DCIT, CIR-11, KOLKATA, Kolkata V. M/s Premier Irrigation Adritec (P) Ltd., Kolkata

ITA 1327/KOL/2014

• Counselvise Citation: 132723514 RSA 2014
• Duration Of Justice: 1 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-12-2015
• Appeal Filed By: Department
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 09-06-2014
• Court: TRIBUNAL
• Department Lawyers: UDAY KR S ARDAR JCITLD
• Assessee Lawyers: A K TIBREWAL FCA LD
• Keywords: Audit objection; Retrospective amendment; Tax effect
• Section: 143(3)

Judgement Text

ITA NO.1327/KOL/2014 & CO NO.84/KOL/2014 B-AM T.E.L.T RS. 10 LACS M/S. PREMIER IRRIGATION ADRIITEC PVT. LTD 1 IN THE INCOME TAX APPELLATE TRIBUNAL, B BENCH, K OLKATA BEFORE : SHRI MAHAVIR SINGH, JUDICIAL MEMBER, AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER ITA NO. 1327/KOL/2014 A.Y 2010-11 DCIT, CIR-11, KOLKATA VS. M/S. PREMIER IRRIGATIO N ADRITEC PVT. LTD.PAN: AAFCM4800Q (APPELLANT) (RESPONDENT) C.O NO.84/KOL/2014 [ ARISING OUT OF ITA NO. 1327/KOL/2014 A.Y 2010-1 1 ] M/S. PREMIER IRRIGATION ADRITEC VS. M/S. PREMIER IRRIGATION ADRITEC PVT. LTD (CROSS OBJECTOR) (RESPONDENT) FOR THE APPELLANT/DEPARTMENT: SHRI UDAY KR. SARDAR, JCIT/LD. SR.DR FOR THE RESPONDENT/ASSESSEE: SHRI A.K TIBR EWAL, FCA, LD.AR DATE OF HEARING: 29-12 -2015 DATE OF PRONOUNCEMENT: 29-12-201 5 ORDER SHRI M.BALAGANESH, AM : THIS APPEAL OF THE REVENUE AND CROSS OBJECTION OF T HE ASSESSEE ARISE OUT OF THE ORDER OF THE LEARNED CIT(A)-XX, KOLKATA IN APPEAL N O. 211/XII/CIR.11/12-13 DATED 19-03- 2014 AGAINST THE ORDER OF ASSESSMENT FRAME D U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR THE ASST YEAR 2010-11. 2. AT THE OUTSET, IT IS SEEN THAT THE TAX EFFECT O N THE DISPUTED ADDITIONS BEFORE US IS LESS THAN RS. 10 LACS. 3. WE HAVE HEARD THE PARTIES AND PERUSED THE MATER IALS AVAILABLE ON RECORD. IT IS SEEN FROM THE PERUSAL OF THE RECORDS THAT THE TOTAL TAX EFFECT ON THE ADDITIONS DISPUTED BEFORE US IS ADMITTEDLY BELOW THE TAX EFFECT LIMIT PRESCRIBED BY CBDT VIDE CIRCULAR ITA NO.1327/KOL/2014 & CO NO.84/KOL/2014 B-AM T.E.L.T RS. 10 LACS M/S. PREMIER IRRIGATION ADRIITEC PVT. LTD 3 PRESCRIBED MONETARY LIMITS IN ANY OF THE YEAR(S), I F IT IS DECIDED TO FILE APPEAL IN RESPECT OF THE YEAR(S) IN WHICH TAX EFFECT EXCEED S THE MONETARY LIMIT PRESCRIBED. IN CASE WHERE A COMPOSITE ORDER / JUDGEMENT INVOLVE S MORE THAN ONE ASSESSEE, EACH ASSESSEE SHALL BE DEALT WITH SEPARATELY. 8. ADVERSE JUDGEMENTS RELATING TO THE FOLLOWING ISS UES SHOULD BE CONTESTED ON MERITS NOTWITHSTANDING THAT THE TAX EFFECT ENTAILED IS LESS THAN THE MONETARY LIMITS SPECIFIED IN PARA 3 ABOVE OR THERE IS NO TAX EFFECT : (A) WHERE THE CONSTITUTIONAL VALIDITY OF THE PROVISIONS OF AN ACT OR RULE ARE UNDER CHALLENGE, OR (B) WHERE BOARDS ORDER, NOTIFICATION, INSTRUCTION OR C IRCULAR HAS BEEN HELD TO BE ILLEGAL OR ULTRA VIRES, OR (C) WHERE REVENUE AUDIT OBJECTION IN THE CASE HAS BEEN ACCEPTED BY THE DEPARTMENT, OR (D) WHERE THE ADDITION RELATES TO UNDISCLOSED FOREIGN A SSETS / BANK ACCOUNTS. 10. THIS INSTRUCTION WILL APPLY RETROSPECTIVELY TO PENDING APPEALS AND APPEALS TO BE FILED HENCEFORTH IN HIGH COURTS/ TRIBUNALS. PEN DING APPEALS BELOW THE SPECIFIED TAX LIMITS IN PARA 3 ABOVE MAY BE WITHDRA WN / NOT PRESSED. APPEALS BEFORE THE SUPREME COURT WILL BE GOVERNED BY THE IN STRUCTIONS ON THIS SUBJECT, OPERATIVE AT THE TIME WHEN SUCH APPEAL WAS FILED. 3.1 WE FIND THAT INTENTION BEHIND THE CIRCULAR NO.2 1/2015 DATED 10-12-2015 NEEDS TO BE UNDERSTOOD IN THE FOLLOWING PERSPECTIVE:- BY PASSAGE OF TIME, THE MONEY VALUE HAS GONE DOWN, THE COST OF LITIGATION EXPENSES HAS GONE UP, NUMBER OF ASSESSES ON THE FI LES OF THE DEPARTMENT HAVE BEEN INCREASED AND CONSEQUENTLY, THE BURDEN ON THE DEPARTMENT IS ALSO INCREASED TO A TREMENDOUS EXTENT. THE CORRIDORS OF THE SUPERIOR COURTS ARE CHOKED WITH HUGE PENDENCY OF CASES. IN THIS VIEW OF THE MATTER, THE CBDT HAS RIGHTLY TAKEN A DECISION TO REVISE THE MONETAR Y LIMITS IN TUNE WITH THE PRESENT VALUE OF MONEY AND WITH A VIEW TO REDUCE TH E LITIGATION AND OFFERING RELIEF TO SMALL TAX PAYERS. THIS IS ALSO IN VIEW O F THE FACT THAT TIME AND ENERGY OF THE DEPARTMENT COULD BE USED MORE PRODUC TIVELY AND EFFICIENTLY TO ITA NO.1327/KOL/2014 & CO NO.84/KOL/2014 B-AM T.E.L.T RS. 10 LACS M/S. PREMIER IRRIGATION ADRIITEC PVT. LTD 5 EMBEDDED IN SUCH EXPENDITURE HAS REMAINED UNTAXED D UE TO TAX WITHHOLDING LAPSES BY THE ASSESSEE. HENCE, SECTION 40(A)(IA) IS NOT A PENALTY PROVISI ON FOR TAX WITHHOLDING LAPSE BUT IT IS A PROVISION INTRODUC ED TO COMPENSATE ANY LOSS TO THE REVENUE IN CASES WHERE DEDUCTOR HA SNT DEDUCTED TDS ON AMOUNT PAID TO DEDUCTEE AND, IN TURN, DEDUCT EE ALSO HASNT OFFERED TO TAX INCOME EMBEDDED IN SUCH AMOUNT. THE PENALTY FOR TAX WITHHOLDING LAPSE PER SE IS SEP ARATELY PROVIDED UNDER SECTION 271C, AND, THEREFORE, SECTI ON 40(A)(IA) ISNT ATTRACTED TO THE SAME. HENCE, AN ASSESSEE COULD NOT BE PENALIZED UNDER SECTION 40(A)(IA) WHEN THERE WAS NO LOSS TO R EVENUE. THE AGRA TRIBUNAL IN THE CASE OF RAJIV KUMAR AGARWA L V. ACIT [2014] 45 TAXMANN. COM 555 (AGRA-TRIB) HAD HEL D THAT THE SECOND PROVISO TO SECTION 40(A)(IA) IS DECLARATORY AND CURATIVE IN NATURE AND HAS RETROSPECTIVE EFFECT FROM 1 ST APRIL, 2005, BEING THE DATE FROM WHICH SUB-CLAUSE (IA) OF SECTION 40(A) WA S INSERTED BY THE FINANCE (NO.2) ACT, 2004, EVEN THOUGH THE FINANCE A CT, 2012 HAD NOT SPECIFICALLY STATED THAT PROVISO IS RETROSPECTI VE IN NATURE. THE HIGH COURT AFFIRMED THE RATIO LAID DOWN BY THE AGRA TRIBUNAL AND HELD THAT SAID PROVISO IS DECLARA TORY AND CURATIVE IN NATURE AND HAS RETROSPECTIVE EFFECT FROM 1 ST APRIL 2005. 4.1 RESPECTFULLY FOLLOWING THE DECISION OF THE HON BLE DELHI HIGH COURT WE SET ASIDE THE CROSS OBJECTION OF THE ASSESSEE TO THE FILE OF THE AO TO DECIDE THE SAME BASED ON THE EVIDENCES SUBMITTED BY THE ASSESSEE WITH REG ARD TO THE INCLUSION OF SUBJECT MENTIONED RECEIPTS IN THE HANDS OF RESPECTIVE PAYEE S. IF IT IS SO, WE HOLD THAT NO DISALLOWANCE U/S. 40(A)(IA) OF THE ACT WOULD OPERAT E IN THE HANDS OF THE ASSESSEE. THUS, THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED IN LIMINE AND CROSS OBJECTION OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 29. 12.15. SD/- SD/- ( MAHAVIR SINGH, JUDICIAL MEMBER ) ( M.BALAGANESH, ACCOUNTANT MEMBER) DATE :29.12.15