TMI Blog2019 (2) TMI 988X X X X Extracts X X X X X X X X Extracts X X X X ..... However, even after making addition there was still income computed was Nil on account of set-off of brought forward business loss of earlier years. We find that payment of ₹ 51,738 made to M/s. Atharva Landscape included ₹ 3,738 for material and ₹ 48,000 for labour charges, hence, TDS was not required to be made. Similarly, payment of ₹ 32,700 made to M/s. Nirman Projects as consultancy charges, this amount included reimbursement expenses for travelling. Total payment of consultancy charges is at ₹ 29,700 and travelling charges at ₹ 2,700, hence, there was no requirement of deduction of TDS However; the AO has disallowed the same under section 40(a)(ia) of the Act. Even disallowance under section 40(a)(ia), does not amount to concealment of income as held by the Co-ordinate Bench of tribunal in the case of ACIT v. M/s. Medercity Online Pvt. Ltd. [2011 (5) TMI 977 - ITAT HYDERABAD] wherein it was held that where accounts of the assessee are audited and explanation has been offered relating to disallowance under section 40(a)(ia) of the Act, no penalty can be levied under section 271(1)(c) of the Act. Similarly, the assessee has not claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sr. D.R. ORDER PER O. P. MEENA, AM 1. This appeal by the Assessee is directed against the order of learned Commissioner of Income-tax (Appeals)-24 , Mumbai (in short the CIT (A) ) dated 15.09.2017 which in turn has arisen from the penalty order under section 271(1)(c) of Income Tax Act,1961 ( in short of the Act ) passed by the Income Tax Officer, Ward- 15(2)(2) (in short the AO ). 2. Condonation of delay in filing of appeal before Tribunal. 3. At the outset, the learned Counsel submitted that there was a delay of 41 days in filing of the appeal. As the appeal, order was received on 09.10.2017, against which the appeal was to be filed on or before 08.12.2017 as per Limitation Act, whereas the assessee has filed appeal on 18.01.2018 by delay of 41days. The assessee in its petition for condonation of delay has stated that the assessee company has closed down its operation in India and was therefore, seeking legal remedy. It was initially considered that the demand raised under penalty order be cleared to settle the case under Income Tax Act, 1961. However, on consultation the legal experts, the assessee company was advised about the repercussions of paying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the assessee and such omissions/negligence has to be weighed in the light of existing circumstances of each case. It would be the negligence of commission which is a byproduct of a deliberate attempt with mala-fide intention for delay in the process of the litigation which could give some benefit to the litigant, then probably process of litigation which would view some benefit with the litigant then probably that delay would not deserved to be condoned. However, if no mala-fide can be attributed to delay, and that delay will be condonable. The learned counsel for the assessee has placed reliance in the case of Collector, Land Acquisition v. Mst. Katiji Of ₹ 1987 AIR SC1353: 167 ITR 471 (SC) wherein the Supreme Court held that ordinarily delay of each day to be explained but every day delay must be explained does not employ a pedantic approach. The doctrine must be applied is rational, common sense and with pragmatic approach. When substantial justice and technical considerations are pitted against each other, because of substantial justice is to be preferred, for the other side cannot claim to have a vested right is injustice being done because of non-deliberate delay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 143 (3) at Nil after allowing set-off business loss brought forward and making addition /disallowance of ₹ 29,74,078. The AO has made addition/disallowance of ₹ 84,438 under section 40(a)(ia) of the Act being payment on account of labour and consultancy charges as the assessee has failed to deduct TDS thereon. Similarly, an amount of ₹ 13,65,724 was being service tax liability, which was paid in March 2013, and ₹ 4,33,916 being MVAT was paid in January March 2013 being liability of A.Y. 20011-12. Hence, these disallowances of ₹ 17,99,640 were disallowed under section 43B of the Act. Further, the assessee has failed to prove source of cash deposits of ₹ 10,90,000 in bank account hence, same were treated as unexplained cash credit under section 68 of the Act. The AO has also initiated penalty proceedings on these additions/ disallowances. Since the resultant income was at Nil. The assessee has not filed any appeal against quantum addition. Accordingly, the AO has allowed the opportunity of being heard to the assessee during penalty proceedings, but the assessee has failed to furnish any reply of penalty show-cause notice. Under the cir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TJ 398 (Hyderabad) wherein it was held that where accounts of the assessee are audited and explanation has been offered relating to disallowance under section 40(a)(ia) of the Act, no penalty can be levied under section 271(1)(c) of the Act. 13. The learned counsel for the assessee further draw our attention to Paper Book Page No. 67 to 92 being a ledger account of payments relating to service tax and MVAT and submitted that the assessee has followed mercantile system of accounting where the tax liability was treated as capital transaction and reflected in balance sheet. The assessee has not claimed the service tax and MVAT as expenses and delay was not deliberate, therefore, there is no question of any disallowance under section 43B of the Act. The learned counsel for the assessee further submitted that section 43B is not applicable to service tax as held in Pharma Search v. ACIT [2012] 21 taxmann.com 44 (Mumbai-Trib). Further reliance was placed in the case of DCIT v. M/s. M C Retail Pvt. Ltd. I.T.A.No. 419/Mum/2017 dtd.28.09.2018(PB-103) in which it was held that unpaid VAT and service tax liability are not being debited to Profit Loss Account were not claimed as expenditur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P) Ltd. v. ACIT Circle 4(2) Mumbai [2017 88 taxmann.com 777 (Mumbai), and Prince Consultancy (P) Ltd. v. DCIT [2017] 88 taxmann.com 795 ((Mum-Trib) and others as per his written submissions in support of his submissions. In view of above, submissions, the learned counsel for the assessee contended that penalty levied by the AO may please be deleted. 16. Per contra, the ld. Sr. D.R. relied on the orders of lower authorities. 17. We have heard the rival submissions of both the parties and perused the material available on record. A perusal of the assessment and penalty order reveals that the AO has rejected the contentions of the assessee on the basis that the assessee has not deducted TDS, not paid the amount of service tax and MVAT within time and explanation of cash deposits was not convincing. The perusal of the assessment order reveals that the AO has made addition on the basis of facts as disclosed by the assessee in the return of income and during the course of assessment proceedings. We find that the assessee has furnished all relevant facts; therefore, the penalty cannot be levied merely because that it was not acceptable to the AO. Where the explanation is bonafide an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as expenses and delay in deposit with government account was not deliberate therefore, there is no question of any disallowance under section 43B of the Act. However, the AO has not accepted this explanation. Though provisions of section 43B is not applicable to service tax as held in Pharma Search v. ACIT [2012] 21 taxmann.com 44 (Mumbai). Further reliance was placed in the case of DCIT v. M/s. M C Retail Pvt. Ltd. I.T.A.No. 419/Mum/2017 dtd. in which it was held that unpaid VAT and service tax liability are not being debited to Profit Loss Account which were not claimed as expenditure, hence, cannot be added back under section 43B of the Act. Therefore, there was no question of any concealment of income or furnishing of inaccurate particulars of income. With regard cash deposits, we find that the AO has disbelieved this contention of the assessee by observing that there is gap between cash withdrawals and cash deposits and made addition of the same. However, this cannot be ground for addition as held in the case of Gordhan V. ITO [I.T.A.No. 811/Del/2015 dtd. 19.10.15 copy filed] wherein it was held that no addition can be made merely because there was time gap between cash w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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