Shashin Construction Co.,, Ahmedabad vs Department Of Income Tax

BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI RAJPAL YADAV, JUDICIAL MEMBER आयकर अपील सं./ ./ ITA No. 1627/Ahd/2011 िनधा रण वष /Assessment Year: 2007-08 ACIT (OSD), V/s. M/s. Shashin Construction Co., Circle 9 D/802, Status Tower, Opp.

Ahmedabad Doordarshan, Drive-in-road, Ahmedabad PAN : AAFFS 5177 F

अपीलाथ / (Appellant) ू"यथ यथ / (Respondent)

Revenue by : Smt. Sonia Kumar, Sr. DR. Assessee(s) by : Shri G.C. Pipara, AR

सुनवाई क% तार ख/ / Dateof Hearing : 16/06/2015 घोषणा क% तार ख / Date of Pronouncement: 19/06/2015

आदे श/O R D E R

PER G.D. AGRAWAL, VICE PRESIDENT:

This is an appeal filed by the Revenue and is directed against the order of the Ld. Commissioner of Income-tax(Appeals)-XV, Ahmedabad dated 13.04.2011, pertaining to Assessment Year 2007-08.

2. The only ground raised in this appeal by the Revenue is against the deletion of the penalty of Rs.6,40,687/- which was levied by the Assessing Officer u/s 271(1)(c) of the Income-tax Act.

3. The penalty has been levied on account of disallowance u/s 40(a)(ia) and disallowance of donation. The CIT(A) cancelled the penalty with the following observation:-

3. From the facts of this cases, it is seen that the AO imposed penalty on the addition made u/s 40(a)(ia) of Rs.19,03,405 in the order passed u/s 143(3) on 15.12.2009. The order itself shows that on payments made totaling to ITA No. 1627/Ahd/2011 ACIT vs. Shashin Construction Co For AY 2007-08 2

Rs.13,81,860/- TDS was deducted but deposited late in government account and on interest payment of Rs.2,67,409/- and laboratory payment of Rs.2,78,743 no TDS had been deducted at all. In my view late deposit of TDS and non-deduction of TDS from interest and laboratory payments constitutes only a technical breach of law for which penalty u/s 271(1)(c) is not warranted. Similarly in my view out of disallowances of donation penalty is not leviable as a mere disallowance as no malafide stands proved on the part of the appellant and the mistake and its admission can be treated bonafide. The AO is directed to delete the penalty imposed."

4. After considering the arguments of both the sides and facts of the case, we do not find any infirmity in the order of the CIT(A). The major addition was on account of disallowance u/s 40(a)(ia) for the failure of the assessee to deduct tax at source. We find that the Hon'ble jurisdictional High Court in the case of CIT vs. L G Chaudhary, vide Tax Appeal No.536 of 2012, decided this issue in favour of the assessee. The relevant portion of the judgment of Hon'ble jurisdictional High Court reads as under:-

"We heard learned counsel, Ms. Paurami Sheth for the appellant and senior counsel, Mr. Soparkar for the respondent. Learned counsel, Ms. Sheth has argued that the Tribunal had failed to see that the assessee had failed to deduct the TDS as per law which was also deposited late and on such disallowance as has been confirmed by both CIT (Appeals) and ITAT and therefore, the imposition of penalty by Assessing Officer was just and proper. Per contra, learned senior counsel submitted that none of the elements of Section 271(1)(c) get attracted in case of the respondent assessee. On due consideration of the submissions of both sides and on examining the orders of all the authorities, we find no reason to interfere in this appeal in as much as both the authorities namely CIT(A) and ITAT have rightly deleted the penalty observing that the disallowance was due to non-payment of TDS, which was at the most a technical default. There being nothing to indicate any concealment of the income or furnishing of inaccurate particulars of income by the assessee, the Assessing Officer was rightly not justified in levying the penalty."

5. Respectfully following the above, we agree with the CIT(A) that the levy of penalty u/s 271(1)(c) for disallowance u/s 40(a)(ia) made only on the ground of failure of the assessee to deduct the tax at source is not justified.

ITA No. 1627/Ahd/2011 ACIT vs. Shashin Construction Co For AY 2007-08 3

6. The other disallowance was on account of donation and charity amounting to Rs.60,253/-. That merely because the donation given by the assessee during the course of carrying on of his business has been claimed as revenue expenditure by the assessee and disallowed by the Assessing Officer will not be sufficient to levy the penalty u/s 271(1)(c). While taking this view, we derive support from the decision of Hon'ble Apex Court in the case of CIT Vs. Reliance Petroproducts Pvt. Ltd, reported in [2010] 322 ITR 158 (SC). We, therefore, respectfully following the decisions of Hon'ble jurisdictional High Court in the case of L G Chaudhary (supra) and Hon'ble Apex Court in the case of Reliance Petroproducts Pvt. Ltd. (supra), uphold the order of the CIT(A) and dismiss the appeal filed by the Revenue.

7. In the result, the Revenue's appeal is dismissed.

Order pronounced in the Court on 19th June, 2015 at Ahmedabad.

Sd/- Sd/-

(RAJPAL YADAV) (G.D. AGRAWAL) JUDICIAL MEMBER VICE-PRESIDENT Ahmedabad; Dated 19/06/2015 Biju T., PS

षत Copy आदे श क% ूितिल,प अमे,षत/ of the Order forwarded to : 1. अपीलाथ / The Appellant 2. ू"यथ / The Respondent. 3. संबंिधत आयकर आयु. / Concerned CIT 4. आयकर आयु.(अपील) / The CIT(A)

5. ,वभागीय ूि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