ITO 25(2)(1), MUMBAI V. JAGANNATH VISHNU TEMKAR, MUMBAI

ITA 1436/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75412 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 06-02-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 18-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K SAHU
• Assessee Lawyers: RAHUL KHANDHERIA
• Section: 143(3); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER ./I.T.A. NO.1436/M/2011 ( AY: 2005 - 2006 ) ITO - 25(2)(1), C - 11 BLDG, R.NO.107, P.K. BHAVAN, B.K. C., BANDRA (E), MUMBAI 400 051. / VS. SHRI JAGANNATH V ISHNU TEMKAR, 504, A - WING, RAHEJA GREEN, RAHEJA ESTATE, KULUPWADI, BORIVALI (E), MUMBAI 400066. ./ PAN : AAAPT 9486 D ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI R.K. SAHU, DR / RESPONDENT BY : SHRI RAHUL KHANDHERIA / DATE OF HEARING :06.2.2014 / DATE OF PRONOUNCEMENT :06.2.2014 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 18.2.2011 IS AGAINST THE ORDER OF THE CIT (A) - 35, MUMBAI DATED 24.12.2010 FOR THE ASSESSMENT YEAR 2005 - 2006. 2. IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN DELETING THE PENALTY LEVIED BY THE AO U/S 271(1)(C) OF THE ACT AMOUNTING TO RS. 20,51,000/ - FOR FAILURE TO DEDUCT TDS ON PAYMENTS MADE FOR SUB - CONTRACTS FOR TRANSPORTATIO N OF GOODS. 2. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT (A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE AO BE RESTORED. 3. AT THE OUTSET, SHRI RAHUL KHANDHERIA, LD COUNSEL FOR THE ASSESSEE MENTIONED THAT THE ASSESSEE IS AN INDIVIDUAL AND ENGAGED IN THE BUSINESS OF GOODS TRANSPORTATION AS A PART OF THE BUSINESS. HE PAID TRANSPORTATION CHARGES OF RS. 61,02,309/ - TO VARIOUS PARTIES WITHOUT MAK ING TDS. ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT AND THE AO MADE DISALLOWANCE BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT AND THE CIT (A) CONFIRMED THE SAME AND THERE IS NO APPEAL BEFORE THE TRIBUNAL ON QUANTUM ADDITIONS. CONSEQUENT LY, PENALTY 2 PROCEEDINGS WERE INITIATED U/S 271(1)(C) OF THE ACT AND PENALTY OF RS. 20,51,000/ - WAS LEVIED FOR FAILURE TO DEDUCT TDS FOR TRANSPORTATION CHARGES. MATTER TRAVELLED TO THE CIT (A) ON THE ISSUE OF LEVYING OF PENALTY. 4. DURING THE PROCEEDINGS BE FORE THE CIT (A), ASSESSEE RAISED AN ARGUMENT THAT THE PROVISIONS OF SECTION 194C, WHICH ARE ENABLING PROVISIONS, DO NOT APPLY TO THE CASES OF THE INDIVIDUALS OR HUF. THE ASSESSEES STAND IS THAT THE INDIVIDUALS ARE COVERED ONLY BY THE SUBSEQUENT AMENDMEN T APPLICABLE W.E.F. 1.6.2007 ONWARDS. THE AMENDED PROVISIONS OF CLAUSE (K) OF SECTION 194C ARE RELEVANT HERE. ACCORDINGLY, THE CONTENTS OF PARA 5.2 OF THE IMPUGNED ORDER ARE RELEVANT. AGGRIEVED WITH THE SAME, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE ABOVE MENTIONED GROUNDS. 5. DURING THE PROCEEDINGS BEFORE US, LD DR RELIED ON THE ORDER OF THE AO. 6. ON THE OTHER HAND, LD COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF THE CIT (A). 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE RELEVANT MATERIAL PLACED BEFORE US. ON PERUSAL OF THE CIT (A)S ORDER IN GENERAL AND PARA 5.2 OF THE IMPUGNED ORDER, WE FIND THE SAME IS RELEVANT HERE WHICH READS AS UNDER: 5.2. IT IS TRUE THAT THE LD CIT (A) WHI LE DEALING WITH THE QUANTUM APPEAL, CONFIRMED THE ADDITION BUT THE NATURE OF CONTRACT, AS TO WHETHER IT REALLY AMOUNTS TO SUBCONTRACT WAS NOT EXAMINED IN DETAIL. AS SEEN FROM HIS ORDER THERE IS A POSSIBLE VIEW THAT THE APPELLANT DID NOT AWARD SUBCONTRACT AND THEREBY NOT LIABLE TO DEDUCT TAX AT SOURCE U/S 194C(2). FURTHER, AS CONTENDED BY THE REPRESENTATIVE, THE CA WHO CONDUCTED TAX AUDIT REPORT CERTIFIED THAT THE APPELLANT WAS NOT LIABLE TO DEDUCT TAX AT SOURCE WHICH MEANS THAT THE APPELLANT HAS TAKEN THE OPINION OF THE EXPERT AND BASED ON HIS EXPERT OPINION, THE TAX WAS NOT DEDUCTED AT SOURCE AND THEREBY IT CANNOT BE SAID THAT THERE IS CONCEALMENT OF INCOME, WHEN THE WORKING OF TOTAL INCOME OF THE APPELLANT WITHOUT DISALLOWANCE U/S 40(A)(IA) IS SUPPORTED BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF T.ASHOK PAI (292 ITR 11) . EVEN OTHERWISE, THE WORD CONCEALMENT MEANS HIDING FROM THE KNOWLEDGE OF THE AO AND IN THE CASE OF APPELLANT, THE AO HAS NOT BROUGHT ANY MATERIAL IN THE IMPUGNED ORDER TO SHOW THAT THERE WAS SUPPRESSION OR MISREPRESENTATION OF SOME FACTS DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE STAND OF THE AO WAS THAT THE APPELLANT OMITTED TO EFFECT ARTIFICIAL DISALLOWANCE U/S 40(A)(IA) AND LEVIED CONCEALMENT PENALTY WHICH CANNOT BE SUSTAINED. EVEN OTHERWISE, AS CONTENDED BY THE REPRESENTATIVE THE APPELLANT DEDUCTED TAX AT SOURCE IN THE SUBSEQUENT YEARS AND CLAIMED THE AMOUNT DISALLOWED IN THIS YEAR AS DEDUCTION IN THE YEAR OF TAX DEDUCT ION & PAYMENT INTO GOVERNMENT ACCOUNT. IN VIEW OF THE ABOVE, I FIND THAT THERE IS NO CASE FOR LEVY OF CONCEALMENT OF PENALTY AND THE SAME IS CANCELLED. 8. ON PERUSAL OF THE ABOVE PARA, IT IS CLEAR THAT THE AMENDED PROVISIONS DO NOT APPLY TO THE ASSESSMEN T YEAR 2005 - 2006 WHICH IS UNDER CONSIDERATION. THE 3 DISCUSSION RELATING TO THE EXPERTS ADVICE ALSO HELPS THE ASSESSEE. CONSIDERING THE ABOVE SETTLED LEGAL POSITION OF THE ISSUE, WE ARE OF THE OPINION THAT THE ORDER OF CIT (A) IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED . 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH FEBRUARY, 2014 IMMEDIATELY AFTER COMPLETION OF HEARING. SD/ - SD/ - (VIVEK VARMA) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 6 .2 .2014 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI