Income Tax Appellate Tribunal - Chandigarh
Sh. Sukhwinder Singh, Ludhiana vs Ito, Ludhiana on 29 October, 2018
आयकर अपील य अ धकरण,च डीगढ़ यायपीठ "बी" , च डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH 'B', CHANDIGARH ी संजय गग , याय क सद य एवं ीमती अ नपणा ू ग$ता ु , लेखा सद य BEFORE: SHRI SANJAY GARG, JM & SMT.ANNAPURNA GUPTA, AM आयकर अपील सं./ ITA No.372/Chd/2017 नधा रण वष / Assessment Year : 2010-11 Sh.Sukhwinder Singh, बनाम The Income Tax Officer, Prop.M/s Ahmedgarh, Ward-1(3), Aayakar Tanker Transport Co., Bhawan, Rishi Nagar, Ludhiana. Ludhiana.
थायी लेखा सं./PAN NO: A N Z P S 8 4 3 4 Q
अपीलाथ /Appellant यथ /Respondent
नधा रती क ओर से/Assessee by : Shri Salil Kapoor, Adv.
& Saumya Singh, Adv.
राज व क ओर से/ Revenue by : Shri J.K. Garg, CIT DR
सनवाई
ु क तार#ख/Date of Hearing : 31.07.2018
उदघोषणा क तार#ख/Date of Pronouncement: 29.10.2018 आदे श/Order PER ANNA PURNA GUPTA, A. M. :
The present ap peal has been fi l ed by the as sessee agai nst the order of the Commi ssi oner of I ncome Ta x ( Appeal s) -1, Ludhi ana (in short CI T( A) dated 29.12.2016 passed u/s 250 ( 6) of the I ncome Ta x Act, 1961 ( i n short referred to as 'Act') , confi rmi ng the l ev y of penalt y u/s 271( 1) ( c) of the Act.
2. Th e a s s e s s e e h as r a i s e d t h e f o l l o w i n g g r o un d s be f o r e u s c h a l l e n g i ng t h e l e v y o f p e n a l t y both on legal ground as w e l l a s o n m er i ts o f t h e c a s e :
"1. That the notice U/s 274 and penalty order passed u/s 271(l)(c) of the IT Act by the AO 2 ITA No.372/Chd/2017 A.Y.2010-11 levying a penalty of Rs.1,01,53,044/- dated 28.10.2015 are illegal, without jurisdiction, barred by time limitation and the CIT(A) has erred in upholding the same.
2. That, the penalty has been initiated vide notice issued u/s 274, without any specific charge, hence, the notice and the order passed u/s 271(l)(c) are illegal, bad in law and without jurisdiction and vague.
3. That no valid satisfaction has been recorded by the AO while completing the assessment proceedings, hence, the notice issued u/s 274 and the order passed u/s 271(l)(c) are illegal, bad in law and without jurisdiction.
4. That the AO and CIT(A) have failed to appreciate that there is neither any concealment of income nor furnishing of inaccurate particulars by the assessee and hence no penalty is leviable U/s 271(l)(c)
5. That the invocation of Explanation 1 against the assessee is illegal and bad in law."
3. D u r i n g t he c o u rs e o f h e ar i n g be fo r e u s L d. C o u n se l f or t h e a s s es s e e s t a te d t h a t t h e p e n al t y i n t h e p r e s e nt c a s e h ad b e e n l e v i ed o n di s a l l o w a nc e o f f re i g h t p a y me n t s a m o u n t i n g t o R s . 3 , 3 8, 4 3 , 4 88 / - f o r n o n d edu c t i o n o f t a x a t s o u r c e o n t h e s a m e , a s p er t h e p r o v i s i o ns o f s e c t i o n 4 0 ( a ) ( i a ) o f t h e A c t . D r a w i n g o ur a t t e n t i o n t o t he f a c t s o f t h e c a s e , t h e L d . c o u n s e l f or a s s es s e e s t a t ed t h a t t h e a s s e s se e wa s m a i n l y e n g a g e d i n t he bu s i n e s s o f t ra n sp o r t a t i o n of e d i bl e o i l f r o m K a n d l a Se a P o rt t o d i ff e r e n t p a rt s o f th e c ou n t r y a n d wa s a l s o t ra n s p o rt i ng m o l l as e s f r o m U P an d bl a c k o i l f ro m / t o d i f f e r e n t p l a c e s w i t h i n t h e c o u n tr y . I t w as p o i n t ed o u t t h a t d u r i n g t h e i m p ug n e d y e a r th e a ss e s s e e h a d s h o wn r e c e i p t s on account of cartage of Rs . 1, 4 4 , 7 5 , 1 88 / - . Du r i n g t he a s s e s s m e nt p r oc e e d i n g s it w as n o t i c ed t h at the to t a l r e c e i p t s a s pe r t h e TD S c l a i m w a s R s . 3 , 0 5, 6 2 ,5 3 7 / - . On 3 ITA No.372/Chd/2017 A.Y.2010-11 b e i n g a s ke d t o e x p l a i n t he d i f fe re n c e i t wa s s t at ed t h a t t he a s s e s s e e h a d r ece i v e d t r a n s po r t at i o n c h a r g e s o n a c c o u n t o f p e t t y t a n k o w n e rs a m o u n t i n g t o R s . 6 , 1 1 , 37 , 2 3 7 /- o n w h i c h h e h a d s h o wn co m m i s s i o n i n com e o f R s . 3 5, 5 9 ,5 1 0 / - . Th e A . O . h e l d t h a t th e y w e r e s u b - c on t r a c t o w n e rs o f t a n k a n d TD S s h o u l d h a v e b e e n d e d u c t e d o n t h e s a m e . Th e s u m m a r y o f f r e i g ht c r e d i te d o r p a i d t o th e p e t t y t an k o w n e r s w a s p r o c u r e d fr o m th e a s s e s s ee a nd a f t e r g oi n g th r o u g h t h e s a m e , t h e A .O . h e l d t h a t a ss e s se e w a s r e q u i r e d t o d e d u c t TD S on freight payments m ad e to petty t an k o w n e rs a m o u n t i n g t o Rs . 3 , 3 8 , 4 3, 4 8 8 / - a n d n o t h a v i n g d o n e s o , d i s a l l o we d t h e sa i d s u m a n d m ad e a d d i t i o n of th e s a m e t o t h e i n c o m e of t he a s s e s s e e. O u r a t t e n t i o n w a s d ra w n t o t h e r e l e v a n t f i n d i n g s o f t h e A . O . , i n hi s o r d e r p a s s ed u / s 1 4 3 ( 3) o f t h e A ct a t pa ge 1 8 a s un d e r :
A s p e r th e r e p l y d ate d 0 8 . 0 3 . 2 0 1 3 th e s u mma r y of f re ig h t c r e d i te d / p aid to p e tty tan k e r o wn e r s is as u n d e r :
Period covered Les than More than Total
Rs.20,000/- Rs.20,000/-
01.04.2009 to 30.09.2009 123119 31150935 31274054
01.10.2009 to 31.03.2010 169525 21977368(with PAN) 22146893
01.10.2009 to 31.03.2010 - 6252063(Without 6252063
PAN)
T h us th e as s e s s e e was l i ab l e to d e d u c t th e T D S o n R s . 3 , 1 1 , 50 , 9 3 5 /- b e in g th e amo u n t p ai d / c r e d i te d ab o v e R s . 2 0 , 0 0 0/ - as r e g ar d i n g t h e p e r io d 0 1 . 0 4 . 2 0 09 to 3 0 . 0 9 . 2 0 0 9 , E v e n if th e as s e s s e e was h av i n g th e PAN.
A s r e g ar d s th e p e r io d 0 1 . 1 0 . 2 0 1 0 to 3 1 . 0 3 . 2 0 1 0 no T D S was to b e d e d u c te d o n th e p ay me n ts l e s s th an R s . 2 0 , 0 0 0/ - an d wh e r e th e tan k e r o wn e r s is h av in g P A N n u mb e r s , th e c o u n s e l of th e as s e s s e e h as f urn is h e d th e d e tai l s o f th e a mo u n t p a i d wh e re as s e s s e e was n o t h av in g th e P A N n u mb e r s d u r in g th is p e r io d wh i c h c o me s to R s . 6 2 , 5 2 , 0 6 3 / - . T h u s th e T DS wa s to b e d e d u c te d o n R s . 3 , 3 8 , 43 , 4 8 8 / - 1 3, 1 1 , 5 0, 9 3 5 + 6 2 , 5 2 , 0 6 3 - 35 , 5 9 , 5 1 0 ( c o mmi s s io n in c o me c r e d i te d to th e P r o f i t & L o s s A / c ) .4 ITA No.372/Chd/2017
A.Y.2010-11 In v ie w o f th e n o n c o mp l i an c e o f th e p r o v is i o n s of S e c ti o n 1 9 4 C , i t is h e l d th at f re ig h t p ay me n ts of R s . 3 , 3 8 , 43 , 4 8 8 /- s h al l n o t b e al l o wab l e to th e as s e s s e e as a b u s in e s s e x p e n d i tu r e . T h er ef o r e, th is a mo u n t o f R s . 3, 3 8 , 4 3 , 4 8 8/ - is b e in g d is al l o we d an d ad d e d b ac k to th e in c o me o f th e as s e s s e e f or n o n - c o mp l i an c e o f pro v is io n s o f S e c ti o n 1 9 4 C r ws 4 0 ( a) ( i a) wh i c h th e as s e s s e e d id n o t s h o wn in h is P r o f i t & L o s s A c c o u n t as r e c e ip ts . "
B y n o t s h o wi n g h is g r o s s r e c e ip ts , th e as s e s s e e i s g u il ty o f co n c e al me n t an d f ur n i s h in g of in ac c u r ate p ar ti c u l ar s o f in c o me .
P e n al ty p r o c e e d i n g s u / s 2 7 1 ( 1 ) ( c ) o f th e In c o me T ax A c t, 1961 ar e b e in g in i t i at e d s e p ar ate l y f or c o n c e al me n t an d f urn is h i n g o f in ac c u r ate p ar t i c u l ar s of i n c o me . "
4. Th e L d . c o u n s e l f o r a s s e s s e e th e r e a f t e r p oi n t ed o u t t h a t t h e m a t t e r w a s c a r r i e d i n ap p e a l b e f o r e t h e L d . C I T( A ) w h o n o t e d t h at s i m i l a r a d di t i on h a d b e e n m ad e i n t h e a s s e s s m e nt y e a r 2 0 0 8 - 0 9 i n t h e c a s e o f t h e a s s es s e e w h i c h h a d b e e n d e l e ted b y t h e CI T( A ) v i d e o r de r d a te d 1 3 . 5 . 2 0 11 b u t t h e H o n ' b l e I . T. A . T. , o n a p p ea l f i l e d b y t h e Re v e n u e f or a s s e s s m e nt y e a r 2 0 0 8 - 0 9 , h a d u p h e l d t he d i s al l o w a n c e. Th e r e f o r e , following the d ec i si o n of the I . T. A . T. the L d . CI T( A ) c o n f i rm e d t h e d i s a l l o wa n c e m a d e i n t h e i m p u g n ed y e a r . O u r a t t e nti o n w a s d r a w n to t h e r e l e v a n t f i n d i n g s o f t h e CI T( A ) i n t h i s r e g a r d a t p a g es 4 t o 1 4 o f th e o r d e r o f t he C I T( A ) d a t e d 2 0 .2 . 2 0 1 4 i n t h i s re g a r d , a c o p y o f w h i c h w a s p l a c e d b ef o r e us .
5. Th e L d . c o u n s el f o r a ss e s s e e s ta t e d t h at i t i s ev i d e n t f r o m t h e s a m e th a t t h e i s s u e w as a d e b a t ab l e i ssu e a n d t h e a s s e s s e e 's s t a n d/ c l a i m o f n o t h av i n g d e d u c t e d TD S o n t h e s a m e w a s a b on a f i d e c l ai m s i nc e i t w a s a c c ept e d b y t h e C I T( A ) i n a p p e l l a t e p r o c e e d i ng s f o r a s s e s s m e nt y e a r 2 0 0 8 - 5 ITA No.372/Chd/2017
A.Y.2010-11 0 9 . Th e L d . c o u n s e l f o r a s s e s see f u r t h e r p o i n ted o u t t h a t t h e a s s e s se e h ad f i l e d a n a pp e al a g a i n s t t he o rd e r o f t h e I . T. A . T. p a s s e d i n a s s e s s m e n t ye a r 2 0 0 8 - 0 9 i n t h e H i g h C o u r t a n d th e qu e s t i o n o f l a w on t h e i m p u g ne d i s s u e h a d b e e n a d m i t t e d by t h e H i g h C o u r t. O u r a t t e n t i o n w a s d r a w n to the same placed at P a p er B o o k p ag e N o. 1. Th e Ld. c o u n s e l f o r a s s es s e e p o i n t e d o u t t h a t i n a l l o t h e r y e a r s t he a s s e s s e e ha d b e en o p e r a t i ng i t s bu s i n e s s o n si m i l a r l i n e s b y g e t t i n g g o o ds t r a n s p o r t e d t hr o ug h p e t t y t a n k o w n e r s o n c o m m i s s i on b a si s a n d n o a dd i t i o n h a d b e e n m ad e . I t w a s f u r t h e r p o i n t e d o u t t h a t w h i l e th e a s s e s s e e h ad r e t u r n e d i n c o m e o f R s. 8 ,9 2 , 4 8 0 / - th e s am e h a d b e e n as s e s s e d a t R s . 4 , 0 1 , 87 , 4 6 8 /- w i t h t h e s u b s t an t i a l a d di t i o n bei n g m a d e o n a c c o u n t o f th e a f o r e s a i d d i sa l l o w a n c e an d th e a s s e s s e e was also being u n j u s t i fi a b l y charged wi t h th e levy of p e n a l t y . Th e L d . c o u n s e l f o r a s se s s e e t he r e f o re , c o n t e n d e d t h a t s i n c e t he i s s u e o f d e d u ct i on o f t a x a t s o u rc e o n t h e freight p a y m e n ts made to p et t y tank o w ne rs was a d e b a t a b l e i s s u e a n d t h e q u e s t i o n o f l a w h a d be e n a d m i t t ed b y t h e H o n ' bl e Hi g h C o u r t a nd t he b o n a f i d e s o f t he a s s e s s e e h a d b e e n p r o ve d, t h e r e w a s n o re a s o n f o r c ha r g i n g p e n a l t y u / s 2 7 1 ( 1 ) ( c ) o f t h e A c t . Th e L d . c o u n s e l f or a s s es s e e r e l i ed u p o n t h e f o l l o wi n g c a s e l a w s i n s u p p o r t o f t h i s c o n t e n t i on t h a t n o p e n al t y w a s l e vi a b l e o n d e b a t a b l e i s su e s i n wh i ch q u e s t i o n o f l a w ha d b e e n ad m i t t ed b y t h e H i g h Co ur t :
1) C I T- 2 1 V s . M / s A d v a i t a E s t a t e D e v e l o p m en t P v t.
L t d . , I n c o me Ta x A p p e a l N o . 14 98 o f 2 0 1 4 d a t e d 1 7 . 2 . 2 0 1 7.
6 ITA No.372/Chd/2017
A.Y.2010-11
6. O u r a t te n t i o n w as d r a w n t o t h e fi n d i n g s of t he H on ' b l e H i g h C o u r t a t pa r a s 5 , 6 , 7 a nd 8 a s u n d e r , ho l d i n g t h a t a d m i s s i o n of a pp e a l i n q u a n tu m p r o c e e d i n gs a s g i v i n g r i se t o s u b s t a n ti a l qu e s t i o n o f l a w itself disclosed that the i s s u e i n vo l v e d w a s d e b a ta b l e an d t h u s no p e na l t y w as i m p o s a b l e o n t he s a m e :
"5. The Revenue had filed an appeal from the order of the Tribunal in Nayan Builders and Developers Pvt. Ltd. (supra) deleting the penalty. This appeal being CIT vs. Nayan Builders and Developers [(2014) 368 ITR 722] entertained by this Court. It upheld the view of the Tribunal that the imposition of penalty was not justified as admission of appeal in quantum proceeding on this issue as substantial question of law was proof enough of the issue being debatable. The aforesaid decision in Nayan Builders and Developers Pvt.Ltd (supra) was also followed by this Court in CIT-8 vs. Aditya Birla Power Co. Ltd. in Income Tax Appeal No. 851 of 2014 rendered on 2nd December, 2015 .
6. However, Mr. Tejveer Singh, learned Counsel appearing for the appellant- Revenue seeks to distinguish the decision of this Court in Nayan Builders and Developers Pvt. Ltd. (supra) on the ground that this Court had after recording the fact that where appeals from orders in quantum proceedings of this Court have been admitted as giving rise to substantial question of law then that itself discloses that the issue is debatable.
However, Mr. Singh points out that it also further records "In our view there was no case made out for imposition of penalty and the same was rightly set aside." On the basis of the above observation it is contention of Mr. Tejveer Singh that the appeal from penalty proceeding was not admitted by this Court as on merits no case for imposition of penalty was made out.
7. Mr. Dalai, the learned Counsel for the respondent- assessee invited our attention to the order of the Tribunal dated 18th March, 2011 in the case of Nayan Builders and Developers Pvt. Ltd (supra). On perusal of the Tribunal order dated 18th March, 2011 we note that the Tribunal in Nayan Builders and Developers Pvt. Ltd (supra) had deleted the penalty only on the ground that as substantial question of law had been admitted by this Court in quantum proceedings the issue is debatable. It was on the basis of the aforesaid reasoning of the Tribunal in Nayan Builders and Developers Pvt.Ltd. (supra), that this Court held that no penalty is imposable. Thus the distinction sought to be made by Mr. Tejveer Singh does not assist the Revenue, as it does not exist. 7 ITA No.372/Chd/2017
A.Y.2010-11
8. In view of the decision taken by this Court in Nayan Builders and Developers Pvt. Ltd (supra) as well as in Aditya Birla Power Co. Ltd. (supra) the proposed question does not give rise to any substantial question of law. Thus not entertained."
7. Th e L d . c o u n s e l f o r a s s e s s e e fur t h e r r e l i e d u p on t h e d e c i s i o n of t h e I TA T C h a n d i g a r h B e n c h i n t h e c as e o f A CI T Vs. M/s P u n ja b Containers & Warehousing in I TA N o . 8 8 8 / C hd / 2 0 13 d a t e d 7 . 8 . 20 15 f o r t h e p r o p os i t i o n t h a t n o p e n a l t y w a s l e v i a b l e o n di s a l l o w a n c e m a de u /s 4 0 ( a ) ( i a) o f t h e A c t w h e r e e x p l a n a t i on of the assessee fo r m a k i ng t h e c l a i m a p p e a rs t o b e b o n a f i d e . O u r a t t e n t i o n w a s d r a wn t o t h e r e l e v a n t fi n d i n g s a t p a r a s 1 0 a n d 1 1 o f t h e o r d e r a s under:
"10. We have considered the rival submissions and do not f ind any justif ication to interf ere with the order of the ld. CIT(Appeals) in canceling the penal ty. In this case, the Assessing Off icer has initiated penal ty on this issue in f urnishing inaccurate particulars of income. The Assessing Off icer in the penal ty order also levied the penalty f or f urnishing inaccurate particulars of income and relied upon decision of Hon'ble Delhi High Court in the case of CIT Vs Zoom Communication Pvt. Ltd. 327 ITR 510 in which the High Court upheld the penal ty levied f or wrong cl aim of deduction on account of income tax payment under section 40( a)( ia) of the Act. This judgement has also been rel ied upon by ld. DR during the course of arguments. On going through the assessment order, we f ind that assessee while expl aining the above issue, submitted bef ore the Assessing Off icer that assessee corporation has taken loan f rom Punjab State Warehousing Corporation on which a sum of Rs.2.84 Crore has been credited as interest during the year. Both the corporations being under the same management, it was evident that the Punjab State Warehousing Corporation was incurring heavy loss and no income tax was payable by the corporation during the assessment year under appeal i. e. 2007-08. The Punjab State Warehousing Corporation has f iled its Income T ax Return f or the year under consideration decl aring a loss of Rs. 126.40 Crore and has claimed a ref und of Rs. 84.33 lacs. Copy of the Income T ax Return with computation was f iled bef ore Assessing 8 ITA No.372/Chd/2017 A.Y.2010-11 Off icer. It was, theref ore, submitted that in vie w of the above, no TDS was made f rom interest during the year under consideration and assessee relied upon decision of the Hon'ble Supreme Court in the case of Hindustan Coca Cola Beverages Pvt. Ltd. Vs CIT. These f acts, therefore, clearly disclose that assessee disclosed all the particulars of income in the return of income as well as at the assessment stage and the reasons f or non deduction of TDS on the interest payment made to Punjab State Warehousing Corporation. May be, the addition is made at the assessment stage, would not automatically lead to the conclusion that assessee is liable f or levy of the penal ty under section 271(1)(c) of the Act. The f acts noted above clearly Sho ws that all the f acts material to the computation of income under the Income T ax Act were declared to the revenue authority and assessee offered expl anation to the same and the expl anation of the assessee was not f ound to be f alse. The expl anation of the assessee, theref ore, appears to be bonaf ide because the assessee claimed that when Punjab State Warehousing Corporation was running in loss and they were not liable to pay tax, no TDS on interest was deducted. This would lead to the conclusion that it is not a case of f urnishing inaccurate particulars of income or making f alse claim bef ore the authorities belo w. The Expl anation-I to Section 271(1)(c) of the Act, thus, would not be attracted in the case of the assessee. The ld. CIT(Appeals) was therefore, justif ied in following the order of ITAT Delhi Bench in the case of AT & T Communication Services Pvt. Ltd. (supra) on the matter in issue. The ld. DR relied upon decision in the case of Zoom Communications Pvt. Ltd. (supra) which is on different f acts as is also noted by the Assessing Off icer in the penalty order.
11. Considering the facts and circumstances of the case in the light of the f indings of the ld.
CIT(Appeals), we are of the vie w that there is no error in the order of the ld. CIT(Appeals) in cancel ing the penal ty on account of disallo wance made under section 40( a)( ia) of the Act. Thus, the departmental appeal on this issue has also no merit. The same is accordingly, dismissed."
8. The Ld. DR, on the other hand, relied upon the order of the CIT(A) and stated that since the ITAT Chandigarh Bench had upheld the disallowance on identical issue in the case of assessee for assessment year 2008-09, the explanation of the assessee was clearly untenable for non 9 ITA No.372/Chd/2017 A.Y.2010-11 deduction of tax at source and, therefore, the assessee had concealed particulars of its income to this extent. Our attention was drawn to the findings of the CIT(A) at para 2.3 of the order as under:
"2.3 I have carefully considered the facts of the case, the basis of imposing the penalty and the arguments of the AR, The assessee has shown total receipt on account of cartage Rs. 1,44,75,188/-. The Officer asked had the appellant to fife reconciliation of total receipts with the IDS claimed by him. On verification it was found that the total receipts as per the IDS claimed by him. On verification it was found that the total receipts as per the TDS claimed were Rs.3,05,62,537/-. The appellant was to explain the difference. The appellant explained that the receipt of petty tanker owners was amounting to Rs.6,11,37,237/- on which he had shown commission income of Rs.35,59,510/-. The Assessing Officer held that they were sub-contract owners of tankers and TDS should have been deducted on the same. Therefore, addition of Rs. 3,38,43,488/- was made u/s 40(a)(ia) of the Act of the said amount which was not shown in the P&L account. Since, the appellant did not shown his gross receipts, he was guilty of concealment & furnishing of inaccurate particular of income. The appellant adopted the method of crediting the net commission to the P&L account, This method did not clarify the entire picture in respect of the business operations of the appellant from the perusal of the Profit & loss account. The Hon'ble ITAT Chandigarh Bench vide its order for the A.Y. 2008-09 in the appellant's own case 30.03.2013 while discussing the appeal of the appellant has held has held that the GRs/bills against the freight due from the principals were raised in the name of the appellant. The same were raised both for tankers owned by the appellant and tankers hired by the appellant. The payment for the tankers owned and the tankers hired by the appellant were made to the appellant by the principal and TDS was deducted on the same. The credit of the TDS has been claimed by the appellant in the Income Tax Return. However, the receipts relating to the individual tank owners were not included by the appellant in its total receipts and only the commission claimed to have been returned have been reflected in the P&L account. The Hon'ble 1TAT held that the appellant has raised GRs/Bills in the name of his concern, both for the tankers owned by him those hired by him. The appellant received freight payment from the principals in respect of both type of tankers on which TDS deducted. The TDS credit was claimed by the appellant on the receipts which according to the appellant were not includible in his hands. Further, all the main parties were deducting TDS on the payments made to the appellant. Therefore, the Hon'ble ITAT held that the total contractual receipts both on account 10 ITA No.372/Chd/2017 A.Y.2010-11 of own fleet of tankers and on account of tankers hired are to be recognized as receipts in the hands of the appellant as the appellant himself had claimed the benefit of TDS at source out of such receipts and the same are to be treated as a part of the total receipts of the appellant The Hon'ble ITAT did not accept the plea of consistency regarding following the same accounting principle from year to year in view of the established principle that under the Income tax Act each year is independent and the principle of res-judicata does not apply. The accounting principle adopted by the appellant failed to reveal the complete picture regarding the business operations and receipts of the appellant. The ITAT has further held that it is the duty of the Assessing Officer to consider whether the books disclose the true status of accounts or not and the officer is not bound to follow the method followed in earlier years. The Hon'ble ITAT further observed th at in th e c ase of the app el l an t there were the understanding between the party under which the appellant is not only engaging the service of the individual tank owners but has also agreed to incurr various expenses relating to such tankers including the payment of installments due on tankers. The modus-operandi adopted by the appellant establishes the presence of contract between the parties under which it was agreed that out of the freight due to the individual tax owners various tax owners related to the said tankers like installments due, diesel cost of documentation was to be paid by the appellant and thereafter the balance amount was to be paid in advance or on completion of the contract and therefore sec 194C is applicable. The said arrangement is clear understanding between the parties though not in writing. Therefore, the appellant could not justify with supporting evidence his contention that there was no contract between the appellant and various tank owners and that sec 194C is not applicable. As per explanation l to sec 27l(1)(c) where a person fails to offer an explanation or offer an explanation which is found by the Assessing Officer to be false then the amount added or disallowed in computing the total income of such person as a result thereof, shall be deemed to represent the income in respect of which particulars have been concealed. Under the circumstances, the Assessing Officer was satisfied that the appellant has concealed its income and has furnished inaccurate particulars of his income. There is no set language or pattern laid down for the Assessing Officer to record his satisfaction. The satisfaction is not to be recorded in a particular manner or reduced in writing as held by the Hon'ble Supreme Court i n th e c as e o f Mak Data P. Ltd. vs. CIT in civil no.9772 of 2013 (arising out of SLP(civil) no.18389 of 2014). It has held in the case of CIT vs. Zoom Communication Pvt Ltd. 2010 327 ITR 510 by the Hon'ble Delhi High Court that if the assessee makes the claim which is not incorrect in law but, is without any basis and the explanation furnished by him for making such a claim is not found to be bonafide, penalty u/s 271(l)(c) is attracted. Further, it has been held by the Supreme Court in the case of 11 ITA No.372/Chd/2017 A.Y.2010-11 Union of India & Others vs. Dharminder Textiles Processors 306 ITR 277 that the explanations appended to sec 271(l)(c) indicate the element of strict liability of the assessee and the penalty is a civil liability and willful concealment is not an essential ingredient. Further, the Hon'ble Supreme Court has held in the case of K.P.Madhusudanan vs. CIT 251 ITR 99 that by virtue of the notice u/s 271, the assessee is put to notice that if he does not prove that his failure to return his correct income was not due to fraud or neglect, he shall be deemed to have concealed particulars of income or furnish inaccurate particulars thereof. The Hon'ble Allahabad High Court held in the case of CIT vs. M. Habibullah, 136 ITR 716 that where the findings in the assessment proceedings were against the appellant and no evidence was produced during the penalty proceedings to show that the failure to return income was not due to fraud or willful neglect on his part, the penalty u/s 271(l)(c) was valid. Under the circumstances the AR was not Justified to hold that the issue is debatable especially in view of the of the Hon'ble ITAT Chandigarh in the case. Further since the charge under which the penalty is to be imposed by the Assessing Officer was stated in the assessment order itself, the appellant was within a position to be able to defend his case and it cannot be said that the principle of natural justice in such a case is violated, even though notice issued u/s 274 may not specify the charge. The appellant did not even produce the copy of the notice u/s 274 of the Act to substantiate its claim although the onus was cast on the appellant to substantiate his claim. Given the facts and circumstances, the Assessing Officer was justified in imposing the said penalty. Under the circumstances, it is held that the Assessing Officer was justified in imposing the said penalty. These grounds of appeal are dismissed."
9. We have heard the rival contentions and have gone through the orders of the authorities below as also the documents and case laws referred to before us. We are in agreement with the contentions of the Ld. counsel for assessee that the issue on which penalty was levied was a debatable issue and also that the explanation of the assessee was bonafide and, therefore, the assessee could not be charged with having concealed or furnished inaccurate particulars of his income so as to attract the levy of penalty u/s 271(1)(c) of the Act. 12 ITA No.372/Chd/2017
A.Y.2010-11
10. Admittedly, the disallowance made in the present case on which penalty had been levied, related to payments made to petty tank owners, amounting to Rs.3,38,43,488/-, u/s 40(a)(ia) of the Act for non deduction of tax at source. The Revenues case for justifying the levy of penalty rests entirely on the confirmation of identical disallowance made in the case of the assessee in the preceding year, i.e A.Y 2008-09, by the ITAT. But, as pointed out by the Ld.Counsel for the assessee, the disallowance made in assessment year 2008-09 had been deleted in first appeal by the CIT(A). This fact finds mention in the order of the CIT(A) for the impugned year also, who after noting the same proceeded to uphold the disallowance following the order of the ITAT. We find that this itself is a pointer to the fact that the issue of tax deduction at source on the payments made to the tank owners was capable of two views. This is further strengthened by the fact that the Hon'ble High Court has admitted the appeal filed by the assessee against the order passed by the I.T.A.T. in assessment year 2008-09, for determination of the question of law proposed on the disallowance made. There is, therefore, no iota of doubt that the issue of deduction of tax at source on payments made to petty tank owners was a debatable issue, with the CIT(A) holding that no TDS was deductible on the same in first appeal and even the Hon'ble High Court finding merit in the question of law proposed in this regard and admitting the same, while the I.T.A.T. took an adverse 13 ITA No.372/Chd/2017 A.Y.2010-11 view against the assessee. No question of levy of penalty arises in such circumstances ,as the assessee cannot be held to have either concealed/furnished any inaccurate particulars of income on an issue which is debatable. The reliance placed by the Ld.Counsel for the assessee on the decision of the Hon'ble Bombay High Court in the case of Advaita Estate Development (supra) is apt ,wherein it has been held that admission of appeal in quantum proceedings on the issue as substantial question of law was proof enough of the issue being debatable and no penalty was leviable.
11. Further, issue of tax deduction at source on payments made to tank owners in the present case being capable of two views, and the assessee having adopted one of them, of not deducting TDS on the same, the bonafides of the explanation of the assessee stand proved. It cannot be said that the view taken by the assessee was wholly untenable in law or that the explanation of the assessee was false, unreasonable and not bonafide. Therefore also, the assessee could not be charged with having concealed/furnished any inaccurate particulars of income so as to levy penalty u/s 271(1)© of the Act.
12. Even otherwise, we find that the return for the impugned year was filed by the assessee on 23.9.2010 and the CIT(A) had passed the order for assessment year 2008- 09 deleting the disallowance made on identical issue on 14 ITA No.372/Chd/2017 A.Y.2010-11 13.5.2011. Therefore, as on the date of filing of return for the impugned year the view of the assessee that no TDS was deductible on the payments made to the petty tank owners was a legally tenable view since it was only later, on 30.9.2013 when the I.T.A.T. reversed the order of the CIT(A), that an adverse view arose.
13. In view of the above facts and circumstances of the case, we hold that the issue on which penalty was levied in the present case was a debatable issue and the explanation of the assessee was bonafide, therefore, the assessee could not be said to have either concealed or furnished any particulars of income so as to attract the levy of penalty u/s 271(1)(c) of the Act. The penalty so levied is, therefore, directed to be deleted.
14. No arguments were made by the Ld. counsel for assessee vis-à-vis the legal grounds raised before us. The same, therefore, are dismissed. In view of the above, the appeal of the assessee is partly allowed.
15. I n t he r e s u l t, t he a p p e a l o f t h e as s e s s e e i s p a rt l y allowed.
O r d e r p r on o u n c ed i n t h e O p e n Cou r t o n 2 5. 0 7 . 2 018 .
संजय गग अ नपणा
ू ग$ता
ु
(SANJAY GARG ) (ANNAPURNA GUPTA)
याय क सद य/ Judicial Member लेखा सद य/ Accountant Member
*दनांक /Dated: 29th October, 2018
*रती*
15 ITA No.372/Chd/2017
A.Y.2010-11
आदे श क त*ल+प अ,े+षत/ Copy of the order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. आयकर आय-त
ु / CIT
4. आयकर आय-त
ु (अपील)/ The CIT(A)
5. +वभागीय त न0ध, आयकर अपील#य आ0धकरण, च2डीगढ़/ DR, ITAT, CHANDIGARH
6. गाड फाईल/ Guard File
आदे शानसार
ु / By order,
सहायक पंजीकार/ Assistant Registrar