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Income Tax Appellate Tribunal, “G” Bench, Mumbai
Before: Shri B.R. Baskaran (AM) & Shri Pawan Singh (JM)
The appeal filed by the Revenue is directed against the order dated 9.5.2014 passed by learned CIT(A)-6, Mumbai deleting the penalty levied by the Assessing Officer u/s. 271(1)(c) of the Act for A.Y. 2007-08.
We have heard the parties and perused the record. The assessee is engaged in media related business. From the books of account of the assessee, the Assessing Officer noticed that the assessee has credited account of M/s. AIM Production Limited of `19,50,000/-with narration professional charges received from January to March, 2007. The assessee did not offer the same as its income. When it was questioned, the assessee said that the same was received on behalf of UTV Software Communication and hence account of the UTV Software Communication has been debited with equal amount of 2 M/s. Western Outdoor Media Technologies Ltd.
` 19,50,000/. The Assessing Officer did not accept the contentions of the assessee and accordingly, assessed the amount of ` 19,50,000/- as its income on account of professional fees. Since the assessee did not deduct tax at source in respect of ` 19,50,000/- payable to UTV Software Communication, the Assessing Officer disallowed the said amount u/s. 40(a)(ia) of the Act. The Assessing Officer also levied penalty u/s. 271(1)(c) of the Act on the above said additions aggregating to ` 39,00,000/-.
Learned CIT(A) deleted the penalty by following the decision rendered by Hon'ble Supreme Court in the case of Reliance Petro Products P. Ltd. (322 ITR 158) and also holding that the assessee was under bonafide belief that the amount of ` 19,50,000/- was not its income as the same was purely in the nature of reimbursement to UTV Software Communication.
Aggrieved by the order passed by learned CIT(A), the Revenue has filed this appeal before us.
It is an admitted fact that the assessee did not credit the amount of ` 19,50,000/- received from AIM Production P. Ltd. to the profit and loss account and at the same time, the assessee has also not debited profit and loss account with the amount of ` 19,50,000/- shown as payable to UTV Software Communication. The very fact that the Assessing Officer has disallowed the amount payable to UTV Software Communication u/s. 40(a)(ia) shows that the Assessing Officer is accepting the same as expenditure allowable in the hands of the assessee, but for section 40(a)(ia) of the Act. The above said action of the Assessing Officer, without considering the provisions of sec. 40(a)(ia) would show that there is no taxable income in the hands of the assessee on account of the receipt of ` 19,50,000/- from AIM Production P. Ltd, since the equivalent amount paid to UTV Software Communication was allowed as deduction. In this view of the matter, penalty levied on the amount of ` 19,50,000/- for non-disclosure of the amount received from AIM Production P. Ltd. is not sustainable, since the Assessing Officer himself has 3 M/s. Western Outdoor Media Technologies Ltd.
accepted indirectly that equivalent amount paid to UTV Software Communication is allowable as deduction.
In respect of the disallowance made u/s. 40(a)(ia) of the Act, we noticed that the penalty is not leviable thereon also, since the addition has been made due to a legal fiction incorporated in the Act. In our view, such kind of disallowance would not give rise either to the concealment of particulars of income or furnishing or inaccurate particulars of income. As pointed out by learned CIT(A), the assessee was under bonafide belief that the amount of ` 19,50,000/- received from AIM Production P. Ltd. and payable to UTV Software Communication would not give rise to any income, since it was received on behalf of UTV Software Communication only. Hence, we are of the view that learned CIT(A) was justified in deleting the penalty levied u/s. 271(1)(c) of the Act. Accordingly, we uphold his decision.
In the result, appeal filed by the Revenue is dismissed.
Order has been pronounced in the Court on 20.7.2016