UNITED MARINE SERVICES, NAVI MUMBAI V. ITO WD 12(1)(2), MUMBAI

ITA 1179/MUM/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2783 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2009-2010
• Appeal Filed On: 21-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VISHWAS S JADHAV
• Section: 194C; 2

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN, AM AND PAWAN SINGH, JM ./ I.T.A. NO . 1179 / MUM/20 1 4 ( / ASSESSMENT YEA R : 200 9 - 10 ) M/S UNI TED MARINE S ERVICES, 8, GAURISHANKAR,ROW HOUSE, SECTOR - 19,PLOT NO.35, NERUL, NAVI MUMBAI - 400705 / VS. INCOME TAX OFFICER - WARD 12(1)(2), AAYAKAR BHAVAN, M K ROAD, MUMBAI - 400020 ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN. : AABFU9086H / APPELLANT BY SHRI BHADRESH DOSHI / RESPONDENT BY SHRI VISHWAS S JADHAV / DATE OF HEARING : 2.11 . 201 5 / DATE OF PRONOUNCE MENT: 2.11. 201 5 / O R D E R P ER B R BASKARAN, AM: THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 25.11.2013 PASSED BY THE LD. CIT(A) - 23 , MUMBAI AND IT RELATES TO THE ASSESSMENT YEAR 2009 - 10. 2. THE ASSESSEE IS AGG RIEVED BY THE DECISION OF THE LD.CIT(A) IN CONFIRMING THE PENALTY OF RS.55.30 LAKHS LEVIED BY THE AO U/S 271 (1)(C) OF THE INCOME TAX ACT, 1961. 3. T HE LD. COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED THAT THE IMPUGNED PENALTY WAS LEVIED IN RESPECT OF DISALLOWANCE MADE UNDER ITA NO. 1179 / MUM/20 1 4 2 SECTION 40(A)(IA) OF THE ACT. THE LD. COUNSEL SUBMITTED THAT THE TAX AUDITOR HAD GIVEN DETAILS OF DISALLOWANCE WHICH ARE REQUIRED TO BE MADE UNDER SECTION 40(A)(IA) OF THE ACT IN THE TAX AUDIT REPORT AND THE COPY OF TAX AUDIT REP ORT WAS ALSO FILED ALONG WITH THE RETURN OF INCOME . HOWEVER, SINCE THE TAX AUDIT REPORT WAS OBTAINED ON THE LAST DATE FOR FILING THE RETURN OF INCOME, THE DISALLOWANCE REQUIRED TO BE UNDER SECTION 40(A)(IA) OF THE ACT WAS , BY INADVERTENCE, OMITTED TO BE ADDED TO THE TOTAL INCOME. HOWEVER, AT THE TIME OF ASSESSMENT PROCEEDINGS, THE ASSESSEE ACCEPTED THE SAID DISALLOWANCE WHEN THE SAME WAS POINTED OUT BY THE AO. HE SUBMITTED THAT THE TAX AUDIT REPORT CONTAINS ALL THE DETAILS RELATING TO THE DISALLOWANCE RE QUIRED TO BE MADE U/S 40(A)(IA) OF THE ACT. ACCORDINGLY, THE LD. AR SUBMITTED THAT THE ASSESSEE DID NOT CONCEAL ANY PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. HE FURTHER SUBMITTED THAT THE HONBLE SUPREME COURT CONSIDERED AN IDE NTICAL ISSUE IN THE CASE OF PRICE WATERHOUSE COOPER (P) LTD. V/S CIT REPORTED IN 348 ITR 306 (SC) . IN THE CASE BEFORE HONBLE APEX COURT, THE ASSESSEE THERE OMITTED TO DISALLOW PROVISION OF GRATUITY IN THE COMPUTATION OF INCOME, THOUGH THE SAID DISALLOW ANCE WAS DULY REPORTED BY THE TAX AUDITOR AND THE TAX AUDIT REPORT WAS FILED ALONG WITH RETURN OF INCOME. T HE HONBLE APEX COURT HELD THAT THE SAME CANNOT BE CONSIDERED TO BE A CASE OF CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTI CULARS OF INCOME AND ACCORDINGLY DELETED THE PENALTY LEVIED IN THAT CASE . 4 . THE LD. AR FURTHER SUBMITTED THAT THE DISALLOWANCE U/S 40(A)(IA) FOF THE ACT IS MADE FOR NON - DEDUCTION OF TAX AT SOURCE FROM ANY EXPENDITURE AND HENCE IT IS ONLY A TECHNICAL DIS ALLOWANCE AND THE SAID EXPENDITURE SHALL BE ALLOWED IN THE YEAR IN WHICH THE TDS WAS DEDUCTED AND REMITTED. HE SUBMITTED THAT, IN THE FOLLOWING CASES, IT HAS BEEN HELD THAT THE PENALTY ITA NO. 1179 / MUM/20 1 4 3 U/S 271(1)(C) CANNOT BE LEVIED IN RESPECT OF OMISSION TO MAKE DISALLOW ANCE U/S 40(A)(IA) OF THE ACT: A) SHRI DALCHAND H GUPTA V/S ACIT - ITA NO.2982/MUM/2013 B) RUSH BUILDERS AND DEVELOPERS V /S ACIT - ITA NO.6684/MUM/2012 C) M/S NEW HORIZON INDIA LIMITED V/S DCIT - ITA NO.865/DEL/2010 D) DCIT V/S TATA ASSET MANAGEMENT LT D - ITA NO.8437/MUM/2011 E) CIT V/S L G CHAUDHARY - 215 TAXMANN 95 (GUJ)(HC) 5. THE LD. DR, ON THE CONTRARY, PLACED FULL RELIANCE ON THE ORDERS PASSED BY THE LOWER AUTHORITIES. 6. HAVING HEARD THE RIVAL CONTENTIONS, WE ARE OF THE VIEW THAT THERE IS ME RIT IN THE CONTENTION S MADE BY THE LD.AR. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE DETAILS RELATING TO DISALLOWANCE REQUIRED TO BE MADE U/S 40(A)(IA) OF THE ACT HAVE DULY BEEN FURNISH ED IN THE TAX AUDIT REPORT . WE FURTHER NOTICE THAT THE TAX AUDITOR HAS FURNISHED THE TAX AUDIT REPORT ON 30 - 09 - 2009, I.E., ON THE LAST DATE FOR FILING RETURN OF INCOME FOR ASSESSMENT YEAR 2009 - 10. HENCE, THERE IS MERIT IN THE CONTENTIONS OF THE ASSESSEE THAT THE DISALLOWANCE WAS OMITTED TO BE MADE, BY INADVERTENC E. IT IS ALSO AN UNDISPUTED FACT THAT THE ASSESSEE HAS AGREED TO THE DISALLOWANCE, WHEN THE SAME WAS POINTED OUT BY THE AO. HENCE, THE FACTS AVAILABLE IN THE PRESENT CASE IS IDENTICAL TO THE ONE CONSIDERED IN THE CASE OF PRICE WATER HOUSE COOPER (P) LTD (SUPRA) BY HONBLE SUPREME COURT, WHEREIN, ON IDENTICAL FACTS, THE HONBLE SUPREME COURT HELD AS UNDER: - THE CONT ENTS OF THE TAX AUDIT REPORT SUGGEST THAT THERE IS NO QUESTION OF THE ASSESSEE CONCEALING ITS INCOME. THERE IS ALSO NO QUESTION OF THE ASSESS EE FURNISHING ANY INACCURATE PARTICULARS. IT APPEARS TO US THAT ALL THAT HAS HAPPENED IN THE PRESENT CASE IS THAT THROUGH A BONA FIDE AND INADVERTENT ERROR, THE ASSESSEE WHILE SUBMITTING ITS RETURN FAILED TO ADD THE PROVISION FOR GRATUITY TO ITS TOTAL INC OME. THIS CAN ONLY BE DESCRIBED AS A HUMAN ERROR WHICH WE ARE ALL PRONE TO MAKE . THE CALIBER AND EXPERTISE OF THE ASSESSEE HAS LITTLE OR NOTHING TO DO WITH THE INADVERTENT ERROR. THAT THE ASESSEE ITA NO. 1179 / MUM/20 1 4 4 SHOULD HAVE BEEN CAREFUL CANNOT BE DOUBTED, BUT THE ABSEN CE OF DUE CARE, IN A CASE SUCH AS THE PRESENT DOES NOT MEAN THAT THE ASSESSEE IS GUILTY OF EITHER FURNISHING INACCURATE PARTICULARS OR ATTEMPTING TO CONCEAL ITS INCOME. IN THE INSTANT CASE ALSO, THE TAX AUDITOR HAS DULY REPORTED THE DISALLOWANCE THAT IS REQUIRED TO BE MADE U/S 40(A)(IA) OF THE ACT AND THE LD A.R, DURING THE COURSE OF ARGUMENTS, TOOK US THROUGH THE RELEVANT REPORT GIVEN BY THE TAX AUDITOR. HENCE, BY FOLLOWING THE DECISION RENDERED BY HONBLE SUPREME COURT IN THE ABOVE SAID CASE, THE PENAL TY LEVIED 271(1)(C) OF THE ACT AND CONFIRMED BY LD CIT(A) IS LIABLE TO BE SET ASIDE. 7. IN O THE R CASES RELIED UPON BY THE ASSE SSEE, IT HAS BEEN HELD THAT FAILURE ON THE PART OF THE ASSESSEE TO MAKE DISALLOWANCE U/S 40(A)(IA) OF THE ACT WILL NOT GIVE RISE TO CONCEALMENT OF PA RTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. FOLLOWING OBSERVATIONS MADE BY THE MUMBAI BENCH OF THE TRIBUNAL IN THE CA S E OF RUS H I BUILDERS AND DEVELOPERS V/S ACIT IN ITA NO.6684/MUM/2012 (AY - 2007 - 08) DATED 4.3.2015 , ARE RELEVANT IN THIS REGARD : 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE ALSO GONE THROUGH THE RECORDS. IN THIS CASE, THE PENALTY HAS BEEN LEVIED FOR DISALLOWANCE OF EXPENDITURE U/S.40(A)(IA) OF THE ACT. IT IS NOT A CASE OF FURNISHING OF I NACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME. THE FAILURE TO DEDUCT THE TDS ON THE PART OF THE ASSESSEE HAS RESULTED IN DISALLOWANCE OF EXPENDITURE. THE ASSESSEE HAD NOT FURNISHED ANY INACCURATE PARTICULARS OF INCOME OR EXPENDITURE. THE ASSESSE E HAS ALREADY FACED THE CONSEQUENCES BY WAY OF DISALLOWANCE OF EXPENDITURE FOR NON - DEDUCTION OF TDS AS PER THE PROVISIONS OF SECTION 194C OF THE ACT. IT IS NOT THE CASE OF THE REVENUE THAT THE ASSESSEE HAD NOT INCURRED THE EXPENDITURE CLAIMED OR THAT THE C LAIM OF EXPENDITURE WAS BOGUS OR INCORRECT. THE DISALLOWANCE OF EXPENDITURE WAS ATTRACTED DUE TO NON - DEDUCTION OF TDS AND IT CANNOT BE SAID TO BE A CASE OF CONCEALMENT OF INCOME OR ITA NO. 1179 / MUM/20 1 4 5 FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE LEVY OF PENALTY U/S.271 (1)(C) OF THE ACT IS NOT ATTRACTED IN THIS CASE AND THE SAME IS ACCORDINGLY ORDERED TO BE DELETED. THE RATIO OF THE ABOVE SAID DECISION SHALL ALSO APPLY TO THE FACTS OF THE PRESENT CASE. 8 . IN VIEW OF THE AFORESAID DISCUSSIONS, WE ARE OF THE VIEW THAT T HE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT BY THE AO. ACCORDINGLY , WE SET ASIDE THE ORDER OF LD. CIT(A) AND DIRECT THE AO TO DELETE THE IMPUGNED PENALTY . 10 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E IS ALLOWED . PRONOUNCED ACCORDINGLY ON 2 ND NOVEMBER , 2 015. 2 ND NOV , 2 015 SD SD ( PAWAN SINGH ) ( B.R. BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 2 ND NOV , 2 015. . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI