9911796707
TMI Blog2025 (2) TMI 158X X X X Extracts X X X X X X X X Extracts X X X X ..... ty was initiated for furnishing inaccurate particulars of income and in the penalty order also the penalty was imposed for the same default. 2. Whether on the facts and circumstances of the case and in law, the Ld. CIT()A is correct in deleting the penalty u/s. 271(1)(c) of Act ignoring the fact that the assessee was fully aware of his default regarding furnishing of inaccurate particulars of income as is clearly mentioned in order passed u/s. 143(3) r.w.s. 263 and the assessee was offered adequate opportunity before the Assessing Officer to set out his defence against levy of penalty?." 3. The relevant facts in brief are that the Assessee, a public Limited company engaged, inter alia, in manufactured and sale of cement, filed original return of income for the Assessment Year 2011-2012 on 30/11/2011. Thereafter, the Assessee filed a revised return of income on 27/11/2012, which was selected for regular scrutiny. Assessment under Section 143(3) of the Act was framed on the Assessee vide Assessment Order, dated 16/03/2015. Subsequently, the aforesaid Assessment Order was revised vide order, dated 29/03/2017, passed under Section 263 of the Act by the Commissioner of Income Tax (LT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nishing inaccurate particulars of income as the Assessee had made disclosure of the relevant facts. 6. Being aggrieved by the above order passed by the CIT(A), the Revenue has preferred the present appeal before the Tribunal on the grounds reproduced in paragraph 2 above. 7. We have heard both the sides and have perused the material on record. 8. It emerges that during the original assessment proceedings the Assessing Officer noted that the Assessee had created Provision for Mine Reclamation Expenses amounting to INR.3.98 Crores which were included under the head 'Manufacturing & Other Expenses' debited to the Profit & Loss Account for the relevant previous year. The Assessee was asked to furnish details of Mine Reclamation Expenses and explain the allowability of the same as deduction vide Query No. 36 raised by way of Notice, dated 05/12/2014, issued by the Assessing Officer. In response, the Assessee filed Reply Letter, dated 16/12/2014, and provided justification for claim of deduction of Mine Reclamation Expenses which reads as under: "21.1 During the previous year relevant to the assessment year under consideration the assessee have incurred mines reclamation expenses am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see, it can be seen that the provision for Mine Reclamation Expenses was made in terms of Rule 34 of Mineral Conservation and Development Rules, 1988, framed under Section 18 of Mines And Minerals Regulation and Development Act 1957, which oblige the holder of license to undertake site restoration, reclamation, and rehabilitation of land affected by prospecting or mining operations. It was the contention of the Assessee that the mining activity formed part of the business of the Assessee-company, and therefore, the reclamation expenses were incurred wholly and exclusively for the purpose of business of the Assessee on account of commercial expediency. 10. During the proceeding before the Tribunal, it was contended on behalf of the Revenue that the Assessing Officer had in Paragraph 11.7 of the Penalty Order clearly returned a finding that the Assessee had failed to provide a reasonable explanation for making claim of deduction in respect of provision Mine Reclamation Expenses. Per contra, it was a contended on behalf of the Assessee that the CIT(A) had appreciated the explanation offered by the Assessee during the original assessment proceedings which stood substantiated by the st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncurred during the relevant previous year aggregating to INR.2.18 Crores. 13. On perusal of the abovesaid documents/details (placed before us as part of the paper-book), we find that the complete disclosure of all primary facts was made by the Assessee during the assessment proceedings. Further, the Assessee had also provided explanation that the deduction for provisions for Mine Reclamation Expenses was claimed on the understanding that the Assessee was under statutory obligation to incur the aforesaid expenses for restoration/reclamation of mining sites as per the provisions of Mineral Conservation and Development Rules, 1988, framed under Section 18 of Mines And Minerals Regulation and Development Act 1957. Rule of 34 of the aforesaid rules reads as under: "34. Reclamation and rehabilitation of lands: Every holder of prospecting licence or mining lease shall undertake the phased restoration, reclamation and rehabilitation of lands affected by prospecting or mining operations and shall complete this work before the conclusion of such operations and the abandonment of prospect or mine." 14. It has been claimed that the Assessee was of the bonafide belief that the Assessee was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1961." (Emphasis Supplied) 15. On perusal of above, we find that the Assessing Officer had failed to appreciate that the amount of INR.3.98 Crores included Mine Reclamation Expenses of INR.2.18 Crores actually incurred during the relevant previous year. Further, there was no discussion on the explanation furnished by the Assessee. Similarly, while levying penalty vide order dated 31/03/2022 passed under Section 271(1)(c) of the Act the Assessing Officer has concluded that the Assessee had failed to offer any explanation. We find that the aforesaid finding returned by the Assessing Officer is factually incorrect. In our view, the Assessee had disclosed all the primary facts. Further, even if it is assumed that the Assessee had furnished inaccurate particulars of income, we are of the view that the Assessee had discharged the burden cast under Section 273B of the Act to prove that the Assessee had reasonable cause for the same. The Assessee was of the bonafide belief that the liability to incur expenses in terms of Rule 34 of the Mineral Conservation and Development Rules, 1988 was an ascertained liability and provision created to meet the same was allowable as deduction under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d u/s. 246 of the I.T. Act by the learned CIT(Appeals). However, the present appeal before us is an order u/s. 263 of the I.T.Act. Hence, in our considered opinion, this issue is not arising out of the order in appeal before us. Be as it may, the assessee requests that actual expenses of Rs. 2.18 crores debited in the above said note to its accounts should be allowed as a deduction, can be considered only if there has not been any provisions made earlier, there cannot be a double deduction thereof in the current assessment year." 17. We are alive to the fact that in Paragraph 11.6 and Paragraph 12 of the Penalty Order, the Assessing Officer also stated that the Assessee has filed 'inaccurate particulars of income' while, at the same time, making reference to Explanation 1 to Section 271(1)(c) of the Act. However, in our view, on a co-joint reading of Paragraph 11.13 and 13 of the Penalty Order it becomes clear that the Assessing Officer has finally levied penalty under Section 271(1)(c) of the Act (read with Explanation 1 thereto) for concealment of the particulars of income whereas the charge as per the Assessment Order passed under Section 143(3) read with Section 263 of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X
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