ANILKUMAR RAVIRAJU CHINTALEPATI, MUMBAI V. ITO 19(3)(1), MUMBAI

ITA 2909/MUM/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5370 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 24-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARKAMAL SOHI
• Assessee Lawyers: ASHOK L SHARMA
• Keywords: Non-deduction of tax; TDS; Set aside
• Section: 271(1)(c); 40(a)(ia)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI BEFORE HONBLE JUSTICE(R) SHRI P.P.BHATT, PRESIDENT AND G.S. PANNU, VICE PRESIDENT ITA NO.2909/MUM/2017 ANIL KUMAR RAVIRAJU CHINTALEPATI, B-3, ANUBHAV ZAVERI ROAD, MULUND(W). PAN NO.ACWPC 0009 K : (A.Y : 2005-2006) ITO 19(3)(1), NOW WITH 23(10(2), MUMBAI (APPELLANT) VS . (RESPONDENT) APPELLANT BY : SHRI ASHOK L SHARMA, AR RESPONDENT BY : MS HARKAMAL SOHI, DR DATE OF HEARING : 04/04/2019 DATE OF PRONOUNCEMENT : 31/05/2019 O R D E R PER G.S. PANNU, VP : THE CAPTIONED APPEAL FILED BY THE ASSESSEE PERTAIN ING TO ASSESSMENT YEAR 2005-06 IS DIRECTED AGAINST AN ORDE R PASSED BY CIT(A)-32, MUMBAI DATED 28.2.2017, WHICH IN TURN AR ISES OUT OF AN ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 28. 3.2013. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS OF THE CASE THE AO ERRED IN LEVYIN G AND LD CIT(A) IN CONFIRMING ON A SUM OF RS.16,97,627/- WHICH WAS ADDITION ON ACCOUNT OF NON-DEDUCTION OF TAX UNDER SECTION 40(A) (IA) AND SUCH ADDITION WAS PROCEDURAL IN NATURE. 2 2909/MUM /2017 A.Y. 2005-06 2. ON THE FACTS OF THE CASE, THE AO ERRED IN LEVYIN G AND LD CIT(A) IN CONFIRMING ON A SUM OF RS.7,64,520/- ON ACCOUNT OF UNDISCLOSED SALES ON THE BASIS OF FORM 26AS. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE IS IN THE BUSINESS OF AD FILMS AND RELEASE OF SAME IN MEDIA. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S.143(3) OF THE I.T.ACT, INTER ALIA, MAKING VARIOUS ADDITIONS/DISALLOWANCES. ON APPEAL, THE CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE BY UPHOLDING THE ADDITIONS MADE UNDER SECTION 40(A)(IA) OF THE ACT OF RS.16,97,627/ - AND ON ACCOUNT OF DISCREPANCY IN SALES MADE WITH M/S HINDUSTAN LEVER LTD., ON THE BASIS OF 26AS OF RS.7,64,520/-. 4. THE ASSESSING OFFICER INITIATED PENALTY PROCEEDI NGS U/S.271(1)(C) OF THE ACT FOR CONCEALMENT OF INCOME BY FURNISHING INACCURATE PARTICULARS OF INCOME AND REQUIRED THE ASSESSEE TO SHOW CAUSE AS TO WHY PENALTY SHOULD NOT BE IMPOSED FOR FURNISHING I NACCURATE PARTICULARS OF INCOME. SINCE, THERE WAS NO COMPLIANCE FROM THE ASSESSEE, THE ASSESSING OFFICER LEVIED PENALTY OF RS.16,97,627/- FOR THE DISALLOWANCE U/S.40(A)(IA) OF THE ACT AND RS.7,64,520/- FOR THE DISALLOWANCE OF RS.7,64,520/-. 5. ON APPEAL, THE CIT(A) CONFIRMED THE LEVY OF PENA LTY OF RS.16,97,627/- ON THE GROUND THAT THE ASSESSEE HAS ADMITTED THE DISALLOWANCE, WHICH ITSELF PROVES THAT THE ASSESSEE HAS MADE INCORRECT CLAIM OF EXPENSES. AS REGARDS PENALTY OF RS.7,64,5 20/-, THE CIT(A) OBSERVED THAT THE ASSESSEE HAS NOT FURNISHED ANY EV IDENCE FROM M/S. HINDUSTAN UNILEVER LTD.,/M/S. BERGER PAINTS LTD., T O CONFIRM THE NATURE OF DISCREPANCY AND, HENCE, THE PENALTY WAS CONFIRME D. 6. BEING AGGRIEVED BY THE PENALTY ORDER, THE ASSESS EE IS IN APPEAL BEFORE US. 7. AT THE TIME OF HEARING, LD A.R. OF THE ASSESSEE SUBMITTED THAT THE ADDITION ON ACCOUNT OF NON-DEDUCTION OF TAX U/S.40( A)(IA) OF THE ACT ARE PROCEDURAL IN NATURE AND UNDER NO CIRCUMSTANCES REP RESENTS 3 2909/MUM /2017 A.Y. 2005-06 CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS. HE SUBMITTED THAT THE TAX WAS PAID IN THE YEAR 2012-13 AND WAS CLAIMED AS EXPENSES IN THAT YEAR. WITH REGARD TO ADDITION ON ACCOUNT OF UNDISCLOSED SALES AS REFLECTED IN FORM 26AS, LD A.R . SUBMITTED THAT IN THE CASE OF M/S. BERGER PAINTS LTD.,., SAID AMOUNT WAS ACCOUNTED FOR IN FINANCIAL YEAR 2003-04 AND IN CASE OF M/S. HINDUSTA N UNILEVER LTD., ON SUCH AMOUNT ERRONEOUSLY. LD A.R. ALSO SUBMITTED TH AT THE PENALTY PROCEEDINGS ARE SEPARATE FROM THE ASSESSMENT PROCEE DINGS AND ALL ADDITIONS ARE NOT LIABLE FOR PENALTY. LD A.R. ALSO REFERRED THE FOLLOWING DECISIONS FOR THE PROPOSITION THAT IF THERE IS DISA LLOWANCE U/S.40(A)(IA), NO PENALTY U/S.271(1)(C) CAN BE LEVIED. 1 ATUL SHAMJI BHARANI HUF ITA NO. 6380/MUM/2013 DT 12.04.2017 (MUMBAI A BENCH) 2. RAMKRISHNA SHETTY VS ACIT ITA NO. 7142/MUM/2011 DT 11.12.2013 (MUMBAI D BENCH 3. TANUSHRI BASU VS ACIT MUMBAI- ITA NO. 2922/MUM/2 012 DT 22.05.2013 E- BENCH, MUMBAI 4. ACIT CIRCLE 13(1) NEW DELHI VS NATIONAL PROJECT CONSTRUCTIONS AND CORPORATION LTD- ITA NO 6014/ DEL/2013 AND CO N O. 133/DEL/2014 DT 15.02.2016 E BENCH DELHI. 5. ACIT VS MADVERSITY ONLINE LTD 2012 27 TAXMANN.CO M 109 HYDERABAD DT 23.11.2012. 6. SYNDICATE LABELS VS ACIT CIRCLE 38(1) NEW DELHI SMC NEW DELHI. 7. DEVPRAS INSTITUTE VS ITO WARD 2(2) BARODA, ITA N O. 1743/AHD/2012 DT 23.11.2012. 8. ON THE OTHER HAND, LD D.R. SUPPORTED THE ORDER O F THE CIT(A). 9. WE HAVE CONSIDERED SUBMISSIONS OF LD REPRESENTATIV ES OF PARTIES AND PERUSED ORDERS OF AUTHORITIES BELOW. WE FIND TH AT THE ASSESSEE HAS COME IN APPEAL AGAINST THE PENALTY U/S.271(1)(C), W HICH HAS BEEN CONFIRMED BY THE CIT(A) ON TWO ISSUES I.E. (I) ADDI TION MADE 4 2909/MUM /2017 A.Y. 2005-06 U/S.40(A)(IA) OF THE ACT AND ON ACCOUNT OF UNDISCLO SED SALES AS REFLECTED IN 26AS STATEMENT. WITH REGARD TO THE PENALTY MADE FOR THE ADDITION U/S.40(A)(IA) OF THE ACT, WE FIND THAT THE ASSESSIN G OFFICER HAS LEVIED PENALTY U/S.271(1)(C) OF THE ACT AS THE ASSESSEE FA ILED TO DEDUCT TDS. IN THIS CASE, THE TAX WAS PAID IN THE YEAR 2012-13 AND WAS CLAIMED AS EXPENSES IN THAT YEAR ONLY. WE OBSERVE THAT THE GE NUINENESS OF THE CLAIM OF THE ASSESSEE HAS NOT BEEN DISPUTED BY THE DEPARTMENT. THEREFORE, IT CANNOT BE SAID THAT ASSESSEE HAS CLAI MED EXPENSES WHICH ARE FALSE OR NOT GENUINE. THE ASSESSEE HAS FURNISHE D ALL THE RELEVANT FACTS CONCERNING THE CLAIM MADE BY IT IN THE RETURN FILED. THE AO HAS LEVIED PENALTY IN RESPECT OF SAID AMOUNT MERELY BEC AUSE SAID CLAIM OF THE ASSESSEE WAS DISALLOWED U/S.40(A)(IA) OF THE AC T AS ASSESSEE FAILED TO DEDUCT TDS THEREON. 10. SIMILARLY, AS REGARDS TO PENALTY MADE ON ACCOUN T OF UNDISCLOSED SALES AS REFLECTED IN FORM 26AS, IT IS THE CONTENTI ON OF THE ASSESSEE THAT IN THE CASE OF BERGER PAINTS LTD., SAID INCOME WAS ACCOUNTED FOR IN FINANCIAL YEAR 2003-04 AND IN THE CASE OF HINDUSTAN UNILEVER LTD., THE AMOUNT WAS WRITTEN OFF AS DISCOUNT AND TAX WAS DEDU CTED ON SUCH AMOUNT ERRONEOUSLY. 11. THE APEX COURT IN THE CASE OF RELIANCE PETROPRODUCTS LTD (SUPRA) HAS HELD THAT A MERE MAKING OF THE CLAIM WHICH IS NOT SUSTAINABLE IN THE LAW, BY ITSELF WILL NOT AMOUNT T O FURNISHING INACCURATE PARTICULARS OF INCOME. IN THE PRESENT CASE, ADMITTE DLY, ASSESSEE MADE A CLAIM BUT THE SAME WAS REJECTED AND DISALLOWED NOT FOR THE REASON THAT THE CLAIM WAS NOT GENUINE OR WAS FABRICATED BUT IN VIEW OF PROVISIONS OF LAW THAT ASSESSEE DID NOT DEDUCT TDS THEREON. WE AR E OF THE CONSIDERED THAT VIEW THAT THE RATIO OF JUDGMENT OF HONBLE APE X COURT IN THE CASE OF RELIANCE PETROPRODUCTS LTD (SUPRA) SQUARELY APPLIES TO THE FACTS OF THE CASE BEFORE US AND, THEREFORE, LEVY OF PENALTY IS NOT JUSTIFIED. WE ALSO FIND THAT THE DECISIONS RELIED ON BY THE ASSES SEE WITH REGARD TO 5 2909/MUM /2017 A.Y. 2005-06 PENALTY IMPOSED FOR THE DISALLOWANCE U/S.40(A)(IA) OF THE ACT SUPPORT THE STAND OF THE ASSESSEE. WE ALSO FIND THAT THE H ONBLE P&H HIGH COURT IN THE CASE OF PCIT VS. TORQUE PHARMACEUTICALS (2016) 389 ITR 46 (P&H), WHEREIN, THE HONBLE HIGH COURT HAS OBSER VED AS UNDER: '4. THE PRIMARY CHALLENGE IN THIS APPEAL IS TO THE CANCELLATION OF PENALTY ON ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF EXPENDITURE UNDER SECTION 40(A)(IA) OF THE ACT. THE ASSESSEE HAD MADE A CLAIM OF DEDUCTION IN THE RETURN OF INCOME. NO FINDING HAS BEEN RECORDED BY THE AUTHORITIES BELOW THAT THE CLA IM MADE BY THE ASSESSEE IS MALAFIDE. IT HAS BEEN CATEGORICALLY RECORDED BY THE TRIBUNAL AFTER EXAMINING THE ENTIRE MATERIAL ON RECORD THAT THE CIT(A) HAD RIGHTLY CANCELLED THE PENALTY AGAINS T THE ASSESSEE. IT WAS FURTHER RECORDED THAT THE ASSESSEE MADE A BO NAFIDE CLAIM OF DEDUCTION OF THE EXPENDITURE AND EVEN THOUGH IT WAS NOT ACCEPTABLE TO THE REVENUE WOULD NOT LEAD TO THE CON CLUSION THAT THE ASSESSEE HAD CONCEALED THE PARTICULARS OF INCOM E OR FILED INACCURATE PARTICULARS OF INCOME. 12. AS REGARDS TO THE PENALTY MADE U/S.271(1)(C) FO R THE UNACCOUNTED SALES REFLECTED IN FORM 26AS, WE FIND THAT IN THE CASE O F BERGER PAINTS LTD., SAID INCOME WAS ACCOUNTED FOR I N FINANCIAL YEAR 2003-04 AND IN THE CASE OF HINDUSTAN UNILEVER LTD., THE AMOUNT WAS WRITTEN OFF AS DISCOUNT AND TAX WAS DEDUCTED ON SUC H AMOUNT ERRONEOUSLY. THEREFORE, IN OUR VIEW, T HE ASSESSEE HAS EXPLAINED THE ABOVE DIFFERENCE IN THE RECEIPTS AS PER THE DETAILS SUBMITTED BEFORE THE AUTHORITIES BELOW AND THE DETAILS NOTED IN 26AS. I T IS WELL SETTLED LAW THAT QUANTUM AND PENALTY PROCEEDINGS ARE INDEPENDEN T AND DISTINCT PROCEEDINGS. EVEN IF THE ADDITION IS AGREED BY THE ASSESSEE AND IF THE ASSESSEE IS ABLE TO EXPLAIN THE ADDITION, THEN, PEN ALTY MAY NOT BE LEVIABLE IN THE FACTS AND CIRCUMSTANCES OF THE CASE . THE ABOVE FACTS CLEARLY INDICATE THAT THE EXPLANATION OF ASSESSEE A T THE PENALTY STAGE WAS FACTUALLY CORRECT BASED ON THE MATERIAL ON RECO RD AND ASSESSEE SUCCESSFULLY EXPLAINED THE ADDITION SO MADE WHICH I S THE BASIS FOR LEVY OF THE PENALTY. SINCE THE DIFFERENCE IS RECONCILED AND CLAIM OF ASSESSEE HAVE NOT BEEN DOUBTED OR REJECTED, THEREFORE, LD. C IT(A) WAS NOT 6 2909/MUM /2017 A.Y. 2005-06 JUSTIFIED IN CONFIRMING THE LEVY OF PENALTY. CONSID ERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT SINCE THE ASSESSEE EXPLAINED THE ABOVE ADDITION, THEREFORE, P ENALTY NEED NOT BE IMPOSED IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 13. IN VIEW OF FOREGOING DISCUSSION, AND RESPECTFUL LY FOLLOWING THE DECISIONS RELIED UPON BY THE ASSESSEE BEFORE US, WE SET ASIDE THE ORDER OF THE CIT(A) CONFIRMING THE LEVY OF PENALTY U/S.27 1(1)(C) OF THE ACT AND ALLOW THE APPEAL OF THE ASSESSEE. 14. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. PRONOUNCED ON 31/05/2019 SD/- SD/- (JUSTICE P.P. BHATT) PRESIDENT (G.S. PANNU) VICE PRESIDENT MUMBAI, DATE : 31/05/2019 B.K.PARIDA, SR.PS COPY TO : 1) THE APPELLANT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, F BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, MUMBAI