The ACIT, (OSD), Circle-9, Ahmedabad V. M/s. Nayan C.Shah, Ahmedabad

ITA 2154/AHD/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80571 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 31-12-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 23-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Section: 143(3); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMEDABAD , BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER. ITA NO. 2154/AHD/2014 (ASSESSMENT YEAR: 2005-06) ACIT (OSD), CIRCLE-9, AHMEDABAD APPELLANT VS. M/S. NAYAN C. SHAH 208, AKRUTI COMPLEX, NR. SARDAR STADIUM UNDERPASS, NAVRANGPURA, AHMADABAD-380009 RESPONDENT PAN: AACFN3071C / BY REVENUE :SHRI DINESH SINGH, SR. D.R. / BY ASSESSEE : URVASHI SHODHAN, A.R. /DATE OF HEARING :31.12.2014 !'# /DATE OF PRONOUNCEMENT : 31.12.2014 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY REVENUE AGAINST THE O RDER OF COMMISSIONER OF INCOME TAX (APPEALS)-XV, AHMEDABAD, DATED 15 TH MAY, 2014 FOR A.Y. 2005-06 ON THE FOLLOWING GROUND S: I.T.A. NO. 2154/AHD/2014 FOR A.Y. 05-06 (ACIT(OSD) VS. M/S. NAYAN C. SHAH) PAGE 2 1A). THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)- XV, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETIN G THE PENALTY OF RS.7,16,818/- LEVIED U/S. 271(1)(C) OF THE ACT. 1B). THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-X V, AHMADABAD HAS ERRED IN LAW AND ON FACTS TO IGNORE EXPLANATION 1 OF PROVISION OF SECTION 271(1)(C) OF THE ACT, WHICH LAYS DOWN THAT WHERE ASSESSEES EXPLANATION IN RESPECT OF ANY MATTER WAS NOT FOUND SATISFACTORY, PROVISION OF SECTION 271(1)(C) OF T HE ACT, WERE ATTRACTED FOR FURNISHING INACCURATE PARTICULAR S OF INCOME. 2). ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XV, AHMEDABAD OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 2. ASSESSING OFFICER IN THE PENALTY ORDER OBSERVED AS UNDER: (A) THE RETURN OF INCOME WAS FILED BY THE ASSESSE E ON 07.07.2005 DECLARING TOTAL INCOME OF RS.13,01,223/- . THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE I.T. ACT ON 28.12.2007 DETERMINING THE TOTAL INCOME AT RS.36,62 ,880/-. IN THE ASSESSMENT, DISALLOWANCE OF RS.22,58,374/- W AS MADE U/S 40(A)(IA) OF THE I.T. ACT OUT OF PAYMENTS MADE TO VARIOUS LABOUR CONTRACTORS. IN RESPECT OF THIS ADDI TION, PENALTY PROCEEDINGS U/S 271 (1) (C) OF THE IT ACT W ERE INITIATED BY ISSUE OF NOTICE U/S 274 R.W.S. 271 (1) (C) OF THE IT ACT DATED 28.12.2007. AGAINST THE DISALLOWANCE OF RS.22,58,374/- MADE U/S 40(A)(IA) OF THE ACT, THE ASSESSEE PREFERRED AN APP EAL BEFORE THE CIT(A)-XV, AHMEDABAD. THE CIT(A)-XV, AHMEDABAD VI DE ORDER DATED 28.05.2008, SUSTAINED THE ADDITION TO T HE EXTENT OF RS.19,58,374/-. (B) IN RESPONSE TO THE SHOW-CAUSE NOTICE ISSUED, FO R PENALTY PROCEEDINGS THE ASSESSEE SUBMITTED WRITTEN SUBMISSION DATED 03.03.2010, THE RELEVANT PORTION O F WHICH IS REPRODUCED AS UNDER: I.T.A. NO. 2154/AHD/2014 FOR A.Y. 05-06 (ACIT(OSD) VS. M/S. NAYAN C. SHAH) PAGE 3 .. IT IS SUBMITTED THAT THE DISALLOWANCE WAS MADE ON HIGH TECHNICAL GROUND. DISALLOWANCE OF RS.19,58,374/- ON ACCOUNT OF PAYMENT OF TDS WAS NOT MADE TO THE GOVERNMENT ACCOUNT BEFORE 31.03.2005 FO R THE ASSESSMENT YEAR 2005-06. HOWEVER, THE SAID AMOUNT OF RS.19,58,374/- WAS ALLOWED AS A DEDUCTION FOR THE SUBSEQUENT ASSESSMENT YEAR IN WHICH THE PAYMENT OF T.D.S. WAS MADE TO THE GOVERNMENT ACCOUNT BY THE ASSESSEE. THEREFORE, THERE IS NO LOSS OF REVENUE BY WAY OF TA X. WE ENCLOSED HEREWITH THE COPY OF ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2006-07 DATED 24-10-2008 AND ORDER DATED 13-01-2009 UNDER SECTION 154 OF THE I.T. ACT, 1961 FOR YOUR KIND REFERENCE. THE ASSESSING OFFICER HAD ALLOWED THE DEDUCTION OF RS.19,58,374/- AND REDUCED THE TOTAL INCOME TO RS.3,26,596/-. IN VIEW OF THE ABOVE WE WOULD LIKE TO STATE THE DISALLOWANCE WAS MADE ON A TECHNICAL GROUND AND SINCE ALL THE CONDITIONS OF SECTION 273A ARE FULFIL LED AND REQUEST YOUR GOOD SELF THAT PLEASE WAIVE THE PENALTY PROCEEDINGS AND DO NOT IMPOSE ANY PENALTY UNDER SECTION 271(1)(C) OF THE I.T. ACT, 1961.' (C) THE A.O. REJECTED ASSESSEES EXPLANATION AND OBSERVED THAT THE ASSESSEE HAS SUBMITTED THAT THE TAX DEDUCTED A T SOURCE OF RS.19,58,374/- WAS NOT DEPOSITED INTO GOVERNMENT ACCOUNT WITHIN THE STIPULATED PERIOD I.E . 31.03.2005, WHICH WAS ONLY A TECHNICAL MISTAKE. IT IS PERTINENT TO REPRODUCE THE RELEVANT PROVISION S OF THE ACT BEFORE REACHING ANY CONCLUSION IN THIS REGA RD. SECTION 40 (A) (IA) OF THE IT ACT PROVIDE AS UNDER :- 'NOTWITHSTANDING ANYTHING TO THE CONTRARY IN SECTIONS 30 TO 38, THE FOLLOWING AMOUNTS SHALL NOT BE I.T.A. NO. 2154/AHD/2014 FOR A.Y. 05-06 (ACIT(OSD) VS. M/S. NAYAN C. SHAH) PAGE 4 DEDUCTED IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSI ON',- (A) IN THE CASE OF THE ASSESSEE- (IA) ANY INTEREST , COMMISSION OR BROKERAGE, FEES F OR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SERVICE S PAYABLE TO A RESIDENT, OR AMOUNTS PAYABLE TO A CONTRACTOR OR SUB CONTRACTOR, BEING RESIDENT , FOR CARRYING OUT ANY WORK ( INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK), ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVIIB AND SUCH TAX HAS NOT BEE N DEDUCTED OR, AFTER DEDUCTION , HAS NOT BEEN PAID DURING THE PREVIOUS YEAR, OR IN THE SUBSEQUENT YEAR BEFORE THE EXPIRY OF THE TIME PRESCRIBED UNDER SUB- SECTION (1) OF SECTION 200:' SECTION 200(1) PROVIDES AS UNDER: 'ANY PERSON DEDUCTING ANY SUM IN ACCORDANCE WITH [THE FOREGOING PROVISIONS OF THIS CHAPTER] SHALL PA Y WITHIN THE PRESCRIBED TIME, THE SUM SO DEDUCTED TO THE CREDIT OF THE CENTRAL GOVERNMENT OR AS THE BOARD DIRECTS' THUS THE PROVISIONS OF THE ACT ARE CLEAR AND UNAMBIGUOUS ABOUT THE LIABILITIES OF THE PERSON DEDUCTING THE TAX AT SOURCE. THE ASSESSEE WAS REQUIRED TO ADD BACK THE DISALLOWABLES TO ITS INCOME AND PAY THE DUE TAX THE REON. THE ASSESSEE HOWEVER HAD FAILED TO INCLUDE THE ABOV E AMOUNT OF RS.19,58,374/- IN ITS INCOME AND FAILED T O PAY THE TAXES. THUS, THE ASSESSEE HAS FURNISHED INACCUR ATE PARTICULARS IN RESPECT OF INCOME OF RS.19,58,374/-. IN THE CASE OF ASSESSEE DISALLOWANCE OF RS.19,58,37 4/- WAS MADE SINCE THE ASSESSEE HAD FAILED TO DEPOSIT T HE TAX DEDUCTED AT SOURCE INTO THE 3VERNMENT ACCOUNT BEFOR E THE EXPIRY OF THE TIME PRESCRIBED UNDER SUB-SECTION (1) OF SECTION 200 OF THE I.T. ACT (IN THIS CASE 31.03.200 5). THE ASSESSEE HAS NOT GIVEN ANY REPLY TO THE SATISFACTIO N OF THE I.T.A. NO. 2154/AHD/2014 FOR A.Y. 05-06 (ACIT(OSD) VS. M/S. NAYAN C. SHAH) PAGE 5 AO AS TO WHAT PREVENTED HIM FROM DEPOSITING THE TDS INTO THE GOVT. A/C. MERELY STATING THAT THE DISALLOWANCE WAS MADE ON TECHNICAL GROUND, THE ASSESSEE CANNOT BE AB SOLVED OF ITS RESPONSIBILITIES OF COMPLYING WITH THE PROVI SIONS OF THE ACT WHILE FURNISHING THE PARTICULARS OF INCOME. WHAT WAS EXPECTED FROM THE ASSESSEE WAS TO PROVE TH E BONA FIDE OF HIS BELIEF WHICH THE ASSESSEE HAD FAIL ED TO PROVE IN THIS CASE. SIMILAR VIEW HAS ALSO BEEN TAKEN BY HON'BLE MADRAS HIGH COURT IN THE MATTER FOR LEVY OF PENALTY UNDER SECTION 18(L)(A) OF THE WEALTH TAX ACT (V.G.PANEERDAS & CO.( P) LTD. VS. COMMISSIONER OF WEALTH TAX). THE RELEVANT PORTI ON OF THE JUDGMENT IS REPRODUCED HEREUNDER: AS REGARDS THE LEVY OF PENALTY UNDER SECTION 18(L) (C), THE PLEA OF THE ASSESSEE WAS THAT THE ASSESSEE WAS UNDER THE BONA FIDE IMPRESSION THE ONLY EXPLANATION OF THE ASSESSEE WAS THAT HE WA S UNDER THE BONA FIDE IMPRESSION THAT THE ASSETS WERE NOT TAXABLE FOR THESE YEARS. WHAT HAS TO BE DECIDED THEREFORE IS BONA FIDE OF THIS ERRONEOUS IMPRESSION . GOING BEYOND WELL KNOWN PRINCIPLE THAT THE IGNORANC E OF LAW IS NO EXCUSE, IT HAS TO BE POINTED OUT THAT THE ASSESSEE COULD NOT POINT OUT ANY MATERIAL FACT SHOW ING THAT IT WAS PREVENTED FROM GETTING TO KNOW THE RELE VANT PROVISIONS OF FINANCE ACT, 1983.' EVEN IN THIS CASE THE ASSESSEE HAS NOT PROVED THE BONA FIDE OF HIS BELIEF (D) THE A.O. THEREFORE HELD THAT IN VIEW OF THE DI SCUSSION ABOVE AND THE PROVISIONS OF EXPLANATIONN-1 TO SECTI ON 271(1)(C) OF THE I.T.ACT, 1961, I AM CONVINCED THAT THE CASE OF ASSESSEE ATTRACTS PROVISIONS OF SECTION 271(L)(C ) AS ASSESSES FURNISHED INACCURATE PARTICULARS OF INCOME AND HENCE CONCEALED INCOME. I THEREFORE, LEVY PENALTY O F RS.7,16,618/- @ 100% OF TAX SOUGHT TO BE EVADED AS AGAINST MAXIMUM PENALTY LEVIABLE OF RS.21,49,854/- @ 300% O F SUCH TAX. I.T.A. NO. 2154/AHD/2014 FOR A.Y. 05-06 (ACIT(OSD) VS. M/S. NAYAN C. SHAH) PAGE 6 THIS PENALTY ORDER IS PASSED AFTER OBTAINING PRIOR APPROVAL OF THE ADDL. C.I.T. RANGE-9, AHMEDABAD ACC ORDED VIDE LETTER NO.ADDL./RANGE.9/PEN/APPROVAL/2009-10 D ATED 29.03.2010. 3. MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AU THORITY, WHEREIN VARIOUS CONTENTIONS WERE RAISED ON BEHALF O F ASSESSEE. HAVING CONSIDERED THE SAME CIT(A) HAS DELETED THE P ENALTY IN QUESTION. SAME HAS BEEN OPPOSED BEFORE US ON BEHALF OF REVENUE INTER ALIA SUBMITTING THAT CIT(A) WAS NOT J USTIFIED IN DELETING PENALTY OF RS.7,16,818/- LEVIED UNDER THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT. ACCORDINGLY, ORDER O F CIT(A) BE SET ASIDE AND THAT OF ASSESSING OFFICER BE RESTORED. O N OTHER HAND, LD. AUTHORIZED REPRESENTATIVE SUPPORTED THE ORDER O F CIT(A). 4. AFTER GOING THROUGH RIVAL SUBMISSIONS AND MATERI AL ON RECORD, WE FIND THAT ASSESSEE IS A PARTNERSHIP FIRM AND ENGAGED IN BUSINESS OF BUILDING CONSTRUCTION AND CONTRACTS. IT HAS FILED ITS RETURN OF INCOME FOR A.Y. 2005-06 ON 07.07.2005 DECLARING TOTAL INCOME OF RS.13,01,223/-. ASSESSING OFFICER NOTICED THAT THOUGH PAYMENTS EXCEEDING RS.50,000/- IN AGGREGATE TO 11 DIFFERENT PARTIES AS LISTED IN PARA 3 OF ASSESSMENT ORDER WAS MADE THROUGH OUT THE YEAR. TDS WAS MADE U/S.194C A ND DEPOSITED IN GOVERNMENT ACCOUNT ON 17.05.2005. SAM E WERE DISALLOWED U/S. 40(A)(IA). THE STAND OF ASSESSEE H AS BEEN THAT THERE WAS NO CONTRACT WITH LABOURERS. HOWEVER, ASS ESSING OFFICER DISALLOWED THE SAME. IN QUANTUM APPEAL, MA TTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY WHO HA S GIVEN PART RELIEF. ASSESSING OFFICER LEVIED PENALTY OF RS.7,1 6,618/- UNDER I.T.A. NO. 2154/AHD/2014 FOR A.Y. 05-06 (ACIT(OSD) VS. M/S. NAYAN C. SHAH) PAGE 7 THE PROVISION OF SECTION 271(1)(C). IN APPEAL, CIT (A) OBSERVED THAT ASSESSEE IN ITS BOOKS OF ACCOUNT HAS REFLECTED ALL THE TRANSACTIONS IN QUESTION. CIT(A) WITHOUT GOING INT O CONTROVERSY OF CONSIDERATION OF QUANTUM ADDITION OBSERVED THAT MAIN ISSUE IN PENALTY IS WHETHER IN SUCH FACTS AND CIRCUMSTANC ES, SATISFACTION CAN BE DRAWN ABOUT FURNISHING INACCURA TE PARTICULARS OF INCOME. ASSESSEE TOOK CERTAIN STAND BEFORE ASSESSING OFFICER, WHICH WAS NOT FOUND SATISFACTORY BY ASSESSING OFFICER. ASSESSING OFFICER FAILED TO APP RECIATE HIS SATISFACTION THAT HOW ASSESSEE SUBMITTED INACCURATE PARTICULARS IN RESPECT OF TRANSACTION, WHICH WAS AL READY DISCLOSED AND THERE WAS NO DISPUTE IN RESPECT OF FA CTS AND FIGURES OF THOSE TRANSACTIONS. MERE DISALLOWANCE B Y ASSESSING OFFICER IS NOT SUFFICIENT TO REACH THE CONCLUSION O F FURNISHING INACCURATE PARTICULARS OF INCOME. THE DISALLOWANCE MADE AND UPHELD ON ACCOUNT OF DEEMING PROVISIONS OF SECTION 40(A)(IA) OF THE ACT ARE BECAUSE OF NON DEPOSIT OF TDS SO DEDUCT ED BY ASSESSEE WITHIN DUE DATE AS PRESCRIBED U/S. 200(1) OF THE ACT. BUT, SUCH DEDUCTED TDS WAS DULY PAID BEFORE FILING OF RETURN OF INCOME FOR THE IMPUGNED PREVIOUS YEAR. AS PER THE AMENDMENT IN SECTION 40(A)(IA) OF THE ACT WHICH WAS HELD AS CLARIFICATORY; SUCH DEPOSIT NOW DOES NOT REQUIRE TH E OPERATION OF PROVISION OF SECTION 40(A)(IA) OF THE ACT I.E. I SSUE WAS DEBATABLE AT RELEVANT POINT OF TIME. FURTHER, ASSE SSING OFFICER ON HIS OWN THROUGH RECTIFICATION U/S. 154 OF THE AC T ALLOWED THE CLAIM OF EXPENDITURE IN SUBSEQUENT YEAR. ASSES SEE BONAFIDELY MADE THE CLAIM, WHICH CANNOT BE SAID TO BE I.T.A. NO. 2154/AHD/2014 FOR A.Y. 05-06 (ACIT(OSD) VS. M/S. NAYAN C. SHAH) PAGE 8 FURNISHING INACCURATE PARTICULARS OF INCOME. ACCOR DINGLY, CIT(A) WAS JUSTIFIED IN DELETING PENALTY. SAME IS UPHELD. 5. AS A RESULT, APPEAL FILED BY REVENUE IS DISMISSE D. PRONOUNCED IN THE OPEN COURT ON THIS THE 31 ST DAY OF DECEMBER, 2014. SD/- SD/- (ANIL CHATURVEDI) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER TRUE COPY S.K.SINHA $ $ $ $ &' &' &' &' ('# ('# ('# ('# / COPY OF ORDER FORWARDED TO:- 1. / REVENUE 2. / ASSESSEE 3. -- . / CONCERNED CIT 4. .- / CIT (A) 5. '23 &, , / DR, ITAT, AHMEDABAD 6. 367 89 / GUARD FILE. BY ORDER / $ , :/ - , <