Appeal dismissed for delay, another allowed for re-examination of penalty under Section 271(1)(c).

The appeal in ITA No. 6002/Mum/2017 was dismissed due to a delay of 2119 days in filing. However, the appeal in ITA No. 6001/Mum/2017 was allowed for statistical purposes, with the penalty issue remanded to the AO for fresh adjudication. The penalty imposed under Section 271(1)(c) for non-deduction of TDS was set aside, and the case was directed back to the AO for re-examination based on the explanations provided by the assessee.

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Issues Involved:
1. Disallowance of expenses under Section 40(a)(ia) of the Income-tax Act, 1961 due to non-deduction of TDS under Section 194C.
2. Condonation of delay in filing the appeal against quantum assessment.
3. Imposition of penalty under Section 271(1)(c) of the Income-tax Act, 1961.

Detailed Analysis:

1. Disallowance of Expenses Under Section 40(a)(ia):

Clearing and Forwarding Charges:
The assessee claimed that the C&F charges of Rs. 1,33,569 were paid to M/s Rajgor Shipping Agency, which were disallowed by the AO due to non-deduction of TDS under Section 194C. The assessee argued that since the income component in the total payment was less than Rs. 50,000, disallowance was not warranted. However, the AO held that TDS is required on the total payment.

Terminal Handling Charges:
The assessee paid Rs. 1,54,028 to M/s Swift Freight (I) P. Ltd. for terminal handling charges. The AO disallowed this amount due to non-deduction of TDS under Section 194C, relying on CBDT circular number 715 dated 08.08.1995.

Courier and Parcel Charges:
The assessee paid Rs. 98,307 to KMB Services for courier and parcel charges, which were disallowed due to non-deduction of TDS under Section 194C. The AO rejected the assessee's contention that courier charges are akin to postage and hence not subject to TDS, relying on CBDT circular number 715 dated 08.08.1995.

Transport and Hamali Charges:
The assessee paid Rs. 1,29,740 to M/s Sunil Transport Services and Rs. 85,131 to Mr. Pratap Shinde for transport and hamali charges. The AO disallowed these payments due to non-deduction of TDS under Section 194C, stating that the payments exceeded the threshold limits.

2. Condonation of Delay in Filing the Appeal:

The assessee filed an appeal with the tribunal on 25.09.2017, delayed by 2119 days beyond the limitation period stipulated under Section 253(3). The main reason for the delay was the advice from the consultant regarding the amendments made in Section 40(a)(ia) by the Finance Act, 2012, which were held to be retrospective. The tribunal found that no sufficient cause was made out by the assessee to condone the delay, as no cogent material was provided to demonstrate that the payee had included such income in their return and paid due taxes. The appeal was dismissed on this ground.

3. Imposition of Penalty Under Section 271(1)(c):

Penalty Imposed by AO:
The AO imposed a penalty of Rs. 3,71,334 (200% of the tax sought to be evaded) due to the disallowance of expenses under four heads for non-deduction of TDS under Section 194C. The AO held that the assessee's audit report and computation statement constituted inaccurate particulars.

Appeal Against Penalty:
The assessee argued that the expenses included reimbursement of expenses and service tax, on which TDS was not required. The assessee claimed a bonafide belief that TDS was to be deducted only on the income component. The tribunal found that the invoices required verification and that the assessee deserved an opportunity to explain its case. The issue was set aside and restored to the AO for fresh adjudication.

CIT(A) Decision:
The CIT(A) confirmed the penalty, stating that no bonafide belief was pleaded by the assessee. The tribunal allowed the appeal for statistical purposes, directing the AO to re-examine the evidence and explanations provided by the assessee.

Conclusion:

- Appeal in ITA No. 6002/Mum/2017: Dismissed due to the delay of 2119 days.
- Appeal in ITA No. 6001/Mum/2017: Allowed for statistical purposes, with the issue of penalty being remanded to the AO for fresh adjudication.

Order Pronounced:
The order was pronounced in the open court on 27.03.2019.

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