Dipendra Bahadur Singh, Keonjhar V. Principal CIT, Cuttack

ITA 178/CTK/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3757 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-07-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 16-02-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 09-05-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KUNAL SINGH
• Assessee Lawyers: S K AGRAWALLA
• Keywords: Assessment record
• Section: 143(3); 142(1); 14A; 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI N.S.SAINI, AM & SHRI PAV AN KUMAR GADALE, JM ./ ITA NO. 1 7 8 / CTK /20 1 5 ( / ASSESSMENT YEAR : 20 09 - 20 1 0 ) DIPENDRA BAHADUR SING H, HUDISAHI, JODA, DISTRICT - KEONJHAR, ODISHA - 758034 VS. THE P RINCIPAL COMMISSIONER OF INCOME TAX , CUTTACK ./ ./ PAN/GIR NO. : A DJPS 5869 D ( / APPELLANT ) .. ( / RESPONDENT ) /AS SESSEE BY : SHR I S.K.AGRAWALLA, AR /REVENUE BY : SHRI KUNAL SINGH, DR / DATE OF HEARING : 03 / 0 7 /201 7 / DATE OF PRONOUNCEMENT 05 / 0 7 /201 7 / O R D E R PER SHRI PAV AN KUMAR GADALE, JM : TH E ASSESSEE HAS FILED A N APPEAL AGAINST THE REVISION ORDER OF PR. CIT , CUTTACK , DATED 08.03.2016 , WHEREIN THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS : - 1. FOR THAT, THE ORDER PASSED U/S 263 OF THE ACT BY LD. COMMISSIONER OF INCOME TAX IS NOT SUSTAINABLE IN VIEW OF THE FACT T HAT THE ASSESSMENT ORDER PASSED U/S 143(3) IS EITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE, THEREFORE THE ORDER PASSED U/S 263 IS LIABLE TO BE SET ASIDE. 2. FOR THAT, THE LD. COMMISSIONER OF INCOME TAX HAS COMMITTED AN ERROR OF LAW IN H OLDING THAT, THE LD. ASSESSING OFFICER HAD NOT DONE THE PROPER INQUIRY WITH REGARD TO THE DEDUCTION OF TDS FROM THE INTEREST PAID TO DIFFERENT COMPANIES AND THE PROVISIONS OF SECTION 40(A)(IA) IS ATTRACTED, IN VIEW OF THE FACT THAT AFTER DOING OF PROPER IN QUIRY THE LD. ASSESSING OFFICER DISALLOWED THE PROPORTIONATE EXPENSES DEBITED UNDER THE HEAD INTEREST U/S 14A OF THE ACT. THEREFORE THE ACTION OF THE LD. COMMISSIONER OF INCOME TAX IS NOT CORRECT AND THE ORDER PASSED U/S 263 IS LIABLE TO BE QUASHED. 2. BR IEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A MINING CONTRACTOR AND FILED THE R ETURN OF INCOME FOR THE ASSESSMENT YEAR 2010 - 2011 ON 1.3.2012 DECLARING TOTAL INCOME OF RS. 1,40,30,425/ - AND THE R ETURN OF ITA NO. 1 7 8 /201 6 2 INCOME WAS PROCESSED U/S. 143(3) OF THE ACT. SUBSEQU ENTLY, THE CASE WAS SELECTED FOR SCRUTINY UNDER THE CASS AND NOTICES U/S.143(2) & 142(1) WERE ISSUED, IN COMPLIANCE TO THE SAME, LD. AR OF THE ASSESSEE APPEARED FROM TIME TO TIME AND CASE WAS DISCUSSED. THE AO ON PERUSAL OF ASSESSMENT RECORD FOUND THAT THE ASSESSEE HAS CLAIMED EXPENSES OF RS. 79,10,139/ - UNDER THE H EAD FINANCE CHARGES . T HE ASSESSEE WAS MADE INVESTMENT S OF RS.4,50,00,000/ - IN THE FINANCIAL YEAR 2010 - 2011 IN ITS SISTER CONCERN S . THE AO APPLIED THE PROVISIONS OF SECTION 14A AND MADE DISALLOWAN CE OF RS.15,47,511/ - AND ALSO DISALLOWANCE U/S.43B OF RS.1,20,30,933/ - AND THE DIFFERENCE OF RS.2,07,861/ - IN THE INVESTMENT OF FLAT, AND ASSESSED INCOME OF RS.2,78,94,555/ - AND PASSED THE A SSESSMENT ORDER U/S.143(3) OF THE ACT, DATED 20.03.2014 . 3. MEANW HILE, LD. PRINCIPAL CIT FOUND THE ORDER PASSED BY THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE, AS PER THE FINANCIAL STATEMENTS THE ASSESSEE HAS CLAIMED THE FINANCE CHARGES OF RS.79,10,139/ - IN THE PROFIT AND LOSS ACCOUNT. IN RESPECT OF S ECURED LOAN WHERE THE INTEREST WAS PAID TO THE NON - BANKING FINANCIAL COMPANIES AND THE PROVISIONS OF SECTION 194A OF THE ACT SHALL APPLY AND THE ASSESSEE HAS TO DEDUCT TDS, HENCE , DISALLOWANCE HAS TO BE MADE U/S.40(A)(IA) OF THE ACT, WHICH THE AO HAS FAIL ED TO EXAMINE. IN RESPONSE TO THE NOTICE U/S.263 OF THE ACT, THE ASSESSEE HAS FILED WRITTEN SUBMISSION S EXPLAINING THAT THESE EXPENSES PERTAINS TO VEHICLES LOANS AND INTEREST AMOUNT IS PAID TO THE SBI, HDFC AND ICICI BANK AND THESE FINANCE COMPANIES HAVE OFFERED THEIR INTEREST INCOME IN THEIR INCOME TAX RETURNS. LD. PR. CIT ITA NO. 1 7 8 /201 6 3 FOUND THAT THE AO HAS NOT EXAMINED THIS ASPECT OF NON - DEDUCTION OF TDS ON INTEREST PAYMENTS TO THE EXTENT OF RS.20,01,742/ - PAID THE SBI, HDFC AND ICICI BANK . THE CONTENTION OF LD. AR THAT THESE PAYMENTS WERE MADE WITHIN THE SAME FINANCIAL YEAR, AND OFFERED BY THE RECIPIENTS. THE L D. CIT FOUND THE FACTS ARE NOT CLEAR AND RELY ON THE JURISDICTIONAL HIGH COURT AND HONBLE APEX COURT DECISION, AND IS OF THE OPINION THAT THE ORDER PASSED BY THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE, A CCORDINGLY, DIRECT ED THE AO TO EXAMINE THE ISSUE AFRESH AND PASS THE ORD ER. 4 . AGGRIEVED BY THE ORDER OF THE PR. CIT , THE ASSESSEE ASSAILED AN APPEAL BEFORE THE TRIBUNAL. 5 . BEFORE US, L D. A RS CONTENTION THAT THE CIT(A) HAS NOT DEALT IN ACCORDANCE WITH THE LAW AND DIRECTED THE AO TO EXAMINE THE ISSUE AFRESH IRRESPECTIVE OF THE FACT THAT THE AO HAS MADE AN ENQUIRY IN RESPECT OF DEDUCTION OF TDS OF DIFFERENT COMPANIES. SINCE THE PROPER ENQUIRY WAS MADE AND THE AO HAVING SATISFIED WITH EXPLANATIONS DID NOT MAKE ADDITION . LD. AR REFERRED TO THE PAPER BOOK TO SUPPORT THE CLAIM WITH WRITTEN SUBMISSIONS ON THE PAYMENTS OF INTEREST AND ALSO FILED OTHER DETAILS AND PRAYED FOR ALLOWING THE APPEAL. 6. C ONTRA, LD. DR RELIED ON THE ORDERS OF THE LD. PRINCIPAL COMMISSIONER OF INCOME TAX. 7. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE FINDING S OF LOWER AUTHORITIES AND MATERIAL ON RECORD. PRIMA FACIE , THE CONTENTION OF LD. AR THAT THE AO HAS MADE AN ENQU IRY IN RESPECT OF PAYMENTS MADE TO THE ITA NO. 1 7 8 /201 6 4 FINANCE COMPANIES AND HAVING SATISFIED HAS NOT MADE ANY DISALLOWANCE. IN THE COURSE OF HEARING ON THE QUERY FROM THE BENCH THAT WHETHER THE ASSESSEE HAS ANY EVIDENCE TO STATE THAT THESE COMPANIES HAVE OFFERED THIS INC OME IN THEIR INCOME TAX RETURNS AND INCOME TAX ASSESSMENT PARTICULARS TO SUBSTANTIATE THAT THERE IS NO LOSS OF REVENUE AND EXPLANATIONS OF LD. ARA ARE NOT CONVINCING . WE FOUND AS PER THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT , I N THE CASE S WHERE THE AS SESSEE FAILS TO DEDUCT TDS IN ACCORDANCE WITH THE PROVISIONS OF CHAPTER - XVII - B, THE ASSESSEE SHALL NOT BE TREATED AS ASSESSEE IN DEFAUL T, PROVIDED THE RECIPIENT /PAYEE HAS PAID THE TAX ON SUCH INCOME AND COMPLIED THE CONDITIONS. WE FIND THAT L D. CIT HAS DIR ECTED THE AO AT PARA 8 OF PAGE 5 OF THE REVISION ORDER TO VERIFY AND TO CONSIDER THE ISSUE AFRESH. THE LD. AR SUBMITTED THAT THE AO HAS PASSED THE ORDER UNDER SEC. 143(3)/263 THAT BASED ON THE DIRECTIONS OF PR.CIT AND IS PENDING FOR DISPOSAL BEFORE THE CIT( A). W E ARE OF THE OPINION THAT THE CIT HAS DIRECTED THE AO TO CONSIDER THE ISSUE AFRESH AND THE ASSESSEE WAS PROVIDED AN OPPORTUNITY TO SUBSTANTIATE ITS CLAIM U/S. 40(A)(IA) FOR NON - DEDUCTION OF TDS. ACCORDINGLY, W E ARE OF THE CONSIDERED VIEW THAT THE ORDER OF THE PR. CIT IS IN ACCORDANCE WITH THE LAW AND WE ARE NOT INCLINED TO INTERFERE WITH THE SAME AND UPHOLD THE CIT ORDER LAND DISMISS THE GROUNDS OF APPEAL OF THE ASSESSEE . 8 . IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. ITA NO. 1 7 8 /201 6 5 O RDER PRONOUNCED IN THE OPEN COURT ON THIS 05/07 / 201 7 . SD/ - ( N. S. SAINI ) SD/ - ( PA V AN KUMAR GADALE ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER CUTTACK ; DATED / 0 7 /201 7 . . / PKM , SENIOR PRIVATE SECRETARY / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) , / ITAT, CUTTACK 1. / THE APPELLANT - DIPENDRA B AHADUR SINGH, HUDISAHI, JODA, DISTRICT - KEONJHAR, ODISHA - 758034 2. / THE RESPONDENT - 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, CUTTACK 6. / GUARD FILE. //TRUE COPY//