M/S. NUTECH CONSTRUCTION, Bhopal V. THE DCIT 1(1), Bhopal

ITA 158/IND/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2370 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 13-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard
• Section: 43B; 143(3); 142(1)

Judgement Text

ITA NO.158/IND/2015 A.Y. 2010-11 NUTECH CONSTRUCTION 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.158/IND/2015 ASSESSMENT YEAR: 2010-11 ORDER PER MANISH BORAD, AM. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-1, BHOPAL [IN SHORT REFERRED TO AS THE CIT (A)] DATED 31.12.2014 ARISING OUT OF THE ORDER U/S 143(3) OF THE INCOME TAX ACT DATED 18.03.2013 FRAME D BY THE DY. COMMISSIONER OF INCOME TAX-1(1), BHOPAL PERTAINING TO ASSESSMENT YEAR 2010-11. M/S. NUTECH CONSTRUCTIO N, GM 34-35, C BLOCK, MANSAROVAR COMPLEX, HOSHANGABAD ROAD, BHOPAL VS. INCOME TAX OFFICER, 2(2) , BHOPAL (APPELLANT) (RE SPONDENT ) PAN NO.AACFN8643E RESPONDENT BY SHRI RAJEEV JAIN , SR. DR APPELLANT BY SHRI SUMIT NEMA, ADV & SHRI AMIT JAIN,CA (AR) DATE OF HEARING: 02.01.2018 DATE OF PRONOUNCEMENT: . 01.2018 ITA NO.158/IND/2015 A.Y. 2010-11 NUTECH CONSTRUCTION 2 2. ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL; 1. THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE C ASE THE ORDER PASSED IS VITIATED ON SEVERAL GROUNDS HENCE THE SAME MAY KIND LY BE QUASHED. 2. THAT THE LEARNED ASSESSING OFFICER ERRED AND WAS NOT JUSTIFIED IN MAKING ADDITION AND THE LEARNED CIT(A) IN CONFIRMING THE A DDITION OF RS.1,26,19,795/- (43,10,869 + 83,08,926/-) ON ACCOU NT OF DISALLOWANCE U/S 40(A)(IA) OF THE ACT FOR PAYMENT OF MACHINE HIRE CH ARGES AND FREIGHT AND CARTAGE RESPECTIVELY. 3. THAT THE LEARNED ASSESSING OFFICER ERRED WAS NOT JUSTIFIED IN MAKING AN ADDITION OF RS.5,33,602/- (1,60,418/- + 3,73,184/-) ON ACCOUNT OF DISALLOWANCE U/S 43B OF THE ACT FOR PAYMENT OF SERV ICE TAX AND PROVIDENT FUND RESPECTIVELY. 3. BRIEFLY STATED FACTS AS CULLED OUT FROM THE RECO RDS ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN CIVIL CON STRUCTION BUSINESS. RETURN OF INCOME FILED ON 27.07.11 DECLA RING TOTAL INCOME OF RS.19,32,560/-. THE CASE SELECTED FOR SCR UTINY. NOTICES U/S 143(2) AND U/S 142(1) OF THE ACT DULY SERVED AL ONGWITH DETAILED QUESTIONNAIRE. THE ASSESSMENT U/S 143(3) OF THE ACT WAS COMPLETED, ASSESSING INCOME AT RS.1,50,85,960/- AFT ER MAKING DISALLOWANCE U/S 40(A)(IA) OF THE ACT FOR NON DEDUC TION OF TDS ON SUM OF RS.1,26,19,795/- AND DISALLOWANCE OF DEDUCTI ON U/S 43B FOR PAYMENT OF SERVICE TAX AND PROVIDENT FUND TOTALING AT RS.5,33,602/- 4. THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT( A) BUT COULD NOT SUCCEED AS BOTH THE ADDITIONS WERE CONFIRMED. 5. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNA L. 6. AT THE OUTSET THE LD. COUNSEL SUBMITTED THAT THE ALLEGED PAYMENT AT RS.1,26,19,795/- WHICH HAS BEEN ADDED TO THE INC OME OF THE ITA NO.158/IND/2015 A.Y. 2010-11 NUTECH CONSTRUCTION 3 ASSESSEE FOR NON DEDUCTION OF TAX STANDS ALREADY O FFERED TO TAX BY THE PAYEE. FURTHER IF REQUIRED NECESSARY VERIFICATI ON MAY BE MADE BY THE LD.A.O. THE LD. COUNSEL FURTHER SUBMITTED T HAT WITH REGARD TO ADDITION OF RS.5,33,602/- U/S 43B OF THE ACT THE AMOUNT STOOD ALREADY PAID AND SAME CAN ALSO BE VERIFIED FROM THE RECORDS PLACED IN THE PAPER BOOK. THE LD. DEPARTMENTAL REPRESENTA TIVE SUPPORTED THE ORDERS OF LOWER AUTHORITIES. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED RECORDS PLACED BEFORE US. 8. AS REGARDS GROUND NO.2 DISALLOWANCE OF SECTION 4 0(A)(IA) OF THE ACT AT RS.1,26,19,795/- THE ALLEGED AMOUNT RELATED TO MACHINE HIRE CHARGES OF RS.43,10,869/- AND FREIGHT AND CARTAGE E XPENSES OF RS.83,08,926/-. THE TAX AUDITOR MENTIONED IN THE FO RM 3CD ANNEXED TO TAX AUDIT REPORT THAT THE ASSESSEE HAS N OT DEDUCTED TAX AT SOURCE ON THESE PAYMENTS. DURING THE COURSE OF HEARING THE LD. COUNSEL HAS SUBMITTED THAT THE ALLEGED AMOUNT HAVE BEEN OFFERED TO TAX BY THE PAYEE. WE OBSERVE THAT IT HAS BEEN C ONSISTENTLY HELD BY VARIOUS CO-ORDINATE BENCHES INCLUDING THE CO-ORD INATE BENCH, ITAT, AGRA IN THE CASE OF RAJIV KUMAR AGRAWAL V/S A CIT, ITA NO.337/AGRA/2013 ORDER DATED 29.5.2013 WHEREIN IT H AS BEEN HELD THAT THE INSERTION OF SECOND PROVISO TO SECTION 40(A)(I A) IS DECLARATIVE AND CURATIVE IN NATURE AND IT HAS RETROSPECTIVE EFF ECT FROM 1 ST APRIL,005 BEING THE DATE FROM WHICH SUB CLAUSE I(A) OF SECTION 40(A) WAS INSERTED BY THE FINANCE (NO.2) ACT, 2004. IT HAS FURTHER HELD THAT THE SCHEME OF SECTION 40 (IA), AS WE SEE IT, IS AI MED AND ITA NO.158/IND/2015 A.Y. 2010-11 NUTECH CONSTRUCTION 4 ENSURING THAT EXPENDITURE SHOULD NOT BE ALLOWED AS DEDUCTION IN THE HANDS OF THE ASSESS IN A SITUATION IN WHICH INCOME INVOLVED IN SUCH EXPENDITURE HAS REMAINED UNTAXED DUE TO TAX WITHHOL DING LAPSES BY THE ASSESSEE. 9. WE, THEREFORE RESPECTFULLY FOLLOWING THE DECISIO N OF TRIBUNAL AND IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE AR E OF THE VIEW THAT IF THE PAYEE I.E. PERSONS RECEIVING THE IMPUGNED AM OUNT TOTALING TO RS.1,26,19,795/- HAVE OFFERED THE ALLEGED AMOUNT TO TAX BY WAY OF SHOWING IT AS PART OF REVENUE IN THEIR BOOKS OF ACC OUNTS AND TAXES AS APPLICABLE HAS BEEN PAID THEN THERE IS NO LOSS T O THE REVENUE. WE ACCORDINGLY DEEM IT FIT AND PROPER TO REMIT THE MATTER OF DISALLOWANCES U/S 40(A)(IA) OF THE ACT TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION AND ALSO DIRECT HIM TO CARRY OUT NECESSARY VERIFICATIONS OF RELATED PAYMENTS AS THE SAME HAVING BEEN TAKEN INTO ACCOUNT BY THE RECIPIENTS IN COMPUTATION OF THEIR INCOME, REGARDING PAYMENT OF TAXES AND FILING OF INCOME TAX RETURN. NECESSARY CERTIFICATES FROM CHARTERED ACCOUNTANT OF THE PAYEE SHOULD ALSO BE OBTAINED TO THIS EFFECT. NEEDLESS TO MENTION THAT A PROPER OPPORTUNITY OF BEING HEARD IS PROVIDED TO TH E ASSESSEE. IN THE RESULT GROUND NO.2 OF THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 10. NOW WE TAKE UP GROUND NO.3 RELATING TO DISALLOW ANCE OF DEDUCTION U/S 43B OF THE ACT AT RS.5,33,602/- WHICH INTER ALIA INCLUDES SERVICE TAX PAYMENT OF RS.1,60,418/- AND P ROVIDENT FUND PAYMENT OF RS.3,73,184/-. EVEN THOUGH THE LD. COUN SEL HAS BEEN ITA NO.158/IND/2015 A.Y. 2010-11 NUTECH CONSTRUCTION 5 CONSISTENTLY ARGUING THAT THE ASSESSEE HAS PAID TH ESE AMOUNTS AND IS ELIGIBLE FOR DEDUCTION U/S 43B OF THE ACT, HOWEV ER NO EVIDENCES IN SUPPORT THEREOF HAS BEEN PRODUCED BEFORE THE LOWER AUTHORITIES. HOWEVER, THE LD. COUNSEL HAS REQUESTED TO PROVIDE O NE MORE OPPORTUNITY TO GO BEFORE THE ASSESSING OFFICER FOR GETTING NECESSARY VERIFICATION OF THE PAYMENTS MADE TO THE GOVERNMEN T TREASURY. 11. WE ACCORDINGLY REMIT THIS ISSUE OF DEDUCTION U /S 43B TO THE FILE OF THE ASSESSING OFFICER AND DIRECT THE ASSESSEE TO PRODUCE THE EVIDENCE OF PAYMENT OF SERVICE TAX AND PROVIDENT FU ND AT RS.1,60,418/- AND RS.3,71,384/- RESPECTIVELY BEFORE THE ASSESSING OFFICER AND IF THEY ARE FOUND CORRECT TO THE SATISF ACTION OF ASSESSING OFFICER THEN THE IMPUGNED ADDITION MAY BE DELETED. NEEDLESS TO MENTION THAT A PROPER OPPORTUNITY BEING HEARD IS GI VEN TO THE ASSESSEE. GROUND NO.3 OF THE ASSESSEES APPEAL IS A LLOWED FOR STATISTICAL PURPOSES. 12. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSE. THE ORDER PRONOUNCED IN THE OPEN COURT ON 16.01.201 8. SD/- SD/- ( KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER / DATED : 16 TH JANUARY, 2018 COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUA RD FILE. BY ORDER PRIVATE SECRETARY/DDO, INDORE ITA NO.158/IND/2015 A.Y. 2010-11 NUTECH CONSTRUCTION 6 1. DATE OF DICTATION : 11/01/2018 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER : 12/01/2018 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR.P.S./P .S: 12.1.2018 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT: 12.1.2018 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P.S./P.S.:15.1.2018 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK:17.1 .2018 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISSTANT R EGISTRAR FOR SIGNATURE OF THE ORDER. 9. DATE OF DESPATCH OF THE ORDER: