M/S. BHANSALI TRADE IMPEX, GIRGAON V. ITO-19(1)(2), MUMBAI

ITA 574/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 9663 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 04-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHTAR S ANSARI
• Assessee Lawyers: JITENDRA SINGH
• Keywords: Reasonable cause; Bonafide mistake; TDS
• Section: 271(1)(c); 40(a)(ia); 274; 13; 153

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC II BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI N.K. PRADHAN, ACCOUNTANT MEMBER I TA NO. 574 /MUM. /2019 ( ASSESSMENT YEAR : 20 13 14 ) M/S. B HA NSALI TRADE IMPEX 204, 2 ND FLOOR, MATRY MANDIR TARDEO, MUMBAI 400 007 PAN AAFFB7831F . APPELLANT V/S INCOME TAX OFFICER WARD 19 ( 1 )( 2 ), MUMBAI . RESPONDENT ASSESSEE BY : SHRI JITENDRA SINGH REVENUE BY : S HRI AKHTAR S. ANSARI DATE OF HEARING 24 . 0 6 .20 20 DATE OF ORDER 30.06.2020 O R D E R THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE CHALLENG ING THE ORDER DATED 6 TH JUNE 2018, PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 6, MUMBAI, CONFIRMING THE PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ) AMOUNTING TO ` 1,60,776, FOR THE ASSESSMENT YEAR 2013 14. 2. THE REGISTRY HAS POINTED OUT A DELAY OF 153 DAYS IN FILING THE APPEAL. THE ASSESSEE HAS FILED AN APPLICATION SEEKING CONDONATION OF DELAY. IT IS THE CONTENTION OF THE ASSESSEE THAT ONE OF THE PARTNERS 2 M/S. BHANSALI TRADE IMPEX FATHER WAS HOSPITALIZED DUE TO SERIOUS ILLNESS AND ULT IMATELY DIED WHICH RESULTED IN DELAY IN FILING THE APPEAL. IN SUPPORT OF SUCH CONTENTION, A COPY OF THE DEATH CERTIFICATE WAS ENCLOSED TO THE APPLICATION. 3. HAVING CONSIDERED RIVAL SUBMISSIONS, WE ARE OF THE VIEW THAT THE DELAY IN FILING THE APPEAL WAS DUE TO A REASONABLE CAUSE, HENCE, WE CONDONE THE DELAY AND ADMIT THE APPEAL FOR ADJUDICATION ON MERIT. 4. BRIEF FACTS ARE, THE ASSESSEE , A PARTNERSHIP FIRM , FILED ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 28 TH SEPTEMBER 2013, DECLARING INCOME OF ` 9,71,710. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ON A PERUSAL OF THE AUDIT REPORT NOTICED THAT THE AUDITOR HAS SUBMITTED THE DETAILS OF UNPAID TDS AMOUNTING TO ` 19,861. ON A QUERY BEING MADE, THE ASSESSEE SUBMITTED THAT IT HAS VOLUNTARI LY DISALLOWED THE TDS AMOUNT UNDER SECTION 40(A)(IA) OF THE ACT. THE ASSESSING OFFICER , BEING OF THE VIEW THAT THE ASSESSEE SHOULD HAVE DISALLOWED THE CORRESPONDING EXPENDITURE AND NOT THE TDS AMOUNT, DISALLOWED THE AMOUNT OF ` 5,40,170, UNDER SECTION 40(A)(IA) OF THE ACT. THE ASSESSEE DID NOT CONTEST THE AFORESAID DISALLOWANCE. ON THE BASIS OF THE AFORESAID DISALLOWANCE, THE ASSESSING OFFICER INITIATED PROCEEDINGS FOR IMPOSITION OF PENALTYUNDER SECTION 271(1)(C) OF THE ACT, ALL EGING FURNISHING OF INACCURATE PARTICULARS OF INCOME AND CONCEALMENT OF INCOME. AFTER ISSUING A SHOW CAUSE NOTICE TO THE 3 M/S. BHANSALI TRADE IMPEX ASSESSEE UNDER SECTION 274 R/W SECTION 271(1)(C) OF THE ACT, THE ASSESSING OFFICER ULTIMATELY PASSED AN ORDER IMPOSING PENALTY OF ` 1,6 0,776, UNDER SECTION 271(1)(C) OF THE ACT. THE PENALTY IMPOSED WAS ALSO SUSTAINED BY THE LEARNED COMMISSIONER (APPEALS). 5. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , THE ASSESSEE HAS DISCLOSED ALL MATERIAL FACTS RELATING TO THE EXPENDITURE MADE AS WEL L AS TAX DEDUCTED AT SOURCE NOT ONLY IN THE AUDIT REPORT, BUT ALSO DURING THE ASSESSMENT PROCEEDINGS. HE SUBMITTED , DUE TO A BONAFIDE MISTAKE, THE ASSESSEE HAD DISALLOWED THE TDS AMOUNT INSTEAD OF THE EXPENDITURE CORRESPONDING TO SUCH TDS. HE SUBMITTED , THE RE BEING NEITHER FURNISHING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME, THE PENALTY IMPOSED SHOULD BE DELETED. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY RELIED UPON THE OBSERVATIONS OF THE ASSESSING OFFICER AND LEARNED COMMISSIONE R (APPEALS). 7. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS EVIDENT FROM THE MATERIAL ON RECORD THAT IN THE STATUTORY AUDIT REPORT ITSELF, THE AUDITOR HAS FURNISHED THE DETAILS OF EXPENDITURE IN RESPECT OF WHICH TAX WAS NOT DEDUCTED AT SOURCE. IT IS ALSO EVIDENT THAT THE ASSESSEE HAS VOLUNTARILY MADE SOME DISALLOWANCES UNDER SECTION 40(A)(IA) OF THE ACT. HOWEVER, THE MISTAKE 4 M/S. BHANSALI TRADE IMPEX COMMITTED BY THE ASSESSEE IS, INSTEAD OF DISALLOWING EXPENDITURE INCURRED WHICH WAS SUBJECT TO TDS, I T HAS COMPUTED THE TDS AMOUNT OF SUCH EXPENDITURE AND HAS DISALLOWED UNDER SECTION 40(A)(IA) OF THE ACT. THIS APPEARS TO BE A BONAFIDE MISTAKE ON THE PART OF THE ASSESSEE , AS SUBMITTED BY THE LEARNED AUTHORISED REPRESENTATIVE. IN ANY CASE OF THE MATTER, TH E ASSESSING OFFICER HAS NOT DOUBTED EITHER THE GENUINENESS OF THE EXPENDITURE CLAIMED OR THE PAYMENTS MADE . THE ONLY REASON FOR WHICH THE EXPENDITURE WAS DISALLOWED IS DUE TO NON DEDUCTION OF TAX AT SOURCE. IN OTHER WORDS, IT IS STATUTORY DISALLOWANCE. THA T BEING THE CASE, THE ASSESSEE CANNOT BE ACCUSED OF SUBMITTING INACCURATE PARTICULARS OF INCOME O R CONCEALING ITS INCOME. ACCORDINGLY, WE DELETE THE PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT AMOUNTING TO ` 1,60,776. 8. BEFORE PARTING, WE MUST OBSERV E THAT THE ASSESSEE HAS RAISED A LEGAL ISSUE BY WAY OF ADDITIONAL GROUND CHALLENGING THE VALIDITYOF PENALTY ORDER PASSED BY THE ASSESSING OFFICER ON THE GROUND OF DEFECTIVE SHOW CAUSE NOTICE ISSUED UNDER SECTION 274 OF THE ACT. SINCE WE HAVE DELETED THE PE NALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT ON MERIT S , IT IS NOT NECESSARY FOR US TO DEAL WITH THE ADDITIONAL GROUND RAISED BY THE ASSESSEE. ACCORDINGLY, THE ADDITIONAL GROUND IS DISMISSED. 5 M/S. BHANSALI TRADE IMPEX 9. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED AS INDICATED ABO VE. ORDER PRONOUNCED THROUGH NOTICE BOARD UNDER RULE 34(4) OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 196 3 ON 30.06.2020. SD/ - N.K. PRADHAN ACCOUNTANT MEMBER S SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 30.06.2020 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE C I T(A); (4) THE C I T, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ASSISTANT REGISTRAR ITAT, MUMBAI