Shriram Chits (Maharashtra) Ltd, ... vs Assessee

आयकर अपील य अ धकरण, मुंबई यायपीठ "ई" मुंबई IN THE INCOME TAX APPELLATE TRIBUNAL" E" BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN (AM) AND AMIT SHUKLA, (JM) सव ी बी.आर.बा करन, लेखा सद य एवं अ मत शु ला, या यक सद य के सम

आयकर अपील सं./I.T.A. No.1853/Mum/2012 ( नधारण वष / Assessment Year :2008-09)

M/s Shriram Chits (Maharashtra) बनाम/ Dy. Commissioner of Income Tax Ltd, Circle 3(3), Vs. C/o Shankarlal Jain and Mumbai.

Associates, 12, Engineer Building, 265, Princess Street, Mumbai-400002 (अपीलाथ /Appellant) .. ( यथ / Respondent)

थायी ले ख ा सं . /जीआइआर सं . /PAN/GIR No. :AAECS7592Q

अपीलाथ ओर से / Appellant by Shri S L Jain यथ क ओर से/Respondent by Smt. N V Nadkarni

सन ु वाई क तार ख / Date of Hearing : 21.4.2015 घोषणा क तार ख /Date of Pronouncement : 29. 4.2015

आदे श / O R D E R

PER B.R. BASKARAN (AM)

The assessee has filed this appeal challenging the order dated 01- 11-2011 passed by ld. CIT(A)-7, Mumbai and it relates to the assessment year 2008-09. The assessee is aggrieved by the decision of Ld.CIT(A) in confirming the penalty of Rs.6,04,548/- levied u/s 271(1)(c) of the Income Tax Act, 1961 (The Act) on the disallowance of Rs.8,89,306/- made by the AO in the quantum assessment proceedings.

2. We heard the parties and perused the record. The assessee company is engaged in chit fund business. The AO noticed that the 2 I T A N o . 1 8 5 3 / Mu m / 2 0 1 2

assessee has written off certain debit balances and claimed the same as deduction. On verification of the details of the same, the AO noticed that the assessee has written off TDS of earlier years to the tune of Rs.8.98,306/-. Since the taxes paid will not be allowed as deduction, the assessing officer disallowed the said claim and the same was also accepted by the assessee. The AO levied penalty of Rs.6,04,548/- on the above said amount @ 200% of the tax sought to be evaded. The Ld CIT(A) also confirmed the said penalty by placing reliance on the decision of Hon'ble Delhi High Court in the case of Zoom Communications Pvt Ltd (40 DTR (Del) 249).

3. However, according to the Ld. A.R, the assessee has written off the TDS amount to be received from the income tax department as refund and since it was not received for a long time, the assessee decided to write it off. the Ld A.R further submitted that the same was allowable as business expenditure, since the TDS was deducted from its income in the normal course. Accordingly the Ld A.R contended that the disallowance of the above said claim is a debatable one and hence the same will not lead to penalty u/s 271(1)(c) of the Act. He further submitted that the assessee has agreed for the addition to purchase peace and on that count also, the same could not lead to penalty. The Ld A.R also submitted that the assessee has neither concealed particulars of income nor furnished inaccurate particulars of income. Accordingly he prayed for deletion of the penalty.

4. On the contrary, the Ld D.R placed strong reliance on the order passed by Ld CIT(A).

3 I T A N o . 1 8 5 3 / Mu m / 2 0 1 2

5. Having heard rival contentions, we are of the view that there is merit in the contentions of the assessee. There is no dispute with regard to the fact that the assessee has written off the TDS receivable account, which according to the assessee is the tax amount receivable from the income tax department and the same represents the amount paid by or on behalf of the assessee over and above the amount of tax due from it. So, in our view, the said excess amount partakes the character of Advance payment and would not assume the character of "tax". Hence, we agree with the contentions of the assessee that the question whether the deduction claimed by the assessee by writing off the amount of tax due from income tax department is allowable as deduction or not is a debatable question, where two views are possible. Hence, in our view, there is merit in the contentions of the assessee that the said claim will not lead to levy of penalty u/s 271(1)(c) of the Act. In view of the above, we are of the view that the Ld CIT(A) was not justified in confirming the penalty levied by the AO. Accordingly, we set aside his order and direct the assessing officer to cancel the impugned penalty.

6. In the result, the appeal filed by the assessee is allowed.

The above order was pronounced in the open court on 29th Apr, 2015.

घोषणा खल ु े यायालय म दनांकः29th Apr, 2015 को क गई ।

Sd sd (अ मत शु ला / AMIT SHUKLA) (बी.आर.बा करन / B.R. BASKARAN) या यक सदस ्य / JUDICIAL MEMBER लेखा सद य / ACCOUNTANT MEMBER

मुंबई Mumbai: 29th Apr,2015.

व. न.स./ SRL , Sr. PS 4 I T A N o . 1 8 5 3 / Mu m / 2 0 1 2

आदे श क त ल प अ े षत/Copy of the Order forwarded to :

1. अपीलाथ / The Appellant

2. यथ / The Respondent.

3. आयकर आयक ु ् त(अपील) / The CIT(A)- concerned

4. आयकर आयु त / CIT concerned

5. वभागीय त न ध, आयकर अपील य अ धकरण, मब ुं ई / DR, ITAT, Mumbai concerned

6. गाड फाईल / Guard file.

आदे शानस ु ार/ BY ORDER, True copy सहायक पंजीकार (Asstt. Registrar) आयकर अपील य अ धकरण, मुंबई /ITAT, Mumbai