ACIT Circle 4(1), Chandigarh V. M/s Punjab Genco Ltd.,, Chandigarh

ITA 410/CHANDI/2012

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6848 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 year(s) 5 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 09-02-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 11-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C CHANDRAKANTA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI. SANJAY GARG, JUDICIAL, MEMBER AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER ITA NO.410/CHD/2012 ASSESSMENT YEAR: 2005-06 ACIT VS. M/S PUNJAB GENCO LTD. RANGE 4(1), PLOT NO. 1-2, SECTOR-33D CHANDIGARH CHANDIGARH PAN NO. AABCE4247L (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. TEJ MOHAN SINGH DEPARTMENT BY : SMT. C. CHANDRAKANTA DATE OF HEARING : 22/08/2017 DATE OF PRONOUNCEMENT : 21/09/2017 ORDER PER DR. B.R.R.KUMAR, AM THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE A GAINST THE ORDER OF THE LD. CIT(A) CHANDIGARH DT. 15/01/2012. 2. THE EFFECTIVE GROUND TAKEN BY THE ASSESSEE IS GR OUND NO. 2 WHICH READS AS UNDER: 2. THE LD. CIT(A) ERRED IN DELETING THE PENALTY IMP OSED UNDER SECTION 271(1)(C) ON ADDITION UNDER SECTION 40(A)(IA) OF TH E INCOME TAX ACT, 1961. 3. BRIEF FACTS : THE ASSESSING OFFICER OBSERVED DURING THE ASSESSME NT PROCEEDING THAT THE ASSESSEE HAS CLAIMED EXPENDITURE OF INTEREST PAYABL E TO M/S PUNJAB ENERGY DEVELOPMENT AGENCY (PEDA). AN AMOUNT OF RS. 2,01,19 ,172/- HAS BEEN PAID BY THE ASSESSEE TO M/S PUNJAB ENERGY DEVELOPMENT AGENC Y. THE ASSESSEE EXPLAINED THAT THE SAID INTEREST HAS BEEN PAID ONLY TO PEDA BEING A NODAL AGENCY FOR ONWARD TRANSFER OF SAME TO STATE GOVERNM ENT WHO IN TURN SHALL PAY THE SAME TO THE WORLD BANK. THE SAID INTEREST HAS B EEN PAID TO PEDA DUE TO THE 2 FACT THAT THE LOANS HAVE BEEN TRANSFERRED TO THE AS SESSEE ONLY THROUGH PEDA. SINCE THERE WAS NO DOCUMENTARY EVIDENCE ON RECORD O R PRODUCED TO SHOW THAT ASSESSEEE HAS TAKEN LOAN FROM THE GOVERNMENT AND IT S LIABILITY TO PAY THE INTEREST AND PRINCIPAL AMOUNT IS TOWARDS PUNJAB GOV ERNMENT, THE ASSESSING OFFICER OBSERVED THAT THE LOAN HAS BEEN GIVEN BY PE DA TO THE ASSESSEE THAT IS THE REASON FOR ASSESSEE PAYING INTEREST TO PEDA. TH E ASSESSING OFFICER HELD THAT AS PER PROVISIONS OF SECTION 40(A)(IA) ANY INTEREST AMOUNT ON WHICH TAX IS REQUIRED TO BE DEDUCTED BY THE ASSESSEE, WILL BE AL LOWED ONLY IF TAX IS DEDUCTED AND DEPOSITED. SINCE THE ASSESSEE HAS FAIL ED TO DEDUCT TAX ADDITION OF RS. 2,01,19,172/-WAS MADE U/S 40(A)(IA) BY THE A SSESSING OFFICER. THIS ADDITION HAS BEEN CONFIRMED BY THE CIT(A) IN APPEAL U/S 250( 6). OWING TO THE CONFIRMING OF THE ADDITION THE ASSESSING OFFICER VIDE THE PENA LTY ORDER DT. 19/12/2007 HAS LEVIED PENALTY UNDER SECTION 271(1)(C) @ 100% OF TH E TAX SOUGHT TO BE EVADED. 4. AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). 5. THE LD. CIT(A) HELD THAT THE ADDITION MADE ON TH IS ACCOUNT WAS CONFIRMED BY CIT(A) IN THE INSTANT YEAR BUT CIT(A) HAS HELD I N A.Y. 2006-07 AND 2007-08 THAT PAYMENT MADE TO THE PUNJAB GOVT, THROUGH PEDA IS NO T COVERED U/S 40(A)(IA) OF THE ACT AND SO THE ISSUE HAS BECOME DEBATABLE. FURT HER, THE HON'BLE ITAT DELHI IN THE CASE OF AT & T COMMUNICATIONS SERVICES INDIA PVT. LTD. (42 DTR 22) HAS HELD THAT THE DISALLOWANCE MADE BY INVOKING PROVISI ONS OF SECTION 40(A)(I) CANNOT BE A GROUND TO LEVY PENALTY U/S 271(L)(C) SI NCE IN SUCH SITUATIONS, IT CANNOT BE SAID THAT THE ASSESSEE HAD FAILED TO DISC LOSE FULLY AND TRULY ALL MATERIAL FACTS RELEVANT TO THE DEDUCTION CLAIMED BY THE ASSE SSEE. SECTION 40(A)(I) PERTAINS TO PAYMENTS MADE TO NON-RESIDENTS AND THE CORRESPONDING PROVISION FOR RESIDENTS IS SECTION 40(A) (IA) AND SO THE RATIO OF THIS DECISION IS EQUALLY APPLICABLE IN RESPECT OF DISALLOWANCE U/S 40(A)(IA) ALSO. MOREOVER, THE ENTIRE AMOUNT HAD BEEN ADDED U/S 40(A)(IA) FOR NON-DEDUCTI ON OF TAX AND THE APPELLANT HAS ALREADY BEEN PENALIZED BY TAXING WHOL E OF THE AMOUNT, ON WHICH TAX WAS TO BE DEDUCTED. HOLDING THUS, AND KEEPING I N VIEW THE FACT THAT THE ISSUE IS DEBATABLE, THE LD. CIT(A) HAS DELETED THE CONCEALMENT PENALTY LEVIED U/S 271(L)(C) BY FOLLOWING THE DECISION OF HON'BLE ITAT DELHI (SUPRA). 6. AGGRIEVED WITH THE DECISION OF THE LD. CIT(A), T HE REVENUE PREFERRED APPEAL BEFORE US AGAINST THE DELETION OF THE PENALT Y. 3 7. BEFORE US THE LD. DR ARGUED THAT THE PENALTY IS LEVIABLE FOR THE CURRENT YEAR AS THE ADDITION HAS BEEN SUSTAINED BY THE LD. CIT(A), WHEREAS THE LD. AR ARGUED THAT THE PENALTY CANNOT BE LEVIED ON DISALLO WANCES MADE UNDER SECTION 40(A)(IA). 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFUL LY AND WE FIND FORCE IN THE SUBMISSIONS OF LD. COUNSEL FOR THE AS SESSEE. IN THIS CASE ASSESSEE HAS NEITHER CONCEALED ANY PARTICULARS OF I NCOME NOR FURNISHED ANY INACCURATE PARTICULARS OF INCOME. IN FACT, TDS HAS BEEN DEDUCTED IN THE NEXT YEAR AND EVEN EXPENDITURE HAS BEEN ALLOWED IN THE SUBSEQUENT YEARS, THEREFORE, IT IS N OT A FIT CASE OF LEVY OF PENALTY AND ACCORDINGLY WE FIND NOTHING WRONG WI TH THE ORDER OF CIT(A). SIMILAR VIEW WAS TAKEN BY THE COORDINATE BE NCH OF ITAT CHANDIGARH IN THE CASE OF ACIT VS. M/S TORQUE PHARM ACEUTICALS (P) LTD. IN ITA NO. 972/CHD/2013 DT. 19/05/2015 WHEREIN IT WAS HELD AS UNDER: THE ISSUE INVOLVED IN THE APPEAL IS REGARDING CANC ELLATION OF PENALTY ON ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF EXPENDITURE UNDER SECTION 40(A)(IA) OF THE ACT. TH E ASSESSEE HAS DISCLOSED THE ENTIRE FACTS BEFORE THE AUTHORITIES B ELOW WITHOUT CONCEALING ANY INCOME. THE ASSESSEE MADE A CLAIM O F DEDUCTION IN THE RETURN OF INCOME AND EXPLAINED THE FACTS BUT THE SAME WERE NOT ACCEPTED BY THE AUTHORITIES BELOW AND ADDITIONS HAVE BEEN CONFIRMED. THEREFORE, IT IS A CASE OF MERE DISALLO WANCE OF EXPENDITURE WITHOUT BRINGING ANY ADEQUATE MATERIAL AGAINST ASSESSEE TO PROVE THAT ASSESSEE HAS CONCEALED THE P ARTICULARS OF INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF I NCOME. THE APPEAL OF THE ASSESSEE ON SUBSTANTIAL QUESTION OF L AW WITH REGARD TO DISALLOWANCE UNDER THE PROVISIONS HAD BEEN ADMIT TED BY HON'BLE PUNJAB & HARYANA HIGH COURT. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS HARYANA WAREHOUSING COR PORATION 314 ITR 215 HELD AS UNDER : HELD, DISMISSING THE APPEAL, THAT THE DEDUCTION CL AIMED BY THE ASSESSEE WAS LEGITIMATE AND BONAFIDE IN TERMS OF THE CONFLICTING DETERMINATION OF LAW ON THE PROPOSITION IN QUESTION. THE CATEGORICAL FINDING AT THE HANDS OF THE TRIBUNAL IN ITS ORDER WAS THAT THE ASSESSEE HAD DISCLOSED THE ENTIR E FACTS WITHOUT HAVING CONCEALED ANY INCOME. THERE WAS NO ALLEGATION AGAIN ST THE ASSESSEE THAT IT HAD FURNISHED INACCURATE PARTICULARS OF ITS INCOME. THE DETERMINATION OF THE TRIBUNAL HAD NOT BEEN CONTROVERTED EVEN IN THE GROUNDS RAISE D IN THE APPEAL. THE ASSESSEE WAS GUILTY OF NEITHER OF THE TWO CONDITION S. THEREFORE, IN THE ABSENCE OF TWO PRE-REQUISITES POSTULATED UNDER SECTION 271(1)( C) IT WAS NOT OPEN TO THE REVENUE TO INFLICT ANY PENALTY ON THE ASSESSEE. 9. THE LD. CIT(APPEALS) CONSIDERING THE MATERIAL ON RECORD CORRECTLY FOLLOWED THE DECISION OF THE DELHI BENCH IN THE CASE OF AT&T COMMUNICATIONS SERVICES (INDIA) PVT. LTD. (SUP RA) FOR CANCELING THE PENALTY AGAINST THE ASSESSEE. THE ASSESSEE MAD E A BONAFIDE 4 CLAIM OF DEDUCTION OF THE EXPENDITURE EVEN THOUGH I T WAS NOT ACCEPTABLE TO THE REVENUE, WOULD NOT LEAD TO INFERE NCE THAT ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME OR FILED INACCURATE PARTICULARS OF INCOME. NOTHING IS BROUG HT ON RECORD IF CLAIM OF ASSESSEE WAS INCORRECT IN LAW OR WAS MALAF IDE. 10. CONSIDERING THE ABOVE DISCUSSION, IN THE LIGHT OF THE FINDINGS OF THE LD. CIT(APPEALS), WE DO NOT FIND ANY JUSTIFICAT ION TO INTERFERE WITH THE ORDER OF THE LD. CIT(APPEALS) IN CANCELLING THE PENALTY. 11. IN THE RESULT, DEPARTMENTAL APPEAL STANDS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON SD/- SD/- (SANJAY GARG) (DR. B.R.R. KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 21/09/2017 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR