ITO, Khanna V. Sh. Rajinder Pal Singh, Khanna

ITA 1347/CHANDI/2012

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9812 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-07-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 11-03-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 27-12-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R.SOOD, ACCOUNTANT MEMBER ITA NO. 1347/CHD/2012 (ASSESSMENT YEAR : 2009-10) THE INCOME TAX OFFICER, VS. MR.RAJINDER PAL SINGH, WARD-III, PROP. M/S KHANNA KHANNA. GUJRAT ROADWAYS, VILLAGE BHATTIAN, G.T. ROAD, KHANNA, PAN: AYVPS9985P (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANJIT SINGH, DR RESPONDENT BY : NONE DATE OF HEARING : 01.07.2015 DATE OF PRONOUNCEMENT : 03.07.2015 O R D E R PER BHAVNESH SAINI, J.M. : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-II, LUDHIANA DATED 25.10.2012 FOR ASSESSM ENT YEAR 2009-10 ON THE FOLLOWING GROUNDS : 1.(A) THE LD. COMMISSIONER OF INCOME TAX (APPEAL)-LI, LU DHIANA ON FACTS AS WELL AS IN LAW HAS ERRED IN DELETING THE DISALLOW ANCE OF RS. 23,97,226/- MADE BY THE A.O. UNDER SECTION 40A(IA) OF 2 THE INCOME TAX ACT, 1961 BY HOLDING THAT THE PROVIS IONS OF SECTION 40A(IA) ARE APPLICABLE TO THE AMOUNTS OUTSTA NDING AS ON THE LAST DAY OF THE FINANCIAL YEAR ONLY AND NOT TO PAYMENTS ACTUALLY MADE DURING THE FINANCIAL YEAR. (B) THE LD. COMMISSIONER OF INCOME TAX (APPEAL)-LL, LUDH IANA HAS ERRED IN DELETING THE ABOVE ADDITION BY FOLLOWIN G ORDER OF THE VISHAKHAPATNAM BENCH OF THE HON'BLE ITAT IN THE CASE OF M/S MERILYN SHIPPING AND TRANSPORTS, WHICH IS NOT A JURISDICTIONAL APPELLATE AUTHORITY. (C) THE LD. COMMISSIONER OF INCOME TAX (APPEAL)-LL, LUDHIANA HAS FAILED TO APPRECIATE THAT THE CHANDIGARH BENCH O F THE HON'BLE ITAT HAS HELD THAT THE PROVISIONS OF SECTION 40A(IA) ARE APPLICABLE TO ALL THE PAYMENTS MADE OR PENDING DU RING THE FINANCIAL YEAR. 2. WE HAVE HEARD THE LEARNED D.R FOR THE REVENUE A ND PERUSED THE FINDINGS OF THE AUTHORITIES BELOW. HOW EVER, NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE NOTIFYIN G THE DATE OF HEARING THROUGH REGISTERED POST. THIS APPEAL W AS HEARD ALONGWITH THE APPEAL OF THE ASSESSEE IN ITA NO.1346/CHD/2012, WHICH IS SEPARATELY DISPOSED OFF. 3. THE LEARNED CIT (APPEALS) NOTED IN THE IMPUGNED ORDER THAT THE ISSUE OF DISALLOWANCE OF RS.23,97,22 6/- HAS RAISED BEFORE HIM UNDER SECTION 40(A)(IA) OF THE IN COME TAX ACT, 1961 (IN SHORT THE ACT) FOR VIOLATION OF SEC TION 194C OF THE ACT. THE LEARNED CIT (APPEALS) FURTHER REFERR ED TO PARA 5.1 OF HIS APPELLATE ORDER AND NOTED THAT THE ASSES SEES GROSS PROFIT WAS WORKED OUT BY THE ASSESSING OFFICER AT RS.15,09,430/- @ 20% OF RECEIPTS OF RS.75,47,153/-. THE BALANCE 80% OF THE GROSS RECEIPTS I.E. RS.60,37,723 /- WAS 3 CONSIDERED TO HAVE BEEN PAID AS FREIGHT AND HIRE CH ARGES. OUT OF THIS, RS.12,43,269/- WAS SHOWN AS PAYABLE AS DISCUSSED. OUT OF THE BALANCE AMOUNT, THE ASSESSI NG OFFICER HELD THAT IN THE ABSENCE OF ANY VERIFIABLE DETAILS, 50% OF THE FREIGHT PAID WAS LIABLE FOR DEDUCTION OF TDS UNDER SECTION 194C OF THE ACT. 50% OF THE GROSS PAYMENTS MADE T O THE TRUCK OWNERS COMES TO RS.23,97,226/-. THE ASSESSE E HAD NOT DEDUCTED TDS ON THESE AMOUNTS. ACCORDINGLY, AN AM OUNT OF RS.23,97,226/- WAS DISALLOWED UNDER SECTION 40(A)(I A) OF THE ACT. 4. THE ASSESSEE CHALLENGED THE ADDITION BEFORE THE LEARNED CIT (APPEALS) AND IT WAS SUBMITTED THAT THE PROVISIONS OF SECTION 194C OF THE ACT ARE NOT APPLICABLE IN TH E CASE OF THE ASSESSEE. IT WAS FURTHER SUBMITTED THAT THE I.T.A .T., (SPECIAL BENCH) VISHAKHAPATNAM IN THE CASE OF MERILYN SHIP PING & TRANSPORTS VIDE ORDER DATED 29.3.2012 HELD THAT SECTION 40(A)(IA) OF THE ACT IS ONLY APPLICABLE TO EXPENSE AMOUNT OUTSTANDING IN THE BOOKS OF ACCOUNT ON THE YEAR END . IT WAS SUBMITTED THAT IN THE CASE OF ASSESSEE THE AMOUNT WAS PAID. THEREFORE, THERE IS NO SCOPE FOR MAKING DISALLOWANC E. THE LEARNED CIT (APPEALS) FOLLOWING THE ORDER OF I.T.A. T. (SPECIAL BENCH) VISHAKHAPATNAM IN THE CASE OF MERILYN SHIPP ING & TRANSPORTS (SUPRA) DELETED THE ADDITION. HIS FIND INGS ON THIS ISSUE AT PAGE 15 OF THE APPELLATE ORDER ARE REPRODU CED AS UNDER : 4 II) DISALLOWANCE OF RS.23,97,226/-:- THIS DISALLOWANCE REPRESENTS THE AMOUNTS ACTUALLY PAID BY THE APPELLAN T DURING THE YEAR WITHOUT DEDUCTING ANY TDS. THE APPELLANT HAS C ONTENDED THAT HE WAS NOT LIABLE TO DEDUCT TAX WITH REGARD TO THESE PAYMENTS IN VIEW OF THE PROVISIONS OF SECTION 194C AS DISCUSSED ABOVE. IN ADDITION TO THIS THE APPELLANT ALSO RELIED UPON THE CASE OF SPECIAL BENCH OF HON'BLE VISHAKAPATNAM TRIBUNAL IN THE CASE OF MERILYN SHIPPING & TRANSPORTS VS. ACIT (2012) 20 TAXMANN.CO M 244 (VISAKHAPATNAM). IN THIS CASE, THE HON'BLE ITAT HEL D THAT PROVISIONS OF SECTION 40(A)(IA) ARE APPLICABLE ONLY TO AMOUNTS O F EXPENDITURE WHICH ARE PAYABLE AS ON DATE 31ST MARCH OF EVERY YE AR AND IT CANNOT BE INVOKED TO DISALLOW EXPENDITURE WHICH HAS BEEN ACTU ALLY PAID DURING PREVIOUS YEAR, WITHOUT DEDUCTION OF TDS. IT IS AN UNDISPUTED FACT THAT THE AMOUNT OF RS.23,97,226/- HAD ALREADY BEEN PAID BY THE APPELLANT DURING THE YEAR. KEEPING IN VIEW JUDGM ENT OF THE HON'BLE ITAT, VISHAKAPATNAM, I HOLD THAT NO DISALLO WANCE CAN BE MADE U/S 40(A)(IA) WITH REGARD TO THE PAYMENTS ALREADY MADE DURING THE YEAR. DISALLOWANCE OF RS.23,97,226/- IS THER EFORE DELETED. THESE GROUNDS OF APPEAL ARE THEREFORE, PARTLY ALLOW ED. 5. THE LEARNED D.R FOR THE REVENUE CONTENDED THAT NOW THE ISSUE IS COVERED AGAINST THE ASSESSEE BY THE JU DGMENT OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF P.M.S. DIESELS VS. CIT REPORTED IN 374 ITR 562, IN WHICH IT WAS HELD THAT THE REQUIREMENT TO DEDUCT TAX AT SOUR CE IS MANDATORY AND PROVISIONS OF SECTION 40(A)(IA) OF TH E ACT ARE APPLICABLE TO THE ASSESSEE WHO FOLLOWS CASH SYSTEM AS WELL AS THE ASSESSEE WHO FOLLOWS MERCANTILE SYSTEM. CONS IDERING THE FACTS OF THE CASE NOTED BY THE LEARNED CIT (APPEALS ) IN THE LIGHT OF THE JUDGMENT OF THE HON'BLE PUNJAB & HARYA NA HIGH COURT IN THE CASE OF P.M.S. DIESELS (SUPRA), THE I SSUE IS COVERED IN FAVOUR OF THE REVENUE AND AGAINST THE AS SESSEE. THEREFORE, FOLLOWING THE DECISION OF THE HON'BLE JU RISDICTIONAL 5 HIGH COURT, WE SET ASIDE THE ORDER OF THE LEARNED C IT (APPEALS) AND RESTORE THE ORDER OF THE ASSESSING OF FICER. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 3 RD DAY OF JULY, 2015. SD/- SD/- (T.R.SOOD) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 3 RD JULY, 2015 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH