Raghubir Bhuwalka, Howrah V. ITO, Ward - 46(2) , Kolkata

ITA 2444/KOL/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2605 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 04-02-2020
• Assessment Year: 2013-2014
• Appeal Filed On: 22-11-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL
• Assessee Lawyers: DEVORSHI BHUWALKA
• Keywords: TDS; Set aside
• Section: 40(a)(ia); 201

Judgement Text

, C , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA ( . . , . . , ) [BEFORE SHRI A. T. VARKEY, JM & DR. A.L. SAINI, AM] I.T.A. NO. 2444/KOL/2018 ASSESSMENT YEAR: 2013-14 RAGHUBIR BHUWALKA (PAN: AFUPB7381Q) VS. INCOME-TAX OFFICER, WARD-46(2), KOLKATA APPELLANT RESPONDENT FOR THE APPELLANT SHRI DEVORSHI BHUWALKA, AR FOR THE RESPONDENT SHRI SUPRIYO PAL, JCIT, DR DATE OF HEARING 03.02.2020 DATE OF PRONOUNCEMENT 18.03.2020 ORDER PER SHRI A.T.VARKEY, JM : THIS IS AN APPEAL PREFERRED BY THE ASSESSEE AGAINS T THE ORDER OF LD. CIT(A) -14, KOLKATA DATED 31.08.2018 FOR AY 2013-14. 2. THE FIRST GROUND OF APPEAL OF THE ASSESSEE IS A GAINST THE ACTION OF THE LD. CIT(A) IN SUSTAINING THE ADDITION OF A SUM OF RS.3, 92,964/- MADE BY THE AO ON ACCOUNT OF INTEREST AND REMUNERATION RECEIVED FROM PARTNERSHIP FIRM. 3. BRIEF FACTS OF THE CASE AS NOTED BY THE AO ARE T HAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT CAME TO HIS NOTICE THAT A SSESSEE IS THE PARTNER OF THE FIRM NAMED M/S. UTTAM ENGINEERS FROM WHERE THE ASSESSEE HAS DERIVED INCOME FROM REMUNERATION OF RS.1,65,898/- AND INTEREST ON CAPIT AL WHICH HE HAS INVESTED TO THE TUNE OF RS.2,26,944/-. HOWEVER, ACCORDING TO AO, THIS T OTAL AMOUNT OF RS.3,92,842/- HAD NOT BEEN DISCLOSED BY THE ASSESSEE IN HIS TOTAL INC OME FOR THE YEAR UNDER CONSIDERATION. SO, HE ISSUED SHOW CAUSE TO THE ASSESSEE AS TO WHY THE SAID UNDISCLOSED RECEIPT SHOULD NOT BE INCLUDED IN THE TOTAL INCOME OF THE ASSESSEE . ACCORDING TO AO, THE ASSESSEE HAD REPLIED IN WRITING THAT IT WAS OMITTED FROM THE ACC OUNTS DUE TO CLERICAL ERROR. SO, THE 2 I.T.A. NO. 2444/KOL/2018 ASSESSMENT YEAR: 2013-14 RAGHUBIR BHUWALKA. AO NOT SATISFIED WITH THE EXPLANATION OF THE ASSESS EE IN RESPECT OF THE UNDISCLOSED RECEIPT AS A PARTNER FROM M/S. UTTAM ENGINEERS TOTA LLING RS.3,92,842/- WAS ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. AGGRIEVED, TH E ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) AND CONTENDED THAT HE HAS DULY DISCL OSED THE AMOUNT IN THE RETURN OF INCOME AND OFFERED THE AMOUNT OF RS.3,92,842/- AS HIS INCOME. HOWEVER, THE LD. CIT(A) OBSERVED THAT THE ASSESSEE HAS PRODUCED ONLY PHOTO COPY OF THE COMPUTATION OF TAXABLE INCOME WHICH DOES NOT EVEN MENTION THE RELE VANT ASSESSMENT YEAR AND SINCE THE ASSESSEE HAS NOT PROVIDED FULL COMPUTATION STAT EMENT (ONLY A SINGLE SHEET WAS PROVIDED BEFORE THE LD. CIT(A) ACCORDING TO HIM DO ES NOT EVEN MENTION THE ASSESSMENT YEAR), THEREFORE, THE LD. CIT(A) REJECTE D THE CLAIM OF THE ASSESSEE THAT THE ASSESSEE HAD DULY OFFERED IN ITS RETURN OF INCOME T HE SAID AMOUNT RECEIVED FROM HIS PARTNERSHIP FIRM. MOREOVER ACCORDING TO LD. CIT(A) , SINCE THE ASSESSEE DID NOT FILE THE ENTIRE RETURN OF INCOME, HE COULD NOT VERIFY TH E VERACITY OF THE CONTENTION OF THE ASSESSEE THAT HE HAD DISCLOSED THE AMOUNT IN THE RE TURN OF INCOME. THEREFORE, HE SUSTAINED THE ORDER OF THE AO. AGGRIEVED, ASSESSEE IS BEFORE US. 4. HAVING HEARD BOTH THE PARTIES AND AFTER PERUSA L OF THE RECORDS, WE NOTE THAT THE AO HAD ADDED THE REMUNERATION OF RS.1,65,898/- AND INTEREST ON CAPITAL OF RS.2,26,944/- RECEIVED BY THE ASSESSEE FROM M/S. UT TAM ENGINEERS TOTALLING RS.3,92,842/- SINCE ACCORDING TO HIM, THE ASSESSEE HAD NOT DISCLOSED THE TOTAL AMOUNT OF RS.3,92,842/- IN HIS BOOKS. ACCORDING TO ASSESS EE/LD. AR, THE ASSESSEE HAD FILED THE BALANCE SHEET OF THE PROPRIETARY CONCERN AND TH E AMOUNT RECEIVED FROM THE PARTNERSHIP WAS NOT ROUTED THROUGH THE P&L ACCOUNT OF THE ASSESSEE. ACCORDING TO ASSESSEE HE INFACT HAD SHOWN THE AMOUNT IN ITS COMP UTATION OF TAXABLE INCOME AND DREW OUR ATTENTION TO THE COMPUTATION OF TAXABLE IN COME WHERE WE NOTE THAT THE ASSESSEE HAD IN FACT SHOWN INTEREST ON CAPITAL FROM M/S. UTTAM ENGINEERS AT RS.2,26,944/- AND PARTNERS REMUNERATION FROM M/S. UTTAM ENGINEERS OF RS.1,65,898/- . OUR ATTENTION WAS ALSO DRAWN TO PAGE NO. 10 OF T HE PAPER BOOK, WHEREIN COLUMN 23 THE ASSESSEE HAD SHOWN THE INCOME OF RS.3,92,842/- IN ITS RETURN OF INCOME WHICH IS PLACED FROM PAGES 1 TO 24 OF THE PAPER BOOK. THUS, IT HAS BEEN CONTENDED THAT THE ASSESSEE HAS DULY DISCLOSED THE AMOUNT, WHICH THE AO HAS ADDED AGAIN WHICH ACTION 3 I.T.A. NO. 2444/KOL/2018 ASSESSMENT YEAR: 2013-14 RAGHUBIR BHUWALKA. AMOUNTS TO DOUBLE ADDITION OF THE SAME INCOME. THE LD. DR WANTS THE MATTER TO BE VERIFIED BY THE AO SINCE THE WHOLE CONFUSION WAS DU E TO THE ASSESSEE MAKING CERTAIN VAGUE CONTENTIONS BEFORE THE AO AND WITHOUT BOTHERI NG TO BRING THE FACTS STATED BEFORE US TO THE NOTICE OF AO/CIT(A). WE NOTE FROM PERUSA L OF THE RETURN OF INCOME THAT THE ASSESSEE AT COLUMN 23 PAGE 10 OF THE RETURN OF INCO ME FOR AY 2013-13 HAS DISCLOSED THE AMOUNT IN DISPUTE I.E. RS.3,92,842/- AND ALSO I N THE COMPUTATION OF INCOME. HOWEVER WE NOTE THAT SINCE THE ASSESSEE COULD NOT P ROPERLY EXPLAIN THE FACTS DISCUSSED SUPRA, THE AO HAS MADE THE ADDITION. BE THAT AS IT MAY BE, IN THE INTEREST OF BOTH THE PARTIES, IN THE LIGHT OF THE DISCUSSIONS (SUPRA), W E DEEM IT FIT TO SET ASIDE THE ORDER OF THE LD. CIT(A) AND REMAND THE MATTER BACK TO THE FI LE OF AO TO VERIFY AS TO WHETHER THE ASSESSEES CONTENTION THAT IT HAS DISCLOSED THE AMOUNT OF RS.3,92,842/- IN THE RETURN OF INCOME WHICH HE HAS RECEIVED AS REMUNERAT ION AND INTEREST FROM THE PARTNERSHIP FIRM M/S. UTTAM ENGINEERS AND IF IT IS TRUE, THEN THERE IS NO NEED OF ANY ADDITION, CONSQUENTLY THE SAME SHOULD BE DELETED. THE AO TO GIVE OPPORTUNITY TO THE ASSESSEE AND DECIDE THE ISSUE AFRESH AFTER VERIFICA TION AS DIRECTED ABOVE. THEREFORE, THIS GROUND OF APPEAL OF ASSESSEE IS ALLOWED FOR ST ATISTICAL PURPOSES. 5. GROUND NO. 2 IS AGAINST THE ACTION OF THE LD. CI T(A) IN SUSTAINING THE ADDITION OF RS.1,24,111/- MADE BY AO U/S. 40(A)(IA) OF THE A CT. 6. BRIEF FACTS OF THE CASE AS NOTED BY THE AO ARE T HAT FROM A PERUSAL OF THE CONSOLIDATED P&L ACCOUNT OF THE ASSESSEE IT REVEALE D THAT ASSESSEE HAD MADE PAYMENTS WITHOUT DEDUCTION OF TDS IN RESPECT OF INT EREST PAID TO THE TUNE OF RS.1,24,411/-. AFTER ISSUING SHOW CAUSE TO THE ASS ESSEE THE AO NOTICED THAT THE ASSESSEE COULD NOT OFFER ANY EXPLANATION REGARDING THE EXPENDITURE INCURRED ON ACCOUNT OF INTEREST PAID OF RS.1,24,411/- AND SINCE HE PAID INTEREST WITHOUT DEDUCTING TAX AT SOURCE, THE AO DISALLOWED THE SAME FOR VIOLA TION OF PROVISION OF SECTION 40(A)(IA) OF THE ACT AND ADDED BACK TO THE TOTAL IN COME OF THE ASSESSEE. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT (A), WHO WAS PLEASED TO SUSTAIN THE SAME. AGGRIEVED, THE ASSESSEE IS BEFORE US. 4 I.T.A. NO. 2444/KOL/2018 ASSESSMENT YEAR: 2013-14 RAGHUBIR BHUWALKA. 7. HAVING HEARD BOTH THE PARTIES AND AFTER PERUSAL OF THE RECORDS, WE NOTE THAT THE CONTENTION OF THE ASSESSEE IS THAT ASSESSEE HAS PA ID RS.1,24,411/- TO M/S. ANGEL BROKING LTD. ON ACCOUNT OF INTEREST AND THE AO HAS DISALLOWED THE SAME INTEREST EXPENDITURE FOR NON-DEDUCTION OF TDS WHILE MAKING T HE PAYMENT. THE LIMITED PRAYER OF THE ASSESSEE IS THAT AS PER THE AMENDMENT MADE I N THE FINANCE ACT W.E.F. 01.04.2015 IN RESPECT OF SECTION 40(A)(IA) OF THE A CT WHEREIN AMENDMENT HAS BEEN MADE TO THE EFFECT THAT THE DISALLOWANCE SHOULD BE COMPUTED AT 30% OF THE TOTAL AMOUNT ON WHICH TAX HAS NOT BEEN DEDUCTED AND THERE FORE, ACCORDING TO HIM, 100% DISALLOWANCE SHOULD BE RESTRICTED TO 30%, SINCE THE TRIBUNAL HAS HELD THAT THIS AMENDMENT IS RETROSPECTIVE IN NATURE AND RELIED ON THE ORDER OF THE KOLKATA TRIBUNAL IN M/S. IMAX INFRASTRUCTURE PVT. LTD., IT(SS) A NO. 23/KOL/2017 & CO NO. 77/KOL/2017 VICE VERSA DATED 16.01.2019 WHEREIN IT HAS BEEN HELD THAT SAID AMENDMENT TO SECTION 40(A)(IA) OF THE ACT BROUGHT WITH EFFECT FROM 01.04.2015 IS CURATIVE IN NATURE AND SO RETROSPECTIVE IN OPERATIO N AND CITED SEVERAL OTHER DECISIONS AND, THEREFORE, THE LIMITED PRAYER IS THAT THE 100% DISALLOWANCE MADE BY THE AO SHOULD BE RESTRICTED TO 30% WHICH WORKS OUT TO RS.3 7,323/- IN PLACE OF THE ADDITION OF RS.1,24,411/- MADE BY THE AO. WE FIND SUBSTANTIAL FORCE IN THE CONTENTION OF THE ASSESSEE THAT 30% OF THE DISALLOWANCE ONLY MAY BE S USTAINED IN VIEW OF THE AMENDMENT BROUGHT INTO FINANCE ACT NO. 2 W.E.F. 201 5. 8. WE ALSO NOTE THAT IN THE CASE OF M/S. IMAX INFRA STRUCTURE PVT. LTD. (SUPRA) THE TRIBUNAL HAS OBSERVED AS UNDER IN A SIMILAR CASE: THE AMENDMENT BROUGHT IN BY THE FINANCE ACT N O. 2, W.E.F. 01/04/2015 TO SECTION 40(A)(IA) OF THE ACT, WHICH IS HELD TO BE C URATIVE AND HENCE RETROSPECTIVE, BY THE ITAT CHANDIGARH BENCH OF THE TRIBUNAL IN THE CASE O F DCIT VS. PUNJAB INFRASTRUCTURE & DEVELOPMENT BOARD CHANDIGARH; ITA NO.774/CHD/2013 , ORDER DT. 30/09/2015. THE LD. D/R, HAD NO OBJECTIONS WITH THE SAME. 4.1. IN VIEW OF THE ABOVE CONCESSION GIVEN BY THE L D. COUNSEL FOR THE ASSESSEE, WE REVERSE THE ORDER OF THE LD. CIT(A) AND RESTORE THE DISALLOWANCE MADE BY THE ASSESSING OFFICER U/S 40(A) (IA) OF THE ACT, TO THE EXTENT OF 30% OF THE TOTAL AMOUNT. THE BALANCE DISALLOWANCE IS HEREBY DELETED. 9. RESPECTFULLY FOLLOWING THE RATIO WE SET ASIDE TH E ORDER OF LD. CIT(A) AND RESTRICT THE DISALLOWANCE AT 30% OF THE DISALLOWED AMOUNT I.E. RS.1,24,441/- AND THE BALANCE DISALLOWANCE IS DELETED. APPEAL OF ASSESSE E IS PARTLY ALLOWED. 5 I.T.A. NO. 2444/KOL/2018 ASSESSMENT YEAR: 2013-14 RAGHUBIR BHUWALKA. 10. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 18TH MARCH , 2020. SD/- (A.L. SAINI) SD/- (A. T. VARK EY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 18TH MARCH, 2020 JD. SR. PS COPY OF THE ORDER FORWARDED TO: 1. APPELLANT SHRI RAGHUBIR BHUWALKA, 7 TH FLOOR, 17/17, HAT LANE, HOWRAH-711101 2. RESPONDENT ITO, WARD-46(2), KOLKATA. 3. LD. CIT(A)-14, KOLKATA (SENT THROUGH E-MAIL) 4. CIT, KOLKATA. 5. DR, KOLKATA BENCHES, KOLKATA. (SENT THROUGH E-MAIL) TRUE COPY, BY ORDER, ASSISTANT REGISTRAR ITAT, KOLKATA BENCHES