Shri Purshottam Prabhudas Patel, Ahmedabad V. The ACIT, (OSD), Circle-9, Ahmedabad

CO 172/AHD/2014

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 2752 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 19 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 09-02-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 21-07-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: P M MEHTA; GM THAKOR
• Section: 143(3); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMEDABAD BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.54/AHD/2014 & C.O. NO.172/AHD/2014 (ASSESSMENT YEAR: 2007-08) ACIT(OSD), CIRCLE-9, AHMEDABAD APPELLANT VS. SHRI PURSHOTTAM PRABHUDAS PATEL, (PROP. P. P. PATEL & CO.), 54, RACHNA SOCIETY, NR. JODHPUR CHAR RASTA, SATELLITE, AHMEDABAD 380015 RESPONDENT/CRO SS OBJECTOR PAN: AGXPP1574B /BY REVENUE : SHRI K. MADHUSUDAN, SR. D.R. /BY ASSESSEE : SHRI G. M. THAKOR & SHRI P. M . MEHTA, A.R. /DATE OF HEARING : 31.01.2017 /DATE OF PRONOUNCEMENT : 09.02.2017 ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS REVENUES APPEAL AND ASSESSEES CROSS OBJECTIO N THERETO ARISE FROM THE CIT(A)-XV, AHMEDABADS ORDER DATED 15.10.2 013, PASSED IN APPEAL ITA NO. 54/AHD/14 WITH C.O. NO.172/AHD/14 (ACIT (OS D) VS. SHRI PURSHOTTAM P. PATEL) A.Y. 2007-08 - 2 - NO. CIT(A)-XV/ACIT(OSD)/CIR-9/162/2012-13, IN PROCE EDINGS UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 19 61; IN SHORT THE ACT. 2. THE REVENUES SOLE SUBSTANTIVE GROUND SEEKS TO R EVIVE SECTION 40(A)(IA) DISALLOWANCE OF RS.30,78,700/- MADE BY TH E ASSESSING OFFICER IN THE IMPUGNED RE-ASSESSMENT FRAMED ON 01.11.2012 ON ACCOUNT OF ASSESSEES FAILURE IN NOT REMITTING THE TDS DEDUCTED AS PER TH E SCHEME OF THE ACT. THE REVENUES CASE IS THAT THE CIT(A) HAS ERRED IN DELE TING THE ABOVE STATED DISALLOWANCE AFTER OBSERVING AS UNDER: (B) GROUND NO. 2 TO 8 ARE DESCRIPTIVE WITH FACT, C ASE LAWS ETC. BUT MAINLY AGAINST THE DISALLOWANCE U/S 40(A)(IA) OF THE ACT A ND ADDITION OF RS. 30,78,000/-. IT IS CONTENDED IN THE GROUND THAT TDS WAS DEDUCTED OU T OF SUCH PAYMENT AND PAID BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME H ENCE AS PER JUDICIAL PRONOUNCEMENT AS RELIED ON BY APPELLANT, DISALLOWAN CE AND ADDITION U/S 40(A)(IA) OF THE ACT ARE NOT JUSTIFIED. IT IS UNDISPUTED AS A DMITTED BY A.O. ALSO THAT DUE TDS WAS DEDUCTED OUT OF PAYMENT TO M/S J. J. PATEL BUT THE DISPUTE RELATE TO ITS PAYMENT BEYOND DUE DATE AS STIPULATE UNDER SECTION 200(1) O F THE IT. ACT. I AM INCLINED WITH THE CONTENTIONS OF THE APPELLANT THAT IN THE EVENTU ALITY THAT DUE TDS WAS DEDUCTED AND PAID BEFORE FILLING OF RETURN OF INCOME, THERE REMAINS NO PAYABLE AMOUNT OUT OF SUCH EXPENDITURE AS ON 31/03/07 ON WHICH THERE W AS ALLEGED TO BE A DEFAULT AS PER SECTION 40 (A) (IA) OF THE ACT, HENCE THERE REM AINS NO JUSTIFICATION FOR MAKING DISALLOWANCE AND ADDITION. THE A.O. IN THE ASSESSME NT ORDER MENTIONED THAT AFTER VERIFICATION OF DETAILS THERE IS NO DISPUTE THAT TO TAL AMOUNT CREDITED IN THE SUBCONTRACTOR J. J. PATEL ACCOUNT IS RS. 65,33,133/ - AND TDS WAS DEDUCTED IN THE MONTH OF MARCH 2007 AND PAID TO GOVT. ACCOUNT IN TH E MONTH OF APRIL 2007. THE DISPUTE IS RELATED TO CREDITING OF AN AMOUNT OF RS. 30,78,700/- OUT OF THIS TOTAL RS.55,33,133/-. IN JANUARY 2007 TO FEB. 2007 ON WHI CH TDS WAS DEDUCTED AND PAID LATE AS STIPULATED U/S 194C READ WITH SECTION 200(1) OF THE IT. ACT HENCE DISALLOWABLE U/S 40 (A)(IA) OF THE ACT. THE A.O.'S OBSERVATION IS NOT DISPUTED WITH EXISTING PROVISION. BUT THE LEGAL PREPOSITION IN TH IS REGARD GIVES BENEFIT TO THE ASSESSEE, IF THE DUE TDS DEDUCTED AND PAID BEFORE T HE DUE DATE OF FILLING OF RETURN OF INCOME. HON'BLE CALCUTTA HIGH COURT IN THE CASE OF CIT V/S VIRGIN CREATIONS IN ITS JUDGMENT DT. 23/11/11 HELD THAT AMENDMENT BROUGHT B Y THE FINANCE ACT 2010 IN SECTION 40(A)(IA) OF THE ACT ARE CLARIFICATORY AND RETROSPECTIVE HENCE NO DISALLOWANCE BE MADE U/S 40 (A)(IA) OF THE ACT WHER E IDS HAS BEEN PAID BEFORE THE DUE DATE OF FILLING OF RETURN OF INCOME. HON'BLE IT AT AHMEDABAD 'B' BENCH IN ITS ORDER DT. 03/01/10 IN THE CASE OF SHRI KANUBHAI RAM JIBHAI MAKWANA V/S ITO FOLLOWED THE SAME RATIO. IN THE CASE OF ITO WARD 9( 4) V/S SHRI SANJAY SANDALAL PATEL ITA NO. 2826/AHD/2011 (A.Y. 08-09) VIDE ORDER DT. 23/03/201, HON'BLE ITAT AHMEDABAD EVEN AFTER CONSIDERING THE SPECIAL BENCH ORDER IN THE CASE OF M/S BHARTISHIPYARD LTD. V/S DY. C.I.T (ITA NO. 2404/MUM /2009 ORDER DT. 12/09/11) FOLLOWED THE HON'BLE CALCUTTA HIGH COURT JUDGMENT I N THE CASE OF VIRGIN CREATIONS ITA NO. 54/AHD/14 WITH C.O. NO.172/AHD/14 (ACIT (OS D) VS. SHRI PURSHOTTAM P. PATEL) A.Y. 2007-08 - 3 - (SUPRA) AND ALLOWED THE BENEFIT TO ASSESSEE FOR PAY MENT OF TDS BEFORE FILLING OF RETURN OF INCOME WITHIN DUE DATE FOR NON APPLICABIL ITY OF SECTION 40(A)(IA) OF THE ACT. IT IS THEREFORE FOLLOWING THE RATIOS OF ABOVE DISCUSSED LEGAL AUTHORITIES, DISALLOWANCE IN THE CASE OF APPELLANT U/S 40(A)(IA) OF THE ACT IS NOT SUSTAINABLE IN LAW. THE A.O. IS DIRECTED TO DELETE THE ADDITION SO MADE OF RS.30,78,700/-. THE APPELLANT GETS RELIEF ACCORDINGLY. ALL THE GROUNDS ARE THEREFORE TREATED AS ALLOWED FOR STATISTICAL PURPOSE. 3. THE ASSESSEES CROSS OBJECTION ON THE OTHER HAND CHALLENGES THE VALIDITY OF THE IMPUGNED RE-OPENING TAKEN RECOURSE TO BY THE ASSESSING AUTHORITY AND UPHELD IN THE LOWER APPELLATE PROCEEDINGS. 4. WE HAVE HEARD BOTH THE PARTIES STRONGLY REITERAT ING THEIR RESPECTIVE STANDS. WE NOTICE FIRST OF ALL THAT THE ASSESSEE H AD DULY DEDUCTED TDS UPON THE IMPUGNED CONTRACTUAL PAYMENTS AND PAID/REMITTED THE SAME IN GOVERNMENT ACCOUNT ON 09.04.2007. THE REVENUES CA SE IS THAT THE ASSESSING OFFICER HAD RIGHTLY INVOKED SECTION 40(A) (IA) DISALLOWANCE IN THESE FACTS AND CIRCUMSTANCES. WE FIND THAT THE ISSUE AS TO WHETHER TDS DEDUCTED BY AN ASSESSEE AND REMITTED BEFORE THE END OF THE R ELEVANT PREVIOUS YEAR OR PAID BEFORE THE DUE DATE OF FILING OF RETURN IS NO MORE RES INTEGRA SINCE HONBLE CALCUTTA HIGH COURT IN VIRGIN CREATIONS CAS E (SUPRA) HAS ALREADY SETTLED THE LAW THAT AMENDMENT TO SECTION 40(A)(IA) MADE BY THE FINANCE ACT, 2010 IS RETROSPECTIVELY APPLICABLE W.E.F. 01.04.200 5 THEREBY IMPLIEDLY REVERSING THIS TRIBUNALS SPECIAL BENCH DECISION IN BHARTI SHIPYARD LTD. VS. DCIT (2011) 132 ITD 53 (MUM.). LEARNED DEPARTMENTA L REPRESENTATIVE FAILS TO DISPUTE THIS LEGAL POSITION. WE THUS FIN D NO REASON TO INTERFERE WITH THE CIT(A)S FINDINGS DELETING SECTION 40(A)(IA) DI SALLOWANCE IN QUESTION. THE REVENUES SOLE SUBSTANTIVE GROUND AS WELL AS IT S MAIN APPEAL FAILS. 5. WE NOW COME TO ASSESSEES CROSS OBJECTION CHALLE NGING VALIDITY OF REOPENING. LEARNED COUNSEL REPRESENTING ASSESSEE S TATES VERY FAIRLY THAT THE ITA NO. 54/AHD/14 WITH C.O. NO.172/AHD/14 (ACIT (OS D) VS. SHRI PURSHOTTAM P. PATEL) A.Y. 2007-08 - 4 - ASSESSEE NO MORE WISHES THE PRESS THE SAME MORE PAR TICULARLY IN VIEW OF OUR FINDINGS ON MERITS. WE THUS DISMISS ASSESSEES CRO SS OBJECTION AS NOT PRESSED AT THIS STAGE. 6. THIS REVENUES APPEAL IS DISMISSED AND ASSESSEE S CROSS OBJECTION IS DISMISSED AS NOT PRESSED. [PRONOUNCED IN THE OPEN COURT ON THIS THE 09 TH DAY OF FEBRUARY, 2017.] SD/- SD/- ( MANISH BORAD ) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 09/02/2017 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )*+ ,--. . /0 / DR, ITAT, AHMEDABAD 1 +23 45 / GUARD FILE. BY ORDER / . // . /0