Maris Cements Private Limited, Huliyar V. The Assistant Commissioner Of Income Tax, Circle - 1, Tumkur

ITA 1672/BANG/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 0119 (ITAT-BANGALORE)
• Duration Of Justice: 11 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 22-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRIYADARSHI MISRA
• Keywords: Commercial expediency; TDS; Set aside; Bogus
• Section: 271(1)(c)

Judgement Text

ITA 1672 OF 2019 MARIS CEMENTS PVT. LTD., HULIYAR IN THE INCOME TAX APPELLATE TRIBUNAL CBENCH: BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENTAND SHRI B.R. BASKARAN, ACCOUTANT MEMBER ITA NOS.1672/BANG/2019 ASSESSMENTYEAR:2015-16 MARIS CEMENTS PRIVATE LTD. 42-B, BASAVESWARANILAYA B.H. ROAD, RAMMOHAN CIRCLE HULIYAR-572218 PAN NO :AADCM4331L VS. THE ACIT CIRCLE-1 TUMKUR APPELLANT RESPONDENT APPELLANT BY : N O N E RESPONDENT BY : SHRI PRIYADARSHIMISRA, DR DATE OF HEARING : 23.06.2020 DATE OF PRONOUNCEMENT : 26.06.2020 O R D E R PERB.R. BASKARAN, ACCOUNTANT MEMBER: THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST ORDER DATED 20.5.2019 PASSED BY LD. CIT(A)-7, BENGA LURU AND IT RELATES TO THE ASSESSMENT YEAR 2015-16. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD. CIT(A) IN CONFIRMING THE PENALTY LEVIED BY THE AO U/S 271(1)( C) OF THE INCOME-TAX ACT,1961 ['THE ACT' FOR SHORT]. ITA 1672 OF 2019 MARIS CEMENTS PVT. LTD., HULIYAR PAGE 3 OF 12 PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT FOR FU RNISHING OF INACCURATE PARTICULARS OF INCOME. 5. IN THE PENALTY PROCEEDINGS BEFORE THE A.O., TH E ASSESSEE SUBMITTED THAT IT HAS AGREED FOR ALL THE A DDITIONS IN ORDER TO AVOID PROLONGED LITIGATION AND TO BUY P EACE. ACCORDINGLY, THE ASSESSEE PRAYED FOR CANCELLATION O F THE PENALTY. THE A.O. DID NOT AGREE WITH THE EXPLANATIO NS GIVEN BY THE ASSESSEE. THE AO TOOK SUPPORT OF THE DECISION RENDERED BY HONBLE SUPREME COURT IN THE C ASE OF MAK DATA PVT. LTD. (358 ITR 593)(SC), WHEREIN HO NBLE SUPREME COURT OBSERVED THAT THE STATUTE DOES NOT RECOGNIZE DEFENSES LIKE VOLUNTARY DISCLOSURE, BU Y PEACE, AVOID LITIGATION, AMICABLE SETTLEMENT ETC. THUS , EVEN VOLUNTARY SURRENDER OF INCOME WILL NOT ALWAYS NECES SARILY RESCUE THE ASSESSEE FROM THE PENALTY PROVISIONS WHI CH ARE IN THE NATURE OF REMEDY FOR LOSS OF POSSIBLE REVENU E. ACCORDINGLY, THE A.O. LEVIED A PENALTY OF RS.5,53,0 00/- U/S 271(1)(C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF THE INCOME. THE LD. CIT(A) CONFIRME D THE ITA 1672 OF 2019 MARIS CEMENTS PVT. LTD., HULIYAR PAGE 5 OF 12 7. WE HEARD LD D.R AND PERUSED THE RECORD. WE NOTICE THAT THE ASSESSEE HAS FURNISHED DETAILED EXPLANATIO NS BEFORE LD CIT(A). WITH REGARD TO THE DISALLOWANCE OF RS.1,41,672/- FOR NON-DEDUCTION OF TDS, THE ASSESSE E HAS PLACED ITS RELIANCE ON THE DECISION RENDERED BY HON BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. L.G.CHOUD HARY (33 TAXMANN.COM 156)(GUJ.) WE HAVE GONE THROUGH TH E SAID DECISION AND WE NOTICE THAT THE PENALTY LEVIED BY THE AO U/S 271(1)(C) OF THE ACT HAS BEEN DELETED BY THE HONBLE GUJARAT HIGH COURT WITH THE FOLLOWING OBSERVATIONS:- 3. WE HEARD LEARNED COUNSEL, MS. PAURAMISHETH FOR THE APPELLANT AND SENIOR COUNSEL, MR. SOPARKAR FOR THE RESPONDENT. LEARNED COUNSEL, MS. SHETH HAS ARGUED THAT THE TRIB UNAL HAD FAILED TO SEE THAT THE ASSESSEE HAD FAILED TO DEDUC T THE TDS AS PER LAW WHICH WAS ALSO DEPOSITED LATE AND ON SUCH DISAL LOWANCE AS HAS BEEN CONFIRMED BY BOTH CIT (APPEALS) AND ITAT A ND THEREFORE, THE IMPOSITION OF PENALTY BY ASSESSING O FFICER WAS JUST AND PROPER. PER CONTRA, LEARNED SENIOR COUNSEL SUBMITTED THAT NONE OF THE ELEMENTS OF SECTION 271(1)(C) GET ATTRA CTED IN CASE OF ITA 1672 OF 2019 MARIS CEMENTS PVT. LTD., HULIYAR PAGE 7 OF 12 (II)DISALLOWANCE OF PURCHASE AMOUNT RS.1,22,951/- THE APPELLANT ENCLOSES HEREWITH THE LEDGER ABSTRACT OF LAND PURCHASES ACCOUNT, WHICH INCLUDES THE COST OF PURCH ASES OF LAND LESS TDS AND THE TDS AMOUNTS ARE DEBITED TO TH E SAME LAND PURCHASE ACCOUNT SINCE THE TDS ALSO FORMS PART OF THE COST OF PURCHASES. IN THE COURSE OF ASSESSMENT PRO CEEDINGS, THE A.R. OF THE APPELLANT HAS MISTAKENLY AGREED FOR THE DISALLOWANCE OF TDS FROM THE LAND PURCHASE ACCOUNT. IN THE VIEW OF THIS FACT, THERE IS NO FURNISHING OF INACCU RATE PARTICULARS AND THEREFORE, THE LEVY OF PENALTY IS NOT WARRANTED . THE APPELLANT FURTHER SUBMITS THAT THERE IS NO FALSE CL AIM OF EXPENDITURES AND THE ENTIRE CLAIM OF EXPENDITURE IN THIS ACCOUNT ARE GENUINE AND ALLOWABLE THE APPELLANT FU RTHER SUBMITS THAT THERE IS NO OBSERVATION BY THE ASSESSI NG OFFICER IN THE ASSESSMENT ORDER TO PROVE BY WAY OF ANY MATERIA L BROUGHT ON RECORD THAT THE EXPENSES CLAIMED ARE BOGUS OR AT BEST TO PROVE THAT THE ACT OF THE APPELLANT IS CONTUMACIOUS . HENCE, THE PENALTY LEVIED REQUIRES DELETION. IT IS SUBMITTED THAT THE ASSESSEE DID NOT CLAIM THE TDS AMOUNT DEDUCTED FROM CONSIDERATION PAID FOR LAND PURCHASE AS AN EXPENDITURE AT ALL, I.E., THE SAID T DS AMOUNT WAS ALSO CAPITALIZED IN LAND ACCOUNT. WE NO TICE THAT THE ASSESSEE HAS SUBSTANTIATED ITS SUBMISSIONS BY FURNISHING LEDGER ACCOUNT COPY OF LAND PURCHASE ACC OUNT BEFORE LD CIT(A). ACCORDINGLY, IT WAS SUBMITTED TH AT THIS ADDITION WAS ERRONEOUSLY ACCEPTED BY THE ASSESSEE. SINCE THE ASSESSEE DID NOT CLAIM TDS AMOUNT DEDUCTION FRO M CONSIDERATION PAID FOR LAND PURCHASE, THE QUESTION OF DISALLOWING THE SAME DOES NOT ARISE. HENCE ERRONEO US ITA 1672 OF 2019 MARIS CEMENTS PVT. LTD., HULIYAR PAGE 9 OF 12 EXPLANATION GIVEN AND ALSO CONDUCT OF THE ASSESSEE, WE ARE OF THE VIEW THAT THE OMISSION ON THE PART OF TH E ASSESSEE TO DISALLOW THE INTEREST PAID ON DELAYED REMITTANCE OF TDS WAS AN INADVERTENT ERROR. ACCORD INGLY, FOLLOWING THE DECISION RENDERED BY HONBLE SUPREME COURT IN THE CASE OF PRICE WATER HOUSE COOPERS PVT. LTD. (SUPRA), PENALTY U/S 271(1)(C) OF THE ACT LEVIED ON THIS ADD ITION IS LIABLE TO BE DELETED. 10. THE NEXT ISSUE RELATES TO DISALLOWANCE OF INTER EST EXPENSES OF RS.17.34 LAKHS. THE A.O. NOTICED THAT THE ASSESSEE HAS BORROWED FUNDS AND PAID INTEREST THERE ON. HE ALSO NOTICED THAT THE ASSESSEE HAS ADVANCED INTE REST FREE ADVANCES TO ITS SISTER CONCERN. ACCORDINGLY, THE A.O. WAS OF THE VIEW THAT THE BORROWED FUNDS HAVE BEEN DIVERTED TO SISTER CONCERNS AND ACCORDINGLY DISALLO WED THE INTEREST EXPENDITURE. BEFORE LD. CIT(A), THE ASSES SEE SUBMITTED THAT THE A.O. HAS NOT BROUGHT ON RECORD A NY NEXUS BETWEEN BORROWED FUNDS AND THE ADVANCE GIVEN TO SISTER CONCERN. FURTHER, IT WAS SUBMITTED THAT THE ITA 1672 OF 2019 MARIS CEMENTS PVT. LTD., HULIYAR PAGE 11 OF 12 NEXUS BETWEEN THE BORROWED FUNDS AND THE LOAN GIVEN TO THE SISTER CONCERNS. THE PURPOSE AND AVAILABILITY O F COMMERCIAL EXPEDIENCY WERE ALSO NOT EXAMINED, MEANI NG THEREBY, THE ADDITION HAS BEEN MADE ON ESTIMATED BA SIS. THE HONBLE SUPREME COURT IN THE CASE OF RELIANCE P ETRO PRODUCTS 322 ITR 158 HAS HELD THAT MERELY BECAUSE T HE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH CLAIM W AS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT ATTRACT PENALTY U/S 271(1)(C) OF T HE ACT. IN THIS VIEW OF THE MATTER, WE ARE OF THE VIEW THAT TH E PENALTY LEVIED ON THIS ADDITION IS ALSO LIABLE TO BE DELETE D. 12. IN VIEW OF THE FOREGOING DISCUSSIONS, WE ARE OF THE VIEW THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFI RMING THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. ACCORDING LY, WE SET ASIDE THE ORDER PASSED BY LD. CIT(A) AND DIRECT THE A.O. TO DELETE THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT FOR THE YEAR UNDER CONSIDERATION.