Budh Singh Gulab Singh, New Delhi V. ITO WARD - 29(8), New Delhi

ITA 1431/DEL/2020

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 7879 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 21-07-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: TDS
• Section: 139; 143(3); 40(a)(ia); 143(1)

Judgement Text

1 ITA no. 1431/Del/2020 Budh Singh Gulab Singh Vs. ITO IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “SMC”: NEW DELHI BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER ITA No. 1431/DEL/2020 [Assessment Year: 2014-15 Budh Singh Gulab Singh, Petrol Pump Mehrauli Road, New Delhi-110030 PAN- AAAFB1423E Vs Income-tax Officer, Ward-29(8), New Delhi. APPELLANT RESPONDENT Appellant by Shri Rajiv Saxena, Adv. & Ms. Sumangla Saxena Adv. Respondent by Sh. Om Prakash, Sr. DR Date of hearing 11.01.2022 Date of pronouncement 25.02.2022 O R D E R PER KUL BHARAT, JM: This appeal, by the assessee, is directed against the order of the learned Commissioner of Income-tax (Appeals)-11, New Delhi, dated 23.10.2017, pertaining to the assessment year 2014-15. The assessee has raised following grounds of appeal: “1. That the Ld. Commissioner of income Tax (Appeal)-ll Delhi has grossly erred in law and on the facts in confirming the action of the AO in computing the total income of the assessee firm to the tune of Rs. 27,10,780/against returned income of Rs. 12,83,700/. 2 ITA no. 1431/Del/2020 Budh Singh Gulab Singh Vs. ITO 2. That the Ld. Commissioner of Income Tax (Appeal)has grossly erred in law as well as on facts in confirming the action of AO i.e. disallowance of Rs. 5,08,727/ expenditure incurred on account of LFR and added to the total income of the assessee firm which is bad in the eyes of the law. 3. That the Ld. Commissioner of Income Tax (Appeal)has grossly erred in law as well as on facts in confirming the action of AO i.e. disallowance of Rs. 7,55,030/ expenditure incurred on account of Cash Handling Charges and added to the total income of the assessee firm which is bad in the eyes of the law. 4. That the order of the Ld. Commissioner of Income Tax (Appeal) is bad in Law. 5. That both the lower authority have failed to appreciate the intention of assessee firm and confirm the disallowance of Rs. 12,63,757/ and added in the income of assessee firm which is against the facts of the case and bad in law. 2. The facts giving rise to the present appeal are that in this case return of income was originally filed through electronic mode on 08.09.2014, declaring a total income of Rs. 12,83,700/- and the return was processed u/s 143(1) of the Income-tax Act, 1961, hereinafter referred to as the “Act”. Subsequently the case was taken up for scrutiny under CASS and the assessment u/s 143(3) of the Act was framed. Thereby the Assessing Officer made addition of Rs. 5,08,727/- for not deducting tax @ 10% in respect of rent paid by the assessee. Further, the Assessing Officer disallowed expenditure of R. 7,55,030/- for not deducting tax. Further, the Assessing Officer made addition on account of disallowance of claim of the 3 ITA no. 1431/Del/2020 Budh Singh Gulab Singh Vs. ITO assessee regarding evaporation of Rs. 31,645/-; disallowance of interest of Rs. 32,400/- paid to Shri Manjiv Sethi and other ad hoc disallowance out of car repair and maintenance of R. 99,275/-. Thus, the Assessing officer assessed income at Rs. 27,10,780/- against the declared income of Rs. 12,83,700/-. 3. Aggrieved against this, the assessee preferred appeal before the learned CIT(Appeals), who dismissed the appeal for want of prosecution. Aggrieved against this, the assessee is in appeal before this Tribunal. The only effective grounds in this appeal are ground nos. 2 & 3. 4. Learned counsel for the assessee in respect of the additions reiterated the submissions as made in the brief synopsis. For the sake of brevity the synopsis of the assessee is reproduced as under: “BRIEF SYNOPSIS Hon’ble Member, The captioned appeal is fixed tor hearing for today i.e. 06-10-2021 before your goodself. It is submitted that instant appeal is filed against two additions confirmed by Ld.CIT(Appeals) made by the AO who followed the his predecessor’s decision in earlier assessment for AY 2011-12 , 2012-13 and 2013-14 and confirmed by Ld.CIT(A) because the order of ITAT were passed subsequently. These are agitated in ground no. 2 and 3 of the instant appeal which are as follows: 4 ITA no. 1431/Del/2020 Budh Singh Gulab Singh Vs. ITO 2. That the Ld. Commissioner of Income Tax (Appeals) has grossly erred in law as well as on facts in confirming the action of AO i.e. disallowance of Rs.5,08,727/- expenditure incurred on account of LFR and added to the total income of the assessee firm which is bad in law. 3. That the Ld. Commissioner of Income Tax (Appeal) has grossly erred in law as well as on facts in confirming the action of AO i.e. disallowance of Rs. 7,55,030/- expenditure incurred on account of Cash Handling Charges and added to the total income of the assessee firm which is bad in the eyes of the law. It is submitted that the Hon’ble ITAT Delhi Bench in assessee’s own case for AY 2011-12, 2012-13 [PBPg 17-22] and AY 2013-14 [PB Pg 38-46] has decided in previous years as follows. Relevant contents arc reproduced hereunder : At page Page 4 of the ITAT order for AY 2011-12 on ground no2 “4. Adverting to the facts of the instant case, it is seen that the assessee paid a sum of Rs.6,36,920/- to Bharat Petroleum Corporation Limited. There can be question of suspecting that the BPCL did not include such rental income from the assessee its return of income. It is, therefore, held that the case of the assessee is covered by second proviso to section 40(a)(ia) and hence the disallowance made cannot be sustained. 1, therefore order to delete the disallowance. This ground is allowed. On around no 3 5. The only other ground which survived in this appeal is against the confirmation of disallowance of Rs. 3,11,300/- the factual matrix of this ground is that the assessee paid cash handling expenses at Rs.3,11,500/- to certain persons, the assessing officer disallowed the same by holding that no evidence of incurring such expenses was furnished. The Learned CIT(A) echoed the disallowance. 6. After considering the rival submissions and perusing the relevant material on record, it can be seen that the assessee paid cash handling charges to certain persons on monthly basis vouchers for such payments have been placed on record Since, such expenses were incurred during the course of business, in my considered opinion, the 5 ITA no. 1431/Del/2020 Budh Singh Gulab Singh Vs. ITO same should not have been disallowed. I, therefore, order to delete the addition. " In pursuance to the common order passed by Hon'ble ITAT for AY 2011-12 and 2012-13 by deleting the additions made on account of 40(a)(ia) and cash handling charges, another order was passed by ITAT Delhi Bench for AY 2013-14 in assessee’s own case [PB Pg 38-46] at Pg 39 it would be observed that the Hon'ble bench opined at para 2 as : "2. In so far as grounds no2 and 3 are concerned, ld. Counsel submitted that the same now stands covered by the decision of Hon’ble Tribunal in assessee’s own case in the Assessment Years 20111-12 and 2012-13. ” Moreover, at para 5 page 40 of paper-book it has been categorically mentioned that the similar issue have come up for adjudication before this bench in earlier years also and the same were deleted and similar view was adopted in AY 2013-14 as well as observed from page 41 para 6 of the paper book. “6. This respectfully following the similar facts permitting in this year also, I delete the said disallowance ids 40(a)(ia). " It is, therefore, humbly prayed since the issues are covered by the orders of ITAT in assessee's own case in earlier years the additions made may kindly be deleted. 5. The learned D.R. opposed the submissions and supported the orders of the authorities below. 6. I have heard the rival submissions and perused the record. It is the say of the assessee that similar additions were made in earlier years and the matter was taken in appeal to the Tribunal. It is stated that the Assessing officer followed the 6 ITA no. 1431/Del/2020 Budh Singh Gulab Singh Vs. ITO decision of the predecessor for the assessment years 2011-12, 2012-13 & 2013-14. The Hon’ble Coordinate Bench of the Tribunal in assessee’s own case in ITA no. 2618/Del/2018 for assessment year 2013-14, vide order dated 26.02.2019, decided similar ground nos. 2 & 3 in favour of the assessee by observing as under: “5.1 find that this issue had come up for consideration in the earlier years also, wherein the Tribunal had deleted the said disallowance after holding and observing as under:- "3. I have heard both the sides and perused the relevant material on record. The case of the Revenue is that the assessee made a payment of Rent to BPCL and did not deduct tax at source which attracted disallowance under section 4o(a)(ia). Second proviso to section 4o(a)(ia) provides that where an assessee fails to deduct the whole or any part of the tax in accordance with the provisions of Chapter XVII- B on any such sum but is not deemed to be an assessee in default under the first proviso to Section 201(1), then for the purposes of section 4o(a)(ia) it shall be deemed that the assessee has deducted and paid tax on said sum on the date of furnishing of return of income by the resident payee. The essence of this provision is that if the payer has not made deduction of tax at source, but the payee has furnished his return of income u/s 139 of the Act by including the amount received from the assessee-payer, then the assessee shall be deemed to have deducted and paid tax on the date of furnishing of return of income by the payee and as such no disallowance under section 40(a)(ia) will be made. Though this proviso has been inserted by the Finance Act 2012 w.e.f. 1.4.2013 but several courts have held it to be retrospective. The Hon'ble' jurisdictional High Court in CIT vs. Ansal Landmark Township Private Limited (2015) 279 CTR 384 (Del) has held that second proviso to section 4o(a)(ia) is declaratory and curative in nature and has retrospective effect from 1.4.2005. On a conjoint reading of second proviso to section 4o(a)(ia) and first proviso to section 201(1), it becomes graphically clear that if the payee has furnished his return of income under section 139 and has taken into account such sum paid by the payer for computing income in such return of income and has paid income tax thereon, then the 7 ITA no. 1431/Del/2020 Budh Singh Gulab Singh Vs. ITO payer cannot be treated as assessee in default. A fortiori, no disallowance under section 4o(a)(ia) can be made in such circumstances. 4. Adverting to the facts of the instant case, it is seen that the assessee paid a sum of Rs.6,36,920/- to Bharat Petroleum Corporation Limited. There can be question of suspecting that the BPCL did not include such rental income from the assessee in its return of income. It is, therefore, held that the case of the assessee is covered by second proviso to section 40(a)(ia) and hence the disallowance made cannot be sustained. I, therefore, order to delete the disallowance. This ground is allowed." 6. Thus, respectfully following the similar facts permeating in this year also, I delete the said disallowance u/s.4o(a)(ia).” 7. Further, in respect of ground no. 3, the Tribunal held as under: “11. Moreover, I find that the reasoning given by the Assessing Officer that handling of cash is responsible and risky work for which he should have engaged professionals, then he was required to deduct TDS. Such a reasoning for making the disallowance cannot be held to be valid ground, because in the nature of business carried out by the assessee which is selling of petrol and petroleum product from its petrol pump, huge cash is generated throughout the working hours and if assessee is paving cash handling charges to two persons which is in the form of salary, then disallowance cannot be made especially when vouchers for such payment have been produced. Accordingly, respectfully following the order of the Tribunal for the earlier years, I delete the same.” 8. The Revenue has not pointed out any change in facts and circumstances. Therefore, taking the consistent view, the additions challenged by way of ground nos. 2 & 3 are hereby deleted. Ground nos. 2 & 3 of the assessee’s appeal are allowed. 8 ITA no. 1431/Del/2020 Budh Singh Gulab Singh Vs. ITO 9. The other grounds of the assessee are general in nature and need no separate adjudication. 10. In the result, assessee’s appeal is allowed. Sd/- (KUL BHARAT) JUDICIAL MEMBER Dated: 25/02/2022. *MP* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI