Shri Prakashchandra S. Soni, Ahmedabad V. The ACIT, Circle-10, Ahmedabad

ITA 3008/AHD/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9113 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 09-02-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 27-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEEPAK SUTARIA
• Keywords: Deemed dividend
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENC H (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI S. S. GODARA, JUDICIAL MEMBER) ITA. NO: 3008/AHD/2015 (ASSESSMENT YEAR: 2009-10) PRAKASHCHANDRA S. SONI 209-201, NATIONAL PLAZA, OPP. LAL BUNGLOWS, C.G. ROAD, AHMEDABAD V/S ASSTT. CIT, CIRCLE-10, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: ACNPS4516Q APPELLANT BY : SHRI PARIN SHAH, AR RESPONDENT BY : SHRI DEEPAK SUTARIA, SR. D.R . ( )/ ORDER DATE OF HEARING : 09 -02-201 7 DATE OF PRONOUNCEMENT : 13 -02-2017 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-5, AHMEDABAD DATED 14.09.2015 PERTAINING TO A.Y. 2009- 10. ITA NO. 3008 /AHD/2015 . A.Y. 2009-10 2 2. THE ONLY GRIEVANCE OF THE ASSESSEE IS THAT THE LD. CIT(A) ERRED IN CONFIRMING THE PENALTY OF RS. 5,52,338/- LEVIED U/S. 271(1)(C) OF THE ACT. 3. THE ROOTS FOR THE LEVY OF PENALTY LIE IN THE ASSESS MENT ORDER DATED 13.12.2011 MADE U/S. 143(3) OF THE ACT. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE A.O NOTICED THAT THE AS SESSEE HAS CREATED A PROVISION OF RS. 16.25 LACS AS UNPAID EXPENSES FOR M/S. SUVARNAKALA PVT. LTD. THE A.O. FURTHER NOTICED THAT THE ASSESSEE DO NOT H AVE ANY BUSINESS TRANSACTIONS WITH THE SAID COMPANY, THEREFORE, THER E IS NO REASON FOR CREATING A LIABILITY AS PROVISION FOR EXPENSES. THE A.O. FURTHER NOTICED THAT THE ASSESSEE IS HOLDING 25% OF SHARES IN THE SAID C OMPANY. INVOKING THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT, THE A.O. TREATED RS. 16.25 LACS AS DEEMED DIVIDEND OF THE ASSESSEE. THE ASSESSEE LOST IN QUANTUM APPEALS. 4. PENALTY PROCEEDINGS WERE SEPARATELY INITIATED FOR T HE IMPUGNED ADDITION. 5. THE ASSESSEE WAS ASKED TO SHOW CAUSE WHY PENALTY SH OULD NOT BE LEVIED U/S. 271(1)(C) OF THE ACT ON ACCOUNT OF ADDITION MA DE U/S. 2(22)(E) OF THE ACT TO THE TUNE OF RS. 16.25 LACS. ASSESSEE IN ITS REPLY STATED THAT HE IS DRAWING SALARY FROM M/S. SUVARNAKALA PVT. LTD. WHIC H PAID HIM THE SALARY WITHOUT DEDUCTING TAX AT SOURCE. SUBSEQUENTLY, WHEN IT CAME TO THE NOTICE OF THE COMPANY, IT DEBITED THE ASSESSEE BY RS. 16.2 5 LACS TOWARDS THE TDS AMOUNT. THE ASSESSEE IN ITS BOOKS OF ACCOUNTS SIMUL TANEOUSLY CREDITED M/S. SUVARNAKALA PVT. LTD BY RS. 16.25 LACS. THEREFORE, NO PENALTY SHOULD BE LEVIED. ITA NO. 3008 /AHD/2015 . A.Y. 2009-10 3 6. THIS SUBMISSION OF THE ASSESSEE DID NOT FIND ANY FA VOUR WITH THE A.O. WHO LEVIED THE PENALTY OF RS. 5,52,338/-. 7. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) B UT WITHOUT ANY SUCCESS. 8. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE REITERA TED WHAT HAS BEEN STATED BEFORE THE LOWER AUTHORITIES. PER CONTRA, THE LD. C OUNSEL STRONGLY SUPPORTED THE FINDINGS OF THE LD. CIT(A). 9. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORD ERS OF THE AUTHORITIES BELOW. WE HAVE ALSO CAREFULLY PERUSED THE RELEVANT DOCUMENTARY EVIDENCES BROUGHT ON RECORD IN THE LIGHT OF THE RULE 18(6) OF THE ITAT RULES. IT IS TRUE THAT THE ASSESSEE WAS DRAWING SALARIES AND PERQUISI TE FROM M/S. SUVARNAKALA PVT. LTD. WE FIND THAT THE SAID COMPANY PAID THE SALARIES AND PERQUISITES WITHOUT DEDUCTING TAX AT SOURCE. ON REA LIZING ITS MISTAKE THE SAID COMPANY DEBITED ASSESSEES ACCOUNT AND SIMULTA NEOUSLY THE ASSESSEE CREDITED THE SAID COMPANIES ACCOUNT BY RS. 16.25 LA CS BY WAY OF JOURNAL ENTRY. THESE FACTS CLEARLY SHOW THAT THIS IS NOT A FIT CASE FOR THE LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT EVEN IF THE ASSES SEE HAS LOST IN QUANTUM APPEALS. WE, ACCORDINGLY, SET ASIDE THE FINDINGS OF THE LD. CIT(A) AND DIRECT THE A.O. TO DELETE THE PENALTY OF RS. 5,52,338/-. ITA NO. 3008 /AHD/2015 . A.Y. 2009-10 4 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 13 - 02- 20 17 SD/- SD/- (S. S. GODARA) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY ACCOUNTANT MEMBER AHMEDABAD: DATED 13 /02/2017 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD