M/s Shalimar Construction, Darjeeling V. D.C.I.T, Cir-2, Siliguri

ITA 2443/KOL/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9209 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 5 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 27-02-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 09-10-2013
• Court: TRIBUNAL
• Department Lawyers: RAJAT KUMAR KUREEL
• Assessee Lawyers: S K TULSIAN SENIOR
• Keywords: Unexplained expenditure; Business income; Retrospective amendment; Additional evidence; Condonation of delay
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A, BENC H KOLKATA BEFORE SHRI N.V.VASUDEVAN, JM & DR. A.L.SAINI, AM ./ ITA NO.2443/KOL/2013 ( / ASSESSMENT YEAR:2010-2011) M/S SHALIMAR CONSTRUCTION, SHIVMANDIR, PO:KADAMTALA, DISTRICT : DARJEELING-734011 VS. DCIT, CIRCLE-2, MATIGARA, SILIGURI, WEST BENGAL. ./ ./PAN/GIR NO.: AAWFS 5786 K ( /APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY : SHRI S.K.TULSIAN, SENIOR ADVOCATE REVENUE BY : SHRI RAJAT KUMAR KUREEL, JCIT / DATE OF HEARING : 27/02/2017 /DATE OF PRONOUNCEMENT 22/03/2017 / O R D E R PER DR. ARJUN LAL SAINI, AM: THE CAPTIONED APPEAL FILED BY THE ASSESSEE PERTAINI NG TO ASSESSMENT YEAR 2010-2011, IS DIRECTED AGAINST THE ORDER PASSED BY LD. CIT(A), SILIGURI, IN APPEAL NO.03/CIT(A)/SLG/2013-1 4, DATED 29.05.2013, WHICH IN TURN ARISES OUT OF AN ORDER PASSED BY THE ASSESSING OFFICER (AO) UNDER SECTION 143(3) OF THE INCOME TAX ACT 1961, (H EREINAFTER REFERRED TO AS THE ACT), DATED 01.03.2013. 2. BRIEF FACTS OF THE CASE QUA THE ASSESSEE ARE THA T THE ASSESSEE FILED ITS E-RETURN OF INCOME ON 14/10/2010, DISCLOSING TO TAL INCOME OF RS.12,36,040/-. THE ASSESSEES CASE WAS SELECTED FO R SCRUTINY U/S 143(3) OF THE ACT AND THE AO HAS COMPLETED THE ASSESSMENT BY MAKING DISALLOWANCE ON ACCOUNT OF UNEXPLAINED EXPENDITURE RS.5,98,492 ( EXPENDITURE INCURRED BY THE ASSESSEE WITHOUT DEBIT BALANCE IN THE CASH BOOK) AND DISALLOWED RS.5,73,950/-( MACHINE HIRE CH ARGES PAID WITHOUT DEDUCTING TDS). ITA NO.2443/13 M/S SHALIMAR CONSTRUCTION 2 3. THE CAPTIONED APPEAL IS TIME BARRED FOR 54 DAYS. THE ASSESSEE FILED A PETITION FOR CONDONATION OF DELAY ALONGWITH AFFIDAV IT. AFTER HEARING LD AR FOR THE ASSESSEE, WE THINK THAT THERE IS GENUINE RE ASON FOR DELAY IN FILING THE SAID APPEAL THEREFORE, WE CONDONE THE DELAY AND THE APPEAL IS ADMITTED FOR HEARING. 4. AGGRIEVED FROM THE ORDER OF AO, THE ASSESSEE FIL ED AN APPEAL BEFORE THE LD. CIT(A), WHO HAS PARTLY ALLOWED THE A PPEAL OF THE ASSESSEE OBSERVING THE FOLLOWINGS :- OBSERVATION OF CIT(A) FOR GROUND NO. 4 RAISED BY AS SESSEE I HAVE CAREFULLY EXAMINED AND CONSIDERED THE SUBMIS SION OF THE LD AR AND ALSO PERUSED THE ASSESSMENT ORDER. ON PERUSAL I FIND THAT THE LD AO HAS EXAMINED THE CASH BOOK IN DETAIL AND' FOUND OUT DISCREPANCIES AS MENTIONED IN THE ASSESSMENT ORDER. THE LD AO HAS MA DE PAINSTAKING EFFORTS TO DETECT THE DISCREPANCIES IN THE CASH BOO K AND CAME TO THE FINDING THAT THE ASSESSEE MADE SEVERAL PAYMENTS AGA INST VARIOUS EXPENSES AMOUNTING TO RS.5,98,492/- DURING THE PERI OD FROM 02.12.2009 TO 18.01.2010 ALTHOUGH THE FIRM HAD NO SUFFICIENT C ASH IN HAND DURING THAT PERIOD. IN COURSE OF ASSESSMENT PROCEEDINGS THE ASS ESSEE WAS ASKED TO SHOW CAUSE AS TO WHY THE AMOUNT OF RS. 5,98,492/- S HOWN AS EXPENSES INCURRED DURING THE ABOVE PERIOD SHOULD NOT BE ADDE D BACK TO THE RETURNED INCOME FOR FAILURE TO EXPLAIN THE SOURCE T HEREOF. AS IT IS EVIDENT FROM THE ASSESSMENT ORDER THE ASSESSEE FAILED TO EX PLAIN BEFORE THE LD AO THE SOURCE OF PAYMENTS OF RS. 5,98,492/-AGAINST VARIOUS EXPENSES DURING THE ABOVE PERIOD. EVEN IN THE COURSE OF APPE LLATE PROCEEDINGS THE EXPLANATION SUBMITTED BY THE LD AR 'OF THE ASSESSEE IS WITHOUT ANY DOCUMENTARY EVIDENCES. THE LD AR HAS STATED IN THE WRITTEN SUBMISSION THAT THE AMOUNT OF RS. 5,98,492/-WAS ACTUALLY PAID BY THE PARTNERS ON BEHALF OF THE FIRM WHICH LATER ON REIMBURSED IT TO THE PARTNERS. THE LD AR HAS ADMITTED THAT THERE WAS CLERICAL ERROR IN RECOR DING THE ENTRIES IN THE CASH BOOK. BUT THE LD AR FAILED TO SUBSTANTIATE THE CLAIM MADE IN THE WRITTEN SUBMISSION BY FURNISHING SUPPORTING DOCUMEN TS. IN THE ABSENCE OF SUPPORTING DOCUMENTS THE CONTENTION OF THE LD AR OF THE ASSESSEE CANNOT BE ACCEPTED. IN SUCH CIRCUMSTANCES THE ACTION OF TH E LD AO OF MAKING ADDITION OF RS. 5,98,492/- AS UNEXPLAINED EXPENDITU RE MET OUT OF UNDISCLOSED SOURCE IS HELD TO BE JUSTIFIED. THEREFO RE. I AM NOT INCLINED TO INTERFERE WITH THE ORDER OF THE LD AO ON THIS POINT . THE ADDITION OF RS.5,98,492/-MADE BY THE LD AO AS UNEXPLAINED EXPEN DITURE MET OUT OF UNDISCLOSED SOURCE IS CONFIRMED. OBSERVATION OF CIT(A) FOR GROUND NO. 3 RAISED BY AS SESSEE THEREFORE, IT IS CLEAR THAT THE JUDGEMENTS OF THE S PECIAL BENCH OF ITAT, VISAKHAPATNAM IN M/S MERILYN SHIPPING & TRANSPORTS, VISAKHAPATNAM VS. ACIT (2012) IN ITA NO. 477/VIZAG/2008 AND OF THE HO N'BLE ITAT, KOLKATA ITA NO.2443/13 M/S SHALIMAR CONSTRUCTION 3 IN MASOOM RAJA VS. ASST. CIT, ITA NO.06/KOL/2012 CA NNOT BE FOLLOWED IN THE INSTANT CASE. FOLLOWING THE JUDGEMENTS OF THE H ON'BLE HIGH COURT OF CALCUTTA IN THE CASES OF CIT, KOLKATA-XI VS. CRESCE NT EXPORT SYNDICATES AND CIT VS. MD. JAKIR HOSSAIN MONDAL CITED ABOVE, I HOLD THAT THE ASSESSEE WAS LIABLE TO DEDUCT TAX AT SOURCE FROM TH E PAYMENTS OF RS. 5,73,950/- PAID ON ACCOUNT OF MACHINERY HIRE CHARGE S AS PER THE PROVISIONS OF SECTION 1941 OF THE ACT-AND SINCE THE ASSESSEE HAS FAILED TO DEDUCT TAX AT SOURCE FROM THE PAYMENTS OF RS. 5,73, 950/- PAID ON ACCOUNT OF MACHINERY HIRE CHARGES THE LD AO WAS FULLY JUSTI FIED IN DISALLOWING THE SUM OF RS. 5,73,950/-PAID ON ACCOUNT OF MACHINERY H IRE CHARGES AS-PER THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. THE REFORE, THE ADDITION OF RS. 5, 73,950/- ON ACCOUNT OF MACHINERY HIRE CHARGES MA DE BY THE LD AO IS CONFIRMED. 5. NOT BEING SATISFIED WITH THE ORDER OF LD. CIT(A) , THE ASSESSEE IS IN APPEAL BEFORE US AND HAS TAKEN THE FOLLOWING GROUND S OF APPEAL :- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. COMMISSIONER OF LNCOME TAX (APPEAL) ERRED IN NOT TH E ALLOWING THE SUM OF RS.5,73,950/- ON ACCOUNT OF MACHINERY HI RE CHARGES AS PER THE PROVISIONS OF SECTION 40(A)(IA) OF THE A CT. 2. THAT IN VIEW OF THE 'INTERIM SUSPENSION' OF THE ORDER OF THE SPECIAL BENCH OF ITAT, VISAKHAPATNAM IN THE CASE OF M/S. MERILYN SHIPPING & TRANSPORTS, THE LD CIT(A) ERRED IN HAVING HELD THAT THE SAID JUDGEMENT IS NO MORE A GOOD CASE . 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.5,73,950/- U/S 40(A)(IA) OF THE ACT, IN VIEW OF THE RECENT JUDGEMENT OF THE ALLAHABAD HIGH COURT IN THE CASE O F VECTOR SHIPPING SERVICES (P) LTD, WHEREIN THE DECISION OF THE SPECIAL BENCH IN THE CASE OF M/S. MERILYN SHIPPING & TRANSP ORTS WAS ONCE AGAIN CONFIRMED, HOLDING THAT SEC.40(A)(IA) DI SALLOWANCE APPLIES ONLY TO AMOUNTS 'PAYABLE' AS ON 31ST MARCH AND NOT TO AMOUNTS ALREADY 'PAID' DURING THE YEAR. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. COMMISSIONER OF INCOME TAX (APPEAL) ERRED IN CONFIR MING THE ADDITION OF RS.5,98,492/- ON ACCOUNT OF UNEXPLAINED EXPENDITURE MET OUT OF UNDISCLOSED SOURCE WHEN THE SAME WAS ACTUALLY PAID BY THE PARTNERS ON BEHALF OF THE FIRM AND WAS LATER ON REIMBURSED TO THE PARTNERS. 5. THAT THE ORDER OF THE LD. A.O. AND THE CIT(A) A CCORDINGLY BE MODIFIED AND YOUR APPELLANT BE GIVEN SUCH RELIEF(S) AS PRAYED FOR. ITA NO.2443/13 M/S SHALIMAR CONSTRUCTION 4 6. GROUNDS NOS. 1 ,2 AND 3 RAISED BY THE ASSESSEE R ELATE ADDITION OF RS.5,73,950/- ON ACCOUNT OF MACHINERY HIRE CHARG ES AS PER THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. 6.1 LD. AR FOR THE ASSESSEE SUBMITTED BEFORE US THA T SECTION 40(A) (IA) CAN NOT BE SEEN AS INTENDED TO BE A PENAL PROVISION TO PUNISH THE LAPSES OF NON DEDUCTION OF TAX AT SOURCE FROM PAYMENTS FOR EXPENDITURE- PARTICULARLY WHEN THE RECIPIENTS HAVE TAKEN INTO AC COUNT INCOME EMBEDDED IN THESE PAYMENTS, PAID DUE TAXES THEREON AND FILED INCOME TAX RETURNS IN ACCORDANCE WITH THE LAW. THE LD AR FOR THE ASSESSEE ALSO RELIED ON THE FOLL OWING JUDGMENTS: (1).RKP COMPANY, ITA NO.106/RPR/2016 DATED 24.06.20 16: 8. THE SECOND ISSUE IS WITH RESPECT TO THE SECOND PROVISO TO SECTION 40(A)(IA) BEING HELD TO BE RETROSPECTIVE, WITHOUT CORRESPONDI NG ENABLING PROVISION IN THE RULES BEING HELD TO BE RETROSPECTIVE. THAT IS A HYP ER TECHNICAL ARGUMENT AND TOO PEDANTIC AN APPROACH. THE SECOND PROVISO TO SECTION 40(A)(IA) WAS HELD TO BE RETROSPECTIVE IN IN THE CONTEXT OF FINDING SOLUTION TO THE PROBLEM TO THE TAXPAYER, AND THE MATTER WAS SET ASIDE TO THE FILE OF THE ASS ESSING OFFICER WITH CERTAIN DIRECTIONS ABOUT FACTUAL VERIFICATIONS ON THE RECIP IENT HAVING INCLUDED THE SAME IN THE RECEIPTS BASED ON WHICH TAXABLE INCOME IS COMPU TED, AND THE INCOME HAVING BEEN OFFERED TO TAX. IT IS THIS ACTION OF THE COORD INATE BENCH THAT WAS UPHELD BY THE TRIBUNAL AND THE COURSE OF ACTION SO ADOPTED BY THE COORDINATE BENCH APPROVED BY THEIR LORDSHIPS. IT IS IMPERMISSIBLE TO PICK UP ONE OF THE ASPECTS OF THE DECISION OF THE JUDICIAL AUTHORITY AND READ THE SAME IN ISOLATION WITH OTHER ASPECTS. THE DECISION IS NOT ON THE RETROSPECTIVITY OF THE PROVISO ALONE, ITS ALSO ON DELETION OF DISALLOWANCE IN THE EVENT OF THE RECIPI ENT HAVING TAKEN INTO ACCOUNT THESE RECEIPTS IN THE COMPUTATION OF INCOME. THE JU DGE MADE LAW IS AS BINDING ON THE AUTHORITIES BELOW AS IS THE LEGISLATED STATUE. THE HYPER TECHNICAL STAND OF THE DEPARTMENTAL REPRESENTATIVES, THEREFORE, DOES NOT M ERIT OUR APPROVAL. 9. AS REGARDS LACK OF GUIDANCE FROM HON'BLE JURISDI CTIONAL HIGH COURT, THAT CAN NOT BE REASON ENOUGH TO DISREGARD THE DECISIONS FROM NO N-JURISDICTIONAL HIGH COURTS.HON'BLE COURTS ABOVE, BEING A HIGHER TIER OF THE JUDICIAL HIERARCHY, BIND THE LOWER FORUMS NOT ONLY IN THE JURISDICTION OF RESPEC TIVE HIGH COURTS, BUT UNLESS, THERE IS ANYTHING CONTRARY THERETO BY THE JURISDICT IONAL HIGH COURTS, OTHER JURISDICTIONS AS WELL. THERE CANNOT BE ANY DISPUTE ON THE FUNDAMENTAL PROPOSITION THAT IN THE HIERARCHICAL JUDICIAL SYSTEM THAT WE HA VE, BETTER WISDOM OF THE COURT BELOW HAS TO YIELD TO HIGHER WISDOM OF THE COURT AB OVE, AND THEREFORE WE HAVE TO HUMBLY BOW BEFORE THE VIEWS EXPRESSED BY HON'BLE CO URTS ABOVE, SUCH A HIGH COURT BEING A NON-JURISDICTIONAL HIGH COURT DOES NO T ALTER THE POSITION AS LAID DOWN BY HON'BLE BOMBAY HIGH COURT IN THE MATTER OF CIT VS. GODAVARI DEVI SARAF (1978) 113 ITR 589 (BORN) AND AS ANALYZED BY A COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF ACIT VS AURANGABAD HOLIDAY RESORTS P VT.LTD [(2009) 118/TD 1 (PUNE)]. ITA NO.2443/13 M/S SHALIMAR CONSTRUCTION 5 10. I N VIEW OF THE ABOVE DISCUSSIONS, AS ALSO BEARING IN MIND ENTIRETY OF THE CASE, WE DEEM IT FIT AND PROPER TO REMIT THE MATTER TO TH E FILE OF THE ASSESSING OFFICER FOR LIMITED VERIFICATION ON THE ASPECT AS TO WHETHER RE CIPIENT OF PAYMENT HAS INCLUDED THE SAME IN HIS COMPUTATION OF BUSINESS INCOME OFFE RED TO TAX, AND, IF FOUND TO BE SO, DELETE THE DISALLOWANCE IN QUESTION. WITH THESE DIRECTIONS, THE MATTER STANDS RESTORED TO THE FILE OF THE ASSESSING OFFICER. 11.IN THE RESULT, THE APPEAL IS ALLOWED FOR THE STA TISTICAL PURPOSES IN THE TERMS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT TODAY ON THE 24TH DAY OF JUNE, 2016. (2). RAJEEV KUMAR AGARWAL, ITA NO.337/AGRA/2013, DA TED MAY 29,2013 9. ON A CONCEPTUAL NOTE, PRIMARY JUSTIFICATION FOR SUCH A DISALLOWANCE IS THAT SUCH A DENIAL OF DEDUCTION IS TO COMPENSATE FOR THE LOSS O F REVENUE BY CORRESPONDING INCOME NOT BEING TAKEN INTO ACCOUNT IN COMPUTATION OF TAXA BLE INCOME IN THE HANDS OF THE RECIPIENTS OF THE PAYMENTS. SUCH A POLICY MOTIVATED DEDUCTION RESTRICTIONS SHOULD, THEREFORE, NOT COME INTO PLAY WHEN AN ASSESSEE IS AB LE TO ESTABLISH THAT THERE IS NO ACTUAL LOSS OF REVENUE. THIS DISALLOWANCE DOES DEINC ENTIVIZE NOT DEDUCTING TAX AT SOURCE, WHEN SUCH TAX DEDUCTIONS ARE DUE, BUT, SO FA R AS THE LEGAL FRAMEWORK IS CONCERNED, THIS PROVISION IS NOT FOR THE PURPOSE OF PENALIZING FOR THE TAX DEDUCTION AT SOURCE LAPSES. THERE ARE SEPARATE PENAL PROVISIONS TO THAT EFFECT. DEINCENTIVIZING A LAPSE AND PUNISHING A LAPSE ARE TWO DIFFERENT THINGS AND HAVE DISTINCTLY DIFFERENT, AND SOMETIMES MUTUALLY EXCLUSIVE, CONNOTATIONS. WHEN WE APPRECIATE THE OBJECT OF SCHEME OF SECTION 40(A)(IA), AS ON THE STATUTE, AND TO EXAMINE WHETHER OR NOT, ON A 'FAIR, JUST AND EQUITABLE' INTERPRETATION OF LAW- A S IS THE GUIDANCE FROM HON'BLE DELHI HIGH COURT ON INTERPRETATION OF THIS LEGAL PROVISION, IN OUR HUMBLE UNDERSTANDING, IT COULD NOT BE AN 'INTENDED CONSEQUENCE' TO DISALLOW T HE EXPENDITURE, DUE TO NON DEDUCTION OF TAX AT SOURCE, EVEN IN A SITUATION IN WHICH CORRESPONDING INCOME IS BROUGHT TO TAX IN THE HANDS OF THE RECIPIENT. THE S CHEME OF SECTION 40(A)(IA), AS WE SEE IT, IS AIMED AT ENSURING THAT AN EXPENDITURE SH OULD NOT BE ALLOWED AS DEDUCTION IN THE HANDS OF AN ASSESSEE IN A SITUATION IN WHICH INC OME EMBEDDED IN SUCH EXPENDITURE HAS REMAINED UNTAXED DUE TO TAX WITHHOLD ING LAPSES BY THE ASSESSEE. IT IS NOT, IN OUR CONSIDERED VIEW, A PENALTY FOR TAX WIT HHOLDING LAPSE BUT IT IS A SORT OF COMPENSATORY DEDUCTION RESTRICTION FOR AN INCOME GO ING UNTAXED DUE TO TAX WITHHOLDING LAPSE. THE PENALTY FOR TAX WITHHOLDING LA PSE PER SE IS SEPARATELY PROVIDED FOR IN SECTION 271 C, AND, SECTION 40(A)(IA) DOES NO T ADD TO THE SAME. THE PROVISIONS OF SECTION 40(A)(IA), AS THEY EXISTED PRIOR TO INSE RTION OF SECOND PROVISO THERETO, WENT MUCH BEYOND THE OBVIOUS INTENTIONS OF THE LAWMAKERS AND CREATED UNDUE HARDSHIPS EVEN IN CASES IN WHICH THE ASSESSEE'S TAX WITHHOLDING LAPSES DID NOT RESULT IN ANY LOSS TO THE EXCHEQUER. NOW THAT THE LEGISLATURE HAS BEEN C OMPASSIONATE ENOUGH TO CURE THESE SHORTCOMINGS OF PROVISION, AND THUS OBVIATE T HE UNINTENDED HARDSHIPS, SUCH AN AMENDMENT IN LAW, IN VIEW OF THE WELL SETTLED LEGAL PO SITION TO THE EFFECT THAT A CURATIVE AMENDMENT TO AVOID UNINTENDED CONSEQUENCES IS TO BE TREATED AS RETROSPECTIVE IN NATURE EVEN THOUGH IT MAY NOT STATE SO SPECIFICALLY , THE INSERTION OF SECOND PROVISO MUST BE GIVEN RETROSPECTIVE EFFECT FROM THE POINT O F TIME WHEN THE RELATED LEGAL PROVISION WAS INTRODUCED. IN VIEW OF THESE DISCUSSIO NS, AS ALSO FOR THE DETAILED REASONS SET OUT EARLIER, WE CANNOT SUBSCRIBE TO THE VIEW THAT IT COUL D HAVE BEEN AN 'INTENDED CONSEQUENCE' TO PUNISH THE ASSESSEES FOR NON DEDUCT ION OF TAX AT SOURCE BY DECLINING THE DEDUCTION IN RESPECT OF RELATED PAYME NTS, EVEN WHEN THE CORRESPONDING INCOME IS DULY BROUGHT TO TAX. THAT WILL BE GOING MU CH BEYOND THE OBVIOUS INTENTION OF THE SECTION. ACCORDINGLY, WE HOLD THAT THE INSERTIO N OF SECOND PROVISO TO SECTION 40(A)(IA) IS DECLARATORY AND CURATIVE IN NATURE AND IT HAS RETROSPECTIVE EFFECT FROM 1 ST APRIL, 2005, BEING THE DATE FROM WHICH SUB CLAUSE (I A) OF SECTION 40(A) WAS INSERTED BY THE FINANCE (NO.2) ACT, 2004. 10. IN VIEW OF THE ABOVE DISCUSSIONS, WE DEEM IT FIT AND PROPER TO REMIT THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDIC ATION IN THE LIGHT OF OUR ABOVE OBSERVATIONS AND AFTER CARRYING OUT NECESSARY VERIF ICATIONS REGARDING RELATED PAYMENTS HAVING BEEN TAKEN INTO ACCOUNT BY THE RECI PIENTS IN COMPUTATION OF THEIR INCOME, REGARDING PAYMENT OF TAXES IN RESPECT OF SU CH INCOME AND REGARDING FILING OF ITA NO.2443/13 M/S SHALIMAR CONSTRUCTION 6 THE RELATED INCOME TAX RETURNS BY THE RECIPIENTS. W HILE GIVING EFFECT TO THESE DIRECTIONS, THE ASSESSING OFFICER SHALL GIVE DUE AN D FAIR OPPORTUNITY OF HEARING TO THE ASSESSEE, DECIDE THE MATTER IN ACCORDANCE WITH THE L AW AND BY WAY OF A SPEAKING ORDER. WE ORDER SO. 6.2. LD. DR FOR THE REVENUE HAS PRIMARILY RELIED O N THE FINDINGS OF THE AO, WHICH WE HAVE ALREADY NOTED IN OUR EARLIER PARA AND IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. 6.3. HAVING HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL ON RECORD, WE ARE OF THE VIEW THAT THERE IS MERIT IN THE SUBMI SSIONS OF THE ASSESSEE, AS THE PROPOSITION CANVASSED BY LD. AR FOR THE ASSE SSEE ARE SUPPORTED BY THE FACTS NARRATED BY HIM ABOVE AND THE CASE LAWS C ITED BY HIM ABOVE. AS LD. AR FOR THE ASSESSEE HAS POINTED OUT THAT THE O BJECT OF SCHEME OF SECTION 40(A)(IA), AS ON THE STATUTE, AND TO EXAMIN E WHETHER OR NOT, ON A 'FAIR, JUST AND EQUITABLE' INTERPRETATION OF LAW- A S IS THE GUIDANCE FROM HON'BLE DELHI HIGH COURT ON INTERPRETATION OF THIS LEGAL PROVISION, IN OUR HUMBLE UNDERSTANDING, IT COULD NOT BE AN 'INTENDED CONSEQUENCE' TO DISALLOW THE EXPENDITURE, DUE TO NON DEDUCTION OF T AX AT SOURCE, EVEN IN A SITUATION IN WHICH CORRESPONDING INCOME IS BROUGHT TO TAX IN THE HANDS OF THE RECIPIENT. IN VIEW OF THE ABOVE DISCUSSIONS, WE DEEM IT FIT AND PROPER TO REMIT THE MATTER TO THE FILE OF THE ASSESSING OF FICER FOR FRESH ADJUDICATION IN THE LIGHT OF OUR ABOVE OBSERVATIONS AND AFTER CA RRYING OUT NECESSARY VERIFICATIONS REGARDING RELATED PAYMENTS HAVING BEE N TAKEN INTO ACCOUNT BY THE RECIPIENTS IN COMPUTATION OF THEIR INCOME, R EGARDING PAYMENT OF TAXES IN RESPECT OF SUCH INCOME AND REGARDING FILIN G OF THE RELATED INCOME TAX RETURNS BY THE RECIPIENTS. ITA NO.2443/13 M/S SHALIMAR CONSTRUCTION 7 7.GROUND NO.4 RELATES TO ADDITION OF RS.5,98,492/- ON ACCOUNT OF UNEXPLAINED EXPENDITURE MET OUT OF UNDISCLOSED SOUR CE WHEN THE SAME WAS ACTUALLY PAID BY THE PARTNERS ON BEHALF OF THE FIRM AND WAS LATER ON REIMBURSED TO THE PARTNERS. 7.1 THE LD AR FOR THE ASSESSEE SUBMITTED BEFORE US THAT THE AMOUNT OF RS.5,98,492/- WAS ACTUALLY PAID BY THE PARTNERS ON BEHALF OF THE FIRM AND WAS LATER ON REIMBURSED TO THE PARTNER. THE LD AR F OR THE ASSESSEE HAS SUBMITTED BEFORE US AN AFFIDAVIT OF THE PARTNER. IN THE AFFIDAVIT THE PARTNER STATED THAT HE MADE PAYMENT OF RS.5,98,492.46 FOR A ND ON BEHALF OF PARTNERSHIP FIRM, M/S SHALIMAR CONSTRUCTION. 7.2. LD. DR FOR THE REVENUE HAS PRIMARILY RELIED O N THE FINDINGS OF THE AO, WHICH WE HAVE ALREADY NOTED IN OUR EARLIER PARA AND IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. 7.3 HAVING HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL ON RECORD, WE ARE OF THE VIEW THAT THIS ISSUE REQUIRES FRESH E XAMINATION AT THE END OF THE ASSESSING OFFICER, AS THE LD AR FOR THE ASSESSE E HAS SUBMITTED BEFORE US AN AFFIDAVIT, WHICH STATES THAT THE PARTNER MADE PAYMENT ON BEHALF OF PARTNERSHIP FIRM. THIS IS AN ADDITIONAL EVIDENCE BE FORE US AND TO BE EXAMINED BY THE ASSESSING OFFICER. THEREFORE, WE RE MIT THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE THE AFFIDA VIT OF THE PARTNER AND ADJUDICATE THE SAID ISSUE AFTER GIVING PROPER OPPOR TUNITY OF BEING HEARD TO THE ASSESSEE. 7.4. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E ON GROUND NO.4, IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO.2443/13 M/S SHALIMAR CONSTRUCTION 8 ORDER PRONOUNCED IN THE OPEN COURT ON THIS 22/03 /2017. SD/ - (N.V.VASUDEVAN) S D/ - (DR. A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA ; ! DATED 22/03/2017 '#$%& /PRAKASH#MISHRA ,SR.PS. / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( ASSTT. REGISTRAR) $ % , / ITAT, KOLKATA 1. / THE APPELLANT-M/S SHALIMAR CONSTRUCTION 2. / THE RESPONDENT.- DCIT, CIRCLE-2, MATIGARA, SILIGURI 3. 0 ( ) / THE CIT(A), KOLKATA. 4. 0 / CIT 5. 12 3 4456 , 56 , / DR, ITAT, KOLKATA 6. 3 78 / GUARD FILE. 1 4 //TRUE COPY//