The Madurai Hindu Permanent Fund Ltd., Madurai V. DCIT, Madurai

CO 81/CHNY/2016

• Counselvise Citation: [2016] 123 COUNSELVISE.COM (IT) 2496 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 5 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 28-10-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 22-06-2016
• Court: TRIBUNAL
• Assessee Lawyers: SHIVA SRINIVAS JCITD R
• Section: 206AA

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI , . !' BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G.PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A.NO.1276/MDS./2016 & C.O. NO.81/MDS./2016 / ASSESSMENT YEAR :2012-13 THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-2, MADURAI. VS. M/S. THE MADURA HINDU PERMANENT FUND LTD., 51-52,WEST TOWER STREET, MADURAI. [PAN AABCT 1316 L ] ( #$ / APPELLANT) ( %&#$ /RESPONDENT / CROSS OBJECTOR) / APPELLANT BY : MR.SHIVA SRINIVAS,JCIT,D.R /RESPONDENT BY : NONE / DATE OF HEARING : 03 - 1 0 - 201 6 !' / DATE OF PRONOUNCEMENT : 28 - 10 - 2016 ' / O R D E R PER BENCH: THIS APPEAL BY THE REVENUE AND CROSS OBJECTIONS F ILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(A)- I, MADURAI DATED 15. 02.2016 ITA NO. 1276/MDS./2016 :- 2 -: PERTAINING TO THE ASSESSMENT YEAR 2012-13. SINCE IS SUES INVOLVED IN THIS REVENUES APPEAL & CROSS OBJECTIONS ARE COM MON IN NATURE, THESE ARE CLUBBED TOGETHER, HEARD TOGETHER, DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2.1 THE MAIN GRIEVANCE OF REVENUE IN ITS APPEAL IS THAT THE LD.CIT(A) ERRED IN DELETING THE ADDITION OF ` 61,50,717/- MADE U/S.40(A)(IA) OF THE ACT ON ACCOUNT OF NON-COMPLIAN CE OF TDS PROVISION I.E. THE ASSESSEE WHILE OBTAINING FORM 15 G/15H FROM THE DEPOSITORS, FAILED TO OBTAIN THE PAN OF THE DEDUCTE ES AS REQUIRED U/S.206AA(2) OF THE ACT. 2.2 THE ASSESSEE HAS RAISED GROUNDS IN ITS C.O IN SUPPORT OF THE ORDER OF THE LD.CIT(A). 3. THE FACTS OF THE CASE ARE THAT THE DURING THE C OURSE OF ASSESSMENT PROCEEDINGS, THE AO FOUND THAT THE ASSES SEE CLAIMED INTEREST PAYMENT OF ` 7,31,01,000/- OUT OF WHICH THE INTEREST PAID TO THE DEPOSITORS WAS ` 6,99,40,723/-. FURTHER, THE AO FOUND THAT THE ASSESSEE HAD PAID INTEREST EXCEED ING ` 5,000/- IN EACH CASE TO VARIOUS DEPOSITORS TOTALING TO ` 61,50,717/- FOR WHICH THE ASSESSEE HAD OBTAINED FORM 15G/15H FROM T HE DEPOSITORS AND THE SAME WERE ALSO FILED BEFORE THE CIT,MADURAI. ITA NO. 1276/MDS./2016 :- 3 -: HOWEVER, ON VERIFICATION THE AO NOTICED THAT ALL TH E FORMS 15G/15H ARE NOT HAVING PAN. THEREFORE, THE AO INVOK ED THE PROVISIONS OF THE SECTION 206AA OF THE ACT AND DISA LLOWED THE AMOUNT OF ` 61,50,717/- U/S.40(A)(IA) OF THE ACT. THE ASSESS EE CARRIED THE APPEAL BEFORE THE LD.CIT(A). 4. ON APPEAL, THE LD.CIT(A) PLACED RELIANCE ON THE JUDGMENT OF KARNATAKA HIGH COURT IN WRIT PETITION NOS.12780 TO 12782 DATED 05.06.2012 AFTER COMPARING SEC.139A AND SEC.2 06AA BY OBSERVING THAT SEC.206AAIS NOT APPLICABLE TO THE PE RSONS WHO HAVE INCOME LESS THAN TAXABLE LIMIT. AS SUCH AO IS NOT JUSTIFIED IN RESORTING TO DISALLOWANCE U/S.40(A)(IA) OF THE ACT MERELY BECAUSE THE PERMANENT ACCOUNT NUMBERS WERE NOT MENTIONED IN FORM NO.15G/15H AND CONSEQUENTLY NO ADDITION WAS WARRANT ED. FURTHER, HE OBSERVED THAT IN VIEW OF THE JUDGEMENT OF ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. VECTOR SHIPPING S ERVICES PVT. LTD. IN 357 ITR 642, ONLY THE AMOUNT OUTSTANDING AT THE END OF FINANCIAL YEAR IS LIABLE FOR DISALLOWANCE U/S.40(A) (IA) OF THE ACT. AGAINST THIS, THE REVENUE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. NONE APPEARED FOR THE ASSESSEE. HOWEVER, L D.A.R FILED AN ADJOURNMENT PETITION STATING THAT HE IS AWAY FRO M INDIA AND THAT ITA NO. 1276/MDS./2016 :- 4 -: HE WILL BE BACK IN 2 ND FEBRUARY, 2017. HOWEVER, THERE IS NO EVIDENCE FOR THIS FOREIGN TRIP AND ALSO ADJOURNMENT SOUGHT BY THE LD.A.R IS VERY LONG. AS SUCH IT CANNOT BE GRANTED. HENCE, WE PROCEED TO DISPOSE THE CASE AFTER HEARING LD.D.R. IN OUR OPINION, THERE IS NO MATERIAL ON RECORD TO SUGGEST THAT THE RECIPIENT OF THE INCOME FROM THE ASSESSEE IS NOT TAXABLE UNDER THE A CT AND THERE IS NO BASIS FOR LD.CIT(A) TO COME TO THE CONCLUSION THAT THE RECIPIENTS ARE NOT ASSESSED TO INCOME TAX. IN OUR O PINION, UNLESS THE ASSESSEE PLACED NECESSARY EVIDENCE TO SUGGEST T HAT THE RECIPIENTS OF THE INCOME ARE NOT TAXABLE AND THEY A RE NOT HAVING PAN, ADDITION CANNOT BE DELETED MADE BY THE AO U/S. 40(A)(IA) OF THE ACT. HENCE, WE REMIT THE ISSUE TO THE FILE OF A O WITH A DIRECTION TO THE ASSESSEE TO PROVE THAT THE RECIPIE NTS OF THE INCOME IS NON-TAXABLE PERSONS. IF THEY ARE NOT NON TAXABLE PERSONS, THEN PAN IS NOT MENTIONED IN THE FORM NO.1 5G/H, THEN IT MAY CONSIDERED AS GOOD AND SUFFICIENT AND NOT TO DISALLOW U/S.40(A)(IA) OF THE ACT. HOWEVER, WE MAKE IT CLEAR THAT WHILE CONSIDERING THE ISSUE AFRESH, THE AO SHALL TAKE NOT E OF THE JUDGEMENT OF SPECIAL BENCH OF TRIBUNAL IN THE CASE OF MERILYN SHIPPING AND TRANSPORT V. ACIT (2012) 16 ITR (TRIB. ) 1 (SB) WHEREIN HELD THAT SECTION 40(A)(IA) IS NOT APPLICAB LE WHEN THERE IS ITA NO. 1276/MDS./2016 :- 5 -: NO OUTSTANDING BALANCE AT THE END OF THE CLOSE OF T HE YEAR RELEVANT TO THE ASSESSMENT YEAR IN RESPECT OF THESE PAYMENTS. HOWEVER, THE ASSESSEE HAS NOT BROUGHT ON RECORD, TH E DETAILS OF OUTSTANDING EXPENSES OR SCHEDULE OF SUNDRY CREDITOR S SHOWING WHETHER THE IMPUGNED AMOUNT IS OUTSTANDING AT THE E ND OF THE CLOSE OF THE PREVIOUS YEAR RELEVANT TO THE ASSESSME NT YEAR EITHER IN THE NAME OF THE PARTY OR OUTSTANDING EXPENSES. 6. WHEN THE PAYMENT IS NOT OUTSTANDING AT THE END OF THE CLOSE OF FINANCIAL YEAR, THE EXPENDITURE CANNOT BE DISALL OWED. WITH THIS OBSERVATION, WE REMIT THE ISSUE TO THE FILE OF AO F OR FRESH CONSIDERATION. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. AND CROSS OBJECTIONS FILED BY THE ASSESSEE IS DISMISSED AS INFRUCTUOUS. ORDER PRONOUNCED ON 28 TH OCTOBER, 2016, AT CHENNAI. SD/ - SD/ - ( . ) ( G.PAVAN KUMAR ) / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED: 28 TH OCTOBER, 2016 K S SUNDARAM ITA NO. 1276/MDS./2016 :- 6 -: &'(()*( +* / COPY TO: ( 1 . / APPELLANT 3. ( ,(- . / CIT(A) 5. */0 (1 / DR 2. / RESPONDENT 4. ( , / CIT 6. 02(3 / GF