Amiya Sachindra Dey, SILVASSA V. The Income tax Officer, Silvassa Ward, Vapi

ITA 3154/AHD/2016

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 2327 (ITAT-SURAT)
• Duration Of Justice: 1 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 30-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J K CHANDANANI
• Keywords: Principle of natural justice; Additional evidence; TDS
• Section: 40(a)(ia)

Judgement Text

SHRI AMIYA SACHINDRA DEY IN ITA NO.3154 OF 2016 PAGE 1 OF 5 , , INCOM TAX APPELLATE TRIBUNALSURAT-BENCH-SURAT . . , . . , BEFORE SHRI C.M.GARG, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER ITA NO.3154/AHD/2016: ASSESSMENT YEAR:2007-08 SHRI AMIYA SACHINDRA DEY, C/O. BALAJI INDUSTRIES, S.NO.910/3, DOKMARDI, AMLI, SILVASSA. PAN: AGRPD 4653K V S . INCOME TAX OFFICER, SILVASSA WARD, SILVASSA. APPELLANT /RESPONDENT /ASSESSEE BY SHRI RYAN SALDA NHA, CA /RESPONDENT BY SHRI J.K.CHANDANANI, SR.DR / DATE OF HEARING: 13 .0 3 .2018 /PRONOUNCEMENT DATE 18 .04 .2018 ORDER PER O. P. MEENA, AM 1 THIS APPEAL FILED BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-VALSAD, DATED 19.10.2016 FOR THE ASSESSMENT YEAR 2007-08 U/S.144 R.W.S 254 OF THE INCOME TAX ACT 1961(IN SHORT THE ACT). 2 THIS GROUND OF APPEAL RELATES TO UPHOLDING THE DISALLOWANCE OF RS.71,39,011/- U/S.40(A)(IA) OF THE ACT FOR FAILURE TO DEDUCT TDS ON LABOUR CHARGES AND FAILED TO ADMIT ADDITIONAL EVIDENCE UNDER RULE 46A IN THE FORM OF AFFIDAVITS OF THE SUB-CONTRACTORS ADMITTING THAT THE LABOUR CHARGES WERE DULY REFLECTED IN THEIR BANK STATEMENT AND THAT THEY HAD NOT FILED RETURN OF INCOME SINCE IT WAS BELOW TAXABLE LIMIT. SHRI AMIYA SACHINDRA DEY IN ITA NO.3154 OF 2016 PAGE 2 OF 5 3 BRIEF FACTS ARE THAT THE ASSESSEE IS A LABOUR CONTRACTOR AND HAS GIVEN SUB- CONTRACT TO 8 NO. OF PARTIES TO WHOM PAYMENT AMOUNTING TO RS.71,39,011/- HAS BEEN MADE WITHOUT DEDUCTING TDS THEREON. THEREFORE, THE AO DISALLOWED THE SAME BY INVOKING THE SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT. IN APPEAL, THE CIT(A) HAS ALSO CONFIRMED THE FINDINGS OF THE AO BY PLACING RELIANCE ON THE RATIO LAID DOWN IN THE CASE OF ITO VS. SHRI PARASMAL MANEKCHAND JAIN IN ITA NO.2690/AHD/2012 OF ITAT, AHMEDABAD DATED 22.11.2013. THE CIT(A) OBSERVED THAT INSPITE OF NO. OF OPPORTUNITIES GIVEN TO FILE EXPLANATION, THE ASSESSEE FAILED TO FILE THE SAME DURING THE ASSESSMENT PROCEEDINGS. THE APPELLANT HAS ALSO NOT FURNISHED DETAILS DURING THE APPELLATE PROCEEDINGS, THOUGH APPELLATE PROCEEDINGS WERE POSTED ON VARIOUS DATES. THE CIT(A) FURTHER OBSERVED THAT AFFIDAVITS FROM CONTRACTOR FILED NOW ARE NOT ADMISSIBLE AS THERE WAS NO REASON BY WHICH THE APPELLANT WAS PREVENTED TO FILE SUCH AFFIDAVITS BEFORE THE AO. HENCE, ADDITIONAL EVIDENCE FILED WERE NOT ADMITTED UNDER RULE 46A OF INCOME-TAX RULES, 1962. 4 HOWEVER, THE CIT(A) OBSERVED THAT THE PRESENT PROCEEDINGS ARE SET ASIDE ASSESSMENT PROCEEDINGS WITH CLEAR DIRECTION TO RE-ADJUDICATE THE ISSUE OF DISALLOWANCE OF EXPENDITURE U/S.40A(IA) OF THE ACT NOT DEDUCTED FOR TDS FROM THE PAYMENTS MADE TO THE SUB-CONTRACTORS WITH THE DIRECTION TO CONSIDER THE AMENDMENT MADE BY THE FINANCE ACT 2012 THAT IF THE PAYEE PAID TAX ON THE AMOUNT PAID BY THE ASSESSEE TO HIM BY SHOWING THE RECEIPT AS HIS INCOME, THE NON-DISALLOWANCE OF EXPENDITURE CAN BE MADE IN THE HANDS OF THE ASSESSEE. HOWEVER, DURING THE SET ASIDE PROCEEDINGS, THE ASSESSEE FAILED TO PRODUCE ANY SHRI AMIYA SACHINDRA DEY IN ITA NO.3154 OF 2016 PAGE 3 OF 5 EVIDENCES AS PER THE DIRECTION OF ITAT AND ALSO COULD NOT PRODUCE THE EVIDENCE HAS REQUIRED BUT INSTEAD FILED AFFIDAVIT FROM THE SUB-CONTRACTORS BY ADMITTING THAT NO RETURN OF INCOME SHOWING THE RECEIPT AS INCOME AND TAX PAID THEREON HAS BEEN FILED BY THEM. BECAUSE AS PER THEM, THEIR INCOME WAS FULLY TAXABLE LIMIT. IF THE CIT(A) NOT ADMITTED THESE EVIDENCES ON THE REVENUE THAT THESE EVIDENCES WERE OF THE ACT FILED BEFORE THE AO. THEREFORE, PROVISIONS OF RULE 46A OF THE I.T. ACT 1962 ARE NOT APPLICABLE. 5 BEING AGGRIEVED, THE ASSESSEE FILED THIS APPEAL BEFORE US. THE LD.COUNSEL SUBMITTED THAT PROVISIONS OF SECTION 40A(IA) OF THE ACT IS NOT APPLICABLE IF THE PAYEE FILES RETURN OF INCOME AND THE PAYEE PAYS TAX AND THE AND THE PAYEE FILES RETURN OF INCOME ON WHICH TDS WAS NOT DEDUCTED TO TAX. A REFERENCE TO THE AFFIDAVIT OF THE PAYEES AT PAGE 40 TO 57 OF THE PAPER BOOK SHOWS THAT ALL THE CONTRACTORS HAD TAXABLE INCOME RUPEES BELOW RS.1 LAKH. THEREFORE, THEY WERE NOT REQUIRED TO FILE RETURN OF INCOME. THEREFORE, FOLLOWING THE DECISION OF DELHI HIGH COURT IN THE CASE OF CIT VS ANSAL LANK MARK TOWNSHIP PVT. LTD [2015] 377 ITR 635 [DEL] AND CIT VS. KOTAK SECURITIES LTD. [2002] 340 ITR 333 [BOMBAY]. THE LD.COUNSEL FURTHER ARGUED THAT THE LD.CIT(A) SHOULD HAVE ADMITTED THE ADDITIONAL EVIDENCE FILED IN THE RULE 46A OF THE ACT IN THE FORMER AFFIDAVITS FROM THE SUB-CONTRACTORS AS THEY WERE NOT ASSESSED TO TAX AND ACCORDINGLY NOT REQUIRED TO FILE RETURN OF INCOME AS PER PROVISIONS OF SECTION 139(1)(B) OF THE ACT. 6 ON THE OTHER HAND, THE LD.DR HAS RELIED ON THE ORDERS OF THE AO. 7 WE HAVE NOTICED THAT THE ISSUE IS COVERED, IN PRINCIPLE, IN FAVOR OF THE ASSESSEE BY HONBLE DELHI HIGH COURTS JUDGEMENT IN THE CASE OF CIT VS. SHRI AMIYA SACHINDRA DEY IN ITA NO.3154 OF 2016 PAGE 4 OF 5 ANSAL LAND MARK TOWNSHIP (P) LTD., JUDGEMENT DATED 26TH AUGUST, 2015, IN ITA NO.160/2015, WHEREIN THEIR LORDSHIPS HAVE HELD THAT AS LONG AS THE RECIPIENT OF THE INCOME HAS PAID THE DUE TAX IN RESPECT OF THE INCOME EMBEDDED IN THE PAYMENTS, DISALLOWANCE UNDER SECTION 40(A) (IA) OF THE ACT CANNOT BE INVOKED. HOWEVER, AS THIS ASPECT OF THE MATTER HAS NOT BEEN EXAMINED BY ANY OF THE AUTHORITIES BELOW. WE FIND THAT THE ADDITIONAL EVIDENCE NOT CONSIDERED BY THE LD. CIT(A) HAS A MATERIAL BEARING ON THE DECISION TAKEN BY HIM. UNDER THESE CIRCUMSTANCES, IT WAS INCUMBENT UPON HIM TO CONFRONT THESE EVIDENCES TO THE AO AND SEEK HIS COMMENTS. IN ABSENCE OF THE SAME, THE ORDER PASSED BY THE LD. CIT(A) IS PASSED IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. THE PRINCIPLE OF AUDI ALTERAM PARTEM IS THE BASIC CONCEPT OF NATURAL JUSTICE. THE EXPRESSION AUDI ALTERAM PARTEM IMPLIES THAT A PERSON MUST BE GIVEN AN OPPORTUNITY TO DEFEND HIMSELF. THIS PRINCIPLE IS SINE QUA NON OF EVERY CIVILIZED SOCIETY. THE RIGHT TO NOTICE, RIGHT TO PRESENT CASE AND EVIDENCE, RIGHT TO REBUT ADVERSE EVIDENCE, RIGHT TO CROSS EXAMINATION, RIGHT TO LEGAL REPRESENTATION, DISCLOSURE OF EVIDENCE TO PARTY, REPORT OF ENQUIRY TO BE SHOWN TO THE OTHER PARTY AND REASONED DECISIONS OR SPEAKING ORDERS. WE FIND THAT THE GUIDANCE FOR RIGHT OF HEARING, AS IS LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF MANEKA GANDHI V. UNION OF INDIA, WHEREIN HON'BLE SUPREME COURT HAS HELD THAT RULE OF FAIR HEARING IS NECESSARY BEFORE PASSING ANY ORDER. WE FIND THAT IT IS PRE-DECISION HEARING STANDARD OF NORM OF RULE OF AUDI ALTERAM PARTEM. AFTER TAKING INTO ACCOUNT ALL THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND IT APPROPRIATE TO SEND THIS ISSUE BACK TO THE FILE OF THE AO. THE ASSESSEE SHALL SUBMIT ALL THE EVIDENCES BEFORE THE AO IN SUPPORT OF ITS CLAIM AND SHALL BE FREE TO RAISE ALL LEGAL AND SHRI AMIYA SACHINDRA DEY IN ITA NO.3154 OF 2016 PAGE 5 OF 5 FACTUAL ISSUES BEFORE THE AO. THE AO SHALL GIVE ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE AND SHALL DECIDE THIS ISSUE AFRESH AFTER CONSIDERING ALL THE DETAILS AND EVIDENCES AND JUDGEMENTS AS MAY BE PLACED BY THE ASSESSEE BEFORE HIM. THE ASSESSEE SHALL ALSO FILE ITS SUBMISSIONS ALONG WITH REQUISITE EVIDENCES WITH REGARD TO ALL THE REASONS GIVEN BY THE AO IN THE ASSESSMENT ORDER WHICH SHALL BE DULY CONSIDERED BY THE AO BEFORE DECIDING THIS ISSUE AFRESH. WITH THESE DIRECTIONS, THIS ISSUE IS SENT BACK TO THE FILE OF THE AO. 8 THIS GROUND MAY BE TREATED AS ALLOWED FOR STATISTICAL PURPOSES 9 ORDER PRONOUNCED IN THE OPEN COURT ON 18.04.2018. D/- SD/- SD/- ( . . /C.M. GARG) ( . . / O.P.MEENA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER / SURAT, DATED: 18 TH APRIL, 2018 S.GANGADHARA RAO COPY OF ORDER SENT TO- ASSESSEE/AO/PR. CIT/ CIT (A)/ ITAT (DR)/GUARD FILE OF ITAT. BY ORDER / / TRUE COPY / / ASSISTANT REGISTRAR, SURAT