RECAP Associates, CHENNAI V. ACIT, CHENNAI

ITA 1359/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4284 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 12-06-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 17-05-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P SURESH RAO
• Assessee Lawyers: T BANUSEKAR
• Keywords: Additional evidence

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI . . . , ! , ' #$ % [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ] ./ I.T.A. NO.1359/MDS/2016 / ASSESSMENT YEAR : 2012-2013. RECAP ASSOCIATES, NO.3A, III FLOOR, 41/17. I AVENUE, INDIRA NAGAR, ADYAR, CHENNAI 600 020. [PAN AAKFR 2965H] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, NON CORPORATE CIRCLE 15(1) CHENNAI. ( &' / APPELLANT) ( ()&' /RESPONDENT) / APPELLANT BY : SHRI. T. BANUSEKAR, C.A. /RESPONDENT BY : SHRI. P. SURESH RAO, JCIT. / DATE OF HEARING : 12-06-2017 / DATE OF PRONOUNCEMENT : 14-06-2017 / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-15, CHENN AI DATED 12.02.2016 AND PERTAINS TO ASSESSMENT YEAR 2012- 2013. ITA NO. 1359/MDS/2016. :- 2 -: 2. THE FIRST GROUND RAISED BY THE ASSESSEE IS WITH REG ARD TO DISALLOWANCE U/S. 40(A)(IA) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) IN RESPECT OF PROJECT EXPENSES. LD. ASSESSIN G OFFICER IN THE ASSESSMENT ORDER HELD THAT ASSESSEE HAD DEDUCTED T DS ONLY ON C9,00,000/- PAID AND THUS, THE LD. ASSESSING OFFICE R DISALLOWED A SUM OF C31,68,860/- AND ADDED TO THE TOTAL INCOME U/S. 40(A)(IA) OF THE ACT AND LD. ASSESSING OFFICER ALSO NOTED THAT ASSESSEE HAD NOT DEDUCTED TDS ON PAYMENTS MADE TO FANA ENTERPRISES AND N. GOV IND RAJAN OF C10,00,000/- AND C50,000/- RESPECTIVELY. ACCORDING LY, HE ADDED THE SAME U/S. 40(A)(IA) OF THE ACT. AGGRIEVED, ASSESSE E FILED AN APPEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) . 3. LD. COMMISSIONER OF INCOME TAX (APPEALS) PLACED REL IANCE ON THE JUDGMENT OF HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF P.M.S. DIESELS VS. CIT (ITA NO716 OF 2009) (O & M) DATED 29.04.2015 AND DISMISSED THE GROUND TAKEN BY THE ASSESSEE. AGGRIEVED, ASSESSEE FILED AN APPEAL BEFORE THE TRIB UNAL. 4. BEFORE US, LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT THE SAID PAYMENTS WAS MADE IN ARUNACHAL PRADESH, THE R ECEIPTANT OF THE SAID PAYMENT WAS EXEMPTED FROM TAX U/S. 10(26) OF T HE ACT. THEREFORE NO TAX WAS REQUIRED TO BE DEDUCTED ON THIS PAYMENTS . EVEN THOUGH THE ASSESSEE PLACED NECESSARY EVIDENCE BEFORE LD. COMMISSIONER OF ITA NO. 1359/MDS/2016. :- 3 -: INCOME TAX (APPEALS) AS AN ADDITIONAL EVIDENCE, IT WAS NOT CONSIDERED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) AND PRAYED THAT THE ISSUE MAY BE REMITTED TO THE LD. ASSESSING OFFICER FOR FRESH CONSIDERATION. 5. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. WE ACCEDE TO THE REQUEST OF THE LD. AUTHORI SED REPRESENTATIVE. ACCORDINGLY IN THE INTEREST OF JUSTICE, WE REMIT TH E ISSUE BACK TO THE FILE OF THE LD. ASSESSING OFFICER TO EXAMINE THE APPLICA BILITY OF SEC. 10(26) OF THE ACT IN THIS CASE AND DECIDE ACCORDINGLY. THE GROUND OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 7. NEXT GROUND RAISED BY THE ASSESSEE IS WITH REGARD T O DISALLOWANCE OF C10,50,000/- PAID TO CONSULTANCY C HARGES U/S. 40(A)(IA) OF THE ACT. THIS PAYMENT WAS DISALLOWED ON ACCOUNT OF NON DEDUCTION OF TDS BY INVOKING THE PROVISIONS OF SEC. 40(A)(IA) OF THE ACT. 8. AFTER HEARING BOTH THE PARTIES, WE ARE OF THE OPIN ION THAT THIS ISSUE CAME FOR CONSIDERATION BEFORE THE HONBL E SUPREME COURT IN ITA NO. 1359/MDS/2016. :- 4 -: CIVIL APPEAL NO.5512 OF 2017 IN THE CASE OF M/S. PALAM GAS SERVICES VS. CIT, DATED 03.05.2017 WHEREIN IT WAS HELD AS UNDER:- 15. MS. DHUGGA INVITED OUR ATTENTION TO A JUDGME NT OF THE DIVISION BENCH OF MADRAS HIGH COURT IN TU BE INVESTMENTS OF INDIA LTD. V. ASSISTANT COMMISSI ONER OF INCOME-TAX (TDS), [2010] 325 ITR 610 (MAD). THE DIVISION BENCH REFERRED TO THE STATISTICS PLACED BE FORE IT BY THE DEPARTMENT WHICH DISCLOSED THAT TDS COLLEC TION HAD AUGMENTED THE REVENUE. THE GROSS COLLECTI ON OF ADVANCE TAX, SURCHARGE, ETC. WAS RS. 2,75,857.70 CRORES IN THE FINANCIAL YEAR 2008-09 OF WHICH THE TDS COMP ONENT ALONE CONSTITUTED RS.1,30,470.80 CRORES. THE DI VISION BENCH OBSERVED THAT INTRODUCTION OF SECTION 40( A)(IA) HAD ACHIEVED THE OBJECTIVE OF AUGMENTING THE TDS TO A SUBSTANTIAL EXTENT. THE DIVISION BENCH ALSO O BSERVED THAT WHEN THE PROVISIONS AND PROCEDURES RELATING TO TDS ARE SCRUPULOUSLY APPLIED, IT ALSO ENSURED THE IDEN TIFICATION OF THE PAYEES THEREBY CONFIRMING THE NETWORK OF ASSESSEES AND THAT ONCE THE ASSESSEES ARE IDENTIFIE D IT WOULD ENABLE THE TAX COLLECTION MACHINERY TO BRIN G WITHIN ITS FOLD ALL SUCH PERSONS WHO ARE LIABLE TO COME WITHIN THE NETWORK OF TAX PAYERS. THESE OBJECTS ALS O INDICATE THE LEGISLATIVE INTENT THAT THE REQUIREMENT OF DE DUCTING TAX AT SOURCE IS MANDATORY. ACCORDINGLY, THIS ISSUE IS DECIDED AGAINST THE ASSE SSEE. 9. NEXT GROUND RAISED BY THE ASSESSEE IS WITH REGARD T O DISALLOWANCE OF BUSINESS PROMOTION EXPENSES AT C5,6 6,441/-. 10. BRIEF FACTS OF THE CASE ARE THAT LD. ASSESSING OFFI CER IN THE ASSESSMENT ORDER HELD THE ASSESSEE TO PRODUCE BILLS AND INVOICES FOR BUSINESS PROMOTION EXPENSES. HOWEVER, ASSESSEE HAS NOT PRODUCED BILLS AND VOUCHERS TO THE TUNE OF C5,66,441/-. THUS , LD. ASSESSING OFFICER DISALLOWED THE SAME AND ADDED C5,66,441/- T O THE TOTAL INCOME ITA NO. 1359/MDS/2016. :- 5 -: OF THE ASSESSEE. AGGRIEVED, ASSESSEE FILED AN APPE AL BEFORE LD. COMMISSIONER OF INCOME TAX (APPEALS). 11. LD. COMMISSIONER OF INCOME TAX (APPEALS) OBSERVED THE LD. ASSESSING OFFICER HAD DISALLOWED BUSINESS PROMOTION EXPENSES OF C5,66,441/- AS THE BILLS WERE NOT PRODUCED BEFORE L D. ASSESSING OFFICER. SINCE THE ASSESSEE HAS NOT PRODUCED THE BILLS, THE COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE ACTION OF THE LD . ASSESSING OFFICER AND DISMISSED THE GROUND OF THE ASSESSEE. 12. . WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MAT ERIAL ON RECORD. THIS EXPENSES ARE NOT PROPERLY VOUCHED. IN OUR OPINION, WHEN ASSESSEE CLAIMED ANY EXPENDITURE, IT IS THE D UTY OF THE ASSESSEE TO PLACE NECESSARY BILLS AND VOUCHERS PROVING THE E XPENDITURE. SINCE THE ASSESSEE FAILED TO ESTABLISH INCURRING OF EXP ENDITURE, LOWER AUTHORITIES ARE JUSTIFIED IN DISALLOWING THE EXPEND ITURE. THE GROUND OF THE ASSESSEE IS REJECTED. 13. THE LAST GROUND RAISED BY THE ASSESSEE IS WITH REGA RD TO DISALLOWANCE OF C10,00,000/- U/S. 68 OF THE ACT. 14. BRIEF FACTS OF THE CASE ARE THAT THE LD. ASSESSING OFFICER IN THE ASSESSMENT PROCEEDINGS DIRECTED THE ASSESSEE TO PR ODUCE ITA NO. 1359/MDS/2016. :- 6 -: CONFIRMATION FROM M/S.BACKEND BANGALORE PVT LTD. HOWEVER, ASSESSEE FAILED TO PRODUCE THE CONFIRMATION. HENCE , LD. ASSESSING OFFICER ADDED C10,00,000/- OUTSTANDING IN THE NAME OF M/S.BACKEND BANGALORE PVT. LTD TO THE TOTAL INCOME OF THE ASSES SEE. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE LD. COMMISSIONE R OF INCOME TAX (APPEALS). 15. BEFORE LD. COMMISSIONER OF INCOME TAX (APPEALS), LD . AUTHORISED REPRESENTATIVE SUBMITTED THAT THE SUM OF C10,00,000/- WAS A LOAN TAKEN FROM M/S.BACKEND BANGALORE PVT. LTD D URING THE YEAR ENDED 31.03.2012. THE SAID AMOUNT WAS REPAID BY CH EQUE IN THE SUBSEQUENT YEAR ON 20.06.2012 AS EVIDENCED BY THE BANK STATEMENT AND THE LEDGER ACCOUNT. THEREFORE THE FACT OF REPAY MENT OF C10,00,000/- TO M/S.BACKEND BANGALORE PVT. LTD IN THE SUBSEQUENT YEAR, BY ITSELF CONFIRMS THE EXISTENCE AND GENUINEN ESS OF THE OUTSTANDING LIABILITY OF C10,00,000/-ON ACCOUNT OF THE SAID CREDITOR IN THE EARLIER YEAR ENDED 31.03.2012. LD. COMMISSIONE R OF INCOME TAX (APPEALS) OBSERVED THAT LD. ASSESSING OFFICER HAS A DDED SUNDRY CREDITORS OF C10,00,000/- AS THE ASSESSEE DID NOT P RODUCE CONFIRMATION. THE ASSESSEE HAS SUBMITTED THAT IT H AS REPAID LOAN ON 20.06.2012. HOWEVER, SINCE NO CONFIRMATION WAS FILE D, LD. ITA NO. 1359/MDS/2016. :- 7 -: COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE ADDITION OF C10,00,000/- 16. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. IN THIS CASE ASSESSEE PLACED PAN OF THE CR EDITOR. SO, IT IS TO APPROPRIATE TO VERIFY THE IDENTITY OF THE PARTIES AND GENUINENESS OF THE TRANSACTIONS ALONGWITH CAPACITY OF THE LENDER TO AD VANCE THE MONEY TO THE ASSESSEE. ACCORDINGLY, THE ISSUE IS REMITTED B ACK TO THE FILE OF THE LD. ASSESSING OFFICER FOR CONSIDERATION. LD. ASSES SING OFFICER HAS TO MAKE NECESSARY ENQUIRY AND DECIDE THEREUPON. THE GR OUND OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. 17. . IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALL OWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON WEDNESDAY, THE 14TH DAY OF J UNE, 2017, AT CHENNAI. SD/- SD/- ( . . . ! ) (N.R.S. GANESAN) / JUDICIAL MEMBER ( ! ) (CHANDRA POOJARI) ' / ACCOUNTANT MEMBER '# / CHENNAI $% / DATED:14.06.2017 KV %&'' ()'*) / COPY TO: ' 1 . / APPELLANT 3. ' +',! / CIT(A) 5. )-.' / / DR 2. / RESPONDENT 4. ' + / CIT 6. .0'1 / GF