DHANANJAY M PANDEY, MUMBAI V. ITO 25 (3)(2), MUMBAI

ITA 1042/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2982 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2016
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 25-02-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 14-02-2014
• Court: TRIBUNAL
• Keywords: Non-deduction of tax
• Section: 194C

Judgement Text

, , D, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.1042/MUM/2014 ASSESSMENT YEAR: 2007-08 DHANAN JA Y M. PANDEY , 105 ANANT APARTMENT, THAKUR VILLAGE KANDIVALI(E) MUMBAI-400101 / VS. ITO 25 ( 3 ) ( 2 ) , R.NO.642, 6 TH FLOOR, AAYAKAR BHAVAN, M.K. RD. MUMBAI-400020 (ASSE SSEE ) (REVENUE) P.A. NO. AHJPP9612M !' / ASSESSEE BY SHRI DARSHAN GANDHI (AR) / REVENUE BY SHRI RAKESH RANJAN ( SR. DR) # $ % & / DATE OF HEARING : 21/06/2016 % & / DATE OF ORDER: 29/06/2016 / O R D E R PER ASHWANI TANEJA (ACCOUNTANT MEMBER): THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS), MUMBAI- 35 {(IN SHORT CIT(A)}, DATED 17.12.2013 PASSED AG AINST PENALTY DHANANJAY M. PANDEY 2 ORDER U/S 271(1)(C) DATED 29.03.2011 FOR THE ASSESS MENT YEAR 2007-08. 2. DURING THE COURSE OF HEARING, ARGUMENTS WERE MADE B Y SHRI DARSHAN GANDHI, AUTHORISED REPRESENTATIVE (AR) ON BEHALF OF THE ASSESSEE AND BY SHRI RAKESH RANJAN, DEPARTMENTAL REPRESENTATIVE (DR) ON BEHALF OF THE R EVENUE. 3. THE SOLITARY ISSUE RAISED IN THIS APPEAL BY THE AS SESSEE IS WITH REGARD TO LEVY OF PENALTY OF RS.8,09,300/- ON THE DISALLOWANCE MADE BY THE AO U/S 40(A)(IA). 3.1. DURING THE COURSE OF HEARING, LD. COUNSEL HAS MADE DETAILED ARGUMENTS AND SUPPORTED THEM WITH VARIOUS JUDGMENTS IN SUPPORT OF HIS CLAIM THAT NO PENALTY U /S 271(1)(C) CAN BE LEVIED WITH RESPECT TO DISALLOWANC E MADE U/S 40(A)(IA). 3.2. PER CONTRA, LD. DR SUPPORTED THE ORDERS OF THE LOW ER AUTHORITIES. 3.3. WE HAVE GONE THROUGH THE ORDERS OF THE LOWER AUTHO RITIES AS WELL AS JUDGMENT PLACED BEFORE US BY THE LD. COU NSEL ON THIS ISSUE. IT IS NOTED THAT DISALLOWANCE WAS MADE U/S 40(A)(IA) FOR AN AGGREGATE AMOUNT OF RS.8,09,300/- ON ACCOUNT OF FOLLOWING PAYMENTS: A. SUB-CONTRACT CHARGES RS.5,79,300/- B. LEGAL FEES RS.50,000/- C. ACCOUNTING/PROFESSIONAL CHARGES RS.30,000/- DHANANJAY M. PANDEY 3 D. ARCHITECT FEES RS.1,50,000/- TOTAL RS.8,09,300/- WITH THE ASSISTANCE OF LD. COUNSEL, IT IS NOTED BY US THAT GENUINENESS OF THIS EXPENSES HAS NEVER BEEN DOUBTED BY THE LOWER AUTHORITIES AT ANY STAGE. FURTHER, THESE EXPE NSES WERE DULY SUBSTANTIATED BY FILING REQUISITE EVIDENCES. N O ADVERSE OBSERVATIONS HAVE BEEN MADE BY THE AO IN THIS REGAR D. THUS, GENUINENESS OF ALL THESE EXPENSES IS NOT DOUBTED AN D THESE EXPENSES WERE DULY SUBSTANTIATED. THE ONLY GROUND T O MAKE DISALLOWANCE WAS ON ACCOUNT OF NON-DEDUCTION OF TAX AT SOURCE U/S 194C BY INVOKING DEEMING PROVISIONS OF SECTION 40(A)(IA). UNDER THESE CIRCUMSTANCES, THE ISSUE ARISES WHETHER IT IS A CASE OF CONCEALMENTOF INCOME OR FURNISHING OF INACC URATE PARTICULARS OF INCOME. 3.4. WE HAVE CONSIDERED THE FACTS OF THIS CASE AND JUDG MENT RELIED UPON BY THE LD. COUNSEL. IT IS NOTED FROM TH E PERUSAL OF THE PENALTY ORDER THAT NO CASE OF CONCEALMENT OF FU RNISHING OF INACCURATE PARTICULARS OF INCOME HAS BEEN MADE BY T HE AO WHILE LEVYING THE PENALTY. IT HAS BEEN STATED BY TH E LD. AO WHILE LEVYING THE PENALTY THAT SINCE DISALLOWANCE H AS BEEN MADE U/S 40(A)(IA), THEREFORE, THERE AROSE A PRESUM PTION OF CONCEALMENT OF INCOME. WE DO NOT AGREE WITH THE APP ROACH OF THE AO. THE DISALLOWANCE OF AN EXPENSES BECAUSE OF APPLICATION OF DEEMING PROVISIONS OF SECTION 40(A)( IA) CANNOT STRAIGHTAWAY GIVE RISE TO A PRESUMPTION OF CONCEALM ENT OF INCOME, ESPECIALLY, WHEN THE EXPENSES HAVE BEEN FOU ND TO BE OTHERWISE GENUINE AND DULY SUBSTANTIATED. IN THE CA SE OF CIT DHANANJAY M. PANDEY 4 VS. DAHYABHAI VELJIBHAI PATEL, BY THE HONBLE GUJRA T HIGH COURT VIDE ITS ORDER DATED 06.01.2014 IN TAX APPEAL NO.7 98 OF 2013 HELD AS UNDER: HAVING HEARD LEARNED COUNSEL FOR THE APPELLANT AND HAVING PERUSED THE JUDGMENT UNDER CHALLENGE, WE SEE NO SCOPE FOR INTERFERENCE. THE TRIBUNAL APPLIED THE DE CISION OF THE APEX COURT IN CASE OF RELIANCE PETROPRODUCTS PR IVATE LIMITED, REPORTED IN 322 ITR 158 (SC) AND OBSERVED THAT MERELY ON ACCOUNT OF DISALLOWANCE OF CERTAIN CLAIM, PENALTY CANNOT BE IMPOSED. THE TRIBUNAL ALSO RECORDED THAT THE QUESTION OF DISALLOWANCE UNDER SECTION 40[A](IA) OF THE ACT IN RESPECT OF TRANSPORTERS HAD GIVEN RISE TO DIVERS IFIED OPINION. CIT [A] HAS FURTHER RECORDED THAT THE DEPA RTMENT DID NOT QUESTION GENUINENESS OF THE EXPENDITURE BUT DISALLOWED THE SAME MERELY ON THE GROUND THAT TDS W AS NOT DEDUCTED. SUCH BEING THE FACTUAL POSITION, NO Q UESTION OF LAW ARISES. TAX APPEAL IS, THEREFORE, DISMISSED. 3.5. SIMILAR VIEW HAS BEEN TAKEN BY THE HONBLE GUJARAT HIGH COURT IN A RECENT JUDGMENT IN THE CASE OF NAYAN C. SHAH V. INCOME TAX OFFICER 69 TAXMANN.COM 256 (GUJ) VIDE ORDER DATED 29 TH MARCH 2016 WHEREIN IT WAS HELD THAT WHERE ASSESSEE HAD MADE CLAIM OF EXPENDITURE IN RELATION TO LABOUR PAYMENTS WHICH WAS DISALLOWED BY APPLYING SECTION 4 0(A)(IA), UNDER THESE CIRCUMSTANCES, IT WOULD NOT AMOUNT TO F URNISHING OF INACCURATE PARTICULARS OF INCOME SO AS TO ATTRAC T PENALTY U/S 271(1)(C). NO CONTRARY JUDGMENT HAS BEEN BROUGHT TO OUR NOTICE BY THE LD. DR. THUS, KEEPING IN VIEW FACTS O F THIS CASE AND WELL SETTLED POSITION OF LAW,. WE FIND THAT LD. COUNSEL HAS BEEN ABLE TO SUCCESSFULLY SHOW THAT IN THIS CASE PE NALTY WAS NOT LEVIABLE. THUS, PENALTY LEVIED IS DELETED. DHANANJAY M. PANDEY 5 4. IN THE RESULT, THIS APPEAL FILED BY THE ASSESSEE I S ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH JUNE, 2016. SD/- (JOGINDER SINGH) SD/- (ASHWANI TANEJA) '# / JUDICIAL MEMBER $# / ACCOUNTANT MEMBER # $ MUMBAI; ( DATED: 29 /06 /2016 CTX? P.S/. . . %'&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. *+, / THE APPELLANT 2. -.+, / THE RESPONDENT. 3. / / # 0 ( * ) / THE CIT, MUMBAI. 4. / / # 0 / CIT(A)- , MUMBAI 5. 34 - , / *& 5 , # $ / DR, ITAT, MUMBAI 6. 6! 7$ / GUARD FILE. / BY ORDER, .3* - //TRUE COPY// / (DY./ASSTT. REGISTRAR) , # $ / ITAT, MUMBAI