THE ACIT, 3(1), Indore V. Shri Vijay Kalidhar, Indore

ITA 1313/IND/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2327 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 18-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K G GOYAL
• Assessee Lawyers: C P RAWKA
• Keywords: Business income; Opportunity of being heard; Retrospective amendment; Additional evidence
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.1313/IND/2016 ASSESSMENT YEAR: 2008-09 REVENUE BY SHRI K.G.GOYAL, SR.DR RESPONDENT BY SHRI C.P.RAWKA, CA DATE OF HEARING 01.02.2018 DATE OF PRONOUNCEMENT 09.02.2018 ORDER PER MANISH BORAD, AM. THIS APPEAL FILED BY THE REVENUE IS DIRE CTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-1, INDO RE DATED 24.08.2016 WHICH IS ARISING OUT OF THE ORDER U/S 14 3(3) R.W.S. 254 OF THE INCOME TAX ACT DATED 31.07.2015 FRAMED BY TH E ACIT-3(1), INDORE PERTAINING TO ASSESSMENT YEAR 2008-09. 2. REVENUE HAS RAISED FOLLOWING GROUNDS OF AP PEAL:- ASSISTANT COMMISSIONER OF INCOME TAX 3(1), INDORE VS. SHRI VIJAY KALIDHAR, INDORE (REVENUE) (RESPONDENT ) PAN NO.AHMPK7036P (I) WHETHER IN THE FACTS AND IN THE CIRCU MSTANCES OF THE CASE THE LD. CIT(A) ERRED IN LAW BY ALLOWING THE APPEAL OF THE A SSESSEE WITHOUT APPRECIATING THE FINDINGS OF THE ASSESSING OFFICER. (II) WHETHER IN THE FACTS AND IN THE CIRCU MSTANCES OF THE CASE THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 43,65, 013/- U/S 40(A)(IA) OF THE I.T.ACT IN VIOLATION OF RULE 46A OF I.T.RULE S, 1962 AND ACCEPTING THE COPIES OF RETURN OF DEDUCTEES AND THE CERTIFICA TE IN FORM NO. 26A AS AN ADDITIONAL EVIDENCE WITHOUT ALLOWING OPPORTUN ITY THE ASSESSING OFFICER. (III) WHETHER IN THE FACTS AND IN THE CIRCU MSTANCES OF THE CASE THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 43,65, 013/- U/S 40(A)(IA) OF THE I.T.ACT RELYING OF THE DECISION OF THE JURIS DICTIONAL ITAT IN THE CASE OF CIT VS SILVER REALITIES AND INFRASTRUCTURE (P) LTD. WHICH IS NOT APPLICABLE IN THE INSTANT CASE AS THE FIRST PROVISO TO SUB-SECTION (1) OF SECTION 201 IS INSERTED BY THE FINANCE ACT, 2012 WH ICH IS NOT RELEVANT TO THE A.Y.2008-09 UNDER CONSIDERATION. (IV) THE APPELLANT RESERVES THE RIGHT TO AD D, AMEND OR ALTER THE GROUND OF APPEAL ON OR BEFORE THE DATE IS FINALLY HEARD FOR D ISPOSAL. 3. BRIEFLY STATED, THE FACTS, AS CULLED OUT FROM RE CORD, ARE THAT THE ASSESSEE IS AN INDIVIAUL RUNNING THE BUSIN ESS OF ADVERTISING AGENCY UNDER THE SOLE PROPRIETORSHIP CO NCERN M/S SRIJAN ADVERTISING. E-RETURN FOR THE A.Y. 2008-09 W AS FILED ON 25.11.2008 DECLARING TOTAL INCOME AT RS. 21,01,050/ -. THE ASSESSMENT U/S 143(3) OF THE ACT WAS COMPLETED ON 2 8.12.2010 ASSESSING THE INCOME AT RS.64,66,063/- AFTER MAKING ADDITIONS OF RS.14,24,652/- AND RS. 29,40,361/- U/S 40(A)(IA) OF THE ACT ON ACCOUNT OF NON-DEDUCTION OF TDS. THE LEARNED CIT(A ) CONFIRMED THE ADDITION. 4. WHEN THE MATTER CAME UP BEFORE THE TRIBUNAL, VID E ITS ORDER DATED25.11.2014 THE COORDINATE BENCH SET ASID E THE ISSUE OF DISALLOWANCE OF RS.43,65,013/- MADE U/S 40(A)(IA) OF THE ACT TO THE FILE OF THE AO FOR DECIDING THE ISSUE DE NOVO AFTER CONDUCTING INQUIRIES. THEREAFTER, THE AO WHILE FRAMING THE ASS ESSMENT AS PER THE DIRECTIONS OF THE TRIBUNAL U/S 254 OF THE ACT, AGAIN CONFIRMED THE ADDITION BY OBSERVING THAT THE ASSESSEE WAS LIA BLE TO DEDUCT TDS. 5. AGGRIEVED, THE ASSESSEE AGAIN CAME IN APPEAL BEF ORE THE LEARNED CIT(A) AND SUBMITTED COPIES OF RETURNS FILE D BY THE DEDUCTEES ALONG WITH CERTIFICATES IN FORM NO. 26A DULY VERIFIED BY THE CA IN SUPPORT OF ITS CLAIM THAT THE ALLEGED PAY MENTS HAVE BEEN SHOWN AS INCOME/REVENUE IN THE RESPECTIVE RETURNS O F INCOME OF THE DEDUCTEES. ACCORDINGLY, THE LEARNED CIT(A) DELETED THE IMPUGNED ADDITION OF RS. 43,65,013/-. NOW THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 6. THE LEARNED DR SUPPORTED THE ORDER OF THE AO AND THE LEARNED COUNSEL FOR THE ASSESSEE RELIED ON THE FIND INGS OF THE LEARNED CIT(A) AND THE SUBMISSIONS MADE BEFORE HIM. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD PLACED BEFORE US. THE GRIEVANCE OF THE REVE NUE IS TWO-FOLD; FIRSTLY IT IS AGGRIEVED FOR THE ALLEGED VIOLATION O F RULE 46A OF THE INCOME TAX RULES AND SECONDLY ON MERITS AGAINST DEL ETION OF ADDITION OF RS. 43,65,013/- MADE BY THE AO BY APPLY ING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT AS THE A SSESSEE FAILED TO DEDUCT TAX AT SOURCE ON THE PAYMENTS OF RS.43,65,01 3/-. 8. AS FAR AS THE FIRST ISSUE IS CONCERNED, WE FIND THAT THE ISSUE IS IN SECOND ROUND AND COMPLETE DETAILS WITH SUBMISSIONS WERE FILED BEFORE THE AO. HOWEVER, THE ASSESSEE SU BMITTED COPIES OF INCOME TAX RETURNS AND CERTIFICATES OF CA RELATING TO DEDUCTEES BEFORE THE CIT(A) WHO HIMSELF HAS INHERENT POWERS U /S 251 OF THE ACT WHEREIN HE CAN CONFIRM, REDUCE, ENHANCE OR ANNU L THE ASSESSMENT. WE OBSERVE THAT THE LEARNED CIT(A) HAS CAREFULLY CONSIDERED THE EVIDENCES WHICH WERE VERY MUCH GOING TO THE ROOT OF THE ISSUE AND IT SEEMS THAT THE CIT(A) IN ORDER NOT TO PROLONG THE LITIGATION, EXAMINED THE EVIDENCES AND DECIDED THE ISSUE ACCORDINGLY. WE, THEREFORE, FIND NO VIOLATION OF R ULE 46A OF IT RULES AT THE END OF THE LEARNED CIT(A) AND, ACCORDINGLY, WE DISMISS GROUND NO. 2 RAISED BY THE REVENUE. 9. NOW COMING TO MERITS OF THE CASE WHEREIN THE REV ENUE HAS RAISED GROUND NO. 3 CHALLENGING THE DELETION OF ADDITION OF RS.43,65,013/- U/S 40(A)(IA) OF THE ACT, WE FIND TH AT THERE IS NO DISPUTE THAT THE ASSESSEE WAS REQUIRED TO DEDUCT TA X AT SOURCE FOR THE PAYMENTS MADE TO M/S CHIRANJAN ADVERTISING AND M/S SONAL ADVERTING ON THE AMOUNTS PAID AT RS.29,43,361/- AND RS.14,24,652/-, RESPECTIVELY. HOWEVER, IT HAS BEEN CONSISTENTLY HELD BY VARIOUS JUDGMENTS OF THE HONBLE COURTS AND THE TRIBUNAL THAT THE ULTIMATE OBJECT OF THE REVENUE IS THAT TAX IS P AID BY THE DEDUCTEES ON THE AMOUNTS SO RECEIVED BY THEM. 10. WE FIND IT PERTINENT TO OBSERVE THE DETAILED FI NDINGS OF THE LEARNED CIT(A) DELETING THE DISALLOWANCE OF RS. 43,65,013/- MADE BY THE AO BY INVOKING PROVISIONS OF SECTION 40 (A)(IA) OF THE ACT WHICH ARE AS UNDER :- 6. GROUND NO.2:- THIS GROUND OF THE APPELLANT IS DIRECTED AGAINST THE DISALLOWANCE OF RS. 43,65,013/- U/S 40(A)(IA) OF T HE ACT. THE DETAILED FACTS OF THE CASE AS PER THE ASSESSMENT ORDER ARE R EPRODUCED AT PARA NO. 2 ABOVE AND THE DETAILED SUBMISSIONS OF THE APP ELLANT ARE REPRODUCED AT PARA NO. 3 ABOVE. 6.1 THE CRUX OF THE APPELLANTS SUBMISSION IS THA T NO DISALLOWANCE IS CALLED FOR IN VIEW OF THE AMENDED PROVISION OF SECT ION 40(A)(IA) WHICH READS AS UNDER:- PROVIDED FURTHER THAT WHERE AN ASSESSEE F AILS TO DEDUCT THE WHOLE OR ANY PART OF THE TAX IN ACCORDANCE WITH THE PROVISION OF CHAPTER XVII B OR ANY SUCH SUM BUT IS NOT DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER THE FIRST PROVISO TO SUB- SECTION (1) OF SECTION 201, THEN, FOR THE PURPOSE OF THIS SUB-CLAU SE, IT SHALL BE DEEMED THAT THE ASSESSEE HAS DEDUCTED AND PAID THE TAX ON SUCH SUM ON THE DATE OF FURNISHING OF RETUTN OF INCOME B Y THE RESIDENT PAYEE REFERRED TO IN THE SAID PROVISO . AND IN PURSUANCE OF THE ABOVE COPY OF RETURN FI LED BY THE DEDUCTEES ALONGWITH CERTIFICATE IN FORM 26A VERIFIED BY THE C .A. WERE PRODUCED AND IT WAS EMPHASIZED THAT THE CONCOMITANT AMENDMEN T IN THE PROVISIONS OF SECTION 201 OF THE ACT IS HELD TO BE RETROSPECTIVE AND IS EFFECTIVE FROM 2005 AS HELD BY THE DELHI HIGH COURT IN THE CASE OF CIT V/S ANSAL LAND MARK TOWNSHIP (P) LTD. AND THE ABOVE DECISION HAS BEEN FOLLOWED BY THE JURISDICTION ITAT IN THE CASE OF CIT V/S SILVER REALITIES AND INFRASTRUCTURE (P) LTD. 6.2 APPELLANT HAS ALSO TAKEN AN ALTERNATIVE ARGUM ENT RELYING ON THE DECISION OF THE APEX COURT IN CASE OF VECTOR SHIPPI NG PVT. LTD. CONTENDING THAT HE WAS NOT REQUIRED TO DEDUCT TDS A S THESE AMOUNTS WERE NOT PAYABLE AT THE END OF THE YEAR. THE ALTERN ATIVE ARGUMENT OF THE APPELLANT IS NOT IN ACCORDANCE WITH LAW AS THE DECISION OF THE APEX COURT IN THE CASE OF VECTOR SHIPPING PVT. LTD. IS WITHOUT DISCUSSING THE ISSUE ON MERITS AND THE APEX COURT H AS DISMISSED THE DEPARTMENTAL SLP IN LIMINE. 6.3 THE JURISDICTIONAL ITAT IN THE CASE OF CIT VS. SILVER REALITIES & INFRASTRUCTURE (P) LTD. HAS MADE THE FOLLOWING OBSE RVATIONS:- WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIO NS OF THE PARTIES IN VIEW OF THE JUDGEMENTS CITED BEFORE US. HONBLE DEL HI HIGH COURT IN THE CASE OF CIT VS. ANSAL LAND MARK TOWNSHIP PRIVAT E LIMITED (SUPRA) HAS CATEGORICALLY HELD THAT SECOND PROVISO TO SECTION 40(A)(IA) IS DECLARATORY AND CURATIVE IN NATURE AND HAS RETROSPECTIVE EFFECT FRORM 1 ST APRIL, 2005. WE, THEREFORE, IN THE INTEREST OF JU STICE AND FAIR PLAY, RESTORE THIS ISSUE TO THE FILE OF TH E ASSESSING OFFICER FOR THE PURPOSE OF LIMITED VERIFICATION ON THE ASPE CT AS TO WHETHER DAINIK BHASKAR HAS INCLUDED THE RECEIPT IN ITS PROF IT AND LOSS ACCOUNT IN COMPUTING THE BUSINESS INCOME OFFERED TO TAX AND IF IT IS FOUND TO BE SO, THE ASSESSING OFFICER IS DIRECTED T O DELETE THE DISALLOWANCE. NEEDLESS TO SAY THAT THE ASSESSING OF FICER SHALL PROVIDE ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . IN VIEW OF THE ABOVE DECISION OF THE JURISDICTIONAL ITAT AND THE FACT THAT THE APPELLANT HAS FILED COPIES OF RET URN OF THE DEDUCTEES AND THE CERTIFICATE IN FORM NO. 26A OF THE ACT. THE ADDITION IS DIRECTED TO BE DELETED. THIS GROUND OF THE APPELLANT IS THEREFO RE ALLOWED. RS. 43,65,013/- DELETED. 11. FROM THE PERUSAL OF THE ABOVE FINDINGS OF THE L EARNED CIT(A) IN THE LIGHT OF VARIOUS JUDGMENTS DISCUSSED IN HIS FINDINGS AND ALSO IN THE GIVEN FACTS AND CIRCUMSTANCES OF TH E CASE WHEREIN THE ASSESSEE HAS BEEN SUCCESSFUL IN PROVING THAT TH E ALLEGED AMOUNTS HAVE BEEN OFFERED TO TAX BY THE DEDUCTEES I N THEIR RESPECTIVE RETURNS OF INCOME THEREBY CAUSING NO LOS S TO THE REVENUE. WE FIND NO REASON TO INTERFERE IN THE FINDINGS OF T HE LEARNED CIT(A). IN THE RESULT, GROUND NO. 3 OF THE REVENUE IS DISMI SSED. 12. GROUND NOS. 1 AND 4 ARE GENERAL IN NATURE WHICH NEED NO ADJUDICATION. 13. IN THE RESULT, THE APPEAL OF THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN OPEN COURT ON 09 FEB RUARY, 2018. SD/- SD/- (KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER FEBRUARY 09, 2018 COPY TO : APPELLANT/RESPONDENT/CIT/CIT(A)/DR DN/-