KAMBHARE CHEMICALS (I) P.LTD, MUMBAI V. ITO 4(2)(4), MUMBAI

ITA 1449/MUM/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5567 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 03-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHEN
• Assessee Lawyers: SANJAY KAPADIA; NAVIN KUMAR MISHRA AR S
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI G.S. PANNU , AM AND SHRI PAWAN SINGH , JM ITA NO. 1449 /MUM/201 4 ASSESSMENT YEAR 20 05 - 06 M/S. KAMBHARE CHEMICALS (I) P.LTD. MOHANLAL JAIN & CO. CHARTERED ACCOUNTANTS 10, CHART ERED HOUSE, GROUND FLOOR, D R. C.H. STREET MARINE LINES, MUMBAI - 400 0 02 . / VS. INCOME TAX OFFICER - 4(2)(4) MUMBAI. ./ PAN : AA BCK 0905 A ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY S/ SHRI SANJAY KAPADIA & NAVIN KUMAR MISHRA - (AR .S ) / RESPO NDENT BY SHRI M.C. OMI NINGSHEN - DR DATE OF HEARING 0 3/07 /2018 DATE OF PRONOUNCEMENT 31 /07/2018 / O R D E R PER PAWAN SINGH , JUDICIAL MEMBER : THIS APPEAL BY ASSESSEE UNDER SECTION 253 OF THE INCOME TAX ACT , IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME - TAX (APPEALS) - 9, MUMBAI [LD. CIT (A) ] DATED 16/12/2013 FOR ASSESSMENT YEAR 2005 - 06 . THE CIT ( A) CONFIRMED THE PENALTY LEVIED BY THE ASSESSING OFFICER (A.O.) U/S. 271(1)(C) . THE ASSESSEE HAS RAISED THE FOLLOWING GROUN DS OF APPEAL. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE HON'BLE CIT (A) ERRED IN CONFIRMING THE PENALTY LEVIED ON MEDICAL EXPENSES OF RS. 10,50,000/ - AND THE REASON ASSIGNED FOR DOING SO ARE WRONG AND CONTRARY TO THE PROVISION OF INCOME TAX ACT AND RULES MADE THERE UNDER. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE HON'BLE CIT (A) ERRED IN CONFIRMING THE PENALTY LEVIED ON INTEREST PAYMENT OF RS. 2,02,891 / - AND THE REASON ASSIGNED FOR DOING SO ARE WRONG AND CONTRARY TO THE PROVISION OF INCOME TAX ACT AND RULES MADE THERE UNDER. ITA NO. 1449 /MUM/201 4 M/S. KAMBHARE CHEMICALS (I) PVT.LTD. 2 3. THE APPELLANT CRAVE, LEAVE TO ADD, ALTER, AMEND OR MODIFY ANY OR ALL GROUNDS OF APPEAL ON OR BEFORE THE DATE OF HEARING. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING OF LEAD INGOTS ALLOYS AND LITHARGE, FILED ITS RETURN OF INCOME ON 29/10/2005, DECLARING TOTAL LOSS AT RS.14,48,302/ - . THE ASSESSMENT WAS COMPLETED U/S. 143(3) ON RS.2 4 /12 /2007 ASSESSING TOTAL INCOME AT RS. 38,78,072/ - . THE AO WHILE PASSING THE ASSESSMENT ORDER MADE AN ADDITION FOR : I) NON DEDUCTION OF TDS OF RS.2,02,891/ - U/S.40(A) ( IA) OF THE ACT; II) DISALLOWANCE OF BROKERAGE AND C OMMISSION OF RS.20,87,997/ - ; III) DISALLOWANCE OF REPAIR AND MAINTENANCE OF RS.13,47,718/ - AND IV) MEDICAL EXPENSES OF DIRECTOR AMOUNTING TO RS.19,50,000/ - 3. ON APPEAL, BEFORE THE CIT(A) ALL THE ADDITIONS WERE CONFIRMED. HOWEVER, ON FURTHER APPEAL BEFORE THE ITAT THE ASSESSEE WAS GRANTED PARTIAL RELIEF IN DELETING THE DISALLOWAN CE OF BROKERAGE AND COMMISSION OF RS.20,87,997/ - AND ON REPAIR AND MAINTENANCE OF RS.13,47,718/ - . HOWEVER, THE DISALLOWANCE OF RS.2,02,891/ - U/S. 40(A)(IA) AND MEDICAL EXPENSES TO THE EXTENT OF RS.10,50,000/ - WAS SUSTAINED . 3.1. BEFORE THE ORDER WAS PASSED BY THE TRIBUNAL THE AO LEVIED PENALTY ON ALL 4 DISALLOWANCES. THE PENALTY RELATED TO THE DISALLOWANCE WITH REGARD TO MEDICAL EXPENSES OF RS.10.50 LAKHS AND DISALLOWANCE UNDER SECTION 40(A)(IA) ON ACCOUNT OF INTEREST PAYMENT OF RS.2.02 LAKHS IS CHALLENGED BEFORE US. ITA NO. 1449 /MUM/201 4 M/S. KAMBHARE CHEMICALS (I) PVT.LTD. 3 4. WE HAVE HEARD THE SUBMISSIONS OF THE LD. AUTHORISED REPRESENTATIVE (AR) FOR THE ASSESSEE AND THE LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENUE AND PERUSED THE MATERIAL BEFORE US. THE LD. A R SUBMITS THAT THE ADDITION ON MEDICAL EXPENS ES WAS SUSTAINED AS THE ASSESSEE COULD NOT FURNISH SUPPORTIVE EVIDENCE. THE LD. AR SUBMITS HE IS NOW FILED THE DETAILS OF MEDICAL EXPENSES INCURRED BY THE ASSESSEE COMPANY ON THE MEDICAL EXPENSES OF ITS D IRECTOR. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAS NEITHER CONCEALED NOR FILED ANY INACCURATE PARTICULARS OF INCOME. THE DISALLOWANCE WAS SUSTAINED SOLELY IN THE GROUND THAT THE ASSESSEE COULD NOT FURNISH ANY SUPPORTIVE EVIDENCE. 4.1. FOR THE ISSUE OF NON DEDUCTION OF TDS ON PAYMENT OF INTEREST THE LD . AR SUBMITS THAT NO PENALTY IS LEVIABLE ON SUCH DISALLOWANCE . I N SUPPORT OF HIS SUBMISSION THE LD. AR RELIED UPON THE DECISION OF THE TRIBUNAL IN THE CASE OF TANUSHREE BASU (ITA NO.2922/MUM/2012 DATED 22/5/2013 FOR AY 2007 - 08). 4.2 . ON THE OTHER HAND THE LD. DR SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. SO FAR AS THE CONTENTION OF THE LD. AR OF THE ASSESSEE THAT THE ASSESSEE COULD NOT FURNISH SUFFICIENT EVIDENCE, THE LD. AR SUBMITS THAT THE EVIDENCE FURNISHED BY THE ASSESSEE IS SUFFICIENT. 5. WE HAVE CO NSIDERED THE RIVAL SUBMISSIONS OF THE PARTIES AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW . WE HAVE NOTED THAT INITIALLY THE AO HAS LEVIED PENALTY ON DISALLOWANCE ON MEDICAL EXPENSES OF DIRECTOR OF THE ITA NO. 1449 /MUM/201 4 M/S. KAMBHARE CHEMICALS (I) PVT.LTD. 4 ASSESSEE COMPANY FOR RS.19,50,000/ - AND DISALLOWANCE OF INTEREST PAYMENT OF RS.2,02,891/ - U/S. 40(A)(IA). THE DISALLOWANCE OF MEDICAL EXPENSES ON WHICH PENALTY WAS SUSTAINED IS NOW ONLY RS.10,50,000/ - . THE ASSESSING OFFICER HAS NOT QUESTIONED THE GENUINENESS OF PAYMENT ON BOTH THE DISALLOWANCES . THE DISALLOWANCE UNDER SECTION 40(A)(IA) WAS MADE ON TECHNICAL GROUND. THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF NAYAN C. SHAH VS. ITO (386 ITR 304)(GUJ.) HELD THAT THE ASSESSEE MADE A CLAIM FOR EXPENDITURE IN RELATION TO THE LABOUR PAYMENT, WHICH H E WAS NOT ENTITLED TO CLAIM IN VIEW OF SECTION 40(A)(IA). IT WOULD NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME SO AS TO ATTRACT PENALTY U/S. 271(1)(C). SO FAR AS DISALLOWANCE OF M EDICAL EXPENSES ARE CONCERNED INITIALLY THE DISALLOWANCE WAS MADE FOR RS.19.50 LAKHS, HOWEVER, THE SAME WAS SUSTAINED TO THE EXTENT OF RS.10.50 LAKHS BY THE TRIBUNAL. WE HAVE NOTED THAT THE LD. CIT(A) HAS CONFIRMED THE PENALTY HOLDING THAT EXPENDITURE WAS NOT SUPPORTED BY ANY DOCUMENTARY EVIDENCE. WE HAVE NOTED THAT THAT ASSESSEE HAS FILED CHART SHOWING DETAILS OF EXPENDITURE INCURRED BY THE ASSESSEE COMPANY WHICH CONSISTS OF EXPENSES AS FOLLOWS : S.NO. PARTICULARS DAYS SHIFTS/VISITS RATE PER DAY AMOUNT A HOSPITAL EXPENSES 1 . BOMBAY HOSPITAL 897484.00 B. CARE T AKER EXPENSES 1. NURSES CONVEYNCE 2. WARD BOY CONVEYANCE 153.00 153.00 153.00 153.00 3 3 2 2 600 60 300 30 275400.00 2754 0.00 91800.00 9180.00 ITA NO. 1449 /MUM/201 4 M/S. KAMBHARE CHEMICALS (I) PVT.LTD. 5 3. PHYSIO THERAPY 4. ACUPUNCTURE 5. DOCTORS FEES 150.00 VISIT 30.00 VISIT 80.00 VISIT 700 750 800 105000.00 22500.00 64000.00 C. TREATMENT EXPENSES 1. OXYGEN MACHINE 2. OXYGEN CYLINDER 3. SUCTION MACHINE & NEBULISER MACHINE 4. MEDICINE & DRUGS 5. MEDICAL REPORTS (TEST) 153 60 153 500 280 100 75600.00 1 68.00 15300.00 240000.00 44000.00 D. OTHER 1. BED CHARTS (ON RENT) 153 350 53550.00 MISCELLANEOUS EXPENSES 10946.00 1950000.00 5.1. WE HAVE FURTHER NOTED THAT ADDITION WAS UPHELD FOR WANT OF EVIDENCE ONLY. IN OUR VIEW THE ASS ESSEE HAS NOW FILED THE DETAILS OF THE MEDICAL EXPENSES. IN OUR VIEW, MERELY THE ASSESSEE COULD NOT FURNISH SUFFICIENT EVIDENCE TO SUBSTANTIATE ITS CLAIM WOULD NOT AMOUNTS TO FURNISH INACCURATE PARTICULARS OR CONCEALED ANY INCOM E, WHEN GENUINENESS OF THE P AYMENT IS NOT DISPUTED. THEREFORE, THE PENALTY LEVIED ON DISALLOWANCE OF MEDICAL EXPENSES IS ALSO NOT LEVIABLE, WHICH WE DELETE. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 . 07.2018. SD/ - SD/ - ( G.S. PANNU ) (PAWAN SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED: 31 /07/2018 JV.SR.PS. ITA NO. 1449 /MUM/201 4 M/S. KAMBHARE CHEMICALS (I) PVT.LTD. 6 / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2 . RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR D BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , / ITAT, MUMBAI.