OSCAR INFRA P. LTD, NAVI MUMBAI V. ASST CIT CEN CIR 8(4), MUMBAI

ITA 4122/MUM/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0234 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 16-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PURSHOTTAM KUMAR
• Keywords: Non compliance
• Section: 194C; 6; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHR I RAJESH KUMAR , ACCOUNTANT MEMBER ITA NO .4122 /MUM. /2016 ( ASSESSMENT YEAR : 2011 12 ) OSCAR INFRA P. LTD. JN 3 14 5, AASHIRWAD CHS SECTOR 9, VASHI NAVI MUMBAI 400 730 PAN AABC00152H . APPELLANT V/S ASSTT. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 8(4) , MUMBAI . RESPONDENT ASSESSE E BY : SHR I J.P. BAIRAGR A REVENUE BY : SHR I PURSHOTTAM KUMAR DATE OF HEARING 08.08.2017 DATE OF ORDER 18.08.2017 O R D E R PER SAKTIJIT DEY, J.M. A FORESAID APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 31 ST OCTOBER 2014, PASSED BY THE LEARNED COMMISSIONER (APPEALS) 50 , MUMBAI, CONFIRMING THE PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT'). 2 . BRIEF FACTS OF THE CASE ARE, THE ASSESSEE IS A COMPANY. FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE FILED IT S RETURN OF INCOME DECLARING INCOME AT NIL. IN THE COURSE OF ASSESSMENT 2 CINEYUG PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE, THOUGH, HAS MADE PAYMENT OF ` 7.70 CRORE TOWARDS CONTRACT WORK, HOWEVER, IN TERMS OF SECTION 194C OF THE ACT, IT HAS NOT DEDUCTED TAX AT SOURCE. HE, THEREFORE, CALLED UPON THE ASS ESSEE TO EXPLAIN WHY THE EXPENDITURE CLAIMED SHOULD NOT BE DISALLOWED UNDER SECTION 40(A)(IA) OF THE ACT. THOUGH, THE ASSESSEE OBJECTED TO THE PROPOSED DISALLOWANCE SUBMITTING THAT THE PAYMENT WAS MADE TO A JOINT VENTURE, THEREFORE, PROVISIONS OF SECTION 1 94C OF THE ACT ARE NOT APPLICABLE, H OWEVER, THE ASSESSING OFFICER REJECTING ASSESSEES EXPLANATION DISALLOWED AMOUNT OF ` 7.70 CRORE UNDER SECTION 40(A)(IA) OF THE ACT FOR NON DEDUCTION OF TAX AT SOURCE. FURTHER, THE ASSESSING OFFICER NOTICING THAT THE ASS ESSEE HAS CLAIMED CARRY FORWARD OF LOSS AMOUNTING TO ` 6.06 CRORE, CALLED UPON THE ASSESSEE TO JUSTIFY THE CLAIM. IN RESPONSE, IT WAS SUBMITTED BY THE ASSESSEE THAT THE LOSS PERTAINED TO ASSESSMENT YEAR 2009 10, HOWEVER, THE ASSESSING OFFICER ON EXAMINING THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 2009 10, FOUND THAT THERE IS NO LOSS DETERMINED BY THE ASSESSING OFFICER TO BE CARRIED FORWARD. ACCORDINGLY, HE DISALLOWED THE CARRY FORWARD OF LOSS CLAIMED BY THE ASSESSEE. FURTHER, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE DURING THE RELEVANT PREVIOUS YEAR HAS CLAIMED SHORT TERM CAPITAL LOSS OF ` 29,21,703. THE ASSESSING OFFICER OBSERVED, IN TERMS OF SECTION 94(7) OF THE ACT, LOSS OF ` 58,258, IS NOT ALLOWABLE IN RESPECT OF DIVIDEND EARNED ON PURCHASES OF SHARE S 3 CINEYUG MADE THREE MONTHS BEFORE THE RECORD DATE. A SSESSEE ACCEPTED THE VIEW EXPRESSED BY THE ASSESSING OFFICER WHILE EXPLAINING THAT MISTAKE COMMITTED WAS ON ACCOUNT OF LACK OF PROPER GUIDANCE BY THE TAX CONSULTANT. ON THE BASIS OF ADDITIONS MADE , THE ASSESSING OFFICER INITIATED PROCEEDINGS FOR IMPOSITION OF PENALTY ALLEGING FURNISHING OF INACCURATE PARTICULARS OF INCOME. THOUGH, THE ASSESSEE OBJECTED TO THE PENALTY PROCEED ING , HOWEVER, THE ASSESSING OFFICER IMPOSED PENALTY OF ` 4,60,87,534 UNDER SECTION 271(1)( C) OF THE ACT. THE PENALTY IMPOSED WAS UPHELD BY THE LEARNED COMMISSIONER (APPEALS) IN AN EX PARTE ORDER WHICH IS IMPUGNED IN THE PRESENT APPEAL. 3 . LEARNED AUTHORISED REPRESENTATIVE SUBMITTED, AS FAR AS THE DISALLOWANCE MADE UNDER SECTION 40(A)(IA) OF THE A CT AMOUNTED TO ` 7.70 CRORE IS CONCERNED, NO PENALTY CAN BE IMPOSED UNDER SECTION 271(1)(C) OF THE ACT AS THE ASSESSEE HAS NEITHER FURNISHED INACCURATE PARTICULARS OF INCOME NOR CONCEALED THE PARTICULARS OF INCOME. IT IS MERE STATUTORY DISALLOWANCE FOR NON COMPLIANCE OF TDS PROVISIONS. AS FAR AS DISALLOWANCE OF CARRY FORWARD OF LOSS AMOUNTING TO ` 6.05 CRORE IS CONCERNED, THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED, IN AN ORDER PASSED UNDER SECTION 154 OF THE ACT ON 30 TH MAY 2016, THE ASSESSING OFFIC ER HAS ACTUALLY ALLOWED THE CARRY FORWARD OF LOSS OF ` 6.05 CRORE BY SE TTING IT OFF AGAINST THE INCOME OF THE IMPUGNED ASSESSMENT YEAR. HE, THEREFORE, SUBMITTED NO PENALTY CAN BE IMPOSED ON SUCH AMOUNT. AS FAR AS THE BALANCE ADDITION OF ` 58,258 IS 4 CINEYUG CONCERN ED, THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT IT WAS A GENUINE MISTAKE OF THE ASSESSEE DUE TO LA C K OF PROPER GUIDANCE OF PROFESSIONAL AND IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE ACCEPTING THE MISTAKE HAS OFFERED THE AMOUNT AS INCOM E. HE SUBMITTED, THERE BEING NO DELIBERATE ATTEMPT ON THE PART OF THE ASSESSEE TO EITHER CONCEAL PARTICULARS OF INCOME OR FURNISH INACCURATE PARTICULARS OF INCOME, PENALTY UNDER SECTION 271(1)(C) OF THE ACT SHOULD NOT BE IMPOSED. 4 . LEARNED DEPARTMENTAL REPR ESENTATIVE RELIED UPON THE OBSERVATIONS OF THE LEARNED COMMISSIONER (APPEALS). 5 . WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. NOTABLY, PENALTY UNDER SECTION 271(1)(C) HAS BEEN IMPOSED ON THE BASIS OF THE FOLLOWING ADDITIONS. ` 7,70,00,000 ON ACCOUNT OF DISALLOWANCE U/S 40(A)(IA) ` 6,05,00,258 DISALLOWANCE ON ACCOUNT OF CARRY FORWARD OF LOSS PERTAINING TO A.Y. 2009 10 ` 58,258 DISALLOWANCE ON ACCOUNT OF SHORT TERM CAPITAL LOSS U/S 94(7). 6 . AS FAR AS DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT FOR ` 7,70,00,000 IS CONCERNED, UNDISPUTEDLY, THE ASSESSEE HAS FURNISHED FULL PARTICULARS OF SUCH PAYMENT BEFORE THE ASSESSING OFFICER AND THE ASSESSING OFFICER HAS NOT DOUBTED OR DISPUTED THE GENUI NENESS OF 5 CINEYUG PAYMENTS MADE BY THE ASSESSEE . ONLY BECAUSE OF NON DEDUCTION OF TAX AT SOURCE WHILE MAKING SUCH PAYMENTS, THE ASSESSING OFFICER HAS DISALLOWED THE SAME UNDER SECTION 40(A)(IA) OF THE ACT. THUS, AS COULD BE SEEN, THE DISALLOWANCE WAS ON ACCOUNT OF A TECHNICAL DEFAULT COMMITTED BY THE ASSESSEE IN NOT CONDUCTING TAX AT SOURCE. THAT BEING THE CASE, IN OUR CONSIDERED OPINION, IT NEITHER LEADS TO CONCEALMENT OF INCOME NOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. AS HELD BY THE HON'BLE SUPREME COU RT IN CIT V/S RELIANCE PETROPRODUCTS PVT. LTD., [2010] 322 ITR 158 (SC) , EVERY DISALLOWANCE MADE BY THE ASSESSING OFFICER WOULD NOT LEAD TO IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT UNLESS THE CONDITIONS OF SECTION 271(1)(C) ARE SATISFIED. A PPLYING THE AFORESAID RATIO, IMPOSITION OF PENALTY ON THE ADDITION OF ` 7,70,00,000 IS NOT VALID. AS FAR AS CARRY FORWARD OF LOSS OF ` 6.05 CRORE IS CONCERNED, IT IS EVIDENT THAT ON THE BASIS OF ORDER PASSED BY THE LEARNED COMMISSIONER (APPEALS) IN QUANTUM PROCEEDINGS FOR ASSESSMENT YEAR 2009 10, THE ASSESSING OFFICER IN AN ORDER PASSED UNDER SECTION 154 OF THE ACT, ON 30 TH MAY 2016, FOR THE IMPUGNED ASSESSMENT YEAR, HAS IN FACT ALLOWED ASSESSEES CLAIM OF CARRY FORWARD OF LOSS OF ` 6.05 CRORE. THAT BEING THE CASE, THERE IS NO ADDITION SURVIVING FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. AS FAR AS REMAINING ADDITION OF ` 58,258 IS CONCERNED, NOTABLY, DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS ACCEPTED THE FACT T HAT THE 6 CINEYUG CLAIM OF LOSS TO THAT EXTENT WAS DUE TO A MISTAKE ARISING OUT OF LA C K OF PROPER GUIDANCE BY A PROFESSIONAL. IN OUR VIEW, THE AFORESAID EXPLANATION OF THE ASSESSEE APPEARS TO BE BELIEVABLE . IN THE AFORESAID FACTS AND CIRCUMSTANCES, WE ARE OF THE VIE W THAT PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS NOT IMPOSABLE SINCE PRIMARY CONDITION S OF SECTION 271(1)(C) ARE NOT SATISFIED. 7 . IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18.08.2017 SD/ - RAJESH KUMAR ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 18.08.2017 COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (DY./ASSTT. REGISTRAR) ITAT, MUMBAI