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The DCIT-10(1), Aayakar Bhavan, Mumbai-400 020 Vs. M/s. Maharashtra State Electricity Distribution Co. Ltd. Prakashgad, A.K. Marg, Stational Road, Bandra , Mumbai-400 051
March, 20th 2015
                ,  Û `'                               

  IN THE INCOME TAX APPELLATE TRIBUNAL "B" BENCH, MUMBAI

   [^ . , Ú¢   Û]   ãá,    ¢

          BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND

              SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER

          ./I.T.A. Nos. 330 & 331/Mum/2013
     ( [ [ / Assessment Years : 2007-08 & 2009-190

The DCIT-10(1), / M/s. Maharashtra State
Aayakar Bhavan,      Electricity Distribution Co.
                 Vs.
Mumbai-400 020       Ltd.,
                     Prakashgad, A.K. Marg,
                     Stational Road,
                     Bandra ($E),
                     Mumbai-400 051
    . /   . / PAN/GIR No. : AAECM 2933K
( /Appellant)   ..       (× / Respondent)
   / Appellant by:       Shri S.J. Singh
                                              Shri K.K. Ved

             / Date of Hearing                           :12.03.2015
             /Date of Pronouncement :18.03.2015

                            / O R D E R


PER N.K. BILLAIYA, AM:


      These two appeals by the Revenue are directed against two
separate orders of the Ld. CIT(A)-21, Mumbai pertaining to assessment
years2007-08 and 2009-10. Both these appeals were heard together and
dispose of by this common order for the sake of convenience.
                                      2               ITA No. 330 & 331/M/2013




ITA No. 330/M/2013- A.Y. 2007-08



2.     The sole grievance of the Revenue is that the Ld. CIT(A) erred in
deleting the penalty levied by the AO amounting to Rs. 455. 34 crores
u/s. 271(1)(c) of the Act.

3.     Briefly stated the facts of the case are that during the course of the
scrutiny assessment proceedings, the Assessing Officer noticed that the
assessee has paid a sum of Rs. 1351.62 crores to M/s. Power Grid Corpn.
Of India Ltd. and M/s. Maharashtra State Electricity Distribution Co. Ltd.
for use of their electricity transmission network, pursuant to a Bulk
Power Transmission agreement executed between            the parties.   The
assessee was asked to explain as to whether any tax has been deducted at
source on such payment. It was explained that the assessee was not liable
to deduct any tax at source. The explanation of the assessee did not find
any favour from the AO who disallowed Rs. 1351.62 crores u/s. 40(a)(ia)
of the Act.

4.     The matter travelled upto the Tribunal. The Tribunal in ITA No.
2276/M/2011 and 2405/M/2011 deleted the addition made u/s. 40(a)(ia)
of the Act therefore to this extent, we do not find any error in the findings
of the Ld. CIT(A). The Ld. CIT(A) has correctly held that no penalty
can be levied as the quantum additions have been deleted by the Tribunal.

4.1.   Proceeding further, during the course of the assessment
proceedings, the AO found that the assessee has claimed Rs.
1,15,07,000/- as Revenue expenditure on account of meter equipment.
The assessee was asked to explain as to why the excess claim of
                                    3                 ITA No. 330 & 331/M/2013


expenditure as pointed out by the CAG in his report should not be
disallowed. The assessee explained that necessary rectification entries
have been passed in the subsequent years therefore no disallowance
should be made. Penalty proceedings u/s. 271(1)(c) of the Act has been
initiated by the AO.




4.2.   During the course of the penal proceedings, the assessee was asked
to explain as to why the penalty should not be levied on meter equipment
charges claimed as revenue expenditure.        It was explained that the
assessee had made complete disclosure in the statement of accounts
therefore there is no question of any concealment.

4.3.   After considering this explanation of the assessee, the AO observed
that during the course of audit by the CAG party, it came to the notice
that the assessee instead of capitalizing the expenditure incurred on cost
of new meters claimed the same as revenue therefore there was
overstatement of revenue expenditure . The AO was convinced that the
assessee has claimed a wrong expenditure, therefore, liable for penalty
u/s. 271(1)© of the Act for furnishing inaccurate particulars of income.
The AO accordingly levied the penalty.

5.     The assessee carried the matter before the Ld. CIT(A) and
reiterated its claim relying upon the decision of the Price Waterhouse
Coopers Pvt. Ltd Vs CIT in Civil Appeal No. 6924/2012.               After
considering the facts and the submissions, in the light of the decision of
the Hon'ble Supreme Court in the case of Price Waterhouse Coopers
Pvt. Ltd(supra), the Ld. CIT(A) deleted the penalty so levied.

6.     Aggrieved by this, the Revenue is before us.
                                      4                 ITA No. 330 & 331/M/2013


7.    In so far as the deletion of penalty on disallowance made u/s.
40(a)(ia) is concerned, the Ld. Departmental Representative fairly
conceded that the quantum additions have been deleted by the Tribunal,
therefore there is no basis for the levy of penalty. In so far as the levy of
penalty on overstatement of expenditure is concerned, the DR strongly
supported the assessment order. It is the say of the Ld. DR that by
claiming capital expenditure as revenue expenditure, the assessee has
clearly filed inaccurate particulars of its income, therefore, the AO has
rightly levied the penalty u/s. 271(1)(c) of the Act.

8.    Per contra, the Ld. Counsel for the assessee strongly contended that
the penalty cannot be levied because the assessee has not filed any
inaccurate particulars.    All the material facts were disclosed in the
statement of accounts itself. It is the say of the Ld. Counsel that the
assessee is a Government company and therefore there cannot be any
concealment of particulars. In support of his claim, the assessee relied
upon the decision of the Tribunal in the case of Gurbux Kaur Sandhu Vs
Inspecting ACIT 15 TTJ (CHD)128, Mumbai Bench in the case of Dena
Bank in ITA Nos. 6336 to 6339/M/1983. The Ld. Counsel also relied
upon the decision of the Hon'ble Calcutta High Court in the case of Smt.
Bani Roy Choudhary 131 ITR 578 and on the decision of the Hon'ble
Supreme Court in the case of Cement Marketing Co. 124 ITR 15.

9.    We have carefully perused the orders of the authorities below. Let
us first see the conduct of the assessee. The assessment order made u/s.
143(3) of the Act is dt. 31.12.2009. The return was filed on 30.10.2007.
The CAG report is dt. 17.5.2008. This means that on 17.5.2008 the
assessee was well aware of the qualified remarks made by the CAG in so
far as the claim of expenditure as revenue expenditure in respect of meter
                                     5                 ITA No. 330 & 331/M/2013


equipment is concerned. The assessee did not care to revise its return.
Not only the assessee did not file any revised return of income but the
assessee at the same time contested the disallowance made by the AO in
the appeal filed before the Ld. CIT(A). The Ld. CIT(A) confirmed the
disallowance made by the AO.

10.   The assessee carried the matter before the Tribunal though did not
press the ground relating to this disallowance but the fact of the matter is
that the assessee did contested this disallowance before the Tribunal.
This conduct of the assessee clearly distinguishes the facts of the present
case with all the cases relied upon by the assessee.

10.1. Moreover in the case of Price Waterhouse Coopers Pvt. Ltd(supra),
once the mistake was pointed out to the assessee, the assessee
immediately filed a revised return and the matter ended then and there
only. On these peculiar facts, the Hon'ble Supreme Court deleted the
levy of penalty.    The Ld. CIT(A) has erroneously relied upon this
decision of the Hon'ble Supreme Court on the facts                  narrated
hereinabove.

10.2. In our considered opinion, the conduct of the assessee speaks for
itself. We, therefore, set aside the findings of the Ld. CIT(A) and uphold
the levy of penalty u/s. 271(1)(c) of the Act in so far as it relates to the
claim of capital expenditure as revenue expenditure.

11.   Since the levy of penalty is deleted in respect of disallowance made
u/s. 40(a)(ia) of the Act, we restore this issue to the file of the AO with a
direction to recompute the penalty in respect of the claim of capital
expenditure as revenue expenditure. We order accordingly.
                                      6                ITA No. 330 & 331/M/2013


12.   In the result, the appeal filed by the assessee is partly allowed.



ITA No. 331/M/2013-A.Y.


13.   The sole grievance of the Revenue is that the Ld. CIT(A) erred in
deleting the addition of Rs. 7,95,16,000/- on account of under statement
of Revenue.

14.   At the very outset, the Ld. Counsel for the assessee stated that the
issue raised by the Revenue has been decided by the Tribunal in earlier
assessment years in favour of the assessee and against the Revenue. The
Ld. Counsel for the assessee placed the order of the Tribunal for A.Y.
2007-08 and 2008-09 in ITA Nos. 2276 , 2405, 7539 & 8572/M/2011.

15.   The Ld. Departmental Representative pointed out that the facts are
totally different and therefore the issues cannot be taken as covered in
favour of the assessee.

16.   The Ld. Counsel for the assessee rebutting to the statement made
by the Ld. DR, drew our attention to the findings of the Ld. CIT(A)
pointing out that the Ld. CIT(A) has followed the order of the Tribunal
for earlier assessment year, therefore it cannot be said that the issue is not
covered by the earlier order of the Tribunal.

17.   We have carefully perused the orders of the authorities below. We
have also considered thoughtfully the decision of the Tribunal for earlier
assessment years placed before us by the Ld. Counsel.
                                    7                ITA No. 330 & 331/M/2013


17.1. Let us first understand the facts relating to the addition of Rs.
7,95,16,000/-. This find place at para 5.1 on page-2 of the assessment
order which reads as under:


             "Addition on account of unbilled revenue

             The CAG in its comments on Revenue from sale of power'
             has stated as under:

             "The above is understated due to

             a) Non-accountal of supplementary bills on introduction of
                new tariff categopry HT-II commercial at Rastapeth-
                Rs.644.71 lakhs
             b) Non-consideration of unbilled revenue for reliability
                charges for zero load shedding in Pune city at Rastapeth
                and at Ganesh Khind-Rs. 150.45 lakhs."

                In reply to the comment of the CAG, the assessee's
                management has replied as under (pg. 45 of the Annual
                Report.)

                "The necessary rectification entry has been passed
                during the financial year 2009-10"

17.2.        In the earlier assessment year i.e. 2007-08, the Tribunal had
the occasion to consider the following facts before it which find placed at
para 10.1 of the order which reads as under:

             "The facts relating to A.Y. 2007-08 are that from the audit of
             the assessee by the CAG u/s. 619(4) of the Companies Act, it
             was noted that the assessee did not recognize the unbilled
             revenue (revenue for energy supplied and bills not issued till
             March, 2007) to the extent of Rs. 36.95 crores resulted in the
             understatement of revenue, which was added to the income
             of the assessee."
                                      8              ITA No. 330 & 331/M/2013





      Thus it can be seen that the facts before the Tribunal in earlier
assessment years were totally different from the facts of the year under
consideration as mentioned hereinabove.

17.3 It appears that the First Appellate authority has been simply carried
away by the submissions made by the assessee that the issue is covered
by the earlier order of the Tribunal. It is clear that the Ld. CIT(A) has
decided the issue in favour of the assessee without understanding the
facts of the case and without comparing it with the facts of the earlier
assessment year. This make the order of the Ld. CIT(A) erroneous.

18.   In the interest of justice and fair play, we restore this issue to the
file of the Ld. CIT(A) to be decided afresh on the peculiar facts for the
year under consideration and not to be carried away by the decision of the
Tribunal in earlier assessment years. The Ld. CIT(A) is directed to
decide this issue afresh after giving a reasonable and sufficient
opportunity of being heard to the assessee.

19.   In the result, the appeal filed by the assessee for ITA No. 330/M/13
for A.Y. 2007-08is partly allowed and ITA No. 331/M/13 for A.Y. 2009-
10 is treated as allowed for statistical purpose.

      Order pronounced in the open court on 18th March, 2015


               Sd/-                                   Sd/-
      (D.MANMOHAN )                            (N.K. BILLAIYA)
  Ú¢ / VICE PRESIDENT                    / ACCOUNTANT MEMBER
 Mumbai;  Dated : 18th March, 2015
.../ RJ , Sr. PS .../ RJ , Sr. PS
                           9     ITA No. 330 & 331/M/2013



    /Copy of the Order forwarded to :
1.  / The Appellant
2.   × / The Respondent.
3.    () / The CIT(A)-
4.     / CIT
5.    ,   , 
     / DR, ITAT, Mumbai
6.   [  / Guard file.
                                / BY ORDER,
          ×  //True Copy//
                       / 
                    (Dy./Asstt. Registrar)
                    ,  / ITAT, Mumbai

 
 
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