Shri Abdul Jalalbhai Vadaviya, Ahmedabad V. The Income Tax Officer, Ward-9(4), Ahmedabad

ITA 3102/AHD/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0517 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 26-09-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 27-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAHUL KUMAR
• Keywords: Difference of opinion

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER ./ ITA NO. 3102/AHD/2013 / ASSESSMENT YEAR : 2005-06 ABDUL JALALBHAI VADAVIYA, SHOP NO.10, 1 ST FLOOR, SUPER COMPLEX, SARKHEJ DHAL, SARKHEJ HIGHWAY, AHMEDABAD PAN : AAYPV 5757 B VS ITO, WARD 9 (4), AHMEDABAD / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI TEJ SHAH, ADVOCATE REVENUE BY : SHRI RAHUL KUMAR, SR DR / DATE OF HEARING : 26/09/2016 / DATE OF PRONOUNCEMENT: 26/09/2016 / O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, AHMEDABAD D ATED 14.10.2013 FOR AY 2005-06. 2. THE SOLE GROUND RAISED BY THE ASSESSEE READS AS UNDER:- THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ORDER O F THE AO IN LEVYING PENALTY U/S 271(1)(C) OF THE ACT. 3. LD. COUNSEL FOR THE ASSESSEE CONTENDS AS UNDER:- (I) AY 2005-06 WAS THE FIRST YEAR OF INTRODUCTION OF SE CTION 40(A)(IA) AND THERE EXISTED DIFFERENCE OF OPINION ABOUT THE I NTERPRETATION OF SECTION 40(A)(IA) OF THE ACT; (II) THE ASSESSEE WAS A BONA FIDE BELIEF THAT THESE PROVISIONS WERE NOT APPLICABLE TO THE IMPUGNED CONTRACTORS PAYMENTS; (III) THE ASSESSEES BOOKS OF ACCOUNTS WERE AUDITED AND E VEN THE AUDITORS DID NOT POINT OUT THAT THE IMPUGNED PAYMEN TS WERE IN SMC-ITA NO. 3102/AHD/2013 ABDUL JALALBHAI VADAVIYA VS. ITO AY : 2005-06 2 ANY WAY HIT BY SECTION 40(A)(IA); THUS, THE ASSESSE ES BONA FIDE BELIEF DEMONSTRATED FROM THE FACTS AND CIRCUMSTANCES; (IV) RELIANCE IS PLACED ON ITAT, HYDERABAD BENCH DECISIO N IN THE CASE OF ACIT VS. MEDVERSITY ONLINE LIMITED, REPORTED IN [2012] 27 TAXMANN.COM 109 (HYD), WHEREIN THE SIMILAR PENALTY WAS DELETED BY THE TRIBUNAL, BY FOLLOWING OBSERVATIONS:- 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A). WE FIND THA T THE DISALLOWANCE OF EXPENSES WAS MADE BY INVOKING THE PROVISIONS OF S.40(A)(IA) OF THE ACT. IN THIS CASE, THE ASSESSEE HAS FURNISHED ALL TH E RELEVANT MATERIAL FACTS ALONGWITH ITS RETURN OF INCOME. THE AUDIT REP ORT IN THE STATUTORY FORM WAS ALSO ANNEXED TO THE RETURN OF INCOME BY TH E ASSESSEE. THE ASSESSEE HAS FILED AN EXPLANATION WHICH COULD NOT B E SAID TO BE NOT BONA FIDE. WE FIND THAT MERELY BECAUSE CERTAIN DISA LLOWANCE HAS BEEN MADE DUE TO SOME PROVISION OF LAW, IT COULD NOT BE SAID THAT THE ASSESSEE IS GUILTY OF CONCEALMENT OF INCOME OR FURN ISHING OF INACCURATE PARTICULARS OF INCOME. IT IS NOT THE CASE OF THE DE PARTMENT THAT THE EXPLANATION OF THE ASSESSEE WAS WITHOUT ANY BASIS O R FOUNDATION. IT IS A CASE OF HONEST DIFFERENCE OF OPINION BETWEEN THE ASSESSEE AND THE REVENUE REGARDING THE DISALLOWANCE MADE AND THE APP LICABILITY OF THE PROVISIONS OF S.40(A)(IA) OF THE ACT. IN THESE FACTS OF THE CASE, WE HOLD THAT NO CASE FOR IMPOSITION OF PENALTY UNDER S.271( 1)(C) OF THE ACT COULD BE MADE OUT BY THE DEPARTMENT. ACCORDINGLY, T HERE IS NO MISTAKE IN THE ORDER OF THE CIT(A) IN HOLDING THAT T HERE WAS NO CASE OR JUSTIFICATION FOR IMPOSING PENALTY UNDER S.271(1)(C) OF THE ACT. ACCORDINGLY, THE GROUNDS OF APPEAL OF THE REVENUE AR E REJECTED. (V) IT IS CONTENDED THAT THE ASSESSEE BEING UNDER A BONA FIDE BELIEF THAT THE PENALTY IS NOT EXIGIBLE. 4. LD. DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5. I HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE LOWER AUT HORITIES. FROM THE FACTS AND CIRCUMSTANCES, IT IS DISCERNABLE THAT THE ASSES SEE WAS UNDER A BONA FIDE SMC-ITA NO. 3102/AHD/2013 ABDUL JALALBHAI VADAVIYA VS. ITO AY : 2005-06 3 BELIEF ABOUT THE APPLICABILITY OF PROVISIONS OF SEC TION 40(A)(IA). THE AUDITORS ALSO HAVE NOT POINTED OUT ANY DEFAULT IN TERMS OF S ECTION 40(A)(IA). THEREFORE, FOLLOWING THE DECISION OF ITAT, HYDERABA D BENCH IN THE CASE OF ACIT VS. MEDVERSITY ONLINE LIMITED (SUPRA), THIS IS NOT A FIT CASE FOR IMPOSITION OF PENALTY WHICH IS DELETED. ACCORDINGL Y, ASSESSEES APPEAL IS ALLOWED. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 26 TH SEPTEMBER, 2016 AT AHMEDABAD. SD/- R.P. TOLANI (JUDICIAL MEMBER) AHMEDABAD; DATED 26/09/2016 *BIJU T. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD