MATURE TRADING AND INVESTMENT LTD, MUMBAI V. JT CIT (TDS) 1(3), MUMBAI

ITA 3776/MUM/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6497 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2009-2010
• Appeal Filed On: 24-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D G
• Keywords: Business expenditure; Maximum Marginal Rate; Bonafide belief; Period of limitation; Question of law; Initiation of penalty proceedings; Time period of passing order; TDS
• Section: 40(a)(ia); 271D; 271E; 201; 274; 246

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NO.3776/M/2017 ASSESSMENT YEAR: 2009-10 M/S. MATURE TRADING AND INVESTMENT LTD., FORTUNE -2000, PLOT NO.C- 3, G BLOCK, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI 400 051 PAN: AAACM9730G VS. JT. COMMISSIONER OF INCOME TAX OFFICER (TDS)- 1(3), 701, 7 TH FLOOR, K.G. MITTAL AYURVEDIC HOSPITAL BUILDING, CHARNI ROAD, MUMBAI 400 004 (APPELLANT) (R ESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI VIJAY MEHTA, A.R. REVENUE BY : SHRI D.G. PANSARI, D.R. DATE OF HEARING : 12.02.2019 DATE OF PRONOUNCEMENT : 19.02.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 04.03.2015 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2009-10. 2. THE GROUNDS TAKEN BY THE ASSESSEE ARE AS UNDER: 1. THE ORDER PASSED BY THE CIT (A) IS ILLEGAL, B AD IN LAW, ULTRA VIRES AND CONTRARY TO THE PROVISIONS OF LAW AND FACTS OF THE CASE AND WIT HOUT APPRECIATING THE FACTS OF THE CASE IN THEIR PROPER PERSPECTIVE. 2. THE LEARNED CIT (A), MUMBAI ERRED IN CONFIRMIN G THE ACTION OF THE ASSESSING OFFICER (AO) IN LEVYING PENALTY AMOUNTING TO RS. 67 ,69,046/-U/S 271C OF INCOMC ACT, 1961 FOR AY 2009-10. ITA NO.3776/M/2017 M/S. MATURE TRADING AND INVESTMENT LTD. 2 3. IT IS PRAYED THAT THE ORDER OF CIT (A) BE CANCE LLED AND DIRECTION BE ISSUED TO ALLOW THE APPEAL ON THE GROUNDS RAISED BEFORE HIM. 4. EACH ONE OF THE ABOVE GROUNDS OF APPEAL IS WIT HOUT PREJUDICE TO THE OTHER. 5. THE APPELLANT RESERVES THE RIGHTS TO AMEND ALT ER OR ADD TO ANY OF THE ABOVE GROUNDS OF APPEAL. 3. BESIDES, THE ASSESSEE HAS RAISED A ADDITIONAL G ROUND VIDE LETTER DATED 24.9.2018 WHICH IS REPRODUCED BELOW:- 1. KINDLY REFER TO THE ABOVE MATTER WHICH IS FI XED FOR HEARING ON 26.09.2018. IT IS SUBMITTED THAT WHILE PASSING ORDER DATED 30.03.2011 U/S. 201 (I)/201(1 A) OF THE ACT, THE INCOME-TAX OFFICER (TDS)-1(3), MUMBAI HAD INITIATED PROCEEDINGS U/S. 271C OF THE ACT. HOWEVER, PENALTY U/S. 271C OF THE ACT W AS LEVIED BY THE JT. CIT (TDS), RANGE-1(3), MUMBAI BY HER ORDER DATED 04.03.2015. T HOUGH A GROUND ASSAILING THE LEGALITY AND VALIDITY OF SUCH AN ORDER WAS TAKEN BE FORE THE CIT(A) SO ALSO BEFORE THIS HON'BLE TRIBUNAL, AS A MATTER OF ABUNDANT PRECAUTIO N AND AS ADVISED, WE DEEM IT NECESSARY TO TAKE UP THE ENCLOSED ADDITIONAL GROUND FOR ADJUDICATION AND DECISION. 2. IT IS SUBMITTED THAT THE ADDITIONAL GROUND OF AP PEAL RAISES ONLY A QUESTION OF LAW AND FOR ITS CONSIDERATION NO NEW FACTS ARE REQU IRED TO BE BROUGHT ON RECORD. IT IS, THEREFORE, HUMBLY PRAYED THAT THE ADDITIONAL GR OUND OF APPEAL ENCLOSED HEREWITH MAY KINDLY BE ADMITTED AND ADJUDICATED BY YOUR HONOURS. IN THIS REGARD, WE RELY UPON THE FOLLOWING DECISIONS RENDERED BY VA RIOUS COURTS. I. NATIONAL THERMAL POWER CORPORATION V. CIT [229IT R 383 (SC)] II. JUTE CORPORATION OF INDIA LTD. V, CIT [187 ITR 688 (SC)] III. AHMEDABAD ELECTRICITY CO. LTD. V. CIT [199 ITR 351 (BOM) (FB)] 4. THE LD A.R. SUBMITTED BEFORE THE BENCH THAT THE ISSUE SOUGHT TO BE RAISED IN THE ADDITIONAL GROUND IS OF LEGAL NATURE THAT ORDER PASSED BY THE JT. COMMISSIONER OF INCOME TAX IMPOSING PENALTY U/S 271C OF THE ACT IS BARRED BY L IMITATION. THE LD AR ARGUED THAT THOUGH A GROUND ASSAILING TH E LEGALITY AND VALIDITY OF THE ORDER TAKEN BEFORE THE CIT(A) AND ALSO BEFORE THE TRIBUNAL, AS A MATTER OF ABUNDANT PRECAUTION AN D AS ADVISED, IT IS DEEMED NECESSARY TO TAKE A SPECIFIC ADDITIONAL GROUND FOR ADJUDICATION BY THIS HONBLE TRIBUNAL. T HE LD AR CONTENDED THAT THE ADDITIONAL GROUND RAISES A PURE QUESTION LAW AND IS ARISING OUT THE RECORDS BEFORE THE AUTHORITI ES BELOW AND ITA NO.3776/M/2017 M/S. MATURE TRADING AND INVESTMENT LTD. 3 REQUIRES NO NEW FACTS TO BE VERIFIED OR BROUGHT ON RECORDS AND THEREFORE THE SAME MAY BE ADMITTED AND ADJUDICATED. THE LD. COUNSEL RELY ON A SERIES OF DECISIONS IN SUPPORT OF ARGUMENTS NAMELY (I) NATIONAL THERMAL POWER CORPORATION LTD. VS CIT 229 ITR 383(SC), (II)JUTE CORPORATION OF INDIA LTD. VS C IT 187 ITR 688(SC) AND (III)AHMEDABAD ELECTRICITY CO. LTD VS CI T 199 ITR 351(BOM). THE LD DR ON THE OTHER HAND ARGUED THAT T HE GROUND WAS NEITHER TAKEN BEFORE THE AO NOR BEFORE THE CIT( A) AND THEREFORE IT SHOULD NOT BE ADMITTED AT THIS STAGE A ND MAY BE DISMISSED. 5. AFTER HEARING BOTH THE SIDES AND PERUSING THE MA TERIALS BEFORE US, WE OBSERVE THAT THE ISSUE RAISED BY THE LD COUNSEL IS PURELY A LEGAL ISSUE EMANATING OUT OF THE RECORDS A ND NO NEW FACTS ARE REQUIRED TO BE BROUGHT ON RECORDS OR REQU IRED TO BE VERIFIED, THEREFORE FOLLOWING THE RATIO LAID IN TH E ABOVE DECISIONS, WE ARE INCLINED TO ADMIT THE SAME. WE WOULD LIKE T O ADJUDICATE THE ADDITIONAL GROUND FIRST. 6. THE FACTS IN BRIEF ARE THAT THE ASSESSEE PAID A SUM OF RS.3,40,50,048/- TO MMRDA ON ACCOUNT OF GROUND RENT WHICH WAS SUBJECT TO THE DEDUCTION OF TAX AT SOURCE U/S 1 94I OF THE I.T. ACT. THE ASSESSEE HOWEVER DID NOT DEDUCT THE SAID T DS. THEREAFTER, THE AO AFTER ISSUING SHOW CAUSE NOTICE, PASSED ORDER U/S 201(1)/201(1A) OF THE ACT RAISING A DEMAND OF RS.83,93,617/- COMPRISING RS. 67,69,046/- TOWARDS T DS AND RS. 16,24,571/- TOWARDS INTEREST U/S 201(1A) VIDE O RDER DATED 30.3.2011 PASSED U/S 201(1)/201(1A) OF THE ACT. THE AO ALSO STATED IN THE ORDER PARA 6 THAT PENALTY PROCEEDINGS U/S 271C OF THE ACT ARE SEPARATELY INITIATED FOR NON DEDUCTION OF TAX ITA NO.3776/M/2017 M/S. MATURE TRADING AND INVESTMENT LTD. 4 DEDUCTED AT SOURCE. THE APPELLATE ORDER OF THE CIT( A) AGAINST THE ORDER OF AO WAS PASSED ON 27.02.2014. THE AO RE FERRED THE MATTER OF IMPOSITION OF PENALTY ON 07.01.204 AND SH OW NOTICE WAS ISSUED BY THE JCIT ON 09.01.2015.THEREAFTER THE ORDER IMPOSING PENALTY U/S 271C WAS PASSED ON 4.3.2015, A LMOST 4 YEARS AFTER THE INITIATION OF PENALTY PROCEEDINGS V IDE ORDER DATED 30.3.2011 PASSED U/S 201(1)/201(1A). 7. THE LD AR ARGUED THAT THE ORDER PASSED BY THE LD JT. COMMISSIONER OF INCOME TAX IS BARRED BY LIMITATION AS ENVISAGED IN THE PROVISIONS OF SECTION 275(1) OF T HE ACT. THE LD AR SUBMITTED THAT THE ACTION FOR INITIATION OF PENA LTY WAS TAKEN ON 30.3.2011 IN THE ORDER PASSED U/S 201(1)/201(1A ) AND THEREFORE THE PERIOD OF LIMITATION HAS TO BE CALCUL ATED FROM THAT DATE WHEREAS ORDER IMPOSING PENALTY U/S 271C WAS PA SSED ON 4.3.2015, ALMOST 4 YEARS AFTER THE INITIATION OF PE NALTY PROCEEDINGS VIDE ORDER DATED 30.3.2011 PASSED U/S 201(1)/201(1A).THE LD AR TOOK US THROUGH THE PROVIS IONS OF THE ACT ON LIMITATION AND SUBMITTED THAT ORDER PASSED B Y THE JCIT DATED 4.3.2015 IS BARRED BY LIMITATION AND THEREFOR E IS NULL AND VOID. THE LD AR RELIED ON A SERIES OF DECISIONS TO SUPPORT HIS ARGUMENTS NAMELY: 1. CIT V. JITENDRA SINGH RATHORE(352 ITR 327) (HC-R AJASTHAN) 2. CIT V. HISSARIA BROTHERS (291 ITR 244) (HC-RAJAS THAN) 3. CIT V. HISSARIA BROTHERS (386 ITR 719) (SC) 4. PR. CIT V. JKD CAPITAL AND FINLEASE LTD. (378 I TR 614) (HC-DEL) 5. ITO V. SHRI DINESH JAIN FOR A.Y. 2009-10 IN ITA NO. 3'/94/DEL/2013 DATED 16.05.2014. (TRIB.-DEL) 6. LODHA BUILDERS (P) LTD V. ACIT AND OTHERS (163 T TJ 778) (TRIB.-MUM.) ITA NO.3776/M/2017 M/S. MATURE TRADING AND INVESTMENT LTD. 5 8. FINALLY THE LD AR PRAYED BEFORE THE BENCH THAT O RDER SO PASSED U/S 271C MAY BE QUASHED AS BEING TIME BARRED IN VIEW OF THE RATIO LAID DOWN IN THE DECISIONS REFERRED TO ABOVE. 9. THE LD DR ON THE OTHER HAND OPPOSED THE ARGUMENT S ADVANCED BY THE LD AR BY SUBMITTING THAT THE ORDER IMPOSING PENALTY IS NOT BARRED BY LIMITATION AS THE PERIOD O F LIMITATION HAS TO BE RECKONED NOT FROM THE DATE OF ORDER PASSED U/ S 201(1)/201(1A) DATED 30.3.02011 BUT FROM THE DATE T HE ORDER PASSED BY THE LD CIT(A) DISMISSING THE APPEAL OF T HE ASSESSEE. IN THE INSTANT CASE THE ORDER OF CIT(A) WAS PASSED ON 27.2.2014 AND THEREFORE THE ORDER IMPOSING PENALTY U/S 271C O F THE ACT WAS WELL WITHIN LIMITATION AS PROVIDED IN SECTION 2 75 OF THE ACT. THE DR ARGUED THAT AS THE JCIT WAS REFERRED THE MAT TER OF INITIATION OF PENALTY PROCEEDINGS ON 7.1.2014 THERE AFTER THE NOTICE U/S 271 R.W.S. 274 WAS ISSUED ON 9.1.2015. A FTER CONSIDERING THE REPLY OF THE ASSESSEE THE JCIT PASS ED THE ORDER U/S271C ON 4.3.2015.THUS THE LD DR PRAYED THAT THER E IS NO MERITS IN THE LEGAL ISSUE OF ORDER BEING TIME BARRE D U/S 275 OF THE ACT AD MAY BE DISMISSED. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS BEFORE US CAREFULLY IN THE DECISIONS CITED BY THE LD AR. THE ONLY ISSUE BEFORE US IS WHETHER THE ORDER OF TH E JCIT DATED 4.3.2015 IS BARRED BY LIMITATION AS PER THE PROVISI ONS OF SECTION 275(1)(C) OF THE ACT. FOR BETTER UNDERSTANDING OF T HE PROVISIONS THE SAME ARE EXTRACTED BELOW: SECTION 275(1)(C) IN THE INCOME- TAX ACT, 1995 (C) IN ANY OTHER CASE, AFTER THE EXPIRY OF THE FINA NCIAL YEAR IN WHICH THE PROCEEDINGS, IN THE COURSE OF WHICH ACTION FOR THE IMPOSITION OF PENALTY HAS BEEN INITIATED ARE COMPLETED, OR SIX MONTHS FROM THE END OF THE MONTH IN WHICH ACTION FOR IMPOSITION OF PENALTY IS INITIATED, WHICHEVER PERIOD EXPIRES L ATER.] ITA NO.3776/M/2017 M/S. MATURE TRADING AND INVESTMENT LTD. 6 1. SUBSTITUTED BY THE TAXATION LAWS (AMENDMENT) ACT , 1970, W. E. F. 1- 4- 2 INSERTED BY THE DIRECT TAX LAWS (SECOND AMENDMENT ) ACT, 1989 , W. E. F. 1- 4- 1989 . 3 CLAUSES (A), (B) AND (C) SUBSTITUTED FOR C LAUSES (A) AND (B) BY THE DIRECT TAX LAWS (AMENDMENT) ACT, 1987 , W. E. F. 1- 4- 1989 . PRIOR TO THEIR SUBSTITUTION, CLAUSE (A), AS AMENDED BY THE FINANCE (NO. 2) ACT, 1977 , W. E. F. 10- 7- 1978 , AND CLAUSE (B) READ AS UNDER:' (A) IN A CASE WHERE THE RELEVAN T ASSESSMENT OR OTHER ORDER IS THE SUBJECT- MATTER OF AN APPEAL TO THE DEPUTY COMMISSI ONER (APPEALS) OR THE COMMISSIONER (APPEALS) UNDER SECTION 246 OR AN APPE AL TO THE APPELLATE TRIBUNAL UNDER SUB- SECTION (2) OF SECTION 253, AFTER THE EX PIRATION OF A PERIOD OF- (I) TWO YEARS FROM THE END OF THE FINANCIAL YEAR IN WH ICH THE PROCEEDINGS, IN THE COURSE OF WHICH ACTION FOR IMPOSITION OF PENALTY HA S BEEN INITIATED, ARE COMPLETED, OR (II) SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE ORDER OF THE DEPUTY COMMISSIONER (APPEALS) OR THE COMMISSIONER (APPEALS ) OR, AS THE CASE MAY BE, THE APPELLATE TRIBUNAL IS RECEIVED BY THE CHIEF COMMISS IONER OR COMMISSIONER, WHICHEVER PERIOD EXPIRES LATER; IT IS CLEAR FROM THE ABOVE THAT IN ANY OTHER CASE N OT COVERED BY THE PROVISIONS OF SECTION 275(1)(A)&(B) , NO ORD ER IMPOSING PENALTY SHALL BE PASSED AFTER EXPIRY OF THE FINANCI AL YEAR DURING WHICH THE ACTION FOR IMPOSITION OF PENALTY HAS BEEN INITIATED OR SIX MONTHS FROM THE END OF THE MONTH IN WHICH ACTIO N FOR IMPOSITION OF PENALTY IS INITIATED WHICH EVER EXPIR ES LATER. THERE ARE TWO LIMBS IN THE CLAUSE(C). AS PER THE FIRST LI MB, THE PENALTY CAN BE IMPOSED IN THE CASE OF THE ASSESSEE. IN THE FIRST LIMB THE PENALTY CAN BE IMPOSED UPTO 31.3.2011 OR UP TO 30.9 .2011 WHICHEVER IS LATER. THUS IN THIS CASE THE PENALTY G ETS TIME BARRED ON 30.9.2011 AS THAT IS THE LATER OF THE TWO. IN T HE BACKGROUND OF THESE FACTS THE RATIO LAID DOWN IN THE VARIOUS D ECISIONS SHALL BE SEEN. 11. IN THE CASE CIT VS HISSARIA BROS(SUPRA) THE HO NBLE COURT HAS HELD THAT THE PENALTY PROCEEDINGS U/S 271D OF T HE ACT FOR VIOLATION OF PROVISIONS OF SECTION 269SS AND 269T O F THE ACT ARE NOT RELATED TO THE, ASSESSMENT PROCEEDINGS BUT ARE INDEPENDENT OF IT, THEREFORE, THE COMPLETION OF APPELLATE PROCE EDINGS ARISING OUT OF ASSESSMENT PROCEEDINGS OR OTHER PROCEEDINGS DURING ITA NO.3776/M/2017 M/S. MATURE TRADING AND INVESTMENT LTD. 7 WHICH THE PENALTY PROCEEDINGS U/S 271D AND 271E MAY HAVE BEEN INITIATED HAS NO RELEVANCE FOR SUSTAINING OR NOT SUSTAINING THE PENALTY PROCEEDINGS AND THEREFORE CLAUSE(A)OF S UBSECTION (1) OF /SECTION 275 CAN NOT BE ATTRACTED TO SUCH PROCEE DINGS. IF THAT WERE NOT SO CLAUSE(C)OF SECTION275(1) WOULD BE REDU NDANT BECAUSE OTHERWISE AS A MATTER OF FACT EVERY PENALTY PROCEEDING IS USUALLY INITIATED WHEN DURING SOME PROCEEDINGS SUCH DEFAULT IS NOTICED, THOUGH THE FINAL FACT FINDING IN THIS PROC EEDING MAY NOT HAVE ANY BEARING ON THE ISSUES RELATING TO ESTABLIS HING DEFAULT I.E. THE PENALTY FOR DEDUCTING TAX AT SOURCE WHILE MAKING PAYMENT TO EMPLOYEES OR CONTRACTOR OR FOR THAT MAT TER NOT MAKING PAYMENT THROUGH CHEQUE OR DEMAND DRAFT WHERE IT IS SO REQUIRED TO BE MADE. EITHER OF THE CONTINGENCIES DO ES NOT AFFECT THE COMPUTATION OF TAXABLE INCOME AND LEVY OF CORRE CT TAX ON CHARGEABLE INCOME; IF CLAUSE (A) IS TO BE INVOKED , NO NECESSITY OF CLAUSE (C) WOULD ARISE. FINALLY COURT HELD THAT LIM ITATION U/S 275(1)(C) APPLIES. THE ABOVE DECISION OF THE HIGH C OURT WAS AFFIRMED BY THE HONBLE SUPREME COURT AS REPORTED I N (2016) 386 ITR 719(S.C.) 12. IN THE CASE OF CIT VS JITENDRA SINGH RATHORE(SUP RA) THE HONBLE RAJASTHAN HIGH COURT HELD THAT PERIOD OF LI MITATION AS PRESCRIBED IN CLAUSE OF SECTION 275(1) IS TO BE C ALCULATED FROM THE FIRST SHOW CAUSE NOTICE ISSUED BY THE AO AND N OT THE JCIT. IN THIS CASE THE SHOW CAUSE NOTICE FOR INITIATION O F PENALTY PROCEEDINGS WAS ISSUED BY THE AO ON 25.3.2003 AND S ERVED ON 27.3.2003 AND THE PERIOD OF LIMITATION EXPIRED ON 3 0 SEPTEMBER,2003 WHEN SIX MOTHS EXPIRED FROM THE END OF THE MONTH IN WHICH THE ACTION FOR IMPOSING PENALTY WAS INITIATED. THE COURT HELD THAT THE ORDER PASSED BY JCIT FOR P ENALTY U/S ITA NO.3776/M/2017 M/S. MATURE TRADING AND INVESTMENT LTD. 8 271D ON 28 TH MAY 2004 WAS CLEARLY HIT BY THE BAR OF LIMITATION PRESCRIBED IN CLAUSE OF SECTION 275(1) OF THE ACT . THE HONBLE COURT HAS FOLLOWED THE EARLIER ORDER IN THE CASE O F HISSARIA BROS (2007) 291ITR244 (RAJ). IN THE INSTANT CASE BEFORE US ALSO THE ACTION FOR I NITIATION OF PENALTY PROCEEDINGS U/S 271C WAS INITIATED WHILE P ASSING THE ORDER U/S 201(1)/201(1A) ON 30.3.2011 BY THE INCOM E TAX OFFICER(TDS).THE PENALTY THE SHOW CAUSE NOTICE WAS ISSUED BY THE JCIT ON 9.1.2015 AND THE ORDER IMPOSING PENALTY WAS PASSED ON 4.3.2015.WE FIND FORCE IN THE ARGUMENTS OF THE LD AR THAT THE PROVISIONS OF SECTION 275(1)(A) ARE NOT AP PLICABLE TO THE PRESENT CASE BUT IS COVERED BY SECTION 275(1)(C) O F THE ACT. THEREFORE THE LIMITATION FOR PASSING THE ORDER U/S 271C EXPIRED ON 30.9.2011 AS THE LIMITATION PERIOD HAS TO BE TAK EN FROM THE DATE ON WHICH THE ACTION FOR INITIATION OF PENALTY PROCEEDINGS TAKEN BY THE ASSESSING OFFICER (TDS) AND NOT FROM T HE DATE OF SHOW CAUSE NOTICE ISSUED BY THE JCIT. WE, THEREFOR E, RESPECTFULLY FOLLOWING THE RATIO LAID BY THE HONBL E RAJASTHAN HIGH COURT AS AFFIRMED BY THE HONBLE SUPREME COURT , HOLD THAT THE ORDER PASSED U/S 271C ID BARRED BY LIMITATION. 13. EVEN ON MERIT THE ASSESSEE HAS VERY STRONG CAS E IN SO FAR AS IN ALL THE PRECEDING FROM AY 2004-05 TO AY 2008- 09 AND SUCCEEDING YEARS 2010-11 & 2011-12 ,THE THE REVENUE HAS NOT MADE ANY DISALLOWANCE U/S 40(A)(IA) DESPITE THE FAC T THAT ASSESSEE HAD NOT DEDUCTED ANY TDS ON THE PAYMENT OF GROUND RENT TO MMRDA. WE FIND MERIT IN THE ARGUMENTS OF TH E LD AR THAT THE ASSESSEE WAS UNDER BONAFIDE BELIEF THAT IT IS NOT LIABLE TO DEDUCT ANY TAX AT SOURCE FROM THE GROUND RENT PA ID TO ITA NO.3776/M/2017 M/S. MATURE TRADING AND INVESTMENT LTD. 9 MMRDA AS IN THE PRECEDING AND SUCCEEDING NO TDS WAS DEDUCTED AND THE REVENUE ACCEPTED THE CLAIM OF THE ASSESSEE WITHOUT MAKING ANY DISALLOWANCE U/S 40(A)(IA) OF TH E AC. EVEN THE TAX AUDITOR IN TAX AUDIT REPORT IN FORM 3CD REP ORTED IN PARA 17(F) THAT AMOUNTS INADMISSIBLE U/S 40(A)(IA) AS N/A. THUS THE ASSESSEE WAS UNDER GENUINE AND BONAFIDE BELIEF THAT NO TDS IS REQUIRED TO BE DEDUCTED. THE LD. A.R. RELIED ON A C OUPLE OF DECISIONS NAMELY; 1. HINDUSTAN STEEL LTD VS. STATE OF ORISSA 83 ITR 2 6 2. CIT VS KOTAK SECURITIES LTD (2012) 340 ITR 333 (BOM) THE HONBLE SUPREME COURT IN THE CASE OF HINDUSTAN STEEL LTD (SUPRA) OBSERVED THAT EVEN WHEN THERE IS A TECH NICAL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT OR WHERE THE BREACH FLOWS FROM THE BONAFIDE BELIEF THAT OFFENDER IS NOT LIABLE TO ACT IN A MANNER PRESCRIBED BY THE STATUTE, THE AUTHORITY C OMPETENT TO IMPOSE PENALTY IS JUSTIFIED IN REFUSING TO IMPOSE P ENALTY. SIMILARLY, IN THE CASE OF CIT VS KOTAK SECURITIES LT D (SUPRA), THE HONBLE COURT HAS HELD THAT WHERE THE REVENUE HAS A CCEPTED THE BUSINESS EXPENDITURE IN THE PAST 10 YEARS, THE N FA ILURE TO DEDUCT TAX AT SOURCE IN THE 11 TH YEAR IS NOT A GROUND FOR DISALLOWING THE SAID PAYMENT. IN THE CASE OF THE AS SESSEE THE PAYMENT OF GROUND RENT TO MMRDS HAS BEEN ACCEPTED B Y THE REVENUE IN THE EARLIER AND SUCCEEDING YEARS, SO IN THE PRESENT CASE THE ASSESSING OFFICER CAN NOT MADE DISALLOWANC E U/S 40(A)(IA) OF THE ACT AND CONSEQUENTLY NO PENALTY U/ S 271C CAN BE IMPOSED. ITA NO.3776/M/2017 M/S. MATURE TRADING AND INVESTMENT LTD. 10 14. IN RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 19.02.2019. SD/- SD/- ( RAM LAL NEGI) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 19.02.2019. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASS TT. REGISTRAR, ITAT, MUMBAI.