Nallamreddy Venkateswara Rao, Guntur V. THE ITO, Guntur

ITA 260/VIZ/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6812 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 11-06-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T S N MURTHY
• Keywords: Reasonable cause; Assessment record; Condonation of delay
• Section: 143(3); 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , ACCOUNTANT MEMBER . / I . T .A.NO. 260 /VIZAG/ 201 5 ( / ASSESSMENT YEAR: 20 1 0 - 1 1 ) NALLAMREDDY VENKATESWARA RAO PROP:MAHANTI CIVIL GROUPS D.NO.12 - 7 - 62, KOTHAPET GUNTUR - 522 (PAN : A CBPN8775E ) INCOME TAX OFFICER WARD - 1(2), GUNTUR ( / APPELLANT) / RESPONDENT) / APPELLANT BY : SHRI G.V.N.HARI, A R / RESPONDENT BY : SHRI T.S.N.MURTHY, D R / DATE OF H EARING : 01 .0 8 .2017 / DATE OF P RONOUNCEMENT : 09 . 0 8 . 2017 / O R D E R PER D.S. SUNDER SINGH , ACCOUNTANT MEMBER : DELAY: THE ASSESSEE FILED THE APPEAL WITH THE DELAY OF 25 DAYS AND FILED AFFIDAVIT EXPLAINING THE RE ASON S OF HEALTH PROBLEMS. THE LD.DR DID NOT OBJECT FOR CONDONATION OF DELAY . WE HEARD BOTH THE PARTIES AND OF THE 2 ITA NO. 260 /VIZ/2015 NALLAMREDDY VENKATESWARA RAO, GUNTUR VIEW THAT THERE IS A REASONABLE CAUSE FOR DELAY AND ACCORDINGLY CONDONE THE DELAY AN D ADMIT THE APPEAL. TH IS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE PRINCIPAL C OMMISSIONER OF INCOME TAX (PR.CIT), GUNTUR DATED 24.02.2015 PASSED U/S 263 OF I.T.ACT . 2. BRIEF FACTS OF THE CASE ARE THAT THE A SSESSEE FILED THE RETURN OF INC O ME ADMITTING THE TOTAL THE INCOME OF RS. 4,01,800/ - ON 28.09.2010. THE ASSESSMENT WAS COMPLETED ON TOTAL INCOME OF RS.9,63,756/ - . IN THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER MADE VARIOUS ADDITIONS AND COMPLETED THE ASSESSMENT . SUBSEQUENTLY, THE PR.CIT, GUNTUR HAS TAKEN UP THE CASE FOR REVISION U/S 263 AND ISSUED NOTICE FOR REVISING THE ASSESSMENT ORDER PASSED U/S 143(3) DATED 20.03.2013. DURING THE REVISION PROCEEDINGS, THE LD. PR.CIT NOTICED THAT THE ASSESSEE HAS NOT DEDUCT ED THE TDS ON T HE PAYMENT OF INTEREST EXCEEDING RS.5,000/ - TO THE FOLLOWING CREDITORS : S.NO. DT. OF PAYMENT NAME OF THE PERSON TO WHOM THE INTEREST WAS PAID S/SHRI/SMT AMOUNT PAID RS. 1. 31.03.2010 N PADMA KUMARI 24,008 2. - DO - M RAJA RAO 24,008 3. - DO - B NARAYANA RAO 15,996 4. - DO - Y HARI BABU 15,996 3 ITA NO. 260 /VIZ/2015 NALLAMREDDY VENKATESWARA RAO, GUNTUR 5. - DO - S RAMA MOHAN RAO 15,996 6. - DO - INT. PAID TO VARIOUS PARTIES FOR LATE PAYMENT OF SUNDRY CREDITORS 32,094 TOTAL 1,28,098 2.1. SECONDLY, THE LD.PCIT FOUND THAT THERE WAS ADDITION OF RS.1,34,400/ - TO THE CAPITAL ACCOUNT OF THE ASSESSEE FOR WHICH NO EXPLANATION WAS FURNISHED BY THE ASSESSEE. ACCORDINGLY, THE LD. PR.CIT ISSUED THE NOTICE U/S 263 AND AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE, THE LD. PR.CIT SET ASIDE THE ORDER PASSED U/S 143(3) FOR LIMITED PURPOSE OF EXAMINING THE ADDITION U/S 40(A)(IA) IN RESPECT OF THE INTEREST PAYMENT AND SOURCE FOR THE CASH CREDIT TO THE CAPITAL ACCOUNT. 2.2. AGGRIEVED BY THE ORDER OF THE PR.CIT, THE ASSESSEE FILED APPEAL BEFORE THIS TRIBUNAL. DURING THE APPEAL HEARING, THE LD.AR ARGUED THAT THE PR.CIT HAS TAKEN UP THE CASE FOR REVISION FOR NON DEDUCTION OF TAX AT SOURCE AND THE PAYMENT OF I NTEREST EXCEEDING RS.5,000/ - TO THE FOLLOWING PERSONS : S.NO. DT. OF PAYMENT NAME OF THE PERSON TO WHOM THE INTEREST WAS PAID S/SHRI/SMT AMOUNT PAID RS. 1. 31.03.2010 N PADMA KUMARI 24,008 2. - DO - M RAJA RAO 24,008 3. - DO - B NARAYANA RAO 15,996 4. - DO - Y HARI BABU 15,996 4 ITA NO. 260 /VIZ/2015 NALLAMREDDY VENKATESWARA RAO, GUNTUR 5. - DO - S RAMA MOHAN RAO 15,996 6. - DO - INT. PAID TO VARIOUS PARTIES FOR LATE PAYMENT OF SUNDRY CREDITORS 32,094 TOTAL 1,28,098 2.3. THE INCOME OF THE ABOVE PERSONS WAS BELOW TAXABLE LIMIT AND THEY HAVE FILED FORM 15G FOR NON DEDUCTION OF T AX AT SOURCE, WHICH WAS PLACED BEFORE THE AO AND THE LD.AO HAS ALLOWED THE INTEREST EXPENDITURE AFTER VERIFICATION OF FORM 15G FILED BY PAYE ES . HE FURTHER ARGUED THAT ONCE THE AO HAS EXAMINED THE EVIDENCES FO R NON DEDUCTION OF TAX AT SOURCE AND SATISFIED , THE SAME ISSUE CANNOT BE REEXAMINED AND IT AMOUNTS TO DIFFERENC E OF OPINION. T HE LD.PR.CIT PLAC ED RELIANCE ON THE DECISION OF HONBLE HIGH COURT OF RAJASTHAN IN THE CASE OF CHHOGMAL CHIRANJI LAL & ORS. VS. COMMISSIONER OF INCOME TAX [ 257 ITR 51 ] AND DIRECTED THE ASSESSING OFFICER TO EXAMINE THE DISALLOWANCE U/S 40(A) (IA). THE LD. A.R. FURTHER ARGUED THAT ON SAME ISSUE THE HONBLE HIGH COURT OF RAJASTHAN , DIVISION BENCH IN THE CASE OF ISHWARDAS & BROTHERS VS. COMMISSIONER OF INCOME TAX REPORTED 71 CCH 0060 HELD THAT THE ORDER PASSED BY THE SINGLE JUDGE REJECTING THE WRIT PETITION IN TOTO IS NOT SUSTAINABLE AND SET A SIDE THE ORDER AND REMANDED THE MATTER BACK TO THE CONCERNED CIT. 5 ITA NO. 260 /VIZ/2015 NALLAMREDDY VENKATESWARA RAO, GUNTUR 2.4. I N THE CASE OF CASH CREDITS TO THE CAPITAL AC COUNT, THE LD.A.R ARGUED THAT THE ASSESSING OFFICER HAS MADE THE ESTIMATED DISALLOWANCE IN RESPECT OF EXPENSES AND THE TELE SCOPIC BENEFIT BE GIVEN FOR SET OFF . ACCORDING TO THE LD.AR THE ORDER PASSED BY THE LD.PR. CIT IS ERRONEOUS AND THE SAME REQUIRED TO B E SET ASIDE. 3. ON THE OTHER HAND, THE LD.DR RELIED ON THE ORDERS OF THE LD.PR.CIT. 4 . WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. IN THIS CASE, THE ASSESSEE HAD MADE THE PAYMENT OF RS.1,28,098/ - AS INTEREST EXCEEDING RS.5,000/ - TO EACH PERSON WITHOUT DEDUCTION OF TAX AT SOURCE. AS PER THE PROVISION OF SECTION 194A, INTEREST PAYMENTS MADE TO THE PERSONS EXCEEDING RS.5,000/ - ATTRACTS TDS AND THE ASSESSEE REQUI RED TO DEDUCT THE TAX AT SOURCE. IN CASE, THE BENEFICIARY IS BELOW THE INCOME OF TAXABLE LIMIT, HE IS PERMITTED TO FURNISH FORM NO.15G REQUESTING FOR NON DEDUCTION OF TAX AT SOURCE AND IN SUCH CASE THE ASSESSEE IS PERMITTED TO MAKE THE PAYMENT WITHOUT DEDUCTI ON OF TAX AT SOURCE. IN THIS CASE THE ASSESSEE HAS OBTAINED FORM 6 ITA NO. 260 /VIZ/2015 NALLAMREDDY VENKATESWARA RAO, GUNTUR NO.15G ON 28.04.2010 AND FURNISHED BEFORE THE AO. THE LD.AO AFTER VERIFICATION OF FORM 15G SUBMITTED BY THE ASSESSEE SATISFIED THAT THE RECIPIENTS WERE HAVING THE INCOME BELOW THE TAXABLE LI MIT AND ALLOWED THE EXPENDITURE. NO ADDITION WAS MADE U/S 40(A)(IA). FROM THE ORDER U/S 263 IT IS EVIDENT THAT THE FO R M 15G WAS AVAILABLE IN THE ASSESSMENT RECORDS, HENCE THE ISSUE WAS EXAMINED AND THE DECISION WAS TAKEN BY THE A O WITH REGARD TO NON DEDUCT ION OF TAX AT SOURCE. NO OTHER EVIDENCE WAS BROUGHT ON RECORD TO HOLD THAT THE DECISION TAKEN BY THE AO WAS INCORRECT. THEREFORE WE DO NOT FIND ANY ERROR IN THE ORDER PASSED BY THE AO AND ACCORDINGLY WE HOLD THAT THE REVISION ORDER PASSED BY THE LD.CIT ON THE ISSUE OF NON DEDUCTION OF TAX AT SOURCE ON PAYMENT OF INTEREST IS BAD IN LAW AND WE SET ASIDE THE ORDER OF THE LD.CIT U/S 263 ALLOW THE ASSESSEES APPEAL. 4.1. THE SECOND ISSUE FOR REVISION WAS ADDITION S TO THE CAPITAL ACCOUNT S FOR WHICH THE SOURCE REQUIRED TO BE EXPLAINED BY THE ASSESSEE . THE ASSESSEE HAS NOT EXPLAINED THE SOURCE BEFORE THE ASSESSING OFFICER AND ASSESSING OFFICER HAS NOT CALLED FOR THE DETAILS. THERE IS NO EVIDENCE PLACED BEFORE US BY THE LD.AR WITH REGARD TO CREDIT IN CAPITAL ACC OUNTS. THE EXTENSION OF TELESCOPIC BENEFIT FROM THE ESTIMATED INCOME REQUIRED 7 ITA NO. 260 /VIZ/2015 NALLAMREDDY VENKATESWARA RAO, GUNTUR TO BE EXAMINED IN THE ASSESSMENT WITH THE NATURE OF ADDITION AND APPLICATION OF INCOME . THE L D.P R. CIT HAS SET ASIDE THE ISSUE TO THE FILE OF AO WITH A DIRECTION TO MAKE ENQUIRIES AND TO DECIDE THE ISSUE. THE ISSUE IS KEPT OPEN BEFORE THE AO AND THE ASSESSEE IS FREE TO CANVASS THE ISSUE AT THE TIME OF GIVING EFFECT TO THE ORDER OF THE LD.CIT . THE LD.AR DID NOT PLACE ANY EVIDENCE BEFORE US WITH REGARD TO THE SOURCE FOR CREDIT IN TH E CAPITAL ACCOUNT AND THIS ISSUE WAS NOT EXAMINED BY THE AO, THEREFORE, T HE PR.CIT HAS RIGHTLY TAKEN UP THE CASE FOR REVISION ON THIS ISSUE AND WE UPHOLD THE ORDER OF THE LD.P R. CIT AND DISMISS THE APPEAL OF THE ASSESSEE ON THIS GROUND. 5 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. T HE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 9 TH AUG 20 17 . SD/ - SD/ - ( . ) ( . . ) (V. DURGA RAO) ( D.S. SUNDER SINGH ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /VISAKHAPATNAM /DATED : 09 . 0 8 .2017 L. RAMA, SPS 8 ITA NO. 260 /VIZ/2015 NALLAMREDDY VENKATESWARA RAO, GUNTUR / COPY OF THE ORDER FORWARDED TO : - 1. / THE APPELLANT NALLAMREDDY VENKATESWARA RAO, PROP:MAHANTI CIVIL GROUPS, D.NO.12 - 7 - 62, KOTHAPET, GUNTUR - 522 2 . / THE RESPONDENT THE INCOME TAX OFFICER, WARD - 1(2), GUNTUR 3 . THE PR. COMMISSIONER OF INCOME TAX, GUNTUR 4 . , , / DR, ITAT, VISAKHAPATNAM 5 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM 9 ITA NO. 260 /VIZ/2015 NALLAMREDDY VENKATESWARA RAO, GUNTUR