M/s. Alpha Projects Society Pvt.Ltd., Baroda V. The Dy.CIT.,Circle-1(1), Baroda

ITA 2869/AHD/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57303 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 14-03-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 18-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: NIKITA BRAHMBHATT
• Keywords: Retrospective amendment; Reason to believe; TDS
• Section: 271(1)(c); 143(3); 40(a)(ia); 147; 148

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.2869/AHD/2011 ASSESSMENT YEAR:2005-06 M/S. ALPHA PROJECTS SOCIETY P. LTD., LEVEL NO.4, ADM BUILDING, ALEMBIC CAMPUS, ALEMBIC ROAD, VADODARA -390 004 PAN NO.AABCA9331L V/S . DCIT, CIRCLE-1(1), AAYKAR BHAVANA, RACE COURSE, VADODARA (APPELLANT) .. (RESPONDENT) /BY APPELLANT NIKITA BRAHMBHATT, AR /BY RESPONDENT SHRI VINOD TANWANI, SR-DR /DATE OF HEARING 14-03-2012 /DATE OF PRONOUNCEMENT 23-03-2012 O R D E R PER KUL BHARAT, JUDICIAL MEMBER:- THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DIRECTED BY LD. COMMISSIONER OF INCOME-TAX (APPEALS )-I, BARODA DATED 14-09- 2011 FOR ASSESSMENT YEAR 2005-06. 2. THE FACTS IN BRIEF ARE THAT THE IN THIS CASE THE ASSESSMENT U/S. 143(3) OF THE INCOME-TAX ACT, 1961 WAS COMPLETED ON 24-04-200 7. SUBSEQUENTLY IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE INCOME CH ARGEABLE TO TAX HAS ESCAPED INCOME AND A NOTICE U/S. 148 OF THE ACT AFT ER RECORDING THE REASONS U/S. 147 OF THE ACT WAS SERVED UPON THE ASSESSEE ON 22-02-2010. THE REASONING GIVEN FOR REOPENING OF THE ASSESSMENT REP RODUCED AS UNDER:- ITA NO.2869/AHD/2011 A.Y. 2005-06 M/S ALPHA PROJECTS SOCIETY P. LTD. V. DCIT CIR-1(1) BR D PAGE 2 FROM THE PERUSAL OF THE RETURN OF INCOME FILED BY THE ASSESSEE IT IS SEEN THAT ASSESSEE COMPANY MADE PAYMENT TO CONTRACT ORS AND TO PROFESSIONAL AND TECHNICAL SERVICE. TDS WAS DEDUCTE D ON VARIOUS DATES FROM APRIL 2004 TO FEB 2005, BUT PAID AFTER THE FIN ANCIAL YEAR I.E. 313.2005 I.E. ASSESSEE HAD REMITTED THE TDS AMOUNT IN GOVT. ACCOUNT ON 11.4.2005 AND 6.4.2005. PARTICULARS OF HEAD UNDER WHICH TAX IS DEDUCTED AT SOURCE AMOUNT OF TAX DEDUCTED AT SOURCE DUE DATE OF REMITTAN CE DT. OF PAYMENT AMOUNT DISALLOWABLE U/S.40(A)(IA) PERCE NTAGE CONTRACTOR/SU BCONTRACTOR 1049 31.3.200 5 11.4.2005 RS.50,168 2.09% PROFESSIONAL 16699 31.3.200 5 6.4.2005 RS.3,19,400 5.227 5% TOTAL AMOUNT DISALLOWABLE RS.3,69,568 IN VIEW OF THE ABOVE FACTS OF THE CASE AND THE PROV ISIONS OF LAW, I HAVE REASON TO BELIEVE THAT DISALLOWANCE U/S.40(A)(IA) O F RS.3,69,568/- REMAINED TO BE MADE & THEREBY INCOME TO THE TUNE OF RS.3,69,568/- HAS ESCAPED ASSESSMENT BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS FOR ITS ASSESSMENT. AS PER COLUMN 27(A) OF FORM NO. 3CD, ASSESSEE HAS M ADE PAYMENTS TO CONTRACTOR/SUB-CONTRACTOR AND PROFESSIONAL/TECH SERVICE, TDS WAS DEDUCTED ON VARIOUS DATES FROM APRIL 2004 TO FEB 20 05 BUT PAID AFTER THE FINANCIAL YEAR I.E. 31.3.2005. THE ASSESSEE OBJECTED TO THE REOPENING OF THE ASSES SMENT, HOWEVER, THE OBJECTION OF THE ASSESSEE WAS NOT ACCEPTED BY THE A SSESSING OFFICER AND HE PROCEEDED TO DISALLOW THE EXPENSES U/S. 40(A)(IA) O F THE ACT. 3. THE ASSESSEE FEELING AGGRIEVED BY THE ORDER OF T HE ASSESSING OFFICER APPROACHED THE LD. CIT(A) WHO DISMISSED THE APPEAL OF THE ASSESSEE. 4. AGAIN THE ASSESSEE FEELING AGGRIEVED BY THE ORDE R OF LD. CIT(A) HAS APPROACHED BEFORE THE TRIBUNAL BY WAY OF THIS PRESE NT APPEAL AND RAISED THE FOLLOWING GROUND:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN FACT AND IN LAW IN CONFIRMING THE ACTION OF AO IN REOPENING THE ASSESSMENT COMPLETED BY ITA NO.2869/AHD/2011 A.Y. 2005-06 M/S ALPHA PROJECTS SOCIETY P. LTD. V. DCIT CIR-1(1) BR D PAGE 3 WAY OF REGULAR ASSESSMENT BY INVOKING THE PROVISION OF SECTION 147 OF THE INCOME TAX ACT, 1961 AND COMPLETING THE ASSESSMENT, COMMENCED UNDER INVALID EXERCISE OF POWERS U/S. 147 OF THE ACT. 2. THE LEARNED COMMISSIONER OF INCOME TAX (*APPEALS ) ERRED IN FACT AND IN LAW IN CONFIRMING THE ACTION OF AO IN MAKING DISALL OWANCE U/S.40(A)(IA) AMOUNTING TO RS.3,69,568/- PARTICULARS DUE DATE OF REMITTANCE DATE OF PAYMENT AMOUNT DISALLOWED (RS) CONTRACTOR/SUB CONTRACTOR 31/03/2005 11/04/2005 50,168 PROFESSIONAL 31/03/2005 06/04/2005 3,19,400 3,69,568 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN FACT AND IN LAW IN CHARGING INTEREST U/S.234B OF THE INCOME TAX ACT, 1961. 4. LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERR ED IN FACT AND IN LAW IN INITIATING PENALTY PROCEEDINGS U/S. 271(1)(C) OF T HE INCOME TAX ACT, 1961. 5. AT THE TIME OF HEARING LD. COUNSEL FOR THE ASSES SEE HAS NOT PRESSED THE GROUND NO.1. HENCE, WE DISMISS THE SAME AS NOT PRES SED. 6. GROUND NO.2 IS WITH REGARD TO DISALLOWANCE OF U/ S. 40(A)(IA). THE LD. CIT(A) HAS GIVEN VIEW WHICH REPRODUCED AS UNDER:- 3.2 I HAVE CONSIDERED THE MATTER. DISALLOWANCE OF RS.3,69,568/- MADE U/S. 40(A)(IA) WAS IN RESPECT OF AMOUNT CREDITED IN MONT HS OF FEBRUARY AND JANUARY, 2006, TAX DEDUCTED FROM WHICH WAS DEPOSITE D TO THE CREDIT OF GOVERNMENT IN APRIL/AUGUST 2006. APPELLANT HAS RELI ED UPON DECISION OF ITAT, AHMEDABAD IN THE CASE OF KANUBHAI RAMJIBHAI MAKWANA (2011) 44 SOT 264 (AHD) THAT PROVISIONS OF SECTION 40(A)(IA) AS AMEND ED BY FINANCE ACT, 2010 W.E.F. 1.4.2010 ARE TO BE TREATED AS HAVING RETROSP ECTIVE APPLICATION WITH EFFECT FROM 1ST APRIL, 200-5. HOWEVER, ITATS MUMBAI SPECI AL BENCH IN THE CASE OF BHARATI SHIPYARD LTD. V DCIT IN ORDER DATED 12.9.2011 (ITATONLINE.ORG) HAS OVERRULED DECISION IN THE CASE OF KANUBAHAI MAKWANA , 135 TTJ (AHD) 364 AS WELL AS BANSAL PARIVAHAN 43 SOT 619 (MUMBAI AND HAS HELD AS UNDER:- THE AMENDMENT TO S.40(A)(IA) BY THE FA 2010 WAS MA DE RETROSPECTIVELY APPLICABLE ONLY FROM AY 2010-11 AND NOT EARLIER. IT IS NOWHERE STATED THAT THE AMENDMENT IS CURATIVE OR DE CLARATORY IN NATURE NOR IS SUCH AN INTENTION DISCERNIBLE. ORDINARILY, A SUBSTANTIVE PROVISION IS PROSPECTIVE IN OPERATION AND COURTS CANNOT GIVE IT RETROSPECTIVE EFFECT EXCEPT IN LIMITED CIRCUMSTAN CES WHERE, SAY, THE AMENDMENT MAKES EXPLICIT WHAT WAS EARLIER IMPLICIT OR WHERE THE AMENDMENT WAS TO REMOVE UNINTENDED CONSEQUENCES IN THE EXISTING ITA NO.2869/AHD/2011 A.Y. 2005-06 M/S ALPHA PROJECTS SOCIETY P. LTD. V. DCIT CIR-1(1) BR D PAGE 4 PROVISION AND TO MAKE IT WORKABLE. A PROVISION GIVING RELIEF CANNOT BE REGARDED AS RETROSPECTIVE ONLY BECAUSE THE ORIGI NAL PROVISION CAUSED HARDSHIP TO THE ASSESSEE. S.40(A)(IA) CAUSED INTENDED DIFFICULTY WITH THE OBJECT OF DISCOURAGING NON-COM PLIANCE WITH THE TDS PROVISIONS. A PARTIAL RELAXATION IN ITS RIGOR, INSE RTED WITH PROSPECTIVE EFFECT, CANNOT BE TREATED AS RETROSPECTIVE. IN VIEW OF THIS, DISALLOWANCE OF RS.3,69,568/- U/S. 40(A)(IA) IN RESPECT OF PAYMENTS IN MONTHS OF JANUARY & FEBRUARY, 2006, TAX DEDUCTED AT SOURCE FROM WHICH WAS NOT DEPOSITED TO THE CREDIT OF GOVER NMENT BEFORE 31.3.2006 IS CONFIRMED. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIALS AVAILABLE ON RECORD AND ORDERS PASSED BY THE AUTHORITIES BELOW. THE ISS UE INVOLVED IN THE PRESENT APPEAL HAS NOW BEEN DECIDED BY THE HONBLE CALCUTTA HIGH C OURT IN THE CASE OF CIT V. VIRGIN CREATORS IN GA NO.3200/2011 DATED 23-11-2011 AGAINST THE REVENUE. HOWEVER, IT IS NOTEWORTHY THAT THE SPECIAL BENCH OF ITAT MUMBAI IN THE CASE OF BHARATI SHIPYARD LTD. V. DCIT IN ITA NO.2404/MUM/2009 IN ORDER DATED 12-09-2011 HAS TAKEN A VIEW THAT THE AMENDMENT IS PROSPECTIVE IN NATURE AND WOULD APPLY ACCORDINGLY. RESPECTFULLY FOLLOWING THE DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF VIRGIN CREATORS (SUPRA) THE ORDER OF LD. CIT(A) IS NOT SUS TAINABLE. HENCE, THIS GROUND OF ASSESSEES APPEAL IS ALLOWED. THE ASSESSI NG OFFICER IS DIRECTED TO DELETE THE DISALLOWANCE OF RS.3,69,568/- AS MADE U/S. 40(A )(IA) OF THE ACT. 8. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 23/03 /2012 SD/- SD/- (A.K.GARODIA) (K UL BHARAT) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, *DKP /TRUE COPY/ - 23/03/2012 '() * +, +, +, +, --. --. --. --. /. /. /. /. / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. )-1 + +2 / CONCERNED CIT 4. + +2- / CIT (A) 5. .56 ---1, + -1 , '() / DR, ITAT, AHMEDABAD 6. 69: ;< / GUARD FILE. BY ORDER/ +, , =/ ' > + -1 , '() *