FOBEOZ INIDA P.LTD, MUMBAI V. ITO WD 9(1)-4, MUMBAI

ITA 4250/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79002 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-05-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 25-11-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 20-06-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PITAMBAR DAS
• Assessee Lawyers: CHAMPA L PUROHIT
• Keywords: Non-deduction of tax

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUM BAI , BEFORE SHRI D. MANMOHAN, VP AND SHRI SANJAY ARORA, AM I.T.A. NO. 4250/MUM/2012 ( / ASSESSMENT YEAR: 2007-08) FOBEOZ INDIA PVT. LTD. FOEOZ TOWERS, SHEETAL APTS., RAMCHANDRA LANE, KANCHPADA, MALAD (W), MUMBAI-400 064 VS. INCOME TAX OFFICER, WARD-9(1)-4, MUMBAI ! ' ./PAN/GIR NO. AAACF 9720 B ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) !#&' / APPELLANT BY : SHRI CHAMPA L. PUROHIT $%!#&' / RESPONDENT BY : SHRI PITAMBAR DAS ( )*&+, / DATE OF HEARING : 08.04.2014 -./&+, / DATE OF PRONOUNCEMENT : 28.05.2014 0 O R D E R PER SANJAY ARORA, A. M.: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-19, MUMBAI (CIT(A) FOR SH ORT) DATED 10.04.2012, CONFIRMING THE LEVY OF PENALTY U/S.271(1)(C) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) IN ITS CASE FOR THE ASSESSMENT YEAR (A.Y.) 2007-08 VID E ORDER DATED 11.03.2011. 2. THE IMPUGNED PENALTY STANDS LEVIED IN THE INSTAN T CASE ON THREE SEPARATE DISALLOWANCES. THE SAME HAVING BEEN SINCE CONFIRMED BY THE TRIBUNAL, I.E., ON QUANTUM, WHICH WOULD ONLY BE ON THE BASIS OF THE FACTS, WE S HALL ENLIST THE SAME SEPARATELY, AS FOLLOWS: 2 ITA NO. 4250/MUM/2012 (A.Y. 2007-08) FOBEOZ INDIA PVT. LTD. VS. ITO A) FREIGHT (RS.1,33,561/-) : THE SAID SUM, PAID TO M/S. FREIGHT SYSTEMS (I) P. LTD., AN INDIAN COMPANY, TOWARD FREIGHT ON IMPORTS, STANDS DISALLOW ED ON ACCOUNT OF NON- DEDUCTION OF TAX AT SOURCE. NO EXPLANATION WHATSOEV ER STANDS FURNISHED BY THE ASSESSEE AT ANY STAGE, LEADING TO THE CONFIRMAT ION OF THE DISALLOWANCE AS WELL AS THE PENALTY THEREON, LEVIED SUBSEQUENTLY. B) REIMBURSEMENT OF EXPENSES (RS.1 LAC) : THE SAME ARE CLAIMED TO BE PAID TO AN ADVOCATE, SHR I A. V. MENON, BY WAY OF REIMBURSEMENT FOR PUBLICATION OF NOTICES. HOWEVER, NO BILLS FROM ANY NEWSPAPER, ETC. BEING SUBMITTED, THE ASSESSEES CLAIM WAS CONSIDERED DOUBTFUL. BESIDES, EVEN OTHERWISE, PAYMENT TO PROFE SSIONALS ATTRACTS DEDUCTION OF TAX AT SOURCE AND, CONSEQUENTLY, DISAL LOWANCE U/S.40(A)(IA) IN- AS-MUCH AS THERE WAS NO SUCH DEDUCTION. C) ADVERTISEMENT (RS.65,000/-) : OF THE SAME, RS.50,000/- STANDS PAID TO HYPERCITY MALL FOR DISPLAY OF THE COMPANYS PRODUCTS AT THE PROMINENT PLACES I N THE MALL, SO THAT THE SAME IS ONLY IN THE NATURE OF ADVERTISEMENT EXPENDI TURE, SUBJECT TO TAX DEDUCTION AT SOURCE, AND WHICH HAVING NOT BEEN MADE , WOULD ATTRACT SECTION 40(A)(IA). FOR THE BALANCE RS.15,000/-, NO DETAILS FOR PAYMENT TO M/S. RADHA KRISHAN FOOD WERE AVAILABLE. THE PENALTY HAVING BEEN CONFIRMED IN THE ABSENCE OF ANY EXPLANATION FURNISHED BY THE ASSESSEE FOR THE IMPUGNED CLAIMS AND/OR DEFAULT , THE ASSESSEE IS IN SECOND APPEAL. 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. 3.1 WITH REGARD TO THE PAYMENT OF FREIGHT AND ADVER TISEMENT AT RS.1,33,561/- AND RS.50,000/- RESPECTIVELY, THE DISALLOWANCE STANDS E FFECTED U/S.40(A)(IA) ON ACCOUNT OF NON-DEDUCTION OF TAX AT SOURCE. WITHOUT DOUBT, THE PAYMENT STANDS MADE DURING THE RELEVANT YEAR, SO THAT IT WAS NOT PAYABLE AS AT THE YEAR-END. THE TRIBUNAL PER ITS SPECIAL BENCH DECISION IN THE CASE OF MERILYN SHIPPING & TRANSPORTS VS. ADDL. CIT [2012] 136 ITD 23 (VISHK) (SB) [ALSO 16 ITR (TRIB) 1] HAS HELD THAT SECTION 40(A)(IA) WOULD HOLD ONLY WHERE THE AMOUNT UNDER REFERENCE IS PAYABLE AS AT THE YEAR-END. SIMILAR VIEW STANDS EXPRESSED BY THE HONBLE ALLAHABAD HIGH COURT IN CIT VS. VECTOR SHIPPING SERVICES [2013] 85 CCH 201 (ALL). NO DOUBT A CONTRARY VIEW S TANDS EXPRESSED BY THE CALCUTTA AND 3 ITA NO. 4250/MUM/2012 (A.Y. 2007-08) FOBEOZ INDIA PVT. LTD. VS. ITO GUJARAT HIGH COURTS IN CIT VS. CRESCENT EXPORT SYNDICATE [2013] 216 TAXMANN 258 (CAL); AND CIT VS. SIKANDARKHAN N. TUNVAR [2013] 357 ITR 312 (GUJ) RESPECTIVELY, THE FACT OF THE MATTER REMAINS THAT THE ISSUE IS DEBATABLE, LIA BLE TO MORE THAN ONE VIEW. ACCORDINGLY, IN OUR VIEW, NO PENALTY IS LEVIABLE ON THESE DISALL OWANCES. 3.2 WITH REGARD TO THE OTHER TWO DISALLOWANCES LIST ED AT (B) & (C) ABOVE, WITHOUT DOUBT, EVEN THE PRIMARY DETAILS WERE NOT FORTHCOMIN G AT ANY STAGE, MUCH LESS EXHIBITING THE NEXUS THEREOF WITH THE ASSESSEES BUSINESS. NO IMPROVEMENT IN ITS CASE STANDS MADE EVEN IN THE PENALTY PROCEEDINGS. WE ACCORDINGLY HAV E NO HESITATION IN CONFIRMING THE PENALTY ON THESE TWO DISALLOWANCES, AGGREGATING TO RS.1,15,000/-. WE DECIDE ACCORDINGLY. 4. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY A LLOWED. 1/+23451+& ) 6 +&+7 ORDER PRONOUNCED IN THE OPEN COURT ON MAY 28, 2014 SD/- SD/- (D. MANMOHAN) (SANJAY ARORA) / VICE PRESIDENT / ACCOUNTANT MEMBER ( 8* MUMBAI; 9 DATED : 28.05.2014 )3 ROSHANI , SR. PS !' # $%&' (!'% COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $%!# / THE RESPONDENT 3. ( :+ ; < / THE CIT(A) 4. ( :+ / CIT - CONCERNED 5. =)>?$3+3@4 ,@4/ ( 8* / DR, ITAT, MUMBAI 6. ?5A* GUARD FILE !' ) / BY ORDER, */)+ , (DY./ASSTT. REGISTRAR) , ( 8* / ITAT, MUMBAI