DCIT 10(2)(2), MUMBAI V. MARKSANS PHARMA LTD, MUMBAI

ITA 7278/MUM/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7038 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-06-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2006-2007
• Appeal Filed On: 09-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH DESHPANDEYDR
• Keywords: Principle of natural justice; Question of law; Non-deduction of tax
• Section: 143(3); 260A; 154

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES I, MUMBAI , . , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA NO.7278/MUM/2016 ASSESSMENT YEAR: 2006-07 DCIT-10(2)(2), ROOM NO.216-A, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020 / VS. M/S MARKSANS PHARMA LIMITED, 11 TH FLOOR, GRANDEUR VEER DESAI, EXTENSION ROAD, ANDEHRI (WEST), MUMBAI-400053 ( / REVENUE) ( ! ' /ASSESSEE) P.A. NO.AAACT3153G C.O. NO.102/MUM/2018 (ARISING OUT OF ITA NO.7278/MUM/2016 ) ASSESSMENT YEAR: 2006-07 M/S MARKSANS PHARMA LIMITED, 11 TH FLOOR, GRANDEUR VEER DESAI, EXTENSION ROAD, ANDEHRI (WEST), MUMBAI-400053 / VS. DCIT-10(2)(2), ROOM NO.216-A, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020 ( ! ' /ASSESSEE) ( / REVENUE) P.A. NO.AAECM6057A ITA NO.7278/MUM/2016 & C.O. NO.102/MUM/2018 M/S MARKSANS PHARMA LTD.. 2 / REVENUE BY SHRI SAURABH DESHPANDEY-DR ! ' / ASSESSEE BY SHRI VIJAY MEHTA # $ % ' & / DATE OF HEARING : 05/06/2018 % ' & / DATE OF PRONOUNCEMENT 05/06/2018 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATED 27/09/2016 OF THE LD. FIRST APPELLATE AUTHORI TY, MUMBAI AND THE ASSESSEE HAS PREFERRED CROSS OBJECTI ON. IN THE APPEAL OF THE REVENUE, THE GROUND RAISED PERTAI NS TO DELETING THE PENALTY OF RS.57,99,493/- IMPOSED UNDE R SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (HERE INAFTER THE ACT). 2. DURING HEARING, THE LD. DR, SHRI SAURBH DESHPANDE, ADVANCED ARGUMENTS, WHICH IS IDENTICAL T O THE GROUND RAISED BY CONTENDING THAT WHILE DELETING THE PENALTY, THE FIRST APPELLATE AUTHORITY DID NOT APPR ECIATE THAT CLAIMING FCCB EXPENSES AGGREGATING RS.1,72,29, 629/- ARE OTHERWISE INADMISSIBLE UNDER THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT AS THE ASSESSEE DID NOT DISCHA RGED THE ITA NO.7278/MUM/2016 & C.O. NO.102/MUM/2018 M/S MARKSANS PHARMA LTD.. 3 STATUTORY OBLIGATION OF DEDUCTING TAX AT SOURCE ON THE PAYMENTS MADE TO FOREIGN ENTITY AND THE ASSESSEE SO UGHT TO REDUCE THE INCIDENCE OF TAXATION BY CONCEALING T HE INCOME AS WELL AS FURNISHING OF INACCURATE PARTICUL ARS OF INCOME. ON THE OTHER HAND, SHRI VIJAY MEHTA, LD. C OUNSEL FOR THE ASSESSEE, DEFENDED THE IMPUGNED ORDER BY CONTENDING THAT ISSUE IS HIGHLY DEBATABLE AND THERE IS NEITHER CONCEALMENT NOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. RELIANCE WAS PLACED UPON THE DECISION OF THE TRIBUNAL IN THE CASE OF SATYAJIT MO VIES PVT. LTD. VS ACIT (ITA NO.6306/MUM/2011), INCOME TAX OFF ICER VS VISHAL MADHUSUDAN BHAI CHOKSI (ITA NO.62/AHD/2013), NETAMBIT VALUE FIRST SERVICE PVT. LTD. (ITA NO.1704/DEL/2016). RAMKIRSHNA SHETTY VS ACIT ( ITA NO.7142/MUM/2011) AND HON'BLE GUJARAT HIGH COURT IN CIT VS L G. CHAUDHARY (ITA NO.536 OF 2012) 215 TAXM AN 95(GUJ.) AND NAYAN C SHAH VS INCOME TAX OFFICER 386 ITR 304 (GUJ.). 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW O F THE ITA NO.7278/MUM/2016 & C.O. NO.102/MUM/2018 M/S MARKSANS PHARMA LTD.. 4 ABOVE, WE ARE REPRODUCING HEREUNDER THE RELEVANT PO RTION OF THE ORDER OF THE TRIBUNAL IN THE CASE OF SATYAJI T MOVIE PVT. LTD. VS ACIT (ITA NO.6306/MUM/2011), ORDER DAT ED 21/02/2014 FOR READY REFERENCE AND ANALYSIS:- THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGA INST THE ORDER DATED 10.08.2011 PASSED BY CIT(APPEALS)-3, MUMBAI, IN RELATION TO THE PENALTY PROCEEDINGS U/S 271(1)(C) FOR THE AS SESSMENT YEAR 2005-06. THE ASSESSEE IN THIS APPEAL HAS RAISED FOL LOWING GROUNDS TO CHALLENGE THE IMPUGNED ORDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(APPEALS) HAS FAILED TO APPRECIATE THAT SHOW CAUSE NOTICE UNDER SECTION 271(1)(C) IS A STATUTORY CONDITION PR ECEDENT TO THE IMPOSITION OF PENALTY AND, THEREFORE, THE PENALTY P ROCEEDINGS ARE BAD IN LAW SINCE NOTICE UNDER SECTION 271(1)(C) HAS NOT BE EN PROPERLY SERVED ON THE APPELLANT WITHIN THE PRESCRIBED PERIOD AND, THE REFORE, THE SAID NOTICE IS AGAINST THE PRINCIPLE OF NATURAL JUSTICE AND CONSEQ UENTLY INVALID IN LAW. 2. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CIT( APPEALS) HAS ERRED IN CONFIRMING THE LEVY OF PENALTY ON ADDITIONS MADE ON ACCOUNT OF DISALLOWANCE OF EXPENSES OF RS. 9,83,145/-, NON-DED UCTION OF TDS OF PROFESSIONAL FEES RS. 25,05,138/- AND PRELIMINARY E XPENSES OF RS. 8,905/- IT IS, THEREFORE, RESPECTFULLY SUBMITTED THAT PENAL TY CONFIRMED ON A SUM OF RS. 34,97,188/- IS UNTENABLE ON THE FACTS OF THE OF THE CASE AND IS UNJUSTIFIABLE IN LAW AND, THEREFORE, NEEDS TO BE DE LETED. 2. IN THIS CASE PENALTY HAS BEEN LEVIED ON FOLLOWIN G DISALLOWANCES AGGREGATING TO RS.34,97,188/-:- (I) ADHOC DISALLOWANCE OF EXPENSES DEBITED IN THE P ROFIT & LOSSS ACCOUNT OF RS. 9,83,145/- (II) DISALLOWANCE U/S 40(A)(IA) ON ACCOUNT OF NON D EDUCTION OF TDS ON PROFESSIONAL AND TECHNICAL FEES AND PUBLICIT Y EXPENSES OF RS. 25,05,138/- ITA NO.7278/MUM/2016 & C.O. NO.102/MUM/2018 M/S MARKSANS PHARMA LTD.. 5 (III) DISALLOWANCE OF PRELIMINARY EXPENSES U/S 35D OF RS. 8,905/- 3. BRIEF FACTS QUA, THE AFORESAID DISALLOWANCES ON WHICH PENALTY HAS BEEN LEVIED ARE THAT, ASSESSEE IS ENGAG ED IN THE BUSINESS OF FILM MAKING AND IN PROFIT & LOSS ACCOUN T, THE ASSESSEE HAS CLAIMED A SUM OF RS. 22,05,138/- AS TE CHNICAL AND PROFESSIONAL EXPENSES AND RS. 3,00,000/- AS PUBLICI TY EXPENSES. THE AO NOTED THAT ON THESE PAYMENTS, THE ASSESSEE HAS NOT DEDUCTED TDS AS REQUIRED AND ACCORDINGLY HE MADE DISALLOWANCE U/S. 40(A)(IA). HE FURTHER NOTICED THA T ASSESSEE HAS CLAIMED VARIOUS FILM PRODUCTION EXPENSES AND ADMINISTRATIVE EXPENSES WHICH WERE NOT OPEN TO FULL VERIFICATION, ACCORDINGLY HE MADE ADHOC DISALLOWANC E @ OF 20%, AGGREGATING TO RS.9,83,145/-. FURTHER THE AO N OTED THAT ASSESSEE HAS CLAIMED PRELIMINARY EXPENSES WRITTEN O FF OF RS. 9,700/- U/S 35D. AS PER THE PROVISIONS OF SECTION 3 5D, TOTAL ALLOWABILITY IS RESTRICTED TO 2.5% OF THE CAPITAL E MPLOYED AND IN THE ASSESSEES CASE THE CAPITAL EMPLOYED WAS RS. 1,50,000/- ONLY. THUS HE RESTRICTED THE CLAIM OF EXPENSES AT R S. 3,750/- WHICH IS ALLOWABLE FOR THE PERIOD OF 5 YEARS. THUS EXCESS CLAIM OF RS. 8,950/- WAS DISALLOWED. 4. IN THE FIRST APPEAL, IT APPEARS THAT ALL THESE D ISALLOWANCES WERE NOT PRESSED BEFORE THE LD. CIT(A) BY THE ASSES SEE. 5. THE AO AFTER INVOKING THE PROVISIONS OF EXPLANAT ION 1 TO SECTION 271(1)(C), LEVIED THE PENALTY ON THESE DISA LLOWANCES. EVEN THE LD. CIT(A) TOO HAS CONFIRMED THE LEVY OF P ENALTY ON THE AFORESAID DISALLOWANCE, FIRSTLY ON THE GROUND T HAT ASSESSEE HAS FAILED TO DISCHARGE ITS ONUS DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS WELL AS DURING THE COURSE OF PENALTY PROCEEDINGS; SECONDLY THE ASSESSEE HAS FAILED TO CO MPLY WITH THE STATUTORY REQUIREMENTS OF DEDUCTING TDS ON THE PAYMENTS WHICH HAS BEEN CLAIMED AS EXPENSES; AND LASTLY THE ASSESSEES CLAIM WAS NOT LEGALLY SUSTAINABLE IN LAW. 6. BEFORE US, THE LD. COUNSEL SHRI K.K. LALKAKA FIR ST ADDRESSING US ON MERITS, SUBMITTED THAT, SO FAR AS LEVY OF PENALTY ON ADHOC DISALLOWANCE ON ACCOUNT OF EXPENSE S OF RS. 9,83,145/- IS CONCERNED, NO PENALTY CAN BE LEVIED, AS IT IS NEITHER FURNISHING OF INACCURATE PARTICULARS OF INC OME NOR ANY ITA NO.7278/MUM/2016 & C.O. NO.102/MUM/2018 M/S MARKSANS PHARMA LTD.. 6 CONCEALMENT OF INCOME, FOR THE REASON THAT ASSESSEE S BOOKS OF ACCOUNTS WERE DULY AUDITED AND NO SUCH DISCREPANCY HAS BEEN FOUND BY THE AO. AS REGARDS THE DISALLOWANCE U/S 40 (A)(IA) ON ACCOUNT OF NON DEDUCTION OF TDS ON PAYMENT OF TECHN ICAL AND PROFESSIONAL FEES AND PUBLICITY EXPENSES FOR SUMS A GGREGATING TO RS. 25,05,138/-, HE SUBMITTED THAT THE GENUINENE SS OF THESE EXPENSES AND QUANTUM OF PAYMENTS HAS NOT BEEN DOUBT ED. THE DISALLOWANCE HAS BEEN MADE ONLY ON ACCOUNT OF TECHN ICAL DEFAULT OF NON DEDUCTION OF TDS, FOR WHICH THERE IS A SEPARATE PROVISION FOR LEVY OF INTEREST AND PENALTY UNDER TH E ACT. REGARDING THE PRELIMINARY EXPENSES ALSO, HE SUBMITT ED THAT THE ENTIRE INFORMATION WERE FURNISHED WITH REGARD TO TH E CLAIM OF PRELIMINARY EXPENSES, THEREFORE, IT CANNOT BE HELD THAT INACCURATE PARTICULARS HAVE BEEN FURNISHED BY THE A SSESSEE. 7. LD. DR ON THE OTHER HAND STRONGLY RELIED UPON TH E OBSERVATION AND FINDING OF LD. CIT(A) AND SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSEE COULD NOT FURNISH THE RELEVANT DETAILS AND, THEREFO RE, THE PENALTY HAS RIGHTLY BEEN CONFIRMED. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTI ES AND ALSO CAREFULLY PERUSED THE MATERIALS PLACED ON RECORD. S O FAR AS LEVY OF PENALTY ON DISALLOWANCE OF RS. 9,83,145/- IS CON CERNED, IT IS SEEN THAT THE AO HAS MADE ADHOC DISALLOWANCE AT THE RATE OF 20% OF THE VARIOUS EXPENSES WITHOUT POINTING OUT AN Y SPECIFIC EXPENSES BEING IN THE NATURE OF NON BUSINESS PURPOS E OR FOR PERSONAL USE. IF THE ACCOUNTS HAVE BEEN AUDITED, TH EN THE NORMAL PRESUMPTION IS THAT THE EXPENSES ARE VERIFIA BLE VIS-A- VIS THE DOCUMENTS MAINTAINED BY THE ASSESSEE. EVEN THOUGH DISALLOWANCES HAVE BEEN MADE IN THE QUANTUM PROCEED INGS, DUE TO NON VERIFIABILITY OF EXPENSES THROUGH CORROB ORATIVE EVIDENCES AND THE SAME HAS NOT BEEN CHALLENGED, HOW EVER THIS DOES NOT LEAD TO ANY INFERENCE THAT ASSESSEE IS LIA BLE FOR LEVY OF PENALTY FOR EITHER FURNISHING OF ANY INACCURATE PAR TICULARS OR FOR CONCEALMENT OF PARTICULARS OF INCOME. THE DISAL LOWANCE IS PURELY BASED ON ADHOC BASIS, DEHORS ANY ADVERSE MAT ERIAL ON RECORD, THEREFORE, NO PENALTY IS WARRANTED U/S 271( 1)(C) ON ADHOC DISALLOWANCE OF THE EXPENSES CLAIMED BY THE A SSESSEE IN THE PROFIT & LOSS ACCOUNT. ITA NO.7278/MUM/2016 & C.O. NO.102/MUM/2018 M/S MARKSANS PHARMA LTD.. 7 9. AS REGARDS THE DISALLOWANCE U/S 40(A)(IA), ON AC COUNT OF PAYMENT OF TECHNICAL AND PROFESSIONAL FEES AND PUBL ICITY EXPENSES, IT IS SEEN FROM THE RECORD THAT THE AO HA S MADE THE DISALLOWANCE ON THE GROUND THAT TDS HAS NOT BEE N DEDUCTED ON SUCH PAYMENTS. THE GENUINENESS AND THE QUANTUM OF PAYMENT HAVE NOT BEEN DISPUTED AT ALL. T HE DISALLWOANCE HAS BEEN MADE MERELY ON ACCOUNT OF TEC HNICAL DEFAULT OF NON DEDUCTION OF TDS. UNDER THE INCOME T AX ACT, FAILURE TO DEDUCT TDS, ENTAILS LEVY OF INTERES T AND PENALTY UNDER DIFFERENT PROVISIONS OF THE ACT AND C ERTAINLY NOT U/S 271(1)(C), WHICH CAN BE LEVIED ONLY IF THE ASSESSEE HAS CONCEALED PARTICULARS OF HIS INCOME OR HAS FURN ISHED INACCURATE PARTICULARS OF INCOME. IN THIS CASE ASSE SSEE HAS NEITHER FURNISHED ANY INACCURATE PARTICULARS OF INC OME NOR HAS CONCEALED ANY PARTICULARS OF INCOME BECAUSE ALL THE DETAILS OF EXPENSES, GENUINENESS OF THE PAYMENT AND QUANTUM HAS BEEN ACCEPTED. ONCE THE PAYMENTS MADE T O PROFESSIONAL AND TECHNICAL PERSONS HAVE NOT BEEN DO UBTED AND ON THE BASIS OF SUCH PAYMENTS THE ASSESSEE HAS DEBITED THE SAID AMOUNT IN THE P&L ACCOUNT, IT CANNOT BE HE LD THAT ASSESSEE IS LIABLE FOR PENALTY WITHIN THE AMBIT OF SECTION 271(1)(C). THUS LEVY OF PENALTY ON THE DISALLOWANCE S MADE BY VIRTURE OF SECTION 40(A)(IA) CANNOT BE SUSTAINED . ACCORDINGLY WE HOLD THAT PENALTY LEVIED ON SUCH DISALLOWANCES SHOULD BE DELETED. 10. LASTLY, WITH REGARD TO DISALLOWANCE OF CLAIM OF DEDUCTION U/S 35D, IT IS SEEN THAT ASSESSEE HAS FURNISHED THE NECESSARY INFORMATION WITH REGARD TO CLAIM OF SUCH EXPENSES, IN THE AUDITED STATEMENT OF ACCOUNT DULY DISCLOSED IN THE RETURN. EVEN IF THE ENTIRE CLAIM OF THE ASSESSEE HAS NOT BEEN FO UND TO BE SUSTAINABLE, THEN ALSO IT CANNOT BE HELD THAT ASSES SEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME. TO ATTR ACT THE PROVISIONS OF SECTION 271(1)(C), THE ASSESSEE MUST BE HELD TO HAVE CONCEALED THE MATERIAL PARTICULARS OR TO HAVE FURNISHED INACCURATE PARTICULARS. IF CERTAIN CLAIM MADE BY AS SESSEE IS FOUND NOT SUSTAINABLE BUT HAS DISCLOSED ALL THE MAT ERIAL FACTS, THEN IT CANNOT BE HELD THAT ASSESSEE IS GUILTY OF F URNISHING OF INACCURATE PARTICULARS SO AS TO ATTRACT THE PENAL P ROVISIONS OF SECTION 271(1)(C). HENCE ON THIS DISALLOWANCE ALSO NO PENALTY IS WARRANTED. ITA NO.7278/MUM/2016 & C.O. NO.102/MUM/2018 M/S MARKSANS PHARMA LTD.. 8 11. ACCORDINGLY PENALTY LEVIED U/S 271(1)(C) ON AFO RESAID DISALLOWANCES ARE CANCELLED AND THE ORDER OF LD. CI T(A) IS SET ASIDE. THE GROUND NO. 2 AS RAISED BY THE ASSESSEE S TANDS ALLOWED. 12. SINCE WE HAVE ALREADY DELETED THE PENA LTY ON MERITS, THE LEGAL ISSUE AS RAISED IN GROUND NO. 1 I S NOT BEING ADJUDICATED AS THE SAME HAS BECOME PURELY ACADEMIC. 13. IN THE RESULT APPEAL FILED BY THE ASSESSEE IS A LLOWED. 2.2. THE HON'BLE GUJARAT HIGH COURT IN NAYAN C. SHAH (2016) 386 ITR 304 (GUJ.), ORDER DATED 29/03/2 016 ON THE ISSUE OF PENALTY UNDER SECTION 271(1)(C) R.W .S. 40(A)(IA) OF THE ACT, CONSIDERING THE DECISION IN R ELIANCE PETRO PRODUCTS PVT. LTD (2010) 322 ITR 158 (SUPREME COURT) HELD AS UNDER:- THIS APPEAL UNDER SECTION 260A OF THE INCOME TAX A CT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT') IS DIRECTED AGAINST THE ORDER DATED 07.03.2012 PASSED BY THE INCOME TAX APPELLATE TRIBU NAL, AHMEDABAD BENCH 'C', AHMEDABAD (HEREINAFTER REFERRED TO AS TH E 'TRIBUNAL') IN ITA NO.2822/AHD/2011, WHEREBY THE APPEAL PREFERRED BY THE REVENUE HAS BEEN DISMISSED. 2. THIS COURT, BY AN ORDER DATED 18.03.2014, ADMITTED THE APPEAL ON THE FOLLOWING SUBSTANTIAL QUESTION OF LAW: 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AS WELL AS IN LAW, THE APPELLATE TRIBUNAL WAS JUSTIFIED IN REVERS ING THE ORDER OF CIT(A) AND RESTORING THE ORDER PASSED BY ASSESSING OFFICER LEVYING PENALTY OF RS.4,44,510/- UNDER SECTION 271(1)(C) OF THE ACT?' 3. THE ASSESSEE, A PARTNERSHIP FIRM IS ENGAGED IN THE BUSINESS OF CONSTRUCTION. DURING THE COURSE OF ASSESSMENT PROCE EDINGS, THE ASSESSING OFFICER, ON VERIFICATION OF DETAILS SUBMI TTED IN RESPECT OF LABOUR PAYMENT, NOTICED THAT IN SOME CASES, THE TAX DEDUCTED AT SOURCE FROM CERTAIN PARTIES TO WHOM LABOUR PAYMENTS WERE M ADE, WERE NOT DEPOSITED INTO GOVERNMENT ACCOUNT AS PER THE PROVIS IONS OF SECTION ITA NO.7278/MUM/2016 & C.O. NO.102/MUM/2018 M/S MARKSANS PHARMA LTD.. 9 200(1) OF THE ACT. HE, THEREFORE, HELD THAT THE ASS ESSEE HAD CLEARLY VIOLATED PROVISIONS OF SECTION 40( A )( IA ) OF THE ACT AND ACCORDINGLY, MADE A TOTAL ADDITION OF RS.13,20,588/- TO THE TOTA L INCOME OF THE ASSESSEE. THE ASSESSING OFFICER, THEREAFTER, INITIA TED PENALTY PROCEEDINGS BY ISSUANCE OF NOTICE UNDER SECTION 274 READ WITH SECTION 271 OF THE ACT ON 24.10.2008 TO THE RESPONDENT - AS SESSEE. THE ASSESSEE SUBMITTED ITS REPLY IN RESPONSE TO THE SHOW CAUSE N OTICE THE DETAILS WHEREOF ARE REPRODUCED IN PARAGRAPH 2 OF THE IMPUGN ED ORDER. THE ASSESSING OFFICER, HOWEVER, WAS NOT CONVINCED BY TH E REASONS PUT FORTH BY THE ASSESSEE AND ACCORDINGLY, LEVIED MINIMUM PEN ALTY OF RS.4,44,510/- UNDER SECTION 271(1)( C ) OF THE ACT. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE COMMISSIONER OF INC OME TAX (APPEALS), WHO BY AN ORDER DATED 16.09.2011, ALLOWED THE APPEA L BY HOLDING THAT OUT OF AN AMOUNT OF RS.13,20,588/-, TAX WAS DEDUCTE D AT SOURCE IN RESPECT OF RS.6,18,300/- AND WAS DEPOSITED IN THE G OVERNMENT ACCOUNT ON 24.04.2006, THAT IS, BEFORE THE DUE DATE OF FILI NG OF RETURN AND THUS, WAS COVERED BY THE DECISION OF THE TRIBUNAL IN KANUBHAI RAMJIBHAI MAKWANA V. ITO [2011] 44 SOT 264/9 TAXMANN.COM 55 (AHD. - TRIB.) . AS REGARDS THE BALANCE AMOUNT OF TDS, THE COMMISSIO NER (APPEALS) TOOK NOTE OF THE FACT THAT THE SAME WAS DEPOSITED I N THE GOVERNMENT ACCOUNT ON THE AMOUNT OF RS.13,20,588/- ON 1.12.200 8 AND WAS ALLOWABLE IN ASSESSMENT YEAR 2007-08, AND WAS ACCOR DINGLY OF THE VIEW THAT NO PENALTY IS WARRANTED UNDER SECTION 271(1)( C ) OF THE ACT FOR TECHNICAL BREACH OF LAW AND DELETED THE PENALTY IMP OSED BY THE ASSESSING OFFICER. THE REVENUE CARRIED THE MATTER I N APPEAL BEFORE THE TRIBUNAL, WHICH HELD THAT THE ASSESSEE HAD SUPPRESS ED THE ACTUAL PARTICULARS OF INCOME BY NOT MAKING DISALLOWANCE UN DER SECTION 40( A )( IA ) OF THE ACT AND RESTORED THE PENALTY ORDER PASSED BY THE ASSESSING OFFICER. BEING AGGRIEVED, THE APPELLANT-A SSESSEE HAS PREFERRED THE PRESENT APPEAL. 4. MR. K. T. DAVE, LEARNED ADVOCATE FOR THE APPELLANT SUBMITTED THAT THE TRIBUNAL HAS FAILED TO APPRECIATE THAT THE DEFAULT, IF ANY, WAS TECHNICAL AND VENIAL IN NATURE INASMUCH AS, THE DISALLOWANCE TO THE EXTENT OF RS.6,18,300/- WAS ALLOWED IN ASSESSMENT YEAR 2007-0 8 VIDE ORDER UNDER SECTION 154 DATED 03.02.2009, WHEREAS IN RESPECT OF THE BALANCE AMOUNT OF RS.7,94,590/-, THE TAX DEDUCTED AT SOURCE WAS MA DE AND DEPOSITED WITH INTEREST ON 01.12.2008 SO THAT IT WAS ADMISSIB LE IN ASSESSMENT YEAR 2009-10. IT WAS SUBMITTED THAT THE ENTIRE EXERCISE TAKING ALL THE YEARS TOGETHER WAS REVENUE NEUTRAL ON ACCOUNT OF UNIFORM RATE OF TAX @ 30% APPLICABLE IN ALL THESE YEARS. IT WAS FURTHER SUBMI TTED THAT THE TRIBUNAL HAS FAILED TO APPRECIATE THAT THE ENTIRE DISALLOWAN CE OF RS.7,94,590/- ITA NO.7278/MUM/2016 & C.O. NO.102/MUM/2018 M/S MARKSANS PHARMA LTD.. 10 WAS NOT DISALLOWABLE UNDER SECTION 40( A )( IA ) OF THE ACT AND HENCE, NO PENALTY UNDER SECTION 271(1)( C ) OF THE ACT WAS ATTRACTED. IT WAS, ACCORDINGLY, URGED THAT THE BREACH BEING TECHNICAL AND VENIAL IN NATURE, THE COMMISSIONER (APPEALS) WAS WHOLLY JUSTIFIED IN DELETING THE PENALTY AND THAT THE TRIBUNAL WAS NOT JUSTIFIED IN RESTORING THE PENALTY IMPOSED BY THE ASSESSING OFFICER. 4.1 IN SUPPORT OF HIS SUBMISSIONS, THE LEARNED ADVOCAT E PLACED RELIANCE UPON AN UNREPORTED DECISION OF THIS COURT IN THE CA SE OF CIT V. L. G. CHAUDHARY [2013] 215 TAXMAN 95 (MAG.)/33 TAXMANN.COM 156 (GUJ.) WHEREIN, THE COURT OBSERVED THAT THE DISALLOWANCE WAS DUE TO NON-PAYMENT OF TDS, WHICH WAS AT THE MOST A TECHNIC AL DEFAULT AND THAT, THERE WAS NOTHING TO INDICATE ANY CONCEALMENT OF THE INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME BY T HE ASSESSEE AND THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN LEVYING THE PENALTY. THE COURT, ACCORDINGLY, DID NOT FIND ANY REASON TO INTE RFERE IN THE APPEAL AND HELD THAT BOTH THE AUTHORITIES, NAMELY, CIT (APPEAL S) AND THE TRIBUNAL HAVE RIGHTLY DELETED THE PENALTY. 5. OPPOSING THE APPEAL, MR. VARUN PATEL, LEARNED STAN DING COUNSEL FOR THE RESPONDENT, REITERATED THE FINDINGS RECORDED BY THE ASSESSING OFFICER AND THE TRIBUNAL. IT WAS SUBMITTED THAT IN THE PRESENT CASE, WHILE THE APPELLANT-ASSESSEE HAD DEPOSITED RS.6,18, 300/- ON 24.04.2006, THAT IS, BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, THE BALANC E AMOUNT OUT OF RS.13,12,588/- HAD NOT BEEN DEPOSITED IN THE YEAR U NDER CONSIDERATION AND WAS DEPOSITED ONLY IN THE SUBSEQUENT YEAR. REFE RRING TO THE FINDINGS RECORDED BY THE ASSESSING OFFICER, IT WAS POINTED O UT THAT THE APPELLANT, ON HIS OWN, DID NOT BRING THE AFORESAID FACTS TO TH E NOTICE OF THE ASSESSING OFFICER AND THAT SUCH FACTS WERE DISCOVER ED ONLY DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IT WAS POINTED OU T THAT THE ADDITION/DISALLOWANCE MADE ON ACCOUNT OF NON-DEDUCT ION OF TAX AT SOURCE AND NON-PAYMENT OF THE TAX DEDUCTED AT SOURC E INTO THE GOVERNMENT ACCOUNT WITHIN THE STIPULATED TIME AS PE R THE PROVISIONS OF SECTION 40( A )( IA ) OF THE ACT, ARE FOUND OUT BY THE ASSESSING OFFICE R ONLY DURING THE COURSE OF ASSESSMENT PROCEEDINGS. UNDER THE CIRCUMSTANCES, THE ASSESSING OFFICER WAS JUSTIFIED IN HOLDING THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME AS CONTE MPLATED UNDER SECTION 271(1)( C ) OF THE ACT AND THAT THE TRIBUNAL WAS WHOLLY JUSTI FIED IN AFFIRMING THE FINDINGS RECORDED BY THE ASSESSING OFFICER. ACCORDING TO THE LEARNED COUNSEL, THE QUESTION AS TO WHETHER THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS IS A QUESTION OF F ACT, WHICH DOES NOT ITA NO.7278/MUM/2016 & C.O. NO.102/MUM/2018 M/S MARKSANS PHARMA LTD.. 11 GIVE RISE TO ANY QUESTION OF LAW. IT WAS, ACCORDING LY, URGED THAT THE QUESTION IS REQUIRED TO BE ANSWERED IN FAVOUR OF TH E REVENUE AND AGAINST THE APPELLANT AND THAT THE APPEAL DESERVES TO BE DI SMISSED. 6. THE FACTS ARE NOT IN DISPUTE. THE ASSESSEE FILED R ETURN OF INCOME DECLARING TOTAL INCOME OF RS.8,28,646/-, WHEREAS, B Y AN ORDER DATED 24.10.2008 UNDER SECTION 143(3) OF THE ACT THE ASSE SSMENT WAS COMPLETED BY ASSESSING THE TOTAL INCOME AT RS.24,84 ,970/-. WHILE FRAMING ASSESSMENT UNDER SECTION 143(3) OF THE ACT, THE ASSESSING OFFICER INVOKED THE PROVISIONS OF SECTION 40( A )( IA ) OF THE ACT AND MADE DISALLOWANCE OF RS.14,29,890/-. THE ASSESSEE POINTE D OUT THAT OUT OF THE TOTAL AMOUNT OF RS.14,29,890/-, TAX WAS DEDUCTED AT SOURCE IN RESPECT OF RS.6,18,300/- AND WAS DEPOSITED ON 24.4.2006, THAT IS, BEFORE THE DUE DATE FOR FILING OF RETURN OF INCOME, WHEREAS IN RES PECT OF THE BALANCE AMOUNT OF RS.7,94,590/-, THE TAX WAS DEDUCTED AT SO URCE AND PAID IN THE SUBSEQUENT YEAR AND ACCORDINGLY, SUCH EXPENDITURE W AS ALLOWED IN THE SUBSEQUENT YEAR. THE ASSESSING OFFICER, FOR THE REA SON THAT THE DISCREPANCY IN NOT DEDUCTING THE TAX AT SOURCE AND PAYING THE SAME INTO THE GOVERNMENT ACCOUNT HAD NOT BEEN DISCLOSED BY TH E ASSESSEE AND THAT THE SAME WAS REVEALED ONLY DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, FORMED THE OPINION THAT THE ASSESSEE H AD FURNISHED INACCURATE PARTICULARS OF INCOME AND LEVIED PENALTY UNDER SECTION 271(1)( C ) OF THE ACT. THE TRIBUNAL, WHILE UPHOLDING THE FIN DING RECORDED BY THE ASSESSING OFFICER, HAS FOUND THAT T HIS WAS NOT A CASE WHEREIN THE CLAIM MADE BY THE ASSESSEE WAS ALLOWABL E UNDER THE PROVISIONS OF THE ACT AND THAT THE ASSESSEE WAS REQ UIRED TO DEDUCT TAX IN ACCORDANCE WITH THE STATUTORY PROVISIONS AND DEPOSI T THE SAME WITHIN THE STIPULATED TIME LIMIT AS PRESCRIBED, WHICH HAS NOT BEEN DONE BY THE ASSESSEE. THE TRIBUNAL HAS, ACCORDINGLY, COME TO TH E CONCLUSION THAT THE ASSESSEE HAD SUPPRESSED ACCURATE PARTICULARS OF INC OME BY NOT MAKING DISALLOWANCE UNDER SECTION 40( A )( IA ) OF THE ACT. 7. AS NOTICED HEREINABOVE, THE COMMISSIONER (APPEALS) HAD DELETED THE PENALTY ON THE GROUND THAT THE DEFAULT BEING TECHNI CAL AND VENIAL IN NATURE INASMUCH AS THE ENTIRE AMOUNT OF TAX WHICH W AS REQUIRED TO BE DEDUCTED AT SOURCE WAS DEDUCTED AND DEPOSITED IN TH E GOVERNMENT ACCOUNT. ACCORDING TO THE COMMISSIONER (APPEALS) FO R A TECHNICAL BREACH, LEVY OF PENALTY WAS NOT WARRANTED. THUS, TH E ASSESSEE WHILE FILING THE RETURN OF INCOME, DID NOT MAKE DISALLOWA NCE UNDER SECTION 40( A )( IA ) OF THE ACT IN RELATION TO THE AMOUNTS PAID ON WHI CH IT HAD NOT DEDUCTED THE TAX AT SOURCE. IT IS THE CASE OF THE A SSESSEE BEFORE THE ASSESSING OFFICER AS WELL AS THE AUTHORITIES CONCER NED THAT EACH AND ITA NO.7278/MUM/2016 & C.O. NO.102/MUM/2018 M/S MARKSANS PHARMA LTD.. 12 EVERY PARTICULAR OF INCOME WAS ACCURATELY FURNISHED AND THERE WAS A TRUE DISCLOSURE OF ALL PARTICULARS BY IT AND THAT T HE DISALLOWANCE WAS ONLY ON A TECHNICAL GROUND, INASMUCH AS, THOUGH THE DISALLOWANCE WAS MADE IN THE ASSESSMENT YEAR 2006-07, THE AMOUNT WAS ALLOWED AS A DEDUCTION IN THE SUBSEQUENT ASSESSMENT YEAR. 8. AT THIS JUNCTURE IT MAY BE APPOSITE TO REFER TO TH E DECISION OF THE SUPREME COURT IN THE CASE OF CIT V. RELIANCE PETROPRODUCTS (P.) LTD. [2010] 322 ITR158/189 TAXMAN 322 , WHEREIN THE COURT WHILE INTERPRETING THE PROVISIONS OF SECTION 271(1)( C ) OF THE ACT, HAS HELD THAT A GLANCE AT THE SAID PROVISION WOULD SUGGEST THAT I N ORDER TO BE COVERED BY IT, THERE HAS TO BE CONCEALMENT OF THE PARTICULA RS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHE D INACCURATE PARTICULARS OF HIS INCOME. IN THE FACTS OF THAT CAS E, THE COURT FOUND THAT IT WAS NOT A CASE OF CONCEALMENT OF THE PARTICULARS OF THE INCOME, NOR WAS IT THE CASE OF THE REVENUE EITHER. HOWEVER, THE COU NSEL FOR THE REVENUE SUGGESTED THAT BY MAKING AN INCORRECT CLAIM FOR THE EXPENDITURE ON INTEREST, THE ASSESSEE HAD FURNISHED INACCURATE PAR TICULARS OF INCOME. THE COURT OBSERVED THAT IT HAD TO ONLY SEE AS TO WH ETHER IN THAT CASE, AS A MATTER OF FACT, THE ASSESSEE HAD GIVEN INACCURATE P ARTICULARS. THE COURT NOTED THAT AS PER LAW LEXICON, THE MEANING OF THE W ORD 'PARTICULAR' IS A DETAIL OR DETAILS (IN THE PLURAL SENSE); THE DETAIL S OF A CLAIM, OR THE SEPARATE ITEMS OF AN ACCOUNT. THEREFORE, THE WORD ' PARTICULAR' USED IN SECTION 271(1)( C ) WOULD EMBRACE THE MEANING OF THE DETAILS OF THE C LAIM MADE. THE COURT FURTHER OBSERVED THAT IN WEBSTER'S DICTIONARY, THE WORD 'INACCURATE' HAS BEEN DEFINED AS: 'NOT ACCURATE, NO T EXACT OR CORRECT; NOT ACCORDING TO TRUTH; ERRONEOUS; AS AN INACCURATE STA TEMENT, COPY OR TRANSCRIPT.' THE COURT OBSERVED THAT READING THE WO RDS 'INACCURATE' AND 'PARTICULARS' IN CONJUNCTION, THEY MUST MEAN THE DE TAILS SUPPLIED IN THE RETURN, WHICH ARE NOT ACCURATE, NOT EXACT OR CORREC T, NOT ACCORDING TO TRUTH OR ERRONEOUS. THE COURT NOTED THAT IT WAS AN ADMITTED POSITION THAT NO INFORMATION GIVEN IN THE RETURN WAS FOUND TO BE INCORRECT OR INACCURATE. IT WAS NOT AS IF ANY STATEMENT MADE OR ANY DETAIL SUPPLIED WAS FOUND TO BE FACTUALLY INCORRECT AND ACCORDINGLY , HELD THAT, PRIMA FACIE , THE ASSESSEE COULD NOT BE HELD GUILTY OF FURNISHI NG INACCURATE PARTICULARS. THE COURT REPELLED THE CONTENTION RAIS ED BY THE COUNSEL FOR THE REVENUE THAT 'SUBMITTING AN INCORRECT CLAIM IN LAW FOR THE EXPENDITURE ON INTEREST WOULD AMOUNT TO GIVING INAC CURATE PARTICULARS OF SUCH INCOME'. THE COURT HELD THAT IN ORDER TO EXPOS E THE ASSESSEE TO THE PENALTY UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY ANY STRETCH OF IMAG INATION, MAKING AN INCORRECT CLAIM IN LAW CANNOT TANTAMOUNT TO FURNISH ING INACCURATE ITA NO.7278/MUM/2016 & C.O. NO.102/MUM/2018 M/S MARKSANS PHARMA LTD.. 13 PARTICULARS. THEREFORE, IT IS OBVIOUS THAT IT MUST BE SHOWN THAT THE CONDITIONS UNDER SECTION 271(1)( C ) MUST EXIST BEFORE THE PENALTY IS IMPOSED. THE COURT FURTHER OBSERVED THAT THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BECAU SE THAT IS THE ONLY DOCUMENT, WHERE THE ASSESSEE CAN FURNISH THE PARTIC ULARS OF HIS INCOME. 9. REVERTING TO THE FACTS OF THE PRESENT CASE, THE AS SESSING OFFICER, IN THE PENALTY ORDER, HAS OBSERVED THAT THE ADDITION/D ISALLOWANCE MADE ON ACCOUNT OF NON-DEDUCTION OF TAX DEDUCTED AT SOURCE AND NON-PAYMENT OF THE TAX DEDUCTED AT SOURCE INTO THE GOVERNMENT ACCO UNT WITHIN THE STIPULATED TIME AS PER THE PROVISIONS OF SECTION 40 ( A )( IA ) OF THE ACT, ARE TOTALLY FOUND OUT BY THE ASSESSING OFFICER ONLY DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS AND HAD NOT BEEN DISCLOSED B Y THE ASSESSEE. HE, ACCORDINGLY, HAS FORMED THE OPINION THAT THE ASSESS EE HAS FURNISHED INACCURATE PARTICULARS OF INCOME. HOWEVER, HE HAS N OT STATED AS TO WHAT ARE THE INACCURATE PARTICULARS OF INCOME IN THE RET URN FILED BY THE APPELLANT. 10. FROM THE FACTS AS EMERGING FROM THE RECORD, IT APP EARS THAT THE ASSESSEE HAS MADE A CLAIM OF EXPENDITURE IN RELATIO N TO THE PAYMENTS MADE, WHICH HE MAY NOT HAVE BEEN ENTITLED TO CLAIM IN VIEW OF THE PROVISIONS OF SECTION 40( A )( IA ) OF THE ACT, AS TAX ON PART OF SUCH AMOUNT HAD NOT BEEN DEDUCTED AT SOURCE AND DEPOSITED IN TH E GOVERNMENT ACCOUNT BEFORE THE DUE DATE FOR FILING RETURN INCOM E. HOWEVER, AS HELD BY THE SUPREME COURT IN THE ABOVE DECISION, MERELY SUBMITTING AN INCORRECT CLAIM IN LAW FOR THE EXPENDITURE WOULD NO T AMOUNT TO FURNISHING INACCURATE PARTICULARS OF INCOME. THE IM PUGNED ORDER PASSED BY THE TRIBUNAL, THEREFORE. CANNOT BE SUSTAINED. 11. ANOTHER NOTABLE ASPECT OF THE MATTER IS THAT WHILE THE ASSESSING OFFICER HAS IMPOSED PENALTY ON THE GROUND THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME, THE TRI BUNAL HAS SET ASIDE THE ORDER OF THE COMMISSIONER (APPEALS) BY HOLDING THAT THE ASSESSEE HAS SUPPRESSED THE ACTUAL PARTICULARS OF INCOME BY NOT MAKING DISALLOWANCE UNDER SECTION 40( A )( IA ) OF THE ACT. THUS, THE ASSESSING OFFICER HAS IMPOSED PENALTY ON THE GROUND OF FURNIS HING INACCURATE PARTICULARS, WHEREAS THE TRIBUNAL HAS UPHELD THE OR DER OF THE ASSESSING OFFICER ON THE GROUND OF CONCEALMENT OF PARTICULARS . IT IS BY NOW WELL SETTLED THAT WHILE ISSUING A NOTICE UNDER SECTION 2 71(1)( C ) OF THE ACT, THE ASSESSING OFFICER IS REQUIRED TO SPECIFY AS TO WHAT IS THE DEFAULT ON THE PART OF THE ASSESSEE, AS TO WHETHER THE CASE IS ONE OF FURNISHING INACCURATE PARTICULARS, OR WHETHER IT IS A CASE OF CONCEALMENT OF INCOME, OR BOTH. IN THE FACTS OF THE PRESENT CASE, THE ASSE SSING OFFICER HAS ITA NO.7278/MUM/2016 & C.O. NO.102/MUM/2018 M/S MARKSANS PHARMA LTD.. 14 PROCEEDED ON THE FOOTING THAT INACCURATE PARTICULAR S WERE FILED BY THE ASSESSEE, WHEREAS THE TRIBUNAL HAS HELD THAT THE AS SESSEE HAD SUPPRESSED PARTICULARS FOR THE YEAR UNDER CONSIDERA TION. UNDER THE CIRCUMSTANCES, THE TRIBUNAL, HAVING CONFIRMED THE P ENALTY IMPOSED BY THE ASSESSING OFFICER ON THE GROUND OF SUPPRESSION OF ACTUAL PARTICULARS IN RESPECT OF WHICH THE ASSESSEE WAS NOT PUT TO NOT ICE, THE ORDER OF THE TRIBUNAL IS RENDERED UNSUSTAINABLE ON THIS GROUND A LSO. 12. IN THE LIGHT OF THE AFORESAID DISCUSSION, THE COUR T IS OF THE VIEW THAT THE VIEW EXPRESSED BY THE COMMISSIONER (APPEALS) TO THE EFFECT THAT THE BREACH IN QUESTION WAS TECHNICAL AND VENIAL IN NATU RE, REQUIRES TO BE UPHELD AND THE IMPUGNED ORDER PASSED BY THE TRIBUNA L UPHOLDING THE LEVY OF PENALTY ON THE GROUND OF SUPPRESSION OF PAR TICULARS, DESERVES TO BE SET ASIDE. 13. FOR THE FOREGOING REASONS, THE APPEAL SUCCEEDS AND IS ACCORDINGLY ALLOWED. THE QUESTION IS ANSWERED IN THE NEGATIVE, THAT IS, IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. IT IS ACCORDI NGLY HELD THAT THE APPELLATE TRIBUNAL WAS NOT JUSTIFIED IN REVERSING T HE ORDER OF COMMISSIONER (APPEALS) AND RESTORING THE ORDER PASS ED BY THE ASSESSING OFFICER LEVYING PENALTY OF RS.4,44,510/- UNDER SECTION 271(1)( C ) OF THE ACT. THE IMPUGNED ORDER PASSED BY THE TRIB UNAL IS HEREBY QUASHED AND SET ASIDE AND CONSEQUENTIALLY TH E ORDER PASSED BY THE COMMISSIONER (APPEALS) IS HEREBY RESTORED. THER E SHALL BE NO ORDER AS TO COSTS. 2.3. IF THE CONCLUSION LAID DOWN IN THE AFOREMENTIONED CASES ALONG WITH THE DECISIONS CITED BEFORE US, WE FIND THAT THE LD. ASSESSING OFFICER MADE THE ADDITION OF RS.7,46,70,898/- OUT OF THAT THE FIRST APPELLATE AUTHORITY GRANTED PART RELIEF OF RS.5,74,41,269/- A ND ON FURTHER APPEAL BEFORE THE TRIBUNAL, THE ORDER OF TH E FIRST APPELLATE AUTHORITY WAS AFFIRMED. THE LD. ASSESSING OFFICER LEVIED PENALTY OF RS.57,99,493/-, UNDER SECTION 271 (1)(C) OF THE ACT FOR CONCEALMENT OF RS.1,72,29,629/-. BEFORE US AS ITA NO.7278/MUM/2016 & C.O. NO.102/MUM/2018 M/S MARKSANS PHARMA LTD.. 15 WELL AS BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEAL), THE STAND OF THE ASSESSEE IS THAT DEDUCTI ON OF TDS IS A DEBATABLE AND TECHNICAL ISSUE; THEREFORE, AT L EAST PENALTY CANNOT BE IMPOSED. ADMITTEDLY, THE PROVISI ON OF SECTION 40(A)(IA) IS A DEEMING SECTION WHICH CREATE S LEGAL FICTION, THEREFORE, THE DISALLOWANCE MADE SIMPLY IN VOKING THE PROVISION WILL NOT ATTRACT PENALTY FOR CONCEALM ENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE RATIO LAID DOWN BY THE HON'BLE APEX COURT IN HINDUSTAN ST EEL LTD. VS STATE OF ORISSA 83 ITR 26 (SUPREME COURT) S UPPORTS OUR VIEW, WHEREIN, IT WAS HELD THAT THE AUTHORITY COMPETENT TO IMPOSE THE PENALTY WILL BE JUSTIFY IN REFUSING T HE PENALTY WHERE THERE IS A TECHNICAL OR VENIAL BREACH OF PROV ISION OR WHERE THE BREACH FLOWS FROM A BON-FIDE BELIEF THAT OFFENDER IS NOT LIABLE TO ACT IN A MANNER PRESCRIBED BY A ST ATUTE. THE CASE OF THE ASSESSEE FURTHER FIND SUPPORT FROM THE DECISION FROM DELHI HIGH COURT IN THE CASE OF CIT V S AT & T COMMUNICATIONS SERVICES PVT. LTD. 342 ITR 257 (DEL. ), WHEREIN IT WAS HELD THAT INVOKING THE PROVISIONS OF SECTION 40(A)(IA) FOR MAKING THE DISALLOWANCE SHOULD NOT BE A GROUND FOR LEVY OF PENALTY. IDENTICAL RATIO WAS LAI D DOWN IN ITA NO.7278/MUM/2016 & C.O. NO.102/MUM/2018 M/S MARKSANS PHARMA LTD.. 16 NEW HORIZON INDIA PVT. LTD. VS DCIT 12 ITR (TRIB.) 322 (DEL.), MUMBAI BENCH OF THE TRIBUNAL IN RAM KRISHNA S. SHETTY VS DIT (ITA NO.7142/MUM/2011) AND THE DECISI ON FROM HON'BLE APEX COURT IN THE CASE OF RELIANCE PET RO PRODUCTS 322 ITR 158 (SUPREME COURT). FOLLOWING THE AFORESAID DECISIONS AND CONSIDERING THE FACTUAL MAT RIX, WE AFFIRM THE STAND OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL), RESULTING INTO DISMISSAL OF THE APPEAL OF THE REVENUE. 3. SO FAR AS, THE C.O. NO.102/MUM/2018, RAISED BY THE ASSESSEE IS CONCERNED, SINCE, WE HAVE UPHELD THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL ), THE CROSS OBJECTION OF THE ASSESSEE HAS BECOME IN-FRUCT UOUS. FINALLY, THE APPEAL OF THE REVENUE AS WELL AS THE C ROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 05/06/2018. SD/- (G. MANJUNATHA) SD/- (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER # $ MUMBAI; + DATED : 05/06/2018 F{X~{T? P.S/. . . , ITA NO.7278/MUM/2016 & C.O. NO.102/MUM/2018 M/S MARKSANS PHARMA LTD.. 17 %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. ,-./ / THE APPELLANT 2. 01./ / THE RESPONDENT. 3. 2 2 # 3' , ( ,- ) / THE CIT, MUMBAI. 4. 2 2 # 3' / CIT(A)- , MUMBAI 5. 56 0' , 2 ,-& , , # $ / DR, ITAT, MUMBAI 6. 7 8$ / GUARD FILE. / BY ORDER, / (DY./ASSTT. REGISTRAR) , # $ / ITAT, MUMBAI