REETA RAJESH SHETH,MUMBAI vs. ITO 24(3)(4), MUMBAI

(Appellant) (Respondent) Assessee by : Shri Bhupendra Shah (AR) Revenue by : Shri Ram Tiwari (Sr.DR) Date of hearing : 28.06.2018 Date of Pronouncement : 28.06.2018 Order Under Section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER:

2. Brief facts of the case are that assessee is engaged in manufacturing and selling of containers filed her return of income for assessment year 2007- 08 on 24 October 2007, declaring total income at Rs. 166350/-. The assessment was completed on 27th November 2009 under section 143(3). - Smt. Reeta Rajesh Sheth The assessing officer while passing assessment order made addition of Rs. 6,77,550/-by make disallowance under section 40(a)(ia) holding that no tax was deducted (TDS) on the payment made to Jain Packaging Private Ltd. On appeal before learned Commissioner (Appeals) the addition was confirmed. After confirming the addition on the first appellate stage. The assessing officer issued notice under section 274 read with sect section 271(1)(c). The assessee filed her reply to the said show cause notice. In the reply the assessee contended that the assessee has not concealed the income nor furnished inaccurate particular thereof. The assessee further contended that she has filed appeal before the Tribunal.

The contention of the assessee was not accepted by assessing officer. The assessing officer levied the penalty @100% of tax sought to be evaded vide its order dated 31 July 2014. On further appeal before learned Commissioner (Appeals) the action of assessing officer in levying the penalty was confirmed. Therefore, further aggrieved by the order of Commissioner learned (Appeals) the assessee has filed present appeal before us.

Therefore, the disallowance under section 40(a)(ia) cannot be applied for levying penalty u/s 271(1)(c) either for concealment of income or for furnishing inaccurate particulars of income. The subject matter of penalty before us only relates to disallowance/addition under section 40(a)(ia) of Rs. 6,77,523/-. Therefore, respectfully following the decision of co- ordinate bench of Tribunal in Ramkrishna Shetty (supra) wherein it was held that the disallowance was made in AY under section 40(a)(ia), when genuineness of the payment was not disputed by the Revenue, the levy of 3 Smt. Reeta Rajesh Sheth penalty is not justified. Considering the peculiarity of the fact, the penalty levied by Assessing officer on disallowance under section 40(a)((ia) in the present case is deleted.