Mr Parmanand Tiwari, Kolkata V. Income Tax Officer, Ward - 54(1), Kolkata,

ITA 2417/KOL/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83089 (ITAT-KOLKATA)
• Duration Of Justice: 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-09-2014
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 03-10-2013
• Court: TRIBUNAL
• Department Lawyers: DAVID Z CHAWNGTHU ADD L
• Assessee Lawyers: N O N E
• Section: 43B; 143(3)

Judgement Text

` , SMC(B) , IN THE INCOME TAX APPELLATE TRIBUNAL SMC(B) BENCH : KOLKATA () BEFORE , ) [BEFORE SHRI MAHAVIR SINGH, JM] / I.T.A NO.2417/KOL/2013 !'/ ASSESSMENT YEAR: 2008-09 MR. PARMANAND TIWARI, VS. INCOME-TAX OFFICER, WD -54(1), KOLKATA (PAN: ABIPT7714M) ($% /APPELLANT ) (&'$%/ RESPONDENT ) DATE OF HEARING: 21.08.2014 DATE OF PRONOUNCEMENT: 02.09.2014 FOR THE APPELLANT: N O N E FOR THE RESPONDENT: SHRI DAVID Z. CHAWNGTHU, ADD L. CIT, SR. DR () / ORDER THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A)-XXXVI, KOLKATA IN APPEAL NO. 398/CIT(A)-XXXVI/KOL/WD. 54(1)/2010-11/910 DATE D 30.08.2013. ASSESSMENT WAS FRAMED BY ITO, WARD-54(1), KOLKATA U/S. 143(3) OF T HE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR AY 2008-09 VIDE HIS O RDER DATED 28.12.2010. 2. THE ONLY ISSUE IN THIS APPEAL OF ASSESSEE IS AGA INST THE ORDER OF CIT(A) CONFIRMING THE ORDER OF AO DISALLOWING CREDIT OF TDS AT RS.1,48,07 8/-. FOR THIS ASSESSEE HAS RAISED FOLLOWING GROUND NOS. , 3 AND 4: 2. ON THE FACTS AND N THE CIRCUMSTANCES OF THE CA SE, THE LEARNED CIT(A) ERRED IN UPHOLDING THE ORDER OF THE A.O. DISALLOWING CREDIT IN RESPECT OF THE AMOUNT OF TAX DEDUCTED AT SOURCE OF RS.1,49,078/- IN THE NAME OF THE PARTHERSHIP FIRM M/S TIWARI & CO. OF WHICH THE APPELLANT WAS AN ERSTWHILE PARTNER AND WHICH REMAINED FULLY CONVERTED INTO THE PROPRIETORSHIP CONCERN OF THE APPELLANT TH ROUGHOUT THE PERIOD COVERED BY THE APPELLATE YEAR UNDER CONSIDERATION. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED CIT(A) ERRED IN NEGLECTING TO TAKE NTO ACCOUNT THE FACT THAT THE E NTIRE INCOME IN RESPECT OF THE TDS AMOUNTS HAD DULY BEEN INCLUDED IN THE TOTAL INCOME OF THE APPELLANT AS HIS NCOME FROM PROPRIETORSHP CONCERN AND HENCE, ON FACTS AS WELL AS LAW, THE CREDITS FOR TDS SHOULD ALSO HAVE BEEN CONSDERED IN THE HANDS OF THE APPEL LANT ALONE. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED CIT(A) FURTHER ERRED IN OVERLOOKING THE FACT THAT THE CREDITS IN RESPECT OF THE TDS AMOUNTS UNDER CONSIDERATION HAD NEITHER BEEN CLAIMED NOR ALLOWED IN THE HANDS O F ANY OTHER ASSESSEE. 3. BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND A PROFESSIONAL CHARTERED ACCOUNTANT. EARLIER, ASSESS EE WAS PARTNER IN THE FIRM M/S. TIWARI & CO. HAVING PAN: AACFT6997P. THIS FIRM M/S. TIWARI & CO . WAS DISSOLVED W.E.F. 30.12.2006 AND ASSESSEE I.E. MR. PARMANAND TIWARI BECAME PROPRIETO R OF THIS FIRM W.E.F. 30.12.2006. THE 2 ITA NO.2417/K/2013 PARMANAND TIWARI AY 08-09 ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDING S FILED RETURN OF INCOME ELECTRONICALLY ON 29.09.2008 FOR AY 2008-09 I.E. THE RELEVANT ASSESSM ENT YEAR. THE AO AFTER GOING THROUGH THE DETAILS OF TDS CERTIFICATES FOUND THAT ALL THE TDS CERTIFICATES ARE ISSUED IN THE NAME OF M/S. TIWARI & CO. HAVING PAN: AACFT6997P, WHICH BELONGS TO PARTNERSHIP FIRM AND NOT OF INDIVIDUAL. DURING THE COURSE OF ASSESSMENT PROCEE DINGS, THE AO REQUIRED THE ASSESSEE TO PRODUCE RECONCILED STATEMENT OF PROFESSIONAL RECEIP TS VIS--VIS THE CLAIM OF TDS. THE ASSESSEE REVEALED THAT THE CREDIT CLAIMED FOR TDS CERTIFICAT ES ISSUED IN FAVOUR OF M/S. TIWARI & CO. FOR THE REASON THAT M/S. TIWARI & CO. BECAME PROPRIETOR SHIP CONCERN OF THE ASSESSEE AND EARLIER THIS WAS A PARTNERSHIP FIRM. THIS PARTNERSHIP FIRM M/S. TIWARI & CO. GOT DISCONTINUED W.E.F. 30.12.2006. BEFORE THE AO, THE ASSESSEE RELIED ON THE PROVISIONS OF SECTION 37BA OF THE I. T. RULES, 1962 (HEREINAFTER REFERRED TO AS THE RULES ), WHEREIN M/S. TIWARI & CO. DECLARED AND CONFIRMED THAT THE INCOME ON WHICH TAX HAS BEEN DED UCTED AT SOURCE FOR AY 2008-09 RELEVANT TO FY 2007-08 IS ASSESSABLE IN THE HANDS OF THE ASS ESSEE MR. PARMANAND TIWARI OTHER THAN THE DEDUCTEE AND CREDIT FOR SUCH DEDUCTION OF TAX AT SO URCE BE GIVEN TO HIM AS INCOME ON ACCOUNT OF TDS IS INCLUDIBLE IN THE ASSESSMENT PROCEEDINGS OF MR. PARMANAND TIWARI, THE ASSESSEE. THE ASSESSEE CONTENDED BEFORE THE AO THAT HE HAS ALREAD Y INCLUDED THE SAID ENTIRE INCOME IN THE RETURN OF INCOME AND ACCORDINGLY, THE CREDIT FOR TD S SHALL BE ALLOWED IN ACCORDANCE WITH RULE 37BA OF THE RULES. THE AO DISALLOWED THE CLAIM OF THE ASSESSEE BY OBSERVING THAT RULE 37BA OF THE RULES AS INSERTED BY IT (SIXTH AMDT.) RULES (HEREINAFTER REFERRED TO AS AMENDMENT RULES) W.E.F. 01.04.2009 ONLY AND HENCE, THE CREDI T IN THE HAND OF INDIVIDUAL ASSESSEE I.E. MR. PARMANAND TIWARI CANNOT BE ALLOWED. FOR THIS, HE O BSERVED IN PARA 4.1 OF THE ASSESSMENT ORDER AS UNDER: 4.1. IN REGARD TO POINT (C) OF PARA 3.1. IT IS WORTHY NO TE THAT THE RULE 37BA OF THE I. T. RULES, 1962 HAS BEEN INSERTED BY THE I T (SIXTH AMD T.) RULES, W.E.F. 1-4-2009 ONLY. AS PER PROVISION OF 37BA OF THE INCOME TAX RULES WHERE IN IT HAS CLEARLY BEEN MENTIONED THAT CREDIT FOR TAX DEDUCTED AT SOURCES AND PAID TO THE CENTRAL GOVERNMENT SHALL BE GIVEN TO THE PERSON PROVIDED THAT THE DEDUCTEE FILES A DECLA RATION WITH THE DEDUCTOR AND THE DEDUCTOR REPORTS THE TAX DEDUCTION IN THE NAME OF O THER PERSON IN THE INFORMATION RELATING TO DEDUCTION OF TAX REFERRED TO SUB RULE (1) OF RUL E 37BA. IN THIS CASE RULE 37BA AS MENTIONED BY THE ASSESSEE DOES NOT COVER THE SITUAT ION. IT IS ALSO WORTHY TO NOTE THAT THE DEDUCTEE HAS MADE DECLARATION BEFORE ASSESSING OFFI CER WHICH IS WRONG AS ASSESSING OFFICER IS NOT THE DEDUCTOR OF TAX AT SOURCE. THER EFORE, THE CONTENTION OF THE ASSESSEE IS NOT TENABLE. AGGRIEVED, ASSESSEE CAME IN APPEAL BEFORE CIT(A), W HO ALSO CONFIRMED THE ACTION OF AO BY OBSERVING AS UNDER: THE RULE EVEN THOUGH AVAILABLE FOR SUBSEQUENT YEAR , MAKES IT ABUNDANTLY CLEAR THAT CREDIT WILL BE GIVEN BASED ON THE INFORMATION BY THE DEDUC TOR. THE ONLY MITIGATING CIRCUMSTANCES HAS BEEN GIVEN IN THE PROVISO, WHEN T HE DEDUCTEE (IN THIS CASE M/S. TIWARI & CO. PARTNERSHIP FIRM), FILES A DECLARATION TO THE DEDUCTOR, AND THE DEDUCTOR REPORT THE TAX DEDUCTION IN THE NAME OF THE OTHER PERSON. 3 ITA NO.2417/K/2013 PARMANAND TIWARI AY 08-09 4.3. IN VIEW OF THE ABOVE THE A.O. HAS CORRECTLY NO T GIVEN CREDIT TO TDS MADE IN THE NAME OF M/S. TIWARI & CO. PARTNERSHIP FIRM, IN THE HANDS OF APPELLANT, ERSTWHILE PARTNER, EVEN THOUGH HE HAD SHOWN THE INCOME OF THE FIRM IN HIS H ANDS VOLUNTARILY. AGGRIEVED, NOW ASSESSEE IS IN APPEAL BEFORE TRIBUNA L. 4. I HAVE HEARD LD. SR. DR AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. THE FACTS ARE CLEARLY NARRATED ABOVE AND THERE IS NO DI SPUTE AS REGARDS TO THE FACTS OF THE CASE. THE ASSESSEE IS A CHARTERED ACCOUNTANT CARRYING ON HIS PROFESSION UNDER THE PARTNERSHIP FIRM M/S. TIWARI & CO. FOR AND FROM THE YEAR 1983. THE PARTNE RSHIP FIRM M/S. TIWARI & CO. GOT DISSOLVED W.E.F. 30.12.2006 AND ASSESSEE BECAME PROPRIETOR OF THIS FIRM. THE ASSESSEE HAS INCLUDED THE INCOME QUA THE TDS CERTIFICATES ISSUED IN THE NAME OF M/S. TIWARI & CO. HAVING PAN AACFT6997P, WHICH STANDS FOR THE PARTNERSHIP FIRM A ND ALSO CLAIMED THE CREDIT FOR TDS IN THE INDIVIDUAL CAPACITY. THE AO COMPLETED THE ASSESSME NT WHEREBY HE INCLUDED THE ENTIRE INCOME OF THE FIRM M/S. TIWARI & CO. BUT DID NOT ALLOW THE CREDIT FOR TDS AT RS.1,53,380/- FOR THE REASON THAT THE TDS CREDIT IS NOT REFLECTED IN THE PAN OF SHRI PARMANAND TIWARI, THE CHARTERED ACCOUNTANT IN HIS INDIVIDUAL CAPACITY. DURING THE C OURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE SUBMITTED PROPER DECLARATION GIVING THE ENTIRE FACT THAT THE INCOME OF M/S. TIWARI & CO. HAS DULY BEEN INCLUDED IN THE HANDS OF ITS PROPRIETOR A ND IS ASSESSABLE IN THE HANDS OF THE ASSESSEE. M/S. TIWARI & CO. UNDER WHOSE PAN THIS TDS HAS BEEN DEDUCTED, HAS NOT MADE ANY SEPARATE CLAIM OF THE TDS AND ALSO NOT DECLARED SEPARATE INC OME ON THIS ACCOUNT. AFTER GOING THROUGH THE FACTS IN ENTIRETY, I FIND THAT THIS IS ONLY A T ECHNICAL BREACH AND THAT ALSO FOR THE REASON THAT THESE PROFESSIONAL RECEIPTS RECEIVED BY THE ASSESSE E ARE COMMITMENT OF EARLIER YEARS WHEN THE FIRM WAS IN EXISTENCE. THESE RECEIPTS ARE EARNED B Y THE PROFESSIONAL WORK OF M/S. TIWARI & CO. AS PROPRIETARY CONCERN IN INDIVIDUAL CAPACITY OF SH RI PARMANAND TIWARI. WRONG SUBMISSION OF PAN BY DEDUCTORS DOES NOT DEBAR FOR CLAIMING OF TDS DEDUCTED PARTICULARLY WHEN THE INCOME IS INCLUDED IN THE HANDS OF THE ASSESSEE. NOW THE LEGISLATURE, TO MITIGATE THE RIGOURS OF LAW, HAS AMENDED THE PROVISIONS OF SECTION 37BA OF THE ACT B Y THE AMENDMENT RULES, 2009 W.E.F. 01.04.2009. THE RELEVANT RULE READS AS UNDER: CREDIT FOR TAX DEDUCTED AT SOURCE FOR THE PURPOSES OF SECTION 199. 37BA (1) CREDIT FOR TAX DEDUCTED AT SOURCE AND PAID TO THE CENTRAL GOVERNMENT IN ACCORDANCE WITH THE PROVISIONS OF CHAPTER XVII, SHALL BE GIVEN TO THE PERSON TO WHOM PAYMENT HAS BEEN MADE OR CREDIT HAS BEEN GI VEN (HEREINAFTER REFERRED TO AS DEDUCTEE) ON THE BASIS OF INFORMATION RELATIN G TO DEDUCTION OF TAX FURNISHED BY THE DEDUCTOR TO THE INCOME-TAX AUTHORITY OR THE PERSON AUTHORISED BY SUCH AUTHORITY. (2) (I) WHERE UNDER ANY PROVISION OF THE ACT, THE W HOLE OR ANY PART OF THE INCOME ON WHICH TAX HAS BEEN DEDUCTED AT SOURCE IS ASSESSA BLE IN THE HANDS OF A PERSON OTHER THAN THE DEDUCTEE, CREDIT FOR THE WHOLE OR AN Y PART OF THE TAX DEDUCTED AT 4 ITA NO.2417/K/2013 PARMANAND TIWARI AY 08-09 SOURCE, AS THE CASE MAY BE, SHALL BE GIVEN TO THE O THER PERSON AND NOT TO THE DEDUCTEE: PROVIDED THAT THE DEDUCTEE FILES A DECLARATION WITH THE DEDUCTOR AND THE DEDUCTOR REPORTS THE TAX DEDUCTION IN THE NAME OF T HE OTHER PERSON IN THE INFORMATION RELATING TO DEDUCTION OF TAX REFERRED T O IN SUB-RULE (1). (II) THE DECLARATION FILED BY THE DEDUCTEE UNDER CL AUSE (I) SHALL CONTAIN THE NAME ADDRESS, PERMANENT ACCOUNT NUMBER OF THE PERSON TO WHOM CREDIT IS TO BE GIVEN, PAYMENT OR CREDIT IN RELATION TO WHICH CREDIT S TO BE GIVEN AND REASONS FOR GIVING CREDIT TO SUCH PERSON. (III) THE DEDUCTOR SHALL ISSUE THE CERTIFICATE FOR DEDUCTION OF TAX AT SOURCE IN THE NAME OF THE PERSON IN WHOSE NAME CREDIT IS SHOWN IN THE INFORMATION RELATING TO DEDUCTION OF TAX REFERRED TO IN SUB-RULE (L) AND SH ALL KEEP THE DECLARATION IN HIS SAFE CUSTODY. (3) (I) CREDIT FOR TAX DEDUCTED AT SOURCE AND PAID TO THE CENTRAL GOVERNMENT, SHALL BE GIVEN FOR THE ASSESSMENT YEAR FOR WHICH SU CH INCOME IS ASSESSABLE. (II) WHERE TAX HAS BEEN DEDUCTED AT SOURCE AND PAID TO THE CENTRAL GOVERNMENT AND THE INCOME IS ASSESSABLE OVER A NUMBER OF YEARS , CREDIT FOR TAX DEDUCTED AT SOURCE SHALL BE ALLOWED ACROSS THOSE YEARS IN THE S AME PROPORTION IN WHICH THE INCOME IS ASSESSABLE TO TAX. (4) CREDIT FOR TAX DEDUCTED AT SOURCE AND PAID TO T HE ACCOUNT OF THE CENTRAL GOVERNMENT SHALL BE GRANTED ON THE BASIS OF (I) THE INFORMATION RELATING TO DEDUCTION OF TAX FU RNISHED BY THE DEDUCTOR TO THE INCOME-TAX AUTHORITY OR THE PERSON AUTHORISED BY SU CH AUTHORITY; AND (II) THE INFORMATION IN THE RETURN OF INCOME IN RES PECT OF THE CLAIM FOR THE CREDIT, SUBJECT TO VERIFICATION IN ACCORDANCE WTH THE RISK MANAGEMENT STRATEGY FORMULATED BY THE BOARD FROM TIME TO TIME. FROM THE ABOVE PROVISIONS OF RULE 37BA OF THE RULES , WHEREIN IT HAS CLEARLY BEEN MENTIONED THAT CREDIT FOR TAX DEDUCTED AT SOURCE AND PAID TO THE CENTRAL GOVERNMENT SHALL BE GIVEN TO THE PERSON PROVIDED THAT THE DEDUCTEE FILES A DECLARATI ON WITH THE DEDUCTOR AND THE DEDUCTOR REPORTS THE TAX DEDUCTION IN THE NAME OF OTHER PERSON IN TH E INFORMATION RELATING TO DEDUCTION OF TAX REFERRED TO IN SUB-RULE (1) OF RULE 37BA OF THE RUL ES. FURTHER, SUB-RULE (3) OF RULE 37BA OF THE RULES PROVIDES THAT FOR THE PURPOSE OF GIVING C REDIT IN RESPECT OF TAX DEDUCTED IN TERM OF PROVISIONS OF CHAPTER XVII FOR THE PURPOSE OF GIVIN G CREDIT TO A PERSON OTHER THAN THOSE REFERRED TO IN SUB-SECTION (1) AND ALSO THE ASSESSM ENT YEAR IN WHICH SUCH CREDIT MAY BE GIVEN. IN VIEW OF THE ABOVE PROVISION OF SECTION 37BA OF T HE RULES AND THE PROVISIONS OF SECTION 199(1) OF THE ACT, THE CREDIT FOR TAX DEDUCTION COU LD BE GIVEN TO THE PERSON FROM WHOSE INCOME TAX HAS BEEN DEDUCTED. THE RULE AS AMENDED BY THE AMENDMENT RULES, 2009 W.E.F. 01.04.2009 MAKES IT ABUNDANTLY CLEAR THAT THE CREDIT WILL BE G IVEN BASED ON THE INFORMATION BY DEDUCTOR. THE PROVISO TO SUB-RULE (2) OF RULE 37BA OF THE RUL ES MITIGATES THE HARDSHIP FACED BY ASSESSEE FOR CLAIMING CREDIT OF TDS WHEREBY DEDUCTEE FILES A DECLARATION WITH THE DEDUCTOR AND THE DEDUCTOR REPORTS THE TAX DEDUCTION IN THE NAME OF O THER PERSON IN THE INFORMATION RELATING TO 5 ITA NO.2417/K/2013 PARMANAND TIWARI AY 08-09 DEDUCTION OF TAX AS REFERRED TO IN SUB-RULE (1) OF RULE 37BA OF THE RULES. IN SUCH PROVISIONS OF LAW, THE ASSESSEE SHOULD HAVE BEEN ALLOWED CREDIT F OR TDS IN THE GIVEN SET OF FACTS AND CIRCUMSTANCES OF THE CASE. THE ONLY ISSUE IS THAT THE AMENDED PROVISION IS APPLICABLE W.E.F. 01.04.2009 AND THE RELEVANT ASSESSMENT YEAR INVOLVE D IS 2008-09. WHETHER THE AMENDED RULE AS AMENDED BY AMENDMENT RULES, 2009 IS A BENEFICIAL PROVISION MITIGATING THE HARDSHIP OF THE ASSESSEE AND IN TURN THE SAME CAN BE DECLARED AS RE TROSPECTIVE AND WILL APPLY TO ALL PENDING MATTERS. SIMILAR ISSUE WAS DEALT BY HONBLE SUPREM E COURT IN THE CASE OF ALLIED MOTORS PVT. LTD. VS. CIT (1997) 224 ITR 677 (SC), WHEREIN IT HA S BEEN HELD THAT THE PROVISIONS OF THE FIRST PROVISO, WHICH HAS NEWLY BEEN INSERTED BY THE FINAN CE ACT, 1987, WITH EFFECT FROM 1 ST APRIL, 1998, TO SECTION 43B IS REMEDIAL IN NATURE, DESIGNE D TO ELIMINATE UNINTENDED CONSEQUENCES WHICH MAY CAUSE UNDUE HARDSHIP TO THE ASSESSEE AND WHICH MADE THE PROVISION UNWORKABLE OR UNJUST IN A SPECIFIC SITUATION, AND IS OF CLARIFICA TORY NATURE AND, THEREFORE, HAS TO BE TREATED AS RETROSPECTIVE WITH EFFECT FROM 1 ST APRIL, 1984, THE DATE ON WHICH SECTION 43B HAS NE WLY BEEN INSERTED BY THE FINANCE ACT, 1983. SIMILARLY, HERE ALSO THE RULE WAS INSERTED BY THE AMENDMENT RULES, 2009 TO REMOVE THE HARDSHIP FACED BY ASSESSEES AND TO GIVE TRUE MEANING TO THE PROVISION OF SECTION 199 OF THE ACT. IN SUCH CI RCUMSTANCES, I DIRECT THE AO TO ALLOW THE CREDIT OF TDS AFTER VERIFYING DECLARATION TO BE FIL ED BY DEDUCTEE IN TERM OF PROVISO TO SUB-RULE (2) OF RULE 37BA OF THE RULES. IN TERM OF THE ABOV E, THE APPEAL OF ASSESSEE IS ALLOWED. 5. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. 6. ORDER PRONOUNCED IN OPEN COURT ON 02.09.2014. SD/- , (MAHAVIR SINGH) JUDICIAL MEMBER DATED : 2ND SEPTEMBER, 2014 *+ ,- . JD.(SR.P.S.) () / &0 1(0!2- COPY OF THE ORDER FORWARDED TO: 1 . $% / APPELLANT MR. PARMANAND TIWARI, 107/1, PARK STREE T, KOLKATA-700 016 2 &'$% / RESPONDENT ITO, WARD-54(1), KOLKATA 3 . ) ( )/ THE CIT(A), KOLKATA 4. 5. ) / CIT KOLKATA 089 & / DR, KOLKATA BENCHES, KOLKATA '0 &/ TRUE COPY, ():/ BY ORDER, - /ASSTT. REGISTRAR .