M/s. Mechelec Steel Products, Baroda V. The Income tax Officer,Ward-2(3), Baroda

ITA 2489/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89426 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2005-2006
• Appeal Filed On: 05-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD (BEFORE SHRI SHAILENDRA KR. YADAV, J.M. & SHRI ANIL CHATURVEDI, A.M.) I.T. A. NO.2489/AHD/2011 (ASSESS MENT YEAR: 2005-06) M/S. MECHELEC STEEL PRODUCTS 3/13, INDUSTRIAL ESTATE, GORWA, BARODA V/S INCOME-TAX OFFICER, WARD- 2(3), BARODA (APPELLANT) (RESPONDENT) PAN: AAEFM1861D APPELLANT BY : WRITTEN SUBMISSION RESPONDENT BY : SMT. SONIA KUMAR, SR. D.R. ( )/ ORDER DATE OF HEARING : 29-04-2015 DATE OF PRONOUNCEMENT : 07-05-2015 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE OR DER OF CIT(A)-III, BARODA DATED 12.07.2011 FOR A.Y. 2005-06. 2. IN THIS CASE, NONE APPEARED ON BEHALF OF ASSESSEE B UT HOWEVER WRITTEN SUBMISSIONS DATED 16.04.2015 WERE FILED BY THE ASSE SSEE. WE THEREFORE PROCEED TO DECIDE THE APPEAL, EX PARTE QUA THE ASSE SSEE ON THE BASIS OF MATERIAL ON RECORD AND WRITTEN SUBMISSIONS. ITA NO 2489/ AHD/2011 . A.Y. 2005-0 6 2 3. ASSESSEE IS A PARTNERSHIP FIRM STATED TO BE ENGAGED IN THE BUSINESS OF MANUFACTURING OF WATER COOLERS AND FURNITURE. ASSES SEE FILED ITS RETURN OF INCOME FOR A.Y. 2005-06 ON 14.10.2005 DECLARING TOT AL INCOME AT RS. 4,01,800/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED UNDER SECTION 143(3) VIDE ORDER DATED 06 .09.2007 AND THE TOTAL INCOME WAS DETERMINED AT RS. 5,83,970/- BY INTERALI A DISALLOWING EXPENDITURE OF RS. 1,82,172/- U/S. 40(A)(IA) ON ACC OUNT OF NON DEDUCTION OF TDS. ON THE AFORESAID ADDITION MADE U/S. 40(A)(IA), A.O VIDE ORDER DATED 25.03.2008 LEVIED PENALTY OF RS. 70,000/- U/S. 271( 1)(C) ON ACCOUNT OF CONCEALMENT OF INCOME. AGGRIEVED BY THE AFORESAID PENALTY ORDER, ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO VIDE ORDER DATED 12.07.2011 DISMISSED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE AFORESAID ORDER OF LD. CIT(A), ASSESSES IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUND:- 1. THAT THE LD. CIT(A) ERRED IN CONFIRMING LEVY OF PEN ALTY OF RS. 70,000/- U/S. 271(1)(C) OF THE I.T. ACT, ON THE ALLEGED GROUND OF CONCEALME NT OF INCOME. 4. BEFORE US, IN THE WRITTEN SUBMISSIONS IT IS INTERAL IA SUBMITTED THAT AT THE TIME OF MAKING OF PAYMENT OF LABOUR CHARGES, PACKING AN D FORWARDING EXPENSES, ON SOME OF THE PAYMENTS, TDS WAS NOT DEDUCTED BUT S UBSEQUENTLY THE TDS WAS DEDUCTED AND WAS ALSO DEPOSITED IN SUBSEQUENT Y EARS. IT WAS FURTHER SUBMITTED THAT THE PAYMENT OF LABOUR CHARGES HAVE N OT BEEN HELD TO BE NON GENUINE OR BOGUS BUT THE DISALLOWANCE HAS BEEN MADE ON ACCOUNT OF LEGAL FICTION CREATED BY SECTION 40(A)(IA) OF THE ACT. IT WAS FURTHER SUBMITTED THAT THERE WAS NO CONCEALMENT OR FURNISHING OF ANY INACC URATE PARTICULARS REGARDING THE INCOME THAT WERE SUBMITTED IN THE RET URN OF INCOME AND IT WAS THE CASE OF TECHNICAL DEFAULT. FURTHER RELIANCE WAS ALSO PLACED ON THE DECISION ITA NO 2489/ AHD/2011 . A.Y. 2005-0 6 3 OF AHD. TRIBUNAL IN THE CASE OF ITO VS. KOTHARI BRO THERS ITA NO. 1081/AHD/2009 ORDER DATED 12.06.2009. IT WAS THUS S UBMITTED THAT THE PENALTY LEVIED U/S. 271(1)(C) BE DELETED. THE LD. D .R. ON THE OTHER HAND SUPPORTED THE ORDER OF A.O. 5. WE HAVE HEARD THE LD. D.R. AND PERUSED THE MATERIAL ON RECORD. IN THE PRESENT CASE, DISALLOWANCE ON ACCOUNT OF 40(A)(IA) WAS MADE ON ACCOUNT OF NON DEDUCTION OF TDS. IT IS ASSESSEES SUBMISSION T HAT THE TDS WAS DEDUCTED LATE AND WAS PAID IN SUBSEQUENT YEARS. IT IS ALSO A FACT THAT THE EXPENSE ON ACCOUNT OF PACKING AND FORWARDING EXPENS ES AND LABOUR CHARGES HAVE NOT BEEN HELD TO BE BOGUS OR NON GENUINE BUT T HE DISALLOWANCE HAS BEEN MADE ON ACCOUNT OF LEGAL FICTION U/S. 40(A)(IA). BE FORE US, REVENUE HAS NOT BROUGHT ANY MATERIAL ON RECORD TO CONTROVERT THE AF ORESAID SUBMISSIONS OF ASSESSEE. FURTHER THE REVENUE HAS NOT PLACED ANY MA TERIAL ON RECORD TO DEMONSTRATE THAT THE SUBMISSIONS MADE BY THE ASSESS EE WERE INCORRECT OR FALSE. FURTHER THE DISALLOWANCE U/S. 40(A)(IA) IN O UR VIEW IN THE PRESENT CASE CAN ONLY BE CONSIDERED TO BE A TECHNICAL FAULT. FUR THER THERE IS NOTHING ON RECORD TO DEMONSTRATE THAT ON THE PART OF THE ASSES SEE THERE WAS ANY CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME. WE FURTHER FIND THAT THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. L.G. CHAUDHARY TAX APPEAL NO. 536/A/2012 ORDER DATED 15. 01.2013 HAS HELD THAT NO PENALTY U/S. 271(1)(C) CAN BE LEVIED WHEN T HE NON DEDUCTION OF TDS WAS IN THE NATURE OF TECHNICAL FAULT. BEFORE US, RE VENUE HAS NOT BROUGHT ANY CONTRARY BINDING DECISION IN ITS SUPPORT. IN VIEW O F THE AFORESAID FACTS, WE ARE OF THE VIEW THAT THE PRESENT CASE IS NOT A CASE WHERE PENALTY FOR CONCEALMENT OF INCOME U/S. 271(1)(C) COULD HAVE BEE N LEVIED. WE THEREFORE DIRECT ITS DELETION. IN THE RESULT, THIS GROUND OF ASSESSEE IS ALLOWED. ITA NO 2489/ AHD/2011 . A.Y. 2005-0 6 4 6. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 07 - 05 - 2015. SD/- SD/- (SHAILENDRA KR. YADAV) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHM EDABAD