Shri Dwarka Dhessh Sethia, Bhopal V. The ACIT 3(1), Bhopal

ITA 198/IND/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5831 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 10-03-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MOHD JAVED
• Assessee Lawyers: YESHWANT SHARMA
• Keywords: Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE (SINGLE MEMBER CASE) BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER I.T.A.NO.198/IND/2014 A.Y. : 2009-10 SHRI DWARKA DHEESH SETHIA, ACIT, 3(1), BHOPAL. VS BHOPAL APPELLANT RESPONDENT PAN NO. ACRPS3048P APPELLANT BY : SHRI YESHWANT SHARMA, CA RESPONDENT BY : SHRI MOHD. JAVED, DR O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A) DATED 28.11.2013 FOR THE ASSESSMENT YEAR 2009-10. 2. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL:- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ORDER OF THE LD.CIT(A) IS BAD IN LAW. DATE OF HEARING : 2 0 .0 7. 2016 DATE OF PRONOUNCEMENT : 2 0 .0 7 .2016 DWARKA DHEESH SETHIA VS. ACIT, 3(1), BHOPAL I.T.A.N O. 198/IND/2014 A.Y. 2009-10 2 2 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN MAINTAINING ADDITION OF RS.14,42,475/- ON ACCOUNT OF UNDISCLOSED SALES/RECEIPTS. 3. THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIA(A) ERRED, THE LD. CIT(A) ERRED IN CONFIRMING ADDITION OF RS. 71,000/- ON ACCOUNT OF INTEREST PAID, DUE TO NON-DEDUCTION OF TDS THEREON. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND DERIVES INCOME FROM BUSINESS OF FABR ICATION OF PARTS AND COMPONENTS OF POWER GENERATION, DISTRIBUT ION AND MAINTENANCE OF EQUIPMENT THROUGH PROPRIETARY FIRM M/S. SHRAO ENGG. WORKS. THE RETURN OF INCOME FOR ASSES SMENT YEAR 2009-10 WAS FILED ON 29.09.2009 DECLARING TOTAL INCOME OF RS. 22,98,540/-. THE CASE WAS SELECTED FOR SCRUTI NY UNDER CASS AND ACCORDINGLY, THE AO ISSUED NOTICE U/S 143( 2)/142(1) ALONGWITH QUESTIONNAIRE AND THE ASSESSEE COMPLIED TH E REQUIREMENTS OF THE AO FROM TIME TO TIME. THE AO AS SESSED THE INCOME AT RS. 49,52,015/- AFTER MAKING DIFFEREN T ADDITIONS ON DIFFERENT GROUNDS. DWARKA DHEESH SETHIA VS. ACIT, 3(1), BHOPAL I.T.A.N O. 198/IND/2014 A.Y. 2009-10 3 3 4. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE FILED APP LICATION UNDER RULE 46A OF INCOME TAX RULES, 1962, ALONGWITH THE WRITTEN SUBMISSION AND CERTAIN ADDITIONAL EVIDENCES WHICH WERE FORWARDED TO THE AO FOR HIS EXAMINATION AND REPO RT U/S 250(4) OF THE ACT. THE GROUNDS OF APPEAL AGAINST TH E IMPUGNED ORDER OF ASSESSMENT ARE BEING DISPOSED OF ON THE BA SIS OF THE WRITTEN SUBMISSION OF THE LD. AUTHORIZED REPRESENTAT IVE OF THE ASSESSEE, REMAND REPORT OF THE AO AND REJOINDER TO THE REMAND REPORT AS PER THE LINES INDICATED BELOW. 5. GROUND NO. 1 IS OF GENERAL NATURE AND DOES NOT REQU IRE ANY ADJUDICATION. 6. GROUND NO.2 RELATES TO THE MAINTAINING ADDITION OF RS. 14,42,475/- BY THE LD. CIT(A) ON ACCOUNT OF UNDISC LOSED SALES/RECEIPTS. 7. FACTS RELATING TO THIS GROUND ARE THAT ON VERIFICAT ION OF INCOME FROM JOB WORK SHOWN IN THE PROFIT AND LOSS ACC OUNT WITH REFERENCE TO THE TDS CERTIFICATES, THE AO FOUND THAT AS PER TDS CERTIFICATES THE RECEIPTS WERE RS. 60,97,54 5/- WHEREAS, THE ASSESSEE HAS SHOWN RECEIPTS OF RS. 46,55 ,075/- DWARKA DHEESH SETHIA VS. ACIT, 3(1), BHOPAL I.T.A.N O. 198/IND/2014 A.Y. 2009-10 4 4 IN THE PROFIT AND LOSS ACCOUNT. THAT APART, THE ASS ESSEE HAS CLAIMED FULL CREDIT OF RS. 1,38,172/-, THE TAX DEDU CTED ON RS. 60,97,545/-. THUS, THE ASSESSEE HAS NOT OFFERED FOR TAXATION JOB WORK RECEIPTS OF RS. 14,42,475/- AND ACCORDINGL Y, THE AO ASSESSED THE SAME AS INCOME OF THE ASSESSEE IN THE YEAR UNDER CONSIDERATION . 8. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CI T(A) HAS CONFIRMED THE ADDITION OF RS. 14,42,475/-. 9. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE MAINTAINED THE BOOKS OF ACCOUNTS UNDER MERCANTILE SYSTEM OF ACCOUNT. ASSESSEE CLAIME D TDS AT RS. 1,38,172/- AND DECLARED LABOUR JOB INCOME OF RS . 46,55,070/- IN THE PROFIT AND LOSS ACCOUNT. AS PER TDS CERTIFICATE, THE LABOUR JOB INCOME COMES TO RS. 60, 97,545/- AND HENCE THE ASSESSEE HAS NOT OFFERED LABOUR JOB I NCOME OF RS. 14,42,475/- AND ADDED THE SAME TO THE TOTAL INC OME OF THE ASSESSEE. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE IMPUGNED ISSUED WAS NOT RAISED BY THE AO DURING ASSESSMENT PROCEEDINGS AND HENCE FILED DETAI LED SUBMISSIONS BEFORE CIT(A) BY WAY OF ADDITIONAL EVIDE NCE DWARKA DHEESH SETHIA VS. ACIT, 3(1), BHOPAL I.T.A.N O. 198/IND/2014 A.Y. 2009-10 5 5 STATING THAT THE SUBJECT JOB WORK INCOME HAS ALREADY BEEN ACCOUNTED FOR IN EARLIER FINANCIAL YEAR 2007-08 ( A .Y.2008-09) IN WHICH YEAR THE BILLS WERE RAISED. THE LD. CIT(A) CALLED FOR REMAND REPORT OF AO AFTER DUE VERIFICATION BY HIM R EGARDING CLAIM OF THE ASSESSEE AND DETAILED INQUIRIES. THE A O CARRIED OUT DETAILED INQUIRY AND VERIFIED THE BOOKS OF ACCO UNTS AND CATEGORICALLY ACCEPTED IN THE REMAND REPORT THAT TH E SUBJECT JOB WORK INCOME OF RS. 14,42,475/- HAS BEEN DULY AC COUNTED FOR IN FINANCIAL YEAR 2007-08 AND WAS INCLUDED IN TO TAL JOB WORK RECEIPT OF RS. 34,55,713/-. THE LD. CIT(A) HAS ALSO REPRODUCED THE FINDINGS IN HIS APPELLATE ORDER. THE LD. CIT(A) HAS SUSTAINED THE ADDITION ON SOME IRRELEVANT CONSI DERATION LIKE RECONCILIATION BEING NOT AVAILABLE, CHALLAN NO . NOT VERIFIABLE AND SO ON AND SO FORTH. THE LD. CIT(A) A LSO IGNORED EXPLANATION OF THE ASSESSEE. THE LD. CIT(A) IS WHOL LY UNLAWFUL AND UNWARRANTED BECAUSE AS PER SETTLED LAW, ONCE THE AO HIMSELF HAS CATEGORICALLY ACCEPTED THAT THE SUBJECT INCOME HAS ALREADY BEEN ACCOUNTED FOR IN EARLIER ASSESSMENT YE AR 2007- 08, THERE IS NO RHYME OR REASON FOR THE CIT(A) TO U NDULY DRAG THE ISSUE INTO FURTHER MERITLESS LITIGATION ON IRRE LEVANT AND DWARKA DHEESH SETHIA VS. ACIT, 3(1), BHOPAL I.T.A.N O. 198/IND/2014 A.Y. 2009-10 6 6 EXTRANEOUS CONSIDERATION BECAUSE IT WOULD BE MERE TR AVESTY OF JUSTICE AND UNWANTED DRAIN ON THE GOVERNMENT RESOURC ES. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE RELIE D UPON THE DECISION OF DELHI I.T.A.T. IN ACIT VS. R.P.G. CREDI T & CAPITAL LIMITED, (2015 60 TAXMANN.COM 160(DELHI I.T.A.T.) A ND DECISION OF I.T.A.T. AHMEDABAD BENCH) IN THE CASE O F SADBHAV ENGG. LTD., VS. DCIT,(2014) 45 TAXMANN.COM 333.THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE CONCLUDED THAT THE ADDITION MAY PLEASE BE DELETED. 10. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON TH E ORDERS OF THE LOWER AUTHORITIES. 11. I HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD. I HAVE ALSO GONE THROUGH THE CASE LAWS RELIED UPON BY THE LD. AUTHORIZED REPRESE NTATIVE OF THE ASSESSEE. IN THE INTEREST OF JUSTICE AND FAIR, I RESTORE THIS MATTER TO THE FILE OF AO WITH THE DIRECTION THAT HE SHALL ONCE AGAIN EXAMINE THE CASE OF THE ASSESSEE IN THE LIGHT OF REMAND REPORT AND ALSO EVIDENCES SUBMITTED UNDER RULE 46A OF INCOME TAX RULES, 1962. THE AO SHALL DECIDE THE MATTER AFR ESH IN DWARKA DHEESH SETHIA VS. ACIT, 3(1), BHOPAL I.T.A.N O. 198/IND/2014 A.Y. 2009-10 7 7 ACCORDANCE WITH LAW AFTER PROVIDING OPPORTUNITY OF BE ING HEARD TO THE ASSESSEE. 12. GROUND NO. 3 RELATES TO ADDITION OF RS. 71,000/- MA DE BY THE AO AND CONFIRMED BY THE LD. CIT(A) ON ACCOU NT OF INTEREST PAID, DUE TO NON-DEDUCTION OF TDS THEREON. 13. FACTS OF THIS GROUND ARE THAT THE ASSESSEE PAID INT EREST OF RS. 71,000/- TO SHRI O.P.SETHIA (HUF) BUT TAX HA S NOT BEEN DEDUCTED AT SOURCE. THE PROVISIONS OF SECTION 40(A) (IA) BEING VIOLATED, THE AO DISALLOWED THE EXPENSE ON INTEREST OF RS. 71,000/- AND ADDED TO THE RETURNED INCOME. 14. THE LD. CIT(A) CONFIRMED THE DISALLOWANCE OF RS. 71,000/- ON ACCOUNT OF INTEREST U/S 40(A)(IA) BY OB SERVING AS UNDER :- I HAVE CONSIDERED THE SUBMISSION OF THE LD. AR AND REMAND REPORT OF THE AO CAREFULLY. SMT. UMA SETHIA IS THE WIFE OF THE APPELLANT. SHE IS PROPRIETOR OF M/S. GLOBAL INDUSTRIES AND DERIVES INCOME FROM EXECUTION OF JOB WORKS OF PROPRIETARY CONCERN OF THE APPELLANT I.E. M/S. SHRAO ENGINEERING WORKS, BHOPAL. SHRI O.P. DWARKA DHEESH SETHIA VS. ACIT, 3(1), BHOPAL I.T.A.N O. 198/IND/2014 A.Y. 2009-10 8 8 SETHIA IS THE BROTHER OF THE APPELLANT. THE HUF OF SHRI O.P. SETHIA HAS GIVEN FRESH UNSECURED LOAN OF RS. 5,00,000/- TO THE APPELLANT IN THE YEAR UNDER CONSIDERATION, BESIDES OPENING BALANCE OF LOAN OF EARLIER YEAR OF RS. 1,08,944/-. THE APPELLANT, HAS EXPLAINED THE SOURCE OF SHRI O.P. SETHIA (HUF) TO ADVANCE OF RS. 5,00,000/- AS REPAYMENT OF LOAN OF RS. 4,99,247/- TAKEN BY SMT. UMA SETHIA ON 27-06-2008. THE HUF HAS MADE A DECLARATION OF NO TAXABLE INCOME IN THE YEAR UNDER REFERENCE BY FILING FORM NO. 15G. BUT, PART-II OF THE FORM IS BLANK AND THE DATE ON WHICH THE DECLARATION WAS FURNISHED BY THE DECLARANT IS NOT KNOWN. THE DEDUCTOR HAS NEITHER SIGNED THE FORM IN PART-IL NOR FORWARDED IT TO THE COMMISSIONER OF INCOME TAX. THUS, WHETHER THE DECLARATION WAS FILED BEFORE CREDIT OF INTEREST IS NOT SUBJECT TO VERIFICATION. IN OTHE R WORDS, THE CREDITOR BEING THE BROTHER OF THE APPELLANT, SUCH DECLARATION IS EASILY AVAILABLE DWARKA DHEESH SETHIA VS. ACIT, 3(1), BHOPAL I.T.A.N O. 198/IND/2014 A.Y. 2009-10 9 9 TO THE APPELLANT EVEN IN SUBSEQUENT DAYS TO COPE UP THE REQUIREMENTS IN ORDER TO MITIGATE THE DEFAULT. IN CASE THE FORM IS NOT RECEIVED BEFORE PAYMENT OF INTEREST, DEDUCTION OF TAX AT SOURCE IS A MUST AS HAS BEEN DECIDED BY THE HON'BLE HIGH COURT OF RAJASTHAN IN THE CASE OF CHHOGMAL CHIRANJI LAL VS. CIT REPORTED IN 157 ITR 51. IN THE PRESENT CASE IN HAND, THE CREDITOR BEING A CLOSE RELATIVE OF THE APPELLANT, THE DECLARATION IN FORM NO. 15G IS ACCESSIBLE AT ANY MOVEMENT I.E. IT CAN BE PREPARED AND PRODUCED BEFORE THE AO WHEN AND WHERE REQUISITIONED IN ORDER TO MITIGATE THE DEFAULT. IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE DISCUSSED ABOVE, I FIND THAT STATUTORY CONSEQUENCE INCLUDING DISALLOWANCE U/S 40(A)(IA) WOULD NOT BE OBLITERATED FOR DEFAULT COMMITTED BY THE APPELLANT AND THE DEFAULT BEING NOT A TECHNICAL MISTAKE, THE DISALLOWANCE MADE ON THIS COUNT IS CONFIRMED. DWARKA DHEESH SETHIA VS. ACIT, 3(1), BHOPAL I.T.A.N O. 198/IND/2014 A.Y. 2009-10 10 10 15. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AU THORITIES. 16. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON TH E ORDERS OF THE LOWER AUTHORITIES. 17. I HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD. I HAVE ALSO GONE THROUGH THE CASE LAWS RELIED UPON. I UPHOLD THE ACTION OF THE LD . CIT(A). NO INTERFERENCE IS CALLED FOR. GROUND NO. 3 IS REJECTE D. 18. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER HAS BEEN PRONOUNCED IN THE OP EN COURT ON 20 TH JULY, 2016, SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 20 TH JULY, 2016. CPU* DWARKA DHEESH SETHIA VS. ACIT, 3(1), BHOPAL I.T.A.N O. 198/IND/2014 A.Y. 2009-10 11 11