J.M. MHATRE,PANVEL, PANVEL V. ITO(CEN )THANE, MUMBAI

ITA 2345/MUM/2011

• Counselvise Citation: 234519914 RSA 2011
• Duration Of Justice: 1 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-05-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Next Hearing Date: 07-05-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 23-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KUSUM INGALE
• Assessee Lawyers: D R JAKHOTIA
• Section: 40A(3); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES J MUMBAI BEFORE SHRI B.R. MITTAL, JUDICIAL MEMBER AND SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO. 2345/MUM/2011 ASSESSMENT YEAR 2005-2006 M/S. J.M. MHATRE, PLOT NO. 57/58, MARKET YARD, SAHAKAR NAGAR, PANVEL 410 206. PAN: AABFJ 9979N VS. THE INCOME TAX OFFICER, CENTRAL, THANE. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI D.R. JAKHOTIA, REVENUE BY : SMT. KUSUM INGALE, DR DATE OF HEARING : 07-05-2012 DATE OF PRONOUNCEMENT : 07-05-2012 ORDER PER RAJENDRA, A.M. THE FOLLOWING ARE THE GROUNDS OF APPEAL RAISED IN T HE APPEAL PREFERRED AGAINST THE ORDER DT. 30-11-2010 OF CIT(A )-1, MUMBAI: LEARNED CIT(A) HAS ERRED IN LAW AND FACTS ON INVOK ING PROVISIONS OF SECTION 40(A)(IA) AND THUS MAKING ADDITION/DISAL LOWANCE OF ` 96,30,357/- INSTEAD OF THE FACTS THAT TDS PAYMENT WAS MADE BEFORE FILING OF RETURN LEARNED CIT(A) HAS ERRED IN LAW ON FACTS BY MAKING SEPARATE ADDITION U/S. 40 (A)(IA) OF ` 96,30,357/- IN SPITE OF FACTS THAT INCOME HAS BEEN ESTIMATED AFTER REJECTION OF BOOKS RESULT. 2. AUTHORISED REPRESENTATIVE (AR) REJECTED BOOKS OF ACCOUNTS U/S. 145(3) R.W.S. 144 OF THE ACT AND ESTIMATED INCOME O F THE ASSESSEE AT ` 3.98 CRORES. APPEAL FILED BY THE ASSESSEE WAS PAR TLY ALLOWED BY THE ITA NO. 2345/MUM/2011 M/S. J.M. MHATRE, 2 CIT(A). BUT, CIT(A) ENHANCED THE INCOME OF THE ASS ESSEE UNDER THE HEAD ENHANCEMENT OF INCOME (DISALLOWANCE U/S. 40(A)(IA) . HIS OBSERVATIONS AT PG. 13 PARA 12 ARE AS UNDER: DURING THE PERIOD RELEVANT TO THE ASSESSMENT IN A PPEAL, THE APPELLANT HAS DEBITED A SUM OF ` 3,64,44,157/- AND ` 7,35,68,828/- UNDER THE HEAD SUB CONTRACT AND TRANSPORTATION C HARGES. ACCORDING TO THE DETAILS FURNISHED ` 3,59,13,332/- AND ` 3,19,56,010/- OF SUB CONTRACT AND TRANSPORTATION CHARGES RESPECTIVELY AR E LIABLE TO TDS U/S. 194C OF THE ACT. FROM THE DETAILS FURNISHED, I FIN D THAT ` 97,000/-, ` 1,24,464/- AND ` 42,810/- OF TDS HAVE BEEN PAID INTO GOVERNMENT ACCOUNT ON 24-06-2005, 31-03-2006 AND 31-03-2006 RE SPECTIVELY. THAT IS, THE PAYMENTS ARE MADE MUCH BEYOND THE DUE DATE PRESCRIBED THEREBY INVITING INVOKING OF THE PROVISIONS OF SECT ION 40(A)(IA). SIMILARLY, THERE IS A SHORT PAYMENT OF TDS AMOUNT TO THE TUNE OF ` 1,07,680/- I.E., AS AGAINST THE TDS DEDUCTION MADE OF ` 8,72,872/- THE APPELLANT PAID INTO GOVERNMENT ACCOUNT ONLY ` 7,65,011/-. THE BELATED PAYMENTS OF THE TDS INTO GOVERNMENT ACCOUNT CLEARLY ATTRACTS TH E INVOKING OF THE PROVISIONS OF SECTION 40(A)(IA) AND, THEREFORE, EXP ENDITURE NEEDS TO DISALLOWED. THE EXPENDITURE INVOLVED IS ` 96,30,357/-. 3. BEFORE US, AUTHORISED REPRESENTATIVE (AR) SUBMIT TED THAT TDS PAYMENT WAS MADE BEFORE FILING OF RETURN AND SAME W AS PERMISSIBLE AS PER LAW, THAT ONCE AN ESTIMATE OF INCOME WAS MAD E, NO SEPARATE ADDITIONS/DISALLOWANCES OF EXPENDITURE COULD BE MAD E. HE RELIED UPON 72 ITR 194, 184 ITR, 349 AND IT SOT 467, 159 T AXMANN 392 AND 39 SOT 13 ITAT(HYD). DEPARTMENTAL REPRESENTATIVE (DR) RELIED UPON THE OR DER OF THE CIT(A). 4. AFTER HEARING THE RIVAL SUBMISSION, WE ARE OF TH E OPINION THAT ENHANCEMENT MADE BY THE CIT(A) WAS NOT AS PER LAW. AS PER THE CIT(A) TDS AMOUNTING TO ` 97,000/-, 1.24 LAKHS AND ` 42,180/- WAS DEPOSITED BEYOND THE DUE DATE PRESCRIBED. WE ARE O F THE OPINION THAT FOR INVOKING PROVISION OF 40(A)(IA) DATES OF FILING OF RETURN OF INCOME SHOULD ALWAYS BE TAKEN INTO CONSIDERATION. ORDER O F THE CIT(A) IS SILENT ABOUT THIS ASPECT. IN THESE CIRCUMSTANCES, WE ARE UNABLE TO ENDORSE THE VIEWS OF THE CIT(A). OUR VIEWS ARE ALS O BASED ON THE HYDERABAD DECISION OF CASE OF TEJA CONSTRUCTION DEC IDED BY ITAT (39 SOT 13 URO). IN THE SAID CASE, TRIBUNAL HELD AS UN DER: THE ASSESSEE WAS A PARTNERSHIP FIRM CARRYING ON CO NSTRUCTION BUSINESS. DURING THE RELEVANT ASSESSMENT YEAR IT F ILED ITS RETURN ADMITTING AN INCOME OF ` 71.16 LAKHS. THE ASSESSMENT WAS ITA NO. 2345/MUM/2011 M/S. J.M. MHATRE, 3 COMPLETED DETERMINING THE INCOME AT ` 10.88 CRORES. THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT R EJECTED THE BOOKS OF ACCOUNT AND ESTIMATED THE TOTAL INCOME AT 10 PERCENT OF THE GROSS RECEIPTS. HE FURTHER DISALLOWED THE PAYM ENT MADE TO THE SUB-CONTRACTORS WITHOUT DEDUCTING THE TDS BY IN VOKING PROVISIONS OF SECTION 40(A)(IA). ON APPEAL, THE CO MMISSIONER (APPEALS) CONFIRMED THE ORDER OF THE ASSESSING OFFI CER. WE ARE OF THE CONSIDERED OPINION THAT THE INCOME OF THE AS SESSEE HAVING BEEN DETERMINED BY RESORTING TO ESTIMATION, THERE I S NO SCOPE FOR ANY FURTHER DISALLOWANCE EITHER IN TERMS OF SECTION 40(A)(IA) 40A(3) OR OTHERWISE. WHILE DECIDING THE ISSUE IN FA VOUR OF THE ASSESSEE, TRIBUNAL RELIED UPON THE MATTERS OF INDWE LL CONSTRUCTION (232 ITR 776) AND KENARA SAHA & SUBHAS H SAHA 301 ITR 171 (KOL.) (SB) (AT). 6. RESPECTFULLY FOLLOWING THE ABOVE REFERRED CASE, WE ALLOW THE APPEAL FILED BY THE ASSESSEE, WE ARE UNABLE TO UPHO LD THE ACTION OF THE CIT(A) IN INVOKING THE PROVISIONS OF SEC. 40(A)(IA) OF THE ACTS, ESPECIALLY WHEN THE INCOME WAS ESTIMATED AFTER REJECTING THE B OOKS OF ACCOUNTS OF THE ASSESSEE. ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 07 TH MAY 2012. SD/- SD/- (B.R. MITTAL) (RAJENDRA) JUDICIAL MEMBER ACC OUNTANT MEMBER MUMBAI, DATE 07 TH MAY, 2012 TNMM COPY TO: 1. APPELLANT 2. RESPONDENT 3. THE CONCERNED CIT (A) 4. THE CONCERNED CIT 5. DR J BENCH, ITAT, MUMBAI 6. GUARD FILE (TRUE COPY) BY ORDER ASST. REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI