P.S.R. Associates,, Kakinada v. THE JCIT,, Visakhapatnam

ITA 132/VIZ/2015 | 2009-2010
Pronouncement Date: 22-11-2017 | Result: Partly Allowed

Appeal Details

RSA Number 13225314 RSA 2015
Assessee PAN VPNPO0899D
Bench Visakhapatnam
Appeal Number ITA 132/VIZ/2015
Duration Of Justice 2 year(s) 7 month(s) 6 day(s)
Appellant P.S.R. Associates,, Kakinada
Respondent THE JCIT,, Visakhapatnam
Appeal Type Income Tax Appeal
Pronouncement Date 22-11-2017
Appeal Filed By Assessee
Tags No record found
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 22-11-2017
Assessment Year 2009-2010
Appeal Filed On 16-04-2015
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM . . . BEFORE SHRI V. DURGA RAO JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH ACCOUNTANT MEMBER . / I . T .A.NO. 132 /VIZ/ 201 5 ( / ASSESSMENT YEAR: 20 09 - 1 0 ) M/S P.S.R.ASSOCIATES OPP.BOAT CLUB PITHAPURAM ROAD KAKINADA [ PAN : VPNPO0899D] VS. THE J CIT RANGE - 6(TDS) VISAKHAPATNAM ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHRI G.V.N.HARI AR / RESPONDENT BY : S HRI M.K.SETHI DR / DATE OF HEARING : 1 6 . 11 .2017 / DATE OF PRONOUNCEMENT : 22 . 11 .2017 / O R D E R PER D.S. SUNDER SINGH ACCOUNTANT MEMBER : 1 . THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME - TAX (APPEALS) - 2 [CIT(A)] VISAKHAPATNAM VIDE 2 ITA NO . 132 /VIZ/201 5 P.S.R.ASSOCIATES KAKINADA ITA NO. 0043 / 0728 /1 3 - 1 4/JT.CIT R - 6(TDS)/VSP/14 - 15 DATED 27 . 02 .2015 FOR THE ASSESSMENT YEAR 20 09 - 1 0 . 2. THE ASSESSEE FILED THE ORIGINAL GROUND S CHALLENGING THE PENALTY IMPOSED BY THE AO U/S 271C OF I.T.ACT. SUBSEQUENTLY VIDE PETITION DATED 20.10.2017 THE ASSESSEE HAS RAISED THE FOLLOWING ADDITIONAL GROUNDS : A. WHETHER THE ORDER PASSED U/S 271C IS BARRED BY LIMITATION AS PER THE PROVISIONS OF S.275(1)(C) OF THE INCOME TAX ACT 1961 AND HENCE THE PENALTY ORDER IS LIABLE TO B E CANCELLED? B. WHETHER THE JOINT COMMISSIONER OF INCOME TAX IS JUSTIFIED IN LEVYING THE PENALTY U/S 271C WHEN THE ASSESSEE IS NOT HELD TO BE DEEMED TO BE IN DEFAULT U/S 201(1) OF THE INCOME TAX ACT 1961? THE ADDITIONAL GROUND S ARE ALSO RELATED TO THE IMPOSITION OF PENALTY U/S 271C OF I.T.ACT BUT RAISED THE VALIDITY OF IMPOSING PENALTY U/S 271C WITHOUT TREATING THE ASSESSEE AS ASSESSEE IN DEFAULT U/S 201(1) OF THE I.T.ACT. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER ( AO) FOUND THAT THE ASSESSEE HAS NOT DEDUCTED THE TDS ON CERTAIN PAYMENTS WHICH ATTRACTS THE TAX DEDUCTION AT SOURCE AND MADE SHORT DEDUCTION IN RESPECT OF CERTAIN PAYMENTS. THE S HORT DEDUCTION WAS MADE U/S 194I OF I.T.ACT AND NON DEDUCTION WAS MADE U/S 19 4C ON SUB CONTRACTS. THE JOINT C OMMISSIONER OF INCOME TAX (JCIT) RANGE - 6(TDS) VISAKHAPATNAM HAS PASSED THE ORDER U/S 271C IMPOSING PENALTY OF RS.14 76 479/ - FOR SHORT 3 ITA NO . 132 /VIZ/201 5 P.S.R.ASSOCIATES KAKINADA DEDUCTION / NON DEDUCTION OF TAX AT SOURCE. AGGRIEVED BY THE ORDER OF THE JT.CIT THE ASSESSEE WENT ON APPEAL BEFORE THE CIT (A) AND THE LD.CIT (A) DELETED THE PENALTY IMPOSED ON SHORT DEDUCTION AMOUNTING TO RS.11 57 677/ - AND CONFIRMED THE PENALTY ON NON DEDUCTION OF TAX AT SOURCE TO THE TUNE OF RS.3 18 802/ - . 3. AGGRIEVED BY THE ORDER OF THE LD.CIT(A) THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. DURING THE APPEAL HEARING THE LD.AR SUBMITTED THAT THE ASSESSEE MADE THE PAYMENTS FOR HIRE CHARGES AND SUB CONTRACT PAYMENTS BUT ACCOUNTED THE SAME INADVERTENTLY IN THE SOIL PURCHASE ACCOUNT THOUGH THE SAME REPRESENT ED THE SUB CONTRACT PAYMENTS. DUE TO I NCLUSION OF SUB CONTRACTS ACCOUNTS IN THE SOIL PURCHASE ACCOUNT THE ASSESSEE WAS UNDER THE IMPRESSION THAT THE PAYME NT REPRESENTED THE PURCHASES AND HENCE THE TDS WAS NOT MADE . FURTHER THE LD.AR SUBMITTED THAT THE ASSESSEE HAS DEDUCTED THE TDS OF ALL THE REMAINING PAYMEN TS EXCEPT THE SOIL PURCHASE ACCOUNT WHICH EVIDENCES THE BONAFIDE S OF THE ASSESSEE. THEREFORE THE LD.AR ARGUED THAT DUE TO INCLUSION OF PAYMENT IN THE SOIL PURCHASE ACCOUNT IT HAS SKIPPED THE VERY ATTENTION OF ASSESSEE FOR DEDUCTION OF TAX AT SOURCE AND ARGUED THAT THIS IS A REASONABLE CAUSE HENCE REQUESTED TO CANCEL THE PENALTY IMPOSED BY THE AO . THE LD.AR FURTH ER 4 ITA NO . 132 /VIZ/201 5 P.S.R.ASSOCIATES KAKINADA ARGUED THAT SECTION 271C SHOULD BE R.W.S. 273B AND IF THERE IS REASONABLE CAUSE THERE IS NO REASON TO IMPOSE THE PENALTY. IN THIS CASE THE LD.AR ARGUED THAT HAVING DED UCTED THE TDS ON ALL PAYMENTS EXCEPT THE SUB CONTRACT PAYMENTS WHICH WERE INCLUD ED IN THE SOIL PURCHASE ACCOUNT MIST AKE IN BONAFIDE AND HENCE REQUESTED TO CANCEL THE PENALTY 4. ON THE OTHER HAND LD.DR ARGUED THAT ACCOUNT ING OF SUB CONTRACT PAYMENT IN SOIL PURCHASE ACCOUNT ITSELF IS INCORRECT CLASSIFICATION AND ARGUED THAT THE CIT(A) HAS RIGHTLY UPHELD TH E ORDER OF TH E AO WHICH REQUIRE NO INTERFERENCE. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. THE ASSESSEE HAS NOT DEDUCTED THE TDS ON SUB CONTRACT PAYMENTS AMOUNTING TO RS.38 12 952/ - ON WHICH THE PENALTY WAS IMPOSED BY THE JCIT AND CONFIRMED BY THE LD.CIT (A) . THE ASSESSEE HAS DEDUCTED THE TDS ON A LL THE PAYMENTS EXCEPT SHORT DEDUCTION AND NON DEDUCTION TO THE EXTENT OF PAYMENTS INCLUDED IN THE PURCHASE ACCOUNT THERE WAS NO OTHER DEFAULT IN RESPECT OF COMPLYING THE PROVISIONS OF TD S BY THE ASSESSE AND THIS FACT WAS NOT DISPUTED BY THE AO . THE AO ALSO DID NOT TREAT THE ASSESSEE AS ASSESSEE IN DEFAULT U/S 201 (1) AND 201(1 A ) OF I.T.ACT FOR ANY OTHER NON COMPLIANCE 5 ITA NO . 132 /VIZ/201 5 P.S.R.ASSOCIATES KAKINADA OF THE PROVISIONS OF TDS INCLUDING THE PRESENT ISSUE OF NON DEDUCTION OF TAX AT SOURCE. THE ASSESSEE HAS DEBITED THE PAYMENTS IN SOIL PURCHASE ACCOUNT INSTEAD OF SUB CONTRACT PAYMENTS WHICH IS EVIDENCED BY THE ASSESSMENT ORDER. AS PER SECTION 271B OF I.T. ACT NO PENALTY SHALL BE IMPOSED IF THE ASSESSEE PROVES THAT THERE IS REASONABLE CAUSE FOR THE FAILURE OF THE ASSESSEE. IN THE INSTANT CASE THE TAX H AS NOT DEDUCTED THE TDS DUE TO WRONG CLASSIFICATION OF THE PAYMENTS MADE WHICH WAS INCLUDED UNDER THE HEADING PU RCHASES AND THE P URCHASES DO NOT ATTRACT THE TDS WHEREAS THE SUB CONTRACT PAYMENTS ATTRACT TDS. SINCE THE PAYMENTS WERE INCLUDED IN THE PURCHASES ACCOUNT WHICH DOES NOT ATTRACT THE TDS THE ASSESSEE COULD NOT TAKE IMMEDIATE ATTENTION AND DEDUCT THE TD S . SINCE THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE IN RESPECT OF OTHER TDS PAYMENTS WE HOLD THE EXPLANATION OFFERED BY THE ASSESSEE IS REASONABLE. THE ASSESSEE ALSO EXPLAINED THAT THE SAID EXPLANATION COULD NOT BE TAKEN BEFORE THE AO AS WELL AS TH E LD.CIT(A) DUE TO OVERSIGHT. THEREFORE WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEES EXPLANATION OF INCLUSION OF SUB CONTRACT PAYMENTS IN THE SO IL PURCHASE ACCOUNT SKIPPED THE ATTENTION OF THE ASSESSEE FOR DEDUCTION OF TAX AT SOURCE APPEARS TO B E GENUINE AND REASONABLE. ACCORDINGLY WE SET ASIDE THE ORDER OF THE LD.CIT (A) AND CANCEL 6 ITA NO . 132 /VIZ/201 5 P.S.R.ASSOCIATES KAKINADA THE PENALTY IMPOSED BY THE AO U/S 271(1)(C) FOR NON DEDUCTION OF TAX AT SOURCE. APPEAL OF THE ASSESSEE ON THIS GROUND IS ALLOWED. 6. THE ASSESSEE HAS RAISED ADDITI ONAL GROUND WITH REGARD TO THE LIMITATION OF PASSING THE PENALTY ORDER U/S 271 C AND THE VALIDITY OF IMPOSING THE PENALTY U/S 271C WITHOUT DEEMING THE ASSESSEE AS ASSESSEE IN DEFAULT WHICH WAS NOT ARGUED BY L D.A.R HENCE BOTH THE GROUNDS ARE DISMISSED AS N OT PRESSED. 7 . IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY ALLOWED . THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 22 ND NOV 2017 . SD/ - SD/ - ( . ) ( . . ) (V. DURGA RAO) ( D.S. SUNDER SINGH ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /VISAKHAPATNAM /DATED : 22 . 11 .2017 L. RAMA SPS 7 ITA NO . 132 /VIZ/201 5 P.S.R.ASSOCIATES KAKINADA / COPY OF THE ORDER FORWARDED TO: - 1. / THE APPELLANT - P.S.R.ASSOCIATES OPP.BOAT CLUB PITHAPURAM ROAD KAKINADA 2 . / THE RESPONDENT THE J CIT RANGE - 6 (TDS) VISAKHAPATNAM 3. THE COMMISSIONER OF INCOME TAX - (TDS) VI JAYAWADA 4 . THE COMMISSIONER OF INCOME TAX (APPEALS) - 1 VISAKHAPATNAM AND RAJAHMUNDRY 5 . / DR ITAT VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT VISAKHAPATNAM