SHARMILLA VAZ, MUMBAI V. ITO, WARD 11(1)(4), MUMBAI

ITA 5722/MUM/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3337 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2016
• Appeal Filed By: Assessee
• Bench Allotted: E
• Next Hearing Date: 05-08-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 18-09-2013
• Court: TRIBUNAL
• Department Lawyers: BEENA SUBHASH
• Assessee Lawyers: PARESH SHAPONA
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH (JM) & SHRI B.R. BASKARAN (AM) I.T.A. NO. 5722 /MUM/ 20 1 3 (ASSESSMENT YEAR 200 6 - 0 7 ) MS. SHARMILL A VAZ PROPRIETOR M/S. SHYLITE CREATIONS INC. 702, WAVE LASH PERRY CROSS ROAD , BANDRA (W) MUMBAI - 400 050. VS. ITO WARD 11(1)(4) AAYAKAR BHAVAN M.K. ROAD MUMBAI - 400 020. ( APPELLANT ) ( RESPONDENT ) PAN NO . AAAPV1696H ASSESSEE BY SHRI PARESH SHAPONA DEPARTMENT BY MS. BEENA SUBHASH DATE OF HEARING 2 9 . 8 . 201 6 DATE OF P RONOUNCEMENT 29 . 8 . 201 6 O R D E R PER B.R. BASKARAN (AM) : - THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 14.8.2013 PASSED BY LEARNED CIT(A) - 3, MUMBAI CONFIRMING THE PENALTY OF ` 2,86,103/ - LEVIED BY THE ASSESSING OFFICER U/S. 271(1)(C) OF THE I.T. ACT. 2. LEARNED AR SUBMITTED THAT THE ASSESSEE IS A PROFESSIONAL SINGER AND SHE FILED HER RETURN OF INCOME DECLARING A TOTAL INCOME AT ` 5,32,992/ - . SINCE THE ASSESSEE DID NOT COOPERATE WITH THE ASSESSING OFFICER, THE ASSESSMENT WAS COMPLETED U/S.144 OF THE ACT, WHEREIN ENTIRE EXPENSES CLAIMED BY THE ASSESSEE WAS DISALLOWED. IN THE APPELLATE PROCEEDINGS, THE ASSESSEE FAILED DETAILS RELATING TO EXPENSES AND ACCORDINGLY LEARNED CIT(A) CALLED FOR A REMAND REPORT FROM THE AO . AFTER CONSI DERING THE REMAND REPORT, LEARNED CIT(A) SUSTAINED FOLLOWING ADDITIONS : - 2 I) SALARY ` 6,38,600/ - II) INSTRUMENT CHARGES ` 2,11,380/ - III) TRAINING EXPENSES (50%) ` 27,785/ - IV) OUT OF REMAINING EXPENSES (20%) ` 42,314/ - ` 9,20,079/ - IT IS PERTINENT TO N OTE THAT THE DISALLOWANCE FROM SALA RY EXPENSES AND INSTRUMENT CHARGES WAS MADE U/S. 40(A)(IA) OF THE ACT FOR NON DEDUCTION OF TAX AT SOURCE. REMAINING TWO DISALLOWANCES WERE MADE ON ADHOC BASIS TO TAKE CARE OF PERSONAL/NON - PROFESSIONAL PORTION . 3. LEA RNED AR SUBMITTED THAT THE DISALLOWANCE MADE U/S. 40(A)(IA) WOULD NOT ATTRACT PENALTY PROVISIONS U/S. 271(1)(C) OF THE ACT , SINCE THE SAME CANNOT BE CONSIDERED AS A CASE OF CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INC OME. IN SUPPORT OF THIS PROPOSITION LEARNED AR PLACED RELIANCE ON HOST OF CASE LAWS. HE FURTHER SUBMITTED THAT THE REMAINING TWO DISALLOWANCES HAVE BEEN MADE ON ESTIMATED BASIS AND HENCE THE SAME ARE ALSO NOT LIABLE FOR PENALTY. 4 . ON THE CONTRARY, LEA RNED DEPARTMENTAL REPRESENTATIVE PLACED HEAVY RELIANCE ON THE ORDER PASSED BY LEARNED CIT(A). 5 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. WE NOTICED THAT THE IDENTICAL ISSUE WITH REGARD TO LEVYING OF PENALTY U/S. 271(1)(C) FOR DISALLOWA NCE MADE U/S 40(A)(IA) WAS CONSIDERED BY THE COORDINATE BENCH IN THE CASE OF RUSHI BUILDERS AND DEVELOPERS VS. ACIT (ITA NO. 6684/MUM/2012 DATED 4.3.2015) AND THE TRIBUNAL HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE WITH FOLLOWING OBSERVATIONS : - 4 . WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE ALSO GONE THROUGH THE RECORDS. IN THIS CASE, THE PENALTY HAS BEEN LEVIED FOR DISALLOWANCE OF EXPENDITURE U/S.40(A)(IA) OF THE ACT. IT IS NOT A CASE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME OR CONCEALM ENT OF INCOME. THE FAILURE TO DEDUCT THE TDS ON THE PART OF THE ASSESSEE HAS RESULTED IN DISALLOWANCE OF EXPENDITURE. THE ASSESSEE HAD NOT FURNISHED ANY INACCURATE PARTICULARS OF INCOME OR EXPENDITURE. THE ASSESSEE HAS ALREADY FACED THE CONSEQUENCES BY WAY OF DISALLOWANCE OF EXPENDITURE FOR NON - DEDUCTION OF TDS AS PER THE PROVISIONS OF SECTION 3 194C OF THE ACT. IT IS NOT THE CASE OF THE REVENUE THAT THE ASSESSEE HAD NOT INCURRED THE EXPENDITURE CLAIMED OR THAT THE CLAIM OF EXPENDITURE WAS BOGUS OR INCORRECT. THE DISALLOWANCE OF EXPENDITURE WAS ATTRACTED DUE TO NON - DEDUCTION OF TDS AND IT CANNOT BE SAID TO BE A CASE OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE LEVY OF PENALTY U/S.271(1)(C) OF THE ACT IS NOT ATTRACTED IN THIS CASE AND THE SAME IS ACCORDINGLY ORDERED TO BE DELETED. 6 . WE NOTICE THAT THE CO - ORDINATE BENCH OF TRIBUNAL HAS CONSIDERED AN IDENTICAL ISSUE IN THE CASE OF ITO VS. M/S. WESTERN OUTDOOR MEDIA TECHNOLOGIES PVT. LTD. (ITA NO. 5400/MUM/2014 DATED 20.7.2016) AND ALSO IN OTHER CASES RELIED UPON BY THE ASSESSEE , WHEREIN ALSO THE PENALTY WAS DELETED ON IDENTICAL REASONING . FOLLOWING THE DECISIONS REFERRED ABOVE, WE ALSO DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY LEVIED ON THE DISALLOWANCES MADE FOR NON DEDUCTION OF TAX U/S. 40(A)(IA) OF THE ACT. WITH REGARD TO THE REMAINING TWO DISALLOWANCES WE NOTICED THAT THEY HAVE BEEN MADE ON ADHOC BASIS ON THE PRESUMPTION THAT THERE WOULD BE AN ELEMENT OF PERSONAL NATURE/NON PROFESSIONAL NATURE IN THE SAID EXPENSES. SINCE THE SAID DISALLOWANCES HAVE BEEN MADE ON ADHOC BASIS BY DRAWING CERTAIN PRESUMPTIONS , WE ARE OF THE VIEW THAT THEY WOULD NOT ATTRACT PENALTY U/S. 271(1)(C) OF THE ACT. 7 . IN VIEW OF THE ABOVE, WE SET ASIDE THE ORDER PASSED BY LEARNED CIT(A) AND DIR ECT THE ASSESSING OFFICER TO DELETE THE PENALTY LEVIED U/S. 271(1)(C) OF THE ACT. 8 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 29. 8 .2016 SD/ - SD/ - (MAHAVIR SINGH ) (B.R.BASKARAN ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 29 / 8 / 20 1 6 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 4 5. DR, ITAT, MUMBAI 6. GUAR D FILE. BY ORDER, //TRUE COPY// ( DY./ASSTT. REGISTRAR) ITAT, MUMBAI PS