M/s. Dazzle Beverages, Bhubaneswar V. ITO, Bhubaneswar

ITA 180/CTK/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7578 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 08-11-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 20-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K PRADHAN
• Keywords: Reasonable cause; Condonation of delay
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK SMC BENCH, CUTTACK BEFORE SHRI N.S SAINI, ACCOUNTANT MEMBER ITA NO S . 180 & 181 /CTK/2015 ASSESSMENT YEAR S : 2005 - 06 & 2006 - 07 M/S. DAZZLE BEVERAGES, A/7, CNI COMPLEX, PATIA, BHUBANESWAR. VS. ITO, WARD - 1(2), BHUBANESWAR. PAN/GIR NO. AAEFD 1786 C (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : NONE REVENUE BY : SHRI D.K.PRADHAN , DR DATE OF HEARING : 8 /11 / 2016 DATE OF PRONOUNCEMENT : 8 /11 / 2016 O R D E R THESE ARE APPEALS FILED BY THE ASSESSEE AGAINST SEPARATE ORDER S OF CIT(A) 1, BHUBANESWAR, DATED 1.12.2014 FOR ASSESSMENT YEAR 2005 - 06 AND DATED 28.11.2014 FOR THE ASSESSMENT YEAR 2006 - 07, RESPECTIVELY. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE WHEN THE CASE WAS CALLED FOR HEARING . HO WEVER, ADJO URNMENT PETITION WAS FILED BY THE LD A.R. OF THE ASSESSEE. SINCE THE ISSUE UNDER APPEAL CAN BE DECIDED IN THE ABSENCE OF THE ASSESSEE, I REJECT THE ADJOURNMENT 2 ITA NOS.180 & 181/CTK/2015 ASSESSMENT YEARS :2005 - 06 & 2006 - 07 PETITION AND PROCEED TO DECIDE THE APPEALS EXPARTE - QUA - ASSESSEE AFTER HEARING LD D.R. AND ON THE BASIS OF MATERIALS AVAILABLE ON RECORD. 3 . THE APPEAL FOR ASSESSMENT YEAR 2005 - 06 IS TIME BARRED BY 35 DAYS AND THE APPEAL FOR ASSESSMENT YEAR 2006 - 07 IS TIME BARRED BY 66 DAYS. THE ASSESSEE HAS FILED AFFIDAVITS FOR CONDONATION OF DELAY I N FILING THE APPEALS REQUESTING TO CONDONE THE DELAY. AFTER GOING THROUGH THE AFFIDAVITS, I FIND THAT THE ASSESSEE HAD REASONABLE CAUSE FOR NOT FILING THE APPEAL S WITHIN THE STIPULATED TIME. LD D.R. DID NOT HAVE ANY OBJECTION FOR CONDONING THE DELAY. I , THE REFORE, CONDONE THE DELAY OF 35 & 66 DAYS FOR THE ASSESSMENT YEARS 2005 - 06 & 2006 - 07 IN FILING THE APPEAL S BEFORE THE TRIBUNAL AND ADMIT THE APPEAL S FOR HEARING. 4 . IN ITA NO.180/CTK/2015 FOR ASSESSMENT YEAR 2005 - 06, THE GRIEVANCE OF THE ASSESSEE IS THAT THE LD CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.7,40,779/ - MADE BY THE ASSESSING OFFICER U/S.40(A)(IA) OF THE I.T.ACT, 1961 FOR N ON - DEDUCTION OF TDS U/S.194C FROM PAYMENTS TO LABOURERS. 5. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER F OUND THAT THE ASSESSEE HAS CLAIMED DEDUCTION FOR PAYMENT OF RS.3,42,343/ - AND RS.3,98,436/ - MADE TO SHRI S.N.POTHAL & SHRI R.K.MOHANTY, CONTRACTORS, RESPECTIVELY FROM WHICH NO TAX WAS DEDUCTED U/S.194C OF THE ACT. 3 ITA NOS.180 & 181/CTK/2015 ASSESSMENT YEARS :2005 - 06 & 2006 - 07 THEREFORE, BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT, THE AO DISALLOWED DEDUCTION FOR RS.7,40,779/ - . 6. ON APPEAL, LD CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 7. I HAVE HEARD THE LD D.R. AND PERUSED THE MATERIALS AVAILABLE ON RECORD. I FIND FROM THE ASSESSMENT ORDER THAT THE PAYMENTS OF RS.3,42,343/ - AND RS.3,98,436/ - WERE MADE TO SHRI S.N.POTHAL & SHRI R.KMOHANTY, CONTRACTORS DURING THE YEAR AND NO AMOUNT WAS OUTSTANDING PAYABLE TO THEM AS AT THE END OF THE FINANCIAL YEAR. 8. THE HO NBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. VICTOR SHIPPING SERVICES (P) LTD., ( 2013) 357 ITR 642(ALL) HAS HELD THAT FOR DISALLOWING EXPENSES FROM BUSINESS AND PROFESSION ON THE GROUND THAT TAX HAS NOT BEEN DEDUCTED AT SOURCE, THE AMOUNT SHOULD BE P AYABLE AND NOT IT HAS BEEN PAID BY THE END OF THE Y EAR. T HE SLP FILED AGAINST THE JUDGMENT OF HONBLE ALLAHABAD HIGH COURT HAS BEEN DISMISSED BY THE HONBLE SUPREME COURT VIDE JUDGMENT DATED 2.7.2014 IN CC NO.(S) 8068/2014. THEREFORE, IN VIEW OF THE DECISI ON OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF VICTOR SHIPPING SERVI C ES (P) LTD (SUPRA), NO DISALLOWANCE U/S.40(A)(IA) WAS WARRANTED IN THE CASE OF THE ASSESSEE. THEREFORE, I SET ASIDE THE ORDERS OF LOWER AUTHORITIES AND DELETE THE ADDITION OF RS. RS.7 ,40,779/ - MADE U/S.40(A)(IA) OF THE ACT AND ALLOW THE GROUND OF APPEAL OF THE ASSESSEE. 4 ITA NOS.180 & 181/CTK/2015 ASSESSMENT YEARS :2005 - 06 & 2006 - 07 9. IN ITA NO.181/CTK/2015 FOR ASSESSMENT YEAR 2006 - 07, THE GRIEVANCE OF THE ASSESSEE IS THAT THE LD CIT(A) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING DEDUCTION FOR COMMISSION PAYMENT OF RS.5,89,504/ - FOR WHICH DEDUCTION WAS DISALLO WED IN ASSESSMENT YEAR 2005 - 06 TO THE ASSESSEE FOR NOT DEPOSITING THE TDS WITHIN THE DUE DATE U/S.13 9(1) OF THE ACT, WHICH WAS SUBSEQUENTLY DEPOSITED TO THE CREDIT OF THE CENTRAL GOVERNMENT ON 3 .10.2005, AND PER PROVISO TO SECTION 40(A)(IA) OF THE ACT, THE DEDUCTION WAS ALLOWABLE IN ASSESSMENT YEAR 2006 - 07 IN WHICH TDS WAS ACTUALLY PAID TO THE CREDIT OF THE CENTRAL GOVERNMENT. 10. I HAVE HEARD LD D.R. AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSEE MADE COMMISSION PAYMENT ON SALES OF RS,.5,89,504/ - , WHICH WAS DISALLOWED AS DEDUCTION IN ASSESSMENT YEAR 2005 - 06 AS TDS DEDUCTED ON THE SAME WAS NOT DEPOSITED TO THE CREDIT OF THE CENTRAL GOVERNMENT WITHIN THE DUE DATE PRESCRIBED U/S.139(1) OF THE ACT. THE ASSESSEE SUBSEQUENTLY DEPOSITED THE TDS AMOUNT TO THE CREDIT OF THE CENTRAL GOVERNMENT ON 3.10.2005 RELATING TO ASSESSMENT YEAR 2006 - 07 AND CLAIMED DEDUCTION OF RS.5,89,504/ - IN THE PRESENT ASSESSMENT YEAR 2006 - 07. THE ASSESSING OFFICER AS WELL AS LD CIT(A) DISALLOWED THE CLAI M FOR DEDUCTION OF RS.5,89,504/ - ON THE GROUND THAT PROVISIONS OF SECTION 43B AND SECTION 5 ITA NOS.180 & 181/CTK/2015 ASSESSMENT YEARS :2005 - 06 & 2006 - 07 40(A)(IA) ARE DIFFERENT AND THAT AS PER SECTION 40(A)(IA) OF THE AC T, IF NO TAX IS DEDUCTED OR AFTER DEDUCTION NOT PAID WITHIN THE DUE DATE IN RESPECT OF INTEREST, CO MMISSION, ETC, THE CLAIM OF EXPENDITURE SHALL NOT BE ALLOWED IN COMPUTING THE TOTAL INCOME. THE PROVISIONS OF SECTION 40(A)(IA) DO NOT REQUIRE THAT THE CLAIM OF DEDUCTION MAY BE ALLOWED IN THE YEAR OF PAYMENT OF TDS. I FIND THAT THE OBSERVATION S OF THE ASSESSING OFFICER AS WELL AS LD CIT(A) ARE INCORRECT. I FIND THAT THE FIRST PROVISO TO SECTION 40(A)(IA) AT THE RELEVANT POINT OF TIME PROVIDED THAT WHERE IN RESPECT OF ANY SUCH SUM, TAX HAS BEEN DEDUCTED IN ANY SUBSEQUENT YEAR, OR HAS BEEN DEDUCT ED ; (A) DURING THE PREVIOUS YEAR BUT PAID AFTER THE SAID DUE DATE OR (B) DURING ANY MONTH OF THE PREVIOUS YEAR BUT PAID AFTER THE END OF THE SAID PREVIOUS YEAR, SUCH SUM SHALL BE ALLOWED AS A DEDUCTION IN COMPUTING THE INCOME OF THE PREVIOUS YEAR IN WHICH SUCH TAX HAS BEEN PAID. IN THE INSTANT CASE, AS THE TDS ON COMMISSION PAYMENT OF RS.5,59,504/ - WAS DEPOSITED ON 3.10.2005 RELEVANT TO ASSESSMENT YEAR 2006 - 07, THEREFORE, DEDUCTION OF RS.5,89,504/ - WAS ALLOWABLE TO THE ASSESSEE IN A.Y. 2006 - 07 AS THE SAME WAS DISALLOWED IN A.Y. 2005 - 06 FOR NOT DEPOSITING THE TDS AMOUNT WITHIN THE DATE PRESCRIBED U/S.139(1) OF THE ACT. I, THEREFORE, SET ASIDE THE ORDERS OF LOWER AUTHORITIES AND DIRECT THE ASSESSING OFFICER TO ALLOW DEDUCTION OF RS.5,89,504/ - TO THE ASSESSEE . THUS, GROUNDS OF APPEAL OF THE ASSESSEE ARE ALLOWED. 6 ITA NOS.180 & 181/CTK/2015 ASSESSMENT YEARS :2005 - 06 & 2006 - 07 11. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCE D IN THE OPEN COURT ON 8 /11 / 2016. SD/ - ( N.S SAINI) A CCOUNTANT MEMBER CUTTACK; DATED 8 /11 /2016 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, ASST.REGISTRAR, ITAT, CUTTACK 1. THE APPELLANT : M/S. DAZZLE BEVERAGES, A/7, CNI COMPLEX, PATIA, BHUBANESWAR 2. THE RESPONDENT: ITO, WARD - 1(2), BHUBANESWAR. 3. THE CIT(A) - 1, BHUBANESWAR. 4. CIT , BHUBANESWAR. 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//