Om Art Print, Vijayawada V. THE CIT, Vijayawada

ITA 37/VIZ/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6525 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 21-09-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 01-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V MADHUVANI
• Keywords: Revision of order
• Section: 143(3); 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , ACCOUNTANT MEMBER . / I . T .A.NO. 37 /VIZ/ 201 6 ( / ASSESSMENT YEAR: 20 0 8 - 0 9 ) M/S OM ART PRINTS D.NO.27 - 22 - 60, JD HOSPITAL ROAD GOVERNORPET VIJAYAWADA [ PAN : A AAFO3163C ] VS. CIT, VIJAYAWADA ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHRI G.V.N.HARI , A R / RESPONDENT BY : S MT V . MADHUVANI, DR / DATE OF HEARING : 0 9 . 1 1 .2017 / DATE OF PRONOUNCEMENT : 15 . 1 1 .2017 / O R D E R PER D.S. SUNDER SINGH , ACCOUNTANT MEMBER : 1. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE PRINCIPAL COMMISSIONER OF INCOME TAX [ PR. CIT] , VI JAYAWADA DATED 12.01.2016 FOR THE ASSESSMENT YEAR 20 0 8 - 09 . 2 ITA NO . 37 /VIZ/201 6 OM ART PRINT . , VIJAYAWADA 2. IN THIS CASE, ASSESSMENT U/S 143( 3 ) WAS MADE ON 13.12.2010 ON TOTAL INCOME OF RS.5,11,864/ - . THE LD. CIT, VIJAYAWADA HAS TAKEN UP THE CASE FOR REVISION U/S 263 DUE TO THE FOLLOWING DISCREPANCIES NOTICED BY HIM IN THE REVISION PROCEEDINGS : (A) AS PER VAT RETURNS, THE SALES WERE DECLARED AT RS.3,03,10,204/ - , WHEREAS IN THE I NCOME TAX RETURN, THE SALES WERE ADMITTED AT RS.2,97,06,705/ - RESULTING IN DIFFERENCE OF RS.6,03,499/ - . (B) AS PER P&L A/C, TH E VAT PAID WAS RS.9,50,983/ - AND AS PER VAT RETURNS IT WAS OBSERVED BY THE CIT THAT THE VAT PAID WAS RS.1,94,624/ - ONLY AND THERE WAS DIFFERENCE OF RS.7,56,359/ - WHICH REMAINED UNEXPLAINED. (C) AS PER TRADING AND P&L A/C, THE CIT NOTICED THAT A SUM OF RS.3 3,63,840/ - WAS INCURRED TOWARDS BINDING CHARGES, COMPUTER MAINTENANCE, PRINTING CHARGES AND FREIGHT CHARGES. HOWEVER A S PER 3CD REPORT, NO DETAILS WERE MENTIONED REGARDING DEDUCTION OF T AX AT SOURCE IN COLUMN NO.27(A) AS PER FORM 3CD. 2.1. THE LD. CIT VIEWE D THAT THE ASSESSMENT MADE U/S 143( 3 ) ON 13.12.2010 WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND ACCORDINGLY ISSUED SHOW CAUSE NOTICE. IN RESPONSE TO THE SHOW CAUSE NOTICE THE A SSESSEE FILED EXPLANATION AND AFTER GOING THROUGH THE 3 ITA NO . 37 /VIZ/201 6 OM ART PRINT . , VIJAYAWADA EXPL ANATION FILED BY THE ASSESSEE, THE LD. CIT SATISFIED THAT THERE WAS NO DIFFERENCE WITH REGARD TO THE SALES ADMITTED IN THE VAT RETURN AND THE P&L ACCOUNT, HENCE, THE ISSUE WITH REGARD TO THE DIFFERENCE IN SALES AMOUNTING TO RS.6,03,499/ - WAS DROPPED. 2. 2. WITH REGARD TO THE SECOND ISSUE OF DIFFERENCE IN PAYMENT OF VAT AMOUNTING TO RS.7,56,359/ - , IT WAS REMITTED BACK TO THE FILE OF THE AO WITH A DIRECTION TO ALLOW THE CLAIM AFTER VERIFICATION OF THE PAYMENT. 2.3. WITH REGARD TO THE THIRD ISSUE OF NON D EDUCTION OF TAX AT SOURCE, THE LD.CIT REMITTED THE MATTER BACK TO THE FILE OF THE AO WITH A DIRECTION TO VERIFY THE PAYMENTS LIABLE FOR TDS AND APPLY THE PROVISIONS OF 40(A)(IA) OF THE I.T.ACT. 2.4 ACCORDINGLY, THE LD. CIT HELD THAT THE ORDER PASSED U/S 143(3) DATED 13.12.2010 WAS ERRONEOUS AND PREJUDICIAL TO THE INTERST OF REVENUE AND SET ASIDE THE ASSESSMENT ORDER AND DIRECTED THE A.O. TO REDO THE ASSESSMENT DENOVO AFTER GIVING OPPORTUNITY TO THE ASSESSEE. 4 ITA NO . 37 /VIZ/201 6 OM ART PRINT . , VIJAYAWADA 3.0 THE AO PASSED THE CONSEQUENTI AL ORDER GIVING EFFECT TO THE ORDER OF THE CIT U / S 263 BY AN ORDER U/S 143(3) R. W.S. 263 ON 29.01.2014. IN THE CONSEQUENTIAL ORDER THE AO DID NOT FIND ANY DIFFERENCE WITH REGARD TO THE VAT PAYMENT AND THE SAME WAS ACCEPTED AND GIVEN A FINDING THAT THERE WAS NO EXCESS CLAIM OF VAT. 3.1 WITH REGARD TO THE DISALLOWANCE OF EXPENDITURE U/S 40(A)(IA), IT INVOLVED EXPENS ES RELATING TO BINDING CHARGES OF RS.11,6 0,105/ - , COMPUTER MAINTENANCE OF RS .3,46,734/ - , PRINTING CHARGES OF RS.13,12,981/ - AND FREIGHT CH ARGES OF RS.5,44,020/ - AGGREGATING TO RS.33,63, 840/ - . THE ASSESSING OFFICER EXAMINED THE ABOVE ISSUE S AND FOUND THAT THERE WAS NO CASE FOR MAKING ADDITION U/S 40(A)(IA) IN THE CASE OF PRINTING, BINDING CHARGES AND COMPUTER MAINTENANCE AND ALLOWED THE SAME . 3.2 WITH REGARD TO FREIGHT CHARGES, THE ASSESSING OFFICER FOUND THAT A SUM OF RS. 2,56,961/ - ATTRACTS THE TDS WHICH WAS NOT DEDUCTED BY THE ASSESSEE AND ACCORDINGLY BROUGHT TO TAX U/S 40(A)(IA) OF I.T.ACT. 4.0 THE ORDER PASSED U/S 143(3) R.W.S 263 DATED 29.01.2014 WAS TAKEN UP BY THE PR.CIT, VIJAYAWADA FOR REVISION U/S 263 IN 2 ND ROUND AND FOUND 5 ITA NO . 37 /VIZ/201 6 OM ART PRINT . , VIJAYAWADA THAT THE ASSESSING OFFICER DID NOT FOLLOW THE DIRECTIONS OF THE LD.CIT U/S 263 DATED 18.03.2013. THE LD.PR. CIT OBSERVED THAT IN THE ORDERS U/S 263 IT WAS CLEARLY MENTIONED THAT THE ASSESSEE HAD ACCEPTED THE NON DEDUCTION OF TAX AT SOURCE AND ASSUR ED TO PAY THE TAX WITH INTEREST AND ACCORDINGLY DIRECTED THE A.O. TO MAKE THE ADDITION. THE A.O. I NSTEAD OF MAKING THE ENTIRE SUM OF RS.33,63,840/ - AS ADDITION AND ACTED BEYOND THE JURISDICTION AND ALLOWED THE EXPENDITURE INCURRED UNDER THE HEAD PRINTING AND BINDING CHARGES STATING THAT THE PROVI SIONS OF TDS WERE NOT APPLICABLE, HENCE ISSUED THE SHOW CAUSE NOTICE TO THE ASSESSEE AND THE ASSESSEE FILED THE OBJECTIONS. THE PR.CIT HAS GONE THROUGH THE EXPLANATION OF THE ASSESSEE. BEING NOT CONVINCED WITH THE EXPLANATION OF THE ASSESSEE, THE L D.PR.CIT SET ASIDE THE ORDER PASSED U/S 143(3) R.W.S. 26 3 ON 29.01.2014 AND DIRECTED THE ASSESSING OFFICER TO REDO THE ASSESSMENT. 5 . AGGRIEVED BY THE ORDER OF THE LD. PR. CIT, THE ASSESSEE CARRIED THE MATTER TO THE TRIBUNAL. DURING THE APPEAL HEARING, LD.AR INVITED OUR ATTENTION TO PARA 5.2 OF THE ORDER PAS SED U/S 263 BY THE CIT VIDE ORDER DATED 18.03.2013 AND ARGUED THAT THE CIT HAS DIRECTED THE ASSESSING OFFICER TO EX AMINE THE LIABILITY OF DEDUCTION OF TAX AT SOURCE AND APPLY THE PROVISIONS U/S 40(A)(IA) AND ACCORDINGLY SET ASIDE THE ASSESSMENT ORDER 6 ITA NO . 37 /VIZ/201 6 OM ART PRINT . , VIJAYAWADA FOR REDOING THE SAME. ACCORDING TO THE LD.AR, THE LD. CIT HAS STATED THAT THE LIABILITY WITH REGARD TO THE DEDUCTION OF TAX AT SOURCE AND BINDING CHARGES, COMPUTER MAINTENANCE, FREIGHT CHARGES REQUIRED TO BE EXAMINED BY THE AO AND ASSESS THE INCOME FOR WHICH THE TAX WAS NOT DEDUCTED IN ACCORDANCE WITH THE PROVISIONS OF THE I.T.ACT. HENCE, LD.AR ARGUED THAT THE AO HAS CORRECTLY FOLLOWED THE DIRECTIONS OF THE CIT AND AFTER THOROUGH VERIFICATION OF THE DETAILS , TAKEN A CONSCIOUS DECISION AND TAXED THE FREIGHT CH ARGES U/S 40(A)(IA) TO THE EXTENT OF RS.2,56,961/ - . SINCE THE ASSESSING OFFICER HAS CORRECTLY FOLLOWED THE INSTRUCTIONS OF CIT AND MADE PROPER EXAMINATION, THERE IS NO CASE FOR MAKING THE REVISI ON U/S 263 IN THE SECOND ROUND AND REQUESTED TO QUASH THE ORD ER PASSED U/S 263 BY THE PR.CIT, VIJAYAWADA ON 12.01.2016. 6 . ON THE OTHER HAND, LD.DR RELIED ON THE ORDERS OF THE PR.CIT. 7 . WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. THE CIT IN THE ORIGINAL ORDER PASSED U/S 263 ON 18.03.2013 IN PARA NO.5.2 DIRECTED THE ASSESSING OFFICER TO VERIFY ALL SUCH PAYMENTS WHICH ARE LIABLE FOR TDS AND APPLY THE PROVISIONS OF 40(A)(IA). EVEN THE ASSESSEE ALSO ACCEPTED THAT SOME PAYMENTS WERE MADE WITHOUT MAKING THE TDS. FOR 7 ITA NO . 37 /VIZ/201 6 OM ART PRINT . , VIJAYAWADA READY REFERENCE, WE EXTRACT THE RELEVANT PARAGRAPH OF THE ORDER PASSED U/S 263 DATED 18.03.2013. 5.2 . THE THIRD ISSUE IN THIS CASE IS THAT THE ASSESSEE HAD PAID RS.33,63,840/ - TOWARDS BINDING CHARGES, COMPUTER MAINTENANCE AND FREIGHT CHARGES ETC HOWEVER, NO TDS WAS MADE ON THE ABOVE MENTIONED PAYMENTS. THE ASSESSEE HAD FURNISHED THE DETAILS OF THE ABOVE PAYMENTS Q111,8 - 0.3 - 2013. AS PER THE DETAILS FURNISHED THE ASSESSEE' S LIABILITY FOR DEDUCTING TAX IS VERY CLEAR AND THE ASSESSEE HAD ALSO ACCEPTED THE SAME AND ST A TED THAT SOME OF THE PAYMENTS WERE MADE WITHOUT MAKING ANY 11)5 AND ASSURED TO PAY THE TAX WITH INTEREST. THEREFORE, THE AO IS DIRECTED TO VERIFY ALL SUCH PAYMENT S WHICH ARE LIABLE FOR TDS AND APPLY THE PROVISIONS OF 40(A)(IA). 7 .1. FROM THE PLAIN READING OF ORDER U/S 263 EXTRACTED ABOVE, IT IS CLEAR THAT THE ASSESSEE HAD ACCEPTED THAT SOME PAYMENTS WERE MADE WITHOUT MAKING THE TDS AND ASSURED TO PAY TAX ON SUCH AMOUNT AND THE CIT DIRECTED TO VERIFY ALL SUCH PAYMENTS LIABLE FOR TDS AND APPLY THE PROVISIONS OF SECTION 40(A)(IA) OF I.T.ACT WHICH SHOWS THAT THE LD.CIT HAS NOT DIRECTED THE AO TO MAKE THE ADDITION OF THE ENTIRE SUM OF RS.33,63,840/ - AND THE ASSESSEE AL SO DID NOT ACCEPT FOR SUCH ADDITION. IN THE CONSEQUENTIAL ORDER, THE ASSESSING OFFICER HAS VERIFIED THE PAYMENTS MADE FOR BINDING CHARGES, COMPUTER CHARGES AND FREIGHT CHARGES ETC. AND GIVEN A FINDING THAT THE PROVISIONS OF SECTION 40(A)(IA) ARE NOT APPLIC ABLE FOR BINDING CHARGES, COMPUTER MAINTENANCE AND PRINTING CHARGES AND ONLY IN THE CASE OF FREIGHT CHARGES 40(A)(IA) IS APPLICABLE TO THE EXTENT OF RS.2,56,961/ - FOR NON DEDUCTION OF TAX AT SOURCE. SINCE THE ASSESSING OFFICER HAS FOLLOWED THE 8 ITA NO . 37 /VIZ/201 6 OM ART PRINT . , VIJAYAWADA INSTRUCTION S CORRECTLY, THERE IS NO CASE FOR MAKING REVISION U/S 263 AND THE LD.PR.CIT MISUNDERSTOOD THE DIRECTION GIVEN BY THE LD.CIT U/S 263. THEREFORE, THE ORDER PASSED BY THE AO U/S 143(3) R.W.S. 263 IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE RE VENUE. HENCE, WE SET ASIDE THE ORDER OF THE LD.PR. CIT PASSED U/S 263 AND ALLOW THE APPEAL OF THE ASSESSEE. 8 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 15 TH NOV 20 17 . SD/ - SD/ - ( . ) ( . . ) (V. DURGA RAO) ( D.S. SUNDER SINGH ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /VISAKHAPATNAM /DATED : 15 . 1 1 .2017 L. RAMA, SPS 9 ITA NO . 37 /VIZ/201 6 OM ART PRINT . , VIJAYAWADA / COPY OF THE ORDER FORWARDED TO: - 1. / THE APPELLANT - M/S OM ART PRINTS, D.NO.27 - 22 - 60, JD HOSPITAL ROAD, GOVERNORPET, VIJAYAWADA 2 . / THE RESPONDENT THE CIT, VIJAYAWADA 3 . THE PR. COMMISSIONER OF INCOME TAX , VI JAYAWADA 4 . , , / DR, ITAT, VISAKHAPATNAM 5 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM