ITO, New Delhi v. M/s. JRK Construction Pvt. Ltd., New Delhi

ITA 2275/DEL/2010 | 2006-2007
Pronouncement Date: 28-02-2011 | Result: Dismissed

Appeal Details

RSA Number 227520114 RSA 2010
Assessee PAN AABCJ5199B
Bench Delhi
Appeal Number ITA 2275/DEL/2010
Duration Of Justice 9 month(s) 14 day(s)
Appellant ITO, New Delhi
Respondent M/s. JRK Construction Pvt. Ltd., New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 28-02-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 28-02-2011
Date Of Final Hearing 25-02-2011
Next Hearing Date 25-02-2011
Assessment Year 2006-2007
Appeal Filed On 14-05-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D : NEW DELHI BEFORE SHRI C.L.SETHI JM AND SHRI B.C.MEENA AM ITA NO.2275/DEL/2010 ASSESSMENT YEAR : 2006-07 INCOME TAX OFFICER WARD-4(2) NEW DELHI. VS. M/S JRK CONSTRUCTION PVT.LTD. 744 MILKHA SINGH MARG ASIAD VILLAGE NEW DELHI 110 048. PAN NO.AABCJ5199B. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAVI RAM CHANDRAN SR.DR. RESPONDENT BY : SHRI SANJEEV NAGPAL ADVOCATE. ORDER PER C.L.SETHI JM : THE REVENUE IS IN APPEAL AGAINST THE ORDER DATED 10.3.2010 OF LEARNED CIT(A) DELETING THE PENALTY AMOUNTING TO `3 50 454/- LEVIED BY THE AO IN RESPECT OF ADDITION OF `10 41 165/- U/S 271(1)(C) OF THE IT ACT FOR THE AY 2006- 07. 2. BRIEFLY STATED THE FACTS OF THE CASE AS BORNE OUT FROM THE ORDE RS OF THE AUTHORITIES BELOW ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS ITA-2275/DEL/2010 2 OF CONSTRUCTION. THE RETURN OF INCOME WAS FILED ON 30.11.2006 DECL ARING TOTAL INCOME AT `1 31 051/-. THE ASSESSMENT U/S 143(3) OF THE ACT WAS COMPLETED ON 23.12.2008 DETERMINING TOTAL INCOME AT `18 85 336/- AFT ER MAKING THE FOLLOWING ADDITIONS/DISALLOWANCES:- (A) DISALLOWANCE OUT OF LABOUR CHARGES U/S 40(A)(IA) TO THE EXTENT OF `7 77 978/-. (B) DISALLOWANCE OUT OF EXPENSES PAYABLE U/S 43B TO THE EXTENT OF `8 43 111/-. (C) DISALLOWANCE OUT OF ESI AND EPF U/S 43B AMOUNTING TO `56 761/ - AND (D) DISALLOWANCE OUT OF ELECTRICITY & WATER CHARGES TO THE EXTENT OF `76 345/-. 3. AGAINST THE ASSESSMENT ORDER THE ASSESSEE FILED AN APPEAL BEFOR E THE LEARNED CIT(A). THE LEARNED CIT(A) DELETED THE DISALLOWANCE OF `7 13 000/- MADE BY THE AO U/S 43B OF THE ACT. THE ORDER OF CIT(A) WAS ULT IMATELY UPHELD BY THE TRIBUNAL. THEREAFTER THE AO HAD GIVEN APPEAL EFFECT TO THE APPELLATE ORDERS AND FINALLY DETERMINED THE TOTAL INCOME OF THE A SSESSEE AT `11 72 216/- AS AGAINST `1 31 051/- SHOWN BY THE ASSESSEE. THE AO INITIATED PENALTY PROCEEDINGS IN THE COURSE OF ASSESSMENT PROCEEDINGS. ULTIMATELY THE ITA-2275/DEL/2010 3 AO IMPOSED PENALTY U/S 271(1)(C) AMOUNTING TO `3 50 454/- IN RESPECT OF THE ADDITION OR DISALLOWANCE OF `10 41 165/-. 4. THE FIRST ITEM OF DISALLOWANCE IS OF `56 761/- ON ACCOUNT OF DELA YED PAYMENT OF EMPLOYEES CONTRIBUTION TOWARDS ESI & PF. IT IS NOW W ELL-SETTLED BY THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. VINAY CEMENT (2009) 313 ITR (ST.) 1/(2007) 213 CTR 268 THAT IN THE LIGHT OF THE DELETION OF SECOND PROVISO TO SECTION 43B THE PAYMENT OF EMPLOYEES CONTRIBUTION TOWARDS ESI & PF EVEN IF PAID WITHIN DUE DATE OF TH E FILING OF RETURN OF INCOME SHOULD BE ALLOWED. IN THE PRESENT CASE DISALLOWA NCE WAS MADE BECAUSE THE PAYMENT WAS NOT MADE WITHIN DUE DATE SPECIFIED IN SECTION 36(1)(VA) OF THE ACT. THEREFORE THIS ADDITION IS NOT FIT WH ERE PENALTY U/S 271(1)(C) CAN BE LEVIED. THE LEARNED CIT(A) HAS RIGHTLY DELE TED THIS PENALTY. 5. SECOND ITEM IS DISALLOWANCE OUT OF LABOUR CHARGES TO THE EXTENT OF `7 77 978/- ON THE GROUND THAT THE TAX DEDUCTED AT SOURCE WAS NOT PAID WITHIN TIME. 6. IN THE AUDIT REPORT THIS FACT WAS CLEARLY MENTIONED THAT ASSESSEE HAS NOT COMPLIED WITH THE PROVISIONS OF SECTION 194C AND THEREFORE DISALL OWANCE ITA-2275/DEL/2010 4 OF THE EXPENSES U/S 40(A)(IA) WAS MADE. THE ASSESSEE EXPLAINED THA T WHEN IT WAS POINTED OUT IN THE AUDIT REPORT THAT TAX HAS NOT BEEN PAID W ITHIN TIME THE ASSESSEE IMMEDIATELY DEPOSITED THE AMOUNT OF TDS ON 15.11.200 6 BEFORE FILING THE RETURN OF INCOME WITH A BONA-FIDE BELIEF THAT THE PAYMENT SHALL BE ALLOWED AS A DEDUCTION INASMUCH AS TAX HAS ALREADY BEEN PAID BEFORE FILING OF THE RETURN OF INCOME. THE COPY OF TDS PAYMENT WAS ALSO SUBMITTED BY THE ASSESSEE. THE ASSESSEE HAS CLAIMED THIS DEDUCTION ON THE BONA-FIDE BE LIEF THAT TAX HAS ALREADY BEEN DEPOSITED BEFORE FILING THE RETURN O F INCOME. IN OUR CONSIDERED OPINION THIS IS MERE A DISALLOWANCE OF CLAIM UNDER A PROVISI ON OF LAW CONTAINED IN SECTION 40(A)(IA) OF THE ACT. THEREFORE THE PENALTY U/S 271(1)(C) IS NOT ATTRACTED PARTICULARLY IN VIEW OF THE FACT THA T ALL THE DETAILS OF LABOUR CHARGES AND PAYMENT OF TAX DEDUCTED AT SOURCE HAVE BEEN DULY FURNISHED BY THE ASSESSEE BEFORE THE AO. 7. NEXT ITEM IS DISALLOWANCE OF EXPENSES LEVELED U/S 43B IN RESPE CT OF EXPENSES OF `1 30 081/-. THIS DISALLOWANCE WAS MADE BY THE AO BE CAUSE OF DIFFERENCE OF OPINION AND WHERE THE ADDITION U/S 43B ON ACCOUNT OF GOVERNMENT TAX EPF & ESI WAS HIGHLY DEBATABLE AT THAT POINT OF TIME THE LEVY OF PENALTY ON ANY ISSUE IS LEGALLY NOT CORRECT. ITA-2275/DEL/2010 5 8. NEXT ITEM IS DISALLOWANCE OUT OF ELECTRICITY AND WATER CHARGES TO THE EXTENT OF `76 345/-. IN THIS CONNECTION THE ASSESSEE HAS FURNI SHED ALL THE DETAILS OF ELECTRICITY AND WATER CHARGES. THE DISALLOWANCE HAS BEE N MADE BY TAKING A DIFFERENT VIEW BY THE AO. THE AO DISALLOWED THE HAL F OF THE EXPENDITURE OF `1 52 170/- INCURRED IN RESPECT OF OFFICE CUM RESIDEN CE PREMISES WHERE DIRECTORS WERE ALSO RESIDING. HALF OF THE EXPENSES W ERE TREATED TO BE PERSONAL IN NATURE. HOWEVER THIS MERE DISALL OWANCE OF ELECTRICITY AND WATER CHARGES INCURRED GENUINELY BY THE ASSESSEE FOR PERSONAL USE OF DIRECTORS CANNOT SAID TO BE AN ADDITION OF SUCH A NATURE WHERE PE NALTY U/S 271(1)(C) CAN BE LEVIED. 9. IN THE LIGHT OF THE DISCUSSION MADE ABOVE WE THEREFORE FIND THA T THE ASSESSEE HAS BEEN ABLE TO DISCHARGE ITS BURDEN THAT LAY UPON IT UNDER EXPLANATION (1) TO SECTION 271(1)(C) BY FURNISHING ALL PARTICULARS RE LATING TO THE CLAIM AND BY GIVING BONA-FIDE EXPLANATION THAT THE CLAIM OF VA RIOUS EXPENSES IN THE RETURN OF INCOME WAS MADE BONA-FIDELY. WE DO NOT FIND ANY MATERIAL ON RECORD TO SUGGEST THAT THE ASSESSEE HAS DELIBERATELY CLAIMED TH E UNALLOWABLE EXPENSES WITH A VIEW TO REDUCE ITS TAX LIABILIT Y. THE ASSESSEES CLAIM IN OUR CONSIDERED OPINION CAN BE SAID TO BE A BONA-FIDE ONE IN RESPECT OF WHICH PENALTY U/S 271(1)(C) IS NOT ATTRACTED. IN THIS VIEW OF THE MATTER WE ITA-2275/DEL/2010 6 THEREFORE HOLD THAT THE LEARNED CIT(A) HAS RIGHTLY DELETED THE PENALTY AND NO INTERFERENCE FROM OUR SIDE IS REQUIRED. 10. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS DISMISSE D. DECISION PRONOUNCED IN THE OPEN COURT ON 28 FEBRUARY 2011. SD/- SD/- (B.C.MEENA) (C.L.SETHI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 28.02.2011. VK. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT ASSISTANT REGISTRAR ITA-2275/DEL/2010 7