M/s.Magnum Buildtech, Alappuzha V. The DCIT, Alappuzha

ITA 317/COCH/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5087 (ITAT-COCHIN)
• Duration Of Justice: 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 14-05-2019
• Assessment Year: 2006-2007
• Appeal Filed On: 04-07-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: TDS; Set aside
• Section: 43B; 40(a)(ia); 143(1); 154

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFOR E S/ SHRI CHANDRA POOJARI , AM & GEORGE GEORGE K., J M I .T . A. NO . 317/COCH/2 018 ASSESSMENT YEAR : 2006 - 07 MAGNUM BUILDTECH, XII/358, EZHUPUNNA, ALLEPPEY - 688 548. [PAN: AAMFM 1609H] VS. THE DEPUTY COMMISSIONER OF INCOME - TAX, CIRCLE - 1 , ALAPPUZHA. (ASSESSEE - APPELLANT) (REVENUE - RESPONDENT) A SSESSEE B Y SHRI RAJA KANNAN, ADV. REVENUE BY SMT. A.S. BINDHU, SR. DR D ATE OF HEARING 14/05/2019 DATE OF PRONOUNCEMENT 15 / 05 /201 9 O R D E R PER CHANDRA POOJARI, AM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A) , KOTTAYAM DATED 31/01/2018 AND PERTAIN TO THE ASSESSMENT YEAR 2006 - 07 . 2. THERE WAS A DELAY OF 61 DAYS IN FILING THE APPEAL BEFORE THE TRIBUNAL. THE LD. AR HAS FILED CONDON ATION PETITION WHEREIN IT WAS STATED THAT THE ASSESSEE RECEIVED THE COPY OF THE ORDER OF THE CIT(A) ON 05/03/2018. THE ASSESSEE HAD DISCONTINUED THE BUSINESS AND THERE WAS DELAY IN ENGAGING LEGAL COUNSEL FOR PREFERRING APPEAL BEFORE THE TRIBUNAL AND ALSO FOR THE REASON THAT THE AUTHORIZED REPRESENTATIVE WHO APPEARED FOR THE ASSESSEE BEFORE THE CIT(A) WAS NOT KEEN IN REPRESENTING THE I.T.A. NO . 317/COCH/ 2018 2 ASSESSEE BEFORE THE TRIBUNAL. IT WAS STATED THAT THE NEW COUNSEL ENGAGED BY THE ASSESSEE THOUGH WAS ENTRUSTED WITH THE PAPER S ON 20/05/2018 TOOK TIME FOR STUDYING THE PAPERS AND PREPARATION OF THE APPEAL. THIS RESULTED IN DELAY OF 61 DAYS IN FILING THE APPEAL BEFORE THE TRIBUNAL. IT WAS SUBMITTED THAT THE DELAY WAS NOT DELIBERATE AND BEYOND THE CONTROL OF THE ASSESSEE. HENCE, IT WAS PRAYED THAT THE TRIBUNAL MAY CONDONE DE LAY OF 61 DAYS IN FILING THE APPEAL AND THE APPEAL MAY BE DISPOSED OF ON MERITS. 2.1 WE HAVE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH THE REASONS ADVANCED BY THE ASSESSEE FOR FILING THE APPEAL BELATEDLY BEFORE THIS TRIBUNAL. WE ARE SATISFIED WITH THE REASONS EXPLAINED BY THE ASSESSEE FOR FILING THE APPEAL BELATEDLY. ACCORDINGLY, WE CONDONE THE DELAY OF 61 DAYS IN FILING THE APPEAL AND ADMIT THE APPEAL FOR ADJUDICATION. 3. THE ASSESSEE HAS RAISE D THE FOLLOWING GROUNDS OF APPEAL. A) THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IS AGAINST LAW AND FACTS AND CIRCUMSTANCES OF THE CASE. THE ORDER, IF ALLOWED TO STAND, WOULD OCCASION A TRAVESTY OF JUSTICE AND CAUSE IRREPARABLE LOSS AND HARDSHI P TO THE APPELLANT. B) THE APPELLATE COMMISSIONER OUGHT TO HAVE FOUND THAT GOING BY THE PROVISIONS OF THE 2 ND PROVISO TO SECTION 4 0(A) (IA) THE APPELLANT IS ENTITLED TO DEDUCTION OF THE PAYMENTS MADE TO M/S. BORN BUILDERS PVT . LTD. AS THE S AID SUB - CONTRACT OR (BORN BUILDERS) HAVE DULY FILED RETURNS BY INCLUDING THE PAYMENTS MADE BY THE APPELLANT AS THEIR INCOME. I.T.A. NO . 317/COCH/ 2018 3 C) THE APPELLATE COMMISSIONER ERRED IN HOLDING THAT THE 2 ND PROVISO TO SECTION 40(A) (IA) IS NOT PROSPECTIVE IN NATURE. IT HAS BEEN THE SETTLED LAW THAT THE AMENDMENT TO THE MACHINERY PROVISION TO CURE ANY ANOMALY OR TO PREVENT UNDUE HARDSHIP TO THE ASSESSEES WOULD ALWAYS BE RETROSPECTIVE IN NATURE. THE LAW IN THIS REGARD IS FAIRLY SETTLED BY THE HON'BLE SUPREME COURT RIGHT FROM THE DECISION IN C I T VS . ALOM EXTRUSIONS 305 ITR 227 (SC). WHEN THE PROVISO TO SECTION 4 0 (A)(IA) WAS INTRODUCED TO MITIGATE UNDUE HARDSHIP CAUSED TO THE ASSESSEES, THE APPELLATE COMMISSIONER OUGHT TO HAVE FOUND THAT THE SAME IS CURATIVE IN NATURE AND THEREFORE WOULD HAVE RETROSP ECTIVE APPLICATION. D) THE APPELLATE COMMISSIONER ERRED IN UPHOLDING THE ORDER OF THE ASSESSING AUTHORITY ISSUED UNDER SECTION 154 OF THE INCOME TAX ACT, 1961 ON AN ISSUE WHICH IS HIGHLY DISPUTED AND IN ANY CASE WHERE TWO VIEWS ARE POSSIBLE AND THE VIEW - T AKEN IN THE ORDER DATED 31.03.2008 PASSED UNDER SECTION 143(1) WAS A POSSIBLE VIEW. THERE ARE ALSO CONFLICTING DECISIONS ON THE POINT AND THE MAJORITY OF THE SAME IS IN FAVOUR OF THE APPELLANT AND SUPPORTS THE ORDER DATED 31.03 . 2008. THEREFORE, IT WAS NOT WITHIN THE POWERS OF THE ASSESSING AU THORITY TO VARY THE DECISION IN A PROCEEDINGS UNDER SECTION 154 OF THE ACT, WHICH IS INTENDED ONLY TO RECTIFY MISTAKE APPARENT FROM THE RECORD. CONSEQUENTLY, THE APPELLATE COMMISSIONER OUGHT TO HAVE SET ASIDE THE PROCEE DINGS UNDER SECTION 154 OF THE ACT AS ISSUED CLEARLY BEYOND JURISDICTION. 4 THE FACTS OF THE CASE ARE THAT THE ASSESSEE FIRM HAD NOT DEDUCTED TDS FROM THE LABOUR CHARGES PAID AMOUNTING TO RS.2434192/ - FOR AY 2006 - 07. THE ASSESSMENT PROCEEDINGS WERE C OMPLETED U/S. 154 OF THE ACT ON 02/08/2010. THE ASSESSING OFFICER MADE THE ADDITION OF RS.2434192/ - ON ACCOUNT OF DISALLOWANCE OF LABOUR CHARGES U/S. 40(A)(IA) OF THE ACT. 5 . ON APPEAL, THE CIT(A) OBSERVED THAT THE ASSESSEE IN ADVANCEMENT OF HIS CLAIM THAT THE SECOND PROVISO IS APPLICABLE RETROSPECTIVELY FROM 01/04/2005 HAS RELIED ON VARIOUS DECISIONS OF NON - JURISDICTIONAL TRIBUNALS AND HIGH COURTS. HOWEVER, THE I.T.A. NO . 317/COCH/ 2018 4 CIT(A) WAS OF THE VIEW THAT THE HIGH COURT OF KERALA IN THE CASE OF THOMAS GEORGE MUTHOOT (235 TAXMAN.COM 246) WHILE CONSIDERING THIS QUESTION HELD AS UNDER: 15. A STATUTORY PROVISION, UNLESS OTHERWISE EXPRESSLY STATED TO BE RETROSPECTIVE OR BY INTENDMENT SHOWN TO BE RETROSPECTIVE, IS ALWAYS PROSPECTIVE IN OPERATION. FINANCE ACT, 2012 SHOWS THAT THE SECOND PROVISO TO SECTION 40(A)(IA) HAS BEEN INTRODUCED WITH EFFECT FROM 01/04/2013. READING OF THE SECOND PROVISO DOES NOT SHOW THAT IT WAS MEANT OR INTENDED TO BE CURATIVE OR REMEDIAL IN NATURE, AND EVEN THE APPELLANTS DID NOT HAVE SUCH A CASE . INSTEAD, BY THIS PROVISO, AN ADDITIONAL BENEFIT WAS CONFERRED ON THE ASSESSES. SUCH A PROVISION CAN ONLY BE PROSPECTIVE AS HELD BY THIS COURT IN PRUDENTIAL LOGISTICS AND TRANSPORTS (SUPRA). T HEREFORE, THIS CONTENTION RAISED ALSO CANNOT BE ACCEPTED. 6. AGAINST T HIS, THE ASSESSEE IS IN APPEAL BEFORE US. THE LD. AR SUBMITTED THAT ISSUE IN DISPUTE IS A DEBATABLE ISSUE AND CANNOT BE DEALT BY THE ASSESSING OFFICER VIDE PROCEEDINGS U/S. 154 OF THE I.T. ACT. HE DREW OUR ATTENTION TO THE FOLLOWING JUDGMEN TS: 1) CIT VS. ANSAL L ANDMARK TOWNSHIPS (P) LTD. (ITA NOS.160 & 161/2015 DATED 26 TH AUGUST, 2015 (DEL.) 2) CIT VS. SHRADDHA & S.S. K ALE, JOINT VENTURE ( 377 ITR 635 ) (BOM.) 6.1 THE LD. AR SUBMITTED THAT THE JUDGMENT OF THE DELHI HIGH COURT IN THE CASE OF ANSAL LANDMARK TOWNSHIPS (P) LTD. CITED SUPRA WAS THE SUBJECT MATTER OF LITIGATION BEFORE THE SUPREME COURT WHEREIN THE SUPREME COURT IN D IARY NO. 24249/2017 DATED 25 TH AUGUST, 2017 GRANTED LEAVE IN RESPECT OF THE JUDGMENT OF THE DELHI HIGH COURT CITED SUPRA. AS SUCH, ACCORDING TO HIM, THIS ISSUE IS A DEBATABLE ISSUE AND THE ASSESSING OFFICER SHOULD NOT HAVE DEALT THE ISSUE IN DISPUTE U/S. 154 OF THE ACT. I.T.A. NO . 317/COCH/ 2018 5 THE LD. AR ALSO RELIED ON THE JUDGMENT OF THE SUPREME COURT IN THE CASE OF CIT VS. ALOM EX TRUSIONS LTD. (319 ITR 306) WHEREIN IT WAS HELD THAT THE OMISSION OF THE SECOND PROVISO TO SECTION 43B OF THE INCOME TAX ACT, 1961 BY THE FINANCE ACT, 2003, OPERATED, RETROSPECTIVELY, WITH EFFECT FROM APRIL 1, 1988 AND NOT PROSPECTIVELY FROM APRIL, 2 004. EARLIER UNDER THE SECOND PROVISO TO SECTION 43B AS AMENDED BY THE FINANCE ACT, 1989, ASSESSES WERE ENTITLED TO DEDUCTION ONLY IF THE CONTRIBUTION STOOD CREDITED ON OR BEFORE THE DUE DATE GIVEN IN THE PROVIDENT FUNDS ACT. THIS CREATED FURTHER DIFFICU LTIES AND ON A REPRESENTATION MADE TO THE FINANCE MINISTRY ONE MORE AMENDMENT WAS MADE BY THE FINANCE ACT, 2003. THOUGH THIS AMENDMENT WAS MADE APPLICABLE WITH EFFECT FROM APRIL 1, 2004, THE AMENDMENT WAS CURATIVE IN NATURE AND APPLIED RETROSPECTIVELY WIT H EFFECT FROM APRIL 1, 1988. WHEN A PROVISO IN A SECTION IS INSERTED TO REMEDY UNINTENDED CONSEQUENCES AND TO MAKE THE SECTION WORKABLE, THE PROVISO WHICH SUPPLIES AN OBVIOUS OMISSION THEREIN IS REQUIRED TO READ RETROSPECTIVELY IN OPERATION, PARTICULARLY TO GIVE EFFECT TO THE SECTION AS A WHOLE. 7. THE LD. DR RELIED ON THE ORDER OF THE LOWER AUTHORITIES. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. IN OUR OPINION, THIS ISSUE WAS CONSIDERED BY THE JURISDICTIONAL HIGH COURT IN THE CA SE OF CIT VS. THOMAS GEORGE MUTHOOT (235 TAXMAN 246) . BEING SO, WITHIN THE JURISDICTION OF KERALA HIGH COURT, THE ISSUE IN DISPUTE CANNOT BE SAID TO BE A DEBATABLE ISSUE. IN OUR OPINION, THE ASSESSING OFFICER IS JUSTIFIED IN MAKING ADDITION U/S. 40 ( A ) ( IA) OF THE I.T.A. NO . 317/COCH/ 2018 6 ACT VIDE PROCEEDINGS U/S. 154 OF THE ACT DATED 02/08/2010 . ACCORDINGLY, THIS GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 15 TH MA Y, 2019 SD/ - SD/ - (GEORGE GEORGE K.) (CHANDRA POOJARI) JUDICIAL ME MBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 15 TH MAY , 2019 GJ COPY TO: 1 . MAGNUM BUILDTECH, XII/358, EZHUPUNNA, ALLEPPEY - 688 548. 2. THE DEPUTY COMMISSIONER OF INCOME - TAX, CIRCLE - 1 , ALAPPUZHA. 3 . THE COMMISSION ER OF INCOME - TAX (AP P EALS) , KOTTAYAM. 4. THE PR. COMMISSIONER OF INCOME - TAX, KOTTAYAM. 5 . D. R., I.T.A.T., COCHIN BENCH, COCHIN. 6 . GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T., COCHIN I.T.A. NO . 317/COCH/ 2018 7