The ITO, Ward-9(1), Ahmedabad V. M/s. Nayan C.Shah, Ahmedabad

ITA 2822/AHD/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57252 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 15-11-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S N DIVETIA
• Keywords: Depreciation; Retrospective amendment
• Section: 143(3); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C AHMEDABAD BEFORE SHRI, A.K.GARODIA, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ITA NO.2822/AHD/2011 ASSESSMENT YEAR:2006-07 INCOME-TAX OFFICER, WARD-9(1), AHMEDABAD V/S . M/S NAYAN C SHAH 214/ANHIL COMPLEX, B/H URJA HOUSE, SWASTIK SOCIETY, NAVRANGPURA, AHMEDABAD-380009 PAN NO.AACEN3071C (APPELLANT) .. (RESPONDENT) / BY APPELLANT SHRI VINOD TANWANI, SR-DR / BY RESPONDENT SHRI S.N.DIVETIA, AR / DATE OF HEARING 27-02-2012 / DATE OF PRONOUNCEMENT 07-03-2012 O R D E R PER KUL BHARAT, JUDICIAL MEMBER:- THE PRESENT APPEAL HAS BEEN PREFERRED AGAINST THE O RDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XV, AHMEDABAD DATED 16-09-2 011 PASSED IN APPEAL NO.CITA-XV/ITO9(1)/20/09-10, WHEREBY THE PENALTY U/ S. 271(1)(C) AS LEVIED BY THE ASSESSING OFFICER HAS BEEN DELETED. THE SAID ORDER HAS BEEN CHALLENGED ON THE FOLLOWING GROUNDS:- 1) THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XV , AHMEDABAD HAS ERRED IN LAWS AND ON FACTS IN DELETING THE PENALTY OF RS. 4,44,510/- LEVIED U/S. 271(1)(C) OF THE ACT. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XV, AHMEDABAD OUGHT TO HAVE UP HELD THE ORDER OF THE ASSESSING OFFICER. ITA NO.2822/AHD/2011 A.Y. 2006-07 ITO WD-9(1), ABD V. M/S. NAYAN C SHAH PAGE 2 IN THE PRESENT CASE ASSESSMENT U/S 143(3) OF THE AC T WAS COMPLETED VIDE ASSESSMENT ORDER DATED 24-10-2008. DURING THE COURS E OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS NOT DEDUCTED TAX AT SOURCE AS PER THE PROVISIONS OF 194C OF THE ACT. THE ASSESSEE WAS, THEREFORE VIDE LETTER DATED 10-10-2008 WAS ASKED TO EXPLAIN WHY EXPENSES AS CLA IMED SHOULD NOT BE DISALLOWED. THE ASSESSEE FILED REPLY TO THE SHOW-CA USE AS ISSUED BY THE AO. THE AO BEING NOT CONVINCED WITH THE REPLY OF THE ASSESS EE DISALLOWED THE EXPENSES AS CLAIMED AND INITIATED PENALTY PROCEEDINGS SEPARATEL Y. 2. THE ASSESSING OFFICER ISSUED NOTICE U/S. 274 R.W .S 271(1)(C) OF THE INCOME- TAX ACT, 1961 ON 24-10-2008. IN RESPONSE TO THE SAI D NOTICE THE ASSESSEE SUBMITTED ITS REPLY VIDE LETTER DATED 06-12-2008. THE REPLY O F THE ASSESSEE IS REPRODUCED IN THE PENALTY ORDER AS UNDER:- WE ARE PREFERRING THIS REPLY FOR SHOW CAUSE FOR TH E REQUEST NOT TO IMPOSE OF PENALTY U/S. 271(1)(C) IN OUR CASE FOR THE ABOVE S TATED ASSESSMENT YEAR. THE BRIEF FACTS HAVE BEEN SATED HEREINBELOW: OURS IS A PARTNERSHIP FIRM AND WE ARE REGULARLY AS SESSED TO TAX UNDER THE PROVISIONS OF INCOME TAX, 1961 WITH ITO, WARD-9(1), AHMEDABAD, WE HAD SUBMITTED THE RETURN OF INCOME DECLARING TOTAL INCO ME AT RS.8,28,646/- AS AGAINST WHICH YOUR GOODSELF HAS COMPLETED THE ASSES SMENT ASSESSING TOTAL INCOME AT RS.22,84,970/- VIDE ORDER U/S. 143(3) FRA MED ON 24.10.2008. YOUR GOODSELF HAS INVOKED PROVISIONS OF SECTION 40(A)(IA ) AND MADE DISALLOWANCE OF RS.14,12,9890/-. WE WOULD LIKE TO INFORM YOUR GO ODSELF THAT OUT OF RS.14,12,890/-. WE WOULD LIKE TO INFORM YOUR GOODSE LF THAT OUT OF RS.14,12,890/- THE TAX WAS DEDUCTED ON RS.6,18,300/ - AND DEPOSITED ON 17.4.2007. WE FURTHER STATE ON BALANCE OF RS.7,94,5 90/- THE DEDUCTION OF TAX AT SOURCE WAS NOT MADE. HOWEVER, WE SUBMIT THAT THE TAX AT SOURCE OF RS.25,132/- ALONG WITH INTEREST OF RS.6814/- IS PAI D BY US ON 1.12.2008. YOUR GOODSELF HAS TAKEN A VIEW FOR RS.6,18,300/- THAT TA X DEDUCTIBLE ON THE DIFFERENT DATES DURING THE PREVIOUS YEAR ENDED ON 31.3.006 AN D EXPENDITURE OF RS.7,94,590/- ON WHICH DEDUCTION OF TAX AT SOURCE W AS NOT MADE THEREFORE EXPENDITURE WAS NOT ADMISSIBLE IN COMPUTATION OF TH E TOTAL INCOME FOR THE A.Y. 2006-07 IN VIEW OF SECTION 40(A)(IA). IT IS FURTHER SUBMITTED THAT YOUR GOODSELF HAS DISA LLOWED RS.87,480/- IN RESPECT OF MACHINERY PURCHASED CLAIMED AS MATERIAL PURCHASE AND THE ASSESSEE HAD IN THE REPLY OF SHOW CAUSE ACCEPTED THAT IT HAS BEE N CLAIMED OUT OF MISTAKE AS EXPENDITURE AND WITH NO INTENTION NOT CONCEALMENT O F INCOME. ASSESSEE HAS REQUESTED TO ALLOW THE DEPRECIATION ON THE SAME AND HAS ALLOWED THE DEPRECIATION. IT IS SUBMITTED THAT EACH AND EVERY PARTICULAR OF I NCOME WAS ACCURATELY FURNISHED AND THERE WAS TRUE DISCLOSURE OF ALL PART ICULARS BY OUR FIRM. THE ITA NO.2822/AHD/2011 A.Y. 2006-07 ITO WD-9(1), ABD V. M/S. NAYAN C SHAH PAGE 3 DISALLOWANCE IS ONLY ON A HIGH TECHNICAL GROUND. DI SALLOWANCE THOUGH MAY BE MADE FOR THE A.Y. 2006-07, THE AMOUNT SHALL BE ALLO WED AS A DEDUCTION FOR SUBSEQUENT ASSESSMENT YEARS. THE ASSESSEE SUBMITS T HAT IN VIEW OF SPECIFIC PROVISIONS OF SECTION 40(A)(IA) THE COMPUTATION OF INCOME FOR THE SUBSEQUENT YEARS AND POSITION OF REFUND OF TAX SHALL BE AS UND ER: TOTAL INCOME AS PER ASSESSMENT ORDER FOR THE YEAR 2006-07 RS.22,84,970/- LESS: DEDUCTION U/S.40(A) FOR A.Y.2005-06 RS.19 ,58,374/- TOTAL INCOME RS. 3,26,596 ACCORDINGLY, TOTAL INCOME SHALL BE REDUCED BY THE R ETURNED INCOME OF RS.8,28,646/- AND ON WHICH TAX OF RS.2,78,921/- IS PAID BY THE ASSESSEE FOR THE A.Y. 2006-07. WE WOULD LIKE TO SUBMIT THAT AFTE R CONSIDERING THE ABOVE FACTS THE TAX ON TOTAL INCOME SHALL BE AS UNDER:- TOTAL INCOME RS.3,26,596 TOTAL INCOME ROUNDED OFF RS.3,26,600 TAX @ 30% RS. 97,980 ADD: SURCHARGE @ 10% RS. 9,798 RS.1,07,778 ADD: EDU. CESS @ 2% RS. 2,156 FROM TIME TO TIME AND UTMOST COOPERATION WAS EXTEND ED DURING THE ASSESSMENT PROCEEDINGS. THE DISALLOWANCE IS MERELY ON A TECHNICAL GROUND AND SINCE ALL THE CONDITIONS OF SECTION 273A ARE FU LFILLED AND PENALTY MAY NOT BE IMPOSED. OUR FIRM SHALL BE PLEASED TO FURNISH AN Y OTHER DETAILS AND/OR INFORMATION AS MAY REQUIRE BY YOUR GOODSELF ON HEAR ING FROM YOU. THE ASSESSING OFFICER WAS NOT CONVINCED WITH THE RE PLY AND LEVIED MINIMUM PENALTY OF RS.4,44,510/- U/S 271(1)(C) . 3. THE ASSESSEE FEELING AGGRIEVED BY THE ORDER DATE D 17-04-2009 PREFERRED AN APPEAL BEFORE LD. CIT(A), LD. CIT(A) IN HIS ORDER D ATED 16-09-2011 AND WAS PLEASED TO OBSERVE AS UNDER:- 3. IT IS SEEN THAT OUT OF RS.13,20,588 TDS IN RESP ECT OF RS.6,18,300 HAS BEEN DEPOSITED IN GOVERNMENT ACCOUNT ON 24.4.2006 THAT I S BEFORE THE DUE DATE OF FILING OF RETURN, AND IS THUS COVERED BY HONBLE IT AT DECISION IN THE CASE OF KANUBHAI RAMJIBHAI VS. ITO REPORTED IN 49 DTF 70 (AHD) (TRIB.). THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS MA DE BY THE LD. COUNSEL FOR THE ASSESSEE WAS PLEASED TO DIRECT THE ASSESSING OFFICE R TO DELETE THE PENALTY AS IMPOSED BY HIM. ITA NO.2822/AHD/2011 A.Y. 2006-07 ITO WD-9(1), ABD V. M/S. NAYAN C SHAH PAGE 4 4. SINCE BOTH THE GROUNDS AS TAKEN IN THIS APPEAL A RE INTERCONNECTED, HENCE, ARE BEING DISPOSED OF TOGETHER. THE LD. DR HAS VEHEMENT LY ARGUED THAT THE ACTION OF THE ASSESSING OFFICER IS JUSTIFIED IN LEVYING THE PENAL TY AND RELIED UPON THE PENALTY ORDER. THE LD. DR HAS SUBMITTED THAT THERE WAS NO OCCASION TO INTERFERE WITH THE ORDER PASSED BY THE AO. ON THE CONTRARY, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THERE WERE TWO AMENDMENTS INTO THE PROVISIONS OF THE ACT. LD. DR CONTRADICTED THAT THE AMENDMENT WAS MADE IN THE YEAR 2010 WHILE IN THE PR ESENT CASE, THE RETURN WAS FILED ON 16-10-2006. THE LD. COUNSEL FOR THE ASSESS EE HAS ARGUED THAT HIS CASE IS NOT A CASE OF FILING OF INACCURATE PARTICULARS OF I NCOME BUT HAVING A DEBATABLE ISSUE. THE LD. AR FOR THE ASSESSEE HAS RELIED UPON THE DEC ISION PASSED IN ITA NO.1670/AHD/2009 IN THE CASE OF M/S. DUTT PRODUCTS V. ITO ORDER DATED 24-07-2009 AND IN ITA NO.6196 AND 6197/MUM/2010 IN THE CASE OF ITO V. M/S H.S. ENGINEERING & MARKETING ORDER DATED 21-10-2011. ADMITTEDLY, THE INCOME-TAX RETURN WAS FILED ON16-10-2006 AND OUT OF RS.13,20,588/- TDS WAS DEPO SITED AT RS.6,18,300/- ON 24- 04-2006 AND BALANCE WAS DEPOSITED ON 01-12-2008. SO FAR THE AMOUNT OF RS.6,18,300/- THAT WAS DEPOSITED IN THE GOVERNMENT ACCOUNT ON 24-04-2006, IT IS SO DEPOSITED BEFORE FILING OF THE INCOME TAX RETURN. B UT, SO FAR THE BALANCE AMOUNT IS CONCERNED IT WAS NOT DEPOSITED EVEN BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME. THEREFORE, THE BENEFIT OF DEPOSITING THE SAME EVEN BEFORE FILING OF INCOME TAX RETURN IS NOT AVAILABLE WITH ASSESSEE. THE AR FOR THE ASSE SSEE HAS RELIED UPON THE DECISION PASSED IN ITA NO.1670/AHD/2009 IN THE CASE OF M/S. DUTT PRODUCTS (SUPRA) AND IN ITA NO.6196 AND 6197/MUM/2010 IN THE CASE OF M/S H.S. ENGINEERING & MARKETING (SUPRA). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS MADE BY DEPARTMENTAL REPRESENTATIVE AND THE AUTHORIZED REPRESENTATIVE. A DMITTEDLY THIS IS NOT THE CASE WHEREIN THE CLAIM AS MADE BY THE ASSESSEE WAS ALLOW ABLE UNDER ANY PROVISION OF ACT. THE ASSESSEE WAS REQUIRED TO DEDUCT TAX AT SOU RCE (TDS IN SHORT) IN ACCORDANCE WITH THE STATUTORY PROVISIONS AND DEPOSI T THE SAME AS PRESCRIBED. THE SAME HAS NOT BEEN DONE BY THE ASSESSEE. THE ASSESSE E CANNOT TAKE SHELTER BEHIND THE ARGUMENT THAT EVERYTHING WAS DISCLOSED, IN FACT , THIS IS THE CASE WHERE THE ASSESSEE HAS SUPPRESSED THE ACTUAL PARTICULAR OF TH E INCOME BY NOT MAKING DISALLOWANCE U/S 40(A)(IA). HENCE, WE ARE OF THE VI EW THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN GIVING THE BENEFIT TO THE ASSESSEE. WE FIND THAT IN PARA-4 OF ASSESSMENT ITA NO.2822/AHD/2011 A.Y. 2006-07 ITO WD-9(1), ABD V. M/S. NAYAN C SHAH PAGE 5 ORDER, IT IS NOTED BY THE ASSESSING OFFICER THAT OU T OF TOTAL PAYMENT OF RS.6,48300/-; PAYMENT OF RS.30,000/- WAS MADE IN MARCH, 2006 AND NO DISALLOWANCE WAS MADE FOR THIS AMOUNT OF RS.30,000/- AND HENCE, IT IS SEE N THAT THIS AMOUNT OF RS.6,18,300/- WAS PAID BEFORE MARCH06. THE PROVISIONS OF SEC. 40 (A)(IA) AS AMENDED BY FINANCE ACT, 2008 W.R.E.F. 1-4-2005 ARE AS UNDER:- (IA) ANY INTEREST, COMMISSIONS OR BROKERAGE, FEES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SERVICES PAYABLE TO A RESIDENT, OR AMOUNTS PAYABLE TO A CONTRACTOR OR SUB-CONTRACTOR, BEING RESIDENT, FOR C ARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WO RK), ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII-B AND SUCH TAX HAS NOT BEEN DEDUCTED OR, AFTER DEDUCTION, HAS NOT BEEN PAID,- (A) IN A CASE WHERE THE TAX WAS DEDUCTIBLE AND WAS SO DEDUCTED DURING THE LAST MONTH OF THE PREVIOUS YEAR, ON OR BEFORE THE D UE DATE SPECIFIED IN SUB- SECTION (1) OF SECTION 139; OR (B) IN ANY OTHER CASE, ON OR BEFORE THE LAST DAY OF TH E PREVIOUS YEAR: AS PER THIS AMENDED PROVISIONS ALSO FOR TDS DEDUCTE D PRIOR TO LAST MONTH OF THE PREVIOUS YEAR, PAYMENT HAS TO BE MADE ON OR BEFORE THE LAST DAY OF THE PREVIOUS YEAR. PRIOR TO THIS RETROSPECTIVE AMENDMENT, PROVISIONS I N THE STATUTE BOOK AT THE TIME OF FILING RETURN OF INCOME ON 16-10-2006 WERE AS UNDER :- (IA) ANY INTEREST, COMMISSION OR BROKERAGE, FEES F OR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SERVICES PAYABLE TO A RESIDENT, OR AMOUNTS PAYABLE TO A CONTACTOR OR SUB-CONTRACTOR, BEING RESIDENT, FOR CA RRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WO RK), ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVIII-B AND SUCH TAX HAS NOT BEEN DEDUCTED OR, AFTER DEDUCTION, HAS NOT BEEN PAID DUR ING THE PREVIOUS YEAR, OR IN THE SUBSEQUENT YEAR BEFORE THE EXPIRY OF THE TIME P RESCRIBED UNDER SUB- SECTION (1) OF SECTION 200: PROVIDED THAT WHERE IN RESPECT OF ANY SUCH SUM, TAX HAS BEEN DEDUCTED IN ANY SUBSEQUENT YEAR OR, HAS BEEN DEDUCTED IN THE PR EVIOUS YEAR BUT PAID IN ANY SUBSEQUENT YEAR AFTER THE EXPIRY OF THE TIME PR ESCRIBED UNDER SUB-SECTION (1) OF SECTION 200, SUCH SUM SHALL BE ALLOWED AS A DEDUCTION IN COMPUTING THE INCOME OF THE PREVIOUS YEAR IN WHICH SUCH TAX HAS B EEN PAID. HENCE, THERE IS NO BASIS AS PER WHICH THE ACTION OF THE ASSESSEE OF NOT MAKING SUO MOTU DISALLOWANCE U/S.40(A)(IA) CAN BE SAID TO BE B ONA FIDE. ITA NO.2822/AHD/2011 A.Y. 2006-07 ITO WD-9(1), ABD V. M/S. NAYAN C SHAH PAGE 6 6. REGARDING TRIBUNALS ORDER CITED BY LD. AR BEING RENDERED IN THE CASE OF M/S. H.S. ENGINEERING & MARKETING (SUPRA), WE FIND THAT THE SAME IS NOT APPLICABLE I N THE PRESENT CASE. IN THAT CASE, THE ISSUE OF ALLOWABILI TY OF DEDUCTION U/S 80-O ON GROSS BASIS OR NOT BASIS WAS FOUND BY THE TRIBUNAL TO BE DEBATABLE ISSUE BUT IN THE PRESENT CASE, NO SUCH THINGS COULD BE PLACED ON RECORD THAT THIS ISSUE WAS DEBATABLE WHEN THE ASSESSEE FILED RETURN OF INCOME ON 16-10-2006. REGARDING SECOND TRIBUNAL ORDER CITED BY LD. AR REN DERED IN THE CASE OF M/S DUTT PRODUCTS (SUPRA) ALSO WE FIND THAT THE SAME IS ALSO NOT APP LICABLE IN THE PRESENT CASE BECAUSE FACTS ARE DIFFERENT. IN THAT CASE, IT IS NO TED BY THE TRIBUNAL IN PARA-6 THAT THE ASSESSEE HAD DISCLOSED ALL FACTS TO THE ASSESSING O FFICER AND IT IS NOT SO IN THE PRESENT CASE, HENCE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE PENALTY. WE, THEREFORE, REVERSE HIS ORDER AND RESTORE THE PENALT Y ORDER. 7. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 07/03 /2012 SD/- SD/- (A.K.GARODIA) (KUL BHARAT) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, *DKP - 07/03/2012 ()* + ,- ,- ,- ,- ../ ../ ../ ../ 0/ 0/ 0/ 0/ / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. *.2 , ,3 / CONCERNED CIT 4. , ,3- / CIT (A) 5. /67 ...2, , .2 , ()* / DR, ITAT, AHMEDABAD 6. 7:; <= / GUARD FILE. BY ORDER/ ,- , /TRUE COPY/ >/ ( ? , .2 , ()* +