ADDL CIT (TDS) RG 1, MUMBAI V. ENTERTAINMENT ONE INDIA LTD ( NOW MERGED WIH AD LABS LTD), MUMBAI

ITA 3863/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49448 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 05-07-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 13-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JITENDRA B SANGHAVI
• Keywords: Rectification of order
• Section: 133A; 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, E BENCH, MUMBAI. BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO, JUDICIAL MEMBER I.T.A NO.3863/ MUM/2010 ASSESSMENT YEAR: 2006-07 ADDL. CIT (TDS), RANGE-1 .. APPELLANT 8 TH FLOOR, R.NO.812, K.G.MITTAL AYURVEDIC HOSPITAL BLD G., CHARNI ROAD(W), MUMBAI-02. VS ENTERTAINMENT ONE INDIA LTD. ,. RESPONDEN T (NOW MERGED WITH AD LABS LTD), FILM CITY, GOREGOAN(E),, MUMBAI. PA NO.AACCA 2061 J APPEARANCES: G.P.TRIVEDI, FOR THE APPELLANT JITENDRA B SANGHAVI, FOR THE RESPONDENT O R D E R PER PRAMOD KUMAR: 1. BY WAY OF THIS APPEAL, THE ASSESSING OFFICER HAS CALLE D INTO QUESTION CORRECTNESS OF CIT(A)S ORDER DATED 18 TH FEBRUARY, 2010, IN THE MATTER OF PENALTY UNDER SECTION 271 C OF THE INCOME TAX ACT, 1961, FO R THE ASSESSMENT YEAR 2006-07 ON THE FOLLOWING GROUNDS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) WAS NOT JUSTIFIED IN DELETING THE PENALTY U/S.271C OF THE I.T .ACT, 1961 AND THE QUANTUM ADDITION BY OBSERVING THAT THE PROVISION OF SECTION 19 4C AND 194J ARE NOT ATTRACTED IN THE CASE OF THE APPELLANT WITH REFERENC E TO ORDER OF HONBLE ITAT DATED 15.6.2009 VIDE ITA NOS.1095 TO 098/MUM/2007. 2 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LD CIT(A ) WAS NOT JUSTIFIED IN DELETING THE PENALTY U/S.271C OF I.T.ACT 1961 WHERE THE APPEAL U/S.260A OF I.T.ACT 1961 HAS ALREADY BEEN FILED IN HONBLE HIGH COURT, BOMBAY VIDE LODGING NO.ITXAL NO.2885 OF 2009 DATED 17.12.2009 A GAINST THE HONBLE ITATS ORDER NOS.1095 TO 1098/M/2007 DATED 15.6.2009 WHICH IS PASSED IN CONNECTION WITH APPEAL AGAINST ORDER U/S.201(1) IN ASSE SSEES OWN CASE. 2. TO ADJUDICATE ON THIS GRIEVANCE, ONLY A FEW MATER IAL FACTS NEED TO BE TAKEN NOTE OF. THE ASSESSEE WAS SUBJECTED TO A SURVEY ACTION U NDER SECTION 133A OF THE INCOME TAX ACT, 1961 AND IN THE COURSE OF THE SAID SUR VEY PROCEEDINGS, IT WAS FOUND THAT THE ASSESSEE TAX DEDUCTOR HAS NOT DEDUCTED TAX AT SO URCE FROM THE CERTAIN PAYMENTS AMOUNTING TO ` .95,55,342. THE CONTENTION OF THE ASSESSEE WAS THAT THE TAX WAS NOT DEDUCTIBLE FROM THOSE PAYMENTS BECAUSE THE ASSESSE HAD MAINLY PROVIDED FINANCE AND THAT THE PROVISIONS OF CHAPTER XVII ARE N OT APPLICABLE IN THIS CASE. THIS CONTENTION, HOWEVER, WAS NOT ACCEPTED BY THE AO AND THAT THE AO PROCEEDED TO RAISE DEMAND UNDER SECTION 201 R.W.S 194C AND 194J OF THE A CT. THE AO FURTHER REQUIRED THE ASSESSEE TO SHOW CAUSE AS TO WHY PENALTY UNDER SECTION 271C FOR NOT DISCHARGING THE TAX WITHHOLDING OBLIGATION BE IMPOSED. AS THERE WAS NO REPLY FROM THE ASSESSEE TAX DEDUCTOR, THE AO PROCEEDED TO IMPOSE PENALTY UND ER SECTION 271C OF THE ACT. THOUGH THE ORIGINAL TAX WITHHOLDING DEMAND WAS RAISED FOR ` .95,55,342, THE AO NOTICED THAT PURSUANT TO RECTIFICATION ORDER UNDER SE CTION 154, THE DEMAND WAS REDUCED TO ` .8,38,740. ACCORDINGLY, PENALTY UNDER SECTION 271C WAS ALSO IMPOSED AT ` .8,38,740 I.E. EQUAL TO THE AMOUNT OF TAX WHICH THE ASSSESSEE TAX DEDUCTOR FAILED TO DEDUCT THE TAX AT SOURCE. AGGRIEVED, THE ASSESSEE CARR IED THE MATTER IN APPEAL. BY THE TIME THE MATTER CAME UP FOR CONSIDERATION BEFORE THE CIT(A), A COORDINATE BENCH OF THIS TRIBUNAL VIDE ORDER DATED 15.6.2009 HAD QUASH ED THE TAX WITHHOLDING DEMAND IN RESPECT OF WHICH THE IMPUGNED PENALTY WAS LEVIED. THE CIT(A) TOOK NOTE OF THIS AND CONCLUDED THAT SINCE THE TRIBUNAL HAS DELETED TH E QUANTUM ADDITION, THE PENALTY LEVIED UNDER SECTION 271C ALSO DESERVED TO BE DELETED. THE ASSESSING OFFICER IS NOT SATISFIED AND IS IN APPEAL BEFORE US. 3. LEARNED REPRESENTATIVES FAIRLY AGREE THAT THE DEM AND FOR SHORT DEDUCTION OF TAX AT SOURCE IN RESPECT OF WHICH THE IMPUGNED PENALT Y UNDER SECTION 271C IS LEVIED IS QUASHED BY ORDER DATED 15.6.2009 PASSED BY A COORDINAT E BENCH, COPY OF THE SAID 3 ORDER WAS PLACED BEFORE US. LEARNED DEPARTMENTAL REP RESENTATIVE, HOWEVER, SUBMITS THAT IN VIEW OF THE FACT THAT THE REVENUE HAS FILED APPEAL AGAINST THE SAID ORDER BEFORE THE HONBLE HIGH COURT, THEY WOULD LIKE THE MATTER ALIVE IN RESPECT OF PENALTY AS WELL. LEARNED COUNSEL, ON THE OTHER HAND, SUBMITS THAT ONCE THE QUANTUM DEMAND ITSELF IS QUASHED, PENALTY CANNOT SURVIVE. 4. HAVING HEARD THE RIVAL CONTENTIONS AND HAVING PER USED THE MATERIAL ON RECORD, WE FIND THAT THE VERY QUANTUM DEMAND FOR TA X WITHHOLDING IS QUASHED BY THE CO-ORDINATE BENCH, THEREFORE, WE ARE OF THE VIEW TH AT THE IMPUGNED PENALTY WAS RIGHTLY DELETED BY THE CIT(A) FOR THE SHORT REASON, A ND THAT WE NEED NOT INTERFERE IN THE MATTER. MERELY BECAUSE AN ORDER IS CHALLENGED IN APPEAL BEFORE THE HIGHER JUDICIAL FORUM, IT DOES NOT LOSE ITS BINDING NATURE OR ENFORCEABILITY. ONCE IT IS NOT IN DISPUTE THAT THE TAX WITHHOLDING DEMAND ITSELF IS QUASH ED, AS THE LD CIT(A) RIGHTLY POINTS OUT, THE VERY CAUSE OF ACTION OF PENALTY FOR N OT WITHHOLDING TAX IN RESPECT OF WHICH DEMAND CEASES TO SURVIVE. WE APPROVE AND UPHOLD THE ACTION OF THE CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. 5. IN THE RESULT, APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 15 TH JULY, 2011 SD/- (VIJAY PAL RAO) JUDICIAL MEMBER SD/- (PRAMOD KUMAR) ACCOUNTANT MEMBER MUMBAI, DATED 15 TH JULY, 2011 PARIDA COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS),14 MUMBAI 4. COMMISSIONER OF INCOME TAX, (TDS), RANGE-1 , MUMB AI 5. DEPARTMENTAL REPRESENTATIVE, BENCH E, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI