M/s Prestige International, Panchkula V. Addl. CIT, Panchkula Range, Panchkula

ITA 208/CHANDI/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7508 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 20-01-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUKHWINDER SHARMA
• Keywords: Retrospective amendment
• Section: 201(1); 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH , CHANDIGARH BEFORE MS. DIVA SINGH, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.208/CHD/2018 (ASSESSMENT YEAR : 2011-12) M/S PRESTIGE INTERNATIONAL, VS. THE ADDL.CIT, 267, INDUSTRIAL AREA, PANCHKULA RANGE, PHASE-1, PANCHKULA. PANCHKULA. PAN: AAIFP3677L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PARIKSHIT AGGARWAL, CA RESPONDENT BY : SMT.SUKHWINDER SHARMA, ADDL.CIT DATE OF HEARING : 08.05.2018 DATE OF PRONOUNCEMENT : 11.07.2018 ORDER PER ANNAPURNA GUPTA, A.M . : THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAI NST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (AP PEALS), PANCHKULA (HEREINAFTER REFERRED TO AS CIT(APPEALS)) DATED 4.12.2017 RELATING TO ASSESSMENT YEAR 2011-12. 2. AT THE OUTSET IT WAS POINTED OUT THAT THIS WAS T HE SECOND ROUND BEFORE THE ITAT AND THE SOLE ISSUE REL ATED TO DISALLOWANCE MADE U/S 40(A)(IA) OF THE INCOME TAX A CT, 1961 (IN SHORT THE ACT)OF RS.4,50,000/-, BEING PROFESS IONAL FEES PAID TO ONE SHRI K.R BAJPAI ON ACCOUNT OF TAX DE DUCTED AT SOURCE ON IT NOT BEING DEPOSITED BEFORE THE DUE DA TE PRESCRIBED FOR FILING RETURN OF INCOME. IT WAS POI NTED OUT THAT IN THE FIRST ROUND OF APPEAL BEFORE THE CIT(AP PEALS), THE ASSESSEES APPEAL HAD BEEN ALLOWED ACCEPTING T HE ALTERNATE CONTENTION OF THE ASSESSEE THAT SINCE TDS HAD 2 BEEN DEPOSITED LATE IN THE SUCCEEDING YEAR, THE SAM E IS ALLOWABLE IN THE SUCCEEDING YEAR I.E. ASSESSMENT YE AR 2012- 13. THE CIT(APPEALS) AT THE SAME TIME DID NOT ADJU DICATE THE CONTENTION OF THE ASSESSEE THAT THE RECIPIENT H AD DISCLOSED THE PROFESSIONAL CHARGES PAYMENT IN HIS I NCOME FOR THE YEAR UNDER CONSIDERATION AND PAID TAXES ON THE SAME AND THEREFORE IN THE LIGHT OF THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF ANSAL LAND MARK TOWNSHIP (P) LTD., 377 ITR 635, THE PROVISO TO SECT ION 40(A)(IA) WOULD BE APPLICABLE WITH RETROSPECTIVE EF FECT, CALLING FOR NO DISALLOWANCE U/S 40(A)(IA) OF THE AC T. THE ASSESSEE THEREFORE CARRIED THE MATTER IN APPEAL BEF ORE THE I.T.A.T., WHO SET ASIDE THE ORDER OF THE CIT(APPEAL S) WITH THE DIRECTION TO DECIDE THE ISSUE IN THE LIGHT OF T HE AFORESTATED CONTENTION OF THE ASSESSEE, IN ACCORDAN CE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 3. DURING SECOND ROUND OF APPELLATE PROCEEDINGS, TH E ASSESSEE FILED WRITTEN SUBMISSIONS, AFTER CONSIDERI NG WHICH THE LD.CIT(APPEALS) HELD THAT THE ASSESSEE WAS NOT ENTITLED TO THE BENEFIT OF THE SECOND PROVISO TO SECTION 40( A)(IA), SINCE IT HAD FAILED TO FULFILL THE BASIC CONDITIONS REQUIRED UNDER IT. RELEVANT FINDINGS OF THE LD.CIT(APPEALS) AT PARAS 6 AND 6.2 OF HER ORDER ARE AS UNDER: 6 . I HAVE GONE THROUGH THE FACTS OF THE CASE DOCUMEN TARY EVIDENCES FILED AND WRITTEN SUBMISSION FILED BY THE APPELLANT. IT IS NOTED THAT SECOND PROVISO TO SECTION 40(A)(IA) WAS INSERTED BY FINANCE ACT, 2012 WITH EFFECT FROM 15 TH APRIL, 2013. THE EFFECT OF THE SAID PROVISO IS TO INTRODUCE A LEG AL FICTION WHERE AN ASSESSEE FAILS TO DEDUCT TAX IN ACCORDANCE WITH PROVISIONS OF 3 CHAPTER- XVII -B. ACCORDINGLY, WHEN SUCH ASSESSEE IS DEEMED NOT TO BE AN ASSESSEE IN DEFAULT IN TERMS OF THE FIRST P ROVISO TO SUB SECTION (1) TO SECTION 201 OF THE ACT, THEN, 'IT SHALL B E DEEMED THAT THE ASSESSEE HAS DEDUCTED AND PAID THE TAX ON SUCH SUM ON THE DATE OF FURNISHING OF RETURN OF INCOME BY THE RESID ENT PAYEE REFERRED TO IN THE SAID PROVISO.' THE FIRST PROVISO T O SECTION 201 WAS ALSO INTRODUCED WITH EFFECT FROM 15 TH JULY, 2012. EVEN IF THE APPELLANT'S PLEA OF RETROSPECTIVE EFFECT TO THE AMEND MENT AND INSERTION OF SECOND PROVISO TO SECTION 40(A)(IA) TO BE OF DECLARATORY AND CURATIVE NATURE IS ACCEPTED IN VIEW OF THE DECISION IN CIT VS. ANSAL LAND MARK TOWNSHIP (P) LTD. 377 ITR 63 5 (SUPRA), THE BENEFIT OF SECOND PROVISO TO SECTION 40(A)(IA) C AN BE GRANTED ONLY WHEN THE APPELLANT CAN BE TREATED AS A PERSON-N OT-IN-DEFAULT SUBJECT TO FULFILLMENT OF CONDITIONS STIPULATED IN THE FIRST PROVISO TO SECTION 201(1) BASED ON THE FACTS OF ITS CASE. 6.1 FROM A PERUSAL OF THE ASSESSMENT ORDER, COPY OF RETURN OF THE RESIDENT PAYEE, FORM 26AS OF RESIDENT PAYEE & F ORM 16 AND CERTIFICATE OF ACCOUNTANT FILED BY THE APPELLANT THE FOLLOWING FACTS EMERGE: (A) THE APPELLANT HAS DEDUCTED TAX ON THE PROFESSIO NAL CHARGES OF RS.4, 50,000/- CREDITED/PAID TO RESIDENT PAYEE, SH.K.R. BAJPAI, BUT DID NOT DEPOSIT THE TAX DEDUCTED B Y IT BEFORE THE DUE DATE. THE APPELLANT HAS DEPOSITED THE TDS O N 27.03.2012 AND FILED THE RETURN FOR THE RELEVANT YEAR O N THE SAME DATE I.E. 27.03.2012, WHICH WAS FILED LATE, BEYOND THE DUE DATE CIFIED IN SECTION 139(1) WHICH WAS 31.07.2011 IN ITS CASE. THUS THE APPELLANT'S CASE IS NOT OF NON-DEDUCTION OR EVEN SHORT DEDUCTION OF TDS WHICH IS A PRIMARY CONDITION AS PER PROVISIONS OF FIRST PROVISO TO SECTION 2011(1) AND OF SECOND PROVISO TO SECTION 40 (A)(IA). FURTHER REGARDING THE CLAIM THAT RESIDENT PAYEE SH.K.R.BAJPAI HAS DISCLOSED THESE PROFESSIONAL CHAR GES AS HIS INCOME FOR THE YEAR IN QUESTION AND PAID THE DUE TA XES WITHIN TIME ALLOWED U/S 139, IT IS NOTED THAT SH.K.R. BAJPAI HA S ALSO FILED HIS RETURN OF INCOME BEYOND THE DUE DATE SPECIFIED U/SL 39(L) OF THE ACT. THE RETURN HAS BEEN FILED ON 27.03.2012 WHILE THE DUE DATE WAS 31.07.2011. FORM 26AS IN RESPECT OF SH.K.R. BAJPAI SHOWS 31.03.2011 AS TRANSACTION DATE AND 29.03.2013 AS TH E DATE OF BOOKING OF AMOUNT OF RS.45,000/- AS TDS BY APPELLANT M/S PRES TIGE INTERNATIONAL. THE ENCLOSED CERTIFICATE FROM THE AC COUNTANT CERTIFYING THAT RESIDENT PAYEE HAS FULFILLED CONDITIONS MENTION ED IN FIRST PROVISO TO SUBSECTION (1) OF SECTION 201 AS ANNEXURE ' A' TO FORM 26 AS IS REPRODUCED AS UNDER: '(I) M/S PRESTIGE INTERNATIONAL HAS PAID TO OR CREDIT ED FOLLOWING SUM TO THE ACCOUNT OF KRISHAN RAM BAJPAI WITHOUT DEDUCTION O F WHOLE OR ANY PART OF THE TAX IN ACCORDANCE WITH THE PROVISIO NS OF CHAPTER-XVII- B NATURE OF DATE OF SECTION AMOUNT AMOUNT OF DETAILS OF AMOUNT PAYMENT CREDIT UNDER WHICH TAX HAS DEDUCTIBLE CREDITED TAX DEDUCTIBLE DEDUCTED, IF ANY 4 AMOUNT DEDUCTED DATE OF DEDUCTION PROFESSIONAL 31.03.11 194J 450000 45000 45000 31.03.11 (II) THE PAYEE, WHO IS A RESIDENT, HAS FURNISHED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2011-12 RELEVANT TO THE PAYMENT REFERRED TO IN (I) ABOVE. THE DETAILS OF RETU RN OF INCOME FILED BY THE PAYEE ARE AS UNDER: DATE OF MODE OF ACKNOWLEDGEMENT IF PAPER AMOUNT OF TAX DUE DETAILS OF FILING FILING I.E. NUMBER OF RETURN RETURN- TOTAL ON THE TAX PAID RETURN WHETHER E- FILED DESIGNATION TAXABLE INCOME FILED OR AND ADDRESS INCOME AS DECLARED PAPER RETURN OF THE PER RETURN IN THE ASSESSING FILED RETURN OFFICER 27.03.12 E-FILED 36477382027031 2 - 6,08,860 57,445 TDS RS. 68681 (III) THE PAYEE HAS TAKEN INTO ACCOUNT THE SUM REFE RRED TO IN (I) FOR COMPUTING HIS TAXABLE INCOME IN RETURN OF I NCOME FILED BY HIM THE DETAILS OF WHICH ARE AS UNDER: RECEIPT ON HEAD OF INCOME GROSS RECEIPT UNDER THE AMOUNT OF TAXABLE INCOME WHICH TAX HAS UNDER WHICH THE HEAD OF INCOME UNDER UNDER THE HEAD OF INCOME NOT BEEN RECEIPT IS WHICH THE RECEIPT IS UNDER WHICH THE RECEIPT IS DEDUCTED ACCOUNTED FOR ACCOUNTED FOR ACCOUNTED FOR 4,50,000 INCOME FROM 6,50,000 6,50,000 BUSINESS & PROFESSION (IV) IT HAS BEEN ENSURED THAT THE INFORMATION FURN ISHED IS TRUE AND CORRECT IN ALL RESPECT AND NO RELEVANT INFORMAT ION HAS BEEN CONCEALED OR WITHHELD (V) NEITHER, I, NOR ANY OF MY PARTNERS, IS A DIREC TOR, PARTNER OR AN EMPLOYEE OF THE ABOVE MENTIONED ENTITIES OR ITS ASSOCIATED CONCERNS.' AS CAN BE SEEN FROM THE ABOVE REPRODUCED CERTIFICAT E AND FROM THE RETURNINCOME OF SH.K.R. BAJPAI, THE TAX DUE ON INCOME DECLARED IN THE RETURN HAS NOT BEEN PAID BY THE RES IDENT PAYEE (IN THE FORM OF ADVANCE TAX OR SELF ASSESSMEN T TAX) BUT THE PAYEE HAS CLAIMED ADJUSTMENT OF TOT AL TDS OF RS.68.681 - WHICH INCLUDES TDS OF RS.45,000/- WHICH WAS N OT 5 DEPOSITED BY THE DEDUCTOR BY THE DUE DATE BUT DEPOSIT ED ONLY ON 27.03.2012 AND ON THE SAME DATE THE RESIDENT PAY EE AS WELL AS THE DEDUCTOR APPELLANT HAVE BOTH FILED THEIR RETUR N OF INCOME FOR THE RELEVANT YEAR I.E. RETURNS WERE FILED BEYOND TH E DUE DATE SPECIFIED U/S 139(1). 6.2. THEREFORE, IN THE FACTS OF THE INSTANT CASE THE PROVISO TO SECTION 201(1) IS NOT APPLICABLE SINCE THE APPELLANT DEDUCTOR DOES NOT MEET THE CONDITION OF HAVING FAILED TO DE DUCT THE WHOLE OR ANY PART OF TAX FAILED TO DEDUCT THE WHOL E OR ANY PART OF TAX' SINCE IT HAS DEDUCTED THE REQUIRED TA X, ALTHOUGH DEPOSITED IT IN THE SUBSEQUENT FINAN CIAL YEAR ON 27.3.2012. FURTHER, THE RESIDENT PAYEE ALSO DOES NOT MEET THE CONDITION OF HAVING PAID THE TAX DUE' ON T HE INCOME WHICH IS COMPUTED BY TAKING INTO ACCOUNT THE SUM PAID SINCE HE HAS ONLY CLAIMED ADJUSTMENT OF TAX DE DUCTED AT SOURCE BY THE APPELLANT WHICH HAS BEEN DEPOSITED LAT E ON 27.03.2012 AND BOOKED ON 29. 03.2013 AS PER FORM 26AS OF RESIDENT PAYEE. THUS THE TAX DUE HAS NOT BEEN DEPOS ITED IN THE GOVERNMENT TREASURY WITHIN STIPULATED TIME EITHE R FROM DEDUCTOR OR THE DEDUCTEE. THIS IS NOT A CASE WHERE DEPARTMENT HAS ALREADY RECOVERED TAX FROM DEDUCTEE/ PAYEE WHO HAS PAID TAX ON THE AMOUNT RECEIVED FROM DEDUCT OR AND THE DEPARTMENT IS SEPARATELY RECOVERING TAX FROM TH E DEDUCTOR ON THE SAME INCOME BY TREATING THE DEDUCTOR TO BE ASSE SSEE IN DEFAULT FOR NON DEDUCTION OF TAX. THEREFORE, IN VIEW OF ABOVE DISCUSSION AS CONDITIONS STIPULATED IN THE FIRST PROV ISO TO SECTION 201(1) ARE NOT FULFILLED BY APPELLANT/PRINC IPAL OFFICER OF THE APPELLANT AS WELL AS BY THE RESIDENT PAYEE CONSEQUENTLY THE APPELLANT IS TREATED AS AN ASSESSEE IN DEFAULT. THEREFORE, THE BENEFIT OF SECOND PROVISO TO SECTION 40(A)(IA), CANNOT BE GRANTED TO THE APPELLANT IN THE INSTANT CAS E EVEN AFTER ALLOWING THE PLEA OF RETROSPECTIVE NATURE OF THE AMEND MENT TO SECTION 201(1) AND SECTION 40(A)(IA). THE ACTION OF THE AO IN MAKING ADDITION OF RS.4,50,000/- BY DISALLOWING THE PRO FESSIONAL CHARGES OF RS.4,50,000/- PAID TO SH. K.R.BAJPAI BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) R.W.S. 194J OF THE ACT IS, THEREFORE, UPHELD. 4. AGGRIEVED BY THE SAME THE ASSESSEE HAS COME IN APPEAL BEFORE US RAISING THE FOLLOWING GROUND: 1. THAT ON THE FACTS, CIRCUMSTANCES AND LEGAL POSITION OF THE CASE, THE WORTHY CIT(A) IN APPEAL NO. 67/PKL/16-17 DATED 04.12.2017 HAS ERRED IN PASSING THAT ORDER IN CONTRAVENTION OF THE PROVISIONS OF SECTION 250(6) OF THE INCOME TAX ACT, 1961. 2. THAT ON THE FACTS, CIRCUMSTANCES AND LEGAL POSITION OF THE CASE, THE WORTHY CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.4,50,000/- 6 ORIGINALLY MADE U/S 40(A)(IA) BY THE LD. AO EVEN WHEN THE APPELLANT WAS ENTITLED TO BENEFIT OF PROVISO TO SAID SECTION AND THE HON'BLE ITAT IN THE 1 ST ROUND HAD SENT THE MATTER BACK TO WORTHY CIT(A) WITH SPECIFIC DIRECTIONS. 3. THAT THE APPELLANT CRAVES LEAVE FOR ANY ADDITION, DELETION OR AMENDMENT IN THE GROUNDS OF APPEAL ON OR BEFORE THE DISPOSAL OF THE SAME. 5. DURING THE COURSE OF HEARING BEFORE US, THE LD. COUNSEL FOR ASSESSEE RELIED UPON THE SUBMISSIONS MADE BEFOR E THE LD.CIT(APPEALS), WHILE THE LD. DR RELIED UPON THE O RDER OF THE LD.CIT(APPEALS). 6. WE HAVE HEARD THE CONTENTIONS OF BOTH THE PARTIE S. WE HAVE ALSO GONE THROUGH THE ORDER OF THE CIT(APPEALS ) AND WE FIND THAT THE ISSUE IN THE PRESENT CASE OF DISALLOW ANCE MADE U/S 40(A)(IA) OF THE ACT, WAS RESTORED BY THE ITAT FOR THE LIMITED PURPOSE OF EXAMINING THE ELIGIBILITY OF THE ASSESSEE TO CLAIM THE BENEFIT OF THE SECOND PROVISO TO SECTI ON 40(A)(IA) . 7. ON GOING THROUGH THE ORDER OF THE CIT(APPEALS), WE FIND NO INFIRMITY IN THE SAME. THE LD.CIT(APPEALS) AFTER TAKING NOTE OF THE CONDITIONS REQUIRED TO BE FULFIL LED FOR THE PURPOSE OF CLAIMING BENEFIT OF THE SECOND PROVISO T O SECTION 40(A)(IA), BEING NO TAXES DEDUCTED BY THE ASSESSEE ON THE PAYMENT AND TAXES ON THE SAME BEING PAID BY THE PAY EE IN HIS RETURN FILED U/S 139 OF THE ACT, FOUND FROM THE FACTS BEFORE HIM THAT THE NONE OF THE CONDITIONS WERE FUL FILLED IN THE PRESENT CASE. LD.CIT(APPEALS) FOUND THAT THE AS SESSEE HAD DEDUCTED TAX AT SOURCE AND THE PAYEE HAD NOT PA ID TAXES ON THE SAME BUT HAD CLAIMED SO, ON ACCOUNT O F THE 7 TDS DEPOSITED BY THE ASSESSEE LATER ON IN THE SUCCE EDING YEAR BY FILING HIS RETURN OF INCOME LATE, AFTER TDS WAS DEPOSITED BY THE ASSESSEE. NONE OF THE ABOVE FINDIN GS OF THE CIT(APPEALS) HAVE BEEN CONTROVERTED BY THE LD.COUNS EL FOR THE ASSESSEE. WE THEREFORE SEE NO REASON TO INTERFE RE IN THE ORDER OF THE CIT(APPEALS) HOLDING THAT THE ASSESSEE IS NOT ENTITLED TO BENEFIT OF THE SECOND PROVISO TO SECTIO N 40(A)(IA) OF THE ACT AND THUS UPHOLDING THE DISALLOWANCE OF PROFESSIONAL CHARGES AMOUNTING TO RS.4,50,000/-. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (DIVA SINGH) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 11 TH JULY, 2018 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH