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Income Tax Appellate Tribunal, “H” BENCH, MUMBAI
Before: SHRI G.S. PANNU, AM & SHRI PAWAN SINGH, JM
आदेश / O R D E R
Per Pawan Singh , Judicial Member:
This appeal by assessee under section 253 of the Income tax Act, is directed against the order of ld. Commissioner of Income-tax (Appeals)-9, Mumbai [ld. CIT(A)] dated 16/12/2013 for Assessment Year 2005-06. The CIT (A) confirmed the penalty levied by the Assessing Officer (A.O.) u/s. 271(1)(c) . The assessee has raised the following Grounds of appeal. “1. On the facts and in the circumstances of the case and in law the Hon'ble CIT (A) erred in confirming the penalty levied on Medical Expenses of Rs. 10,50,000/- and the reason assigned for doing so are wrong and contrary to the provision of Income Tax Act and rules made there under.
2. On the facts and in the circumstances of the case and in law the Hon'ble CIT (A) erred in confirming the penalty levied on Interest payment of Rs. 2,02,891 /- and the reason assigned for doing so are wrong and contrary to the provision of Income Tax Act and rules made there under.
M/s. Kambhare Chemicals (I) Pvt.Ltd. 3. the Appellant crave, leave to add, alter, amend or modify any or all grounds of appeal on or before the date of hearing.”
2. Brief facts of the case are that the assessee is a company engaged in the business of manufacturing of lead ingots alloys and litharge, filed its return of income on 29/10/2005, declaring total Loss at Rs.14,48,302/-. The assessment was completed u/s. 143(3) on Rs.24/12/2007 assessing total income at Rs.38,78,072/-. The AO while passing the assessment order made an addition for : i) Non deduction of TDS of Rs.2,02,891/- u/s.40(a)(ia) of the Act; ii) Disallowance of brokerage and commission of Rs.20,87,997/- ; iii) Disallowance of repair and maintenance of Rs.13,47,718/- and iv) Medical expenses of director amounting to Rs.19,50,000/-
3. On appeal, before the CIT(A) all the additions were confirmed. However, on further appeal before the ITAT the assessee was granted partial relief in deleting the Disallowance of brokerage and commission of Rs.20,87,997/- and on repair and maintenance of Rs.13,47,718/-. However, the disallowance of Rs.2,02,891/- u/s. 40(a)(ia) and medical expenses to the extent of Rs.10,50,000/- was sustained. 3.1.Before the order was passed by the Tribunal the AO levied penalty on all 4 disallowances. The penalty related to the disallowance with regard to medical expenses of Rs.10.50 lakhs and disallowance under section 40(a)(ia) on account of interest payment of Rs.2.02 lakhs is challenged before us.
M/s. Kambhare Chemicals (I) Pvt.Ltd.
We have heard the submissions of the ld. Authorised Representative (AR) for the assessee and the ld. Departmental Representative (DR) for the revenue and perused the material before us. The ld. AR submits that the addition on medical expenses was sustained as the assessee could not furnish supportive evidence. The ld. AR submits he is now filed the details of medical expenses incurred by the assessee company on the medical expenses of its Director. It was further submitted that the assessee has neither concealed nor filed any inaccurate particulars of income. The disallowance was sustained solely in the ground that the assessee could not furnish any supportive evidence. 4.1. For the issue of non deduction of TDS on payment of interest the ld. AR submits that no penalty is leviable on such disallowance. In support of his submission the ld. AR relied upon the decision of the Tribunal in the case of Tanushree Basu (ITA No.2922/Mum/2012 dated 22/5/2013 for AY 2007-08). 4.2. On the other hand the ld. DR supported the order of the authorities below. So far as the contention of the ld. AR of the assessee that the assessee could not furnish sufficient evidence, the ld. AR submits that the evidence furnished by the assessee is sufficient.
We have considered the rival submissions of the parties and have gone through the orders of the authorities below. We have noted that initially the AO has levied penalty on disallowance on medical expenses of director of the M/s. Kambhare Chemicals (I) Pvt.Ltd.
assessee company for Rs.19,50,000/- and disallowance of interest payment of Rs.2,02,891/- u/s. 40(a)(ia). The disallowance of Medical expenses on which penalty was sustained is now only Rs.10,50,000/-. The Assessing Officer has not questioned the genuineness of payment on both the disallowances. The disallowance under section 40(a)(ia) was made on technical ground. The Hon'ble Gujarat High Court in the case of Nayan C. Shah vs. ITO (386 ITR 304)(Guj.) held that the assessee made a claim for expenditure in relation to the labour payment, which he was not entitled to claim in view of Section 40(a)(ia).
It would not amount to furnishing of inaccurate particulars of income so as to attract penalty u/s. 271(1)(c).
So far as disallowance of Medical expenses are concerned initially the disallowance was made for Rs.19.50 lakhs, however, the same was sustained to the extent of Rs.10.50 lakhs by the Tribunal. We have noted that the ld. CIT(A) has confirmed the penalty holding that “expenditure was not supported by any documentary evidence.” We have noted that that assessee has filed chart showing details of expenditure incurred by the assessee company which consists of expenses as follows:
S.No. Particulars Days Shifts/visits Rate per Amount day 897484.00 A Hospital Expenses 1. Bombay Hospital B. Care taker Expenses 1. Nurses 153.00 3 600 275400.00 Conveynce 153.00 3 60 27540.00 2. Ward Boy 153.00 2 300 91800.00 Conveyance 153.00 2 30 9180.00 4
M/s. Kambhare Chemicals (I) Pvt.Ltd.
Physio Therapy 150.00 Visit 700 105000.00 30.00 Visit 4. Acupuncture 750 22500.00 80.00 Visit 5. Doctors Fees 800 64000.00 C. Treatment Expenses 1. Oxygen Machine 153 500 75600.00 2. Oxygen Cylinder 60 280 168.00 3. Suction Machine & Nebuliser 153 100 15300.00 Machine 4. Medicine & Drugs 240000.00 5. Medical Reports (Test) 44000.00
D. Other 1. Bed charts (On rent) 153 350 53550.00 Miscellaneous Expenses 10946.00 1950000.00 5.1. We have further noted that addition was upheld for want of evidence only.
In our view the assessee has now filed the details of the Medical expenses. In our view, merely the assessee could not furnish sufficient evidence to substantiate its claim would not amounts to furnish inaccurate particulars or concealed any income, when genuineness of the payment is not disputed.
Therefore, the penalty levied on disallowance of medical expenses is also not leviable, which we delete.
In the result, appeal of assessee is allowed.