The main legal point established in the judgment is that the actual payment of excise duty, as evidenced by central excise returns, is crucial in determining the allowance of certain payments as expenses under Section 43B of the Income Tax Act, 1961.

JUDGMENT

T.S. Sivagnanam, J. - We have heard Mr. Soumen Bhattacharyya, learned standing counsel for the appellant/revenue and Mr. Subhas Agarwal, learned counsel appearing for the respondent/assessee.

2. It appears that there is a delay of 985 days in filing this appeal. We have perused the affidavit filed in support of the petition for condonation delay and we find that there is no satisfactory explanation for condoning such huge delay. Nevertheless, the learned counsel for the parties were agreeable to argue the main appeal, itself, therefore, we exercise discretion and condone the delay. Accordingly the delay in filing the appeal is condoned.

3. The petition for condonation of delay is allowed and disposed of.

ITAT 177 of 2021

4. This appeal by the revenue filed under Section 260A of the Income Tax Act, 1961 (the Act) is directed against the order dated 20th November, 2018 passed by the Income Tax Appellate Tribunal 'C' Bench, Kolkata (Tribunal) in ITA/954/Kol/2017 for the assessment year 2012-13.

5. The revenue has raised the following substantial questions of law for consideration :

1. Whether the Learned ITAT has committed substantial error in law in not considering that under the provision of Section 43B of the Income Tax Act, 1961 certain payment should be allowed to be claimed as an expenses only in the year in which they have been paid and not in the year in which the liability to pay such sums was incurred.

2. Whether the Learned ITAT erred in law and failed to appreciate the term, object and purpose of the provisions contained in Section 263 of the Income Tax Act, 1961, by passing the impugned order.

6. We have heard Mr. Soumen Bhattacharyya, learned standing counsel for the appellant/revenue and Mr. Subhas Agarwal, learned counsel appearing for the respondent/assessee.

7. The question before the Tribunal was whether the Principal Commissioner of Income Tax - 1, Kolkata was justified in invoking its power under Section 263 of the Act. The assessee was issued a show- cause notice under Section 263 of the Act calling upon them to explain as to why the assessment order should not be revised/modified or set aside on the ground that a certain sum of money had been debited towards excise duty of finished goods and the same amount had been shown under the head 'Short Term Provision' in the balance sheet as on 31st March, 2012. Further it was stated that as per annexure -X, the Tax Audit Report shows payment of excise duty to the extent of only Rs.30,45,000/- before the due date for submitting the return. Therefore, the Commissioner proposed that the remaining amount of Rs.5,43,76,924/- was required to be paid back. The assessee submitted reply dated 20th February, 2017.

8. However, the Commissioner was not satisfied with the reply and confirmed the proposal in the show-cause notice issued under Section 263 of the Act, consequently set aside the assessment order dated 30th March, 2015 and directed the assessing officer to pass a fresh assessment order. Pursuant to such direction the assessing officer gave effect to the direction by passing an assessment order dated 17th July, 2017. The learned standing counsel for the appellant/revenue would draw our attention to the giving effect of the order dated 17th July, 2017 and submits that the excise duty liability cannot be allowed as deduction since it was not actually paid by the assessee during the relevant year. The assessee challenged the order passed by the CIT by filing an appeal before the Tribunal. The Tribunal took note of the submission that the assessee has made provision for excise duty or closing stock of finished goods in respect of various divisions and proceeded to examine the central excise returns and not stopping with the certificate issued by the Tax Auditor in the Audit Report. This exercise was done by the Tribunal to satisfy itself as to whether payments have been effected or adjusted against the available input credit of the respective division. This finding of the