KUMAR PRINTING WORKS, MUMBAI V. ITO WD 13(2)(3), MUMBAI

ITA 1487/MUM/2010

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 6166 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2006-2007
• Appeal Filed On: 24-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABANI K NAYAK
• Assessee Lawyers: MRUGAKSHI K JOSHI
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'G' BENCH, MUMBAI BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. 1487/MUM/2010 (ASSESSMENT YEAR: 2006-07) M/S. KUMAR PRINTING WORKS INCOME TAX OFFICER - 13( 2)(3) PREM JIVAN, GROUND FLOOR MUMBAI 87, KAZI SYED ST, MUMBAI 400003 VS. PAN - AAAFK 1754 H APPELLANT RESPONDENT APPELLANT BY: MS. MRUGAKSHI K. JOSHI RESPONDENT BY: SHRI ABANI K. NAYAK O R D E R PER B. RAMAKOTAIAH, A.M. THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER OF THE CIT(A)- XXIV, MUMBAI DATED 28.01.2010 CONFIRMING THE PENALTY UNDE R SECTION 271(1)(C) LEVIED BY THE A.O. 2. BRIEFLY STATED, THE ASSESSEE HAD FILED THE RETURN O F INCOME FOR A.Y. 2006-07 ON 30.10.2006 DECLARING NIL INCOME AFTER AD JUSTING LOSS OF EARLIER YEAR. IN THE ASSESSMENT ORDER UNDER SECTION 143(3) DATED 24.12.2008, AN ADDITION OF ` 11,80.741/- BEING PRINTING LABOUR CHARGES OF ` 10,92,949/- AND FOLDING LABOUR CHARGES OF ` 87,792/- ON WHICH TDS WAS NOT DEDUCTED WAS MADE. PENALTY PROCEEDINGS WERE INITIATED AGAINST TH E ASSESSEE AND PENALTY OF ` 3,97,437/- WAS LEVIED ON THE ASSESSEE VIDE ORDER UN DER SECTION 271(1)(C) DATED 05.06.2009. THE CIT(A) CONFIRMED THE PENALTY STATING BRIEFLY AS UNDER: - 2.2 I HAVE CONSIDERED THE SUBMISSION OF THE LD. CO UNSEL BUT IT IS SEEN THAT THE APPELLANT HAS VIOLATED THE PROVISIONS OF S EC. 40(A)(IA) R.W. SEC.200(1) OF I.T. ACT, BY NOT DEDUCTING THE TDS ON PRIMARY AND BROKERAGE CHARGES AND THEREFORE HAS COMMITTED DEFAU LT U/S. 271(1)(C) AND THE PENALTY IS CONFIRMED AND APPEAL IS HEREBY D ISMISSED. 3. IT WAS THE SUBMISSION OF THE LEARNED A.R. THAT THE ASSESSEE WAS NOT WELL VERSED WITH TDS PROVISIONS, WHICH WAS INTRODUC ED IN THE EARLIER YEAR AND THE A.O. MADE THE DISALLOWANCE UNDER SECTION 40 (A)(IA) ON WHICH PENALTY ITA NO. 1487/MUM/2010 M/S. KUMAR PRINTING WORKS 2 PROCEEDINGS WERE INITIATED. THE ASSESSEE HAS ACCEPT ED THE ADDITION IN THE ASSESSMENT ORDER AS IT WAS INFORMED THAT THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DEDUCT AND PAY THE TAX. HOWEVER, THE DI SALLOWANCE DOES NOT CALL FOR PENALTY UNDER SECTION 271(1)(C). HE FILED THE O RDER OF THE ITAT IN THE CASE OF ACIT VS. BHORUKA LOGISTICS (P) LTD. 2010 34 (II) ITCL 552 (MUM B TRIB) ON SIMILAR FACTS WHEREIN THERE IS A DISALLOWANCE OF EXPENSES DUE TO DELAY IN PAYMENT OF TDS AND THE ITAT HELD THAT THE DISALLOWA NCE OF EXPENDITURE DOES NOT AMOUNT TO CONCEALMENT OF INCOME OR FURNISHING O F INACCURATE PARTICULARS OF INCOME. 4. THE LEARNED D.R. RELIED ON THE ORDERS OF THE A.O. A ND THE CIT(A). 5. WE HAVE CONSIDERED THE ISSUE AND SUBMISSION OF THE LEARNED COUNSEL AND LEARNED D.R. THIS IS A CASE WHERE THE A.O. DISA LLOWED THE AMOUNT UNDER SECTION 40(A)(IA) DUE TO NON-COMPLIANCE OF THE TDS PROVISIONS. IN OUR OPINION THE DISALLOWANCE OF GENUINE EXPENDITURE BY VIRTUE O F LEGAL PROVISIONS DOES NOT CALL FOR ANY PENALTY PROCEEDINGS UNDER SECTION 271(1)(C). THE ITAT IN THE ABOVE REFERRED CASE OF CIT VS. BHORUKA LOGISTIC (P) LTD. HAS CONSIDERED SIMILAR FACT OF DISALLOWANCE ON NON-PAYMENT OF TDS MADE UNDER SECTION 40A(IA) AND HELD AS UNDER: - 7. THIS IS A CASE WHERE THE DISPUTE AROSE AGAINST THE DISALLOWANCE OF EXPENDITURE IN VIEW OF SECTION 40(A)(IA) OF THE ACT . THE ASSESSEE HAD IN FACT PAID TDS AND IT IS NOT IN DISPUTE THAT THE EXP ENDITURE SHOULD BE ALLOWED IN THE SUBSEQUENT YEAR IN WHICH THE TDS HAS BEEN PAID TO THE GOVT. TREASURY. THE FIRST APPELLATE AUTHORITY, IN O UR CONSIDERED OPINION, HAS RIGHTLY RELIED UPON THE JUDGEMENT OF THE HON'BL E PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V. AJAIN SINGH & CO. (2002) 253 ITR 630, WHEREIN IT IS HELD THAT MERE DISALLOWANCE OF EXPEND ITURE WILL NOT PER SE AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF I NCOME. AT PARA 5 PAGE 3 OF HIS ORDER, THE FIRST APPELLATE AUTHORITY RIGHT LY HELD AS FOLLOWS: ONCE THE EXPLANATION OF THE ASSESSEE IS NOT CONSID ERED FALSE AND EXPLANATION HAS BEEN GIVEN, THE PENALTY CAN ONLY BE LEVIED IF THE EXPLAN ATION IS NOT BONA FIDE AND FILL DETAILS FOR THE COMPUTATION OF INCOME HAS NOT BEEN GIVEN BY THE APPELLANT. IT MAY BE NOTED THAT RAJASTHAN HIGH COURT DECISION IN (2001) 251 ITR 373 HAS ENUNCIATED THE PRINCIPLE OF BONA FIDE, WHEREIN IT HAS BEEN HELD THAT THERE IS P RESUMPTION THAT EXPLANATION GIVEN IS BONA FIDE UNLESS PROVED TO BE OTHERWISE. WE UPHOLD THIS FINDING OF THE FIRST APPELLATE AUTHO RITY. 6. FURTHER TO THIS, THE HON'BLE SUPREME COURT IN THE C ASE OF CIT VS. RELIANCE PETROPRODUCTS P. LTD. 322 ITR 158 HAS ALSO HELD THAT MERE DISALLOWANCE OF EXPENDITURE OR A CLAIM DOES NOT CAL L FOR PENALTY. IN VIEW OF ITA NO. 1487/MUM/2010 M/S. KUMAR PRINTING WORKS 3 THIS, WE ARE OF THE OPINION THAT THE FACTS OF THE C ASE DOES NOT CALL FOR ANY LEVY OF PENALTY UNDER SECTION 271(1)(C). ACCORDINGLY THE PENALTY IS CANCELLED. ASSESSEES GROUNDS ARE ALLOWED. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH NOVEMBER 2010. SD/- SD/- (R.S. PADVEKAR) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 30 TH NOVEMBER 2010 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) XXIV, MUMBAI 4. THE CIT XII, MUMBAI CITY 5. THE DR, G BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.