The ITO, Ward-1(2), JUNAGADH V. M/s Madhuvan Export Industries, JUNAGADH

ITA 183/RJT/2014

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6753 (ITAT-RAJKOT)
• Duration Of Justice: 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 11-03-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: J C RANPURA
• Keywords: Audit objection; Tax effect
• Section: 143(3); 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBULAL, SMC BENCH, RAJKOT BEFORE SHRI T. K. SHARMA, JM ITA NO.183/RJT/2014 ASSESSMENT YEAR : 2006-07 THE INCOME-TAX OFFICER, WARD-1(2), JUNAGADH ( / APPELLANT) M/S. MADHUVAN EXPORT INDUSTRIES, SARAGWADA ROAD, SABALPUR, JUNAGADH PAN : AADFM 3118 L / RESPONDENT / REVENUE BY SHRI JAYANT JHAVERI, DR / ASSESSEE BY SHRI J. C. RANPURA, CA / DATE OF HEARING 10.04.2014 !'# / DATE OF PRONOUNCEMENT 11.04.2014 / ORDER THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER DAT ED 21.01.2014 OF CIT(A)- IV, RAJKOT DELETING THE DISALLOWANCE OF RS.4,27,667 /- MADE BY THE ASSESSING OFFICER U/S 40(A)(IA) OF THE INCOME-TAX ACT FOR THE ASSESSM ENT YEAR 2006-07 2. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS A FIRM ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF GROUND NUT, COTTON SEE DS, OIL CAKE ETC.. FOR THE ASSESSMENT YEAR UNDER APPEAL, IT FILED THE RETURN O F INCOME ON 27.09.2006 DECLARING TOTAL INCOME AT RS.NIL. ORIGINAL ASSESSMENT WAS CO MPLETED VIDE ORDER U/S 143(3) OF THE ACT DATED 24.12.2008 AT TOTAL ASSESSED INCOME O F RS.41,500/-. THEREAFTER, LD. CIT-III, RAJKOT VIDE HIS ORDER DATED 21.03.2011 SET ASIDE THE ORIGINAL ASSESSMENT ORDER DATED 24.12.2008 AND DIRECTED TO DISALLOW THE COMMISSION PAYMENT OF RS.4,27,667/- U/S 40(A)(IA) ON THE GROUND THAT THE ASSESSEE HAD NOT MADE PAYMENT OF TAX DEDUCTED FROM COMMISSION PAYMENTS MADE TILL FEBRUARY 2006 BEFORE DUE DATE. ACCORDINGLY, THE ASSESSING OFFICER VIDE ORDER U/S 1 43(3) R.W.S. 263 OF THE ACT DATED 28.09.2011 ASSESSED TO TOTAL INCOME AT RS.4,69,170/ - U/S 40(1)(IA) OF THE ACT ON THE GROUND THAT TAX DEDUCTED AT SOURCE FROM COMMISSION EXPENSE WAS PAID AFTER DUE DATE. ON APPEAL, IN THE IMPUGNED ORDER, LD. CIT(A) DELETED THE DISALLOWANCE MADE U/S 40(A)(IA) OF RS.4,27,667/- FOR THE DETAILED REA SON GIVEN IN PARAGRAPH 4 OF THE IMPUGNED ORDER WHICH READS AS UNDER:- 4. I HAVE CAREFULLY PERUSED THE WRITTEN SUBMISSION OF THE AR. I HAVE ALSO GONE THROUGH THE ORDER PASSED U/S 263 AND THE SUBSE QUENT ORDER PASSED U/S 2 183-RJT- 2014 MADHUVAN EXPORT INDUSTRIES (SM C) 143(3) OF THE ACT BY THE AO. FROM THE AUDITED ACCOU NTS AND THE EVIDENCES PRODUCED BY THE AR DURING THE COURSE OF APPELLATE P ROCEEDINGS, IT IS SEEN THAT, THE DEDUCTED TAX WAS REMITTED INTO THE GOVERNMENT A CCOUNT BEFORE THE DUE DATE OF FILING OF THE RETURN. THEREFORE, THERE IS N O LOSS TO THE EXCHEQUER. THE ONLY ISSUE IS THE FAILURE TO REMIT THE TAX WITHIN A MONTH OF ITS DEDUCTION, AS AGAINST REMITTANCE OF THE SAME BEFORE THE DUE DATE OF THE FILING OF RETURN. I FIND THAT THE MATTER IS SQUARELY COVERED BY THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF VIRGIN CREATIONS, WHICH I S ALSO FOLLOWED BY THE HONBLE ITAT RAJKOT BENCH IN THE CASE OF RANA BUILD ERS (31 TAXMAN.COM 372). I ALSO FIND THAT THE ISSUE IS DECIDED IN FAVO UR OF THE ASSESSEE BY VARIOUS TRIBUNALS, INCLUDING THE AHMEDABAD AND RAJKOT TRIBU NALS. THEREFORE, FOLLOWING THE JUDICIAL RULINGS ON THE ISSUE, THE DISALLOWANCE MADE U/S 40(A)(IA) OF RS.4,27,667/- IS DELETED. AGGRIEVED WITH THE ORDER OF LD. CIT(A), THE REVENUE IS NOW IN APPEAL BEFORE THIS TRIBUNAL. 3. AT THE TIME OF HEARING BEFORE US, ON BEHALF OF THE ASSESSEE, SHRI J.C. RANPURA, CA, APPEARED AND CONTENDED THAT THIS APPEAL IS FILE D BY THE DEPARTMENT ON 11.03.2014; THEREFORE, IT GOVERNED BY THE INSTRUCTI ON NO.3/2011 (F.NO.279/MISC.142/2007-ITJ) DATED 09.02.2011 ISSUE D BY C.B.D.T. IN REGARD TO FILING OF APPEALS, INTER ALIA, BEFORE ITAT. THE MON ETARY LIMIT IN REGARD TO TAX EFFECT LAID DOWN IN THE SAID INSTRUCTION FOR FILING APPEAL BEFO RE THE TRIBUNAL IS RS.3 LAKHS. ADMITTEDLY, TAX EFFECT IN THE PRESENT APPEAL IS LES S THAN RS.3 LAKHS. THE LD. COUNSEL OF THE ASSESSEE FURTHER SUBMITTED THAT THE APPEAL DOES NOT FALL UNDER ANY OF THE EXCEPTIONS MENTIONED IN INSTRUCTION NO.3/2011 DATED 09.02.2011. 4. ON THE OTHER HAND, SHRI JAYANT JHAVERI, DR, AP PEARED FOR THE REVENUE COULD NOT CONTROVERT THE AFORESAID SUBMISSIONS MADE BY TH E LD. COUNSEL OF THE ASSESSEE. 5. HAVING HEARD BOTH SIDES, I HAVE CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND THE INSTRUCTION NO.03/2011 DA TED 09.02.2011 ISSUED BY C.B.D.T., WHICH WAS RELIED BY THE LD. COUNSEL OF TH E ASSESSEE. IN PARAGRAPH NO.8 OF THE INSTRUCTION NO.3/2011 DATED 09.02.2011 PROVIDED EXCEPTIONS WHERE APPEAL CAN BE PREFERRED BY THE DEPARTMENT EVEN IF TAX EFFECT I S LESS THAN RS.3 LAKHS. THE SAID PARAGRAPH OF THE INSTRUCTION NO.3/2011 READS AS UND ER:- '8. ADVERSE JUDGMENTS RELATING TO THE FOLLOWING ISS UES SHOULD BE CONTESTED ON MERITS NOTWITHSTANDING THAT THE TAX EFFECT ENTAILED IS LESS THAN THE MONETARY LIMITS SPECIFIED IN PARA 3 ABOVE OR THERE IS NO TAX EFFECT. (A) WHERE THE CONSTITUTIONAL VALIDITY OF THE PROVIS IONS OF AN ACT OR RULE ARE UNDER CHALLENGE, OR 3 183-RJT- 2014 MADHUVAN EXPORT INDUSTRIES (SM C) (B) WHERE BOARD'S ORDER, NOTIFICATION, INSTRUCTION OR CIRCULAR HAS BEEN HELD TO BE ILLEGAL OR ULTRA VIRES, OR (C) WHERE REVENUE AUDIT OBJECTION IN THE CASE HAS B EEN ACCEPTED BY THE DEPARTMENT.' ADMITTEDLY, THE PRESENT APPEAL DOES NOT FALL UNDER ANY OF THE ABOVE MENTIONED EXCEPTIONS; THEREFORE, THE APPEAL FILED BY THE REVE NUE IS HIT BY INSTRUCTION NO.3/2011 DATED 09.02.2011 OF C.B.D.T. THEREFORE, THE APPEAL FILED BY THE REVENUE IS LIABLE TO BE DISMISSED. ACCORDINGLY, THIS APPEAL BY THE REVE NUE STANDS DISMISSED FOR TAX EFFECT. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON THE DATE MEN TIONED HEREINABOVE. SD/- ( $.. &' / T. K. SHARMA) ( ) /JUDICIAL MEMBER *)& +),/ ORDER DATE: 11.04.2014 !$ /RAJKOT *BT / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT- THE INCOME-TAX OFFICER, WARD-1(2), JU NAGADH 2. / RESPONDENT- M/S. MADHUVAN EXPORT INDUSTRIES, SAR AGWADA ROAD, SABALPUR, JUNAGADH 3. ,0,1 * * 2 / CONCERNED CIT-III, RAJKOT 4. * * 2- / CIT (A)-IV, RAJKOT 5 . 567 1, * 1 #, !$ / DR, ITAT, RAJKOT 6 . 79 :; / GUARD FILE *)& / BY ORDER TRUE COPY PRIVATE SECRETARY, ITAT, RAJKOT