Sri GURJANTSINGH., Hooghly V. I.T.O.1(3),Hooghly., Hooghly

ITA 1669/KOL/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83043 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2014
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 14-11-2012
• Court: TRIBUNAL
• Assessee Lawyers: M D SHAH
• Keywords: Reasonable cause
• Section: 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH C , KOLKATA [BEFORE HONBLE SRI MAHAVIR SINGH, JM & HONBLE S RI SHAMIM YAHYA, AM ] ITA NO.1669/KOL/2012 ASSESSMENT YEAR : 2009-10 ( APPELLANT ) (RESPONDENT) SRI GURJANT SINGH . -VS- I.T.O., WARD-1(3), HOOGHLY HOOGHLY (PAN:AKUPB 4773 Q) ITA NO.56/KOL/2013 ASSESSMENT YEAR : 2009-10 ( APPELLANT ) (RESPONDENT) I.T.O., WARD-1(3) -VS- SRI GURJANT SINGH HOOGHLY HOOGHLY (PAN:AKUPB 4773 Q) FOR THE ASSESSEE SHRI M.D.SHAH FOR THE DEPARTMENT SHRI VIVEK VERMA, JCIT, SR.(DR) DATE OF HEARING : 07.07.2014 DATE OF PRONOUNCEMENT :.05. 08.2014. ORDER PER SHRI SHAMIM YAHYA, AM THESE CROSS APPEALS FILED BY THE ASSESSEE AND THE R EVENUE EMANATE OUT OF ORDER OF LD. CIT(A)-XXXVI, KOLKATA DATED 15.10.2012 AND PERTAIN TO ASSESSMENT YEAR 2009-10. ITA NO.1669/KOL/2012 (ASSESSEES APPEAL): 2. THE GROUNDS OF APPEAL IN THIS APPEAL READ AS UN DER :- 1. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD.CIT APPEALS ERRED IN MAKING AN ADDITION OF RS.1,21,33,003 U/S 40(A)(IA) OF THE ACT. THE ADDITION WAS UNJUSTIFIED AND THE SAME BE DELETED. 2.FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE CA SE THE APPELLANT HAVING DEDUCTED TDS NO DISALLOWANCE U/S 40(A)(IA) OF THE ACT WAS CALLED FOR. THUS THE ADDITION WAS UNJUSTIFIED AND THE SAME BE DELETED. 3. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE C ASE THE APPELLANT HAVING MADE SHORT TDS NO DISALLOWANCE U/S 40(A)(IA) OF THE ACT WAS CA LLED FOR. THUS THE ADDITION WAS UNJUSTIFIED AND THE SAME BE DELETED. 4. FOR THAT THE APPELLANT CRAVES LEAVE TO MODIFY OR AMEND THE ABOVE GROUNDS OR PRESS FOR NEW GROUNDS OF APPEAL. ITA.NO.1669/KOL/2012 & 56/KOL/2012 SHRI GURJANT SINGH A.YR.2009-10 2 ITA NO.56/KOL/2012 (REVENUES APPEAL): 2. 1 THE GROUNDS OF APPEAL IN THIS APPEAL READ AS U NDER :- 1. THE LD.CIT(A)-XXXVI, KOLKATA ERRED IN LAW AS WE LL AS ON FACTS IN DELETING THE ADDITION OF RS.1,06,92,991/- MADE U/S 40(A)(IA), ON THE GROUND THAT IT WAS NOT ON OUTSTANDING AMOUNT ON THE YEAR END. 2. THAT THE APPELLANT CRAVES LEAVE TO ADD/DELETE/MO DIFY ANY FURTHER GROUND. 3. AT THE OUTSET WE NOTE THAT THERE IS A DELAY OF 15 DAYS IN FILING THE APPEAL BY THE REVENUE.. THE REASONABLE CAUSE FOR THE DELAY IS SAI D TO BE THE DELAY IN RECEIVING OF THE RECORDS AND LEAVE OF THE CONCERNED OFFICER. UPON CA REFUL CONSIDERATION WE CONDONE THE DELAY IN FILING THE APPEAL BY THE REVENUE. 4. THE ASSESSEE IN THIS CASE IS A TRANSPORTER AND RUNS HIS BUSINESS IN THE NAME AND STYLE OF M/S.G.S.ROAD LINES. DURING THE COURSE OF A SSESSMENT THE AO NOTED THAT THE ASSESSEE HAS PAID RS.1,06,92,991/- FOR TRUCK FREIGH T TO THE TRUCK OWNERS. ON ENQUIRY IN THIS REGARD THE ASESSEES COUNSEL RESPONDED THAT PA YMENTS DID NOT ATTRACT TDS. AO WAS NOT SATISFIED WITH THIS. HE HELD THAT THE ASSES SEE HAS FAILED TO COMPLY WITH THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT AND HAS NOT DEDUCTED TDS WHILE PAYING RS.1,06,92,991/-. HENCE HE DISALLOWED THE SAID AMOU NT PAID TO TRUCK OWNERS AS HIRE CHARGES. 5. UPON ASSESSEES APPEAL THE LD. CIT(A)REFERRED TO THE DECISION OF THE SPECIAL BENCH OF ITAT IN THE CASE OF MERILYN SHIPPING AND T RANSPORT AND NOTED THAT DISALLOWANCE U/S 40(A)(IA) CAN BE MADE IN RESPECT O F EXPENSES PAYABLE (LIABILITY) ONLY. THE LD. CIT(A) FURTHER NOTED THAT NO DISALLOWANCE C AN BE MADE IN RESPECT OF AMOUNTS ACTUALLY PAID. HENCE THE LD. CIT(A) DELETED THE ADD ITION OF RS.1,06,92,991/-. HOWEVER, THE LD. CIT(A) NOTED THAT THE AMOUNT PAYAB LE AS SHOWN BY THE ASSESSEES BALANCE SHEET IN THIS REGARD WAS RS.1,21,33,003.93. HENCE THE LD. CIT(A) NOTED THAT SINCE THE ASSESSEE HAS NOT DEDUCTED TDS ON THE AMOU NT PAYABLE OF RS.1,21,33,003.93 HE DISALLOWED U/S 40(A)(IA) OF THE ACT AND THE INCO ME OF THE ASSESSEE WAS ENHANCED BY THE AMOUNT OF RS,.1,21,33,003.93. ITA.NO.1669/KOL/2012 & 56/KOL/2012 SHRI GURJANT SINGH A.YR.2009-10 3 AGAINST THE ABOVE ORDER THE ASSESSEE AND THE REVENU E ARE IN CROSS APPEALS BEFORE US. 6. THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT T HE SUNDRY CREDITORS OF RS.1,21,33,003/- CANNOT BE DISALLOWED U/S 40(A)(IA) OF THE ACT WITHOUT FINDING OUT OR BRINGING ON RECORD THAT THE SAID AMOUNT REPRESENTS CURRENT YEAR EXPENDITURE WHICH IS PAYABLE. FURTHER WHEN THE ENTIRE YEARS EXPENDITURE ON HIRE CHARGES WAS RS.1,06,92,991 HOW COULD THERE BE CREDITORS FOR RS. 1,21,33,003 RELATING TO THE CURRENT YEAR. THE DISALLOWANCE U/S 40(A)(IA) OF THE ACT CAN BE ONLY WITH RESPECT TO THE EXPENDITURE OF THE CURRENT YEAR. THUS THE BASIS OF THE LD. CIT(A) WAS INCORRECT BOTH IN FACT AND LAW. THUS THE DISALLOWANCE OF RS.1,22,33,0 03 DESERVES TO BE DELETED. 6.1. THE LD. COUNSEL OF THE ASSESSEE FURTHER SUBMIT TED THAT IN THE ASSESSMENT ORDER THE LD.AO ON PAGE 2 HAS GIVEN A SPECIMEN TABLE WHE REIN HE HAS FOUND THAT THE ASSESSEE WAS GUILTY OF SHORT DEDUCTION OF TDS AND N OT OF NON DEDUCTION OF TDS. HOWEVER ONCE HAVING FOUND THAT THE ASSESSEE HAD DED UCTED TDS ON PAGE 2, THE AO THEN ON PAGE 3 GAVE A FINDING THAT THE ASSESSEE DID NOT DEDUCT TDS. THE LD. COUNSEL SUBMITTED THAT THIS SHOWS THAT THE AO HIMSELF WAS C ONFUSED WITH RESPECT TO THE FACTS OF THE CASE. HE THEREFORE SUBMITTED THAT IF THE AO FINDS THAT THE ASSESSEE WAS GUILTY OF SHORT DEDUCTION THEN AS PER THE DECISION OF THE S K TEKRIWAL ITAT NO.183 OF 2012 DATED 03-12-2012, NO DISALLOWANCE U/S 40(A)(IA) OF THE ACT CAN BE MADE IN CASE OF SHORT DEDUCTION. THUS THE ENTIRE ADDITION SHOULD BE DELETED ON THIS GROUND. 6.2. THE LD. COUNSEL OF THE ASSESSEE FURTHER SUBMIT TED THAT THE ASSESSEE HAS ACTUALLY DEDUCTED THE TAX AND DEPOSITED THE PAYMENT IN THIS REGARD. IN THIS REGARD HE HAS SUBMITTED THE FOLLOWING CHART : SL.NO. GROSS TDS TDS DEPOSITED WITHIN 1. 34,15,298/- 34,584/- 31-03-2009 2. 59,16,222/- 62,252/- 30-09-2009 3. 13,61,471/- 1,793/- POST 30-09-2009 1,06,92,991 ITA.NO.1669/KOL/2012 & 56/KOL/2012 SHRI GURJANT SINGH A.YR.2009-10 4 6.3. IN THIS REGARD HE SUBMITTED THAT THE TDS WHICH WAS DEPOSITED WITHIN THE DUE DATE OF FILING OF RETURN U/S 139(1) OF THE ACT NO D ISALLOWANCE CAN BE MADE U/S 40(A)(IA) OF THE ACT IN VIEW OF THE DECISION OF THE JURISDICT IONAL HIGH COURT OF CALCUTTA IN THE CASE OF VIRGIN CREATIONS IN ITAT NO.302 OF 2011. ON THE BASIS OF THE ABOVE THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT PAYMENTS ON TDS MADE WITH RESPECT TO SERIAL NO.1 AND 2 OF THE ABOVE TABLE COMPRISE GROSS AMOUNT OF RS.93,31,520 OUT OF THE TOTAL SUM OF RS.1,06,92,991. THUS THIS AMOUNT DESERVES TO BE DELETED. IN RESPECT OF SERIAL NO.3 IN THE TABLE COMPRISING OF GROSS AMOUNT OF RS. 13,61,471/- OUT OF THE TOTAL SUM OF RS.106,92,991 THE LD. COUNSEL OF THE ASSESSEE SUBMI TTED THAT TDS WAS DEDUCTED AND PAID AFTER 30.09.2009.THUS THE DEDUCTION SHOULD BE ALLOWED IN THE SUBSEQUENT YEARS AS PER PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. IN THE ALTERNATIVE THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT AMENDMENT TO THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT MADE BY THE FINANCE ACT 2012 IS ALSO RETROSPECTIVE IN NATURE. HENCE THE AO BEFORE MAKING THE DISALLOWANCE U/S 40(A)(IA) OF THE ACT HE SHOULD BE DIRECTED TO VERIFY IF THE PAYMENTS RECIPIENTS HAVE FIELD THEIR RETURNS AND PA ID THEIR RESPECTIVE TAXES. IF THE AO FINDS THE SAME, THEN THE BENEFIT OF THE PROVISIONS OF THE AMENDED SECTION OF SECTION 40(A)(IA) BY THE FINANCE ACT 2012 SHOULD APPLY. IN THIS REGARD THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT FINANCE ACT 2012 HAS ALSO A MENDED THE PROVISIONS OF SECTION 40(A)(IA ) OF THE ACT WHICH NOW STATES THAT IF AN A SSESSEE MAKES PAYMENT IN VIOLATION TO SECTION 40(A)(IA) OF THE ACT TO A RESIDENT PAYEE WITHOUT DEDUCTION OF TAX AND IS NOT DEEMED TO BE AN ASSESSESSEE IN DEFAULT UNDER SECTIO N 201(1) ON ACCOUNT OF PAYMENT OF TAXES BY THE PAYEE, THEN FOR THE PURPOSE OF ALLOWIN G DEDUCTION OF SUCH SUM IT SHOULD BE DEEMED THAT THE ASSESSEE HAS DEDUCTED AND PAID T HE TAX ON SUCH SUM BEFORE THE DATE OF FURNISHING OF RETURN OF INCOME BY THE RESIDENT P AYEE. IN SUPPORT OF HIS CLAIM THE LD. COUNSEL OF THE ASSESSEE PLACED RELIANCE UPON THE DE CISION OF SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF BHARTI AUTO PRODUCTS VS. CI T 37 TAXMANN.COM 37 AND THE DECISION OF ITAT AGRA BENCH IN THE CASE OF RAJEEV K UMAR AGARWAL VS ADDL.CIT IN ITA NO.337/AGRA/2013 DATED 29.05.2014. 7. THE LD. DR, ON THE OTHER HAND RELIED UPON THE OR DERS OF THE AUTHORITIES BELOW AND HAS BEEN HEARD.. ITA.NO.1669/KOL/2012 & 56/KOL/2012 SHRI GURJANT SINGH A.YR.2009-10 5 8. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE R ECORDS. WE FIND THAT THE LD. COUNSEL OF THE ASSESSEE IS CORRECT IN SUBMITTING TH AT SUNDRY CREDITORS OF RS.1,21,33,003 CANNOT BE DISALLOWED U/S 40(A)(IA) OF THE ACT WITHOUT BRINGING ON RECORD THAT THE SAID AMOUNT REPRESENTS CURRENT YEAR EXPENDITURE WHICH IS PAYABLE. IT IS CLEAR THAT THE SAID AMOUNT REPRESENTED SUNDRY CREDI TORS AND DID NOT REPRESENT EXPENDITURE RELATED TO CURRENT YEAR. HENCE THE LD. CIT(A)S ORDER FOR DISALLOWANCE OF RS.1,21,33,003 IS SET ASIDE. 8.1. WE FURTHER NOTE THAT THE LD. COUNSEL OF THE A SSESSEE HAS MADE OUT A CASE THAT AO HAS GIVEN A FINDING THAT THERE WAS SHORT DEDUCTI ON OF TAX AND HE HAS NOT GIVEN A CLEAR FINDING THAT THERE IS NO DEDUCTION OF TAX. IF THE CASE WAS OF SHORT DEDUCTION THEN AS PER THE DECISION OF THE TRIBUNAL IN THE CASE OF SK TEKRIWAL (SUPRA) WHICH WAS APPROVED BY THE JURISDICTIONAL HIGH COURT IN ITAT N O.183 OF 2012 VIDE ORDER DATED 3.12.2012 NO DISALLOWANCE U/S 40(A)(IA) OF THE ACT CAN BE MADE. HENCE THIS ISSUE THAT THERE WAS ONLY A CASE OF SHORT DEDUCTION NEEDS TO B E VERIFIED BY THE AO. HENCE WE REMIT THE ISSUE TO THE FILE OF THE AO TO EXAMINE AS TO WHETHER THERE WAS A CASE OF SHORT DEDUCTION OR NON DEDUCTION OF TAX. IF THERE WAS ONL Y SHORT DEDUCTION THEN THE RATIO THAT EMANATE OUT OF THE TRIBUNALS DECISION WILL FOLLOW. 8.2. NOW WE CONSIDER THE ALTERNATE SUBMISSIONS OF T HE LD. COUNSEL OF THE ASSESSEE. AS REGARDS HIRE CHARGES OF RS.1,06,92,991/- WE NOTE THAT THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THERE WAS SOME ERROR ON THE PART OF THE COUNSEL WHO REPRESENTED THE ASSESSEE BEFORE THE AUTHORITIES BEL OW. IN THIS REGARD THE LD. COUNSEL OF THE ASSESSEE HAS GIVEN A CHART AS REPRODUCED ABOVE REGARDING THE PAYMENT OF THE HIRE CHARGES PAYABLE. AS REGARDS SERIAL NO. 1 AND 2 IN T HE ABOVE CHART PAYMENT OF TDS WAS MADE UPTO THE DATE OF FILING OF THE RETURN AND THE SAME HAS TO BE ALLOWED. HENCE WE REMIT THIS ISSUE TO THE FILE OF THE AO TO VERIFY TH E DATE OF DEPOSIT OF THE TDS IN THIS CASE AND DELETE THE DISALLOWANCE IF THE DEPOSIT OF TDS HAS BEEN DONE UPTO THE FILING OF THE RETURN. ITA.NO.1669/KOL/2012 & 56/KOL/2012 SHRI GURJANT SINGH A.YR.2009-10 6 8.3. AS REGARDS THE LAST ITEM IN THE ABOVE CHART, A SUM OF RS.13,61,471/- HAS BEEN CLAIMED TO HAVE BEEN DEPOSITED AFTER 30.09.2009. IN THIS REGARD ALSO WE AGREE WITH THE SUBMISSION OF THE LD. COUNSEL OF THE ASSESSEE AND G IVE DIRECTION THAT IT SHOULD BE ALLOWED AS PER THE PROVISION OF SECTION 40(A)(IA) O F THE ACT. 9. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE I S ALLOWED AND THE APPEAL FILED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 05.08.2014. SD/- SD/- [ MAHAVIR SINGH ] [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 05.08.2014. R.G.(.P.S.) COPY OF THE ORDER FORWARDED TO: 1. SHRI GURJANT SINGH, PROP: M/S.G.S.ROAD LINES, 137, G.T.ROAD, MANICKTALA, SERAMPORE, HOOGHLY-712201,. 2 I.T.O., WARRD-1(3), HOOGHLY. 3 . CIT(A)-XXXVI, KOLKATA 4. CIT - KOLKATA. 5. CIT-DR, KOLKATA BENCHES, KOLKATA TRUE COPY, BY ORDER, ASST. REGISTRAR , ITAT, KOLKATA BENCHES