ACIT, Jaipur V. PREEYA HOME STAUDY P LTD., JHUNJHUNU

ITA 148/JPR/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5244 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 06-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K JAIN
• Assessee Lawyers: BINOD GUPTA DHK
• Keywords: Depreciation; Opportunity of being heard; Retrospective amendment; Initiation of penalty proceedings; Wrong claim; Ignorance of law
• Section: 143(3)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VH-VKJ-EHUK] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF; D LNL; DS LE{K BEFORE: SHRI T.R.MEENA, AM & SHRI LALIET KUMAR, JM VK;DJ VIHY LA -@ ITA NO. 148/JP/2013 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2006-07. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2, JAIPUR. CUKE VS. M/S PREEYA HOME STUDY PVT. LTD., 1G-13, INDRA NAGAR, JHUNJHUNU (RAJ) LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AADCP 2254 P VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI S.K. JAIN (DCIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI BINOD GUPTA. LQUOKBZ DH RKJH[K@ DATE OF HEARING : 03/05/2016. MN?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 31/05/2016. VKNS'K@ ORDER PER T.R. MEENA, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 27/11/2012 OF THE LEARNED C.I.T.(A)(CENTRAL), JAIPUR FOR A.Y. 2006-07. THE SOLE EFFECTIVE GROUND OF APPEAL IS AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD CIT(A), CENTRAL, JAIPUR HAS ERRED IN DELETING THE PE NALTY OF RS. 28,80,261/- ON THE ADDITIONAL OF RS. 70,48,4 81 & RS. 1,00,370/- MADE BY THE A.O. BY INVOKING SECTION 40(A)(IA) AND RS. 44,02,000/- ON ACCOUNT OF CONTING ENT 2 ITA NO. 148/JP/2013 ACIT VS M/S PREEYA HOME STUDY PVT. LTD. LIABILITY, WHICH WERE CONFIRMED BY THE CIT(A) ALSO, THOUGH BY CLAIMING SUCH DEDUCTION THE ASSESSEE HAS UNDER STATED ITS TOTAL INCOME AND THEREFORE, FURNIS HED INACCURATE PARTICULARS OF ITS INCOME ATTRACTING PEN ALTY PROVISIONS U/S 271(1)(C). 2. THE SOLE GROUND OF THE APPEAL IS AGAINST DELETING THE PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) OF RS. 28,80,261/-. THE ASSESSEE COMPANY FILED RETURN ON 27/11/2006 DECL ARING TOTAL INCOME OR RS. 20,77,790/-. SCRUTINY ASSESSMENT U/S 143(3) OF THE ACT WAS COMPLETED ON 24/12/2008. THE ASSESSEE COMPANY RECEIVED FEES F ROM ITS MEMBERS FOR IMPARTING COMPUTER EDUCATION. THE LD ASSESSING OFFIC ER MADE VARIOUS ADDITIONS AND ASSESSED INCOME AT RS. 1,32,40,996/-. THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT WAS INITIATED B Y ISSUING NOTICE SEPARATELY WITHOUT ASSIGNING ANY SPECIFIC FAULT OF T HE ASSESSEE WHETHER IT IS FOR CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. THE QUANTUM ADDITION WAS CHALLENGED BY THE ASSESSEE B EFORE THE LD CIT(A). THE LD ASSESSING OFFICER CONSIDERED FOLLOWING ADDITIO N FOR IMPOSING PENALTY U/S 271(1)(C) OF THE ACT. SL.NO . DESCRIPTION AMOUNT 1. DISALLOWANCE U/S 40(A)(IA) RS. 70,48,481/- 2. DISALLOWANCE OUT OF CAR HIRE CHARGES RS. 1,00,3 70/- 3. DISALLOWANCE OF CONTINGENT LIABILITY RS. 11,77 ,500/- TOTAL RS. 83,26,351/- 3 ITA NO. 148/JP/2013 ACIT VS M/S PREEYA HOME STUDY PVT. LTD. THE LD ASSESSING OFFICER GAVE FINDINGS IN PENALTY OR DER THAT PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT WAS INITIATED F OR FURNISHING INACCURATE PARTICULARS OF INCOME AND/OR CONCEALMENT OF INCOME BY THE ASSESSING OFFICER BY ISSUING NOTICE DATED 24/12/2008. 2.1 BEFORE IMPOSING PENALTY U/S 271(1)(C), HE GAVE REASONABLE OPPORTUNITY OF BEING HEARD. THE ASSESSEE AVAILED THE OPPORTUNITY AND ITS SUBMISSION HAS BEEN REPRODUCED BY THE ASSESSING OFF ICER ON PAGE NO. 2 OF THE PENALTY ORDER. AFTER CONSIDERING THE ASSESSEES REPLY, THE LD ASSESSING OFFICER CONSIDERED THE PROVISIONS OF SECTION 271(1) (C) ON PAGE NOS. 2 AND 3 AND HELD THAT IT IS CLEAR CUT CASE MADE BY THE REV ENUE AGAINST THE ASSESSEE FOR CONCEALMENT OF INCOME AND/OR FURNISHING OF INAC CURATE PARTICULARS OF INCOME, INASMUCH AS ASSESSEES DEFAULT OF PROVISION S OF SECTION 40(A)(IA) OF THE ACT. THE ASSESSEES REPLY ON BONAFIDENESS HAS NO T FOUND CONVINCING TO THE ASSESSING OFFICER AS CLAIMED BY THE ASSESSEE TH AT THE RETURN WAS FILED ON THE BASIS OF ADVICE OF THE CHARTERED ACCOUNTANT BUT THE LD ASSESSING OFFICER HELD THAT IGNORANCE OF LAW IS NO EXCUSE. THE ASSESSI NG OFFICER HAD EVALUATED PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. HE FURT HER HELD THAT THE ASSESSEE DID NOT CONTEST THE CERTAIN ADDITIONS BEFORE THE AP PELLATE AUTHORITY AS HE WAS AWARE OF THE CONTRAVENTION OF THE PROVISIONS OF I T LAW AND COULD NOT HAVE ESCAPED THE RIGOURS BY ANY MEANS OR METHOD. THE ASSESSEE HAD NOT 4 ITA NO. 148/JP/2013 ACIT VS M/S PREEYA HOME STUDY PVT. LTD. BROUGHT ON RECORD ANY EVIDENCE IN SUPPORT OF ITS CO NTENTION NOR HAD THE ASSESSEE PUT FORTH ANY ARGUMENT WHEREBY THE ONUS CAS T UPON IT IN RESPECT OF ITS INNOCENCE AND RIGHTEOUS CONDUCT IS ESTABLISH ED. THE CASE LAWS CITED BY THE ASSESSEE ARE ALSO NOT SQUARELY APPLICABLE. HE F URTHER RELIED ON THE DECISION IN THE CASE OF UNION OF INDIA VS. DHARMEND RA TEXTILES PROCESSORS 295 ITR 244 (SC) WHEREIN IT HAS BEEN HELD THAT PENAL TY U/S 271(1)(C) OF THE ACT IS A CIVIL LIABILITY AND THE WILLFUL CONCEAL MENT IS NOT AN ESSENTIAL INGREDIENT FOR ATTRACTING CIVIL LIABILITY. THEREFORE , HE IMPOSED 100% PENALTY OF TAX SOUGHT TO BE EVADED AT RS. 28,80,261/- ON CO NCEALED INCOME. IT IS ALSO A FACT THAT THE LD DCIT HAS NOT TAKEN AP PROVAL U/S 274(2)(B) OF THE ACT FROM THE JCIT BEFORE IMPOSING PENALTY U/S 271(1)(C) OF THE ACT AS THE AMOUNT WAS MORE THAN RS. 20,000/-. 3. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD CIT(A), WHO HAD PART LY ALLOWED THE APPEAL BY OBSERVING AS UNDER:- II. THE ANOTHER DISALLOWANCE/ ADDITION WHICH IS BASI S FOR IMPOSITION OF PENALTY IS AMOUNTING TO RS. 4402000/- ON ACCOUNT CONTINGENT LIABILITY. AS REGARDS THIS ADDIT ION THE APPELLANT HAS FURNISHED AN EXPLANATION THAT COMMISS ION IS CLAIMED IN P&L ACCOUNT AND SHOWN PAYABLE ON REGULAR BASIS AS AND WHEN A NEW MEMBER IS INTRODUCED HOWEVER THE AMOUNT IS PAID TO SUCH MEMBER ONLY WHEN THE NEW MEMBE R 5 ITA NO. 148/JP/2013 ACIT VS M/S PREEYA HOME STUDY PVT. LTD. FURTHER INTRODUCED TWO MEMBERS. THE AO REJECTED THE CLAIM OF THE APPELLANT ON THE REASONING THAT THE LIABILITY O F COMMISSION PAYMENT DID NOT CRYSTALLIZE INASMUCH AS IT WILL BECO ME PAYABLE ONLY WHEN TWO NEW MEMBERS ARE INTRODUCED. IN THIS CONNECTION IT WILL BE NOTED THAT AS REGARDS THIS ISS UE THE APPELLANT HAS FURNISHED ALL PARTICULARS CORRECTLY A ND IT IS NOT A CASE WHERE IT CAN BE SAID THAT INACCURATE PARTICULA RS HAVE BEEN FURNISHED. THE ASSESSEE HAS MADE A LEGAL CLAIM AS PER CONSISTENT BUSINESS PRACTICE HOWEVER SUCH CLAIM IS R EJECTED BY THE AO. THE APPELLANT HAS ALSO REFERRED CERTAIN CASE LAWS AS DISCUSSED ON PAGE 12 AND 13 OF THIS ORDER WHICH AS P ER APPELLANT SUPPORTED HIS CLAIM. THE ESSENTIAL ISSUE T O BE NOTED THAT THIS IS AN ISSUE WHERE DEFINITELY THERE CAN BE MORE THAN ONE OPINION/ OPTION REGARDING ALLOWABILITY OF SUCH C LAIM. THE APPELLANT OPTED FOR AN OPTION RELYING UPON CERTAIN CASE LAWS WHICH IS REJECTED BY THE AO. HOWEVER REJECTION OF SUC H LEGAL CLAIM CANNOT BE SAID TO BE A CASE OF CONCEALMENT OF INCOME. REFERENCE IS MADE TO THE DECISION OF HONBLE SUPREM E COURT IN THE CASE OF RELIANCE PETRO CHEMICALS PVT. LTD. V S. CIT REPORTED IN 322 ITR 158. 10. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EX PENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT, IN OUR OPINION, A TTRACT THE PENALTY UNDER SECTION 271(1)(C). IF WE ACCEPT THE CO NTENTION OF THE REVENUE THEN IN CASE OF EVER RETURN WHERE THE CLAIM MADE IS NOT ACCEPTED BY AO FOR ANY REASON, THE ASSE SSEE WILL 6 ITA NO. 148/JP/2013 ACIT VS M/S PREEYA HOME STUDY PVT. LTD. INVITE PENALTY UNDER SECTION 271 (1)(C). THAT IS CL EARLY NOT THE INTENDMENT OF THE LEGISLATURE. KEEPING IN VIEW THE PROPOSITION OF LAW LAID DOWN BY HONBLE SUPREME COURT, THE PENALTY U/S 271(1)(C) OF IT ACT C ANNOT BE IMPOSED ON SUCH DISALLOWANCE OF RS. 44044000/-. III. AS REGARDS ANOTHER DISALLOWANCE/ ADDITION OF R S. 118370/- AND 30400/- TOTAL FOR RS. 148770/-. IT IS NOTED THA T SUCH EXPENSES WERE NOT AT ALL ALLOWABLE TO THE APPELLANT. AS REGARDS THE CLAIM OF DONATION OF RS 118370/ THIS IS NOT AN ALLOWABLE EXPENSES. SIMILARLY REGARDING DISALLOWANCE OF RS. 30400/- THE APPELLANT HAS CLAIMED HIGHER DEPRECIATI ON ON BOOKS WHEREAS DEPRECIATION WAS TO BE ALLOWED AT LOWER R ATE. THE ESSENTIAL POINT TO BE NOTED IS THAT THE APPELLAN T HAS FAILED TO FURNISH ANY BONA FIDE EXPLANATION AS TO WHY SUCH CLAIM WERE MADE WHEN SPECIFICALLY SUCH CLAIMS ARE NOT ALLOWA BLE. IT IS NOT A CASE WHERE THERE CAN BE TWO OPINIONS ON THE ALLOWABILITY OF SUCH CLAIM. THEREFORE PRIMA FACIE SUC H CLAIM WAS WRONG AND INCORRECT AND BY MAKING WRONG CLAIM THE APPELLANT CONCEALED HIS INCOME TO THE EXTENT OF RS. 148770/-. THEREFORE PENALTY U/S 271(1)(C) OF IT ACT ON SUCH QUA NTUM ADDITION OF RS. 148770/- DESERVES TO BE IMPOSED/ SU STAINED. THE AO HAS RIGHTLY IMPOSED PENALTY ON SUCH QUANTUM ADDITION. THE PENALTY AMOUNTING TO RS. 36612/- WHICH IS 100% TAX SOUGHT TO BE EVADED ON SUCH QUANTUM ADDITI ON OF RS.148770/- IS ACCORDINGLY CONFIRMED. THEREFORE THE APPELLANT GETS RELIEF OF RS. 2843649/-. 7 ITA NO. 148/JP/2013 ACIT VS M/S PREEYA HOME STUDY PVT. LTD. 6. THE APPEAL IS PARTLY ALLOWED. THE ADDITION/DISALLOWANCES MADE AT RS. 1,18,370/-, 30 ,400/- IN TOTAL RS. 1,48,770/-, THESE EXPENSES ARE NOT ALLOWABLE TO THE APPELLANT, WHICH INCLUDES DONATION MADE AND HIGHER DEPRECATION CLAIM ED IN BOOKS OF ACCOUNT. ACCORDINGLY, HE CONFIRMED THE PENALTY AMOUNT ON IT AND GIVEN THE RELIEF OF RS. 28,43,649/-. 4. NOW THE REVENUE IS IN APPEAL BEFORE US. THE LD DR HAS VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND AR GUED THAT THE ADDITION HAS BEEN CONFIRMED BY THE APPELLATE AUTHORITY AND T HE ASSESSEE HAD CONCEALED THE PARTICULARS OF INCOME AND ALSO FURNIS HED INACCURATE PARTICULARS OF INCOME. THEREFORE, ORDER OF THE LD CIT(A) DESERVES TO BE REVERSED. 5. AT THE OUTSET, THE LD AR OF THE ASSESSEE HAS REI TERATED THE ARGUMENTS MADE BEFORE THE LD CIT(A). THERE WAS A TDS SURVEY COND UCTED ON 08/3/2007. TDS WAS DEDUCTED OUT OF TOTAL COMMISSION E XPENDITURE OF RS. 70,48,481/- ON RS. 20,48,500/-. FINALLY REMAINING A MOUNT OF RS. 49,99,981/- WAS FOUND FINAL FOR VIOLATION OF PROVISIONS OF SECTI ON 40(A)(IA) OF THE ACT. THE APPELLANT COMPANY WAS IN BUSINESS OF IMPARTING ED UCATION TO ITS MEMBERS. THE COMPANY WAS FOLLOWING MULTI LEVEL MARKETI NG MODEL, WHEREIN, EVERY MEMBERS WAS GETTING COMMISSION ON INTRODUCING NEW MEMBERS AT PREDETERMINE RATE. EVERY MEMBER GETTING UPGRADED I N LEVEL ACCORDING TO 8 ITA NO. 148/JP/2013 ACIT VS M/S PREEYA HOME STUDY PVT. LTD. THE PERSONS JOINING, COMPANY UNDER HIS/HER LEG. IT IS UNDISPUTED FACT THAT EVERY MEMBER WHO JOINS THE COMPANY, UPON JOINING, I MMEDIATELY BECOME ELIGIBLE FOR BASIC COMMISSION WHICH IS PAYABLE ON IN TRODUCTION OF MINIMUM TWO NEW MEMBERS. THE COMPANY PROVIDED IN COMMISSION E XPENDITURE RS. 44,02,000/- HOWEVER, TILL 31 ST MARCH, 2006, THESE MEMBERS COULD NOT INTRODUCE TWO NEW MEMBERS. ON VERIFICATION OF COMMISS ION EXPENDITURE, IT IS ALSO FOUND THAT THE COMMISSION AMOUNTING TO RS. 32, 24,500/- WAS COVERED UNDER BOTH THE HEADS I.E. DISALLOWANCE OF RS. 70,48, 481/- AND RS. 44,02,000/-. THE LD ASSESSING OFFICER REDUCED THIS DOUBLE ADDITION IN COMPUTING ITSELF. THE GENUINENESS OF EXPENSES UNDER BOTH THE HEADS HAS NOT BEEN DOUBTED BY THE LOWER AUTHORITIES. THE ISSUE IS DEBATABLE WHETHER THIS EXPENSE IS ALLOWABLE OR NOT DURING THE YEAR UND ER CONSIDERATION. THIS ITEM WAS ADDED IN THE TDS LIST W.E.F. 01/4/2005 AND TH ERE WAS A CONFUSION AND AMBIGUITY REGARDING INTERPRETATION, WHICH IS EVI DENT FROM THE FACT THAT BY FINANCE ACT, 2008, A RETROSPECTIVE AMENDMENT WAS MADE TO THIS SECTION, FURTHER AMENDMENT WAS MADE TO THIS SECTION BY FINANC E ACT, 2010. THE SAID AMENDMENT HAS FURTHER BEEN HELD AS CLARIFICATORY IN NATURE BY VARIOUS COURTS AND HELD THAT SAME IS EFFECTIVE FROM 01/4/2005. THE AUDITOR ALSO HAD NOT POINTED OUT THAT ON THIS AMOUNT TDS IS LIABLE TO BE DEDUCTED IN AUDIT REPORT. THE ASSESSEE HAD EXPLAINED THE REASONS FOR NOT CONSI DERING THIS AMOUNT IN 9 ITA NO. 148/JP/2013 ACIT VS M/S PREEYA HOME STUDY PVT. LTD. THE INCOME, WHICH WAS BONAFIDE. THAT RECIPIENT WERE N OT UNDER THE TAX NET AS THEIR INCOME WAS BELOW TAXABLE LIMIT, THEREFORE, T HE ASSESSEE WAS TO GET THE FORM NO. 15G/15H BUT WHICH COULD NOT BE COLLECTE D BUT SUBSEQUENTLY THE TDS WAS COLLECTED AND DEPOSITED IN GOVERNMENT ACC OUNT. THE LD AR HAS FURTHER ARGUED THAT THE GENUINENESS OF THE EXPENSES HAS NOT BEEN DOUBTED BY THE LOWER AUTHORITIES AND EXPLANATION SUBMITTED B Y THE ASSESSEE IS BONAFIDE, NO PENALTY CAN BE IMPOSED U/S 271(1)(C) B Y RELYING ON THE DECISION IN THE CASE OF CIT VS FILTREX TECHNOLOGIES (P) LTD. 232 TAXMAN 0811 (KAR). HE FURTHER RELIED ON THE DECISION OF HO NBLE MUMBAI TRIBUNAL IN THE CASE OF YOGESH R. DESAI VS ACIT (2010) 38 DTR 101 WHEREIN IT HAS BEEN HELD THAT MERELY BECAUSE AN AMOUNT IS NOT ALLO WED OR TAXED TO INCOME, IT CANNOT BE SAID THAT THE ASSESSEE HAD FIL ED INACCURATE PARTICULARS OR CONCEALED ANY INCOME CHARGEABLE TO TAX. NO PENAL TY CAN BE LEVIED. 5.1 FURTHER BEFORE ADJUDICATION OF THE APPEAL BY TH E LD CIT(A) ON 17/11/2009, A SEARCH WAS CONDUCTED ON THE APPELLANT. THEREAFTER, THE ASSESSEE APPROACHED TO THE SETTLEMENT COMMISSION AN D ULTIMATELY CASE HAS BEEN SETTLED UNDER THE FACTS AND CIRCUMSTANCES, NO ADVERSE INFERENCE CAN BE DRAWN IN NON-CONTESTING OF THE CERTAIN ADDITIONS IN QUANTUM APPEAL. THE PENALTY PROCEEDINGS AND QUANTUM PROCEEDINGS ARE SEP ARATE AND THE LD ASSESSING OFFICER HAD TO GIVE THE FINDINGS AT THE T IME OF IMPOSING PENALTY BY 10 ITA NO. 148/JP/2013 ACIT VS M/S PREEYA HOME STUDY PVT. LTD. CONSIDERING THE EVIDENCES. HE FURTHER RELIED ON THE DECISION IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS LIMITED (2010) 322 IT R 158 (SC) WHEREIN IT HAS BEEN HELD THAT MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT A CCEPTABLE TO THE REVENUE, THAT BY ITSELF, WOULD NOT, IN OUR OPINION, ATTRACT THE PENALTY U/S 271(1)(C) OF THE ACT. MOREOVER, IT IS A FACT THAT D ISALLOWANCES MADE IN ASSESSMENT PROCEEDINGS ARE BY INVOKING SECTION 40(A )(IA) WHICH IS A DEEMING PROVISION AND CREATES LEGAL FRICTION. THE SA ID LEGAL FRICTION CANNOT BE EXTENDED FROM DISALLOWING THE EXPENDITURE AND CAN NOT BE CONSIDERED FOR PROVISIONS OF SECTION 271(1)(C) OF THE ACT. THE VARI OUS COURTS HAVE HELD THAT LEGAL FRICTION CANNOT BE EXTENDED AND HAS TO BE LIM ITED TO THE PURPOSES FOR WHICH IT IS CREATED. NO DEDUCTION OF TDS IS A TECHNIC AL FAULT BECAUSE THIS AMOUNT IS INADMISSIBLE IN A PARTICULAR YEAR ARE ADM ISSIBLE IN SUBSEQUENT YEAR WHEN PAYMENT OF TDS WERE MADE BY THE ASSESSEE. HE RELIED ON THE DECISION OF HON'BLE GUJARAT HIGH COURT N THE CASE O F CIT VS DAHYABHAI VELJIBHAI PATEL ITA NO. 793 OF 2013 DATED 06/1/2014 WHEREIN DISALLOWANCE U/S 40(A)(IA) IS FOUND DEBATABLE AND FINDING GIVEN BY THE LD CIT(A) THAT PAYMENTS CLAIMED BY THE ASSESSEE HAD NOT BEEN QUEST IONED ON THE BASIS OF GENUINENESS BY THE REVENUE. THEREFORE, NO PENALTY C AN BE IMPOSED. HE FURTHER RELIED ON THE DECISION OF HONBLE AHMADABAD ITAT IN THE CASE OF 11 ITA NO. 148/JP/2013 ACIT VS M/S PREEYA HOME STUDY PVT. LTD. DEVPRAS INSTITUTE VS. ITO ITA NO. 1743/AHD/2012 DATE D 23/11/2012 WHEREIN IT HAS BEEN HELD THAT DISALLOWANCE MADE UNDER THE PROVISIONS OF SECTION 40(A)(IA) BUT GENUINENESS OF PAYMENTS HAVE NOT BEEN DOUBTED, THEREFORE BY RELYING ON THE HON'BLE SUPREME COURT D ECISION IN THE CASE OF RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA), APPEAL WAS DECIDED IN FAVOUR OF THE ASSESSEE. HE FURTHER RELIED ON THE FOLLOWING CAS E LAWS:- (I) ACIT VS SEAWAYS SHIPPING LTD. IN APPEAL NO. 80/H/ 2011 HYDERABAD BENCH OF ITAT. (II) ITAT AHMADABAD IN ITO VS M/S LUCKY STAR INTERNA TIONAL ITA NO. 1041/AHD/2010 DATED 12 MARCH, 2012. (III) DELHI HIGH COURT IN CIT VS. AT&T COMMUNICATION S SERVICES INDIA (P) LTD. (2012) 18 TAXMANN.COM 144 (DELHI). (IV) ITAT DELHI IN THE CASE OF DCIT VS ASIAN HOTELS L TD., 2011-TIOL- 795-ITAT-DEL (ITA NO. 3820/DEL/2010 DATED JANUARY, 7, 2011. (V) ACIT VS BHORUKA LOGISTICS PVT. LTD. (2010) 34 (I I) ITCL 552. (VI) ACIT VS M/S SARASWATI CONSTRUCTION COMPANY ITA N O. 2865/AHD/2010. (VII) M.P. TOLLS ROAD LIMITED, MUMBAI VS. ACIT ITA N O. 36/IND/2012 INDORE. (VIII) ITAT, AHMADABAD IN THE CASE OF L.G CHOUDHARY VS. DCIT, ITA NO. 228/AHD./2010 (IX) ITAT, AHMADABAD IN THE CASE OF ANUPAMA RASAYAN INDIA LIMITED VS DCIT ITA NO. 504 & 505/AHD/2010 (X) ITAT, AHMADABAD IN THE CASE OF ACIT VS MAZDA LTD . ITA NO. 1552/AHD/2011 DATED 07/06/2012. HE ALTERNATIVELY ALSO ARGUED THAT THE LD ASSESSING OFFICER HAD NOT SPECIFIED THE DEFAULT OF THE ASSESSEE WHETHER PENALTY WAS INITI ATED FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME. EVEN IN PENALTY 12 ITA NO. 148/JP/2013 ACIT VS M/S PREEYA HOME STUDY PVT. LTD. ORDER, THE LD ASSESSING OFFICER WAS NOT POINTED OUT THE DEFAULT COMMITTED BY THE ASSESSEE. THEREFORE, THE LD ASSESSING OFFICER HA D NOT RECORDED SATISFACTION FOR INITIATION OF PENALTY PROCEEDINGS AT THE TIME OF ASSESSMENT AS WELL AS IN IMPOSING PENALTY U/S 271(1)(C) OF THE ACT . THUS, HE PRAYED TO UPHOLD THE ORDER OF THE LD CIT(A). 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IT IS A FACT THAT THE LD ASSESSING OFFICER IN ASSESSMENT PROCEEDINGS HAD NOT MENTIONED ANY PAR TICULAR LIMB OF PENALTY WHETHER IT IS FOR CONCEALMENT OF INCOME OR FOR FURNI SHING INACCURATE PARTICULARS OF INCOME. HE ALSO HAD NOT GIVEN ANY FI NDING IN THE PENALTY ORDER THAT THIS PENALTY WAS ON ACCOUNT OF A PARTICULAR LIM B. THE LD DCIT AT THE TIME OF IMPOSING PENALTY, HAS ALSO NOT TAKEN APPROV AL FROM THE LD JCIT U/S 274(2)(B) OF THE ACT. IT IS ALSO UNDISPUTED FACT TH AT THE ASSESSEE HAS NOT DEDUCTED TDS ON COMMISSION EXPENSES CLAIMED DURING T HE YEAR UNDER CONSIDERATION BUT IT HAS BEEN EXPLAINED THAT THIS P ROVISION WAS INSERTED W.E.F. 01/4/2005 WHICH WAS AMENDED FROM TIME TO TIME. THERE WAS AN AMBIGUITY AND DOUBTS IN APPLICATION OF THIS PROVISI ON. THE AUDITOR OF THE ASSESSEE HAD ALSO NOT POINTED OUT THIS DEFECT IN TH E AUDIT REPORT WHETHER TDS WAS LIABLE TO BE DEDUCTED OR NOT ON COMMISSION EX PENSES CLAIMED BY THE ASSESSEE. NON-DEDUCTION OF TDS IS A TECHNICAL V IOLATION U/S 40(A)(IA) OF 13 ITA NO. 148/JP/2013 ACIT VS M/S PREEYA HOME STUDY PVT. LTD. THE ACT. THE DISALLOWANCE UNDER THIS SECTION ARE MADE ON THE BASIS OF DEEMING PROVISION BUT VARIOUS HON'BLE HIGH COURTS A S WELL AS ITAT HELD THAT LEGAL FRICTION CREATED U/S 40(A)(IA) CANNOT BE EXTE NDED FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT AS THE DEEMING PROVISION I NSERTED FOR SPECIFIC PURPOSES. THE CASE LAWS RELIED UPON BY THE ASSESSEE ARE SQUARELY APPLICABLE, THEREFORE, WE UPHOLD THE ORDER OF THE LD CIT(A). 7. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 31/05/2016. SD/- SD/- YFYR DQEKJ VH-VKJ-EHUK (LALIET KUMAR) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 31 ST MAY,2016 RANJAN* VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- THE ACIT, CENTRAL CIRCLE-2, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- M/S PREEYA HOME STUDY PVT. LTD., JHUNJHUNU (RAJ). 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO.148/JP/2013) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR