Anand Prakash, Ghaziabad V. DCIT, Circle-1, Ghaziabad

ITA 5712/DEL/2018

AI Insights

The case involves appeals by Anand Prakash against penalty orders issued by the Income Tax Officer (ITO), Ward-1(5), Ghaziabad, under Section 271(1)(c) of the Income Tax Act for the assessment years 2009-10, 2010-11, and 2011-12. The penalties were imposed following disallowances made under Section 40(a)(ia) due to non-deduction of TDS on interest payments. The Tribunal consolidated the appeals and examined the merits of the penalties imposed. It was found that the interest payments were made to reputed companies and the corresponding incomes were included in the returns of these companies. Therefore, the Tribunal concluded that there was no concealment of income or furnishing of inaccurate particulars by the assessee, leading to the decision to allow the appeals and delete the penalties.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 121494 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 4 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-02-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 23-01-2023
• Assessment Year: 2010-2011
• Appeal Filed On: 04-09-2018
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: TDS
• Section: 68; 27; 6; 263; 63; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “A” DELHI BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI YOGESH KUMAR US, JUDICIAL MEMBER I.T.As. No.5711, 5712 & 5713/DEL/2018 Assessment Years 2009-10, 2010-11 & 2011-12 Anand Prakash, 71, Navyug Market, Ghaziabad. Vs. ITO, Ward-1(5), Ghaziabad. TAN/PAN: ADDPP5884B (Appellant) (Respondent) Appellant by: Shri Akhilesh Kumar, Adv. Respondent by: Shri Kanv Bali, Sr.DR Date of hearing: 24 01 2023 Date of pronouncement: 03 02 2023 O R D E R PER PRADIP KUMAR KEDIA, A.M.: Th e cap tio n ed ap p eals h av e b een fi led b y th e asse ssee ag ain st th e o rd ers o f th e ld . CIT(A)-I, No id a, all d ated 3 0 .0 4 .20 18 arisin g fro m th e p en alty o rd ers p assed b y th e Assessi n g Officer u /s.2 7 1 (1 )(c) o f th e Act, a ll d ated 2 8 .0 2 .2 01 7 co n cern ing Assessmen t Years 2 0 09 -10 , 2 0 1 0-1 1 an d 2 0 11 -12 . 2 . All th e c ap tio n ed ap p eals h av e b een h eard to g ether an d are b ein g d isp o sed o f b y way o f th is co n so lid at ed o rd er. ITA No .5 71 1 /Del/ 2 0 18 (Assessmen t Year 2 0 0 9 -1 0 ) 3 . Brie fly sta ted , th e assess ee fil ed ret u rn o f in co me d ec larin g Rs.1 8 ,6 7 ,9 8 0 /- as tax ab le in co me. Th e assessmen t was fra med u n d er Sectio n 1 4 3(3 ) r.w. Sectio n 2 6 3 o f th e Act wherein th e ad d itio n s o f Rs .1 7 ,6 5 ,0 13 /- was c arried o u t. Th e a dd itio n o f I.T.As. No.5711, 5712, 5713/Del/2018 2 Rs.1 2 ,1 0 ,1 0 6 /- o n acco u n t o f d is allo wan ce o f in t erest was h o wev er d eleted in q u an tu m p ro ceed in g s an d th e b alan ce ad d it io n o f Rs .5 ,5 4 ,9 0 7 /- was resto red to th e fi le o f th e Assess i n g Offic er fo r su itab l e v eri fica tio n s in th e q u an tu m p ro ceed ing s in ITA No .5 62 0 /Del/ an d 6 1 84 /Del/2 0 1 5 (Assessmen t Years 2 00 9 -10 an d 2 0 10 -11 ) o rd er d ated 1 9 .0 4 .2 01 8 . 4 . In th is b ack d ro p , th e ld . co u n sel su b mi t ted th a t th e d is p u te n o w remain s to ward s imp o si tio n o f p en al ty at an amou n t o f Rs.5 ,5 4 ,9 0 7 /-. It was su b mit ted th at th e a fo resaid a mo u n t rep resen ts p ay men t o f in tere st to In d ia Bu lls /Ko tak M ah in d ra on wh ich TDS was omi t ted to b e d ed u cted b y th e assessee req u ired in ter ms o f p ro v isio n o f Sect io n 1 94 A o f th e Act an d co n seq u en tly d isal lo wan ce were carried o u t u n d er Sect io n 4 0 (a)(ia) o f th e Act . In th e ma t ter, th e ld . co u n sel p o in t ed o u t th at th e p ay ees are rep u ted co mp an ies an d th e co rresp o nd in g in co me h av e b een in clu d ed in th e resp ect iv e retu rn s o f th e p ay ees . Th u s, no ad d itio n s/d is al lo wan ces u n d er Secti o n 40 (a)(ia) are permit ted in v iew o f p leth o ra o f ju d ic ial p rec ed en ts. No twith s t an d in g , th e imp o si t io n o f p en alty u n d er Sect io n 2 7 1 (1 )(c) fo r disallo wan ces u n d er d eemin g p rov isio n s o f Sect io n 4 0 (a)(ia) wh ere th e in terest h as b een p aid a s a ma tt er o f fac t, is n o t ju s ti fied. 5 . We fin d mer it in su ch co n ten tio n s . Th e Tr ib u n al h a s se t asid e th e issu e o f d isal lo wan ce u n d er Sectio n 4 0 (a)(ia) to th e fil e o f th e Assessin g Officer fo r v erific atio n o f su ch in terest b y th e p ay ees as th eir in c o me an d rev ersal o f d isa llo wan ce. Th e p ay men t o f in teres t to th e p ay ees is n o t in disp u te. Th u s, ad mi tted ly th e in teres t ex p en ses hav e b een actu ally i n cu rred . Th e d isall o wan ce o f in teres t ex p en d itu re was at tract ed o n ly d u e to no n d ed u ctio n o f TDS an d it can n o t b e said to b e a case o f co n ceal men t o f in co me I.T.As. No.5711, 5712, 5713/Del/2018 3 o r fu rn ish in g o f in accu rate p arti cu lar s o f in co me p er s e. Th e l ev y o f p en alty u n d er Sect io n 2 71 (1 )(c) is th u s n o t attract ed . Co u p led with th is, n o t ice i ssu ed u nd er Sectio n 27 4 r.w. Sectio n 2 71 (1 )(c) h as b een sta ted t o b e issu ed in a me ch an ica l man n er with o u t strik in g o f th e in a p p rop riate p o rtio n fro m th e n o tice. It is th u s n o t k n own th e ex act n a tu re o f d efau lt co mmi t ted b y th e asses see. 6 . Hen ce wh en seen cu mu lat iv e, as sessee d eserv es t o be ex o n erated fro m th e clu tch es o f p en al ty u n d er Sectio n 2 7 1 (1)(c) o f th e Act . 7 . In th e resu l t, th e a p p eal o f th e asses s ee is a l lo wed . ITA No .5 71 2 /Del/ 2 0 18 (Assessmen t Year 2 0 1 0 -1 1 ) 8 . Brie fly s ta ted , th e assesse e d ecl ared tax ab le inco me o f Rs.2 0 ,5 6 ,1 0 1 /- in its retu rn o f in co me fo r Assess men t Year 2 0 10 - 1 1 . Ad d itio n s o f Rs.1 ,4 7 ,9 9 ,8 7 9 /- was mad e to t h e retu rn ed in co me in th e ass e ssmen t fra med u n der Sect io n 1 4 3 (3) o f th e Act . Fin al ly , an amo u n t o f Rs.1 1 ,0 2 ,7 4 0 /- was su stain ed in th e h an d s of th e assesse e in th e q u an tu m p ro ceed in g s b efo re th e Trib u n al in ITA No .6 18 4 /Del/ 2 0 15 o rd er d ated 1 9 .0 4 .2 01 8 . 9 . In th is co n tex t , th e ld . co u n sel p o in t ed o u t th at th e a ss essee h ad receiv ed Rs.1 0 lak h in ag g reg ate fro m ten d i ffer en t tru sts wh ich were all eg ed to b e n o n g en u in e an d co n sequ en tly th e ad d itio n s were ma d e u n d er Sectio n 6 8 o f th e Ac t an d in ter est o f Rs.1 ,0 2 ,7 4 0 /- th ereo n was also added . In th is b ack dro p , th e ld . co u n sel ad v erted t o th e led g er acco u n t o f th e len d ers tru sts an d su b mit ted th at s i milar cred i ts h av e b een rece iv ed fro m th ese tru sts in th e ear li er y ears also wh ich h as n o t b een d istu rb ed and accep ted as g en u in e in th e earl ier y ears. Th e assess men t o rders o f th e tru st were also ad v erted to re in fo rce th e c lai m o f th e asses s ee th at th e I.T.As. No.5711, 5712, 5713/Del/2018 4 len d er tru sts are b o n a fid e an d g en u in e. It was fu rth er co n ten d ed th at th e ad d it io n s h av e b een mad e b y in vo k in g th e do ctrin e o f p rep on d eran ce o f p ro b ab ili ti es an d with o u t an y co ncrete b as is ag ain st th e assess e e. I t was th u s u rg ed th at p en a lty u n d er Sec tio n 2 7 1 (1 )(c) is n o t ju sti fi ed u n d er th e circu ms tan ces wh ich o p erate o n a d ifferen t fo o ti n g . 1 0 . We h av e co n sid ered th e su b missio n s mad e o n b eh alf o f th e assesse e. In th e li g h t o f th e fac ts p o in ted o u t o n b eh al f o f th e assesse e, i .e ., (i) s imi lar tran sac t io n s accep ted in th e ea rlier y ears (ii) p ay men t o f in teres t o n su ch en t ries after d ed uct io n o f TDS (ii i) assess men t o f tru st (iv ) ad d it io n s b ased o n prepo nd eran ce o f p ro b ab ili ti es, we fi n d meri t in th e p le a o f th e assessee wh en test ed o n th e to u ch sto n e o f Sec tio n 2 7 1 (1 )(c) o f th e Ac t. 1 1 . Wh ile it is tru e t h at th e fin d in g s g iv en in th e asse ss men t p ro ceed in g s wo u ld b e relev an t an d ad missib l e ma t eria l in th e p en alty p ro ceed in gs b u t ho wev er su ch fin d in g s can n ot o p erate as res ju d ica ta b eca u se co n sid eratio n s th at aris e in t h e p en alty p ro ceed in g s are q u ite d ifferen t fr o m th o se in th e assessmen t p ro ceed in g s. Th e d o cu men ts p ro d u ced o n b eh alf o f t he assesse e p o in ts o u t th e circu mst an ces wh ich d o create so me do ub t, th e b en efi t o f wh ich s h o u ld go to th e as sessee in so far as t h e p en alty p ro ceed in g s are co n cern ed . 1 2 . We are th u s in c li n ed to accep t th e co n ten tio n s rais e d on b eh alf o f th e asses see. Th e p en al ty i mp o sed o n th e assessee u n d er Sect io n 2 7 1(1 )(c) is th u s n o t su st ain ab le in law a nd is th u s d irected to b e d e le ted . 1 3 . In th e resu l t, th e a p p eal o f th e asses s ee is a llo wed . ITA No . 5 7 13 /Del/ 2 0 18 (Assessmen t Year 2 0 1 1 -1 2 ) I.T.As. No.5711, 5712, 5713/Del/2018 5 1 4 . Brie fly s ta ted , th e assesse e d ec lared Rs. 2 0 ,6 9,3 7 0 /- in its retu rn o f in co me fo r Assessmen t Y ear 2 0 11 -12 in q uest io n and ad d itio n o f Rs.2 0 , 7 8 ,5 00 /- was mad e in th e q u an tu m p ro ceed in g s. Ho wev er, an amo u n t o f Rs.1 ,3 0 ,0 0 0 /- ap p ro x . was o n ly su stain ed in th e seco n d ap p eal b efo re th e Trib u n al. Th e ld . co u n sel su b mi ts th at afo resa id a mo u n t o f Rs .1 ,3 0 ,0 0 0/- rep resen ts in tere st o n lo an o f Rs.1 0 lak h d isal lo wed in Assessme n t Year 2 01 0 -1 1 as d iscu ssed in ITA No .5 7 1 2 /Del/2 0 1 8 su p ra. 1 5 . Fo r th e reaso n s n arrated in Assessmen t Year 2 0 10 -1 1 (su p ra), we see n o ju sti fica t io n in retain in g th e pen alt y imp o sed o n su ch in terest d i sal lo wan ce. Th e p en alty i mp o sed u n d er Sect io n 2 7 1 (1 )(c) is th u s d ele ted . 1 6 . In th e resu l t, th e a p p eal o f th e asses s ee is a llo wed . 1 7 . In th e co mb in ed resu lt, a ll th e ca p tio n ed ap p eals o f th e assesse e are a llo wed . Order pronounced in the open Court on 03/02/2023. Sd/- Sd/- [YOGESH KUMAR US] [PRADIP KUMAR KEDIA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: /02/2023 prabhat