SUNNY WASAN, KORBA(CG) V. DY.. C.I.T. CIRCLE, KORBA, KORBA(CG)

ITA 390/BIL/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8955 (ITAT-RAIPUR)
• Duration Of Justice: 3 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 19-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P CHAUDHURY
• Assessee Lawyers: R B DOSHI
• Keywords: Ignorance of law

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO.390/RPR/2014 ASSESSMENT YEAR : 2010-2011 SUNNY WASAN, PROP. M/S. SUN CONSTRUCTION, 88, INDRA COMMERCIAL COMPLEX, T.P. NAGAR, KORBA. VS. DCIT, CIRCLE, KORBA PAN/GIR NO. AAPPW 0342 E (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI R.B.DOSHI, AR REVENUE BY : SHRI O.P.CHAUDHURY, DR DATE OF HEARING : 17/01/ 2018 DATE OF PRONOUNCEMENT : 19/01/ 2018 O R D E R PER PAVAN KUMAR GADALE, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDE R OF THE CIT(A)- BILASPUR, DATED 26.8.2014 FOR THE ASSESSMENT YEAR 2010 -2011. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1.THE LEARNED ASSESSING OFFICER AS WELL AS THE COMMISSIONE R OF INCOME TAX APPEALS ARE NOT JUSTIFIED IN APPLYING THE PROVISIONS OF SECTION 40(A)(IA) OF INCOME TAX ACT, 1961 WHEN THE BOO KS OF ACCOUNTS HAVE BEEN REJECTED. THE ENTIRE ADDITION IS ILLE GAL SHOULD BE DELETED. 2. THAT, THE LEARNED COMMISSIONER OF INCOME TAX APPEA LS HAS ERRED IN LAW AND ON FACTS OF THE CASE IN CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFICER OF RS. 16,32,797/-. THE ASSE SSEE 2 ITA NO.390/RPR/2014 ASSESSMENT YEAR : 2010-2011 HAS ALREADY PAID THE SUM AND THE PROVISIONS OF SECTION 4 0(A)(IA) ARE NOT APPLICABLE TO THE SUM ALREADY PAID BY THE ASSESSE E. THE ADDITION SHOULD BE ORDERED TO BE DELETED. 3. THAT, THE ASSESSEE WAS IGNORANT OF THE FACT THAT THE P ROVISIONS OF SECTION 40(IA) OF THE INCOME TAX ACT, 1961 ARE APP LICABLE TO PAYMENT OF HIRE CHARGES TO NBFCS AND IGNORANCE OF LAW IS AN EXCUSE. 4. THAT SINCE THERE ARE DIFFERENT VIEWS OF VARIOUS COUR TS ON THE ISSUE OF 40(A)(IA) THE ASSESSEE MUST BE GIVEN THE BENEFIT OF DOUBT. 5. THE APPELLANT CRAVES PERMISSION TO RAISE THE ADDITION AL GROUND OR GROUNDS AT THE TIME OF HEARING OF THE APPEAL. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN I NDIVIDUAL AND IS PROPRIETOR OF M/S. SUN CONSTRUCTION. HE FILED THE RE TURN OF INCOME ON 25.2.2011 SHOWING TOTAL INCOME OF RS.18,06,015/-. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS DERIVED INCOME FROM CONTRACT W ORKS OBTAINED FROM VEDANTA ALUMINUM LTD., GDCL, BALAJI INFRATEC AN D SUB-CONTRACT FROM M/S. J.J. ASSOCIATES. THE ASSESSING OFFICER IN THE COURSE OF SCRUTINY ASSESSMENT , THE ASSESSEE FILED THE LIST OF SUNDRY CREDITORS A ND AMOUNT SHOWN OUTSTANDING AGAINST THEIR NAMES. IN RESPONSE TO A SSESSING OFFICERS QUERY, THE ASSESSEE HAS SUBMITTED THAT THERE ARE ABOUT 10 0 CREDITORS AND IT IS IMPOSSIBLE TO PRODUCE THEM AS THEY ARE PETTY VILLAGE RS, WHO SUPPLIED THE MATERIALS TO THE ASSESSEE FOR CONSTRUCTION WORK. IN ABSEN CE OF EVIDENCE AND CONFIRMATION OF CREDITORS AND AS AGREED BY THE ASSESSEE, TH E ASSESSING 3 ITA NO.390/RPR/2014 ASSESSMENT YEAR : 2010-2011 OFFICER ESTIMATED THE PROFIT 2 8% OF GROSS RECEIPT OF RS. 4,89,88,522/. AS THE ASSESSEE HAS SHOWN INCOME OF RS.18,06,015/-, THE BALANCE OF RS.21,13,067/- WAS ADDED TO THE TOTAL INCOME OF THE ASSE SSEE. 4. ON THE DISPUTED ISSUE, THE ASSESSING OFFICER FOUND FR OM THE PROFIT AND LOSS ACCOUNT THAT A SUM OF RS.24,76,645/- HAS BEEN DEBITE D UNDER THE NARRATION INTEREST. THE ASSESSING OFFICER ALSO FOUND TH AT THE ASSESSEE HAS POAID INTEREST AGGREGATING TO RS.16,32,797/- TO NBFCS NAMELY MAGMA FINANCE LTD., TATA CAPITAL AND BAJAJ AUTO FINANCE LTD ., WITHOUT DEDUCTING TDS THEREFROM. IN RESPONSE TO QUERY RAISED BY THE ASSESSI NG OFFICER, IT WAS SUBMITTED BY THE ASSESSEE THAT 40(A)(IA) IS APPLICABLE ON LY ON PAYABLE AMOUNT AND NOT ON PAID AMOUNT. THIS EXPLANATION WAS NOT ACCEPTABLE TO THE ASSESSING OFFICER AND RELYING ON VARIOUS JUDICIAL PRONOUN CEMENTS, DISALLOWED RS.16,32,797/- AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 5. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 6. HENCE, THE ASSESSEE IS IN APPEAL BEFORE US. 7. AT THE TIME OF HEARING, LD A.R. OF THE ASSESSEE SUBMI TTED THAT THE AMOUNTS ARE NOT COVERED BY THE PROVISIONS OF TDS AND , THEREFORE, THE DISALLOWANCE U/S.40(A)(IA) OF THE ACT DOES NOT ARISE HE SUBMITTED THAT ONCE 4 ITA NO.390/RPR/2014 ASSESSMENT YEAR : 2010-2011 THE INCOME IS ESTIMATED, THERE CANNOT BE ANY MORE ADDIT ION, MORE SO, OF STATUTORY NATURE. 8. LD D.R. SUPPORTED THE ORDERS OF LOWER AUTHORITIES. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE OR DERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. WE NOT ED THAT THE ASSESSING OFFICER HAS ESTIMATED THE NET PROFIT @ 8% OF GROSS CONTRA CT RECEIPTS. THEREFORE, ONCE THE BOOKS OF ACCOUNT ARE REJECTED, THERE IS NO NECESSITY FOR DISALLOWING ANY FURTHER AMOUNTS AS HELD BY HONBLE A. P. HIGH COURT IN THE CASE OF MADDI SUDARSANAM OIL MILLS CO. VS CIT, 37 ITR 36 9 (AP). RESPECTFULLY FOLLOWING THE SAME, WE ARE OF THE OPINION THAT THE ASSESSING OFFICER IS NOT JUSTIFIED IN DISALLOWING RS.16,32,797/- U /S.40(A)(IA) OF THE ACT. HENCE, WE SET ASIDE THE ORDERS OF LOWER AUTHORITIES AND DELETE RS.16,32,797/- AND ALLOW THE GROUNDS OF APPEAL OF THE ASSESSEE. 10. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOW ED. ORDER PRONOUNCED ON 19/01/2018. SD/- SD/- (N.S SAINI) ( PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIALMEMBER RAIPUR; DATED 19 /01/2018 B.K.PARIDA, SPS 5 ITA NO.390/RPR/2014 ASSESSMENT YEAR : 2010-2011 COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PRIVATE SECRETARY ITAT, RAIPUR 1. THE APPELLANT : SUNNY WASAN, PROP. M/S. SUN CONSTRUCTION, 88, INDRA COMMERCIAL COMPLEX, T.P. NAGAR, KORBA 2. THE RESPONDENT. DCIT, CIRCLE, KORBA 3. THE CIT(A)-BILASPUR 4. PR.CIT-BILASPUR 5. DR, ITAT, RAIPUR 6. GUARD FILE. //TRUE COPY//