RMKV FABRICS PVT LTD, Tirunelveli V. DCIT Circle 1, Tirunelveli

ITA 1377/CHNY/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 2291 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 06-05-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G CHANDRABABU
• Assessee Lawyers: G BASKAR
• Keywords: Rectification of order; Opportunity of being heard; TDS
• Section: 143(3); 40(a)(ia); 154

Judgement Text

, , IN THE INCOME-TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . , , BEFORE SHRI DUVVURU RL REDDY, JUDICIAL MEMBER & SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ I.T.A. NO.1377/CHNY/2019 / ASSESSMENT YEAR:2012-13 M/S. RMKV FABRICS PVT. LTD., 176F, RMKV COMPLEX, TRIVANDRUM ROAD, VANNARPETTAI, TIRUNELVELI 627003. [PAN: AAFCR4022H] VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 1, TIRUNELVELI. ( /APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI G. BASKAR, ADVOCATE / RESPONDENT BY : SHRI G. CHANDRABABU, ADDL. CIT / DATE OF HEARING : 02.02.2021 /DATE OF PRONOUNCEMENT : 19.02.2021 / O R D E R PER DUVVURU RL REDDY, JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 1, MADURAI DATED 26.03.2019 RELEVANT TO THE ASSESSMENT YEAR 2012-13. IN THE GROUNDS OF APPEAL, BESIDES CHALLENGING CONFIRMATION OF THE ORDER PASSED UNDER SECTION 154 OF THE INCOME TAX ACT, 1961 [ACT IN SHORT], THE ASSESSEE ALSO DISPUTED CONFIRMATION OF DISALLOWANCE MADE UNDER SECTION 40(A)(IA) OF THE ACT. ITA NO. 1377/CHNY/19 2 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSMENT UNDER SECTION 143(3) THE ACT WAS COMPLETED ON 30.03.2015. UPON FILING OF APPLICATION FOR RECTIFICATION OF MISTAKE APPARENT FROM RECORD UNDER SECTION 154 OF THE ACT TOWARDS RENTAL PAYMENT WAS WRONGLY TYPED AS .1,88,49,478/- THEREBY QUANTUM ADDITION OF .1,49,33,115/- WAS MADE, AFTER VERIFICATION OF THE RECORDS, THE ASSESSING OFFICER RECTIFIED THE MISTAKE APPARENT FROM RECORD AND REDUCED HE SAME FROM THE ASSESSED INCOME. HOWEVER, WHILE VERIFYING RECORDS, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS NOT DEDUCTED TDS ON THE RENT OF .1,07,95,944/- PAID TO M/S. RMKV SILKS PVT. LTD. SINCE THE ABOVE NON- PAYMENT OF TDS WAS NOT NOTICED BY THE ASSESSING OFFICER WHILE CONCLUDING THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT, THE NON-PAYMENT OF TDS ON THE RENT PAID BY THE ASSESSEE WOULD ATTRACT DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT AND ACCORDINGLY, BROUGHT TO TAX. ON APPEAL, THE LD. CIT(A) CONFIRMED THE DISALLOWANCE MADE UNDER SECTION 40(A)(IA) OF THE ACT. 2.1 BEFORE US, THE ASSESSEE HAS CHALLENGED THE JURISDICTION OF THE ASSESSING OFFICER FOR MAKING DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT. AFTER HEARING BOTH THE SIDES, WE FIND THAT AS PER SECTION 154 OF THE ACT, THE ASSESSING OFFICER IS FULLY EMPOWERED TO RECTIFY THE MISTAKE APPARENT FROM RECORDS EITHER OF HIS OWN MOTION OR RECTIFICATION APPLICATION FILED BY THE ASSESSEE. THUS, SINCE THE ASSESSING OFFICER HAS RIGHTLY EXERCISED HIS ITA NO. 1377/CHNY/19 3 JURISDICTION IN RECTIFYING THE MISTAKE APPARENT FROM THE RECORDS, THE GROUND RAISED BY THE ASSESSEE STANDS DISMISSED. 3. WITH REGARD TO THE DISALLOWANCE OF .1,07,95,944/- MADE UNDER SECTION 40(A)(IA) OF THE ACT, BY FILING COPY OF THE LEDGER ACCOUNT OF M/S. RMKV SILKS PVT. LTD., IT WAS THE SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE MAIN CONCERN VIZ., M/S. RMKV SILKS PRIVATE LIMITED PAID THE RENT TO THE LAND LORD AND THE ASSESSEE HAS REIMBURSED ITS SHARE TO M/S. RMKV SILKS PVT. LIMITED. IT WAS FURTHER SUBMISSION THAT THE ASSESSEE HAS NOT DIRECTLY PAID THE RENT TO THE LAND LORD AND THEREFORE, THE QUESTION OF APPLICATION OF SECTION 40(A)(IA) OF THE ACT WOULD NOT ARISE. THUS, THE LD. COUNSEL PRAYED FOR ALLOWANCE OF THE ABOVE EXPENDITURE. ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 4. WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE FIND FORCE IN THE ARGUMENTS OF THE LD. COUNSEL THAT SINCE THE ASSESSEE HAS NOT DIRECTLY PAID THE RENT TO THE LAND LORD AND THEREFORE, THE QUESTION OF DEDUCTING TDS WOULD NOT ARISE. IN VIEW OF THE ABOVE, WE REMIT THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER TO VERIFY AS TO WHETHER M/S. RMKV SILKS PRIVATE LIMITED PAID THE ENTIRE RENT TO THE LAND LORD AFTER DEDUCTING TDS AND THE ASSESSEE HAS ONLY REIMBURSED THE RENT TO M/S. RMKV SILKS PVT. LTD. AND DECIDE THE ISSUE IN ITA NO. 1377/CHNY/19 4 ACCORDANCE WITH LAW AFTER ALLOWING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THUS, THE GROUND RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THE 19 TH FEBRUARY, 2021 AT CHENNAI. SD/ - SD/ - (S JAYARAMAN) ACCOUNTANT MEMBER (DUVVURUL RL REDDY) JUDICIAL MEMBER CHENNAI, DATED, THE 19.02.2021 VM/- /COPY TO: 1. /APPELLANT, 2. / RESPONDENT, 3. ( )/CIT(A), 4. /CIT, 5. /DR & 6. /GF.