TMI Blog2016 (9) TMI 437X X X X Extracts X X X X X X X X Extracts X X X X ..... under this Section are made on the basis of deeming provision held that legal fiction created U/s 40(a)(ia) cannot be extended for levy of penalty U/s 271(1)(c) of the Act as the deeming provision inserted for specific purposes. The case laws relied upon by the assessee are squarely applicable, therefore, we uphold the order of the ld CIT(A). - Decided against revenue. - ITA No. 148/JP/2013 - - - Dated:- 31-5-2016 - Shri T. R. Meena, AM And Shri Laliet Kumar, JM Revenue by : Shri S.K. Jain (DCIT) Assessee by : Shri Binod Gupta. ORDER Per T. R. Meena, A. M. This is an appeal filed by the revenue against the order dated 27/11/2012 of the learned C.I.T.(A)(Central), Jaipur for A.Y. 2006-07. The sole effective ground of appeal is as under:- 1. On the facts and in the circumstances of the case, the ld CIT(A), Central, Jaipur has erred in deleting the penalty of ₹ 28,80,261/- on the additional of ₹ 70,48,481 ₹ 1,00,370/- made by the A.O. by invoking Section 40(a)(ia) and ₹ 44,02,000/- on account of contingent liability, which were confirmed by the CIT(A) also, though by claiming such deduction the assessee has under stated its tot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Section 40(a)(ia) of the Act. The assessee s reply on bonafideness has not found convincing to the Assessing Officer as claimed by the assessee that the return was filed on the basis of advice of the Chartered Accountant but the ld Assessing Officer held that ignorance of law is no excuse. The Assessing Officer had evaluated provisions of Section 40(a)(ia) of the Act. He further held that the assessee did not contest the certain additions before the appellate authority as he was aware of the contravention of the provisions of IT law and could not have escaped the rigours by any means or method. The assessee had not brought on record any evidence in support of its contention nor had the assessee put forth any argument whereby the onus cast upon it in respect of its innocence and righteous conduct is established. The case laws cited by the assessee are also not squarely applicable. He further relied on the decision in the case of Union of India Vs. Dharmendra Textiles Processors 295 ITR 244 (SC) wherein it has been held that penalty U/s 271(1)(c) of the Act is a civil liability and the willful concealment is not an essential ingredient for attracting civil liability. Therefore, he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l invite penalty under section 271 (1)(c). That is clearly not the intendment of the legislature. Keeping in view the proposition of law laid down by Hon ble Supreme Court, the penalty u/s 271(1)(c) of IT Act cannot be imposed on such disallowance of ₹ 44044000/-. iii. As regards another disallowance/ addition of ₹ 118370/- and 30400/- total for ₹ 148770/-. It is noted that such expenses were not at all allowable to the appellant. As regards the claim of donation of ₹ 118370/ this is not an allowable expenses. Similarly regarding disallowance of ₹ 30400/- the appellant has claimed higher depreciation on books whereas depreciation was to be allowed at lower rate. The essential point to be noted is that the appellant has failed to furnish any bona fide explanation as to why such claim were made when specifically such claims are not allowable. It is not a case where there can be two opinions on the allowability of such claim. Therefore prima facie such claim was wrong and incorrect and by making wrong claim the appellant concealed his income to the extent of ₹ 148770/-. Therefore penalty u/s 271(1)(c) of IT Act on such quantum addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses under both the heads has not been doubted by the lower authorities. The issue is debatable whether this expense is allowable or not during the year under consideration. This item was added in the TDS list w.e.f. 01/4/2005 and there was a confusion and ambiguity regarding interpretation, which is evident from the fact that by Finance Act, 2008, a retrospective amendment was made to this section, further amendment was made to this section by Finance Act, 2010. The said amendment has further been held as clarificatory in nature by various courts and held that same is effective from 01/4/2005. The Auditor also had not pointed out that on this amount TDS is liable to be deducted in audit report. The assessee had explained the reasons for not considering this amount in the income, which was bonafide. That recipient were not under the tax net as their income was below taxable limit, therefore, the assessee was to get the form NO. 15G/15H but which could not be collected but subsequently the TDS was collected and deposited in government account. The ld AR has further argued that the genuineness of the expenses has not been doubted by the lower authorities and explanation submitted by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further relied on the decision of Hon ble Ahmadabad ITAT in the case of Devpras Institute Vs. ITO ITA No. 1743/Ahd/2012 dated 23/11/2012 wherein it has been held that disallowance made under the provisions of Section 40(a)(ia) but genuineness of payments have not been doubted, therefore by relying on the Hon'ble Supreme Court decision in the case of Reliance Petroproducts Pvt. Ltd. (supra), appeal was decided in favour of the assessee. He further relied on the following case laws:- (i) ACIT Vs Seaways Shipping Ltd. in appeal No. 80/H/2011 Hyderabad Bench of ITAT. (ii) ITAT Ahmadabad in ITO Vs M/s Lucky Star International ITA No. 1041/Ahd/2010 dated 12 March, 2012. (iii) Delhi High Court in CIT Vs. AT T Communications Services India (P) Ltd. (2012) 18 taxmann.com 144 (Delhi). (iv) ITAT Delhi in the case of DCIT Vs Asian Hotels Ltd., 2011-TIOL- 795-ITAT-Del (ITA No. 3820/Del/2010 dated January, 7, 2011. (v) ACIT Vs Bhoruka Logistics Pvt. Ltd. (2010) 34 (II) ITCL 552. (vi) ACIT Vs M/s Saraswati Construction Company ITA No. 2865/Ahd/2010. (vii) M.P. Tolls Road Limited, Mumbai Vs. ACIT ITA No. 36/Ind/2012 Indore. (viii) ITAT, Ahmadabad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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