DCIT, Jaipur V. COMPUCOM SOFTWARE LIMITED, Jaipur

ITA 852/JPR/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2154 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 15-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S VERMA
• Keywords: Initiation of penalty proceedings; Non-deduction of tax; Difference of opinion
• Section: 194C

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YA DAV, AM VK;DJ VIHY LA- @ ITA NO. 852/JP/2014 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR :2008-2009 THE DCIT, CIRCLE- 6, JAIPUR. CUKE VS. M/S COMPUCOM SOFTWARE LIMITED 5A, TILAK BHAWAN, TILAK MARG C- SCHEME, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAACG5818P VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI RAJEEV SOGANI (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI R.S. VERMA ( ADDL.CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 19/04/2017 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 25/04/2017 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A), JAIPUR 07.10.2014 FOR A.Y. 2008-09 WHEREIN THE REVE NUE HAS TAKEN FOLLOWING GROUND OF APPEAL:- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW THE LD. CIT(APPEALS) ERRED IN DELETING THE P ENALTY IMPOSED U/S 271(1)(C) OF RS. 36,91,580/- WITHOUT APPRECIATING T HE FACT THAT THE ASSESSEE COMPANY FAILED TO DISCHARGE ITS STATUTORY LIABILITY AS PER INCOME-TAX ACT, 1961. FURTHER THE PLEA OF THE ASSES SEE COMPANY THAT ITA NO. 852/JP/2014 DCIT , CIRCLE-6 VS. M/S COMPUCOM SOFTWARE LTD., JAI PUR. 2 THERE IS NO MENS REA IN THE CASE IS ALSO NOT TENABL E BECAUSE MENSREA IS NOT ESSENTIAL FOR CIVIL LIABILITY OF PENALTY (UNION OF INDIA V/S DHARMENDRA TEXTILE PROCESSORS (SC) 306 ITR 277). 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE PENAL TY U/S 271(1)(C) OF THE ACT WAS LEVIED BY THE ASSESSING OFFICER IN RESP ECT OF DISALLOWANCE MADE U/S 40(A)(IA) OF THE ACT. IN THIS CASE, THE AS SESSEE COMPANY HAS NOT DEDUCTED TDS AT A TIME OF CREDIT TO THE ASSOCIA TE BUSINESS ASSOCIATES (ABA) POOL ACCOUNT BUT HAS DEDUCTED TDS AT A TIME OF CREDIT TO THE ACCOUNT OF INDIVIDUAL ABA. THE LD. CIT(A) NOTED THAT THIS PRACTICE OF NOT DEDUCTING TDS AT A TIME OF CREDIT IN THE ABA POOL ACCOUNT BUT DEDUCTING IT AT A TIME OF CREDIT TO THE INDIVIDUAL ABA ACCOUNT HAS BEEN REGULARLY FOLLOWED BY THE ASSESSEE SINCE A.Y. 2002- 03. IT WAS THEREFORE, NOTED THAT THIS IS NOT THE F IRST YEAR THE APPELLANT HAS FOLLOWED SUCH A PRACTICE. IT IS ALSO NOTED THAT THE APPELLANT HAS DEDUCTED TDS ON SUCH PAYMENTS MADE TO ABA AND HAS D EPOSITED THE SAME IN SUBSEQUENT YEAR. THEREAFTER THE LD. CIT(A) TAKING INTO CONSIDERATION THE DECISION OF HONBLE SUPREME COURT IN CASE OF RELIANCE PETRO PRODUCTS LTD. 322 ITR 580 DELETED THE PENALTY AND HIS RELEVANT FINDINGS ARE CONTAINED AT PARA3.5 OF THIS ORDER WHI CH IS AS UNDER:- IN THIS CASE AS WELL, THE ASSESSEE HAS MADE A CLAIM OF EXPENDITURE WHICH HAS BEEN DISALLOWED U/S 40(A)(IA) DUE TO FAILURE ON THE PART OF THE ASSESSEE TO DEDUCT TDS A S PER THE PROVISIONS OF CHAPTER XVII-B. THIS CLAIM OF EXPENDI TURE HAS NOT BEEN DISALLOWED ON THE GROUNDS THAT IT WAS NOT GENU INE OR THAT IT WAS FABRICATED, ERRONEOUS OR FALSE. IT IS ALSO NOT A CASE OF THE EXPENDITURE BEING UNREASONABLE OR EXCESSIVE. IN VIE W OF THE ABOVE JUDGMENTS, DISCUSSED IN PARA 3.4, IT IS HELD THAT MERE MAKING OF A CLAIM OF EXPENDITURE WHICH IS NOT SUSTA INABLE IN THE ITA NO. 852/JP/2014 DCIT , CIRCLE-6 VS. M/S COMPUCOM SOFTWARE LTD., JAI PUR. 3 EYES OF LAW ON ACCOUNT OF FAILURE TO DEDUCT TAX AT SOURCE WILL NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF I NCOME. IN VIEW OF THE ABOVE, DISCUSSIONS, THE ORDER LEVYING PENLTY U/S 271(1)(C) IS NOT SUSTAINED AND IS DIRECTED TO BE DELETED. GRO UND NO. 1 IS ALLOWED. 3. DURING THE COURSE OF HEARING, THE LD. AR HAS SUB MITTED AS UNDER:- 3.2 IT IS UNDISPUTED THAT AT THE TIME OF BOOKING O F EXPENSES AND CREDITING OF THE ABA POOL ACCOUNT, THE PRECISE AMOU NT TO BE TRANSFERRED TO EACH ABA WAS NOT ASCERTAINABLE. A S THE AMOUNTS FROM THE RESPECTIVE SCHOOLS WERE RECEIVED AFTER VAR IOUS DEDUCTIONS AND A PERCENTAGE SUCH AMOUNT RECEIVED, N ET OF DEDUCTION, WAS PASSED ON TO THE ABAS. SINCE THE PRE CISE AMOUNT TO BE PAID TO EACH ABA AT THE TIME OF BOOKING OF TH E EXPENSE WAS NOT KNOWN, THE ASSESSEE COMPANY DID NOT DEDUCT TAX. HOWEVER, AT THE TIME OF ACTUAL PAYOUT TO THE ABA, TDS WAS DE DUCTED. 3.4 RELIANCE IS PLACED ON THE JUDGMENT OF THE HONB LE ITAT CHENNAI BENCH IN THE CASE OF DISHNET WIRELESS LTD.[ 2016] 45 ITR ( TRIB) 430 ( CHENNAI). IN THIS CASE, THE ISSUE BEF ORE THE HONBLE TRIBUNAL WAS TDS UNDER SECTION 194C OF THE ACT, IN RESPECT OF YEAR END PROVISION FOR ESTIMATED EXPENDITURE. THE A SSESSEE COMPANY ENGAGED VARIOUS SERVICE PROVIDERS FOR RENDE RING SERVES LIKE ADDRESS VERIFICATION, CREDIT CERTIFICATION, CO NTENT DEVELOPMENT ETC. THE ASSESSEE ALSO HAD TO PAY THE VARIOUS OTHER SERVICE PROVIDERS, FOR PROVIDING VALUE-ADDED SERVICES TO I TS SUBSCRIBERS. THE ASSESSEE ESTIMATED THE CUSTOMER VERIFICATIONS E XPENDITURE, ON THE BASIS OF EXPENDITURE INCURRED IN THE PAST A ND MADE NECESSARY PROVISION IN THE ACCOUNT. IT WAS HELD THA T THE TAX WAS TO BE DEDUCTED AT SOURCE, IN RESPECT OF THE PAYMENT TO BE MADE BY THE ASSESSEE TO VARIOUS SERVICE PROVIDERS, ETC., ONLY IF THE PAYEE WAS IDENTIFIED AND QUANTUM OF PAYMENT WAS ALS O ASCERTAINABLE ON THE LAST DAY OF THE FINANCIAL YEAR . IN OTHER WORDS, IF WHILE MAKING THE GENERAL PROVISION FOR EX PENSES, NEITHER THE IDENTITY OF THE PAYEE IS KNOWN, NOR THE AMOUNT PAYABLE IS ITA NO. 852/JP/2014 DCIT , CIRCLE-6 VS. M/S COMPUCOM SOFTWARE LTD., JAI PUR. 4 ASCERTAINABLE, THEN THERE WOULD BE NO REQUIREMENT O F TDS, IN RESPECT OF SUCH PROVISION FOR EXPENSES. 3.5 THUS, THE VIEW ADOPTED BY THE ASSESSEE COMPANY OF DEDUCTING TAX AT SOURCE AT THE TIME OF ACTUAL PAYME NT TO THE INDIVIDUAL ABA AND NOT AT THE TIME OF BOOKING OF EX PENSE AND CREDITING THE ABA POOL ACCOUNT WAS ONE OF THE PLAUS IBLE VIEWS. 3.8 IT IS TO BE NOTED THAT COMPLETE DETAILS WERE DI SCLOSED BY THE ASSESSEE COMPANY IN THE RETURN FILED IN A BONA-FIDE MANNER, THE FACT OF WHICH IS UNDISPUTED. THE ADDITIONS MADE BY THE LD. AO WAS SOLELY ON ACCOUNT OF DIFFERENT VIEWS TAKEN ON T HE SAME SET OF FACTS AND, THEREFORE, THEY COULD, AT THE MOST, BE T ERMED AS DIFFERENCE OF OPINION BUT NOTHING TO DO WITH THE CO NCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME. 3.9 IT IS TO BE STATED THAT MERE ADDITION IN THE A SSESSMENT PROCEEDINGS COULD NOT BE THE SOLE BASIS FOR LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THUS A BONAFIDE VIEW TAKEN BY THE ASSESSEE COMPANY, EVEN THOUGH REJECTED, WOULD NOT M AKE THE ASSESSEE COMPANY LIABLE FOR PENALTY UNDER SECTION 2 71(1)(C) OF THE ACT. HONBLE SUPREME COURT IN THE CASE OF RELIA NCE PETROPRODUCTS (P) LTD. (SUPRA) HELD THAT .. WE MUS T HASTEN TO ADD HERE THAT IN THIS CASE, THERE IS NO FINDING THA T ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN WERE FOUND T O BE INCORRECT OR ERRONEOUS OR FALSE. SUCH NOT BEING THE CASE, THE RE WOULD BE NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271( 1)(C) OF THE ACT. A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTA INABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH CLAIM MA DE IN THE RETURN CANNOT AMOUNT TO THE INACCURATE PARTICULARS. WE DO NOT AGREE, AS THE ASSESSEE HAD FURNISHED AT THE DETAILS OF ITS EXPENDITURE AS WELL AS INCOME IN ITS RETURN, WHICH DETAILS, IN THEMSELVES, WERE NOT FOUND TO BE INACCURATE NOR COU LD BE VIEWED AS THE CONCEALMENT OF INCOME ON ITS PART. I T WAS UP TO THE AUTHORITIES TO ACCEPT ITS CLAIM IN THE RETURN O R NOT. MERELY ITA NO. 852/JP/2014 DCIT , CIRCLE-6 VS. M/S COMPUCOM SOFTWARE LTD., JAI PUR. 5 BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, W HICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVEN UE, THAT BY ITSELF WOULD NOT, IN OUR OPINION, ATTRACT THE PENAL TY UNDER SECTION 271(1)(C) OF THE ACT. IF WE ACCEPT THE CONTENTION O F THE REVENUE THEN IN CASE OF EVERY RETURN WHERE THE CLAIM MADE I S NOT ACCEPTED BY ASSESSING OFFICER FOR ANY REASON, THE A SSESSEE WILL INVITE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE. 3.10 FURTHER, IN THE BELOW MENTIONED JUDGMENTS, HON BLE GUJARAT HIGH COURT IN CASE OF NAYAN C. SHAH VS. ITO [2016] ITR 304 (GUJARAT) AND KARNATAKA HIGH COURT IN CASE OF M/S F ILTREX TECHNOLOGIES PVT. LTD. [2016] 380 ITR 222 HAVE HELD THAT NO PENALTY CAN BE LEVIED IN CASE OF DISALLOWANCE UNDER SECTION 40A(IA). 3.24 ANY NOTICE ISSUED UNDER SECTION 274, READ WITH SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961, SHOULD SPECI FY UNDER WHICH LIMB OF SECTION 271(1)(C) OF THE ACT, THE PEN ALTY PROCEEDINGS HAD BEEN INITIATED I.E., WHETHER FOR CO NCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME. IN THE ABSENCE OF WHICH NO PENALTY SHOULD B E LEVIED ON THE ASSESSEE AS DETERMINATION OF SUCH LIMB IS SINE QUA NON FOR IMPOSITION OF PENALTY UNDER SECTION 271(1)(C). 3.25 IT IS PERTINENT TO NOTE THAT IN THE SAID NOTIC E LD. AO HAS NOT CLEARLY MENTIONED THE LIMB, ON THE BASIS OF WHICH, PENALTY WAS PROPOSED TO BE IMPOSED. LD AO HAS SIMPLY ISSUED A P RE-PRINTED NOTICE WITHOUT STRIKING OFF THE UNNECESSARY PORTION S OF THE NOTICE. IF THE LD. AO WAS OF THE VIEW THAT THE ASSESSEE HAS CONCEALED THE INCOME BY FURNISHING INACCURATE PARTICULARS OF INCO ME THEN HE SHOULD HAVE DELETED OR NOT MENTIONED THE OTHER LIMB FOR IMPOSITION OF PENALTY I.E. CONCEALING THE PARTICULA RS OF INCOME. THE ABOVE ACT OF THE LD. AO CLEARLY SHOWS THAT THE ENTIRE EXERCISE OF INITIATION OF PENALTY PROCEEDINGS HAS BEEN DONE WITHOUT APPLICATION OF MIND. ITA NO. 852/JP/2014 DCIT , CIRCLE-6 VS. M/S COMPUCOM SOFTWARE LTD., JAI PUR. 6 3.26 HONBLE KARNATAKA HIGH COURT IN THE CASE OF MA NJUNATHA COTTON & GINNING FACTORY [2013] 359 ITR 565 ( KARNA TAKA) AFTER REFERRING TO THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF T. ASHOK PAI (SUPRA) HELD AS UNDER:- .. CONCEALMENT, FURNISHING INACCURATE PARTICULARS OF INCOME ARE DIFFERENT. THUS THE ASSESSING OFFICER WHILE ISSUING NOTICE HAS TO COME TO THE CONCLUSION THAT WHETHER IS IT A CASE OF CONCEALMENT OF INCOME OR IS IT A CASE OF FURNISHING OF INACCURA TE PARTICULARS. THE APEX COURT IN THE CASE OF ASHOKD PAI REPORTED I N 292 ITR 11 AT PAGE 19 HAS HELD THAT CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME CARRY DIFFERENT CO NNOTATIONS. THE GUJARAT HIGH COURT IN THE CASE OF MANU ENGINEERING REPORTED IN 122 ITR 306 AND THE DELHI HIGH COURT IN THE CASE OF VIRGO MARKETING REPORTED IN 171 TAXMN 156, HAS HELD THAT LEVY OF PENALTY HAS TO BE CLEAR AS TO THE LIMB FOR WHICH I T IS LEVIED AND THE POSITION BEING UNCLEAR PENALTY IS NOT SUSTAINAB LE. THEREFORE, WHEN THE ASSESSING OFFICER PROPOSES TO INVOKED THE FIRST LIMB BEING CONCEALMENT, THEN THE NOTICE HAS TO BE APPROP RIATELY MARKED. SIMILAR IS THE CASE FOR FURNISHING INACCURA TE PARTICULARS OF INCOME. THE STANDARD PERFORMA WITHOUT STRIKING OF T HE RELEVANT CLAUSES WILL LEAD TO AN INFERENCE AS TO NON-APPLICA TION OF MIND.. 3.28 THE ABOVE RATIO LAID DOWN IN THE CASE OF MANJU NATHA COTTON & GINNING FACTORY (SUPRA) HAS BEEN FOLLOWED BY VARI OUS HIGH COURTS IN THE BELOW MENTIONED CASES. SHRI SAMSON PERINCHERY, ITA 1154,953,1097,1226 OF 2 014 ( ORDER DATED 05.01.2017) ( BOMBAY HIGH COURT) SSAS EMERALD MEADOWS [2016] 73 TAXMANN.COM 241 ( K ARNATAKA HIGH COURT) MITSU INDUSTRIES LTD., ITA NO. 216 OF 2004, GUJARAT HIGH COURT 3.29 AN SLP FILED BY THE DEPARTMENT AGAINST THE SAI D ORDER WAS DISMISSED BY THE HONBLE SUPREME COURT IN THE CASE OF SSAS ITA NO. 852/JP/2014 DCIT , CIRCLE-6 VS. M/S COMPUCOM SOFTWARE LTD., JAI PUR. 7 EMERALD [2016 73 TAXMANN.COM 248 (SC). HONBLE APEX COURT IN THE ABOVE MENTIONED CASE HELD THAT WE DO NOT FIND ANY MERIT IN THIS PETITION. THE SPECIAL LEAVE PETITION IS, ACCOR DINGLY, DISMISSED(EMPHASIS SUPPLIED). THUS THE MATTER HAS STAMP OF APPROVAL OF THE HONBLE APEX COURT. 4. THE LD DR IS HEARD WHO HAS VEHEMENTLY ARGUED THE MATTER AND RELIED UPON THE ORDER OF THE AO. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE PENALTY U/S 271(1)(C) HAS BEEN LEVIED BY THE ASSESSING OFFICER IN RESPECT OF DISALLOWANCES MADE U/S 40A(IA) OF THE ACT. AS OBSERVED BY THE LD. CIT(A), THE DEFAULT RE LATES TO THE TIMING OF DEDUCTION OF TDS. IN OTHER WORDS, WHETHER TDS SH OULD HAVE BEEN DEDUCTED AT A TIME OF CREDIT IN THE ABA POOL ACCOUN T OR AT A TIME OF CREDIT TO THE ACCOUNT OF THE INDIVIDUAL ABA. 5.1 IN THIS REGARD, IT IS NOTED THAT THE ASSESSEE C OMPANY WAS AWARDED A CONTRACT FROM THE BOARD OF SECONDARY EDUC ATION, RAJASTHAN TO IMPART COMPUTER EDUCATION IN APPROXIMATELY 600 S CHOOLS IN THE STATE OF RAJASTHAN. ASSESSEE COMPANY IN TURN SUBCONTRACTE D THE ASSIGNMENT TO VARIOUS VENDERS WHICH WERE CALLED AS AUTHORIZED BUSINESS ASSOCIATES (ABA). ASSESSEE COMPANY ENTERED INTO AGREEMENTS WIT H ABAS. AS PER THE AGREEMENT, IT WAS THE RESPONSIBILITY OF ABAS TO COLLECT PAYMENT FROM SCHOOLS ON BEHALF OF THE ASSESSEE COMPANY. PAY MENT WAS MADE BY THE SCHOOLS AFTER CERTAIN DEDUCTIONS SUCH AS TDS , ELECTRICITY CHARGES, PENALTY ETC. OUT OF SUCH AMOUNT RECEIVED BY THE ASS ESSEE COMPANY FROM THE SCHOOLS, 80% WAS PASSED ON TO THE ABAS. R EMAINING 20% WAS RETAINED BY THE ASSESSEE COMPANY AS ITS PROFIT. AS PER THE AGREEMENT THE LIABILITY TO REMIT THE AMOUNT TO ABAS , FOR THEIR SHARE, ITA NO. 852/JP/2014 DCIT , CIRCLE-6 VS. M/S COMPUCOM SOFTWARE LTD., JAI PUR. 8 AROSE ONLY WHEN THE ASSESSEE COMPANY RECEIVED THE E NTIRE AMOUNT FROM THE SCHOOL WITH THE HELP OF RESPECTIVE ABAS. T ILL SUCH TIME THE AMOUNT, TO BE REMITTED TO ABAS, REMAINED OUTSTANDIN G IN THE BOOKS OF THE ASSESSEE COMPANY. ONCE THE AMOUNT TO BE RECEIV ED FROM THE SCHOOL BECAME DUE, INCOME WAS RECOGNIZED AND THE SC HOOL WAS TREATED AS A DEBTOR. AT THE SAME TIME EXPENDITURE TO THE EX TENT OF 80% OF SUCH GROSS AMOUNT WAS RECOGNIZED IN THE BOOKS AND AN ABA POOL ACCOUNT WAS CREDITED AND NOT THE INDIVIDUAL ACCOUNT OF EACH ABA. THEREAFTER, WHEN THE AMOUNT WAS RECEIVED FROM ANY PARTICULAR SC HOOL, THE AMOUNT DUE TO RESPECTIVE ABA WAS TAKEN OUT FROM ABA POOL A CCOUNT AND TRANSFERRED TO THE INDIVIDUAL ACCOUNT OF SUCH ABA. ASSESSEE COMPANY DID NOT DEDUCT TDS ON THE AMOUNT OF EXPENSES BOOKED THROUGH THE ABA POOL ACCOUNT AS THE EXACT AMOUNT TO BE PAID TO INDIVIDUAL ABAS WAS NOT ASCERTAINED AT THAT POINT OF TIME. ONCE THE AMOUNT WAS RECEIVED FROM THE RESPECTIVE SCHOOL, THEREAFTER THE AMOUNT TO BE TRANSFERRED TO INDIVIDUAL ABA, LOOKING AFTER THAT P ARTICULAR SCHOOL, WAS ASCERTAINED, THEN THE TAX WAS DEDUCTED AT SOURCE ON SUCH PAYMENT IN TERMS OF SECTION 194C OF THE ACT. 5.2 HERE IT WOULD BE RELEVANT TO REFER TO THE PROVI SIONS OF SECTION 194C OF THE ACT, THE NON-COMPLIANCE THEREOF HAS RES ULTED IN DISALLOWANCE U/S 40(A)(IA) AND THE RESULTANT PENALT Y WHICH READS AS UNDER: (1) ANY PERSONS RESPONSIBLE FOR PAYING ANY SUM TO ANY RESIDENT ( HEREAFTER IN THIS SECTION REFERRED TO AS THE CONTRA CTOR) FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING O UT ANY WORK) IN PURSUANCE OF A CONTRACT BETWEEN THE CONTRACTOR AND A SPECIFIED ITA NO. 852/JP/2014 DCIT , CIRCLE-6 VS. M/S COMPUCOM SOFTWARE LTD., JAI PUR. 9 PERSONS SHALL, AT THE TIME OF CREDIT OF SUCH SUM TO THE ACCOUNT OF THE TRACTOR OR AT THE TIME OF PAYMENT THEREOF IN CASH O R BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE, WHICHEVER IS EARLIER, DEDUCT AN AMOUNT EQUAL TO (2) WHERE ANY SUM REFERRED TO IN SUB-SECTION (1) IS CREDITED TO ANY ACCOUNT, WHETHER CALLED SUSPENSE ACCOUNT OR BY AN Y OTHER NAME, IN THE BOOKS OF ACCOUNT OF THE PERSON LIABLE TO PAY SU CH INCOME, SUCH CREDITING SHALL BE DEEMED TO BE CREDIT OF SUCH INCO ME TO THE ACCOUNT OF THE PAYEE AND THE PROVISIONS OF THIS SECTION SHALL APPLY ACCORDINGLY. 5.3 IN THE INSTANT CASE, THEREFORE, WHAT IS RELEVAN T TO EXAMINE IS WHETHER THE ASSESSEE WAS RESPONSIBLE FOR PAYMENT O F ANY SUM TO THE ABA FOR CARRY OUT ANY WORK IN PURSUANCE OF A CONTRA CT. HERE, IT IS RELEVANT TO NOTE THAT IT IS NOT JUST THE WORK WHICH HAS TO BE CARRIED OUT IN PURSUANCE OF A CONTRACT BUT EVEN THE PAYMENT (WH ICH IS PAYABLE FOR CARRYING OUT SUCH WORK) HAS TO BE IN PURSUANCE OF T HE CONTRACT. THE ASSESSEE COMPANY HAS CONTENDED AS PER ITS AGREEMENT WITH THE INDIVIDUAL ABAS, THE LIABILITY TO REMIT THE AMOUNT TO ABAS FOR THEIR SHARES AROSE ONLY WHEN THE ASSESSEE COMPANY RECEIV ED THE ENTIRE AMOUNT FROM THE RESPECTIVE SCHOOLS WITH THE HELP OF RESPECTIVE ABAS. GIVEN THAT THERE WAS SOME DISPUTE BECAUSE OF WHICH PAYMENTS TO THE ASSESSEE COMPANY WERE WITHHELD BY THE SCHOOLS, A FA CT WHICH HAS BEEN ACCEPTED BY THE REVENUE, THE ASSESSEE COMPANY HAS N OT CREDITED OR PAID THE AMOUNT TO THE INDIVIDUAL ABAS. AT THE SAM E TIME, FROM AN ACCOUNTING STAND POINT, ONCE THE SERVICES HAVE BEEN RENDERED TO THE RESPECTIVE SCHOOLS, THE AMOUNT IN RELATION TO SUCH SERVICES BECAME DUE TO THE ASSESSEE AND THE SAME WAS RECOGNIZED AS INCO ME AND ITA NO. 852/JP/2014 DCIT , CIRCLE-6 VS. M/S COMPUCOM SOFTWARE LTD., JAI PUR. 10 CORRESPONDING EXPENDITURE TO THE EXTENT OF 80% OF SUCH GROSS AMOUNT (DUE TO THE ABAS) WAS RECOGNIZED IN THE BOOKS UNDER THE ABA POOL ACCOUNT AND NOT TO THE INDIVIDUAL ACCOUNT OF THE RE SPECTIVE ABAS. THEREFORE, ON SUCH CREDIT TO THE ABA POOL ACCOUNT, THE ASSESSEE HAS NOT DEDUCTED ANY TDS. HOWEVER LATER ON WHEN THE PAYMEN T WAS REALIZED FROM THE SCHOOLS, THE AMOUNT WAS CREDITED TO THE IN DIVIDUAL ABA ACCOUNT, TDS WAS DEDUCTED AND DEPOSITED WITH THE GO VERNMENT. WE FOUND FORCE IN THE ABOVE EXPLANATION THAT LIABILITY TO PAY UNDER THE CONTRACT IS A RELEVANT CONSIDERATION FOR DETERMININ G THE LIABILITY TOWARDS THE TDS AND ONLY WHEN SUCH EVENT HAPPENS, THE TDS H AS TO BE DEDUCTED. THE ENTRIES/CREDIT IN THE BOOKS OF ACCOU NT HAVE THEREFORE TO BE READ TAKING INTO CONSIDERATION THE CONTRACTUAL O BLIGATIONS UNDER THE CONTRACT AND CANNOT BE READ DEVOID OF THE SAME. IT S A DIFFERENT MATTER THAT SUCH EXPLANATION HAS NOT BEEN ACCEPTED BY THE AO AND BY THE LD CIT(A) WHILE CONFIRMING THE DISALLOWANCE IN THE QUA NTUM PROCEEDINGS. HOWEVER, THE SAID EXPLANATION CONTINUE TO HOLD THE FORT AND SUPPORT THE CASE OF THE ASSESSEE AGAINST NON-LEVY OF PENALTY FO R FURNISHING INACCURATE PARTICULARS OF INCOME. FURTHER, THE SAI D EXPLANATION COUPLED WITH THE FACT THAT THERE IS NO DISPUTE THAT THE EX PENDITURE IS GENUINE AND THE SERVICES HAVE BEEN AVAILED BY THE ASSESSEE COMPANY AND THE AMOUNT HAVE BEEN PAID TO THEM ALSO SUPPORT THE CASE OF THE ASSESSEE AGAINST NON-LEVY OF PENALTY. IT IS NOW WELL SETTLE D AS HELD BY THE HONBLE SUPREME COURT IN CASE OF RELIANCE PETROPROD UCTS LIMITED (SUPRA) THAT MERE MAKING OF CLAIM WHICH IS NOT SUST AINABLE IN LAW BY ITSELF WILL NOT AMOUNT TO FURNISHING INACCURATE FOR RETURN OF INCOME. THERE IS NO FINDING GIVEN BY THE ASSESSING OFFICER THAT IN THE DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN OF INCOME, T HERE IS ANY INCORRECT, ITA NO. 852/JP/2014 DCIT , CIRCLE-6 VS. M/S COMPUCOM SOFTWARE LTD., JAI PUR. 11 ERRONEOUS OR FALSE INFORMATION WHICH HAS BEEN SUPP LIED BY THE ASSESSEE. 5.4 THEREFORE IN LIGHT OF ABOVE DISCUSSIONS AND IN THE ENTIRETY OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND RESPECTFUL LY FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT IN RELIANCE P ETRO PRODUCTS LTD., WE ARE OF THE VIEW THAT THE PENALTY LEVIED BY THE A SSESSEE HAS RIGHTLY BEEN DELETED BY THE LD. CIT (A). THEREFORE WE CONF IRM THE ORDER OF THE LD CIT (A) AND GROUND OF APPEAL TAKEN BY THE REVENU E IS DISMISSED. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 25/04/2017 DQY HKKJR FOE FLAG ;KNO (KUL BHARAT) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 25/04/2017. * SANTOSH. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- DCIT, CIRCLE-6, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- M/S COMPUCOM SOFTWARE LIMITED 5A, TILAK BHAWAN, TILAK MARG C-SCHEME, JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO.852/JP/2014} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR ITA NO. 852/JP/2014 DCIT , CIRCLE-6 VS. M/S COMPUCOM SOFTWARE LTD., JAI PUR. 12