JAGDISH CONSTRUCTION LTD, M.P. V. ADDL CIT 4(2), MUMBAI

ITA 3473/MUM/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6362 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: J
• Assessment Year: 2012-2013
• Appeal Filed On: 12-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Additional evidence
• Section: 40(a)(ia); 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI RAMIT KOCHAR , ACCOUNTANT MEMBER ITA NO. 3473 / MUM/2017 ( ASSESSMENT YEAR : 20 12 1 3 ) JAGDISH CONSTRUCTION LTD., 8, SHASTRI NAGAR, NEEMUCH 458441 (M.P.) PAN AABCJ0294K . APPELLANT V/S ADDITIONAL COMMISSIONER OF INCOME TAX, AYAKAR BHAVAN, ROOM NO. 542, MARINE LINES, MUMBAI . RESPONDENT ASSESSEE BY : MS. DINK LE HARIA (AR) REVENUE BY : MS. DEEPIKA ARORA (DR) DATE OF HEARING 10 .0 1 .201 9 DATE OF ORDER 30.01.2019 O R D E R PER SAKTIJIT DEY, J.M. THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 23.03.2017 PASSED BY THE COMMISSIONER OF INCOME (APPEALS) - 9, MUMBAI , FOR THE ASSESSMENT 2012 - 13. 2. THE FIRST ISSUE RELATES TO DISALLOWANCE OF EXPENDITURE AMOUNTING TO RS. 1,55,532/ - . 2 JAGDISH CONSTRUCTION LTD. 3 . BRIEFLY THE FACTS ARE , THE ASSESSEE , A COMPANY , IS ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTIONS , MINING, EXCAVATION AND TRANSP ORTATION. F OR THE ASSESSMENT YEAR UNDER DISPUTE T HE ASSESSEE FILED ITS RETURN OF INCOME ON 29.09.2012 DECLARING TOTAL INCOME OF RS. 61,11,620/ - . DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTI CED THAT THE ASSESSEE HAS DE BITED AN AMOUNT OF RS. 31,10,640/ - TO THE PROFIT AND LOSS ACCOUNT TOWARDS VARI OUS EXPENDITURES. THEREFORE, HE CALLED UPON THE ASSESSEE TO FURNISH SUPPORTING BILLS AND ALSO PROVE THAT SUCH EXP ENDITURE WAS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. IN RESPONSE T O THE QUERY RAISED BY THE ASSESSING OFFICER, THE ASSESSEE FURNISHED BILLS AND VOUCHERS TO JUSTIFY THE CLAIM OF THE EXPENDITURE. HOWEVER, THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE EVIDENCES FURNISHED BY THE ASSESSEE. THEREFORE, HE DISALLOWED 10% OUT OF THE EXPENDITURE CLAIMED OF RS. 31,10,640/ - WHICH WORKED OUT TO RS.3,11,064/ - . THE ASSESSEE CHALLENGED THE AFORESAID DISALLOWANCE BEFORE L D. COMMISSIONER (APPEALS) . A FTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE L D. COMMISSIONER (APPEALS) REDUCED THE DISALLOWANCE TO 5% OF THE TOTAL EXPENSES CLAIMED BY THE ASSESSEE. LD. A UTHORIZED R EPRESENTATIVE SUBMITT E D , AS AGAINST THE TOTAL TURN OVER AT RS. 19 CRORES SHOWN BY THE ASSESSEE , EXPENDITURE INCURRED UNDER VARI OUS HEAD AMOUNT ED TO RS. 31,10,640/ - . FURTHER, S HE SUBMITTED , ALL EXPENDITURE S ARE SUPPORTED BY AUTHENTIC BILLS AND VOUCHERS. FURTHER, S HE SUBMITTED , UNDER IDENTICAL FACTS AND CIRCUMSTANCES THE TRIBUNAL IN ASSESSEES OWN 3 JAGDISH CONSTRUCTION LTD. CASE FOR ASSESSMENT YEAR 2004 - 05 HAD DELETED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. SH E SUBMITTED , GIV EN AN OPPORTUNITY, ASSESSEE CAN PROVE ALL THE EXPENDITURE CLAIMED THROUGH PROPER DOCUMENTARY EVIDENCE. THUS, SHE SUBMITTED , THE ISSUE MAY BE REST ORED BACK TO THE FILE OF THE ASSESSING OFFICER. 4 . THE L D. DEPARTMENTAL REPRESENTATIVE , THOUGH , RELIED UPON OF THE OBSERVATIONS OF THE COMMISSIONER (APPEALS), HOWEVER, HE HAS NO OBJECTION FOR RESTORING THE ISSUE TO THE ASSESSING OFFICER FOR FRESH ADJUD ICATION. 5 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS EVIDENT , OUT OF THE TOTAL EXPENDITURE CLAIMED OF RS. 31,10,640/ - UNDER VARI OUS HEADS, THE ASSESSING OFFICER HAS DISALLOWED 10% ON AD HOC BASIS WHICH HAS BEEN REDUCE D TO 5% BY T HE L D. COMMISSIONER (APPEALS) . I T IS THE CLAIM OF THE ASSESSEE BEFORE US THAT ALL EXPENDITURE S CLAIMED ARE SUPPORTED BY AUTHENTIC BILLS AND VOUCHERS. IT IS ALSO SUBMITTED THAT UNDER IDENTICAL FACTS AND CIRCUMSTANCES THE TRIBUNAL IN ASSESSEES O WN CASE FOR A.Y. 2004 - 05 HAS DELETED THE ADDITION. CONSIDERING THE AFORESAID SUBMISSIONS OF THE L D. A UTHORISED R EPRESENTATIVE , WE ARE INCLINED TO RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE AFRESH KEEPING IN VIEW THE DOCUMENTARY EVIDE NCES TO BE FILED AS WELL AS THE ORDER OF THE TRIBUNAL CLAIMED TO HAVE BEEN PASSED FOR ASSESSMENT YEAR 2004 - 05. NEEDLESS TO MENTION , THE ASSESSING OFFICER MUST AFFORD REASONABLE OPPORTUNITY OF BEING HEARD TO 4 JAGDISH CONSTRUCTION LTD. THE ASSESSEE BEFORE DECIDING THE ISSUE. THIS GROU ND IS ALLOWED FOR STATISTICAL PURPOSES. 6 . THE NEXT ISSUE RELATES TO DISALLOWANCE OF RS. 15,20,541/ - U/S 40(A)(IA) OF THE ACT. BRIEFLY THE FACTS ARE , DURING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS PAID INTEREST AMOUNTING TO RS. 15,20,541/ - TO NON - BANKING FINANCIAL INSTITUTION S (NBFC) WITHOUT DEDUCTING TAX AT SOURCE U/S 194A OF THE ACT. ACCORDINGLY, HE DISALLOWED THE SAID AMOUNT U/S 40(A)(IA) OF THE ACT. THOUGH, THE ASSESSEE CHALLENGED THE AFORE SAID DISALLOWANCE BEFORE THE FIRST APPELLATE AUTHORITY, HOWEVER , HE ALSO SUSTAINED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. THE L D. AUTHORIZED REPRESENTATIVE SUBMITTED , THOUGH , THE ASSESSEE HAS NOT DEDUCTED TAX AT SOURCE WHILE PAYING THE INTEREST , H OWEVER , THE PAYEES HAVE OFFERED THE PAYMENT RECEIVED BY THEM AS INCOME AND HAVE ALSO PAID TAX. SHE SUBMITTED , THOUGH , BEFORE THE COMMISSIONER (APPEALS) THE ASSESSEE HAS SUBMITTED DOCUMENTARY EVIDENCES SUPPORTING THE AFORESAID CLAIM , INCLUDING CERTIFICATE F ROM THE CONCERNED CHARTERED ACCOUNTANT AS PER THE PROVISION OF SECTION 201 (1), HOWEVER, LD. COMMISSIONER (APPEALS) SUSTAINED THE DISALLOWANCE WITHOUT ENTERTAINING THE EVIDENCE FILED BY THE ASSESSEE. TH US, LD. AUTHORISED REPRESENTATIVE SUBMITTED , THE ISSUE MAY BE RESTORED BACK TO THE ASSESSING OFFICER FOR CONSIDERING ASSESSEES CLAIM AFTER VERIFYING THE EVIDENCES . IN THIS CONTEXT L D. AUTHORISED 5 JAGDISH CONSTRUCTION LTD. REPRESENTATIVE D REW OUR ATTENTION TO THE CERTIFICATE ISSUED BY THE CHARTERED ACCOUNTANT PLACED IN THE PAPER BOOK. 7 . THE L D. DEPARTMENTAL REPRESENTATIVE HAS NO OBJECTION FOR FRESH VERIFICATION OF ASSESSEES CLAIM BY THE ASSESSING OFFICER. 8 . WE HAVE CONSIDER ED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THOUGH , IT MAY BE A FACT THAT WHILE PAYIN G INTEREST OF RS. 15,20,541/ - THE ASSESSEE HAS NOT DEDUCTED TAX AT SOURCE , HOWEVER, BEFORE THE FIRST APPELLATE AUTHORITY T HE ASSESSE E HAS PRODUCED DOCUMENTARY EVIDENCES BY WAY OF ADDITIONAL EVIDENCE TO DEMONSTRATE THAT PAYEES/RECIPIENT OF INTEREST FROM THE ASSESSEE HAVE NOT ONLY OFFERED SUCH INCOME BUT HAVE ALSO PAID TAX ON IT . A S COULD BE SEEN FROM THE FACTS ON RECORD, L D. COMMISSIONER (APPEALS) HAS REFUSED TO ENTERTAIN THE ADDIT IONAL EVIDENCES SUBMITTED BY THE ASSESSEE SIMPLY O N THE GROUND THAT THE ASSESSEE DID NOT PRODUCE THEM BEFORE THE ASSESSING OFFICER . IN OUR VIEW, REJECTION OF THE ADDITIONAL EVIDENCE S PRODUCED BY THE ASSESSEE AT THRESHOLD IS I M PROPER . IF THE PAYEES , AS CLAI MED BY THE ASSESSEE , HAVE OFFERED THE INTEREST INCOME TO TAX , THEN AS PER PROVISO TO SECTION 201 (1) READ WITH SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT, NO DISALLOWANCE CAN BE MADE U/S 40(A)(IA) OF THE ACT. THEREFORE, TO ESTABLIS H SUCH CLAIM IF THE A SSESSEE FURNISHES DOCUMENTARY EVIDENCES AS PER THE STATUTORY PROVISION, THEY SHOULD NOT BE REJECTED ON TECHNICAL GROUND. IN VIEW OF THE AFORESAID, WE ARE INCLINED TO RESTORE THE ISSUE TO THE ASSESSING OFFICE TO EXAMINE ASSESSEES CLAIM THAT THE PAYEES HAVE 6 JAGDISH CONSTRUCTION LTD. OFFERED THE INTEREST INCOME TO TAX IN THE RELEVANT ASSESSMENT YEAR . IN CASE THE ASSESSEE IS ABLE TO ESTABLISH ITS CLAIM THROUGH PROPER DOCUMENTARY EVIDENCES , I N OUR VIEW, NO DISALLOWANCES U/S 40(A)(IA) CAN BE MADE. THIS GROUND IS ALLOWED FOR STATISTICAL P URPOSES. 9 . IN THE RESULT, ASSESSEE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 30.01.2019. SD/ - SD/ - RAMIT KOCHAR ACCOUNTANT MEMBER SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 30.01.2019 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER ALINDRA PRIVATE SECRETARY (SR. PRIVATE SECRETARY) ITAT, MUMBAI