M/s. Tejnder Singh & Associates, Bhopal V. M/s ACIT 1(1), Bhopal

CO 4/IND/2014

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 1225 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 4 month(s) 30 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 10-08-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 11-03-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N D PATWA; ASHISH GOEL
• Assessee Lawyers: R A VERMA
• Section: 143(3); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, J.M. AND SHRI B.C.MEENA, A.M. I.T.A.NO.91/IND/2013 A.Y. : 2006-07 ACIT, 1(1). BHOPAL M/S.TEJINDER SINGH & ASSOCIATES, VS. E-4/35, ARERA COLONY, BHOPAL APPELLANT RESPONDENT P.A.N.NO.AAAFT5324Q C.O.NO. 4/IND/2014 ARISING OUT OF I.T.A.NO. 91/IND/2013 A.Y. :2006-07 M/S.TEJINDER SINGH & ASSOCIATES, VS ACIT, 1(1). BHOPAL E-4/35, ARERA COLONY, BHOPAL CROSS OBJECTOR RESPONDENT -: 2: - 2 DEPARTMENT BY : SHRI ASHISH GOEL, CA, AND SHRI N. D. PATWA, ADV. ASSESSEE BY : SHRI R.A.VERMA, SR. DR DATE OF HEARING : 0 6 . 0 7 .201 5 DATE OF PRONOUNCEMENT : 10 . 0 8 .201 5 O R D E R PER GARASIA, J.M. THE APPEAL BY THE REVENUE AND CROSS OBJECTION BY TH E ASSESSEE ARE DIRECTED AGAINST THE ORDER OF CIT(A), RAIPUR, DATED 07.12.2012 FOR THE ASSESSMENT YEAR 2006-07. 2. THE FOLLOWING GROUNDS HAVE BEEN RAISED BY THE REVENUE :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN 1. DELETING THE ADDITION OF RS. 48,15,671/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SHORT ACCOUNTING OF CONTRACT RECEIPTS AGAINST WHICH TDS CLAIM WAS MADE. -: 3: - 3 2. DELETING THE ADDITION OF RS. 1,60,38,600/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OF THE PAYMENT UNDER PROVISIONS OF SECTION 40(A)(IA) O F THE INCOME-TAX ACT, 1961. GROUND NO.1 : 3. THE ASSESSEE IS AN INDIVIDUAL AND DERIVES INCOME FR OM CONTRACT WORK. THE ASSESSMENT ORDER WAS COMPLETED U /S 143(3) OF THE INCOME-TAX ACT, 1961. DURING THE ASSE SSMENT PROCEEDINGS, THE ASSESSEE HAS TOTAL RECEIPT WHICH I NCLUDES TDS CREDIT THE ASSESSEE HAS TO OFFER THE TDS CREDIT FOR TAXATION, BUT THE ASSESSEE FIRM HAS CLAIMED THE TDS CREDIT AT RS. 18,08,689/- AS PER THE TDS CERTIFICATE AND CONT RACT RECEIPT FOR TAX RS. 8,67,20,513/- AGAINST THE ACTUAL CONTRA CT RECEIPT OF RS.9,15,36,184/-. THAT CONTRACT RECEIPTS WERE SHORT ACCOUNTED TO THE EXTENT OF RS. 48,15,671/-, WHICH WAS LEFT TO , BE CONSIDERED, WHILE PASSING THE ORDER U/S 153 AND IT WAS BROUGHT TO TAX AND ORDER WAS PASSED U/S 154 OF THE ACT. 4. THE MATTER CARRIED TO LD. CIT(A). THE LD. CIT(A) HA S DELETED THE ADDITION BY OBSERVING AS UNDER :- -: 4: - 4 7. I HAVE CAREFULLY GONE THROUGH THE WRITTEN SUBMISSION OF THE APPELLANT AND ALSO THE ORDER U/S 154. THE ONUS CERTAINLY REMAINS ON THE APPELLANT TO PROVE THAT THE ENTIRE INCOME ACCRUED DURING THE YEA R HAS BEEN OFFERED FOR TAXATION AND RECONCILE THE INCOME AS PER TDS CERTIFICATE WITH THAT OF PROFIT A ND LOSS ACCOUNT. I FIND THAT THE APPELLANT DID FURNISH EXPLANATION FOR THE DIFFERENCE IN INCOME BETWEEN TD S CERTIFICATE WITH THAT OF PROFIT AND LOSS ACCOUNT. T HE RECONCILIATION STATEMENT FURNISHED BY THE APPELLANT EXPLAINS THE REASONS FOR DIFFERENCE IN INCOME. IN M Y CONSIDERED VIEW, THE REASONS EXPLAINED BY THE APPELLANT BY WAY OF RECONCILIATION STATEMENT ARE SATISFACTORY. IT IS ALSO NOT IN DISPUTE THAT THE DEDUCTORS ARE REQUIRED TO MAKE TDS EVEN ON ADVANCE PAYMENTS, WHEREAS, SUCH PAYMENTS GET RECOGNIZED AS INCOME IN SUBSEQUENT YEAR IN WHICH INCOME ACCRUES AS PER THE MERCANTI8LE SYSTEM OF ACCOUNTING . IT IS NOT THE CASE OF THE AO THAT THE APPELLANT IS NOT FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING -: 5: - 5 CONSISTENTLY. THE CLAIM OF THE APPELLANT THAT TDS W AS MADE ON ADVANCE PAYMENTS IS GETTING SUBSTANTIATED FROM THE RUNNING BILLS. I AM CONVINCED WITH THE EXPLANATION OFFERED BY THE APPELLANT. THE AO HAS NO T REBUTTED THE SUBMISSIONS OF THE APPELLANT. THE APPELLANT HAS CERTAINLY DISCHARGED THE ONUS THAT LA Y ON IT. HENCE, THE ADDITION MADE BY THE ASSESSING OFFICER CANNOT BE SUSTAINED. THE ADDITION IS, THEREFORE, DELETED. 5. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. WE FIND THAT DURING THE ASSESSMENT PROCEE DINGS, THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE HAD TOTAL TURNOVER OF RS. 8,67,20,513/- AND THE ASSESSEE HAS RECEIVED RS. 75,89,541/- AS ADVANCE FROM MPRDC, DAMON, M.P. AND THAT WAS ADJUSTED IN THE TURNOVER FOR ASSESSMENT YEAR 20 07-08 AND THAT RECONCILIATION TURNOVER WAS FILED BEFORE THE L D. CIT(A). THE CHART READS AS UNDER :- -: 6: - 6 PARTICULARS AMOUNT AMOUNT TOTAL AMOUNT CREDITED AS PER TDS CERTIFICATE (FORM- 16A) 9,15,36,184/ - LESS : A.SECURED ADVANCE RECEIVED FROM MPRDC 36,89,541/ - B. SECURED ADVANCE RECEIVED FROM MPRDC 39,00,000/ - 75,89,541 ADD: A. SECURED ADVANCE ADJUSTED RELATING TO THE FINANCIAL YEAR 2004-05 23,08,387/ - B. INCOME FROM P & G LIMITED NOT SHOWING RTS CERTIFICATES 2,23,734/ - C. INCOME FROM CENTRAL BANK, NOT SHOWING TDS CERTIFICATE 2,41,749/ - 27,73,870/ - NET TURNOVER REPORTED IN THE PROFIT AND LOSS ACCOUNT ON 31.03.2006 -- 8,67,20,513/ - -: 7: - 7 6. THE LD. CIT(A) HAS VERIFIED THIS CHART AND HE WAS SATISFIED WITH THE EXPLANATION OF THE ASSESSEE AND THE ADDITION WAS DELETED. 7. DURING THE COURSE OF HEARING, THE LD. SENIOR D.R. COULD NOT BRING ANY CONTRARY MATERIAL AGAINST THE F INDING OF THE CIT(A), THEREFORE, WE HAVE NO ALTERNATIVE EXCEP T TO ENDORSE THE ACTION OF AO. 8. IN THE RESULT, THE APPEAL ON THIS GROUND IS DISMISS ED. GROUND NO. 2 : 9. THE AO HAS STATED THAT THE TDS OF RS. 2,00,000/- WA S PAYABLE AS ON 31.03.2006 AS PER SCHEDULE PROVISION OF THE BALANCE SHEET BUT THE ASSESSEE HAS NOT FURNISHED TH E PROOF OF TDS DEPOSITED BY IT WITHIN THE PRESCRIBED PERIOD; T HAT CORRESPONDING PAYMENTS WERE REQUIRED TO BE DISALLOW ED U/S 40(A)(IA); THAT NO DISALLOWANCE WAS MADE WHILE PASS ING THE ORDER U/S 143(3) WHICH IS MISTAKE APPARENT FROM REC ORD; THAT TDS IS DEDUCTIBLE AS AND WHEN PAYMENT IS EITHER CRE DITED OR PAID; THAT AS PER BALANCE SHEET AS ON 31.03.2006 SE CURED ADVANCE FROM PWD DAMOH (MPRDC) WAS SHOWN AT RS. -: 8: - 8 58,72,114/-; THAT THE ASSESSEE FURNISHED ONLY THE D ETAILS OF PAYMENT OF RS. 14,51,376/- MADE BY IT DURING THE MO NTH OF JANUARY TO MARCH 2006 AND TAX DEDUCTED THEREON; THA T WHOLE TAX DEDUCTED BY THE ASSESSEE AMOUNTING TO RS. 2,00, 000/- WAS DEPOSITED BY IT ON 07.04.2006; THAT IT IS CLEAR THAT THE EXPENSES OF RS. 18,15,245/- ON ACCOUNT OF SUB-CONTR ACT WORK WERE ONLY ALLOWABLE EXPENSES BECAUSE OF THIS PAYMEN T ONLY TAX OF RS. 20,367/- WAS DULY DEDUCTED AND DEPOSITED WIT HIN PRESCRIBED TIME; THAT CORRESPONDING PAYMENT OF RS. 1,60,38,660/- ON ACCOUNT OF SUB-CONTRACT WORK WERE NOT ALLOWABLE AS PER PROVISIONS OF SECTION 40(A)(IA); T HAT AN AMOUNT OF RS 1,60,38,660/- IS HEREBY ADDED. 10. THE MATTER CARRIED TO LD. CIT(A). THE LD. CIT(A) HA S ALLOWED THE CLAIM BY OBSERVING AS UNDER :- 11. I HAVE CAREFULLY GONE THROUGH THE WRITTEN SUBMISSIONS OF THE APPELLANT AND ALSO THE ORDER U/S 154. IT IS SEEN THAT THE APPELLANT HAD DEPOSITED TDS ON 07.04.2006. IT IS NOT THE CASE OF THE AO THAT THE APPELLANT HAD NOT MADE ANY TDS OR THAT THE SAME WAS NOT DEPOSITED. THE -: 9: - 9 AO HAS NOT MADE OUT A CASE THAT THE ENTIRE AMOUNT ON WHICH TDS WAS MADE HAD REMAINED PAYABLE. IT IS SETTLED POSITION OF LAW THAT THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT HAD NO APPLICATION IN RESPECT OF THE PAYMENTS MADE, SINCE THEY WERE APPLICABLE ONLY IN RESPECT OF THE EXPENDITURE SHOWN AS PAYABLE. AS PER THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN HINDUSTAN COCA COLA BEVERAGES (P) LTD. VS. CITY, (2007) 293 ITR 226 ( S.C. ), SINCE THE IMPUGNED PAYMENT MADE BY THE APPELLANT, HAVING ALREADY SUFFERED TAX IN THE HANDS OF THE RECIPIENT, RECOVERY OF THE TAX ON THE SAID SUM, COULD NOT AGAIN BE MADE FROM THE PAYER VIZ., THE APPELLANT. THE ONLY REASON OR MAKING THE ADDITION, AS GIVEN BY THE ASSESSING OFFICER, WAS THAT THE APPELLANT HAD NOT DEDUCTED TAX AT SOURCE ON THE SAID PAYMENT OF COMMISSION MADE BY THE APPELLANT. THE BARE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT, PROVIDES FOR NON- -: 10: - 10 DEDUCTION OF AN AMOUNT WHICH REMAINS PAYABLE TO A RESIDENT IN RESPECT OF FEES FOR TECHNICAL SERVICES ETC. IN MY CONSIDERED VIEW, IT IS NOT APPLICABLE WHERE EXPENDITURE WAS PAID. THIS PROVISION IS APPLICABLE ONLY IN CASES WHERE THE PAYMENTS ARE DUE AND OUTSTANDING. THE WORD PAYABLE IS NOT DEFINED THROUGH THE WORD PAID IS DEFINED U/S 43(2) TO MEAN ACTUALLY PAID OR INCURRED. HENCE, BY IMPLICATION, THE WORD PAYABLE DOES NOT MEAN ACTUALLY PAID OR INCURRED. SECTION 40(A)(IA) OF THE ACT, OTHERWISE BEING A LEGAL FICTION, NEEDS TO BE CONSTRUED STRICTLY IN VIEW OF THE DECISION OF SUPREME COURT IN CIT VS. MOTHER INDIA REFRIGERATION INDUSTRIES (P) LTD., [ (1985) 48 CTR (S.C.) 176. THE CBDT CIRCULAR NO. 5 OF 2005 DATED 15.07.2005, (2005) 197 CTR (ST.)] HAS ALSO CLARIFIED THAT THE PROVISIONS OF SECTION 40(A)(IA) IS TO AUGMENT COMPLIANCE OF TDS PROVISIONS IN THE CASE OF RESIDENTS AND CURB BOGUS PAYMENTS TO THEM. AS -: 11: - 11 SUCH I AM OF THE CONSIDERED VIEW THAT THE DISALLOWANCE, IF ANY, REQUIRED TO BE MADE, SHOULD HAVE BEEN RESTRICTED TO THE EXTENT OF THE SUM SHOWN IN THE BALANCE SHEET AS PAYABLE, AT THE END OF THE YEAR I.E. ON THE BALANCE SHEET DATE. HOWEVER, THIS WAS NOT THE CASE IN THE CASE OF THE APPELLANT, UNDER CONSIDERATION, AS THE AO WAS ALSO MENTIONED THAT THE PAYMENT WAS MADE BY THE APPELLANT. 12. THE CASE OF THE APPELLANT FIND SUPPORT FROM THE DECISION IN K. SRINIVAS NAIDU V. ACIT, (2010) 131 TTJ (HYD) (UO) 17. IN JAIPUR VIDYUT VITRAN NIGAM LIMITED VS. DY. CIT, (2009) 123 TTJ (JAIPUR) 888 ALSO, IT WAS HELD THAT; SECTION 40(A)(IA) APPLIES ONLY WHEN THE AMOUNT IS PAYABLE AND NOT WHERE THE EXPENDITURE WAS PAID. IN STATE BANK OF INDORE V. CIT, (2004) 191 CTR (MP) 522, THE M.P. HIGH COURT FOLLOWED THE DECISION OF THE KARNATAKA HIGH COURT IN CIT VS. VIJAYA BANK, (19879) 175 ITR 611 (KAR) AND -: 12: - 12 RESPECTING THE ETHICS OF JUDICIAL DISCIPLINE, THE M.P. HIGH COURT HAD HELD THAT THERE WAS NEITHER ANY OTHER VIEW CONTRARY TO THE ONE TAKEN BY THE KARNATAKA HIGH COURT (SUPRA) NOR THE VIEW TAKEN BY THE KARNATAKA HIGH COURT WAS OVERRULED BY THE SUPREME COURT. HENCE, HONOURING THE ETHICS OF JUDICIAL DISCIPLINE, THE M.P. HIGH COURT HAD RESPECTFULLY FOLLOWED THE RATIO LAID BY THE KARNATAKA HIGH COURT AND DECIDED THE ISSUE, UNDER CONSIDERATION, BEFORE IT. IN THE CASE OF THE APPELLANT ALSO, THE OPERATION OF LAW, PRONOUNCED IN THE AFOREMENTIONED JUDICIAL PRONOUNCEMENTS, HAS NOT BEEN SUSPENDED BY THE ORDER OF THE SUPREME COURT OR BY THE ORDER OF THE JURISDICTIONAL HIGH COURT. UNIFORMITY OF TREATMENT AND EQUALITY BEFORE LAW IS THE ESSENCE OF THE JUSTICE, AS HELD BY THE S.C. IN UOI VS. KAUMUDINI NARAYAN DALAL, (2001) 249 ITR 219 ( S. C. ) AND UOI V. SATISH PANALAL -: 13: - 13 SHAN, (2001) 249 ITR 221 (S. C.). THE PRINCIPLE OF JUDICIAL DISCIPLINE REQUIRES THAT THE ORDERS OF THE HIGHER APPELLATE AUTHORITIES SHOULD BE FOLLOWED UNRESERVEDLY BY THE SUBORDINATE AUTHORITIES, SINCE THE OPERATION OF LAW PRONOUNCED IN THOSE DECISIONS HAD NOT BEEN SUSPENDED BY A COMPETENT COURT. IF THIS HEALTHY RULE IS NOT FOLLOWED, THE RESULT WILL ONLY BE UNDUE HARASSMENT TO THE ASSESSEES AND CHAOS IN ADMINISTRATION OF TAX LAWS AS HELD IN UOI VS. KAMLAKSHI FINANCE CORPORATION LIMITED, AIR,1992 (S.C.)711. IN THIS VERY DECISION, THE HON'BLE SUPREME COURT FURTHER OBSERVED THAT THESE OBSERVATIONS, MUST BE UNDERSTOOD AS INTENDED TO CORRECT THE TENDENCY ON THE PART OF THE OFFICERS OF THE DEPARTMENT AND THE DEPARTMENT SHOULD TAKE IT IN PROPER SPIRIT IN THE LIGHT OF THE REQUIREMENTS FOR JUDICIAL DISCIPLINE. FAILURE TO FOLLOW THE ORDER OF THE HIGHER JUDICIAL COURTS ON THE GROUND THAT THERE WAS NO DECISION -: 14: - 14 OF THE JURISDICTIONAL COURT, WAS FOUND TO BE AN OBJECTIONABLE PHRASE AND THAT UNLESS THE OPERATION OF THE ORDERS OF THE ORDER OF THE SUPERIOR FORUM ARE SUSPENDED, THE SAME SHOULD BE FOLLOWED AS HELD BY THE HON'BLE SUPREME COURT IN AIR (1992) S.C. 711, MENTIONED SUPRA. 13. THE CASE OF THE APPELLANT FINDS SUPPORT FROM THE DECISION OF MERILYN SHIPPING & TRASNPORTS VS. ACIT, A.Y. 2005-06, I.T.A.NO. 477/VIZ./2008 ORDER DATED 29.03.2012 ALSO. 14. I FIND THAT THE CASE OF THE APPELLANT IS SQUARELY COVERED BY THE DECISION OF HON'BLE CALCUTTA HIGH COURT CITED SUPRA AND CASE OF THE APPELLANT CERTAINLY FINDS SUPPORT FROM THE DECISION OF THE APEX COURT REFERRED ABOVE INASMUCH AS IN THE INSTANT CASE, THE APPELLANT HAD DULY DEPOSITED THE TDS WELL BEFORE THE DUE DATE OF FILING INCOME TAX RETURN U/S 139(1). I AM CONVINCED THAT THE PROVISIONS OF SECTION 40(A)(IA) ARE NOT APPLICABLE ON THE PAYMENT TO CONTRACTOR -: 15: - 15 AMOUNTING TO RS. 1,60,38,660/-. HENCE, THE DISALLOWANCE IS DELETED. 15. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PAR TIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE ISSUE IN CONTROVERSY IS COVERED BY THE DEC ISION OF HON'BLE SUPREME COURT IN THE CASE OF HINDUSTAN COCA COLA BEVERAGES (P) LTD. VS. CIT, (2007) 293 ITR 226 ( S. C. ), WHEREIN IT IS HELD THAT IF THE IMPUGNED PAYMENT MAD E BY THE ASSESSEE, HAVING ALREADY SUFFERED TAX IN THE HANDS OF THE RECIPIENT, RECOVERY OF THE TAX ON THE SAID SUM, COU LD NOT AGAIN BE MADE FROM THE TAX PAYER. MOREOVER, WE FIND THAT THE ASSESSEE HAS ALREADY DEDUCTED TDS AND ENTIRE AMOUNT OF RS. 2 LAKHS HAVE BEEN PAID ON 7.4.2006. AS PER THE AMEN DED PROVISIONS OF SECTION 40(A)(IA), WHEREIN IT IS HELD THAT IF THE ASSESSEE DEPOSITS THE TDS OF ANY MONTH DURING THE P REVIOUS YEAR AT ANY TIME BEFORE THE DATE OF FILING THE INCO ME TAX RETURN, THE ASSESSEE HAS DEPOSITED THE ENTIRE AMOUNT OF TDS BEFORE FILING THE INCOME TAX RETURN. THEREFORE, WE ARE OF THE VIEW THAT NO DISALLOWANCE U/S 40(A)(IA) CAN BE MADE. THEREFOR E, WE ARE -: 16: - 16 OF THE VIEW THAT THE LD. CIT(A) IS JUSTIFIED IN GRA NTING THE RELIEF. HENCE, WE DISMISS THE APPEAL ON THIS GROUND. 16. THE CROSS OBJECT IS DISMISSED AS WITHDRAWN. 17. IN THE RESULT, THE APPEAL OF THE REVENUE AS WELL AS CROSS OBJECTION BOTH ARE DISMISSED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 10 TH AUGUST, 2015. SD/- (B. C. MEENA) ACCOUNTANT MEMBER SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 10 TH AUGUST, 2015. CPU* 17