The DCIT, Circle-3, Surat V. M/s. Shree Hindustan Fabricators, Surat

ITA 2625/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89782 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 17-07-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 21-10-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NARENDRA SINGH
• Keywords: Non-deduction of tax
• Section: 143(3); 194C

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ./ ITA NO.2625/AHD/2011 /BLOCK ASSTT. YEAR: 2005-2006 DCIT, CIR.3 SURAT. VS SHREE HINDUSTAN FABRICATES 107, 1WST FLOOR, CHANCELLOR OPP: RTO, RING ROAD SURAT. PAN AABFH 4833 R %& / (APPELLANT) '( %& / (RESPONDENT) REVENUE BY : SHRI NARENDRA SINGH, SR.DR ASSESSEE BY : SHRI MEHUL SHAH / DATE OF HEARING : 17/07/2015 / DATE OF PRONOUNCEMENT: 24/07/2015 )*/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF THE LD.CIT(A)-II, SURAT DATED 4.8.2011 PASSED FOR ASSTT .YEAR 2005-06. 2. THE SOLITARY GRIEVANCE OF THE REVENUE IS THAT TH E LD.CIT(A) HAS ERRED IN DELETING THE PENALTY OF RS.18,39,630/- IMP OSED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED ITS RETURN OF INCOME ON 28.10.2005 DECLARING TOTAL INCOME AT RS.1 9,42,100/-. THE ASSESSMENT ORDER WAS PASSED UNDER SECTION 143(3) OF THE ACT ON 24.12.2007 DETERMINING TOTAL INCOME AT RS.1,23,53,7 32/-. ACCORDING TO ITA NO.2625/AHD/2011 2 THE AO, THE ASSESSEE HAD FAILED TO DEDUCT TDS UNDER SECTION 194C AND 194J OF THE ACT AS WELL AS FAILED TO PAY TDS BEFORE THE PRESCRIBED TIME UNDER SECTION 200 OF THE ACT. HE MADE ADDITION OF RS.78,37,140/- UNDER SECTION 40(A)(IA) OF THE ACT. 4. ON APPEAL, THE LD.CIT(A) HAS RESTRICTED THE DISA LLOWANCE TO RS.50,27,336/-. 5. THE ASSESSEE CARRIED THE MATTER BEFORE THE TRIBU NAL, AND THE TRIBUNAL VIDE ORDER DATED 5.10.2012 PASSED IN ITA N O.3826/AHD/2008 RESTRICTED THE DISALLOWANCE TO RS.4,85,252/-. THE REVENUE TOOK THE MATTER IN THE HONBLE HIGH COURT AND THE HONBLE HI GH COURT HAS SET ASIDE THE ORDER OF THE TRIBUNAL AND RESTORED THE IS SUE BACK TO THE TRIBUNAL FOR ADJUDICATION. THE TRIBUNAL HAS SET AS IDE THE ORDER OF THE CIT(A) IN THE QUANTUM APPEAL, AND RESTORED THE ISSU E TO THE FILE OF THE AO. THE FINDINGS OF THE TRIBUNAL READ AS UNDER: 7. WE HAVE HEARD THE DR AND PERUSED THE ORDERS OF T HE LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. WE F IND THAT THE AO MADE DISALLOWANCE OF RS.78,37,140/- BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT AS THE ASSESSEE FAI LED TO DEDUCT TAX AT SOURCE UNDER SECTION 194C AND 194J OF THE ACT AN D DEPOSIT THE SAME WITH THE GOVERNMENT WITHIN THE PRESCRIBED TIME UNDER SECTION 200 OF THE ACT. THE SAME WAS RESTRICTED TO RS.50,27,336/- BY THE CIT(A). WE FIND THAT THE SECOND PROVISO BEL OW SECTION 40(A)(IA) INSERTED BY THE FINANCE ACT, 2012 W.E.F. 1.4.2013 READS AS UNDER: '[PROVIDED FURTHER THAT WHERE AN ASSESSEE FAILS TO DEDUCT THE WHOLE OR ANY PART OF THE TAX IN ACCORDANCE WITH THE PROVISIONS OF CHAPTER XVII-B ON ANY SUCH SUM BUT IS NOT DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER THE FIRST PROVISO TO S UB-SECTION (1) OF SECTION 201, THEN, FOR THE PURPOSE OF THIS S UB-CLAUSE, IT SHALL BE DEEMED THAT THE ASSESSEE HAS DEDUCTED AND PAID THE TAX ON SUCH SUM ON THE DATE OF FURNISHING OF RETURN OF INCOME BY THE RESIDENT PAYEE REFERRED TO IN THE SAID PROVI SO.] . THE AGRA BENCH OF THE TRIBUNAL IN THE CASE OF RAJEE V KUMAR AGARWAL VS. ACIT IN ITA NO.337/AGRA/2013 HAS HELD T HAT THE PROVISIONS OF SECTION 40(A)(IA), AS THEY EXISTED PR IOR TO INSERTION ITA NO.2625/AHD/2011 3 OF SECOND PROVISO THERETO, WENT MUCH BEYOND THE OBV IOUS INTENTIONS OF THE LAWMAKERS AND CREATED UNDUE HARDS HIPS EVEN IN CASES IN WHICH THE ASSESSEES TAX WITHHOLDING LAPSE S DID NOT RESULT IN ANY LOSS TO THE EXCHEQUER. THEREFORE, THE TRIB UNAL HELD THAT INSERTION OF SECOND PROVISO IS A CURATIVE AMENDMENT TO AVOID UNINTENDED CONSEQUENCES IS TO BE TREATED AS RETROSP ECTIVE IN NATURE. AS BOTH THE LOWER AUTHORITIES HAVE NOT LOO KED INTO THE MATTER FROM THIS ANGLE, WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND RESTORE THE MATTER TO THE FILE OF T HE AO FOR RE- ADJUDICATION OF THE ISSUE AFRESH IN LIGHT OF THE DI SCUSSION MADE HEREINABOVE, AFTER ALLOWING REASONABLE AND PROPER O PPORTUNITY OF HEARING TO THE ASSESSEE. THUS, THIS GROUND IS ALLO WED FOR STATISTICAL PURPOSE. 8. IN THE RESULT, THIS GROUND OF THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE COURT ON FRIDAY, THE 10 TH APRIL, 2015 AT AHMEDABAD. SD/- SD/- 6. SINCE THE TRIBUNAL HAS SET ASIDE THE QUANTUM ADD ITION TO THE FILE OF THE AO FOR RE-ADJUDICATION IN THE LIGHT OF RETRO SPECTIVE AMENDMENT CARRIED OUT IN SECTION 40(A)(IA) OF THE INCOME TAX ACT BY WAY OF FINANCE ACT, 2012, THUS, THE ADDITION IS YET TO BE FINALIZE D. SUB-CLAUSE (III) OF SECTION 271(1) CONTEMPLATES THAT IF IT IS HELD THAT THE ASSESSEE CONCEALED THE PARTICULARS OF INCOME OR FURNISHED IN ACCURATE PARTICULARS OF INCOME, THEN IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM WHICH SHALL NOT BE LESS THAN, BUT SHALL NOT EXCEED THREE TIMES, THE AMOUNT OF TAX SOUGHT TO BE EVADED BY THE REASON OF THE CONCEA LMENT OF PARTICULARS OF HIS INCOME OR FURNISHING OF INACCURATE PARTICULA RS OF INCOME, BE DIRECTED TO BE PAID. MEANING THEREBY, THE PENALTY EQUIVALENT TO THE TAX SOUGHT TO BE EVADED OR THREE TIMES OF THE TAX IS TO BE COMPUTED ON THE ADDITION FOR WHICH A CHARGE IS TO BE PROVED THAT TH E ASSESSEE HAS CONCEALED THE PARTICULARS OF THIS INCOME. THE ADDI TION IS YET TO BE MADE. IN THAT SITUATION, THERE CANNOT BE ANY QUEST ION OF COMPUTING THE PENALTY UNLESS AN AMOUNT IS DETERMINED, ON WHICH, A LLEGATION OF EVADING TAX CAN BE LEVELED. THERE MAY NOT BE ANY P ENALTY IN THE PRESENT SITUATION IN THIS CASE. THE LEARNED AO, WH ILE FINALISING THE ITA NO.2625/AHD/2011 4 ORDER, COMES OUT A DECISION WHETHER ANY DISALLOWANC E UNDER SECTION 40(A)(IA) ON ACCOUNT OF NON-DEDUCTION OF TAX IS TO BE MADE OR NOT. AFTER WORKING OF THAT AMOUNT ONLY, IT WILL BE OPEN FOR THE AO TO INITIATE OR NOT INITIATE THE PENALTY PROCEEDINGS. 7. IN VIEW OF THE ABOVE SITUATION, THIS APPEAL OF T HE REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. THE ORDER OF THE CIT(A) IS SET ASIDE. IT IS LEFT TO WISDOM OF THE AO TO INITIATE OR NOT INIT IATE THE PENALTY PROCEEDINGS AFTER FINALIZATION OF QUANTUM ADDITION, IF ANY, MADE TO THE INCOME OF THE ASSESSEE. WITH THE ABOVE OBSERVATION S, THE APPEAL OF THE REVENUE IS TREATED AS ALLOWED FOR STATISTICAL PURPO SE. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE COURT ON 24 TH JULY, 2015 AT AHMEDABAD. SD/- SD/- (ANIL CHATURVEDI) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 27/07/2015