PR. COMMISSIONER OF INCOME TAX Vs. PRAVEEN SAXENA

JUDGEMENT

(1.) The Revenue claims to be aggrieved by the order of the Income Tax Appellate Tribunal (ITAT) whereby it dismissed its appeal. The ITAT affirmed the order of CIT(A) who had directed that the disallowance of Rs.70 lakhs paid by the assessee respondent as a condition pursuant to the order of this Court dated 01.02.2007 was liable as an expense and that it was covered by Sec. 43B of the Income Tax Act, 1961 [hereafter "the 1961 Act"].

(2.) The assessee is engaged in the business of import and export of commodities, including edible oil, through a proprietory concern, i.e. M/s. Nova International. On 211.2006, a search was conducted by the Customs authorities in its premises; the assessee was arrested subsequently by the Directorate of Revenue Intelligence (DRI) on 05.12006 on the suspicion of evasion of payment of duties to the extent of more than Rs.3 crores.

(3.) The assessee had approached this Court; in the course of proceedings, the Customs authorities had contended that the duty element payable was in excess of Rs.3 crores and that bail could be granted only if a substantial amount out of that was deposited. The Court, therefore, made an order on 01.07.2007 in Bail Application 18/2007, directing the assessee to deposit total amount of Rs.70 lakhs which was to be appropriated by the Customs authorities. In addition, the assessee was also directed to furnish adequate security to the extent of Rs.2 crores. For the concerned year, i.e. AY 2007-08, the assessee contended that the amount had to be allowed under Sec. 43B of the 1961 Act. The Assessing Officer (AO) framed the assessment, disallowing the amount amongst others. He was of the opinion firstly that the amount was a penalty and consequently, even otherwise, in the absence of an adjudication order, no amount was payable.