NITIN CHANDRAKANT DESAI, MUMBAI V. ACIT 11(1), MUMBAI

ITA 7229/MUM/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8220 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 30-10-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 05-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: C N VAZE
• Keywords: Non-deduction of tax

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUM BAI , . . , ! BEFORE SHRI JOGINDER SINGH, JM AND SHRI N. K. BILL AIYA, AM ' #$ ./ I.T.A. NO. 7229/MUM/2012 ( / ASSESSMENT YEAR: 2006-07) SHRI NITIN CHANDRAKANT DESAI 201A, VENTURA SHOPPING CENTRE, CENTRAL AVENUE, OPP. HDFC BANK, HIRANANDANI BUSINESS PARK, POWAI, MUMBAI-400 076 / VS. ACIT-11(1), MUMBAI & ./''' ./PAN/GIR NO. AAFPD 8678 Q ( #$&( /APPELLANT ) : ( )*&( / RESPONDENT ) #$&( + , / APPELLANT BY : SHRI C. N. VAZE )*&( + , / RESPONDENT BY : SHRI VIVEK BATRA - ./ + 0 1 / DATE OF HEARING : 30.10.2014 234 + 0 1 / DATE OF PRONOUNCEMENT : 31.10.2014 '5 / O R D E R PER N. K. BILLAIYA, AM: THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST TH E ORDER OF THE LD. CIT(A)-3, MUMBAI DATED 29.10.2012 PERTAINING TO THE ASSESSMEN T YEAR (A.Y.) 2006-07. 2. THE SOLE GRIEVANCE OF THE ASSESSEE IS THAT THE L D. CIT(A) HAS ERRED IN CONFORMING THE PENALTY LEVIED BY THE ASSESSING OFFICER (A.O.) U/S.271(1)(C) OF THE ACT AMOUNTING TO RS.71,53,984/-. 2 ITA NO. 7229/MUM/2012 (A.Y. 2006-07) NITIN CHANDRAKANT DESAI VS. ACIT 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSMENT FOR THE YEAR UNDER CONSIDERATION WAS COMPLETED BY MAKING THE FOLLOWING DISALLOWANCES: A) LABOUR CHARGES RS.2,07,80,254/- B) DISALLOWANCE OF PAYMENTS U/S.40(A)(IA) RS.4,25 ,415/- C) DISALLOWANCE OF PAYMENTS U/S.40A(3) RS.48,0 00/- PENALTY U/S.271(1)(C) OF THE ACT HAS BEEN LEVIED ON THE AFORE-MENTIONED DISALLOWANCES. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE STA TED THAT THE DISALLOWANCES OUT OF LABOUR CHARGES HAVE BEEN DELETED BY THE TRIBUNAL IN QUANTU M APPEAL QUA ITA NO. 3298/MUM/2010. 4. WE HAVE CAREFULLY PERUSED THE ORDER OF THE TRIBU NAL IN ITA NO. 3298/MUM/2010. WE FIND THAT THE TRIBUNAL AT PARA 6 OF ITS ORDER HA S DELETED THE DISALLOWANCES ON ACCOUNT OF LABOUR CHARGES. 5. SINCE THE VERY BASIS FOR THE LEVY OF PENALTY HAS BEEN REMOVED BY THE TRIBUNAL IN QUANTUM APPEAL, NO PENALTY CAN BE LEVIED ON THE DIS ALLOWANCES OUT OF LABOUR CHARGES OF RS.2,07,80,254/-. 6. THE NEXT DISALLOWANCE IS OUT OF PAYMENT U/S.40(A )(IA). WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FIN D FROM THE RECORD THAT DEFAULT FOR NON- DEDUCTION OF TAX WAS ACCEPTED BY THE ASSESSEE AT TH E TIME OF FILING OF THE RETURN TO THE EXTENT OF RS.19,86,000/-. HOWEVER, DURING THE COURS E OF THE ASSESSMENT PROCEEDINGS, THE A.O. NOTICED THAT ON THE PAYMENT OF RS.45,14,467/-, THE ASSESSEE HAS FAILED TO DEDUCT THE TAX AT SOURCE ON WHICH THE PENALTY HAS BEEN LEVIED. IN OUR CONSIDERED OPINION, THE DISALLOWANCES HAVE BEEN MADE ONLY ON THE TECHNICAL GROUND THAT NO TDS WAS MADE BY THE ASSESSEE. THE NON-DEDUCTION OF TAX BY THE ASSES SEE WAS RESULTED IN DISALLOWANCES OF EXPENDITURE U/S.40(A)(IA) OF THE ACT THAT ITSELF CA NNOT BE CONSTRUED AS FURNISHING INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME. IN OUR CONSIDERED OPINION, THE MISTAKE COMMITTED BY THE ASSESSEE WAS COMPENSAT ED BY DISALLOWING THE EXPENDITURE. 3 ITA NO. 7229/MUM/2012 (A.Y. 2006-07) NITIN CHANDRAKANT DESAI VS. ACIT THERE IS NOTHING ON RECORD TO SUGGEST THAT THE ASSE SSEE HAS FURNISHED ANY FACTUAL INCORRECT INFORMATION, IN OUR OPINION, THE CONDITIONS LAID DO WN IN SECTION 271(1)(C) OF THE ACT IS NOT COMPLIED WITH. BEING SO, THE LEVY OF PENALTY IS NOT JUSTIFIED ON THE DISALLOWANCE U/S.40(A)(IA) OF THE ACT. 7. THE ONLY OTHER DISALLOWANCE REMAINS IS THAT OF R S.48,000/- U/S.40A(3) OF THE ACT. FOR THE REASONS MENTIONED HEREINABOVE IN PARA 6, IN OUR CONSIDERED OPINION, THE DISALLOWANCES U/S.40A(3) CANNOT ATTRACT LEVY OF PEN ALTY U/S.271(1)(C) OF THE ACT. WE, THEREFORE, SET ASIDE THE ORDER OF THE LD. CIT(A) AN D DIRECT THE A.O. TO DELETE THE PENALTY OF RS.71,53,984/-. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. $6 407 896 0 + #$ . : 0 + 0 ! ORDER PRONOUNCED IN THE OPEN COURT ON OCTOBER 31 ST , 2014 SD/- SD/- (JOGINDER SINGH) (N. K. BILLAIYA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER - / MUMBAI; ; DATED : 31.10.2014 ... ./ ROSHANI , SR. PS ! ' #$%& ' &$ / COPY OF THE ORDER FORWARDED TO : 1. #$&( / THE APPELLANT 2. )*&( / THE RESPONDENT 3. ' ' - <0 ( #$ ) / THE CIT(A) 4. ' ' - <0 / CIT - CONCERNED 5. ?.@ )08 , ' #$1 #8 4 , - / / DR, ITAT, MUMBAI 6. A9 B/ / GUARD FILE ! ( / BY ORDER, )/(* + (DY./ASSTT. REGISTRAR) , - / / ITAT, MUMBAI