Malaya Kumar Panda, Kalahandi V. ACIT, Sambalpur

ITA 241/CTK/2013

• Counselvise Citation: 24122114 RSA 2013
• Duration Of Justice: 1 year(s) 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-10-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 17-10-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 15-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANIL SHARMA
• Assessee Lawyers: D K SHETH
• Keywords: Principle of natural justice; Question of law

Judgement Text

I.T.A. NO. 2 41 / CTK ./20 1 3 ASSESSMENT YEAR: 20 0 9 - 20 10 & ITA. NO. 2 7 3 /CTK/20 1 3 ASSESSMENT YEAR: 200 9 - 20 10 PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE SHRI S .V. MEHROTRA (ACCOUNTANT MEMBER) , AND SHRI GEORGE MATHAN (JUDICIAL MEMBER) I.T.A. NO. 2 41 / CTK / 20 1 3 ASSESSMENT YEAR : 200 9 - 20 10 MALAYA KUMAR PANDA,................... .... ... ....... .. .APP ELL ANT MAIN ROAD, CHARBAHAL, BHAWANIPATNA, DIST. KALAHANDI - 766 001 [PAN : A BFPP 3986 Q] ] - VS. - ASSISTANT COMMISSIONER OF INCOME TAX , .... . RESPONDENT CIRCLE - 2 (1), AAYAKAR BHAWAN, AAINTHAPALLI, SAMBALPUR - 760 001 & I.T.A. NO. 2 7 3 / CTK / 20 1 3 ASSESSMENT YEAR : 200 9 - 20 10 ASSISTANT COMMISSIONER OF INCOME TAX,........APPELLANT CIRCLE - 2(1), AAYAKAR BHAWAN, AAINTHAPALLI, SAMBALPUR - 760 001 - VS. - MALAYA KUMAR PANDA,.............. ..... ..................... . RESPONDE NT MAIN ROAD, CHARBAHAL, BHAWANIPATNA, DIST. KALAHANDI - 766 001 [PAN : ABFPP 3986 Q]] APPEARANCES BY: SHRI D.K. SHETH , A .R. , FOR THE ASSESSEE SHRI ANIL SHARMA, D.R , FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : OCTOBER 1 7 , 2 01 4 DATE OF PRONOUN CING THE ORDER : OCTOBER 20 , 201 4 I.T.A. NO. 2 41 / CTK ./20 1 3 ASSESSMENT YEAR: 20 0 9 - 20 10 & ITA. NO. 2 7 3 /CTK/20 1 3 ASSESSMENT YEAR: 200 9 - 20 10 PAGE 2 OF 6 O R D E R AS PER BENCH : I.T.A. NO. 2 41 / CTK / 20 1 3 IS AN APPEAL FILED BY THE ASSESSEE AND ITA NO. 2 7 3/CTK/2013 IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS), CUTTACK , ODISHA IN APPEAL NO. 01 35 / 1 2 - 1 3 DATED 1 4 . 0 2 .20 1 3 FOR THE ASSESSMENT YEAR 200 9 - 10 . 2 . SHRI D.K. SHETH , ADVOCATE, REPRESENTED ON BEHALF OF THE ASSESSEE AND SHRI ANIL SHARMA, D.R. , REPRESENTED ON BEHALF OF THE REVENUE. 3. IN RESPECT OF THE GROUND NO . 1 OF ASSESSEES APPEAL , IT IS AGAINST THE ACTION OF THE LD. CIT(APPEALS) IN CONFIRMING THE DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT ON ACCOUNT OF NON - DEDUCTION OF TDS ON THE FREIGHT AND HIRE CHARGES. IT WAS THE SUBMISSION THAT THE ISSUE WAS COVERE D BY THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL DATED 16.10.2014 IN ITA NO. 54/CTK/2013 IN THE CASE OF TYBAS PROJECTS PVT. LTD. 4 . IN REPLY, LD. D.R. VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND LD. CIT(APPEALS). 5 . WE HAVE CON SIDERED THE RIVAL SUBMISSIONS. I T IS NOTICED THAT THE PAYMENTS HAVE BEEN MADE BEFORE THE DUE DATE OF FILING OF THE RETURN . COORDINATE BENCH OF THIS TRIBUNAL VIDE HIS DECISION DATED 16.10.2014 IN ITA NO. 54/CTK/2013 IN THE CASE OF TYBAS PROJECTS PVT. LTD. H AS HELD AS FOLLOWS: - 19. HAVING HEARD BOTH THE SIDES, WE FIND THAT ITAT DELHI BENCH IN THE CASE OF MRS KANAK SINGH IN ITA NO.5530/DEL/2012 ORDER DATED 19.9.2012 HELD AS UNDER: 5. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE RECORD OF THE CASE. THE FA CTS ARE NOT DISPUTED. ADMITTEDLY ASSESSEE DID NOT DEDUCT THE TAX AS REQUIRED UNDER THE PROVISIONS OF SECTION 194C. HOWEVER, IT IS ALSO NOT DISPUTED THAT NO AMOUNT WAS PAYABLE AT THE END OF THE YEAR TO SUB - CONTRACTORS. UNDER SUCH CIRCUMSTANCES, THE MAJORITY VIEW DECISION OF SPECIAL BENCH IN THE CASE MERILYN SHIPPING & TRANSPORTS (SUPRA), IS SQUARELY APPLICABLE TO THE FACTS OF THE CASE. HOWEVER, THE SPECIAL BENCH DECISION WAS EXAMINED I.T.A. NO. 2 41 / CTK ./20 1 3 ASSESSMENT YEAR: 20 0 9 - 20 10 & ITA. NO. 2 7 3 /CTK/20 1 3 ASSESSMENT YEAR: 200 9 - 20 10 PAGE 3 OF 6 BY VARIOUS HIGH COURT AND IT WAS HELD BY HONBLE ALLAHABAD HIGH COURT IN TH E CASE OF M/S VECTOR SHIPPING SERVICES (P) LTD. (SUPRA), AS UNDER: WE DO NOT FIND THAT THE REVENUE CAN TAKE ANY BENEFIT FROM THE OBSERVATIONS MADE BY THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF MERILYN SHIPPING AND TRANSPORT LTD. (136 ITD 23) (SB) QU OTED AS ABOVE TO THE EFFECT SECTION 40 (A) (IA) WAS INTRODUCED IN THE ACT BY THE FINANCE ACT, 2004 WITH EFFECT FROM1.4.2005 WITH A VIEW TO AUGMENT THE REVENUE THROUGH THE MECHANISM OF TAX DEDUCTION AT SOURCE. THIS PROVISION WAS BROUGHT ON STATUTE TO DISALL OW THE CLAIM OF EVEN GENUINE AND ADMISSIBLE EXPENSES OF THE ASSESSEE UNDER THE HEAD 'INCOME FROM BUSINESS AND PROFESSION' IN CASE THE ASSESSEE DOES NOT DEDUCT TDS ON SUCH EXPENSES. THE DEFAULT IN DEDUCTION OF TDS WOULD RESULT IN DISALLOWANCE OF EXPENDITURE ON WHICH SUCH TDS WAS DEDUCTIBLE. IN THE PRESENT CASE TAX WAS DEDUCTED AS TDS FROM THE SALARIES OF THE EMPLOYEES PAID BY M/S MERCATOR LINES LTD., AND THE CIRCUMSTANCES IN WHICH SUCH SALARIES WERE PAID BY M/S MERCATOR LINES LTD., FOR M/S VECTOR SHIPPING SE RVICES, THE ASSESSEE WERE SUFFICIENTLY EXPLAINED. IT IS TO BE NOTED THAT FOR DISALLOWING EXPENSES FROM BUSINESS AND PROFESSION ON THE GROUND THAT TDS HAS NOT BEEN DEDUCTED, THE AMOUNT SHOULD BE PAYABLE AND NOT WHICH HAS BEEN PAID BY THE END OF THE YEAR. W E DO NOT FIND THAT THE TRIBUNAL HAS COMMITTED ANY ERROR IN RECORDING THE FINDING ON THE FACTS, WHICH WERE NOT CONTROVERTED BY THE DEPARTMENT AND THUS THE QUESTION OF LAW AS FRAMED DOES NOT ARISE FOR CONSIDERATION IN THE APPEAL. THE INCOME TAX APPEALIS DISM ISSED. 5.1. THESE OBSERVATIONS HAVE BEEN MADE WITH REFERENCE TO THE FINDINGS OF THE TRIBUNAL IN ITA NO. 5219/DEL/2012 IN THE CASE OF M/S VECTOR SHIPPING SERVICES, WHICH IS REPRODUCED HEREUNDER: - 7 WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AN D HAVE PERUSED THE RECORD OF THE CASE. THE SUBMISSIONS MADE BEFORE LD. CIT(A), AS NOTED EARLIER, HAVE NOT BEEN CONTROVERTED BY THE DEPARTMENT. IT IS NOT DISPUTED THAT M/S MERCATOR LINES LIMITED HAD DEDUCTED TDS ON SALARIES PAID BY IT ON BEHALF OF ASSESSEE. UNDER SUCH CIRCUMSTANCES ASSESSEE WAS NOT REQUIRED TO DEDUCT TDS ON REIMBURSEMENT BEING MADE BY IT TO M/S MERCATOR LINES LIMITED. FURTHER IN ANY VIEW OF THE MATTER, SINCE IT IS NOT DISPUTED THAT NO AMOUNT REMAINED PAYABLE AT THE YEAR END, THEREFORE, IN VI EW OF THE SPECIAL BENCH DECISION IN THE CASE OF MERILYN SHIPPING AND TRANSPORT LTD., (136 ITD 23) (SB), ADDITION COULD NOT BE MADE. IN THIS CASE, IT WAS HELD AS UNDER: - SECTION 40(A)(IA) WAS INTRODUCED IN T HE ACT, BY THE FINANCE ACT, 2004 WITH EFFECT FRO M 1.4.2005 WITH A VIEW TO AUGMENT THE REVENUE THROUGH THE MECHANISM OF TAX DEDUCTION AT SOURCE. THIS PROVISION WAS BROUGHT ON STATUTE TO DISALLOW THE CLAIM OF EVEN GENUINE AND ADMISSIBLE EXPENSES OF THE ASSESSEE UNDER THE HEAD INCOME FROM BUSINESS AND PR OFESSION IN CASE THE ASSESSEE DOES NOT DEDUCT TDS ON SUCH EXPENSES. THE DEFAULT IN DEDUCTION OF TDS WOULD RESULT IN DISALLOWANCE OF EXPENDITURE ON WHICH SUCH TDS WAS DEDUCTIBLE. 5.1.1. THE SLP FILED AGAINST THE ORDER OF THE HONBLE HIGH COURT STANDS DISM ISSED BY THE HONBLE SUPREME COURT: 5.2. 5.3. SINCE NO DECISION OF HONBLE JURISDICTIONAL HIGH COURT DIRECTLY ON THE ISSUE HAS BEEN BROUGHT TO OUR NOTICE, THEREFORE, CONSIDERING THE CONFLICT OF OPINION BETWEEN VARIOUS HIGH I.T.A. NO. 2 41 / CTK ./20 1 3 ASSESSMENT YEAR: 20 0 9 - 20 10 & ITA. NO. 2 7 3 /CTK/20 1 3 ASSESSMENT YEAR: 200 9 - 20 10 PAGE 4 OF 6 COURT AND THE DECISION OF SPE CIAL BENCH OF THE ITAT, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) ON THE ISSUE IN QUESTION. 20. RESPECTFULLY, FOLLOWING THE SAME, GROUND NOS.2 & 3 ARE ALLOWED. R ESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL DATED 16.10.2014 IN ITA NO. 54/CTK/2013 IN THE CASE OF TYBAS PROJECTS PVT. LTD. , NO AMOUNT IS PAYABLE AND ALL THE AMOUNTS HAVE BEEN FULLY PAID, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AND AS CONFIRMED BY THE LD. CIT(APPEALS) BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) STANDS DELETED. 6 . IN REGARD TO THE 2 ND GROUND, IT IS AGAINST THE ACTION OF THE LD. CIT(APPEALS) IN CONFIRMING THE DISALLOWANCE OF 10% OF THE EXPENDITURE. IT WAS SUBMITTED BY THE LD. A.R. THAT THE ASSESSING OFFICER HAD IN THE COURSE OF A SSESSMENT DISALLOWED AN AD HOC 10% OF THE CASH PAYMENTS MADE FOR THE FUEL CHARGES. IT WAS THE SUBMISSION THAT ALTHOUGH THE ASSESSING OFFICER SAYS THAT BILLS AND VOUCHERS WERE NOT FULLY PRODUCED. IT WAS THE SUBMISSION THAT ALL THE BILLS AND VOUCHERS AS WELL AS LEDGER ACCOUNTS WERE ALSO PRODUCED. IT WAS THE SUBMISSION THAT NO DISALLOWANCE WAS CALLED FOR. 7 . IN REPLY, LD. D . R . VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND LD. CIT(APPEALS). 8 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE ASSESSING OFFICER HAS MADE ESTIMATED DISALLOWANCE OF 10% HOLDING THAT HE WAS NOT CONVINCED THAT THE EXPENSES CLAIMED WERE GENUINE SINCE SUPPORTING BILLS AND VOUCHERS WERE NOT PRODUCED FOR VERIFICATION. IN THE EARLIER PO RTION OF THE SAID PARAGRAPH THE ASSESSING OFFICER SAYS THAT THE ASSESSEE WAS UNABLE TO PRODUCE ALL THE BILLS AND VOUCHERS IN RESPECT OF THE FUEL EXPENSES. A PERUSAL OF THE ORDER OF THE LD. CIT(APPEALS) SHOWS THAT THE LD. CIT(APPEALS) HAS CONFIRMED THE ADDI TION HOLDING THAT IT IS NOT POSSIBLE ON THE PART OF THE ASSESSING OFFICER TO VERIFY ALL THE SUPPORTING BILLS AND VOUCHERS. THIS IS NOT A GROUND ENOUGH TO MAKE A DISALLOWANCE OR TO CONFIRM THE SAME. IF THERE IS ANY SPECIFIC BILLS AND VOUCHERS AVAILABLE, THE N DISALLOWANCE ON THAT ACCOUNT CAN I.T.A. NO. 2 41 / CTK ./20 1 3 ASSESSMENT YEAR: 20 0 9 - 20 10 & ITA. NO. 2 7 3 /CTK/20 1 3 ASSESSMENT YEAR: 200 9 - 20 10 PAGE 5 OF 6 BE MADE AND NOT ON ESTIMATED DISALLOWANCE. IN THESE CIRCUMSTANCES, THE DISALLOWANCE AS MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(APPEALS) STANDS DELETED. 9 . IN RESPECT OF THE 3 RD GROUND, WHICH IS AGAINST THE ACTION OF THE LD. CIT(APPEALS) IN CONFIRMING THE ADDITION MADE UNDER THE HEAD INCOME FROM OTHER SOURCES BY TREATING THE AGRICULTURAL INCOME AS NON - AGRICULTUR AL . IT WAS THE SUBMISSION THAT THE ASSESSEE THROUGH A FAMILY PARTITION RECEIVED 12 ACRES OF LAND. IT WAS THE SUBMISSION THAT THE ASSESSING OFFICER HAD TREATED THE AGRICULTURAL INCOME AS INCOME FROM OTHER SOURCES ONLY ON THE GROUND THAT THE ASSESSEE WAS UNABLE TO PROVE THE OWNERSHIP OF THE LAND. IT WAS THE SUBMISSION THAT HE HAD NO OBJECTION IF TH IS ISSUE WAS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR VERIFICATION AND RE - ADJUDICATION. 10 . IN REPLY, LD. D . R . VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND LD. CIT(APPEALS). 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE ASSESSING OFFICER HAS TREATED THE AGRICULTURAL INCOME CLAIMED BY THE ASSESSEE AS INCOME FROM OTHER SOURCES ON THE GROUND THAT THE PERSONS TO WHOM THE ASSESSEE HAD CLAIMED TO SELL THE PADDY HAD NOT APPEARED BEFORE THE AS SESSING OFFICER. IN THESE CIRCUMSTANCES, THIS ISSUE IS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR RE - ADJUDICATION AFTER GRANTING THE ASSESSEE ADEQUATE OPPORTUNITY TO SUBSTANTIATE HIS CLAIM. 1 2 . IN RESPECT OF THE REVENUES APPEAL, IT WAS THE SUBMISS ION THAT THE ISSUE WAS AGAINST THE ACTION OF THE LD. CIT(APPEALS) IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SUNDRY CREDITORS, WHO ARE, IN FACT, TRADE CREDITORS. IT WAS THE SUBMISSION THAT THE LD. CIT(APPEALS) DELETED THE DISALLOW ANCE BY HOLDING THAT THE SUNDRY CREDITORS HAD NOT APPEARED BEFORE THE ASSESSING OFFICER . THEREFORE, IN THE INTEREST OF NATURAL JUSTICE, THIS ISSUE MAY BE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR RE - ADJUDICATION. I.T.A. NO. 2 41 / CTK ./20 1 3 ASSESSMENT YEAR: 20 0 9 - 20 10 & ITA. NO. 2 7 3 /CTK/20 1 3 ASSESSMENT YEAR: 200 9 - 20 10 PAGE 6 OF 6 13 . TO THIS, LD. A . R . DID NOT RAISE ANY SERIOUS OBJECTION. CONSEQUENTLY CONSIDERING THE SUBMISSIONS OF BOTH THE SIDES, THIS ISSUE IS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR RE - ADJUDICATION AFTER GRANTING THE ASSESSEE ADEQUATE OPPORTUNITY TO SUBSTANTIATE HIS CASE. 14 . IN THE RESULT , THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND THE APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH OCTOBER , 2014. SD/ - SD/ - S .V. MEHROTRA GEORGE MATHAN ( ACCOUNTANT MEMBER) ( JUDICIAL MEMBER) KOLKATA, THE 20 TH D AY OF OCTO BER , 201 4 COPIES TO : (1) THE ASSESSEE (2) THE DEPARTMENT (3) COMMISSIONER OF INCOME - TAX (APPEALS) (4) COMMISSIONER OF I NCOME TAX ( 5 ) THE DEPARTMENTAL REPRESENTATIVE ( 6 ) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH, CUTTACK LAHA/SR. P.S.