ACIT CIR 1, THANE V. INDUSTRIAL GUARDS SERVICES P. LTD, MUMBAI

ITA 7433/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78832 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 11-03-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 04-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PITAMBER DAS
• Assessee Lawyers: M SUBRAMANIAN
• Keywords: Wrong claim; Ignorance of law
• Section: 43B

Judgement Text

, VKBZ VKBZ VKBZ VKBZ , ,, , INCOME TAX APPELLATE TRIBUNAL MUMBAI - I BENCH MUMBAI , , / !' !' !' !' , ! ! ! ! BEFORE S/SH. VIJAY PAL RAO, JUDICIAL MEMB ER & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO. 7433/M/2011, # # # # $ $ $ $ / ASSESSMENT YEAR 2004-05 ACIT CIRCLE-1 MIDC VARDAAN BLDG., LOWER GROUND FLOOR, THANE (W). VS. M/S INDUSTRIAL GUARDS SERVICES PVT. LTD., GAUTAM TERRACE, BASEMENT 1 & 2 M.G.ROAD, THANE (W)- 400602 PAN: AAABCI0036L ( %& / APPELLANT) ( '(%& / RESPONDENT) %& ) ! / APPELLANT BY : SHRI PITA MBER DAS '(%& * ) ! / RESPONDENT BY : SHRI M.SUBRAMANIAN # # # # * ** * +, +, +, +, / DATE OF HEARING : 29-04-2014 -.$ * +, / DATE OF PRONOUNCEMENT : 29- 04- 2014 # # # # , 1961 * ** * 254 )1( ! !! ! +/+ +/+ +/+ +/+ !0 !0 !0 !0 ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,A.M: CHALLENGING THE ORDER DATED 22.07.2011OF THE CIT(A) -I,THANE,ASSESSING OFFICER(AO)HAS FILED FOLLOWING GROUNDS OF APPEAL : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT (A) HAS ERRED DELETING THE PENALTY LEVIED U/S 271(1)(C) OF RS. 6,46,368/-. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT (A) FAILED TO APPRECI ATE THE FACT THAT THE ASSESSING OFFICER HAD CLEARLY BRO UGHT OUT THE FACT THAT THE ASSESSEE MADE A WRONG CLAIM WHICH AMOUNTED TO FURNISHING INACCURATE PARTI CULARS OF INCOME WITH A VIEW OF EVADE TAX. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT (A) ALSO FAILED TO APPRECIATE THE FACT THAT THE ASSESSEE CANNOT TAKE T HE DEFENSE OF IGNORANCE OF LAW. 4. THE ASSESSING OFFICER CRAVES LEAVE TO ADD, AMEND ALTER OR DELETE ANY GROUND OF APPEAL. 2. EFFECTIVE GROUND OF APPEAL IS ABOUT DELETING THE P ENALTY LEVIED U/S.271(1)(C) OF THE ACT. ASSESSEE-COMPANY, ENGAGED IN THE BUSINESS OF RENDER ING OF SECURITY SERVICES, HAD FILED ITS RETURN OF INCOME ON 01.11.2004. AO DETERMINED THE INCOME OF T HE ASSESSEE U/S.143(3) OF THE ACT, ON 26.12.2006, AT RS. 48.09 LAKHS. WHILE PASSING THE A SSESSMENT ORDER, CERTAIN ADDITIONS WERE MADE BY HIM AND PENALTY PROCEEDINGS U/S 271(1)(C) R.W. S ECTION 274 OF THE ACT WERE INITIATED. ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTH ORITY (FAA), WHO GAVE PARTIAL RELIEF TO THE ASSESSEE. AFTER RECEIVING THE ORDER OF THE FAA, AO ISSUED A S HOW CAUSE NOTICE TO THE ASSESSEE FOR IMPOSING PENALTY U/S 271(1)(C). IN THE PENALTY ORDER, HE MEN TIONED THAT ADDITIONS MADE BY THE AO WERE ON THE BASIS OF PROVISIONS ENSHRINED IN THE ACT U/S.36 (1)(VA) AND 43B, THAT THE ASSESSEE WAS REQUIRED TO DEDUCT, CALCULATE AND DEPOSIT THE PF/ESIC OF THE EMPLOYEES TO THE TREASURY WITHIN STIPULATED DATE, THAT SAME WAS NOT DONE BY THE ASSESSEE, THAT THE THEN AO HAD MADE ADDITION TO THE TOTAL 2 ITA NO.7433 MUM 2011 M/S INDUSTRIAL GUARDS SERVICES PVT. LTD. INCOME OF THE ASSESSEE ON THAT COUNT, THAT FAA HAD GIVEN RELIEF TO THE ASSESSEE ON THE BASIS OF EVIDENCE OF PAYMENT PRODUCED BEFORE HIM. FINALLY, H E LEVIED THE PENALTY OF RS. 6,46,368/-. 3. ASSESSEE PREFERRED AN APPEAL BEFORE THE FAA. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE PENALTY ORDER FAA HELD THAT MOST OF THE ADD ITIONS WERE ON ACCOUNT OF DISALLOWANCE OF CLAIMS OF DEDUCTIONS OF PF PAID AFTER DUE DATES AND DELAY IN PAYMENT OF ESIC, THAT SAID PAYMENTS HAD BEEN DISALLOWED ON THE GROUND THAT THERE WAS DE LAY IN DEPOSITING THE MONEY IN THE GOVERNMENT ACCOUNT, THAT THE ISSUE OF PAYMENT OF PF/ESIC BEYON D THE SPECIFIED DATE WAS SETTLED, THAT THERE WERE SCORES OF JUDGMENT WHEREIN IT HAD BEEN HELD TH AT SUCH CONTRIBUTIONS PAID AFTER THE DUE DATE UP TO THE DATE OF FILING OF INCOME-TAX RETURN FOR THAT YEAR WAS ALLOWABLE EXPENDITURE U/S 43(B) OF THE ACT, THAT THERE WAS NO REASON FOR IMPOSING PENALTY ON THE ASSESSEE U/S 271(1)(C) OF THE ACT, THAT MERELY BECAUSE OF ASSESSEE COULD NOT DEPOSIT THE PA YMENTS OF PF/ESIC OR CERTAIN OTHER EXPENSES WERE DISALLOWED DURING THE ASSESSMENT PROCEEDINGS W OULD NOT AUTOMATICALLY LEAD TO CONCLUSION/BELIEF THAT ASSESSEE HAD FILED INACCURAT E PARTICULARS OR HAD CONCEALED THE PARTICULARS OF INCOME, THAT WHAT HAD ALREADY BEEN DISCLOSED IN THE RETURN OF INCOME COULD NOT BE SAID TO BE CONCEALED OR FILING OF INACCURATE PARTICULARS. REFE RRING TO THE JUDGMENTS OF INDEN BISLERS (24) ITR 943) RELIANCE PETROPRODUCTS PVT. LTD. (322 ITR 158) , SHAHABAD CO-OP. SUGAR MILLS LTD. (322 ITR 73), FAA CANCELLED THE PENALTY LEVIED BY THE AO. 4. BEFORE US, DEPARTMENTAL REPRESENTATIVE (DR) FAIRLY CONCEDED THAT ISSUE OF LATE PAYMENT OF CONTRIBUTION TOWARDS THE PF ACCOUNT HAS BEEN DECIDE D BY THE HONBLE SUPREME COURT IN THE CASE ALOM EXTRUSIONS LTD. (319 ITR 306). AUTHORISED REPR ESENTATIVE (AR) CONTENDED THAT ISSUE WAS DEBATABLE, THAT ADDITION DURING THE ASSESSMENT PROC EEDINGS SHOULD NOT RESULT INTO IMPOSING CONCEALMENT PENALTY. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED TH E MATERIAL BEFORE US. WE FIND THAT THE ADDITIONS MADE BY THE AO DURING THE ASSESSMENT PROC EEDINGS PERTAIN TO PF AND ESIC CONTRIBUTIONS. AO HAD MADE DISALLOWANCE IN THIS REG ARD AND AT THAT POINT OF TIME HIS STAND MAY BE JUSTIFIED. BUT, AS FAR AS IMPOSITION OF PENALTY IS CONCERNED, IN OUR OPINION STAND TAKEN BY HIM WAS NOT REASONABLE. IT IS SETTLED PRINCIPLE OF TAXATION THAT ADDITION MADE DURING THE ASSESSMENT PROCEEDING DO NOT PROVE THE CONCEALMENT. IN THE CAS E UNDER CONSIDERATION ASSESSEE HAD DISCLOSED THE LATE PAYMENT OF PF AND OTHER CONTRIBUTIONS TO G OVERNMENT ACCOUNT.THUS, THERE WAS NO CONCEALMENT OF PARTICULARS OR FURNISHING OF INACCUR ATE PARTICULARS. WE FIND THAT IN THE CASE OF ALOM EXTRUSIONS LTD. (SUPRA) THE HONBLE SUPREME COURT H AS FINALLY DECIDED THAT IF PAYMENT OF PF CONTRIBUTION IS MADE BEFORE THE DUE DATE OR FILING OF RETURN OF INCOME, AS ENVISAGED BY THE PROVISIONS OF SEC. 139(1) OF THE ACT, PROVISIONS OF SECTION 43B WILL NOT BE APPLICABLE. FAA HAS DELETED THE PENALTY FOLLOWING THE SAID JUDGMENT. TH EREFORE, IN OUR OPINION ORDER OF THE FAA DOES NOT SUFFER FROM ANY LEGAL INFIRMITY. CONFIRMING HIS ORDER, WE DECIDE EFFECTIVE GROUND OF APPEAL AGAINST THE AO. AS A RESULT,APPEAL F ILED BY THE AO STANDS DISMISSED. 1+2 #3+ , 4 5 * / 6+ * + 78 . ORDER PRONOUNCED IN THE OPEN COURT ON 2 9 TH APRIL,2014. !0 * -.$ ! 9 :# 29 VIZSY , 2014 . * / ; SD/- SD/- ( / VIJAY PAL RAO ) ( !' / RAJENDRA ) /JUDICIAL MEMBER ! ! ! ! /ACCOUNTANT MEMBER / MUMBAI, :# /DATE: 29.04.2014 SK !0 !0 !0 !0 * ** * '+ '+ '+ '+ , 4. THE CONCERNED CIT / = > 5. DR I BENCH, ITAT, MUMBAI / ?/ '+# VKBZ VKBZ VKBZ VKBZ , . . . 6. GUARD FILE/ / 1 (+ (+ (+ (+ '+ '+'+ '+ //TRUE COPY// !0# / BY ORDER, @ / 7 DY./ASST. REGISTRAR , /ITAT, MUMBAI