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Income Tax Appellate Tribunal, DELHI BENCH ‘E’, NEW DELHI
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘E’, NEW DELHI Before Sh. N. K. Saini, AM and Smt. Beena A. Pillai, JM Asstt. Year : 2009-10 Otsuka Chemical India Pvt. Ltd., Vs Asstt. Commissioner of Income 861-862, Joshi Road, Karol Bagh, Tax, Circle-13(1), New Delhi New Delhi (APPELLANT) (RESPONDENT) PAN No. AAACO8042K Assessee by : Sh. Sanjeev Kwatra, CA & Sh. Anup Mehta, CA Revenue by : Sh. Rajesh Kumar, Sr. DR Date of Hearing : 22.05.2017 Date of Pronouncement : 23.05.2017 ORDER Per N. K. Saini, AM:
This is an appeal by the assessee against the order dated 21.02.2014 of ld. CIT(A)-XVI, Delhi.
Following grounds have been raised in this appeal: “1. That on the facts and circumstances of the case and in law, the order passed by CIT (A) is contrary to facts and bad in law.
2. That on the facts and circumstances of the case and in law the Ld. CIT(A) was not justified in upholding the imposition of penalty of Rs. 46,844/- levied u/s 271(1)(c) of the Income Tax Act by the Assessing Officer.
Otsuka Chemical India Pvt. Ltd.
That on the facts and circumstances of the case and in law, the order passed by the CIT(A) is required to be set aside as proper and reasonable opportunity of being heard was not granted to the appellant and the order was passed ex-parte without hearing the appellant.
4. That non appearance before the Hon'ble CIT (A) was due to circumstances which were beyond control of the Appellant.
5. That the Penalty Order is not sustainable on the reasoning that no clear cut finding has been given as to whether penalty was levied for furnishing inaccurate particulars of Income or concealing of true particulars of Income.
6. That the Appellant craves leave to add, alter, amend, modify any of the ground during the course of appeal.”
3. From the above ground, it is gathered that the only issue raised by the assessee relates to the sustenance of penalty levied by the AO u/s 271(1)(c) of the Income-tax Act, 1961 (hereinafter referred to as the Act). From the material available on record, it is noticed that the impugned penalty was levied by the AO by considering the addition made u/s 40(a)(ia) of the Act for the reason that the TDS was not deducted, as concealed income of the assessee. The ld. Counsel for the assessee at the very outset stated that on an identical issue having similar facts, the penalty levied by the AO and sustained by the ld. CIT(A) has been deleted by this bench of the Tribunal in for the assessment year 2006-07 in the case of ACIT,
Otsuka Chemical India Pvt. Ltd. Circle-13(1), New Delhi Vs M/s Overseas Courier Services India (Pvt.) Ltd., New Delhi (copy of the said order was furnished which is placed on record).
In his rival submissions the ld. DR strongly supported the orders of the authorities below but could not controvert the aforesaid contention of the ld. Counsel for the assessee.
We have considered the submissions of both the parties and carefully gone through the material available on the record. It is noticed that an identical issue was a subject matter of the departmental appeal in the case of ACIT, Circle-13(1), New Delhi Vs M/s Overseas Courier Services India (Pvt.) Ltd., New Delhi (supra) wherein by following the earlier order of the ITAT Ahmadabad Bench in the case of ITO Vs Lucky Star International in the penalty levied by the AO and sustained by the ld. CIT(A) was deleted. The relevant findings are given in paras 9 & 10 of the said order which read as under: “9. We have heard the rival parties and have gone through the material placed on record. We find that there was a marginal delay in deposit of tax deducted on contractual payments and the same was deposited after the due date. The assessee was subjected to tax on the disallowance of such expenditure and the Assessing Officer in the subsequent year had allowed the deductions of these expenditures. The assessee had not concealed any particulars of income and rather had furnished full
Otsuka Chemical India Pvt. Ltd. particulars of income including date of deposit of tax which was disclosed in the audit report from which the Assessing Officer came to know about the late deposit of tax. The audit report being integral part of balance sheet and filed along with return of income, therefore, it cannot be said that assessee had concealed particulars of its income. The Hon’ble ITAT in the case of ITO vs. Lucky Star International reported in under similar circumstances has held as under: “At the time of hearing on 16.06.2011, none appeared on behalf of the assessee. We heard the Departmental Representative. In this case, penalty is levied for disallowance of expenditure u/s 40 (a) (ia) of the Income Tax Act. Non deduction of TDS by the assessee was resulted in disallowance of expenditure u/s 40 (a) (ia), that itself cannot be construed as furnishing inaccurate particulars of income or concealment of income. The assessee has failed to deduct TDS which resulted in disallowance of expenditure. Further, the Revenue cannot penalize the assessee by levying penalty u/s 271 (1) (c) of the Act. In order to levy penalty u/s 271 (1) (c) of the Act, there has to be concealment of particulars of income of the assessee or the assessee must have furnished inaccurate particulars of its income. Present is not the case of concealment of income or it is not the case of Revenue that the assessee has furnished inaccurate particulars of income. The department has not found out that the assessee has furnished any factual incorrect information and the assessee is not guilty of furnishing of inaccurate particulars of income. In our opinion, the conditions laid down in section 271(1) (c) of the Act is not complied with. Being so, levy of penalty is not justified merely because the assessee has claimed certain expenditure that expenditure is not eligible in Otsuka Chemical India Pvt. Ltd. view of the above of the provisions of section 40(a)(ia) of the Act and for that reason, expenditure is disallowed. Penalty cannot be levied for mere making of a claim of expenditure which is not sustainable and deletion of penalty by the Ld. CIT (A) is justified. We place reliance on the judgment of the Hon’ble Supreme Court in the case of CIT vs. Reliance Petro Products (Pvt.) Ltd. (322 ITR 158 SC). Accordingly the ground raised by the revenue holds no merit.”
10. Therefore, in view of the judicial pronouncements, we hold that penalty u/s 271(1)(c) was not imposable in the present case on late deposit of TDS. In respect to penalty on other disallowances such as cash expenses, charity and donation etc. we hold that mere disallowance of expenditure cannot result into imposition of penalty.” So, respectfully following the aforesaid referred to order the impugned penalty of Rs.46,844/- levied by the AO u/s 271(1)(c) of the Act and sustained by the ld. CIT(A) is deleted.
In the result, the appeal of the assessee is allowed. (Order Pronounced in the Open Court on 23/05/2017)