The ITO, Ward-9(1), Ahmedabad V. M/s. Rishil Developers, Ahmedabad

ITA 377/AHD/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6050 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 06-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMIT KUMAR VARMA
• Assessee Lawyers: S N DIVATIA
• Keywords: Retrospective amendment
• Section: 143(3); 142(1); 271(1)(c); 143(2); 40(a)(ia)

Judgement Text

, SMC IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JM, AND SHRI MANISH BORAD, AM ./ITA.NO.377/AHD/2014 ( / ASSTT YEAR :2007-08) I.T.O. WD. 9(1), AHMEDABAD. VS. M/S RISHIL DEVELOPERS, B/501, SATYAMEV COMPLEX, OPP. NEW HIGH COURT, S.G. HIGHWAY, AHMEDABAD. (APPELLANT) (RESPONDENT) / APPELLANT BY: SHRI SUMIT KUMAR VARMA, D.R. / RESPONDENT BY: SHRI S.N. DIVATIA, A.R. / DATE OF HEARING 01-05-2017 /DATE OF PRONOUNCEMENT 02-05-2017 / O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER THIS APPEAL FOR ASSESSMENT YEAR 2008-08 IS DIRECT ED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-XV, AHMEDAB AD DATED 13.11.2013 ARISING OUT OF THE ORDER U/S. 271(1)(C) OF THE INCOME TAX ACT 1961 (HEREINAFTER REFERRED TO AS THE ACT) FRAMED ON 13.03.2012 BY I.T.O. WD.-9(1). AHMEDABAD. 2. REVENUES SOLE GRIEVANCE IS AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) DELETING PENALTY OF 16,76,03 1/- LEVIED U/S. 271(1)(C) OF THE ACT. ITA.NO.377/AHD/2014 ASSESSMENT YEAR 2007-08 - 2 3. BRIEFLY STATED FACTS HAS CULLED OUT FROM THE REC ORDS ARE THAT THE ASSESSEE PARTNERSHIP FIRM ENGAGED IN BUSINESS OF REAL ESTATE DEVELOPERS RETURN OF INCOME WAS FILED ON 23.10.2007 DECLARING TOTAL INCO ME OF RS. 50,522/-. CASE PICKED UP FOR SCRUTINY ASSESSMENT. NOTICES U/S. 143 (2) AND 142(1) WERE ISSUED ALONG WITH DETAILED QUESTIONNAIRE. NECESSARY DETAILS WERE FILED ON BEHALF OF THE ASSESSEE. ASSESSMENT U/S. 143(3) OF T HE ACT WAS COMPLETED ON 30.10.2009 AFTER MAKING ADDITIONS OF RS. 41,11,441/ - AND RS. 6,16,742/- FOR VIOLATION OF PROVISIONS U/S. 40(A)(IA) OF THE ACT. INCOME ASSESSED AT RS. 47,78,440/-. APPEAL FILED BY THE ASSESSEE AGAINST T HE ADDITIONS OF RS. 47,27,913/- WAS DISMISSED BY LEARNED COMMISSIONER OF INCOME TAX(APPEALS) VIDE ITS ORDER DATED 07.07.2010. SUBSE QUENTLY PROCEEDINGS U/S. 271(1)(C), OF THE ACT WERE INITIATED AND PENALTY OF RS. 16,76,071/- WAS IMPOSED ON THE ADDITIONS OF RS. 49,79,290/-. 4. AGGRIEVED ASSESSEE WENT IN APPEAL BEFORE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) AGAINST THE IMPUGNED PENALTY U/ S. 271(1)(C) AND SUCCEEDED. AGGRIEVED REVENUE NOW IN APPEAL BEFORE T HE TRIBUNAL. 5. LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY A RGUED SUPPORTING THE ORDER OF THE LEARNED ASSESSING OFFICER. ON THE OTHER HAND LEARNED AUTHORIZED REPRESENTATIVE OF THE ASSESSEE PLACED ON RECORD, COPY OF DECISION OF COORDINATE BENCH VIDE ITA NO. 2668/AHD/2010 PRON OUNCED ON 18.10.2013 WHEREIN DISALLOWANCES OF RS. 41,11,441/- MADE U/S. 40(A)(IA) WAS DELETED AND THE BALANCE DISALLOWANCE OF RS. 6,16,47 2/- WAS CONFIRMED. LEARNED COUNSEL ALSO PLACED ON RECORD THE COPY OF J UDGMENT OF HONBLE JURISDICTIONAL HIGH COURT, TAX APPEAL NO. 291 OF 2 014 DATED 21.04.2014 IN THE CASE OF ASSESSEE WHEREIN REVENUES APPEAL WAS DI SMISSED AND QUESTION ITA.NO.377/AHD/2014 ASSESSMENT YEAR 2007-08 - 3 RAISED WAS ANSWERED IN FAVOR OF ASSESSEE BY HOLDING THAT AMENDMENT IN SECTION 40(A)(IA) OF THE ACT BROUGHT IN BY FINANCE ACT 2010, WITH EFFECT FROM 01.04.2010 HAVE RETROSPECTIVE EFFECT. LEARNED COUN SEL FURTHER REFERRED IN RELIED ON THE DECISION OF LEARNED COMMISSIONER OF I NCOME TAX (APPEALS) DELETING THE IMPUGNED PENALTY. 6. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORD PLACED BEFORE US. SOLE GRIEVANCE OF THE REVENUE IS AGAINST THE OR DER OF COMMISSIONER OF INCOME TAX(APPEALS) DELETING PENALTY OF RS. 16,76,0 31/- LEVIED U/S. 271(1)(C) OF THE ACT. THIS PENALTY WAS IMPOSED FOR VIOLATION OF PROVISIONS OF SECTION 40(A) (IA) OF THE ACT FOR FOLLOWING TWO AMO UNTS:- (1) RS. 41,11,441/- DISALLOWED AS THE INCOME TAX DEDUCTED AT SOURCE ON THIS CONTRACTOR PAYMENT WAS DEPOSITED BEYOND THE PRESCRIBED TIME LIMIT. (2) RS. 6,16,472/- DISALLOWED FOR NOT DEDUCTING TDS ON LABOUR CHARGES PAID TO FOU R PARTIES. 7. THE ABOVE TWO DISALLOWANCES WERE CONFIRMED BY LE ARNED COMMISSIONER OF INCOME TAX (APPEALS). HOWEVER COORD INATE BENCH IN ITS ORDER DATED 18.10.2013 DELETED THE DISALLOWANCE OF RS. 41,11,441/- IN LIEU OF THE AMENDMENT BY FINANCE ACT 2010 WHICH WAS HELD TO BE RETROSPECTIVE BY THE HONBLE KOLKATA HIGH COURT IN THE CASE OF COMMI SSIONER OF INCOME TAX V/S. VIRGIN CREATIONS, ITA NO. 302 OF 2011. AS REGA RDS THE DISALLOWANCE OF RS. 6,16,472/-, SAME WAS CONFIRMED BY THE TRIBUNAL. AGGRIEVED WITH THE ORDER OF TRIBUNAL REVENUE FILED APPEAL AGAINST OF DELETION OF ADDITION OF RS. 41,11,441/- BEFORE THE HONBLE JURISDICTIONAL HIGH COURT BUT COULD NOT SUCCEED, HONBLE COURT ANSWERED THE QUESTION IN FA VOR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE OBSERVING AS FOLLOW:- ITA.NO.377/AHD/2014 ASSESSMENT YEAR 2007-08 - 4 FOLLOWING ARE THE SUBSTANTIAL QUESTIONS OF LAW RAISED BY THE REVENUE IN THE PRESENT TAX APPEAL ARISING FROM THE ORDER OF THE INCOME TAX APPELLATE TRIBUNAL DATED 18 TH OCTOBER 2013. '(A) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE IT AT HAS ERRED IN LAW IN ALLOWING THE APPEAL FILED BY THE ASSESSEE AGAINST THE DECISION OF THE CIT(A) CONFIRMING THE DISALLOWANCE OF RS .41,11,441 /- MADE U/S.40(A)(IA) OF THE INCOME TAX ACT. 1961 ? (B) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ITA T HAS ERRED IN LAW IN DELETING THE ADDITION OF RS.41,11,441/- MADE U/S 40(A)(IA) OF THE INCOME TAX ACT BY HOLDING TO THE EFFECT THAT AMENDMENT TO SECTION 40(A)(IA) OF THE INCOME TAX ACT BY FINANCE ACT, 2010 IS HAVING RETROSPECTIVE APPLICATION? (C) WHETHER THE AMENDMENT TO SECTION 40(A)(IA) OF THE INCOME TAX ACT BROUGHT OUT BY FINANCE ACT. 2010 WITH EFFECT FROM 1.4.2010 IS HAVING RETROSPECTIVE EFFECT?' WE HAVE HEARD LEARNED COUNSEL SHRI VARUN PATEL FOR THE APPELLANT REVENUE AND LEARNED COUNSEL SHRI DIVETIA FOR THE ASSESSEE-RESPONDENT. ALTHOUGH THE QUESTIONS ARE MORE THAN ONE, THE ONLY ISSUE IS WITH REGARD TO THE DELETION OF ADDITION MADE UNDER SECTION 40A(IA) OF THE INCOME TAX ACT, 1961 BY THE TRIBUNAL CONSIDERING THE AMENDMENT BROUGHT ABOUT BY FINANCE ACT, 2010 WITH EFFECT FROM 1.4.2010 HAVING RETROSPECTIVE EFFECT. THIS COURT IN TAX APPE AL NO.412 OF 2013 AND ALLIED MATTERS HAS HELD THIS ISSUE IN FAVOUR OF THE ASSESSEE AND UPHELD THE DECISION OF THE TRIBUNAL BY HOLDING SUCH AMENDMENT RETROSPECTIVE IN NATURE. THE QUESTIONS RAISED IN THE PRESENT TAX APPEAL, THEREFORE, SHALL HAVE TO B E ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. ACCORDINGLY, THI S TAX APPEAL STANDS DISPOSED OF. ITA.NO.377/AHD/2014 ASSESSMENT YEAR 2007-08 - 5 8. FROM GOING THROUGH THE JUDGMENT OF HONBLE JURIS DICTIONAL HIGH COURT IN THE CASE OF ASSESSEE WE FIND THAT THE DISALLOWAN CE OF RS. 41,11,441/- DELETED BY THE COORDINATE BENCH HAS BEEN UPHELD. A S THE QUANTUM ADDITION HAS ITSELF BEEN DELETED THERE REMAINS NO REASON FOR VISITING THE ASSESSEE WITH PENALTY U/S. 271(1)(C) OF THE ACT WHICH IS LEVIABLE ON THE CONCEALED INCOME ONLY. 9. AS FAR AS THE DISALLOWANCE OF RS. 6,16,472/- IS CONCERNED WE OBSERVE THAT SAME HAS BEEN ADDED TO INCOME ONLY FOR NOT DED UCTING TAX AT SOURCE ON THE PAYMENT OF LABOUR CHARGES. REVENUE HAS NOT DISP UTED THE QUANTUM OF THE PAYMENT MADE BY THE ASSESSEE. FURTHER THERE IS NO C ASE OF CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. WE ARE THEREFORE OF THE VIEW THAT LEARNED ASSESSING OFFICER WAS NOT JUSTIFIED IN IMPOSING PENALTY U/S. 271(1)(C) ON THE SAID DISALLOWANCE. WE THEREFORE FI ND NO REASON TO INTERFERE WITH THE ORDER OF LEARNED COMMISSIONER OF INCOME TA X (APPEALS) WHO HAS RIGHTLY DELETED THE IMPUGNED PENALTY OF RS. 16,76,0 31/- BY OBSERVING AS FOLLOWS:- 5. I HAVE PERUSED THE FACTS OF THE CASE. I HAVE PERUSED THE SUBMISSION OF APPELLANT AND CASE LAWS RELIED ON. AFTER CAREFUL CONSIDERATION OF FACTS, SUBM ISSION AND CONTENTIONS OF BOTH A.O. AS WELL AS APPELLANT THE GROUND WISE ADJUDICATION IS AS FOLLOWS: THE ONLY GROUND FROM APPELLANT IS AGAINST THE IMPOSITION OF PENALTY U/S. 271(1)(C) OF THE ACT OF RS. 16,76,031/-. I AM INCLINED WITH CONTENTION OF APPELLANT THAT BOTH ON MEN: AS WELL AS IN LEGAL PREPOSITION, THE PENALTY ON THE ADDITIONS MADE FOR DISALLOWANCE AND ADDITIONS U/S. 40(A)(IA) OF THE ACT FOR INACCURATE PARTICULARS OL INCOME IS NOT EXIGIBLE, IT IS UNDISPUTED FACT THAT MAJOR DI SALLOWANCE AND ADDITION OF RS. 41,11,441/- WERE MADE BY A.O. AND CONFIRMED BY LA CIT(A) ON ACCOUNT OF LATE DEPOSIT OF TDS DEDUCTED BUT HON'BLE ITAT IN THE CASE OF APPE LLANT DELETED SUCH ADDITION, HENCE PENALTY ON THIS AMOUNT HAS NO BASIS. FOR THE BALANCE ITA.NO.377/AHD/2014 ASSESSMENT YEAR 2007-08 - 6 OF RS. 6,16,472/- ADDITION ON ACCOUNT OF ENHANCEMENT BY LD CIT(A) AND UPHELD BY HON'BLE ITAT DOES NOT HAVE ANY SATISFACTION OF LD. CIT(A)FOR INITIATION OF PENALTY. FURTHER THE RATIO OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF M/S. VENUS ENGINEERS (SUPRA) AS RE LED ON BY APPELLANT IS APPLICABLE IN THE CASE OF APPEL LANT. HON'BLE ITAT, AHMEDABAD IN THE CASE OF THE DY. GIT, CIR.9, AHMEDABAD VS. M/S . L. G. CHOUDHRY IN ITA NO. 228/AHD/2010 A.Y. 06-07 VIDE ORDER DTD. 16.03.2012 ON SIMILAR FACTS AFTER CONSIDERING VARIOUS OTHER CASE LAWS VIZ. M/S. SARASWATI CONSTRUCTOR! CO MAZDA LTD. M/S. LUCKY STAR ETC. HELD THAT CONSIDERING DEEMING NATURE OF ADDITION ON ACCOUNT OF DISALLOWANCES U/S. 40(A)(IA) OF THE ACT THER E CANNOT BE ANY SATISFACTION IN REFERENCE TO FURNISHING OF INACCURATE PARTIC ULARS OF INCOME. IT IS THEREFORE RESPECTFULLY FOLLOWING THE RATIO OF THESE CASE LAWS; THE A.O. IS DIRECTED TO DELETE THE PENALTY SO IMPOSED. THE APPELLANT GETS RELIEF ACCORDINGLY. THE GROUND IS THEREFORE ALLOWED. 10. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE COURT ON 2 ND MAY, 2017 AT AHMEDABAD. SD/- SD/- (SHRI RAJPAL YADAV) JUDICIAL MEMBER (SHRI MANISH BOARD) ACCOUNTANT MEMBER