BAWEJA MOVIES P.LTD, MUMBAI V. ITO TDS 1(1)(3), MUMBAI

ITA 2671/MUM/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5595 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 23-05-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 07-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D G
• Assessee Lawyers: SANDEEP SHRIDHAR
• Keywords: Non-deduction of tax
• Section: 133A; 194C; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'E' BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA NOS. 2670 & 2671/MUM/2015 (ASSESSMENT YEARS: 2005-06 & 2006-07) M/S. BAWEJA MOVIES P. LTD. C-65, ASHIRWAD, LOKHANDWALA COMPLEX, ANDHERI (W) MUMBAI 400053 VS. ITO (T.D.S.) - 1(1)(3) 10TH FLOOR, SMT. K.G. MITTAL BUILDING, CHARNI ROAD MUMBAI 400020 PAN AABCB6023C APPELLANT RESPONDENT APPELLANT BY: SHRI SANDEEP SHRIDHAR RESPONDENT BY: SHRI D.G. PANSARI DATE OF HEARING: 31.07.2018 DATE OF PRONOUNCEMENT: 31.07.2018 O R D E R PER G. MANJUNATHA, AM THESE TWO APPEALS FILED BY THE ASSESSEE ARE DIRECTE D AGAINST SEPARATE, BUT IDENTICAL ORDERS OF THE CIT(A)-59, MUMBAI DATED 20.02.2015 AND IT RELATES TO ASSESSMENT YEARS 2005-06 AND 2006-07. SI NCE THE FACTS ARE IDENTICAL AND ISSUES ARE COMMON, THESE APPEALS ARE HEARD TOGETHER AND ARE DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF C ONVENIENCE. 2. THE ASSESSEE HAS RAISED MORE OR LESS COMMON GROUNDS OF APPEAL IN BOTH THE ASSESSMENT YEARS. FOR THE SAKE OF CONVENIE NCE AND BREVITY THE GROUNDS OF APPEAL TAKEN FOR A.Y. 2005-06 ARE EXTRAC TED BELOW: - 1. THE LD. CIT (APPEALS) ERRED IN DISMISSING THE G ROUND NO. 1 RAISED BEFORE HER. 1.1 IN SO DOING SHE DID NOT APPRECIATE THE FACTS AN D CIRCUMSTANCES IN THE MATTER. 2. THE LD. CIT (APPEALS) ERRED IN DISMISSING GROUND NO 2 RAISED BEFORE HER BY NOT APPRECIATING THE FACTS AND CIRCUM STANCES IN THE MATTER. ITA NOS. 2670 & 2671/MUM/2015 M/S. BAWEJA MOVIES P. LTD 2 3. THE LD. CIT (APPEALS) ERRED IN DISMISSING GROUND NO 3 RAISED BEFORE HERE WITHOUT APPRECIATING THE CIRCUMSTANCES AND FACTS. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE C OMPANY IS ENGAGED IN THE BUSINESS OF PRODUCTION OF FEATURE FILMS FOR ENTERTAINMENT. A SURVEY UNDER SECTION 133A OF THE INCOME TAX ACT, 1961 (HER EINAFTER 'THE ACT') FOR TDS VERIFICATION HAS BEEN CARRIED OUT ON 13.12.2005 . DURING THE COURSE OF SURVEY, THE AO NOTICED THAT THE ASSESSEE HAS MADE V ARIOUS PAYMENTS WHICH ATTRACT TDS UNDER THE PROVISIONS OF SECTIONS 194C AND 194J OF THE ACT, BUT FAILED TO DEDUCT TDS ON SUCH PAYMENTS AND ACCORDINGLY, A STATEMENT WAS RECORDED FROM THE DIRECTOR OF THE ASS ESSEE COMPANY, SHRI HARJASPAL S. BAWEJA. THE DIRECTOR OF THE COMPANY, W HILE RECORDING STATEMENT, IN REPLY TO QUESTION NO. 8 STATED THAT H E HAS MADE VARIOUS PAYMENTS WITHOUT DEDUCTION OF TAX AT SOURCE UNDER R ESPECTIVE PROVISIONS OF THE ACT AND FURTHER ADMITTED THAT TDS WAS NOT DEDUC TED ON THE ABOVE PAYMENTS BY MISTAKE. CONSEQUENT TO THE SURVEY, THE AO HAS TAKEN UP PROCEEDINGS UNDER SECTIONS 201(1) AND 201(1A) OF TH E ACT AND CALLED UPON THE ASSESSEE TO EXPLAIN AS TO WHY THE ASSESSEE SHAL L NOT BE TREATED AS ASSESSEE IN DEFAULT FOR FAILURE TO DEDUCT TDS ON VA RIOUS PAYMENTS. IN RESPONSE TO THE NOTICE THE ASSESSEE, VIDE LETTER DA TED 16.03.2011, SUBMITTED THAT THE AMOUNT PAID UNDER THE HEAD PROC ESSING CHARGES TO M/S. ADLABS LTD. IS NOT SETTLED BECAUSE OF VARIOUS REASONS AND FINALLY THE SAME HAS BEEN REVERSED IN THE SUBSEQUENT FINANCIAL YEAR. THEREFORE THE QUESTION OF DEDUCTION OF TDS ON SUCH PAYMENT DOES N OT ARISE. SIMILARLY THE ASSESSEE HAS FILED EXPLANATION FOR OTHER PAYMEN TS TO ARGUE THAT TDS IS NOT APPLICABLE ON THESE PAYMENTS. THE ASSESSEE ALSO TAKEN THE PLEA THAT SINCE THE DEDUCTEE HAS PAID THE TAX ON THE IMPUGNED AMOUNT IN THEIR INCOME TAX RETURNS, IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF HINDUSTAN COCA COLA BEVERAGES PVT. L TD. VS. CIT 293 ITR 226 THE ASSESSEE CANNOT BE HELD AS ASSESSEE IN DEFA ULT WHEN THE DEDUCTEES HAVE PAID TAX ON THE SAID AMOUNT. THE AO, AFTER CON SIDERING THE RELEVANT SUBMISSIONS OF THE ASSESSEE AND ALSO TAKING INTO AC COUNT THE STATEMENT RECORDED DURING THE COURSE OF SURVEY COUPLED WITH T HE OBSERVATIONS OF THE TAX AUDITOR IN ITS REPORT, HELD THE ASSESSEE AS ASS ESSEE IN DEFAULT FOR ITA NOS. 2670 & 2671/MUM/2015 M/S. BAWEJA MOVIES P. LTD 3 FAILURE TO DEDUCT TDS ON VARIOUS PAYMENTS AS LISTED IN HIS ORDER AT PARA 4.1 AND COMPUTED SHORT DEDUCTION OF TAX UNDER SECTI ON 201(1) ACT AND INTEREST UNDER SECTION 201(1A) OF THE ACT. 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PRE FERRED APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE ASSESSEE NEITHER APPEARED NOR FILED ANY WRITTEN SUBMISSIONS, WHICH IS EVIDENT FROM THE FACT THAT THE CIT(A) HAS RECORDED DATES OF HEARING GIVEN TO THE ASSESSEE IN HIS ORDER AT PARA 2 ON PAGES 1 & 2 AS PER WHICH THE ASSESSEE WAS GIVEN 10 HEARINGS ON VARIOUS DATES FOR WHICH THE ASSESSEE APPEARED AND SOUGHT TI ME WITHOUT FILING ANY DETAILS IN RESPECT OF THE OBSERVATIONS MADE BY THE AO WITH REGARD TO NON- DEDUCTION OF TAX AT SOURCE ON VARIOUS PAYMENTS. THE CIT(A), AFTER CONSIDERING THE ASSESSEES NON COOPERATION FOR DISP OSAL OF THE APPEAL, PASSED EX-PARTE ORDER WHEREIN HE HAS UPHELD THE FIN DINGS OF THE AO IN RESPECT OF NON-DEDUCTION OF TAX AT SOURCE ON PAYMEN TS MADE TO VARIOUS PARTIES, SHORT DEDUCTION OF TDS ON PAYMENTS MADE TO M/S. PRIME FOCUS LTD. AND ALSO FAILURE TO DEPOSIT TDS DEDUCTED ON CE RTAIN PAYMENTS. HOWEVER, CONSIDERING THE PLEA OF THE ASSESSEE IN SO FAR AS PAYMENTS MADE BY DEDUCTEES IN THEIR INCOME TAX RETURNS BY FOLLOWI NG THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF HINDUSTAN COCA COLA BEVERAGES PVT. LTD. (SUPRA) DIRECTED THE AO TO VERIFY THE CLAIM OF THE ASSESSEE WITH NECESSARY EVIDENCES AND IF THE ASSESSEE IS ABLE TO DEMONSTRATE THAT THE DEDUCTEES HAVE PAID THE TAX ON THE IMPUGNED AMOUNT, EXCLUDE THOSE AMOUNTS FOR THE PURPOSE OF DETERMINATION OF SHORT D EDUCTION OF TAX UNDER SECTION 201(1) OF THE ACT BUT REITERATED THAT INTER EST UNDER SECTION 201(1A) OF THE ACT WILL REMAIN TILL THE DATE OF FILING OF R ETURN OF INCOME BY THE DEDUCTEES. AGGRIEVED BY THE ORDER OF THE CIT(A), AS SESSEE IS IN APPEAL BEFORE US. 5. THE LEARNED A.R. AT THE TIME OF HEARING SUBMITTED THAT THE LEARNED CIT(A) HAS PASSED EX-PARTE ORDER WITHOUT AFFORDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE TO JUSTIFY ITS CASE WITH NECESSARY EVIDENCE. THEREFORE ONE MORE OPPORTUNITY OF HEARING MAY BE GI VEN BEFORE THE CIT(A) TO FILE NECESSARY EVIDENCES TO PROVE THAT THE ASSES SEE HAS DEDUCTED TDS ON ITA NOS. 2670 & 2671/MUM/2015 M/S. BAWEJA MOVIES P. LTD 4 PAYMENTS WHEREVER APPLICABLE AND ALSO IN CASES WHER EVER THERE IS DISPUTE BETWEEN THE PARTIES REGARDING PAYMENT THE ASSESSEE HAS REVERSED SUCH PAYMENTS IN THE SUBSEQUENT YEARS. THE LEARNED A.R. FURTHER SUBMITTED THAT THE ASSESSEE FILED VARIOUS EVIDENCES BEFORE TH E AO TO JUSTIFY THAT THE PAYEES HAVE PAID TAX ON THE IMPUGNED AMOUNT IN THEI R INCOME TAX RETURNS BUT THE AO IGNORED ALL EVIDENCES FILED BEFORE HIM T O HOLD THE ASSESSEE AS ASSESSEE IN DEFAULT UNDER SECTIONS 201(1) AND 201(1 A) OF THE ACT. THE ASSESSEE IS HAVING ALL DETAILS WHICH CAN BE FILED B EFORE THE LOWER AUTHORITIES AND HENCE THE ISSUE MAY BE SET ASIDE TO THE FILE OF THE CIT(A) TO DECIDE THE ISSUE ON MERITS. 6. ON THE OTHER HAND, THE LEARNED D.R. STRONGLY SUPPOR TED THE ORDER OF THE CIT(A) AND SUBMITTED THAT THE ASSESSEE IS NON-C OOPERATIVE FOR THE PROCEEDINGS BEFORE THE CIT(A), WHICH IS EVIDENT FRO M THE FACT THAT THE CIT(A) HAS GIVEN 10 DATES OF HEARING FOR WHICH THE ASSESSEE EITHER AND SOUGHT ADJOURNMENT OR NOT ATTENDED ON THE DATE OF H EARING. THEREFORE THE CIT(A) IS LEFT WITH NO OPTION BUT TO DISPOSE OF THE APPEAL ON THE BASIS OF THE MATERIAL AVAILABLE ON RECORD. THEREFORE THERE IS NO REASON FOR THE ASSESSEE TO ASK ONE MORE OPPORTUNITY TO GO BEFORE THE CIT(A) TO FILE NECESSARY EVIDENCES. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED TH E MATERIAL AVAILABLE ON RECORD. THE AO HAS COMPUTED SHORT DEDU CTION OF TAX AND INTEREST UNDER SECTIONS 201(1) AND 201(1A) OF THE A CT ON THE BASIS OF ADMISSION OF THE DIRECTOR OF THE COMPANY DURING THE SURVEY PROCEEDINGS IN STATEMENT RECORDED FOR WHICH THE DIRECTOR HAS ADMIT TED THAT BY MISTAKE THE COMPANY HAS NOT DEDUCTED TAX ON VARIOUS PAYMENT S. THIS FACT IS FURTHER SUPPORTED BY THE REPORT OF THE TAX AUDITOR WHERE THE TAX AUDITOR IN ITS AUDIT REPORT HAS QUANTIFIED SHORT DEDUCTION OF TAX ON VARIOUS PAYMENTS. THE ASSESSEE CLAIMED BEFORE THE LOWER AUT HORITIES THAT IN NUMBER OR CASES IT HAS DEDUCTED TDS WHEREVER APPLIC ABLE UNDER THE RESPECTIVE PROVISIONS OF THE ACT. FURTHER, IN SOME CASES WHERE THERE IS A DISPUTE BETWEEN THE PARTIES REGARDING FINAL PAYMENT THE ASSESSEE HAS NOT DEDUCTED TDS AND ALSO REVERSED SUCH PAYMENTS IN SUB SEQUENT FINANCIAL ITA NOS. 2670 & 2671/MUM/2015 M/S. BAWEJA MOVIES P. LTD 5 YEARS. THE ASSESSEE FURTHER CLAIMED BEFORE THE LOWE R AUTHORITIES THAT IT HAS FILED VARIOUS EVIDENCES TO PROVE NON-APPLICATION OF TDS PROVISIONS ON CERTAIN PAYMENTS AND ALSO REVERSAL OF CERTAIN PAYME NTS IN ITS BOOKS OF ACCOUNT IN SUBSEQUENT YEARS. THE ASSESSEE FURTHER C LAIMED THAT IT HAS FILED NECESSARY EVIDENCES TO PROVE THAT THE PAYEES HAVE P AID TAX ON THE IMPUGNED AMOUNT IN THE INCOME TAX RETURNS FOR WHICH NECESSARY EVIDENCES HAVE BEEN FILED BEFORE THE AO. THE AO HAS IGNORED A LL THE EVIDENCES TO TREAT THE ASSESSEE AS ASSESSEE IN DEFAULT AND IT HAS BEEN UPHELD BY THE LEARNED CIT(A) WITHOUT GIVING REASONABLE OPPORTUNITY OF HEA RING. THEREFORE THE ISSUE MAY BE SENT BACK TO THE FILE OF THE CIT(A) TO GIVE ONE MORE OPPORTUNITY OF HEARING TO FILE NECESSARY EVIDENCES. 8. HAVING HEARD THE RIVAL CONTENTIONS, WE FOUND THAT T HE CIT(A) HAS PASSED THE EX-PARTE ORDER ON THE BASIS OF THE MATER IAL AVAILABLE ON RECORD TO UPHOLD THE FINDINGS OF THE AO TO TREAT THE ASSES SEE AS ASSESSEE IN DEFAULT UNDER SECTIONS 201(1) AND 201(1A) OF THE AC T. ALTHOUGH THE ASSESSEE HAS NOT APPEARED BEFORE THE CIT(A) WHEN NU MBER OF OPPORTUNITIES WERE GIVEN, THE CIT(A) HAS NOT APPRAISED THE FACTS IN THE LIGHT OF THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE VIDE ITS LETTER D ATED 19.02.2015. THE CIT(A) HAS SIMPLY UPHELD THE FINDINGS OF THE AO TO TREAT THE ASSESSEE AS ASSESSEE IN DEFAULT UNDER SECTIONS 201(1) AND 201(1 A) OF THE ACT WITHOUT CONSIDERING THE OBJECTIONS OF THE ASSESSEE WITH REG ARD TO NON-APPLICABILITY OF TDS PROVISIONS ON CERTAIN PAYMENTS AND ALSO REVE RSAL OF CERTAIN PAYMENTS IN SUBSEQUENT FINANCIAL YEARS. THOUGH THER E IS FAILURE ON THE PART OF THE ASSESSEE IN APPEARING BEFORE THE CIT(A) ON VARIOUS DATES BUT THE CIT(A) COULD HAVE CONSIDERED THE WRITTEN SUBMISSION S FILED BY THE ASSESSEE IN THE LIGHT OF THE OBSERVATIONS MADE BY THE AO. SI NCE THE CIT(A) HAS UPHELD THE FINDINGS OF THE AO WITHOUT CONSIDERING T HE OBJECTIONS FILED BY THE ASSESSEE, WE ARE OF THE CONSIDERED VIEW THAT TH E ISSUE NEEDS TO BE RE- EXAMINED BY THE AO IN THE LIGHT OF THE EVIDENCES FI LED BY THE ASSESSEE. THEREFORE, WE SET ASIDE THE ISSUE TO THE FILE OF TH E CIT(A) TO DECIDE THE ISSUE AFRESH IN THE LIGHT OF THE OBJECTIONS FILED BY THE ASSESSEE VIDE LETTER DATED ITA NOS. 2670 & 2671/MUM/2015 M/S. BAWEJA MOVIES P. LTD 6 19.02.2015. THE ASSESSEE IS DIRECTED TO FILE NECESS ARY EVIDENCES WITHOUT SEEKING ANY ADJOURNMENT. 9. IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE AR E ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST JULY, 2018. SD/ - SD/ - (MAHAVIR SINGH) (G. MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 31 ST JULY, 2018 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -59, MUMBAI 4. THE CIT - (TDS)-1, MUMBAI 5. THE DR, E BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.