Mr. Joe P. Fernandes, Bangalore V. ITO, Bangalore

ITA 1299/BANG/2011

• Counselvise Citation: 129921114 RSA 2011
• Duration Of Justice: 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 16-12-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUSAN THOMAS JOSE
• Assessee Lawyers: K K CHAITHANYA
• Keywords: Unexplained investment; Depreciation; Rectification of order; Opportunity of being heard; Principle of natural justice; Additional evidence; Reasonable cause; Capital expenditure
• Section: 143(3); 68; 69; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH B, BANGALORE BEFORE SMT. P.MADHAVI DEVI, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER ITA NO.1299/BANG/2011 (ASSESSMENT YEAR: 2006-07) MR. JOE P.FERNANDES, PROP. M/S.HUMAN RESO URCE SPECIALISTS, # 105, 3 RD FLOOR, GLOBE HOUSE, RICHMOND ROAD, BANGALORE - 560025. PAN: AADPF0694A VS. APPELLANT INCOME - TAX OFFICER, WARD 1(3), BANGALORE. RESPONDENT A PPELLANT BY: SHRI K.K.CHAITHANYA, ADVOCATE. RESPONDENT BY : SMT .SUSAN THOMAS JOSE, JCIT DATE OF HEARING: 18 - 10 - 2012 DATE OF PRONOUNCEMENT: 04 - 1 2 - 2012 O R D E R PER SMT. P.MADHAVI DEVI, JM: THIS IS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2006- 07 AND IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-I, BANG ALORE, DATED 20-10-2011. 2. THE ASSESSEE HAS FILED CONCISE GROUNDS OF APPEAL . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIV IDUAL WHO DERIVES INCOME FROM STAFF RECRUITMENT AND OTHER REL ATED SERVICES. FOR THE ASSESSMENT YEAR 2006-07, HE FILED HIS RETUR N OF INCOME DECLARING INCOME OF ` .7,54,690/-. DURING THE ASSESSMENT ITA NO.1299/BANG/2011 PAGE 2 OF 11 PROCEEDINGS U/S 143(3) OF THE INCOME-TAX ACT, 1961, [HEREINAFTER REFERRED TO AS 'THE ACT'] THE AO MADE VARIOUS ADDIT IONS. AGGRIEVED BY THE SAME, THE ASSESSEE PREFERRED AN AP PEAL BEFORE THE CIT(A) WHO CONFIRMED THE SAID ADDITIONS AND THE ASSESSEE IS IN SECOND APPEAL BEFORE US RAISING THE FOLLOWING GR OUNDS OF APPEAL: 1. THE LEARNED COMMISSIONER (APPEALS) IS NOT JUSTIFIED IN UPHOLDING THE ADDITION OF A SUM OF ` 3,00,511/- BEING CAPITAL EXPENDITURE, AS UNEXPLAINED INVESTMENT WHEN THE PROVISIONS OF SECTION 68 OR SECTION 69 OF CHAPTER VI ARE NOT APPLICABLE IN THE CASE OF THE APPELLANT. THE LEARNED COMMISSIONER (APPEALS) IS NOT JUSTIFIED IN FAILING TO APPRECIATE THAT THERE WAS REASONABLE CAUSE WHICH PREVENTED THE APPELLANT FROM SUBMITTING THE EVIDENCE (PURCHASE INVOICE/BILL) TO THE LEARNED ASSESSING OFFICER. 2. WITHOUT PREJUDICE TO THE ABOVE THE LEARNED COMMISSIONER (APPEALS) IS NOT JUSTIFIED IN CONSIDERING THE AFORESAID AMOUNT AS UNEXPLAINED INVESTMENT AS THE BOOKS OF ACCOUNT COMPLETELY EXPLAINED THE SAME AND HE COULD HAVE, AT THE MAXIMUM, DISALLOWED DEPRECIATION IN RESPECT THEREOF . 3. THE LEARNED COMMISSIONER (APPEALS) IS NOT JUSTIFIED IN UPHOLDING THE ADDITION TO TOTAL INCOME OF A SUM OF ` 52,127/- AS TECHNICAL SERVICES. HE IS NOT JUSTIFIED IN FAILING TO APPRECIATE THAT THE SAID RECEIPTS ARE REIMBURSEMENT OF EXPENSES AND HENCE NOT INCOME AT ALL. 4. THE COMMISSIONER (APPEALS) IS NOT JUSTIFIED IN UPHOLDING THE ADDITION TO TOTAL INCOME OF A SUM OF ` 10,00,000/- AS UNEXPLAINED INVESTMENT MERELY BASED ON THE AIR INFORMATION. 5. THE COMMISSIONER (APPEALS) IS NOT JUSTIFIED IN UPHOLDING THE DISALLOWANCE OF A SUM OF ` 50,290/- UNDER SECTION 40(A)(IA) WHEN THE SAID PROVISION IS NOT APPLICABLE TO THE FACTS OF THE INSTANT CASE. 6. THE LEARNED COMMISSIONER (APPEALS) IS NOT JUSTIFIED IN UPHOLDING THE CHARGE OF INTEREST ON REFUND UNDER SECTION 234D OF ` 91,756/-, WHERE ITA NO.1299/BANG/2011 PAGE 3 OF 11 SUCH REFUND HAS NOT BEEN GRANTED TO THE APPELLANT. 3. AS REGARDS GROUND NOS.1 AND 2, BRIEF FACTS ARE T HAT FROM THE BALANCE SHEET OF THE ASSESSEE, THE AO NOTICED T HAT THE ASSESSEE HAS MADE ADDITION OF ` 24,28,375/- TO THE FIXED ASSETS. THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF TH E ADDITIONS TO THE FIXED ASSETS. THE ASSESSEE COULD EXPLAIN TO TH E EXTENT OF ` 21,27,864/-. HOLDING THAT THE BALANCE OF ` 3,00,511/- IS NOT EXPLAINED BY THE ASSESSEE, THE AO MADE ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT. AGGRIEVED, THE ASSESSEE PR EFERRED AN APPEAL BEFORE THE CIT(A) STATING THAT OUT OF THE SU M OF ` 3,00,511/-, ` 2,40,000/- REPRESENTS EXPENDITURE INCURRED BY THE ASSESSEE FOR CARRYING OUT OF INTERIOR AND MINOR WOR KS. HE FILED COPIES OF INVOICES BEFORE THE CIT(A). FURTHER, THE ASSESSEE TOOK OBJECTION THAT THE ADDITION TO UNEXPLAINED INVESTME NT CAN BE MADE ONLY U/S 69 OF THE ACT AND EVEN SUCH ADDITION CAN BE MADE ONLY WHEN THE INVESTMENTS ARE NOT RECORDED IN THE B OOKS OF ACCOUNT AND THE ASSESSEE OFFERED NO EXPLANATION ABO UT THE NATURE AND SOURCE OF THE INVESTMENTS OR THE EXPLANA TION OFFERED BY HIM IS NOT, IN THE OPINION OF THE AO, SATISFACTO RY. HE SUBMITTED THAT THE ASSESSEE HAS RECORDED THE INVEST MENTS IN HIS BOOKS OF ACCOUNT AND HAS ALSO OFFERED THE EXPLANATI ON ABOUT SOURCE OF INVESTMENT AND THEREFORE THE ADDITION CAN NOT BE MADE. IN SUPPORT OF HIS CONTENTION, HE PLACED RELIANCE UP ON VARIOUS DECISIONS OF THE TRIBUNAL AS WELL AS VARIOUS HIGH C OURTS WHICH HAVE BEEN REPRODUCED BY THE CIT(A) IN HIS ORDER. T HE CIT(A) ITA NO.1299/BANG/2011 PAGE 4 OF 11 CALLED FOR A REMAND REPORT FROM THE AO ON THE EVIDE NCE FILED BY THE ASSESSEE. IN THE REMAND REPORT, THE AO OBSERVED THAT THESE EVIDENCES WERE NOT FILED BEFORE THE AO IN SPITE OF SEVERAL OPPORTUNITIES GIVEN TO HIM AND THAT THE ASSESSEES EXPLANATION IS ONLY TECHNICAL. HE, HOWEVER, DID NOT COMMENT ON TH E MERITS OF THE EVIDENCE FILED BY THE ASSESSEE. THE CIT(A), HO WEVER, AFTER CONSIDERING THE REMAND REPORT, OBSERVED THAT THE AS SESSEE HAS NOT FILED ANY APPLICATION UNDER RULE 46A OF THE IT RULES FOR ADMISSION OF THE ADDITIONAL EVIDENCE AND THEREFORE THE SAME CANNOT BE CONSIDERED. HE FURTHER HELD THAT THE AO HAS NOT MADE ANY MENTION OF SEC.69 IN THE ASSESSMENT ORDER AND T HEREFORE IT CANNOT BE SAID TO BE AN ADDITION U/S 69 AND THE ADD ITION IS JUSTIFIED AS THE INVESTMENT HAS NOT BEEN EXPLAINED UP TO THE SATISFACTION OF THE AO. AGGRIEVED BY THE SAID CONF IRMATION OF THE ADDITION BY THE CIT(A), THE ASSESSEE IS IN APPEAL B EFORE US. 3.1 THE LEARNED COUNSEL FOR THE ASSESSEE, WHILE REI TERATING THE ASSESSEES SUBMISSIONS BEFORE THE AUTHORITIES B ELOW, SUBMITTED THAT THE ASSESSEE HAS BEEN ABLE TO FURNIS H DETAILS OF INVESTMENT BEFORE THE AO EXCEPT FOR A SUM OF ` 3 LAKHS AND ODD. HE SUBMITTED THAT WHAT IS NOT EXPLAINED IS ONLY THE APPLICATION OF FUND AND THEREFORE NO ADDITION ON ACCOUNT OF UNEXPL AINED INVESTMENT CAN BE MADE. HE SUBMITTED THAT ADDITION OF UNEXPLAINED INVESTMENTS CAN ONLY BE MADE U/S 69 OF THE ACT AND AS THE ASSESSEE HAS ALREADY RECORDED INVESTMENT IN HIS BOOKS OF ACCOUNT, NO ADDITION U/S 69 IS CALLED FOR. HE SUBM ITTED THAT IF AT ALL ANY DISALLOWANCE IS TO BE MADE, IT IS ONLY OF D EPRECIATION ON ITA NO.1299/BANG/2011 PAGE 5 OF 11 THE SAID INVESTMENTS BUT NOT THE ENTIRE INVESTMENT ITSELF. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT THE ASSESSEE HAS FURNI SHED DETAILS REGARDING INVESTMENT OF ` 2.4 LAKHS AND THE CIT(A), AFTER HAVING CALLED FOR REMAND REPORT FROM THE AO HAS ERRONEOUSL Y DECLINED TO ADMIT THE SAME ON THE GROUND THAT THE ASSESSEE HAS NOT ASKED TO ADMIT THE ADDITIONAL EVIDENCE. HE SUBMITTED THA T THE FINDING OF THE CIT(A) IS TOO TECHNICAL AND IS AGAINST THE P RINCIPLES OF NATURAL JUSTICE. 3.2 THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND ALSO PLACED RELIANCE UPON THE PROVISIONS OF SEC.292 B OF THE ACT FOR THE PROPOSITION THAT MERELY BECAUSE THE AO HAS FAILED TO MENTION THE SECTION UNDER WHICH THE DISALLOWANCE/AD DITION IS MADE, IT WOULD NOT INVALIDATE THE ASSESSMENT ORDER. 3.3 HAVING HEARD BOTH THE PARTIES AND HAVING CONSID ERED THE RIVAL CONTENTIONS, WE FIND THAT THE ADDITION IS MADE ON ACCOUNT OF ASSESSEES INABILITY TO EXPLAIN INVESTME NT TO THE EXTENT OF ` 3,00,550/-. IT CANNOT BE DENIED THAT ANY ADDITION OR DELETION CAN BE MADE BY THE AO ONLY IN ACCORDANCE W ITH LAW AND AS PROVIDED UNDER THE ACT. THE ONLY SECTION WHICH PROVIDES FOR ADDITION FOR UNEXPLAINED INVESTMENT IS SECTION 69 O F THE ACT. SECTION 69 OF THE ACT READS AS UNDER: UNEXPLAINED INVESTMENTS. 69. WHERE IN THE FINANCIAL YEAR IMMEDIATELY PRECEDI NG THE ASSESSMENT YEAR THE ASSESSEE HAS MADE INVESTMENTS WHICH ARE NOT RECORDED IN THE BOOKS OF ACCOUNT, IF ANY, MAINTAINED BY HIM FOR ANY SOURCE O F ITA NO.1299/BANG/2011 PAGE 6 OF 11 INCOME, AND THE ASSESSEE OFFERS NO EXPLANATION ABOU T THE NATURE AND SOURCE OF THE INVESTMENTS OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION O F THE ASSESSING OFFICER, SATISFACTORY, THE VALUE OF THE INVESTMENTS MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE OF SUCH FINANCIAL YEAR. FROM A LITERAL READING OF THE ABOVE SECTION, IT IS CLEAR THAT THE DISALLOWANCE CAN BE MADE BY THE AO ONLY IF ANY INVE STMENT IS NOT RECORDED IN THE BOOKS OF ACCOUNT AND THE ASSESS EE OFFERED NO EXPLANATION ABOUT THE NATURE AND SOURCE OF SUCH INV ESTMENT OR THE EXPLANATION OFFERED BY HIM IS NOT SATISFACTORY TO THE AO. IN THE CASE BEFORE US, AS RIGHTLY POINTED OUT BY THE L EARNED COUNSEL FOR THE ASSESSEE, INVESTMENT HAS BEEN RECORDED IN T HE BOOKS OF ACCOUNT AND IT IS NOT THE CASE OF THE AO THAT THE A SSESSEE HAS NOT BEEN ABLE TO EXPLAIN THE SOURCE OF SUCH INVESTM ENT. THE ONLY CASE OF THE AO IS THAT THE ASSESSEE HAS NOT BEEN AB LE TO PRODUCE THE INVOICES RELATING TO INVESTMENT MADE TO THE EXT ENT OF ` 5,00,550/-. AS HELD BY VARIOUS HIGH COURTS AND ALS O THE TRIBUNAL, AS SUBMITTED BY THE ASSESSEE, IN HIS WRIT TEN SUBMISSIONS AT PAGES 7 TO 9 OF THE PAPER BOOK FILED HIM, NO ADDITION U/ 69 CAN BE MADE WHERE THE INVESTMENT HAS BEEN RECORDED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. IN VIEW OF THE SAME, WE HOLD THAT THE ADDITION IS NOT SUSTAINA BLE. THE ADDITION MADE IS ACCORDINGLY DELETED AND GROUND NO. 1 IS ALLOWED. 4. GROUND NO.2 WHICH IS WITHOUT PREJUDICE TO GROUN D NO.1 IS NOT ADJUDICATED IN VIEW OF ALLOWING OF GROUND NO .1. 5. AS REGARDS GROUND NO.3, BRIEF FACTS OF THE CASE ARE THAT AS PER ANNUAL INFORMATION REPORT, THE AO OBSERVED T HAT THE ITA NO.1299/BANG/2011 PAGE 7 OF 11 ASSESSEE HAS RECEIVED A SUM OF ` 52,127/-. THE ASSESSEE COULD NOT EXPLAIN THE NATURE OF THE RECEIPT AND THEREFORE THE AO MADE THE ADDITION TO THE RETURNED INCOME. AGGRIEVED, TH E ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) STATING THAT IT IS ENGAGED IN THE BUSINESS OF RECRUITMENT OF STAFF AND OTHER R ELATED ACTIVITIES AND THEREFORE, COULD NOT HAVE RECEIVED ANY TECHNICA L SERVICE FEE FROM ITS CLIENTS AND THEREFORE THE AO HAS ERRED IN TREATING THE ABOVE SUM AS FEE FOR TECHNICAL SERVICES. 5.1 THE CIT(A), AFTER CONSIDERING THE ASSESSEES CONTENTIONS OBSERVED THAT TDS CERTIFICATES IN FORM 16A FILED BY THE ASSESSEE REVEALED THAT MOST OF THE PAYMENTS REC EIVED ON WHICH TDS IS MADE, HAVE BEEN SHOWN AS FEES FOR PRO FESSIONAL OR TECHNICAL SERVICES AND THEREFORE THE ASSESSEES ST ATEMENT THAT IT COULD NOT HAVE RECEIVED ANY TECHNICAL SERVICES FEE FROM HIS CLIENTS IS MISLEADING. HE ACCORDINGLY CONFIRMED TH E ADDITION AND THE ASSESSEE IS IN SECOND APPEAL BEFORE US. 5.2 EXCEPT STATING THAT THE ADDITION IS NOT JUSTIF IED, THE LEARNED COUNSEL FOR THE ASSESSEE COULD NOT PLACE AN Y EVIDENCE BEFORE US OR COULD NOT MAKE ANY JUSTIFIABLE ARGUMEN T TO EXPLAIN THE NATURE OF THE RECEIPT OF ` 52,127/-. IT IS THE DUTY OF THE ASSESSEE TO EXPLAIN THE NATURE OF THE RECEIPT WHEN IT CLAIMS THAT THE SAME IS NOT TAXABLE. IN THE ABSENCE OF THE SAM E, WE ARE CONSTRAINED TO CONFIRM THE ADDITION MADE BY THE AO. THIS GROUND OF APPEAL IS ACCORDINGLY REJECTED. 6. AS REGARDS GROUND NO.4, BRIEF FACTS ARE THAT FR OM THE ANNUAL INFORMATION REPORT, THE AO OBSERVED THAT THE ASSESSEE ITA NO.1299/BANG/2011 PAGE 8 OF 11 HAS MADE INVESTMENT OF A SUM OF ` 10 LAKHS IN KARVY COMPUTERS ON 5-4-2005. WHEN CALLED FOR, THE ASSESSEE COULD N OT FURNISH ANY EXPLANATION AND THEREFORE THE AO BROUGHT THE SA ID AMOUNT TO TAX AS UNEXPLAINED INVESTMENT. 6.1 AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEF ORE THE CIT(A) STATING THAT THE ASSESSEE HAS NOT MADE A NY INVESTMENT IN KARVY COMPUTERS BUT THAT INVESTMENT I S MADE IN TATA MUTUAL FUND AND ALSO THAT THE INVESTMENT IS RO LL OVER FROM THE PRECEDING YEAR. THE CIT(A), HOWEVER, DID NOT A CCEPT THE ASSESSEES CONTENTION THAT THE INVESTMENT MADE ON 5-4-2005 IS A ROLL-OVER FROM THE PRECEDING YEAR. HE HELD THAT THIS IS A FRESH INVESTMENT MADE DURING THE YEAR AND THAT AS THE ASS ESSEE COULD NOT OFFER ANY EXPLANATION WITH ANY SUPPORTING MATER IAL EXCEPT FILING STATEMENT OF MUTUAL FUND ACCOUNT FOR THE PER IOD 1-4-2005 TO 31-3-2006. THEREFORE HOLDING THAT THE ASSESSEE H AS NOT BEEN ABLE TO FURNISH THE REASONABLE DETAILS IN SPITE OF SUFFICIENT OPPORTUNITY BEING GIVEN TO HIM, HE CONFIRMED THE AD DITION AND THEREFORE THE ASSESSEE IS IN APPEAL BEFORE US. 6.2 THE LEARNED COUNSEL FOR THE ASSESSEE, WHILE REI TERATING THE ASSESSEES SUBMISSIONS MADE BEFORE THE AUTHORIT IES BELOW, SUBMITTED THAT THE ASSESSEE HAS BEEN MAKING INVESTM ENTS IN VARIOUS FUNDS FROM EARLIER YEARS AND FOR THIS PURPO SE, HAS ENGAGED THE SERVICES OF STANDARD CHARTERED AND THE INVESTMENT IN THE MUTUAL FUND WAS MADE THROUGH STANDARD CHARTE RED. IT WAS SUBMITTED THAT NO NEW INVESTMENT OF ` 10 LAKHS WAS MADE BUT IT WAS ROLL-OVER OF THE EARLIER INVESTMENT AND FOR THIS ITA NO.1299/BANG/2011 PAGE 9 OF 11 PURPOSE, HE FILED A COPY OF THE BANK STATEMENT OF S TANDARD CHARTERED FOR THE MONTH OF FEBRUARY AND MARCH 2005 WHICH SHOWS THAT A CHEQUE FOR ` 10 LAKHS WAS ISSUED ON 21-2-2005 FOR THE INVESTMENT WHICH HAS BEEN UTILIZED FOR INVESTME NT IN TATA MUTUAL FUND ON 5-4-2005. THE LEARNED COUNSEL FOR T HE ASSESSEE HAS ALSO DRAWN OUR ATTENTION TO PAGES 46 AND 92 OF THE PAPER BOOK TO DEMONSTRATE THAT THE CHEQUE FOR ` 10 LAKHS WAS ISSUED ON 23-2-2005 WHICH IN TURN HAS BEEN INVESTED IN TATA M UTUAL FUND ON 5-4-2005. HE SUBMITTED THAT BOTH THE AUTHORITIE S BELOW HAVE FAILED TO CONSIDER THE SAME IN PROPER PERSPECTIVE. 6.3 THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 6.4 HAVING HEARD BOTH THE PARTIES AND HAVING CONSID ERED THE MATERIAL ON RECORD, WE FIND THAT THE ASSESSEES CONTENTIONS THAT THE ASSESSEE HAS ISSUED A CHEQUE FOR ` 10 LAKHS ON 23-2-2005 IS EVIDENCED BY THE STATEMENT OF STANDARD CHARTERED, PLACED AT PAGE 92 OF THE PAPER BOOK AND THIS NEEDS VERIFICATION BY THE AO. IN VIEW OF THE SAME, WE DEEM IT FIT AND PROPER TO REMAND THIS ISSUE TO THE FILE OF THE AO FOR RE-CONS IDERATION IN ACCORDANCE WITH LAW AFTER GIVING THE ASSESSEE A FAI R OPPORTUNITY OF HEARING. THE AO SHALL CONSIDER THE EVIDENCE FUR NISHED BY THE ASSESSEE DE NOVO IN ACCORDANCE WITH LAW AFTER GIVIN G THE ASSESSEE A FAIR OPPORTUNITY OF BEING HEARD. THIS G ROUND IS THUS ALLOWED FOR STATISTICAL PURPOSES. 7. REGARDING GROUND NO.5, BRIEF FACTS ARE THAT THE AO MADE THE DISALLOWANCE OF ` 50,290/- ON THE GROUND THAT THE ITA NO.1299/BANG/2011 PAGE 10 OF 11 ASSESSEE HAS NOT DEDUCTED TAX AT SOURCE BEFORE MAKI NG SUCH PAYMENT. THE CIT(A) CONFIRMED THE ADDITION. THE A SSESSEE IS IN APPEAL BEFORE US. 7.1 AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE PLACED RELIANCE UPON THE DECISION OF THE S PECIAL BENCH OF THE TRIBUNAL IN THE CASE OF MERILYN SHIPPING WHEREIN IT HAS BEEN HELD THAT NO DISALLOWANCE U/S 40A(IA) CAN BE M ADE IF THE AMOUNT IS ALREADY PAID WITHOUT DEDUCTION OF TAX AT SOURCE AND THE DISALLOWANCE CAN BE MADE ONLY IF THE AMOUNT IS PAYABLE AS ON 31 ST MARCH OF THE RELEVANT FINANCIAL YEAR. THE LEARNED DEPARTMENTAL REPRESENTATIVE, HOWEVER, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 7.2 HAVING HEARD BOTH THE PARTIES, WE FIND THAT THE ASSESSEE HAS MADE THE PAYMENT BY THE END OF THE REL EVANT FINANCIAL YEAR AND THEREFORE THE DECISION OF THE SP ECIAL BENCH OF THE TRIBUNAL IN THE CASE OF MERILYN SHIPPING APPLIES TO THE FACTS OF THE CASE. IN VIEW OF THE SAME, THIS GROUND OF APPE AL IS ALLOWED. 8. AS REGARDS GROUND NO.6, WE FIND THAT IN THE REMA ND REPORT, THE AO HAS ALREADY MENTIONED THAT THE ASSES SMENT REQUIRES TO BE RECTIFIED U/S 154 AND AFTER RECEIPT OF REPLY FROM THE ASSESSEE THE ASSESSMENT WILL BE RECTIFIED AND A PPROPRIATE INTEREST U/S 234D WILL BE LEVIED. TAKING THE SAME INTO CONSIDERATION, THE CIT(A) HAS DISMISSED THE ASSESSE ES GROUND OF APPEAL FOR STATISTICAL PURPOSES. AS THE AO HAS HIM SELF OBSERVED THAT INTEREST U/S 234D WILL BE COMPUTED AS PER THE RECTIFICATION ORDER, WE DO NOT FIND THAT THE CIT(A) COULD HAVE GR ANTED ANY ITA NO.1299/BANG/2011 PAGE 11 OF 11 RELIEF TO THE ASSESSEE. THE CIT(A), HOWEVER, SHOULD HAVE MENTIONED THAT THE GROUND IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES INSTEAD OF AS DISMISSING IT FOR STATISTICA L PURPOSES. WITH THESE OBSERVATIONS, WE DIRECT THE AO TO GIVE CONSEQ UENTIAL RELIEF TO THE ASSESSEE. THIS GROUND OF APPEAL IS ACCORDIN GLY ALLOWED FOR STATISTICAL PURPOSES. 9. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 04TH DECEMBER , 2012 . SD/- SD/- (JAS O N P. BOAZ ) ACCOUNTANT MEMBER (SMT. P. MADHAVI DEVI) JUDICIAL MEMBER EKS COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) CONCERNED 4. CIT 5. DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY INCOME-TAX APPELLATE TRIBU NAL, BANGALORE