ITO, New Delhi V. M/s. Nayef Estate Pvt. Ltd., New Delhi

ITA 723/DEL/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3135 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: misc
• Appeal Filed On: 05-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 273B; 143(3); 194C; 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : E NEW DELHI BEFORE SHRI R.K.PANDA , ACCOUNTANT MEMBER AND SMT. BEENA A PILLAI, JUDICIAL MEMBER ITA NO. 723 /DEL/2015 A.Y. 20 08 - 09 ITO WARD 76(1) NEW DELHI VS . M/S NAYEF ESTATE P LTD. 1 - E, NAAZ CINEMA COMPLEX JHANDEWALAN EXTENSION NEW DELHI 110 055 T AN: AACCN5301Q (APPELLANT) (RESPONDENT) APPELLANT BY SH. ATIQ AHMAD, SR.D.R. RESPONDENT BY SH. R.S.SINGHVI, CA . DATE OF HEARING 28 .02. 2018 DATE OF PRONOUNCEMENT 28.02.2018 ORDER PER BEENA A PILLAI, JUDICIAL MEMBER T HE PRESENT APPEAL HAS BEEN FILED BY REVENUE AGAINST ORDER DATED 14/11/14 PASSED BY LD.CIT(A) - 12, NEW DELHI FOR ASSESSMENT YEAR 2008 - 09 ON THE FOLLOWING GROUNDS OF APPEAL: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE PENALTY IMPOSED BY A.O. U/S 272A(2)(K). THE DEPARTMENT HAS FILED APPEAL BEFORE HON BLE ITAT AGAINST ORDER OF LD.CIT(A) FOR QUANTUM ORDER U/S 201(1)/201(1A) OF THE ACT. ITA 723/DEL/2015 A.Y. 2008 - 09 (FY 2007 - 08) ITO VS. NAYEF ESTATE PVT.LTD. NEW DELHI 2 2. THAT APPELLANT CRAVES TO BE ALLOWED TO ADD ANY FRESH GROUNDS OF APPEAL AND/OR DELETE OR AMEND ANY OF THE GROUNDS OF APPEAL. 2. BRIEF FACTS OF THE CASE ARE AS UNDER: LD. AO PASSED ORDER UNDER SECTION 27 2A(2)(K) OF THE INCOME TAX ACT, 1961 (THE A CT ) FOR THE YEAR UNDER CONSIDERATION AS ASSESSEE HAD FAILED TO COMPLY WITH THE PROVISIONS OF SECTION 200 (3) OF THE A CT. IT WAS OBSERVED BY THE LD. AO THAT ASSESSEE HAD FAILED TO FILE QUARTERLY E - T DS RETURN ON OR BEFORE THE DUE DATE AND THE RETURN IN FORM 24Q AND 26Q, WERE FILED WITH DELAY OF 8186 DAYS THEREBY ATTRACTING PENALTY UNDER THE RELEVANT SECTION. LD.AO AFTER RECORDING THE SUBMISSIONS ADVANCED BY ASSESSEE AND CONSIDERING THE SAME, LEVIED A PENALTY AT RS.16,37,200/ - . 2.1. AGGRIEVED BY THE PENALTY LEVIE D ASSESSEE PREFERRED APPEAL BEFORE LD. CIT (A). BEFORE LD. CIT (A) ASSESSEE CONTENDED AS UNDER: 4. T HE AR SUBMITTED COPY OF THE AUDITED BALANCE SHEET FOR THE RELEVANT FINANCIAL YEAR 2007 - 08, REFLECTING NO EXPENSES INCURRED TOWARDS THE SALARIES. HENCE NO D EFAULT IN FILING FORM NO. 24Q. 5. AS REGARDS THE ALLEGED DEFAULT ON THE PART OF THE ASSESSEE FOR NON FILING OF FORM NO.26Q, IT APPEARS THAT THE BASIS FOR THIS IS THE ORDER PASSED BY THE AO U /S 143(3) OF THE I T. ACT, WHEREIN THE AO WAS OF THE VIEW THAT TH E PAYMENT MADE BY THE ASSESSEE TO THE CONSOLIDATOR REPRESENTED A PAYMENT ON ACCOUNT OF CONTRACT ON WHICH THE PROVISIONS OF SECTION 194C WERE APPLICABLE. THE ASSESSEE DURING THE REGULAR ASSESSMENT PROCEEDINGS HAD CLAIMED THAT THE PROVISIONS OF SECTION 194C WERE NOT APPLICABLE, AS THE DEALING OF THE ASSESSEE WITH ITS CONSOLIDATOR NAMELY M / S. VIKRAM ELECTRIC EQUIPMENT PVT. LTD. WAS ON PRINCIPAL TO PRINCIPAL BASIS ON ITA 723/DEL/2015 A.Y. 2008 - 09 (FY 2007 - 08) ITO VS. NAYEF ESTATE PVT.LTD. NEW DELHI 3 WHICH NO TDS WAS REQUIRED TO BE MADE. HOWEVER, THE AO HELD THAT THE PAYMENT MADE TO THE CONSOLIDATOR WAS NOT GENUINE AND WAS LIABLE TO BE DISALLOWABLE U / S.37 OF THE INCOME - TAX ACT. 6. HOWEVER, AS AN ALTERNATE AND WITHOUT PREJUDICE TO THE DISALLOWANCE U / S.37, THE AO WAS OF THE VIEW THAT THE DISALLOWANCE U / S.40A(IA) IS REQUIRED TO BE MADE AND ALSO HELD THAT THE PROVISIONS OF SECTION 194C WERE APPLICABLE ON THE PAYMENTS MADE BY THE ASSESSEE TO THE CONSOLIDATOR. A COPY OF ASSESSMENT ORDER PASSED BY THE AO IS ENCLOSED FOR READY REFERENCE AND RECORDS. (PB PAGE 7 - 15) 7. AGAINST THE APPEAL FILED BY THE ASSESSEE IN RESPECT OF THIS ORDER BEFORE THE CIT(A), THE CIT(A) HELD THAT THE GENUINENESS OF THE PAYMENT COULD NOT BE QUESTIONED. HOWEVER, IN THE APPELLATE ORDER IT WAS HELD THAT THE PROVISIONS OF SECTION 194C WERE APPLICABLE AND ASSESSEE WAS UNDER A STATUTORY OBLIGATION TO MAKE PAYMENTS TO THE CONSOLIDATOR AFTER MAKING TDS U /S 194C OF THE I T. ACT. THE CIT(A) WHILE HOLDING SO, FOLLOWED THE JUDGMENT OF RED TOPAZ REA L ESTATE PVT. LTD. AND THE JUDGEMENT OF FULL BRIGHT BUILDERS AND DEVELOPERS PVT. LTD., WHICH WERE THE ORDERS PASSED BY THE CIT(A) - XVIII IN THE CASE OF RED TOPAZ AND CIT(A) - XIII IN THE CASE OF FULL BRIGHT. THE CIT(A) IN THE ASSESSEE'S CASE ALSO CATEGORICALL Y HELD AFTER NOTICING VARIOUS FACTS IN A VERY DETAILED MANNER THAT THE FACTS OF THE APPELLANT'S CASE WERE IDENTICAL TO THE FACTS OF RED TOPAZ AND FULL BRIGHT; AND THEREFORE, THOSE ORDERS OF CIT(A) WERE FOLLOWED WHILE HOLDING THAT PROVISIONS OF SECTION 19 4C WERE APPLICABLE. A COPY OF ORDER OF CIT(A) IN ASSESSEE'S CASE IS ENCLOSED FOR READY REFERENCE AND RECORDS. (PB PAGE 16 - 30) ITA 723/DEL/2015 A.Y. 2008 - 09 (FY 2007 - 08) ITO VS. NAYEF ESTATE PVT.LTD. NEW DELHI 4 8. THE ASSESSEE HAS PREFERRED AN APPEAL AGAINST THIS ORDER OF CIT(A) AND THE SAME WAS POSTED FOR HEARING BEFORE THE HON BLE ITAT . BASED ON THE AGREEMENTS WITH THE CONSOLIDATOR, THE ASSESSEE WAS UNDER A BONA FIDE IMPRESSION THAT THE DEALING WITH THE CONSOLIDATOR WAS ON PRINCIPAL TO PRINCIPAL BASIS, WHICH VIEW HAS NOT BEEN UPHELD BY HON BLE ITAT. THEREFORE, THERE WAS A REASONABLE C AUSE WITH THE ASSESSEE OF NOT DEDUCTING TDS AND, THEREFORE, THE PENALTY SHOULD NOT HAVE BEEN LEVIED U/S 272A READ WITH SECTION 273B OF THE I.T. ACT. 2.2. ON THE BASIS OF ABOVE SUBMISSIONS LD. CIT (A) DELETED PENALTY LEVIED BY LD.AO. 2.3. AGGRIEVED BY THE ORDER OF LD. CIT (A) REVENUE IS IN APPEAL BEFORE US NOW. 3. AT THE OUTSET LD. AR SUBMITTED THAT , DISPUTE REGARDING TDS PROVISIONS BEING APPLICABLE , HAS BEEN SETTLED BY THIS T RIBUNAL IN QUANTUM APPEAL IN ASSESSEE S OWN CASE FOR ASSESS MENT YEAR UNDER CONSIDERATION, V IDE ORDER DATED 25/03/15 IN ITA NO. 3062/ D EL/2012 AND 4059/ D EL/2012. 3.1. HE FURTHER SUBMITTED THAT THE ORDER OF THIS T RIBUNAL HAS BEEN UPHELD BY HON BLE DELHI HIGH COURT IN ITA NO. 885/2015 V IDE ORDER DATED 18/11/15 . 3.2. LD. DR THOUGH CO ULD NOT CONTROVERT THE ABOVE OBSERVATIONS BY THIS T RIBUNAL WHICH HAS BEEN UPHELD BY HON BLE HIGH COURT , SUPPORTED THE ORDER OF LD. AO. 3.3. WE HAVE PERUSED THE SUBMISSIONS ADVANCED BY BOTH THE SIDES IN THE LIGHT OF THE RECORDS PLACED BEFORE US AS WELL AS THE ORDERS RELIED UPON BY ASSESSEE , IN ASSESSEE S OWN CASE FOR YEAR ITA 723/DEL/2015 A.Y. 2008 - 09 (FY 2007 - 08) ITO VS. NAYEF ESTATE PVT.LTD. NEW DELHI 5 UNDER CONSIDERATION IN QUANTUM PROCEEDINGS , PASSED BY THIS T RIBUNAL AS WELL AS BY HON BLE HIGH COURT. 3.4. IN VIEW OF THE TOTALITY OF FACTS WE DO NOT FIND ANY REASON TO INTERFERE WITH TH E FINDINGS OF LD. CIT (A) AND THE SAME IS UPHELD. 4. IN THE RESULT APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 8 . 0 2 . 2 0 1 8 . S D / - S D / - ( R.K.PANDA ) (BEENA A PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 2 8 T H FEBRUARY, 2018. *MV ITA 723/DEL/2015 A.Y. 2008 - 09 (FY 2007 - 08) ITO VS. NAYEF ESTATE PVT.LTD. NEW DELHI 6 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GUARD FILE BY ORDER ASST. REGISTRAR ITAT, DELHI BENCHES, NEW DELHI