M/S. PVM ASSOCITES, CHENNAI V. ITO, NCW - 8 (4), CHENNAI

ITA 3280/CHNY/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6864 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2017-2018
• Appeal Filed On: 28-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J PAVITHRAN KUMAR
• Assessee Lawyers: SP CHIDAMBARAM ADV
• Keywords: Recovery proceedings; Business income; Rectification of order; TDS; Set aside; FORM 26AS
• Section: 44AD; 143(1); 194J; 154

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI , , BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ./I.T.A. NO.3280/CHNY/2019 ! ' / ASSESSMENT YEAR : 2017-2018. M/S. PVN ASSOCIATES, FLAT NO.1, 3 RD FLOOR, VISWAPRIYA APARTMENTS, NO.3, 1 ST CROSS STREET, KASTURIBAI NAGAR, ADYAR, CHENNAI 600 020. [PAN AAJFP 7065R] VS. THE INCOME TAX OFFICER, NON CORPORATE WARD 8(4) CHENNAI 600 034. ( / APPELLANT) ( /RESPONDENT) # $ % / APPELLANT BY : SHRI. SP. CHIDAMBARAM, ADV &' # $ % /RESPONDENT BY : SHRI. J. PAVITHRAN KUMAR, JCIT. ( ) $ * /DATE OF HEARING : 29-01-2020 +,'! $ * /DATE OF PRONOUNCEMENT : 30-01-2020 / O R D E R PER INTURI RAMA RAO , ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AG AINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAL S)-9, CHENNAI (CIT(A) FOR SHORT) DATED 14.10.2019 FOR THE ASS ESSMENT YEAR (AY) 2017-2018. ITA NOS.3280/2019 :- 2 -: 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THE ORDER OF THE COMMISSIONER OF INCOME-TAX (A PPEALS) IS CONTRARY TO LAW, FACTS AND CIRCUMSTANCES OF THE CAS E. 2. THE COMMISSIONER OF INCOME-TAX (APPEALS) ERRED I N CONFIRMING THE ORDER OF THE ASSESSING OFFICER IN MA KING ADDITION UNDER SECTION 44ADA OF THE ACT. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS) ERRED I N NOT APPRECIATING THAT THE ASSESSING OFFICER (I.E. THE D EPUTY COMMISSIONER OF INCOME-TAX, CPC, BENGALURU) COMMITT ED A MISTAKE WHILE ISSUING INTIMATION UNDER SECTION 143( 1 )(A) OF THE ACT AND AS SUCH THE ORDER UNDER SECTION 143(1)(A) O F THE ACT IS REQUIRED TO BE RECTIFIED UNDER SECTION 154 OF THE A CT. 4. THE COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT T O HAVE APPRECIATED THAT WHEN THE AO FAILS TO RECTIFY THE A PPARENT MISTAKE IN THE INTIMATION ISSUED UNDER SECTION 143( 1)(A) OF THE ACT, THE ISSUE OF CORRECT ASSESSMENT OF INCOME OF T HE APPELLANT UNDER SECTION 44AD OF THE ACT GETS MERGED WITH THE RECTIFICATION ORDER AND AS SUCH THE COMMISSIONER OF INCOME-TAX (A PPEALS) ERRED IN HIS FINDINGS. 5. THE COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT T O HAVE APPRECIATED THAT THE APPELLANT IS AN ELIGIBLE ASSE SSEE AS PER SECTION 44AD OF THE ACT AND THEREFORE, IT HAS CORRE CTLY OFFERED ITS INCOME UNDER SECTION 44AD OF THE ACT. 6. THE COMMISSIONER OF INCOME-TAX (APPEALS) ERRED I N NOT APPRECIATING THAT SECTION 44ADA OF THE ACT IS NOT A PPLICABLE TO THE APPELLANT AS THE APPELLANT IS NOT CARRYING ON A NY PROFESSION. 7. THE COMMISSIONER OF INCOME-TAX (APPEALS) ERRED I N NOT APPRECIATING THAT SECTION 44ADA OF THE ACT IS NOT A PPLICABLE TO THE APPELLANT AS THE APPELLANT IS NOT CARRYING ON A NY PROFESSION. 8. THE COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT T O HAVE APPRECIATED THAT MERELY BECAUSE TDS DONE BY PAYERS UNDER SECTION 194J OF THE ACT CANNOT BE A CONCLUSIVE AND/ OR A DETERMINATIVE FACTOR TO DECIDE THE SECTION UNDER WH ICH APPELLANTS INCOME IS TAXABLE. ITA NOS.3280/2019 :- 3 -: 9. WITHOUT PREJUDICE TO ALL THE ABOVE, THE COMMISSI ONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE APPRECIATED THAT THE SAME INCOME IS TAXED TWICE BY THE AO I.E. UNDER SECTION 44AD AS OFFERED BY THE APPELLANT AND ONCE AGAIN UNDER SECTI ON 44ADA AS MENTIONED IN THE INTIMATION UNDER SECTION 143(1 )(A ) FALLING WITHIN THE SCOPE OF MISTAKE APPARENT FROM RECORD AS ENVISAGED IN SECTION 154 OF THE ACT. THEREFORE ERRED IN CONFI RMING, THE ORDER PASSED BY THE AO UNDER SECTION 154 OF THE ACT . 10. THE COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE APPRECIATED THAT THE AO HAS GIVEN SHORT CREDIT FOR TDS CREDIT INSTEAD OF GRANTING CREDIT OF TDS AS PER FORM 26AS. 11. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND , SUBSTITUTE, RESCIND, MODIFY AND/OR WITHDRAW IN ANY MANNER WHATS OEVER ALL OR ANY OF THE FOREGOING GROUNDS OF APPEAL AT OR BEF ORE THE HEARING OF THE APPEAL. 3. THE BRIEF FACTS OF THE CASE ARE AS UNDER: THE APPELLANT NAMELY M/S. PVN ASSOCIATES, IS A PART NERSHIP FIRM CONSTITUTED UNDER THE PARTNERSHIP ACT. IT IS EN GAGED IN THE BUSINESS OF VERTICAL TRANSPORTATION CONSULTANCY SERVICES. THE RETURN OF INCOME FOR THE AY 2017-18 WAS FILED ON 21.07.2017. BASED ON THE RECEIPT OF RETURN OF INCOME, CPC ISSUED TWO SHOW CAUSE NOTICES DATED 21.05.2018 AND 23.10.2018 PROPOSING ADJUSTMENTS U/ S.143(1) (A) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) ON THE GROUND THAT THERE IS INCONSISTENCY IN THE AMOUNT SHOWN UNDER THE HEAD PROFITS AND LOSS OF BUSINESS OFFERED UNDER PRESUMPTIVE T AXATION AND THE AMOUNT OF RECEIPTS AVAILABLE IN FORM 26AS AGAINST SECTION 194J OF THE ACT. THE CPC IS OF OPINION THAT RECEIPTS U/S.194J O F THE ACT CANNOT BE OFFERED TO TAX U/S.44AD OF THE ACT. FINALLY INTIMA TION U/S.143(1) (A) OF ITA NOS.3280/2019 :- 4 -: THE ACT WAS ISSUED ON 26.03.2019 ASSESSING THE TOT AL INCOME UNDER THE HEAD INCOME FROM BUSINESS OF J53,71,789/- AS AG AINST INCOME OFFERED OF J7,52,620/-. THE DISPARITY BETWEEN THE INCOME ASSESSED AND INCOME OFFERED IS ON ACCOUNT OF DENIAL OF BENEF IT OF PRESUMPTIVE TAX U/S.44AD OF THE ACT. 4. BEING AGGRIEVED BY THE INTIMATION, TWO RECTIFICATIO N PETITIONS WERE FILED ON 19.04.2019 AND 10.09.2019. THE RECTIF ICATION PETITION DATED 19.04.2019 CAME TO BE DISMISSED VIDE ORDER DA TED 14.05.2019 REJECTING THE CONTENTION OF THE ASSESSEE. 5. BEING AGGRIEVED, AN APPEAL WAS FILED BEFORE LD. CI T(A) WHO VIDE IMPUGNED ORDER CONFIRMED THE ACTION OF THE CPC . 6. BEING AGGRIEVED, THE APPELLANT IS IN APPEAL BEFORE US IN THE PRESENT APPEAL. IT IS CONTENDED THAT CPC HAD TRAVEL LED BEYOND THE JURISDICTION CONFERRED U/S.143 (1) (A) OF THE ACT WHILE DENYING THE BENEFIT OF PRESUMPTIVE TAX I N RESPECT OF THE BUSINESS RECEIPTS SIMPLY BASED ON THE TDS PAID BY T HE PAYER OF THE AMOUNT. HE PLACED RELIANCE ON CBDT CIRCULAR NO.689, DATED 24.08.1994. 7. ON THE OTHER HAND, THE LD. SR. DEPARTMENTAL REPRESE NTATIVE PLACED RELIANCE ON THE ORDERS OF LOWER AUTHORITIES. ITA NOS.3280/2019 :- 5 -: 8. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATE RIAL ON RECORD. THE SHORT ISSUE INVOLVED IN THE PRESENT A PPEAL RELATES TO SCOPE AND AMBIT OF ADJUSTMENTS UNDER CLAUSES (I) T O (III) OF THE PROVISO TO SECTION 143(1) (A) OF THE ACT. THE SAID PROVIS O HINGES ON THE EXPRESSIONS PRIME FACIE ADMISSIBLE AND PRIME FACIE INADMISSIBLE. THE CBDT CIRCULAR NO.689, DATED 24.08.1994 CLARIFI ED THAT PRIME FACIE MEANS ON THE FACE OF IT. THE HONBLE SUPREME COURT IN THE CASE OF T.S. BALARAM ITO VS. VOLKARI BROTHERS, (1971) 80 IT R 50 HAD HELD THAT MISTAKE CAN BE RECTIFIED UNDER SECTION 154 O F THE ACT, ONLY IF IT IS AN OBVIOUS AND PATENT MISTAKE AND NOT SOMETHING WHI CH CAN BE ESTABLISHED BY LONG DRAWN PROCESS OF REASONING ON POINTS ON WHICH THERE MAY CONCEIVABLY BY TWO OPINIONS. THERE IS N O GAIN SAYING THAT TDS PROVISIONS ARE ONLY MECHANISM ENVISAGED BY THE PARLIAMENT AS ONE OF THE MODES OF RECOVERY OF TAXES. THESE A RE NOT SUBSTANTIVE PROVISIONS TO DETERMINE THE TRUE NATURE OF RECEIP T OF INCOME. THE NATURE OF RECEIPT CAN BE DETERMINED HAVING REGARD TO THE SUBSTANCE OF THE TRANSACTIONS UNDERLYING THE RECEIPT OF THE MONEY. THIS CAN BE DECIDED ONLY IN THE REGULAR ASSESSMENT PROCEEDINGS BUT NOT UNDER PROCEEDINGS U/S.143 (1) (A) OF THE ACT AS CLASSIFIE D BY THE CBDT CIRCULAR NO.689, DATED 24.08.1994. IF AT ALL, THE A SSESSING OFFICER FEELS THAT ASSESSEE IS NOT ELIGIBLE FOR PRESUMPTIVE TAX, REGIME THE ONLY COURSE OPEN TO HIM IS TO SELECT THE CASE FOR SCRUT INY ASSESSMENT AND ITA NOS.3280/2019 :- 6 -: NOT TO MAKE PRIMA FACIE ADJUSTMENT AS CONTEMPLATE D U/S.143(1) (A) OF THE ACT. THE ACTION OF THE LOWER AUTHORITIES IS AGAINST THE VERY SPIRIT OF PROVISIONS OF SECTION 143(1) (A) OF THE ACT AS CLARIFIED BY THE CBDT CIRCULAR NO.689, DATED 24.08.1994. IN THE CIR CUMSTANCES, WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND ALLOW THE APPEAL FILED BY THE ASSESSEE. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE ST ANDS ALLOWED. ORDER PRONOUNCED ON 30TH DAY OF JANUARY, 2020 AT CHENNAI. SD/- SD/- ( ) (GEORGE MATHAN) /JUDICIAL MEMBER ( ) (INTURI RAMA RAO) /ACCOUNTANT MEMBER -) / CHENNAI . / DATED: 30TH JANUARY, 2020. KV /0 $0& *12032'* / COPY TO: 0 1 . # / APPELLANT 3. 0 ( 4*056 / CIT(A) 5. 278 0& * 9 / DR 2. &' # / RESPONDENT 4. 0 ( 4* / CIT 6. 8:0;) / GF