M/s. L.M.Hati & Co., Jagatsinghpur V. Pr. CIT, Cuttack

ITA 232/CTK/2015

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 0971 (ITAT-CUTTACK)
• Duration Of Justice: 5 year(s) 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 12-05-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M K GAUTAM
• Assessee Lawyers: P R MOHANTY
• Keywords: Assessment record; TDS; Set aside
• Section: 263

Judgement Text

P A G E 1 | 5 IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE S/ SHRI C HANDRA MOHAN GARG , JUDICIAL MEMBER AND LAXMI PRASAD SAHU, ACCOUNTANT MEMBER ITA NO . 232 /CTK/201 5 ASSESSMENT YEAR : 2010 - 2011 M/S. L.M.HATI & CO. 59, MADHUBAN MARKET COMPLEX, PARADEEP, JAGATSINGHPUR VS. PR. CIT, CUTTACK PAN/GIR NO. AAAFL 4732 G (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI P.R.MOHANTY , AR REVENUE BY : SHRI M.K.GAUTAM, CIT DR DATE OF HEARING : 1 1 / 3 / 20 2 1 DATE OF PRONOUNCEMENT : 12 / 3 /20 2 1 O R D E R PER BENCH THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE PR.CIT, CUTTACK DATED 11.3.2015 U/S. 263 OF THE ACT FOR THE ASSESSMENT YEAR 2010 - 2011 . 2. FACTS IN BRIEF ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM, DERIVED INCOME FROM STEVEDORING, TRANSPORTATION AND HIRE CHARGES, ETC. THE ASSESSMENT U/S.144/143(3) WAS COMPLETED ON 18.3.2013 BY THE ASSESSING OFFICER DETERMINING THE TOTAL INCOME AT RS.1,16,87 ,570/ - AFTER ALLOWING SALARY TO THE PARTNERS OF RS.7,44,000/ - AND INTEREST TO THE PARTNERS OF ITA NO.232/CTK/2015 ASSESSMENT YEAR : 2010 - 2011 P A G E 2 | 5 RS.69,04,557/ - . THEREAFTER, BY VIRTUE OF POWERS CONFERRED U/S.263(1) OF THE ACT, LD PR. CIT CALLED FOR ASSESSMENT RECORDS AND FOUND THAT THE ORDER PASSED BY THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE ON THE FOLLOWING GROUNDS: I) AS PER THE PROVISIONS OF SECTION 184(5), THE SALARY PAID TO THE PARTNERS OF RS.7,44,000/ - AND INTEREST TO THE PARTNERS OF RS.69,04,557/ - OUGHT TO HAVE BEEN DISALLOWED BY THE LD. A.O II. AN AMOUNT OF RS. 29,54,616/ - HAS BEEN SHOWN AS PAYMENT TOWARDS OFFIC E RENT, AND THE ASSESSEE APPEARS TO HAVE NOT DEDUCTED TDS FROM SUCH PAYMENT AS REQUIRED U/S. 194 - 1, AND THE SAME OUGHT TO HAVE BEEN DISALLOWED BY THE LD. AO U/S.40(A)(IA). III. THE ASSESSEE HAS DEBITED AN AMOUNT OF RS.16,32,643/ - ON ACCOUNT OF SPEED MONEY, AND DURING THE ASSESSMENT, THE ASSESSEE HAS NOT BEEN ABLE TO SUBSTANTIATE THE SAID EXPENSES, AND THUS, IT OUGHT TO HAVE BEEN DISALLOWED BY THE LD. AO. ACCORDINGLY, LD PR. CIT SET ASIDE THE ASSESSMENT ORDER U/S.263 OF THE ACT AND DIRECTED THE AO TO MAKE THE ASSESSMENT DE NOVO AFTER DUE EXAMINATION OF THE IMPUGNED ISSUES AS WELL AS AFTER CONDUCTING PROPER ENQUIRIES AFTER BEING HEARD TO THE ASSESSEE. 4. LD A.R. OF THE ASSE SSEE SUBMITTED THAT AS REGARDS TO THE PROVISIONS OF SECTION 184(5) OF THE ACT IN RESPECT OF SALARY AND INTEREST PAID TO PARTNERS, THE ITAT CUTTACK IN THE CASE OF THE ASSESSEE IN ITA NO.267 AND 271/CTK/ 2004 - 05 ORDER DATED 13.7.2012 HAS HELD THAT AS THE AS SESSMENT WAS MADE BY THE AO U/S.144 OF THE ACT, THE DISALLOWANCE OF INTEREST AND SALARIES PAID ITA NO.232/CTK/2015 ASSESSMENT YEAR : 2010 - 2011 P A G E 3 | 5 TO THE PARTNERS IS DIRECTED TO THE ALLOWED AS THESE ARE THE EXPENSES INCURRED BY THE ASSESSEE DURING THE COURSE OF CARRYING ON ITS BUSINESS. 5. LD A.R. ALSO CONT ENDED THAT IN THE CASE OF ASSESSEE FOR ASSESSMENT YEAR 2007 - 08, THE ITAT CUTTACK B ENCH IN THE ORDER DATED 11.4.2012 HELD THAT 10% OF SPEED MONEY BE DISALLOWED AND REMAINING CLAIM OF THE ASSESSEE HAVE TO BE ALLOWED. THE LD A.R. SUBMITTED THAT SINCE THE ASSESSEE WAS NOT ALLOWED DUE OPPORTUNITY TO EXPLAIN HIS CASE BY FURNISHING COPIES OF THE TRIBUNAL ORDER (SUPRA) AS WAS FILED BEFORE HIM BUT HE DID NOT PAY ANY ATTENTION TO THESE RELEVANT ORDERS. OTHERWISE, THERE WAS NO VALID AND GOOD REASON TO HOLD THE ASSESSMENT ORDER ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. HE SUBMITTED THAT THE IMPUGNED ORDER U/S.263 OF THE ACT HAS TO BE QUASHED. 6. REPLYING TO ABOVE, THE LD CIT DR STRONGLY SUPPORTED THE IMPUGNED ORDER OF LD PR. CIT AND SUBMITTED THAT THE AO HAS NOT MADE ANY ENQUIRY ON ALL THE ISSUES VIZ NO TDS ON PAYMENT OF RS.2,22,268/ - OF PETTY RENT, PAYMENT OF RS.16,32,643/ - TOWARDS SPEED MONEY AND ALLOWABILITY OF INTEREST AND REMUNERATION TO THE PARTNERS, WHICH WAS NOT ALLOWABLE AS THE ORDER WAS PASSED U/S.144 OF THE ACT. THEREFORE, ORDER OF THE LD PCIT MAY KINDLY BE UPHELD DISMISSING THE APPEAL OF THE ASSESSEE. 7. IN THE PRESENT CASE, FROM THE RELEVANT ASSESSMENT ORDER DATED 18.3.2013, HE OBSERVE THAT THE AO HAS NOT MADE ANY ENQUIRY ON ALL THE ITA NO.232/CTK/2015 ASSESSMENT YEAR : 2010 - 2011 P A G E 4 | 5 ISSUES PICKED UP BY THE LD PCIT FOR ALLEGING THE IMPUGNED ORDER AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. HE ALSO SUBMITTED THAT THE LD PR. CIT HAS NOTED AND CONSIDERED BOTH THE ORDERS OF THE TRIBUNAL ( SUPRA), THEREFORE, IT CANNOT BE ALLEGED THAT NO ATTENTION HAS BEEN GIVEN TO THESE ORDERS. HE SUBMITTED THAT THE AO SHOULD HAVE DISALLOWED 10% OF SPEED MONEY BUT HE FAILED TO DO SO, THUS, THE ASSESSMENT ORDER HAS TO BE HELD AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 8. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS, WE ARE OF THE VIEW THAT IN THE ASSESSMENT ORDER PASSED U/S.144 OF THE ACT, THE AO HAS NOT CONSIDERED ALL THE ISSUES VIZ; PAYMENT OF INTEREST AND SALARY TO THE PARTNERS, SPEED MONEY AND TDS DEDUCTION. THE LD,. PR. CIT WAS RIGHT IN TAKING REVISIONARY ACTION U/S.263 OF THE ACT. CONSEQUENTLY, WE UPHOLD THE ORDER OF LD PR. CIT I N CONFIRMING THE VALIDITY OF ACTION U/S.263 OF THE ACT. HOWEVER, ON MERIT, WE FIND FORCE IN THE CONTENT ION OF LD COUNSEL OF THE ASSESSEE, TO WHICH, LD CIT DR ALSO CANDIDLY AGREED, THAT THE AO IS TO BE DIRECTED TO ADJUDICATE THESE ISSUES AFRESH AFTER CONSIDERING THE ORDER OF THE ITAT DATED 11.4.2012 (SUPRA) AND 13.7.2012 (SUPRA) AND TO ALLOW DUE OPPORTUNIT Y OF HEARING TO THE ASSESSEE BEFORE ADJUDICATION THE ISSUES ON MERITS. ITA NO.232/CTK/2015 ASSESSMENT YEAR : 2010 - 2011 P A G E 5 | 5 9. ACCORDINGLY, THE ACTION U/S.263 OF THE ACT BY THE LD PR. CIT IS UPHELD DISMISSING THE LEGAL GROUND OF THE ASSESSEE. HOWEVER, THE AO IS DIRECTED TO RE - ADJUDICATE THE ISSUES IN THE DIR ECTION AS INDICATED ABOVE. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED WITH THE DIRECTION TO THE AO AS NOTED ABOVE. ORDER PRONOUNCED ON 12 / 3 /20 2 1 . S D/ - SD/ - ( LAXMI PRASAD SAHU ) ( CHANDRA MOHAN GARG ) ACCOUNTANT MEMBER JUDICIAL MEMBER CUTTACK; DATED / 3 /20 2 1 B.K.PARIDA, SPS (OS) COPY OF THE ORDER FORWARDED TO : BY ORDER SR . PVT. S ECRETARY ITAT, CUTTACK 1. THE APPELLANT : M/S. L.M.HATI & CO. 59, MADHUBAN MARKET COMPLEX, PARADEEP, JAGATSINGHPUR 2. THE RESPONDENT. PR. CIT, CUTTACK 3. THE CIT(A) - , CUTTACK 4 . DR, ITAT, CUTTACK 5 . GUARD FILE. //TRUE COPY//