The ACIT,(OSD) Circle-9, Ahmedabad V. M/s. Saraswati Construction Co., Ahmedabad

ITA 2865/AHD/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 2020 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2005-2006
• Appeal Filed On: 13-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G S SURYAVANSHI SRDR
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Business income; Deemed dividend; Capital receipt
• Section: 50C; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI A.N.PHAUJA, ACCOUNTANT MEMBER ITA NO.2865/AHD/2010 ASSESSMENT YEAR:2005-06 DATE OF HEARING:18.2.11 DRAFTED:21.2.11 ACIT (OSD), CIRCLE- 9, AHMEDABAD V/S. M/S. SARASWATI CONSTRUCTION CO. 309, SAMAN COMPLEX, SATELLITE, AHMEDABAD PAN NO.AAGFM2358H (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI G.S. SURYAVANSHI, SR-DR RESPONDENT BY:- SMT. ARTI N SHAH, AR O R D E R PER SHRI MAHAVIR SINGH, JUDICIAL MEMBER:- THIS APPEAL BY REVENUE IS ARISING OUT OF THE ORDER OF COMMISSIONER OF INCOME-TAX(APPEALS)-XV, AHMEDABAD IN APPEAL NO.CIT( A)-XV/DCIT (OSD / CIR.9/69/08-09 DATED 15-09-2010. THE ASSESSMENT WAS FRAMED BY DCIT (OSD), CIRCLE-9, AHMEDABAD U/S.143(3) OF THE INCOME-TAX AC T, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 26-12-2007 FOR T HE ASSESSMENT YEAR 2005-06. THE PENALTY UNDER DISPUTE WAS LEVIED BY DCIT (OSD) CIRC LE-9, AHMEDABAD U/S 271(1)(C) OF THE ACT VIDE HIS ORDER DATED 17-06-2008. 2. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST THE ORDER OF CIT(A) DELETING PENALTY LEVIED U/S.271(1)(C) OF THE ACT IN RESPECT OF DISALLOWANCE MADE BY ASSESSING OFFICER U/S 40(A)(IA) OF THE ACT FOR NON PAYMENTS OF TDS ON CONTRACT PAYMENTS TO CARTING CONTRACTOR. FOR THIS, REVENUE H AS RAISED THE FOLLOWING EFFECTIVE THREE GROUNDS :- ITA 2865/AHD/2010 A.Y . 2005-06 ACIT (OSD) CIR-9 ABD V. M/S. SARASWATI CONSTRUCTI ON CO. PAGE 2 1) THE LD. COMMISSIONER OF INCOME-TAX(A)-XV, AHMED ABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE PENALTY OF RS.2,04,334 /- LEVIED U/S.271(10(C) IN RESPECT DISALLOWANCE OF RS.5,58,404- MADE U/S.40(A) (IA) OF THE ACT. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A)-XV, AHMEDABAD OUGHT TO HAVE UPHELD THE ORDER OF THE ASS ESSING OFFICER. 3) IT IS THEREFORE, PRAYED THAT THE ORDER OF THE LD . COMMISSIONER OF INCOME-TAX (A)-XV, AHMEDABAD MAY BE SET-ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. THE BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE T HAT ASSESSEE-FIRM IS ENGAGED IN CONSTRUCTION ACTIVITIES AND IT HAS FILED ITS RE TURN INCOME ON 30-11-2005 DECLARING TOTAL INCOME AT RS.36,24,921/-. THE ASSESSING OFFIC ER ISSUED NOTICE U/S.143(2) OF THE ACT AND DURING ASSESSMENT PROCEEDINGS HE FOUND THAT ASSESSEE HAD MADE TDS OF RS.18,115/- FROM GROSS CONTRACT PAYMENT TO CARTING CONTRACTOR OF RS. 5,58,404/-. HOWEVER, TDS AMOUNT WAS NOT DEPOSITED INTO GOVT. EX CHEQUER BEFORE EXPIRY OF TIME PRESCRIBED UNDER SUB-SECTION 1 OF SECTION 200 OF TH E ACT. ACCORDING TO HIM, THE AMOUNT ON WHICH THE TDS HAS BEEN MADE IN VIEW OF SE CTION 40(A)(IA) OF THE ACT BUT NOT DEPOSITED INTO GOVERNMENT EXCHEQUER WITHIN SPEC IFIED TIME, IS NOT ALLOWABLE AS DEDUCTION WHILE COMPUTING THE INCOME CHARGEABLE UND ER THE HEAD PROFIT & GAINS OF BUSINESS OR PROFESSION FOR THE YEAR. THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE VIDE HIS REPLY DATED 19-12-2007 HAS ALSO CONFIRMED THIS FACT AND THE GROSS AMOUNT OF RS.5,58,404/- WAS DISALLOWED AND ADDED BACK TO THE TOTAL INCOME OF THE YEAR U/S.40(A)(IA) OF THE ACT. ACCORDING TO THE ASSESSIN G OFFICER, SINCE THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME INASMUCH AS THE AMOUNT OF RS.5,58,404/- ON WHICH THOUGH TDS WAS MADE THE SAME WAS NOT DEPOS ITED INTO GOVERNMENT ACCOUNT WAS NOT DISALLOWED VOLUNTARILY AND ADDED BA CK TO THE TOTAL INCOME, IN VIEW OF SECTION 40(A)(IA) OF THE ACT AND A SHOW CAUSE NOTIC E U/S.271(1(C) OF THE ACT WAS ISSUED ON 26-12-2007. IN REPLY TO SHOW CAUSE NOTICE THE ASSESSEE VIDE LETTER DATED 12-06-2008 FILED DETAILED SUBMISSIONS BEFORE ASSESS ING OFFICER AND THE RELEVANT PORTION OF THE SAID REPLY IS REPRODUCED AS UNDER:- IN THIS CONNECTION WE SUBMIT THAT WE HAVE NEITHER CONCEALED ANY INCOME NOR FURNISHED INACCURATE PARTICULARS. WE SUBMIT AS UNDE R, 1. WE HAD ALREADY SUBMITTED THE DETAILS OF TDS ALON G WITH OUR TAX AUDIT REPORT. 2. ALSO THIS HARSH PROVISIONS OF SECTION 40(A)(IA) CAME INTO EFFECT FROM A.Y 2005-06 AND EVEN RECENT CIRCULAR HAS ALLOWED SOME C ONCESSION AGAINST SAID PROVISIONS. ITA 2865/AHD/2010 A.Y . 2005-06 ACIT (OSD) CIR-9 ABD V. M/S. SARASWATI CONSTRUCTI ON CO. PAGE 3 3. THE AMOUNT OF TDS IS ONLY RS.18,115/- AND WE HAD ALREADY PAID THE SAME AMOUNT BEFORE DUE DATE OF RETURN. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE REQUEST YOU THAT THE RETURN OF INCOME CAN NOT BE STATED TO BE FALSE UNLE SS THERE IS AN ELEMENT OF DELIBERATENESS IN IT. IT IS POSSIBLE THAT IF THE IN CORRECTNESS OF THE RETURN IS DUE TO HARSH PROVISIONS MADE FROM A.Y 2005006 AND WE D ID NOT INCLUDE A PARTICULAR ITEM IN THE TAXABLE INCOME UNDER BONA FI DE BELIEF THAT THE SAME IS NOT LIABLE SO TO INCLUDE IT, IT WOULD NOT BE RIGHT TO CONDEMN THE RETURN AS A FALSE RETURN INVITING PENALTY. FURTHER WE HAD DISCLOSED A LL THE FACTS AND TRANSACTIONS, BUT DUE TO BONA FIDE BELIEF THE RESULTANT INCOME WH ICH HAS NOT BE INCLUDED IN ITS RETURN, IT DOES NOT AMOUNT TO CONCEALMENT OF IN COME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN VIEW OF ABOVE WE REQUEST YOU TO DROP THE PENALTY PROCEEDINGS. 4. THE ASSESSING OFFICER CONSIDERED REPLY BUT THE S AME WAS FOUND AS IRRELEVANT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, ACCORDI NG TO HIM. IN THIS CASE, AS ALREADY DISCUSSED ABOVE, THOUGH THE ASSESSEE HAD MADE HE FO UND THAT TDS OF RS.18,115/- FROM SUB-CONTRACT PAYMENT TO CARTING CONTRACTOR TO THE TUNE OF RS.5,58,404/- WAS DEDUCTED BUT THE AMOUNT OF TDS WAS NOT DEPOSITED IN TO THE GOVERNMENT ACCOUNT WITHIN THE TIME PRESCRIBED UNDER SUB-SECTION 1 OF S ECTION 200 OF THE ACT AND AS PER THE CLEAR CUT PROVISIONS OF SECTION 40(A)(IA) OF TH E ACT, THE ASSESSEE HIMSELF SHOULD HAVE DISALLOWED AND ADDED BACK THE SAID PAYMENT TO CARTING CONTRACTOR OF RS.5,58,404/- TO HIS TOTAL INCOME OF THE YEAR AND T HEN COULD HAVE CLAIMED THE SAME EXPENSES AS DEDUCTION IN SUBSEQUENT YEAR ON PAYMENT BASIS. THE ASSESSING OFFICER NOTED THAT THIS IS INSPITE OF THE FACT THAT THE ASS ESSEE WAS GUIDED BY A QUALIFIED CHARTERED ACCOUNTANT AND ASSESSEE HAS CONSCIOUSLY D ELIBERATELY AND IN DEFIANCE OF PROVISIONS OF THE ACT FURNISHED INACCURATE PARTICUL ARS OF INCOME AND ASSESSING OFFICER LEVIED THE PENALTY OF RS.2,04,334/- AS AGAI NST MAXIMUM PENALTY LEVIABLE ON RS.6,13,002/-. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A). 5. THE CIT(A) DELETED THE PENALTY BY GIVING FOLLOWI NG FINDINGS IN PARA-3 & 4 OF HIS APPELLATE ORDER:- 3. IT IS SEEN THAT PENALTY HAS BEEN IMPOSED WITH R ESPECT TO ADDITION OF RS.5,58,404 MADE U/S.40(A)(IA) OF THE IT ACT DUE TO LATE PAYMENT OF TDS. 4. AFTER GOING THROUGH RIVAL SUBMISSIONS THE AO IS DIRECTED TO DELETE THE PENALTY IMPOSED U/S.271(1) BECAUSE IN MY VIEW TECH NICAL BREACH OF LAW 271(1)(C) PENALTY IS NOT WARRANTED ALSO BECAUSE TDS HAS BEEN DEPOSITED IN GOVERNMENT ACCOUNT BY THE APPELLANT BEFORE DUE DATE \E OF FILING OF RETURN. ITA 2865/AHD/2010 A.Y . 2005-06 ACIT (OSD) CIR-9 ABD V. M/S. SARASWATI CONSTRUCTI ON CO. PAGE 4 AGGRIEVED, REVENUE CAME IN APPEAL BEFORE TRIBUNAL. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE FACTS A RE UNDISPUTED THAT THE ASSESSEE HAD DEDUCTED TDS OF RS.18,115/- FROM GROSS CONTRACT PAYMENT TO CARTING CONTRACTOR OF RS. 5,58,404/- BUT THE SAME WAS NOT DEPOSITED IN TO GOVT. EXCHEQUER BEFORE EXPIRY OF TIME PRESCRIBED UNDER SUB-SECTION 1 OF SECTION 2 00 OF THE ACT. THE ASSESSEE HAS DEDUCTED THIS AMOUNT ON WHICH THE TDS HAS BEEN MADE IN VIEW OF SECTION 40(A)(IA) OF THE ACT BUT NOT DEPOSITED INTO GOVERNMENT EXCHEQ UER WITHIN SPECIFIED TIME, IS NOT ALLOWABLE AS DEDUCTION WHILE COMPUTING THE INCOME C HARGEABLE UNDER THE HEAD PROFIT & GAINS OF BUSINESS OR PROFESSION FOR THE YEAR. WE FIND FROM THE ORDERS OF THE LOWER AUTHORITIES THAT THERE IS NO ALLEGATION THAT THE PAYMENT OF CATERING EXPENSES ON WHICH TDS IS DEDUCTED BUT NOT PAID TO GOVT. EXCHEQU ER IS NON-GENUINE OR BOGUS. IT IS ALSO A FACT THAT THE LOWER AUTHORITIES HAVE NOT BRO UGHT ANYTHING OR NOT DISPUTED THAT THE PAYMENT IS EXCESSIVE OR UNREASONABLE. THE DISAL LOWANCE IS SIMPLY MADE EITHER FOR NON-DEDUCTION OF TDS IN VIEW OF PROVISIONS OF S ECTION 40(A)(IA) OF THE ACT OR NON- PAYMENT OF TDS DEDUCTED TO THE GOVT. EXCHEQUER. WE FIND THAT THE PROVISIONS OF SECTION 40(A)(IA) ARE DEEMING PROVISION WHICH CREAT ES A LEGAL FICTION. THE LEGAL FICTION CREATED BY SECTION 40(A)(IA) CANNOT BE EXTENDED BEY OND THE DISALLOWANCE OF EXPENDITURE AND CANNOT BE APPLIED FOR INVOKING OF P ROVISIONS OF SECTION 271(1)(C) OF THE ACT FOR LEVYING PENALTY FOR CONCEALMENT OF INCO ME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. LEGAL FICTION CANNOT BE EXTE NDED ANY FURTHER AND HAS TO BE LIMITED TO THE AREA FOR WHICH IT IS CREATED. HON'BL E ANDHRA PRADESH HIGH COURT IN THE CASE OF ADDL. CIT V. DURGAMMA P. (1987) 167 1TR 776 (AP) HELD THAT IT IS NOT POSSIBLE TO EXTEND THE FICTION BEYOND THE FIELD LEG ITIMATELY INTENDED BY THE STATUTE. THE HON'BLE COURT WAS DEALING WITH THE PROVISIONS O F SEC. 171(1) OF THE I.T .ACT IN THE CONTEXT OF WHICH IT WAS HELD THAT JOINT FAMILY SHAL L BE DEEMED TO CONTINUE FOR THE LIMITED PURPOSE OF ASSESSING CASES OF JOINT FAMILIE S WHICH HAVE BEEN HITHERTO ASSESSED AS SUCH. IT IS NOT POSSIBLE TO EXTEND THAT FICTION TO OTHER CASES. SIMILAR VIEW WAS TAKEN BY THE HON'BLE KERALA HIGH COURT IN THE C ASE OF CIT V. KAR VALVES LTD. (1987) 168 ITR 416 (KER.) WHEREIN IT IS HELD THAT LEGAL FICTION IS LIMITED TO THE PURPOSE FOR WHICH THEY ARE CREATED AND COULD NOT BE EXTENDE D BEYOND THAT LEGITIMATE FRAME, HON'BLE KERALA HIGH COURT WAS DEALING WITH THE CASE WHERE ASSESSEE SOUGHT TO TAKE ADVANTAGE OF SEC.41(2) BY SUBMITTING THAT IF LIABIL ITIES ARE NOT LIQUIDATED AND ITA 2865/AHD/2010 A.Y . 2005-06 ACIT (OSD) CIR-9 ABD V. M/S. SARASWATI CONSTRUCTI ON CO. PAGE 5 OUTSTANDING ARE NOT COLLECTED, THEN BUSINESS COULD BE DEEMED TO CONTINUE. THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF CONTROLLER OF ESTATE DUTY V. KRISHNA KUMAR DEVI (1988) 173 ITR 561 (ALL) HELD THAT IN INTERPRETING THE LEGAL FICTION THE COURT SHOULD ASCERTAIN THE PURPOSE FOR WHICH IT WAS CREATED 2ND AFTER DOING SO ASSUME ALL FACTS WHICH ARE LOGICAL TO GIVE EFFECT T O THE FICTION, HON'BLE SUPREME COURT IN CIT V. MOTHER INDIA REFRIGERATION PVT. LTD. (19 85) 155 ITGR 711 (SC) HELD THAT LEGAL FICTIONS ARE CREATED ONLY FOR SOME DEFINITE P URPOSE AND THEY MUST BE LIMITED TO THAT PURPOSE AND SHOULD NOT BE EXTENDED BEYOND THAT LEGITIMATE FIELD. IN CIT V, BHARANI PICTURES (1981) 129 ITR 244 (MAD,) IT IS HE LD THAT LEGAL FICTIONS ARE FOR A DEFINITE PURPOSE AND ARE LIMITED TO THE PURPOSE FOR WHICH THEY ARE CREATED AND SHOULD NOT BE EXTENDED BEYOND ITS LEGITIMATE FIELD. T HE STATUTORY FICTION INTRODUCED IN ONE ENACTMENT CANNOT BE INCORPORATED IN ANOTHER ENACTME NT. THE POINT THAT LEGAL FICTION CANNOT BE EXTENDED TO A NEW FIELD WAS HIGHLIGHTED B Y HON'BLE MADRAS HIGH COURT IN CIT V. RAJAM T.S, (19SS) 125 ITR 207(MAD,) WHEREIN IT IS HELD THAT SECTION 41(2) CREATES A LEGAL FICTION UNDER WHICH THE BALANCING C HARGE IS TREATED AS BUSINESS INCOME CHARGEABLE TO TAX BUT WHEN THIS AMOUNT IS DISTRIBUTED TO SHAREHOLDERS THEN IT WOULD NOT BECOME DEEMED DIVIDEND AND IT WOULD BE ON LY A CAPITAL RECEIPT AND NOT DISTRIBUTION OF ACCUMULATED PROFITS. THUS, A LEGAL FICTION WAS INVOKED IN THE HANDS OF THE ASSESSEE COMPANY AND WAS NOT EXTENDED IN THE HA NDS OF THE SHAREHOLDERS. SIMILARLY, THIS TRIBUNAL IN THE CASE OF ITO V. HARLEY STREET PHARMACEUTICALS LTD. IN ITA NO.2492/AHD/2007 VIDE ORDER DATED 16-03-2010 HAS INTERPRETED SECTION 50C BY STATING THAT IN THE PRESENT CASE, SECTION 50C CREA TES A LEGAL FICTION FOR TAXING CAPITAL GAINS IN THE HANDS OF THE SELLER AND IT CANNOT BE E XTENDED FOR TAXING THE DIFFERENCE BETWEEN APPARENT CONSIDERATION AND VALUATION DONE B Y STAMP VALUATION AUTHORITIES AS UNDISCLOSED INVESTMENT U/S 69. IN FACT, SECTION 69 ITSELF IS A LEGAL FICTION WHEREBY INVESTMENT INTO AN ASSET IS TREATED AS INCOME IF IT IS NOT DISCLOSED IN THE REGULAR BOOKS OF ACCOUNT. NO FURTHER LEGAL FICTION FROM ELS EWHERE IN THE STATUTE CAN BE BORROWED TO EXTEND THE FIELD OF SECTION 69. IT IS F OR THE LEGISLATURE TO INTRODUCE LEGAL FICTION TO OVERCOME DIFFICULTY IN TAXING CERTAIN RE CEIPTS OR EXPENDITURE WHICH OTHERWISE WAS NOT POSSIBLE UNDER NORMAL PROVISIONS OF THE ACT . IT IS WITH THIS PURPOSE THAT WHEN IT WAS FOUND DIFFICULT TO PREVENT TAX EVASION BY UN DERSTATING APPARENT SALE CONSIDERATION AS COMPARED TO THE VALUATION MADE BY STAMP VALUATION AUTHORITIES FOR THE PURPOSES OF LEVYING STAMP DUTY THEN IT WAS THOU GHT NECESSARY TO INTRODUCE SECTION 50C FOR SUBSTITUTING APPARENT SALE CONSIDER ATION BY VALUATION DONE BY STAMP ITA 2865/AHD/2010 A.Y . 2005-06 ACIT (OSD) CIR-9 ABD V. M/S. SARASWATI CONSTRUCTI ON CO. PAGE 6 VALUATION AUTHORITIES. THIS FICTION CANNOT BE EXTEN DED ANY FURTHER AND, THEREFORE, CANNOT BE INVOKED BY ASSESSING OFFICER TO TAX THE D IFFERENCE IN THE HANDS OF THE PURCHASER. HON'BLE MADRAS HIGH COURT IN CGT V, R. D AMODARAN (2001) 247 ITR 698 HELD THAT STAMP VALUATION AUTHORITIES HAVE THEIR OW N METHOD OF EVALUATING THE PROPERTY. MERELY BECAUSE FOR THE PURPOSE OF STAMP D UTY, PROPERTY IS VALUED AT HIGHER COST, IT CANNOT BE SAID THAT ASSESSES HAS MADE MORE PAYMENT THAN WHAT IS STATED IN THE SALE DEED. THE HON'BLE ALLAHABAD HIGH COURT IN DINESH KURNAR MITTAL V. ITO (1992)193 ITR 770 (ALL.) QUASHED THE ORDER OF AUTHORITIES BELOW, WHEREIN HALF OF THE DIFFERENCE BETWEEN THE AMOUNT PAID A ND THE VALUE FOR PURPOSES OF STAMP DUTY WAS ADDED AS INCOME OF THE ASSESSEE BY T HE ASSESSING OFFICER. IT IS HELD THAT THERE IS NO RULE OF LAW TO THE EFFECT THAT THE VALUE DETERMINED FOR THE PURPOSES OF STAMP DUTY IS THE ACTUAL CONSIDERATION PASSED BE TWEEN THE PARTIES TO THE SALE. IN THE PRESENT CASE THE ASSESSING OFFICER HAS APPLIED THIS PROVISION OF SECTION 50C FOR THE COMPUTATION OF UNEXPLAINED INVESTMENT U/S.69B O F THE ACT AND WHICH IS NOT PERMISSIBLE UNDER THE ACT. APART FROM THE STAMP DUT Y VALUATION, THERE IS NOTHING ON RECORD WHICH SUGGESTS THAT THE REVENUE HAS PROVED T HAT THE ASSESSEE HAS ACCEPTED OVER AND ABOVE, WHAT HAS BEEN RECORDED AS PURCHASE CONSIDERATION OF THE LAND IN THE INSTRUMENT I.E. THE SALE DEED. WE ARE IN FULL AGREEMENT WITH THE ARGUMENTS OF THE ASSESSEE THAT SECTION 50C IS NOT APPLICABLE IN THE CASE OF PURCHASER AND THIS PROVISION BEING A DEEMING PROVISION WILL APPLY FOR DETERMINING THE FULL VALUE OF CONSIDERATION AS A RESULT OF TRANSFER OF CAPITAL AS SETS FOR THE PURPOSES OF COMPUTATION OF CAPITAL GAINS U/S.48 OF THE ACT. WE FURTHER FIN D THAT THERE IS NO EVIDENCE ON RECORD TO SHOW THAT THE CONSIDERATION OVER AND ABOVE, WHAT HAS BEEN RECORDED IN THE SALE DEED, HAS BEEN MADE BY THE ASSESSEE AND IN THE ABSE NCE OF THE SAME, NO ADDITION OF UNDISCLOSED INVESTMENT CAN BE MADE BY INVOKING T HE PROVISION OF SECTION 69B OF THE ACT. 5. IN THE PRESENT CASE BEFORE US, THE FACTS ARE UND ISPUTED THAT THE ASSESSEE HAD DEDUCTED TDS FROM GROSS CONTRACT PAYMENT TO CARTING CONTRACTOR BUT THE SAME WAS NOT DEPOSITED INTO GOVT. EXCHEQUER BEFORE EXPIRY OF TIME PRESCRIBED UNDER SUB- SECTION 1 OF SECTION 200 OF THE ACT IN VIEW OF SECT ION 40(A)(IA) OF THE ACT. WE FIND THAT THIS IS NOT ALLOWABLE AS DEDUCTION WHILE COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD PROFIT & GAINS OF BUSINESS OR PROFESSION FOR THE YEAR. WE FIND FROM THE ORDERS OF THE LOWER AUTHORITIES THAT THERE IS NO ALLEGATIO N THAT THE PAYMENT OF CATERING ITA 2865/AHD/2010 A.Y . 2005-06 ACIT (OSD) CIR-9 ABD V. M/S. SARASWATI CONSTRUCTI ON CO. PAGE 7 EXPENSES ON WHICH TDS IS DEDUCTED BUT NOT PAID TO G OVT. EXCHEQUER IS NON-GENUINE OR BOGUS. IT IS ALSO A FACT THAT THE LOWER AUTHORIT IES HAVE NOT BROUGHT ANYTHING OR NOT DISPUTED THAT THE PAYMENT IS EXCESSIVE OR UNREASONA BLE. THE DISALLOWANCE IS SIMPLY MADE EITHER FOR NON-DEDUCTION OF TDS IN VIEW OF PRO VISIONS OF SECTION 40(A)(IA) OF THE ACT OR NON-PAYMENT OF TDS DEDUCTED TO THE GOVT. EXC HEQUER. IN VIEW OF THE ABOVE DISCUSSION, THAT THE LEGAL FICTION CREATED BY SECTI ON 40(A)(IA) WILL NOT APPLY TO THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT, THE DIS ALLOWANCE MADE SIMPLY BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT WILL NOT ATTRACT PENALTY FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME BECAUSE THERE IS N O INACCURATE PARTICULARS OF INCOME IN THE RETURN. ACCORDINGLY, WE CONFIRM THE ORDER OF CIT(A) DELETING THE PENALTY AND THIS ISSUE OF THE REVENUES APPEAL IS DISMISSED. 6. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 22/02/2011 SD/- SD/- (A.N.PHAUJA) (MAHAVIR SI NGH) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, DATED : 22/02/2011 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)-XV, AHMEDABAD 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD