DCIT, Circle-1(1), Cuttack V. M/s. H.L.Infrasture, Keonjhar

ITA 22/CTK/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7569 (ITAT-CUTTACK)
• Duration Of Justice: 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-01-2020
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 08-02-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: J K LENKA
• Assessee Lawyers: B TRIPAT HY
• Keywords: Opportunity of being heard; Additional evidence; Set aside
• Section: 40(a)(ia); 194C; 201(1); 201

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI C.M. GARG, JM & SHRI L.P. SAHU, AM . / ITA NO. 2 2 /CTK/201 9 ( / ASSESSMENT YEAR : 20 14 - 201 5 ) DCIT, CIRCLE - 1(1), CUTTACK VS. M/ S H.L. INFRASTRUCTURE, SALAPADA, GHASTIPUR, KEONJHAR - 758020 ./ PANNO. : A A FFH 5386 P ( / APPELLANT ) .. ( / RESPONDENT ) /REVENUE BY : SHRI J.K.LENKA, DR /ASSESSEE BY : SHRI B.TRIPAT HY, AR / DATE OF HEARING : 24 / 12 /20 19 / DATE OF PRONOUNCEMENT : 27 / 01 /20 20 / O R D E R PER L.P.SAHU , A M : TH E REVENUE HAS FILED THIS APPEAL AGAINST THE ORDER OF CIT(A), CUTTACK , DATED 23.11.2018 FOR ASSESSMENT YEAR 201 4 - 201 5 , ON THE FOLLOWING GROUNDS : - GROUND NO. 1 : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CLT(APPEALS) IS NOT JUSTIFIED IN ADMITTING THE ADDITIONAL EVIDENCE I.E. FORM NO.26A BELATEDLY FILED BEFORE HIM WHICH WAS NOT SUBMITTED BEFORE THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDING IN VIOLATION OF PROVISIONS OF RULE 46A OF THE IT RULES, 1962 IN AS MUCH AS (I) NO REASONS WERE RECORDED BY HIM FOR SUCH ADMISSION [RULE 46A(2)] AND (II) NO OPPORTUNITY WAS GRANTED TO THE AO TO EX AMINE THE EVIDENCE & REBUT THE SAME [RULE 46A(3)]. GROUND NO. 2 : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CLT(APPEALS) IS NOT JUSTIFIED IN LAW IN HOLDING THAT THE ASSESSEE IS NOT DEEMED TO BE AN ASSESSEE - IN - DEFAULT UNDER THE FIRST PROVISO T O SECTION 201(1) READ WITH SECTION 40(A)(IA) SINCE THE ASSESSEE HAS FURNISHED A CERTIFICATE FROM AN ACCOUNTANT IN THE PRESCRIBED FORM 26A AS PER RULE 31ACB OF IT RULES, 1961 BEFORE HIM. BUT THE CIT(A) HAS FAILED TO TAKE NOTE THAT AS PER THE SAID RULE 31ACB (ANNEXURE - 1), THE CERTIFICATE IN ITA NO. 2 2 /CTK/201 9 2 FORM NO.26A (ANNEXURE - 11) SHOULD BE FURNISHED TO THE DGLT(SYSTEM) OR THE PERSON AUTHORISED BY THE DGIT(SYSTEM) IN ACCORDANCE WITH THE SPECIFIED PROCEDURES, FORMATS AND STANDARDS AND NOT BEFORE THE C1T(A). SINCE THE FORM NO .26A HAS NOT BEEN FILED BEFORE THE DGIT(SYSTEM), THE ASSESSEE DID NOT DESERVE ANY RELIEF ON THIS ISSUE. GROUND NO. 3 : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(APPEALS) IS NOT JUSTIFIED IN DELETING THE ADDITIONS MADE UNDER DISALLOWANCE O F EXPENSES MADE UNDER THE HEAD 'SUB - CONTRACT WORKS' IN CONTRAVENTION OF PROVISIONS OF SECTION 40(A)(IA) R.W.S. 194C OF THE IT. ACT, 1961 IN ABSENCE OF ANY CORROBORATIVE EVIDENCE PRODUCED DURING THE COURSE OF ASSESSMENT PROCEEDING. GROUND NO.4 : THE APPEL LANT CRAVES LEAVE TO ADD, ALTER, AMEND ONE OR MORE GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD 2. FACTS IN BRIEF ARE THAT THE ASSESSEE IS A FIRM ENGAGED IN THE BUSINESS OF EXECUTION OF CIVIL CONTRACT WORKS. THE RETURN OF INCOME FOR AY. - 2014 - 15 WAS FILED ON 01.12.2014 DISCLOSING A TOTAL INCOME OF RS.34,52,750/ - . THE CASE WAS SELECTED FOR SCRUTINY UNDER THE CASS SCHEME AND STATUTORY NOTICES WERE ISSUED TO THE ASSESSEE. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT THE ASSESSEE HAD D EBITED A SUM OF RS.1,70,40,107/ - TOWARDS SUB - CONTRACT WORKS WITHOUT DEDUCTING ANY TAX AT SOURCE ON THIS PAYMENT. THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLANATION TENDERED BY THE ASSESSEE AND ACCORDINGLY DISALLOWED THE SAME U/S. 40(A)(IA) OF THE I.T ACT, 1961. 3. FEELING AGGRIEVED FROM THE ASSESSMENT ORDER , THE ASSESSEE APPEALED BEFORE THE CIT(A) AND THE CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. ITA NO. 2 2 /CTK/201 9 3 4. AGAINST THE ORDER OF THE CIT(A), THE REVENUE IS IN APPEAL BEFORE THE INCOME TAX APPELLATE TRIBUNAL. 5. LD. DR BEFORE US RELIED ON ORDER OF AO AND SUBMITTED THAT THE CLT(A) IS NOT JUSTIFIED IN ADMITTING THE ADDITIONAL EVIDENCE I.E. FORM NO.26A BELATEDLY FILED BY THE ASSESSEE BEFORE HIM WHICH WAS NOT SUBMITTED BEFORE THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDING IN VIOLATION OF PROVISIONS OF RULE 46A OF THE IT RULES, 1962 IN AS MUCH AS NO REASONS WERE RECORDED BY HIM FOR SUCH ADMISSION [RULE 46A(2)] AND NO OPPORTUNITY WAS GRANTED TO THE AO TO EXAMINE THE EVIDENCE & REBUT THE SAM E [RULE 46A(3)] OF I.T.RULES, 1962. FURTHER, LD. DR SUBMITTED THAT THE ASSESSEE HAS FURNISHED A CERTIFICATE FROM HIS ACCOUNTANT IN THE PRESCRIBED FORM 26A AS PER RULE 31ACB OF IT RULES, 1961 BEFORE HIM BUT THE CIT(A) HAS FAILED TO TAKE NOTE THAT AS PER THE SAID RULE 31ACB , THE CERTIFICATE IN FORM NO.26A SHOULD BE FURNISHED TO THE DGLT(SYSTEM) OR THE PERSON AUTHORISED BY THE DGIT(SYSTEM) IN ACCORDANCE WITH THE SPECIFIED PROCEDURES, FORMATS AND STANDARDS AND NOT BEFORE THE C1T(A). SINCE THE FORM NO.26A HAS NO T BEEN FILED BEFORE THE DGIT(SYSTEM), THE ASSESSEE DID NOT DESERVE ANY RELIEF ON THIS ISSUE. THEREFORE, LD. DR SUBMITTED THAT THE AO HAS RIGHTLY MADE DISALLOWANCE OF EXPENSES MADE UNDER THE HEAD 'SUB - CONTRACT WORKS' IN CONTRAVENTION OF PROVISIONS OF SECTIO N 40(A)(IA) R.W.S. 194C OF THE IT. ACT, 1961 IN ABSENCE OF ANY CORROBORATIVE ITA NO. 2 2 /CTK/201 9 4 EVIDENCE PRODUCED DURING THE COURSE OF ASSESSMENT PROCEEDING. ACCORDINGLY, LD. DR SUBMITTED THAT WITHOUT PROVIDING ANY OPPORTUNITY TO AO TO VERIFY THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE DURING THE COURSE OF APPELLATE PROCEEDING, THE IMPUGNED ORDER PASSED BY THE CIT(A) FAILS AND DESERVES TO BE DISMISSED. 6. ON THE OTHER HAND, LD. AR RELIED ON THE ORDER OF CIT(A) AND SUBMITTED THAT SINCE THE ASSESSEE IS NOT DEEMED TO BE AN ASS ESSEE IN DEFAULT UNDER THE FIRST PROVISO TO SUB - SECTION (1) OF SECTION 201 OF THE I.T.ACT, 1962, THE FOR THE PURPOSES OF SECTION40(A)(IA) OF THE ACT ALSO IT SHALL BE DEEMED THAT THE ASSESSEE HAS DEDUCTED AND PAID THE TAX ON SUCH INCOME AND THEREFORE, NO DI SALLOWANCE U/S.40(A)(IA) IS WARRANTED. ACCORDINGLY, LD. AR SUBMITTED THAT THE APPEAL OF THE REVENUE DESERVES TO BE DISMISSED AND THE ADDITION DELETED BY THE CIT(A) MAY KINDLY BE UPHELD. 7. AFTER HEARING BOTH THE SIDES AND PERUSING THE ENTIRE MATERIAL ON RE CORD ALONG WITH THE OBSERVATIONS MADE BY BOTH THE AUTHORITIES BELOW IN THEIR RESPECTIVE ORDERS, WE FIND THAT THE AO ON PERUSAL OF THE LEDGER ACCOUNT OF THE ASSESSEE FOUND THAT THE ASSESSEE HAS NOT DEDUCTED TAX AT SOURCE FROM THE CREDITS/PAYMENTS MADE TO TH E PARTIES, ACCORDINGLY, HE MADE DISALLOWANCE U/S.40(A)(IA) OF THE ACT. BEFORE THE CIT(A) THE ASSESSEE FURNISHED A CERTIFICATE FROM HIS ACCOUNTANT IN THE PRESCRIBED FORM 26A, CERTIFYING THAT THE AMOUNT OF RS.1,70,40,107/ - PAID TO SHRI ITA NO. 2 2 /CTK/201 9 5 SATYENDRA KUMAR MISHRA BY THE ASSESSEE HAS BEEN TAKEN INTO ACCOUNT OF BY SHRI SATYENDRA KUMAR MISHRA WHILE COMPUTING HIS TAXABLE INCOME FOR A.Y.2014 - 2015, ON THE BASIS OF WHICH THE CIT(A) OBSERVED THAT THE ASSESSEE IS NOT IN DEFAULT IN RESPECT OF SECTION 201(1) OF THE ACT DEEME D TO HAVE DEDUCTED AND PAID THE TAX ON THE AMOUNT IN QUESTION TO SHRI SATYENDRA KUMAR MISHRA BY VIRTUE OF THE SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT. ACCORDINGLY, THE CIT(A) DELETED THE DISALLOWANCE MADE BY THE AO U/S.40(A)(IA) OF THE ACT. NOW, BEF ORE US, THE CONTENTION OF THE LD. DR IS THAT WHEN THE ASSESSEE HAS FILED ADDITIONAL EVIDENCE I.E. FORM NO.26A BEFORE THE CIT(A), IT WAS THE DUTY OF THE CIT(A) TO PROVIDE AN OPPORTUNITY TO AO FOR EXAMINATION OF THE EVIDENCE SO FILED BY THE ASSESSEE FOR THE FIRST TIME IN THE APPELLATE PROCEEDINGS TO AVOID VIOLATION OF PROVISIONS OF RULE 46A OF THE I.T.RULES, 1962. ON PERUSAL OF THE ASSESSMENT ORDER, WE DO NOT FIND ANY MENTION BY THE AO THAT THE ASSESSEE HAS PRODUCED ABOVE EVIDENCE DURING THE COURSE OF ASSESSM ENT PROCEEDINGS . CONSIDERING THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE , WE ARE IN AGREEMENT WITH THE CONTENTION OF LD. DR THAT DEFINITELY THE AO HAS DEPRIVED OF OPPORTUNITY TO VERIFY AND EXAMINE THE ADDITIONAL EVIDENCE ON WHICH BASIS THE CIT(A) HAS DE LETED THE ADDITION , WHICH AMOUNTS TO VIOLATION OF RULES 46A OF THE I.T.RULES, 1962. IN VIEW OF THE ABOVE , WE SET ASIDE THE IMPUGNED ORDER AND DIRECT THE CIT(A) TO PASS A FRESH ORDER AFTER GIVING DUE OPPORTUNITY TO THE AO . NEEDLESS TO SAY, THE ITA NO. 2 2 /CTK/201 9 6 ASSESSEE SHAL L BE GIVEN REASONABLE OPPORTUNITY OF BEING HEARD. ACCORDINGLY, WE ALLOW THE GROUND NO.1 RAISED BY THE REVENUE FOR STATISTICAL PURPOSES. SINCE WE HAVE SET ASIDE THE MATTER TO THE FILE OF CIT(A) FOR FRESH ORDER, OTHER GROUNDS ON MERIT ARE NOT ADJUDICATED UP ON . 8 . IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 27 / 01 /20 20 . SD/ - ( C.M.GARG ) SD/ - (L.P.SAHU) / JUDICIAL MEMBER / ACCOUNTANT MEMBER CUTTACK; DATED 27 / 01 /20 20 PRAKASH KUMAR MISHRA, SR.P.S. / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) ITAT CUTTACK BENCH, CUTTACK 1. / THE APPELLANT - DCIT, CIRCLE - 1(1), CUTTACK 2. / THE RESPONDENT - M/S H.L. INFRASTRUCTURE, SALAPADA, GHASTIPUR, KEONJHAR - 758020 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, CUTTACK 6. / GUARD F ILE. //TRUE COPY//