ART EFECT, MUMBAI V. ACIT 18(2), MUMBAI

ITA 1999/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92977 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 17-06-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 13-03-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: KISHORE V SATWICK
• Keywords: Rectification of order; Retrospective amendment
• Section: 143(3); 154

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI . . , , BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI N.K . BILLAIYA, A CCOUNTANT M EMBER / I .T.A. NO . 1999 /MUM/ 2013 ( / ASSESSMENT YEAR : 2005 - 06 ART EFECT, 19, LAXMI WOOLEN MILLS CO., MUMBAI - 400 011 / VS. THE ACIT - 18(2), MUMBAI ./ ./ PAN/GIR NO. : AAGF 1051K ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: SHRI KISHORE V. SATWICK / RESPONDENT BY : SHRI JEEVANLAL LAVIDIYA / DATE OF HEARING : 22 . 0 6 .2015 / DATE OF PRONOUNCEMENT : 2 6 .0 6 .2015 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST THE ORDER OF THE LD. CIT(A) - 29 , MUMBAI DT. 11.12.2012 PERTAINING TO ASSESSMENT YEAR 200 5 - 0 6 . 2. THE SUM AND SUBSTANCE OF THE GRIEVANCE OF THE ASSESSEE IS THAT THE LD. CIT(A) ERRED IN REJECTING THE RECTIFICATION APPLICATION U/S. 154 ON THE ITA. NO. 1999/MUM/2013 2 GROUND THAT SUBSEQUENT AMENDMENT TO THE INCOME - TAX ACT, 1961 DOES NOT CONSTITUTE MISTAKE APPARENT FROM RECORD. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS IN THE BUSINESS OF COMMERCIAL ARTISTS & DESIGNERS. RETURN FOR THE YEAR UNDER CONSIDERATION WAS SELECTED FOR SCRUTINY ASSESSMENT AND ASSESSMENT U/S. 143(3) OF THE ACT WAS MADE ON 23.11.2007, AFTER MAKING INTER ALIA, FOLLOWING ADDITIONS U/S. 40A(IA) OF THE ACT. I. TDS WAS DEDUCTED ON CONTRACT PAYMENTS MADE OF RS. 67,27,304/ - AND NOT CREDITED THE SAME TO THE GOVT. A/C WITHIN THE STIPULATED TIME. FURTHER, IT IS SEEN FROM THE AUDIT REPORT & STATEMENT OF INCOME, THAT THE ASSESSEE HAS ALREADY DISALLOWED AN AMOUNT OF RS. 9,38,951/ - U/S. 40(A)(IA) ON ACCOUNT OF CONTRACT PAYMENTS. THER EFORE, THE BALANCE AMOUNT OF RS. 57,88,353/ - SHALL BE DISALLOWED U/S. 40(A)(IA). II. IN RESPECT OF TWO PARTIES NAMELY CREATA PRINTERS AND SHUBHAM BOOK BINDING, THE ASSESSEE HAS MADE PAYMENTS OF RS. 5,08,611/ - , RS. 3,41,771/ - AND TDS WAS DEDUCTED ONLY ON 5,02 ,836/ - , RS. 3,34,691/ - RESPECTIVELY. THEREFORE, THE DIFFERENCES OF RS. 5,775/ - AND RS. 7,080/ - ATTRACTS THE PROVISIONS OF SEC. 40(A)(IA). III. ON CONTRACT PAYMENTS MADE OF RS. 5,74,571/ - , TDS WAS NOT DEDUCTED AND CREDITED THE SAME TO THE GOVT. A/C WITHIN THE STIPULATED TIME. ITA. NO. 1999/MUM/2013 3 THEREFORE, THE AMOUNT OF RS. 63,75,779/ - (RS. 57,88,353/ - +RS.7,080/ - + RS. 5,74,571/ - ) IS DISALLOWED U/S. 40(A)(IA) AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 4. VIDE LETTER DT. 28.2.2011, THE ASSESSEE REQUESTED FOR RECTIFICATION OF MISTAKE IN THE ORDER PASSED U/S. 143(3) (SUPRA) ON THE GROUND THAT THE AMENDMENT MADE TO SEC. 40(A)(IA) BY FINANCE ACT, 2010 IS RETROSPECTIVE IN EFFECT AND THEREFORE IS APPLICABLE FOR THE YEAR UNDER CONSIDERATION AND THEREFORE NO DISALLOWANCE U/S. 40(A)(I A) CAN BE MADE. THE CONTENTION OF THE ASSESSEE WAS DISMISSED BY THE AO WHO WAS OF THE STRONG BELIEF THAT ONLY A MISTAKE APPARENT FROM THE RECORD CAN BE RECTIFIED U/S. 154 OF THE ACT WHICH MEANS THAT MISTAKE APPARENT FROM THE RECORD MUST BE AN OBVIOUS AND PATENT MISTAKE AND NOT SOMETHING WHICH CAN BE ESTABLISHED BY A LONG DRAWN PROCESS OF REASONING ON POINTS ON WHICH THERE MAY BE CONCEIVABLY TWO OPINIONS. ACCORDING TO THE AO, THE ISSUE INVOLVED IN ASSESSEES CONTENTION IS A DEBATABLE ISSUE ON POINT OF LAW AND THEREFORE DOES NOT FALL WITHIN THE AMBIT OF SEC. 154 OF THE ACT. RECTIFICATION APPLICATION WAS ACCORDINGLY REJECTED. 5. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) BUT WITHOUT ANY SUCCESS. 6. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE V EHEMENTLY SUBMITTED THAT WITH THE AMENDMENT BROUGHT BY THE FINANCE ACT, 2010, AND SUBSEQUENT DECISIONS OF THE TRIBUNAL IT HAS BEEN SUCCESSFULLY HELD THAT AMENDMENT TO SEC. 40(A)(IA) IS RETROSPECTIVE IN EFFECT THEREFORE THE LD. CIT(A) ERRED IN UPHOLDING T HE REJECTION OF 154 APPLICATION. ITA. NO. 1999/MUM/2013 4 7. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY SUPPORTED THE ORDER OF THE LD. CIT(A). IT IS THE SAY OF THE LD. DR THAT AMENDMENT TO SEC. 40(A)(IA) CANNOT BE MADE THE MISTAKE APPARENT FROM RECORD RECTIFIABLE U/S. 154 OF THE ACT. 8. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE RIVAL SUBMISSION. WE HAVE CAREFULLY PERUSED THE ORDER OF THE AUTHORITIES BELOW. THE UNDISPUTED FACT IS THAT THE ASSESSEE HAS NOT DEPOSITED THE TAX DEDUCT ED AT SOURCE WITHIN THE ST IPULATED TIME. IT IS ALSO AN UNDISPUTED FACT THAT FINANCE ACT, 2010 HAS AMENDED THE PROVISIONS OF SEC. 40(A)(IA) OF THE ACT WHEREBY MAKING THE PROVISION THAT IF THE TAX DEDUCTED AT SOURCE IS DEPOSITED WITH THE GOVERNMENT ON OR BEFORE THE DUE DATE OF FILIN G THE RETURN , THE SAME WILL BE ALLOWED IN THE YEAR OF CLAIM. THIS AMENDMENT WAS FIRST CONSIDERED BY THE TRIBUNAL SPECIAL BENCH IN THE CASE OF BHARATI SHIPYARD LTD. VS DCIT 132 ITD 53 WHEREIN THE SPECIAL BENCH HAS HELD THAT AMENDMENT TO SEC. 40(A)(IA) BY THE FINANCE ACT 2010 IS EFFECTIVE FROM 1.4.2010 AND DOES NOT HAVE RETROSPECTIVE EFFECT. SUBSEQUENT TO THIS THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS VIRGIN CREATORS IN ITA NO. 3200 OF 2011 HAS HELD THAT THE AMENDMENT BY THE FINANCE ACT 2010 IS RETROSPECTIVE WITH EFFECT FROM 1.4.2005. SUBSEQUENT TO THIS DECISION OF THE HONBLE CALCUTTA HIGH COURT , THE BOMBAY TRIBUNAL IN THE CASE OF PIYUSH MEHTA VS ACIT I N ITA NO. 1321 OF 2009 VIDE ORDER DT. 11.4.2012 HAS HELD THAT THE JUDGEMENT OF CALCUTT A HIGH COURT BEING THE ONLY JUDGEMENT OF ANY HIGH COURT ON THIS SUBJECT SHALL PREVAIL. 9. WITH THIS LEGAL BACKGROUND, IT WOULD BE PERTINENT TO CONSIDER THE OBSERVATIONS OF THE HONBLE SUPREME COURT IN THE CASE OF ACIT VS SAURASHTRA KUTCH STOCK EXCHANG E LTD. 305 ITR 227 WHEREIN THE HONBLE SUPREME COURT HAS OBSERVED AS UNDER: ITA. NO. 1999/MUM/2013 5 RECTIFICATION OF AN ORDER STEMS FROM THE FUNDAMENTAL PRINCIPLE THAT JUSTICE IS ABOVE ALL. IT IS EXERCISED TO REMOVE THE ERROR AND TO DISTURB THE FINALITY. A PATENT, MANIFEST A ND SELF - EVIDENT ERROR WHICH DOES NOT REQUIRE ELABORATE DISCUSSION OF EVIDENCE OR ARGUMENTS TO ESTABLISH IT, CAN BE SAID TO BE AN ERROR APPARENT ON THE FACE OF THE RECORD AND CAN BE CORRECTED WHILE EXERCISING CERTIORARI JURISDICTION. AN ERROR CANNOT BE SAID TO BE APPARENT ON THE FACE OF THE RECORD IF ONE HAS TO TRAVEL BEYOND THE RECORD TO SEE WHETHER THE JUDGMENT IS CORRECT OR NOT. AN ERROR APPARENT ON THE RECORD MEANS AN ERROR WHICH STRIKES ONE ON MERE LOOKING AND DOES NOT NEED A LONG DRAWN OUT PROCESS OF R EASONING ON POINTS ON WHICH THERE MAY BE CONCEIVABLY TWO OPINIONS. SUCH ERROR SHOULD NOT REQUIRE ANY EXTRANEOUS MATTER TO SHOW ITS INCORRECTNESS. TO PUT IT DIFFERENTLY, IT SHOULD BE SO MANIFEST AND CLEAR THAT NO COURT WOULD PERMIT IT TO REMAIN ON RECORD. I F THE VIEW ACCEPTED BY THE COURT IN THE ORIGINAL JUDGMENT IS ONE OF POSSIBLE VIEWS, THE CASE CANNOT BE SAID TO BE COVERED BY AN ERROR APPARENT ON THE FACE OF THE RECORD. 10. THE HONBLE SUPREME COURT IN THE SAME BREATH FURTHER OBSERVED AS UNDER: IN SATYANARAYAN LAXMINARAYAN HEGDE V. MALLIKARJUN BHAVANAPPA TIRUMALE [1960] 1 SCR 890, T HIS COURT REFERRING TO BATUK K. VYAS (1953) ILR 1953 BOM 191, AIR 1953 BOM 133 AND HARI VISHNU KAMATH (1955) 1 SCR 1104 STATED AS TO WHAT CANNOT BE SAID TO BE AN ERROR APPARENT ON THE FACE OF THE RECORD. THE COURT OBSERVED : 'AN ERROR WHICH HAS TO BE ESTABLISHED BY A LONG DRAWN PROCESS OF REASONING ON POINTS WHERE THERE MAY CONCEIVABLY BE TWO OPINIONS CAN HARDLY BE SAID TO BE AN ERROR APPARENT ON THE FACE OF THE RECORD. AS THE ABOVE DISCUSSION OF THE RIVAL CONTENTIONS SHOW THE ALLEGED ERROR IN THE PRES ENT CASE IS FAR FROM SELF EVIDENT AND IF IT CAN BE ESTABLISHED, IT HAS TO BE ESTABLISHED BY LENGTHY AND COMPLICATED ARGUMENTS. WE DO NOT THINK SUCH AN ERROR CAN BE CURED BY A WRIT OF CERTIORARI ACCORDING TO THE RULE GOVERNING THE POWERS OF THE SUPERIOR COU RT TO ISSUE SUCH A WRIT.' ITA. NO. 1999/MUM/2013 6 11. COMING BACK TO THE FACTS OF THE CASE IN HAND, CONSIDERING THESE FACTS IN THE LIGHT OF THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT AS DISCUSSED HEREINABOVE, WE DO NOT FIND ANY MERIT IN THE RECTIFICATION APPLICATION OF T HE ASSESSEE. IT WAS RIGHTLY REJECTED BY THE AO AND THE REJECTION WAS RIGHTLY UPHELD BY THE LD. CIT(A). WE, THEREFORE DECLINE TO INTERFERE. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. OR DER PRONOUNCED IN THE OPEN COURT AT THE TIM E OF HEARING ON 2 6 TH JUNE , 2015 SD/ - SD/ - ( I.P. BANSAL ) (N.K. BILLAIYA) /JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 2 6 TH JUNE , 2015 . . ./ RJ , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI