ITO, Chandigarh V. Mr. Satish Kumar, Chandigarh

ITA 1146/CHANDI/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2298 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 28-05-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 08-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rectification of order; Non-deduction of tax; Difference of opinion; Assessment record; Change of opinion
• Section: 143(3); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES SMCCHANDIGARH BEFORE MS SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 1146/CHD/2012 ASSESSMENT YEAR:2006-07 THE ITO WARD 5(3), V SH SATISH KUMAR, CHANDIGARH. # 3201, SECTOR 45-D, CHANDIGARH. PAN NO. AIRPK-9559K (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI AKHILESH GUPTA RESPONDENT BY : SHRI DEEPAK AGGAR WAL DATE OF HEARING : 28.05.2013 DATE OF PRONOUNCEMENT : 29.05.2013 ORDER THE ASSESSEE HAS FILED THE APPEAL AGAINST THE ORDER OF THE CIT(A), DATED 31.08.2012 RELATING TO ASSESSMENT YEAR 2006-0 7 AGAINST THE ORDER PASSED UNDER SECTION 154 OF THE I.T. ACT, 1961. 2. THE REVENUE RAISED THE FOLLOWING GROUNDS OF APPE AL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING APPEAL OF THE ASSE SSEE WITHOUT APPRECIATING THE FACTS OF THE CASE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND, IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF K' S.47,8 1,505/ MADE BY THE ASSESSING OFFICER BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE INCOME-TAX ACT, 1961 FOR FAILURE T O COMPLY WITH THE PROVISIONS OF SECTION-194 C. 3. IT IS PRAYED THAT THE ORDER OF THE LD. CIT (A) BE S ET ASIDE AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 4. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROU NDS OF 2 APPEAL BEFORE THE APPEAL IS HEARD OR IS DISPOSED OF F. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E WAS A CONTRACTOR AND DURING THE YEAR UNDER CONSIDERATION HAD DEBITED SUM OF RS.47,81,505/- TO THE PROFIT & LOSS ACCOUNT ON ACCOUNT OF LABOUR CHARGES, FOR WHICH NO TAX WAS DEDUCTED AT SOURCE. THE AO INITIALLY PASSED ASSESS MENT ORDER U/S 143(3) OF THE IT ACT VIDE ORDER DATED 22.05.2008 ON TAXABLE I NCOME OF RS.343,790/-. THEREAFTER, ORDER U/S 154 OF THE ACT WAS PASSED ENH ANCING THE INCOME OF RS.47,81,505/-. 4. THE CIT(APPEALS) REJECTED THE CONTENTION OF THE ASSESSEE IN RESPECT OF NON-SERVICE OF NOTICE U/S 154 OF THE ACT IN VIEW OF THE FACT THAT THE IMPUGNED NOTICE WAS SENT TO THE ASSESSEE BY SPEED P OST, THOUGH ACKNOWLEDGEMENT OF SERVICE OF THE SAID NOTICE WAS N OT AVAILABLE ON RECORD BUT THE NOTICE WAS NOT RECEIVED BACK UNDELIVERED AN D HENCE THE CIT(APPEALS) HELD THE SERVICE OF NOTICE TO BE VALID . FURTHER, IT WAS HELD BY THE CIT(APPEALS) THAT THE REQUIREMENT OF DEDUCTION OF TAX AT SOURCE AND THE APPLICATION OF THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT WAS A DEBATABLE ISSUE AND CONSEQUENTLY THE RECTIFICATION U/S 154 OF THE ACT COULD NOT BE DONE ON THIS ISSUE. THE ORDER PASSED U/S 154 OF THE IT ACT WAS THUS CANCELLED BY THE CIT(APPEALS). 5. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF TH E CIT(APPEALS). THE LD. DR FOR THE REVENUE PLACED RELIANCE ON THE ORDER OF THE AO. 6. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT THE NOTICE ISSUED U/S 154 OF THE ACT WAS NOT SERVED UPON THE ASSESSEE AND HEN CE, THERE WAS NO REPRESENTATION BEFORE THE AO. HOWEVER, IT WAS FAIR LY ADMITTED BY THE LD. AR FOR THE ASSESSEE THAT THE ORDER ISSUED U/S 154 OF T HE ACT AT THE SAME ADDRESS WAS SERVED UPON THE ASSESSEE WITHIN TIME. FURTHER, IT WAS POINTED OUT BY THE LD. AR FOR THE ASSESSEE THAT THE ISSUE RAISED VIDE THE ALLEGED NOTICE U/S 154 3 OF THE ACT WAS HIGHLY DEBATABLE AND THERE WAS NO ME RIT IN THE INVOKING OF THE PROVISIONS OF SECTION 154 OF THE IT ACT. RELIA NCE WAS PLACED ON THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN MEPCO IND USTRIES LTD. V CIT 319 ITR 208 (S.C). 7. ON PERUSAL OF RECORD AND THE ORDER OF THE CIT(AP PEALS), IT TRANSPIRES THAT THE ISSUE RAISED IN THE PRESENT APPEAL IS AGAI NST THE ORDER PASSED U/S 154 OF THE ACT ENHANCING THE INCOME OF THE ASSESSEE BY RS.47,81,505/-. THE ORIGINAL ASSESSMENT IN THE CASE WAS COMPLETED U/S 1 43(3) OF THE ACT VIDE ORDER DATED 22.05.2008. THEREAFTER, THE AO HAD ISS UED NOTICE U/S 154 OF THE ACT AND THE SAME WAS SENT VIDE SPEED POST AT THE GI VEN ADDRESS OF THE ASSESSEE. THE NECESSARY EVIDENCE IN THIS REGARD WA S AVAILABLE ON THE ASSESSMENT RECORD AND THE SAME WAS PERUSED BY THE C IT(APPEALS). HOWEVER, NO ACKNOWLEDGEMENT OF SERVICE OF THE SAID NOTICE WA S AVAILABLE ON RECORD. BUT THE SAID NOTICE ISSUED U/S 154 OF THE ACT WAS N OT RECEIVED BACK UNDELIVERED BY THE AO. THE ASSESSEE WAS FURTHER IN RECEIPT OF THE ORDER PASSED U/S 154 OF THE ACT AT THE SAME ADDRESS TO WH ICH NOTICE U/S 154 OF THE ACT WAS ISSUED. IN VIEW OF THE ABOVESAID FACTS AND CIRCUMSTANCES OF THE CASE, THERE IS NO MERIT IN THE PLEA OF THE ASSESSEE THAT NO NOTICE U/S 154 OF THE ACT WAS SERVED UPON THE ASSESSEE. 8. THE SECOND ISSUE RAISED IN THE PRESENT APPEAL IS WHETHER THE ISSUE IN QUESTION I.E. THE APPLICABILITY OF THE PROVISIONS O F SECTION 40(A)(IA) OF THE ACT FOR NON-DEDUCTION OF TAX AT SOURCE TO THE LABOU R CHARGES PAID BY THE ASSESSEE, WAS DEBATABLE ISSUE OR NOT. THE MAJORITY VIEW OF THE SPECIAL BENCH OF VISHAKHAPATNAM TRIBUNAL IN ACIT VS. MERILY N SHIPPING & TRANSPORTS ITA NO.477 /VIG /2008 (SB) HELD THAT WHE RE THE EXPENSES HAVE BEEN PAID BY THE ASSESSEE DURING THE YEAR ITSELF, T HERE WAS NO REQUIREMENT FOR TAX DEDUCTION AT SOURCE AND THE PROVISIONS OF S ECTION 40(A)(IA) OF THE ACT WERE NOT APPLICABLE. NOW THE HON'BLE GUJRAT HIGH CO URT IN CIT V SIKANDER 4 KHAN N.TUNVAR & OTHERS, ITA NO.905 OF 2012 JUDGME NT DATED 2.5.2013 AND THE HON'BLE CALCUTTA HIGH COURT IN CIT V CRESEN T EXPORT SYNDICATE ITA NO.20 OF 2013, G.A.NO. 190 OF 2013 HAVE REVERSE D THE DECISION OF SPECIAL BENCH IN ACIT VS. MERILYN SHIPPING & TRANSP ORTS (SUPRA). 9. THE HON'BLE SUPREME COURT IN MEPCO INDUSTRIES LT D. V CIT (SUPRA) HAVE LAID DOWN THE PRINCIPLE THAT WHERE THE ISSUE I S DEBATABLE, THEN THE APPLICATION OF ONE VIEW DURING THE COURSE OF ASSESS MENT PROCEEDINGS AND ANOTHER VIEW DURING THE COURSE OF RECTIFICATION U/S 154 AMOUNTS TO CHANGE OF OPINION AND THE SAME CANNOT BE UNDERTAKEN U/S 154 O F THE ACT BY WAY OF RECTIFICATION OF MISTAKE. 10. IN THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN VIEW OF THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN MEPCO INDUSTRIES V CIT (SUPRA), I FIND NO MERIT IN THE ORDER OF THE AO AND UPHOLD THE ORDER OF THE CIT(APPEALS). THE GROUND OF APPEAL RAISED BY T HE REVENUE IS DISMISSED. 11. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 29 TH DAY OF MAY, 2013. SD/- (SUSHMA CHOWLA) JUDICIAL MEMBER DATED : 29 TH MAY,2013 POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR BY ORDER ASSISTANT REGISTRAR, ITAT, CHANDIGARH