Shri Ashokkumar J. Jain, Ahmedabad V. The Dy.CIT, Circle-9, Ahmedabad

ITA 269/AHD/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9207 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 21-02-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 27-01-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Retrospective amendment; TDS
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 143(3); 92; 201(1)

Judgement Text

ITA NO . 2 69 / AHD/20 1 4 A.Y. 20 08 - 09 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENCH, AHMEDABAD BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI PRA DIP KUMAR KEDIA , ACCOUNTANT MEMBER ITA NO. 2 69 / AHD /201 4 ASSESSMENT YEAR : 20 08 - 09 SHRI ASHOKKUMAR J. JAIN VS. DY. COMMISSIONER OF INCOME TAX, C/O. TRAILOR TRANSPORT, CIRCLE - 9, AHMEDABAD. CALICO NAGAR, SARKHE J ROAD, NAROL, AHMEDABAD. [PAN A CLPJ 4780 D ] (APPELLANT ) (RESPONDENT) A PPELLANT BY : NONE RE SPONDENT BY : S HRI DHARAMVIR YADAV, SR. D.R. D ATE OF HEARING : 2 1 .0 2 . 20 1 7 DATE OF PRONOUNCEMENT : 23 .02 .201 7 O R D E R PER S.S. GODARA , J.M. TH IS ASSESSEE S APPEAL FOR A SSESSMENT Y EAR 20 08 - 09 ARISE S AGAINST CIT(A) - I, AHMEDABAD S ORDER DATED 18.11.2013 PASSED IN CASE NO. CIT(A) - I/CI R.9/350/2013 - 14 IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. CASE CALLED TWICE. NONE APPEARS ON ASSESSEE S BEH ALF DESPITE SERVICE OF NOTICE THROUGH REGISTERED POST ACKNOWLEDGEMENT DUE DATED 30.12.2016. WE THUS T AKE UP THE INSTANT APPEAL FOR ADJUDICATION ON MERITS. 3. THE ASSESSEE S FIRST SUBSTANTIVE GROUND CHALLENGES ACTION OF BOTH THE LOWER AUTHORITIES IN DISALLOWING A SUM OF RS.8,61,268/ - UNDER SECTION 40 (A) (IA) OF T HE ACT ON TH E GROUND THAT HE DID NOT DEDUCT TDS ON ACCOUNT OF INTEREST PAYMENT MADE TO VARIOUS PARTIES. ITA NO . 2 69 / AHD/20 1 4 A.Y. 20 08 - 09 PAGE 2 OF 4 4. THIS CASE FILE REVEALS THAT THE ASSESSEE HAD PAID INTEREST OF RS.38,588/ - , RS.1,79,488/ - , RS.4,26,916/ - AND RS.85,144/ - ; RESPECTIVELY TO FOUR NON - BANKING FINANCE COMPANIES M/S. CHOLA MANDALAM DBS FINANCE LIMITED, INDIA BULLS BANK (FIN.) SERVICES LTD, L&T FINANCE LIMITED & RELIANCE CAPITAL LIMITED . T HERE IS NO DISPUTE THAT IT DID NOT SUBJECT THE SAID INTEREST EXPENSES TO TDS DEDUCTION . THIS FORMED T HE PRECISE REASON FOR THE CIT( A) TO INVOKE T HE I MPUGNED DISALLOWANCE AS HELD IN THE COURSE OF LOWER APPELLATE PROCEEDINGS . 5 . WE HAVE H E ARD THE LEARNED DEPARTMENTAL REPRESENTATIVE. RELEVANT FINDING PERUSED. WE NOTICE AT THE OUTSET THAT THE ASSESSEE S FOUR PAYEES HEREINABOVE ARE NON - BANKING FINANCE COMPANIES ALREADY SUPPOSED TO BE ASSESSED UNDER THE RELEVANT PROVISIONS OF THE ACT. IT EMERGES IN THIS BACK DR O P THAT SECTION 40 (A) (IA) SECOND PROVISO INSERTED IN THE ACT VIDE FINANCE ACT 2012 W.E.F. 01.04.2013 STIPULATING THAT THE IMPUGNED DISALLOWANCE PROVISION DOES NOT APPLY IN CASE THE CONCERNED ASSESSEE IS NOT AN ASSESSEE IN DEFAULT IN LIGHT OF SECTION 201(1) OF THE ACT AS HELD TO BE CURATIVE HAVING RETROSPECTIVE EFFECT W.E.F. 01.04.2005 BY THIS TRIBUNAL S CO - ORDINATE BENCH DECISION IN THE CASE OF RA JEEV KUMAR AGARWAL VS. ADDL. CIT - ITA NO.337/AGRA/2013 - DECIDED ON 29.05.2013 AS UPHELD BY HON BLE DELHI HIGH COURT IN ITS JUDGEMENT IN TAX APPEAL NO.160/2015 IN THE CASE OF C I T VS. ANSAL LAND MARK TOWNSHIP (P) LTD. ; SQUARELY APPLIES HERE. WE THUS DIRE CT THE ASSESSING O FFICER TO VERIFY THE FACTUAL POSITION AND RE - DECIDE THE ISSUE AFRESH AFTER AFFORDING ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. 6 . ASSESSEE S SECOND SUBSTANTIVE GROUND SEEKS TO DELETE ADHOC DISALLOWANCE OF EXPENSES MADE BY THE CIT ( A ) QUA TOTAL EXPENSES OF RS.10,80,323/ - IN THE NATURE OF LO ADING /UNLOADING CHARGES, LABOUR CHARGES, OFFICE E XPENSES AND DRIVER S MEA L EXPENSES AS AGAINST THE LUMP SUM ADHOC DISALLOWANCE OF RS. 2,00,000 / - MADE BY THE ASSESSING O FFICER. ITA NO . 2 69 / AHD/20 1 4 A.Y. 20 08 - 09 PAGE 3 OF 4 7. THERE DOES NOT A PPEAR TO BE ANY DISPUTE THAT THE ASSESSING O FFICER WAS OF THE VIEW TH AT THE ABOVE STATED HEADS OF EXPENSES WERE UNVERIFIABLE NATURE MAKING HIM TO DISALLOW SUM TO THE EXTENT OF A LUMP SUM AMOUNT OF RS.2,00,000/ - . THE CIT(A) HOWEVER IS OF THE VIEW THAT THE ABOVE LUMP SUM DISALLOWANCE IS TOO HIGH MAKING HIM TO RESTRICT THE SAME TO THE EXTENT OF 5% OF THE ABOVE EXPENSES. 8 . LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY ARGUE S THAT THIS DISALLOWANCE HAS ALREADY BEEN DELETED TO A SUBSTANTIVE EXTENT IN THE COURS E OF THE LOWER APPELLATE PROCEEDINGS. IT HOWEVER EMERGES THAT THE ASSESSING OFFICER S ASSESSMENT O RDER DATED 21.12.2010 INVOKED THE IMPUGNED DISALLOWANCE MERELY BECAUSE ASSESSEE S VARIOUS HEADS OF EXPENSES WERE OF UNVERIFIABLE NATURE SINCE SUPPORTED BY SE LF ATTESTED VOUCHERS ONLY. WE FIND THAT HE HAS NOT EVEN ASKED THE ASSESSEE TO PROVE THE CONTENTS OF THE SAID SELF ATTESTED VOUCHERS. WE OBSERVE IN THESE FACTS THAT BECAUSE OF THE FAILURE ON ASSESSEE S PART IN PROVING THE GENUINENESS OF THE EXPENSES , NEIT HER OF THE LOWER AUTHORITIES WERE JUSTIFIED IN INVOKING THE IMPUGNED DISALLOWANCE FORMING SUBJECT MATTER OF THE INSTANT GROUND. WE THUS ACCEPT ASSESSEE S SECOND SUBSTANTIVE GROUND. DISALLOWANCE IN QUESTION OF 5% OF THE ABOVE EXPENSES AMOUNT UPHELD IN COU RSE OF LOWER APPELLATE PROCEEDINGS IS DELETED. 9 . ASSESSEE S THIRD AND LAST SUBSTANTIVE GROUND PLEADS THAT BOTH THE LOWER AUTHORITIES HAVE ERRED IN DISALLOWING ITS PRIOR PERIOD EXPENDITURE CLAIM OF RS.1,32,500/ - . 10. WE NOTICE FROM THE ASSESSMENT ORDER T HAT THE ABOVE SAID SUM COMPRISES OF TWO FIGURES OF RS.70,000/ - AND RS.62,500/ - FOR BILLS DEBITED IN THE NAME S OF CH OTU MISTRY AND RITESH TECHNO FAT . THE ASSESSING O FFICER A S WELL AS THE CIT(A) ARE OF THE VIEW THAT THESE BILLS DO NOT PERTAIN TO RELEVANT PR EVIOUS YEAR SO AS TO BE ALLOWABLE. ITA NO . 2 69 / AHD/20 1 4 A.Y. 20 08 - 09 PAGE 4 OF 4 11 . WE HAVE HEARD THE REVENUE. RELEVANT FINDING PERUSED. IT EMERGES THAT THE ASSESSEE S CASE THROUGHOUT HAS BEEN THAT IT HAD RECEIVED TWO BILLS IN QUESTION ONLY IN THE RELEVANT PREVIOUS YEAR SO AS TO BE TREATED AS CRYST ALLISED LIABILITY. THIS CRUCIAL PLEA HAS NOWHERE BEEN DISPUTED IN COURSE OF THE LOWER APPELLATE PROCEEDINGS. WE NOTICE IN TH ESE FACTUAL CIRCUMSTANCES HON BLE JURISDICTIONAL H IGH C OURT S DECISION IN DCIT VS. ADANI ENTERPRISE LIMITED IN TAX A PPEAL NO.566/2 016 UPHOLDING THIS T RIBUNAL S DECISION DELETING IDENTICAL PRIOR PERIOD EXPENDITURE DISALLOWANCE IN VIEW OF THE FACT THAT THE RELEVANT BILLS HAVE BEEN CRYSTALLISED IN THE IMPUGNED ASSESSMENT YEAR I N QUESTION A ND IN VIEW OF THE FACT THAT THERE W A S NO REVENUE IMPLICATIONS SINCE ASSESSEE HAD BEEN TAXED AT UNIFORM RATE IN EARLIER AS WELL AS CURRENT ASSESSMENT YEAR S ; IS ATTRACTED IN FACTS OF THE INSTANT CASE AS WELL. SINCE LEARNED DEPARTMENTAL REPRESENTATIVE FAILS TO DISPUTE DIFFERENCE IN ASSESSEE S TAX RATE IN T HE PRECEDING AS WELL AS I MPUGNED ASSESSMENT YEA R S , WE THUS ACCEPT ASSESSEE S THIRD AND F INAL SUBSTANTIVE GROUND AS WELL. 12 . IN THE RESULT, THIS ASSESSEE S APPEAL IS PARTLY ACCEPTED . P RONOUNCED IN THE OPEN COURT TODAY ON THE 23 RD DAY OF FEBRUARY , 2 01 7 . SD/ - SD/ - PRA DIP KUMAR KEDIA S.S. GODARA (ACCOUNTANT MEMBER) ( JUDICIAL MEMBER) AHMEDABAD, THE 2 3 RD DAY OF FEBRUARY, 2017 PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD