ACIT 22(1), MUMBAI V. SHRI FAIYAZ S RANGWALA, MUMBAI

ITA 4103/MUM/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 3577 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2014-2015
• Appeal Filed On: 08-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARKAMAL SOHI SANDHU
• Assessee Lawyers: M SUBRAMANIAN
• Keywords: Additional evidence; TDS
• Section: 143(3); 40(a)(ia)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F , MUMBAI BEFORE SHRI C.N. PRASAD, HON'BLE JUDICIAL MEMBER AND SHRI N.K. PRADHAN , HON'BLE ACCOUNTANT MEMBER ITA NO. 4103 /MUM/201 8 (A.Y: 20 14 - 15 ) ASST . COMMISSIONER OF INCOME - TAX 22(1 ) ROOM NO. 322 PIRAMAL CHAMBERS, LALBAUG MUMBAI 400 012 V. SHRI FAIYAZ S. RANGWALA 56/901, EMPRESSA, 2 ND ROAD OPP. MUNICIPAL MARKET, KHAR (W) MUMBAI 400 052 PAN: AADPR8710M (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI M. SUBRAMANIAN DEPARTMENT BY : SHRI HARKAMAL SOHI SANDHU DATE OF HEARING : 17 .09.2019 DATE OF PRONOUNCEMENT : 29 .10 .2019 O R D E R PER C. N. PRASAD (JM) 1. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 34, MUMBAI [HEREINAFTER IN SHORT LD.CIT(A)] DATED 26.03.2018 FOR THE A.Y. 2014 - 15. 2. REVENUE HAS RAISED FOLLOWING GROUNDS IN ITS APPEAL: - 1. ' WHETH ER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS RIGHT IN HOLDING THAT THE ASSESSEE WAS NOT LIABLE FOR AUDIT U/S 44AB IN A.Y 2013 - 14 AND THEREFORE NOT LIABLE FOR MAKING TDS IN THE ASSESSMENT YEAR UNDER CONSIDERATION ON THE 2 ITA NO.4103/MUM/2018 (A.Y: 2014 - 15) SHRI FAIYAZ S. RANGWALA GROUN D THAT GROSS RECEIPTS FOR A.Y 2013 - 14 WERE RS. 96 LACS ONLY WHEN IT IS CLEARLY MENTIONED IN THE ASSESSMENT ORDER THAT GROSS RECEIPTS FOR A.Y 2013 - 14 AMOUNTED TO RS. 1.2 CRORES '. 2. 'WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. C1T(A) WAS RIGHT IN ADMITTING THE ADDITIONAL EVIDENCES IN CONTRAVENTI ON OF THE PROVISIONS OF RULE 46 A OF INCOME TAX RULE 1962, WHICH SHOWED THAT THE AMOUNT RECEIVED FROM BENCHMARK TOWN PLANNING LLP WAS NOT ADVANCE AGAINST FLAT, HOWEVER THE AO HAD CLEARLY MENTIONED IN THE ASSESSMENT ORDER THAT THE SAID RECEIPT WAS ADVANCE'. 3. 'WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. C I T(A) WAS RIGHT IN DELETING THE DISALLOWANCE MADE BY AO U/S 40(A)(IA) OF THE INCOME TAX ACT, WHEN T HE ASSESSEE HIMSELF HAD MADE TDS ON CERTAIN PAYMENTS, HOWEVER FAILED IN MAKING TDS ON OTHER CONTRACTUAL/ PROFESSIONAL / INTEREST EXPENSES' 3. BRIEFLY STATED THE FACTS ARE THAT, THE ASSESSEE AN INDIVIDUAL FILED RETURN OF INCOME ON 29.11.2014 DECLARING INCOME OF .29 , 55 , 320/ - . ASSESSMENT WAS COMPLETED U/S. 143(3) OF THE ACT ON 30.12.2016 DETERM IN ING THE INCOME AT . 4,55,32,294/ - . ASSESSING OFFICER W HILE COMPLETING THE ASSESSMENT DISALLOWED INTEREST AND VARIOUS OTHER EXPENSES OF .4,21,51,182/ - ON THE GROUND THAT THE ASSESSEE DID NOT DEDUCT TAX AT SOURCE ON SUCH PAYMENTS. IN THE COURSE OF THE ASSESSMENT PROCEEDINGS ASSESSEE CONTENDED THAT AS ASSESSEE IS IN THE BUSINESS OF CIVIL CONSTRUCTION AND SINCE HIS TURNOVER DURING THE A.Y.2013 - 14 WAS LESS THAN . 1 CRORE AND SINCE THE EX PENSES INCURRED WERE ALL RELATED TO THE A.Y. 2013 - 14 ASSESSEE IS NOT LIABLE FOR AUDITED U/S. 44AB AND T HEREFORE TDS PROVISIONS HAVE NO APPLICATION . NOT CONVINCED WITH THE SUBMISSIONS OF THE ASSESSEE THE ASSESSING OFFICER DISALLOWED INTEREST AND OTHER 3 ITA NO.4103/MUM/2018 (A.Y: 2014 - 15) SHRI FAIYAZ S. RANGWALA EXPE NSES FOR NON - DEDUCTION OF TDS. ON APPEAL THE LD.CIT(A) DELETED THE ADDITION/DISALLOWANCE MADE BY THE ASSESSING OFFICER . 4. LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER . 5. LD. COUNSEL FOR THE ASSESSEE STRONGLY SUPPORTED THE ORDER OF THE LD.CIT(A). LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITS THAT ASSESSEE HAS NOT FILED ANY ADDITIONAL EVIDENCES BEFORE THE LD.CIT(A) BUT HOWEVER TO SUBSTANTIATE THE SUBMISSION OF THE ASSESSEE T HAT IT IS NOT LIABLE FOR TDS , ASSESSEE HAS PLACED EVIDENCES AS REQUIRED BY THE LD.CIT(A) AND T HEREFORE THERE IS NO VIOLATION OF PROVISIONS OF SECTION 46A OF THE ACT. IT IS SUBMITTED THAT THE EVIDENCES WERE FURNISHED ONLY TO DEMONSTRATE THAT THE TDS PROVIS IONS ARE NOT APPLICA BLE TO THE ASSESSEE AND T HEREFORE SINCE THE EVIDENCES WERE FURNISHED AS PER THE PROVISIONS OF RULE 46A(4) OF THE ACT THERE IS NO VIOLATION OF THE PROVISIONS OF SECTION 46A OF THE ACT AND THIS GROUND OF REVENUE IS TO BE REJECTED . 6. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF THE AUTHORITIES BELOW. ON A PERUSAL OF THE ASSESSMENT ORDER, WE FIND THAT THE ASSESSING OFFICER WAS OF THE VIEW THAT THE TURNOVER OF THE ASSESSEE IS MORE THAN . 1 CRORE AND THE PROVISIONS OF SECTION 44AB ARE APPLICABLE . ACCORDING TO THE ASSESSING OFFICER ASSESSEE HAS RECEIVED .35 LAKHS FROM VAISHALI SHETTY, .61 LAKHS FROM FEM CONSTRUCTION PVT. LTD., AND 4 ITA NO.4103/MUM/2018 (A.Y: 2014 - 15) SHRI FAIYAZ S. RANGWALA . 24 LAKHS FROM BENCHMARK TOWNP LANNING LLP , TOTAL AGGREGATING TO .1.20 CRORES THEREFORE HE WAS O F THE VIEW PROVISIONS OF SECTION 44AB OF THE ACT ARE APPLICABLE AND SINCE THE ASSESSEE HAS NOT DEDUCTED TDS ON CERTAIN PAYMENTS INCLUDING INTEREST , THE ASSESSING OFFICER INVOKING THE PROVISIONS OF SECTION 40A(IA) OF THE ACT DISALLOWED THE SAID EXPENSES FOR NON - DEDUCTION OF TDS . 7. WE OBSERVE THAT B EFORE THE LD.CIT(A) , THE ASSESSEE SUCCESSFULLY DEMONSTRATED THAT HE HAS RECEIVED ONLY .35 LAKHS FROM VAISHALI SHETTY AND .6 1 LAKHS FROM FEM CONSTRUCTION PVT. LTD., AGGREGATING TO .96 LAKHS ONLY WHICH IS LESS THAN . 1 CRORE AND T HEREFORE THE PROVISIONS OF SECTION 44AB OF THE ACT HAVE NO APPLICATION TO THE ASSESSEE. THE ASSESSEE COULD DEMONSTRATE WITH EVIDENCES THAT THE OBSERVATION MADE BY THE ASSESSING OFFICER THAT ASSESSEE HAS RECEIVED .24 LAKHS FROM BENCHMARK TOWNP LANNING LLP WAS IN FACT NOT CORRECT AND NO SUCH PAYMENT WAS RECEIVED BY THE ASSESSEE AND T HEREFORE OBSERVATION MADE BY THE ASSESSING OFFICER WAS FACTUALLY INCORRECT . WE FIND THAT EVIDENCES FURNISHED BEFORE THE LD.CIT(A) ARE ONLY TO DEMONSTRATE THAT T HE PROVISIONS OF SECTION 44AB ARE NOT APPLICABLE TO THE ASSESSEES CASE AND THERE ARE NO ADDITIONAL EVIDENCES SUOMOTO FURNISHED BY THE ASSESSEE. THEREFORE, THE GROUND RAISED BY THE REVENUE THAT THERE IS VIOLATION OF PROVISIONS OF SECTION 46A OF THE ACT IS FACTUALLY INCORRECT. 5 ITA NO.4103/MUM/2018 (A.Y: 2014 - 15) SHRI FAIYAZ S. RANGWALA 8. WE FURTHER OBSERVE THAT THE LD.CIT(A) C ONSIDERING THE SUBMISSIONS AND EVIDENCES FURNISHED BY THE ASSESSEE DELETED THE ADDITION/DISALLOWANCE OBSERVING AS UNDER: - 4.3 GROUND NO. 1,2,3 & 4; - THIS GROUND RELATES TO THE APPLICABILITY OF TDS PROVISIONS. THIS GROUND RELATES TO DISALLOWANCE OF EXPENDITURE U/S.40(A)(IA). THE A.O. HAS NOTED THAT THE APPELLANT WHO IS ENGAGED IN THE BUSINESS OF BUILDERS AND DEVELOPERS HAS RECEIVED ADVANCES FROM DIFFERENT PERSONS EXCEEDING ONE CRORE IN THE IMMED IATE PRECEDING YEAR WHICH IS REQUIREMENT FOR APPLICABILITY OF PROVISIONS OF SECTION 44AB IN THE CASE OF INDIVIDUAL. ACCORDING TO A.O., THE FOLLOWING ADVANCES WERE RECEIVED DURING THE PRECEDING YEAR I.E. A.Y.2013 - 14: - 1) RS.35,00,000/ - FROM VAISHALI SHETTY. 2) RS.61,00,000/ - FROM FEM CONSTRUCTION PRIVATE LIMITED 3) RS.24,00,000/ - FROM BENCHMARK TOWNPLAN IN G LLP. THU S, ONCE THE RECEIPT EXCEEDS RS.1 CRORE WHICH ACCORDING TO A.O. WAS RS.1,20,00,000/ - DURING A.Y.2013 - 14 AND THE APPELLANT WAS REQUIRED TO GET HIS BOOKS OF ACCOUNTS AUDITED U/S.44AB FOR A.Y.2013 - 14. IN THIS BACKGROUND, THE APPELLANT WAS REQUIRED TO APPLY THE PROVISIONS OF TAX DEDUCTED AT S OURCE ON SPECIFIED PAYMENTS. HOWEVER, THE APPELLANT HAS NEITHER APPLIED THE PROVISIONS OF SECTION 44AB NOR HAS DEDUCTED TAX AT SOURCE ON VARIOUS PRESCRIBED PAYMENTS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS SUBMITTED THAT PAYMENT OF RS.24 L ACS FROM BENCHMARK TOWNPLANNING LLP WAS NOT RECEIVED ON ACCOUNT OF ADVANCE AGAINST ANY FLAT. DETAILS WERE SUBMITTED SHOWING THAT NO FLAT WAS EITHER BOOKED OR SOLD TO BENCHMARK TOWNPLANNING LLP AND THUS THE QUESTION OF RECEIVING ADVANCE FROM THE SAME DOES NOT A RISE. BENCHMARK TOWNPLANNING LLP IS A SISTER CONCERN OF BENCHMARK DEVELOPERS WHICH IS A PROPRIETORSHIP CONCERN OF THE APPELLANT. IT WAS FURTHER SUBMITTED THAT RS.90 LACS WAS RECEIVED FROM BENCHMARK TOWNPLANNING LLP DURING F.Y.2012 - 13 AND RS.32 LACS WAS RET URNED IN THE SAME YEAR. THE BALANCE AMOUNT OF RS.58 LACS IS DULY REFLECTED IN THE BALANCE SHEET AS ON 31.03.2013. IT HAS FURTHER BEEN ARGUED THAT THE LOAN FROM BENCHMARK TOWNPLANNING LLP HAS BEEN DULY ACCEPTED BY THE A.O. DURING THE ASSESSMENT PROCEEDINGS FOR A.Y.2013 - 14. IN VIEW OF THE ABOVE STATED FACTS, IT IS CLEAR THAT THE WHOLE BASIS OF A.O'S CONCLUSION THAT THE - APPELLANT WAS LIABLE TO GET ITS ACCOUNTS AUDITED AND THE PRESCRIBED PAYMENTS SHOULD HAVE BEEN SUBJECTED TO 6 ITA NO.4103/MUM/2018 (A.Y: 2014 - 15) SHRI FAIYAZ S. RANGWALA TDS PROVISION IS BASED ON THE PRES UMPTION THAT RECEIPT IN THE PRECEDING YEAR EXCEEDED THE LIMIT; OF RS.1 CRORE. FROM THE ABOVE DISCUSSION THAT THE ADVANCE DURING THE PRECEDING YEAR WAS ONLY RS.96 LACS, NEITHER THE APPELLANT WAS REQUIRED TO GET ITS ACCOUNTS AUDITED AS PER THE PROVISIONS OF SECTION 44AB NOR HE WAS REQUIRED TO DEDUCT TAX ON THE PRESCRIBED PAYMENT AS PER PROVISIONS OF TAX DEDUCTED AT SOURCE. THUS, THE ADDITION OF RS. 4,21,51,182/ - IS DELETED. HENCE THESE GROUNDS OF APPEAL ARE ALLOWED. 9. FURTHER, LD. COUNSEL FOR THE ASSESSEE REFE RRING TO THE AGREEMENT OF SALE DATED 17.07.2015 ENTERED INTO BETWEEN MR. UDAY S. SHETTY AND BENCHMARK TOWNPLANNING LLP WHICH IS PLACED AT PAGE NO. 29 OF THE PAPER BOOK , IT IS SUBMITTED THAT IN FACT BENCHMARK TOWNPLANNING LLP PURCHASED THE PROPERTY FROM ONE MR. UDAY S. SHETTY AND NOT FROM THE ASSESSEE AND T HEREFORE THE OBSERVATION OF THE ASSESSING OFFICER THAT ASSESSEE HAS RECEIVED .24 LAKHS FROM BENCHMARK TOWNPLANNING LLP IS FACTUALLY INCORRECT. NON E OF THESE OBSERVATIONS HA VE BEEN REBUTTED BY THE REVENUE WITH EVIDENCES. IN THE CIRCUMSTANCES, WE DO NOT SEE ANY VALID REASON TO INTERFERE WITH THE FINDINGS OF THE LD.CIT(A). THUS, WE SUSTAIN THE ORDER OF THE LD.CIT(A) AND REJECT THE GROUND S RAISED BY THE REVENUE . 10. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 29 TH OCTOBER , 2019 SD/ - SD/ - ( N.K. PRADHAN ) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI / DATED 29 / 10 / 2019 GIRIDHAR , S R. PS 7 ITA NO.4103/MUM/2018 (A.Y: 2014 - 15) SHRI FAIYAZ S. RANGWALA COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// BY ORDER (ASSTT. REGISTRAR) ITAT, MUM