ORACLE FINANCIAL SERVICES SOFTWARE LTD, MUMBAI V. ITO (TDS) 2(1), MUMBAI

ITA 2929/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3696 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 29-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRADEEP KUMAR SINGH
• Assessee Lawyers: PARAS SAVLA HARSH KAPADIA
• Keywords: Additional evidence; Non-deduction of tax
• Section: 133A; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH C ,MUMBAI BEFORE SHRI R.C.SHARMA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.2929/MUM/2014 (ASSESSMENT YEAR : 2007-08) ORACLE FINANCIAL SERVICES SOFTWARE LTD., ORACLE PARK, OFF WESTERN EXPRESS HIGHWAY, GOREGAON (E), MUMBAI-400057. PAN: AAACC1448B VS. ITO (TDS)-2(1), MUMBAI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI PARAS SAVLA, HARSH KAPADIA (AR) REVENUE BY : SHRI PRADEEP KUMAR SINGH (DR) DATE OF HEARING : 08.08.2016 DATE OF PRONOUNCEMENT : 12.08.2016 O R D E R PER PAW AN SINGH, JM: 1. THE PRESENT APPEAL IS FILED BY THE ASSESSEE AGAINS T THE ORDER OF CIT(A)-13, MUMBAI, DATED 24.02.2014 FOR ASSESSMENT YEAR (AY) - 2007-08 ON THE FOLLOWING GROUNDS OF APPEAL:- 1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME-TAX APPEALS' ('CIT(A)') - 13 , MUMBAI HAS ERRED IN HOLDING THE APPELLANT TO BE AN ASSESSEE IN DEFAULT' UNDER SECTION 201(1) OF THE ACT DUE TO NON-DEDUCTION OF TAXES AT SOURCE ON THE EXCE SS YEAR END PROVISION FOR EXPENSES AMOUNTING TO RS. 65,219,460, WHICH WAS REV ERSED DURING THE NEXT YEAR. 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CITCA) HAS ERRED IN HOLDING THAT THE LIABILITY IN R ESPECT TO PROVISIONS FOR EXPENSES WAS VERY MUCH ASCERTAINED AND CRYSTALLIZED THOUGH NOT ACCURATE AND HENCE, THE APPELLANT IS LIABLE TO DEDUCT TAXES UNDE R SECTION 201 OF THE ACT. 2 ITA NO. 2929/M/2014- ORACLE FINANCIAL SERVICES LTD. 3 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN HOLDING THE APPELLANT TO BE AN 'ASSESSEE IN DEFAULT' UNDER SECTION 201(1) OF THE ACT WITHOUT APPRECIATING THE FACT THAT AMOUNTS PROVIDED FOR WERE MERE ESTIMATES AND THE RESPECTIVE PARTY ACCOUN TS WERE NOT CREDITED AND HENCE, THERE DID NOT EXIST ANY LIABILITY TO DEDUCT TAXES THEREON. 4 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN NOT APPRECIATING THAT THE AFORESAID AMOUNT OF PROVISION FOR EXPENSES WAS DISALLOWED UNDER SECTION 40(A) OF THE ACT AND HENCE , THERE COULD BE NO LIABILITY UNDER SECTION 201 OF THE ACT 5 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN HOLDING THE APPELLANT TO BE AN 'ASSESSEE I N DEFAULT' UNDER SECTION 201(1) OF THE ACT WITHOUT APPRECIATING THE FACT THAT THE A FORESAID EXCESS PROVISION WAS NEVER PAYABLE TO THE PARTIES, AND HENCE, PRINCIPAL LIABILITY OF PAYING TAXES DID NOT EXIST AT ALL. 6 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN LEVYING CONSEQUENTIAL INTEREST UNDER SECTI ON 201(1A) OF THE ACT. ALL THE ABOVE GROUNDS OF APPEAL ARE WITHOUT PREJUDI CE TO ONE ANOTHER . 2. THE BRIEF FACTS OF THE CASE ARE THAT A SURVEY ACTIO N U/S 133A WAS CONDUCTED AT THE PREMISES OF ASSESSEE ON 19.02.2008. IN PURSUANCE OF THE SURVEY ACTION, NOTICE U/S 201(1) AND 201(1A) OF THE ACT WAS ISSUED TO THE ASS ESSEE FOR CALLING THE DETAILS ABOUT THE NON-DEDUCTION OF TDS ON PROVISIONS MADE D URING THE YEAR ENDED ON 31.03.2007. AFTER CONSIDERING THE DETAILS FURNISHED BY ASSESSEE, THE ASSESSING OFFICER (AO) OBSERVED THAT DURING THE YEAR UNDER CO NSIDERATION ASSESSEE MADE A PROVISION AMOUNTING TO RS. 19,09,24,360/- DETAILS O F WHICH WERE FURNISHED. THE ASSESSEE ALSO CONTENDED THAT OUT OF PROVISIONS MADE FOR DEDUCTION OF TDS, THE PROVISIONS AMOUNTING TO RS. 67,52,052/- HAS BEEN RE VERSED IN THE SUBSEQUENT YEAR AND ACCORDINGLY NO TDS HAS BEEN DEDUCTED AT SO URCE ON THE SAID AMOUNT, THE ASSESSEE WAS ASKED TO SHOW CAUSE AS TO WHY THE SAID AMOUNT SHOULD NOT BE CONSIDERED FOR DETERMINING THE LIABILITY ON TDS U/S 201(1) AND INTEREST CHARGEABLE U/S 201(1A) OF THE ACT. AFTER CONSIDERIN G THE CONTENTION OF ASSESSEE, THE AO HOLD THAT THE ASSESSEE NEITHER FURNISHED ANY DOCUMENTARY EVIDENCE IN SUPPORT OF ITS EXPLANATION TOWARD REVERSAL OF SUCH PROVISION NOR PROVIDED ANY PROOF OF PAYMENT OF TDS, THEREFORE, THE ASSESSEE WA S LIABLE TO DEDUCT TDS ON THE PROVISIONS MADE OF RS. 6,52,19,460/-, TDS ON SU CH AMOUNT WAS WORKED OUT TO RS. 31,05,199/- AND FURTHER INTEREST WAS CALCULA TED ON THE SAID AMOUNT FOR 48 MONTHS WHICH WAS CALCULATED AT RS. 16,30,230/-. AGG RIEVED BY THE ORDER OF AO, 3 ITA NO. 2929/M/2014- ORACLE FINANCIAL SERVICES LTD. THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) BUT WITHOUT ANY SUCCESS. FURTHER AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE FILED TH E PRESENT APPEAL BEFORE US. 3. WE HAVE HEARD THE LD AUTHORIZED REPRESENTATIVE (AR) OF THE ASSESSEE AND LD DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENUE AN D PERUSED THE MATERIAL AVAILABLE ON RECORD. AR FOR ASSESSEE ARGUED THAT DU RING THE COURSE OF PROCEEDINGS, THE AO CALLED THE DETAILS OF TAX DEDUC TED AND PAID IN RESPECT OF PROVISIONS OF EXPENSES MADE DURING THE YEAR. THE AS SESSEE MADE THE PROVISIONS AMOUNTING TO RS. 19,09,24,360/-. IN RESPECT OF PROV ISION OF EXPENSES, WE WHEREVER TAX WAS DEDUCTED. THE BALANCE AMOUNT OF RS . 6,52,19,460/- BEING EXCESS PROVISION WAS REVERSED IN THE NEXT YEAR. THE AO WITHOUT APPRECIATING THE FACT AND LAW IN RELATION TO THE PROVISIONS OF CHAPT ER XVII, PROCEEDED TO HOLD THAT ASSESSEE IN DEFAULT FOR NOT DEDUCTING TAX IN R ESPECT OF SUCH PROVISION FOR EXPENSES REVERSED. THE ASSESSEE SUBMITTED THAT SINC E THE AMOUNT WAS NOT PAYABLE AND CONSEQUENTIAL REVERSED IN THE SUBSEQUEN T YEAR AND THERE WAS NO LIABILITY TO DEDUCT THE TAX OVER THE SAME. AR OF TH E ASSESSEE FURTHER ARGUED THAT THE AO HAS ERRONEOUSLY TAKEN THE FIGURE OF RS. 6.52 CRORE INSTEAD OF RS. 5.84 CRORE. AR OF THE ASSESSEE FURTHER ARGUED THAT ASSES SEE ALSO FILING AN APPLICATION FOR ADMISSION OF ADDITIONAL EVIDENCE. IN SUPPORT OF APPLICATION FOR ADDITIONAL EVIDENCE, LD. AR OF THE ASSESSEE SUBMITTED THAT DOC UMENTS FILED BEFORE THE TRIBUNAL AT SERIAL NO.6 OF THE PB WAS NOT SUBMITTED BEFORE THE LOWER AUTHORITIES. AT SERIAL NO. 6 OF THE PB, THE ASSESSEE HAS FILED S AMPLE OF ACCOUNTING ENTRIES FOR PROVISIONS CREATED AND THE SUBSEQUENT REVERSAL ENTR IES PASSED IN THE BOOKS OF ACCOUNTS( PER PAGE NO. 59 TO 66 OF PB). AR OF THE A SSESSEE FURTHER ARGUED THAT ALL THESE EVIDENCE ARE ESSENTIAL AND NECESSARY FOR EFFE CTIVE DISPOSAL OF THE MATTER. DURING THE ASSESSMENT PROCEEDING, THE ASSESSEE WAS NOT ASKED TO PRODUCE SUCH SPECIFIC INFORMATION. AND THE AO HAS NOT CONDUCTED SUFFICIENT QUERIES BEFORE PASSING THE ORDER. LD. DR FOR REVENUE RELIED UPON T HE ORDER OF AUTHORITIES BELOW. 4. WE HAVE CONSIDERED THE RIVAL CONTENTIONS OF THE PAR TIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE HAS TAKEN A CATEG ORICAL STAND BEFORE AO AND 4 ITA NO. 2929/M/2014- ORACLE FINANCIAL SERVICES LTD. THE CIT(A) THAT ASSESSEE HAD MADE A PROVISION FOR E XPENSES AMOUNTING TO RS. 19,09,24,360/-. THE BALANCE AMOUNT OF RS.6,52,19,46 0/- BEING EXCESS PROVISION WAS REVERSED IN THE NEXT YEAR. WHILE FRAMING ORDER THE AO CONCLUDED THAT NO DOCUMENTS WERE FURNISHED BY ASSESSEE TO SUPPORT THE CONTENTION RAISED BEFORE HIM. THE ASSESSEE IN THE APPLICATION FOR ADMISSION OF ADDITIONAL EVIDENCE IS NOW SEEKING PERMISSION TO FILE THE ADDITIONAL EVIDE NCE CONSISTING OF ACCOUNTING ENTRIES FOR THE PROVISION CREATED AND SUBSEQUENT RE VERSAL IN THE NEXT FY IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. AS THESE DOCUMENT S WERE NOT FILED BEFORE THE AUTHORITIES BELOW, WE ADMIT THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE BEFORE US. SINCE, THIS EVIDENCE WERE NOT FILED BEFORE THE LOWER AUTHORITIES AND ARE BEING FILED FOR THE FIRST TIME BEFORE US, WE DEEM IT APPR OPRIATE TO RESTORE THE CASE TO THE FILE OF AO TO EXAMINE THE ACCOUNTING ENTRIES FOR TH E PROVISION CREATED BY THE ASSESSEE FOR THE RELEVANT AY AND REVERSE ENTRY IN T HE SUBSEQUENT YEAR AND PASS THE APPROPRIATE ORDER IN ACCORDANCE WITH LAW. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FO R STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON T HIS 12 TH AUGUST, 2016. SD/- SD/- (R.C.SHARMA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 12/08/2016 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/