The ACIT,(OSD)Circle-9, Ahmedabad V. M/s. Shashin Construction Co., Ahmedabad

ITA 1627/AHD/2011

• Counselvise Citation: 162720514 RSA 2011
• Duration Of Justice: 4 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 16-06-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 14-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Assessee Lawyers: G C PIPARA A R
• Keywords: Revenue expenditure
• Section: 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ ././ ./ ITA NO. 1627/AHD/2011 / ASSESSMENT YEAR: 2007-08 ACIT (OSD), CIRCLE 9 AHMEDABAD V/S. M/S. SH ASHIN CONSTRUCTION CO., D/802, STATUS TOWER, OPP. DOORDARSHAN, DRIVE-IN-ROAD, AHMEDABAD PAN : AAFFS 5177 F / // / (APPELLANT) !' !' !' !' / // / (RESPONDENT) REVENUE BY : SMT. SONIA KUMAR, SR. DR. ASSESSEE(S) BY : SHRI G.C. PIPARA, AR #$ % &'/ // / DATE OF HEARING : 16/06/2015 () % &' / // / DATE OF PRONOUNCEMENT: 19/06/2015 *+ *+ *+ *+/ // / O R D E R PER G.D. AGRAWAL, VICE PRESIDENT: THIS IS AN APPEAL FILED BY THE REVENUE AND IS DIREC TED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME-TAX(APPEALS )-XV, AHMEDABAD DATED 13.04.2011, PERTAINING TO ASSESSMENT YEAR 200 7-08. 2. THE ONLY GROUND RAISED IN THIS APPEAL BY THE REV ENUE IS AGAINST THE DELETION OF THE PENALTY OF RS.6,40,687/- WHICH WAS LEVIED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE INCOME-TAX ACT. 3. THE PENALTY HAS BEEN LEVIED ON ACCOUNT OF DISALL OWANCE U/S 40(A)(IA) AND DISALLOWANCE OF DONATION. THE CIT(A) CANCELLED THE PENALTY WITH THE FOLLOWING OBSERVATION:- 3. FROM THE FACTS OF THIS CASES, IT IS SEEN THAT T HE AO IMPOSED PENALTY ON THE ADDITION MADE U/S 40(A)(IA) OF RS.19,03,405 IN THE ORDER PASSED U/S 143(3) ON 15.12.2009. THE ORDER ITSELF SHOWS THAT ON PAYMENTS MADE TOTALING TO ITA NO. 1627/AHD/2011 ACIT VS. SHASHIN CONSTRUCTION CO FOR AY 2007-08 2 RS.13,81,860/- TDS WAS DEDUCTED BUT DEPOSITED LATE IN GOVERNMENT ACCOUNT AND ON INTEREST PAYMENT OF RS.2,67,409/- AND LABORA TORY PAYMENT OF RS.2,78,743 NO TDS HAD BEEN DEDUCTED AT ALL. IN MY VIEW LATE DEPOSIT OF TDS AND NON-DEDUCTION OF TDS FROM INTEREST AND LABO RATORY PAYMENTS CONSTITUTES ONLY A TECHNICAL BREACH OF LAW FOR WHIC H PENALTY U/S 271(1)(C) IS NOT WARRANTED. SIMILARLY IN MY VIEW OUT OF DISALLO WANCES OF DONATION PENALTY IS NOT LEVIABLE AS A MERE DISALLOWANCE AS N O MALAFIDE STANDS PROVED ON THE PART OF THE APPELLANT AND THE MISTAKE AND IT S ADMISSION CAN BE TREATED BONAFIDE. THE AO IS DIRECTED TO DELETE THE PENALTY IMPOSED. 4. AFTER CONSIDERING THE ARGUMENTS OF BOTH THE SIDE S AND FACTS OF THE CASE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A). THE MAJOR ADDITION WAS ON ACCOUNT OF DISALLOWANCE U/S 40(A)(I A) FOR THE FAILURE OF THE ASSESSEE TO DEDUCT TAX AT SOURCE. WE FIND THAT THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. L G CHAUDHARY, VI DE TAX APPEAL NO.536 OF 2012, DECIDED THIS ISSUE IN FAVOUR OF THE ASSESS EE. THE RELEVANT PORTION OF THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT R EADS AS UNDER:- WE HEARD LEARNED COUNSEL, MS. PAURAMI SHETH FOR TH E APPELLANT AND SENIOR COUNSEL, MR. SOPARKAR FOR THE RESPONDENT. LEARNED C OUNSEL, MS. SHETH HAS ARGUED THAT THE TRIBUNAL HAD FAILED TO SEE THAT THE ASSESSEE HAD FAILED TO DEDUCT THE TDS AS PER LAW WHICH WAS ALSO DEPOSITED LATE AND ON SUCH DISALLOWANCE AS HAS BEEN CONFIRMED BY BOTH CIT (APP EALS) AND ITAT AND THEREFORE, THE IMPOSITION OF PENALTY BY ASSESSING O FFICER WAS JUST AND PROPER. PER CONTRA, LEARNED SENIOR COUNSEL SUBMITTED THAT N ONE OF THE ELEMENTS OF SECTION 271(1)(C) GET ATTRACTED IN CASE OF THE RESP ONDENT ASSESSEE. ON DUE CONSIDERATION OF THE SUBMISSIONS OF BOTH SIDES AND ON EXAMINING THE ORDERS OF ALL THE AUTHORITIES, WE FIND NO REASON TO INTERFERE IN THIS APPEAL IN AS MUCH AS BOTH THE AUTHORITIES NAMELY CIT(A) AND ITAT HAVE RI GHTLY DELETED THE PENALTY OBSERVING THAT THE DISALLOWANCE WAS DUE TO NON-PAYMENT OF TDS, WHICH WAS AT THE MOST A TECHNICAL DEFAULT. THERE BE ING NOTHING TO INDICATE ANY CONCEALMENT OF THE INCOME OR FURNISHING OF INAC CURATE PARTICULARS OF INCOME BY THE ASSESSEE, THE ASSESSING OFFICER WAS R IGHTLY NOT JUSTIFIED IN LEVYING THE PENALTY. 5. RESPECTFULLY FOLLOWING THE ABOVE, WE AGREE WITH THE CIT(A) THAT THE LEVY OF PENALTY U/S 271(1)(C) FOR DISALLOWANCE U/S 40(A)(IA) MADE ONLY ON THE GROUND OF FAILURE OF THE ASSESSEE TO DEDUCT THE TAX AT SOURCE IS NOT JUSTIFIED. ITA NO. 1627/AHD/2011 ACIT VS. SHASHIN CONSTRUCTION CO FOR AY 2007-08 3 6. THE OTHER DISALLOWANCE WAS ON ACCOUNT OF DONATIO N AND CHARITY AMOUNTING TO RS.60,253/-. THAT MERELY BECAUSE THE D ONATION GIVEN BY THE ASSESSEE DURING THE COURSE OF CARRYING ON OF HIS BU SINESS HAS BEEN CLAIMED AS REVENUE EXPENDITURE BY THE ASSESSEE AND DISALLOW ED BY THE ASSESSING OFFICER WILL NOT BE SUFFICIENT TO LEVY THE PENALTY U/S 271(1)(C). WHILE TAKING THIS VIEW, WE DERIVE SUPPORT FROM THE DECISION OF H ONBLE APEX COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD, RE PORTED IN [2010] 322 ITR 158 (SC). WE, THEREFORE, RESPECTFULLY FOLLOWING TH E DECISIONS OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF L G CHAUDH ARY (SUPRA) AND HONBLE APEX COURT IN THE CASE OF RELIANCE PETROPRODUCTS PV T. LTD. (SUPRA), UPHOLD THE ORDER OF THE CIT(A) AND DISMISS THE APPEAL FILE D BY THE REVENUE. 7. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . ORDER PRONOUNCED IN THE COURT ON 19 TH JUNE, 2015 AT AHMEDABAD. SD/- SD/- (RAJPAL YADAV) JUDICIAL MEMBER (G.D. AGRAWAL) VICE-PRESIDENT AHMEDABAD; DATED 19/06/2015 BIJU T., PS *+ % !&, -*,& *+ % !&, -*,& *+ % !&, -*,& *+ % !&, -*,&/ COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT. 3. & #. / CONCERNED CIT 4. #. ( ) / THE CIT(A) 5. ,12 !& , , / DR, ITAT, AHMEDABAD 6. 2 4$ / GUARD FILE . *+# *+# *+# *+# / BY ORDER, TRUE COPY \ 5 55 5/ // / 6 6 6 6 ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD