The ITO, Ward-9(1), Ahmedabad V. M/s. Venus Engineers, Ahmedabad

ITA 2718/AHD/2009

• Counselvise Citation: [2010] 137 COUNSELVISE.COM (IT) 0083 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 18-01-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 30-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M C PANDIT
• Assessee Lawyers: N O N E
• Keywords: Reasonable cause
• Section: 273B; 143(3); 194C

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, C BENCH, AHMEDABAD. BEFORE: HON'BLE SHRI T.K. SHARMA, JUDICIA L MEMBER, AND HON'BLE SHRI D.C. AGRAWAL, ACCOUNTANT MEMBER ITA NO. 2718/AHD/2009 ASSESSMENT YEAR : 2006-2007 INCOME TAX OFFICER, WARD-9(1), AHMEDABAD VERSUS M/S. VENUS ENGINEERS, AHMEDABAD PAN: AAFFV 4001 K (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI M.C. PANDIT, SR. DR FOR THE RESPONDENT : N O N E ORDER PER T K SHARMA, JUDICIAL MEMBER :- THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER DATED 29.07.2009 OF LD. COMMISSIONER OF INCOM E TAX(APPEALS)-XV, AHMEDABAD FOR THE ASSESSMENT YEAR 2006-07 CANCELLIN G THE PENALTY OF RS.7,42,707/- LEVIED BY THE A.O. UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. 2. DESPITE THE SERVICE OF NOTICE THROUGH REGISTERED POST, ON THE DATE OF HEARING NEITHER ANYBODY APPEARED FROM THE SIDE OF THE ASSES SEE NOR AN APPLICATION OF ADJOURNMENT RECEIVED. WE, THEREFORE, PROCEED TO DEC IDE THIS APPEAL ON THE BASIS OF THE SUBMISSIONS MADE BY THE LD. DEPARTMENTAL REPRESENTA TIVE AND MATERIAL AVAILABLE ON RECORD. 3. BRIEF FACTS ARE THAT THE ASSESSEE IS A FIRM ENGA GED IN THE BUSINESS OF CONSTRUCTION AND REPAIR OF CIVIL AND INDUSTRIAL BUI LDING. FOR THE ASSESSMENT YEAR UNDER APPEAL, IT FILED THE RETURN OF INCOME DECLARING TOT AL INCOME AT RS.1,18,323/-. THIS RETURN OF INCOME WAS ACCOMPANIED BY COPY OF PROFIT & LOSS A/C., BALANCE-SHEET AND THE TAX AUDIT REPORT UNDER SECTION 44AB OF THE INCO ME TAX ACT IN FORM NO. 3CB AND 3CD. THE ASSESSMENT UNDER SECTION 143(3) WAS CO MPLETED BY THE A.O. ON 26.11.2008 DETERMINING THE TOTAL INCOME AT RS.23,24 ,820/- AND DISALLOWED RS.22,06,498/- UNDER SECTION 40(A)(IA) OF THE ACT O UT OF PAYMENTS MADE TO LABOUR, TRANSPORT AND CARTING EXPENSES. 4. AT THE TIME OF HEARING, SHRI M.C. PANDIT, SR. D. R. APPEARING ON BEHALF OF THE REVENUE CONTENDED THAT THE ASSESSEE HAS CONCEALED T HE PARTICULARS AND FURNISHED INACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT. IN 2 ITA NO.2718/AHD/2009 ORDER TO CLAIM THE DEDUCTION, THE ASSESSEE WAS REQU IRED TO DEDUCT TDS AS REQUIRED BY THE PROVISIONS CONTAINED IN SECTION 40(A)(IA) OF TH E INCOME TAX ACT. SINCE NO TAX WAS DEDUCTED, THE DISALLOWANCE WAS RIGHTLY MADE. THE AS SESSEE HAS ACCEPTED THE DISALLOWANCE. ON THIS DISALLOWANCE, PENALTY UNDER S ECTION 271(1)(C) IS LEVIABLE AND THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IS NOT JUSTIFIED IN CANCELLING THE SAME. 5. HAVING HEARD THE LD. DEPARTMENTAL REPRESENTATIVE , WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IN CASE, T HERE IS A REASONABLE CAUSE WITHIN THE MEANING OF SECTION 273B OF THE INCOME TAX ACT, 1961 , PENALTY UNDER VARIOUS SECTIONS INCLUDING SECTION 271(1)(C) IS NOT LEVIABLE. THIS I S THE FIRST YEAR OF RETURN. ALL THE RELEVANT ACCOUNTS OF LABOUR PAYMENTS, TRANSPORT EXP ENSES AND CARTING EXPENSES WERE PRODUCED BEFORE THE A.O. THE BOOKS OF ACCOUNTS OF T HE ASSESSEE WERE AUDITED UNDER SECTION 44AB OF THE ACT AND THE AUDIT REPORTS IN FO RM NO. 3CB AND 3CD WERE DULY FURNISHED WITH THE RETURN OF INCOME. IN THE TAX AUD IT REPORT ALSO, NO TDS DEFAULT HAS BEEN POINTED OUT BY THE AUDITORS, WHICH THEY ARE RE QUIRED TO STATE. PRIMA FACIE, IT APPEARS THAT DUE TO IGNORANCE OF THE PROVISIONS CON TAINED IN SECTION 40(A)(IA) OF THE INCOME TAX ACT, 1961, THE ASSESSEE COULD NOT DEDUCT TDS FROM THE PAYMENTS MADE TO LABOUR, TRANSPORT AND CARTING EXPENSES. THE BONAFID E OF THE ASSESSEE IS ALSO PROVED BY THE FACT THAT THE CONCERNED CHARTERED ACCOUNTANT, W HO AUDITED THE ACCOUNTS OF THE ASSESSEE UNDER SECTION 44AB HAS NOT POINTED OUT NON -DEDUCTION OF TDS UNDER SECTION 194C FROM PAYMENTS MADE TO LABOUR, TRANSPORT AN CAR TING EXPENSES. IN THESE CIRCUMSTANCES, THE EXPLANATION OF THE ASSESSEE IS B ONAFIDE. PENALTY UNDER SECTION 271(1)(C) IS NOT AUTOMATIC. WE ARE, THEREFORE, OF T HE VIEW THAT THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IS LEGALLY AND FACTUALLY CORRECT IN CANCELLING THE PENALTY OF RS.7,42,707/- LEVIED BY THE A.O. UND ER SECTION 271(1)(C) IN RESPECT OF DISALLOWANCE OF RS.22,06,498/- MADE UNDER SECTION 4 0(A)(IA) OF THE INCOME TAX ACT, 1961. WE, THEREFORE, DECLINE TO INTERFERE. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON 22 ND JANUARY, 2010. SD/- SD/- S /- /- (D.C. AGRAWAL) (T.K. SHARMA) ACCOUNTANT MEMBER JUD ICIAL MEMBER DATED: 22/01/2010 3 ITA NO.2718/AHD/2009 COPY OF THE ORDER IS FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) CONCERNED 4. THE CIT, 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, // TRUE COPY // ASSTT. REGISTRAR/ DEPUTY REGISTRAR ITAT, AHMEDABAD BENCHES, AHMEDABAD. LAHA/SR. P.S.