Shri Mohmed Shakil Mohmed Shafi Mutwalli, Himatnagar V. Income Tax Officer, Sabarkantha Ward-3., Himatnagar

ITA 238/AHD/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 5817 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 31-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R R MAKWANA
• Keywords: Revision of order; Reasonable cause
• Section: 143(3); 40(a)(ia); 194C; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENCH (CONDUCTED THROUGH VIRTUAL COURT) BEFORE: SHRI MAHAVIR PRASAD, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEM BER SHRI MOHMED SHAKIL MOHMED SHAFI MUTAWALLI [POP: SABAR INDUSTRIES] 122, GIDC, MOTIPURA, HIMATNAGAR PAN: ABLPM3361L (APPELLANT) VS THE ITO, S.K. WARD-3, HIMATNAGAR-383001 (RESPONDENT) REVENUE BY: SHRI R.R. MAKWANA, SR. D.R. ASSESSEE BY: SHRI SANJAY R. SHAH, A .R. DATE OF HEARING : 09-09-2021 DATE OF PRONOUNCEMENT : 16-09-202 1 /ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:- THIS ASSESSEES APPEAL FOR A.Y. 2012-13, ARISES FRO M ORDER OF THE CIT(A)-2, AHMEDABAD DATED 26-10-2017, IN PROCEEDIN GS UNDER SECTION 143(3) R.W.S. 263 OF THE INCOME TAX ACT, 1961; IN S HORT THE ACT. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL:- ITA NO. 238/AHD/2018 ASSESSMENT YEAR 2012-13 I.T.A NO. 238/AHD/2018 A.Y. 2012-13 PAGE NO SHRI MOHMED SHAKIL MOHMED SHAFI MUTAWALLI VS. ITO 2 YOUR APPELLANT BEING AGGRIEVED BY THE ORDER PASSED BY ME COMMISSIONER OF INCOME TAX (APPEALS)-2, AHMEDABAD [HEREINAFTER REFE RRED TO AS 'LEARNED C1T (APPEALS)'] DATED 26/10/2017 PRESENTS THIS APPEAL A GAINST THE SAME ON THE FOLLOWING AMONGST OTHER GROUNDS OF APPEAL. THE GROU NDS OF APPEAL SET OUT HEREUNDER ARE INDEPENDENT OF AND WITHOUT PREJUDICE TO EACH OTHER: 1.0 THE LEARNED C1T(A) ERRED IN LAW AND ON FA CTS IN CONFIRMING DISALLOWANCE OF RS.7,95,121/- OUT OF RS.10,63,955/- MADE BY THE LEARNED A.O. U/S 40 (A)(IA) OF THE ACT. 2.0 THE LEARNED C1T(A) GROSSLY ERRED IN CONFIRMING SUCH DISALLOWANCE IGNORING THE PROVISIONS OF SECTION 194C (6) OF THE ACT AND A LSO IGNORING THE BINDING DECISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT V/S VALIBHAI KHANBHAI MANKAD REPORTED AT 261 CTR 538. IT IS SUBMITTED THA T IT BE SO HELD NOW AND DISALLOW ONCE AS CONFIRMED BY THE LEARNED C1T(A) BE DELETED. 3. THE ASSESSEE HAS ALSO FILED ADDITIONAL GROUNDS OF APPEAL AS FOLLOWS:- 1.0 THE LEARNED AC ERRED IN DISALLOWING A SU M OF RS.10,63,955/- ON THE GROUND THAT THIS AMOUNT WHICH IS PAID FOR FREIGHT H AS NOT BEEN ESTABLISHED TO HAVE BEEN PAID FOR THE PURPOSE OF TRANSPORT AND THUS ERR ED IN DISALLOWING THE SAID AMOUNT QUESTIONING THE GENUINENESS OF THE EXPENSES WHEREAS THE LEARNED ADMINISTRATIVE CITS U/S 263 ORDER HAD DIRECTED HIM TO VERIFY THS APPLICABILITY OF SECTION 40 (A)(IA) TO SUCH PAYMENT. THE LEARNED AO HAS THUS EXCEEDED HIS JURISDICTION AND SO THE ORDER PASSED BY HIM IS BAD IN LAW ON THIS COUNT. THE LEARNED CIT(A) ERRED IN UPHOLDING SUCH TREATMENT BY THE LEARNED AO IN PARA 2.2 OF HIS ORDER. IT IS SUBMITTED THAT IT BE SO HELD NO W AND THE DISALLOWANCE MADE BY THE LEARNED AO AND CONFIRMED BY LEARNED CIT(A) ON T HIS COUNT BE DELETED. 1.1 WITHOUT PREJUDICE TO THE ABOVE, THE LEARN ED AO AND LEARNED C!T(A) SAILED TO APPRECIATE THAT THE APPELLANT HAD LED FULL EVIDE NCES TO ESTABLISH GENUINENESS OF THE PAYMENT MADE FOR FREIGHT TO THE TRANSPORTERS AN D HENCE THE ABOVE PAYMENT OF RS. 10,63,955/- SHOULD NOT HAVE BEEN DISALLOWED BY QUESTIONING THE GENUINENESS OF THE SAME, IT IS SUBMITTED THAT IT BE SO HELD NOW . 4. THERE WAS A DELAY OF 26 DAYS IN FILING THIS INSTANT APPEAL. IN THIS REGARD, THE ASSESSEE HAS FILED APPLICATION FOR COND ONATION OF DELAY IN FILING THE APPEAL ALONG WITH AFFIDAVIT DATED 13 TH FEB, 2020. IN THE AFFIDAVIT, THE ASSESSEE HAS EXPLAINED THAT ORDER PASSED BY THE LD. CIT(A) WAS MISPLACED FROM THE ASSESSEE AND AFTER LOCATING THE ORDER THE SAME HANDED OVER TO THE CONSULTANT OF THE ASSESSEE WHO WAS BASED AT HIMATNA GAR, HOWEVER, THE APPEAL BEFORE THE ITAT WAS TO BE FILED BY ANOTHER C ONSULTANT BASED AT I.T.A NO. 238/AHD/2018 A.Y. 2012-13 PAGE NO SHRI MOHMED SHAKIL MOHMED SHAFI MUTAWALLI VS. ITO 3 AHMEDABAD. THEREFORE, THERE WAS SOME DELAY IN FILI NG THE INSTANT APPEAL BECAUSE OF THE CIRCUMSTANCES WHICH WERE BEYOND THE CONTROL OF THE ASSESSEE. LOOKING TO THE EXPLANATION OF THE ASSESSEE AND MARG INAL DELAY IN FILING THIS APPEAL IT APPEARED THAT THERE WAS REASONABLE CAUSE WHICH RESULTED DELAY IN FILING THIS APPEAL. THEREFORE, WE CONDONE DELAY OF 26 TH DAYS IN FILING THIS APPEAL. 5. THE FACT IN BRIEF IS THAT ORIGINAL ASSESSME NT U/S. 143(3) OF THE ACT WAS FINALIZED IN THE CASE OF THE ASSESSEE ON 26 TH MARCH, 2014 DETERMINING TOTAL INCOME AT RS. 9,15,737/-. SUBSEQUENTLY, LD. CIT HA S PASSED ORDER U/S. 263 AND DIRECTED THE ASSESSING OFFICER TO MAKE AFRESH ASSESSMENT AFTER GIVING OPPORTUNITY TO THE ASSESSEE ON THE ISSUE OF NON-DED UCTION OF TAX ON THE FREIGHT PAYMENT OF RS. 10,63,995/-. CONSEQUENTLY, ASSESSMENT U/S. 143(3) OF THE ACT WAS FINALIZED ON 16 TH FEB, 2015 WHEREIN ASSESSING OFFICER HELD THAT ONLY SUBMISSION OF PAN NO. OF THE TRANSPORTERS WERE NOT SUFFICIENT WITH RESPECT TO THE PAYMENT MADE TO TRANSPORTER. CONSEQ UENTLY, THE CLAIM OF TRANSPORT EXPENSES OF RS. 10,63,995/- WAS DISALLOWE D AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 6. THE ASSESSEE HAS FILED APPEAL BEFORE THE LD . CIT(A). THE LD. CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE HOLDING TH AT ASSESSEE HAS NOT MADE COMPLIANCE WITH THE PROVISION OF SECTION 194C(7) OF THE ACT. 7. DURING THE COURSE OF APPELLATE PROCEEDINGS B EFORE US, THE LD. COUNSEL HAS SUBMITTED PAPER BOOK COMPRISING COPIES OF DOCUM ENTS AND DETAILS OF SUBMISSION MADE BEFORE THE ASSESSING OFFICER AND LD . CIT(A). THE LD. I.T.A NO. 238/AHD/2018 A.Y. 2012-13 PAGE NO SHRI MOHMED SHAKIL MOHMED SHAFI MUTAWALLI VS. ITO 4 COUNSEL HAS REFERRED PAGE NOS. 14 TO 18 OF THE PAPE R BOOK CONTAINING PARTICULARS OF THE TRANSPORTERS ALONG WITH COPIES O F INVOICES, TRANSPORTATION BILLS ALONG WITH THE PARTICULARS OF TRUCK NO. PAN N O, PHONE NO AND COMPLETE ADDRESSES OF THE TRANSPORTERS. THE LD. COUNSEL HAS REFERRED THE DECISIONS OF SOMA RANI GHOSH VS. DCIT 74 TAXMANN.COM 90 (KOLKATA ITAT), CIT VS. SHRI MRIKAMBA TRANSPORT CO. 57 TAXMAN.COM 273 (KARN ATAKA HIGH COURT) AND ACIT VS. ARIHAND TRADING CO. 104 TAXMANN.COM 33 6 (JAIPUR ITAT). THE LD. COUNSEL SUBMITTED THAT IN THE AFORESAID DEC ISIONS IT WAS HELD THAT WHEN THE ASSESSEE HAD MADE COMPLIANCE WITH THE PROV ISION OF SECTION 194C(6) THEN SIMPLY NOT MAKING COMPLIANCE WITH SECT ION 194C(7) WILL NOT LEAD TO DISALLOWING THE CLAIM OF ASSESSEE U/S. 40(A )(IA) OF THE ACT. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE HAS SUPPORTED THE ORDER OF LOWER AUTHORITIES 8. HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON RECORD. WITHOUT REITERATING FACTS AS ELABORATED IN THIS ORDER, ASSE SSMENT ORDER U/S. 143(3) OF THE ACT WAS PASSED ON 26TH MARCH, 2014. IN THIS RE GARD, THE LD. COUNSEL SUBMITTED THAT AT THE TIME OF ORIGINAL ASSESSMENT R ELEVANT SUPPORTING INFORMATION I.E. PAN NO, COPY OF TRANSPORT BILL AND OTHER PARTICULARS COMPRISING COMPLETE ADDRESSES OF THE TRANSPORTERS W ERE FURNISHED BEFORE THE ASSESSING OFFICER DEMONSTRATING THAT ASSESSEE HAD M ADE COMPLIANCE WITH THE PROVISION OF SECTION 194(6) OF THE I.T. ACT. WITHOUT CONSIDERING THE RELEVANCY OF THESE FACTS, THE LD. PR. CIT HAS SET A SIDE THIS ISSUE TO THE FILE OF ASSESSING OFFICER FOR MAKING AFRESH ASSESSMENT. DU RING THE COURSE OF ASSESSMENT MADE U/S. 143(3) R.W.S. 263 OF THE ACT B EFORE THE ASSESSING OFFICER, COPIES OF PANS OF THE TRANSPORTERS ALONG W ITH COPIES OF INVOICES I.T.A NO. 238/AHD/2018 A.Y. 2012-13 PAGE NO SHRI MOHMED SHAKIL MOHMED SHAFI MUTAWALLI VS. ITO 5 CONTAINING PARTICULARS OF PHONE NO., ADDRESS, AND O THER PARTICULARS OF THE TRANSPORTATION OF THE GOODS WERE FURNISHED. HOWEV ER, THE ASSESSING OFFICER HAS NEITHER DISPROVED THE GENUINENESS OF THESE EVID ENCES NOR MADE ANY FURTHER VERIFICATION/EXAMINATION RELATED TO THE CLA IM OF SUCH EXPENDITURE DEBITED TO THE P & L A/C. THE LD. CIT(A) HAS SUSTA INED THE DISALLOWANCE MERELY ON TECHNICAL BASIS THAT ASSESSEE HAS FAILED TO MAKE COMPLIANCE WITH THE PROVISION OF SECTION 194(7) OF THE ACT. IN THI S REGARD, WE HAVE GONE THROUGH THE JUDICIAL PRONOUNCEMENTS REFERRED BY THE LD. COUNSEL IN THE CASE OF THE SOMA GHOSH V VS. DCIT 74 TAXMAN.COM 90 THE I TAT CALCUTTA HOLDING THAT IF ASSESSEE COMPLIES WITH THE PROVISIO N OF SECTION 194(6), NO DISALLOWANCE U/S. 40(A)(IA) IS PERMISSIBLE EVEN THO UGH THERE IS VIOLATION OF PROVISION OF SECTION 194C(7) OF THE ACT. IN THE C ASE OF CIT VS. MARIKAMBA TRANSPORT CO., THE HONBLE HIGH COURT OF KARNATKA 5 7 TAXMAN.COM 273 HELD THAT IN CASE OF PAYMENT MADE TO SUB-CONTRACTOR NON- FILING OF FORM NO. 15- I/JIS ONLY A TECHNICAL DEFECT AND PROVISION U/S. 4 0(A)(IA) SHOULD NOT ATTRACT IN SUCH A CASE. IN THE LIGHT OF THE ABOVE FACTS AND FINDINGS, IT IS OBSERVED THAT IN THIS CASE ASSESSEE HAS FURNISHED THE COPIES OF P AN ALONG WITH COPIES OF INVOICES OF TRANSPORTATION BILL COMPRISING COMPLETE ADDRESS OF THE TRANSPORTER, PHONE NO AND COMPLETE PARTICULARS OF T HE GOODS LOADED THROUGH THE TRANSPORTATION. HOWEVER, THE ASSESSING OFFICER HAS NOT TAKEN ANY STEP TO DISPROVE THE GENUINENESS OF THE TRANSPORTATION EXPE NSES BY NOT CONDUCTING ANY INQUIRY THEREFORE SIMPLY FOR TECHNICAL LAPSE U /S. 194(7) IT IS NOT APPROPRIATE TO DISALLOW THE CLAIM OF TRANSPORTATION EXPENSES. LOOKING TO THE ABOVE FACTS AND FINDING, WE CONSIDER THAT THE DECIS ION OF LD. CIT(A) IS NOT JUSTIFIED, THEREFORE, THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. SINCE WE HAVE ALLOWED THE MAIN GROUND OF APPEAL OF THE AS SESSEE, THEREFORE, THE I.T.A NO. 238/AHD/2018 A.Y. 2012-13 PAGE NO SHRI MOHMED SHAKIL MOHMED SHAFI MUTAWALLI VS. ITO 6 ADDITIONAL GROUND FILED BY THE ASSESSEE HAS BECOME INFRUCTUOUS AND THE SAME IS DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16-09-2021 SD/- SD/- (MAHAVIR PRASAD) (AMARJIT SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 16/09/2021 / COPY OF ORDER FORWARDED TO:- 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,