DCIT, Tuticorin V. A.Hariharan, Tuticorin

ITA 216/CHNY/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8752 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 23-05-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 05-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CLEMENT RAMESHKUMAR CIT MRS VI
• Section: 143(3); 194C; 2

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , A B ENCH, CHENNAI . , . , # $ BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI G.PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A.NO.216/MDS/2016 ( / ASSESSMENT YEAR: 2012-13) THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE I, TUTICORIN. VS MR. A.HARIHARAN, 4/29E, 1, MADURAI BYE PASS ROAD, MADATHUR, TUTICORIN. PAN: AAKPH8833N ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR.CLEMENT RAMESHKUMAR, ADDL. CIT /RESPONDENT BY : MRS.VIDHYA, C.A. /DATE OF HEARING : 23 RD MAY, 2016 /DATE OF PRONOUNCEMENT : 20 TH JULY, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THIS APPEAL IS FILED BY THE REVENUE AGGRIEVED BY TH E ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS)- 1, MADURAI IN ITA NO. 048/2015-16 DATED 18.11.2015 PASSED UNDER SECTION 143(3) R.W.S. 250(6) OF THE ACT. 2. THE REVENUE IN ITS APPEAL HAS RAISED SEVERAL GR OUNDS, HOWEVER, THE CRUX OF THE ISSUE IS THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DELETING THE DISALLOWANCE OF ` 9,74,03,552/- MADE BY THE LEARNED ASSESSING OFFICER BY INVOKING THE PROVISIONS OF SEC TION 2 ITA NO.216/MDS/2016 40(A)(IA) OF THE ACT FOR NON- REMITTANCE OF TDS WI THIN THE DUE DATE OF FILING OF THE RETURN UNDER SECTION 139(1) O F THE ACT. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF LOGISTICS FIL ED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2012-13 ON 06.12. 2012 ADMITTING TOTAL INCOME OF ` 78,86,740/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS COMPLETED BY THE LEARNED ASSESSING OFFICER UNDER SE CTION 143(3) OF THE ACT ON 31.03.2015 WHEREIN AMONGST CE RTAIN OTHER ADDITIONS, ADDITION WAS ALSO MADE BY INVOKI NG THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT BY DISA LLOWING THE EXPENDITURE FOR ` 9,74,03,552/-. 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, I T WAS NOTICED BY THE LEARNED ASSESSING OFFICER THAT THE A SSESSEE HAS PAID RS.9,74,03,552/- TOWARDS CONTRACT & RENT C HARGES WHEREIN PROVISIONS OF SECTION 194C AND 194I OF THE ACT ARE APPLICABLE AND ACCORDINGLY DEDUCTED TAX AT SOURCE FROM SUCH PAYMENTS MADE, HOWEVER THE TAX THAT WAS DEDUCTED WA S NOT REMITTED INTO THE GOVERNMENT TREASURY BEFORE THE DU E DATE OF 3 ITA NO.216/MDS/2016 FILING OF RETURN OF INCOME. THE DETAILS OF THE SAME ARE EXTRACTED HEREIN BELOW FROM THE ORDER OF THE LEARNE D ASSESSING OFFICER FOR REFERENCE:- S.NO. NAME OF THE DEDUCTEE NATURE OF PAYMENT AMT. PAID RS. TAX DEDUCTED RS. TAX DEPOSITED RS. DATE OF DEPOSIT INTO GOVT. A/C 1. M/S. HARI & CO. CONTRACT 194C 2,37,09,160 4,74,183 4,74,183 04.12.12 2. -DO- CONTRACT 194C 4,92,76,029 9,85,522 9,85,522 04.12.12 3. -DO- CONTRACT 194C 89,20,635 1,78,413 1,78,413 04.12.12 4. -DO-- CONTRACT 194C 1,44,47,728 2,80,313 2,80,313 04.12.12 5 M/S. RAJALAKSHMI SALT WORKS RENT 1941 10,50,000 1,05,000 1,05,000 04.12.12 TOTAL 9,74,03,552 20,23,431 20,23,431 SINCE THE ASSESSEE HAD REMITTED THE TAX DEDUCTED AT SOURCE INTO THE GOVT. TREASURY ONLY AFTER 30.09.2012 BEING THE DUE DATE OF FILING THE RETURN OF INCOME FOR THE ASSESSE E FOR THE RELEVANT ASSESSMENT YEAR 2012-13, THE LEARNED ASSES SING OFFICER DISALLOWED THE ENTIRE EXPENSE OF RS.974,03, 552/- INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT AND ACCORDINGLY MADE ADDITION FOR THE SAME. 6. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) DELETED THE ADDITION AFTER OBTAINING REMA ND REPORT 4 ITA NO.216/MDS/2016 DATED 6.11.2015 FROM THE LEARNED ASSESSING OFFICER. FOR ARRIVING AT SUCH CONCLUSION, THE MAIN REASONS ADDUC ED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ARE AS FOLLOWS:- I) THE ENTIRE CONTRACT PAYMENT AND RENT PAYMENT WER E MADE TO M/S. HARI & COMPANY AND M/S. RAJALAKSHMI SALT WORKS RESPECTIVELY. II) BOTH THESE PAYEES HAD FILED THEIR RETURN OF INC OME FOR THE RELEVANT ASSESSMENT YEAR AND HAD DISCHARGED THE IR TAX LIABILITY. III) HONBLE AGRA BENCH OF THE TRIBUNAL IN THE CASE OF RAJEEV KUMAR AGARWAL VS. ADDITIONAL. CIT REPORTED IN 165 TTJ 228 HAS HELD THAT THE 2 ND PROVISO TO 40(A)(IA) OF THE ACT INSERTED BY FINANCE ACT, 2012 IS CLARIFICAT ORY IN NATURE AND APPLICABLE TO ALL PENDING PROCEEDINGS. 7. BEFORE US, THE LEARNED DEPARTMENTAL REPRESENTATI VE VEHEMENTLY ARGUED BY STATING THAT THE 2 ND PROVISO TO SECTION 40(A)(IA) OF THE ACT HAS BEEN INSERTED BY THE FINAN CE ACT, 2012 W.E.F. 01.04.2013 AND THEREFORE THE SAME IS NO T APPLICABLE TO THE CASE OF THE ASSESSEE WHICH FALLS FOR THE 5 ITA NO.216/MDS/2016 ASSESSMENT YEAR 2012-13. HE THEREFORE PLEADED THAT THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) MAY BE SET ASIDE AND THAT THE LEARNED ASSESSING OFF ICER MAY BE RESTORED. 8. THE LEARNED AUTHORIZED REPRESENTATIVE ON THE OTH ER HAND RELIED IN THE ORDER OF THE LEARNED COMMISSIONE R OF INCOME TAX (APPEALS) AND ARGUED IN SUPPORT OF THE S AME. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE MATERIALS AVAILABLE ON RECORD. THE 2 ND PROVISO TO SECTION 40(A)(IA) OF THE ACT IS INDEED INSERTED BY FINANCE ACT, 2012 W.E.F. 1.4.2013 WHICH STATES THAT, WHERE AN ASSESSEE FAILS TO DEDUCT THE WHOLE OR ANY PART OF TAX IN ACC ORDANCE WITH THE PROVISIONS OF CHAPTER XVII-B ON ANY SUCH SUM BU T IS NOT DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER THE 1 ST PROVISO TO SUB-SECTION (1) OF SECTION 201, THEN FOR THE PURPOS E OF THIS SUB-CLAUSE, IT SHALL BE DEEMED THAT THE ASSESSEE HA S DEDUCTED AND PAID THE TAX ON SUCH SUM ON THE DATE O F FURNISHING OF RETURN OF INCOME BY THE RESIDENT PAYE E REFERRED TO IN THE SAID PROVISO. 6 ITA NO.216/MDS/2016 FROM THE ABOVE, IT IS CLEAR THAT THE PENAL PROVISIO NS OF SECTION 40(A)(IA) OF THE ACT CANNOT BE INVOKED WHERE THE PA YEE HAS DECLARED THE PAYMENT MADE BY THE ASSESSEE IN HIS RE TURN OF INCOME AND ACCORDINGLY PAID TAX. THE HONBLE AGRA BENCH OF THE TRIBUNAL IN THE CASE CITED HEREIN ABOVE HAS ALS O HELD AS UNDER:- SECOND PROVISO TO SECTION 40(A)(IA), INTRODUCED WITH EFFECT FROM 1ST APRIL 2013, PROVIDES, THAT ' WHERE AN ASSESSEE FAILS TO DEDUCT THE WHOLE OR ANY PART OF THE TAX IN ACCORDANCE WITH THE PROVISIONS OF CHAPTER XVII-B ON ANY SUCH SUM BUT IS NOT DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER THE FIRST PROVISO TO SUB-SECTION (1) OF SECTION 201 , THEN, FOR THE PURPOSE OF THIS SUB-CLAUSE, IT SHALL BE DEEMED THAT THE ASSESSEE HAS DEDUCTED AND PAID THE TAX ON SUCH SUM ON THE DATE OF FURNISHING OF RETURN OF INCOME BY THE RESIDENT PAYEE REFERRED TO IN THE SA ID PROVISO'. IN OTHER WORDS, AS LONG AS THE ASSESSEE CANNOT BE TREATED AS AN ASSESSEE IN DEFAULT, THE DISALLOWANCE UNDER SECTION 40(A)(IA) CANNOT COME INTO PLAY EITHER. TO UNDERSTAND THE EFFECT OF THIS PROVISO, IT IS USEFUL TO REFER TO FIRST PROVISO TO SECTION 201(1), WHICH IS ALSO INTRODUCED BY THE FINANCE ACT 2012AND EFFECTIVE1ST JULY 2012, AND WHICH PROVIDES THAT 'ANY PERSON, INCLUDING THE PRINCIPAL OFFICER OF A COMPANY, WHO FAILS TO DEDUCT THE WHOLE OR ANY PART OF THE TAX IN ACCORDANCE WITH THE PROVISIONS O F THIS CHAPTER ON THE SUM PAID TO A RESIDENT OR ON THE SUM CREDITED TO THE ACCOUNT OF A RESIDENT SHALL NOT BE DEEMED TO BE AN ASSESSEE IN DEFAULT IN RESPECT OF SUCH TAX IF SUCH RESIDENT-(I)HAS FURNISHED HIS RETURN OF INCOME UNDER SECTION 139; (II) HAS TAKEN INTO ACCOUNT SUCH SUM FOR 7 ITA NO.216/MDS/2016 COMPUTING INCOME IN SUCH RETURN OF INCOME; AND(III) HAS PAID THE TAX DUE ON THE INCOME DECLARED BY HIM IN SUCH RETURN OF INCOME, AND THE PERSON FURNISHES A CERTIFICATE TO THIS EFFECT FROM AN ACCOUNTANT IN SUCH FORM AS MAY BE PRESCRIBED.' THE UNAMBIGUOUS UNDERLYING PRINCIPLE SEEMS TO BE THAT IN THE SITUATIONS IN WHICH THE ASSESSEES TAX WITHHOLDING LAPSE HAVE NOT RESULTED IN ANY LOSS TO THE EXCHEQUER, AND THIS FACT CAN BE REASONABLY DEMONSTRATED, THE ASSESSEE CANNOT BE TREATED AS AN ASSESSEE IN DEFAULT. FURTHER THE KOLKATA BENCH OF THE TRIBUNAL IN THE CA SE OF NEW ALIGHMENT VS. ITO REPORTED IN 69 TAXMANN.COM 122 (K OLKATA) HAS HELD THAT PROVISO INSERTED BY THE FINANCE ACT, 2012 IN SECTION 40(A)(IA) OF THE ACT IS DECLARATORY AND CUR ATIVE IN NATURE AND THEREFORE IT SHOULD BE GIVEN RETROSPECTI VE EFFECT FROM 01.04.2005 BEING THE DATE FROM WHICH SUB-CLAUS E (IA) OF SECTION 40(A) OF THE ACT WAS INSERTED BY THE FINANC E (NO.2) ACT, 2004. 10. IN THESE CIRCUMSTANCES, WE DO NOT FIND IT NECES SARY TO INTERFERE WITH THE ORDERS OF THE LEARNED COMMISSION ER OF INCOME TAX (APPEALS) WHO HAS ONLY FOLLOWED THE RATI OS LAID DOWN BY THE CO-ORDINATE BENCHES OF THE TRIBUNAL IN THE CASES CITED SUPRA. THEREFORE, WE HEREBY CONFIRM THE ORDE R OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AND DI RECT 8 ITA NO.216/MDS/2016 THE LEARNED ASSESSING OFFICER TO DELETE ADDITION OF RS.9,74,03,552/- MADE BY THE LEARNED ASSESSING OFFI CER BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 20 TH JULY, 2016 SD/- SD/- ( . ) ( . ) (G.PAVAN KUMAR) ( A.MOHAN ALANKAM ONY ) # % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER # /CHENNAI, ( /DATED 20 TH JULY, 2016 SOMU *+ ,+ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF