SMT. POONAM PUJARI,ROURKELA V. PR. CIT, SAMBALPUR

ITA 218/CTK/2023

AI Insights

The case involves an appeal by Smt. Poonam Pujari against a penalty imposed by the Pr. CIT, Sambalpur, for non-deduction of TDS on transport contract payments amounting to Rs.5,49,70,718 during the assessment year 2014-15. The penalty was levied following an order under section 263 of the Income Tax Act, which deemed the original assessment erroneous and prejudicial to the interest of the revenue. The Tribunal examined whether the imposition of penalty under section 271(1)(c) was justified, considering the circumstances of the case and relevant legal precedents.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 26012 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 23-10-2024
• Assessment Year: 2014-2015
• Appeal Filed On: 07-06-2023
• Other Referred Cases: Price Waterhouse Coopers Pvt. Ltd vs. CIT, CIT vs. Reliance Petrochemicals Ltd.
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY KUMAR
• Assessee Lawyers: B.R.PANDA
• Keywords: TDS; Non-deduction of tax; Bogus
• Section: 263; 271(1)(c); 22; 40(a)(ia); 194C

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, BEFORE MANISH AGARWAL Smt. Poonam Puj Ananta Vihar, Phase Bhubaneswar PAN/GIR No.ALRPP 1409 N (Appellant Per Bench This is an appeal filed by the assessee against the order of the ld Pr.CIT, Sambalpur ITBA/PNL/F/271(1)(c).2022 2014-15 2. Shri B.R.Panda, Kumar, ld CIT DR appeared for the revenue. IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND MANISH AGARWAL, ACCOUNTANT MEMBER ITA No.218/CTK/2023 Assessment Year : 2014-15 Smt. Poonam Pujari, B-41, Ananta Vihar, Phase-II, Vs. Pr. CIT, Sambalpur ALRPP 1409 N (Appellant) .. ( Respondent Assessee by : Shri B.R.Panda, Adv Revenue by : Shri Sanjay Kumar, CIT Date of Hearing : 23/10/202 Date of Pronouncement : 23/10/2024 O R D E R This is an appeal filed by the assessee against the order of the ld Pr.CIT, Sambalpur dated 3.3.2023 in Appeal No. ITBA/PNL/F/271(1)(c).2022-23/1050393233(1) for the assessment year B.R.Panda, ld AR appeared for the assessee and Shri DR appeared for the revenue. P a g e 1 | 9 IN THE INCOME TAX APPELLATE TRIBUNAL, MEMBER Pr. CIT, Sambalpur Respondent) Sanjay Kumar, CIT DR 24 4 This is an appeal filed by the assessee against the order of the ld in Appeal No. for the assessment year the assessee and Shri Sanjay ITA No.218/CTK/2023 Assessment Year : 2014-15 P a g e 2 | 9 3. Ld AR has filed an adjournment letter, which reads as under: ITA No.218/CTK/2023 Assessment Year : 2014-15 P a g e 3 | 9 4. The appeal is time barred by 36 days. The assessee has filed condonation petition dated 5.6.2023 supported by medical certified by the treating doctor stating that due to her illness, the appeal could not be filed within the due date and, therefore, there was delay of 36 days. It is stated that the delay may be condoned and appeal be heard on merits. We are satisfied that the reasons given in the petition has not been found to be false. Accordingly, we condone the delay of 36 days and admit the appeal for adjudication. ITA No.218/CTK/2023 Assessment Year : 2014-15 P a g e 4 | 9 5. As it is noticed that as the issue pending before the Hon’ble High Court of Orissa in regard to Miscellaneous application against the dismissal of the Miscellaneous application filed by the assessee before the Tribunal has no bearing on the appeal before us, therefore, we reject the adjournment application and the appeal filed by the assessee is being disposed off on merits. 6. A perusal of the facts in the present case clearly shows that the penalty order has been passed by the Pr. CIT, Sambalpur as a consequence of the order passed u/s.263 of the Act by the Pr. CIT, which has resulted invocation of section 40(a)(ia) of the Act in respect of transport contract payments made allegedly on which TDS has not been deducted. 7. In the order passed by Pr. CIT u/s.263 of the Act, vide para 22 of the order, ld Pr. CIT has initiated penalty proceedings u/s.271(1)(c) of the Act for furnishing inaccurate particulars of income. Thereafter, when the ITAT Cuttack Bench has dismissed the appeal of the assessee vide its order dated 12.10.2022 due to non-representation of the case, Pr. CIT has proceeded with the pending penalty proceedings and vide the impugned order dated 3.3.2023 has levied penalty u/s.271(1)(c) of the Act at Rs.1,87,03045/- on the amount of Rs.5,49,70,718/- being the amount disallowed u/s.40(a)(ia) of the Act for non-deduction of tax at source u/s.194C of the Act. Against the said penalty order, the assessee is in appeal before us taking the following grounds of appeal: ITA No.218/CTK/2023 Assessment Year : 2014-15 P a g e 5 | 9 “1. For that the exparte order of the forum below was unjust, improper and illegal as well as excessive which cannot be sustained when the original order appealed is heard exparte without service of notice giving opportunity of hearing. Hence, the order passed has to be quashed. 2. For that no order passed got properly made within the scope of the statute and there being no valid order passed without opportunity then all the proceedings and the levy of demand etc have to be quashed and deleted. 3. For that nothing was confronted about the concealment or got no notice served on the appellant and the exparte order passed has to be quashed in toto. 4. For that no show cause or unexplained nature or any proper concealment of any amount or suppression of any nature neither was issued nor sent but levy of penalty of concealment on estimated case has to be quashed and deleted. 5. For that the main order since is in dispute and the penalty levied on relying the same without proper service has to be quashed in toto.” 8. Brief facts of the case are that the assessment was originally completed u/s.143(3) of the Act vide order dated 29.12.2016 at a total income of Rs.11,65,300/-. Thereafter, the Ld Pr.CIT has invoked the provisions of section 263 of the Act and vide his order dated 29.3.2019 has held that the assessment order passed was erroneous inasmuch as prejudicial to the interest of the revenue on the ground that the assessee has failed to deduct tax at source u/s.194C of the Act on the payments of Rs.5,49,70,718/- made to various parties as transportation charges. In the said order in page 6 to 9, details of transportation charges paid in excess to parties, which is reproduced, to whom payments were made without ITA No.218/CTK/2023 Assessment Year : 2014-15 P a g e 6 | 9 making TDS u/s.194C of the Act. In the order passed by Pr. CIT u/s.263 of the Act, Ld. Pr. CIT has directed to modify the order by making disallowance of Rs.5,49,70,718/- u/s.40(a)(ia) of the Act and thereafter upon dismissal of the appeal against the said order, penalty was imposed u/s.271(1)(c) of the Act. 9. Before us, ld CIT DR vehemently supported the order of Pr. CIT in imposing the penalty and submitted that assessee’s case is covered under Explanation -1 to Section 271(1)(c) of the Act as the assessee has furnished inaccurate particulars of income to the extent of expenditures claimed under the head “transportation charges” and since no TDS was deducted u/s.194C of the Act on the payments which are made in excess of the limits provided u/s.194C of the Act by making TDS. This is a willful default done by the assessee by not disallowing the same as provided u/s.40(a)(ia) of the Act, the assessee has furnished inaccurate particulars of its income and, therefore, the Ld. Pr. CIT has rightly levied penalty u/s.271(1)(c) of the Act for such default. He prayed accordingly. 10. We have considered the submissions of ld CIT DR and perused the materials available on record. In this case, the assessee has failed to deduct TDS on the payments made to various parties u/s.194C of the Act and no plausible explanation was tendered with regard to the same. However, it is seen that the expenses were claimed by the assessee in profit and loss account and they were neither held as unreasonable nor excessive ITA No.218/CTK/2023 Assessment Year : 2014-15 P a g e 7 | 9 nor bogus by the Pr. CIT. Merely for the reason that the assessee has not complied with the provisions of section 194C of the Act , the disallowance was made u/s.40(a)(ia) of the Act. The case of the assessee is not of the guilty by furnishing of any inaccurate particulars nor with an attempt to deliberately concealing the particulars of income. At the most, it is a technical default thereby nothing to indicate any concealment of income and furnishing of inaccurate particulars. The default committed by the assessee at the most can be termed as technical or venial breach of law for which rigors penalty provisions cannot be invoked. The Hon’ble Supreme Court in the case of Price Waterhouse Coopers Pvt. Ltd vs. CIT reported in 348 ITR 306 (SC) held that penalty provisions u/s.271(1)(c) of the Act cannot be levied for concealment/furnishing inaccurate particulars of income in case of bonafide/inadvertent/human error. The assessee has furnished all the relevant details with respect to the claim by it towards transportation expenditures in the return of income filed and also during the assessment proceedings. Pr. CIT based on such details only, concluded that the assessee has failed to comply with the provisions of section 194C of the Act. Thus, no fact was concealed nor any inaccurate particulars of income were filed. The Hon’ble Supreme Court in the case of CIT vs. Reliance Petrochemicals Ltd., 322 ITR 158 (SC) has held that a mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the ITA No.218/CTK/2023 Assessment Year : 2014-15 P a g e 8 | 9 assessee. In the instant case, admittedly, as discussed above, the assessee made a claim, which was not found disallowable on account of genuineness of such claim nor was held as bogus nor fabricated but in view of the provisions of law that the assessee did not deduct TDS on such payments, the disallowance was made after invoking the provisions of section 40(a)(ia) of the Act. In these circumstances, we are of the considered view that the ratio laid down by the Hon’ble Supreme Court in the case of Reliance Petrochemicals Ltd (supra) is squarely applicable to the facts of the instant case and, therefore, levy of penalty u/s.271(1)(c) of the Act is not justified. Various Hon’ble High Courts and Benches of the Tribunal are taking consistent view that where a disallowance is made by invoking the provisions of section 40(a)(ia) of the act for default for non-deduction of TDS, it cannot be held that the assessee has made a willful default of furnishing inaccurate particulars of income. Thus, by respectfully following the judicial pronouncements, penalty levied of Rs.1,87,03,045/- is hereby deleted. 11. In the result, appeal of the assessee stands allowed. Order dictated and pronounced in the open court on 23/10/2024.\\ SD/- SD/- (George Mathan) (Manish Agarwal) JUDICIAL MEMBER ACCOUNTANT MEMBER Cuttack; Dated 23/10/2024 ITA No.218/CTK/2023 Assessment Year : 2014-15 P a g e 9 | 9 B.K.Parida, SPS (OS) Copy of the Order forwarded to : By order Sr.Pvt.Secretary ITAT, Cuttack 1. The appellant; Smt. Poonam Pujari, B-41, Ananta Vihar, Phase-II, Bhubaneswar 2. The Respondent: Pr. CIT, Sambalpur 3. DR, ITAT, 4. Guard file. //True Copy// "