REETA RAJESH SHETH, MUMBAI V. ITO 24(3)(4), MUMBAI

ITA 1326/MUM/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6679 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2007-2008
• Appeal Filed On: 24-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAM TIWARI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH D, MU MBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.1326/MUM/2017 (ASSESSMENT YEAR- 20007-08) SMT. REETA RAJESH SHETH C/O M/S RUSAPI CONTAINERS, 251, JAWAHAR NAGAR, 1 ST ROAD, GOREGAON (W), MUMBAI-400062 PAN:AAFPS7363F VS. ITO-24(3)(4) BANDRA (E), MUMBAI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI BHUPENDRA SHAH (AR) REVENUE BY : SHRI RAM TIWARI (SR.DR) DATE OF HEARING : 28.06.2018 DATE OF PRONOUNCEMENT : 28.06.2018 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER: 1. THIS APPEAL BY ASSESSEE UNDER SECTION 253 OF INCOME TAX ACT IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER (APPEALS) DATED 18 NOVEMBER 2016 IN CONFIRMING THE PENALTY ORDER LEVIED UNDER S ECTION 271(1)(C) DATED 31 JULY 2014. THE ASSESSEE HAS RAISED THE FOL LOWING GROUND OF APPEAL; (I) IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, LEARNED COMMISSIONER (APPEALS) ERRED IN CONFIRMING PENALTY UNDER SECTION 271(1) (C) AMOUNTING TO RS. 1,52,752/- LEVIED BY A SSESSING OFFICER ON THE ADDITION OF RS. 6,77,523/-MADE UNDER SECTION 40 (A) (IA). 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS ENGAGE D IN MANUFACTURING AND SELLING OF CONTAINERS FILED HER RETURN OF INCOME F OR ASSESSMENT YEAR 2007- 08 ON 24 OCTOBER 2007, DECLARING TOTAL INCOME AT RS . 166350/-. THE ASSESSMENT WAS COMPLETED ON 27 TH NOVEMBER 2009 UNDER SECTION 143(3). ITA NO. 1326/M/17- SMT. REETA RAJES H SHETH 2 THE ASSESSING OFFICER WHILE PASSING ASSESSMENT ORDE R MADE ADDITION OF RS. 6,77,550/-BY MAKE DISALLOWANCE UNDER SECTION 40 (A)(IA) HOLDING THAT NO TAX WAS DEDUCTED (TDS) ON THE PAYMENT MADE TO JA IN PACKAGING PRIVATE LTD. ON APPEAL BEFORE LEARNED COMMISSIONER (APPEALS) THE ADDITION WAS CONFIRMED. AFTER CONFIRMING THE ADDITI ON ON THE FIRST APPELLATE STAGE. THE ASSESSING OFFICER ISSUED NOTIC E UNDER SECTION 274 READ WITH SECT SECTION 271(1)(C). THE ASSESSEE FILED HER REPLY TO THE SAID SHOW CAUSE NOTICE. IN THE REPLY THE ASSESSEE CONTENDED T HAT THE ASSESSEE HAS NOT CONCEALED THE INCOME NOR FURNISHED INACCURATE PAR TICULAR THEREOF. THE ASSESSEE FURTHER CONTENDED THAT SHE HAS FILED APPEA L BEFORE THE TRIBUNAL. THE CONTENTION OF THE ASSESSEE WAS NOT ACCEPTED BY ASSESSING OFFICER. THE ASSESSING OFFICER LEVIED THE PENALTY @100% OF TAX S OUGHT TO BE EVADED VIDE ITS ORDER DATED 31 JULY 2014. ON FURTHER APPEA L BEFORE LEARNED COMMISSIONER (APPEALS) THE ACTION OF ASSESSING OFFI CER IN LEVYING THE PENALTY WAS CONFIRMED. THEREFORE, FURTHER AGGRIEVED BY THE ORDER OF COMMISSIONER LEARNED (APPEALS) THE ASSESSEE HAS FIL ED PRESENT APPEAL BEFORE US. 3. WE HAVE HEARD LEARNED AR OF THE ASSESSEE AND THE LE ARNED DR FOR REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECOR D. THE LD. AR OF THE ASSESSEE SUBMITS THAT THE ASSESSING OFFICER LEVIED THE PENALTY ON DISALLOWANCE U/S 40(A)(IA) FOR NON DEDUCTING TAX AT SOURCE (TDS) OF CONTRACT PAYMENT. THE PROVISION OF SECTION 40(A)(IA ) ARE DEEMING ITA NO. 1326/M/17- SMT. REETA RAJES H SHETH 3 PROVISION WHICH CREATE LEGAL FICTION AND LEGAL FICT ION CANNOT BE EXTENDED BEYOND THE DISALLOWANCE OF EXPENDITURE. THEREFORE, IT CANNOT BE APPLIED FOR LEVYING PENALTY U/S 271(1)(C) EITHER FOR CONCEA LMENT OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND THE PENALTY IS LIABLE TO BE DELETED. IN SUPPORT OF HIS SUBMISSION, THE LD. AR O F THE ASSESSEE RELIED ON THE DECISION IN CASE OF BDA LTD. VS. ITO [281 ITR 9 9 (BOM)] AND DECISION OF TRIBUNAL IN RAMKRISHNA SHETTY VS. ACIT (ITA NO. 7142/M/2011 DATED 11.12.2013. ON THE OTHER HAND, TH E LD. DR SUPPORTED THE ORDER OF LOWER AUTHORITY. 4. WE HAVE CONSIDERED THE SUBMISSION OF LD. REPRESENTA TIVE OF BOTH THE PARTIES. CONSIDERING THE FACTS AND THE PRESENT CASE , WE ARE IN AGREEMENT WITH THE SUBMISSIONS OF LD AR FOR THE ASSESSEE THAT THE PROVISION OF SECTION 40(A)(IA) ARE DEEMING PROVISION WHICH CREAT E LEGAL FICTION AND LEGAL FICTION CANNOT BE EXTENDED BEYOND THE DISALLO WANCE OF EXPENDITURE. THEREFORE, THE DISALLOWANCE UNDER SECTION 40(A)(IA) CANNOT BE APPLIED FOR LEVYING PENALTY U/S 271(1)(C) EITHER FOR CONCEALMEN T OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE SU BJECT MATTER OF PENALTY BEFORE US ONLY RELATES TO DISALLOWANCE/ADDITION UND ER SECTION 40(A)(IA) OF RS. 6,77,523/-. THEREFORE, RESPECTFULLY FOLLOWING T HE DECISION OF CO- ORDINATE BENCH OF TRIBUNAL IN RAMKRISHNA SHETTY (SU PRA) WHEREIN IT WAS HELD THAT THE DISALLOWANCE WAS MADE IN AY UNDER SEC TION 40(A)(IA), WHEN GENUINENESS OF THE PAYMENT WAS NOT DISPUTED BY THE REVENUE, THE LEVY OF ITA NO. 1326/M/17- SMT. REETA RAJES H SHETH 4 PENALTY IS NOT JUSTIFIED. CONSIDERING THE PECULIARI TY OF THE FACT, THE PENALTY LEVIED BY ASSESSING OFFICER ON DISALLOWANCE UNDER S ECTION 40(A)((IA) IN THE PRESENT CASE IS DELETED. 5. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT O N 28 TH DAY OF JUNE 2018. SD/- SD/- ( SHAMIM YAHYA ) (PAWAN SING H) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 28/06/2018 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE C