Mr. Satish Arora, Delhi V. ACIT, New Delhi

ITA 3516/DEL/2016

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 7806 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Assessment Year: 2012-2013
• Appeal Filed On: 14-06-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Corroborative evidences; TDS
• Section: 143(3); 40(a)(ia); 133(6); 201(1)

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL, DELHI BENCH G, NEW DELHI BEFORE : SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI B.R.R. KUMAR, ACCOUNTANT MEMBER ITA NO. 3516/DEL/2016 ASSESSMENT YEAR: 2012-13 SATISH ARORA, B - 202, VIVEK VIHAR, PHASE-I, DELHI (PAN-ADHPA5753E) (APPELLANT) VS. ACIT, CIRCLE 22(2), NEW DELHI. (RESPONDENT) APPELLANT BY SH.R.S. SINGHVI, CA & SH. SATYAJIT GOYAL, CA RESPONDENT BY SH. N.K. BANSAL, SR. DR ORDER PER AMIT SHUKLA, J.M.: THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESS EE AGAINST IMPUGNED ORDER DATED 20.05.2016, PASSED BY THE LD. CIT(A)-20 FOR THE QUANTUM OF ASSESSMENT PASSED U/S. 143(3) OF THE IT ACT FOR THE ASSESSMENT YEAR 2012-13. IN THE GROUNDS OF APPEAL, THE ASSESSEE HAS CHALLENG ED FOLLOWING TWO ADDITIONS : 2. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) -XX HAS WRONGLY, ARBITRARILY AND AGAINST THE LAW AND FACTS OF THE CA SE, CONFIRMED THE ADDITION/DISALLOWANCE OF RS 10,00,000/- MADE ON ADH OC/ESTIMATED BASIS TO THE INCOME OF THE ASSESSEE BEING DISALLOWANCE ON AC COUNT OF UNVERIFIABLE PURCHASES OUT OF TOTAL PURCHASES OF BUILDING MATERI AL AMOUNTING TO RS 2,47,54,135/- WHEREAS THE BOOKS OF ACCOUNT ALONG WI TH DETAILS OF PURCHASES DATE OF HEARING 19.09.2019 DATE OF PRONOUNCEMENT 14 .10.2019 ITA NO. 3516/DEL/2016 2 FROM VARIOUS SUPPLIERS WITH BILLS AND VOUCHERS IN E VIDENCE OF PURCHASE OF THE SAME WERE DULY PRODUCED DURING THE COURSE OF ASSESS MENT PROCEEDINGS. 3. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS)- XX HAS WRONGLY, ARBITRARILY AND AGAINST THE LAW AND FACTS OF THE CA SE, CONFIRMED THE ADDITION OF RS 24,07,842/- TO THE INCOME OF THE ASSESSEE BEI NG DISALLOWANCE U/S 40(A)(IA) ON ACCOUNT OF NON DEDUCTION OF TDS ON INTE REST AMOUNTING TO RS 24,07,842/- PAID TO PNB HOUSING FINANCE LIMITED WHE REAS THE SAME HAS BEEN SHOWN BY PNB HOUSING FINANCE LIMITED AS ITS IN COME AND REQUISITE TAX HAS BEEN PAID BY THEM. 2. THE BRIEF FACTS ARE THAT THE ASSESSEE IS A DEVEL OPER AND CIVIL CONTRACTOR. HE AND PURCHASES PLOTS AND THEN AFTER CONSTRUCTION, SE LLS IT AS APARTMENTS. THE LD. ASSESSING OFFICER, ON PERUSAL OF THE TRADING AND PR OFIT & LOSS ACCOUNT, OBSERVED THAT THE ASSESSEE HAS DEBITED A SUM OF RS.1,49,93,7 60/- ON ACCOUNT OF PURCHASES OF BUILDING MATERIAL OF RS.2,47,54,135/-. THE ASSES SING OFFICER REQUIRED THE ASSESSEE TO FURNISH THE BILLS AND VOUCHERS WHICH WE RE DULY PRODUCED AND CHECKED BY THE ASSESSING OFFICER. HOWEVER, THE ASSE SSING OFFICER OBSERVED THAT SOME OF THE BILLS WERE MISSING OR WERE SELF GENERAT ED. ACCORDINGLY, HE PROCEEDED TO MAKE ADHOC DISALLOWANCE OF RS.10,00,00 0/- ON ACCOUNT OF UNVERIFIABLE PURCHASES. THE LD. CIT(A) HAD CONFIRME D THE SAID ADDITION. 3. AFTER HEARING BOTH THE PARTIES AND ON PERUSAL OF THE RELEVANT FINDINGS GIVEN IN THE IMPUGNED ORDER, WE FIND THAT THE ASSES SEE HAD PRODUCED BOOKS OF ITA NO. 3516/DEL/2016 3 ACCOUNT ALONG WITH BILLS AND VOUCHERS IN RESPONSE T O THE SHOW CAUSE NOTICE ISSUED BY THE ASSESSING OFFICER. THE ASSESSING OFFI CER HAS NEITHER PIN-POINTED NOR SUPPLIED THE LIST OF MISSING VOUCHERS NOR HAS A SKED FOR ANY MISSING VOUCHERS DURING THE COURSE OF ASSESSMENT PROCEEDING S, WHICH IS EVIDENT FROM THE ASSESSEES SUBMISSIONS MADE BEFORE THE CIT(A), AS MENTIONED AT PAGE 3 OF THE APPELLATE ORDER. IN FACT, IT HAS BEEN STATED TH AT THE ASSESSEE HAS NEVER GIVEN ANY EXPLANATION THAT ANY BILLS OR VOUCHERS HAS BEEN MISSING. IF THE BOOKS OF ACCOUNTS ALONG WITH ALL THE BILLS HAVE BEEN PRODUCE D AND TRADING ACCOUNT HAS BEEN ACCEPTED, THEN SUCH AN ADHOC DISALLOWANCE ON A CCOUNT OF PURCHASES CANNOT BE MADE BASED ON GENERAL OBSERVATIONS. IF TH ERE WERE DISCREPANCIES AND DEFECTS, THEN A.O. COULD HAVE REJECTED THE BOOKS OF ACCOUNT AND TRADING RESULT. HERE, IT IS NOT A CASE WHERE ANY EVIDENCE HAS NOT B EEN PRODUCED AND EVEN THE ASSESSING OFFICER HAS FAILED TO SPECIFY OR POINT OU T ANY DEFECT IN THE BOOKS OF ACCOUNT PRODUCED BY THE ASSESSEE. ACCORDINGLY, WE D O NOT FIND ANY REASON AS TO WHY SUCH ADHOC DISALLOWANCE ON ACCOUNT OF PURCHASES CAN BE MADE. THUS, GROUND NO. 2 IS ALLOWED AND THE ADDITION IS DELETED . 4. IN SO FAR AS ADDITION OF RS.24,07,842/- ON ACCOU NT OF NON-DEDUCTION OF TDS ON INTEREST PAID TO PNB HOUSING FINANCE LTD. MA DE U/S. 40(A)(IA) IS ITA NO. 3516/DEL/2016 4 CONCERNED, THE ASSESSEE HAS PAID INTEREST ON HOUSIN G LOAN TO PNB HOUSING FINANCE LTD.. THE ASSESSING OFFICER HELD THAT THE A SSESSEE SHOULD HAVE DEDUCT TAX AT SOURCE ON PAYMENT OF SUCH INTEREST AND ACCOR DINGLY, HE PROCEEDED TO MAKE DISALLOWANCE U/S. 40(A)(IA) OF THE ACT. 5. BEFORE THE LD. CIT(A), THE ASSESSEE HAD SUBMITTE D THAT IT WAS A BONA FIDE BELIEF THAT THE PNB HOUSING FINANCE LTD. IS A WHOLL Y OWNED SUBSIDIARY OF PUNJAB NATIONAL BANK AND BEING A BANKING COMPANY, NO TDS I S REQUIRED TO BE DEDUCTED. IT WAS FURTHER SUBMITTED THAT PNB HOUSING FINANCE L TD. HAS SHOWN THIS INTEREST PAYMENT IN ITS RETURN OF INCOME AND HAS PAID TAX TH EREON, THEREFORE, NO DISALLOWANCE SHOULD BE MADE. HOWEVER, THE LD. CIT(A ) OBSERVED THAT THE ASSESSEE HAS NOT FILED ANY SUPPORTING EVIDENCE AND ACCORDINGLY, THE ADDITION WAS CONFIRMED. 6. BEFORE US, THE LD. COUNSEL REITERATED THE SAME C ONTENTION THAT PNB HOUSING FINANCE LTD. IS A SUBSIDIARY OF PUNJAB NATI ONAL BANK AND AS SUCH FALLS WITHIN THE EXCEPTION PROVIDED U/S. 194A(3)(III) OF THE IT ACT. HE FURTHER SUBMITTED THAT PNB HOUSING FINANCE LTD. IS LISTED C OMPANY AND HAS OFFERED THE INTEREST INCOME RECEIVED FROM THE APPELLANT IN ITS RETURN OF INCOME AND THEREFORE, NO CASE OF DISALLOWANCE IN TERMS OF PROV ISO TO SECTION 40(A)(IA) READ WITH FIRST PROVISO TO SECTION 201(1) OF THE ACT CAN BE MADE. IN SO FAR AS THE ITA NO. 3516/DEL/2016 5 APPLICABILITY OF PROVISO BROUGHT BY THE FINANCE ACT , 2012, HE RELIED ON THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ANSAL LAND MARK TOWNSHIP P. LTD. (2015) 377 ITR 635 TO CONTEND THAT IT HAS TO BE APPLIED RETROSPECTIVELY. 7. ON THE OTHER HAND, THE LD. DR STRONGLY RELIED UP ON THE ORDER OF THE LD. CIT(A) AND SUBMITTED THAT PNB HOUSING FINANCE LTD. CANNOT BE TREATED AS A NATIONALIZED BANK. IT IS JUST MERE A SUBSIDIARY OF PUNJAB NATIONAL BANK AND THEREFORE, SUCH A PAYMENT WILL NOT FALL U/S. 194A(3 )(III). IN SO FAR AS OFFERING OF INTEREST INCOME BY PNB HOUSING FINANCE LTD. IN ITS RETURN OF INCOME, HE SUBMITTED THAT NO SUCH PROOF HAS BEEN SUBMITTED BY THE ASSESSEE IN PRESCRIBED FORM. 8. AFTER CONSIDERING THE AFORESAID SUBMISSIONS AND THE RELEVANT FINDINGS GIVEN IN THE IMPUGNED ORDER, WE ARE UNABLE TO AGREE WITH THE CONTENTION OF THE LD. COUNSEL THAT THE INTEREST PAYMENT ON HOUSING LO AN PAID TO PNB HOUSING FINANCE LTD. FALL WITHIN THE CATEGORY OF PAYMENT AS SPECIFIED U/S. 194A(3)(III) BECAUSE IT NOT A NATIONALIZED BANK ALBEIT IT IS MER ELY A SUBSIDIARY OF PUNJAB NATIONAL BANK. THEREFORE, THE INTEREST PAID BY THE ASSESSEE WAS LIABLE FOR DEDUCTION OF TAX AT SOURCE. HOWEVER, WE AGREE WITH THE ALTERNATE CONTENTION OF THE LD. COUNSEL THAT IF THE PNB HOUSING FINANCE LTD . HAS OFFERED INTEREST INCOME ITA NO. 3516/DEL/2016 6 IN ITS RETURN OF INCOME, THEN NO DISALLOWANCE CAN B E MADE IN TERMS OF PROVISO TO SECTION 40(A)(IA) READ WITH FIRST PROVISO TO SECTIO N 201(1). ACCORDINGLY, THE ISSUE IS RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE WHETHER SAID INTEREST PAYMENT HAS BEEN OFFERED TO TAX IN TH E RETURN OF INCOME FILED BY PNB HOUSING FINANCE LTD. IN THIS REGARD, THE ASSESS ING OFFICER SHALL CALL FOR THE CERTIFICATE BY ISSUING NOTICE U/S. 133(6) TO PNB HO USING FINANCE LTD. AND THE ASSESSEE SHALL ALSO MAKE ENDEAVOR TO PLACE THE CERT IFICATE IN PRESCRIBED FORM FOR THE SAID PURPOSE. ACCORDINGLY, GROUND NO. 2 IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. 9. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14/10/2019. SD/- SD/- (B.R.R. KUMAR) (A MIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 14 TH OCT., 2019 *AKS* COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI