Narayan Builders, Ahmedabad vs Assessee

ौी एन0एस0 सैनी, लेखा सदःय एवं ौी कुल भारत, याियक सदःय के सम# BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER

आयकर अपील सं./ ./ ITA No.1763/Ahd/2011 & CO No.182/Ahd/2011 िनधा&रण वष&/Assessment Year: 2005-06

ITO, M/s. Narayan Builders, Ward 9 (1), Vs 43, Shankar Society, Ahmedabad Nr. Amikunj Bus Stand, Ahmedabad PAN : AADFN 4405 H

अपीलाथ)/ अपीलाथ)/ (Appellant) ू+यथ) यथ)/ थ)/ (Respondent & Cross-objector)

Revenue by : Shri Nimesh Yadav, Sr. DR Assessee(s) by : Shri N.C. Amin, AR

सुनवाई क- तार.ख/ / Dateof Hearing : 06/04/2015 घोषणा क- तार.ख / Date of Pronouncement: 08/05/2015

आदे श/O R D E R

PER SHRI KUL BHARAT, JUDICIAL MEMBER:-

This is an appeal filed by the Revenue and the Cross-Objection filed by the assessee, both against the order of the Commissioner of Income Tax (Appeals)-XV, Ahmedabad dated 27.05.2011. Since this appeal and the cross-objections involve common issues, these were heard together and are being disposed of by this consolidated order for the sake of convenience.

2. First we take up the appeal of the Revenue vide ITA No.1763/Ahd/2011 for Assessment Year 2005-06. The Revenue has raised following grounds of appeal:-

ITA No. 1763 & CO 182 Ahd 2011 ITO vs. Narayan Builders For AY 2005-06 2

1. The ld. Commissioner of Income-tax (A)-XV, Ahmedabad has erred in law and on facts in deleting the penalty of Rs.15,72,182/- levied u/s 271(1)(c) of the I.T. Act.

2. On the facts and in the circumstances of the case, the Ld. CIT(A)-XV, Ahmedabad ought to have upheld the order of the Assessing Officer.

3. It is therefore, prayed that the order of the ld. Commissioner of Income-tax (A)-XV, Ahmedabad may be set aside and that of the Assessing Officer be restored.

3. Briefly stated facts are that the case of the assessee was picked up for scrutiny assessment and the assessment u/s.143(3) of the Income-tax Act, 1961 (hereinafter referred to as "the Act") was framed vide order dated 11.10.2007. While framing the assessment, the Assessing Officer also initiated penalty proceedings u/s 271(1)(c) on the additions/disallowance made by the Assessing Officer by invoking provisions of Section 40(a)(ia) of the Act as also on the basis of bogus purchases, unexplained expenditure, etc. In the quantum proceedings, the assessee has taken the matter up to the stage of the Tribunal; however, in the penalty proceedings the Assessing Officer levied penalty of Rs.16,79,650/- from the addition/disallowance of Rs.47,25,947/-. Against this penalty order, the assessee has filed an appeal before the ld. CIT(A) who, after considering the submissions of the assessee, partly allowed the appeal. While partly allowing the appeal, the ld. CIT(A) deleted the penalty on the addition of Rs.44,45,998/- which was made by the Assessing Officer by invoking provisions of Section 40(a)(ia) of the Act for not depositing the tax in the Government account. However, in respect of addition confirmed by the ITAT on account of bogus purchases and unexplained expenditure, the ld. CIT(A) confirmed the penalty on both counts. The Revenue is now in appeal before us against the order of the CIT(A) in respect of deleting the penalty on the addition of Rs.44,45,998/- made u/s 40(a)(ia) of the Act, whereas in the Cross-objection by the ITA No. 1763 & CO 182 Ahd 2011 ITO vs. Narayan Builders For AY 2005-06 3

assessee, the assessee has challenged the confirmation of the penalty by the ld. CIT(A) on account of bogus purchases and unexplained expenditure.

4. The only effective ground in the Revenue's appeal is against the deletion of penalty of Rs.15,72,182/- levied by the Assessing Officer on addition made on account of non-deposition of tax of Rs.44,45,998/- in the Government account.

5. The ld. Sr. DR. supported the order of the Assessing Officer. On the contrary, ld. Counsel for the assessee submitted that the addition made by the Assessing Officer has been deleted by the Co-ordinate Bench of the Tribunal. He drew our attention to the order of this Tribunal dated 08.04.2011 in ITA No.2599/Ahd/2008 for Assessment Year 2005-06 in this regard.

6. We have heard the rival submissions, perused the orders of the lower authorities and material available on record. We find that the Assessing Officer had made additions by invoking provisions of Section 40(a)(ia) by observing as under:-

"The above reply of the assessee is not accepted as the section 40(a)(ia) is self speaking section for disallowance of the sums which has been made without deduction of tax under chapter XVIIB of the Act.

In view of the above, an amount of Rs.44,45,798/- made to various sub- contractor, labourer and transporters without deduction of tax and after deduction of tax not paid within time, is disallowed and added to the income of the assessee."

However, we find that the Co-ordinate Bench of the Tribunal has deleted this addition by observing as under:-

"4. Ground No.1 relates to over all sum of Rs.44,45,798/- whereas ground Nos.2, 3 & 4 relate to sum of Rs.34,76,738/- and ground Nos.5 & 6 relate to sum of Rs.9,69,060/-.

ITA No. 1763 & CO 182 Ahd 2011 ITO vs. Narayan Builders For AY 2005-06 4

5. Regarding sum of Rs.34,76,738/-

During the course of assessment proceedings the AO found that assessee has made the payment of this sum to following six parties:

Sl. Name of the party Date of Due date of Date of TDS No. amount paid depositing deposited before TDS 31/03/2005

1 Patel Labour Contractor 9,09,874/- 31.3.2005 Rs.68,528/- on 2 Patel Builders 13,17,520/- 31.3.2005 30.05.2005;

3 Patel Corporation 9,98,997/- 31.3.2005 Rs.4,532/- on 4 Prutiv Construction Co. 1,57,000/- 31.3.2005 31.5.2005 & 5 Devibhai Solanki 15,000/- 31.3.2005 Rs.1,569/- on 6 Shankerbhai B.Panchal 78,338/- 31.3.2005 23.8.2005 Total 34,76,738/-

According to the AO as TDS deducted on the payments of these parties was not paid by 31.3.2005 but was paid subsequently in the next F.Y. it is hit by section 40(a)(ia). Therefore, deduction cannot be allowed to the assessee.

6. The ld. CIT(A) confirmed the addition on the ground that payment is late and not made before the end of the F.Y.

7. Before us, the ld. AR submitted that by virtue of proviso to section 40(a)(ia) by Finance Act, 2008 introduced with retrospective effect from 1.4.2005, if payment is made on or before the date specified in sub- section (1) of section 139, then no such disallowance can be made. He submitted that this amendment could not be brought to the notice of ld. AO as it had not become law when the AO passed the order.

8. On the other hand, the ld. DR supported the orders of authorities below.

9. After considering the rival submissions, we allow the claim of assessee as it is mentioned by the AO and ld. CIT(A) that payments have been made of the TDS so made by 23.8.2005 whereas last date of filing of return was 31.10.2005 for Asst.

Year 2005-06. Since provisions of section 40(a)(ia) as amended by Finance Act with retrospective effect 1.4.2005 are complied with no disallowance is called for. Ground Nos.2,3 & 4 are, therefore, allowed."

Since in the quantum proceedings, the additions has been deleted by the Coordinate Bench of the Tribunal, therefore, the penalty on this amount does not survive. We, therefore, do not see any reason to interfere with the ITA No. 1763 & CO 182 Ahd 2011 ITO vs. Narayan Builders For AY 2005-06 5

order of the CIT(A) and the same is hereby upheld on this issue. Thus, this ground raised by the Revenue is rejected.

7. Grounds Nos. 2 & 3 are general in nature and require no separate adjudication.

8. Now we take up the cross-objection of the assessee. The only effective ground in this cross-objection is with regard to the confirmation of penalty of Rs.1,07,468/- u/s 271(1)(c) of the Act.

9. The ld. Counsel for the assessee submitted that the additions made by the Assessing Officer and sustained by the CIT(A) and the Tribunal on account of bogus purchases and unexplained expenditure of Rs.2,44,640/- and 27,959/- respectively which were purely made on the basis of estimation; therefore, on these amounts the penalty should not have been levied. On the contrary, the ld. DR. supported the order of the Assessing Officer.

10. We have heard the rival submissions, perused the orders of the lower authorities and material available on record. We find that the additions of Rs.2,44,640/- on account of bogus purchases and Rs.35,509/- (Rs.27,959/-+ Rs.7,550/-) on account of unexplained expenditure have been confirmed by the Co-ordinate Bench of the Tribunal vide its order dated 08.04.2011 in ITA No.2599/Ahd/2008 for Assessment Year 2005-06. Nothing contrary was brought to our knowledge on behalf of the assessee in this regard. Moreover, the assessee could not reconcile the discrepancy noticed with respect to the purchases made from Regent Grannite India/Nirav Sales Corporation either before the lower authorities or even before the Tribunal. In this background, the CIT(A) was rightly upheld the penalty levied by the Assessing Officer on these amounts for furnishing inaccurate particulars of ITA No. 1763 & CO 182 Ahd 2011 ITO vs. Narayan Builders For AY 2005-06 6

income. Therefore, the finding of the CIT(A) in this regards needs no interference from our side and the same is upheld. Thus, the cross-objection filed by the assessee is rejected.

11. In the result, the appeal filed by the Revenue as well as the cross- objection filed by the assessee, both are dismissed.

Order pronounced in the Court on 8th May, 2015 at Ahmedabad.

Sd/- Sd/-

( N.S. SAINI) (KUL BHARAT) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 08/05/2015 *Biju T. षत Copy आदे श क- ूितिल2प अमे2षत/ of the Order forwarded to : 1. अपीलाथ) / The Appellant 2. ू+यथ) / The Respondent. 3. संबंिधत आयकर आयु4 / Concerned CIT 4. आयकर आयु4(अपील) / The CIT(A)

5. 2वभागीय ूितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad

6. गाड& फाईल / Guard file.

/ BY ORDER, आदे शानु सार

TRUE COPY

Dy./Asstt.Registrar) उप/सहायक पंजीकार ( उप/ अिधकरण, अहमदाबाद / आयकर अपीलीय अिधकरण, ITAT, Ahmedabad