Asst. CIT, Circle-2, Solapur V. M/s. Vijay Construction, Solapur

ITA 338/PUN/2013

• Counselvise Citation: 33824514 RSA 2013
• Duration Of Justice: 1 year(s) 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 01-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJIB JAIN
• Assessee Lawyers: P S SHINGTE
• Keywords: Unexplained cash credit; Opportunity of being heard
• Section: 143(3); 194C; 68; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBE R AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO. 243/PN/2013 (ASSESSMENT YEAR: 2008-09) M/S. VIJAY CONSTRUCTION, 156, MURARJI PATH, SOLAPUR 413007 APPELLANT PAN NO.AABFV1071D VS. ASST. COMMISSIONER OF INCOME TAX, CIRCLE-2, SOLAPUR RESPONDENT ITA NO.338/PN/2013 (ASSESSMENT YEAR: 2008-09) ASST. COMMISSIONER OF INCOME TAX, CIRCLE-2, SOLAPUR APP ELLANT VS. M/S. VIJAY CONSTRUCTION, 156, MURARJI PATH, RESPONDENT SOLAPUR 413007 PAN NO.AABFV1071D ASSESSEE BY : SHRI P.S. SHINGTE REVENUE BY : SHRI RAJIB JA IN DATE OF HEARING : 04-07-2014 DATE OF PRONOUNCEMENT : 30-07-2014 ORDER PER G.S. PANNU, A.M . : THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AND T HE REVENUE AND ARE DIRECTED AGAINST THE ORDER OF THE C OMMISSIONER OF INCOME-TAX (APPEALS)-III, PUNE DATED 19-12-2011 WHICH, IN TURN, HAS ARISEN FROM ORDER DATED 27-12-2010 PASSE D BY THE ASSESSING OFFICER, UNDER SECTION 143(3) OF THE INCO ME-TAX ACT, 1961 (IN SHORT THE ACT), PERTAINING TO THE ASSESSM ENT YEAR 2008- 09. ITA NO 234 AND 338/PN/2013 M/S. VIJAY CONS TRUCTION 2. THE RESPECTIVE GROUNDS OF APPEAL RAISED BY THE A SSESSEE AND THE REVENUE ARE AS UNDER : GROUNDS BY ASSESSEE : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LOWER AUTHORITIES ERRED IN MAKING THE DISALLOWANCE OF RS.49,45,976/- BY INVOKING THE PROVISIONS OF SECTION 40 (A)(IA) IN RESPECT OF PAYMENTS MADE TO SUB -CONTRACTORS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LOWER AUTHORITIES ERRED IN MAKING THE DISALLOWANCE OF RS.3,95,894/- BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) IN RESPECT OF PAYMENTS MADE TO FINANCE COMPANIES. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LOWER AUTHORITIES ERRED IN MAKING THE ADDITION OF R S.21,20,000/- BY TREATING THE BUSINESS ADVANCES AS UNEXPIRED CASH CR EDIT. GROUNDS BY REVENUE : 1. THE HON'BLE CIT(A)-III, PUNE ERRED IN DELETING THE ADDITION OF RS.1,05,06,018/- MADE BY A.O. ON ACCOUNT OF DISALLO WANCE MADE BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE I.T.ACT, 1961 IN RESPECT OF PAYMENTS MADE TO SUB-CONTRACTORS BY PLAC ING RELIANCE ON THE DECISION OF HIGH COURT OF CALCUTTA, IN THE CASE OF CIT-XI CALCUTTA VS. VIRGIN CREATIONS (GA3200/2011 DATED 23/11/2011) WHEREIN CALCUTTA HIGH COURT HELD THAT THE AMENDMENT TO THE PROVISIONS OF SECTION 40(A)(IA) OF THE I.T ACT BY THE FINANCE ACT , 2010 HAS RETROSPECTIVE APPLICATION FROM 01.04.2005. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE CIT(A)-III, PUNE OUGHT TO HAVE UPHELD THE ORDER OF THE AO RELYI NG ON THE DECISION OF SPECIAL BENCH OF ITAT, MUMBAI IN THE CA SE OF BHARATI SHIPYARD LTD. VS. DY.CIT (132 ITD 53) DATED 09/09/2 011 WHEREIN IT IS HELD THAT THE AMENDMENT CARRIED OUT BY THE FINANCE ACT, 2010 TO THE PROVISIONS OF SECTION 40(A)(IA) CANNOT BE HELD TO R ETROSPECTIVE FROM A.Y.2005-06. THE SPECIAL BENCH ALSO HELD THAT AMEND MENT BROUGHT IN BY THE FINANCE ACT, 2010 TO SECTION 40(A)(IA) W. E.F 01-04-2010 IS NOT REMEDIAL AND CURATIVE IN NATURE. HOWEVER, RELIA NCE HAS BEEN PLACED BY HIM ON THE DECISION OF NON JURISDICTIONAL COURT OF HIGH COURT OF CALCUTTA. 3. THE ORDER OF THE CIT(A)-III PUNE, BE VACATED AN D THAT OF THE AO BE RESTORED. 3. IN SO FAR AS THE APPEAL OF THE REVENUE IS CONCER NED THE SOLITARY ISSUE RELATES TO THE ACTION OF THE CIT(A) IN DELETING THE ADDITION OF RS.1,05,06,018/- BY INVOKING SECTION 40 (A)(IA) OF THE ACT. THE SAID GROUND OF APPEAL IS COMPRISED OF A T OTAL ITA NO 234 AND 338/PN/2013 M/S. VIJAY CONS TRUCTION DISALLOWANCE OF RS.1,54,51,994/- MADE BY THE ASSESS ING OFFICER BY INVOKING SECTION 40(A)(IA) OF THE ACT WITH RESPE CT TO PAYMENTS MADE TO SUB-CONTRACTORS. THE CIT(A) DELETED THE AD DITION TO THE EXTENT OF RS.1,05,06,018/- WHILE RETAINING IT TO TH E EXTENT OF RS.49,45,976/-. THE REVENUE IS IN APPEAL BEFORE US CHALLENGING THE ORDER OF THE CIT(A) DELETING THE ADDITION OF RS .1,05,06,018/- WHEREAS THE ASSESSEE BY WAY OF GROUND OF APPEAL NO. 1 IS CHALLENGING THE DISALLOWANCE OF RS.49,45,976/- RETA INED BY THE CIT(A). SINCE THE TWO CROSS GROUNDS RELATES TO SIM ILAR ISSUE THEY ARE BEING TAKEN UP TOGETHER FOR ADJUDICATION. 4. IN BRIEF, THE FACTS ARE THAT ASSESSEE IS A PARTN ERSHIP FIRM ENGAGED IN THE BUSINESS OF CIVIL CONTRACTING AND FO R THE ASSESSMENT YEAR UNDER CONSIDERATION IT FILED A RETU RN OF INCOME DECLARING INCOME OF RS.31,01,138/-. THE SAID RETUR N OF INCOME WAS SUBJECT TO SCRUTINY ASSESSMENT. DURING THE COU RSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTIC ED THAT WITH RESPECT TO PAYMENTS MADE TO VARIOUS SUB CONTRACTORS AMOUNTING TO RS.1,54,51,994/-, AS DETAILED IN A TABULATION AP PEARING IN PARA 3 OF THE ASSESSMENT ORDER, ASSESSEE HAD EITHER NOT DEDUCTED TAX AT SOURCE IN ACCORDANCE WITH THE PROVISIONS OF CHAP TER XVII-B OF THE ACT OR HAVING DEDUCTED TAX AT SOURCE NOT DEPOSI TED THE SAME IN ACCORDANCE WITH THE PROVISIONS OF CHAPTER XVII-B OF THE ACT. THEREFORE, HE INVOKED THE PROVISIONS OF SECTION 40( A)(IA) OF THE ACT AND DISALLOWED THE EXPENDITURE OF RS.1,54,51,99 4/-. 5. THE CIT(A) NOTICED THAT WITH RESPECT TO PAYMENTS TO SUB- CONTRACTORS OF RS.1,05,06,018/-, TAX WAS DEDUCTED A T SOURCE BUT THE SAME WAS NOT DEPOSITED INTO THE GOVERNMENT ACCO UNT ON OR BEFORE THE DATE SPECIFIED IN RULE 30 OF THE INCOME TAX RULES, ITA NO 234 AND 338/PN/2013 M/S. VIJAY CONS TRUCTION 1962. HOWEVER, HE FOUND THAT THE TAX SO DEDUCTED W AS DEPOSITED BEFORE THE DUE DATE OF FILING OF RETURN PRESCRIBED U/S.139(1) OF THE ACT AND THEREFORE HE HELD THAT SUCH AMOUNT WAS NOT LIABLE FOR DISALLOWANCE U/S.40(A)(IA) OF THE ACT ON THE GROUND THAT THE AMENDMENT BROUGHT IN SECTION 40(A)(IA) OF THE ACT B Y THE FINANCE ACT, 2010 W.E.F. 01-04-2010 WAS RETROSPECTIVE IN OP ERATION FOLLOWING THE JUDGEMENT OF THE HONBLE CALCUTTA HIG H COURT IN THE CASE OF VIRGIN CREATIONS (GA 3200/2011 DATED 23-11- 2011). HAVING UPHELD THE PLEA OF THE ASSESSEE IN PRINCIPLE THE CIT(A) NOTICED THAT SINCE SUCH A PLEA WAS RAISED FOR THE F IRST TIME BEFORE HIM AND NOT BEFORE THE ASSESSING OFFICER, HE DEEMED IT FIT AND PROPER TO REQUIRE THE ASSESSING OFFICER TO VERIFY I F THE AMOUNT OF TDS CORRESPONDING TO THE PAYMENTS OF RS.1,05,06,018 /- WAS REMITTED TO THE GOVERNMENT ACCOUNT ON OR BEFORE THE DUE DATE OF FILING OF RETURN. THE CIT(A) HAS FURTHER DIRECTED THE ASSESSING OFFICER THAT IF THE TAX WAS SO DEPOSITED, THEN THE DISALLOWANCE OF RS.1,05,06,018/- SHALL STAND DELETED. AGAINST THE SAID DECISION OF THE CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 6. IN SO FAR AS THE BALANCE AMOUNT OF RS.49,45,576/ - IS CONCERNED, THE CIT(A) NOTICED THAT THE ASSESSEE DID NOT DEDUCT TAX AT SOURCE IN ACCORDANCE WITH THE PROVISIONS OF CHAPTER XVII-B AND ACCORDINGLY HE HELD THAT SUCH EXPENDITURE WAS L IABLE TO BE DISALLOWED IN TERMS OF SECTION 40(A)(IA) OF THE ACT . THE ASSESSEE IS IN APPEAL ON THIS ASPECT OF THE MATTER. 7. BEFORE US, THE LEARNED DEPARTMENTAL REPRESENTATI VE APPEARING FOR THE REVENUE HAS CONTENDED THAT THE CI T(A) ERRED IN HOLDING THAT THE AMENDMENT CARRIED OUT BY THE FINAN CE ACT, 2010 TO THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT W ERE APPLICABLE TO ITA NO 234 AND 338/PN/2013 M/S. VIJAY CONS TRUCTION THE INSTANT ASSESSMENT YEAR WHEREAS THE SAID AMENDM ENT WAS BROUGHT ON THE STATUTE W.E.F. 01-04-2010. THEREFOR E, ACCORDING TO THE LEARNED DEPARTMENTAL REPRESENTATIVE THE CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO DELETE THE ADDIT ION OF RS.1,05,06,018/-. 8. ON THIS ASPECT THE LEARNED REPRESENTATIVE FOR TH E ASSESSEE VEHEMENTLY POINTED OUT THAT THE CIT(A) HAS FOLLOWED THE JUDGEMENT OF THE HONBLE CALCUTTA HIGH COURT IN PRE FERENCE TO A CONTRARY VIEW LAID DOWN BY THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF BHARATI SHIPYARD LTD. VS. DY.CIT 132 IT D 53 AND THAT NO ERROR CAN BE FOUND IN THE ORDER OF THE CIT(A) WH EREIN THE JUDGEMENT OF A HIGH COURT HAS BEEN FOLLOWED AND THE RE IS NO CONTRARY DECISION OF ANOTHER HIGH COURT ON THIS POI NT. 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. QUA THE AMOUNT OF RS.1,05,06,018/- REPRESENTING PAYMENT TO SUB- CONTRACTORS, ASSESSEES PLEA BEFORE THE CIT(A) WAS THAT THE CORRESPONDING TAX DEDUCTED AT SOURCE WAS REMITTED T O THE GOVERNMENT ACCOUNT ON OR BEFORE THE DUE DATE OF FIL ING OF THE RETURN FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. ON THAT BASIS IT WAS SOUGHT TO BE CANVASSED THAT NO DISALLOWANCE WAS MERITED U/S.40(A)(IA) OF THE ACT HAVING REGARD TO THE AMEND MENT BROUGHT IN SECTION 40(A)(IA) OF THE ACT BY THE FINANCE ACT, 2010 W.E.F. 01- 04-2010 INSPITE OF THE FACT THAT SUCH TAX WAS NOT D EPOSITED IN TERMS OF PERIOD SPECIFIED IN RULE 30 OF THE INCOME TAX RULES. 10. IN THIS CONTEXT, IT MAY BE NOTICED THAT IN TERM S OF THE AMENDMENT BROUGHT IN SECTION 40(A)(IA) BY THE FINAN CE ACT, 2010 W.E.F. 01-04-2010 IT IS PRESCRIBED THAT WHERE AFTER DEDUCTION, TAX ITA NO 234 AND 338/PN/2013 M/S. VIJAY CONS TRUCTION HAS BEEN PAID ON OR BEFORE THE DUE DATE SPECIFIED I N SECTION 139(1) OF THE ACT, NO DISALLOWANCE U/S.40(A)(IA) OF THE ACT SHALL BE MADE. THE SAID AMENDMENT HAS BEEN MADE BY THE FINA NCE ACT, 2010 W.E.F.,01-04-2010, BUT ITS OPERATION HAS BEEN FOUND TO BE RETROSPECTIVE BY THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF VIRGIN CREATIONS (SUPRA). AS PER THE HONBLE HIGH COURT THE AMENDMENT WAS TO BE UNDERSTOOD AS RETROSPECTIVE IN OPERATION AND THUS IT WOULD MEAN THAT THE PAYMENTS/CREDITS IN QUESTION WHERE TDS WAS DEDUCTED AND REMITTED TO THE CREDIT O F THE GOVERNMENT ON OR BEFORE THE DUE DATE OF FILING OF R ETURN U/S.139(1) OF THE ACT FOR THE YEAR UNDER CONSIDERAT ION, NO DISALLOWANCE WAS TO BE MADE U/S.40(A)(IA) OF THE AC T. IN VIEW OF THE AFORESAID JUDGEMENT OF THE HONBLE CALCUTTA HIG H COURT AND THERE BEING NO CONTRARY JUDGEMENT OF ANOTHER HIGH C OURT, WE FIND NO REASONS TO DEVIATE FROM THE CONCLUSION DRAWN BY THE CIT(A) ON THIS ASPECT. NO DOUBT, SPECIAL BENCH OF THE TRIBUN AL IN THE CASE OF BHARATI SHIPYARD LTD. (SUPRA) HAS TAKEN A CONTRARY VIEW BY HOLDING THAT THE AMENDMENT BROUGHT IN SECTION 40(A) (IA) OF THE ACT BY THE FINANCE ACT, 2010 W.E.F. 01-04-2010 WAS NOT RETROSPECTIVE IN OPERATION. HOWEVER, JUDGMENT OF H ONBLE HIGH COURT, THOUGH NON JURISDICTIONAL, IS TO PREVAIL OVE R THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL, HAVING REGARD TO THE JUDICIAL DISCIPLINE. THEREFORE, WE FIND NO JUSTIFICATION ON THE PART OF THE REVENUE IN ASSAILING THE ORDER OF THE CIT(A) ON THE GROUND THAT THE CIT(A) FOLLOWED THE JUDGEMENT OF THE HONBLE CA LCUTTA HIGH COURT IN THE CASE OF VIRGIN CREATIONS (SUPRA) ON TH E SUBJECT CONTROVERSY. THUS, IN SO FAR AS GROUND OF APPEAL R AISED BY THE REVENUE IS CONCERNED, WE FIND NO MERIT IN THE SAME. ACCORDINGLY, THE GROUND OF REVENUE IS DISMISSED. ITA NO 234 AND 338/PN/2013 M/S. VIJAY CONS TRUCTION 11. NOW WE MAY TAKE UP THE BALANCE OF THE DISALLOWA NCE OF RS.49,45,976/- WHICH HAS BEEN SUSTAINED BY THE CIT( A). THE DETAILS OF SUCH PAYMENTS HAVE BEEN TABULATED IN PAR A 2.3(A)(I) OF THE ORDER OF THE CIT(A). THE AFORESAID PAYMENTS HA VE BEEN MADE TO SUB-CONTRACTORS ON VARIOUS DATES. IT WAS NOTICE D THAT ASSESSEE DID NOT DEDUCT THE REQUISITE TDS AT THE TIME OF MAK ING PAYMENTS TO THE SUB-CONTRACTORS. HOWEVER, ACCORDING TO THE ASSESSEE, IT DEDUCTED TAX AT SOURCE WHEN THE BILLS RAISED BY THE RECIPIENT SUB- CONTRACTORS WERE ULTIMATELY ADJUSTED/CREDITED IN TH E ACCOUNT BOOKS. THE CLAIM OF THE ASSESSING OFFICER AND THER EAFTER THE CIT(A) IS TO THE EFFECT THAT THE PROVISIONS OF CHAP TER XVII-B, I.E. SECTION 194C IN THIS CASE, REQUIRE THAT TAX OUGHT T O HAVE BEEN DEDUCTED AT THE TIME OF MAKING THE PAYMENT OR AT TH E TIME OF CREDIT, WHICHEVER IS EARLIER. SINCE THE ASSESSEE F AILED TO DEDUCT THE TAX AT SOURCE AT THE TIME OF MAKING THE PAYMENT S, WHICH IS EARLIER, THEREFORE, ACCORDING TO THE REVENUE SUCH F AILURE ATTRACTED THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. 12. BEFORE US, THE PLEA RAISED BY THE LEARNED COUNS EL IS THAT THOUGH THE ASSESSEE DID NOT DEDUCT THE REQUISITE TD S AT THE TIME OF MAKING THE PAYMENTS YET THE TAX WAS DULY DEDUCTE D AT THE TIME OF ADJUSTING/CREDITING THE BILLS RAISED BY THE SUB- CONTRACTOR, WHICH WAS DONE DURING THE YEAR UNDER CONSIDERATION ITSELF AND THE REQUISITE TAX WAS DEPOSITED IN THE GOVERNMENT ACCOU NT BEFORE THE DUE DATE OF FILING OF RETURN SPECIFIED U/S.139(1) O F THE ACT FOR THE YEAR UNDER CONSIDERATION. THEREFORE, ACCORDING TO THE LEARNED COUNSEL FOLLOWING THE JUDGEMENT OF THE HONBLE CALC UTTA HIGH COURT IN THE CASE OF VIRGIN CREATIONS (SUPRA) THE S AID AMOUNT OF ITA NO 234 AND 338/PN/2013 M/S. VIJAY CONS TRUCTION EXPENDITURE ALSO DOES NOT ATTRACT DISALLOWANCE U/S. 40(A)(IA) OF THE ACT. 13. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS DEF ENDED THE DISALLOWANCE SUSTAINED BY THE CIT(A) BY POINTING OU T THAT APART FROM NOT DEDUCTING THE TAX AT SOURCE IN THE MANNER PRESCRIBED U/S.194C OF THE ACT, THE CIT(A) ALSO FOUND THAT THE TDS WAS NOT DEPOSITED BEFORE THE DUE DATE OF FILING OF RETURN U /S.139(1) OF THE ACT. 14. IN REPLY, LEARNED REPRESENTATIVE FOR THE ASSESS EE FURNISHED A CHART SHOWING THAT THE ENTIRE TDS, INCLUDING THAT R ELATING TO THE IMPUGNED PAYMENTS, WAS DEPOSITED BEFORE THE DUE DAT E OF FILING OF RETURN SPECIFIED U/S.139(1) OF THE ACT. IT HAS ALSO BEEN ASSERTED THAT THE OBSERVATION OF THE CIT(A) CONTAIN ED IN PARA 2.3(A)(I) TO THE CONTRARY IS BASED ON A MISREADING OF THE ASSESSEES SUBMISSIONS MADE BEFORE HIM. IN ANY CAS E, THE LEARNED COUNSEL SUBMITTED THAT THE SAID ASPECT CAN BE A MATTER OF VERIFICATION AS TO WHETHER ASSESSEE HAD DEPOSITED T HE REQUISITE TAX DEDUCTED AT SOURCE BEFORE THE DUE DATE FOR FILING O F RETURN SPECIFIED U/S.139(1) OF THE ACT OR NOT. 15. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. IN OUR CONSIDERED OPINION, THE ASSESSING OFFICER AND ALSO THE CIT(A) HAVE MISDIRECTED THEMSELVES IN INVOKING SECTION 40(A)(IA ) OF THE ACT MERELY ON THE GROUND THAT TAX WAS NOT DEDUCTED BY T HE ASSESSEE AT THE TIME OF MAKING IMPUGNED PAYMENTS TO THE SUB - CONTRACTORS. NO DOUBT SECTION 194C OF THE ACT REQU IRES AN ASSESSEE TO DEDUCT TAX AT SOURCE AT THE TIME OF MAK ING PAYMENT OR AT THE TIME OF CREDITING THE ACCOUNT OF THE RECI PIENT, WHICHEVER IS EARLIER. SO HOWEVER, SECTION 40(A)(IA) OF THE A CT IS TRIGGERED ITA NO 234 AND 338/PN/2013 M/S. VIJAY CONS TRUCTION ONLY IN SITUATION WHERE TAX HAS NOT BEEN DEDUCTED O R AFTER DEDUCTION HAS NOT BEEN PAID ON OR BEFORE THE DUE DA TE SPECIFIED IN SUB-SECTION (1) OF SECTION 139 OF THE ACT, AS AMEND ED BY THE FINANCE ACT, 2010. NOTABLY, THE RIGOURS OF SECTION 40(A)(IA) OF THE ACT OPERATE ONLY IN RELATION TO PAYMENTS ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII-B AND SUCH TAX HAS NOT BEEN DEDUCTED OR, AFTER DEDUCTION, [HAS NOT BEEN PA ID ON OR BEFORE THE DUE DATE SPECIFIED IN SUB-SECTION (1) OF SECTION 139. 15.1 THE AFORESAID EXPRESSION IN SECTION 40(A)(IA) OF THE ACT CLEARLY SHOW THAT IT MERELY SEEKS TO DISALLOW EXPEN DITURE ON PAYMENTS ON WHICH TAX HAS NOT BEEN DEDUCTED OR WHER E AFTER DEDUCTION IT HAS NOT BEEN PAID IN THE MANNER PRESCR IBED. PERHAPS, CASES OF DELAYED DEDUCTION ARE NOT SOUGHT TO BE COV ERED IN THE MISCHIEF OF SECTION 40(A)(IA) OF THE ACT; BUT IN AN Y CASE, IN THE PRESENT CASE IT IS NOT IN DISPUTE THAT BEFORE THE E ND OF THE PREVIOUS YEAR ITSELF, ASSESSEE HAS DEDUCTED THE TA X AT SOURCE AND THE SAME IS CLAIMED TO HAVE BEEN PAID ON OR BEFORE THE DUE DATE SPECIFIED IN SECTION 139(1) OF THE ACT. THUS, IN TH IS BACKGROUND, IN PRINCIPLE, WE UPHOLD THE PLEA OF THE ASSESSEE FOLLO WING THE RATIO OF THE JUDGEMENT OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF VIRGIN CREATIONS (SUPRA). HOWEVER, SINCE THERE IS AN AMBIGUITY WITH REGARD TO THE ACTUAL DATE OF DEPOSIT TO THE AC COUNT OF THE GOVERNMENT, WE DEEM IT FIT AND PROPER TO RESTORE TH E MATTER BACK TO THE FILE OF THE ASSESSING OFFICER WHO SHALL VERI FY AS TO WHETHER THE AMOUNTS OF TDS CORRESPONDING TO THE PAYMENTS OF RS.49,45,976/- TO THE SUB-CONTRACTORS WAS DEPOSITED INTO THE GOVERNMENT ACCOUNT ON OR BEFORE THE DUE DATE OF FIL ING OF RETURN OF INCOME SPECIFIED U/S.139(1) OF THE ACT FOR THE Y EAR UNDER CONSIDERATION. IF ASSESSING OFFICER IS SATISFIED, THEN NO ITA NO 234 AND 338/PN/2013 M/S. VIJAY CONS TRUCTION DISALLOWANCE U/S.40(A)(IA) OF THE ACT SHALL REMAIN, OTHERWISE THE ASSESSING OFFICER SHALL BE AT LIBERTY TO PROCEED AS PER LAW. NEEDLESS TO MENTION THE ASSESSING OFFICER SHALL ALL OW THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD IN SUPPORT OF HIS STAND BEFORE PASSING A SPEAKING ORDER ON THIS ASPECT. AC CORDINGLY, ON THIS ACCOUNT ASSESSEE SUCCEEDS FOR STATISTICAL PURP OSES. 16. GROUND APPEAL NO.2 RAISED BY THE ASSESSEE IS WI TH REGARD TO A DISALLOWANCE OF RS.3,95,894/- SUSTAINED BY THE CI T(A) ON ACCOUNT OF SECTION 40(A)(IA) OF THE ACT. IN THIS R EGARD, BRIEF FACTS ARE, THE ASSESSING OFFICER DISALLOWED A SUM OF RS.5 ,66,900/- U/S.40(A)(IA) OF THE ACT IN RESPECT OF PAYMENT/CRED IT OF INTEREST TO FINANCE COMPANIES. THE CIT(A) DELETED A SUM OF RS. 1,71,006/- AND RETAINED BALANCE OF RS.3,95,894/-. NOT BEING S ATISFIED WITH THE ORDER OF THE CIT(A) THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 17. ON THIS ASPECT, THE FINDING OF THE LOWER AUTHOR ITIES IS THAT THE ASSESSEE HAS NOT DEDUCTED AT SOURCE U/S.194A OF THE ACT FROM THE PAYMENTS/CREDITS OF THE IMPUGNED INTEREST MADE TO THE FINANCE COMPANIES. IN THIS VIEW OF THE MATTER, THE PROVISIONS OF SECTION 40(A)(IA) HAVE BEEN HELD TO BE ATTRACTED. 18. ON THIS ASPECT, THE PLEA OF THE LEARNED COUNSEL BEFORE US IS BASED ON THE SECOND PROVISO INSERTED IN SUB-CLAUSE( IA) OF CLAUSE (A) OF SECTION 40 BY THE FINANCE ACT, 2010 W.E.F. 0 1-04-2013. AS PER THE SAID AMENDMENT IT IS PRESCRIBED THAT THE DI SALLOWANCE U/S.40(A)(IA) OF THE ACT IS NOT ENVISAGED, IF ASSES SEE FAILS TO DEDUCT THE FULL OR ANY PART OF THE TAX IN ACCORDANC E WITH THE PROVISIONS OF CHAPTER XVII-B UNLESS THE ASSESSEE IS DEEMED TO BE ITA NO 234 AND 338/PN/2013 M/S. VIJAY CONS TRUCTION AN ASSESSEE IN DEFAULT UNDER THE FIRST PROVISO TO S UB-SECTION (1) OF SECTION 201 OF THE ACT. 19. THE LEARNED COUNSEL HAS SUBMITTED THAT FOLLOWIN G THE RATIO OF THE JUDGEMENT OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF VIRGIN CREATIONS (SUPRA), WHICH DEALT WITH THE FIRS T PROVISO INSERTED BY THE FINANCE ACT, 2010 THE IMPUGNED AMEN DMENT BY THE LEGISLATURE BE ALSO CONSIDERED AS RETROSPECTIVE IN OPERATION SINCE IT HAS BEEN INTRODUCED TO ELIMINATE UNINTENDE D AND UNDUE HARDSHIPS TO THE TAXPAYERS. IN THIS CONTEXT, RELIA NCE HAS BEEN PLACED ON A DECISION OF OUR COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. M/S. GAURIMAL MAHAJAN & SONS VIDE I TA NO.1852/PN/2012 ORDER DATED 06-01-2014 WHEREIN SIMI LAR PROPOSITION RAISED BY THE ASSESSEE WAS RESTORED TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO EXAMINE THE S AME AFRESH AND IN ACCORDANCE WITH LAW, FOLLOWING THE DECISION OF T HE COCHIN BENCH OF THE TRIBUNAL IN THE CASE OF ANOTNY D. MUNDACKAL VS. ACIT VIDE ITA NO.38/COCH/2013 ORDER DATED 29-11-2013. 20. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS NOT SERIOUSLY OPPOSED THE PRAYER OF THE ASSESSEE FOR REMANDING TH E ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER TO BE EXAMINED IN THE LIGHT OF THE NEW PLEA NOW RAISED BY THE ASSESSEE. 21. HAVING CONSIDERED THE RIVAL STANDS, WE FIND THA T THE PLEA RAISED BY THE ASSESSEE IS A FRESH PLEA, WHICH WAS N OT RAISED BEFORE THE LOWER AUTHORITIES. THE PLEA RAISED IS BASED ON THE SECOND PROVISO INSERTED IN SECTION 40(A)(IA) OF THE ACT BY THE FINANCE ACT, 2012 W.E.F. 01-04-2013. UNDER SIMILAR CIRCUMSTANCE S, OUR COORDINATE BENCH IN THE CASE OF M/S. GAURIMAL MAHAJ AN & SONS ITA NO 234 AND 338/PN/2013 M/S. VIJAY CONS TRUCTION (SUPRA) HAS DEEMED IT FIT TO RESTORE THE ISSUE TO T HE FILE OF THE ASSESSING OFFICER WITH DIRECTIONS TO DECIDE THE ISS UE AFRESH IN ACCORDANCE WITH LAW. FOLLOWING THE SAID PRECEDENT, IN THE PRESENT CASE ALSO, THE MATTER IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER WHO SHALL RE-VISIT THE ISSUE AFTER ALLOWING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD IN THE MATTER . THE ASSESSING OFFICER SHALL CONSIDER THE PLEA RAISED BY THE ASSESSEE AND THEREAFTER PASS AN ORDER AFRESH ON THIS ASPECT IN ACCORDANCE WITH LAW. THUS, ON THIS ASPECT ASSESSEE SUCCEEDS F OR STATISTICAL PURPOSES. 22. THE LAST GROUND RAISED BY THE ASSESSEE IS WITH REGARD TO ADDITION OF RS.21,20,000/- MADE BY TREATING THE BUS INESS ADVANCES AS UNEXPLAINED CASH CREDITS. IN THIS CONT EXT, THE RELEVANT FACTS ARE THAT THE ASSESSEE WAS FOUND TO H AVE RECEIVED AMOUNTS IN CASH FROM 9 PERSONS DETAILED IN PARA 4.1 OF THE ORDER OF THE CIT(A). ON BEING CALLED UPON BY THE ASSESSI NG OFFICER TO PRODUCE THE AFORESAID PERSONS ALONG WITH THEIR PROO F OF IDENTITY, DETAILS OF BANK PASSBOOK, INCOME-TAX ASSESSMENTS ET C. TO PROVE THEIR CREDIT WORTHINESS AND GENUINENESS OF THE TRAN SACTIONS, THE ASSESSING OFFICER HAS NOTED THAT ASSESSEE FAILED TO ADDUCE ANY EVIDENCE IN SUPPORT OF THE AFORESAID CASH CREDITS A ND THEREFORE THE ENTIRE AMOUNT WAS ADDED TO THE INCOME OF THE ASSESS EE BY INVOKING SECTION 68 OF THE ACT. THE CIT(A) HAS ALS O AFFIRMED THE ADDITION AGAINST WHICH THE ASSESSEE IS IN APPEAL BE FORE US. 23. BEFORE US THE LEARNED COUNSEL HAS REITERATED TH E SUBMISSIONS PUTFORTH BEFORE THE LOWER AUTHORITIES. AS PER THE ASSESSEE THE AMOUNTS WERE RECEIVED IN CASH FROM SUC H PERSONS WITH THE INTENTION OF GIVING MACHINERIES ON RENT. H OWEVER, ITA NO 234 AND 338/PN/2013 M/S. VIJAY CONS TRUCTION EVENTUALLY THE MACHINERIES COULD NOT BE LENT AND AM OUNTS WERE REPAID. HOWEVER, THE ASSESSEE COULD NOT CONTACT TH E PARTIES TO OBTAIN ANY CONFIRMATIONS ETC., BUT IT HAS ASSERTED THAT THE CREDITS ARE GENUINE. 24. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REPR ESENTATIVE APPEARING FOR THE REVENUE HAS RELIED UPON THE ORDER S OF THE AUTHORITIES BELOW IN SUPPORT OF THE CASE OF THE REV ENUE. THE LEARNED DEPARTMENTAL REPRESENTATIVE SPECIFICALLY PO INTED OUT THAT NO MATERIAL WAS FURNISHED BY THE ASSESSEE IN SUPPOR T OF HIS PLEA AND THEREFORE THE ADDITION U/S.68 OF THE ACT HAS BE EN RIGHTLY SUSTAINED BY THE CIT(A). 25. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. SECTION 68 OF THE ACT POSTULATES THAT WHERE ANY SUM IS FOUN D CREDITED IN THE ACCOUNT BOOKS OF AN ASSESSEE AND THE ASSESSEE O FFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION O F THE ASSESSING OFFICER, SATISFACTORY, THEN THE SUM SO CREDITED MAY BE CHARGED TO INCOME-TAX AS INCOME OF THE ASSESSEE OF THE PREVIOU S YEAR. OSTENSIBLY, HAVING REGARD TO THE PROVISIONS OF SECT ION 68 OF THE ACT, THE ONUS IS ON THE ASSESSEE TO ESTABLISH THE N ATURE AND SOURCE OF THE IMPUGNED CASH CREDITS APPEARING IN IT S BOOKS OF ACCOUNT. OSTENSIBLY, THE INGREDIENTS OF SECTION 68 OF THE ACT CAN BE SAID TO BE SATISFIED IF ASSESSEE IS ABLE TO ESTA BLISH THE IDENTITY, CREDIT WORTHINESS OF THE CREDITORS AND GENUINENESS OF THE TRANSACTIONS. CONSIDERED IN THE AFORESAID BACKGROU ND, THE ORDERS OF THE AUTHORITIES BELOW CLEARLY ESTABLISH THAT NON E OF THE INGREDIENTS OF SECTION 68 OF THE ACT CAN BE SAID TO HAVE BEEN SATISFIED BY THE ASSESSEE IN THE PRESENT CASE. THE RE IS NO MATERIAL ITA NO 234 AND 338/PN/2013 M/S. VIJAY CONS TRUCTION TO SHOW THE IDENTITY OF THE CREDITORS. INFACT THE NATURE OF THE CREDITS, CLAIMED TO BE ADVANCES RECEIVED FOR HIRING OF MACHINERY, ITSELF HAS NOT BEEN ESTABLISHED BY THE ASSESSEE. I N THE ABSENCE OF ANY MATERIAL AND EVIDENCE TO ESTABLISH EITHER THE N ATURE OR THE SOURCE OF THE CREDITS IN QUESTION, IN OUR VIEW, THE LOWER AUTHORITIES HAVE RIGHTLY INVOKED SECTION 68 OF THE ACT IN MAKIN G THE IMPUGNED ADDITION. THE SAME IS HEREBY AFFIRMED HAVING REGAR D TO THE MATERIAL AND EVIDENCE ON RECORD. THUS, ON THIS GRO UND ASSESSEE FAILS. 26. RESULTANTLY, THE APPEAL OF THE REVENUE IS DISMI SSED AND THAT OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 30-07-2014. SD/- SD/- (SHAILENDRA KUMAR YADAV) (G.S. PA NNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED : 30 TH JULY 2014 SATISH COPY TO:- 1) ASSESSEE 2) DEPARTMENT 3) THE CIT (A)-III, PUNE 4) THE CIT-III, PUNE 5) THE DR, A BENCH, I.T.A.T., PUNE. BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY I.T.A.T., PUNE