ITO, UDAIPUR V. Shri Ashok Kumar Shah, UDAIPUR

ITA 346/JODH/2012

• Counselvise Citation: 34623314 RSA 2012
• Duration Of Justice: 1 year(s) 11 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 13-08-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 10-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Keywords: Depreciation; Rectification of order
• Section: 143(3); 263; 154; 139

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENCH : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 346 /JODH/2012 (A.Y. 2006 - 0 7 ) ITO , WARD - 1(2), UDAIPUR. VS. SHRI ASHOK KUMAR SHAH, 143, RAJMANDI BHAWAN, SEC. 11, HIRAN MAGARI, UDAIPUR. (APPELLANT) PAN NO. AEGPS 8640 L (RESPONDENT) ASSESSEE BY : NONE. DEPARTMENT BY : SHRI N.A. JOSHI - D.R. DATE OF HEARING : 1 3 / 0 8 /201 4 . DATE OF PRONOUNCEMENT : 08 /0 9 /201 4 . O R D E R PER N.K. SAINI, A.M TH IS IS AN APPEAL BY THE DEPARTMENT AGAINST THE ORDER DATED 12 /07 /201 2 OF L D . CIT(A), UDAIPUR . THE FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: ON THE FACTS AND IN THE PRESENT CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN : - 1. D ELETING ADDITION RECEIVED OF RS. 6 ,00,000/ - MADE ON ACCOUNT OF ADVANCE AMOUNT RECEIVED AGAINST THE PROPOSED SALE OF BUS. 2 2. DELETING DISALLOWANCE OF RS. 88,666/ - MADE ON ACCOUNT OF DEPRECIATION. 3. DELETING ADDITION OF RS. 4,30,000/ - MADE U/S. 40(A)(IA) OF THE I.T. ACT ON ACCOUNT OF NON - DEDUCTION OF TDS ON COMMISSION EXPENSES. THAT THE APPELLANT CRAVES TO ADD, AMEND, ALTER, DELETE OR MODIFY ANY OR ALL THE ABOVE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. 2 DURING THE COURSE OF HEARING, NOBODY WAS PRESENT ON BEHALF OF THE ASSESSEE. EARLIER ALSO, WHENEVER CASE WAS FIXED, NOBODY WAS PRESENT ON BEHALF OF THE ASSESSEE. THEREFORE, WE PROCEEDED TO DECIDE THIS APPEAL EXPARTE QUA THE ASSESSEE AFTER HEARING THE LEARNED D.R., OF COURSE ON MERIT. 3. FIRST ISSUE IN THIS APPEAL RELATES TO THE DELETION OF ADDITION OF RS. 6 LAC MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ADVANCE AMOUNT RECEIVED AGAINST THE PRO P OSED SALE OF BUS. 4. FACTS RELATING TO THIS ISSUE, IN BRIEF, ARE THAT THE ASSESSEE WAS ENGAGED IN RUNNING OF TOURIST BUSES UNDER THE NAME AND STYLE OF M/S. RAJ MANDIR TRAVELS AND FILED HIS RETURN OF INCOME DECLARING AN INCOME OF RS. 2,74,056/ - . THE ASSESSMENT WAS COMPLETED U/S. 143(3) OF THE I.T. ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT IN SHORT) VIDE ORDER DATED 06/11/2008 A FTER MAKING THE ADDITION OF RS. 30,000/ - ON AGREED BASIS FOR 3 UNVERIFIED COMMISSION EXPENSES. THEREAFTER, RECTIFICATION ORDER U/S. 154 OF THE ACT WAS PASSED ON 07/09/2009 WHEREIN AN ADDITION OF RS. 5,55,909/ - WAS MADE ON ACCOUNT OF EXCESS CLAIM OF DEPRECIATION THEREBY ASSESSING THE TOTAL INCOME OF RS. 8,59,965/ - . THE ORIGIN AL ORDER PASSED U/S. 143(3) OF THE ACT HAS BEEN SET ASIDE BY THE LD. CIT U/S. 263 OF THE ACT VIDE ORDER DATED 12/10/2010 AND THE CASE WAS RESTORED BACK TO THE ASSESSING OFFICER WITH THE DIRECTION TO PASS FRESH ASSESSMENT ORDER . THE ASSESSING OFFICER DURIN G THE COURSE OF FRESH ASSESSMENT PROCEEDINGS , NOTICED THAT THE ASSESSEE CLAIMED TO HAVE RECEIVED RS. 6 LAC FROM SHRI RAJENDRA SINGH IN SEPTEMBER, 2005 AS AN ADVANCE ON ACCOUNT OF SALE OF BUS NO. 5920. THE ASSESSING OFFICER OBSERVED THAT SINCE THE BUS WAS TRANSFERRED IN MARCH, 2005, SO IT WAS DIFFICULT TO BELIEVE THE STORY OF ADVANCE RECEIVED AMOUNTING TO RS. 6 LAC IN SEPTEMBER, 2005 AND AS THE ASSESSEE WAS NOT ABLE TO PRODUCE SHRI RAJENDRA SINGH FOR EXAMINATION , H E MADE THE ADDITION OF RS. 6 LAC. 5. BEIN G AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED AS UNDER: - ' THE LEARNED ASSESSING OFFICER PRESUMED THAT BUS NO.5920 WAS SOLD IN MARCH 2005, WITHOUT ANY BASIS OF DOCUMENTARY EVIDENCE INCLUDING BALANCE SHEET, DETAIL OF FIXED ASS ETS, WDV AS ON 1 - 04 - 2005 ETC FILED (ANNEX - 1). HENCE, THE ADVANCE RECEIVED AGAINST BUS IN SEPT., 2005 WAS NOT ACCEPTED BY HIM AND ADDED THE 4 AMOUNT OF RS.6 LACS TO THE TOTAL INCOME. WE SUBMIT THAT THE FACTS ARE QUITE DIFFERENT. THE BUS WAS SOLD ON 31 - 03 - 2006. THE FACT I.E. EXISTENCE OF VEHICLE NO. 5920, HAS BEEN SHOWN IN THE BALANCE SHEET, DETAILS OF FIXED ASSETS, SCHEDULE OF ADVANCES AS ON 31 - 03 - 2006. WE ACCEPT THAT IN THE LETTER DATED 29 - 11 - 2011, THE CORRECTION IN THE DATE WAS LEFT BY OVERSIGHT AN D THAT MAY MISLEAD THE JUDGMENT OF LEARNED ASSESSING OFFICER. THERE WAS NO TIME GIVEN TO OBTAIN THE CERTIFICATE OF TRANSFER FROM R.T.O. UDAIPUR. THE COPIES OF AFFIDAVIT AND CERTIFICATE OF R.T.O. IS ENCLOSED HEREWITH IN SUPPORT OF OUR SUBMISSION (ANNEX - 11). 6 . THE LEARNED CIT(A), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, DELETED THE ADDITION BY OBSERVING IN PARA 3.3 OF THE IMPUGNED ORDER WHICH READ AS UNDER: - 3.3 I HAVE CONSIDERED THE SUBMISSION OF THE APPELLANT AS WELL AS THE ASSESSMENT ORDER AND COMMENTS OF THE A.O. WHO WAS PRESENT IN APPEAL PROCEEDINGS. IT IS SEEN THAT THE APPELLANT HAS EXPLAINED IN THE ORIGINAL PROCEEDINGS THAT BY TYPING MISTAKE, IT HAS BEEN WRONGLY MENTIONED THAT THE BUS HAS BEEN SOLD ON 31.03.2005. THIS BUS WAS SOLD ON 31.3.20 06. IN SUPPORT OF THE RECEIPT OF THE ABOVE AMOUNT AS ADVANCE RECEIPTS IN SEPTEMBER, 2005, THE ASSESSEE HAS GIVEN AFFIDAVIT/CONFIRMATION OF SHRI RAJENDER SINGH AS PER WHICH HE HAS GIVEN ADVANCE OF RS.6 LACS IN CASH IN SEPTEMBER,2005 TO THE ASSESSEE FOR PURCHASE OF BUS NO. 5920. THE WORD 'ADVANCE' IN THIS AFFIDAVIT ITSELF SHOWS THAT THE BUS WAS SOLD AFTER THIS DATE. MOREOVER, THE ASSESSEE HAS ALSO SUBMITTED VERIFICATION OF REGISTRATION CERTIFICATE AS PER WHICH THE BUS WAS TRANSFERRED IN THE NAME OF YADVEN DRA SINGH ON 31.3.2006. ALSO STATEMENT OF DEPRECIATION CLAIMED SHOWS THAT THIS BUS CONTINUED TO BE RETAINED IN WDV AS ON 1.4.2005 AND UPTO 31.3.2006. ALL THESE FACTS GOE S TO SHOW THAT THIS BUS WAS TRANSFERRED ON 31.3.2006 AS CLAIMED BY THE APPELLANT. AS RE GARDS THE RECEIPT OF ADVANCE, THE APPELLANT HAS FILED CONFIRMATION SHOWING COMPLETE ADDRESSES OF SHRI RAJENDRA SINGH ALONGWITH PAN. ALSO, AS REGARDS THE NON PRODUCTION OF SHRI RAJENDER SINGH BEFORE THE A.O., IT HAS BEEN EXPLAINED THAT THE TRANSFEREE HAS RE FUSED TO ATTEND. IN SUCH CIRCUMSTANCES, THE ASSESSEE HAS DISCHARGED HIS PRIMARY ONUS BY WAY OF FURNISHING OF PAN OF THE PAYER, CONFIRMATION AND AFFIDAVIT OF THE PAYER ALONGWITH HIS ADDRESS. NO EVIDENCE CONTRARY TO CLAIM OF APPELLANT IS ON RECORD. IN VIEW O F ABOVE CIRCUMSTANCES, ADDITION OF RS.6 LACS IS NOT SUSTAINABLE AND IS DELETED. 5 NOW THE DEPARTMENT IS IN APPEAL. 7 . LEARNED D.R. STRONGLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND REITERATED THE OBSER VATIONS MADE IN THE ASSESSMENT ORDER DATED 07/ 12/2011. 8 . WE HAVE CONSIDERED THE SUBMISSIONS OF THE LEARNED D.R. AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THE PRESENT CASE, THE PURCHASER OF THE BUS SH R I RAJENDRA SINGH IN HIS AFFIDAVIT/ CONFIRMATION CLEARLY STATED THAT AN ADVANCE OF RS. 6 LAC WAS GIVEN IN CASH IN SEPTEMBER 2005 TO THE ASSESSEE FOR PURCHASE OF BUS NO. 5920. THE SAID BUS WAS TRANSFERRED IN THE NAME OF SHRI YAVENDRA SINGH ON 31/03/2006 . THEREFORE, THE ADDITION MADE BY THE ASSESSING OFFICER ON THIS BASIS THAT THE BUS WAS SOLD ON 31/03/2005 AND THE ADVANCE WAS TAKEN IN SEPTEMBER 2005 WAS BASED ON WRONG APPRECIATION OF THE FACTS . THEREFORE, THE L D. CIT(A) AFTER CONSIDERING THE FACTS OF THE CASE IN RIGHT PERSPECTIVE, WAS JUSTIFIED IN DELETING THE IMPUGNED ADDITION. WE DO NOT SEE ANY MERIT IN THIS GROUND OF THE DEPARTMENTAL APPEAL . 9 . NEXT ISSUE VIDE GROUND NO. 2 RELATES TO THE DELETION OF DISALLO WANCE OF RS. 88,666/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DEPRECIATION. 6 10 . FACTS RELATING TO THIS ISSUE, IN BRIEF, ARE THAT THE ASSESSING OFFICER DISALLOWED DEPRECIATION OF RS. 88,666/ - ON THE BUS NO. RJ - 27P - 5720 ON THIS BASIS THAT THE SAID BUS WAS SOLD IN MARCH, 2005 . WHEN THE MATTER WAS TAKEN TO THE LD. CIT(A), THE SAID DISALLOWANCE WAS DELETED ON THIS BASIS THAT THE BUS NO. RJ - 27P - 5720 WAS SOLD IN MARCH, 2006 AND NOT IN MARCH, 2005 . NOW THE DEPARTMENT IS IN APPEAL. 11 . WE HAVE CONSIDERED THE SUBMISSIONS OF LEARNED D.R. AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THE PRESENT CASE , WHILE DECIDING GROUND NO. 1 , IT HAS BEEN HELD THAT THE ASSESSEE SOLD THE BUS ON 31/03/2006 AND IT WAS TRANSFERRED ON THE SAID DATE, THEREFORE, THE ASSESSEE WAS ENTITLED FOR DEPRECIATION UPTO MARCH, 2006 AS SUCH THE LD. CIT(A) RIGHTLY DELETED THE IMPUGNED DISALLOWANCE MADE BY THE ASSESSING OFFICER. 12. THE LAST ISSUE VIDE GROUND NO. 3 RELATES TO THE DELETION OF ADDITION OF RS. 4,30,000 / - MADE BY THE ASSESSING OFFICER U/S. 40(A)(IA) OF THE ACT . 13 FACTS RELATING TO THIS ISSUE, IN BRIEF, ARE THAT THE ASSESSEE HAD SHOWN COMMISSION EXPENSES OF RS. 4,80,000/ - WHICH WERE PAID TO VARIOUS AGE NTS FOR BUS BOOKING. THE ASSESSING OFFICER NOTICED THAT THE LEDGER 7 ACCOUNT REVEALED THAT THE BOOKING AGENTS HAD PAID THE PAYMENTS TO THE ASSESSEE AFTER DEDUCTING COMMISSION . THE ASSESSEE EXPLAINED THAT OUT OF THE AMOUNT OF RS. 4,80,000/ - , A SUM OF RS. 50,000/ - HAD BEEN PAID TO DIFFERENT AUT O/ TAXI DRIVERS FOR BOOKING THE BUS THROUGH THEM A ND BALANCE AMOUNT WAS PAID TO THE FOLLOWING AGENTS: - 1 R A JMANDI TRAVELS, NATHDWARA AGENT SHRI DEEPAK SANADHYA 2 RAJMANDIR TRAVELS, MUMBAI AGENT SHRI GANESH CHO UDHARY 3 J.P. EAGLE TRAVELS, AMET AGENT SHRI CHANGANLAL GUJJAR 4 RAJ MANDIR TRAVELS, GOMTI CHOURAHA AGENT SHRI DHARMESH GUJJAR 5. PRITI TOURS & TRAVELS, GINGLA AGENT SHRI BABERMAL PATEL 6. TRISHA TRAVELS, JAGAT AGENT SHRI DINESH JAIN 14 THE ASSESSING OFFICER NOTICED THAT AS PER SECTION 194H, THE ASSESSEE SH OULD HAVE DEDUCTED TAX AT SOURCE WHILE MAKING THE ABOVE COMMISSION PAYMENT EXCEPT TO AUTO/TAXI DRIVERS OF RS. 50,000/ - AND AS THE SAID TDS WAS NOT DEDUCTED , THE ASSESSING OFFICER MADE THE ADDITION OF RS. 4,30,000/ - U/S. 40(A)(IA) OF THE ACT. 15 BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED AS UNDER: - WE SUBMIT THAT THE ASSESSEE IS DOING THE BUSINESS OF RUNNING THE TOURIST BUS ES TO THE VARIOUS PLACES. THE NATURE OF BUSINESS IS IN CASH TRANSACTION. YOUR KIND ATTENTION IS INVITED TO THE NAME AND ADDRESS OF THE AGENTS. MANY 8 OF THESE ARE SITUATED IN THE VILLAGES A ND THEY MAY NOT BE HAVING BANK ACCOUNT OR ASSESSED WITH INCOME TAX DEPARTMENT FOR SECURING BUSINESS WE CANNOT INSIST THEM ON ANY NEW CONDITION. THEY ARE IN BUSINESS WITH US SINCE A LONG TIME. FURTHER THE ASSESSING OFFICER HIMSELF MADE IT CLEAR THAT DEDUCTION OF TAX CANNOT BE POSSIBLE, AS THE ASSESSEE RECEIVED THE PAYMENT OF SALE PROCEEDS, AFTER DEDUCTING THE COMMISSION AMOUNT FROM THE AGENTS. THUS, IT IS VERY CLEAR THAT THE CIRCUMSTANCES ARE B EYOND HIS CONTROL . AND THE PLACES SITUATED AT RURAL AREAS THE PROVISION OF SECTION 194H AND 40(A)(IA) CANNOT BE COMPLIED AND ARE OUT OF THE PREVIEW OF LAW. HENCE, THE EXEMPTION FROM THE CONDITIONS SHOULD BE ALLOWED FROM THESE SECTIONS. THEREFORE, THE CL AIM SHOULD BE ALLOWED. FURTHER VIDE SUBMISSIONS DATED 10/07/2012, IT HAS BEEN SUBMITTED THAT THE COMMISSION PAID TO AGENT ON BOOKING OF TICKETS (GROUND NO. 5) , THE AMOUNT HAS ALREADY BEEN PAID IN FULL AND NO AMOUNT IS OUTSTANDING AS ON 31/03/2006. HENCE, WE SUBMIT THAT IT DOES NOT COVER U/S. 40(A)(IA). THEREFORE, IT SHOULD BE ALLOWED. 16 THE LEARNED CIT(A), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, OBSERVED THAT THE BOOKING AGENTS HAD BOOKED VARIOUS BUSES AND AFTER DED UCTING THEIR COMMISSION THE BALANCE AMOUNT HAD BEEN PAID TO THE ASSESSEE . SO, THE ASSESSEE RECEI V ED NET AMOUNT ONLY AND NOTHING WAS PAYABLE TO THE BOOKING AGENTS AT THE END OF THE PREVIOUS YEAR, THEREFORE, THE PROVISIONS OF SECT 40(A)(IA) WERE NOT APPLICABLE AS HAS BEEN HELD BY THE ITAT, SPECIAL BENCH , VISHAKHAPATNAM IN THE CASE OF MERILYIN SHIPPING & TRANSPORTERS VS. ACIT , RANGE - 1, VISHAKHAPATNAM REPORTED AT 70 DTR (SB) 81 . HE ACCORDINGLY DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. NOW TH E DEPARTMENT IS IN APPEAL. 9 17 . LEARNED D.R. STRONGLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND FURTHER SUBMITTED THAT THE TDS WAS NOT DEDUCTED BY THE ASSESSEE AND WAS NOT DEPOSITED BEFORE THE YEAR END, THEREFORE, DISALLOWANCE U/S. 40(A)(IA) OF THE ACT WAS RIGHTLY MADE BY THE ASSESSING OFFICER AND THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE SAME. 1 8 . WE HAVE CONSIDERED THE SUBMISSIONS OF LEARNED D.R. AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THE PRESENT CASE, IT IS NOTICE D THAT NO TDS WAS OUTSTANDING AND PAYABLE AT THE TIME OF THE DUE DATE OF FILING THE RETURN U/S. 139(1) OF THE ACT. IT IS ALSO NOTICED THAT A PROVISO TO SUB - CLAUSE (IA) OF CLAUSE (A) TO SECTION 40 OF THE ACT HAS BEEN SUBSTITUTED BY THE FINANCE ACT, 2010 AN D READ AS UNDER: - ( IA ) ANY INTEREST, COMMISSION OR BROKERAGE, [RENT, ROYALTY,] FEES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SERVICES PAYABLE TO A RESIDENT, OR AMOUNTS PAYABLE TO A CONTRACTOR OR SUB - CONTRACTOR, BEING RESIDENT, FOR CARRYING OUT ANY WORK (INCLUDING SUPPL Y OF LABOUR FOR CARRYING OUT ANY WORK), ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII - B AND SUCH TAX HAS NOT BEEN DEDUCTED OR, AFTER DEDUCTION, [HAS NOT BEEN PAID ON OR BEFORE THE DUE DATE SPECIFIED IN SUB - SECTION (1) OF SECTION 139 :] [ PROVIDED THAT WHERE IN RESPECT OF ANY SUCH SUM, TAX HAS BEEN DE DUCTED IN ANY SUBSEQUENT YEAR, OR HAS BEEN DEDUCTED DURING THE PREVIOUS YEAR BUT PAID AFTER THE DUE DATE SPECIFIED IN SUB - SECTION (1) OF SECTION 139 , SUCH SUM SHALL BE ALLOWED AS A DEDUCTION IN COMPUTING THE INCOME OF THE PREVIOUS YEAR IN WHICH SUCH TAX HAS BEEN PAID . ] 10 ALTHOUGH , THE SAID PROVISO IS SUBSTITUT ED W.E.F. 01/04/2010, HOWEVER, THE ITAT MUMBAI BENCH C IN THE CASE OF PIYUSH C. MEHTA VS. ACIT (SUPRA) BY FOLLOWING THE ORDER OF THE HON'BLE CALCUTTA HIGH COURT IN I.T.A.NO. 302/2011 GA 3200/2011 HAS HELD THAT THE AMENDMENT TO THE PROVISIONS OF SECTION 4 0(A)(IA) OF THE ACT IS RETROSPECTIVE W.E.F. 01/04/2005. IN THE PRESENT CASE, THE LD. CIT(A) WAS ALSO OF THE SAME VIEW WHILE DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. WE THEREFORE, BY FOLLOWING THE DECISION OF THE COORDINATE BENCH I.E. ITAT MUMBAI, IN THE CASE OF PIYUSH C. MEHTA VS. ACIT (SUPRA), DO NOT SEE ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) ON THIS ISSUE. ACCORDINGLY, WE DO NOT SEE ANY MERIT IN THE APPEAL OF THE DEPARTMENT ON THIS ISSUE. 19. IN THE RESULT, APPEAL OF THE DEPARTME NT IS DISMISSED . ( ORDER PRONOUNCED IN THE COURT ON 08 TH SEPTEMBER , 201 4) . ( HARI OM MARATHA ) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 08 TH SEPTEMBER , 201 4 . VR/ - 11 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD. CIT 4. THE CIT(A) 5. THE D.R SR. PRIVATE SECRETARY , ITAT, JODHPUR .