M/s DESHMUKH CONSTRUCTIONS, Aurangabad V. ITO, Aurangabad

ITA 1854/PUN/2012

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1164 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 31-08-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 21-09-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B C MALAKAR
• Keywords: Reasonable cause
• Section: 44AD; 147; 148; 144; 139

Judgement Text

] IQ.KS ] IQ.KS ] IQ.KS ] IQ.KS IQ.KS IQ.KSIQ.KS IQ.KS IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE . . , , ' # BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.1853/PN/2012 '% % / ASSESSMENT YEAR : 2002-03 M/S. B.V. CONSTRUCTIONS, 115-116, SFS COMPLEX, JALNA ROAD, AURANGABAD PAN NO.AAHFB1094Q . / APPELLANT V/S ITO, WARD-2(1), AURANGABAD . / RESPONDENT . / ITA NO.1854/PN/2012 '% % / ASSESSMENT YEAR : 2002-03 M/S. DESHMUKH CONSTRUCTIONS, 115-116, SFS COMPLEX, JALNA ROAD, AURANGABAD PAN NO.AAEFD9972A . / APPELLANT V/S ITO, WARD-2(1), AURANGABAD . / RESPONDENT / ASSESSEE BY : NONE / DEPARTMENT BY : SHRI . B.C. MALAKAR / ORDER PER BENCH : THE ABOVE 2 APPEALS FILED BY THE RESPECTIVE ASSESSEES AR E DIRECTED AGAINST THE SEPARATE ORDERS DATED 20-07-2012 OF THE CIT(A), AURANGABAD RELATING TO ASSESSMENT YEAR 2002-03. SINCE IDENTICAL / DATE OF HEARING :31.08.2015 / DATE OF PRONOUNCEMENT:31.08.2015 2 ITA NOS.1853 AND 1854/PN/2012 GROUNDS HAVE BEEN TAKEN BY BOTH THE ASSESSES AND OFFIC E ADDRESS OF THE ABOVE ASSESSES IS SAME, THEREFORE, THESE WERE HEA RD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. 2. THESE APPEALS WERE FIXED FOR HEARING FOR THE FIRST TIME O N 19-03-2015. SINCE NOBODY APPEARED ON THAT DATE THE C ASES WERE ADJOURNED TO 06-07-2015. SINCE NOBODY APPEARED ON 06 -07-2015 FRESH NOTICES WERE ISSUED BY RPAD FIXING THE DATE OF HEAR ING ON 31-10-2015. HOWEVER, DESPITE SERVICE OF NOTICE NONE APPE ARED ON BEHALF OF THE RESPECTIVE ASSESSES ON 31-10-2015. THEREFO RE, BOTH THE APPEALS ARE BEING DECIDED ON THE BASIS MATERIAL AVAILABLE ON RECORD AND AFTER HEARING THE LD. DEPARTMENTAL REPRESENTATIVE. 3. FIRST WE TAKE UP ITA NO.1854/PN/2012 IN CASE OF M/S. DESHMUKH CONSTRUCTIONS AS THE LEAD CASE. FACTS OF TH E CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM MAINLY WORKI NG AS SUB- CONTRACTOR FOR SHRI M.B. PATIL WHO IS ENGAGED IN THE BUSINES S OF CIVIL CONSTRUCTION (M/S. B.V. CONSTRUCTIONS IS ALSO A PARTNERSHIP FIRM WORKING AS SUB-CONTRACTOR FOR SHRI M.B. PATIL). THE ASSESSE E FILED THE RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 05 -10-2005 DECLARING INCOME OF RS.77,100/-. THE PROFIT WAS DECLARED AS PER PROVISIONS OF SECTION 44AD OF THE ACT. SINCE THE ASSESSE E HAD FILED THE BELATED RETURN BEYOND THE TIME ALLOWED U/S.139 OF THE ACT AND HAS NOT FURNISHED COPY OF THE PARTNERSHIP DEED ALTHOUGH CLAIMED RE MUNERATION TO PARTNERS U/S.40(B), THE AO ISSUED NOTICE U/S.148 OF THE ACT ON 02-08-2006. 4. DESPITE REPEATED OPPORTUNITIES GIVEN THERE WAS NO COM PLIANCE BY THE ASSESSEE TO THE VARIOUS NOTICES ISSUED BY THE AO. THE AO, THEREFORE, COMPLETED THE ASSESSMENT U/S.144 R.W.S. 147 BY DISALLOWING 3 ITA NOS.1853 AND 1854/PN/2012 REMUNERATION CLAIMED AT RS.1,38,900/-. (SIMILAR CLAIM OF REMUNERATION OF RS.1,38,900/- DISALLOWED IN CASE OF M/S. B.V. CONSTRUCTIONS) 5. BEFORE CIT(A) THE ASSESSEE FILED THE CERTIFIED COPY OF THE PARTNERSHIP DEED ALONG WITH A COPY OF REGISTRATION OF THE FIRM WITH THE REGISTRAR OF FIRMS AND COPY OF REGISTRATION OF THE FIRM AS CO NTRACTORS WITH GOVERNMENT OF MAHARASHTRA. RELYING ON VARIOUS DECIS IONS IT WAS SUBMITTED THAT NON-FILING OF THE COPY OF PARTNERSHIP DEED IS A PROCEDURAL DEFAULT AND THE AO WAS NOT JUSTIFIED IN DISALLOWING REMUNERATION TO PARTNERS U/S.40(B) OF THE I.T. ACT. IT WA S FURTHER ARGUED THAT THE AO WAS ALSO NOT JUSTIFIED IN ISSUING NOTICE U/S.148 AND PASS THE ORDER U/S.144 R.W.S.147. 6. HOWEVER, THE CIT(A) WAS ALSO NOT SATISFIED WITH THE ARGUM ENTS ADVANCED BY THE ASSESSEE. AFTER VERIFYING THE RECORDS AND CONSIDERING THE VARIOUS SUBMISSIONS MADE BY THE ASSESSEE FROM TIME T O TIME AND AFTER OBTAINING A REMAND REPORT FROM THE AO, THE LD.CIT(A) UPHELD THE ACTION OF THE AO IN COMPLETING THE ASSESSMENT U/S.144 R.W .S.147 AS WELL AS DISALLOWING THE REMUNERATION TO PARTNERS AMOUNTING TO RS.1,38,900/-. 7. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : THE FOLLOWING GROUNDS ARE TAKEN WITHOUT PREJUDICE T O EACH OTHER- ON FACTS AND IN LAW, 1] THE LEARNED CIT(A) ERRED IN UPHOLDING THE ACT ION OF THE LEARNED A.O. IN REOPENING OF THE ASST. U/S. 148 OF THE ACT. 2] THE LEARNED CIT(A) ERRED IN HOLDING THAT THE LEARNED A.O. WAS JUSTIFIED IN MAKING THE BEST JUDGMENT ASST. U/S. 144 OF THE ACT. 4 ITA NOS.1853 AND 1854/PN/2012 3] THE LEARNED CIT(A) ERRED IN HOLDING THAT THE LEARNED A.O. WAS JUSTIFIED IN MAKING THE DISALLOWANCE OF RS. 1,38,900/- U/S. 40(B )(V) OF THE ACT IN RESPECT OF REMUNERATION PAID TO THE PARTNERS, 4] THE LEARNED CIT(A) ERRED IN HOLDING THAT: A. THE ASSESSEE WAS NON-COOPERATIVE DURING THE ASST. PROCE EDINGS AND HENCE, THE DISALLOWANCE MADE BY THE LD. A.O. IN RESPE CT OF REMUNERATION PAID TO THE PARTNERS WAS JUSTIFIED. B. THE ASSESSEE FIRM WAS NOT ABLE TO PROVE THAT THE PART NERS TO WHOM REMUNERATION HAS BEEN PAID WERE, IN FACT, WORKING PA RTNERS OF THE FIRM AND THEREFORE, THE DISALLOWANCE MADE BY THE LEARNED A.O. WAS JUSTIFIED. 5. THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED T HAT: A. THE NON-COMPLIANCE OF THE ASSESSEE DURING THE ASST. PR OCEEDINGS WAS ATTRIBUTABLE TO A REASONABLE CAUSE ON THE PART OF THE ASSESSEE AND HENCE, THE CASE OF THE ASSESSEE SHOULD HAVE BEEN DECIDED ON MERI TS AFTER PROPER VERIFICATION OF THE FACTS OF THE CASE DURING THE APPE LLATE PROCEEDINGS. B. THE PAYMENT OF REMUNERATION BY THE ASSESSEE FIRM TO IT'S PARTNERS WAS DULY SUPPORTED BY THE REGISTERED PARTNERSHIP DEED FURN ISHED BEFORE THE LD.CIT(A) DURING THE APPELLATE PROCEEDINGS AND HENCE , THE SAID PAYMENT WAS ALLOWABLE U/S.40(B)(V) OF THE ACT. C. THE PARTNERS TO WHOM THE REMUNERATION WAS PAID WE RE WORKING PARTNERS AND HENCE, THE SAID PAYMENTS SHOULD HAVE BEEN ALLOWED U/S.40(B)(V) OF THE ACT. 6. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND O R DELETE ANY OF THE ABOVE GROUNDS OF APPEAL. 8. WE HAVE CONSIDERED THE ARGUMENTS ADVANCED BY THE L D. DEPARTMENTAL REPRESENTATIVE AND PERUSED THE ORDERS OF THE AO AND CIT(A). IT IS AN ADMITTED FACT THAT THE ASSESSEE HAS FILED THE BELATED RETURN WITHOUT ENCLOSING THE CERTIFIED COPY OF THE PARTNER SHIP DEED AND HAS CLAIMED REMUNERATION TO PARTNERS U/S.40(B). IT IS ALSO A FACT THAT THE ASSESSEE HAS COMPUTED ITS TAXABLE INCOME BY APPLY ING PROVISIONS OF SECTION 44AD AND CLAIMED REMUNERATION TO PARTNERS FROM THE BOOK PROFIT SO COMPUTED U/S.44AD. IT IS ALSO AN ADMITTED FACT T HAT DESPITE REPEATED OPPORTUNITIES GIVEN BY THE AO THE ASSESSEE N EVER BOTHERED TO APPEAR BEFORE THE AO FOR WHICH THE AO WAS CONSTRAINED T O PASS THE ORDER U/S.144 R.W.S.147. FOR CLAIMING REMUNERATION U/S.40(B ) OF THE 5 ITA NOS.1853 AND 1854/PN/2012 I.T. ACT TO THE PARTNERS THE ASSESSEE IS REQUIRED TO E NCLOSE A CERTIFIED COPY OF THE PARTNERSHIP DEED ALONG WITH THE RETURN OF INC OME. IN THE INSTANT CASE, THE ASSESSEE HAS NOT DONE SO. FURTHER, SINCE THE ASSESSEE HAD FILED THE RETURN BEYOND THE PRESCRIBED TIME , AS PER SECTION 139 OF THE I.T.ACT THE AO HAD ISSUED THE NOTICE U/S.148. IN VIEW OF THE ABOVE THE LD.CIT(A) WAS FULLY JUSTIFIED IN UPHOLDING THE ACTION OF THE AO IN COMPLETING THE ASSESSMENT U/S.144 DISA LLOWING THE REMUNERATION TO PARTNERS. SINCE THE RETURN WAS FILED BELA TEDLY AND THE ASSESSEE HAD TAXABLE INCOME, THE AO WAS ALSO JUSTIFIED IN INVOKING THE PROVISIONS OF SECTION 148 OF THE I.T. ACT. WE THEREFORE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) REJECTING THE VARIOUS GR OUNDS RAISED BEFORE HIM. WE ACCORDINGLY UPHOLD THE SAME. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY DISMISSED. ITA NO.1853/PN/2012 (M/S. B.V. CONSTRUCTIONS) : 9. AFTER HEARING THE LD. DEPARTMENTAL REPRESENTATIVE AND ON PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW, WE FIND THE FACTS IN THE ABOVE APPEAL ARE IDENTICAL TO THE FACTS IN THE CASE OF M/S. DESHMUKH CONSTRUCTIONS-ITA NO.1854/PN/2012. HERE ALSO, THE ASSES SEE HAD FILED THE RETURN OF INCOMEBELATEDLY AND HAS NOT ENCLOSED THE CERTIFIED COPY OF PARTNERSHIP DEED ALONG WITH THE RETURN OF INCOME. IT HAS COMPUTED PROFIT U/S.44AD OF THE I.T. ACT AND CLAIMED REMUN ERATION TO PARTNERS U/S.40(B). THERE WAS ALSO NON-COMPLIANCE BEFORE T HE AO FOR WHICH THE AO PASSED AN ORDER U/S.144 R.W.S. 147 WHICH HA S BEEN UPHELD BY THE CIT(A). THEREFORE, FACTS BEING SIMILAR, FOLLOWING O UR REASONINGS GIVEN IN THE CASE OF M/S. DESHMUKH CONSTRUCTIO NS IN ITA NO.1854/PN/2012, WE UPHOLD THE ORDER OF THE CIT(A) IN THIS CASE ALSO. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY DISMISSED. 6 ITA NOS.1853 AND 1854/PN/2012 10. IN THE RESULT, BOTH THE APPEALS FILED BY THE RESPECTIV E ASSESSES ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31-08-2015. SD/- SD/- ( VIKAS AWASTHY ) ( R.K. PANDA ) ' / JUDICIAL MEMBER / ACCOUNTANT MEMBER IQ.KS PUNE ; # DATED : 31 ST AUGUST, 2015. LRH'K ( )'+ , / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ( ) S / THE CIT(A), AURANGABAD 4. ( S / THE CIT, AURANGABAD 5. 6. + ., ., IQ.KS / DR, ITAT, B PUNE; / GUARD FILE. / BY ORDER , + //TRUE C + //TRUE COPY// 2 . / SR. PRIVATE SECRETARY ., IQ.KS / ITAT, PUNE