Otsuka Chemical India Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 2661/DEL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3109 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 22-05-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 01-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SANJEEV KWATRA
• Keywords: Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E , NEW DELHI BEFORE SH. N. K. SAINI, AM AND SMT. BEENA A. PILLAI , JM IT A NO. 2661 /DEL/201 4 : ASSTT. YEAR : 200 9 - 10 OTSUKA CHEMICAL INDIA PVT. LTD., 861 - 862, JOSHI ROAD, KAROL BAGH, NEW DELHI VS ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE - 13(1), NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. A A ACO8042K ASSESSEE BY : SH. SANJEEV KWATRA, CA & SH. ANUP MEHTA, CA REVENUE BY : SH. RAJESH KUMAR , SR. DR DATE OF HEARING : 22 .0 5 .201 7 DATE OF PRONOUNCE MENT : 23 .05 . 201 7 ORDER PER N. K. SAINI, AM : THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 21.02.2014 OF LD. CIT(A) - XVI, DELHI . 2 . F OLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ORDER PASSED BY CIT (A) IS CONTRARY TO FACTS AND BAD IN LAW. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE IMPOSITION OF PENALTY OF RS. 46,844/ - LEVIED U/S 271( 1 )(C) OF THE INCOME TAX ACT BY THE ASSESSING OFFICER. ITA N O. 2661 /DEL/201 4 OTSUKA CHEMICAL INDIA PVT. LTD. 2 3. THAT ON THE FAC TS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ORDER PASSED BY THE CIT(A) IS REQUIRED TO BE SET ASIDE AS PROPER AND REASONABLE OPPORTUNITY OF BEING HEARD WAS NOT GRANTED TO THE APPELLANT AND THE ORDER WAS PASSED EX - PARTE WITHOUT HEARING THE APPELLANT. 4 . THAT NON APPEARANCE BEFORE THE HON'BLE CIT (A) WAS DUE TO CIRCUMSTANCES WHICH WERE BEYOND CONTROL OF THE APPELLANT. 5. THAT THE PENALTY ORDER IS NOT SUSTAINABLE ON THE REASONING THAT NO CLEAR CUT FINDING HAS BEEN GIVEN AS TO WHETHER PENALTY WAS LEVIED F OR FURNISHING INACCURATE PARTICULARS OF INCOME OR CONCEALING OF TRUE PARTICULARS OF INCOME. 6. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND, MODIFY ANY OF THE GROUND DURING THE COURSE OF APPEAL. 3 . FROM THE ABOVE GROUND, IT IS GATHERED THAT THE ONLY ISSUE RAISED BY THE ASSESSEE RELATES TO THE SUSTENANCE OF PENALTY LEVIED BY THE AO U/S 271(1)(C) OF THE INCOME - TAX ACT, 1961 (HERE INAFTER REFERRED TO AS THE ACT) . FROM THE MATERIAL AVAILABLE ON RECORD, IT IS NOTICED THAT THE IMPUGNED PENALTY WAS LEVIE D BY THE AO BY CONSIDERING THE ADDITION MADE U/S 40(A)(IA) OF THE ACT FOR THE REASO N THAT THE TDS WAS NOT DEDUCTED, AS CONCEALED INCOME OF THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET STATED THAT ON AN IDENTICAL ISSUE HAVING SIMILAR FA CTS , THE PENALTY LEVIED BY THE AO AND SUSTAINED BY THE LD. CIT(A) HAS BEEN DELETED BY THIS BENCH OF THE TRIBUNAL IN ITA NO. 5758/DEL/2012 FOR THE ASSESSMENT YEAR 2006 - 07 IN THE CASE OF ACIT, ITA N O. 2661 /DEL/201 4 OTSUKA CHEMICAL INDIA PVT. LTD. 3 CIRCLE - 13(1) , NEW DELHI VS M/S OVERSEAS COURIER SERVICES INDIA (P VT.) LTD., NEW DELHI (COPY OF THE SAID ORDER WAS FURNISHED WHICH IS PLACED ON RECORD). 4 . IN HIS RIVAL SUBMISSIONS THE LD. DR STRONGLY SUPPORTED THE ORDER S OF THE AUTHORITIES BELOW BUT COULD NOT CONTROVERT THE AFORESAID CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE. 5 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IT IS NOTICED THAT AN IDENTICAL ISSUE WAS A SUBJECT MATTER OF THE DEPARTMENTAL APPEAL IN THE CASE OF ACIT, CIRCLE - 13(1 ), NEW DELHI VS M/S OVERSEAS COURIER SERVICES INDIA (PVT.) LTD., NEW DELHI (SUPRA) WHEREIN BY FOLLOWING THE EARLIER ORDER OF THE ITAT AHMADABAD BENCH IN THE CASE OF ITO VS LUCKY STAR INTERNATIONAL IN ITA NO. 1041/A HD/2010, T HE PENALTY LEVIED BY THE AO AND SUSTAINED BY THE LD. CIT(A) WAS DELETED. THE RELEVANT FINDINGS ARE GIVEN IN PARAS 9 & 10 OF THE SAID ORDER WHICH READ AS UNDER: 9. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE THROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT THERE WAS A MARGINAL DELA Y IN DEPOSIT OF TAX DEDUCTED ON CONTRACTUAL PAYMENTS AND THE SAME WAS DEPOSITED AFTER THE DUE DATE. THE ASSESSEE WAS SUBJECTED TO TAX ON THE DISALLOWANCE OF SUCH EXPENDITURE AND THE ASSESSING OFFICER IN THE SUBSEQUENT YEAR HAD ALLOWED THE DEDUCTIONS OF THE SE EXPENDITURES. THE ASSESSEE HAD NOT CONCEALED ANY PARTICULARS OF INCOME AND RATHER HAD FURNISHED FULL ITA N O. 2661 /DEL/201 4 OTSUKA CHEMICAL INDIA PVT. LTD. 4 PARTICULARS OF INCOME INCLUDING DATE OF DEPOSIT OF TAX WHICH WAS DISCLOSED IN THE AUDIT REPORT FROM WHICH THE ASSESSING OFFICER CAME TO KNOW ABOUT THE L ATE DEPOSIT OF TAX. THE AUDIT REPORT BEING INTEGRAL PART OF BALANCE SHEET AND FILED ALONG WITH RETURN OF INCOME, THEREFORE, IT CANNOT BE SAID THAT ASSESSEE HAD CONCEALED PARTICULARS OF ITS INCOME. THE HON BLE ITAT IN THE CASE OF ITO VS. LUCKY STAR INTERNAT IONAL REPORTED IN ITA NO. 1041/AHD/2010 UNDER SIMILAR CIRCUMSTANCES HAS HELD AS UNDER: AT THE TIME OF HEARING ON 16.06.2011, NONE APPEARED ON BEHALF OF THE ASSESSEE. WE HEARD THE DEPARTMENTAL REPRESENTATIVE. IN THIS CASE, PENALTY IS LEVIED FOR DISALLOWAN CE OF EXPENDITURE U/S 40 (A) (IA) OF THE INCOME TAX ACT. NON DEDUCTION OF TDS BY THE ASSESSEE WAS RESULTED IN DISALLOWANCE OF EXPENDITURE U/S 40 (A) (IA), THAT ITSELF CANNOT BE CONSTRUED AS FURNISHING INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCO ME. THE ASSESSEE HAS FAILED TO DEDUCT TDS WHICH RESULTED IN DISALLOWANCE OF EXPENDITURE. FURTHER, THE REVENUE CANNOT PENALIZE THE ASSESSEE BY LEVYING PENALTY U/S 271 (1) (C) OF THE ACT. IN ORDER TO LEVY PENALTY U/S 271 (1) (C) OF THE ACT, THERE HAS TO BE C ONCEALMENT OF PARTICULARS OF INCOME OF THE ASSESSEE OR THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF ITS INCOME. PRESENT IS NOT THE CASE OF CONCEALMENT OF INCOME OR IT IS NOT THE CASE OF REVENUE THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTI CULARS OF INCOME. THE DEPARTMENT HAS NOT FOUND OUT THAT THE ASSESSEE HAS FURNISHED ANY FACTUAL INCORRECT INFORMATION AND THE ASSESSEE IS NOT GUILTY OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN OUR OPINION, THE CONDITIONS LAID DOWN IN SECTION 271(1 ) (C) OF THE ACT IS NOT COMPLIED WITH. BEING SO, LEVY OF PENALTY IS NOT JUSTIFIED MERELY BECAUSE THE ASSESSEE HAS CLAIMED CERTAIN EXPENDITURE THAT EXPENDITURE IS NOT ELIGIBLE IN ITA N O. 2661 /DEL/201 4 OTSUKA CHEMICAL INDIA PVT. LTD. 5 VIEW OF THE ABOVE OF THE PROVISIONS OF SECTION 40(A) (IA) OF THE ACT AND FOR TH AT REASON, EXPENDITURE IS DISALLOWED. PENALTY CANNOT BE LEVIED FOR MERE MAKING OF A CLAIM OF EXPENDITURE WHICH IS NOT SUSTAINABLE AND DELETION OF PENALTY BY THE LD. CIT (A) IS JUSTIFIED. WE PLACE RELIANCE ON THE JUDGMENT OF THE HON BLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS (PVT.) LTD. (322 ITR 158 SC). ACCORDINGLY THE GROUND RAISED BY THE REVENUE HOLDS NO MERIT. 10. THEREFORE, IN VIEW OF THE JUDICIAL PRONOUNCEMENT S, WE HOLD THAT PENALTY U/S 271(1) (C) WAS NOT IMPOSABLE IN THE PRESEN T CASE ON LATE DEPOSIT OF TDS. IN RESPECT TO PENALTY ON OTHER DISALLOWANCES SUCH AS CASH EXPENSES, CHARITY AND DONATION ETC. WE HOLD THAT MERE DISALLOWANCE OF EXPENDITURE CANNOT RESULT INTO IMPOSITION OF PENALTY. SO, RESPECTFULLY FOLLOWING THE AFORESAID REFERRED TO ORDER THE IMPUGNED PENALTY OF RS.46,844/ - LEVIED BY THE AO U/S 271(1)(C) OF THE ACT AND SUSTAINED BY THE LD. CIT(A) IS DELETED. 6 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED . (O RDER PRONOUNCED IN THE OPEN COURT ON 23 /0 5 /2017 ) SD/ - SD/ - ( BEENA A. PILLAI ) (N. K. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 23 /05 /2017 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR