ITO, Ward 3(4), Pune V. Shri Balasaheb Sandhu Gogawale, Pune

ITA 2116/PUN/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 72432 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-12-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 29-10-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P L PATHADE
• Section: 143(3); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.2116/PN/2012 (A.Y.2009-10) ITO, WARD 3(4), PUNE APPELLANT VS. SHRI BALASAHEB SANDHU GOGAWALE, C-4/23, SHIVTARA GARDENS, GANGANJAY SOCIETY, KOTHRUD, PUNE - 411038 PAN: ACRPG4313R RESPONDENT APPELLANT BY : SHRI P.L. P ATHADE RESPONDENT BY : SHRI SUNIL GANOO DATE OF HEARING : 12.12.2013 DATE OF ORDER : 24.12.2013 ORDER PER R.K. PANDA, A.M: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER DATED 26.06.2012 OF THE CIT(A)-II, PUNE RELATING TO A.Y. 2009-10. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS AN INDIVIDUAL AND CARRIES ON THE BUSINESS OF CENTERING WORK AND L ABOUR CHARGES IN CIVIL CONSTRUCTION ON CONTRACT BASIS. THE ASSESSEE FILED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS.9,43,410/- WHIC H WAS ASSESSED U/S 143(3) DETERMINING THE TOTAL INCOME AT RS.41,55 ,560/-. DURING THE ASSESSMENT PROCEEDINGS, THE A.O. NOTICED THAT T HE ASSESSEE HAD MADE PAYMENTS ON ACCOUNT OF LABOUR CHARGES AND NO T DS HAD BEEN DEDUCTED ON SUCH PAYMENTS. THE A.O. ALSO NOTICED TH AT THE ASSESSEE 2 HAD DEDUCTED TDS ON THE SUB-CONTRACT OF RS.3,98,949 /-. THE AUDITORS IN THE TAX AUDIT REPORT AT COL. NO. 27(A) HAD COMMENTED THAT THE ASSESSEE HAD NOT COMPLIED WITH THE PROVISIONS O F CHAPTER XVII B REGARDING DEDUCTION OF TAX AT SOURCE AND PAYMENT TH EREOF TO THE CREDIT OF THE CENTRAL GOVT. HOWEVER, NO DETAILS RE GARDING THE DEDUCTION OF TAX WAS FURNISHED BY THE TAX AUDITOR U NDER COLUMN 27(B) OF THE TAX AUDIT REPORT. THE A.O., THUS WORKE D OUT THE TOTAL PAYMENTS ON ACCOUNT OF LABOR CHARGES ON WHICH TDS H AD NOT BEEN DEDUCTED AT RS.31,23,144/-. THE A.O. HELD THAT THE ASSESSEE HAD DEFAULTED AND FAILED TO DEDUCT THE TAX U/S 194C AND THEREFORE AS PER THE PROVISIONS OF SEC.40(A)(IA) THE ENTIRE AMOUNT H AS TO BE DISALLOWED. THE A.O ACCORDINGLY DISALLOWED THE AFORESAID AMOUNT OF RS.31,23,144/- AND ADDED THE SAME TO THE TOTAL INCO ME. THE A.O ALSO DISALLOWED A SUM OF RS.89,000/- U/S 40(A)(IA) HOLDING THAT THE ASSESSEE HAD NOT DEDUCTED TDS ON THE SAID AMOUNT AN D THE SAME WAS ADDED TO THE TOTAL INCOME. THUS THE A.O DISALL OWED A TOTAL SUM OF RS.32,12,144/- (31,23,144 +89,000) U/S. 40(A)(IA ) AND ADDED THE SAME TO THE TOTAL INCOME. 3. BEFORE CIT(A), THE ASSESSEE HAD TAKEN THE FOLLOW ING GROUNDS: 1) IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LEARNED ASSESSING OFFICER HAS ERRED IN MAKING A DIS ALLOWANCE OF RS.32,12,144/- U/S40(A)(IA) OF THE I.T ACT, 1961 . THE SAID DISALLOWANCE BEING PATENTLY ILLEGAL BAD IN LAW, DEV OID OR MERITS AND LEGALLY UNSUSTAINABLE THE SAME MAY PLEAS E BE DELETED. 2) IT MAY PLEASE BE HELD THAT THE PAYMENT OF RS. 31,23 ,144/- MADE BY THE APPELLANT DURING THE RELEVANT YEAR TO T HE VARIOUS SUPERVISORS/HEADS OF THE TEAMS IS OUTSIDE THE SCOPE AND PURVIEW OF THE PROVISIONS OF SEC. 194C OF THE IT AC T AND CONSEQUENTLY THE DISALLOWANCE OF RS. 31,23,144/- MA DE BY THE LEARNED ASSESSING OFFICER U/S 40(A)(IA) OF THE IT ACT BE DELETED, 3) SINCE AS ON 31-3-2009, THE LABOR CHARGES AMOUNTING TO RS.31,23,144/- WERE FULLY PAID AND NO AMOUNT WAS OUTSTANDING, THE PROVISIONS OF SEC. 40(A)(IA) OF THE I.T. ACT 3 ARE IN APPLICABLE AND CONSEQUENTLY THE DISAL LOWANCE MADE U/S 40(A)(IA) OF THE ACT DESERVES TO BE DELETE D. 4) THE LEARNED ASSESSING OFFICER HAS FAILED TO APPRECI ATE THAT THE APPELLANT IN HIS RETURN OF INCOME HAS VOLUNTARILY M ADE A DISALLOWANCE OF RS.89,000/- U/S 40(A)(IA) OF TH E I.T. ACT. IN THE CIRCUMSTANCES, THE DISALLOWANCE OF THE SAID AMOUNT MADE BY THE LEARNED ASSESSING OFFICER ONCE AGAIN, B EING ERRONEOUS AND UNWARRANTED AS THE SAME AMOUNT TO DOU BLE DISALLOWANCE THE SAME MAY PLEASE BE DELETED. 5) THE APPELLANT CRAVES THE PERMISSION TO ADD, AMEND, MODIFY, ALTER, REVISE, SUBSTITUTE, DELETE ANY OR ALL GROUND S OF APPEAL, IF DEEMED NECESSARY AT THE TIME OF HEARING OF THE APPE AL. 4. BASED ON THE ARGUMENTS ADVANCED BEFORE HIM, THE LD. CIT(A) FOLLOWING THE DECISION OF THE VISHAKAPATNAM SPL. BE NCH OF THE TRIBUNAL IN THE CASE OF MERILYN SHIPPING AND TRANSP ORT VS. ACIT REPORTED IN (2012) 136 ITD 23 (VISH) SB, HELD THAT THE PROVISIONS OF SEC.40(A)(IA) ARE NOT APPLICABLE TO THE ASSESSEE AS NO AMOUNTS WERE PAYABLE ON THE LAST DAY OF THE FINANCIAL YEAR. AGG RIEVED WITH SUCH ORDER OF THE CIT(A), THE REVENUE IS IN APPEAL BEFOR E US ON THE FOLLOWING GROUNDS: A) THE LD CIT(A) ERRED IN DELETING THE ADDITION OF RS.29,09,326/- MADE BY THE AO U/S 40(A)(IA) ON ACCO UNT OF NON DEDUCTION OF TAX AT SOURCE ON PAYMENTS MADE BY THE ASSESSEE. B) THE LD. CIT(A) ERRED IN RELYING UPON THE DECISION O F VISHAKAPATNAM SPECIAL BENCH OF TRIBUNAL IN THE CASE OF MERILYN SHIPPING AND TRANSPORT (136 ITD 23 (SB) WHI LE HOLDING THAT THE PROVISIONS OF SECTION 40(A)(IA) WE RE NOT APPLICABLE TO THE ASSESSEE AS NO AMOUNTS WERE PAYAB LE ON THE LAST DATE OF THE FINANCIAL YEAR. C) THE LD. CIT(A) ERRED IN NOT APPRECIATING THAT SECTI ON 40(A)(IA) WAS INSERTED IN ORDER TO ENSURE SCRUPULOUS ADHERENC E TO THE TDS PROVISIONS AND IS APPLICABLE IRRESPECTIVE OF THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE. D) THE LD CIT(A) ERRED IN NOT RELYING ON THE DECISION OF THE DEY'S MEDICAL (UP) (P) LTD. VS UNION OF INDIA AND OTHERS (2009) 316 ITR 445, WHEREIN IT WAS HELD THAT IN CASE OF FA ILURE TO 4 DEDUCT TAX AT SOURCE SUCH PAYMENTS SHALL NOT BE ALL OWED TO BE DEDUCTED FROM THE COMPUTATION OF INCOME OF THE A SSESSEE U/S 40(A)(IA). 5. WE HAVE HEARD THE RIVAL ARGUMENTS MADE BOTH BY T HE SIDES AND PERUSED THE ORDERS OF AO AND CIT(A). WE FIND THE I SSUE OF APPLICABILITY OF PROVISIONS OF SEC.40(A)(IA) IN A C ASE WHERE NO AMOUNTS WERE PAYABLE ON THE LAST DAY OF THE FINANCIAL YEAR HAS BEEN DECIDED AGAINST THE ASSESSEE BY THE DECISION OF THE COORDIN ATE BENCH OF THIS TRIBUNAL IN THE CASE OF VINAY ASHWINIKUMAR JONEJA V S. ITO VIDE ITA NO.1514/PN/2012 ORDER DATED 22.10.2013 FOR A.Y.2006 -07. THE LD. COUNSEL FOR THE ASSESSEE HOWEVER, SUBMITTED THAT TH E LD. CIT(A) WHILE DECIDING THE APPEAL HAS NOT DECIDED THE GROUN D NO.2 RAISED BEFORE HIM, WHEREIN, THE ASSESSEE HAS CHALLENGED TH E APPLICABILITY OF PROVISIONS OF SEC.194(C) OF THE ACT TO THE ASSESSEE . HE, THEREFORE, REQUESTED THAT THE MATTER MAY BE SET ASIDE TO THE F ILE OF THE CIT(A) FOR DECIDING THE GROUND NO.2 RAISED BEFORE HIM. THE LD . DR HAS NO OBJECTION FOR RESTORING THE ISSUE TO THE FILE OF CI T(A) TO DECIDE THE LEGAL GROUND RAISED BEFORE HIM REGARDING NON-APPLIC ABILITY OF PROVISIONS OF SEC. 194(C) OF THE ACT TO THE ASSESSE E. 6. WE FIND THAT LD. CIT(A) WHILE DECIDING THE APPEA L AT PARA 5 OF HIS ORDER HAS OBSERVED AS UNDER: 5. SO FAR AS GROUND NO.2 IS CONCERNED, THE DECISI ON IS COVERED BY THE OTHER SPECIFIC GROUND DISCUSSED IN THE PRECE DING PARAS WHILE ADJUDICATING GROUND NO.3, THEREFORE, NO SEPAR ATE DECISION IS SPECIFICALLY REQUIRED IN RESPECT OF THIS GROUND. 7. SINCE HE HAS NOT ADJUDICATED THE GROUND NO.2 WHE REIN THE ASSESSEE HAS CHALLENGED THE APPLICABILITY OF PROVIS IONS OF SECTION 194C ON PAYMENTS MADE TOWARDS LABOUR CHARGES, THERE FORE, WE RESTORE THE ISSUE TO THE FILE OF THE CIT(A) TO DECI DE THE GROUND NO.2 RAISED BEFORE HIM. WE HOLD AND DIRECT ACCORDINGLY. 5 8. THE APPEAL FILED BY THE REVENUE IS ACCORDINGLY, ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THE DAY OF 24 TH DECEMBER 2013. SD/- SD/- (SHAILENDRA KUMAR YADAV) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 24 TH DECEMBER, 2013 GCVSR COPY TO:- 1. DEPARTMENT 2. ASSESSEE 3. THE CIT(A), KOLHAPUR 4. THE CIT, KOLHAPUR 5. THE DR, A BENCH, I.T.A.T., PUNE. 6. GUARD FILE //TRUE COPY// BY ORDER SENIOR PRIVATE SECRETARY, I.T.A.T., PUNE