Shri Ashvinbhai Jerambhai Patel, Surat V. The Income tax Officer,Ward-6(1), Surat

ITA 1403/AHD/2013

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9455 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 20-10-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 13-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P S CHOUDHARY
• Keywords: Retrospective amendment
• Section: 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENCH AHMEDABAD BEFORE SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER, AND SHRI S. S. GODARA, JUDICIAL MEMBER. ITA NOS.1403AHD/2013 (ASSESSMENT YEAR:2009-10) ASHVINBHAI JERAMBHAI PATEL 58, MATA STREET, HAZIRA, SURAT 394270 APPELLANT VS. INCOME TAX OFFICER WARD 6(1), ROOM NO. 614, AAYAKAR BHAVAN, MAJURA GATE, SURAT 395001 RESP ONDENT PAN: AKNPP1036A /BY ASSESSEE : SHRI RAJESH M. UPADHYAY, A.R. /BY REVENUE : SHRI P. S. CHOUDHARY, SR. D.R. /DATE OF HEARING : 20.10.2016 /DATE OF PRONOUNCEMENT : 17.01.2017 ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2009-10 ARISES AGAINST CIT(A)-I, SURATS ORDER DATED 11.03.2013, PASSED IN APPEAL NO. CAS- I/TFR/6.8/147/12-13, IN PROCEEDINGS UNDER SECTION 1 43(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. ITA NO. 1403/AHD/2013 (ASHVINBHAI J. PATEL VS. ITO) A.Y. 2009-10 - 2 - 2. THE ASSESSEES FIRST SUBSTANTIVE GROUND PLEADS T HAT BOTH THE LOWER AUTHORITIES HAVE ERRED IN REJECTING HIS BOOKS U/S.1 45(3) OF THE ACT THEREBY MAKING GROSS PROFITS ADDITION OF RS.3,47,374/-. TH E ASSESSEE IS A PROPRIETOR OF TWO CONCERNS ENGAGED IN VEGETABLE TRADING AND TR ANSPORTATION. THE ASSESSING OFFICER NOTICED INCREASE IN DIESEL AND OI L EXPENSES FROM 7.42% IN PRECEDING ASSESSMENT YEAR TO 25.23% IN THE IMPUGNED ASSESSMENT YEAR FOLLOWED BY A SIMILAR TREND IN REPAIR AND MAINTENAN CE EXPENSES FROM 1.48% TO 6.47% AND ALSO IN TRANSPORT EXPENSES FROM 4.11% TO 15.96% RESPECTIVELY. HE THUS ISSUED A SHOW CAUSE NOTICE. THE ASSESSEE F ILED REPLY. HE PLEADED THAT ALL THE ABOVE THREE EXPENSES INCREASED WAS AS PER PETROLEUM PRICES UPTREND HAVING CORRESPONDING EFFECT ON SUBCONTRACT CHARGES FOR TRANSPORTATION. HE EXPLAINED THAT THE ABOVE REPAIR AND MAINTENANCE CHARGES HAD SEEN INCREASED IN QUESTION DUE TO THE FACT THAT HE HAD TO KEEP EACH AND EVERY VEHICLE VERY WELL TUNED TO SERVE ITS PUBLIC L IMITED COMPANIES CLIENTELE LIKE M/S. ESSAR AND OTHER ENTITIES IN A BETTER MANN ER. 3. THE INSTANT CASE FILE REVEALS THAT THE ASSESSING OFFICER REJECTED ASSESSEES ABOVE PLEAS IN ASSESSMENT ORDER DATED 30 .12.2011. HE INTER ALIA HELD THAT ASSESSEE HAD NOT PRODUCED NOR ANNEXED THE SUPPORTING BILLS AND VOUCHERS FOR THE PURPOSE OF VERIFICATION AND CONFIR MATION FROM THE PAYEE PARTIES. HE THUS REJECTED ASSESSEES PLEA OF HAVIN G MADE PAYMENTS THROUGH ELECTRONIC MODES. THE ASSESSING OFFICER WAS FURTHE R OF THE VIEW THAT THE ASSESSEE WAS A TRANSPORTER AND ANY INCREASE IN PRIC E OF PETROLEUM PRODUCT WOULD LEAD TO SIMILAR TREND IN HIS INCOME AS WELL. HE FURTHER DECLINED ASSESSEES EXPLANATION THAT HIS OVER ALL GP HAD INC REASED FROM 26.09% TO 40.97% ON THE GROUND THAT HIS TWO BUSINESSES IN VEG ETABLE TRADING AND TRANSPORTATION WERE ENTIRELY DIFFERENT. THE ASSESS ING OFFICER HELD THAT THE LATTERS GP HAD RATHER DECREASED FROM 17.13% TO 13. 48% IN THE IMPUGNED ASSESSMENT YEAR. THIS FOLLOWED HIS MUCH MORE CLINC HING OBSERVATION THAT THE ITA NO. 1403/AHD/2013 (ASHVINBHAI J. PATEL VS. ITO) A.Y. 2009-10 - 3 - FORMER VEGETABLE TRADING BUSINESS HAD COMMENCED ONL Y IN THE RELEVANT PREVIOUS YEAR. THE ASSESSING OFFICER ACCORDINGLY R EJECTED ASSESSEES BOOKS U/S.145(3) OF THE ACT. HE WENT ON TO ADOPT GP @17. 13% AS IN THE PRECEDING ASSESSMENT YEAR QUA LATTER TRANSPORTATION BUSINESS THEREBY MAKING ADDITION OF RS.3,47,734/- IN QUESTION. THE CIT(A) UPHOLDS THE SAME. 4. WE HAVE HEARD BOTH THE PARTIES. RELEVANT FINDIN GS PERUSED. THE ASSESSEE REITERATES ITS STAND AS ADOPTED BEFORE THE ASSESSING OFFICER AND NARRATED IN THE PRECEDING PARAGRAPH. HE HOWEVER FA ILS TO EXPLAIN AS TO HOW GP OF BOTH VEGETABLE TRADING AND TRANSPORTATION BUS INESSES COULD BE COMBINED SINCE FORMING ALTOGETHER DIFFERENT LINES O F BUSINESS. THERE IS FURTHER NO EVIDENCE OF PETROLEUM PRODUCT PRICES INC REASED, PAYMENT OF EXORBITANT RATE TO SUB CONTRACT OR EVEN REPAIR AND MAINTENANCE CHARGES IN THE CASE FILE. WE THUS FIND NO REASON TO INTERFERE WIT H BOTH THE LOWER AUTHORITIES ACTION REJECTING ASSESSEES BOOKS U/S.145(3) OF THE ACT AND ESTIMATING THE IMPUGNED GROSS PROFIT ADDITION OF RS.3,47,734/- IN QUESTION. WE THUS DECIDE THIS FIRST ISSUE AGAINST THE ASSESSEE. 5. THE ASSESSEES SECOND SUBSTANTIVE GROUND SEEKS T O DELETE SECTION 40(A)(IA) DISALLOWANCE OF RS.33,042/- MADE ON ACCOU NT OF NON DEDUCTION OF TDS ON INTEREST PAYMENT MADE TO M/S. TML FINANCE PE RTAINING TO HIGHER PURCHASE CHARGES. THE ASSESSEE IS FAIR ENOUGH IN A DMITTING NOT TO HAVE DEDUCTED TDS ON THE ABOVE INTEREST PAYMENT. HIS ON LY PLEA IS THAT HIS PAYEE IS AN NBFC (NON BANKING FINANCE COMPANY) ALREADY AS SESSED TO TAX QUA THE IMPUGNED INTEREST INCOME. HE QUOTES CASE LAW OF HI NDUSTAN COCA COLA BEVERAGES PVT. LTD. VS. CIT (2007) 293 ITR 226 (SC) HOLDING THAT AN ASSESSEE IS NOT AN ASSESSEE IN DEFAULT IN CASE ONCE THE PAYEE DECLARES IN HIS INCOME THE AMOUNT RECEIVED. THE ASSESSEE BEFORE US THEN RELIES UPON SECTION 40(A)(IA) SECOND PROVISO INSULTED IN THE ACT BY THE FINANCE ACT, 2012 W.E.F. ITA NO. 1403/AHD/2013 (ASHVINBHAI J. PATEL VS. ITO) A.Y. 2009-10 - 4 - 01.04.2013 STIPULATING THAT THE IMPUGNED DISALLOWAN CE PROVISION IS NOT INVOKABLE IN CASE AN ASSESSEE IS NOT AN ASSESSEE IS IN DEFAULT BY VIRTUE OF SECTION 201(1) FIRST PROVISO IN CASE THE PAYEE CONC ERN HAS ALREADY PAID TAXES THEREUPON. HE CITES CO-ORDINATE BENCH DECISION IN RAJEEV KUMAR AGARWAL VS. ACIT ITA NO.337/AGRA/2013 DECIDED ON 29.05.2013 HOL DING THE SAID PROVISO TO BE CURATIVE HAVING RETROSPECTIVE EFFECT AS UPHELD IN HONBLE DELHI HIGH COURTS DECISION IN ITA NO.160/2015 CIT VS. AN SAL LAND MARK TOWNSHIP (P) LTD. DECIDED ON 26.08.2015. LD. DEPAR TMENTAL REPRESENTATIVE FAILS TO DISPUTE THESE LEGAL DEVELOPMENTS. WE THUS DIRECT THE ASSESSING OFFICER TO VERIFY AND CONFIRM THE FACT AS TO WHETHE R THE ASSESSEES PAYEE (SUPRA) HAS DECLARED ITS INCOME INCLUDING THE IMPUG NED INTEREST PAYMENTS OR NOT. HE SHALL DELETE THE IMPUGNED DISALLOWANCE IN CASE IT IS FOUND TO HAVE BEEN ALREADY INCLUDED IN ABOVE PAYEES TAXABLE INCOM E. THIS SUBSTANTIVE GROUND IS ACCORDINGLY ACCEPTED FOR STATISTICAL PURP OSES. 6. THIS LEAVES US WITH ASSESSEES THIRD SUBSTANTIVE GROUND CHALLENGING SECTION 40(A)(IA) DISALLOWANCE/ADDITION OF RS.2,55, 050/- ON TRUCK HIRE CHARGES PAID TO SMT. REKHABEN PATEL. THE ASSESSING OFFICER NOTICED THE ASSESSEE AS NOT TO HAVE PRODUCED FORM 15I IN CASE OF THE ABOVE PAYEE. HE THUS DISALLOWED ASSESSEES IMPUGNED PAYMENT OF TRUCK HIR ING CHARGES. THE CIT(A) CONFIRMS THE SAME. 7. WE COME TO ASSESSEES WRITTEN SUBMISSION FILED I N THE LOWER APPELLATE PROCEEDINGS THAT HE HAD INDEED ENCLOSED THE ABOVE F ORM 15I BEFORE THE CIT(A). LEARNED COUNSEL THEN QUOTES THIS TRIBUNAL S DECISION IN ITO VS. SHREE ODHAVRAM TRANSPORT ITA NO.3263/AHD/2011 HOLDI NG THAT SECTION 40(A)(IA) DISALLOWANCE IS NOT TO BE MADE IN CASE A DEDUCTOR ASSESSEE FILES ITS PAYEES DECLARATION IN FORM 15I. IT IS FURTHER EVI DENT THAT ASSESSEES FORM 15I FORMS THE PART OF RECORD AT PAGES 109 TO 115 OF THE PAPER BOOK. LD. ITA NO. 1403/AHD/2013 (ASHVINBHAI J. PATEL VS. ITO) A.Y. 2009-10 - 5 - DEPARTMENTAL REPRESENTATIVE FAILS TO REBUT THIS FAC TUAL POSITION. WE THUS FIND NO REASON TO SUSTAIN THE IMPUGNED DISALLOWANCE. TH E SAME STANDS DELETED. THE ASSESSEE SUCCEEDS IN HIS LAST SUBSTANTIVE GROUN D. 8. THIS ASSESSEES APPEAL IS PARTLY ALLOWED. [PRONOUNCED IN THE OPEN COURT ON THIS THE 17 TH DAY OF JANUARY, 2017.] SD/- SD/- (N. K. BILLAIYA) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 17/01/2017 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )*+ ,--. . /0 / DR, ITAT, AHMEDABAD 1 +23 45 / GUARD FILE. BY ORDER / . // . /0