M/s. Bhoomi Construction, RAJKOT-GUJARAT V. The Income Tax Officer, Ward-1(4), RAJKOT-GUJARAT

CO 32/RJT/2012

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 8165 (ITAT-RAJKOT)
• Duration Of Justice: 1 month(s) 28 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 07-12-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 07-01-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 10-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANKUR GARG
• Assessee Lawyers: SUMIT C SHINGALA
• Keywords: Opportunity of being heard
• Section: 133(6); 194C

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBULAL; RAJKOT BENCH, RAJKOT. BEFORE SHRI T. K. SHARMA, JM AND SHRI B.R.JAIN, AM ITA NO.503/RJT/2012. / ASSESSMENT YEARS 2008-09 INCOME TAX OFFICER, WARD 1(4), AAYAKAR BHAVAN, 5TH FLOOR, ROOM NO.504, RACE COURSE, RING ROAD RAJKOT -360001 ( / APPELLANT) VS. M/S BHUMI CONSTRUCTION RAJKOT 1 ST FLOOR, SHRADDHA COMPLEX, OPP GANGA HALL, AMIN MARG, RAJKOT. PAN:AACFB0164G / RESPONDENT CO NO.32/RJT/2012 IN ITA NOS.503/RJT/2012. / ASSESSMENT YEARS 2009-10 M/S BHUMI CONSTRUCTION RAJKOT ( /CROSS - OBJECTOR ) VS. INCOME TAX OFFICER, WARD 1(4), / RESPONDENT / REVENUE BY SHRI ANKUR GARG ' / ASSESSEE BY SHRI SUMIT C SHINGALA & /DATE OF HEARING 5.12.2012 & / DATE OF PRONOUNCEMENT 7.12.2012 / / / / ORDER & && &. .. . . . . . , , , , / T. K. SHARMA, J. M. THIS APPEAL BY THE REVENUE AND CROSS-OBJECTION BY THE ASSESSEE ARE AGAINST THE ORDER DATED 26.6.2012 OF CIT(A)-I, RAJKOT FOR THE ASSESSMENT YEAR 2009-10. ITA NOS.503/RJT/2012. CO NO.32/RJT/2012 2 2. THE GROUNDS RAISED BY THE REVENUE IN IS APPEAL RE AD AS UNDER : 1. THE LD. CITA)-I, HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS.98,74,733/- U/S SECTION 40 (A)(IA) MADE BY THE AO ON ACCOUNT OF TAX NOT BEEN DEPOSITED OR PAID DURING THE PREVIOUS YEAR. 2 THE CIT(A)-I, HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS.2,06,400/- U/S 40(A)(IA ) MADE BY THE AO ON ACCOUNT OF TAX NOT BEEN DEDUCTED OR PAID DURING THE PREVIOUS YEAR 3. WITH REGARD TO THE GROUND NO.1, THE FACTS OF THE CA SE ARE THAT THE ASSESSEE IS ENGAGED IN CIVIL CONSTRUCTION ACTIVITIES. DURING THE YEAR UNDER CONSIDERATION, THE AO MADE DISALLOWANCE U/S 40(A)(IA) A MOUNTING TO RS.98,74,733/- AS THERE WAS VIOLATION OF THE PROVISIONS OF SECTION 194C OF THE INCOME TAX ACT, 1961(THE ACT) AS DISCUSSED IN PARAGR APHS 4 OF THE ASSESSMENT ORDER. ON APPEAL, BEFORE THE LD. CIT(A), T HE LD. AR OF THE ASSESSEE POINTED OUT THAT THE HONBLE HIGH COURT OF THE CALCUTTA IN THE CASE OF CIT V/S VIRGIN CREATIONS IN ITA NO.302 OF 2 011, DATED 23.11.2011 HAS HELD THAT : MOREOVER, THE SUPREME COURT, AS HAS BEEN RECORDED BY THE LEARNED TRIBUNAL, IN THE CASE OF ALLIED MOTORS PVT. LTD. AND ALSO IN THE CASE OF ALOM EXTRUSIONS LTD., HAS ALREADY DECIDED THA T THE AFORESAID PROVISION HAS RETROSPECTIVE APPLICATION. AGAIN , IN THE CASE REPORTED IN 82 ITR 570, THE SUPREME COURT HELD THA T THE PROVISION, WHICH HAS INSERTED THE REMEDY TO MAKE THE PROVISION WOR KABLE, REQUIRES TO BE TREATED WITH RETROSPECTIVE OPERATION SO THAT REASONABLE DEDUCTION CAN BE GIVEN TO THE SECTION AS WELL BEFORE THE LD. CI(A), IT WAS FURTHER SUBMITTED THAT T HE ISSUE UNDER CONSIDERATION STANDS DECIDED IN VIEW OF THE DECISION OF TH E HONBLE CALCUTTA HIGH COURT IN THE CASE OF VIRGIN CREATIONS, W HICH HAS BEEN FOLLOWED IN THE FOLLOWING CASES: I. PIYUS C MEHTA V. ACIT ITA NO.3121/MUM/2009 DAT ED 11.4.2012 II. ACIT V. M.K.GURUMURTHY IRA NO.717/BANG/2011 DA TED 10.5.2012 ITA NOS.503/RJT/2012. CO NO.32/RJT/2012 3 III. ITO V. TARU LEADING EDGE P.LTD. ITA NO.3582 /DEL/2011 DATED 22.5.2012 IV. ITO V. SK.MOFIZUL ALI- ITA NO.1153/KOL/20 11 DATED 15.5.2012 4. AFTER CONSIDERING THE AFORESAID SUBMISSIONS, THE LD. CIT(A) DELETED THE SAME BY FOLLOWING THE DECISION OF THE HONBLE CALC UTTA HIGH COURT IN THE CASE OF VERGIN CREATION (SUPRA) AND THE DECISION OF THE TRIBUNAL IN THE CASE OF M/S ALPHA PROJECTS V/S DCIT IN ITA NO.2869/ AHD/2011. AGGRIEVED WITH THE ORDER OF THE LD. CIT(A), THE R EVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 5. WE HAVE HEARD BOTH THE SIDES. BEFORE US, THE LD. DR COULD NOT POINT OUT ANY CONTRARY JUDGMENT OF ANY OTHER HIGH C OURT. WE ARE, THEREFORE, OF THE VIEW THAT THE LD. CIT(A) IS LEGAL LY AND FACTUALLY CORRECT IN FOLLOWING THE STATUTORY DECISION OF THE HONBLE CALCUTT A HIGH COURT IN THE CASE OF VERGIN CREATIONS (SUPRA) IN DELETING THE DISAL LOWANCE OF RS.98,74,733/- MADE BY THE AO U/S 40(A)(IA) OF THE ACT. GROUND NO.1 TAKEN BY THE REVENUE STANDS DISMISSED. 6. WITH REGARD TO THE GROUND NO.2, THE FACTS OF THE CASE ARE THAT IN THE ASSESSMENT ORDER, THE AO TOOK A VIEW THAT THE ASSESSE E WAS REQUIRE TO DEDUCT TAX AT SOURCE U/S 194-I OF THE ACT ON PAYM ENT OF RS.2,06,400/- PAID TO ONE M/S JAY BHAVANI JCB SERVICES FOR JCB RENT. BEFORE THE LD. CIT(A), THE ASSESSEE CONTENDED THAT IT IS NOT A RENT. THE PAYMENT IN QUESTION WAS FOR A PURCHASE OF CLAY. IN SUPPORT OF THIS SUBMISSION, A CONFIRMATION WAS OBTAINED FROM /S JAY BHAVANI JCB SERV ICE ON ITS LETTER HEAD WHEREIN IT IS CLEARLY MENTIONED THAT TRANSACTIONS WERE NOT OF RENT, AND THIS COULD HAVE BEEN CROSS VERIFIED BY THE AO WITH THE PARTY CONCERNED. AFTER CONSIDERING THE SAME THE LD. CIT(A) DELETED THE ITA NOS.503/RJT/2012. CO NO.32/RJT/2012 4 ADDITION. AGGRIEVED WITH THE ORDER OF THE LD. CIT( A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 7. BEFORE US, THE LD. DR POINTED OUT THAT THE CONFIRM ATION WHICH IS FILED BEFORE THE LD. CIT(A) WAS NOT FILED BEFORE THE AO. HE ACCORDINGLY SUGGESTED THAT THIS ISSUE BE RESTORED TO THE FILE OF TH E AO WITH A DIRECTION TO THE ASSESSEE TO FILE THE CONFIRMATION LETTER BEFORE T HE AO, THE AO MAY MAKE CROSS VERIFICATION AND RE-ADJUDICATE THE ISSUE OF ADD ITION MADE U/S 40(AI)(A). AS AGAINST THIS THE LD. COUNSEL FOR THE ASSESS EE SUPPORTED THE ORDER OF THE LD. CIT(A). 8. ADMITTEDLY, THE CONFIRMATION WAS OBTAINED FROM / S JAY BHAVANI JCB SERVICE WAS FILED BEFORE THE LD CIT(A) WAS NOT FIL ED BEFORE THE AO. WE, THEREFORE, SET ASIDE THE ORDER OF THE LD. CIT(A ) AND RESTORE THIS ISSUE TO THE FILE OF THE AO AND DIRECT THE ASSESSEE TO FILE CONFIRMATION BEFORE THE AO WHO WILL EXAMINE THE SAME AND RE-ADJUDICATE THE ISSU E OF DISALLOWANCE OF RS.2,06,400/-. THE GROUND NO.2 IS ALLO WED FOR STATISTICAL PURPOSES. CROSS OBJECTION NO.32/RJT/2012. 9. GROUND TAKEN IN THE CROSS-OBJECTION READS AS UNDER : ADDITION OF RS.4,82,000/- MADE ONLY ON THE BASIS OF BASELESS ASSUMPTION, SURMISES, CONJECTURES, AND SIMPLY BECAUSE AN ERRONEOUS ENTRY SHOWN UP IN THE FORM 26AS OF THE ASSESSE E, DUE TO MISTAKE OF SOMEBODY ELSE, AND IN TOTAL ABSENCE OF ANY OTHER MATERIAL ON RECORD OR PROOF/SUPPORTING, SHOULD BE DEL ETED. 10. FACTS RELATING TO CONTROVERSY INVOLVED IN THE AFO RESAID GROUND IS THAT IN THE ASSESSMENT ORDER, THE AO MADE ADDITION OF RS.4,82,000/- FOR THE DETAILED REASONS DISCUSSED IN PARAGRAPH 6 OF THE ASSE SSMENT ORDER. ITA NOS.503/RJT/2012. CO NO.32/RJT/2012 5 ON APPEAL, BEFORE THE LD. CIT(A) THE ASSESSEE CONTEND ED THAT IT HAS NOT CARRIED OUT ANY WORK OF YOUTH ORGANIZATION, THEREFORE , IT IS NOT RECORDED IN ITS BOOKS OF ACCOUNT. THE LD. COUNSEL OF THE ASSESSEE FURTHE R POINTED OUT THAT THE AO OBTAINED CONFIRMATION IN WRITING FROM YO UTH ORGANIZATION IN RESPONSE TO THE NOTICE UNDER SECTION 133(6) OF THE ACT WHICH WAS NOT MADE AVAILABLE TO THE ASSESSEE. HE ACCORDINGLY SUGGESTED TH AT THIS ISSUE BE RESTORED TO THE FILE OF THE AO WITH A DIRECTION T O FURNISH THE CONFIRMATION OBTAINED FROM YOUTH ORGANIZATION AND RE-ADJUDICATE T HIS ADDITION AFRESH AFTER CONSIDERING THE OBJECTION OF ASSESSEE IN THIS REGARD . THE LD. DR OBJECTED TO THIS ON THE GROUND THAT FORM NO.26AS FILE D BY YOUTH ORGANIZATION, WANKANER CLEARLY INDICATES THAT THEY HAVE PAID RS. 4,82,000/- TO THE ASSESSEE ON WHICH THEY HAVE DEDUCTE D TDS, THEREFORE, NO USEFUL PURPOSE WOULD BE SERVED BY GIVI NG ONE MORE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 11. WE HAVE HEARD BOTH THE PARTIES. WE HAVE CAREFULL Y GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IT IS PERTINENT TO N OTE THAT THE ASSESSEE HAD DENIED THAT NEITHER IT HAS CARRIED OUT THE WORK NOR THEY HAVE RECEIVED THE AMOUNT OF RS.4,82,000/- FROM THEM. IT APPEARS T HAT THE AO RECEIVED CONFIRMATION FROM YOUTH ORGANIZATION WHICH WAS NOT MAD E AVAILABLE TO THE ASSESSEE. WE, THEREFORE, SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THIS ISSUE TO THE FILE OF THE AO WITH A DIRECTION THAT THE ASSESSEE SHOULD MADE AVAILABLE ALL THE DOCUMENTS IN ITS POSSESSION INDICATI NG THAT THE ASSESSEE HAS CARRIED OUT THE WORK FOR RS.4,82,000/- FOR Y OUTH ORGANIZATION AND THE AO WILL ALSO ASCERTAIN TO WHOM TH E PAYMENT OF RS.4,82,000/- WAS MADE BY YOUTH ORGANIZATION, WHETHER THIS PAYMENT WAS MADE THROUGH ACCOUNT PAYEE CHEQUE, DETAILS OF BANK A CCOUNT ON ITA NOS.503/RJT/2012. CO NO.32/RJT/2012 6 WHICH THE PAYMENT OF RS.4,82,000/- WAS DEPOSITED AND CON DUCT NECESSARY INQUIRY IN THIS REGARD AND RE-ADJUDICATE THE ADDITION OF RS.4,82,000/- IN ACCORDANCE WITH LAW. THE GROUND TAKEN BY THE ASSESSEE IN CROSS- OBJECTION IS ALLOWED FOR STATISTICAL PURPOSE. 12. IN THE RESULT, FOR STATISTICAL PURPOSE, THE APPEA L OF THE REVENUE IS PARTLY ALLOWED AND THE CROSS-OBJECTION OF THE ASSESSEE IS T REATED TO BE ALLOWED FOR STATISTICAL PURPOSE. THIS ORDER IS PRONOUNCED IN THE OPEN COURT ON THE DAT E MENTIONED HEREINABOVE. SD SD ( B.R.JAIN) (T. K. SHARMA) / ACCOUNTANT MEMBER /JUDICIAL MEMBER -/ ORDER DATE 7.12.2012. /RAJKOT SRL / / / / 0/ 0/ 0/ 0/ / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT-, 2. / RESPONDENT- 3. 5 / CONCERNED CIT. 4. 5- / CIT (A). 5. / , , / DR, ITAT, RAJKOT 6. / GUARD FILE. / BY ORDER , TRUE COPY SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, RAJKOT.