Income Tax Appellate Tribunal - Chandigarh
A.B. Sugars Ltd., Chandigarh vs Department Of Income Tax on 3 July, 2015
IN THE INCOME TAX APPELLATE TRIBUNAL
DIVISION BENCH,CHANDIGARH
BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER
AND SHRI T.R.SOOD, ACCOUNTANT MEMBER
ITA No. 789/CHD/2013
Assessment Year: 2006-07
The A.C.I.T., Vs M/s A.B. Sugars Ltd.,
Circle 1(1), House No. 77,
Chandigarh. Sector 11-A,
Chandigarh.
PAN: AABCG3045M
(Appellant) (Respondent)
Appellant by : Shri S.K.Mittal
Respondent by : Shri T.N.Singla
Date of Hearing : 01.07.2015
Date of Pronouncement : 03.07.2015
O R D E R
PER BHAVNESH SAINI,JM This appeal by revenue is directed against the order of ld. CIT(Appeals) Chandigarh dated 01.04.2013 for assessment year 2006-07 challenging the cancellation of penalty under section 271(1)(c) of the Income Tax Act.
2. Briefly the facts as noted in the impugned order are that the Assessing Officer while framing the assessment 2 under section 143(3) of the Act made the following additions :
i) Rs. 4,35,457/- on account of disallowance of certain expenses under section 40(a)(ia) of the Act.
ii) Total disallowance of Rs. 7,85,336/- ( Rs.
7,19,513/- + Rs. 65,823/-) under section 14A of the Act.
Notional interest of Rs. 20,40,000/- was also added by passing rectification order under section 154 of the Act.
3. The Assessing Officer has levied penalty under section 271(1)(c) of the Act on all these additions which were challenged before ld. CIT(Appeals).
4. The assessee, as regards disallowance of expenses under section 40(a)(ia) of the Act and levy of the penalty submitted that several benches of the Tribunal have given decision for and against the assessees and so the issue has become debatable. The ld. CIT(Appeals) noted that in the case of the assessee, the assessee had not deducted tax on certain payments, so the addition was made under section 40(a)(ia) of the Act. Therefore, assessee cannot be said to have deliberately furnished inaccurate particulars of income. The ld. CIT(Appeals) relied upon decision of ITAT Delhi Bench in the case of AT & T Communication Services (India) Pvt. Ltd. 42 DTR 22 in which it was held that the disallowance made by invoking provisions of Section 40(a)(ia) cannot be a ground to levy penalty under section 3 271(1)(c) of the Act. The assessee has not failed to disclose fully and truly all material facts. Therefore, ratio of the above judgement squarely apply and that since entire amount was added for non-deduction of tax, therefore, it is not a case of concealment of income or furnishing inaccurate particulars of income. Accordingly, penalty on this item was cancelled and appeal of the assessee was allowed.
5. On disallowance under section 14A of the Act, the assessee submitted before ld. CIT(Appeals) that notional expenditure was disallowed under section 14A of the Act so no penalty was leviable and relied upon decision of the Hon'ble Supreme Court in the case of Reliance Petroproducts Pvt. Ltd. 322 ITR 158 (S.C). The ld. CIT(Appeals) found that the disallowance of expenses under section 14A of the Act has been made by the Assessing Officer on proportionate/estimated basis. The assessee had not concealed the particulars of its income or had not furnished inaccurate particulars of income so as to levy the penalty. The ld. CIT(Appeals) relied upon decision of Hon'ble Supreme Court in the case of Reliance Petroproducts Pvt. Ltd. (supra) and cancelled the penalty.
6. With regard to disallowance of notional interest and security deposit to NHAI, on which penalty was also levied, ld. CIT(Appeals) noted that the disallowance made by Assessing Officer under section 154 of the Act has been deleted by him vide order dated 28.06.2012, therefore since 4 addition has been deleted, penalty would not survive. The ld. CIT(Appeals), accordingly, cancelled the penalty and allowed the appeal of the assessee.
7. The ld. DR relied upon order of the Assessing Officer, on the other hand, ld. counsel for the assessee reiterated the submissions made before authorities below and also placed on record copy of order of ITAT Chandigarh Bench in the case of the same assessee for assessment year 2006-07 and 2007-08 dated 27.11.2013 in ITA 1120/2010 etc. The ld. counsel for the assessee, referring to the order of the Tribunal on quantum submitted that with regard to addition of Rs.4,35,457/- under section 40(a)(ia) of the Act, the Tribunal held that Section 194C would apply only if the payment made exceeds Rs. 20,000/- and since freight payment has been made only for Rs. 20,000/-, therefore TDS provision under section 194C of the Act would not apply with respect to this payment of freight. 7(i) The ld. counsel for the assessee with regard to disallowance under section 14A of the Act on the amount of Rs. 7,19,512/- submitted that the Tribunal in the same order dated 27.11.2013 restricted the disallowance to Rs. 1 lac only by holding that Rule 8D would be applicable from assessment year 2008-09. He has also submitted that with regard to addition of Rs. 656,823/- under section 14A, the Tribunal has deleted the addition holding that on earning agriculture income hardly any administrative expenses would be required to be spent. The ld. counsel for the 5 assessee, therefore, submitted that since substantial additions have already been deleted by the Tribunal and that only small additions are left only on estimate basis, therefore, ld. CIT(Appeals) was justified in canceling the penalty.
8. We have considered the rival submissions and do not find any justification to interfere with the order of the ld. CIT(Appeals) in canceling the penalty under section 271(1)(c) of the Act. The ld. counsel for the assessee by referring to the order of Tribunal on quantum in the case of the assessee submitted that the Tribunal has deleted part of the addition under section 40(a)(ia) of the Act and substantially reduced the disallowance under section 14A of the Act. The assessee has disclosed all the facts in the return of income and disallowance under section 40(a)(ia) was made because no TDS was deducted and that Tribunal held that provisions of Section 14A read with Rule 8D would be applicable from assessment year 2008-09 and made reasonable estimated disallowance of Rs. 1 lac. The notional interest has already been deleted by the ld. CIT(Appeals).
9. Considering the facts and circumstances noted above, it is clear that penalty was levied for mere disallowance of expenses on estimate basis which would not lead to inference that assessee has concealed the particulars of income or furnished inaccurate particulars of income. The ld. CIT(Appeals) rightly placed reliance upon the decision 6 of the Hon'ble Supreme Court in the case of Reliance Petroproducts Pvt. Ltd. (supra) for canceling the penalty. We, therefore, do not find any merit in the departmental appeal. The same is accordingly, dismissed.
10. In the result, departmental appeal is dismissed.
Order pronounced in the Open Court on 3rd July,2015.
Sd/- Sd/-
(T.R.SOOD) (BHAVNESH SAINI)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 3rd July,2015.
'Poonam'
Copy to:
The Appellant, The Respondent, The CIT(A), The CIT,DR Assistant Registrar, ITAT Chandigarh