ITO, New Delhi V. M/s Amer Traders (Joint Venture), Delhi

ITA 211/DEL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 4039 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-04-2010
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 13-04-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 19-01-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MRS PRATIMA KAUSHIK
• Assessee Lawyers: T R TALWAR
• Section: 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH-A, NEW DELHI BEFORE SHRI G.E. VEERABHADRAPPA, VICE PRESIDENT & SHRI H.S. SIDHU, JUDICIAL MEMBER I.T.A.NO.211 /DEL/2009 ASSESSMENT YEAR 2005-06 INCOME-TAX OFFICER, WARD-21(4), VS. M/S AMER TRADER S (JOINT VENTURE), D-BLOCK, PAPER GODOWN, KH.NO.675, VIKAS BHAWAN, BABA COLONY, NEW DELHI. NEAR RADHEY SHYAM MANDIR, BURARI GAON, DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : MRS. PRATIMA KAUSHIK, SR. D.R. RESPONDENT BY : MR. T.R. TALWAR, ADVOCATE O R D E R PER H.S. SIDHU, JM: REVENUE HAS FILED THE CAPTIONED APPEAL AGAINST THE ORDER PASSED BY THE CIT(A)-XXII, NEW DELHI DATED 3.11.2008 FOR THE ASSE SSMENT YEAR 2005-06 ON THE FOLLOWING GROUNDS:- 1. THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DELE TING THE ADDITION OF RS.1,12,19,434/- IS MADE BY THE ASSESSING OFFICER A S INCOME OF AOP. 2. THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DELE TING THE ADDITION OF RS.1,46,412 ON ACCOUNT OF ALLEGED CLAIM OF THE ASSE SSEE. 2. FACTS ARE NOT DISPUTED BY BOTH THE PARTIES AND, THEREFORE, NEED NOT BE REPEATED TO AVOID REPETITION. AT THE TIME OF HEARI NG BOTH THE PARTIES AGREED THAT ITA NO.211/DEL/2009 2 THE ISSUE INVOLVED IN GROUND NO.1 HAS BEEN DECIDED IN FAVOUR OF REVENUE BY THE SPECIAL BENCH OF THE ITAT VIDE ORDER DATED 31.8.200 7 IN THE CASE OF PRADEEP AGENCIES-JOINT VENTURE V. ITO, ITA NO.17/DEL/2007/2 007 (111)-TTJ-0346-TDLS. 4. WE HAVE HEARD BOTH THE PARTIES. WE HAVE ALSO PE RUSED THE ORDER OF THE SPECIAL BENCH OF THE ITAT, DELHI DATED 31.8.2007 IN THE CASE OF PRADEEP AGENCIES (SUPRA). FOR THE SAKE OF CONVENIENCE, THE RELEVANT OBSERVATIONS FROM THE ORDER OF SPECIAL BENCH ARE REPRODUCED HEREUNDER :- WE DO NOT SEE ANY INCONSISTENCY OR CONTRADICTION B ETWEEN THE CIRCULAR SO ISSUED AND S. 145 OF THE IT ACT. IN FA CT, THE CIRCULAR CLARIFIES THE WAY IN WHICH THESE AMOUNTS ARE TO BE TREATED UNDER THE ACCOUNTING PRACTICE FOLLOWED BY THE LENDER. THE CIRCULAR, THE REFORE, CANNOT BE TREATED AS CONTRARY TO SECTION 1454 OF THE IT ACT OR ILLEGA L IN ANY FO RM. IT IS MEANT FOR A UNIFORM ADMINISTRATION OF LAW BY ALL THE IT A UTHORITIES IN A SPECIFIC SITUATION AND, THEREFORE, VALIDLY ISSUED UNDER S. 1 19 OF THE IT ACT. AS SUCH, THE CIRCULAR WOULD BE BINDING ON THE DEPARTMENT. IN THE CASE OF CIT VS. SAHNEY STEEL & PRESS WORKS L TD., (1985) 44 CTR (AP) 243: (1985) 152 ITR 39 (AP) [AFFIRMED BY A PEX COURT IN SAHNEY STEEL & PRESS WORKS LTD. ETC. ETC. ETC. VS. CIT (1 997) 142 CTR(SC) 261; (1997) 228 ITR 253(SC)] IT HAS BEEN HELD THAT POWER S CONFIRMED BY THE BOARD UNDER S. 119 CANNOT BE PUT ON A HIGHER FOOTI NG THAN THE RULE MAKING EFFECT AND IT IS WELL SETTLED THAT RULE MAKI NG AUTHORITY CANNOT TRAVEL BEYOND THE FOUR CORNERS OF THE ACT NOR CAN IT MAKE RULE CONTRARY TO THE PROVISIONS OF THE ACT. THE FOLLOWING OBSERVATIONS FROM THE SAID DECISION ARE REPRODUCED BELOW:- 54. THE POWER IS CONFERRED UPON THE BOARD FOR THE PROPER ADMINISTRATION OF THIS ACT AND IT WOULD FOLLOW THA T THIS POWER HAS TO BE EXERCISED CONSISTENT WITH AND WITHIN THE FOUR CORNE RS OF THE ACT. IN OTHER WORDS, THE BOARD IS GIVEN THE POWER TO FILL IN THE DETAILS OR TO PRESCRIBE PROCEDURES WHERE THE ACT AND THE RULES ARE SILENT. BUT THE SAID POWER CAN NEVER BE CONSTRUED AS ONE ENABLING THE BOARD TO ISS UE CIRCULARS OVERRIDING, MODIFYING OR IN EFFECT AMENDING THE PRO VISIONS OF THE ACT. MR. ANJANEYULU ARGUES THAT THE CIRCULARS WHICH ARE FAV OURABLE TO THE ASSESSEE ARE BINDING BUT NOT THOSE WHICH ARE AGAINST THE INT ERESTS OF THE ASSESSEE. AGAIN WE ARE UNABLE TO DISCERN ANY PRINCIPLE BEHIND SUCH A DISTINCTION. THE POWER CONFERRED BY THE BOARD BY S. 119 CANNOT B E PUT ON A HIGHER FOOTING THAN THE RULE MAKING POWER AND IT IS WELL-S ETTLED THAT THE RULE- ITA NO.211/DEL/2009 3 MAKING AUTHORITY CANNOT TRAVEL BEYOND THE FOUR CORN ERS OF THE ACT NOR CAN IT MAKE A RULE CONTRAR``Y TO THE PROVISIONS OF THE ACT. INDEED IN JALAN TRADING CO. (P) LTD. VS. MILL MAZDOOR SABHA (1996) 36 COMP CAS 901 (SC) : AIR 1967 SC 691, THE PROVISION EMPOWERING TH E CENTRAL GOVERNMENT TO REMOVE DOUBTS OR DIFFICULTIES IN GIVI NG EFFECT TO THE PROVISIONS OF THE ACT WAS STRUCK DOWN AS AMOUNTING TO DELEGATION OF THE LEGISLATIVE POWER TO EXECUTIVE AUTHORITY WHICH IS I MPERMISSIBLE. THUS IT IS CLEAR FROM THE ABOVE POSITION OF LAW AS DESCRIBED IN THE AFOREMENTIONED DECISIONS THAT POWERS OF CBDT EXERCI SED UNDER S. 119 ARE NOT WIDE ENOUGH TO TRAVEL BEYOND THE SCOPE OF T HE ACT. ITS POWERS ARE SAME AS ARE THE POWERS OF THE RULE MAKING AUTHORITY . MOREOVER, IT HAS ALREADY BEEN POINTED OUT THAT IN ANY CASE THE CIRCU LAR HAD LOST ITS VALIDITY AS PER LAW DECLARED BY THE APEX COURT BY WAY OF THE DECISION IN THE CASE OF ITO VS. ATCHAIAH (SUPRA) WHEN THE CONTROVERSY PR EVAILING ON THE ISSUE WAS RESOLVED AND IT WAS INTERPRETED THAT UNDER 1961 ACT NO OPTION WAS VESTED WITH THE ITO TO EITHER ASSESS THE AOP OR ITS MEMBERS. SUCH OPTION THOUGH WAS AVAILABLE UNDER 1922 ACT BUT WAS NOT PRO VIDED IN 1961 ACT AS THERE WAS A DIFFERENCE IN THE LANGUAGE OF BOTH THE ACTS. IT HAS ALSO BEEN POINTED OUT IN THIS ORDER THAT THERE WAS SUBSEQUENT CHANGE IN THE LEGISLATION WHEN S. 167B WAS INTRODUCED. THUS RELY ING ON THE CIRCULAR IT CANNOT BE HELD THAT ASSESSING OFFICER HAD NO JURISD ICTION TO ASSESS THE AOP (ASSESSEE) AS HE HAD ALREADY ASSESSED ITS MEMBE RS. IN VIEW OF THE ABOVE DISCUSSION OUR ANSWER TO THE Q UESTION REFERRED TO THE SPECIAL BENCH IS THAT ASSESSMENT MADE BY ASS ESSING OFFICER ON AOP IS VALID IN THE LIGHT OF THE JUDGMENT OF HON'BL E SUPREME COURT IN THE CASE OF ITO VS. CH. ATCHAIAH (SUPRA) AND ALSO IN TH E LIGHT OF THE STATUTORY AMENDMENTS BROUGHT IN THE STATUTE. FOR THE REASONS DISCUSSED ABOVE BOARDS CIRCULAR DT. 24 TH AUGUST, 1966 CANNOT BE RELIED UPON TO HOLD THAT THE ASSESSMENT ON AOP IS INVALID. THE SAID CIRCULA R HAD LOST ITS VALIDITY. OUR FINDINGS WITH REGARD TO GROUNDS RAISED BY THE A SSESSEE IN ITS APPEAL ARE AS UNDER:- 1. APROPOS GROUND NO.1 IT IS HELD THAT CIT(A) WAS R IGHT IN CONFIRMING THE FINDINGS OF THE ASSESSING OFFICER THAT COMMISSI ON INCOME OF RS.2,37,55,912 WAS TAXABLE IN THE HANDS OF ASSESSEE (I.E. IN THE STATUS OF AOP) AND THE SAID INCOME WAS NOT TAXABLE IN THE HAN DS OF RESPECTIVE MEMBERS OF JOINT VENTURE; 2. APROPOS GROUND NO.2 IT IS HELD THAT AS SHARE OF INCOME FALLING TO THE SHARES OF RESPECTIVE MEMBERS OF AOP IN ALL CASES IS ABOVE THE EXEMPTION LIMIT, THE CIT(A) WAS RIGHT IN CONFIRMING THE FINDI NG OF ASSESSING OFFICER THAT TAX ON AOP SHOULD BE LEVIED AT MAXIMUM MARGINA L RATE. ITA NO.211/DEL/2009 4 3. APROPOS GROUND NO.3 IT IS HELD THAT THE BOARD IN STRUCTION DT. 24 TH AUGUST, 1966 WAS NOT BINDING ON ASSESSING OFFICER I N VIEW OF AFOREMENTIONED DECISION OF HON'BLE SUPREME COURT IN THE CASE OF ITO VS. CH. ATCHAIAH (SUPRA) AND ALSO IN THE LIGHT OF SUBSE QUENT AMENDMENT IN THE STATUTE. THEREFORE, ASSESSING OFFICER WAS RIGHT IN MAKING ASSESSMENT IN THE HANDS OF THE AOP AND SUCH ASSESSMENT IS VALID I N ACCORDANCE WITH LAW AND CIT(A) WAS RIGHT IN CONFIRMING THE SAME. KEEPING IN VIEW OUR ABOVEMENTIONED CONCLUSION, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. AFTER GOING THROUGH THE FINDING OF THE SPECIAL BENC H OF ITAT IN THE CASE OF PRADEEP AGENCIES-JOINT VENTURE, SUPRA, WE ARE OF TH E CONSIDERED OPINION THAT THE ISSUE INVOLVED IN THE PRESENT APPEAL HAS ALREAD Y BEEN DECIDED IN FAVOUR OF DEPARTMENT BY THE AFORESAID SPECIAL BENCH. THEREFO RE, RESPECTFULLY FOLLOWING THE SAME, THE ISSUE IN GROUND NO.1 OF THE APPEAL FILED BY THE REVENUE IS ALLOWED AND ORDER OF THE ASSESSING OFFICER IN THIS REGARD IS UP HELD. 5. AS REGARDS GROUND NO.2 REGARDING DELETION OF ADD ITION OF RS.1,46,412/- ON ACCOUNT OF ALLEGED CLAIM OF THE ASSESSEE, LD. D.R. RELIED UPON THE ORDER PASSED BY THE ASSESSING OFFICER. ON THE CONTRARY, THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE ORDER PASSED BY THE LD. FIRST APPEL LATE AUTHORITY. 6. AFTER HEARING BOTH THE PARTIES AND PERUSING THE IMPUGNED ORDER, WE ARE OF THE CONSIDERED OPINION THAT LD. FIRST APPELLATE AUT HORITY HAS RIGHTLY DELETED THE ADDITION IN DISPUTE BY RELYING ON THE RATIO OF JUDG MENT OF PUNJAB & HARYANA HIGH COURT IN THE CASE OF OSWAL WOOLLEN MILLS LTD. V. CI T, 122 ITR 789-800(PUNJAB) AS ALSO JUDGMENTS OF VARIOUS HIGH COURTS. RELEVANT OB SERVATIONS OF THE LD. FIRST ITA NO.211/DEL/2009 5 APPELLATE AUTHORITY AS CONTAINED IN PARA 4.1 OF HIS ORDER IS REPRODUCED HEREUNDER FOR THE SAKE OF CONVENIENCE:- 4.1 I HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTI ONS. I FIND MYSELF IN AGREEMENT WITH THE APPELLANTS CONTENTION THAT WHEN THEY HAVE ISSUED THE CHEQUE THEY HAVE COMPLETED THEIR PART OF OBLIGATION TO SETTLE THE DEBT THEREAFTER TO PERFORM AN ACT TO GET THE CHEQUES ENC ASHED FROM BANK IS LEFT WITH THE PAYEE. IT IS A SETTLED PROPOSITION OF LAW THAT IF PAYMENT BY ANY CHEQUE IS ACCEPTED AND THE CHEQUE ON PRESENTATION I S IN CASH, THE PAYMENT RELATES BACK TO THE DATE WHEN THE CHEQUE HA D BEEN RECEIVED. IN THIS CONTEXT, RELIANCE IS PLACED ON THE DECISIONS I N THE CASES OF OSWALL WOOLLEN MILLS LTD. V. CIT (1980) 122 ITR 789, 800 ( PUNJAB), CIT V. ROHTAK, DELHI TRANSPORT PVT. LTD., (1981) 130 ITR 777 (PUNJ AB), CIT V. KUMUDAN PUBLICATIONS PVT. LTD. (1981) 128 ITR 617 (MAD.) AN D P.L. HAULWEL TRAILERS LTD. V. DCIT (2006) 100 ITD 485 (CHENNAI). IT MAY BE CLARIFIED THAT THE AFORESAID DECISIONS WERE RENDERED IN THE CONTEXT OF PAYMENT OF ADVANCE TAX IN THE GOVT. TREASURY OR BANKS. HOWEVERKL, THE RATIO LAID DOWN IN THOSE CASES IS APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE IN SO FAR AS THE PRESENTATION OF THE CHEQUE BY THE APPELLANT TO THE PAYEE IS CONCERNED. THEREFORE, I DELETE THE ADDITIONS OF RS. 1,46,712. THE APPELLANT DID NOT PRESS THE GROUND OF APPEAL IN RES PECT OF THE ADDITION OF RS.8,076. HENCE THE ACTION OF THE ASSESSING OFFICE R TO THAT EXTENT IS UPHELD. KEEPING IN VIEW THE FINDING GIVEN BY THE LEARNED F IRST APPELLATE AUTHORITY, WE FIND THAT ASSESSEE HAS COMPLETED THEIR OBLIGATION BY ISS UING CHEQUES WHICH HAVE BEEN ENCASHED ON PRESENTATION TO THE BANK LATER ON. THEREFORE, THE PAYMENT RELATES BACK TO THE DATE WHEN THE CHEQUES HAVE BEEN RECEIVED I.E. 31.3.2005 THAT COVERS THE ASSESSMENT YEAR 2005-06 WHICH IS IN DISPUTE IN THE PRESENT APPEAL. THEREFORE, THE LD. FIRST APPELLATE AUTHORI TY HAS RIGHTLY DELETED THE ADDITION OF RS.1,46,712 AND SUSTAINED THE BALANCE ADDITION O F RS.8086 AND RIGHTLY UPHELD THE ORDER OF THE ASSESSING OFFICER TO THAT EXTENT. KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED OPINION THAT NO INTERFERENCE ITA NO.211/DEL/2009 6 IS CALLED FOR IN THE WELL-REASONED ORDER PASSED BY THE LEARNED FIRST APPELLATE AUTHORITY. GROUND NO.2 RELATING TO DELETION OF ADD ITION OF RS.1,46,712/- IS ACCORDINGLY DISMISSED AND ORDER OF LD. FIRST APPELL ATE AUTHORITY IN THIS REGARD IS UPHELD. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23.4.2010. SD/- SD/- ( G.E. VEERABHADRAPPA) ( H.S. SIDHU ) VICE PRESIDENT JUDICIAL MEMBER DATED: 23 RD APRIL, 2010. VSK COPY TO: 1. APPELLANT-REVENUE 2. RESPONDENT-ASSESSEE 3. CIT(A) 4. ITO 5. DR, ITAT, NEW DELHI. ASSISTANT REGISTRAR