Nkc Conveyor Pvt. Ltd.,, New Delhi vs Department Of Income Tax

This is an appeal filed by the Revenue and is directed against the order

of the Ld.CIT(A)-XVI, New Delhi dt. 5.3.2013 pertaining to the Assessment Year

('AY') 2005-06.

2. Facts in brief:- The company is a subsidiary of NKC Conveyor Co.Ltd. Japan

and is in the business of supply and trading of conveyor systems etc. to various

companies in India, specifically to automobile sector. During the year under

reference, the company filed its income tax return on 28.10.2005 declaring the

income of Rs.1,098,320/-. The company also filed the tax audit report u/s 44AB of

the Act along with the return of income. As per clause 21 of the tax audit report

filed along with the income tax return, a delay in deposit of tax deducted at source,

as per Annexure E, was reported. As per this enclosed annexure E, complete

details of deduction/due date of deduction/date of deposit etc. were reflected along

with details of section under which the deduction was made and also the amount of 2

TDS. Hence it was claimed that correct and full facts and particulars were

disclosed before the Income Tax Dept. Along with the return of income.

3. The Assessing Officer (the 'AO') made disallowance under provisions of

S.40(A)(ia) of the Income Tax Act, 1961 (the 'Act'), on the ground that the assessee

has made tax deducted at source from contractors u/s 194C of the Act from

contract payments of Rs.53,846/- and u/s 195 of the Act from design fee payments

of Rs.51,61,006/- but has failed to deposit the same within the time prescribed

under the Statute. He also observed that the assessee has not suo moto disallowed

these expenditure while computing its return of income. He levied penalty u/s

271(1)(c ) of the Act on these disallowances.

4. The assessee carried the matter in appeal. The First Appellate Authority

considered the various explanations given by the assessee and deleted the penalty.

The assessee initially filed an appeal with the Ld.CIT(A) on the disallowance in

question, , but had withdrawn the appeal in view of the fact that it had already

deposited the tax demanded on completion of assessment and as the assessee could

claim the amount disallowed in the subsequent A.Y. under the provisions of

S.40(a)(ia) of the Act. The Ld.CIT(A) observed that, in the tax audit report filed

along with the return of income, the fact of delay in remittance of tax deducted at

source was reported as per Annexure 'E' and that the assessee has disclosed the

correct and full facts and particulars. He was of the opinion that this was a case of

human error and the explanation given by the assessee was bonafide. He granted

relief.

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5. Aggrieved the Revenue is in appeal before us on the following grounds.

"1. Whether on the facts & in the circumstances of the case, the Ld.CIT(A) has erred in law by deleting penalty u/s 271(1)(c ) of Rs.17,55,656/- in the light of the fact the assessee had wilfully claimed the wrong deductions.

2. Whether on the facts & in the circumstances of the case, the Ld.CIT(A) has erred in law by failing to appreciate the facts discussed in detail in the assessment order by ignoring the facts that the assessee repeated the mistake many times. Firstly by deducting the amount from the P&L account, secondly by not claiming the same in the original return for the AY 2006-07 and thirdly by filing an appeal against this addition and afterwards withdrawing the same.

3. Whether on the facts & in the circumstances of the case, the Ld.CIT(A) has erred in law by failing to appreciate the facts discussed in detail in the penalty order u/s 271(1)(c ) of the Act, regarding assessee deliberately claiming various non-allowable expenses.

4. Whether on the facts & in the circumstances of the case, the Ld.CIT(A) has erred in law and failed to appreciate the decision of the Ld.CIT(A) in the quantum appeal of the case wherein the appeal of the assessee was dismissed.

5. The appellant craves to be allowed to add any fresh grounds of appeal and/or delete or amend any of the grounds of appeal."

6. We have heard Ms.Priyanka Pareek, CA the Ld.Counsel for the

assessee and Shri P.Damkanunjna, Ld.Sr.D.R. on behalf of the Revenue.

7. On a careful consideration of the facts and circumstances of the case,

on a perusal of material on record, orders of lower authorities, we hold as

follows.

8. The ground on which the AO levied penalty u/s 271(1)(c ) of the Act is

that the assessee has furnished inaccurate particulars of income. We find

that the assessee had filed its return of income, where it enclosed a tax

audit report u/s 44AB of the Act. In this tax audit report in Annexure E,

the factum in delay in deducting the TDS was disclosed. To that extent, in

our view, there is no concealment of income. Coming to the point that the 4

assessee had not suo moto disallowed this claim of expenditure u/s 40(a)(ia)

of the Act and u/s 40(a), we are of the view that the explanation given by the

assessee, that it was a genuine mistake has force. The explanation given

is bonafide. Under the circumstances we uphold the order of the First

Appellate Authority and dismiss this appeal of the Revenue.

9. In the result, the appeal filed by the Revenue stands dismissed.

Order pronounced in the Open Court on 08th May, 2015.

Sd/- Sd/- (C.M. GARG) (J. SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER

Dated: the 08th May, 2015

· Manga

Copy forwarded to: -

1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY

By Order,

ASSISTANT REGISTRAR