Shri Paresh C.Shah,HUF, Baroda V. The Income tax Officer,Ward-2(2), Baroda

ITA 2797/AHD/2011

• Counselvise Citation: 279720514 RSA 2011
• Duration Of Justice: 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 11-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M K PATEL

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI MUKUL KR.SHRAWAT, JUDICIAL MEMBER AND SHRI A.L.GEHLOT, ACCOUNTANT MEMBER ./ I.T.A. NO.2797/AHD/2011 ( / / / / ASSESSMENT YEAR : 2005-06) PARESH C.SHAH (HUF) PROP.KRISHNA STEEL TRADERS 366/1, GIDC ESTATE MAKARPURA, VADODARA / VS. THE ITO WARD-2(2) BARODA ! ./'# ./ PAN/GIR NO. : AAEHS 2124 R ( $ / // / APPELLANT ) .. ( %&$ / RESPONDENT ) $ ' / APPELLANT BY : SHRI M.K.PATEL %&$ ( ' / RESPONDENT BY : SHRI SAMIR TEKRIWAL, SR. D.R. )* ( +,! / / / / DATE OF HEARING : 11/1/2012 -. ( +,! / DATE OF PRONOUNCEMENT : 13.1.12 / / O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE ASSESSEE W HICH HAS EMANATED FROM THE ORDER OF LEARNED CIT(APPEALS)-III , BARODA DATED 05/08/2011 AND THE GROUND ARGUED BEFORE US READS A S FOLLOWS:- 1. THE APPELLANT HAD DEBITED A SUM OF RS.1,77,759/- AS FREIGHT CHARGES PAID TO M/S.BOMBAY GUJARAT TRANSPORT AND TI MES TRANSPORT. THE APPELLANT HAS NOT DEDUCTED TDS ON T HE SAID PAYMENTS. THE AMOUNT WAS DISALLOWED U/S.40(1)(IA) OF THE ACT BY THE LD. A.O. THE LD. A.O. HAS LEVIED PENALTY OF RS.59,834/- U/S.271(1)(C), WHICH HAS BEEN UPHELD BY THE LD.CIT( A), VADODARA. ITA NO.2797/AHD /2011 PARESH C.SHAH (HUF) VS. ITO ASST.YEAR 2005-06 - 2 - 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING PENALTY ORDER PASSED U/S.271(1)(C) OF THE I.T.ACT DATED 20/06/200 8 AND THE ASSESSMENT ORDER PASSED U/S.143(3) OF THE I.T. ACT, 1961 DATE D 20/12/2007 WERE THAT THE HUF IS IN THE BUSINESS OF TRADING IN STEE L AND ALLOYS BARS. A DISALLOWANCE U/S.40(A)(IA) OF RS.1,77,759/- WAS MAD E. THE SAID DISALLOWANCE WAS NOT CONTESTED BY THE ASSESSEE. T HE SAID AMOUNT WAS DEBITED TO THE PROFIT & LOSS ACCOUNT AS FREIGHT EX PENSES PAID TO M/S.BOMBAY GUJARAT TRANSPORT (RS.1,09,168/-) AND AN ANOTHER AMOUNT OF FREIGHT EXPENSES PAID TO M/S. TIME TRANSPORT (RS. 68,591/-). AS PER ASSESSING OFFICER, THE SAID PAYMENT WAS WITHOUT DED UCTION OF TAX, THEREFORE COVERED BY THE PROVISIONS OF SECTION 194- C OF THE I.T.ACT TO BE READ ALONG WITH THE PROVISION OF SECTION 40(A)(IA) OF THE I.T.ACT. DURING THE PENALTY PROCEEDINGS, IT WAS ARGUED THAT UNDER W RONG PRESUMPTION, IT WAS CONSIDERED BY THE ASSESSEE THAT THOSE PAYMENTS DID NOT ATTRACT TDS PROVISIONS. IT HAS ALSO BEEN ARGUED THAT THE PROVI SIONS OF SECTION 40(A)(IA) WERE INSERTED VERY RECENTLY WITH EFFECT F ROM A.Y. 2005-06 AND SINCE IT WAS A NEW PROVISION THEREFORE FOR THE YEAR UNDER CONSIDERATION THE SCOPE OF THE SAID SECTION WERE NOT PROPERLY UND ERSTOOD. MERELY DISALLOWANCE OF AN EXPENDITURE DO NOT PER SE AMOUNT TO CONCEALMENT OF INCOME. CASE LAWS CITED WERE CIT VS. AJAIB SINGH & CO. 253 ITR 630 (P&H) AND CIT VS. SKYLINE AUTO PRODUCTS (P) LTD. 27 1 ITR 335 (M.P.). HOWEVER, THE ASSESSING OFFICER WAS NOT CONVINCED AN D LEVIED THE PENALTY ITA NO.2797/AHD /2011 PARESH C.SHAH (HUF) VS. ITO ASST.YEAR 2005-06 - 3 - OF RS.59,844/-. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY, THE ACTION OF THE ASSESSING OFFICER WAS AFFIRMED. 3. FROM THE SIDE OF THE APPELLANT, LD.AR MR.M.K.PAT EL APPEARED AND ARGUED THAT ALL THE INFORMATION IN RESPECT OF THE F REIGHT CHARGES WERE VERY MUCH BEFORE THE ASSESSING OFFICER AND NO PART OF IT WAS FOUND FALSE OR CONCEALED BY THE ASSESSEE. ON THE OTHER HAND, FROM THE SIDE OF THE REVENUE, LD.DR MR.SAMIR TEKRIWAL APPEARED AND PLACE D RELIANCE ON THE ORDER OF THE LEARNED CIT(APPEALS). THE LEARNED DEP ARTMENTAL REPRESENTATIVE HAS CONTESTED THAT THE QUESTION OF D EDUCTION OF TDS WAS NOT DEBATABLE AND THE ASSESSEE HAD CLAIMED DEDUCTI ON OF AN EXPENDITURE WHICH WAS NOT AT ALL ALLOWABLE, THEREFORE THE ASSES SEE HAS DELIBERATELY FURNISHED INACCURATE PARTICULARS. HE HAS PLEADED T HAT THE CASE LAWS CITED BY THE LEARNED CIT(APPEALS) WERE RIGHTLY APPLIED BE CAUSE A LEGALLY UNTENABLE AND UNSUSTAINABLE CLAIM OF DEDUCTION IS W ITHIN THE AMBITS OF PENALTY PROVISIONS. 4. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, WE ARE OF THE CONSCIENTIOUS VIEW THAT THIS IS NOT A FIT CASE FOR LEVY OF CONCEALMENT PENALTY. THE ADMITTED FACTUAL POSITION IS THAT AS PER THE PROFIT & LOSS ACCOUNT, THE IMPUGNED AMOUNTS WERE DULY REFLECTED U NDER THE HEAD FREIGHT EXPENSES. THEREFORE, IT IS NOT THE CASE THAT THE FACTS RELATING TO FREIGHT EXPENSES WERE CONCEALED BY THE ASSESSEE. ACCORDING TO US, EVEN THIS IS NOT THE CASE THAT PARTICULARS IN RESPE CT OF FREIGHT EXPENSES WERE INACCURATELY FURNISHED. THE FREIGHT EXPENSE S WERE OTHERWISE AN ALLOWABLE DEDUCTION AND THE REVENUE HAS NOT STATED THAT THOSE ITA NO.2797/AHD /2011 PARESH C.SHAH (HUF) VS. ITO ASST.YEAR 2005-06 - 4 - EXPENDITURE WERE EITHER BOGUS OR THOSE WERE WRONGLY CLAIMED BEING NOT WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS . THE ONLY REASON FOR DISALLOWANCE WAS THE PRESENCE OF AN ANOTHER SECTION WHICH PRESCRIBES THAT IN CASE OF NON-DEDUCTION OF TDS, SUCH AN EXPEN DITURE IS TO BE DISALLOWED. THE PRESENCE OF SECTION 40(A)(IA) APPE ARS TO BE ADHERE TO THE TDS PROVISION, SO THAT THE COLLECTION OF TAX SHOULD BE MADE AT SOURCE ITSELF. FOR SUCH NON-COMPLIANCE OF TDS PROVISIONS , IT WAS UNFAIR ON THE PART OF THE REVENUE TO HOLD THAT THE ASSESSEE HAD C ONCEALED THE INCOME. THE ASSESSEE HAS OFFERED AN EXPLANATION THAT THE AS SESSMENT YEAR UNDER CONSIDERATION, I.E. A.Y. 2005-06 WAS THE FIRST YEAR OF APPLICATION OF THE PROVISIONS OF SECTION 40(A)(IA) AND UNDER BONA FIDE IMPRESSION, AS ALSO UNDER WRONG INTERPRETATION OF THE STATUTE; THE ASSE SSEE HAD INADVERTENTLY CONSIDERED THAT THOSE PROVISIONS WOULD NOT APPLY FO R THE YEAR UNDER CONSIDERATION. WE THEREFORE HOLD THAT THE RELIANCE PLACED BY THE ASSESSEE ON THE AFOREMENTIONED TWO DECISIONS WAS CORRECT AND THAT THE PENALTY PROVISIONS SHOULD NOT BE ATTRACTED ON THE ASSESSEE . WE HOLD ACCORDINGLY AND DIRECT TO DELETE THE PENALTY. GROUND IS ALLOWE D. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. SD/- SD/- ( A.L. GEHLOT ) ( MU KUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 13/ 01 /2012 0,.., .../ T.C. NAIR, SR. PS ITA NO.2797/AHD /2011 PARESH C.SHAH (HUF) VS. ITO ASST.YEAR 2005-06 - 5 - / ( %+1 2 1+ / ( %+1 2 1+ / ( %+1 2 1+ / ( %+1 2 1+/ COPY OF THE ORDER FORWARDED TO : 1. $ / THE APPELLANT 2. %&$ / THE RESPONDENT. 3. + )3 / CONCERNED CIT 4. )3() / THE CIT(A)-III, BARODA 5. 167 %+ , , / DR, ITAT, AHMEDABAD 6. 78 9* / GUARD FILE. /) /) /) /) / BY ORDER, &1+ %+ //TRUE COPY// : :: :/ // / ' ' ' ' ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD 1. DATE OF DICTATION..11.01.2012 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 11.01.2012 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S 13.1.12 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 13.1.12 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER