D.CI.T.(TDS), Circle-58, Kolkata, Kolkata V. M/s J.J.Exporters Ltd., Kolkata

ITA 2569/KOL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4711 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2016
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 11-11-2013
• Court: TRIBUNAL
• Department Lawyers: SUDIPTA G UHA JCITLD
• Assessee Lawyers: S JHAJHARIA FCA LD
• Keywords: Reasonable cause
• Section: 273B; 143(3); 10B

Judgement Text

ITA NO.2569/KOL/2013AC-JM M/S. J.J EXPORTERS LTD 1 IN THE INCOME TAX APPELLATE TRIBUNAL, A BENCH, K OLKATA BEFORE : SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI S.S VISWANETHRA RAVI, JUDICIAL MEMBE R I.T.A NO. 2569/KOL/2013 A.Y : 2007-08 D.C.I.T (TDS), CIR-58, KOLKATA VS. M/S. J.J. EXPO RTERS LTD PAN: AAACJ 6722H (APPELLANT) (RESPON DENT) C.O NO. 154/KOL/2013 [ ARISING OUT OF ITA NO.2569/KOL/2013 A.Y 2007-08] M/S. J.J. EXPORTERS LTD VS. D.C.I.T (TDS), CIR- 58, KOLKATA (CROSS OBJECTOR) (DEPARTMENT) FOR THE APPELLANT/DEPARTMENT: SUDIPTA G UHA, JCIT, LD.SR.DR FOR THE RESPONDENT/ASSESSEE: SHRI S.JHAJHARIA, FCA, LD.AR DATE OF HEARING: 09-06-2016 DATE OF PRONOUNCEMENT: 15- 06-20 16 ORDER SHRI S.S VISWANETHRA RAVI, JM THIS APPEAL OF THE REVENUE AND CROSS OBJECTION OF THE ASSESSEE ARISE OUT OF THE ORDER OF THE CIT(A)--I, KOLKATA IN APPEAL NO. 137/CIT(A)-I/CIRCLE-58/2012- 13 FOR THE ASSESSMENT YEAR 2007-08 AGAINST THE OR DER OF PENALTY IMPOSED U/S. 271C OF THE INCOME TAX ACT, 1961 (HEREINAFTER REF ERRED TO AS THE ACT). 2. THE ONLY ISSUE IS TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE PENALTY U/S. 271 C IS SUSTAINABLE IN VIEW OF DELETION OF DI SALLOWANCE BY THE CIT(A) IN THE FIRST APPEAL. ITA NO.2569/KOL/2013AC-JM M/S. J.J EXPORTERS LTD 2 3. BRIEF FACTS ARE THAT THE AO BY AN ORDER DTD. 28- 12-2011 U/S. 143(3) OF THE ACT HAD DISALLOWED AN AMOUNT OF RS.3,84,07,558/- U /S. 40(A)(IA) OF THE ACT FOR NON DEDUCTION OF TDS ON COMMISSION PAID TO FOREIGN AGENTS FOR SERVICES RENDERED AND UTILIZED OUTSIDE INDIA. AGAINST WHICH THE ASSES SEE PREFERRED AN APPEAL BEFORE THE CIT(A), WHEREIN THE SAID DISALLOWANCE WAS DELE TED BY HIS ORDER DTD. 25-11- 2011. 4. AS AGGRIEVED BY THE ORDER OF CIT(A), THE REVENUE PREFERRED AN APPEAL BEFORE THE TRIBUNAL INTER ALIA CHALLENGING THE AMON GST OTHER GROUNDS, BUT, HOWEVER, NOT THE DELETION OF DISALLOWANCE MADE BY T HE AO U/S. 40(A)(IA) OF THE ACT AND THE APPEAL AS IT IS STILL PENDING FOR ADJ UDICATION BEFORE THE TRIBUNAL. 5. AS MATTER STOOD THUS, THE AO ISSUED A NOTICE DT. 09-02-2012 U/S. 271C OF THE ACT FOR DEFAULT IN MAKING TDS, AND DURING SUCH PROCEEDINGS THE ASSESSEE HAS BROUGHT TO THE NOTICE OF THE AO BY HIS LETTER DT. 0 2-03-2012 THAT THE ASSESSEE HAS GOT RELIEF ON DISALLOWANCE MADE IN RESPECT OF COMMI SSION PAID TO FOREIGN AGENTS IN FIRST APPEAL VIDE ORDER DT. 25-11-2011 PASSED BY THE CIT(A) AND THE REVENUE DID NOT CONTEST THE SAID DELETION BEFORE THE TRIBUN AL IN THE APPEAL PREFERRED BY THE REVENUE. INSPITE OF WHICH, THE AO LEVIED PENALTY OF RS.43,51,576/- BY HIS ORDER DT. 27-04-12. THE RELEVANT PORTION OF WHICH IS REPR ODUCED HEREIN BELOW:- ORDER U/S. 271C OF THE INCOME-TAX ACT, 1961 . . IT REVEALS FROM THE INSPECTORS REPORT THAT THE D EPARTMENT HAS FILED AN APPEAL BEFORE THE LD. I.T.A.T ON 07/02/2012 AGAI NST THE ORDER OF LD. C.I.T(A)-XII, KOLKATA. SO THE ISSUE IS STILL ALIVE AND THE DEPTT. HAS NOT ACCEPTED IN DECISION OF LD. C.I.T(A). ITA NO.2569/KOL/2013AC-JM M/S. J.J EXPORTERS LTD 3 SECTION 271C HAS PROVIDED AS UNDER IF ANY PERSON FAILS TO DEDUCT THE WHOLE OR ANY PA RT OF THE TAX AS REQUIRED BY OR UNDER THE PROVISIONS OF CHAPTER XVII -B, THEN, SUCH PERSON SHALL BE LIABLE TO PAY, BY WAY OF PENALTY, A SUM EQUAL TO THE AMOUNT OF TAX WHICH SUCH PERSON FAILED TO DEDUCT OR PAY AS AFORESAID. HENCE, THE ARGUMENT OF THE A/R DOES NOT CONSTITUTE A REASONABLE CAUSE ON THE PART OF THE DEDUCTOR AS PROVIDED IN SECTION 273B OF THE I.T ACT. IT IS A FIT CASE FOR IMPOSING PENALTY U/S. 271C ON THE AMOUNT AS GIVEN BELOW: AMOUNT PAID T D S S.C & E. C TOTAL RS.3,84,07,55 8/- RS.38,40,75 6/- RS.5,10,82 0/- RS.43,51,75 6/- IN VIEW OF ABOVE, IT IS HELD THAT PENALTY U/S. 271C IS IMPOSABLE ON THE DEDUCTOR AND I HEREBY IMPOSE A PENALTY OF RS.43,51, 576/- ON THE DEDUCTOR. 6. THE CIT-A HAVING CONSIDERED THE SUBMISSION OF THE ASSESSEE AND HAVING EXAMINED THE GROUNDS OF APPEAL FILED BY THE REVENU E BEFORE THE TRIBUNAL HAS OPINED AS UNDER:- THEREFORE, FROM THE ABOVE, IT IS CLEAR THAT THE AP PELLANT WAS NOT LIABLE FOR DEDUCTION OF TDS IN RESPECT OF THE COMMISSION P AYMENTS OF RS.3,84,07,558/-. IT IS FURTHER SEEN THAT ALTHOUGH THE DEPARTMENT HAS FILED AN APPEAL IN THE ITAT AGAINST THE ABOVE MENTIONED O RDER OF CIT(A)-XII, KOLKATA, HOWEVER, IN THE GROUNDS OF APPEAL TAKEN BE FORE THE HONBLE ITAT THE ISSUE OF DISALLOWANCE S/S. 40(A)(IA) FOR ALLEGED NON DEDUCTION OF TAX HAS NOT BEEN TAKEN UP. THE RELEVANT GROUNDS OF APPEAL ENCLOSED WITH FORM NO.46 FILED BEFORE THE HONBLE ITAT BY THE A.O ARE REPRODUCED AS UNDER:- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE ADDITION U/S. 36(1)(III) MAD E ON THE BASIS OF AUDITORS CERTIFICATE IN THE FORM NO.3CD. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE CIT(A) HAS ERRED IN DELETING UPWARD ADJUSTMENT AMOUNTING TO RS.10,83 ,00,000/- WITHOUT ITA NO.2569/KOL/2013AC-JM M/S. J.J EXPORTERS LTD 4 APPRECIATING THE FACT THAT THE ASSESSEE ITSELF COMP ARED THE PROFIT AT ENTERPRISE LEVEL. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE CIT(A) HAS ERRED IN DELETING UPWARD ADJUSTMENT AMOUNTING TO RS.10,8 3,00,000/- THOUGH THE ASSESSEE FAILED TO PROVIDE THE COMPARABLE PROFIT AT TRANSACTIONAL LEVEL. THE JCIT(TDS) IN HIS PENALTY ORDER HAS TAKEN THE ON LY GROUND FOR IMPOSITION OF PENALTY THAT THE MATTER WAS STILL AL IVE IN VIEW OF THE DEPARTMENTS APPEAL BEFORE THE ITAT. BUT CONSIDERIN G THE ABOVE, IT IS CLEAR THAT THE OBSERVATION MADE IN THE PENALTY ORDER THAT THE ISSUE IS STILL ALIVE AND THE DEPARTMENT HAS NOT ACCEPTED THE DECISION IS OF CIT(A) IS NOT CORRECT AND NO GROUND OF APPEAL ON THIS ISSUE HAS BEEN TAKEN UP BEFORE THE ITAT. IT IS, THEREFORE, HELD THAT THE JCIT(TDS) WAS NOT JUSTIFIED IN IMPOSITION OF PENALTY U/S. 271C, SINCE IT HAS BEEN HELD IN THE APPELLANTS OWN CASE FOR A.Y 2007-08 IN APPEAL THAT THERE WAS N O DEFAULT IN PAYMENT OF TDS, AS THE AMOUNT PAID WAS NOT TAXABLE IN INDIA. I T IS, THEREFORE, CLEAR THAT THE PROVISIONS OF TDS WERE NOT APPLICABLE ON T HE PAYMENT OF ABOVE AMOUNT AND HENCE THERE WAS NO GROUND OF IMPOSITION OF PENALTY U/S. 271C FOR ALLEGED NON DEDUCTION OF TDS. THE A.O IS ACCORD INGLY DIRECTED TO DELETE THE PENALTY IMPOSED U/S. 271C. 7. AS AGGRIEVED BY THE ORDER OF THE CIT(A) THE REVE NUE PREFERRED THIS APPEAL BEFORE THE TRIBUNAL AND CONTENDED THAT IT IS OPEN TO THE DEPARTMENT OF REVENUE TO FILE THE SUPPLEMENTARY GROUNDS OF APPEAL IN THE MAIN APPEAL FILED BY THE REVENUE AGAINST OTHER ADDITIONS MADE BY THE AO BY H IS ORDER DATED 28-12-2011. 8. IN REPLY, THE LD.AR SUBMITS THAT THOUGH THE APPE AL WAS PREFERRED BY THE REVENUE BEFORE THE TRIBUNAL, IT DID NOT CHOOSE TO F ILE ANY SUPPLEMENTARY GROUNDS OF APPEAL, WHICH ARE STILL PENDING BEFORE THE TRIBU NAL FOR ADJUDICATION. 9. HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MAT ERIAL AVAILABLE ON RECORD. IT IS OBSERVED FROM THE ORDER OF THE CIT(A) THAT HE EXAMINED THE GROUNDS OF APPEAL IN FORM NO.35. HE FOUND THAT THE REVENUE DID NOT CONTEST THE SAID ITA NO.2569/KOL/2013AC-JM M/S. J.J EXPORTERS LTD 5 DELETION ON DISALLOWANCE MADE BY THE AO U/S. 40(A)( IA) OF THE ACT. THE FACTS REMAINS UNDISPUTED THAT THE CIT-A HAVING JURISDICTI ON DELETED THE SAID DISALLOWANCE IN AN APPEAL FILED BY THE ASSESSEE BY HIS ORDER DT:25-11-2011 AGAINST WHICH THE REVENUE ALSO PREFERRED AN APPEAL BEFORE T HE TRIBUNAL WITHOUT THERE BEING ANY GROUND CHALLENGING THE SAID DELETION BY T HE CIT-A AND HAVING FOUND THE FACTS ON RECORD, THE CIT-A HELD THAT IMPOSITION OF PENALTY IS NOT MAINTAINABLE AND CANCELLED THE PENALTY IMPOSED BY THE AO ON THE ASSESSEE. WE FIND THAT INSPITE OF STATING THAT IT IS OPEN TO THE REVENUE TO FILE T HE SUPPLEMENTARY GROUNDS OF APPEAL CHALLENGING THE SAID DELETION, HOWEVER, THE REVENUE DID NOT MAKE ANY SUPPLEMENTARY GROUNDS OF APPEAL. THEREFORE, WE FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE CIT(A) AND THE SAME IS HEREBY UPHELD IN CANCELLING THE PENALTY IMPOSED BY THE AO. THEREFORE, WE ARE OF TH E VIEW, THE ORDER IMPOSING PENALTY BY THE AO U/S. 271C OF THE ACT IS NOT JUSTI FIED, ACCORDINGLY, THE SOLE GROUND RAISED BY THE REVENUE IS DISMISSED. C.O NO. 154/KOL/2013 ARISING OUT OF ITA NO. 2569/KOL/2013 FOR THE A.Y 2 007-08 BY THE ASSESSEE 10. THE ASSESSEE SUBMITS THE C.O FILED IS IN SUPPOR T OF THE ORDER OF CIT(A). SINCE WE UPHOLD THE IMPUGNED ORDER OF THE CIT(A) I N CANCELLING THE PEANLTY, CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED BEING INFRUCTUOUS. 11. IN THE RESULT, THE APPEAL OF THE REVENUE AND C ROSS OBJECTION OF THE ASSESSEE, BOTH ARE DISMISSED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON 15 / 0 6 /2016 SD/- P.M. JAGTAP ACCOUNTANT MEMBER SD/- S.S.VISWANETHRA RAVI J JU DICIAL MEMBER ITA NO.2569/KOL/2013AC-JM M/S. J.J EXPORTERS LTD 6 COPY OF THE ORDER FORWARDED TO: 1.. THE APPELLANT/DEPARTMENT : THE DCIT (TDS) CIR- 58, KOL 10B MIDDLETON ROAD, KOLKATA-71. 2 THE RESPONDENT/ASSESSEE: M/S. J.J EXPORTERS LTD C /O SALARPURIA JAJODIA & CO 7 C.R AVENUE, KOL-72. 3 4.. /THE CIT, /THE CIT(A) 5. DR, KOLKATA BENCH 6. GUARD FILE. TRUE COPY, BY ORDER, ASSTT REGISTRAR ** PRADIP SPS DATE 15 /06/ 2016