EMC, MUMBAI V. ADDL CIT TDS RG-1, MUMBAI

ITA 5578/MUM/2009

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7609 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 20-03-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 12-10-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PARTHASARTHI NAIK
• Assessee Lawyers: VIPUL B JOSHI
• Keywords: Reasonable cause; Non compliance
• Section: 133A; 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH I BENCH BEFORE SHRI G.E.VEERABHADRAPPA, PR ESIDENT AND SHRI VIVEK VARMA, JM ITA NO. 5575, 5576, 5578 AND 5581/MUM/2009 ASSESSMENT YEAR : 2000-01, 2001-02, 2002-03 AND 2003-04 M/S. EMC C/O HINDUSTAN STEEL & METAL WORLDS, GALA NO. 2, B/H ACME INDUSTRIAL ESTATE, SEWARI BUNDER ROAD, MUMBAI 400015 PAN NO. AAAFE8003D VS. ADDL. COMMISSIONER OF I. TAX, TDS RANGE 1, AYURVEDIC HOSPITAL BUILDING, CHARNI ROAD, MUMBAI 400001 (APPELLANT) (RESPONDENT) APPELLANT BY : MR VIPUL B. JOSHI RESPONDENT BY : MR PARTHASARTHI NAIK DATE OF HEARING : 20.03.2012 DATE OF PRONOUNCEMENT : 28.03.2012 ORDER PER VIVEK VARMA, JM: THE FOUR APPEALS PERTAINING TO ASSESSMENT YEARS 2000-01 TO 2003-04 HAVE BEEN FILED BY THE ASSESSEE AGAINST ORDERS PASSED BY CIT(A) XXX DATED 15.04.2008 U/S 271C OF THE ACT., LEVYING PENALTY FOR NON DEDUCTION OF TAX AT SOURCE. 2. THE GROUNDS OF APPEAL FILED BY THE ASSESSEE ALONG WITH FORM NO. 36 HAS AS MANY AS 5 GROUNDS. THE ASSESSEE THEREAFTER FILED AN APPLICATION FOR SUBMISSION OF ADDITIONAL GROUND ON 14.06.2010. THE AR APPEARING FOR THE ASSESSEE SUBMITTED THE FACTUAL BACK GROUND OF THE CASE, WHEREIN HE STATED THAT EMC IS AN EVENT MANAGEMENT COMPANY FORMED BY 2 VERY YOUNG PROFESSIONAL S IN 28.01.1999. THE FIRM COMMENCED ITS BUSINESS ON 01.07.1998. FOR FINANCIAL YEARS 2000-01 TO 2002-03, THESE TWO YOUNG ENERGETIC PROFESSIONALS, WHO WERE BUSY IN THE SETTING UP OF BUSINESS, DID NOT ATTEND TO LEGAL FORMALITIES AND COMPLIANCES. A SURVEY WAS CONDUCTED U/S 133A OF THE INCOME TAX ACT ON 20.02.2004, WHERE IT WAS NOTICED THAT THE ASSESSEE FIRM HAD FAILED TO DEDUCT TAX AT SOURCE FOR ASSESSMENT YEARS 2000-01 TO 2002-03 AND PART OF 2003-04 IN RESPECT OF CERTAIN PAYMENTS ON WHICH THE ASSESSEE WAS LIABLE TO DEDUCT TAX AT SOURCE U/S 194C ITA NO.5575/MUM/2009 ASSESSMENT YEAR: 2000-01 2 AND 194J OF THE INCOME TAX ACT. THE AO, THUS, COMPUTED THE AMOUNT OF NON/SHORT DEDUCTION OF TDS FOR THE RELEVANT YEARS AT RS. 6,25,481 (PAGE 1 OF APB). THE AR, WHILE SUBMITTING THE FACTS OF THE CASE, MENTIONED THAT THIS BEING A PARTNERSHIP FIRM, WHICH, BECAUSE OF UNAVOIDABLE CIRCUMSTANCES WAS CLOSED DOWN 2004. HE FURTHER PLEADED THAT SINCE THE PARTNERS WERE YOUNG AND ENERGETIC TO BOOST THEIR BUSINESS DID NOT PAY ATTENTION TO LEGAL FORMALITIES, THIS ITSELF WOULD BE A CAUSE FOR REASONABLENESS FOR NON COMPLIANCE. 3. DR ON THE OTHER HAND SUPPORTED THE VIEWS TAKEN BY THE REVENUE AUTHORITIES. 4. WE HAVE GONE THROUGH THE FACTS AND HAVE TAKEN NOTE OF THE REASONABLE CAUSE AS PROPOUNDED BY THE AR, WE FEEL THAT THE LAW HAS BEEN VIOLATED, THOUGH, MIGHT BE, UNKNOWINGLY, BUT STILL THE VIOLATION IS THERE. WE ALSO FIND THAT THE ASSESSEE HAS GIVEN THE DETAILS OF ITS EMPLOYEES, WHO DO NOT APPEAR TO BE PERSONS KNOWING LEGAL PROVISIONS. WE ARE ALSO IN AGREEMENT WITH THE SUBMISSION MADE BY THE AR THAT THERE WERE CERTAIN SERVICES FOR WHICH THERE WOULD BE NO TDS, BUT THE POINT RAISED BY THE DR, ALSO CANNOT BE IGNORED THAT IGNORANCE COULD BE ATTRIBUTED TO ONE YEAR BUT NOT FOR ALL THE YEARS. IN THE LIGHT OF THIS, WE HOLD THAT PENALTY U/S 271C FOR 2000-01 BE DELETED AND FOR 2001-02 TO 2003-04 (THREE YEARS) THE AO IS DIRECTED TO RESTRICT THE AMOUNT OF NON / SHORT DEDUCTION OF TDS AFTER CONSIDERING ALL THE RELIEF AND EXEMPTIONS GRANTED BY THE ACT. 5. THE APPEAL FOR ASSESSMENT YEAR 2000-01 IS ALLOWED AND FOR ASSESSMENT YEAR 2001-02 TO 2003-04 ARE ALLOWED IS PART. PRONOUNCED IN THE OPEN COURT ON 28 TH MARCH, 2012 SD/- SD/- ( G.E.VEERABHADRAPPA ) PRESIDENT (VIVEK VARMA) JUDICIAL MEMBER MUMBAI, DATED : 28 TH MARCH, 2012 RASIKA COPY TO: 1. THE APPELLANT 2. THE RESPONDENT ITA NO.5575/MUM/2009 ASSESSMENT YEAR: 2000-01 3 3. COMMISSIONER OF INCOME TAX (APPEALS),XXIX, MUMBAI 4. COMMISSIONER OF INCOME TAX, 8, MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH E MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI