Tip Top Builders & Construction Pvt. Ltd., Kolkata V. CIT-III, KOLKATA, Kolkata

ITA 1194/KOL/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4612 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 1 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 11-07-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 27-05-2014
• Court: TRIBUNAL
• Department Lawyers: NIRAJ KUMAR
• Assessee Lawyers: MIRAJ D. SHAH
• Keywords: Assessment record
• Section: 143(3); 133(6); 194C; 68; 263

Judgement Text

1 ITA NO. 1194/KOL/2014 TIP TOP BUILDERS & CONSTN. P. LTD., AY 2009-10 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA [BEFORE SHRI M. BALAGANESH, AM & SHRI S. S. VISWAN ETHRA RAVI, JM] I.T.A NO. 1194/KOL/2014 ASSESSMENT YEAR: 2009-10 TIP TOP BUILDERS & CONSTRUCTION PVT. LTD. VS. COM MISSIONER OF INCOME-TAX-III (PAN: AABCT2623E) KOLKATA. ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 11.07.2016 DATE OF PRONOUNCEMENT: 13.07.2016 FOR THE APPELLANT: SHRI MIRAJ D. SHAH, AR FOR THE RESPONDENT: SHRI NIRAJ KUMAR, CIT, DR ORDER PER SHRI M. BALAGANESH, AM: THIS APPEAL BY ASSESSEE IS ARISING OUT OF REVISION ORDER OF CIT, KOLKATA-III, KOLKATA VIDE NO. CIT-III/DC(HQ)-3/KOL/263/2013-14/7201-7203 DATE D 25/26.03.2014. ASSESSMENT WAS FRAMED BY ITO, WD-9(1), KOLKATA U/S. 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR AY 2009-10 VIDE HIS ORDER DATE D 30.12.2011. 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD CIT IS JUSTIFIED IN INVOKING REVISIONARY JURISDICTION U/S 263 OF THE AC T IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE BRIEF FACTS OF THIS ISSUE IS THAT THE RETUR N OF INCOME FOR THE ASST YEAR 2009-10 WAS FILED BY THE ASSESSEE ON 29.9.2009 DECLARING TAXABL E INCOME OF RS. 3,82,280/-. THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 30.12.2011 D ETERMINING THE TOTAL INCOME AT RS. 11,74,000/- AFTER MAKING CERTAIN DISALLOWANCES. THE LD CIT ON PERUSAL OF ASSESSMENT RECORDS, DOCUMENTS, ACCOUNTS, SUBMISSIONS ETC., IT WAS OBSER VED THAT THE ASSESSEE HAD PAID A SUM OF RS.6,31,14,006/- TO M/S. GANANAYAK VINCOM PVT. LTD. AND RS.7,31,63,040/- TO M/S UMANG MERCHANDISE PVT. LTD. THE TWO PARTIES AS PER 197(1) CERTIFICATE SUBMITTED WERE ENTITLED TO A LOWER RATE OF DEDUCTION OF TDS. M/S. GANANAYAK VIN COM PVT. LTD. WOULD ENJOY LOWER RATE FROM 26-02-2009 TO 31-03-2009 AND M/S UMANG MERCHAN DISE PVT. LTD. WOULD ENJOY THE 2 ITA NO. 1194/KOL/2014 TIP TOP BUILDERS & CONSTN. P. LTD., AY 2009-10 BENEFIT FROM 06-03-2009 TO 31-03-2009. THE ITO, WAR D-9(1), KOLKATA, THE A.O. ISSUED NOTICES U/S. 133(6) TO BOTH THE TWO PARTIES AND IN RESPONSE TO SUCH NOTICE, M/S. GANANAYAK VINCOM PVT. LTD. INFORMED THAT THEY HAD RECEIVED RS.6,59,31 ,83 4/- DURING THE PERIOD APRIL, 2008 & JANUARY, 2009 AND THE BALANCE RS.32,71,803/- IN MAR CH, 2009. TOTAL BILL INCLUDING SERVICE TAX WAS RS.6,92,03,637/-. M/S UMANG MERCHANDISE PVT. LT D. HAD STATED TO HAVE RECEIVED RS.7,72,99,427/- DURING APRIL, 2008 & JANUARY, 2009 AND BALANCE RS.44,42,642/- IN MARCH, 2009. TOTAL BILL INCLUDING SERVICE TAX WAS RS.8,17, 42,.051/-. IN OTHER WORDS THE ASSESSEE HAD MADE PAYMENTS OF RS.6,59,31,854 + RS. 7,72,99,427 = RS.14,32,31,261 BETWEEN APRIL 2008 AND JANUARY 2009 RS.32,71,803 + RS.44,42,642 = RS.7 7,14,445 IN MARCH 2009. THE ASSESSEE WAS SUPPOSED TO DEDUCT TDS AT NORMAL RATES ON RS.14 ,32,31,261/- AND AT A LOWER RATE ON RS.77,14,445/- AS PER RATES APPLICABLE FOR TDS U/S. 194C & 194I AS THE CASE MAY BE. THE ASSESSEE SHOULD HAVE DEDUCTED TAX AT SOURCE U/S 194 C ON CONTRACTS AND U/S 194I ON MACHINERY HIRING ETC. TOTALING TO RS.41,77,475/, BEING RS. 29 ,83,840/- AND RS.11.93,635/- U/S 194C & 194I RESPECTIVELY. AS PER DATA AVAILABLE, TDS OF RS.17,1 03/- ONLY WAS MADE FROM THESE TWO PARTIES RESULTING IN SHORT DEDUCTION OF TDS OF RS.41,60,372 /- [41,77,475 10,710]. CONVERSELY IT APPEARS THAT NO TAX WAS DEDUCTED ON EXPENDITURE OF RS.14,25,60,223/- AND SHOULD HAVE BEEN DISALLOWED U/S.40(A) (IA) OF THE I. T. ACT. NO PRO PER COMPLIANCE WAS MADE BY THE ASSESSEE BEFORE THE LD CIT BY GIVING PROPER REPLIES TO THE S HOW CAUSE NOTICE ON MERITS OF THE CASE. THE LD CIT HELD THAT THE POWER OF REVISION BY THE CIT U /S 263 IS VERY WIDE AND IT IS IN THE NATURE OF SUPERVISORY JURISDICTION. IT IS WELL SETTLED THAT INCORRECT ASSUMPTION OF FACTS OF APPLICATION OF LAW SATISFIES THE REQUIREMENT OF THE LAW I.E. ORDE R BEING ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. THE ORDER PASSED BY THE AO W ITHOUT APPLICATION OF MIND OR ORDERS SHOWING APPARENT ERROR OF REASONING OR THE ORDERS W HERE THE AO SIMPLY ACCEPTS WHAT THE ASSESSEE HAS STATED IN HIS RETURN OF INCOME AND FAI LS TO MAKE THE ENQUIRIES WHICH ARE CALLED FOR IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WILL AL SO CALL FOR INTERVENTION U/S 263 BY THE CIT. ACCORDINGLY HE DISMISSED THE PRELIMINARY OBJECTION RAISED BY THE ASSESSEE ON THE ASSUMPTION OF JURISDICTION U/S 263 OF THE ACT. THE LD CIT OBSERVE D THAT SINCE THE LOWER / NIL DEDUCTION CERTIFICATE U/S 197(1) OF THE ACT WAS AVAILABLE ONL Y FOR A LIMITED PERIOD OF TIME IN A YEAR, THE ASSESSEE OUGHT TO HAVE DEDUCTED TAX AT SOURCE ON PA YMENTS MADE PRIOR TO THE EXEMPTION PERIOD U/S 197(1) OF THE ACT AND CONCLUDED THAT THERE WAS SHORT DEDUCTION OF TAX AT SOURCE TO THE TUNE 3 ITA NO. 1194/KOL/2014 TIP TOP BUILDERS & CONSTN. P. LTD., AY 2009-10 OF RS. 41,60,372/- WARRANTING PROPORTIONATE DISALLO WANCE U/S 40(A)(IA) OF THE ACT. ACCORDINGLY HE HELD THAT THE ORDER PASSED BY THE LD AO WITHOUT MAKING THIS PROPORTIONATE DISALLOWANCE U/S 40(A)(IA) FOR SHORT DEDUCTION OF TDS AS ERRONEOUS A ND PREJUDICIAL TO THE INTEREST OF THE REVENUE. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US ON T HE FOLLOWING GROUNDS:- 1. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE NOTICE U/S 263 OF THE INCOME TAX ACT , 1961 ISSUED BY THE LEARNED COMMISSIONER OF INCOME T AX WAS WITHOUT JURISDICTION FOR WANT OF PROPER NOTICE AND OPPORTUNITY AND THE ORDER PASSED ON THE BASIS OF SUCH NOTICE WAS BAD IN LAW HENCE THE SAME BE QUASHED AND OR ANNULLED. 2. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE C ASE THE NOTICE U/S 263 OF THE INCOME TAX ACT 1961 ISSUED BY THE LEARNED COMMISSIONER OF INCOME T AX WAS WITHOUT JURISDICTION AND THE ORDER PASSED ON THE BASIS OF SUCH NOTICE WAS BAD IN LAW H ENCE THE SAME BE QUASHED AND OR ANNULLED. 3. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE C ASE THE LEARNED COMMISSIONER OF INCOME TAX ERRED IN HOLDING THAT THE ASSESSMENT ORDER PASSED B Y THE LEARNED ASSESSING OFFICER IN THE CASE OF THE APPELLANT WITH INADEQUATE INQUIRY AND HENCE ERR ONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AND THEREBY SETTING ASIDE THE SAID ASSESSME NT ORDER U/S 263 OF THE INCOME TAX ACT 1961. 4. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE C ASE THE LEARNED COMMISSIONER OF INCOME TAX ERRED IN HOLDING THAT THE ASSESSMENT ORDER PASSED B Y THE LEARNED ASSESSING OFFICER IN THE CASE OF THE APPELLANT WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AND THEREBY SETTING ASIDE THE SAID ASSESSMENT ORDER U/S. 263 OF THE INCOME TA X ACT 1961. 5. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE C ASE THE LEARNED COMMISSIONER OF INCOME TAX FAILED TO APPRECIATE THAT THE ASSESSMENT ORDER WAS NOT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AND AS SUCH THE LEARNED COMMISSIONER OF INC OME TAX HAD NO JURISDICTION TO INTERFERE WITH THE SAID ASSESSMENT ORDER. 6. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE C ASE THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX U/S 263 OF THE INCOME TA X ACT 1961 IS BASED ON WRONG APPRECIATION OF FACTS OF THE CASE AND IS BAD IN LAW. 7. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE C ASE THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX U/S 263 OF THE INCOME TA X ACT 1961 FAILED TO CONSIDER THE CORRECT LAW APPLICABLE TO PROVISIONS OF SECTION 68 OF THE I T ACT 1961 AND HENCE THE ORDER PASSED BE QUASHED. 8. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE C ASE THE DIRECTIONS CONTAINED IN THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX U/S 263 O F THE INCOME TAX ACT 1961 ARE BEYOND JURISDICTION AND HENCE THE SAME BE STRUCK DOWN OR Q UASHED. 9. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE C ASE THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX U/S 263 OF THE INCOME TA X ACT 1961 IS WITHOUT ANY BASIS AND HENCE THE SAME BE QUASHED. 10.THE APPELLANT CRAVES LEAVE TO PRESS NEW, ADDITIO NAL GROUNDS OF APPEAL OR MODIFY, WITHDRAW ANY OF THE ABOVE GROUNDS AT THE TIME OF HEARING OF THE APPEAL. 4. THE LD AR ARGUED THAT THERE CANNOT BE ANY DISAL LOWANCE U/S 40(A)(IA) OF THE ACT IN RESPECT OF SHORT DEDUCTION OF TAX AT SOURCE. RELIA NCE IN THIS REGARD WAS PLACED ON THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF C IT VS S.K.TIBREWAL IN ITAT NO. 183 OF 2012 G.A.NO. 2069 OF 2012 DATED 3.12.2012. HE STA TED THAT THE TRIBUNAL ORDER IN THE CASE OF S.K.TIBREWAL WAS PASSED IN ITA NO. 1135/KOL/2010 DA TED 21.10.2011 WHEREIN IT WAS HELD THAT THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT COUL D NOT BE MADE APPLICABLE FOR SHORT DEDUCTION 4 ITA NO. 1194/KOL/2014 TIP TOP BUILDERS & CONSTN. P. LTD., AY 2009-10 OF TAX AT SOURCE. HENCE, THE LD AO HAD ONLY TAKEN A POSSIBLE VIEW BY FOLLOWING THE JURISDICTIONAL TRIBUNAL ORDER WHILE FRAMING THE ASS ESSMENT U/S 143(3) OF THE ACT ON 30.12.2011. HENCE THE ORDER PASSED BY THE LD AO CANNOT BE CONST RUED AS ERRONEOUS. HE FURTHER ARGUED THAT IN ANY CASE, NO PREJUDICE IS CAUSED TO THE INT EREST OF THE REVENUE AS BOTH THE PARTIES TO WHOM PAYMENTS HAVE BEEN MADE BY THE ASSESSEE I.E M/ S GANANAYAK VINCOM PVT LTD AND M/S UMANG MERCHANDISE PVT LTD HAD DULY CONFIRMED TO THE LD AO ABOUT THE ENTIRE TRANSACTIONS WITH THE ASSESSEE U/S 133(6) OF THE ACT AND THEY AR E ALSO ASSESSED TO INCOME TAX WHEREIN THEY HAD DULY DISCLOSED THESE RECEIPTS IN THEIR RETURNS. HENCE BY APPLYING THE SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT WHICH HAS BEEN HELD TO BE RETROSPECTIVE IN OPERATION BY THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS ANSAL LAND MARK TOWNSHIP P LTD REPORTED IN 377 ITR 635 (DEL), NO DISALLOWANCE IN A NY CASE COULD BE MADE IN THE HANDS OF THE ASSESSEE U/S 40(A)(IA) OF THE ACT. HENCE THE PURP OSE OF REVISION ORDER U/S 263 FAILS. 5. IN RESPONSE TO THIS, THE LD DR ARGUED THAT THE LD AO HAD NOT PROPERLY EXAMINED THE PERIOD FOR WHICH SECTION 197(1) CERTIFICATES WERE I N FORCE. HE OUGHT TO HAVE APPLIED HIS MIND BY MAKING DISALLOWANCE U/S 40(A)(IA) OF THE ACT IN RESPECT OF PAYMENTS MADE BY THE ASSESSEE FOR THE PERIOD APRIL 2008 TO JAN 2009 OR SUCH OTHER PERIOD AS THE CASE MAY BE. DESPITE THE FACT THAT THE ENTIRE REPLIES FILED BY THOSE TWO PARTIES IN RESPONSE TO NOTICES ISSUED U/S 133(6) OF THE ACT , AND DESPITE THE FACT THAT ALL THE DATA WERE V ERY MUCH AVAILABLE ON RECORD INCLUDING THE SECTION 197(1) CERTIFICATES, THE LD AO HAD NOT PROP ERLY APPLIED HIS MIND ON THE SAME. HENCE REVISIONARY JURISDICTION INVOKED BY THE LD CIT DIRE CTING THE LD AO TO MAKE PROPORTIONATE DISALLOWANCE U/S 40(A)(IA) OF THE ACT FOR SHORT DED UCTION OF TAX AT SOURCE IS RIGHT IN LAW. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE FACTS STATED HEREINABOVE REMAIN UNDISPUTED AND HENCE THE SAME ARE NOT REITERATED FOR THE SAKE OF BREVITY. WE FIND THAT THE ULTIMATE PURPOSE OF INVOKING JURISDICTION U/S 263 OF THE ACT IS TO M AKE PROPORTIONATE DISALLOWANCE U/S 40(A)(IA) OF THE ACT FOR SHORT DEDUCTION OF TAX AT SOURCE. WE FIND THAT THE SHORT POINT THAT ARISES FOR CONSIDERATION IS WHETHER THE DISALLOWANCE U/S 40(A) (IA) OF THE ACT COULD BE MADE FOR SHORT DEDUCTION OF TAX AT SOURCE. WE FIND THAT THIS ISSU E HAS BEEN HELD IN FAVOUR OF THE ASSESSEE BY THE CO-ORDINATE BENCH DECISION OF THIS TRIBUNAL IN THE CASE OF DCIT VS S K TIBREWAL IN ITA NO. 5 ITA NO. 1194/KOL/2014 TIP TOP BUILDERS & CONSTN. P. LTD., AY 2009-10 1135/KOL/2010 DATED 21.10.2011 WHEREIN IT WAS HELD THAT IN THE CASE OF SHORT DEDUCTION OF TAX AT SOURCE, NO DISALLOWANCE U/S 40(A)(IA) OF THE ACT COULD BE MADE IN THE HANDS OF THE ASSESSEE AND THE ASSESSEE COULD BE PROCEEDED AGAINST ONLY UN DER SECTION 201 OF THE ACT IN SUCH CASES. THIS DECISION WAS ADMITTEDLY APPROVED BY THE HONBL E CALCUTTA HIGH COURT IN THE SAME CASE IN ITAT NO. 183 OF 2012 G.A.NO. 2069 OF 2012 DATED 3. 12.2012. WE ALSO FIND THAT THE ASSESSMENT ORDER WAS PASSED U/S 143(3) OF THE ACT O N 30.12.2011 WHICH WAS AFTER THE DECISION RENDERED BY THIS TRIBUNAL ON 21.10.2011. HENCE, IT COULD BE SAFELY CONCLUDED THAT THE LD AO HAD FOLLOWED THE JURISDICTIONAL TRIBUNAL DECISION W HILE ADJUDICATING THE ISSUE OF DISALLOWANCE U/S 40(A)(IA) OF THE ACT THOUGH HE MIGHT NOT HAVE M ENTIONED THE SAME IN HIS ASSESSMENT ORDER. IN SUCH CIRCUMSTANCES, THE ORDER PASSED BY THE LD A O CANNOT BE CONSTRUED AS ERRONEOUS. MOREOVER, THE DECISION OF THE TRIBUNAL PURPORTEDLY RELIED BY THE LD AO HAD BEEN APPROVED BY THE HONBLE HIGH COURT. IN THESE CIRCUMSTANCES, W E CAN SAFELY CONCLUDE THAT THE LD AO HAD TAKEN ONE OF THE POSSIBLE VIEW. IT IS WELL SETTLED THAT TWIN CONDITIONS STIPULATED IN SECTION 263(1) OF THE ACT ARE TO BE SATISFIED I.E THE ORDER BEING ERRONEOUS AND THE OTHER IS IT SHOULD BE PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN TH E INSTANT CASE, ONE OF THE TWIN CONDITION IS NOT SATISFIED. HENCE, WE HAVE NO HESITATION IN QUASHIN G THE REVISION ORDER PASSED U/S 263 OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 13.07.201 6 SD/- SD/- (S. S. VISWANETHRA RAVI) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTAN T MEMBER DATED :13 TH JULY, 2016 JD.(SR.P.S.) 6 ITA NO. 1194/KOL/2014 TIP TOP BUILDERS & CONSTN. P. LTD., AY 2009-10 COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT TIP TOP BUILDERS & CONSTRUCTION PVT. LT D., C/O D. J. SHAH & CO., KALYAN BHAVAN, 2, ELGIN ROAD, KOLKATA-7 00020 2 RESPONDENT CIT-III, KOLKATA. 3 . THE ACIT, KOLKATA 4. 5. DCIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .