M/s LJ Publication Pvt. Ltd, Bhubaneswar V. ITO, Bhubaneswar

ITA 208/CTK/2012

• Counselvise Citation: 20822114 RSA 2012
• Duration Of Justice: 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 21-08-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 27-03-2012
• Court: TRIBUNAL
• Department Lawyers: A BHATTACHARJEE
• Assessee Lawyers: J SAHU
• Keywords: Unexplained cash credit; Unexplained expenditure; Opportunity of being heard; Bonafide belief; Bonafide mistake
• Section: 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , H ONBLE SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER / I.T.A.NO. 208/CTK/2012 / ASSESSMENT YEAR 2007 - 08 M/S.L.J.PUB LICATIONS PVT. LTD., T S2 - 191,SECTOR A, ZONE B, MACHESWAR INDUSTRIAL ESTATE, BHUBANESWAR PAN: AABCL 2255 L - - - VERSUS - INCOME - TAX OFFICER, WARD 1(4), BHUBANESWAR. ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI J.SAHU, AR / FOR THE RESPONDENT: / SHRI A.BHATTACHARJEE, DR / DA TE OF HEARING: 21.08.2012 / DATE OF PRONOUNCEMENT: 14.09.2012 / ORDER . . , , SHRI K.K.GUPTA, ACCOUNTANT MEMBER. T HIS APPEAL BY THE ASSESSEE RAISES THE FOLLOWING GROUNDS. 1. THAT THE ORDER PASSED BY THE LEARN E D C.I.T (APPEAL), BERHAMPUR IS IL LEGAL, ARBITRARY, WITHOUT PROPER APPLICATION OF MIND AND CONTRARY TO THE WEIGHTAGE OF EVIDENCE. 2. THAT THE LEARNED C.I.T (APPEAL), BERHAMPUR, HAS NOT DULY CONSIDERED THE GROUNDS OF DELAY FOR WHICH THE ORDER REJECTING THE APPEAL IS ILLEGAL, ARBITRARY. THAT THE APPELLANT HAVING EXERCISED DUE DILIGENCE AND THERE BEING NO WILLFUL AND DELIBERATE LATCHES, DELAY SHOULD HAVE BEEN CONDONED IN THE END OF JUSTICE. 3. THAT THE DISALLOWANCE OF EDITING EXPENSES OF 14,79,300.00 AND PRINTING EXPENSES OF 6,59,000.00 U/S 40(A)(IA) FOR NON - DEDUCTION OF TDS IS ILLEGAL, ARBITRARY AND IS LIABLE TO BE QUASHED. 4. THAT THE ADDITION OF RS 82,000.00 MADE FOR UNACCOUNTED EXPENDITURE WITHOUT CONFRONTATION AND WITHOUT GIVING R EASONABLE OPPORTUNITY IS ILLEGAL AND IS LIABLE TO BE QUASHED. 5. THAT THOUGH THE APPELLANT HAS PRODUCED THE CONFORMATIONS AS REGARDS ALL SUNDRY CREDITORS EXCEPT ONE MR. CHANDRASEKHAR MISHRA AMOUNTING TO 32,000.00 DUE TO THE DEATH OF THE SAID CREDITOR, TH E ADDITION MADE U/S 68 IS ILLEGAL AND IS LIABLE TO BE QUASHED. 2 6. THAT THE ADDITION OF 1,50,000.00 FOR UNEXPLAINED CASH CREDIT U/S 68 WITHOUT CONSIDERING THE EVIDENCE AND WITHOUT HAVING ANY CONFRONTATION IS ILLEGAL AND CONTRARY TO THE PRINCIPLE OF NATURA L JUSTICE. 7. THAT THE DISALLOWANCE OF THE SHARE APPLICATION MONEY OF 1,80,000.00 WITHOUT PROPER VERIFICATION OF DOCUMENTS AND EVIDENCES IS ILLEGAL AND IS LIABLE TO BE QUASHED. 2. THE BRIEF FACTS AS HAVE BEEN BROUGHT ON RECORD ARE THAT THE ASSESSEE COMP ANY IS A PUBLISHER FILED ITS RETURN OF INCOME AT NIL WHICH WAS CONSIDERED FOR SCRUTINY U/S.143(3). THE ASSESSING OFFICER PROCEEDED TO DISALLOW THE EXPENSES CLAIMED U/S.40(A)(IA) BEING DEVELOPMENT INSTITUTI ON AND SERVICES USING HOLISTIC APPROACH PAYMENTS WE RE WITHOUT DEDUCTION OF TAX AT SOURCE. PRINTING EXPENSES WERE DISALLOWED MAKING PAYMENT TO EXPRESS PUBLICATION (MADURAI) LTD. LIABILITIES SHOWN IN THE BALANCE SHEET WERE REQUIRED TO BE EXPLAINED WHEN A PART THEREOF WAS BROUGHT TO TAX U/S.68. SIMILARLY A SU M OF 1,50,000 WAS BROUGHT TO TAX AS THE ASSESSEE COULD NOT EXPLAIN THE DISCREPANCY IN THE STATEMENT OF A LOAN CREDITOR. THE REFUND OF SHARE APPLICATION MONEY WAS ALSO BROUGHT TO TAX AND THE TOTAL LOSS RETURNED AS NIL BY THE ASSESSEE WAS COMPUTED AT INCOME OF 22,39,9810. 3. AGGRIEVED THE ASSESSEE APPEALED BEFORE THE FIRST APPELLATE AUTHORITY WHO EXPLAINED THE NATURE OF ADDITIONS MADE BY THE ASSESSING OFFICER AS FOLLOWS. REFER ASSESSMENT ORDER FOR DISA LLOWANCES OF PAYMENT MADE TO DISHA I.E.(EDITING EXPENSES ) FOR AM OUNT 14,79,300 1 - U/S 40(A)(I A) OF IT ACT, 1961 . AS PER THE INCO ME TAX ACT.1961 THE SEC 40(A) (I A) REFERRED TO BY YOUR OFFICE READS AS FOLLOWS:ANY INTEREST, COMMISSION OR BROKERAGE, RENT, ROYALTY FEES FOR PROFESSIONAL SERVICES OR FEES FOR TECHN ICAL SERVICES PAYABLE TO A RESIDENT OR AMOUNT PAYABLE TO A CONTRACTOR/SUBCONTRACTOR BEING RESIDENT FOR CARRYING OUT ANY WORK( INCLUDING SUPPLY OF LABOR FOR CARRYING OUT ANY WORK) ON WHICH TAX IS DEDUCTABLE AT SOURCE UNDER CHAPTER XVLL - B AND SUCH TAX HAS NO T BEEN DEDUCTED OR AFTER DEDUCTION HAS BEEN PAID DURING THE PREVIOUS YEAR OR IN THE SUBSEQUENT YEAR BEFORE THE EXPIRY OF THE TIME LIMIT PRESCRIBED UNDER SEC 200(1). PROVIDED THAT WHERE, IN RESPECT OF ANY SUCH TAX HAS BEEN DEDUCTED IN ANY SUBSEQUENT YEAR O R HAS BEEN DEDUCTED IN THE PREVIOUS YEAR BUT 3 PAID IN ANY SUBSEQUENT YEAR AFTER THE EXPIRY OF THE TIME BUT PAID IN ANY SUBSEQUENT YEAR AFTER THE EXPIRY OF THE TIME LIMIT PRESCRIBED UNDER SEC 200(1) SUCH SUM SHALL BE ALLOWED AS A DEDUCTION IN COMPUTING THE INCOME OF THE PREVIOUS YEAR IN WHICH SUCH TAX HAS BEEN PAID. IF WE READ CAREFULLY THE ABOVE CLAUSE DISALLOWANCES IS MADE FOR EXPENSES PAYABLE AS PER BOOKS OF ACCOUNTS ON WHICH TDS IS DEDUCTABLE & HAS NOT BEEN DEDUCTED DURING SUCH YEAR. IN OUR CASE THERE IS NO AMOUNT PAYABLE REGARDING SUCH EXPENSES (AS 14,79,300 HAVE BEEN PAID TO DISHA DURING THE YEAR) . THEREFORE THIS SECTION IS NOT APPLICABLE IF EXPENSES ARE ALREADY PAID DURING THIS YEAR. THEREFORE, THE LEARNED INCOME TAX OFFICER IS NOT CORRECT BY LAW / FACT TO APPLY THIS SEC. AND DISALLOWS EXPENSES, WHICH HAS BEEN ALREADY PAID DURING THE YEAR. 2. DISALLOWANCES OF RS 6,59.000 PAID TO EXPRESS PUBLICATIONS( MADURAI) LIMITED . U/S 40(A)(I A) THERE IS AMOUNT OF 6,59,000 PAID TO EXPRESS PUBLICATIONS (MADURA I ) LTD. DURING THIS YEAR. SO, AS PER THE SAME CLARIFICATION IN PREVIOUS PAYMENT THIS SEC 40(A)(IA) IS NOT APPLICABLE IF EXPENSES IS ACTUALLY PAID DURING THIS YEAR. THEREFORE, THE LEARNED INCOME TAX OFFICER IS NOT CORRECT BY LAW / FACT TO APPLY THIS SEC. 40 (A)(IA) AND DISALLOWS EXPENSES, WHICH HAS BEEN ALREADY PAIDDURING THE YEAR. 3. DISALLOWANCES OF 32,000 RECEIVED FROM LATE CHANDRASEKHAR MISHRA TOTAL UNSECURED LOAN 8,40,000 OUT OF THIS 32,000 OF SRI CHANDRASEKHAR MISHRA HAS BEEN DISALLOWED BY CONCERNED ASSESSING OFFICERS AS A BALANCE CONFIRMATION COULD NOT BE OBTAINED FROM HIM. AT THE TIME WHEN THE ASSESSING OFFICER WAS ASKING FOR BALANCE CONFIRMATION SRI CHANDRASEKHAR MISHRA WAS DEAD, SO THE BALANCE CONFIRMATION COULD NOT BE SUBMITTED (HOWEVER THE DEATH CERTIFICATE WAS SUBMITTED) THEREFORE, THE LEARNED INCOME TAX OFFICER IS NOT CORRECT BY LAW/ FACT TO APPLY THIS SEC. AND DISALLOWS EXPENSES. 4. DISALLOWANCES OF 82,000 AS DIFFERENTIAL AMOUNT RECEIVED BY EXPRESS PUBLICATION (MADURAI) LTD. FROM US. THEREFORE, THE LEARNED INCOME TAX OFFICER IS NOT CORRECT BY LAW/FACT TO APPLY THIS SEC. AND DISALLOWS EXPENSES . 5. DISALLOWANCES OF 1,50,000 AS UNSECURED LOAN TAKEN FROM SRI BISWADUTTA MISHRA. THE LEARNED INCOME TAX OFFICER ORDER FOR DISALLOWING 1,50,000 (IGNORING EVIDENCE PRESENTED BEFORE HIM ) BROUGHT FROM MR. BISWADUTTA 4 MISHRA & IMPOSING PENALTY ON SUCH AMOUNT IS NOT CORRECT BY LAW OR FACT. 6. DI SALLOWANCES OF 1,80,000 AS SHARE APPLICATION MONEY PENDING ALLOCATION AS UNACCOUNTED FOR INCOME. THE LEARNED INCOME TAX OFFICER ORDER DISALLOWING 1,80,000 AS SHARE APPLICATION MONEY (IGNORING DOCUMENTS & EVIDENCE PRODUCED BEFORE ASSESSMENT) AND IMPOSING PENALTY ON S UCH AMOUNT IS NOT CORRECT. 4. HOWEVER, THE LEARNED CIT(A) CHOSE TO DISMISS THE APPEAL OF THE ASSESSEE IN LIMINE BY NOT ADMITTING THE SAME IN VIEW OF THE ASSESSEE HAVING PREFERRED TO FILE THE APPEAL WITH A DELAY OF MORE THAN ONE YEAR WITHOUT BRINGING REASO NS ON RECORD. 5. AT THE OUTSET, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT AN APPLICATION U/S.154 WAS FILED BEFORE THE ASSESSING OFFICER AFTER RECEIVING THE ORDER U/S.143(3) WHICH WAS A BONAFIDE MISTAKE WHEN THE COUNSEL APPEARING BEFORE THE LEARNE D CIT(A) WAS CONFINED TO BED REST AFTER POST OPERATION OF SEPTICEMIA AND IN VIEW OF THE APPELLATE ORDER RECEIVED BY THE ASSESSEE ANOTHER COUNSEL WAS ENGAGED WHICH ON ACCOUNT OF ILLNESS AND DETORIATION OF HEALTH OF EARLIER COUNSEL WERE NOT BROUGHT ON RECORD BY THE LEARNED COUNSEL FOR THE ASSESSEE INSOFAR AS THE LEARNED CIT(A) OUGHT TO HAVE CONDONED THE DELAY OF HAVING PREFERRED AN APPLICATION U /S.154 WHICH TILL NOW HAS NOT BEEN CONSIDERED BY THE ASSESSING OFFICER WHICH AT LEAST COULD BE APPEALED AGAINST BEFO RE THE LEARNED CIT(A). THE DELAY CAUSED IN FILING THE APPEAL WAS PURELY A BONAFIDE BELIEF OF SEEKING REMDY AND IT IS NOT DELIBERATE, WILLFUL ATTEMPT WHICH THE LEARNED CIT(A) HAS TRIED TO TAKE RECOURSE BY OPINING THAT AT LEAST AN APPLICATION U/S.264 COULD H AVE BEEN FILED. HE PRAYED THAT THE ISSUE BE RESTORED TO THE FILE OF THE LEARNED CIT(A) FOR CONSIDERATION ON MERITS AS SUBMITTED A T THE TIME OF FILING OF THE APPEAL, THOUGH BELATEDLY. FOR THIS PURPOSE HE HAS CHOSEN TO FILE AN ADDITIONAL GROUND CONTENDING THAT THE DISMISSAL OF THE ASSESSEES APPEAL IN LIMINE WAS NOT ON PROPER CONSIDERATION 5 OF THE FACTS WHICH GROUND MAY KINDLY BE CONSI DERED FOR ADJUDICATION OVER AND ABOVE THE GROUNDS AS MENTIONED ABOVE. 6. THE LEARNED DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW AND THE MATERIAL ON RECOR D. WITHOUT DELIBERATING ON THE ISSUES ON MERITS AS AGITATED BY THE LEARNED COUNSEL FOR THE ASSESSEE, AS MENTIONED ABOVE, THE LEARNED COUNSEL FOR THE ASSESSEE HAS PRAYED FOR RESTORATION OF THE ISSUES ON MERITS TO THE FILE OF THE LEARNED CIT(A) WHO HAS NOT D ELIBERATED ON THE MERIT ADDITIONS AND DISALLOWANCE IN VIEW OF HAVING CONSIDERED THE ASSESSEES PLEA OF HAVING SOUGHT REMEDY U/S. 1 54 INSTEAD OF FILING APPEAL BEFORE HIM ON TIME. A COPY OF THE PETITION U/S.15 4 HAS BEEN FURNISHED FILED BEFORE THE ASSESSING OF FICER ON 14 TH JANUARY, 2010 (WITHIN 30 DAYS OF ASSESSMENT ORDER) , WHICH HAS BEEN PERUSED BY US INSOFAR AS THE CONTENTION OF THE ASSESSEE AS AN APPELLANT WHETHER COULD BE RECTIFIED WAS STILL THE ISSUE TO BE DEALT WITH EITHER BY THE ASSESSING OFFICER OR BY T HE LEARNED CIT(A). THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT BECAUSE OF MISFORTUNE FACED BY THE ASSESSEES EARLIER COUNSEL WHO GOT BED RIDDEN DUE TO SUFFERING FROM SEPTICEMIA FOR WHICH THE MEDICAL CERTIFICATE HAS BEEN PLACED ON RECORD. NOT AS SIGNING PURELY PROFESSIONAL NEGLIGENCE ON THE FACT THE ADDITIONS HAVE BEEN MADE WHICH WERE SOUGHT TO BE RECTIFIED BY THE ASSESSEE APPELLANT BY WAY OF A PETITION U/S.154 JUSTIFIES THE DELAY WHICH THE LEARNED CIT(A) HAS TRIED TO CONSIDER FOR DISMISSING THE A SSESSEES APPEAL IN LIMINE. THE OPINI ON OF THE LEARNED CIT(A) TO THE ASSESSEE TO HAVE PREFERRED A PETITION/S.264 IS OF NO AVAIL INSOFAR AS HE HAS TAKEN A PROFESSIONAL APPROACH TO THE ISSUES BEFORE HIM WHICH WAS ALREADY WITHIN THE DOMAIN OF THE ASSESSEE - APP ELLANT BUT BE CAUSE THE COUNSEL HANDLING THE ASSESSEES CASE BEFORE THE 6 ASSESSING OFFICER WAS BED RIDDEN AND COULD ONLY BE CONSIDERED AS A MAT TER FOR SCRUPULOUSLY FINDING APPARENT MISTAKES AND NOT REASONS FOR BRINGING ON RECORD THE ADDITIONS/DISALLOWANCE W HICH HAVE BEEN CONSIDERED IN DETAIL BY THE ASSESSING OFFICER. IN THIS VIEW OF THE MATTER, WE CONDONE THE DELAY IN FILING THE FIRST APPEAL AND SET ASIDE THE IMPUGNED ORDER OF THE LEARNED CIT(A) AND RESTORE THE ISSUES TO HIS FILE FOR CONSIDERATION OF THE SAM E AFTER AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. SD/ - SD/ - ( . . . ) , (K.S.S.PRASAD RAO), JUDICIAL MEMBER ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( ) DATE: 14.09.2012 - COPY OF THE ORDER FORWARDED TO: 1. / THE APPELLANT : 2 / THE RESPONDENT: 3. / THE CIT, 4. ( ) / THE CIT(A), 5. / DR, CUTTACK BENCH 6. GUARD FILE . / TRUE COPY, / BY ORDER, APPENDIX XVII SEAL TO BE AFFIXED ON THE ORDER SHEET BY THE SR . P.S./P.S. AFTER DICTATION IS GIVEN 1. DATE OF DICTATION 11.09.2012.. 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 12.09.2012OTHER MEMBER . 3. DATE ON WHICH THE APPROVED DRAF T COMES TO THE SR. P.S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.... 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S 14.9.2012 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 14.9.2012 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER ............. ... 9. DATE OF DESPATCH OF THE ORDER .. ( ), (H.K.PADHEE), SENIOR.PRIVATE SECRETARY.