INDUSTRIAL RUBBER PRODUCTS P.LTD, MUMBAI V. ITO 9(2)(1), MUMBAI

ITA 3898/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79477 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-07-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 28-07-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 04-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIKASH K AGARWAL
• Assessee Lawyers: BHARAT DESAI
• Section: 143(3); 194C

Judgement Text

, INCOME TAX APPELLATE TRIBUNALMUMBAI BENCH ES I MUMBAI , , ! BEFORE S.SH.VIJAY PAL RAO,JUDICIAL MEMBER AND RAJEN DRA,ACCOUNTANT MEMBER ./ ITA NO.3898/MUM/2012 ' ' ' ' # # # # / ASSESSMENT YEAR 2005-06 ( $% / APPELLANT) ( &'$% / RESPONDENT) ' ' ' '() () () () * * * * / ASSESSEE BY : SHRI BHARAT DESAI + * / REVENUE BY : SHRI VIKASH K. AGARWAL ' ' ' ' + ++ + ), ), ), ), / DATE OF HEARING : 28/07/2014 -.# + ), / DATE OF PRONOUNCEMENT : 28/08/2014 PER RAJENDRA,AM ' ' ' ' : CHALLENGING THE ORDER DT.29.03.2010 OF THE CIT(A)-2 0,MUMBAI,ASSESSEE-COMPANY HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. LEARNED CIT(APPEALS) ERRED IN PASSING AN ORDER ON E X-PARTE BASIS. 2. THE ORDER OF CIT(APPEALS) BE SET ASIDE FOR FRESH HE ARING. 3. ASSESSEE CRAVES LEAVE TO ADD, AMEND OR ALTER, ALL O R ANY OF THE ABOVE GROUNDS OF APPEAL. 2. ASSESSEE-COMPANY,ENGAGED IN THE BUSINESS OF AUTOMOB ILE PARTS, FILED ITS RETURN OF INCOME ON 21.10.2005 DECLARING THE TOTAL INCOME OF RS. 99,888 /-. ASSESSING OFFICER (AO) COMPLETED THE ASSESSMENT U/S 143(3) OF THE ACT ON 11.12.2007 DETE RMINING THE INCOME OF THE ASSESSEE AT RS. 11,65,710/-. DURING THE COURSE OF ASSESSMENT PROCEE DINGS, AO FOUND THAT ASSESSEE HAD DEBITED TAX ON INTEREST AND PAYMENT TO CONTRACTORS AND SUB-CONT RACTORS, THAT THE DEDUCTED TAX HAD NOT BEEN PAID TO THE EXCHEQUER WITHIN THE TIME ALLOWED BY THE ACT AND RULE 30 OF THE INCOME TAX RULES 1962 (RULES). HE HELD THAT THE TAX DEDUCTED ON RS. 3.03 LAKHS (194A) AND RS. 7.14 LAKHS (194C) WAS NOT PAID ON THE DUE DATE NOR EVEN DURING THE PREVIOUS Y EAR ENDING ON 31.03.2005, THAT SAME WAS PAID IN THE MONTH OF APRIL AND JUNE 2005, THAT AS PER THE P ROVISIONS OF SECTION 40(A) (I) OF THE ACT, THE SAME COULD NOT BE ALLOWED. ACCORDINGLY, AN AMOUNT OF RS. 10.18 LAKHS WAS DISALLOWED AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE U/S 40(A)(I) OF TH E ACT. 3. AGGRIEVED BY THE ORDER OF THE AO ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY, WHO FIXED THE HEARING ON 14.01.2010 AND 17.02.2010 BY SENDING HEARING NOTICES THROUGH SPEED-POST/AD. AS PER THE FAA THE NOTICES WERE RETU RN BACK TO THE POSTAL AUTHORITIES ON BOTH THE OCCASIONS WITH THE REMARK OF UNCLAIMED. HE HELD THA T NO ONE WAS AVAILABLE AT THE GIVEN ADDRESS, THAT MATTER HAD TO BE DECIDED ON MERITS. HE FURTHER HELD THAT ASSESSEE HAD PAID RS. 10.18 LAKHS TO THE CONTRACTORS AND SUB-CONTRACTORS, THAT IT HAD DE DUCTED THE TAX AT SOURCE, THAT IT DID NOT DEPOSIT T HE SAME WITHIN THE DUE DATE AS PRESCRIBED BY THE ACT. UPHOLDING THE ORDER OF THE AO, HE DISMISSED THE APPEAL FILED BY THE ASSESSEE. M/S INDUSTRIAL RUBBER PRODUCTS PVT. LTD., , RAGHUVANSHI WADI, S.V.ROAD, DAHISAR (E), MUMBAI-400068 PAN: AAACI5725P VS ITO WARD 9(2 ) (1), AAYAKAR BHAVAN, MUMBAI-400020 ITA NO. 3898/MUM/2012 M/S INDUSTRIAL RUBBER PRODUCTS PVT. L TD. 2 4. BEFORE US, AUTHORISED REPRESENTATIVE (AR) STATED TH AT ASSESSEE HAD CHANGED HIS ADDRESS, THAT THE HEARING NOTICES OF THE FAA WERE SENT ON THE OLD ADD RESS, THAT IN ABSENCE OF KNOWLEDGE OF DATE OF HEARING, NOBODY APPEARED BEFORE THE FAA, THAT TDS D EDUCTED AS PER THE PROVISIONS OF SECTION 194A AND 194C WAS DEPOSITED IN THE GOVERNMENT ACCOUNT BE FORE THE DUE DATE OF HEARING OF RETURN.HE RELIED UPON THE ORDER OF ALLIED MOTORS PVT. LTD. (2 24 ITR 677) AND THE MATTER VERGIN CREATIONS DELIVERED BY THE HON'BLE KOLKATA HIGH COURT ON 23.1 1.2011 IN ITA NO. 302/2011. DR SUPPORTED THE ORDER OF THE FAA AND REFERRED TO THE DECISION O F BHARTI SHIPYARD DELIVERED BY THE SPECIAL BENCH OF THE TRIBUNAL. 5. WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT IN THE CASE OF VERGIN CREATIONS (SUPRA),THE HON'BLE KOLKATA HIG H COURT HAS HELD THAT IF THE TDS IS PAID BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME PROVISIO NS OF SECTION 40(A)(IA) CANNOT BE INVOKED. WE ALSO FIND THAT IN THE CASE OF PIYUSH C. MEHTA(ITA/1321/M UM/2009-AY.2005-06,DTD.11.04 . 2012)C BENCH OF THE MUMBAI TRIBUNAL HAS CONSIDERED THE CAS E OF BHARTI SHIPYARD AND HAS HELD AS UNDER: ' 17.IT CAN BE SEEN FROM THE ABOVE DECISION OF THE HO NBLE CALCUTTA HIGH COURT THAT AMENDMENT TO THE PROVISIONS OF SEC.40(A)(IA) OF THE ACT, BY THE FINANCE ACT, 2010 AS AFORESAID WAS HELD TO BE RETROSPECTIVE FROM 1.4.2005. IF THE AMENDMENT IS CO NSIDERED AS RETROSPECTIVE FROM 1.4.2005, THE EFFECT WILL BE THAT PAYMENTS OF TDS TO THE CREDIT O F THE GOVERNMENT ON OR BEFORE THE LAST DATE FOR FILING RETURN OF INCOME U/S. 139(1) OF THE ACT FOR THE RELEVANT AY HAVE TO BE ALLOWED AS DEDUCTION. ADMITTEDLY IN THE CASE OF THE ASSESSEE PAYMENTS WER E SO MADE BEFORE THE SAID DUE DATE AND IN TERMS OF THE DECISION OF THE HONBLE CALCUTTA HIGH COURT NO DISALLOWANCE COULD BE MADE BY THE AO U/S. 40(A)(IA) OF THE ACT. 18.THE QUESTION NOW IS AS TO WHETHER TO FOLLOW THE DECISION OF THE HONBLE SPECIAL BENCH WHICH HAS TAKEN THE VIEW THAT AMENDMENT BY THE FINANCE AC T, 2010 TO THE PROVISIONS OF SEC.40(A)(IA) OF THE ACT IS PROSPECTIVE AND NOT RETROSPECTIVE FROM 1 .4.2005 OR THE DECISION OF THE HONBLE CALCUTTA HIGH COURT TAKING A CONTRARY VIEW. ON THE ABOVE QUE STION, THE LEARNED COUNSEL FOR THE ASSESSEE BROUGHT TO OUR NOTICE THE DECISION OF THE ITAT DELH I IN THE CASE OF TEJ INTERNATIONAL (P) LTD. V. DY. CIT (2000) 69 TTJ (DEL) 650, WHEREIN IT WAS HELD TH AT IN THE HIERARCHICAL JUDICIAL SYSTEM THAT WE HAVE IN INDIA, THE WISDOM OF THE COURT BELOW HAS TO YIELD TO THE HIGHER WISDOM OF THE COURT ABOVE, AND THEREFORE, ONCE AN AUTHORITY HIGHER THAN THIS T RIBUNAL HAS EXPRESSED ITS ESTEEMED VIEWS ON A AN ISSUE, NORMALLY, THE DECISION OF THE HIGHER JUDI CIAL AUTHORITY IS TO BE FOLLOWED. THE BENCH HAS FURTHER HELD THAT THE FACT THAT THE JUDGMENT OF THE HIGHER JUDICIAL FORUM IS FROM A NONJURISDICTIONAL HIGH COURT DOES NOT REALLY ALTER THIS POSITION, AS LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V. GODAVARIDEVI SARAF 113 ITR 589(B OM). 19.IN VIEW OF THE ABOVE, WE HOLD FOLLOWING THE DECI SION OF THE HONBLE CALCUTTA HIGH COURT THAT AMENDMENT TO THE PROVISIONS OF SEC.40(A)(IA) OF THE ACT BY THE FINANCE ACT, 2010 IS RETROSPECTIVE FROM 1.4.2005. CONSEQUENTLY, ANY PAYMENT OF TAX DED UCTED AT SOURCE DURING PREVIOUS YEARS RELEVANT TO AND FROM AY 05-06 CAN BE MADE TO THE GO VERNMENT ON OR BEFORE THE DUE DATE FOR FILING RETURN OF INCOME U/S. 139(1) OF THE ACT. IF PAYMENT S ARE MADE AS AFORESAID, THEN NO DEDUCTION U/S.40(A)(IA) OF THE ACT CAN BE MADE. ADMITTEDLY IN THE PRESENT CASE THE ASSESSEE HAD DEPOSITED THE TAX DEDUCTED AT SOURCE ON OR BEFORE THE DUE DATE FO R FILING RETURN OF INCOME U/S. 139(1) OF THE ACT AND THEREFORE THE IMPUGNED DISALLOWANCE DESERVES TO BE DELETED. WE ORDER ACCORDINGLY AND ALLOW THE APPEAL BY THE ASSESSEE. RESPECTFULLY,FOLLOWING THE ABOVE DECISION OF KOLKAT A HIGH COURT OF VERGIN CREATION AND PIYUSH C. MEHTA(SUPRA) OF THE TRIBUNAL,WE ARE OF THE OPINION THAT WHERE THE TDS IS DEPOSITED BEFORE THE DUE DATE OF FILING OF RETURN THE PROVISIONS OF SECTION 40(A)(IA) SHOULD NOT BE INVOKED. THEREFORE, REVERSING THE ORDER OF THE FAA,WE DECIDE THE EFFECT IVE GROUND OF APPEAL IN FAVOUR OF THE ASSESSEE- COMPANY. AS A RESULT, APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. /)0 '() 2 3 + 4 5) + ) 67. ITA NO. 3898/MUM/2012 M/S INDUSTRIAL RUBBER PRODUCTS PVT. L TD. 3 ORDER PRONOUNCED IN THE OPEN COURT ON 28TH JULY, 2014 . 9 + -.# : ;' 28 TWYKB Z ,2014 . + 4 B SD/- SD/- ( / VIJAY PAL RAO ) ( / RAJENDRA ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER / MUMBAI, ;' / DATE: 28TH JULY, 2014 S.K. 9 9 9 9 + ++ + &) &) &) &) C#) C#) C#) C#) / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / $% 2. RESPONDENT / &'$% 3. THE CONCERNED CIT(A)/ D E , 4. THE CONCERNED CIT / D E 5. DR I BENCH, ITAT, MUMBAI / F4 &)' , . . . 6. GUARD FILE/ 4 / ') ') ') ') &) &)&) &) //TRUE COPY// 9' / BY ORDER, G / 6 DY./ASST. REGISTRAR , /ITAT, MUMBAI