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Income Tax Appellate Tribunal, “A” BENCH, MUMBAI
आयकर अपीलीय अधिकरण “A” न्यायपीठ म ुंबई में। IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, MUMBAI श्री महावीर स िंह, उपाध्यक्ष एविं श्री एम. बालगणेश, लेखा दस्य के मक्ष । BEFORE SRI MAHAVIR SINGH, JM AND SRI M BALAGANESH, AM आयकर अपील िं/ (निर्ाारण वर्ा / Assessment Year 2007-08) Alfa Properties & Investment P. The Dy. Commissioner of Income Ltd. Tax Circle 9(1), Mumbai C/0 Royal Palms (I) P. Ltd., बिाम/ Survey No.169, Aarey Colony, Vs. Unit No.26, Goregaon (E), Mumbai-400 065 (अपीलार्थी / Appellant) (प्रत्यर्थी/ Respondent) स्र्थायी लेखा िं.//PAN No. AAACA9459J अपीलार्थी की ओर े/ Appellant by : None प्रत्यर्थी की ओर े/ Respondent by : Shri Michael Jerald, DR ुिवाई की तारीख / Date of hearing: 07.01.2020 घोर्णा की तारीख / Date of pronouncement 0402.2020 आदेश / O R D E R महावीर स िंह, उपाध्यक्ष / PER MAHAVIR SINGH, VP This appeal by assessee is arising out of order of the Commissioner of Income Tax (Appeals)]-19, Mumbai [in short CIT(A)], in Appeal No. CIT(A)-19/9(1)/I.T. 41/10-11 vide dated 15.06.2011. The Assessment was framed by the Dy. Commissioner of Income Tax, Circle 9(1), Mumbai (in short DCIT/ AO) for the A.Y. 2007-08 vide order dated 27.11.2009 under section 143(3) of the Income-tax Act, 1961 (hereinafter ‘the Act’). The penalty was levied by Dy. Commissioner of Alfa Properties & Investment P. Ltd 2 | Page. Income Tax, Circle-9(1) under section 271(1)(c) of the Act vide order dated 21.05.2010.
The first issue in this appeal of assessee is against the order of CIT(A) confirming the action of the AO in levying penalty under section 271(1)(c) of the Act on disallowance of rent payment made by assessee without deducting TDS under section 40(a)(ia) of the Act amounting to `61,72,064/-. For this, assessee has raised the following grounds: - “(l) PENALTY 0N DISALLOWANCE OF RS. 61,72,064/- OUT OF RENT U/S. 40(a)(ia).
(l) The learned CIT(A)-19, Mumbai [referred as “CIT(A)”] mud in confirming penalty on disallowance out of tent u/s. 40“) of the Act disregarding the fact that there was no concealment of any income or particulars within the meaning of section 271(1)(c) read with Explanation 1.
(2) The learned CIT(A) failed to appreciate that Your Appellant had given a bonafide and genuine explanation wide tater dated 4" Jan, 10 stating, in addition to the other, that the alleged amount of TDS was paid alongwith interest vide paid challan dated 24th Dec., 09 which in purview of the Alfa Properties & Investment P. Ltd 3 | Page. proviso to the said section was allowable in the year of payment of the TDS.
(3) The learned CIT(A) ought to have appreciated that the alleged amount of disallowance was a technical disallowance under the provisions of section 40(a)(ia) of the Act and that the bonafide explanation was already given.
(4) On the facts and circumstances and in view of the bonafnde and genuine explanation, Your Appellant prays that the penalty levied on the disallowance under the provisions of section 40(a)(ia) of the Act may be cancelled.”
We have heard the learned Sr. DR. and gone through the facts and circumstances of the case. We noted that the assessee has paid the amount of TDS along with interest vide challan No. 24.12.2009 and it is in accordance with the proviso to said section and was allowable as payment of TDS is within the due dates. It is noted that simply for the reason of non-deduction of TDS disallowance can be made but it does not attract penalty provisions under section 271(1)(c) of the Act in view of the precedent of ITAT Ahmadabad Bench in the case of ITO vs. Shri Vishal Madusudanbhai Chokshi 2014 (1) TMI 910, wherein it is held as under: - Alfa Properties & Investment P. Ltd 4 | Page. “Deletion of penalty u/s 271(1)(c) of the Act - Held that:-
The Assessing Officer has nowhere alleged that the payment of interest made to finance company on which the TDS was deductable is non genuine or bogus - It is also a fact that there is nothing on record or alleged that the payment of interest is excessive or unreasonable - The disallowance has been made for non- deduction of TDS in view of provisions of section 40(a)(ia) - The legal fiction created by section 40(a)(ia) will not attract penalty for furnishing of inaccurate particulars of income because there is no inaccurate particulars in the return of income.”
We also noted that the Hon’ble Gujarat High court in the case of CIT vs. M/s. Venus Engineers 2011 (8) TMI 1163 (Guj.) (HC) held as under: - “4. On hearing learned Counsel Mrs.Mauna M. Bhatt and on examining the orders of adjudicating authorities, it can be seen that Tribunal was of the opinion that due to ignorance of the provision containing in Section 40(a)(ia) of the Act, the assessee did not deduct TDS from the Alfa Properties & Investment P. Ltd 5 | Page. payment made to labour, transport and carting expenses. The Tribunal was also actuated by the fact that the C.A. who audited the accounts of the assessee under Section 44AB did not point out any infirmity on account of non-deduction of IDS., otherwise, all the relevant accounts were adduced before the Assessing Officer. Thus, when the Tax audit report also did not point out the TDS default to the assessee, the Tribunal concluded that the mistake made by assessee was bonafide and the explanation was found genuine.
5. The Tribunal drew support from the order of CIT(A) that there was no concealment nor was this is a case of furnishing of inaccurate particulars. 6. The reasonings given by both the adjudicating authorities concurrently cannot be held as perverse nor are there any grounds made out by the Revenue to dislodge the findings.
Resultantly, when there is no concealment nor any occasion of furnishing inaccurate particulars to bonafide mistake, Tribunal rightly uphold the order of CIT(A), deleting Alfa Properties & Investment P. Ltd 6 | Page. the penalty, therefore, this Tax Appeal merits no consideration as question of law is to be determined. Hence, same is dismissed.”
From the above, we noted that the issue is squarely covered. Once, there is non-deduction of TDS on any expenditure disallowance is made but genuineness is not in doubt, penalty u/s 271(1)(c) of the Act cannot be attracted and hence, on this issue, we delete the penalty and allow the appeal of the assessee.
Coming to the second issue in this appeal of assessee, we noted that the AO levied the penalty on the rent received of Rs. 4,34,123/- not declared and following are the rent received: - (a) Midtech Pvt. Ltd. : Rs.60,000 (b) Rockwell automation : Rs. 50,000 (c) Huntsman International : Rs. 41,323 (d) Huntsman International : Rs.39,200 (e) Avertis Pharma Ltd. : Rs.2,43,600 Rs.4,34,123