NAYAN C. SHAH Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) This appeal under section 260A of the Income Tax Act, 1961 (hereinafter referred to as "the Act") is directed against the order dated 07.03.2012 passed by the Income Tax Appellate Tribunal, Ahmedabad Bench "C", Ahmedabad (hereinafter referred to as the "Tribunal") in ITA No.2822/Ahd/2011, whereby the appeal preferred by the revenue has been dismissed.

(2.) This court, by an order dated 18.03.2014, admitted the appeal on the following substantial question of law:

(3.) The assessee, a partnership firm is engaged in the business of construction. During the course of assessment proceedings, the Assessing Officer, on verification of details submitted in respect of labour payment, noticed that in some cases, the tax deducted at source from certain parties to whom labour payments were made, were not deposited into Government account as per the provisions of section 200(1) of the Act. He, therefore, held that the assessee had clearly violated provisions of section 40(a)(ia) of the Act and accordingly, made a total addition of Rs.13,20,588/- to the total income of the assessee. The Assessing Officer, thereafter, initiated penalty proceedings by issuance of notice under section 274 read with section 271 of the Act on 24.10.2008 to the respondent assessee. The assessee submitted its reply in response to the show cause notice the details whereof are reproduced in paragraph 2 of the impugned order. The Assessing Officer, however, was not convinced by the reasons put forth by the assessee and accordingly, levied minimum penalty of Rs.4,44,510/- under section 271(1)(c) of the Act. The assessee carried the matter in appeal before the Commissioner of Income Tax (Appeals), who by an order dated 16.09.2011, allowed the appeal by holding that out of an amount of Rs.13,20,588/-, tax was deducted at source in respect of Rs.6,18,300/- and was deposited in the Government account on 24.04.2006, that is, before the due date of filing of return and thus, was covered by the decision of the Tribunal in Kanubhai Ramjibhai v. ITO, 49 DTR 70 (Ahd)(Trib.). As regards the balance amount of TDS,the Commissioner (Appeals) took note of the fact that the same was deposited in the Government account on the amount of Rs.13,20,588/- on 1.12.2008 and was allowable in assessment year 2007-08, and was accordingly of the view that no penalty is warranted under section 271(1)(c) of the Act for technical breach of law and deleted the penalty imposed by the Assessing Officer. The revenue carried the matter in appeal before the Tribunal, which held that the assessee had suppressed the actual particulars of income by not making disallowance under section 40(a)(ia) of the Act and restored the penalty order passed by the Assessing Officer. Being aggrieved, the appellant assessee has preferred the present appeal.