ACIT, New Delhi V. M/s. Modern Stage Service, New Delhi

ITA 198/DEL/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6240 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 05-01-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 09-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJA
• Assessee Lawyers: SANJAY KUMAR GARG
• Keywords: Initiation of penalty proceedings; Wrong claim
• Section: 143(3); 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SHRI J.S. REDDY, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 198/DEL/2014 AY: 20 09-10 ACIT, VS MODERN STAGE SERVICE, WARD-32(1), 35, MUNICIPAL MARKET, NEW DELHI. LODHI ROAD, NEW DELHI. (PAN: AAAFM8966F) (APPELLANT) (RESPONDENT ) APPELLANT BY : SHRI P. DAMKANUNJA, SR. DR RESPONDENT BY : SHRI SANJAY KUMAR GARG, ADV. DATE OF HEARING: 05.01.2016 DATE OF PRONOUNCEMENT: 30.03.2016 ORDER PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER THE PRESENT APPEAL, FILED BY THE DEPARTMENT, HAS BE EN PREFERRED AGAINST THE ORDER DATED 24.10.2013 PASSED BY THE LD. CIT(A)-XXVI, NEW DELHI WHEREIN HE HAS DELETED THE P ENALTY AMOUNTING TO RS.17,30,832/- IMPOSED U/S 271(1) (C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED THE ACT) - FOR ASSESSMENT YEAR 2009-10. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE APPELLANT FIRM IS ENGAGED IN THE SALE OF STAGE LIGHTING & STAGE FURNI SHING EQUIPMENT. THE APPELLANT'S ASSESSMENT WAS COMPLETED U/S I.T.A. NO. 198/D/2014 ASSESSMENT YEAR 2009-10 2 143(3) ON THE RETURNED INCOME OF RS. 61,43,000/-. T HE APPELLANT CLAIMED CREDIT FOR TDS OF RS. 24,81,348/- IN ITS RE TURN OF INCOME (ROI). HOWEVER, THE AO FOUND THAT CREDIT FOR TDS OF RS.17,30,832/- WAS WRONGLY CLAIMED AS THE INCOME CORRESPONDING TO THIS TDS WAS ACCOUNTED FOR BY ONE OF THE SISTER CONCERNS OF THE APPELLANT, NAMELY; M/S MODERN STAGE SERVICES (P) LTD. ACCORDINGLY, THE AO DID NOT ALLOW THE CLAI M FOR CREDIT OF TDS OBSERVING AS UNDER: 'IT WAS ADMITTED BY ASSESSEE THAT THE PAYMENT HAD B EEN MADE TO MODERN STAGE SERVICES PVT. LTD. AND THE TDS CERTIFICATE HAD BEEN INCORRECTLY ISSUED IN THE NAME OF ASSESSEE FIRM BY THESE PARTIES. THE ASSESSEE INSTEA D OF GETTING THE MATTER SORTED OUT AND CORRECTED THE FOR M 16A HAS CLAIMED CREDIT OF TDS IN ITS NAME WHICH WAS PATENTL Y WRONG AND NOT PERMISSIBLE UNDER THE LAW. IF THE INCOME HA D BEEN BOOKED BY THE M/S MODERN STAGE SERVICES PVT. LTD., THEN THE CREDIT OF TDS COULD ONLY BE ALLOWED TO THEM AND NOT TO ASSESSEE. IN VIEW OF THIS, THE CREDIT OF TDS OF RS. 17,30,832/ IS BEING WITHDRAWN AND THE ASSESSEE IS LIABLE TO PA Y TAX ON ACCOUNT OF THIS WITHDRAWAL.' 3. THE AO INITIATED PENALTY U/S 271(L)(C) FOR CONCE ALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INC OME WITHIN THE MEANING OF EXPLANATION 1 TO SUB-SECTION (1) OF THE SECTION 271(L)(C). LATER ON, THE AO, PLACING RELIANCE ON TH E CASES ZOOM COMMUNICATIONS (P) LTD. 327 ITR 51 (DEL), THAKUR V. HARI PRASAD (1987) 167 ITR 603 (AP), DHARMENDRA TEXTILE PROCESSORS I.T.A. NO. 198/D/2014 ASSESSMENT YEAR 2009-10 3 (2008) 166 TAXMAN 65 (SC), K.P. MADHUSUDAN 251 ITR 99 (SC) AND DRAPCO ELECTRIC CORPORATION 122 ITR 341 (GUJ), LEVIED PENALTY U/S 271(L)(C) HOLDING AS UNDER: ' THERE IS NO FORCE IN THIS ARGUMENT OF THE ASSESSEE. THE DEDUCTION OF TAX AT SOURCE BY ANY DEDUCTOR UNDER VARIOUS SECTION OF CHAPTER XVII OF THE INCOME TAX A CT. THE LIABILITY OF THE ASSESSEE IS TO OFFER ALL SUCH CREDITS/RECEIPTS AS ITS INCOME IRRESPECTIVE OF THE SECTION THE DEDUCTOR USED. BUT CLAIMING TAX CREDIT OF OTHER PERSON IS ALTOGETHER DIFFERENT. EVEN IF ANY MISTAKE HAS OCCURRED AT THE LEVEL OF DEDUCTOR, THE ASSESSEE COU LD HAVE GOT IT CORRECTED BY ASKING SUCH DEDUCTOR TO FU RNISH A SIMPLE CORRECTION STATEMENT. THE ASSESSEE INSTEAD OF GETTING THE MATTER SORTED OUT AND CORRECTING THE FO RM 16A DELIBERATELY & KNOWINGLY CLAIMED CREDIT OF OTHE R PERSON'S TDS IN ITS NAME WHICH WAS PATENTLY WRONG AND NOT PERMISSIBLE UNDER THE LAW. IF THE INCOME HA D BEEN BOOKED BY THE M/S MODERN STAGE SERVICES PVT. LTD. , THEN THE CREDIT OF TDS COULD ONLY BE ALLOWED TO THEM AND NOT TO ASSESSEE. IN VIEW OF THIS, THE CRED IT OF TDS OF RS. 17,30,832/- WAS WITHDRAWN AND THE ASSESSEE WAS LIABLE TO PAY TAX ON ACCOUNT OF THIS WITHDRAWAL. THE ASSESSEE DID SO ADVERTENTLY TO AVOI D INCIDENCE OF TAX DUE. ' 4. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BE FORE THE LD. FIRST APPELLATE AUTHORITY WHO DELETED THE PENALTY. I.T.A. NO. 198/D/2014 ASSESSMENT YEAR 2009-10 4 5. NOW, THE DEPARTMENT IS IN APPEAL BEFORE US AND H AS RAISED THE FOLLOWING GROUNDS OF APPEAL: - I) THE CIT(A) HAS ERRED IN DELETING THE PENALTY I MPOSED U/S 271(1)(C) OF RS.17,30,832/-ON ACCOUNT OF WRON G CLAIM OF TDS WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF IN COME BY CLAIMING THE CREDIT OF SAME TDS AT TWO PLACES I. E IN ITS RETURN OF INCOME AND IN THE RETURN OF INCOME FILED FOR ITS SISTER CONCERN M/S MODERN STAGE SERVICES PRIVATE LT D. II) THE CIT(A)HAS ERRED IN DELETING THE PENALTY IM POSED U/S 27(1)(C) OF RS.17,30,832/- ON ACCOUNT OF WRONG CLAIM OF TDS WITHOUT APPRECIATING THE FACT THAT THE ASSES SEE HAS KNOWINGLY, WILLFULLY & DELIBERATELY TRIED TO EV ADE THE TAX BY FURNISHING INACCURATE PARTICULARS OF INCOME IN ITS RETURN OF INCOME BY CLAIMING THE CREDIT OF SAME TDS FOR ITSELF AND ITS SISTER CONCERN. III) THE CIT(A) HAS ERRED IN DELETING THE PENALTY IMPOSED U/S 27(1 )(C) OF RS.17,30,832/- ON ACCOUNT OF WRONG CLAIM OF TDS WITHOUT APPRECIATING THE FACT THAT CLAIMING CREDIT OF SAME TDS FOR TWO DIFFERENT ASSESSEE IS PATENTLY WRONG & ILLEGAL AND VEHEMENTLY CALLS FOR PENALTY FOR FURN ISHING INACCURATE PARTICULARS OF INCOME IN ITS RETURN OF I NCOME. 6. THE LD. DR SUBMITTED THAT THE ASSESSEE'S EXPLANA TION FURNISHED DURING THE COURSE OF ASSESSMENT PROCEEDIN GS WERE CONSIDERED AT THAT TIME AND REASONS FOR SATISFACTIO N FOR INITIATION OF PENALTY PROCEEDINGS WERE MENTIONED IN THE BODY O F ORDER ITSELF. IT WAS SUBMITTED THAT THE LIABILITY OF THE ASSESSEE IS TO OFFER ALL CREDITS/RECEIPTS AS ITS INCOME AND CLAIMING TAX CRE DIT OF OTHER I.T.A. NO. 198/D/2014 ASSESSMENT YEAR 2009-10 5 PERSON IS LEGALLY UNACCEPTABLE. THE LD. DR FURTHER SUBMITTED THAT EVEN IF ANY MISTAKE HAD OCCURRED AT THE LEVEL OF DEDUCTORS, THE ASSESSEE COULD HAVE GOT IT CORRECTED BY ASKING SUCH DEDUCTORS TO FURNISH A SIMPLE CORRECTION STATEMENT. THE ASSESSEE INSTEAD OF GETTING THE MATTER SORTED OUT & RECTFYIN G FORM 16A, DELIBERATELY & KNOWINGLY CLAIMED CREDIT OF THE TDS OF OTHER PERSONS IN ITS NAME WHICH WAS PATENTLY WRONG AND NO T PERMISSIBLE UNDER THE LAW. IT WAS SUBMITTED THAT IF THE INCOME HAD BEEN BOOKED BY M/S MODERN STAGE SERVICES PVT. L TD., THEN THE CREDIT OF TDS COULD ONLY BE ALLOWED TO THEM AND NOT TO ASSESSEE. IN VIEW OF THIS, THE CREDIT OF TDS OF RS. 17,30,832/- WAS WITHDRAWN AND THE ASSESSEE WAS LIABLE TO PAY TAX ON ACCOUNT OF THIS WITHDRAWAL. THE ASSESSEE DID SO ADVERTENTLY TO AVOID INCIDENCE OF TAX DUE. IT WAS FURTHER SUBMITTED THAT ALTHOUGH NO ADDITION TO THE RETURNED INCOME WAS MADE BUT THE FA CT REMAINS THAT IN ORDER TO AVOID PAYMENT OF TAX, THE ASSESSE HAD DELIBERATELY MADE A WRONG CLAIM OF TDS TO THE TUNE OF RS. 17,30,832/- AND HAD ALSO FURNISHED INACCURATE PARTI CULARS TO THIS EXTENT. IT WAS SUBMITTED THAT THE CONDUCT OF T HE ASSESSEE CASTED A SHADOW OF DOUBT/ILL- INTENT ON THE PART OF THE ASSESSEE TO SUBMIT TRUE AND CORRECT PARTICULARS. IT WAS ALS O ARGUED THAT I.T.A. NO. 198/D/2014 ASSESSMENT YEAR 2009-10 6 THE ASSESSEE COULD NOT BE ABSOLVED FROM HIS RESPONS IBILITY OF RETURNING CORRECT INCOME & PARTICULARS AND THAT IF THE EXPLANATION OF ASSESSEE WAS TO BE ACCEPTED, THEN TH ERE WILL BE NO DETERRENCE FOR THE ASSESSES. 7. THE LD. AR RELIED ON THE ORDER OF THE LD. CIT (A) AND SUBMITTED THAT THE LD. CIT (A) HAS DEALT THE ISSUE AT LENGTH AND HAS RIGHTLY DELETED THE PENALTY IMPOSED. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT RECORDS. IT HAS BEEN HELD BY HON'BLE SUPRE ME COURT IN THE CASE OF K. P. MADHUSUDHANAN VS. CIT; 251 ITR 99 THAT NOTICE U/S 271(L)(C) PUTS THE ASSESSEE ON NOTICE RE GARDING APPLICABILITY OF EXPLANATION 1 OF 271(L)(C). EXPLAN ATION 1 OF 271(L)(C) AUTOMATICALLY COMES INTO OPERATION WHEN T HERE IS FAILURE TO OFFER AN EXPLANATION OR THE EXPLANATION OFFERED IS FOUND TO BE FALSE BY THE AO OR THE EXPLANATION OFFERED IS NOT S UBSTANTIATED AND BONAFIDE IS NOT PROVED. EXPLANATION 1 OF 271(L )(C) ENACTS THE RULE OF EVIDENCE WHEREBY THE ONUS IS ON THE ASSESSE E AND IF HE FAILS TO DISCHARGE THE BURDEN THE PRESUMPTION OF FU RNISHING INACCURATE PARTICULARS OF INCOME CAN BE DRAWN. SUC H PRESUMPTION IS TO BE DISCHARGED BY COGENT, RELIABL E AND RELEVANT I.T.A. NO. 198/D/2014 ASSESSMENT YEAR 2009-10 7 MATERIALS' AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. K. R. SADAYAPPAN 185 ITR 49. IT IS THE ASSE SSEES CONTENTION IS THAT IT HAS WRONGLY CLAIMED CREDIT OF TDS OF M/S MODERN STAGE SERVICES (P) LTD. ON THE FACT THAT THE DEDUCTORS HAVE ISSUED TDS CERTIFICATES IN ITS NAME BECAUSE OF THE SIMILARITY IN THE NAMES OF THE TWO ALONG WITH SOME COMMON SHAR EHOLDERS AND PARTNERS. IN OUR CONSIDERED VIEW, WRONG CLAIM T OWARDS CREDIT OF TAX CANNOT BE TERMED AS 'THE AMOUNT OF TAX SOUGHT TO BE EVADED' IN VIEW OF THE SPECIFIC DEFINITION PROVIDED IN EXPL ANATION- 4 TO SECTION 271(1)(C). FURTHER, EXPLANATION 1 TO S ECTION 271(L)(C) CREATES A LEGAL FICTION AND RAISES A PRESUMPTION AG AINST THE ASSESSEE. IT PROVIDES THAT IF IN RESPECT OF ANY FAC T WHICH IS MATERIAL TO THE COMPUTATION OF TOTAL INCOME, ASSESS EE (I) DOES NOT OFFER AN EXPLANATION OR OFFERS AN EXPLANATION WHICH IS FOUND TO BE FALSE BY THE AO, OR (II) OFFERS AN EXPLANATION W HICH HE IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH E XPLANATION IS BONA FIDE AND THAT ALL MATERIAL FACTS HAVE BEEN DIS CLOSED THEN, THE AMOUNT ADDED OR DISALLOWED SHALL BE DEEMED TO B E INCOME IN RESPECT OF WHICH PARTICULARS ARE CONCEALED. IT IS P ERTINENT TO NOTE THAT THIS EXPLANATION IS RESTRICTED TO A CASE WHERE ASSESSEE IS UNABLE TO OFFER AN EXPLANATION OR IS UNABLE TO SUBS TANTIATE THE I.T.A. NO. 198/D/2014 ASSESSMENT YEAR 2009-10 8 EXPLANATION OFFERED BY HIM IN RESPECT OF FACTUAL DE TAIL OF THE INCOME. HERE, IN THE PRESENT APPEAL BEFORE US, THER E IS NO DIFFERENCE IN THE RETURNED AND THE ASSESSED INCOME. THE ISSUE IS ONLY WHETHER OR NOT THE PENALTY IS IMPOSABLE U/S 27 1(1)(C) IN CASE THE CLAIM OF TDS WAS FOUND WRONG. WE ARE OF TH E CONSIDERED VIEW THAT THE WITHDRAWAL OF THE CREDIT O F TDS IN RESPECT OF WHICH THE INCOME IS NOT OFFERED/ASSESSED IN THE RELEVANT AY IN VIEW OF PROVISIONS OF SECTION 199(3) AND RULE 37BA(3) OR OTHERWISE BEING WRONG CLAIM AS IN THIS CASE WOULD NOT BE TERMED AS 'THE AMOUNT OF TAX SOUGHT TO BE EVADED' AS DEFINED IN EXPLANATION-4 TO SECTION 271(1)(C). THER EFORE, AFTER CONSIDERING THE CONSPECTUS OF THE MATERIAL ON RECOR D AND THE RIVAL SUBMISSIONS, WE ARE OF THE CONSIDERED VIEW TH AT THE PRESUMPTION OF CONCEALMENT AS CONTAINED IN EXPLANAT ION (1) OF SECTION 271(L)(C) READ WITH THE EXPLANATION (4) OF SECTION 271(L)(C) HAS BEEN REBUTTED BY THE ASSESSEE AND THAT ALL THE FACTS RELATING TO THIS EXPLANATION AND MATERIAL TO THE COMPUTATION OF TOTAL INCOME HAVE BEEN DULY DISCLOSED. UNDER THE CIRCUMST ANCES, IT IS HELD THAT EXPLANATION OF THE APPELLANT WAS BONA-FID E AND ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMP UTATION OF TOTAL INCOME HAVE BEEN DULY DISCLOSED BY IT. ACCORD INGLY, WE I.T.A. NO. 198/D/2014 ASSESSMENT YEAR 2009-10 9 DECLINE TO INTERFERE AND UPHOLD THE IMPUGNED ORDER. 9. IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH OF MARCH, 2016. SD/- SD/- (J.S. REDDY) (SUDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICI AL MEMBER DATED: THE 30TH OF MARCH, 2016 GS COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT BY ORDER ASSTT. REGISTRAR I.T.A. NO. 198/D/2014 ASSESSMENT YEAR 2009-10 10