Premier Agencies, Hyderabad, Hyderabad V. ACIT, Circle-5(1), Hyderabad, Hyderabad

ITA 232/HYD/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8749 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 09-01-2020
• Assessment Year: 2009-2010
• Appeal Filed On: 13-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N SWAPNA
• Assessee Lawyers: TEJ PRAKASH TOSHNIWAL
• Keywords: Bonafide belief; Additional evidence; Assessment record; Set aside
• Section: 143(3); 43; 48; 148

Judgement Text

ITA NO 232 OF 2017 PREMIER AGENCIES HYDERABAD. PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B SMC BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA NO.232/HYD/2017 ASSESSMENT YEAR: 2009-10 M/S. PREMIER AGENCIES HYDERABAD PAN: AACFP1590Q VS. ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 5(1) HYDERABAD (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI TEJ PRAKASH TOSHNIWAL REVENUE BY : SMT. N. SWAPNA, DR DATE OF HEARING: 09/01/2020 DATE OF PRONOUNCEMENT: 17/01/2020 ORDER THIS IS ASSESSEES APPEAL FOR THE A.Y 2009-10 AGAIN ST THE ORDER OF THE CIT (A)-4, HYDERABAD, DATED 21-11- 2016. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FI RM, ENGAGED IN THE BUSINESS OF DEALERS IN GRILLS, GYPSU M BOARDS AND CONTRACTORS IN FALSE CEILING, FILED ITS RETURN OF I NCOME DECLARING TOTAL INCOME OF RS.29,06,570/-. THE ASSESSMENT WAS COMPLETED U/S 143(3) DETERMINING THE TOTAL INCOME AT RS.30,44 ,080/-. SUBSEQUENTLY, THE AO OBSERVED THAT AN AMOUNT OF RS. 1,02,613/- RECEIVED FROM EMPLOYEES TOWARDS CONTRIBUTION TO PF WAS PAID BY THE ASSESSEE TO THE GOVT. AFTER THE DUE DATE MENTIO NED IN THE RELEVANT STATUTE AND THEREFORE, IT IS NOT ALLOWABLE AS A DEDUCTION AS PER SECTION 36(1)(VA) OF THE I.T. ACT. TO TAKE R EMEDIAL ACTION, THE CASE WAS REOPENED BY ISSUANCE OF A NOTICE U/S 148 D ATED 4.10.2012. IN REPLY THERETO, THE ASSESSEE ACCEPTED THAT THERE WAS A DELAY IN PAYMENT OF PF, BUT SUBMITTED THAT COMPLE TE DUES OF PF ITA NO 232 OF 2017 PREMIER AGENCIES HYDERABAD. PAGE 2 OF 6 WERE PAID BY IT BEFORE THE END OF THE FINANCIAL YEA R, EXCEPT FOR THE MONTH OF MARCH, 2009. IT WAS SUBMITTED THAT THE AMO UNT RECEIVED TOWARDS THE PF NEEDS TO BE CREDITED TO THE EMPLOYEE S A/C BEFORE THE DUE DATES AND THAT THE AMOUNT PAID AS A CHALLAN SHALL BE CREDITED TO EMPLOYEES A/C ONLY AT THE TIME OF FILIN G OF CONTRIBUTION RETURNS UNDER THE RELEVANT ACT. THOUGH THE ASSESSEE ADMITTED THAT THERE WAS A DELAY IN PAYMENT, IT SUBMITTED THA T THE SAME WAS CORRECTED IN DUE TIME. THE ASSESSEE RELIED UPON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. VINAY CEMENT LTD. THE AO HOWEVER, DID NOT ACCEPT THE SAME AND HE DISA LLOWED THE CLAIM OF DEDUCTION OF THE EMPLOYEES CONTRIBUTION TO THE EXTENT OF RS.1,02,613/- AND BROUGHT IT TO TAX. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A) WHO CONFIRME D THE ORDER OF THE AO AND THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. THAT THE ORDER OF THE COMMISSIONER OF INCOME TA X (APPEALS)-4, HYDERABAD, IN CONFIRMING THE ASSESSMEN T ORDER PASSED BY THE ASST. COMMISSIONER OF INCOME TA X, CIRCLE-5(1). HYDERABAD, FOR THE ASSESSMENT YEAR 200 9-10 UNDER THE INCOME TAX ACT, 1961, IS CONTRARY TO LAW, AGAINST THE WEIGHT OF EVIDENCE AND PROBABILITIES OF THE CASE. 2. THAT THE ORIGINAL ASSESSMENT ORDER PASSED BY THE THEN ASSESSING AUTHORITY IS PERFECTLY CORRECT AND DO NOT WARRANT REVISION AT ALL. IT IS SUBMITTED THAT THERE IS NO I LLEGALITY OR IMPROPRIETY OR ANY IRREGULARITY IN THE ORIGINAL ASS ESSMENT ORDER PASSED BY THEN THE ASSESSING AUTHORITY UNDER SECTION 143(3) OF THE INCOME TAX ACT TO WARRANT ANY REVISION AT ALL. 3. THERE IS NO FRESH MATERIAL DE-HORSE THE ASSESSME NT RECORD TO WARRANT ANY REVISION AT ALL OF THE EARLIE R ASSESSMENT ORDER. ALL THE FACTS AND DOCUMENTS BORNE ON RECORD WERE BEFORE THE ASSESSING BEFORE COMPLETION OF THE ASSESSMENT. AFTER LOOKING TO THE ABOVE AND FACTS AN D DOCUMENTS, THE ASSESSMENT HAVE BEEN COMPLETED. HENC E PROPOSING INITIATING SECTION 148 OF THE INCOME TAX ACT AND INVOKING SECTION 148 OF THE INCOME TAX DO NOT WARRA NT THE BORNE FACTS OF THE CASE TO REVISE THE ASSESSMENT OR DER. 4. THE OBSERVATION OF THE ASST. COMMISSIONER THAT T HE PARTICULARS WERE CONCEALED IS ABSOLUTELY INCORRECT. THE ITA NO 232 OF 2017 PREMIER AGENCIES HYDERABAD. PAGE 3 OF 6 HON'BLE COMMISSIONER OF INCOME TAX OF APPEALS MAY B E PLEASED TO CALL FOR THE ENTIRE ASSESSMENT RECORDS T O KNOW ABOUT THE CONCEALED PARTICULARS. THE ALLEGATION IS BALD UNWARRANTED AND CONTRARY TO THE FACTS ON RECORD. 5. MERE ACCEPTING THAT THERE IS DELAY IN PAYMENT OF PROVIDENT FUND, DO NOT MEAN TO BE ACCEPTED AS INCOM E OF THE FIRM. THE ASST. COMMISSIONER FAILED TO NOTE THA T THE DELAY IN PAYMENT WAS COMPLIED WITHIN THE TIME LIMIT PRESCRIBED UNDER THE ACT OR NOT, WHICH THE ASSESSIN G AUTHORITY FAILED TO NOTE AND COMMITTED AN ERROR IN REVISING THE ASSESSMENT ORDER. 6. THE ASSESSMENT ORDER IS GOING BEYOND THE SCOPE O F THE SHOW CAUSE NOTICE. THE PETITIONER REPLIED TO THE CONTENTIONS, WHICH THE ASSESSING AUTHORITY TWISTED AND FURTHER ADDED CERTAIN FACTS TO DISALLOW THE CONTENT IONS OF THE PETITIONER FIRM. THE HON'BLE COURT HAVE HELD IN NUMBER OF OCCASIONS, THAT THE FINAL ORDER CANNOT GO BEYOND THE NOTICE. ONCE THE ABOVE SAID TEST IS APPLIED, THE ASSESSMENT ORDER IS NOT SUSTAINABLE IN THE EYE OF L AW. 7. THE ASSISTANT COMMISSIONER FAILED TO FURNISH THE REASONS, WHY HE PROPOSED THE NOTICE UNDER SECTION 1 48 OF THE INCOME TAX ACT. AT WHOSE INSTANCE THE ABOVE SAI D NOTICE WAS PROPOSED. THE PETITIONER FIRM IS UNDER T HE BONAFIDE BELIEF THAT THE NOTICE WAS ISSUED AT THE I NSTANCE OF THE AUDIT TO PROPOSE REVISION AND BASED ON THAT THE ABOVE SAID NOTICE WAS ISSUED AND CONFIRMED THE PROPOSITION ALTHOUGH REPLY WAS SUBMITTED. THE HON'B LE COURTS HAVE HELD THAT AUDIT PARTY NOTE CANNOT MAKE THE PROPOSED ADDITION. THE ASSESSING AUTHORITY IS QUASI - JUDICIAL AUTHORITY UNDER THE ACT TO ACT INDEPENDENT LY AND NOT THE INSTRUMENTAL AT THE INSTANCE OF THE AUDIT P ARTY'S OBSERVATION. HENCE THE ASSESSMENT IS BAD IN LAW AND LIABLE TO BE SET ASIDE. 8. THE OBSERVATION OF THE ASSESSING AUTHORITY IN DISALLOWING THE SUM OF RS.L.02.613/TOWARDS THE EMPLOYEE'S CONTRIBUTION TO THE RELEVANT FUND, WAS D EALT UNDER SECTION 36(L)(VA) READ WITH EXPLANATION AND H ELD THAT THE SUM SO PAID IS NOT ENTITLED FOR DEDUCTION. ON T HE CONTRARY TO SECTION 43 B WHICH ALLOWS DEDUCTION OF ANY SUM PAYABLE BY THE ASSESSEE ON ACTUAL PAYMENT BASIS I.E., MORE SO THE SAID SUM SHOULD HAVE BEEN PAID ON OR BEFORE FILING THE RETURN OF INCOME. WHEN THERE ARE TWO PROVISIONS CONTRADICTING TO EACH OTHER, THE BENEFIT SHOULD HAVE BEEN EXTENDED TO THE ASSESSEE WHICH MINIMIZES THE LIABILITY. WHEN THERE IS DEBATABLE PROVISION THE AS SESSEE SHOULD NOT BE MULCT WITH HARSH PROVISIONS, WHEN SIM PLICITY PROVISIONS ARE ON RECORD. 9. THE ASSESSING AUTHORITY IGNORED AND FAILED TO DISTINGUISH THAT THE DECISION OF THE HON'BLE DELHI COURT, ITA NO 232 OF 2017 PREMIER AGENCIES HYDERABAD. PAGE 4 OF 6 WHICH WAS CONFIRMED BY THE HON'BLE SUPREME COURT BY DISMISSING THE DEPARTMENTAL SPECIAL LEAVE PETITION, THAT MEANS THE JUDGMENT RENDERED BY THE HON'BLE DELHI HI GH COURT IS APPROVED. HENCE DISTINGUISHING THE SAID JU DGMENT BY THE ASSESSING AUTHORITY IS QUITE CONTRARY TO LAW AND LIABLE TO BE SET ASIDE. THAT THE PETITIONER CRAVES LEAVE OF THE HON'BLE TRI BUNAL TO PERMIT THE PETITIONER TO ADD, ALTER OR AMEND THE GR OUNDS OF APPEAL DURING PENDENCY OF THE SAME . 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT WHAT IS DISALLOWED BY THE AO IS NOT EMPLOYEES CONTR IBUTION, BUT THAT IT IS EMPLOYERS CONTRIBUTION AND SINCE THE SAM E HAS BEEN PAID BEFORE FILING OF THE RETURN OF INCOME, IT IS N OT TO BE DISALLOWED U/S 36(1)VA) OF THE ACT. HE HAS FILED THE RELEVANT DETAILS IN THE FORM OF ADDITIONAL EVIDENCE AND REQUESTED TO ADMIT THE SAME AND CONSIDER THE ISSUE AFRESH. 4. THE LEARNED DR HOWEVER, OPPOSED THE ADDITIONAL EVIDENCE STATING THAT THE ASSESSEE HAS NOT STATED B EFORE THE AO AND THE CIT (A) THAT WHAT IS SOUGHT TO BE DISALLOWE D IS NOT THE EMPLOYEES CONTRIBUTION, BUT HE HAS DISALLOWED EMPL OYERS CONTRIBUTION. TO THIS, THE LEARNED COUNSEL FOR THE ASSESSEE, HAS DRAWN OUR ATTENTION TO THE DETAILS OF THE PAYMENT W HEREIN EVEN INTEREST OF RS.4637/-HAS BEEN PAID ON 27.09.2008 FO R LATE PAYMENT OF THE PF AMOUNT INTO THE BANK A/C. HE PLAC ED RELIANCE UPON THE DECISION OF THE HON'BLE SUPREME COURT IN T HE CASE OF CIT VS. VINAY CEMENT, WHILE THE LEARNED DR RELIED UPON THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CI T VS. GUJARAT ROAD TRANSPORT CORPORATION (2014) 41 TAXMANN.COM 10 0 (GUJ.) AND THE HON'BLE KERALA HIGH COURT IN THE CASE OF CI T VS. MERCHEM LTD (2015) 61 TAXMANN.COM 119 (KER.) AND THE DECISI ON OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF UNIFAC MAN AGEMENT ITA NO 232 OF 2017 PREMIER AGENCIES HYDERABAD. PAGE 5 OF 6 SERVICES (INDIA) (P) LTD VS. DY. CIT REPORTED IN (2 018) 100 TAXMANN.COM 244 (MAD.) WHEREIN IT WAS HELD THAT THE EMPLOYEES CONTRIBUTIONS NOT PAID WITHIN THE DUE DATE CANNOT B E ALLOWED U/S 36(1)(VA) OF THE ACT. 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, I FIND THAT THE ASSESSEES CONTENTION TH AT WHAT HAS BEEN DISALLOWED IS NOT THE EMPLOYEES CONTRIBUTION, BUT IT IS EMPLOYERS CONTRIBUTION, NEEDS VERIFICATION BY THE AO. IF IT IS EMPLOYERS CONTRIBUTION, THEN AS PER THE AMENDED PR OVISION, IT IS TO BE ALLOWED AS A DEDUCTION IF IT IS PAID EVEN BEF ORE FILING THE RETURN OF INCOME AND IF IT IS EMPLOYEES CONTRIBUTI ON ALSO, AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. ALOM EXTRUSION LTD (2009) (185 TAXMANN.COM 416), IT IS T O BE ALLOWED EVEN IF IT IS PAID BEFORE THE DATE OF FILING OF THE RETURN OF INCOME. THEREFORE, I DEEM IT FIT AND PROPER TO REMAND THE I SSUE TO THE FILE OF THE AO ONLY TO VERIFY WHETHER THE DISALLOWANCE I S OF THE EMPLOYER OR EMPLOYEES CONTRIBUTION TO THE PF, AND A LLOW THE DEDUCTION IN ACCORDANCE WITH THE DECISION OF THE HO N'BLE SUPREME COURT IN THE CASE OF CIT VS. ALOM EXTRUSION LTD (SU PRA). 6. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH JANUARY, 2020. SD/- (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 17 TH JANUARY, 2020. VINODAN/SPS ITA NO 232 OF 2017 PREMIER AGENCIES HYDERABAD. PAGE 6 OF 6 COPY TO: 1 M/S. PREMIER AGENCYES C/O SHRI TEJ PRAKASH TOSHNI WAL, ADVOCATE, 4-1-6/B/4, RAMKOTE, HYDERABAD 500095 2 ACIT CIRCLE 5(1) HYDERABAD 3 CIT (A)-4 HYDERABAD 4 PR. CIT 4 HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER