DALCHAND H GUPTA, MUMBAI V. ASST CIT 19(2), MUMBAI

ITA 2982/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88303 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 16-02-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 17-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHILENDRA YADAV
• Assessee Lawyers: JITENDRA SINGH
• Section: 194C

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D , MUMBAI . . , , . , , BEFORE SHRI H.L.KARWA , PRESIDENT AND SHRI D.KARUNAKARA RAO , AM ITA NO. 2982 /MUM/201 3 : ASST.YEAR 200 5 - 200 6 SHRI DALCHAND H. GUPTA 3, CYNTHIA MAIN AVENUE S.V.ROAD, SANTACRUZ (WEST) MUMBAI 400 054. PAN :AAEPG3382M. / VS. THE ASST.COMMISSIONER OF INCOME - TAX CIRCLE 19(2) MUMBAI. ( / APPELLANT) ( / RESPONDENT) /APPELLANT BY : S/ SHRI JITENDRA SINGH & MS.NEHA PARANJPE /RESPONDENT BY : SHRI AKHILENDRA YADAV / DATE OF HEARING : 16.02.2015 / DATE OF PRONOUNCEMENT : 20 .02.2015 / O R D E R PER H.L.KARWA ( PRESIDENT ) : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMI SSIONER OF INCOME - TAX (APPEALS) 30 , MUMBAI, DATED 15 TH FEBRUARY, 2013 , IN CONFIRMING THE PENALTY OF RS. 17,27,000 , LEVIED U/S 271(1)(C) OF THE INCOME - TAX ACT, 1961 (IN SHORT THE ACT ) , FOR THE ASSESSMENT YEAR 2005 - 200 6 . 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND HAS IN RECEIPT OF INCOME FROM HOUSE PROP ERTY AND INCOME FROM BUSINESS. FOR THE ASSESSMENT YEAR 2005 - 2006, THE ASSESSEE FILED HIS RETURN ITA NO. 2982 /MUM/201 3 . SHRI DALCHAND H.GUPTA. 2 OF INCOME ON 28 TH OCTOBER, 2005 DECLARING TOTAL INCOME AT RS.83,05,909. THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT WAS COMPLETED U/S 14 3(3) OF THE AC T ON 28.12.2007 ASSESSING THE TOTAL INCOME AT RS.1,60,44,350. THE ASSESSEE IS A PROPRIETOR OF M/S.D.C.GUPTA & SONS, M/S.D.C.GUPTA & SONS (PUNE DIVISION) AND M/S.GUPTA WEIGH BRIDGE. M/S.D.C.GUPTA & SONS AND ITS PUNE DIVISION ARE IN THE BUSINESS OF GIVING BU SES ON HIRE TO VARIOUS COMPANIES. M/S.GUPTA WEIGH BRIDGE PROVIDES WEIGHMENT SERVICES TO DIFFERENT COMMERCIAL VEHICLES AND CARRIERS OF GOODS. DURING THE YEAR UNDER CONSIDERATION IN THE PUNE DIVISION, TRANSPORT BUSES WERE BEING PLIED BY THE ASSESSEE OF PUNE MUNICIPAL TRANSPORT IN PURSUANCE OF A CONTRACT TO THIS EFFECT BETWEEN THE ASSESSEE AND THE PUNE MUNICIPAL TRANSPORT . THE ASSESSEE IN TURN HAD UNDERTAKEN THE SERVICES OF ONE M/S.MAYURESH FLEETS OF PUNE ON SUB - CONTRACT BASIS IN ORDER TO MEET THE DEMAND FOR B USES TO BE PLIED FOR THE PUNE MUNICIPAL TRANSPORT. THE ASSESSING OFFICER OBSERVED THAT FROM THE LEDGER OF HIRE CHARGES PAID TO M/S.MAYURESH FLEETS ON VARIOUS DATES THAT NO TDS PAYMENTS WERE MADE TO THE TREASURY WITHIN THE TIME LIMIT THOUGH THE SAME WAS CLE ARLY WARRANTED IN TERMS OF SECTION 194C OF THE ACT. ACCORDINGLY, THE A.O. DISALLOWED THE SUM OF RS.51,29,478 PAID TO M/S.MAYURESH FLEETS, AS BUSES HIRE CHARGES U/S 40(A)(IA) OF THE ACT. THE A.O. INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT, AS IN THIS CASE ON THE ABOVE DISALLOWANCE NO SUO MOTO DISALLOWANCE WAS MADE U/S 40(A)(IA) ALTHOUGH CLEARLY WARRANTED. THE ADDITION MADE BY THE A.O. IN THE ASSESSMENT ORDER OF THE ABOVE AMOUNT WAS CONFIRMED BY THE CIT(A) VIDE HIS ORDER DATED 14 TH MAY, 2009. THE A.O. VIDE HIS LETTER DATED 15 TH MARCH, 2011 REQUIRED THE ASSESSEE TO SUBMIT HIS WRITTEN EXPLANATION IN CONNECTION WITH THE PENALTY PROCEEDINGS INITIATED U/S 271(1)(C) OF THE ACT. ITA NO. 2982 /MUM/201 3 . SHRI DALCHAND H.GUPTA. 3 HOWEVER, THE ASSESSEE DID NOT FILE ANY WRITTEN EXPLANATION AS CALLED FOR IN RESPECT OF THE DEFAULT COMMITTED U/S 271(1)(C) OF THE ACT. THE A.O. TOOK A VIEW THAT THE ASSESSEE HAS FILED INACCURATE PARTICULARS OF INCOME AND THEREBY CONCEALED PARTICULARS OF SUCH INCOME WITHIN THE MEANING OF SECTION 271(1)(C) READ WITH E XPLANATION 1 TO THIS SECTION. ACCORDINGLY, THE A.O. IMPOSED PENALTY OF RS.17,27,000 U/S 271(1)(C) OF THE ACT. 3. ON APPEAL, THE CIT(A) CONFIRMED THE PENALTY OBSERVING THAT THE TDS HAS NOT BEEN DEDUCTED AND YET DEDUCTION IN THE COMPUTATION OF INCOME WAS CLAIMED. CONSEQUENTLY, INACCURATE PARTICULARS OF INCOME HAD BEEN FURNISHED. ACCORDING TO THE CIT(A), NO EXPLANATION WAS OFFERED BY THE ASSESSEE BEFORE THE A.O., AND THEREFORE, THE DEEMING FICTION OF EXPLANATION (A) IS DEFINITELY ATTRACTED TO THE FACTS OF THE PRESENT CASE. HE, THEREFORE, CONFIRMED THE PENALTY. 4. WE HAVE HEARD SHRI JITENDRA SINGH, THE LEARNED COUNSEL FOR THE ASSESSEE AND SHRI AKHILENDRA YADAV, THE LEARNED DEPARTMENTAL REPRESENTATIVE, AT LENGTH. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE FOLLOWING DECISIONS O F THE TRIBUNAL : - ( I ) ACIT V. M/S.SEAWAYS SHIPPING LIMITED, ITA NO.80/H/2011 FOR ASST.YEAR 2005 - 2006, ORDER DATED 17 TH JUNE, 2011, HYDERABAD A BENCH, HYDERABAD. ITA NO. 2982 /MUM/201 3 . SHRI DALCHAND H.GUPTA. 4 ( II ) M/S.DEVPRAS INSTITUTE V. ITO, ITA NO.1743/AHD/2012 FOR ASSESSMENT YEAR 2005 - 2006 , ORDER DATED 23TH NOVEMBER, 2012, AHMEDABAD C BENCH, AHMEDABAD. 4.1 IN VIEW OF THE ABOVE DECISIONS, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN THIS CASE NO PENALTY U/S 271(1)(C) IS LEVIABLE. ACCORDINGLY, HE SUBMITTED THAT THE IMPUGNED PENALTY MAY BE DELETED. 4.2 IT IS OBSERVED THAT IN THE INSTANT CASE, PENALTY IS LEVIED FOR DISALLOWANCE OF EXPENDITURE U/S 40(A)(IA) OF THE ACT. WE FIND THAT A SIMILAR ISSUE CAME UP FOR CONSIDERATION BEFORE THE ITAT HYDERAB AD A BENCH, HYDERABAD IN THE CASE OF ACIT V. M/S.SEAWAYS SHIPPING LIMITED (SUPRA). THE TRIBUNAL RELYING ON THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF CIT V. RELIANCE PETRO P RODUCTS P VT. LTD. [(20 10 ) 3 22 ITR 158 (SC)] , HELD AS UNDER: - 5. AT THE TIME OF HEARING ON 16.6.2011, NONE APPEARED ON BEHALF OF THE ASSESSEE. WE HEARD THE DEPARTMENTAL REPRESENTATIVE. IN THIS CASE, PENALTY IS LEVIED FOR DISALLOWANCE OF EXPENDITURE U/S 40(A)(IA) OF THE INCOME - TAX ACT. NON - DEDUCTION OF TDS BY THE ASSESSE E 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 INCOME. THE ASSESSEE HAS FAILED TO DEDUCT TDS WHICH RESULTED IN DISALLOWANCE OF EXPENDITURE. IN OU R OPINION, THE MISTAKE COMMITTED BY THE ASSESSEE WAS COMPENSATED BY DISALLOWING THE 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 CONCEALMENT OF PARTICULARS OF INCOME OF THE ASSESSEE OR THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF ITS INCOME. PRESENT IS NOT THE CASE OF ITA NO. 2982 /MUM/201 3 . SHRI DALCHAND H.GUPTA. 5 CONCEALMENT OF INCOME OR IT IS NOT THE CASE OF REVENUE THAT THE ASSESSEE HAS FURNISHED INACCURATE P ARTICULARS 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 2 71 (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 VIEW OF THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT AND FOR THAT REASON, EXPENDITURE IS DISALLOWED. PENALTY CANNOT BE LEVIED FOR MERE MAKING OF A CLAIM OF THE EXPENDITURE WHICH IS NOT SUSTAINABLE AND DELETION OF PENALTY BY THE CIT(A) IS JUSTIFIED. WE PLACE RELIANCE ON THE JUDGMENT OF THE HON BLE SUPREME COURT IN THE CASE OF CI T V. RELIANCE PETRO PRODUCTS (P) LTD. (322 ITR 158 (SC). ACCORDINGLY THE GROUND RAISED BY THE REVENUE HOLDS NO MERIT. 4.3 AT THE TIME OF HEARING OF THE APPEAL, NO CONTRARY DECISION ON THE ISSUE IN HAND WAS BROUGHT TO OUR NOTICE BY THE REVENUE. IN OUR CO NSIDERED OPINION, THE DECISION OF THE ITAT HYDERABAD BENCH REFERRED TO ABOVE IS SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CASE. RESPECTFULLY FOLLOWING THE ABOVE DECISION, WE HOLD THAT LEVY OF PENALTY U/S 271(1)(C) OF THE ACT, IS NOT JUSTIFIED IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE . M ERELY BECAUSE THE ASSESSEE HAS CLAIMED CERTAIN EXPENDITURE AND THAT EXPENDITURE IS NOT ELIGIBLE IN VIEW OF THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT, AND FOR THAT REASON THE EXPENDITURE IS DISALLOWED, PENALTY CANNOT BE LEVIED FOR MERE MAKING OF A CLAIM OF THE EXPENDITURE, WHICH IS NOT SUSTAINABLE AND HENCE NO PENALTY U/S 271(1)(C ) OF THE ACT, FOR CONCEALING OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME, IS LEVIABLE. ITA NO. 2982 /MUM/201 3 . SHRI DALCHAND H.GUPTA. 6 5 . IN THE RESULT, ASSESSEE S APPEAL IS ALLOWED . ORDER PRONOUNCED ON THIS 20 TH DAY OF FEBRUARY, 2015 . SD/ - SD/ - ( D. KARUNAKARA RAO ) ( H.L.KARWA ) / ACCOUNTANT MEMBER / PRESIDENT MUMBAI; DATED : 20 TH FEBRUARY, 2015 . DEVDAS* / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT , MUMBAI. 4. / CIT(A) - 30 , MUMBAI 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI