The ITO, Ward-1(2), Surat V. M/s. Dineshkumar Deepakkumar Creations Pvt.Ltd., Surat

ITA 1278/AHD/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 76764 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 15-05-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 06-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Keywords: Income from undisclosed sources; Non-deduction of tax; Bad and doubtful debts
• Section: 43B

Judgement Text

, , , , , , , , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD .., ! ! ! ! ' #$, BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER 1. !./ I.T.A. NO.1278/AHD/2013 A.Y. 2009-10 2. !./ I.T.A. NO.687/AHD/2013 A.Y. 2009-10 1. INCOME TAX OFFICER WARD-1(2) AAYAKAR BHAVAN MAJURA GATE SURAT 395 001 2. M/S.DINESHKUMAR DEEPAKKUMAR CREATIONS PVT.LTD. SURAT / VS. 1. M/S.DINESHKUMAR DEEPAKKUMAR CREATIONS PVT.LTD. 314, SHREE KRISHNA MKT RING ROAD, SURAT-395002 2. INCOME TAX OFFICER WARD-1(2) SURAT & !./'( !./ PAN/GIR NO. : AACCD 0604 L ( &) / // / APPELLANTS ) .. ( *+&) / RESPONDENTS ) REVENUE BY : SHRI P.L.KUREEL, SR.DR ASSESSEE BY : SHRI MEHUL SHAH ' , - $. / / / / DATE OF HEARING : 15/05/2014 /01 - $. / DATE OF PRONOUNCEMENT : 30/05/2014 2 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THESE CROSS-APPEALS BY THE REVENUE AND THE ASSES SEE ARE DIRECTED AGAINST THE ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-I, SURAT (CIT(A) FOR SHORT) DATED 05/02/2013 PERTAI NING TO ASSESSMENT YEAR (AY) 2009-10. THESE APPEALS WERE HEARD TOGET HER AND ARE BEING ITA NO.1278/AHD/13 (BY REVENUE )& ITA NO.687/AHD/13 (BY ASSESSEE) ITO VS. M/S.DINESHKUMAR- DEEPAKKUMAR CREATIONS PVT.LTD. ASST.YEAR 2009-10 - 2 - DISPOSED OF BY WAY OF THIS CONSOLIDATED ORDER FOR T HE SAKE OF CONVENIENCE. 2. FIRST, WE TAKE UP THE REVENUES APPEAL IN ITA NO .1278/AHD/2013 FOR AY 2009-10. THE REVENUE HAS RAISED THE FOLLOW ING GROUNDS OF APPEAL:- [1] ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND IN LAW, THE LD.CIT(A)-I, SURAT HAS ERRED IN RESTRICTING THE ADD ITION OF RS.58,43,976/- MADE ON ACCOUNT OF DISALLOWANCE BAD DEBT TO RS.1,18,567/- IN SPITE OF THE FACTS THAT THE ASSESS EE WAS UNABLE TO PROVE THE GENUINENESS OF THE DEBTORS AND NEITHER AN Y STEPS WERE NOT TAKEN TO RECOVER THE DEBTS NOT PROVIDED ANY SUB STANTIAL PROOFS UNDER WHICH CIRCUMSTANCES THE DEBT BECAME BA D DEBT. [2] ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND IN LAW, THE LD.CIT(A)-I, SURAT HAS ERRED IN RESTRICTING THE ADD ITION OF RS.58,43,976/- MADE ON ACCOUNT OF DISALLOWANCE BAD DEBT TO RS.1,18,567/- RELYING ON THE HONBLE SUPREME COURT S DECISION IN THE CASE OF TRF LTD. V/S. CIT 323 ITR 397 EVEN T HOUGH THE FACTS OF THE CASE IS NOT IDENTICAL AS THE BONAFIDEN ESS OF THE DEBTORS WERE NOT ESTABLISHED IN THIS CASE. [3] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD.CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFF ICER. [4] IT IS THEREFORE, PRAYED THAT THE ORDER OF THE C IT(A) MAY BE SET- ASIDE AND THAT OF ASSESSING OFFICER MAY BE RESTORED TO THE ABOVE EXTENT. 2.1. BRIEFLY STATED FACTS ARE THAT A SURVEY U/S.1 33A OF THE I.T.ACT, 1961 (HEREINAFTER AS ACT) WAS CARRIED OUT AT THE BU SINESS PREMISES OF THE ASSESSEE ON 18/03/2009. DURING THE COURSE OF SURV EY, A NOTE-BOOK WAS FOUND FROM THE PREMISES WHEREIN ACCOUNTS OF UNACCOU NTED SALES OF CLOTH AMOUNTING TO RS.52,15,573/- WERE WRITTEN. THE ASSE SSEE ADMITTED THESE ITA NO.1278/AHD/13 (BY REVENUE )& ITA NO.687/AHD/13 (BY ASSESSEE) ITO VS. M/S.DINESHKUMAR- DEEPAKKUMAR CREATIONS PVT.LTD. ASST.YEAR 2009-10 - 3 - AMOUNTS RECEIVABLE FROM THE PARTIES TO WHOM SALES H AVE BEEN MADE OUT OF BOOKS. THE ASSESSEE ALSO ADMITTED IT AS UNACCOU NTED INCOME FOR THE F.Y. 2008-09 OVER AND ABOVE HIS REGULAR INCOME. TH E NOTE BOOK INVENTORISED AS ANN.BF-12 WAS IMPOUNDED U/S.133A(3) OF THE ACT. FURTHER, CASH BALANCE FOUND DURING THE SURVEY WAS R S.9,03,500/- AS AGAINST CASH BALANCE AS PER CASH BOOK OF RS.1,18,30 8/-. DURING THE COURSE OF SURVEY, DIRECTOR OF THE ASSESSEE-COMPANY HAD MADE A DISCLOSURE OF UNACCOUNTED INCOME OF RS.60,00,765/- ON ACCOUNT OF CASH BALANCE OF RS.7,85,192/- AND ON ACCOUNT OF UNACCOUN TED SALES AND UNDERTOOK TO PAY THE TAX ON THE SAME. SUBSEQUENTLY , RETURN WAS FILED ON 30/09/2009 DECLARING TOTAL INCOME AT RS.2,31,690/-. THE CASE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMEN T U/S.143(3) OF THE ACT WAS FRAMED VIDE ORDER DATED 29/12/2011, THEREBY THE ASSESSING OFFICER(AO) DISALLOWED THE CLAIM OF BAD DEBT AMOUNT ING TO RS.58,43,976/- AND MADE ADDITION OF RS.5,66,002/- U /S.40(A)(IA) OF THE ACT ON ACCOUNT OF NON-DEDUCTION OF TAX AT SOURCE. AGAINST THIS, THE ASSESSEE FILED AN APPEAL BEFORE THE LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS, PARTLY ALLOWED THE APPEAL. THE LD.CIT (A) DELETED THE ADDITION MADE ON ACCOUNT OF BAD DEBT AND CONFIRMED AN AMOUNT OF RS.1,18,567/- AS THE DEBIT BALANCE OUTSTANDING IN T HE ASST.YEAR 2005-06 AND ALSO CONFIRMED THE ADDITION OF RS.5,66,002/-. AGAINST THIS, BOTH THE REVENUE AND THE ASSESSEE ARE IN APPEAL BEFORE US. ITA NO.1278/AHD/13 (BY REVENUE )& ITA NO.687/AHD/13 (BY ASSESSEE) ITO VS. M/S.DINESHKUMAR- DEEPAKKUMAR CREATIONS PVT.LTD. ASST.YEAR 2009-10 - 4 - 3. THE ONLY EFFECTIVE GROUND OF THE REVENUE IS AGAI NST THE RESTRICTING THE ADDITION OF RS.58,43,976/- MADE ON ACCOUNT OF D ISALLOWANCE BAD DEBT TO RS.1,18,567/-. 4. THE LD.SR.DR SUPPORTED THE ORDERS OF THE AO AND ALSO RELIED ON THE SUBMISSIONS MADE IN THE STATEMENT OF FACTS ENCLOSED WITH THE APPEAL MEMO. 5. ON THE CONTRARY, LD.COUNSEL FOR THE ASSESSEE SUP PORTED THE ORDERS OF THE LD.CIT(A) AND SUBMITTED THAT THE ISSU E IS SQUARELY COVERED BY THE JUDGEMENT OF HONBLE APEX COURT REND ERED IN THE CASE OF TRF LTD. VS. CIT REPORTED AT (2010) 323 IT R 397 (SC). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE AO DISALLOWED BAD DEBT ON THE BASIS THAT THE AS SESSEE HAS CLAIMED BAD DEBT AS AN INSTRUMENT OF TAX AVOIDANCE/TAX EVAS ION AND HAS NOT PAID ANY TAX ON DISCLOSED INCOME. SINCE ONE OF THE DEBTO R NAMELY RASTOGI TEXTILE WHO DENIED TO HAVE ANY TRANSACTION WITH ASS ESSEE AND IDENTITY OF OTHER DEBTORS WAS NOT ESTABLISHED. THE AO WAS OF THE VIEW THAT THE JUDGEMENT OF HONBLE APEX COURT RENDERED IN THE CAS E OF TRF LTD. VS. CIT(SUPRA) DOES NOT HELP TO THE ASSESSEE. ON THE C ONTRARY, LD.CIT(A) WAS OF THE VIEW THAT THE CASE OF THE ASSESSEE IS SQUARE LY COVERED BY THE JUDGEMENT OF HONBLE APEX COURT RENDERED IN THE CAS E OF TRF LTD. VS. ITA NO.1278/AHD/13 (BY REVENUE )& ITA NO.687/AHD/13 (BY ASSESSEE) ITO VS. M/S.DINESHKUMAR- DEEPAKKUMAR CREATIONS PVT.LTD. ASST.YEAR 2009-10 - 5 - CIT(SUPRA). THE LD.CIT(A) IN HIS ORDER DATED 05/02 /2013 HAS DECIDED THIS ISSUE VIDE PARAGRAPH NOS.7.4 TO 8, BY OBSERVIN G AS UNDER:- 7.4. THE APPELLANT DURING THE COURSE OF APPELLANT PROCEEDINGS, FURNISHED A DETAILED PAPER BOOK CONTAINING THE COPI ES OF SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER AND T HE LEDGER ACCOUNTS OF THESE FIFTEEN PARTIES. THE MATTER WAS REMANDED U/S.46A(3) OF THE INCOME TAX RULES TO THE ASSESSING OFFICER ON 11.09.2012, BY THIS OFFICE. IN RESPONSE, THE ASSES SING OFFICER VIDE HIS REMAND REPORT DATED 27.09.2012 PARA NO.4 ACCEPT ED THAT ALL THESE DETAILS WERE FILED DURING THE ASSESSMENT PROC EEDINGS AND THEREFORE, DETAILS FURNISHED DO NOT AMOUNT TO ADDIT IONAL EVIDENCE. HOWEVER, THE ASSESSING OFFICER IN HIS REMAND REPORT AGAIN MENTIONED THAT NO PARTIES WERE PRODUCED FOR EXAMINA TION AND THEREFORE, ADDITION MADE ON THIS POINT SHOULD BE SU STAINED. 7.5. THE ASSESSING OFFICERS CONTENTION HAS BEEN EXAMINED. IT IS VERY UNREASONABLE TO EXPECT THE ASSESSEE TO PRODUCE A DEBTOR WHO IS NOT WILLING TO PAY THE OUTSTANDING AMOUNT OF DEB T TO THE ASSESSEE COMPANY. MOREOVER, THE FACT THAT THE PRESENT WHERE ABOUTS OF THE DEBTORS ARE NOT KNOWN FURTHER ESTABLISHES THAT THE AMOUNT IS IRRECOVERABLE. IF, THE ASSESSING OFFICER IS TRYING TO MAKE A CASE THAT THE DEBTORS ARE BOGUS, THEN NECESSARY ACTION L IKES IN THE YEAR IN WHICH CORRESPONDING SALES WERE SHOWN AND NOT IN THE PRESENT ASSESSMENT YEAR. AS FAR AS PRESENT ASSESSMENT YEAR IS CONCERNED, THESE DEBTORS EXISTED IN THE BOOKS OF ACCOUNTS OF T HE ASSESSEE COMPANY. APPARENTLY, THE ASSESSING OFFICER HAS NOT MADE OUT A CASE OF BOGUS DEBTORS IN THE ASSTT.YEAR 2005-06 WHE N THE BUSINESS OF THE PROPRIETARY CONCERN WAS TAKEN OVER BY APPELL ANT. THEREFORE, THE CASE MEETS THE BASIC REQUIREMENT OF SECTION 36(1)(VII) THAT THIS INCOME WAS SHOWN IN THE RESPEC TIVE ASSESSMENT YEARS. ONCE THAT IS ESTABLISHED, THE APPELLANT COM PANY IS NOT REQUIRED TO PROVE THAT THE DEBIT HAS BECOME BAD IN THE ASSTT.YEAR 2009-10. THIS IS THE LAW OF THE LAND AS ON DATE, I N VIEW OF DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF M/S.T.R .F. LTD. (SUPRA). ITA NO.1278/AHD/13 (BY REVENUE )& ITA NO.687/AHD/13 (BY ASSESSEE) ITO VS. M/S.DINESHKUMAR- DEEPAKKUMAR CREATIONS PVT.LTD. ASST.YEAR 2009-10 - 6 - 7.6. AS REGARDS THE DEBITS IN THE CASE OF M/S.SURAT SAREE SALES, THE ASSESSING OFFICER AT PAGE 5 OF THE ASSESSMENT O RDER HAS OBSERVED THAT THE APPELLANT-COMPANY DEBITED ON INTE REST AMOUNT OF RS.1,80,567/- ON THE OUTSTANDING DEBIT BALANCE IN A SST.YEAR 2005- 06. HOWEVER, THE INTEREST INCOME OF RS.1,18,567/- WAS NOT OFFERED FOR TAX IN THE ASSESSMENT YEAR 2005-06. IF IT IS C ORRECT, THEN APPELLANTS CLAIM UNDER SECTION 36(1)(VII) IS NOT A LLOWABLE TO THE EXTENT OF RS.1,18,567/-. THE ASSESSING OFFICER SHA LL VERIFY THIS FACT FROM THE RECORDS OF THE ASSESSMENT YEAR 2005-06 AND GIVE APPEAL EFFECT ACCORDINGLY. MOREOVER, THE AMOUNT IS MENTIO NED AS RS.1,80,567/- AT ONE PLACE AND RS.1,18,567/- AT ANO THER PLACE. THE CORRECT AMOUNT NEEDS TO BE VERIFIED. 8. AS REGARDS REMAINING AMOUNT OF BAD DEBT CLAIM, THE SAME IS ALLOWED IN VIEW OF THE DECISION OF THE HONBLE SUPR EME COURT IN THE CASE OF T.R.F. LIMITED (SUPRA). 6.1. WE FIND THAT THE LD.CIT(A) HAS GIVEN A FINDING ON FACT THAT THE BASIC REQUIREMENT OF SECTION 36(1)(VII) THAT THIS I NCOME WAS SHOWN IN THE RESPECTIVE ASSESSMENT YEARS IS MADE. IN VIEW OF TH E JUDGEMENT OF HONBLE APEX COURT IN THE CASE OF TRF LTD. VS. CIT( SUPRA), IT IS NOT REQUIRED FOR THE ASSESSEE TO ESTABLISH THAT THE DE BT, IN FACT, HAS BECOME IRRECOVERABLE IN THE ASST.YEAR 2009-10. THEREFORE , WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD.CIT(A) AS THE AO H AS SUBSTANTIALLY MADE OUT A CASE THAT THE ASSESSEE WAS REQUIRED TO PROVE THAT DEBT HAS BECOME IN FACT BAD. THE HONBLE APEX COURT IN THE CASE OF TRF LTD. VS. CIT(SUPRA) HAS HELD AS UNDER:- 4. THIS POSITION IN LAW IS WELL-SETTLED. AFTER 1ST APR IL, 1989, IT IS NOT NECESSARY FOR THE ASSESSEE TO ESTABLISH THAT TH E DEBT, IN FACT, HAS BECOME IRRECOVERABLE. IT IS ENOUGH IF THE BAD D EBT IS WRITTEN OFF AS IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSEE. H OWEVER, IN THE ITA NO.1278/AHD/13 (BY REVENUE )& ITA NO.687/AHD/13 (BY ASSESSEE) ITO VS. M/S.DINESHKUMAR- DEEPAKKUMAR CREATIONS PVT.LTD. ASST.YEAR 2009-10 - 7 - PRESENT CASE, THE AO HAS NOT EXAMINED WHETHER THE D EBT HAS, IN FACT, BEEN WRITTEN OFF IN ACCOUNTS OF THE ASSESSEE. WHEN BAD DEBT OCCURS, THE BAD DEBT ACCOUNT IS DEBITED AND THE CUS TOMER'S ACCOUNT IS CREDITED, THUS, CLOSING THE ACCOUNT OF THE CUSTO MER. IN THE CASE OF COMPANIES, THE PROVISION IS DEDUCTED FROM SUNDRY DE BTORS. AS STATED ABOVE, THE AO HAS NOT EXAMINED WHETHER, IN F ACT, THE BAD DEBT OR PART THEREOF IS WRITTEN OFF IN THE ACCOUNTS OF THE ASSESSEE. THIS EXERCISE HAS NOT BEEN UNDERTAKEN BY THE AO. HE NCE, THE MATTER IS REMITTED TO THE AO FOR DE NOVO CONSIDERAT ION OF THE ABOVE-MENTIONED ASPECT ONLY AND THAT TOO ONLY TO TH E EXTENT OF THE WRITE OFF. 6.2. THEREFORE, RESPECTFULLY FOLLOWING THE RATIO LA ID DOWN BY THE HONBLE APEX COURT, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD.CIT(A), THE SAME IS HEREBY UPHELD. THUS, GROU ND NOS.1 & 2 OF REVENUES APPEAL ARE DISMISSED. 7. GROUND NOS.3 & 4 ARE GENERAL IN NATURE WHICH REQ UIRE NO INDEPENDENT ADJUDICATION. 8. NOW, WE TAKE UP THE ASSESSEES APPEAL IN ITA NO. 687/AHD/2013 FOR AY 2009-10. THE ASSESSEE HAS RAISED THE FOLLOW ING GROUNDS OF APPEAL:- 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE A S WELL AS LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN NOT DELETING THE ADDITION TO THE EXTEN T OF RS.1,80,567/- ON ACCOUNT OF BAD DEBTS. 2. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF ASSESSING OFF ICER IN MAKING DISALLOWANCE OF RS.5,66,002/- U/S.40(A)(IA) OF THE INCOME TAX ACT, 1961. ITA NO.1278/AHD/13 (BY REVENUE )& ITA NO.687/AHD/13 (BY ASSESSEE) ITO VS. M/S.DINESHKUMAR- DEEPAKKUMAR CREATIONS PVT.LTD. ASST.YEAR 2009-10 - 8 - 3. IT IS THEREFORE PRAYED THAT THE ABOVE ADDITION M ADE BY ASSESSING OFFICER AND CONFIRMED BY COMMISSIONER OF INCOME-TAX (APPEALS) MAY PLEASE BE DELETED. 4. APPELLANT CRAVES LEAVE TO ADD, ALTER OR DELETE A NY GROUND(S) EITHER BEFORE OR IN THE COURSE OF HEARING OF THE AP PEAL. 8.1. APROPOS TO GROUND NO.1, THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LD.CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION TO THE EXTENT OF RS.1,80,567/- ON ACCOUNT OF BAD DEBTS. 8.2. ON THE CONTRARY, LD.SR.DR SUPPORTED THE ORDER OF THE LD.CIT(A) AND SUBMITTED THAT THERE IS A CATEGORICAL FINDING BY TH E LD.CIT(A) THAT THE ASSESSEE-COMPANY DEBITED AN INTEREST AMOUNT OF RS.1 ,80,567/- ON THE OUTSTANDING DEBIT BALANCE IN THE ASST.YEAR 2005-06. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE LD.CIT(A) HAS GIVEN A FINDING ON F ACT VIDE PARA NO.7.6 OF HIS ORDER AS UNDER:- 7.6. AS REGARDS THE DEBITS IN THE CASE OF M/S.SURA T SAREE SALES, THE ASSESSING OFFICER AT PAGE 5 OF THE ASSESSMENT O RDER HAS OBSERVED THAT THE APPELLANT-COMPANY DEBITED ON INTE REST AMOUNT OF RS.1,80,567/- ON THE OUTSTANDING DEBIT BALANCE IN A SST.YEAR 2005- 06. HOWEVER, THE INTEREST INCOME OF RS.1,18,567/- WAS NOT OFFERED FOR TAX IN THE ASSESSMENT YEAR 2005-06. IF IT IS C ORRECT, THEN APPELLANTS CLAIM UNDER SECTION 36(1)(VII) IS NOT A LLOWABLE TO THE EXTENT OF RS.1,18,567/-. THE ASSESSING OFFICER SHA LL VERIFY THIS FACT FROM THE RECORDS OF THE ASSESSMENT YEAR 2005-06 AND GIVE APPEAL ITA NO.1278/AHD/13 (BY REVENUE )& ITA NO.687/AHD/13 (BY ASSESSEE) ITO VS. M/S.DINESHKUMAR- DEEPAKKUMAR CREATIONS PVT.LTD. ASST.YEAR 2009-10 - 9 - EFFECT ACCORDINGLY. MOREOVER, THE AMOUNT IS MENTIO NED AS RS.1,80,567/- AT ONE PLACE AND RS.1,18,567/- AT ANO THER PLACE. THE CORRECT AMOUNT NEEDS TO BE VERIFIED. 9.1. SINCE THE LD.COUNSEL FOR THE ASSESSEE HAS NOT CONTROVERTED THE FINDING OF THE LD.CIT(A) BY PLACING ANY MATERIAL ON RECORD, THEREFORE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD.CI T(A). THUS, GROUND NO.1 OF ASSESSEES APPEAL IS REJECTED. 10. GROUND NO.2 IS AGAINST IN CONFIRMING THE ACTION OF ASSESSING OFFICER IN MAKING DISALLOWANCE OF RS.5,66,002/- U/S .40(A)(IA) OF THE ACT BY THE LD.CIT(A). 10.1. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THA T THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE ITAT RAJKOT BENCH (S PECIAL BENCH) RENDERED IN THE CASE OF BHARTI AUTO PRODUCTS VS. CI T IN ITA NOS.391 & 392(RJT.) OF 2011 FOR AYS 2009-10 & 2010-11, DATED 6 TH SEPTERMBER- 2013 :: REPORTED AT (2013) 37 TAXMANN.COM 37 (RAJKO T TRIB.) (SB). 10.2. ON THE CONTRARY, LD.SR.DR SUPPORTED THE ORDER S OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE HAS NOT GIVEN ANY DETAIL WHETHER THE BUYER HAS TAKEN INTO ACCOUNT THE SAID SUM. 11. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE HONBLE ITAT RAJKOT (SPECIAL BENCH ) IN ITA NOS.391 ITA NO.1278/AHD/13 (BY REVENUE )& ITA NO.687/AHD/13 (BY ASSESSEE) ITO VS. M/S.DINESHKUMAR- DEEPAKKUMAR CREATIONS PVT.LTD. ASST.YEAR 2009-10 - 10 - AND 392(RJT.) OF 2011(SUPRA) VIDE PARAGRAPH NOS.44 ,45 & 46 HAS HELD AS UNDER:- 44. FIRST PROVISO INSERTED IN SUB-SECTION (6A) OF SECTION 206C SEEKS TO ACHIEVE THREE-FOLD OBJECTIVES. ONE, IT SEEKS TO (1) ENSURE THAT THERE IS NO LOSS TO THE REVENUE, I.E., (I) THE BUYER HAS FURNIS HED HIS RETURN OF INCOME U/S 139, (II) THE BUYER HAS TAKEN INTO ACCOUNT SUCH SUM ON WHICH TAX WAS REQUIRED TO BE COLLECTED AT SOURCE U/S 206C FOR COM PUTING INCOME IN SUCH RETURN OF INCOME, (III) THE BUYER HAS PAID THE TAX DUE ON THE INCOME DECLARED BY HIM IN SUCH RETURN OF INCOME, (IV) THE PAYER, I.E., THE PERSON RESPONSIBLE FOR COLLECTING THE TAX AT SOURCE U/S 20 6C, HAS FURNISHED A CERTIFICATE IN FORM NO. 27BA CONFIRMING THE AFORESA ID; (2) RATIONALIZE THE PROVISIONS RELATING TO COLLECTION OF TAX AT SOU RCE; (3) PROVIDE RELIEF TO THE COLLECTOR OF TAX AT SOURCE FROM THE CONSEQUE NCES OF NON/SHORT DEDUCTION COLLECTION OF TAX AT SOURCE AND TO THAT E XTENT IT IS A BENEFICIAL PROVISION. IN THE AFORESAID BACKGROUND, THE ISSUE T HAT ARISES FOR CONSIDERATION IS WHETHER THE FIRST PROVISO TO SECTI ON 206C(6A) IS APPLICABLE TO PENDING MATTERS ALSO NOTWITHSTANDING THE FACT THAT IT HAS BEEN MADE EFFECTIVE FROM 1.7.2012. 45. IN CIT V. CHANDULAL VENICHAND [1994] 209 ITR 7/ 73 TAXMAN 349 (GUJ.), THE ISSUE BEFORE THE HON'BLE JURISDICTIONAL HIGH COURT WAS WHETHER THE FIRST PROVISO INSERTED IN SECTION 43B W ITH EFFECT FROM 1.4.1988, WHICH WAS INTENDED TO BE A BENEFICIAL PR OVISION, WOULD APPLY RETROSPECTIVELY. THE HON'BLE HIGH COURT HAS HELD: ' ONCE IT IS HELD THAT THE PROVISO IS INSERTED AS A REMEDIAL AND CURATIVE MEASURE FOR REMOVING THE DIFFICULTIES FACED BY THE TAXPAYERS BECAUSE OF INADVERTENT MISTAKE OR OMISSION WHICH HAS CREPT IN IN DRAFTING SECTION 43B , IT WOULD BE JUST AND PROPER TO HOLD THAT IT WOULD RELATE BACK TO THE DAT E WHEN SECTION 43B WAS INTRODUCED.' THE AFORESAID JUDGMENT OF THE HON' BLE JURISDICTIONAL HIGH COURT HAS BEEN APPROVED BY THE HON'BLE SUPREME COURT IN ALLIED MOTORS (P.) LTD. V. CIT [19971 224 1TR 677/91 TAXMA N 205. KEEPING IN VIEW THE FACT THAT THE FIRST PROVISO TO SUB-SECT ION (6A) OF SECTION 206C NOT ONLY SEEKS TO RATIONALIZE THE PROVISIONS RELATI NG TO COLLECTION OF TAX AT SOURCE BUT IS ALSO BENEFICIAL IN NATURE IN THAT IT SEEKS TO PROVIDE RELIEF TO THE COLLECTORS OF TAX AT SOURCE FROM THE CONSEQU ENCES FLOWING FROM NON/SHORT COLLECTION OF TAX AT SOURCE AFTER ENSURIN G THAT THE INTEREST OF THE REVENUE IS WELL PROTECTED, WE HAVE NO HESITATIO N TO HOLD THAT THE SAID PROVISO WOULD APPLY RETROSPECTIVELY AND THEREF ORE TO BOTH THE ITA NO.1278/AHD/13 (BY REVENUE )& ITA NO.687/AHD/13 (BY ASSESSEE) ITO VS. M/S.DINESHKUMAR- DEEPAKKUMAR CREATIONS PVT.LTD. ASST.YEAR 2009-10 - 11 - ASSESSMENT YEARS UNDER APPEAL. WE THEREFORE DIRECT THE ASSESSEE TO APPEAR BEFORE THE ASSESSING OFFICER ALONG WITH RELE VANT DOCUMENTS AS STIPULATED BY THE FIRST PROVISO TO SUB-SECTION (6A) OF SECTION 206C WITHIN TWO MONTHS OF THE DATE ON WHICH THIS ORDER IS PRONO UNCED UPON WHICH THE AO SHALL EXAMINE THE CLAIM OF THE ASSESSEE IN T HE LIGHT OF THE SAID PROVISIONS AND PASS APPROPRIATE ORDER ACCORDINGLY I N CONFORMITY WITH LAW AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. THUS THE ISSUE RAISED IN ADDITIONAL GROUND NO. 3 STANDS RESTORED TO THE FILE OF THE AO WITH THE AFORESAID OBSERVATIONS. 46. IN VIEW OF THE FOREGOING, BOTH THE APPEALS FILED BY THE ASSESSEE ARE PARTLY ALLOWED. 11.1 IN THE LIGHT OF THE AFORESAID DECISION OF TH E HONBLE TRIBUNAL (SPECIAL BENCH), WE HEREBY SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW ON THIS ISSUE AND RESTORE THE SAME BACK TO THE FILE OF AO TO DECIDE IT AFRESH, AFTER VERIFYING THE CLAIM OF THE ASSESSEE. THEREFORE, THIS GROUND OF ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PUR POSES. 12. GROUND NOS.3 & 4 ARE GENERAL IN NATURE WHICH RE QUIRE NO INDEPENDENT ADJUDICATION. 13. IN THE COMBINED RESULT, THE APPEAL OF THE REVEN UE IS DISMISSED, WHEREAS THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN COURT ON THE DATE MENTIONED HER EINABOVE AT CAPTION PAGE SD/- SD/- ( .. ) (' #$) ( N.S. SAINI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 30/05/2014 5..., .../ T.C. NAIR, SR. PS ITA NO.1278/AHD/13 (BY REVENUE )& ITA NO.687/AHD/13 (BY ASSESSEE) ITO VS. M/S.DINESHKUMAR- DEEPAKKUMAR CREATIONS PVT.LTD. ASST.YEAR 2009-10 - 12 - 2 - *$6 761$ 2 - *$6 761$ 2 - *$6 761$ 2 - *$6 761$/ COPY OF THE ORDER FORWARDED TO : 1. &) / THE APPELLANT 2. *+&) / THE RESPONDENT. 3. !! $ '8 / CONCERNED CIT 4. '8() / THE CIT(A)-I, SURAT 5. 6 #9 *$ , , / DR, ITAT, AHMEDABAD 6. 9:; <, / GUARD FILE. 2' 2' 2' 2' / BY ORDER, +6$ *$ //TRUE COPY// = == =/ // / !' !' !' !' ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD 1. DATE OF DICTATION ..22.5.14(DICTATION-PAD 16-PAGE S ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 23.5.146 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH FAIR ORDER PLACED BEFORE OTHER MEMBER 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.30.5.14 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 30.5.14 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER