Sanjeevni Sanjay Malve, Nashik V. Income-tax Officer,

ITA 1335/PUN/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1073 (ITAT-PUNE)
• Duration Of Justice: 10 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 22-08-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 12-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Keywords: Business income
• Section: 143(3); 194C

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC , PUNE , BEFORE MS. SUSHMA CHOWLA, JM . / ITA NO. 1 335 /PN/201 5 / ASSESSM ENT YEAR : 20 1 0 - 1 1 SMT. SANJEEV A NI SANJAY MALVE, 4A, PLEASANT PARK, PUMPING STATION ROAD, GANGAPUR ROAD, NASHIK 422005 . / APPELLANT PAN: A FTPM5117Q VS. THE INCOME TAX OFFICER , WARD 1 ( 4 ), NASHIK . / RESPONDENT / APPELLANT BY : NONE / RESPONDENT BY : SHRI P.L. KUREEL / DATE OF HEARING : 22 . 0 8 .201 6 / DATE OF PRONOUNCEMENT: 26 . 0 8 .201 6 / ORDER PER SUSHMA CHOWLA, J M : TH IS APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT (A) - 1 , NASHIK , DATED 24 . 08 .20 1 5 RELATING TO ASSESSMENT YEAR 20 1 0 - 1 1 AGAINST ORDER PASSED UNDER SECTION 1 4 3(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUN DS OF APPEAL : - 1 . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LOWER AUTHORITIES HAVE ERRED IN MAKING AN ADDITION OF RS.17,10,220/ - BY INVOKING PROVISIONS OF SECTION 40(A)(IA) OF THE INCOME TAX ACT, 1961 BY DISREGARDING ITA NO. 1 335 /PN/20 1 5 SMT. SANJEEVANI SANJAY MALVE 2 APPELLANTS CONTENT ION THAT PROVISIONS OF SECTION 194C DO NOT APPLY TO THE APPELLANT AS IN THE PRECEDING FINANCIAL YEAR, PROVISIONS OF SECTION 44AB(A) OF THE INCOME TAX ACT, 1961 WERE NOT APPLICABLE TO THE APPELLANT. THE ACTION OF LOWER AUTHORITIES IS COMPLETELY IN VIOLATIO N OF BASIC UNDERSTANDING OF LAW AND THEREFORE YOUR APPELLANT PRAYS FOR THE DELETION OF ENTIRE ADDITION OF RS.17,10,220/ - . 3. THE APPEAL WAS FIXED FOR HEARING ON 20.07.2016. HOWEVER, NONE APPEARED ON BEHALF OF THE ASSESSEE AND THE MATTER WAS ADJOURNED TO 28.07.2016 . FRESH NOTICE OF HEARING WAS ISSUED TO THE PARTIES, WHICH HAS BEEN RETURNED BACK BY THE POSTAL AUTHORITIES WITH REMARK LEFT DATED 06.08.2016. THERE IS NO OTHER COMMUNICATION ADDRESS AVAILABLE ON RECORD, HENCE, IT IS PROCEEDED TO DECIDE THE PRESENT APPEAL EXPARTE THE ASSESSEE AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE. 4. THE ONLY ISSUE ARISING IN THE PRESENT APPEAL IS AGAINST THE ADDITION OF RS.17,10,200/ - MADE BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF TH E ACT. 5. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION HAD FURNISHED THE RETURN OF INCOME DECLARING TOTAL INCOME AT RS. 7,07,330/ - . THE ASSESSEE WAS ENGAGED IN TRADING IN BUILDING MATERIAL AND PROVIDING LABOUR SERVICES. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD FURNISHED TAX AUDIT REPORT, A UDITED BALANCE SHEET AND THE PROFIT & LOSS ACCOUNT ALONG WITH COMPUTATION OF INCOME. THE TURNOVER IN ONE OF THE CONCERNS WAS RS.21,84,060/ - AND IN OTHER CONCERNS, THE GROSS CONTRACT RECEIPTS WERE TO THE EXTENT OF RS. 23,10,000/ - . THE CASE OF THE ASSESSEE HAD BEEN SELECTED FOR SCRUTINY UNDER CASS. THE ASSESSING OFFICER VIDE PAR A 4 OBSERVED THAT CASH DEPOSITS AS PER CIB INFORMATION WERE EXPLAINED AND WERE VERIFIED WITH THE BOO KS OF ACCOUNT. FURTHER, AIR INFORMATION WAS IN RESPECT OF PROPERTY SOLD FOR RS.62,63,000/ - WHICH WAS ALSO REFLECTED IN THE ACCOUNTS OF SHRI SANJAY DIGAMBER MALVE, WHO IN TURN, HAD SHOWN THE SALE OF PROPERTY AND THE ITA NO. 1 335 /PN/20 1 5 SMT. SANJEEVANI SANJAY MALVE 3 ASSESSMENT ORDER WAS PASSED UNDER SECTIO N 143(3) OF THE ACT. THE ASSESSING OFFICER VIDE PARA 5 NOTES THAT THE ASSESSEE HAD MADE SOME CONTRACT LABOUR PAYMENTS OF RS.17,10,220/ - . SINCE THE ASSESSEE HAD FAILED TO DEDUCT TAX AT SOURCE OUT OF LABOUR PAYMENTS, AS PER PROVISIONS OF SECTION 194C OF TH E ACT, THE ASSESSING OFFICER HELD THE ASSESSEE TO BE IN DEFAULT IN VIEW OF THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT AND DEDUCTION OF RS.17,10,220/ - WAS NOT ALLOWED TO THE ASSESSEE. 6. BEFORE THE CIT(A), THE PLEA OF THE ASSESSEE WAS THAT THE SAID ADD ITION WAS NOT WARRANTED AS THE ASSESSEE WAS NOT LIABLE FOR TAX AUDIT IN THE PRECEDING FINANCIAL YEAR BUT WAS LIABLE FOR TAX AUDIT DURING THE FINANCIAL YEAR, HENCE NO DISALLOWANCE IS MERITED UNDER SECTION 40(A)(IA) OF THE ACT. THE CIT(A) UPHELD THE ORDER O F ASSESSING OFFICER HOLDING THAT UNDER THE PROVISIONS OF CLAUSE (A) OR CLAUSE (B) OF SECTION 44AB OF THE ACT, WHERE THE TURNOVER OF BUSINESS OR PROFESSION CARRIED ON BY THE ASSESSEE EXCEEDED THE MONETARY LIMITS DURING THE RELEVANT FINANCIAL YEAR, THE ASSES SEE WAS LIABLE TO DEDUCT TAX AT SOURCE AND IN THE ABSENCE OF SAME, THE ADDITION IS WARRANTED. 7. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE ORDERS OF AUTHORITIE S BELOW. 9. ON PERUSAL OF RECORD, IT IS APPARENT THAT THE CASE OF ASSESSEE WAS SELECTED FOR SCRUTINY UNDER CASS, IN VIEW OF INFORMATION RECEIVED IN RESPECT OF CASH DEPOSITS. THE ASSESSING OFFICER VIDE PARA 4 OF THE ASSESSMENT ORDER REFERS TO THE AIR INFO RMATION ON ACCOUNT OF SALE OF PROPERTY, WHICH ADMITTEDLY, HAS BEEN SHOWN BY SHRI SANJAY DIGAMBER MALVE, WHEREIN THE ASSESSMENT WAS ITA NO. 1 335 /PN/20 1 5 SMT. SANJEEVANI SANJAY MALVE 4 ALSO COMPLETED UNDER SECTION 143(3) OF THE ACT. FURTHER, THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS N OTED THE FACT THAT THE ASSESSEE HAD MADE SUB - CONTRACT LABOUR PAYMENTS OF RS.17,10,220/ - AND AS PER PROVISIONS OF SECTION 194C OF THE ACT, THESE WERE LIABLE TO TAX DEDUCTION AT SOURCE. THE ASSESSEE HAD FAILED TO DEDUCT TAX AT SOURCE AND IN VIEW OF THE PROV ISIONS OF SECTION 40(A)(IA) OF THE ACT, THE SAID EXPENDITURE CLAIMED BY THE ASSESSEE WAS NOT ALLOWED. THE FIRST ASPECT TO BE SEEN IN THE PRESENT CASE IS WHERE THE CASE OF ASSESSEE WAS SELECTED UNDER CASS OR AS PER CIB INFORMATION, THEN AS PER CBDT INSTRUC TION DATED 08.09.2010, THE ASSESSING OFFICER CAN ONLY MAKE LIMITED SCRUTINY TO THE EXTENT RELATING TO THE AIR INFORMATION OR CIB INFORMATION FOR WHICH THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS. THE ASSESSING OFFICER IN ORDER TO EXERCISE HIS POWER AT A NY OTHER ISSUE, HAS TO SEEK THE PERMISSION OF ADMINISTRATIVE COMMISSIONER AND IN CASE S WHERE THE ADDITION IS ABOVE RS.10 LAKHS. IN THE ABSENCE OF ANY SUCH PERMISSION FROM THE ADMINISTRATIVE COMMISSIONER, THE ASSESSING OFFICER IS ONLY EMPOWERED TO CARRY OU T THE LIMITED SCRUTINY FOR WHICH, THE CASE WAS PICKED UP UNDER CASS. THE SAID PROPOSITION HAS BEEN APPLIED IN EARLIER DECISIONS, WHICH WERE FIXED FOR HEARING BEFORE THE TRIBUNAL. IT APPEARS THAT THE ASSESSING OFFICER HAS NOT TAKEN ANY PERMISSION FROM THE ADMINISTRATIVE COMMISSIONER. THE TRIBUNAL IN SHIDDHESH SHRIPAD MITKAR VS. ITO IN ITA NO.743/PN/2015, RELATING TO ASSESSMENT YEAR 2011 - 12, ORDER DATED 05.08.2016 HAD ALREADY TAKEN A VIEW THAT WHERE THE CASE IS TAKEN UP FOR CASS, THEN ONLY LIMITED SCRUTINY HAS TO BE CARRIED OUT. THOUGH, THE ASSESSEE HAS NOT APPEARED BEFORE THE TRIBUNAL NOR FILED ANY APPLICATION FOR ADJOURNMENT, HOWEVER, IN THE INTEREST OF JUSTICE, I DEEM IT FIT TO RESTORE THE MATTER BACK TO THE FILE OF ASSESSING OFFICER TO VERIFY WHETHER T HIS ISSUE OF NON - DEDUCTION OF TAX AT SOURCE WAS PART OF AIR OR CIB INFORMATION AND / OR ANY PERMISSION WAS SOUGHT FROM ADMINISTRATIVE COMMISSIONER IN THIS ITA NO. 1 335 /PN/20 1 5 SMT. SANJEEVANI SANJAY MALVE 5 REGARD. IN CASE, NO SUCH PERMISSION HAS BEEN SOUGHT FROM THE ADMINISTRATIVE COMMISSIONER, THE ROLE O F ASSESSING OFFICER IN THIS REGARD IS LIMITED AND NO SUCH ADDITION CAN BE MADE UNDER SECTION 40(A)(IA) OF THE ACT. IN CASE THE PERMISSION HAS BEEN SO RECEIVED FROM THE ADMINISTRATIVE COMMISSIONER DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THEN THE ASSES SING OFFICER SHALL CONSIDER THE CLAIM OF ASSESSEE DE NOVO AFTER AFFORDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, ALLOWED. 1 0 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED AS INDIC ATED ABOVE. ORDER PRONOUNCED ON THIS 26 TH DAY OF AUGUST , 201 6 . SD/ - SD/ - (SUSHMA CHOWLA) / JUDICIAL MEMBER / PUNE ; DATED : 26 TH AUGUST , 201 6 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESP ONDENT; 3. ( ) / THE CIT(A) - 1 , NASHIK ; 4. / THE PR. CIT 1 , NASHIK ; 5. 6. , , , - / DR SMC , ITAT, PUNE; / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE