DCIUT CEN CIR 3(3), MUMBAI vs. REMI METALS (GUJARAT) LTD, MUMBAI

At the outset, we would like to mention here that neither the assessee nor his authorized representative appeared before this Tribunal when the appeal was called for hearing nor any application seeking adjournment of the hearing was received in the office of the Tribunal despite service of notice through RPAD. Therefore, we proceed to dispose off the appeal of the revenue ex-parte in absence of assessee after hearing the ld.DR.

Assessment in the present case was framed u/s 143(3) vide order dated 24.12.2007 on a total loss of Rs.34,95,00,086/- against the total loss claimed by the assessee at Rs.37,30,11,940/- by making various disallowances interalia the disallowance u/s 40(a)(ia) of the Act for non deduction of tax at source of Rs.2,31,43,980/-. The said disallowance was made on the ground of non deduction of tax at source from the payments made towards the expenses claimed. In the appellate proceedings before the CIT(A) , the only addition u/s of Rs. 2,31,43,980/- was sustained while other were deleted. Thereafter after the AO issued notice u/s 271(1) of the Act and accordingly levied the penalty of Rs.84,69,053/- being 100% of the tax sought to be evaded by holding that the assessee has committed default u/s 271(1)(c ) of the Act for concealment of the income. In the appellate proceedings, the ld.CIT(A) allowed the appeal of the assessee after following the ratio laid down by the Co-ordinate Bench of the Tribunal in the case of Rushi Builders and Developers in for the 3 I.T.A. No.5254/Mum/2015 assessment year 2007-08, dated 4.3.2014 and the decision of the Hon’ble Delhi High Court in the case of CIT V/s AT&T Communication Services India (P) Ltd(342 ITR 257) (Delhi). 4. We have carefully considered the contentions of the ld. DR and perused the material placed before us including the impugned order. The undisputed facts of the case are that the addition/disallowance was made in the assessment proceedings for non deduction of TDS which was sustained by the CIT(A). In our opinion disallowance/addition resulting from non deduction of TDS u/s 40(a)(ia) of the Act is neither concealment of income nor furnishing inaccurate particulars of income. In our view, the ld.CIT(A) has rightly deleted the penalty by following the decision of the Co- ordinate Bench of the Tribunal in the case of Rushi Builders and Developers (supra) and the decision of the Hon’ble Delhi High Court in the case of AT&T Communication Services India (P) Ltd (supra). In both the cases, it has been held that u/s 40(a)(ia) of the Act for non deduction of tax at source would not be concealment or furnishing of inaccurate income and disallowance was only attracted due to non-deduction of TDS. Therefore we do not find nay infirmity in the order of CIT(A) and uphold the same by dismissing the appeal of the revenue. Accordingly, we dismiss the appeal of the revenue.