Sh. Amit Singh Rana, Chandigarh V. ITO, Ward -5(4), Chandigarh

ITA 17/CHANDI/2022

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 1395 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 20-01-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AJAY CHAUHAN
• Keywords: Corroborative evidences; Agreed addition; TDS; Set aside
• Section: 80C; 194J

Judgement Text

आयकर अपील य अ धकरण,च डीगढ़ यायपीठ “एकल सद यीय’, च डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH ‘SMC’ CHANDIGARH ीमती दवा संह, या#यक सद य BEFORE: SMT. DIVA SINGH, JM आयकर अपील सं./ ITA No. 17/CHD/2022 नधा रण वष / Assessment Year : 2010-11 Shri Amit Singh Rana, House No.381, Labour Bureau HSG Society, Sector 49, Chandigarh. बनाम VS The ITO, Ward 5(4), Chandigarh. थायी लेखा सं./PAN No: BEKPS6996A अपीलाथ /Appellant यथ /Respondent नधा रती क! ओर से/Assessee by : Shri Ajay Chauhan, Advocate राज व क! ओर से/ Revenue by : Smt. Priyanka Dhar, Sr.DR स ु नवाई क! तार&ख/Date of Hearing : 19.05.2022 उदघोषणा क! तार&ख/Date of Pronouncement : 30.06.2022 आदेश/ORDER The present appeal has been filed by the assessee wherein the correctness of the order dated 24.11.2021 of CIT(A) (NFAC i.e. National Faceless Appeal Centre) Delhi pertaining to 2010-11 assessment year is assailed on the following grounds : 1. That the Ld. Commissioner of Income Tax (Appeals), has erred in denying to delete the addition made by A.O. 2. That Ld Commissioner of Income Tax (Appeals ), has also objected over the genuineness of Architect Fee merely because non submission of particulars of Architect his Name and Complete Address. 3. The Assessee has made payment through bank. Assessee now have complete detail with him to prove the genuineness with documentary proofs. ITA/17/CHD/2022 A.Y. 2010-11 Page 2 of 7 4 a). That the Ld. CIT (Appeals ), has erred in not considering the reply, dated 01.06.2017 of the assessee in response to specific query raised by him regarding the Architect Fee which reads as under:- "That the has assessee has given Architect Fee and only one payment of Rs 150,000 and other payments are of Rs 10,000/- and 15,000/-. The assessee as such , was not liable to deduct TDS on Rs10,000/- and Rs 15,000/-." b). That the Ld. CIT(Appeals) has further erred in giving his findings that claimed payment of Rs 175,000/- on account of Architect fee has been disallowed due to genuineness of payment has not been established without giving us opportunity of to prove the same. 5. That the Ld. CIT (Appeals) has erred in giving his findings that the addition is also an agreed addition without mentioning same has not been accepted by A.0. and made addition in lieu violated the provision of Section 194J . 6. That the Ld. CIT (Appeals) has also erred in not considering the 2 nd provision to section 194J of the income tax 1961. 7. That the copy of LIC paid for Rs 7,500 is with assessee. 8. That the appellant craves leave to add or amend any of the grounds of appeal before the appeal is finally heard or disposed off. 2. Both the parties have been heard. 3. The relevant facts of the case are that the assessee returned an income of Rs.1,17,930/- after issuance of notice u/s 148 of the Act. A perusal of the assessment order shows that the assessee is stated to be engaged in this business and profession wherein the assessee's main source of income is from M/s Amit Building Material Suppliers. Notice u/s 148 had been issued to the assessee in view of the fact that in his bank account maintained with Kotak Mahindra Ltd., Chandigarh. The assessee is found to have deposited cash to the tune of Rs.70,53,000/-. ITA/17/CHD/2022 A.Y. 2010-11 Page 3 of 7 3.1 The AO in the course of the assessment proceedings u/s 143(3) read with Section 148 made a disallowance of Rs.1,75,000/- which had been claimed under the head of ‘Architect Fee’. 3.2 Similarly, a disallowance of claim u/s 80C of the Act was made by the AO holding as under : "During the year under consideration the assessee has debited an amount of Rs. 1,75,000/- under the heard Architect Fee. Vide para (i) of questionnaire Bearing No.12743 the AR of the assessee was asked to state whether the Tax has been Deducted at Source or not, if so please furnish the proof thereof. In response to this quarry, the AR of the assessee stated that no Tax has been Deducted at Source. Even the AR has not been able to produce the name and complete address of the receipient of this Architect Fee. At last the AR of the assessee offered for addition of this amount. The offer of the assessee is not acceptable as the assessee has only offered this amount for addition after starting investigation during the course of assessment proceedings. Since the assessee has violated the provisions of section 194J, the amount of Rs. 1,75,000/- is disallowed as business expense and added to the total income of the assessee." 4. As a result of these reasons, addition of the assessment of the returned income of Rs.1,17,930/- was concluded at Rs.3,00,430/-. 5. The assessee carried the issue in appeal before the First Appellate Authority. The ld. CIT(A) discussed the issue in the following manner : 5.1.1 The ground of appeal relates to disallowance of claim of payment of architect fee of Rs. 1,75,000/-. The said amount was added to the total Income. Under para 3.1 of the assessment order, the Assessing Officer has deliberated the issue of disallowance of Rs. 1,75,000/- which is quoted below. "During the year under consideration the assessee has debited an amount of Rs. 1,75,000/- under the heard Architect Fee. Vide para (i) of questionnaire Bearing No. 12743 the AR of the assessee was asked ITA/17/CHD/2022 A.Y. 2010-11 Page 4 of 7 to state whether the Tax has been Deducted at Source or not, if so please furnish the proof thereof. In response to this quarry, the AR of the assessee stated that no Tax has been Deducted at Source. Even the AR has not been able to produce the name and complete address of the recipient of this Architect Fee. At last the AR of the assessee offered for addition of this amount. The offer of the assessee is not acceptable as the assessee has only offered this amount for addition after starting investigation during the course of assessment proceedings. Since the assessee has violated the provisions of section 194J, the amount of Rs. 1,75,000/- is disallowed as business expense and added to the total income of the assessee." From the facts given above, it is clear that the genuineness of Architect Fee was not established before the Assessing Officer, as even the basic details like name and complete address of payee was not furnished. It is further clear that the Authorised Representative of the assessee was not able to justify the claim and as a result he offered to the amount for addition to the total Income. In this background, the claim of payment of Rs.1,75,000/- on account of Architect Fee has been disallowed. No doubt, the Assessing Officer has referred the non- deduction of tax u/s. 194J is one of the reason for disallowance. During Appellate Proceeding, the entire submission of the assessee is confined to the inapplicability of provisions of section 194J of the Act. Even if, this argument is accepted, the basic facts remains that of genuineness of payment has not been established and due to inability of producing the relevant details the same was offered for addition during the appellate proceeding. Thus, the submission during appellate proceeding does not have any bearing on the disallowance/addition of Rs. 1,75,000/-. The addition is also an agreed addition and against agreed there can't be any grievance. The Hon'ble Bombay High Court in case of Rameshchandra & Co. vs. CIT (1987) 168 ITR 375 held as where assessee has agreed to certain additions on account of certain discrepancy in assessee's account which he could not explain, the assessee cannot have grievance if an amount has been taxed in accordance with statement before the Assessing Officer. Thus, the disallowance/addition of Rs. 1,75,000/- upheld. The ground of appeal is dismissed.” 5.1 The addition u/s 80C was dismissed holding as under : “ 5 . 2 . 1 The ground of appeal relates to disallowance of Rs.7,500/- of LIC u/s 80C. This ground of appeal not pressed during the appellate proceedings. There is a treated as dismissed.” 6. Aggrieved the assessee is in appeal before the ITAT. 7. The ld. AR submitted that the assessee before the First Appellate Authority has argued that once the amount has been offered by the assessee himself in the assessment proceedings ITA/17/CHD/2022 A.Y. 2010-11 Page 5 of 7 the occasion to consider it as an addition for visiting penal provisions does not arise. The addition by the Assessing Officer, it was submitted was made because the assessee could not provide the complete name and address of the Architect. Thus, the occasion for violation u/s 194J on an agreed addition it was submitted does not arise. The ld. CIT(A) accordingly, has passed the order holding that assessee has only argued qua 194J. It was his submission that the AO has possibly passed a confusing order and the assessee is not aware what charge he is required to meet. It was his further submission that today he is in a position to name and give the particulars of the Architect to whom fee was paid and provide his particulars. Similarly, it was also his submission that it is incorrect to say that he has not argued on claim of 80C deduction. It was his submission that he is ready to support the said claim also by evidences. Accordingly, it has been his prayer that remand back to the AO may be directed. 8. The ld. Sr.DR though relied upon the impugned order, ultimately could not justify why the offer of addition of Rs. 1,75,000/- paid as Architect Fee should not have been accepted. Considering the argument that today, the assessee is in a position to identify the Architect and provide full particulars. She agreed that the issue may be remanded back to the AO. ITA/17/CHD/2022 A.Y. 2010-11 Page 6 of 7 9. I have heard the submissions and perused the material on record. Considering the fact that the addition was made by the AO on the grounds that the assessee could not identify the Architect and on behalf of the assessee ld. AR has stated that the assessee is in a position to provide full particulars, it is deemed appropriate to set aside both the orders on these issues and restore the same back to the AO denovo. Accordingly, the issue is set aside back to the file of the AO with a direction to pass a speaking order in accordance with law after giving the assessee a reasonable opportunity of being heard. Since, the ld. AR has stated on behalf of the assessee that the specific Architect can be identified. Any fresh evidences deemed necessary, accordingly, which the assessee is in a position to file, shall be entertained. Similarly, qua the 80C claim, the supporting evidences, if any which the assessee is in a position to place before the AO are directed to be taken on record. The issues, accordingly, are set aside back to the file of the AO with a direction to pass a speaking order in accordance with law after giving the assessee a reasonable opportunity of being heard. 10. While so directing, it is made clear that the assessee shall not abuse the trust reposed and shall participate in the proceedings fully and fairly. It is made clear that in the eventuality of abuse of the trust reposed, the AO will be at ITA/17/CHD/2022 A.Y. 2010-11 Page 7 of 7 liberty to pass an order on the basis of material available on record. Said order was pronounced in the Open Court at the time of hearing itself. 11. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the Open Court on 30 th June,2022. Sd/- ( दवा संह ) (DIVA SINGH) या#यक सद य/Judicial Member “प ू नम” आदेश क! त,ल-प अ.े-षत/ Copy of the order forwarded to : 1. अपीलाथ / The Appellant – 2. . यथ / The Respondent 3. .आयकर आय ु /त/ CIT 4. आयकर आय ु /त (अपील)/ The CIT(A) 5. -वभागीय त न2ध, आयकर अपील&य आ2धकरण, च4डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड फाईल/ Guard File आदेशान ु सार/ By order, सहायक पंजीकार/ Assistant Registrar