M/s Vydehi School of Execellence , Bangalore V. Income Tax Officer Ward-4(2)(1), Bangalore

ITA 1668/BANG/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 8217 (ITAT-BANGALORE)
• Duration Of Justice: 7 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 18-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Recovery proceedings; Additional evidence
• Section: 143(3); 40(a)(ia); 201(1); 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI JASON P BOAZ, ACCOUNTANT MEMBER ITA NO.1668/2018 ASSESSMENT YEAR : 2014-15 M/S VYDEHI SCHOOL OF EXCELLENCE, LLP, NO.82, NALLURHALLI WHITEFIELD, PIP AREA, BENGALURU. PAN : AAIFV 3257 E. VS. THE INCOME-TAX OFFICER, WARD-4(2)(1), BENGALURU. APPLICANT RESPONDENT APPLICANT BY : SHRI PRANAVKRISHNA, ADVOCATE RESPONDENT BY : SHRI R.N SIDDAPPAJI, ADDL.CIT DATE OF HEARING : 01.01.2019 DATE OF PRONOUNCEMENT : 04.01.2019 O R D E R PER N.V. VASUDEVAN, VICE PRESIDENT THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE O RDER OF CIT(A)-4, BENGALURU DATED 28/2/2018 RELATING TO THE ASST. YEA R 2014-15. 2. THE ASSESSEE IS A LLP. THE ASSESSEE RUNS EDUCAT IONAL INSTITUTION. IN THE ASSESSMENT PROCEEDINGS, ON VERIFICATION OF T HE DETAILS, THE AO NOTICED THAT ASSESEE HAD INCURRED EXPENSES UNDER TH E HEAD FOOD EXPENSES WHICH WAS CLAIMED AS DEDUCTION IN COMPUTI NG TOTAL INCOME. ON THE AFORESAID PAYMENT, ASSESSEE DID NOT DEDUCT TAX AT SOURCE. THE AO INVOKED THE PROVISION OF SEC 40(A)(IA) OF THE ACT A ND DISALLOWED THE CLAIM FOR DEDUCTION OF EXPENSES TO THE TUNE OF RS.45,73,5 63/- FOR NON DEDUCTION OF TAX AT SOURCE. ACCORDINGLY, THE AFORESAID SUM W AS ADDED TO THE TOTAL ITA NO.1668/BANG/2018 PAGE 2 OF 7 INCOME OF THE ASSESSEE IN THE ORDER OF ASST. DATED 26/12/2016 PASSED U/S 143(3) OF THE INCOME-TAX ACT 1961 (THE ACT). 3. BEFORE THE CIT(A), THE ASSESSEE CONTENDED THAT IT HAD MADE PAYMENT TO CATERERS BY NAME M/S V HIRE 4 U AND THE PAYEE HA D INCLUDED THE SUM RECEIVED FROM THE ASSESSEE IN THEIR RETURN OF INCOM E FILED FOR THE RELEVANT ASST. YEAR. THE ASSESSEE FILED FORM NO. 26A ISSUED BY THE CHARTERED ACCOUNTANT OF M/S. V HIRE 4 U WHEREIN IT WAS CERT IFIED THAT TO THE EXTENT OF RS.41,51,863/- BEING THE AMOUNT RECEIVED BY THEM FR OM THE ASSESSEE, THEY HAD OFFERED THE SAME IN THEIR RETURN OF INCOME. THE ASSESSEE ALSO SUBMITTED THAT THE BALANCE AMOUNT OF RS. 4,21,700/- I.E. [RS. 45,73,5631- MINUS RS. 41,51,8631-] IS THE PROVISION MADE BY THE ASSESSEE FOR THE MONTH OF MARCH 2014 PAID IN THE SUBSEQUENT MONTH WH ICH FELL IN THE NEXT ASSESSMENT YEAR. THE ASSESSEE SUBMITTED THAT THE CE RTIFICATE IN FORM 26A MAY BE ADMITTED AS ADDITIONAL EVIDENCE UNDER RULE 4 6A OF THE INCOME TAX RULES, 1962 (RULES). THE ASSESSEE SUBMITTED THAT AS PER THE SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT READ WITH P ROVISO TO SECTION 201(1) OF THE ACT INSERTED BY FINANCE ACT 2012 W.E.F. 01.04.2 013 AND 01.07.2012 RESPECTIVELY, IF IT IS ESTABLISHED THAT THE PERSON TO WHOM MADE THE PAYMENTS MADE ARE DISALLOWED U/S 40(A)(IA) OF THE A CT HAS FURNISHED RETURN OF INCOME U/S 139 OF THE ACT AND HAS ALSO TAKEN INT O ACCOUNT THE SUM RECEIVED FROM THE ASSESSEE IN COMPUTING IN SUCH RET URN OF INCOME AND IF HE HAD PAID TAX ON THE INCOME DECLARED BY HIM ON SUCH INCOME AND FURNISHED THE CERTIFICATE TO THE ABOVE EFFECT TO THE ACCOUNTA NT IN FORM NO.26A, THEN THE ASSESSEE CANNOT BE DEEMED TO BE AN ASSESSEE IN DEFAULT U/S 201(1) OF THE ACT AND NO DISALLOWANCE U/S 40(A)(IA) OF THE AC T SHOULD BE MADE. ITA NO.1668/BANG/2018 PAGE 3 OF 7 4. THE CIT(A) HOWEVER, DID NOT CONSIDER THE ABOVE S UBMISSIONS OF THE ASSESSEE BUT CONFIRMED THE ORDER OF THE AO. AGGRIEV ED BY THE ORDER OF THE CIT(A), ASSESSEE HAS FILED PRESENT APPEAL BEFORE TH E TRIBUNAL. 5. AT THE TIME OF HEARING, THE LD COUNSEL FOR THE A SSESSEE MADE SUBMISSIONS IN GROUND 4 TO 6 WHICH READS AS FOLLOWS :- 4. THE LEARNED COMMISSIONER OF INCOME-TAX [APPEALS] FAILED TO APPRECIATE THAT THE RECIPIENT I .E. THE PAYEE M/S. VHIRE4U HAS OFFERED THE PAYMENTS RECEIVED BY IT FROM THE APPELLANT IN ITS BOOKS AND CONSEQUENTLY AS PER THE SECOND PROVISO TO SECTION 40[A][IA] OF THE ACT NO DISALLOWANCE IS WARRANTED, ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. THE LEARNED COMMISSIONER OF INCOME-TAX [APPEALS] IS NOT JUSTIFIED IN HOLDING THAT THE APPE LLANT HAS NOT SUBMITTED ANY PROOF TO PROVE THAT THE IMPUG NED SUMS WERE SHOWN AS INCOME BY THE PAYEE, WITHOUT APPRECIATING THAT THE APPELLANT DURING THE COURSE O F APPELLATE PROCEEDINGS HAD FILED CERTIFICATE IN FORM NO. 26A ISSUED BY THE CHARTERED ACCOUNTANT OF THE PAYEE AS PER RULE 31ACB OF THE INCOME-TAX RULES WHICH HAS BEEN OVERLOOKED BY THE LEARNED COMMISSIONER OF INCOME-TAX [APPEALS], ON THE FACTS AND CIRCUMSTANCE S OF THE CASE. 6. THE LEARNED COMMISSIONER OF INCOME-TAX [APPEALS] FAILED TO APPRECIATE THAT THE DEDUCTION OF TAX IS O NLY ONE MODE OF RECOVERY OF TAX AND ONCE THE TAX IS RECOVER ED BY ANY OTHER MODE AND THE RECOVERY OF TAX ON THE AMOUNT WHICH HAS SUFFERED TAX IN THE HANDS OF PAYEE IS NOT PERMISSIBLE SINCE THE SAME WILL AMOUNT TO TAXIN G THE SAME INCOME TWICE I.E. ONCE DISALLOWANCE OF EXPENDITURE IN THE HANDS OF THE PAYER AND ONCE AGAI N THE AMOUNTS BEING TAXED IN THE HANDS OF THE PAYEE, ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 6. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED SUBMISSIONS AS WERE MADE BEFORE THE CIT(A). THE LEARNED DR RELIED ON T HE ORDER OF THE CIT(A). ITA NO.1668/BANG/2018 PAGE 4 OF 7 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AS PE R THE SECOND PROVISO TO SEC.40(A)(IA) OF THE ACT, WHICH WAS INSE RTED BY THE FINANCE ACT, 2012 W.E.F. 1-4-2013, IF THE PAYEES HAVE FILED THEI R RETURN OF INCOME SHOWING THE RECEIPTS FROM THE ASSESSEE IN THEIR RET URN OF INCOME THAN THE IT SHALL BE DEEMED THAT THE ASSESSEE HAS DEDUCTED AND PAID THE TAX ON SUCH SUM ON THE DATE OF FURNISHING OF RETURN OF INCOME B Y THE RESIDENT PAYEE REFERRED TO IN SEC.40(A)(IA) OF THE ACT. THE PROVIS O TO SECTION 201(1) OF THE ACT INSERTED BY THE FINANCE ACT 2012 W.E.F. 01.07.2 012 READS AS FOLLOWS :- PROVIDED THAT ANY PERSON, INCLUDING THE PRINCIPAL OFFICER O F A COMPANY, WHO FAILS TO DEDUCT THE WHOLE OR ANY PART OF THE TAX IN ACCORDANCE WITH THE PROVISIONS OF THIS CHAPTER ON T HE SUM PAID TO A RESIDENT OR ON THE SUM CREDITED TO THE ACCOUNT OF A RESIDENT SHALL NOT BE DEEMED TO BE AN ASSESSEE IN DEFAULT IN RESPECT OF SUCH TAX IF SUCH RESIDENT (I) HAS FURNISHED HIS RETURN OF INCOME UNDER SECITO N 139; (II) HAS TAKEN INTO ACCOUNT SUCH SUM FOR COMPUTING INCOME IN SUCH RETURN OF INCOME; AND (III) HAS PAID THE TAX DUE ON THE INCOME DECLARED B Y HIM IN SUCH RETURN OF INCOME, AND THE PERSON FURNISHES CERTIFICATE TO THIS EFFEC T FORM AN ACCOUNTANT IN SUCH FORM AS MAY BE PRESCRIBED] 8. THE PLEA OF THE ASSESSEE WAS THAT AS PER THE SEC OND PROVISO TO SECTION 40(A)(IA) OF THE ACT READ WITH PROVISO TO S ECTION 201(1) OF THE ACT INSERTED BY FINANCE ACT 2012 W.E.F. 01.04.2013 AND 01.07.2012 RESPECTIVELY, IF IT IS ESTABLISHED THAT THE PERSON TO WHOM MADE THE PAYMENTS MADE ARE DISALLOWED U/S 40(A)(IA) OF THE A CT HAS FURNISHED RETURN OF INCOME U/S 139 OF THE ACT AND HAS ALSO TAKEN INT O ACCOUNT THE SUM RECEIVED FROM THE ASSESSEE IN COMPUTING IN SUCH RET URN OF INCOME AND IF HE HAD PAID TAX ON THE INCOME DECLARED BY HIM ON SUCH INCOME AND FURNISHED THE CERTIFICATE TO THE ABOVE EFFECT TO THE ACCOUNTA NT IN FORM NO.26A, THEN THE ASSESSEE CANNOT BE DEEMED TO BE AN ASSESSEE IN DEFAULT U/S 201(1) OF THE ACT AND NO DISALLOWANCE U/S 40(A)(IA) OF THE AC T SHOULD BE MADE. ITA NO.1668/BANG/2018 PAGE 5 OF 7 9. DESPITE SPECIFIC PLEA OF THE ASSESSEE ABOVE, SU PPORTED BY REPORT OF A CHARTERED ACCOUNTANT AS REQUIRED BY THE PROVISO TO SEC.201(1) OF THE ACT, THE CIT(A) CONFIRMED THE DISALLOWANCE, WITHOUT MAKI NG A REFERENCE TO THE ADDITIONAL EVIDENCE IN THE FORM OF CHARTERED ACCOUN TANTS CERTIFICATE IN FORM NO.26A. WE ARE OF THE VIEW THAT THE ASSESSEE I S ENTITLED TO THE BENEFIT OF 2 ND PROVISO TO SEC.40(A)(IA) OF THE ACT. THEREFORE, T HE CIT(A) OUGHT TO HAVE DIRECTED THE AO TO VERIFY WHETHER THE RECIPIENTS HAVE INCLUDED THE RECEIPTS PAID BY THE ASSESSEE IN THEIR RESPECTIVE RETURNS OF INCOME AND ALSO PAID TAXES ON THE SAME, BY CALLING FOR A REMAND REPORT, AFTER ADMITTING THE ADDITIONAL EVIDENCE FILED BEFOR E HIM. TO THE EXTENT THE RECIPIENTS FROM THE ASSESSEE HAVE SO INCLUDED THE S UM IN THEIR RETURNS OF INCOME AND FILED THE SAME, NO DISALLOWANCE U/S.40(A )(IA) OF THE ACT OUGHT TO HAVE BEEN SUSTAINED BY THE CIT(A). THE CIT(A) COMP LETELY IGNORED THE ADDITIONAL EVIDENCE FILED BEFORE HIM. WE THEREFORE SET ASIDE THE ORDER OF THE CIT(A) TO THE EXTENT TO WHICH HE HAD SUSTAINED THE ORDER OF THE AO ON THE DISALLOWANCE U/S.40(A)(IA) OF THE ACT AND REMAN D THE ISSUE TO THE AO TO VERIFY WHETHER THE RECIPIENTS HAVE INCLUDED THE REC EIPTS PAID BY THE ASSESSEE IN THEIR RESPECTIVE RETURNS OF INCOME AND ALSO PAID TAXES ON THE SAME, AFTER ADMITTING THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE BEFORE CIT(A). TO THE EXTENT THE RECIPIENTS FROM THE ASSE SSEE HAVE SO INCLUDED THE SUM IN THEIR RETURNS OF INCOME AND FILED THE SA ME AND PAID TAXES, IF DUE, ON SUCH INCOME NO DISALLOWANCE U/S.40(A)(IA) OF THE ACT SHOULD BE MADE BY THE AO. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATE D AS ALLOWED FOR STATISTICAL PURPOSE. ITA NO.1668/BANG/2018 PAGE 6 OF 7 PRONOUNCED IN THE OPEN COURT ON 4 TH JANUARY, 2019 . SD/- SD/- ( JASON P BOAZ ) ( N.V. VASUDEVAN) ACCOUNTANT MEMBER VICE PRESIDENT BANGALORE, DATED, 4 TH JANUARY, 2019. / VMS / COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER A SST. REGISTRAR, ITAT, BANGALORE. ITA NO.1668/BANG/2018 PAGE 7 OF 7 1. DATE OF DICTATION 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO SR.P.S .. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER .. 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S. .. 6. DATE OF UPLOADING THE ORDER ON WEBSITE.. 7. IF NOT UPLOADED, FURNISH THE REASON FOR DOING SO .. 8. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 9. DATE ON WHICH ORDER GOES FOR XEROX & ENDORSEMENT 10. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 11. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER . 12. THE DATE ON WHICH THE FILE GOES TO DISPATCH SEC TION FOR DISPATCH OF THE TRIBUNAL ORDER . 13. DATE OF DESPATCH OF ORDER. ..