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Income Tax Appellate Tribunal, DELHI BENCH ‘B’, NEW DELHI
ORDER Per Prashant Maharishi, AM:
This appeal is filed by the revenue against the order passed by the CIT(A) Meerut deleting the penalty of Rs. 9,50,000/- levied by AO u/s 271(1)(c) of the Act. 02. Despite there being a proper notice, none appeared on behalf of the assessee therefore, the issues are decided on merits. 03. Brief facts of assessee co-operative society an amount of Rs. 30,90,616/- on account of employees contribution to provident fund and GSLI contributions made by the assessee which was not deposited within ‘ due date’ but before the filing of return of income. Further an amount of Rs. 11,341/- was disallowed u/s 43B and Rs. 31,564/- was added on non utilisation amount grant received by the Government of India. The AO levied penalty holding that assessee has without reasonable cause furnished inaccurate of particulars in income and therefore a penalty of Rs. 9,50,000/- was levied u/s 271(1)(c) of the Act. Aggrieved by this, assessee preferred appeal before the CIT(A) who in turn deleted the penalty. Against the deletion of this penalty revenue is in appeal before us.
Dugdh Utpadak Sahkari Sangh AY: 2007-08 04. Ld. DR submitted that the assessee hence claimed allowances which are not allowable and therefore AO has rightly levied the penalty on such disallowances. . He submitted that according to the provisions of section 2 (24) (x) rws 36 (1) ( va) of the act PF contribution of employees should have been deposited in time prescribed in those respective laws which has not been done by assessee but it is deposited before due date of filing of return. Therefore the disallowance of P F contribution by employees is rightly disallowed. Such claim is not in accordance with the law and therefore penalty is also rightly levied. He submitted that claim of the assessee is not correct and therefore penalty is rightly levied.
We have carefully considered submissions and relevant orders of lower authorities. The assessee is a co-operative society engaged in the business of marketing of processed milk brought by its members and sale of cattle feed. During the course of assessment the additions have been made and penalty is also levied on those additions. Except the main addition on account of late payments of employees’ contribution to respective funds but before the due date of filing of return of income, other additions are small and petty. We deal with the main disallowance which resulted into levy of the penalty. Regarding Disallowance of Rs. 30,90,616/- is on account of late payment of employees’ contribution relating to EPF and GSLI beyond the due dates prescribed under respective law. It is not in dispute that same were deposited before the due dates of filing of return of income. Assessing Officer has invoked the provisions of Section 2(24)(x) read with section 36(1)(va) and made disallowances. We are aware that there are at least six high court decision on allowability of such claim such as Honourable Gujarat HC ruling in CIT vs. Gujarat State Road Transport Corporation 366 ITR 170 and Honourable Kerala High Court in CIT V Merchem Limited have decided against the assessee holding that employees contribution not deposited within the due dates prescribed under the respective P F laws is not allowable, whereas honourable Delhi high court in case of AIMIL Ltd. 319 ITR 306., Honourable Rajasthan HC in State Bank of Bikaner & Jaipur and Honourable Karnataka HC in Essae Teraoka (P) Ltd. & Spectrum Consultants India P. Ltd. have decided the issue in favour of the assessee. This itself shows that issue is highly debateable. Honourable Supreme Court in case of CIT V. Vegetable Products 88 ITR 192 has held that Dugdh Utpadak Sahkari Sangh AY: 2007-08 “If two reasonable constructions of a taxing provision are possible, that construction which favors the assessee must be adopted. This is a well-accepted rule of construction recognized by this court in several of its decisions.” Therefore, on this issue there are two views possible wherever an issue is debatable such disallowances cannot be subject matter of penalty. Therefore in our view penalty u/s 271(1)(c) cannot be levied. The second and third disallowances are small and petty in nature. The second disallowance of Rs. 11,341/- is on account of unpaid bonus which remained outstanding till the due date of filing of the return of income. The AO has not made out the case that any particulars furnished by the assessee are inaccurate or incorrect. Furthermore merely there is a disallowance penalty cannot be levied. Therefore on this disallowance we delete the penalty. During the year an amount of Rs. 31,654/- remained as not utilised grant received from the Government of India. This amount is added to the total income of the assessee. However, during the course of assessment proceedings assessee has submitted the relevant details. As the details furnished by the assessee are not incorrect. We are not inclined to hold that this addition can also burden the assessee with a further penalty u/s 271(1)(c).
In the result we uphold the order of CIT(A) deleting the penalty of Rs. 9,50,000/- levied u/s 271(1)(c) of the Act.
In the result, the appeal of the revenue is dismissed. (Order Pronounced in the Court on 14/10/2015)