ADINATH BUILDCON PVT. LTD., Jaipur V. PRINCIPAL CIT-CENTRAL, Jaipur

ITA 373/JPR/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2178 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 11-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D S KOTHARI CIT DHK
• Assessee Lawyers: S R SHARMA; R K BHATRA
• Keywords: Non-deduction of tax
• Section: 143(3); 153A; 263

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH HKKXPUN] YS[KK LNL; ,OA JH DQY HKKJR] U;KF;D LNL; DS LE{K BEFORE: SHRI BHAGCHAND, AM AND SHRI KUL BHARAT, JM VK;DJ VIHY LA-@ ITA NO. 373/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2007-08. M/S ADINATH BUILDCON PVT. LTD, JAIPUR. CUKE VS. PR. COMMISSIONER OF INCOME - TAX (CENTRAL), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AADCA2574P VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : S.R. SHARMA & R.K. BHATRA (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI D.S. KOTHARI (CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 05.04.2017. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 17 /04/2017. VKNS'K@ ORDER PER SHRI KUL BHARAT, JM. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF PR. CIT (CENTRAL), JAIPUR, DATED 14.03.2016 PERTAINING TO ASSESSMENT Y EAR 2007-08. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. THAT THE LD. PR. CIT (CENTRAL), JAIPUR IS WRON G AND HAS ERRED IN LAW IN INVOKING THE PROVISIONS OF SECTION 263 OF IT ACT, 1 961 IN CAE OF AESEE IN AS MUCH AS THE ASSESSMENT ORDER PASSED BY LD. AO IS NEITHER NOR PREJUDICIAL TO THE INTEREST OF REVENUE. THE IMPUGN ED ORDER PASSED BY LD. PR. CIT (CENTRAL), JAIPUR IS WITHOUT JURISDICTI ONAL. 2. THAT THE LD. PR. CIT (CENTRAL) IS WRONG AND HAS ERRED IN LAW IN NOT CONSIDERING THE CONTENTION OF THE ASEEE THAT NO DIS ALLOWANCE CAN BE MADE U/S 40(A)(IA) OF THE IT ACT, 1961 ON ACCOUNT O F NON DEDUCTION OF TDS ON INTEREST OF RS. 39,65,510/- CREDITED IN THE ACCOUNT OF SUNNY DEVELOPERS PVT. LTD. IN VIEW OF SECOND PROVISO TO S AID SECTION AND PAYMENT OF DUE TAX THEREON BY THE RECIPIENT COMPANY . THE ASSESSING OFFICER RIGHTLY ALLOWED DEDUCTION OF SAID INTEREST. 2 ITA NO. 373/JP/2016 M/S ADINATH BUILDCON PVT. LTD. 3. THAT THE APPELLANT CRAVES THE PERMISSION TO AD D TO OR AMEND TO ANY OF THE ABOVE GROUNDS OF APPEAL OR TO WITHDRAW ANY OF T HEM. 2. ONLY EFFECTIVE GROUND IS AGAINST INVOCATION OF J URISDICTION U/S 263 OF THE ACT. THEREBY, REVISING THE ASSESSMENT ORDER DATED 28/03/ 2014 PASSED U/S 143(3) READ WITH SECTION 153A OF THE INCOME TAX ACT, 1961 (HERE INAFTER REFERRED TO AS THE ACT). THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT, LD . CIT IS NOT JUSTIFIED IN INVOKING THE PROVISIONS OF SECTION 263 OF THE ACT. LD. COUN SEL SUBMITTED THAT FOR EXERCISING JURISDICTIONAL U/S 263 OF THE ACT TWIN CONDITIONS A RE REQUIRED TO BE SATISFIED. IN THE PRESENT CASE, THE REVENUE HAS NOT PLACED ANY MATERI AL SUGGESTING THAT THE ORDER IS PASSED IS ERRONEOUS SO FAR IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. HE SUBMITTED THAT THE INTEREST OF THE REVENUE IS PROTE CTED WHEN THE PAYEE DECLARED THE AMOUNT IN ITS RETURN OF INCOME AND PAYS INCOME TAX THEREON. IN THE PRESENT CASE, THE ASSESSEE HAS DEMONSTRATED THAT THE PAYEE HAS IN CLUDED THE INTEREST INCOME RECEIVED FROM THE ASSESSEE AND PAID DUE TAXES THERE ON. HE SUBMITTED THAT THIS FACT IS NOT CONTROVERTED BY THE REVENUE. LD. AR FURTHER REITERATED THE SUBMISSIONS AS MADE IN THE WRITTEN SUBMISSIONS FILED DURING THE CO URSE OF HEARING. 3. ON THE CONTRARY, LD. CIT (DR) VEHEMENTLY OPPOSED THE SUBMISSIONS AND CONTENDED THAT THERE IS NO LEGALITY INTO THE ORDER OF THE LD. CIT. HE SUBMITTED THAT AO HAS GROSSLY FAILED TO VERIFY THE FACTS. HE SUBM ITTED THAT, THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE ASSESSEE WAS REQUIRED T O DEDUCT THE TAX ON SOURCE, IN RESPECT OF THE PAYMENT OF THE INTEREST. HE FURTHER SUBMITTED THAT IT IS AN UNDISPUTED POSITION OF LAW THAT NON-DEDUCTION OF TAX BY THE AS SESSEE WOULD ATTRACT DISALLOWANCE OF INTEREST EXPENDITURE UNDER SECTION 40(IA) OF THE ACT. HE SUBMITTED THAT THIS 3 ITA NO. 373/JP/2016 M/S ADINATH BUILDCON PVT. LTD. REQUIREMENT IS MANDATED BY THE PROVISIONS OF THE AC T IN VOGUE. HE SUBMITTED THAT THE AO HAS FAILED TO VERIFY THE INTEREST EXPENDITUR E AND WHETHER THE TAX HAS BEEN DEDUCTED ON SUCH EXPENDITURE OR NOT. HE POINTED OU T THAT FROM THE ASSESSMENT ORDER, IT IS EVIDENT THAT THE ASSESSING OFFICER HAS MERELY ACCEPTED THE RETURNED INCOME. IN REJOINDER,LD. A.R. SUBMITTED THAT THIS IS NOT THE CASE, WHERE THE ASSESSING OFFICER HAS NOT MADE ENQUIRY. IN FACT, T HE ASSESSING OFFICER HAS RAISED QUERY IN THIS RESPECT. 4. WE HAVE HEARD THE RIVAL CONTENTIONS, AND PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDER OF THE AUTHORITIE S BELOW. THE BASIS OF REVISING THE ORDER AS PER THE LD. CIT IS THAT THE ASSESSING OFFI CER FAILED TO VERIFY THE PAYMENT OF TDS ON THE SUM OF RS. 39,65,510/- CREDITED IN THE A CCOUNT OF M/S SUNNY DEVELOPERS PVT. LTD. BEING THE INTEREST, HENCE THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. AS PER SECTION 263 OF THE ACT, THE PRINCIPAL CIT IS EMPOWERED TO CALL FOR EXAMINE THE RECORD OF ANY PROCEEDINGS UNDER THE INCOME TAX ACT AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREON BY THE ASSESSING OFFICER IS ER RONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. HE AFT ER GIVING OPPORTUNITY FOR BEING HEARD MAY PASS SUCH ORDER THEREON, AS THE CIRCUMSTA NCES OF THE CASE JUSTIFIES, INCLUDING AN ORDER ENHANCING OR MODIFYING THE ORDER . THEREFORE, THE CONDITION WHICH REQUIRES TO BE SATIS FIED FOR THE PURPOSE OF JURISDICTION U/S 263 ARE THAT THE ORDER OF THE ASSESSING OFFICER SHOULD BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. MERELY BEC AUSE THE ORDER IS ERRONEOUS WOULD NOT MEET THE REQUIREMENT OF LAW FOR INVOKING THE PR OVISIONS OF SECTION 263. IN THE CASE IN HAND, IT IS STATED BY THE LD. COUNSEL FOR T HE ASSESSEE THAT THE PAYEE HAS 4 ITA NO. 373/JP/2016 M/S ADINATH BUILDCON PVT. LTD. INCLUDED THE INTEREST INCOME INTO THE RETURN OF INC OME AND PAID TAX THEREON. THIS FACT IS NOT CONTROVERTED BY THE REVENUE BY PLACING ANY CONTRARY MATERIAL ON RECORD. UNDER THESE FACTS, WE ARE OF THE CONSIDERED VIEW, T HAT IT IS NOT THE FIT CASE FOR INVOKING THE PROVISIONS OF SECTION 263. THEREFORE, WE SET ASIDE THE ORDER OF THE LD. CIT AND RESTORE THE ASSESSMENT ORDER. THIS GROUND OF THE ASSESSEES APPEAL IS ALLOWED. 5. GROUND NO. 3 IS IN GENERAL IN NATURE AND NEEDS N O SEPARATE ADJUDICATION. 6. IN THE RESULT APPEAL OF THE ASSESSEE IN ITA NO . 373/JP/2016 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON MONDAY, THE 17TH DAY OF APRIL 2017. SD/- SD/- HKKXPUN ( DQY HKKJR ) ( BHAGCHAND ) ( KUL BHARAT ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 17 /04/2017. POOJA/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- M/S ADINATH BUILDCON PVT. LTD., JAIPUR. 2. THE RESPONDENT- PR. COMMISSIONER OF INCOME-TAX ( CENTRAL),JAIPUR. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 373/JP/2016) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 5 ITA NO. 373/JP/2016 M/S ADINATH BUILDCON PVT. LTD.