M/s Khalsa Brothers, Durgapur V. ACIT, CIR-2, Durgapur, Durgapur

ITA 216/KOL/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1667 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 11 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 03-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA
• Keywords: Depreciation; Opportunity of being heard; Principle of natural justice; Assessment record; Non passing of speaking order
• Section: 143(3); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B, BENCH KOLKATA BEFORE SHRI N.V. VASUDEVAN, JM &DR. A.L.SAINI, AM ./ITA NO.216/KOL/2015 ( / ASSESSMENT YEAR: 2010-11) M/S KHALSA BROTHERS D-141, YURI GAGRIN PATH, BIDHANNAGAR, DURGAPUR - 713212 VS. ACIT, CIR-2, DURGAPUR AAYAKAR BHAWAN, CITY CENTRE, DURGAPUR 713216. ./ ./PAN/GIR NO. : AACFK 8843 P (ASSESSEE) .. (RESPONDENT) ASSESSEE BY :SHRI SOMNATH GHOSH, ADVOCATE RESPONDENT BY :SHRI S. DASGUPTA, ADDL. CIT(DR) / DATE OF HEARING : 13/12/2017 /DATE OF PRONOUNCEMENT : 09/02/2018 / O R D E R PER DR. ARJUN LAL SAINI, AM: THE CAPTIONED APPEAL FILED BY THE ASSESSEE, PERTAINING TO ASSESSMENT YEAR 2010-11, IS DIRECTED AGAINST AN ORDER PASSED BY THE COMMISSIONER OF INCOME TAX(APPEALS), DURGAPUR,IN APPEAL NO.42/CIT(A)/DGP/2013-14, DATED 24.12.2014,WHICH IN TURN ARISES OUT OF AN ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT), DATED 30.03.2013. 2.THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. FOR THAT ON THE FACTS OF THE CASE THE LD. CIT(A) DISPOSED OFF THE APPEAL CASE IN A HURRY WITHOUT AFFORDING PROPER AND REASONABLE OPPORTUNITY OF BEING HEARD TO THE APPELLANT, AND THE ORDER PASSED WITHOUT A HEARING MAY PLEASE BE SET ASIDE. 2.FOR THAT ON THE FACTS NARRATED IN THE APPEAL ORDER, IT WILL BE SEEN THAT THE CASE WAS FIXED AND RE-FIXED FOR APPEAL HEARING TWICE WITHIN A PERIOD OF NINE DAYS (WITHOUT ACTUAL SERVICE OF NOTICE OF HEARING) AND THEREAFTER, FINALLY FIXED FOR HEARING ON 24 TH DECEMBER, 2014 AND EX PARTE ORDER PASSED ON THE VERY SAME DATE ON 24 TH DECEMBER, 2014, ITSELF, IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 3. FOR THAT THE LD. CIT(A) HAS NOT DECIDED THE APPEAL ON MERITS AND HAS NOT EVEN CONSULTED THE ASSESSMENT RECORDS AND HAS DISPOSED OFF THE APPEAL EX PARTE, WITHOUT CONSIDERING OR DISCUSSING THE GROUNDS OF APPEAL, VIDE A CRYPTIC, NON SPEAKING ORDER AND THE SAME MAY PLEASE BE SET ASIDE. M/S KHALSA BROTHERS ITA NO.216/KOL/2015 ASSESSMENT YEAR: 2010-11 PAGE | 2 4. FOR THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN SUSTAINING THE ADDITION OF RS.54,43,629/- U/S 40(A)(IA) OF THE ACT, 1961, FOR NON DEDUCTION OF TDS, U/S 194A OF THE ACT61, WHEN THE PROVISIONS ARE NOT APPLICABLE TO THE INSTANT PAYMENT AND THE ADDITION MAY PLEASE BE DELETED. 5.FOR THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN SUSTAINING THE ADDITION OF RS.32,23,370/- U/S 40(A)(IA) OF THE ACT61, FOR NON DEDUCTION OF TDS U/S 194C, IN A TRANSACTION OF PURCHASE AND SALE OF MACHINE SPARES (DULY SUPPORTED BY VAT TAX INVOICE) AND THE ADDITION ILLEGALLY SUSTAINED MAY PLEASE BE DELETED. 6.FOR THE THAT LD. CIT(A) WAS NOT JUSTIFIED IN SUSTAINING THE ADDITION OF RS.45,65,154/- ON A/C OF DEPRECIATION, ON HEAVY VEHICLES, WHEN THE CLAIM OF THE APPELLANT AS PER CBDT CIRCULAR NO.609, @30% IS LEGALLY ALLOWABLE AND MAY PLEASE BE ALLOWED. 7. FOR THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND ANY FURTHER GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING 3. HOWEVER, IN THIS APPEAL, THE ASSESSEE HAS RAISED SIX GROUNDS OF APPEALS, BUT AT THE TIME OF HEARING, THE MAIN GRIEVANCE OF THE ASSESSEE HAS BEEN CONFINED TO GROUND NOS.4, 5 AND 6 ONLY AND OTHER GROUNDS WERE NOT PRESSED. 4. GROUND NO.4 RAISED BY THE ASSESSEE RELATES TO ADDITION OF RS.54,43,629/- U/S 40(A)(IA) OF THE I.T. ACT FOR NON DEDUCTION OF TDS U/S 194A OF THE ACT . 4.1 THE BRIEF FACTS APROPOS THIS ISSUE ARE THAT DURING THE ASSESSMENT PROCEEDINGS, THE AO NOTED THAT ASSESSEE PAID INTEREST/FINANCE CHARGES AT RS.54,43,629/- TO ASHOK LEYLAND, KOTAK MAHINDRA, MAGMA FINCORP LTD., MAGMA FIN LEASING LTD., SREI EQUIP FINANCE AND SREI FINANCE. THE AO WAS OF THE VIEW THAT PAYMENT OF INTEREST AMOUNT WAS MORE THAN THE SPECIFIED LIMIT DURING THE YEAR TO EACH OF THESE ABOVE SAID PARTIES,THEREFORE, PROVISIONS OF SECTION 194A OF THE ACT SHOULD BE APPLICABLE TO THE ASSESSEE. SINCE, THE ASSESSEE DID NOT FOLLOW THE PROVISIONS OF SECTION 194A OF THE ACT, THEREFORE, THE ENTIRE AMOUNT SHOULD BE DISALLOWED U/S 40(A)(IA) OF THE ACT. HOWEVER, DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE CONTENDED BEFORE THE AO THAT NO TDS IS REQUIRED TO BE DEDUCTED FROM HIRE PURCHASE PAYMENTS AS PER CBDT CIRCULAR NO.1425 IN F.NO.275/09/80 DATED 16/11/1981 THEREFORE, PROVISIONS OF SECTION 194A DOES NOT APPLY TO HIM. M/S KHALSA BROTHERS ITA NO.216/KOL/2015 ASSESSMENT YEAR: 2010-11 PAGE | 3 HOWEVER, THE AO REJECTED CONTENTION OF THE ASSESSEE AND MADE THE ADDITION. 4.2 AGGRIEVED BY THE ADDITION MADE BY THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CTI(A) WHO HAS CONFIRMED THE ADDITION MADE BY THE AO BECAUSE NONE APPEARED BEFORE HIM DURING THE APPELLATE PROCEEDINGS.NOT BEING SATISFIED WITH THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 4.3 AT THE OUTSET, THE COUNSEL FOR THE ASSESSEE, SUBMITTED BEFORE US THAT PROVISIONS OF SECTION 194A OF THE ACT, DO NOT APPLICABLE TO HIM. THEREFORE, ADDITION MADE BY THE AO AND CONFIRMED THE LD. CIT(A) NEEDS TO BE DELETED. APART FROM THIS, THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO SUBMITTED THAT THE IMPUGNED ORDER IS AN EX PARTE ORDER AND THE ASSESSEE COULD NOT PLEAD HIS CASE BEFORE THE LD. CIT(A). THEREFORE, THIS ISSUE REQUIRES TO BE EXAMINED AFRESH BY THE AO. 4.4 HOWEVER, THE LD. DR FOR THE REVENUE DID NOT CONTROVERT THE SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE AND FAIRLY AGREED WITH HIM. 4.5 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD, WE NOTE THAT THE IMPUGNED ORDER IS AN EX PARTE ORDER AND THE ASSESSEE COULD NOT PLEAD BEFORE THE LD. CIT(A). THE ASSESSEE COULD NOT SUBMIT THE DETAILS AND DOCUMENTS BEFORE THE LD.CIT(A) AND MOREOVER THE APPLICABILITY OF SECTION 194A IN THE ASSESSEES CASE UNDER CONSIDERATION IS DOUBTFUL. THEREFORE, WE THINK IT PROPER TO SET ASIDE THE ORDER OF THE LD. CIT(A) AND REMIT THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER TO ADJUDICATE AFRESH. WE DIRECT THE AO TO EXAMINE THE APPLICABILITY OF SECTION 194A AND ADJUDICATE THE ISSUE AS PER THE PROVISIONS OF LAW. THEREFORE, WE ALLOW GROUND NO.4 RAISED BY THE ASSESSEE FOR STATISTICAL PURPOSES. 4.6 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE (IN GROUND NO.4), IS ALLOWED FOR STATISTICAL PURPOSES. M/S KHALSA BROTHERS ITA NO.216/KOL/2015 ASSESSMENT YEAR: 2010-11 PAGE | 4 5. GROUND NO.5 RAISED BY THE ASSESSEE RELATES TO ADDITION OF RS.32,23,370/- U/S 40(A)(IA) OF THE ACT FOR NON-DEDUCTION OF TDS U/S 194C OF THE ACT. 5.1 THE BRIEF FACTS APROPOS THIS ISSUE ARE THAT THEASSESSEE PAID RS.32,23,370/- TO M/S VE COMMERCIAL VEHICLES LTD.(VOLVO) ON ACCOUNT OF MACHINE MAINTENANCE CHARGES. THE AO WAS OF THE VIEW THAT THE AMOUNT PAID TO M/S VE COMMERCIAL VEHICLES LTD.(VOLVO), ON ACCOUNT OF MACHINE MAINTENANCE CHARGES, IS REQUIRED TO DEDUCT THE TDS BECAUSE SECTION 194C OF THE ACT CLEARLY STATES THAT: ANY PERSON RESPONSIBLE FOR PAYING ANY SUM TO ANY RESIDENT(HEREAFTER IN THIS SECTION REFERRED TO AS CONTRACT) FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK) IN PURSUANCE OF A CONTRACT BETWEEN THE CONTRACTOR AND A SPECIFIED PERSON SHALL, AT THE TIME OF CREDIT OF SUCH SUM TO THE ACCOUNT OF THE CONTRACTOR OR AT THE TIME OF PAYMENT THEREOF IN CASH OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE, WHICHEVER IS EARLIER, DEDUCT AN AMOUNT EQUAL AT THE RATE AS SPECIFIED UNDER THIS SECTION. THEREFORE, AO WAS OF THE VIEW THAT THE SAID AMOUNT HAS BEEN PAID BY THE ASSESSEE IN PURSUANCE OF A CONTRACT BETWEEN THE ASSESSEE AND M/S VE COMMERCIAL VEHICLES LTD.(VOLVO) AND SINCE THE ASSESSEE HAS VIOLATED THE PROVISIONS OF SECTION 194C OF THE ACT, HENCE HE MADE ADDITION OF RS.32,23,370/-. 5.2 AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FIELD AN APPEAL BEFORE THE LD. CIT(A), WHO HAS CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. DURING THE APPELLATE PROCEEDINGS, THE ASSESSEE DID NOT APPEAR BEFORE THE LD. CIT(A),THEREFORE, HE PASSED AN EX PARTE ORDER. 5.3 NOT BEING SATISFIED WITH THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED BEFORE US THAT ASSESSEE HAS PAID AN AMOUNT TO RS.32,23,370/- TO M/S VE COMMERCIAL VEHICLES LTD.(VOLVO). THE PAYMENT TO M/S VE COMMERCIAL VEHICLES M/S KHALSA BROTHERS ITA NO.216/KOL/2015 ASSESSMENT YEAR: 2010-11 PAGE | 5 LTD.(VOLVO) WASON ACCOUNT OF PURCHASED OF MACHINE PARTS. MOREOVER, THE TRANSACTION BETWEEN ASSESSEE AND M/S VE COMMERCIAL VEHICLES LTD.(VOLVO) WERE DULY SUPPORTED BY THE VAT TAX CHALLENS/INVOICES. THEREFORE, ADDITION MADE BY THE AO AND CONFIRMED BY THE LD. CIT(A) NEEDS TO BE DELETED. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE HAS PRIMARILY REITERATED THE STAND TAKEN BY THE ASSESSING OFFICER, WHICH WE HAVE ALREADY NOTED IN OUR EARLIER PARA AND IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. 5.4 WE HAVE GIVEN A CAREFUL CONSIDERATION TO THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD, WE NOTE THAT THE TRANSACTION BETWEEN ASSESSEE AND M/S VE COMMERCIAL VEHICLES LTD.(VOLVO), AS SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE, RELATES TO PURCHASE OF SPARE PARTS AND WHICH WERE DULY SUPPORTED BY THE VAT TAX INVOICES. SINCE, THE IMPUGNED ORDER OF THE LD. CIT(A) IS AN EX PARTE ORDER, THEREFORE, THE ASSESSEE COULD NOT PLEAD HIS CASE BEFORE THE LD. CIT(A). WE NOTE THAT IF IT IS A PURCHASE TRANSACTION OF SPARE PARTS, THEN IT WOULD BE A PURCHASE AND SALE TRANSACTION AND IT WOULD NOT BE A CONTRACTFOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK) IN PURSUANCE OF A CONTRACT BETWEEN THE CONTRACTOR AND A SPECIFIED PERSON, AND TDS U/S 194C WOULD NOT ATTRACT ,ANDWE ARE OF THE VIEW THAT THIS ASPECT SHOULD BE EXAMINED BY THE ASSESSING OFFICER. THEREFORE,WE DIRECT THE AO TO EXAMINE THE VAT INVOICES AND OTHER RELATED DOCUMENTS AND ADJUDICATE THE ISSUE AS PER THE PROVISIONS OF LAW. WE ALSO DIRECT THE ASSESSEE TO SUBMIT DETAILS OF PURCHASE AND SALE OF MACHINE SPARE PARTS AND VAT INVOICES AND OTHER DOCUMENTS AS REQUIRED BY THE ASSESSING OFFICER. THEREFORE, WE ALLOW THIS GROUND FOR STATISTICAL PURPOSES. 5.5 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE (IN GROUND NO.5), IS ALLOWED FOR STATISTICAL PURPOSES. 6. GROUND NO.6 RAISED BY THE ASSESSEE RELATES TO ADDITION OF RS.45,65,154/- ON ACCOUNT OF DEPRECIATION ON HEAVY VEHICLES, WHEN THE M/S KHALSA BROTHERS ITA NO.216/KOL/2015 ASSESSMENT YEAR: 2010-11 PAGE | 6 CLAIM OF THE ASSESSEE AS PER CBDT CIRCULAR NO.609 SHOULD BE AT THE RATE OF 30%. 6.1THE BRIEF FACTS APROPOS THIS ISSUE ARE THAT DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE CLAIMED DEPRECIATION ON TIPPERS AT THE RATE OF 30% OF WDV. THOSE TIPPERS WERE USED IN THE ASSESSEES OWN BUSINESS. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE SUBMITTED THAT DEPRECIATION ON TIPPER/DUMPERS WERE CLAIMED AT THE HIGHER RATE OF 30% AS PER CBDT CIRCULAR NO.609 DATED 29.07.1991. THE AO OBSERVED THAT CIRCULAR OF CBDT IS ABOUT ALLOWANCE OF DEPRECIATION ON MOTOR VEHICLES OWNED AND USED BY TOUR OPERATORS AND TRAVEL AGENTS IN THE BUSINESS OF RUNNING THEM ON HIRE FOR TOURISTS, THEREFORE IT DOES NOT APPLY TO ASSESSEE. THE ASSESSING OFFICER REJECTED THE CONTENTION OF THE ASSESSEE AND HELD THAT ASSESSEE`S TIPPERS/DAMPER FALL IN THE CATEGORY OF HEAVY GOOD VEHICLES AND IS ELIGIBLE TO CLAIM DEPRECIATION AT THE RATE OF 15%, ONLY, WHEREAS THE ASSESSEE HAD CLAIMED HIGHER RATE OF DEPRECIATION @30%. THEREFORE, THE AO ALLOWED THE DEPRECIATION AT THE RATE OF 15% AND DISALLOWED THE BALANCE AMOUNT TO THE TUNE OF RS. 45,65,154/-. 6.2 AGGRIEVED BY THE ADDITION MADE BY THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A) WHO HAS ALSO CONFIRMED THE ADDITION MADE BY THE AO.NOT BEING SATISFIED WITH THE ORDER OF LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US.THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED BEFORE US THAT SINCE THE ORDER OF THE LD. CIT(A) IS AN EX PARTE ORDER, THEREFORE, HE COULD NOT PLEAD HIS CASE BEFORE HIM. THE LD. COUNSEL THEREFORE, REQUESTED THE BENCH TO REMIT THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION.THE LD. DR FOR THE REVENUE HAS FAIRLY AGREED WITH THE SUBMISSIONS OF LD. COUNSEL FOR THE ASSESSEE. 6.3. WE HAVE GIVEN A CAREFUL CONSIDERATION TO THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD, WE NOTE THAT SINCE THE IMPUGNED ORDER IS AN EX PARTE ORDER, AND THE ASSESSEE COULD NOT PLEAD HIS CASE M/S KHALSA BROTHERS ITA NO.216/KOL/2015 ASSESSMENT YEAR: 2010-11 PAGE | 7 BEFORE THE LD. CIT(A). THEREFORE, WE ARE OF THE VIEW THAT CONSIDERING THE PRINCIPLES OF NATURAL JUSTICE, THIS ISSUE SHOULD BE SENT BACK TO THE FILE OF THE AO FOR FRESH ADJUDICATION. THEREFORE, WE DIRECT THE AO TO EXAMINE THE CIRCULAR OF CBDT VIS-A VIS NATURE AND SIZE OF VEHICLE OF THE ASSESSEE AND ADJUDICATE THE ISSUE AS PER PROVISIONS OF LAW. 6.4 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE (IN GROUND NO.6), IS ALLOWED FOR STATISTICAL PURPOSES. ORDER IS PRONOUNCED IN THE OPEN COURT ON 09/02/2018. SD/- (N.V. VASUDEVAN) SD/- (DR. A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA; DATED 09/02/2018 [ RS SPS] / COPY OF THE ORDER FORWARDED TO : TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY, HEAD OF OFFICE/D.D.O, I.T.A.T, KOLKATA BENCHES, KOLKATA . 1. / THE ASSESSEE M/S KHALSA BROTHERS 2. / THE RESPONDENT- ACIT, CIR-2, DURGAPUR 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, KOLKATA 6. / GUARD FILE.