ACIT, New Delhi V. Sh. Vinod Sharma, New Delhi

ITA 3347/DEL/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7070 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 06-06-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Retrospective amendment; TDS
• Section: 40A(3); 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E, NEW DELHI BEFORE SH. R.K PANDA, ACCOUNTANT MEMBER AND SH. KULDIP SINGH, JUDICIAL MEMBER ITA NO.3347/DEL/2016 ASSESSMENT YEAR: 2011-12 ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 62 (1), NEW DELHI VS SH. VINOD SHARMA A-2/165, 2 ND FLOOR, SAFDARJUNG ENCLAVE, NEW DELHI -110029 PAN NO.AUJPS32935K (APPELLANT) (RESPONDENT) ASSESSEE BY SH. RINKU SINGH, SR. DR DEPARTMENT BY NONE DATE OF HEARING: 14/03/2019 DATE OF PRONOUNCEMENT: 30/04/2019 ORDER PER R.K. PANDA, AM: 1. THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGA INST THE ORDER DATED 31.03.2016 OF THE CIT(A)-20, NEW DELHI RELATI NG TO A. Y. 2011- 12. 2. DESPITE SERVICE OF NOTICE FOR A NUMBER OF TIMES NOBODY WAS APPEARING ON BEHALF OF THE ASSESSEE. THEREFORE, THI S APPEAL IS BEING DECIDED ON THE BASIS OF MATERIAL AVAILABLE ON RECOR D AND AFTER HEARING THE LD. DR. ITA NO.3347/DEL/2016 2 3. THE GROUND NO.1 BY THE REVENUE READS AS UNDER :- IN THE FACTS AND CIRCUMSTANCES THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.12,49,300/- U/ S 40 (A) (IA) ON ACCOUNT OF NON DEDUCTION OF TDS. 4. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS AN INDIVIDUAL AND ENGAGED IN THE BUSINESS OF CIVIL CON STRUCTION UNDER THE NAME AND STYLE OF M/S. LAXMI BUILDERS. HE FILE D HIS RETURN OF INCOME ON 27.09.2011 DECLARING TOTAL INCOME OF RS.1 ,07,87,520/-. THE ASSESSING OFFICER DURING THE COURSE OF ASSESSME NT PROCEEDINGS ASKED THE ASSESSEE TO PROVIDE THE DETAILS OF TDS DE DUCTED ON INTEREST PAYMENT AGAINST LOAN TAKEN BY THE ASSESSEE DURING THE YEAR. FROM THE VARIOUS DETAILS FURNISHED BY THE AS SESSEE HE OBSERVED THAT ASSESSEE HAS NOT DEDUCTED ANY TDS FRO M THE PAYMENT OF INTEREST TO THE FOLLOWING PARTIES :- S. NO. NAME AMOUNT 1 TATA CAPITAL HOUSING FINANCE LIMITED 1,41,600/- 2 RELIANCE CAPITAL LIMITED 1,07,281/- 3 BAJAJ FINSERY LIMITED 2,06,199/- 4 INDIABULLS HOUSING FINANCE LIMITED 5,45,704/- 5 FORTIS FINVEST LIMITED 2,48,516/- TOTAL 12,49,300/- ITA NO.3347/DEL/2016 3 5. THE SUBMISSION OF THE ASSESSEE IS THAT NO TDS IS REQUIRED TO BE DEDUCTED WAS NOT ACCEPTED BY THE ASSESSING OFFICER. INVOKING THE PROVISION OF SECTION 40 (A) (IA) OF THE IT ACT, THE ASSESSING OFFICER MADE ADDITION OF RS.12,49,300/- TO THE TOTAL INCOME OF T HE ASSESSEE. 6. BEFORE CIT(A) IT WAS SUBMITTED THAT THE ENTIRE P AYMENT WAS PAID BY MEANS OF ADVANCE EMI CHEQUES AND THOSE CHEQUES W ERE DULY PAID ON PRESENTATION. ALL THOSE COMPANIES ARE INCOME TA X PAYEE AND IT WOULD BE IMPOSSIBLE TO PRESUME THAT THEY MIGHT HAVE TRIED TO AVOID PAYMENT OF INCOME TAX ON THEIR REGULAR BUSINESS INC OME. IT WAS FURTHER SUBMITTED THAT NO AMOUNT WAS PAYABLE AT THE END OF THE YEAR AND, THEREFORE, PROVISION OF SECTION 40 (A) (IA) AR E NOT APPLICABLE. RELYING ON VARIOUS DECISIONS IT WAS SUBMITTED THAT THE ADDITION MADE BY THE ASSESSING OFFICER IS NOT JUSTIFIED. 7. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESESEE , THE LD. CIT(A) DELETED THE ADDITION BY RELYING ON THE DECIS ION OF HONBLE HIGH COURT IN THE CASE OF CIT-1 VS. ANSAL LANDMARK TOWN SHIP PRIVATE LIMITED VIDE ITA NO.160 AND 161 /DEL/2015 ORDER DAT ED 26.08.2015 ON THE GROUND THAT THE ASSESSEE IN THE INSTANT CASE HAS FILED CERTIFICATE UNDER PROVISO TO SUB-SECTION (1) OF SEC TION 201 (1) OF THE INCOME TAX ACT FROM NBFCS TO WHOM INTEREST WERE PAI D. 8. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE RE VENUE IS IN APPEAL BEFORE THE TRIBUNAL. 9. AFTER HEARING THE LD. DR AND ON PERUSAL OF THE O RDERS OF THE AUTHORITIES BELOW WE DO NOT FIND ANY INFIRMITY IN T HE ORDER OF THE CIT (A) ON THIS ISSUE. THE ASSESSEE HAS FILED CERTIFICA TES FROM BAJAJ ITA NO.3347/DEL/2016 4 FINSERVE LIMITED, RELIANCE CAPITAL LIMITED, TATA CA PITAL HOUSING FINANCE LIMITED, INDIA BULLS HOUSING FINANCE LIMITE D AND FORTIS FINVEST LIMITED SUBSTANTIATING THAT THESE COMPANIES HAVE FILED THEIR INCOME TAX RETURNS DISCLOSING SUCH INTEREST INCOME IN THE TAXABLE INCOME. THEREFORE, THE LD. CIT(A) IN OUR OPINION IS FULLY JUSTIFIED IN DELETING THE ADDITION BY RELYING ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT-1 VS. ANSAL LANDMARK TOWN SHIP PRIVATE LIMITED WHERE IN IT IS HELD THAT THE INSERTION OF S ECOND PROVISO TO SECTION 40 (A) (IA) OF THE IT ACT IS DECLARATORY AN D CURATIVE IN NATURE AND IT HAS RETROSPECTIVE EFFECT FROM 1 ST APRIL, 2005 AND WHERE THE PAYEES HAVE DECLARED SUCH INCOME IN THEIR RESPECTIV E RETURN OF INCOME ITSELF DEEMED THAT THE ASSESSEE HAS DEDUCTED AND PA ID TAX ON SUCH SUM ON THE DATE OF FURNISHING OF INCOME. THEREFORE , THE GROUND RAISED BY THE REVENUE ON THIS ISSUE IS DISMISSED. 10. THE GROUND OF APPEAL NO.2 BY REVENUE READS AS U NDER :- IN THE FACTS AND CIRCUMSTANCES THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION ON ACCOUNT OF CASH P AYMENT U/S 40 A (3) OF RS.48,35,476/-. 11. FACTS, OF THE CASE, IN BRIEF ARE THAT THE ASSES SING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS OBSERVED FROM THE VARIOUS DETAILS FURNISHED BY THE ASSESSEE THAT THE ASSESSEE HAS MADE CASH PAYMENTS TO VARIOUS PARTIES IN VIOLATION OF PROVISI ONS OF SECTION 40A(3) OF THE IT ACT. REJECTING THE VARIOUS EXPLANATION G IVEN BY THE ASSESSEE THE ASSESSING OFFICER MADE ADDITION OF RS.48,35,476 /-. ITA NO.3347/DEL/2016 5 12. BEFORE CIT(A) IT WAS SUBMITTED THAT THE ASSESSE E IS ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION WORK MAINLY FOR GOVERNMENT AGENCIES AND THE PROJECT SITES ARE SITUATED IN REMO TE PLACES. WHILE EXECUTING THE CONTRACTUAL OBLIGATIONS, THE ASSESSEE HAD TO HIRE LABOURERS AND PURCHASE MATERIALS AT THE LOCAL LEVEL AS AND WHEN REQUIRED. THE WORK AT LOCAL LEVEL IS MAINLY DONE T HROUGH SUCH CONTRACTORS WHO INCURRED THE EXPENDITURE AT THE LOC AL LEVEL. THE PROVISION OF RULE 6 DD (K) AND 6DD (J) WAS BROUGHT TO THE NOTICE OF THE CIT(A). 13. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE AND RELYING ON THE DECISIONS OF HONBLE DELHI HIGH COURT IN THE CASE OF RC GOYAL VS. CIT REPORTED IN 29 TAXMAN.COM 406, THE LD. CIT( A) DELETED THE ADDITION HOLDING THAT THE CASE OF THE ASSESSEE FALL S UNDER THE AMBIT OF RULE 6 DD(K). 14. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE RE VENUE IS IN APPEAL BEFORE THE TRIBUNAL. 15. WE HAVE CONSIDERED THE ARGUMENTS ADVANCED BY LD . DR AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. WE FI ND THE ASSESSING OFFICER INVOKING THE PROVISION OF SECTION 40 A (3) MADE ADDITION OF RS.48,35,376/- ON THE GROUND THAT THE ASSESSEE HAS VIOLATED THE PROVISIONS BY MAKING CASH PAYMENTS IN EXCESS OF RS. 20,000/- AT A TIME OTHERWISE THAN BY CROSSED ACCOUNT PAYEE CHEQUE S OR CROSSED BANK DRAFTS. WE FIND THE LD. CIT(A) RELYING ON THE PROVISION OF RULE 6 DD (K) DELETED THE ADDITION HOLDING THAT THE PAYMEN TS HAVE BEEN MADE IN CASH ARE MOSTLY DONE AT THE LOCAL LEVEL BEC AUSE OF BUSINESS EXIGENCIES THROUGH SUCH CONTRACTORS WHO ACT AS HIS AGENT WITHIN THE ITA NO.3347/DEL/2016 6 MEANING OF RULE 6 DD (K). WE FIND THE FACTS ARE NO T COMING OUT CLEARLY FROM THE ORDER OF THE CIT (A) AS TO WHO ARE THE AGE NTS OR SUB CONTRACTORS OF THE ASSESSEE AT THE SITES, WHETHER T HE PAYMENT HAS BEEN MADE BY THE SUCH CONTRACTOR AFTER DEDUCTION OF TAX AND OR THROUGH BANKING CHANNEL ETC. WE, THEREFORE, DEEM I T PROPER TO RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO GIVE ONE MORE OPPORTUNITY TO THE ASSESSEE TO SUBSTANTIAT E THAT THE CASE OF THE ASSESSEE FALLS WITHIN THE PROVISION OF SECTION 6 DD (K). NEEDLESS TO SAY THE ASSESSING OFFICER SHALL DECIDE THE ISSUE AS PER FACT AND LAW AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDINGLY. THE GROUND NO.2 BY THE REV ENUE IS ALLOWED FOR STATISTICAL PURPOSE. 16. THE GROUND OF APPEAL NO.3 BY REVENUE READS AS U NDER :- IN THE FACTS AND CIRCUMSTANCES THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION ON ACCOUNT OF INTEREST ON SERVICE TAX OF RS.9,26,182/-. 17. THE FACTS OF THE CASE, IN BRIEF, ARE THAT THE A SSESSING OFFICER MADE ADDITION OF RS.9,26,182/- ON THE GROUND THAT A SSESSEE HAS PAID THE ABOVE AMOUNT AS INTEREST ON SERVICE TAX FOR DEL AYED PAYMENT. ACCORDING TO THE ASSESSING OFFICER WHEN THE ASSESSE E HAS COLLECTED THE AMOUNT FROM DIFFERENT CUSTOMERS AND INTENTIONAL LY KEPT THE MONEY WITH IT RESULTING INTO DELAY IN DEPOSIT OF TH E SERVICE TAX, THEREFORE, THE ASSESSEE HAS VIOLATED THE PROVISION OF RELEVANT ACT. INVOKING THE EXPLANATION TO SECTION 37 (1) OF THE A CT, THE ASSESSING OFFICER MADE ADDITION OF RS.9,26,182/- TREATING THE SAME AS PENALTY FOR INFRINGEMENT OF LAW. ITA NO.3347/DEL/2016 7 18. THE LD. CIT(A) DELETED THE ADDITION ON THE GROU ND THAT SUCH PAYMENT OF INTEREST ON ACCOUNT OF DELAYED DEPOSIT O F SERVICE TAX IS COMPENSATORY IN NATURE. WE FIND NO INFIRMITY IN TH E ORDER OF THE CIT(A). THE LD. CIT(A) WHILE DELETING THE SUCH DISA LLOWANCE HAS FOLLOWED VARIOUS DECISIONS WHERE IT HAS BEEN HELD T HAT SUCH PAYMENT OF INTEREST ON ACCOUNT OF DELAYED PAYMENT OF SERVIC E TAX IS COMPENSATORY IN NATURE. THE LD. DR COULD NOT POINT OUT ANY CONTRARY DECISION SO AS TO TAKE A DIFFERENT VIEW. WE, THERE FORE, UPHOLD THE ORDER OF THE CIT(A) ON THIS ISSUE AND THE GROUND RA ISED BY THE REVENUE IS DISMISSED. 19. THE GROUND OF APPEAL NO.4 BY REVENUE READS AS U NDER :- IN THE FACTS AND CIRCUMSTANCES THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION IN REDUCING THE TRAVELLING EXPENSES OF RS.1,53,317/0 TO 31,326/-. 20. AFTER HEARING THE LD. DR AND ON PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW, WE FIND THE ASSESSING OFFICER MA DE ADDITION OF RS.1,53,317/- ON ESTIMATE BASIS BEING 1/4 TH OF SUCH EXPENSES TREATING THE SAME AS PERSONAL IN NATURE. WE FIND IN APPEAL L D. CIT (A) RESTRICTED SUCH DISALLOWANCE TO RS.61,326/- BY OBSE RVING AS UNDER :- I HAVE CONSIDERED THE SUBMISSION OF THE APPELLANT AND THE ASSESSMENT ORDER. FOR ANY BUSINESS, TRAVELI NG AND BUSINESS PROMOTION IS A LEGITIMATE BUSINESS EXP ENSES. HOWEVER, THE PRIMARY ONUS OF PROVING THAT SUCH EXPE NSES ARE INCURRED WHOLLY AND EXCLUSIVELY FOR BUSINESS PU RPOSES LIES ON THE ASSESSEE. THEREFORE, TAKING A REASONAB LE VIEW ON THE BASIS OF APPELLANT SUBMISSIONS AND FACTS ON ITA NO.3347/DEL/2016 8 RECORDS, IT IS REASONABLE TO RESTRICT THE DISALLOWA NCE TO 10% OF THE EXPENSES CLAIMED TO COVER EXPENSES OF PERSON AL AND NON-BUSINESS PURPOSES. 21. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF TH E CIT(A) ON THIS ISSUE. NO DOUBT THE ASSESSEE HAS NOT FURNISHED THE REQUISITE DETAILS BEFORE THE ASSESSING OFFICER FOR WHICH VERIFICATION THAT SUCH EXPENSES ARE WHOLLY AND EXCLUSIVELY INCURRED FOR THE PURPOSE OF BUSINESS WAS NOT POSSIBLE. HOWEVER, DISALLOWANCE MADE BY THE AS SESSING OFFICER APPEARS TO BE ON THE HIGHER SIDE UNDER THE FACTS AN D CIRCUMSTANCES OF THE CASE. WE FIND THE CIT(A) HAS TAKEN A PRAGMATIC VIEW ON THIS ISSUE WHICH CALLS FOR NO INTERFERENCE FROM OUR SIDE. WE, THEREFORE, UPHOLD THE SAME AND THE GROUND RAISED BY THE REVENUE ON TH IS ISSUE IS DISMISSED. 22. THE GROUND OF APPEAL NO.5 BEING GENERAL IN NATU RE IS DISMISSED. 23 IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 30.04.2019. SD/- SD/- (KULDIP SINGH) (R.K PANDA) JUDICIAL MEMBER ACCOUNTAN T MEMBER *NEHA* DATE:- 30.04.2019 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI ITA NO.3347/DEL/2016 9 DATE OF DICTATION 10.04.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/ PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT 30.04.2019 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE HEAD CLERK. THE DATE ON WHICH FILE GOES TO THE ASSISTANT REGIST RAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER