DCIT, Mohali V. M/s Arsh International, Mohali

ITA 420/CHANDI/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63915 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 28-08-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 12-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHILESH GUPTA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO.420/CHD/2012 (ASSESSMENT YEAR : 2006-07) THE D.C.I.T., VS. ARSH INTERNATIONAL, CIRCLE 6(1), PLOT NO.17, PH.IX, MOHALI. MOHALI. PAN: AAFFA1220M (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AKHILESH GUPTA, DR RESPONDENT BY : NONE DATE OF HEARING : 28.08.2012 DATE OF PRONOUNCEMENT : 30.08.2012 O R D E R PER SUSHMA CHOWLA, J.M, : THE APPEAL FILED BY THE REVENUE IS AGAINST THE ORD ER OF THE COMMISSIONER OF INCOME-TAX(APPEALS), CHANDIGARH DAT ED 31.01.2012 RELATING TO ASSESSMENT YEAR 2006-07 AGAINST THE PEN ALTY LEVIED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT TH E ACT). 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A HAS ERRED IN ALLOWING APPEAL OF THE ASSESSEE WITHOUT APPRECIATING THE FACTS OF THE CASE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A HAS ERRED IN DELETING THE PENALTY IMPOSED U/S 271(1)(C) ON ADDITION U/S 40A(IA) OF THE INCOME TAX ACT, 1961. 2 4. DESPITE SERVICE OF NOTICE NONE APPEARED ON BEHAL F OF THE ASSESSEE. IN VIEW OF THE ISSUE RAISED IN THE PRESENT APPEAL T HE SAME WAS TAKEN UP FOR HEARING AND LEARNED D.R. FOR THE REVENUE PUT FO RWARD HIS CONTENTION. 5. WE FIND THAT PENALTY AMOUNTING TO RS.27,53,573/- U/S 271(1)(C) OF THE ACT WAS LEVIED. THE SAID PENALTY WAS LEVIED ON THE DISALLOWANCE OF COMMISSION EXPENSES OF RS.19,94,017/- WHERE THE ASS ESSEE WAS UNABLE TO FURNISH ANY EVIDENCE REGARDING THE PAYMENT OF THE C OMMISSION AND THE SAME WAS DISALLOWED. 6. THE SECOND ADDITION WAS MADE ON ACCOUNT OF NON D EDUCTION OF TAX AT SOURCE ON FREIGHT PAYMENT OF RS.61,85,401/- AND IN VIEW OF THE PROVISIONS OF SECTION 40A(IA) OF THE ACT DISALLOWAN CE WAS MADE. THE ASSESSING OFFICER LEVIED PENALTY U/S 271(1)(C) OF T HE ACT ON THE SAID ADDITIONS. 7. THE CIT (APPEALS) CONFIRMED THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT ON THE DISALLOWANCE OF COMMISSION EXPENSES. HOWEVER, DELETED THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT ON DISA LLOWANCE OF FREIGHT EXPENSES, FOLLOWING THE RATIO LAID DOWN BY THE DELH I BENCH OF THE TRIBUNAL IN AT & T COMMUNICATIONS SERVICES INDIA PV T. LTD. [42 DTR 22]. 8. THE REVENUE IS IN APPEAL AGAINST THE SAID DELETI ON OF PENALTY ON ONE OF THE ADDITION MADE IN THE HANDS OF THE ASSESS EE. THE LEARNED D.R. FOR THE REVENUE FAIRLY POINTED OUT THAT THE PENALTY IN THE CASE WAS LEVIED IN VIEW OF THE DISALLOWANCE MADE BY INVOKING THE PR OVISIONS OF SECTION 40A(IA) OF THE ACT. 9. WE FIND THAT DURING THE COURSE OF ASSESSMENT PRO CEEDINGS ADDITION OF RS.61,85,405/- WAS MADE IN VIEW OF THE ASSESSEE HAVING FAILED TO DEDUCT TAX AT SOURCE OUT OF FREIGHT PAYMENTS BY INV OKING THE PROVISIONS 3 OF SECTION 40A(IA) OF THE ACT. WE FIND THAT THE ISSUE OF APPLICATION OF PROVISIONS OF SECTION 40A(IA) OF THE ACT HAS NOW BE EN SETTLED BY THE SPECIAL BENCH OF VISHAKHAPATNAM REPORTED IN ACIT VS . MERILYN SHIPPING & TRANSPORTS[136 ITD 23(SB)(VISHAKHAPATNAM )] AND THERE IS A CHANGE OF VIEW VIS--VIS ALLOWABILITY OF EXPENDITUR E IN THE HANDS OF THE ASSESSEE. IN THE TOTALITY OF FACTS AND CIRCUMSTANC ES OF THE CASE, THERE IS NO MERIT IN LEVY OF PENALTY U/S 271(1)(C) OF THE AC T IN THE HANDS OF THE ASSESSEE. IN VIEW THEREOF, WE UPHOLD THE ORDER OF THE CIT (APPEALS) IN DELETING THE PENALTY LEVIED U/S 271(1)(C) OF THE AC T. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH DAY OF AUGUST, 2012. SD/- SD/- (MEHAR SINGH) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 30 TH AUGUST, 2012 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH 4