If the Company agreed to charge a fixed percentage above the cost price, for storage, insurance and rental charges, it may be reasonably inferred that the Company did not carry on business of supplying materials as a part of- business activity with a view to making profit. The Tribunal's statement of case is bald and in recording its findings the Tribunal has ignored a very important piece of evidence. To enable us to answer the questions referred, it is. necessary that the Tribunal should be called upon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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