DCIT, New Delhi V. M/s Indraprastha Power Generation Co. Ltd., New Delhi

ITA 4933/DEL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4288 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-04-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 18-04-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 11-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHYAMA S BANSIA
• Keywords: Retrospective amendment
• Section: 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH C CC C : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI C.L.SETHI, JM AND SHRI BEFORE SHRI C.L.SETHI, JM AND SHRI BEFORE SHRI C.L.SETHI, JM AND SHRI BEFORE SHRI C.L.SETHI, JM AND SHRI K. K.K. K.D.RANJAN D.RANJAN D.RANJAN D.RANJAN, AM , AM , AM , AM ITA NO. ITA NO. ITA NO. ITA NO.4933/DEL/2010 4933/DEL/2010 4933/DEL/2010 4933/DEL/2010 ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : 2005 2005 2005 2005- -- -06 0606 06 DY.COMMISSIONER OF DY.COMMISSIONER OF DY.COMMISSIONER OF DY.COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -11(1), 11(1), 11(1), 11(1), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. VS. VS. VS. VS. M/S INDRAPRASTHA POWER GENE M/S INDRAPRASTHA POWER GENE M/S INDRAPRASTHA POWER GENE M/S INDRAPRASTHA POWER GENERATION RATION RATION RATION CO.LTD., CO.LTD., CO.LTD., CO.LTD., HIMADRI RAJGHAT POWER HOUSE HIMADRI RAJGHAT POWER HOUSE HIMADRI RAJGHAT POWER HOUSE HIMADRI RAJGHAT POWER HOUSE COMPLEX, COMPLEX, COMPLEX, COMPLEX, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. PAN NO.AABCI0243H. PAN NO.AABCI0243H. PAN NO.AABCI0243H. PAN NO.AABCI0243H. (APPELLANT) (RESPONDENT) APPELLANT BY : SMT.SHYAMA S.BANSIA, CIT-DR RESPONDENT BY : NONE. ORDER ORDER ORDER ORDER PER C.L.SETHI PER C.L.SETHI PER C.L.SETHI PER C.L.SETHI, J , J, J , JM : M : M : M : THE ONLY GROUND RAISED BY THE REVENUE IN THIS APPE AL FILED AGAINST THE ORDER DATED 13.9.2010 OF LEARNED CIT(A) PASSED IN THE MATTER OF PENALTY LEVIED BY THE AO U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 FOR THE AY 2005-06 IS AS UNDER:- THE LD.CIT(A) HAD ERRED IN DELETING THE ADDITION M ADE BY THE AO AMOUNTING TO RS.3,98,88,136/- U/S 40(A)(IA) OF THE I.T.ACT, 1961 AND THEREBY DELETING A PENALTY OF RS.1,43,09,869/-. 2. IN THIS CASE, ASSESSMENT WAS COMPLETED U/S 143(3 ) OF THE ACT ON 31.10.2007 DETERMINING THE LOSS AT `35,18,41,220/- AS AGAINST THE RETURNED LOSS OF `39,17,29,353/-, AS PER REVISED RE TURN. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED BY THE AO THAT ASSESSEE HAD DEDUCTED TDS OUT OF THE CONTRACT PAYME NTS BUT SAME WAS NOT PAID TO THE GOVERNMENT ACCOUNT WITHIN THE S PECIFIED DATE. THE DETAILS OF SUCH TDS, DUE DATE AND DATE OF PAYMENT A RE AS UNDER:- ITA-4933/DEL/2010 2 S.NO. AMOUNT (RS.) AS PER ANNEXURE 11 DUE DATE PAID ON 1. 5,09,532/- 07/04/2005 12/05/2005 2. 3,61,372/- 07/04/2005 04/06/2005 3. 6,635/- 07/04/2005 27/06/2005 3. ON THE BASIS OF THE TOTAL AMOUNT OF TDS OF `8,77 ,539/- AND TAKING INTO ACCOUNT RATE OF TDS AT 2.2%, THE AO WORKED OUT THE TOTAL AMOUNT PAID TO THE CONTRACTORS AT `3,98,88,136/- ON WHICH TAX WAS DEDUCTED BUT PAID LATELY BEYOND THE SPECIFIED DATE. THE AO, THEREFORE, DISALLOWED THE DEDUCTION OF `3,98,88,136/- BY INVOK ING THE PROVISIONS OF SECTION 40(A)(IA). THE AO ALSO INITIATED PENALT Y PROCEEDINGS U/S 271(1)(C) OF THE ACT. 4. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSE E AND FACTS OF THE CASE, THE AO LEVIED PENALTY TO THE EXTENT OF 10 0% OF THE TAX SOUGHT TO BE EVADED ON THE AFORESAID DISALLOWANCE OF `3,98 ,88,136/- DISALLOWED U/S 40(A)(IA) OF THE ACT FOR THE REASON THAT TAX WAS NOT PAID WITHIN THE SPECIFIED DATE. IN THE PENALTY ORDER, T HE AO ALSO RELIED UPON THE DECISION OF APEX COURT IN THE CASE OF K.P. MADH USUDANAN VS. CIT 251 ITR 99 (SC). 5. BEING AGGRIEVED AGAINST THE PENALTY ORDER, THE A SSESSEE PREFERRED AN APPEAL BEFORE THE LEARNED CIT(A). 6. BEFORE THE LEARNED CIT(A), ASSESSEE SUBMITTED TH AT THERE WAS NO DISPUTE TO THE FACT THAT THE ASSESSEE DEDUCTED TAX AT SOURCE FROM THE PAYMENT MADE TO THE CONTRACTORS AND THE SAID TDS WA S REQUIRED TO BE DEPOSITED IN THE GOVERNMENT ACCOUNT ON 7.4.2005 BUT WAS ACTUALLY DEPOSITED ON 12.5.2005, 4.6.2005 AND 27.6.2005. TH E ASSESSEE FURTHER SUBMITTED BEFORE THE LEARNED CIT(A) THAT SE CTION 40(A)(IA) HAS ITA-4933/DEL/2010 3 SINCE BEEN AMENDED RETROSPECTIVELY W.E.F. 1.4.2005 BY THE FINANCE ACT, 2008 PROVIDING THERE THAT IF THE TAX IS DEDUCT IBLE AND WAS SO DEDUCTED DURING THE LAST MONTH OF THE PREVIOUS YEAR AND WAS SUBSEQUENTLY PAID ON OR BEFORE THE DUE DATE SPECIFI ED U/S 139(1) OF THE ACT, THEN SUCH EXPENDITURE SHALL NOT BE DISALLOWED U/S 40(A)(IA) OF THE ACT. IT WAS THUS SUBMITTED BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT IN THE LIGHT OF THE RETROSPECTIVE AMENDMENT EF FECTIVE FROM 1.4.2005, THE EXPENDITURE OF `3,98,88,136/- WAS NOT AT ALL FIT TO BE DISALLOWED INASMUCH AS THE TAX DEDUCTED THEREUPON H AS ULTIMATELY BEEN PAID ON 12.5.2005, 4.6.2005 AND 27.6.2005 MUCH BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME APPLICABLE TO T HE ASSESSEES CASE. THE ASSESSEE FURTHER POINTED OUT THAT DUE DATE SPEC IFIED U/S 139(1) OF THE ACT FOR FILING THE RETURN OF INCOME BY THE ASSE SSEE WAS 31.10.2005 AND THE TDS WHICH WAS DEDUCTED IN THE MONTH OF MARC H, 2005 AND DUE TO BE PAID ON 7.4.2005 HAS ALREADY BEEN PAID BEFORE THIS DATE. IT WAS THUS SUBMITTED THAT DISALLOWANCE OF `3,98,88,136/- WAS ITSELF DESERVED TO BE DELETED. BEFORE THE LEARNED CIT(A), THE ASSE SSEE ALSO PLACED RELIANCE ON THE DECISION OF ITAT MUMBAI B BENCH I N THE CASE OF ACIT VS. BHORUKA LOGISTICS (P) LTD. REPORTED IN ITCL 552 (MUM B TRIB.), WHERE THE TRIBUNAL HAS TAKEN A VIEW AS UNDER:- THIS IS A CASE WHERE DISPUTE AROSE AGAINST THE DISALLOWANCE OF EXPENDITURE IN VIEW SECTION 40(A)(I A) OF THE ACT. THE ASSESSEE HAD IN FACT PAID TDS AND IT IS N OT IN DISPUTE THAT THE EXPENDITURE SHOULD BE ALLOWED IN T HE SUBSEQUENT YEAR IN WHICH THE TDS HAS BEEN PAID TO T HE GOVT. TREASURY. THE FIRST APPELLANT AUTHORITY, IN OUR CONSIDERED OPINION, HAS RIGHTLY RELIED UPON THE JUD GMENT OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. AJAIN SINGH & CO. 253 ITR 630, WHEREIN IT IS HE LD THAT MERE DISALLOWANCE OF EXPENDITURE WILL NOT PER SE AM OUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. AT PARA 4 PAGE 3 OF HIS ORDER, THE FIRST APPELLATE AUTHORITY RIGHTLY HELD AS FOLLOWS:- ITA-4933/DEL/2010 4 ONCE THE EXPLANATION OF THE ASSESSEE IS NOT CONSID ERED FALSE AND EXPLANATION HAS BEEN GIVEN THE PENALTY CA N ONLY BE LEVIED IF THE EXPLANATION IS NOT BONA FIDE AND F ULL DETAILS FOR THE COMPUTATION OF INCOME HAS NOT BEEN GIVEN BY THE APPELLANT. IT MAY BE NOTED THAT RAJASTHAN HIGH COU RT DECISION IN 251 ITR 373 HAS ENUNCIATED THE PRINCIPL E OF BONA FIDE, WHEREIN IT HAS BEEN HELD THAT THERE IS PRESUMPTION THAT EXPLANATION GIVEN IS BONA FIDE UNL ESS PROVED TO BE OTHERWISE. 7. AFTER CONSIDERING THE FACTS OF THE CASE, ASSESSE ES SUBMISSION AND AOS ORDER, THE LEARNED CIT(A) DELETED THE PENA LTY BY OBSERVING AND HOLDING AS UNDER:- I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, BASED ON THE SUBMISSION OF THE AR AND EVIDENCES PLACED ON RE CORD. ON CAREFUL CONSIDERATION, I FIND FORCE IN THE ARGUM ENT PUT FORTH, BY THE AR, DURING THE COURSE OF THE PROCEEDI NGS BEFORE ME AND AM OF THE VIEW THAT THE AMENDED SECTI ON 40(A)(IA) OF THE ACT, PROVIDES THAT IF THE TAX IS D EDUCTIBLE AND WAS SO DEDUCTED DURING THE LAST MONTH OF THE PR EVIOUS YEAR, AND WAS PAID ON OR BEFORE THE DUE DATE SPECIF IED U/S 139(1) OF THE ACT, THEN SUCH EXPENDITURE SHALL NOT BE DISALLOWED U/S 40(A)(IA) OF THE ACT. SINCE THE EXP ENDITURE ITSELF COULD NOT HAVE BEEN DISALLOWED, THEREFORE, T HERE IS NO QUESTION OF THE APPELLANT HAVING DEFAULTED IN FILIN G INACCURATE PARTICULARS OF INCOME OR ANY CONCEALMENT OF INCOME. 8. HENCE, THE DEPARTMENT IS IN APPEAL BEFORE US. 9. THE LEARNED DR HAS REITERATED THE BASIS GIVEN BY THE AO IN LEVYING THE PENALTY U/S 271(1)(C) OF THE ACT. SHE SUBMITTED THAT ASSESSEES CLAIM OF DEDUCTION OF `3,98,88,136/- WAS PRIMA-FACIE DISALLOWABLE INASMUCH AS TAX DEDUCTED AT SOURCE WAS NOT PAID BEFORE THE SPECIFIED DATE. SHE, THEREFORE, SUBMITTED THAT AO HAS RIGHTLY LEVIED THE PENALTY U/S 271(1)(C) OF THE ACT. 10. NONE FOR THE ASSESSEE WAS PRESENT. ITA-4933/DEL/2010 5 11. AFTER HEARING THE LEARNED DR AND CONSIDERING TH E FACTS OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT LEARNED CI T(A) HAS RIGHTLY DELETED THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT ON ACCOUNT OF DISALLOWANCE OF EXPENDITURE ON WHICH TAX WAS DULY D EDUCTED BY THE ASSESSEE BUT PAID LATELY BEYOND THE SPECIFIED DATE. IN THIS CONNECTION, WE MAY REFER TO THE AMENDMENT BROUGHT BY THE FINANC E ACT, 2008 W.R.E.F. 1.4.2005 PROVIDING THAT THE AMOUNTS SPECIF IED IN THAT SECTION WOULD NOT BE DEDUCTED IN COMPUTING THE INCOME UNDER THE ACT IF THE TAX THEREUPON WAS DEDUCTIBLE AT SOURCE UNDER CHAPTE R XVII-B AND SUCH TAX HAS NOT BEEN DEDUCTED OR, AFTER DEDUCTION, IN A CASE WHERE THE TAX WAS DEDUCTIBLE AND WAS SO DEDUCTED DURING THE LAST MONTH OF THE PREVIOUS YEAR, ON OR BEFORE THE DUE DATE SPECIFIED IN SUB-SECTION (1) OF SECTION 139; OR IN ANY OTHER CASE, ON OR BEFORE THE LAST DAY OF THE PREVIOUS YEAR. IN THE PRESENT CASE, THE DUE DATE F OR DEPOSITING THE TAX WAS 7.4.2005 WHICH GOES TO SHOW THAT THE TAX WAS DE DUCTED IN THE MONTH OF MARCH, 2005. IF THE TAX WAS DEDUCTIBLE AN D WAS SO DEDUCTED DURING MARCH, 2005, THE DEDUCTION OF EXPENSES SHALL NOT BE DISALLOWED IF THE TAX SO DEDUCTED IS PAID ON OR BEFORE THE DUE DATE SPECIFIED IN SUB-SECTION (1) OF SECTION 139 OF THE ACT. THIS AM ENDMENT BY THE FINANCE ACT, 2008 HAS BEEN MADE EFFECTIVE RETROSPEC TIVELY FROM 1.4.2005. WHEN THIS ASSESSMENT WAS MADE ON 31.10.2 007, THE AMENDMENT BROUGHT BY THE FINANCE ACT, 2008 WITH RET ROSPECTIVE EFFECT FROM 1.4.2005 WAS NOT ON THE STATUTE, AND AS A RESU LT THEREOF, THE SAID PAYMENT WAS DISALLOWED U/S 40(A)(IA) OF THE ACT. I F THE AMENDMENT BROUGHT BY THE FINANCE ACT, 2008 WITH RETROSPECTIVE EFFECT FROM 1.4.2005 IS APPLIED TO THE PRESENT CASE, WHICH IS R ELATED TO AY 2005-06, THE DISALLOWANCE OF PAYMENT OF `3,98,88,136/- IS IT SELF NOT CALLED FOR. MOREOVER, ALL THE DETAILS ABOUT THE TAX DEDUCTIBLE AT SOURCE AND THE DATE OF PAYMENT HAS BEEN DULY FURNISHED BY THE ASSE SSEE IN THE RETURN OF INCOME AND AO HAS COLLECTED THESE INFORMATIONS O NLY FROM THE ITA-4933/DEL/2010 6 RETURN OF INCOME FILED BY THE ASSESSEE. THEREFORE, IT IS NOT A CASE WHERE ASSESSEE HAS CONCEALED ANY PARTICULARS ABOUT HIS LIABILITY TO DEDUCT THE TAX AT SOURCE AND PAYMENT THEREOF. THIS DISALLOWANCE HAS BEEN MADE PURELY BY INVOKING THE PROVISIONS OF LAW WHICH HAVE BEEN AMENDED RETROSPECTIVELY W.E.F. 1.4.2005 BY THE FINA NCE ACT, 2008. THEREFORE, THIS IS NOT A FIT CASE WHERE PENALTY U/S 271(1)(C) CAN BE LEVIED. THE LEARNED CIT(A) HAS CONSIDERED THE ISSU E IN ITS RIGHT AND CORRECT PERSPECTIVE AND HAS DELETED THE PENALTY. W E DO NOT FIND ANY INFIRMITY IN HIS ORDER. THE ORDER OF LEARNED CIT(A ) DELETING THE PENALTY IS THUS CONFIRMED. 12. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON CONCLUSION OF HEARING ON 18 TH APRIL, 2011. SD/- SD/- (K.D.RANJAN (K.D.RANJAN (K.D.RANJAN (K.D.RANJAN) )) ) (C.L.SETHI (C.L.SETHI (C.L.SETHI (C.L.SETHI) )) ) ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER JUDICIAL ME JUDICIAL ME JUDICIAL ME JUDICIAL MEMBER MBER MBER MBER DATED : 18.04.2011. VK. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR