Kassar Innovative Foods Pvt.Ltd., ... vs Department Of Income Tax

The ITO, Kassar Innovative Foods Ward (2), Pvt. Ltd., 415/P VIII, Ahmedabad, Room No. Vs Moraiya, N-H8, Tal, 105,. Navjivan Trust Sanand, Sarkhej Bavla Bldg., Off. Ashram Road, Road, Ahmedabad Ahmedabad PAN: AAACK6249G (Appellant) (Respondent)

Revenue by: Shri B.L. Yadav, Sr.D.R. Assessee by: None

Date of hearing : 22-12-2014 Date of pronouncement : 09-01-2015

आदे श/ORDER

PER : ANIL CHATURVEDI, ACCOUNTANT MEMBER:-

This appeal is filed by the Revenue against the order of CIT(A)-VIII, Ahmedabad dated 06-12-2010 for A.Y. 2006-07.

I.T.A No. 561/Ahd/2011 A.Y. 2006-07 Page No 2 ITO vs. Kassar Innovative Foods Pvt. Ltd

2. On the date of hearing none appeared on behalf of the Assessee nor any adjournment application was filed by Assessee. We therefore proceed to decide the appeal on the basis of material on record ex parte qua the Assessee.

3. The facts as culled out from the material on record are as under.

4. Assessee is a company stated to be engaged in the business of manufacturing and selling of dehydrated onion flakes. Assessee electronically filed its return of income for A.Y. 2006-07 on 08/12/2006 declaring total income of Rs. Nil. The case was selected for scrutiny and thereafter the assessment was framed u/s. 143(3) vide order dated 28/11/2008 and the total income was determined at Rs. 16,53,714 before set off of brought forward losses. While assessing the total income disallowance of Rs. 6,09,235/- was made u/s. 40(a)(ia) by the AO. On the aforesaid amount disallowed u/s. 40(a)(ia), AO vide penalty order dated 15/04/2009 levied penalty of Rs. 2,39,246/- u/s. 271(1)(c) of the Act. Aggrieved by the order of AO, Assessee carried the matter before Ld. CIT(A). Ld. CIT(A) deleted the penalty by holding as under:

"5.7. In the light of the above decision, if we consider the facts of the case, we notice that the assessee has furnished all the particulars of income and the Assessing Officer has calculated the total income on the basis of those particulars filed by the assessee. The assessee has right to claim all deductions which according to him are permissible in law. It is the duty of Assessing Officer to calculate correct income in accordance with law. If the Assessing Officer found otherwise on considering that material filed by the assessee, we do not find that in such cases which the Assessing Officer computed the different total income than the total income declared by the assessee the same would not amount to furnishing of inaccurate particulars of income or concealment of particulars of income. In the case under consideration, the assessee has claimed transportation expenses amounting to Rs. 609235/- as allowable expenses. The AO has disallowed the same, since assessee has not deducted tax at source out of the payment. The AO has disallowed it u/s. 40(a)(ia). It is the disallowance under legal issue.

I.T.A No. 561/Ahd/2011 A.Y. 2006-07 Page No 3 ITO vs. Kassar Innovative Foods Pvt. Ltd The AO has not treated he transportation expenses as Bogus. The assessee has incurred this expenditure. Since he has not deducted TDS on this payment, AO disallowed the expenditure by legal fixation of Section 40(a)(ia). The entire details were furnished by the appellant in the form of Return of Income and Tax Audit Report. I find that it is not a case of furnishing inaccurate particulars of income or concealment of particulars of income. In the light of the above discussion, I find that it is not a fit case for penalty leviable u/s. 271(1)(c)."

5. Aggrieved by the order of Ld. CIT(A), the Revenue is now in appeal before us.

6. Before us, Id. D.R. took us through the penalty order of A.O and submitted that addition was made because Assessee had failed to comply with TDS provisions of the Act and the Assessee was well aware about its obligation to deduct tax and deposit to the Government account as well as the provisions of Section 40(a)(ia) of the Act. The Assessee should have therefore disallowed the expenses while computing the income. Failure on the part of Assessee to disallow the expenses has resulted into non reflection of the true income of the Assessee. Further had the case not been selected for scrutiny, the income to the tune of Rs. 6,09,235/- would have escaped assessment, Thus it was clear that Assessee had willfully and deliberately furnished inaccurate particulars of income and therefore A.O had rightly levied penalty. He therefore submitted that the order of A.O levying the penalty be upheld.

7. We have heard the ld. D.R. and perused the material on record. We find that Ld. CIT(A) while deleting the penalty has given a finding that the transportation expenses on which the TDS was deductible, has not been treated as bogus by AO and the details of expenses have been furnished by Assessee and the disallowance is on account of legal fiction. We further find that Ld. CIT(A) relying on the decision in the case of Reliance Petro-products Ltd vs. CIT 322 ITR 158 has deleted the penalty. Before us I.T.A No. 561/Ahd/2011 A.Y. 2006-07 Page No 4 ITO vs. Kassar Innovative Foods Pvt. Ltd Revenue could not controvert the findings of Ld. CIT(A) by bringing any contrary material on record, nor has brought any contrary binding decision in its support. In view of the aforesaid facts, we find no reason to interfere with the order of Ld. CIT(A) and thus this ground of Revenue is dismissed.

8. In the result, the appeal of Revenue is dismissed.

Order pronounced in open court on the date mentioned hereinabove at caption page

Sd/- Sd/-

(G.C. GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER Ahmedabad : Dated 09/01/2015 ak

आदे श कȧ ूितिलǒप अमेǒषत / Copy of Order Forwarded to:-

1. Assessee

2. Revenue

3. Concerned CIT

4. CIT (A)

5. DR, ITAT, Ahmedabad

6. Guard file.

By order/आदे श से,

उप/सहायक पंजीकार आयकर अपीलीय अिधकरण, अहमदाबाद