VED PRAKASH SAMARIYA, Jaipur V. ACIT, Jaipur

ITA 116/JPR/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5403 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 30-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA JCIT DHK
• Assessee Lawyers: D P KHANDELWAL
• Keywords: Bonafide belief; Retrospective amendment; Non-deduction of tax; Reasonable cause
• Section: 143(3); 201(1); 154

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH EQDQY DS-JKOR] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI MUKUL K. SHRAWAT, JM & SHRI T.R.MEENA, AM VK;DJ VIHY LA- @ ITA NO. 116/JP/2015 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2008-09 VED PRAKASH SAMARIYA, PROP- SAMARIYA AUTOMOBILES, B-2, TRANSPORT NAGAR, JAIPUR. CUKE VS. A.C.I.T., CIRCLE-5, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ L A-@ PAN/GIR NO.: ADTPS 8880 N VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI D.P. KHANDELWAL (CA) JKTLO DH VKSJ LS @ REVENUE BY : SHRI RAJ MEHRA (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 08/03/2016. MN?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 11/03/2016. VKNS'K@ ORDER PER T.R. MEENA, A.M THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 15/12/2014 OF THE LEARNED C.I.T.(A)-II, JAIPUR FOR A .Y. 2008-09. THE EFFECTIVE GROUNDS OF THE APPEAL ARE AS UNDER:- 1. THAT THE LEARNED ACIT CIRCLE 5, JAIPUR AS WELL AS LEARNED CIT (APPEALS II), JAIPUR BOTH HAVE ERRED IN LAW AND O N FACTS BY DISALLOWING/CONFIRMING THE DISALLOWANCE OF R ENT PAID OF RS. 131280 AND HENCE THE UNJUSTIFIED ADDITI ON IS TO BE SET RIGHT BY YOUR HONOR. 2 ITA NO. 116/JP/2015 VED PRAKASH SAMARIYA VS ACIT 2. THAT IN VIEW OF FACTUAL AND LEGAL POSITION UNLESS THE ASSESSEE APPELLANT IS DECLARED DEFAULTER U/S 201(1 A) OF THE ACT, DISALLOWANCE OF EXPENSES DONE WITHOUT MAKIN G TDS U/S 40(A)(IA) OF THE ACT, COULD NOT BE MADE. THEREFORE THE DISALLOWANCES TO BE DELETED. 3. THAT AS PER SUBMISSIONS MADE TO THE LEARNED ASSES SING AUTHORITY AND AGAIN THE FACTUAL AND LEGAL SUBMISSIO NS MADE TO THE LEARNED CIT (APPEALS II), JAIPUR AND FURTHER SUBMISSIONS TO BE MADE AT THE TIME OF HEARI NG OF THE APPEAL, IT WILL BE FAR CLEAR THAT FACTS AND L EGAL POSITION ARE IN FAVOR THE ASSESSEE APPELLANT, SINCE IT HAS BEEN HELD BY VARIOUS ITAT AND HON. HIGH COURT THAT T HE NEW SECOND PROVISO ADDED IN SECTION 40(A)(IA) AND FI RST PROVISO IN SECTION 201(1) OF THE ACT SINCE 2012 WERE OF CURATIVE NATURE AND ARE APPLICABLE FROM RETROSPECTI VE EFFECT FROM 1 ST APRIL 2005' 2. ALL THE GROUNDS OF APPEAL ARE REVOLVING AROUND R ECTIFYING THE ORDER AND MAKING ADDITION U/S 40(A)(IA) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) FOR RS. 1,31,280/-. THE ASSESSEE IS IN ENGA GED IN THE BUSINESS OF AUTO OIL AND LUBRICANTS. HE FILED HIS RETURN FOR YE AR UNDER CONSIDERATION ON 30/09/2008 DECLARING TOTAL INCOME OF RS. 13,24,3 70/-. THE CASE WAS SCRUTINIZED U/S 143(3) OF THE ACT AND ORDER WAS PASS ED ON 29/12/2010 BY THE ASSESSING OFFICER. THEREAFTER NOTICE U/S 154 OF THE ACT WAS ISSUED BY THE ASSESSING OFFICER AND IT WAS FOUND BY HIM THAT T HE ASSESSEE HAD PAID HOUSE RENT AND NO TDS HAS BEEN DEDUCTED U/S 194(I) OF THE ACT ON RS. 3 ITA NO. 116/JP/2015 VED PRAKASH SAMARIYA VS ACIT 1,31,280/-. THEREFORE, THESE PAYMENTS ARE NOT ALLOWA BLE U/S 40(A)(IA) OF THE ACT. 3. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD CIT(A), WHO HAD DISM ISSED THE APPEAL BY OBSERVING AS UNDER:- 2.3 I HAVE PERUSED THE FACTS OF THE CASE, ASSESSME NT ORDER AND THE SUBMISSIONS OF THE APPELLANT. THIS IS A CASE, WHE RE THE APPELLANT, AN INDIVIDUAL WHOSE TURNOVER EXCEEDS THE MONETARY LIMIT SPECIFIED IN SECTION 44AB, WAS REQUIR ED TO DEDUCT TAX SOURCE FOR RENT PAID AMOUNTING TO RS. 1,31,280/-. IT HAS BEEN STATED THAT TDS COULD NOT B E DEDUCTED BECAUSE THE LANDLORD INSISTED SO, SINCE NO TAX WAS PAYABLE ON HIS TOTAL INCOME. THE APPELLANT HAS SUBMITTED A COPY OF THE ACKNOWLEDGMENT OF THE RETURN OF INCOME OF THE APPELLANT WHICH SHOWS THAT REFUND WAS DUE. THE SECOND PROVISO TO SEC 40(A)(IA) HAS BEEN INTRODU CED BY THE FINANCE ACT, 2012 AND IS EFFECTIVE FROM 1/4/ 2013. THEREFORE, IT IS NOT APPLICABLE TO THIS ASSESSMENT Y EAR. ALSO, THE PROVISO TO SEC 201(1) HAS BEEN INTRODUCED BY THE FINANCE ACT, 2012 AND IS EFFECTIVE FROM 1/7/2012. THEREFORE, IT IS NOT APPLICABLE TO THIS ASSESSMENT Y EAR. IT IS THEREFORE, HELD THAT THE ASSESSING OFFICER HAS CORR ECTLY 4 ITA NO. 116/JP/2015 VED PRAKASH SAMARIYA VS ACIT DISALLOWED THE RENT PAID U/S. 40(A)(IA) OF THE I.T. A CT. THE ABOVE GROUNDS ARE DISMISSED. 4. NOW THE ASSESSEE IS IN APPEAL BEFORE US. THE LD AR OF THE ASSESSEE HAS ARGUED THAT THE TDS WAS NOT DEDUCTED ON RENT PAID DUE TO THE INSISTENCE OF LANDLORD THAT HIS CASE WILL BE A REFUN D CASE AND IN CASE ANY DEMAND IS RAISED, HE WILL PAY OR DEPOSIT ALONGWITH SU BMISSION OF RETURN OF INCOME. THAT AS PER RETURN FILED BY SH. PRABHU DAYAL , A.Y. 2008-09 WITH PAN ACQPK2217F ON 25/2/2009, HE WAS ENTITLED FOR A R EFUND OF RS. 370, COPY OF ACKNOWLEDGEMENT AND COMPUTATION OF INCOME WER E SUBMITTED TO THE ASSESSING OFFICER AND HAS BEEN FILED WITH THE PR ESENT APPEAL. HE FURTHER RELIED ON THE DECISION OF HON'BLE SUPREME C OURT IN THE CASE OF HINDUSTAN COCA COLA BEVERAGES PVT. LTD. VS. CIT 293 ITR PAGE 226, HONBLE RAJASTHAN HIGH COURT DECISION IN THE CASE O F CIT VS. RATHI GUM INDUSTRIES, 213 ITR 198 AND THE DECISION OF HONBLE ITAT JAIPUR BENCH B IN THE CASE OF M/S CHEER SAGAR VS. ITO WARD 3(2), TD S, JAIPUR IN ITA NO. 107/JP/2005 ORDER DATED 30/05/2008 FULLY COVERS THE ISSUE INVOLVED IN THIS CASE AND HENCE THE ORDERS PASSED BY THE LD ASS ESSING OFFICER AND CONFIRMED BY THE LD CIT (APPEALS)-II, JAIPUR ARE NOT SUSTAINABLE IN THE EYES OF LAW. THIS VIEW HAS BEEN FURTHER AFFIRMED BY H ONORABLE GUJARAT HIGH COURT IN CASE OF CIT(TDS) V/S D.P.VEKARIA (TAXMAN 2014) 227 PAGE 5 ITA NO. 116/JP/2015 VED PRAKASH SAMARIYA VS ACIT 146 WHEREIN THE SAME JUDGMENT HAS BEEN DELIVERED REL YING ON THE ABOVE STATED APEX COURT DECISION GIVEN IN THE CASE OF HIN DUSTAN COCA COLA BEVERAGES PVT. LTD. HE FURTHER SUBMITTED THAT IN AD DITION TO THESE CASES HONORABLE ITAT AGRA BENCH IN THE CASE OF RAJEEV KUMA R AGARWAL VS. ADDL. COMMISSIONER OF INCOME TAX (2014) 34 ITR (TRIB) 479 (AGRA) HAS HELD THAT UNLESS THE ASSESSEE IS NOT DECLARED DEFAU LTER AS PER THE FIRST PROVISO TO SECTION 201(TA) WHICH WAS INTRODUCED BY T HE FINANCE ACT 2012 THEN THE SECOND PROVISO TO SECTION 40(A)(IA) WOULD N OT BE APPLICABLE. IT IS A CASE WHERE THERE IS NO LOSS OCCURRED TO THE EXCHE QUER AND HENCE THE ASSESSEE WOULD NOT BE TREATED AS ASSESSEE IN DEFAULT . THEREFORE IF THE ASSESSEE IS NOT A DEFAULTER UNDER SECTION 201(1 A) OF THE ACT THEN THE SECOND PROVISO TO SECTION 40(A)(IA) WOULD NOT BE AP PLICABLE. SECTION 40(A)(IA) WAS NOT A PENAL PROVISION TO PUNISH THE LA PSES OF NON-DEDUCTION OF TAX AT SOURCE FROM PAYMENTS FOR EXPENDITURE .PAR TICULARLY WHEN THE RECIPIENTS HAD TAKEN INTO ACCOUNT INCOME EMBEDDED I N THE PAYMENTS AND PAID DUE TAXES THEREON AND FILED THE INCOME TAX RET URNS IN ACCORDANCE WITH THE LAW. THE ASSESSEE COULD NOT BE PUNISHED FOR NON-DEDUCTION OF TAX AT SOURCE WHEN THE CORRESPONDING INCOME WAS DULY BROUGHT TO TAX. THE INSERTION OF THE SECOND PROVISO TO SECTION 40(A) (IA)WAS DECLARATORY 6 ITA NO. 116/JP/2015 VED PRAKASH SAMARIYA VS ACIT AND CURATIVE IN NATURE AND IT HAS RETROSPECTIVE EFF ECT FROM APRIL 1,2005. FURTHER HON. LNCOME TAX APPELLATE TRIBUNAL. MUMBAI-T BENCH.ITA NO. 1056/MU M/2 011 A.Y.20006-07. DR.ADI R. NAZIR (DATE OF PRONOUNCEMENT : 26-11-2014) HAS HELD THAT SECOND PROVISO ADDED TO THE SECTION 40(A)(IA) OF THE ACT IN 2012 WAS APPLICABLE FROM RETROSPECTIVE EFFECT BECAUSE THIS AMENDMENT WAS CURATIVE IN NATURE AND IS APPLICABLE R ETROSPECTIVELY AND ACCORDINGLY BASING ITS DECISION GIVEN BY THE HONORA BLE KARNATAKA HIGH COURT WHERE IN IT HAS HELD THAT IF THE DEDUCTEE PAY S THE TAX NO DISALLOWANCE SHOULD BE MADE UNDER SECTION 40(A)(IA). THIS DECISION WAS GIVEN IN THE CASE OF SANTOSH KUMAR SHETT (INCOME TAX APPEAL NO. 590/2013) ON 15TH JULY 2014. THIS VIEW IS ALSO SUPPOR TED BY THE JUDGMENT DELIVERED BY THE GUJARAT HIGH COURT IN THE CASE OF OM PRAKASH R.CHOUDHARY IN THE TAX APPEAL NO.412/2013. HE HAS FURTHER SUBMITTED THAT IN ADDITION TO ABOVE THE DECISION BEING GIVEN BY HON,HIGH COURT OF DELHI IN CASE OF C OMMISSIONER OF INCOME TAX-I V/S. ANSAL LAND MARK TOWNSHIP (P)LTD. ON 26.08.2015 (REF. TAXMAN VOL.234 PAGE 825) CLEARLY SAYS THAT SECOND PROVISO TO SECTION 40(A)(IA) IS DECLARATORY AND CURATIVE AND IT HAS RE TROSPECTIVE EFFECT FROM 1.04.2005. IN THIS CASE IT WAS HELD THAT WHERE ASSES SEE MADE PAYMENTS 7 ITA NO. 116/JP/2015 VED PRAKASH SAMARIYA VS ACIT TO A RESIDENT WITHOUT DEDUCTING TAX AT SOURCE UNDER SECTION 194J AND SINCE PAYEE HAD FILED RETURN AND OFFERED SUM RECEIV ED FROM ASSESSEE TO TAX, IMPUGNED DISALLOWANCE MADE UNDER SECTION 40(A)( IA) DESERVED TO BE DELETED- HELD, YES [PARAS 13 AND 14]. THE FACTS OF THE CASE OF THE ASSESSEE -APPELLANT ARE SQUARELY COVERED BY ABOVE S TATED DECISIONS AND THEREFORE THE DISALLOWANCE MADE OF RS. 131280/- IS T OTALLY ILLEGAL AND UNJUSTIFIED AND HENCE IS TO BE DELETED BY YOUR HONO R. ALTERNATIVELY, SINCE THE ASSESSEE WAS PREVENTED ON ACCOUNT OF SUFFICIENT AND REASONABLE CAUSE AND UNDER BONAFIDE BELIEF FROM DEDUCTING THE TAX & THE DEPARTMENT ALSO DID NOT SUFFER ANY REVENUE LOSS BECAUSE THE SA ME WAS PAID BY THE DEDUCTEE, THEREFORE CONSIDERING THE FACTS AND LEGAL SUBMISSIONS CITED AS ABOVE IT IS THEREFORE PRAYED THAT THE RENT EXPENSE ALLOWED EARLIER SHOULD NOT BE DISTURBED AND THE UNJUSTIFIED ADDITION OF RS . 131280/- BE DELETED IN TOTO. 5. AT THE OUTSET, THE LD DR HAS VEHEMENTLY SUPPORTE D THE ORDER OF THE LD CIT(A). 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE RE CIPIENT HAS ALREADY PAID TAX AND EVIDENCE HAS BEEN PRODUCED BEFORE THE ASSESSING OFFICER AS 8 ITA NO. 116/JP/2015 VED PRAKASH SAMARIYA VS ACIT THE RECIPIENT HAD CLAIMED REFUND BY FILING THE RETU RN. THE CASE LAWS CITED ARE SQUARELY APPLICABLE AND THERE IS NO REVENUE LOS S. THEREFORE, APPEAL FILED BY THE ASSESSEE IS ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11/03/2016. SD/- SD/- EQDQY DS-JKOR VH-VKJ-EHUK (MUKUL K. SHRAWAT) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 11 TH MARCH, 2016 RANJAN* VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1 VIHYKFKHZ @ THE APPELLANT- SHRI VED PRAKASH SAMARIYA, JAIPUR.. 2. IZR;FKHZ @ THE RESPONDENT- THE A.C.I.T., CIRCLE-5, JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 116/JP/2015) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR