The ACIT,(OSD) Circle-9, Ahmedabad V. M/s. Venu Engineers, Ahmedabad

ITA 1232/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80314 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 02-09-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 26-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K SINGH
• Assessee Lawyers: U S BHATI
• Keywords: Deemed to accrue or arise in india; Question of law

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER ITA NO. 1232/AHD/2011 A.Y.2005-06 ACIT(OSD) CIRCLE-9, AHMEDABAD. VS M/S. VENU ENGINEERS, 4, SUBHLAXMI INDUSTRIAL ESTATE, SARKHEJ-BAVLA ROAD, CHANGODAR, TA- SANAND, AHMEDABAD. PAN: AACFV 2739F (APPELLANT) (RESPONDENT) REVENUE BY : SHRI V.K. SINGH, SR.D.R., ASSESSEE(S) BY : SHRI U.S. BHATI, AR / // / DATE OF HEARING : 02/09/2014 / DATE OF PRONOUNCEMENT: 5/09/2014 / O R D E R PER SHRI MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE REVENUE ARISING FROM THE ORDER OF THE LD. CIT(APPEALS), AHMEDABAD AND THE GROUND RAIS ED IS AS UNDER: 1. THE LD. COMMISSIONER OF INCOME TAX(A)-XV, AHMED ABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE PENALTY OF RS.13,4 6,990/- LEVIED U/SS.271(1)(C) OF THE IT ACT. . 2. FACTS IN BRIEF WERE THAT AN ASSESSMENT WAS MADE U/S. 143(3), DATED 11.12.2007 WHEREIN IT WAS MENTIONED THAT THE ASSESS EE IN THE STATUS OF REGISTERED FIRM WAS ENGAGED IN THE BUSINESS OF BUIL DING CONSTRUCTION AND FABRICATION WORKS. IT WAS NOTED BY THE AO THAT THE ASSESSEE HAD NOT DEPOSITED THE TDS ON PAYMENT OF RS.48,02,248/- WITH IN THE STIPULATED TIME. HOWEVER, IT WAS NOTED THAT THE TDS WAS DEPOSI TED IN THE GOVERNMENT ACCOUNT ON 27.10.2005. THE AO HAS DISALL OWED THE CLAIM OF ITA NO.1232/AHD/2011 ACIT(OSD) CIR-9, AHMEDABAD VS. M/S. VENU ENGINEERS, AHMEDABAD. FOR A.Y. 2005-06 - 2 - EXPENDITURE OF RS.48,02,248/- BY INVOKING THE PROVI SIONS OF SECTION 40(A)(IA) OF IT ACT. BECAUSE OF THE SAID DEFAULT, A ND IN CONSEQUENCE THEREOF THAT THE SAID ADDITION WAS MADE, A PENALTY U/S.271(1)(C) WAS IMPOSED VIDE AN ORDER DATED 30 TH OF MARCH, 2010 ON THE GROUND THAT TDS DEDUCTED AT SOURCE WAS NOT DEPOSITED WITHIN THE TIM E PRESCRIBED AND FOR THAT THE ASSESSEE HAS NOT GIVEN ANY SATISFACTORY EX PLANATION TO THE AO FOR SUCH DEFAULT. AS PER AO, THE ASSESSEE HAD NOT EXPLA INED THAT WHAT PREVENTED HIM FROM NOT DEPOSITING THE TDS WITHIN TH E TIME PRESCRIBED, RESULTANTLY, LEVIED A PENALTY OF RS.14,81,093/-. 3. THE ASSESSEE HAS CHALLENGED THE LEVY OF PENALTY AND LEARNED CIT(A) HAS EXAMINED THOSE FACTS. HOWEVER IN QUANTUM PROCEEDINGS, LEARNED CIT(A)-XV-AHMEDABAD ORDER DATED 05.12.2008 (APPEAL NO.CIT(A)-XV/JCIT/RANGE-9/133/07-08 HAS GRANTED THE RELIEF AS UNDER: I HAVE THEREFORE, NO ALTERNATIVE BUT TO SEE THE DA TES OF TDS DEPOSITED IN GOVERNMENT ACCOUNT AS PER CLAUSES 'A' AND 'B' INSER TED IN SECTION 40A(IA) VIDE FINANCE ACT 2008 W.E.F. 1.4.2005. ACCORDING TO WHIC H THAT AMOUNT IS DEDUCTIBLE WHICH HAS BEEN CREDITED OR PAID (WHICHEV ER IS EARLIER) DURING ANY PREVIOUS YEAR FROM APRIL TO FEBRUARY OF THAT PREVIO US YEAR AND TAX DEDUCTED AT SOURCE ON THE SAME HAS BEEN DEPOSITED IN MARCH, THAT IS LAST MONTH OF THE PREVIOUS YEAR. THE AMOUNTS THAT HAVE BEEN CREDITED OR PAID WHICHEVER IS EARLIER IN MARCH OF ANY PREVIOUS YEAR ARE DEDUCTIBL E IF TDS ON THE SAME IS DEPOSITED IN THE GOVERNMENT ACCOUNT BEFORE THE DUE DATE OF FILING OF RETURN U/S. L39(L). ACCORDING TO THESE TWO CLAUSES A AND B OF SECTION 40A(IA), THE APPELLANT IS ENTITLED TO DEDUCTION OF AMOUNTS MENTI ONED AT SERIAL NUMBER 1, 3, 5 AND 6 OF ANNEXURE-1 BECAUSE AMOUNTS HAVE BEEN CRE DITED OR PAID IN MARCH, 2005 AND TDS ON THE SAME HAS BEEN DEPOSITED IN GOVE RNMENT ACCOUNT IN OCTOBER, 2005 BEFORE THE DATE OF FILING OF RETURN. ACCORDINGLY THE APPELLANT IS ENTITLED FOR DEDUCTION OF RS.7,54,717 (RS.90,295 + RS.3,66,478 + RS.5,36,442 + RS.28,230 + RS.39,750 + RS.60,000) WHICH IS THE T OTAL OF AMOUNTS MENTIONED AT SERIAL NUMBER 1, 3, 5 AND 6 OF ANNEXUR E-1 OF THIS ORDER. THE ADDITION OF RS. 40,47,531 (RS.48,02,248 MINUS RS.7, 54,717) IS HOWEVER UPHELD U/S.40A(IA). 4. FROM THE SIDE OF THE REVENUE, LEARNED SR.D.R., S RI V.K. SINGH APPEARED AND ARGUED THAT HAD THIS CASE WAS NOT SELE CTED FOR SCRUTINY, THE ITA NO.1232/AHD/2011 ACIT(OSD) CIR-9, AHMEDABAD VS. M/S. VENU ENGINEERS, AHMEDABAD. FOR A.Y. 2005-06 - 3 - ASSESSEE WOULD NOT HAVE BEEN CAUGHT FOR THIS DEFAUL T. PLACING RELIANCE ON THE PENALTY ORDER, LEARNED SR.D.R. HAS ARGUED THAT INACCURATE PARTICULARS HAVE BEEN FURNISHED BY NOT INCLUDING THE AMOUNT ON WHICH THERE WAS A FAILURE FOR PAYMENT OF TDS IN THE GOVERNMENT ACCOUN T WITHIN THE TIME PRESCRIBED; THEREFORE, THE PENALTY WAS RIGHTLY IMPO SED. 5. ON THE OTHER HAND, FROM THE SIDE OF THE RESPONDE NT-ASSESSEE, LEARNED A.R., MR. U.S. BHATI HAS PLEADED THAT THERE WAS NO FURNISHING OF INACCURATE PARTICULARS OR CONCEALMENT OF INCOME BEC AUSE ALL THE INFORMATION WAS FURNISHED AND THE TDS DEDUCTED WAS VERY MUCH IN THE RETURN FILED. HE HAS FURTHER ARGUED THAT THIS IS A CASE WHERE AMENDMENT U/S.40(A)(IA) TOOK PLACE IN THE PAST WAS MADE THE B ASIS OF THE IMPUGNED ADDITION. HOWEVER, LATER ON AN AMENDMENT CAME IN FA VOUR OF THE TAX PAYERS ACCORDING TO WHICH THE TDS AMOUNT WHEN DEDUC TED IF PAID WITHIN THE DUE DATE OF FILING OF RETURN THEN NO ACTION WAS REQUIRED TO BE TAKEN AGAINST THE ASSESSEE. DUE TO THE SAID AMENDED PROVI SIONS THE ASSESSEE WAS OTHERWISE NOT DEFAULTED IN DEPOSITING THE TDS A S PRESCRIBED UNDER LAW. HE HAS PLACED RELIANCE ON FOLLOWING ORDER, NAM ELY, (1) CIT-IV VS. M/S. VENUS ENGINEERS IN TAX APPEAL NO.1292 OF 2010 ORDER DATED 29.08.2011 PRONOUNCED BY HONBLE GUJARAT HIGH COURT WHEREIN IT WAS HELD AS UNDER: ON HEARING LEARNED COUNSEL MRS. MAUNA M. BHATT AND ON EXAMINING THE ORDERS OF ADJUDICATING AUTHORITIES, IT CAN BE SEEN THAT TRIBUNAL WAS OF THE OPINION THAT DUE TO IGNORANCE OF THE PROVISION CONT AINING IN SECTION 40(A)(IA) OF THE ACT, THE ASSESSEE DID NOT DEDUCT TDS FROM TH E PAYMENT MADE TO LABOUR, TRANSPORT AND CARTING EXPENSES. THE TRIBUNAL WAS AL SO ACTUATED BY THE FACT THAT THE C.A. WHO AUDITED THE ACCOUNTS OF THE ASSES SEE UNDER SECTION 44 AB DID NOT POINT OUT ANY INFIRMITY ON ACCOUNT OF NON-D EDUCTION OF TDS., OTHERWISE, ALL THE RELEVANT ACCOUNTS WERE ADDUCED B EFORE THE ASSESSING OFFICER. THUS, WHEN THE TAX AUDIT REPORT ALSO DID N OT POINT OUT THE TDS DEFAULT TO THE ASSESSEE, THE TRIBUNAL CONCLUDED THA T THE MISTAKE MADE BY ASSESSEE WAS BONAFIDE AND THE EXPLANATION WAS FOUND GENUINE ITA NO.1232/AHD/2011 ACIT(OSD) CIR-9, AHMEDABAD VS. M/S. VENU ENGINEERS, AHMEDABAD. FOR A.Y. 2005-06 - 4 - THE REASONING GIVEN BY BOTH THE ADJUDICATING AUTHOR ITIES CONCURRENTLY CANNOT BE HELD AS PERVERSE NOR ARE THERE ANY GROUNDS MAD E OUT BY THE REVENUE TO DISLODGE THE FINDINGS. RESULTANTLY, WHEN THERE IS NO CONCEALMENT NOR ANY OCCASION OF FURNISHING INACCURATE PARTICULARS TO BO NAFIDE MISTAKE, TRIBUNAL RIGHTLY UPHOLD THE ORDER OF CIT(A), DELETING THE PE NALTY, THEREFORE, THIS TAX APPEAL MERITS NO CONSIDERATION AS QUESTION OF LAW I S TO BE DETERMINED. HENCE, SAME IS DISMISSED. (2) DCIT V/S. M/S. LIBERTY PHOSPHATE LTD., 2012(11) TMI 424 ITAT, AHMEDABAD (ITA NO.1099/AHD/2010, ORDER DATED 5 TH OCTOBER, 2012 WHEREIN IT WAS HELD AS UNDER: 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW AND THE JUDGEMENTS CITED BY THE LD. A.R. WE FIND THAT IN TH E PRESENT CASE, TDS WAS DULY DEDUCTED BY THE ASSESSEE AND IT WAS PAID ALSO, ALTHOUGH BELATEDLY. THIS FACT IS NOT AVAILABLE ON RECORD AS TO WHETHER THE PAYMENT WAS MADE BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME O R OTHERWISE BUT AS PER THE DECISION OF COORDINATE BENCH OF THE TRIBUNAL RENDER ED IN THE CASE OF DCIT VS. LG CHAUDHARY (SUPRA), IT WAS HELD THAT WHERE DE DUCTION OF TDS IS MADE BY THE ASSESSEE AND DISALLOWANCE IS MADE U/S 4 0(A)(IA) DUE TO NONE PAYMENT OF TDS, THAT ITSELF CANNOT BE CONSTRUED AS FURNISHING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME. THEREFORE, PENALTY U/S 271(1)(C) IS NOT JUSTIFIED I N THESE CIRCUMSTANCES. IN THE PRESENT CASE, THE FACTS ARE SIMILAR AND EVEN BETTER BECAUSE IN THE PRESENT CASE, TDS WAS DEDUCTED AND PAID ALSO ALTHOUGH BELATEDLY. HENCE, BY RESPECTFULLY FOLLOWING THE TRIBUNAL DECISION, WE DECIDE THIS ISS UE IN THE PRESENT CASE IN FAVOUR OF THE ASSESSEE AND DECLINE TO INTERFERE IN THE ORDER OF LD., CIT(A). 6. IN THE LIGHT OF THE ABOVE FACTS AND THE CASE LAW CITED, WE ARE OF THE VIEW THAT IN A SITUATION WHEN THE RELEVANT MATERIAL WAS ALREADY ON RECORD AND IT WAS NOT THE CASE OF THE REVENUE THAT AFTER T HIS CASE WAS SELECTED FOR SCRUTINY IT WAS FOUND THAT THERE WAS A TOTAL FAILUR E OF NON DEDUCTION OR NON PAYMENT OF TDS, BUT IT WAS FOUND THAT IT WAS SI MPLY A LATE PAYMENT OF TDS; THEN WE ARE OF THE CONSCIENTIOUS VIEW THAT THIS IS NOT A FIT CASE FOR LEVY OF PENALTY U/S.271(1)(C). EVEN IN QUANTUM PROCEEDINGS, THE AMENDED PROVISIONS OF SECTION 40(A)(IA) HAVE BEEN E XAMINED AND DUE ITA NO.1232/AHD/2011 ACIT(OSD) CIR-9, AHMEDABAD VS. M/S. VENU ENGINEERS, AHMEDABAD. FOR A.Y. 2005-06 - 5 - RELIEF WAS GRANTED. WE HAVE ALSO NOTED THAT THE DIS ALLOWANCE IN QUESTION WAS A DEEMED INCOME, OTHERWISE THE EXPENDITURE WAS AN ADMISSIBLE EXPENDITURE; HENCE, IN OUR HUMBLE OPINION ON DEEMIN G DISALLOWANCE NO CONCEALMENT PENALTY SHOULD BE LEVIED. WE, THEREFORE , UPHOLD THE VIEW OF LEARNED CIT(A) AND FIND NO FORCE IN THIS GROUND OF THE REVENUE, THE SAME IS HEREBY DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. SD/- SD/- (N.S. SAINI) (MUKUL KR. SHRAWAT) ACCOUNTANT MEMBER JUD ICIAL MEMBER AHMEDABAD; DATED 05/09/2014 PRABHAT KR. KESARWANI, SR. P.S. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT. 3. #$#% ' '& / CONCERNED CIT 4. ' '&() / THE CIT(A)-III, AHMEDABAD 5. )*' %, ' ' % , ,-$ / DR, ITAT, AHMEDABAD 6. *./ 0 / GUARD FILE. / BY ORDER, 1 11 1/ // /,' #2 ,' #2 ,' #2 ,' #2 ( DY./ASSTT.REGISTRAR) ' ' % ' ' % ' ' % ' ' % , , , , ,-$ ,-$ ,-$ ,-$ / ITAT, AHMEDABAD