Sh. Rakesh Nain Trivedi, Jalandhar V. The Commissioner of Income-tax, Ludhiana

ITA 300/ASR/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73322 (ITAT-AMRITSAR)
• Duration Of Justice: 10 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 20-03-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 06-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S S KALRA
• Section: 153A; 234B; 263; 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.300(ASR)/2013 ASSESSMENT YEAR:2008-09 PAN :ABNPT6769F SH. RAKESH NAIN TRIVEDI, VS. COMMISSIONER OF INCO ME TAX, PROP. M/S. TRIVEDI ENTERPRISES, (CENTRAL) LADOWALI ROAD, JALANDHAR. LUDHIANA. (APPELLANT) (RESPONDENT) APPELLANT BY:SH.S.S.KALRA, CA RESPONDENT BY:SH.TARSEM LAL, DR DATE OF HEARING: 20/03/2014 DATE OF PRONOUNCEMENT:26/03/2014 ORDER PER BENCH ; THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF THE CIT (CENTRAL) LUDHIANA DATED 12.03.2013 FOR THE ASSESSMENT YEAR 2 008-09. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT THE ORDER OF THE LD. CIT(CENTRAL) HOLDING ASSTT. ORDER BEING ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE IS AGAINST LAW AND FACTS OF THE CASE AND THEREFORE SEC TION 263 OF THE INCOME TAX ACT, HAS WRONGLY BEEN APPLIED. IT NO.300(ASR)/2013 2 2. THAT THERE WAS NO OPPORTUNITY GRANTED BY THE CIT (CENTRAL) TO THE ASSESSEE TO OFFER HIS COMMENTS ON THE REPORT OF THE AO AS THE NOTICE FOR APPEARANCE BEFORE THE CIT (CENTRAL) FOR 7/3/2013 WAS NEVER SERVED ON THE ASSESSEE AND THEREFORE THE ORDER PASSED BY THE CIT IS ILLEGAL, VOID AB INITIO ON THE ISSUE OF LACK OF OPPORTUNITY. 3. THAT NON DEDUCTION OF TAX ON COMMISSION PAYMENT OF RS.47,925/- DURING THE YEAR AND ITS CONSEQUENT DISA LLOWANCE U/S 40A(IA) WHICH HAS BEEN MADE AS ONE OF THE REASONS F OR TAKING RESORT TO SECTION 263 IS UNCALLED FOR AS THE TDS PR OVISIONS DID NOT APPLY TO THE ASSESSEE AND WHICH FACT WHEN BROUG HT TO THE NOTICE OF CIT(CENTRAL) WHILE REPLYING TO SHOW CAUS E NOTICE ISSUED BY HIM CHOSEN NOT TO WRITE EVEN A SINGLE LIN E IN REBUTTAL AND THEREFORE THIS REASON DOES NOT EXIST AT ALL. 4. THAT THE SECOND REASON FOR TAKING RESORT TO SECT ION 263 IS THE NON INITIATION OF PENALTY PROCEEDING U/S 271(1)(C) READ WITH EXPLANATION 5A WHICH TOO IS ILLEGAL IF THE FACTS AN D LEGAL POSITION IS TO BE SEEN, AS THE ASSESSEE HAD ARRIVED AT AN AGREEMENT WITH THE DEPTT. FOR NON LEVY OF PENALTY U /S 271(1)(C) WHICH HAS WRONGLY BEEN BRUSHED ASIDE. 5. THAT WITHOUT PREJUDICE TO GROUND NO.4 ABOVE, THE NON INITIATION OF PENALTY U/S 271(1)(C) IS NO GROUND WHERE THE PRO VISIONS OF SECTION 263 CAN BE APPLIED AS HELD BY THE JURISDICT IONAL HIGH COURT OF PUNJAB & HARYANA IN 335 ITR 364 IN THE CAS E OF CIT VS. SUBHASH KUMAR JAIN AND THE CIT HAS SIMPLY IGNOR ED THIS DECISION AND HAS GONE BY OLD DECISION OF ALLAHABAD HIGH COURT TO SUIT HIS OWN CONVENIENCE. 6. THAT THE THIRD REASON FOR NON INITIATION OF PEN ALTY U/S 271A & 271B TOO GETS COVERED BY THE DECISION OF JURISDICTI ONAL HIGH COURT IN 335 ITR 364 AND GETS A FURTHER SUPPORT FRO M THE FACT THAT PENALTY PROCEEDINGS U/S 271A & 271B ARE NOT RE LATED TO ASSTT. AND CAN BE INITIATED ANY TIME AND THEREFORE THE ASSESSMENT FRAMED IS NOT EFFECTED AND THEREFORE THERE IS NO SC OPE OF APPLYING THE PROVISIONS OF SECTION 263 OF THE ACT. IT NO.300(ASR)/2013 3 7. THAT THE DEPTT. IS KEEPING DIFFERENT STANDARDS FOR DIFFERENT ASSESSEES AS THE SAME CENTRAL CIRCLE AT THE SAME P OINT OF TIME ACCEPTS THE AGREEMENT OF SPREAD OVER IN THE CASE O F ANOTHER ASSESSEE AND PENALTY U/S 271(1)(C) NOT INITIATED A ND CONSEQUENTLY SECTION 263 IS NOT INVOKED AND AT THE SAME TIME THE SAME CIRCLE APPLIES A DIFFERENT YARDSTICK IN THE CASE OF ASSESS EE WHERE PROVISION OF SECTION 263 APPLIED DESPITE THE AGREEMENT WITH T HE DEPTT. 8. SUCH OTHER GROUNDS AS MAY BE URGED ON HEARING. 2. THE LD. COUNSEL FOR THE ASSESSEE, MR. S.S.KALRA, CA, DID NOT PRESS GROUND NO.1 AND THEREFORE, THE SAME IS DISMISSED AS NOT PRESSED. 3. GROUND NO.8 IS GENERAL IN NATURE AND THEREFORE, DOES NOT REQUIRE ADJUDICATION. 4. AS REGARDS GROUND NO.1, THE BRIEF FACTS OF THE CASE ARE THAT SEARCH & SEIZURE U/S 132 OF THE ACT WAS CARRIED OUT BY THE D IT(INV.) JALANDHAR ON 11.12.2008. DURING THE SEARCH, CERTAIN INCRIMINATIN G DOCUMENTS WERE FOUND AND SEIZED. NOTICE U/S 153A WAS ISSUED ON 20.05.200 9 IN RESPONSE TO WHICH ASSESSEE FILED HIS RETURN DECLARING INCOME OF RS.78 ,16,530/- ON 31.03.2009. THE ASSESSMENT WAS COMPLETE ACCEPTING THE RETURNED INCOME VIDE ORDER DATED 08.12.2010 U/S 153A OF THE I.T. ACT, 1961. ON PERUSAL OF RECORDS, IT WAS NOTICED THAT ASSESSMENT ORDER HAS BECOME ERRON EOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE ON ACCOUNT O F FOLLOWING ISSUES: (I) THE ASSESSEE HAS PAID COMMISSION OF RS.47,925/- . HOWEVER, NO TAX HAS BEEN DEDUCTED ON COMMISSION. HENCE, THE EXP ENSES OF RS.47,925/- REQUIRED TO BE DISALLOWED U/S 40(A)(IA) OF THE ACT IT NO.300(ASR)/2013 4 WHICH HAS NOT BEEN DONE. CONSEQUENTLY, INTEREST U/S 234B WOULD ALSO INCREASE. (II) PENALTY U/S 271(1)(C) READ WITH EXPLANATION 5A WAS NOT INITIATED. (III) PERUSAL OF PROFIT & LOSS ACCOUNTS REVEALS THAT THE RECEIPTS OF THE ASSESSEE FOR THE YEAR WERE MORE THAN RS.40 LACS. TH EREFORE, THE ASSESSEE WAS REQUIRED TO MAINTAIN BOOKS OF ACCOUNTS U/S 44AA OF THE ACT AND GET HIS ACCOUNTS AUDITED U/S 44AB OF THE ACT. AS THE ASSESSEE HAS FAILED TO COMPLY WITH THE PROVISIO NS OF SEC. 44AA & 44AB, PENALTY PROCEEDINGS U/S 271A & 271B SH OULD HAVE BEEN INITIATED AND IMPOSED. AS THE PENALTY U/S 271A AND 271B WERE NOT INITIATED DURING THE ASSESSMENT PROCE EDINGS THE ORDER PASSED BY THE A.O. IS ERRONEOUS AND PREJUDICI AL TO THE INTEREST OF THE REVENUE. ACCORDINGLY, A SHOW CAUSE NOTICE U/S 263(1) OF THE ACT WAS ISSUED TO THE ASSESSEE VIDE LETTER DATED 20.12.2012 IN RESPONSE T O WHICH AR OF THE ASSESSEE SH. S.S. KALRA SUBMITTED HIS REPLY DATED 0 9.01.2013. ON ASSESSEES SUBMISSIONS, A REPORT WAS CALLED FOR FROM THE A.O. WHICH WAS SUBMITTED BY THE AO VIDE HIS LETTER DATED 30.01.2013 FORWARDED B Y THE ADDL. CIT, RANGE CENTRAL, LUDHIANA VIDE OFFICE LETTER DATED 04.02.20 13. COPY OF THE ABOVE REPORT HAS BEEN SENT TO THE ASSESSEE FOR HIS REPLY. VIDE LETTER DATED 28.02.2013, ASSESSEE WAS ASKED TO SUBMIT HIS EXPLAN ATIONS ON THE REPORT OF THE A.O. FIXING THE CASE FOR HEARING ON 07.03.2013. HOWEVER, NEITHER ANYONE ATTENDED NOR ANY REPLY WAS RECEIVED. IN VIEW OF THE ABOVE, WRITTEN SUBMISSIONS MADE BY THE AR VIDE LETTER DATED 09.01. 2013, WHICH WERE CONSIDERED BY THE LD. CIT. IT NO.300(ASR)/2013 5 5. THE LD. COUNSEL FOR THE ASSESSEE, MR. S.S.KALRA, CA SUBMITTED OBJECTION TO THE INITIATION OF PROCEEDINGS U/S 263( 1) OF THE ACT AND THE LD. CIT AFTER CONSIDERING THE SAME IN PARA 4 TO 16 OF H IS ORDER HELD THAT THE ORDER OF THE ASSESSMENT PASSED BY THE A.O. IS ERRONEOUS A ND PREJUDICIAL TO THE INTEREST OF REVENUE AND ACCORDINGLY THE ORDER PASSE D BY THE A.O. WAS CANCELLED AND AO WAS DIRECTED TO REFRAME THE ORDER IN ACCORDANCE WITH THE PROVISIONS OF THE I.T. ACT. 6. THE LD. COUNSEL FOR THE ASSESSEE, MR. S.S.KALRA, CA, AT THE OUTSET ARGUED THAT PROVISIONS OF SECTION 194H ARE NOT APPL ICABLE. AS REGARDS THE APPLICABILITY OF SECTION 40(A)(IA) OF THE ACT IS CO NCERNED, SINCE THE TURNOVER FOR THE YEAR ENDING 31 ST MARCH, 2007 WAS RS.5,43,519/- ONLY WHICH WAS BELOW RS.40 LACS AND TDS PROVISIONS ARE APPLICABLE ONLY IF THE GROSS RECEIPTS EXCEEDED RS.40 LACS IN THE IMMEDIATELY PRE CEDING YEAR TO THE IMPUGNED YEAR. ACCORDINGLY, THERE IS NO APPLICABILI TY OF SECTION 40(A)(IA) OF THE ACT. HE ARGUED THAT THE LD. CIT IS MISCONCEIVE D OF THE LEGAL PROVISIONS IN THIS REGARD AND THEREFORE, THE PROVISIONS OF SEC TION 263(1) OF THE ACT CANNOT BE MADE APPLICABLE. 7. AS REGARDS THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT READ WITH EXPLANATION 5A, MR. S.S.KALRA, CA ARGUED AND INVIT ED OUR ATTENTION TO PB-5 BEING THE LETTER, WHICH IS STATEMENT U/S 132(4) OF THE ACT OF THE ASSESSEE, IN IT NO.300(ASR)/2013 6 WHICH THE ASSESSEE HAS VERY CATEGORICALLY MADE A SU RRENDER UNDER SECTION 132(4) AND WHERE IN THE SAID LETTER, IT HAS BEEN ST ATED THAT SURRENDER U/S 132(4) IS MADE IN ORDER TO BUY PEACE AND GAIN THE I MMUNITY FROM PENAL ACTION U/S 271(1)(C) OR 276 OF THE I.T.ACT. AS REGA RDS THE EXPLANATION TO SECTION 5A TO SECTION 271(1)(C) OF THE ACT, THE RET URN HAS BEEN FILED WITHIN DUE DATE AS PRESCRIBED UNDER THE ACT AND DUE DATE DOES NOT ONLY REFER TO THE PROVISIONS OF SECTION 139(1) BUT THE SAME INCLUDES THE RETURN FILED UNDER SECTION 139(4) OF THE ACT AND RETURN IN THE PRESENT CASE HAS BEEN FILED ON 31.03.2009 U/S 139(4) OF THE ACT, WHICH IS WITHIN DUE DATE PRESCRIBED UNDER THE ACT. HE RELIED UPON THE DECISION OF MUMBAI BENC H OF ITAT IN THE CASE OF ITO VS. GOPE M. ROCHLANI REPORTED IN [2013] 158 TTJ (MUMBAI) 120 IN THIS REGARD. HE ALSO RELIED UPON THE DECISION OF TH E HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. JAGTAR SI NGH CHAWLA (2013) 215 TAXMAN 154, WHERE IT HAS BEEN HELD THAT SUB-SECTION 4 OF SECTION 139 OF THE ACT IS, IN FACT, A PROVISO TO SECTION 139(1) OF THE ACT. SECTION 139(4) PROVIDES FOR EXTENSION IN PERIOD OF DUE DATE IN CER TAIN CIRCUMSTANCES. THE SAID DECISION IS AVAILABLE AT PB 14 TO 18. THEREFOR E, PENAL ACTION U/S 271(1)(C) OF THE ACT READ WITH EXPLANATION 5A IS NO T APPLICABLE AND THE LD. CIT(A) IS MISCONCEIVED WITH THE SAID PROVISION. IT NO.300(ASR)/2013 7 8. AS REGARDS THE APPLICABILITY OF SECTION 40(A)(IA ) AND SECTION 44AB, WHERE THE ASSESSEE WAS REQUIRED TO MAINTAIN BOOKS OF ACCOUNT AND GETS ITS ACCOUNTS AUDITED RESPECTIVELY, THESE PENALTY PROCEE DINGS ARE INDEPENDENT TO ASSESSMENT PROCEEDINGS AND CAN BE LEVIED INDEPENDE NT OF ASSESSMENT AND THESE HAVE NOTHING TO DO WITH THE ASSESSMENT PROCEE DINGS. ON THIS ACCOUNT, THE LD. CIT(A) HAS MISCONCEIVED ALL THE PROVISIONS OF LAW. ACCORDINGLY, THE LD. COUNSEL FOR THE ASSESSEE PRAYED TO CANCEL THE ORDER OF THE LD. CIT (CENTRAL), LUDHIANA SINCE THE ORDER PASSED BY THE AO IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE. 9. THE LD. DR, MR. TARSEM LAL, ON THE OTHER HAND, RELIED UPON THE ORDER OF CIT (CENTRAL) LUDHIANA. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. AS REGARDS THE APPLICABILITY OF PROVISIONS OF SECTI ON 40(A)(IA) AND 194H OF THE ACT, WE ARE CONVINCED WITH THE ARGUMENTS MADE B Y THE LD. COUNSEL BEFORE THE LD. CIT (CENTRAL), LUDHIANA AND BEFORE U S THAT THE TDS PROVISIONS UNDER SECTION 194H ARE APPLICABLE IF TH E GROSS RECEIPTS EXCEEDS RS.40 LACS IN THE IMMEDIATELY PRECEDING YEAR WHEREA S IN THE PRESENT CASE, THE ASSESSEES TURNOVER IS JUST RS.5.43 LACS AND TH EREFORE, TDS PROVISIONS U/S 194H OF THE ACT CANNOT BE MADE APPLICABLE IN THE IM PUGNED YEAR. ACCORDINGLY, THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT ARE NOT IT NO.300(ASR)/2013 8 APPLICABLE. THEREFORE, THE LD. CIT (CENTRAL ) LUDHI ANA IS NOT JUSTIFIED IN CONCLUDING THAT THE ORDER OF THE AO IS ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF THE REVENUE AND THE SAME IS CANCELLED TO THAT EX TENT. 10.1. AS REGARDS THE SURRENDER MADE, THERE WAS SURR ENDER AND STATEMENT U/S 132(4) OF THE ASSESSEE IS AVAILABLE AT PB-5 WHERE CATEGORICALLY IT WAS STATED THAT THE SURRENDER WAS MADE IN ORDER TO BUY PEACE A ND TO GET IMMUNITY FROM PENAL ACTION U/S 271(1)(C) OR 276 OF THE ACT. THERE FORE, PENAL PROVISIONS CANNOT BE MADE APPLICABLE IN THE FACTS AND CIRCUMST ANCES OF THE PRESENT CASE. 10.2. AS REGARDS FILING OF THE RETURN WITHIN DUE DA TE AS PRESCRIBED UNDER THE ACT, WE ARE CONVINCED WITH THE ARGUMENTS MADE BY TH E LD. COUNSEL FOR THE ASSESSEE, MR. S.S. KALRA, CA THAT DUE DATE INCLUDES RETURN FILED UNDER SECTION 139(4) OF THE ACT IN VIEW OF THE DECISIONS REFERRED TO BY THE LD. COUNSEL FOR THE ASSESSEE. THEREFORE, ON THIS ACCOUNT, AS WELL, THE LD. CIT(CENTRAL), LUDHIANA IS NOT JUSTIFIED IN CONCLUDING THE ORDER O F THE ASSESSMENT AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE. ACCORDINGLY, THE ORDER OF THE LD. CIT(CENTRAL) LUDHIANA IS CANCELLED ON THIS ACCOUNT, AS WELL. 10.3. AS REGARDS THE LEVY OF PENALTY UNDER SECTION 44AA & 44AB OF THE ACT, THEY ARE INDEPENDENT OF ASSESSMENT PROCEEDINGS , WHICH COULD BE LEVIED INDEPENDENT OF THE ASSESSMENT. THEREFORE, THE VIEWS OF THE LD. CIT(CENTRAL) IT NO.300(ASR)/2013 9 LUDHIANA TO HOLD THAT ASSESSMENT WAS MADE ERRONE OUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE, CANNOT BE UPHELD AND T HE SAME IS REVERSED. 10.4. AS REGARDS THE ARGUMENTS MADE BY THE LD. CIT( CENTRAL) LUDHIANA, THAT THE AO HAS NOT MADE APPLICATION OF MIND WITH REGARD TO LEVY OF PENALTY, CANNOT BE HELD GOOD IN VIEW OF OUR DECISIO N HEREINABOVE. ACCORDINGLY, ON ALL THE THREE COUNTS, THE ORDER OF THE LD. CIT(CENTRAL), LUDHIANA IS DIRECTED TO BE CANCELLED AND ALL THE G ROUNDS NO. 1, 3, 4,5,6 & 7 OF THE ASSESSEE ARE ALLOWED. 11 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA NO.300(ASR)/2013 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26TH MARCH, 2014. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 26TH MARCH, 2014 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:SH. RAKESH NAIN TRIVEDI, JALANDHAR. 2. THE CIT(CENTRAL), LUDHIANA. 3. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR