M/s. Shree Hindustan Fabricator, Surat V. The ACIT.,Circle-3, Surat

ITA 3826/AHD/2008

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89271 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 25-03-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 25-11-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 194C

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD 00 , ! ' #$, % & BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER !./ ITA NO. 3826/AHD/2008 % ) *)/ ASSESSMENT YEAR: 2005-2006 M/S.SHREE HINDSTAN FABRICATOR 107, 1 ST FLOOR, CHANCELLOR OP: RTO, RING ROAD SURAT. VS ACIT, CIR.3 SURT. +, / (APPELLANT) -. +, / (RESPONDENT) ASSESSEE(S) BY : NONE REVENUE BY : SHRI NIMESH YADAV, SR.DR / DATE OF HEARING : 25/03/2015 / DATE OF PRONOUNCEMENT: 10/04/2015 // O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMM ISSIONER OF INCOME-TAX (APPEALS)-II, SURAT DATED 17.9.2008. 2. THIS APPEAL WAS DISPOSED OF BY THE TRIBUNAL VIDE ORDER DATED 5.10.2012 PASSED IN ITA NO.3826/AHD/2008 IN A SSTT.YEAR 2005-06. THE TRIBUNAL RESTRICTED THE DISALLOWANCE TO RS.4,85,252/- BEING THE AMOUNT PAYABLE AS ON 31.3.2 005 IN PLACE OF RS.50,27,336/- SUSTAINED BY THE CIT(A) UND ER SECTION 40(A)(IA) OF THE ACT. THE REVENUE CARRIED THE MATT ER IN APPEAL BEFORE THE HONBLE GUJARAT HIGH COURT AND THE HONB LE GUJARAT HIGH COURT HELD THAT THE DECISION OF VISHAKHAPATNAM SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF M/S.MERILYN SH IPPING & TRANSPORTS VS. ACIT, DOES NOT LAY DOWN THE CORRECT LAW, AND ITA NO.3826/AHD/2008 2 QUASHED AND SET ASIDE THE ORDER OF THE TRIBUNAL DAT ED 5.10.2012 AND REMANDED THE MATTER TO THE TRIBUNAL FOR FRESH C ONSIDERATION OF OTHER ISSUES, IF ANY, REGARDING DISALLOWANCE UND ER SECTION 40(A)(IA) OF THE ACT. 3. BRIEF FACTS OF THE CASE ARE THAT THE AO OBSERVED THAT THE ASSESSEE HAD FAILED TO DEDUCT TDS UNDER SECTION 194 C AND 194J OF THE ACT AS WELL AS PAY THE TDS BEFORE THE PRESCR IBED TIME UNDER SECTION 200 OF THE ACT ON RS.78,37,140/-, AND THEREFORE, THE AO DISALLOWED THE DEDUCTION FOR THE EXPENDITURE OF RS.78,37,140/- BY INVOKING THE PROVISION OF SECTION 40(A)(IA) OF THE ACT. 4. ON APPEAL, THE CIT(A) RESTRICTED THE DISALLOWANC E TO RS.50,27,336/- ON THE BASIS OF THE DETAILS FILED BY THE ASSESSEE AFTER REDUCING THE AMOUNTS BEING LESS THAN RS.20,00 0/- PRIOR TO 1.10.2004 AND RS.50,000/- AFTER 1.10.2004. 5. THE DR RELIED ON THE ORDER OF THE AO. 6. THE AR OF THE ASSESSEE FILED ADJOURNMENT PETITIO N FOR ADJOURNMENT OF THE HEARING AND THE SAME WAS REJECTE D BY THE BENCH AS THE REASON FOR THE ADJOURNMENT IS NOT FOUN D TO BE PLAUSIBLE ONE, AND THE APPEAL WAS HEARD EX PARTE QUA THE APPELLANT-ASSESSEE. 7. WE HAVE HEARD THE DR AND PERUSED THE ORDERS OF T HE LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. WE F IND THAT THE AO MADE DISALLOWANCE OF RS.78,37,140/- BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT AS THE ASSESSEE FAI LED TO DEDUCT TAX AT SOURCE UNDER SECTION 194C AND 194J OF THE AC T AND DEPOSIT ITA NO.3826/AHD/2008 3 THE SAME WITH THE GOVERNMENT WITHIN THE PRESCRIBED TIME UNDER SECTION 200 OF THE ACT. THE SAME WAS RESTRICTED TO RS.50,27,336/- BY THE CIT(A). WE FIND THAT THE SEC OND PROVISO BELOW SECTION 40(A)(IA) INSERTED BY THE FINANCE ACT , 2012 W.E.F. 1.4.2013 READS AS UNDER: '[PROVIDED FURTHER THAT WHERE AN ASSESSEE FAILS TO DEDUCT THE WHOLE OR ANY PART OF THE TAX IN ACCORDAN CE WITH THE PROVISIONS OF CHAPTER XVII-B ON ANY SUCH SUM BUT IS NOT DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER THE FIRST PROVISO TO SUB-SECTION (1) OF SECTI ON 201, THEN, FOR THE PURPOSE OF THIS SUB-CLAUSE, IT S HALL BE DEEMED THAT THE ASSESSEE HAS DEDUCTED AND PAID THE TAX ON SUCH SUM ON THE DATE OF FURNISHING OF RETURN OF INCOME BY THE RESIDENT PAYEE REFERRED TO IN THE SAID PROVISO.] . THE AGRA BENCH OF THE TRIBUNAL IN THE CASE OF RAJEE V KUMAR AGARWAL VS. ACIT IN ITA NO.337/AGRA/2013 HAS HELD T HAT THE PROVISIONS OF SECTION 40(A)(IA), AS THEY EXISTED PR IOR TO INSERTION OF SECOND PROVISO THERETO, WENT MUCH BEYOND THE OBV IOUS INTENTIONS OF THE LAWMAKERS AND CREATED UNDUE HARDS HIPS EVEN IN CASES IN WHICH THE ASSESSEES TAX WITHHOLDING LAPSE S DID NOT RESULT IN ANY LOSS TO THE EXCHEQUER. THEREFORE, T HE TRIBUNAL HELD THAT INSERTION OF SECOND PROVISO IS A CURATIVE AMEN DMENT TO AVOID UNINTENDED CONSEQUENCES IS TO BE TREATED AS R ETROSPECTIVE IN NATURE. AS BOTH THE LOWER AUTHORITIES HAVE NOT LOOKED INTO THE MATTER FROM THIS ANGLE, WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND RESTORE THE MATTER TO THE FILE OF T HE AO FOR RE- ADJUDICATION OF THE ISSUE AFRESH IN LIGHT OF THE DI SCUSSION MADE HEREINABOVE, AFTER ALLOWING REASONABLE AND PROPER O PPORTUNITY OF ITA NO.3826/AHD/2008 4 HEARING TO THE ASSESSEE. THUS, THIS GROUND IS ALLO WED FOR STATISTICAL PURPOSE. 8. IN THE RESULT, THIS GROUND OF THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE COURT ON FRIDAY, THE 10 TH APRIL, 2015 AT AHMEDABAD. SD/- SD/- (KUL BHARAT) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 10 /04/2015