M/s. Jaisu Dredging & Shipping Pvt. Ltd., RAJKOT-GUJARAT V. The Assistant Commissioner of Income Tax, Gandhidham Circle, GANDHIDHAM

ITA 157/RJT/2011

• Counselvise Citation: 15724914 RSA 2011
• Duration Of Justice: 1 year(s) 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-04-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 19-03-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 20-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANKUR GARG N O
• Assessee Lawyers: KALPESH DOSHI I N
• Keywords: Opportunity of being heard; Retrospective amendment; Documents seized

Judgement Text

O D, IN THE INCOME TAX APPELLATE TRIBU N AL; RAJKOT BENCH, RAJKOT. .. , O . . O , O BEFORE SHRI T. K. SHARMA, JM AND SHRI D. K. SRIVASTAVA, AM IT A NO . 157 /RJT/20 1 1 I I / ASSESSMENT YEAR 200 7 - 08 M/S. JAISU DREDGING & SHIPPING LTD., C/O. KALPESH S. DOSHI & CO., CHARTERED ACCOUNTANTS, 411, COSMO COMPLEX, MAHILA COLLEGE CIRCLE, RAJKOT PAN: AAACJ9589J ( H / APPELLANT) V S. THE ACIT, GANDHIDHAM CIRCLE, GANDHIDHAM - KUTCH VUH / RESPONDENT IN / ASSESSEE BY SHRI. KALPESH DOSHI I N / REVENUE BY SHRI. ANKUR GARG N O / DATE OF HEARING 19 . 03 .201 3 N O / DATE OF PRONOUNCE MENT 17.4 .2013 / ORDER .. , O / T. K. SHARMA, J. M. THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DATED 19 . 02 .20 11 OF CIT(A) - XX , AHMEDABAD FOR THE ASSESSMENT YEAR 200 7 - 08 . 2. BRIEFLY STATED THE FACTS ARE THAT DURING TH E COURSE OF ASSESSMENT PROCEEDINGS, FROM THE COPY OF LEDGER ACCOUNT OF M/S. JAISU & CO., THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS PAID BOAT HIRE CHARGES OF RS.29,72,880/ - AND RS.3,99,000/ - , TO IT ON WHICH TAXES HAD NOT BEEN DEDUCTED AT SOURCE. THE ASSESSING OFFICER ACCORDINGLY ISSUED A SHOW - CAUSE NOTICE SO AS TO EXPLAIN AS TO WHY THESE AMOUNTS SHOULD NOT BE DISALLOWED U/S. 40(A)(IA) OF THE INCOME TAX ACT (THE ACT ) . IN RESPONSE TO T HIS SHOW - CAUSE NOTICE, THE ASSESSEE FILED LETTER DATED 27.11. 2009 STATING INTER ALIA AS UNDER: - AS EXPLAINED IN OUR EARLIER SUBMISSION, THE BILL RAISED BY JAISU & CO. IS FOR THE SUPPLY OF WATER AND THE NATURE OF TRANSACTION BEING ITA NO. 157/RJT/2011 2 SALE OF WATER, THE TDS PROVISIONS ARE NOT APPLICABLE AND THEREFORE THE TDS HAS NOT BEE N DEDUCTED. 3. BEFORE THE ASSESSING OFFICER, THE ASSESSEE ALSO FURNISHED A PHOTOCOPY OF THE BILLS FOR THE SUPPLY OF WATER RAISED ON ASSESSEE BY M/S. JAISU & CO . SINCE BEFORE THE AO THE ORIGINAL BILLS RAISED BY M/S. JAISU & CO. WERE NOT PRODUCED ON TH E GROUND THAT THESE DOCUMENTS WERE SEIZED BY THE SERVICE TAX AUTHORITIES, THE AO DISALLOWED THE SAME FOR THE DETAILED REASONS GIVEN IN PARA GRAPHS 10 - 13 WHICH ARE REPRODUCED HEREWITH: - 10. THE ASSESSEE ALSO FURNISHED A LIST OF DOCUMENTS SEIZED BY THE SERV ICE TAX AUTHORITIES. FROM THIS LIST IT IS SEEN THAT THE DOCUMENTS PERTAINING TO M/S. JAISU & CO., SEIZED BY THE SERVICE TAX AUTHORITIES, INCLUDE RECEIPTS WATER BILL FILE (2006 - 07). IT IS VERY CLEARLY AND DISTINCTLY MENTIONED THAT THIS FILE CONTAINS PAG ES 1 TO 36 WHEREAS THE SUPPOSED PHOTOCOPY OF THE ORIGINAL DOES NOT MENTION THE PAGE NO. OR BILL NO. A COPY OF THE PHOTOCOPY FURNISHED BY THE ASSESSEE IS ANNEXED TO AND FORMING PART OF THIS ORDER AS ANNEXURE - A. 11. IN VIEW OF WHAT IS STATED ABOVE, IT IS VE RY CLEAR AND IN DUBITABLE THAT THE ASSESSEE HAD PAID BOAT HIRE CHARGES TO M/S. JAISU & CO. OF RS.29,72,880/ - ON WHICH IT FAILED TO DEDUCT TAX AT SOURCE. WHEN THE ASSESSEE REALIZED THE IMPLICATION OF SUCH FAILURE, IT TRIED TO PASS OFF THE BOAT HIRE CHARGES AS HAVING BEEN PAID FOR SUPPLY OF WATER AND THE BILL WAS HURRIEDLY PREPARED AND A COPY TAKEN FOR FURNISHING DURING ASSESSMENT PROCEEDINGS. 12. THE ASSESSEE HAS NOT GIVEN ANY EXPLANATION REGARDING DEFAULT IN DEDUCTING TAX AT SOURCE ON THE AMOUNT OF RS.3,99, 000/ - BEING BOAT HIRE CHARGES PAID TO M/S. JAISU & CO. IT IS, THEREFORE, PRESUMED THAT THE ASSESSEE HAS NOTHING TO SAY IN THE MATTER AND THE DEFAULT HAS BEEN ACCEPTED. 13. IN VIEW OF WHAT HAS BEEN STATED ABOVE, THE SUMS OF RS.29,72,880/ - AND RS.3,99,000/ - AGGREGATING TO RS.33,71,880/ - , BEING BOAT HIRE CHARGES PAID ON WHICH TAXES WERE NOT DEDUCTED AT SOURCE, ARE DISALLOWED U/S 40(A)(IA) AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. AS THE ASSESSEE HAS CONCEALED PARTICULARS OF ITS INCOME, PROCEEDINGS U/S 2 74 R.W.S. 2 71(1)(C) OF THE ACT ARE INITIATED SEPARATELY. 4. ON APPEAL, IN THE IMPUGNED ORDER , THE LD. CIT(A) CONFIRMED THE DISALLOWANCE. AGGRIEVED WITH THE O RDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL ON THE FOLLOWING GROUNDS: - 1. THAT, THE LEARNED CIT (A) HAS WRONGLY DISALLOWED WATER SUPPLY CHAR GES OF RS.33,71,880/ - U/S 40(A) (IA) OF I.T. ACT. 2. THAT, THE FINDINGS OF THE LEARNED CIT (A) ARE NOT JUSTIFIED AND ARE BAD IN LAW. ITA NO. 157/RJT/2011 3 5. AT THE TIME OF HEARING BEFORE US, SHRI KALPESH DOSHI , APPEARED ON BEHALF O F ASSESSEE AND POINTED OUT THAT THE ASSESSEE HAS PURCHASED THE WATER FROM M/S JAISHU AND CO., GANDHIDHAM OF RS.33,71,880/ - . THIS WATER HAS SOLD TO VARIOUS PA RTIES AT RS.47,71,880/ - . THE SALE AND PURCHASES OF WATER ARE RECORDED I N THE PROFIT AND LOSS ACCOUNT. FURTHER THERE WAS A S EARCH BY DIRECTORATE GENERAL OF CENTRAL EXCISE INTELLIGENCE, AHMEDABAD I.E SERVICE TAX DEPARTMENT AND THE SAID DEPARTMENT HAS RECORDED STATEMENT OF FEW OF THE PARTIES AND ALL OF THEM HAVE ACCEPTED THAT THEY HAVE PURCHASED WATER. THE SERVICE TAX DEPARTMENT VIDE PAGE 2 OF THE ORDER AT PARAGRAPH 3.6 HAS RECORDED THE STATEMENT OF OFFICIAL OF M/S J.M.BAXI AND THEY HAVE ACCEPTED PURCHASE OF WATER. ANOTHER PARTY M/S JAMES MACKINTOSH MARINE (AGENCIES) PV T LTD HAS ALSO ACCEPTED THE PURCHASE OF WATER WHEN THEY WERE EXAMINED BY THE S ERVICE T AX D EPARTME NT. THE SERVICE TAX DEPARTMENT HAS ALSO SCANNED COPY OF WATER BILLS ON PAGE S NOS.7 AND 8 OF THE ORDER. FINALLY VIDE PAGE NO.18, THE SERVICE DEPARTMENT HAS COMPUTED LIABILITY ON SUPPLY OF WATER AT RS.36,28,335/ - , WHICH IS RECONCILED WITH SUPPLIER TRADING ACCOUNT. THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THESE CIRCUMSTANTIAL EVIDENCES SHOWS THAT THE ASSESSEE HAS MADE PAYMENT OF SUPPLY OF WATER AND NOT F OR B OAT HIRE CHARGES, THEREFORE, THERE WERE NO LIABILITY OF TDS. 6. WITHOUT PREJUDICE TO THE ABOVE, THE LD COUNSEL OF THE ASSESSEE RAISED TWO ALTERNATIVE PLEAS WHICH ARE AS UNDER : I) THAT THE WHOLE OF THE EXPENSES HAVE BEEN PAID AND NOTHING RE MAINS WAS TO BE PA YABLE AS ON 31.3.20 0 7, THEREFORE, AS PER THE DECISION OF AS PER THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL, VISAKHAPATNAM, IN THE CASE OF MERILYN SHIPPING & TRANSPORTS V/S ADDITIONAL COMMISSIONER OF INCOME - TAX, RANGE - 1, VISAKHAPAT NAM [2012] 20 TAXMANN.COM 244 (VISAKHAPATNAM - TRIB.) (SB) : 136 ITD 23 , THE DISALLOWANCE BE DELETED. ITA NO. 157/RJT/2011 4 II. THE RELIANCE WAS ALSO PLACED ON THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT V. VIRGIN CREATION ITA NO.302 OF 2011 AND CONTENDED THAT THE LAW IS AMENDED BY THE FINANCE BILL 2012. THIS AMENDMENT IS RETROSPECTIVE. IT WAS ALSO SUBMITTED THAT THE RAJKOT BENCH OF THE TRIBUNAL IN THE CASE OF ITO V/S SHRI JAYENDRA KIRITSINH VALA IN ITA NO.504/RJT/2012 HAS FOLLOWED THE DECIS ION OF VIRGIN CREATION (SUPRA) FOR THE PROPOSITION OF APPLICABILITY OF RETROSPECTIVE AMENDMENT. 7. AS AGAINST THIS, THE LD. DR APPEARED FOR THE REVENUE VEHEMENTLY SUPPORTED THE ORDER OF LD. CIT (A). THE LD. DR POINTED OUT THAT SHOW CAUSE NOTICE /ORDER OF SERVICE TAX DEPARTMENT WERE NOT FILED BEFORE BOTH THE DEPARTMENTAL AUTHORITIES BELOW. WITH REGARD TO ALTERNATIVE PLEA, THE LD. DR POINTED OUT THAT THE HONBLE ANDHRA PRADESH HIGH COURT SUSPENDED THE ORDER OF THE SPECIAL BENCH OF THE VISHAKHAPATNAM PA SSED IN MERILYN SHIPPING & TRANSPORTS V/S ADDITIONAL COMMISSIONER OF INCOME - TAX, RANGE - 1 (SUPRA) , THEREFORE, THE SAID DECISION IS NO MORE BINDING. 8. IN REJOINDER, THE LD.COUNSEL OF THE ASSESSEE POINTED OUT THAT, RECENTLY, THE KOLKATA BENCH OF THE TR IBUNAL IN THE CASE OF ITO VS. M/S MGB TRANSPORT IN ITA NO.2280/KOL/2010 (AY 2007 - 08) ORDER DATED 15.3.2013 (ITAT KOLKATA) HELD THAT INTERIM SUSPENSION OF THE DECISION OF VISHAKHAPATNAM SPECIAL BENCH MERILYN SHIPPING 136 ITD 23 (SB) APPLIES ONLY TO THE PARTIES TO THAT PROCEEDING AND DOES NOT DESTROY THE BINDING EFFECT OF THE JUDGEMENT OF THE SPECIAL BEN CH. IN THIS DECISION IT HAS ALSO BEEN HELD THAT STAY OF OPERATION OF AN ORDER AND QUASHING OF AN ORDER. WHILE, IN THE CASE OF A QUASHING, THE ORDER OF THE LOWER COURT CEASES TO EXIST, IN THE CASE OF A STAY, THE ORDER OF THE LOWER COURT CONTINU ES TO OPERATE AND HAVE BINDING EFFECT. 9. HAVING HEARD BOTH THE SIDES , WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT PAPERS OF SERVICE ITA NO. 157/RJT/2011 5 TAX DEPARTMENT ETC AND OTHER CIRCUMSTANTIAL EVIDENCES WERE NOT FILED B EFORE THE LOWER AUTHORITIES. THE ALTERNATIVE PLEA NOW RAISED BEFORE US ALSO WERE NOT RAISED BEFORE BOTH THE DEPARTMENTAL AUTHORITIES BELOW . WE, THEREFORE, SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES ON THIS ISSUE AND RESTORE THIS ISSUE TO THE FILE OF THE LD. CIT(A) WITH A DIRECTION THAT THE ASSESSEE SHALL SUBMIT ALL THE FRESH DOCUMENTS WHICH ARE FILED BEFORE US INCLUDING THE ORDERS OF SERVICE TAX DEPARTMENT ETC AND ALSO THE ORIGINAL BILLS IF ANY NOW THEY ARE AVAILABLE . THE LD. CIT(A) WILL EXAMINE THE SAME AND RE - ADJUDICATE THE CONTROVERSY INVOLVED IN THIS APPEAL K EEPING IN VIEW THE DECISION OF THIS TRIBUNAL IN ITO V/S BHOOMI CONSTRUCTION IN ITA NO.601/RJT/2012 (AY - 2006 - 07) DATED 8.2.2013 AND THE DECISION OF HONBLE KOLKATA HIGH COURT IN THE CASE OF CIT V/S JAKIR HOSSAIN MONDAL IN ITA NO.31 OF 2013, DATED 4.4.2013 (CAL). THE LD. CIT(A) WILL ALSO CONSIDER THE ALTERNATIVE PLEA RAISED BEFORE HIM IN ACCORDANCE WITH LAW AND AFTER GIVING OPPORTUNITY OF BEING HEARD TO BOTH THE SIDES. 10 . IN THE RESULT , FOR STATISTICAL PURPOSE, THE APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED. THIS ORDER IS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED HEREINABOVE. SD SD ( .. TI / D. K. SRIVASTAVA) ( O.. I / T. K. SHARMA) ,,, / ACCOUNTANT MEMBER I / JUDICIAL MEMBER / ORDER DATE 17.4 .2012 /RAJKOT SRL JO O / COPY OF ORDER FORWARDED TO: - 1. H / APPELLANT - . 2. VUH / RESPONDENT - 3. D / CONCERNED CIT . 4. - / CIT (A) . 5. VD, O D, / DR, ITAT, RAJKOT 6. I / GUARD FILE. / BY ORDER , SENIOR PRIVATE SECRETARY TRUE COPY INCOME TAX APPELLATE TRIBUNAL, RAJKOT.