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2015 (6) TMI 643 - ITAT KOLKATA

2015 (6) TMI 643 - ITAT KOLKATA - TMI - Order passed under section 154 by the AO annulled by CIT(A) - AO disallowed to the assessee excess duty, penal interest and central excise and interest - whether the rectification order passed by the AO is valid or not? - Held that:- Mistakes are of two types, mistake of fact or mistake of law. So far the fact is concerned, there is no mistake. The facts submitted before us are undisputed. In respect of mistake of law, the ld. DR, even though vehemently co .....

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apparent on record ? - Held that:- It is not disputed that the assessee was following the mercantile system of accounting. In the mercantile system of accounting, a liability is deductible when it accrues. In the case of the assessee, we noted that the Central Excise Settlement Commission passed the order on 29.02.2008 with corrigendum dated 28.03.2008. Therefore, so far the interest is concerned, the liability accrues when the order was passed by Central Excise Settlement Commission. But the a .....

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uction only in the assessment year 2008-09 and in case the assessee disapproves the assessee could have argued that the accrual of the liability got postponed and it will accrue only when the High Court passed the order. In our opinion, there cannot be two views possible. So far the deduction of the interest in respect of excise duty is concerned, to that extent, we are of the view that there was a mistake apparent in the order of the AO passed under section 143(3) and therefore, the AO has righ .....

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the liability finally is determined by the order of the Hon’ble Delhi High Court, if the assessee proves that the liability accrues during that assessment year. - Decided partly in favour of revenue. - I.T.A. No.645/Kol/2014 - Dated:- 10-6-2015 - Shri P.K.Bansal, A.M. & Shri Mahavir Singh, JJ. For the Petitioner : Shri S.K.Bagaria, Sr. Advocate, Shri A.K.Tulsiyan, FCA, Shri Gopal Das, Advocate & Shri Saurabh Bagaria, Advocate For the Respondent: Shri Ajoy Kumar Singh. CIT, DR ORDER Per S .....

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3. Brief facts relating to this case are that the return showing loss of ₹ 29,09,33,405/- was filed by the assessee on 29.03.2009. Subsequently, an assessment was completed under section 143(3) allowing the claim of the assessee in respect of payments made for excise duty amounting to ₹ 29,17,01,515/- and interest thereon at ₹ 12,93,62,086/- on various dates from the period 1.04.2008 to 31.03.2009, which pertains to the period or previous years 2001-02 to 2005-06. Subsequently, .....

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nt of Excise Duty of ₹ 29,17,01,515/- and Interest ₹ 12,93,62,086/- and also ₹ 3,42,56,200/- is factually incorrect and totally different from the normal Excise Duty which becomes payable regularly as on 31st March of every year and not paid by the end of financial year or within the due date for filing of return due to any reason end also taxed accordingly for the re I event year. Here, the assessee would not have come forward voluntarily to pay the aforesaid amount if no raid .....

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rid of all kind of penalties and prosecutions even after indulging the huge suppression of sale and evading income taxes on profit of suppressed sale, the unaccounted money invested to do the suppressed sale. Identically, another sum of ₹ 2,42,56,200/- as part of Excise Duty evasion and pertains to the past years covered by the order of Settlement Commission of Excise & Customs as well as the part of additional income before ITSC Kolkata and also an issue (questioned) vide the notice u .....

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e will vitiate the purpose of filing of application with additional income to settle the willful attempt of evasion of tax without inviting any penalty and prosecution (as happened in the case of assesse). Further, it will be a blank cheque for any assesse if this kind of deduction will be allowed because pay once following the order of Income Tax Settlement Commission here ITSC Kolkata without the burden of penalty even after evading the tax and then enjoy the recurring benefit without paying a .....

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see had made an application to the Settlement Commission for Customs & Central Excise and consequently also to the Settlement Commission of Income-Tax for the financial year 2001-02 to 2005-06 for the Central excise matters. Central Excise Settlement Commission passed the final order of settlement dated 29.02.2008 thereby excise liabilities for the assessment years 2001-02 to 2005-06 were determined which consisted excise duty, interest thereon and some penalties. Consequently, Income Tax Se .....

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the earlier assessment year 2008-09 that part of the excise duty paid in the previous year relevant to assessment year 2008-09 relied to prior period and therefore, under the mercantile system of accounting, they were not allowable. The AO, therefore, took the recourse to rectify the same in the impugned assessment year. The CIT(A) took the view that the AO indeed and in fact made the reassessment in the guise of rectification and therefore he annulled the impugned rectification order. On merit .....

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4,26,761/- and interest thereon at ₹ 58,29,439/-, he decided in favour of the assessee. 4. We heard the rival submissions and carefully considered the same along with the orders of tax authorities below as well as case laws cited before us. Now the question before us is whether the rectification order passed by the AO is valid or not. Brief facts as we gather, are that the assessee filed settlement application before the Customs & Central Excise Settlement Commission for the period 10. .....

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e Central Excise Settlement Commission, the assessee made the following payments during the impugned assessment year. (a) Duty of ₹ 14,58,50,758/- paid vide Challan No.TR-06/001 dated 28.4.2008. (b) Duty of ₹ 14,58,50,757/- paid vide Challan No.TR-06/002 dated 31.05.2008. (c) Interest of ₹ 12,93,62,086/- paid on 16.02.2009 and 17.03.2009 vide Challan Nos. TR-06/010, 004, 011 and 005. (d) Penalty of ₹ 40 Crores paid on 01.10.2008, 07.11.2008, 12.12.2008, 05.01.2009 and 06. .....

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d interest of ₹ 12,93,62,086/- as paid. During the impugned assessment year, the assessee did not claim any deduction for the penalty of ₹ 40 crores paid by it. In the assessment order passed under section 143(3), the said payments were allowed as per the provisions of section 43B(a) of the Income Tax Act. Subsequently, after issuing the notice under section 154, the AO, vide order dated 24.05.2013, disallowed the payment in respect of excise duty of ₹ 29.17 crores and interest .....

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liability to pay such sum, was incurred by the assessee according to the method of accounting regularly employed by him) only in the previous year, in which such sum is actually paid by the assessee. In view of the clear mandate of section 43B(a), we are of the view that law is very clear that the excise duty is deductible in the year, in which, the assessee has actually paid the excise duty. The ld. DR before us, even though vehemently relied on the order of the AO passed under section 154, but .....

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apparent on record. Mistake must be obvious and patent not something which can be established by long drawn process of reasoning and points on which there can be two opinions. The decision on a debatable point of law is not a mistake apparent from the record. The mistakes are of two types, mistake of fact or mistake of law. So far the fact is concerned, there is no mistake. The facts submitted before us are undisputed. In respect of mistake of law, the ld. DR, even though vehemently contended bu .....

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mistake apparent on record and whether it is debatable in which year the interest on excise duty has to be allowed. It is not disputed that the assessee was following the mercantile system of accounting. In the mercantile system of accounting, a liability is deductible when it accrues. In the case of the assessee, we noted that the Central Excise Settlement Commission passed the order on 29.02.2008 with corrigendum dated 28.03.2008. Therefore, so far the interest is concerned, the liability accr .....

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