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ITA 1420/DEL/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9773 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2012-2013
• Appeal Filed On: 08-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AGAINST DATED PASSED
• Keywords: Question of law; TDS; Set aside
• Section: 271(1)(c); 40(a)(ia)

Judgement Text

1 ITA NO. 1420/DEL/2017 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: E NEW DELHI BEFORE SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER I.T.A. NO. 1420/DEL/20 17 (A.Y 2012-13) NETAMBIT INFO SOURCE E - SERVICES PVT. LTD. 90/31B, 1 ST FLOOR, MALVIYA NAGAR NEW DELHI AABCN2503K (APPELLANT) VS DCIT CIRCLE-18(1) NEW DELHI (RESPONDENT) ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER DATED 19/01/2017 PASSED BY CIT(A)-33, NEW DELHI FOR ASSESSMENT YEAR 2012-13. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORD ER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)[CIT(A) ] UPHOLDING THE LEVY OF PENALTY BY THE AO U/S 271(1)(C) OF THE ACT IS BAD, BOTH IN THE EYES OF LAW AS WELL AS ON FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED, BOTH ON FACTS AND IN LAW IN UPHOLDING THE LEVY OF P ENALTY U/S 271(1)(C) OF RS. APPELLANT BY SH. VED JAIN, ADV & SH. ASHISH GOEL, CA RESPONDENT BY MS. NIDHI SRIVASTAVA, CIT(A) DR DATE OF HEARING 01.07.2019 DATE OF PRONOUNCEMENT 02.07.2019 2 ITA NO. 1420/DEL/2017 16,71,400/- ON ACCOUNT OF DISALLOWANCES MADE BY THE AO. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED, BOTH ON FACTS AND IN LAW IN CONFIRMING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT LEVIED BY THE AO ON THE BASIS OF A NOTICE U NDER SECTION 271(1)(C) WHEREBY NO SPECIFIC ALLEGATION WITH REGARD TO CONCE ALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS HAS BEEN LEVIE D. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED, BOTH ON FACTS AND IN LAW IN CONFIRMING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT DESPITE THE FACT THAT THERE IS NO CONCEALME NT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS FILED BY THE ASSESSEE. 5. (I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE PE NALTY UNDER SECTION 271(1)(C) OF THE ACT ON A DISALLOWANCE OF RS.25,64, 049/- MADE BY THE A.O INVOKING THE PROVISION OF SECTION 40(A) (IA) OF THE ACT. (II) THAT THE CIT(A) HAS ERRED IN CONFIRMING THE ABOVE SAID PENALTY IGNORING THE FACT THAT THE PROVISION OF SECTION 40( A)(IA) BEING IN THE NATURE OF DEEMING PROVISION, EVEN IF THE DISALLOWANCE CAN BE MADE, THE PENALTY ON THE SAME IS NOT CALLED FOR. 6. (I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED, BOTH ON FACTS AND IN LAW IN CONFIRMING THE P ENALTY UNDER SECTION 271(1)(C) OF THE ACT ON A DISALLOWANCE OF INTEREST AMOUNTING TO RS. 28,45,010/- MADE BY THE ASSESSEE. (II) THAT THE ABOVE SAID PENALTY IS NOT LEVIABLE A S THE ADDITION WAS MADE ONLY BY ESTIMATING THE RATE OF INTEREST ARBITRARILY AT 1 3%. 7. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED, BOTH ON FACTS AND IN LAW IN CONFIRMING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT WITHOUT GIVING ANY FINDING RELATED TO CONCE ALMENT OF INCOME OR 3 ITA NO. 1420/DEL/2017 FURNISHING OF INACCURATE PARTICULARS. 8. THAT THE LEARNED CIT(A) HAS ERRED, BOTH ON FACTS AND IN LAW, IN UPHOLDING THE LEVY OF PENALTY, IGNORING THE FACT THAT THE PEN ALTY PROCEEDINGS ARE INDEPENDENT PROCEEDINGS, AND AS SUCH, MERE DISALLOW ANCE OR ADDITION COULD NOT LEAD TO THE LEVY OF PENALTY. 3. THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME ON 28/9/2012 DECLARING CURRENT YEAR LOANS AT RS. 63,43,06,818/-. THE ASSE SSMENT WAS COMPLETED ON 20/03/2015 AT LOSS OF RS.62,88,97,759/- AFTER MAKIN G DISALLOWANCE OF EXPENSES U/S 40(A)(IA) MADE TO RS.25,064,49/- AND A DDITION ON ACCOUNT OF DISALLOWANCE OF INTEREST EXPENSES AMOUNTING TO RS.2 8,45,000/- THE ASSESSING OFFICER ALSO INITIATED PENALTY PROCEEDINGS U/S 271 (1)(C) OF THE ACT. THE PENALTY PROCEEDINGS WERE COMPLETED ON 30/09/2015 BY IMPOSIN G PENALTY AT RS. 16,71,400/-. 4. BEING AGGRIEVED BY THE PENALTY ORDER, THE ASSESS EE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) DISMISSED THE APPEAL OF THE ASS ESSEE. 5. THE LD. AR SUBMITTED THAT THE NOTICE ISSUED U/S 274 READ WITH SECTION 271(1)(C) IS INVALID AS IT DID NOT SPECIFY THE CHAR GE AGAINST WHICH THE PENALTY IS LEVIED. EVEN IN THE ASSESSMENT ORDER, THERE IS NO SEPARATE CHARGE MENTIONED. THUS, NOT ONLY THE NOTICE ISSUED TO THE ASSESSEE U/ S 274 READ WITH SECTION 271(1)(C) IS DEFECTIVE, BUT ASSESSING OFFICER HAS NOT EVEN MADE HIMSELF SATISFIED AT THE TIME OF MAKING DISALLOWANCE/ADDITIONS IN ASS ESSMENT ORDER WHETHER THE ASSESSEE FURNISHED INACCURATE PARTICULAR OF INCOME OR CONCEALED PARTICULARS OF INCOME. THEREFORE, THE LD. AR SUBMITTED THAT ENTIR E PENALTY PROCEEDING STAND VITIATED, IF THE NOTICE ITSELF IS NOT IN ACCORDANCE WITH LAW. THE LD. AR RELIED UPON THE DECISION OF THE HONBLE KARNATAKA HIGH COU RT IN CASE OF CIT(A) VS. M/S MANJUNATHAN AND GINNI FACTORY AND ORS 359 ITR 5 65. THE ABOVE PRINCIPAL WAS FURTHER AFFIRMED BY THE APEX COURT IN CASE OF CIT(A) VS. M/S SSA 4 ITA NO. 1420/DEL/2017 EMERALD MEDALS. THE LD. AR FURTHER SUBMITTED THAT THE PENALTY CANNOT BE LEVIED ON THE DISALLOWANCE U/S 40(A) (IA) AS THE AS SESSEE WAS UNDER THE BELIEF THAT TDS IS NOT LIABLE TO BE DEDUCTED ON PAYMENT OF NBFCS. THE LD. AR FURTHER SUBMITTED THAT THE CIT(A) ALSO HAS NOT GIVE N ANY REASON WHILE CONFIRMING THE ORDER PASSED BY THE ASSESSING OFFICE R. THE LD. AR FURTHER SUBMITTED THAT ON SIMILAR ISSUE THE TRIBUNAL IN ASS ESSEES OWN CASE FOR ASSESSMENT YEAR 2011-12 DELETED THE PENALTY. 6. THE LD. DR RELIED UPON THE ASSESSMENT ORDER, PEN ALTY ORDER AND THE ORDER OF THE CIT (A). 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. FIRST OF ALL, IN THE NOTICE ISSUED U/S 274 R.W.S 271(1)(C) OF THE INCOME TAX ACT, 1961, THERE WAS NO SPECIFIC CHARGES AS REL ATES TO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME. THEREFORE, THERE WAS NO CONCEALMENT ON THE PART OF THE ASSESSEE. THIS W AS A SIMPLE CASE OF DISALLOWANCE U/S 40(A) (IA) AS THE ASSESSEE WAS UND ER THE BELIEF THAT TDS IS NOT LIABLE TO BE DEDUCTED ON PAYMENT OF NBFCS. THUS, T HE AUTHORITIES CITED BY THE LD. AR ARE APPLICABLE IN THE PRESENT CASE. IN RESPE CT OF INTEREST EXPENSES, THE SAME WAS NOT CONCEALED BY THE ASSESSEE BEFORE THE A SSESSING OFFICER. THUS, THERE IS NO CONCEALMENT. THUS, SECTION 271(1)(C) O F THE ACT WAS NOT CORRECTLY INVOKED BY THE ASSESSING OFFICER. THE CIT(A) ALSO OVERLOOKED THE ACTUAL INTENTION OF THE PENALTY PROCEEDINGS WHICH CLEARLY SET OUT THAT WHEN THERE IS INACCURATE PARTICULARS OR CONCEALMENT ON PART OF TH E ASSESSEE, THEN THE SAME SHOULD BE PROCEEDED. BUT IN THE PRESENT CASE, THE A SSESSEE HAS DISCLOSED ALL THE FACTUAL ASPECTS BEFORE THE ASSESSING OFFICER WH ICH CANNOT BE STATED THAT THERE WAS CONCEALMENT OF PARTICULARS OF INCOME OR T HE ASSESSEE FURNISHED INACCURATE PARTICULARS OF INCOME. THE ASSESSEE HAS ALSO FILED ALL THE DETAILS DURING THE REGULAR ASSESSMENT PROCEEDINGS. FROM THE NOTICE, IT CAN BE SEEN THAT THE ASSESSING OFFICER WAS NOT SURE UNDER WHICH PROVISIONS OF SECTION 271 OF THE INCOME TAX ACT, 1961, THE ASSESSEE IS LIABLE FOR PENALTY. THE ISSUE IS 5 ITA NO. 1420/DEL/2017 SQUARELY COVERED BY THE DECISION OF THE HON'BLE SUP REME COURT IN CASE OF M/S SSA EMERALD MEADOWS. THE EXTRACT OF THE HONBLE KA RNATAKA HIGH COURT IN M/S. SSA EMERALD MEADOWS ARE AS UNDER WHICH WAS CO NFIRMED BY THE HONBLE APEX COURT: 3. THE TRIBUNAL HAS ALLOWED THE APPEAL FILED BY TH E ASSESSEE HOLDING THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SE CTION 274 READ WITH SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT) TO BE BAD IN LAW AS IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(1)(C) OF THE ACT, THE PENALTY PROCEEDINGS HAD BEEN INITIATED I.E., WHETHE R FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME. THE TRIBUNAL, WHILE ALLOWING THE APPEAL OF THE ASSESSEE , HAS RELIED ON THE DECISION OF THE DIVISION BENCH OF THIS COURT RENDER ED IN THE CASE OF COMMISSIONER OF INCOME TAX -VS- MANJUNATHA COTTON A ND GINNING FACTORY (2013) 359 ITR 565. 4. IN OUR VIEW, SINCE THE MATTER IS COVERED BY JUDG MENT OF THE DIVISION BENCH OF THIS COURT, WE ARE OF THE OPINION, NO SUBS TANTIAL QUESTION OF LAW ARISES IN THIS APPEAL FOR DETERMINATION BY THIS COU RT. THE APPEAL IS ACCORDINGLY DISMISSED. BESIDES THAT IN ASSESSEES OWN CASE FOR A.Y. 2011-1 2 THE SAME ISSUE HAS BEEN DECIDED BY THE TRIBUNAL IN ITA NO. 1704/DEL/2016 OR DER DATED 16.02.2018 IT IS HELD THAT MERELY BECAUSE THE ASSESSEE COMPANY DID N OT CHALLENGE THE ADDITION BEFORE THE CIT(A), IS NO GROUND TO LEVY PENALTY AGA INST THE ASSESSEE COMPANY. THUS, THE PENALTY IMPOSED U/S 271(1)(C) OF THE ACT IS SET ASIDE. THE APPEAL OF THE ASSESSEE IS ALLOWED. 8. IN RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 2 ND JULY, 2019 . SD/- SD/- (N. K. BILLAIYA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 02/07/2019 6 ITA NO. 1420/DEL/2017 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION 01 .0 7 .2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 01.07.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK