Appeal details
Counselvise Citation
[2017] 127 COUNSELVISE.COM (IT) 4904 (ITAT-DELHI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
4 year(s) 5 month(s) 14 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
01-09-2017
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
D
Next Hearing Date
03-05-2017
Assessment Year
2009-2010
Appeal Filed On
18-03-2013
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 1586 /DEL/201 3 A.Y. : 20 0 9 - 10 ASSTT. COMMISSIONER OF INCOME TAX, GOLGHAR, BARA BAZAR, MALLITAL, NAINITAL VS. M/S KUMAON MANDAL VIKAS NIGAM LTD., OAK PARK, MALLITAL, NAINITAL 263001 (PAN: AABCK4290L) (APPELLANT) (RESPONDENT) DEPARTMENT BY : SH. SHARAVAN GOTRU, SR. DR ASSESSEE BY : NONE ORDER PER H.S. SIDHU, JM THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST THE IMPUGNED ORDER DATED 14/1/2013 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-II, DEHRADUN O N THE FOLLOWING GROUNDS:- 1. LD. CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION MADE ON DISALLOWANCE OF THE PAYMENT ULS 40A(IA) WITHOUT APPRECIATING THE FACTS THAT THE AUDITIONS 'WHETHER THE ASSESSEE HAS DEDUCTED TAX AT SOURCE AND PAID THE AMOUNT SO 2 DEDUCTED TO THE CREDIT OF THE CENTRAL GOVERNMENT IN ACCORDANCE OF THE PROVISIONS OF CHAPTER XVIIB? IF N OT GIVE DETAILS OF DEFAULTS COMMITTED' 2. CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE DISALLOWANCE OF THE PAYMENT OF STATUTORY LIABILITY U/S 43B WITHOUT APPRECIATING THE FACTS THAT THE SPECIAL AUDITOR 'S OBSERVATIONS OF THE INTEREST IS NOT PAID BEFORE THE D UE DATE OF FILING OF RETURN AND INTEREST IS ALLOWABLE ON PAYMEN T BASIS U/S 43B' 3. LD. CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION MADE ON INTEREST EARNED ON EAR MARKED FUN DS WITHOUT APPRECIATING THE FACTS THAT THE CORPORATION'S FI NANCIAL AFFAIRS BEING IN MESS, ABSENCE OF BALANCE SHEET TO P ROVE THAT INTEREST IS LIABILITY AND NOT USED FOR OWN PURPOSE A ND RECOMMENDATION OF THE STATUTORY AUDITOR THAT THE CORPORATI ON SHOULD STOP CREDITING THE INTEREST ON EAR MARKED FUND IN ITS INCOME, THE INTEREST IS BEING TREATED AS UN OTHER SOURC ES AS PER DEFINITION OF INTEREST GIVEN IN SECTION 28A AND IN CLUDES ANY OR OTHER CHANGE IN RESPECT OF ANY CREDIT FACILITY WH ICH HAS NOT BEEN UTILIZED. 4. LD. CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION MADE ON DISALLOWANCE UNDER SECTION 14A WITHOUT 3 APPRECIATING THE FACTS THAT THE CALCULATED EXPENSES U/S 14A BY THE SPECIAL AUDITOR WERE MADE EXCLUSIVELY FOR THE IN COME WHICH DOES NOT FORM TOTAL INCOME UNDER THIS ACT. 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE, A GOV ERNMENT COMPANY, FILED ITS RETURN OF INCOME FOR THE INSTANT YEAR ELECTR ONICALLY DECLARING TAXABLE INCOME OF RS. 63,68,820/- IN THE STATUS OF A C OMPANY. THE CASE WAS SELECTED FOR SCRUTINY THROUGH 1 ST CYCLE OF CASS I THE YEAR 2010-11. ACCORDINGLY, A NOTICE U/S.143(2) OF THE INCO ME TAX ACT, 1961 (HEREINAFTER REFERRED AS THE ACT) DATED 31.8.2010 WAS SERVED UPON THE ASSESSEE. FURTHER NOTICE U/S. 143(2) OF THE AC T DATED 23.5.2011 WAS SERVED UPON THE ASSESSEE DUE TO CHANGE OF INCUMBENT. ON 20.10.2011 A SHOW CAUSE NOTICE FOR INVO KING SECTION 142(2A) OF THE I.T. ACT, 1961 SENT TO THE ASSESSEE. IN RESPONSE TO THE SAME, THE ASSESSEE SUBMITTED THAT DUE TO DELAY IN THE APPOINTMENT OF STATUTORY AUDITOR BY THE C&AG OF INDIA, THE ACCOUNTS OF THE COMPANY COULD NOT GET AUDITED. ALSO, THE A.R. OF THE ASSESEE SUBMITTED THAT THE COMPANY IS A STATUTORY GOVERNMENT COR PORATION AND THE AUDITOR OF THE CORPORATION IS BEING APPOINTED B Y THE C&AG IN CONSULTATION WITH COMPANY LAW BOARD. HENCE, THE A SSESSEE HAS NO CONTROL OVER THE APPOINTMENT OF STATUTORY AUDITOR. AF TER CAREFUL EXAMINATION OF THE VARIOUS DETAILS AND EXPLANATION FI LED BY THE ASSESSEE, A PROPOSAL FOR SPECIAL AUDIT U/S. 142(2A) OF THE ACT WAS 4 SENT FOR APPROVAL TO THE LD. CIT(HALDWANI) AND A PR OPOSAL FOR SPECIAL AUDIT U/S. 142(2) OF THE ACT WAS APPROVED AND M/S AGARWAL RAVINDRA & CO., ANAND ASHRAM COMPLEX, RAMPUR GARDEN , BAREILLY WAS NOMINATED AS AUDITOR U/S. 142(2) OF THE ACT AND WAS REQUESTED TO COMPLETE THE SPECIAL AUDIT FOR AY 2009-10 WITHIN 90 DAYS FROM DATE OF RECEIPT OF LETTER DATED 14.12.2011 AND ON THE REQUEST OF THE SAID COMPANY, THE TIME OF COMPLETION OF AUDIT WAS E XTENDED BY ONE MONTH I.E. TILL 23.4.2012 AND ON THE SAID THE AUD ITOR SUBMITTED HIS AUDIT REPORT WITH ALL ITS ENCLOSURES. AFTER PE RUSAL OF THE SPECIAL AUDIT REPORT A NOTICE U/S. 142(1) OF THE ACT ALONGWITH QUESTIONNAIRE DATED 24.4.2012 WAS SERVED UPON THE ASSESSEE WHICH W AS COMPLIED WITH BY THE A.R. OF THE ASSESSEE ISSUE OF LETTER I .E. 1 A FILED RETURN OF INCOME ON 23.10.2007 DECLARING TOTAL INCOME OF RS. 13,98,780/-. THE RETURN WAS PROCESSED U/S. 143(1) O F THE I.T. ACT, 1961 (HEREINAFTER REFERRED AS THE ACT). THE CASE WAS SELECTED UNDER COMPULSORY SCRUTINY AND SURVEY U/S. 133A OF TH E ACT WAS CARRIED OUT ON THE BUSINESS PREMISES OF THE ASSESSEE ON 12.2.2007. AO ISSUED NOTICE U/S. 143(2) OF THE ACT ON 02.9.2008 WHICH WAS SERVED UPON THE ASSESSEE. SUBSEQUENTLY, NOTICE U/S . 143(2) OF THE ACT WAS ISSUED ON 19.1.2009 FOR PRODUCING THE NECES SARY DETAILS ALONGWITH THE AUDIT REPORT U/S. 44AB OF THE ACT. IN RE SPONSE TO THE NOTICE, THE AR OF THE ASSESEE APPEARED FROM TIME TO TIM E AND FILED 5 THE REPLY AND ALSO PRODUCED BOOKS OF ACCOUNTS. THERE AFTER, THE AO MADE THE VARIOUS ADDITIONS AND ASSESSED THE INCOME OF THE ASSESSEE AT RS. 3,65,45,695/- VIDE ORDER DATED 20/6/2 012 PASSED U/S. 143(3) OF THE I.T. ACT, 1961. 3. AGGRIEVED BY THE ASSESSMENT ORDER DATED 20.6.2012 , ASSESSEE FILED APPEAL BEFORE THE LD. FIRST APPELLATE AUTHORITY WHO HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE VIDE ORDER DATED 14.1.2013. 4. LD. DR RELIED UPON THE ORDER OF THE AO AND REITERA TED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL AND REQ UESTED THAT THE APPEAL OF THE REVENUE MAY BE ALLOWED. 5. IN THIS CASE NOTICE OF HEARING WAS ISSUED TO THE ASSESSEE ON THE ADDRESS AS PER RECORD FOR 14.8.2017 BY RPAD AND IN RESPONSE TO THE SAME, NEITHER THE ASSESSEE NOR ITS AR APPEARE D NOR FILED ANY APPLICATION FOR ADJOURNMENT. THEREFORE, KEEPIN G IN VIEW FACTS AND CIRCUMSTANCES AS EXPLAINED ABOVE, WE ARE OF THE V IEW THAT ASSESSEE IS NOT INTERESTED TO PROSECUTE THE MATTER IN DI SPUTE AND NO USEFUL PURPOSE WOULD BE SERVED TO ISSUE NOTICE AGAIN AND AGAIN TO THE ASSESSEE. THEREFORE, WE ARE DECIDING THE REVENU ES APPEAL EXPARATE QUA ASSESSEE, AFTER HEARING THE LD. DR AND PE RUSING THE RECORDS. 6 6. WE HAVE HEARD THE LD. DR AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW ESPECIALLY THE ORDER OF THE LD. CIT(A ), WITH REGARD TO GROUND NO. 1 RELATING TO DISALLOWANCE ON ACCOUNT OF PAYMENT U/S. 40A(IA) OF THE ACT IS CONCERNED, WE FIND THAT OU T OF TOTAL EXPENSES OF RS. 28.06 LACS, THE TAX WAS DEDUCTED ON RS. 16,57,440/- AND DEPOSITED BEFORE THE DUE DATE OF FILING THE RETURN. THE AO SUMMARILY REJECTED THE SUBMISSION AND DOCUMENTS FILED BY THE ASSESSEE. THE CHALLAN COULD NOT BE PRO DUCED BEFORE THE AO BUT THE COPY OF TDS RETURN WAS PRODUCED IN WHICH I T WAS EVIDENTLY CLEAR THAT THE TDS WAS DEDUCTED AND DEPOSITED WELL WITHIN THE STIPULATED TIME, HENCE, THERE WOULD BE NO OC CASION FOR ANY ADDITION U/S. 40(A)(IA) OF THE ACT, HENCE, WE UPHO LD THE ACTION OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE AND DECIDE THE GROUND NO. 1 AGAINST THE REVENUE. 6.1 WITH REGARD TO GROUND NO. 2 RELATING TO DISALLOWA NCE OF THE PAYMENT OF STATUTORY LIABILITY U/S. 43B IS CONCERNED, WE FIND THAT THIS DISALLOWANCE RELATES TO INTEREST ON LOAN PAYABLE TO THE STATE GOVERNMENT. WE FURTHER FIND THAT AO WENT BY THE OBSERVA TION OF THE SPECIAL AUDITOR IN MAKING THIS DISALLOWANCE. FO R ADJUDICATION, IT IS NECESSARY TO MENTION THE SECTION 43B OF THE AC T, WHICH READ AS UNDER:- 7 NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISION OF THIS ACT, A DEDUCTION OTHERWISE ALLOWABLE UNDER TIS ACT IN RESPECT OF: A) B) . C) .. D) ANY SUM PAYABLE BY THE ASSESSEE AS INTEREST ON ANY LOAN OR BORROWING FROM ANY PUBLIC FINANCIAL INSTITUTI ON FOR A STATE FINANCIAL CORPORATION OR A STATE INDUSTRI AL INVESTMENT CORPORATION, IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THE AGREEMENT GOVERNING SUCH LOAN OR BORROWING, OR E) ANY SUM PAYABLE BY THE ASSESSEE AS INTEREST OF ANY LOAN OR ADVANCES FROM A SCHEDULED BANK IN ACCORDANC E WITH THE TERMS AND CONDITIONS OF THE AGREEMENT GOVERNING SUCH LOAN OR ADVANCES OR . 6.1.1 AFTER PERUSING THE AFORESAID POSITION OF LAW , WE FIND THAT CLAUSE (D) OF SECTION 43B OF THE ACT SPECIFIES THE IN STITUTIONS OR ORGANIZATIONS COVERED AND THERE CAN BE NO REASON TO READ THE STATE GOVERNMENT AS AN INSTITUTION COVERED FOR THE PURPOSES OF SECTION 43(B)(D) OF THE ACT. HENCE, WE UPHOLD THE AC TION OF THE LD. 8 CIT(A) ON THE ISSUE IN DISPUTE AND DECIDE THE GROUND N O. 2 AGAINST THE REVENUE. 6.2 WITH REGARD TO GROUND NO.3 RELATING TO DELETION OF ADDITION ON ACCOUNT OF INTEREST EARNED ON EAR MARKED FUNDS IS C ONCERNED, WE FIND THAT THIS ISSUE RELATES TO ADDITION OF RS. 94.36 LACS BY TREATING AN ALLEGED LIABILITY AS INCOME OF THE ASSESSEE, WE F IND THAT SIMILAR AND IDENTICAL ISSUE HAS ALREADY BEEN DECIDED BY THE LD. CIT(A) IN THE ASSESSMENT YEAR 2008-09, HENCE, FOLLOWING THE CO NSISTENT VIEW, THE SAME WAS RIGHTLY DECIDED IN FAVOUR OF THE ASSESS EE BY THE LD. CIT(A) IN THE PRESENT ASSESSMENT YEAR I.E. 2009-10 W HICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, THEREFORE, WE UPHO LD THE ACTION OF THE LD. CIT(A) ON THIS ISSUE AND DECIDE THE GROUN D NO. 3 AGAINST THE REVENUE. 6.3 WITH REGARD TO GROUND NO. 4 RELATING TO DELETION OF ADDITION ON ACCOUNT OF DISALLOWANCE U/S. 14A OF THE ACT FOR RS. 15.38 LACS IS CONCERNED, WE FIND THAT SIMILAR AND IDENTICAL ISSU E HAS ALREADY BEEN DECIDED BY THE LD. CIT(A) IN THE ASSESSMENT YEAR 2008-09, HENCE, FOLLOWING THE CONSISTENT VIEW, THE SAME WAS R IGHTLY DECIDED IN FAVOUR OF THE ASSESSEE BY THE LD. CIT(A) IN THE PRESENT ASSESSMENT YEAR I.E. 2009-10, WHICH DOES NOT NEED ANY INTERFERENCE 9 ON OUR PART, THEREFORE, WE UPHOLD THE ACTION OF THE LD. CIT(A) ON THIS ISSUE AND DECIDE THE GROUND NO. 4 AGAINST THE RE VENUE. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 01/09/2017. SD/- SD/- (PRASHANT MAHARISHI) [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 01/09/2017 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES
