Nayanaben Vasudev Desai, Nadiad V. The Dy.CIT.,Kheda Circle, Nadiad

ITA 3082/AHD/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67737 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 18-09-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 07-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P BATHEJA
• Assessee Lawyers: S N DIVATIA
• Keywords: Principle of natural justice; Reassessment proceedings
• Section: 143(3); 194C; 147; 148

Judgement Text

ITA NO 3082 /AHD/2011 . A.Y. 2005- 06 1 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD (BEFORE SHRI D.K. TYAGI & SHRI ANIL CHATURVEDI, A. M.) I.T. A. NO. 3082 /AHD/2011 (ASSESSMENT YEAR: 2005-06) NAYANABEN VASUDEV DESAI PROP. SAPAN ENTERPRISES STATION ROAD, NR. SARDAR CIRCLE, NADIAD (APPELLANT) VS. THE DCIT, KHEDA CIRCLE, NADIAD (RESPONDENT) PAN: ABTPD 2485 L APPELLANT BY : SHRI S.N. DIVATIA, A.R. RESPONDENT BY : SHRI O.P. BATHEJA, D.R. ( )/ ORDER DATE OF HEARING : 19-09-2013 DATE OF PRONOUNCEMENT : 27 -09-2013 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF CIT(A)-IV, BARODA DATED 12.10.2011 FOR A.Y. 2005-06. 2. THE FACTS AS CULLED OUT FROM THE ORDER OF LOWER AUT HORITIES ARE AS UNDER: 3. ASSESSEE IS AN INDIVIDUAL AND PROPRIETOR OF SOPAN E NTERPRISE AND IS ENGAGED IN THE BUSINESS AS TRANSPORT CONTRACTOR. S HE FILED HER RETURN OF INCOME FOR A.Y. 05-06 ON 29.10.2005 DECLARING TOTAL INCOME OF RS. ITA NO 3082 /AHD/2011 . A.Y. 2005- 06 2 1,14,360/-. INITIALLY THE ASSESSMENT WAS FRAMED UN DER SECTION 143(3) VIDE ORDER DATED 28.09.2007 AND THE TOTAL INCOME WA S DETERMINED AT RS. 1,34,150/-. THEREAFTER THE CASE WAS RE-OPENED BY IS SUING NOTICE DATED 17.09.2009 UNDER SECTION 148 OF THE ACT AND THE ASS ESSMENT WAS FRAMED UNDER SECTION 143 (3) READ WITH SECTION 147 AND THE TOTAL INCOME WAS DETERMINED AT RS. 42,78,220/-. AGGRIEVED BY THE OR DER OF ASSESSING OFFICER, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) VIDE ORDER DATED 12.10.2011 DISMISSED THE APPEAL OF THE ASSESS EE. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE IS NOW IN APPEAL BEFO RE US AND HAS RAISED THE FOLLOWING GROUND:- 1.1 THE ORDER PASSED U/S. 250 ON 12.10.2011 FOR A.Y. 20 05-06 BY CIT(A)-IV, BARODA UPHOLDING THE DISALLOWANCE OF RS. 41,44,071/- U/S. 40(A)(IA) MADE BY ASSESSING OFFICER IS WHOLLY ILLEGAL, UNLAWFUL AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 1.2 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND OR O N FACTS IN NOT CONSIDERING FULLY AND PROPERLY THE SUBMISSIONS MADE AND EVIDENC E PRODUCED BY THE APPELLANT WITH REGARD TO THE IMPUGNED ADDITIONS. 2.1 THE LD.CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND ON FA CTS IN CONFIRMING THAT THE APPELLANT WAS LIABLE TO MAKE TDS U/S. 194C IN RESPE CT OF THE AMOUNT OF RS.41,44,071 CREDITED TO THE ACCOUNT OF M/S. V. DAS TRANSPORT. 2.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD.CIT(A) OUGHT NOT TO HAVE UPHELD THAT THE APPELLANT WAS LIA BLE TO MAKE TDS U/S. 194C IN RESPECT OF AMOUNT OF RS.41,44,071 CREDITED TO THE A CCOUNT OF M/S. V. DAS TRANSPORT. 2.3 THE LD.CIT(A) HAS ERRED IN UPHOLDING THAT THE ACCOU NTS OF THE APPELLANT WERE SUBJECT TO AUDIT UNDER CLAUSE(A) OR CLAUSE (B) OF S ECTION 44 AB. THE APPELLANT HAD CATEGORICALLY POINTED OUT TO BOTH THE LOWER AUT HORITIES THAT TAX AUDIT WAS MADE U/S 44AE(7) SO THAT SHE WAS NOT COVERED UNDER SECOND PROVISO TO SECTION 194C. 4. SINCE ALL THE GROUNDS ARE INTERCONNECTED AND ARE WI TH RESPECT TO DISALLOWANCE U/S 40(A)(IA), ALL ARE CONSIDERED TOGE THER. 5. DURING THE COURSE OF REASSESSMENT PROCEEDINGS, ASSE SSING OFFICER NOTICED THAT ASSESSEE HAD DEBITED TRUCK RENT EXPENS ES OF RS. ITA NO 3082 /AHD/2011 . A.Y. 2005- 06 3 41,44,071/- WHICH WAS CREDITED TO THE ACCOUNT OF M/ S V. DAS TRANSPORT. HE ALSO NOTICED THAT ASSESSEE HAD NOT DEDUCTED TDS ON THE TRUCK RENT EXPENSES. IN THE OPINION OF ASSESSING OFFICER IN VIEW OF THE PROVISIONS OF SECTION 40(A)(IA) THE EXPENSES WERE LIABLE FOR D ISALLOWANCE SINCE THE ASSESSEE HAS NOT DEDUCTED TDS. HE ACCORDINGLY DISA LLOWED THE ENTIRE EXPENSES OF RS. 41,44,071/- UNDER SECTION 40(A)(IA) AND ADDED TO THE INCOME. AGGRIEVED BY THE ORDER OF ASSESSING OFFICER , ASSESSEE CARRIED THE MATTER BEFORE CIT(A), CIT(A) UPHELD THE ORDER O F ASSESSING OFFICER BY HOLDING AS UNDER:- 7 THUS AS PER ABOVE SECTION THE PAYMENTS OF RS. 41,44 ,071/- AS MADE ON ACCOUNT OF HIRING CHARGES ARE LIABLE TO BE DISALLOWED IN CASE IF TAX AT SOURCE ON SUCH PAYMENT IT NOT MADE AS PER SECTION 194C OF THE ACT AND IT WILL NOT MAKE ANY DIFFERENCE WHETHER THE PAYEE (I.E THE RECIPIENT OF THE AMOUNTS) HAS PA ID DUE TAXES IN ITS CASE OR NOT. THE APPELLANT IS STATUTORILY LIABLE TO DEDUCT THE TAX A T SOURCE ON ABOVE PAYMENTS IN TERMS OF PROVISIONS OF SECTION 194C OF THE ACT. SO THAT D ISALLOWANCE OF EXPENSES COULD NOT BE MADE U/S 40(A)(IA) OF THE ACT. HOWEVER, THE APP ELLANT HAS FAILED TO DEDUCT THE TAX AT SOURCE ON ABOVE PAYMENTS OF RS. 41,44,071/- AND THEREFORE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT ARE CLEARLY ATTRACTED IN HER C ASE. 8. IN VIEW OF ABOVE FACTS AND CIRCUMSTANCES OF TH E CASE AND CLEAR POSITION OF LAW, THE CASE LAWS CITED BY THE APPELLANT IS NOT APPLICABLE TO HER CASE AND THE A.O. HAS CORRECTLY DISALLOWED ABOVE PAYMENTS OF HIRING CHARG ES OF RS. 41,44,071/- U/S 40(A)(IA) OF THE ACT TO ITS TOTAL INCOME AND THEREF ORE SUCH DISALLOWANCE IS CONFIRMED. 6. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE IS N OW IN APPEAL BEFORE US. 7. BEFORE US, THE LD. A.R. SUBMITTED THAT THE ASSESSEE IS AN INDIVIDUAL AND HER GROSS RECEIPTS/SALES FROM THE BUSINESS DID NOT EXCEED THE MONETARY LIMITS SPECIFIED IN SECTION 44AB IN FINANCIAL YEAR 03-04 AND THEREFORE AS PER PROVISO TO SECTION 194C(K), THE ASSESSEE WAS NO T LIABLE TO DEDUCT TDS UNDER SECTION 194C OF THE ACT AND THEREFORE NO DISALLOWANCE UNDER ITA NO 3082 /AHD/2011 . A.Y. 2005- 06 4 SECTION 40(A)(IA) IN THE HANDS OF THE ASSESSEE WAS CALLED FOR. HE ALSO PLACED ON RECORD THE PROFIT AND LOSS ACCOUNT FOR A .Y. 03-04 AT PAGE 77 OF THE PAPER BOOK AND FROM THE AFORESAID PROFIT AND LOSS ACCOUNT, HE POINTED TO THE FACT THAT THE TURNOVER/GROSS RECEIPT S WAS ONLY TO THE EXTENT OF RS. 19,27,724/- AND THUS WAS LESS THAN THE LIMIT PRESCRIBED U/S 194C(K) AND THEREFORE NO DISALLOWANCE U/S 40(A)(IA) WAS CALLED FOR. THE LEARNED D.R. ON THE OTHER HAND SUPPORTED THE ORDER OF ASSESSING OFFICER AND CIT(A). 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE DISALLOWANCE UNDER SECTION 40(A)(I A) WAS MADE BY THE A.O. FOR THE REASON THAT THE ASSESSEE HAD NOT DEDUC TED TDS U/S 194C ON TRUCK RENT EXPENSES. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE IS AN INDIVIDUAL AND THE TURNOVER/GROSS RECEIPTS FOR FINA NCIAL YEAR 03-04 WAS RS. 19,27,724/- AND THUS WAS LESS THAN THE LIMIT PR ESCRIBED UNDER SECTION 44AB OF THE ACT. AS PER PROVISIONS OF SECTION 194C (K) APPLICABLE IN THE YEAR UNDER APPEAL, AN INDIVIDUAL WOULD BE LIABLE TO DEDUCT TDS ONLY IF THE TURNOVER OR GROSS RECEIPTS FROM BUSINESS OF PRO FESSION EXCEEDS THE MONETARY LIMIT SPECIFIED IN SECTION 44AB DURING THE FINANCIAL YEAR IMMEDIATELY PRECEDING THE FINANCIAL YEAR IN WHICH S UCH SUM IS CREDITED OR PAID TO THE ACCOUNT OF THE CONTRACTOR. FOR READ Y REFERENCE THE RELEVANT CLAUSE OF 194C IS REPRODUCED AND IT READS AS UNDER: 194C PAYMENTS TO CONTRACTORS AND SUB-CONTRACTORS - (1) ANY PERSONS RESPONSIBLE FOR PAYING ANY SUM TO ANY RESIDENT (HEREINAFTER IN THIS SECTION REFERRED TO AS THE CONTRACTOR) FOR CARRYING OUT ANY WORK (INCLUDING SU PPLY OF LABOUR FOR CARRYING OUT ANY WORKS) IN PURSUANCE OF A CONTRACT BETWEEN THE C ONTRACTOR AND- (A). (B) (C). (D). ITA NO 3082 /AHD/2011 . A.Y. 2005- 06 5 (E) (F).. (G). (H) (I). (J) (K) ANY INDIVIDUAL OR A HINDU UNDIVIDED FAMILY OR A N ASSOCIATION OF PERSONS OR A BODY OF INDIVIDUALS, WHETHER INCORPORATED OR NOT, OTHER THAN THOSE FALLING UNDER ANY OF THE PRECEDING CLAUSES, WHOSE TOTAL SALES, GROSS RECEIPT S OR TURNOVER FROM THE BUSINESS OR PROFESSION CARRIED ON BY HIM EXCEED THE MONETARY LI MITS SPECIFIED UNDER CLAUSE(A) OR CLAUSE (B) OF SECTION 44AB DURING THE FINANCIAL YEA R IMMEDIATELY PRECEDING THE FINANCIAL YEAR IN WHICH SUCH SUM IS CREDITED OR PAI D TO THE ACCOUNT OF THE CONTRACTOR, SHALL, AT THE TIME OF CREDIT OF SUCH SUM TO THE ACC OUNT OF THE CONTRACTOR OR AT THE TIME OF PAYMENT THEREOF IN CASH OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE, WHICHEVER IS EARLIER, DEDUCT AN AMOUNT EQUAL TO- (I) ONE PER CENT IN CASE OF ADVERTISING. (II) IN ANY OTHER CASE TWO PERCENT, OF SUCH SUM AS INCOME-TAX ON INCOME COMPRISED THERE IN: 9. IN THE PRESENT CASE, SEEN IN THE LIGHT OF CLAUSE (K ) OF SECTION 194C, IT IS A FACT THAT ASSESSEE IS AN INDIVIDUAL, THE FINANCIAL YEAR PRECEDING THE FINANCIAL YEAR FOR WHICH THE SALES, GROSS RECEIPTS OR TURNOVER IS TO BE SEEN IS F.Y. 03-04, AND ADMITTEDLY THE TURNOVER, SALES O R GROSS RECEIPTS IN F.Y. 03-04 IS RS. 19.27 LACS WHICH IS LESS THAN THE MONE TARY LIMIT OF RS. 40 LACS PRESCRIBED IN CLAUSE (A) OF SECTION 44AB. SINC E THE TURNOVER OF THE ASSESSEE FOR FINANCIAL YEAR 03-04, WHICH IS THE FIN ANCIAL YEAR IMMEDIATELY PRECEDING THE FINANCIAL YEAR 04-05, IS LESS THAN THE LIMITS PRESCRIBED U/S 44AB, THE ASSESSEE IS NOT LIABLE TO DEDUCT TDS IN THE YEAR UNDER APPEAL AND SINCE THE ASSESSEE WAS NOT LIABLE TO DEDUCT TDS U/S 194C, NO DISALLOWANCE U/S 40(A)(IA) COULD THEREFORE BE MADE IN THE PRESENT CASE. 10. BEFORE US, THE LD. D.R. COULD NOT CONTROVERT THE SU BMISSIONS MADE BY THE ASSESSEE. IN VIEW OF THE AFORESAID FACTS, WE ARE OF THE VIEW THAT ASSESSEE ITA NO 3082 /AHD/2011 . A.Y. 2005- 06 6 WAS NOT REQUIRED TO DEDUCT TDS IN THE YEAR UNDER AP PEAL AND THEREFORE THE ADDITION MADE BY THE ASSESSING OFFICER UNDER SE CTION 40(A)(IA) IS UNCALLED FOR. WE THEREFORE DIRECT THE DELETION OF A DDITION MADE BY THE ASSESSING OFFICER AND THUS THIS GROUND OF THE ASSES SEE IS ALLOWED. 11. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN OPEN COURT ON 27- 09 - 2013. SD/- SD/- (D.K. TYAGI) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,A HMEDABAD