Sh. Mridul Khanna, Amritsar. V. The Income-tax Officer, Amritsar.

ITA 425/ASR/2012

• Counselvise Citation: 42520914 RSA 2012
• Duration Of Justice: 1 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 16-01-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 09-11-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Gross profit estimation; Retrospective amendment
• Section: 201(1); 139

Judgement Text

ITA NO.425(ASR)/2012 1 IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.425(ASR)/2012 ASSESSMENT YEAR:2007-08 PAN :ACSPK8537H SH. MRIDUL KHANNA PROP. VS. THE INCOME TAX OFFICE R, M/S. TELCO FAB. WARD IV(3), AMRITSAR. 42, GREEN AVENUE, AMRITSAR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH. SALIL KAPOOR, ADVOCATE RESPONDENT BY:SH. TARSEM LAL, DR DATE OF HEARING: 16/01/2014 DATE OF PRONOUNCEMENT:14/02/2014 ORDER PER BENCH ; THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF THE CIT(A), AMRITSAR, DATED 16.08.21012 FOR THE ASSESSMENT YEA R 2007-08. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: ITA NO.425(ASR)/2012 2 1. THAT THE LD. CIT(A) HAS, IN VIEW OF FACTS AND C IRCUMSTANCES OF THE CASE, GROSSLY ERRED IN LAW AND ON FACTS IN UPHO LDING THE FOLLOWING ADDITIONS: I) RS.7,83,645/- FOR DISALLOWING THE DEDUCTION OF INTEREST PAID BY APPLYING THE PROVISIONS OF SEC. 40(A)(IA) OF THE ACT. II) RS.40,000/- ON ACCOUNT OF LOW G.T.RATE 2. THAT THE OBSERVATIONS MADE WERE AGAINST FACTS AND W ERE BASED ON SURMISES AND CONJECTURES AND THE ADDITION WERE W RONGLY MADE BY THE ITO AND THE SAME HAVE BEEN WRONGLY UPHE LD BY THE LD. CIT(A). THE EXPLANATION GIVEN AND THE DETAI LS FILED HAVE NOT BEEN PROPERLY CONSIDERED AND JUDICIALLY INTERPR ETED AND THE ADDITIONS UPHELD ARE UNJUST AND UNLAWFUL. 3. THAT THE ADDITION OF RS.7,83,645/- IS MISCONCEIVED AND THE FACTS AND THE LAW HAVE NOT BEEN PROPERLY APPRECIATE D. IN ANY CASE, THE ADDITION MADE IS UNJUST AND UNLAWFUL. 4. THAT IN ANY CASE, THE RECIPIENTS OF INTEREST OF RS. 7,83,645/- HAD FILED THEIR INCOME TAX RETURNS AND PAID THEIR TAXE S DUE THEREON AND THERE WAS NO LOSS OF REVENUE. THE DISALLOWANCE MADE WAS HARSH, UNJUST, ILLEGAL AND UNLAWFUL. 2. THE LD. COUNSEL FOR THE ASSESSEE DID NOT PRESS G ROUND NO.1(II) WITH REGARD TO THE ADDITION ON ACCOUNT OF LOW G.P. RATE AND THE SAME IS DISMISSED AS NOT PRESSED. 3. AS REGARDS OTHER GROUNDS, THE BRIEF FACTS ARE TH AT IT WAS NOTICED BY THE AO THAT THE ASSESSEE HAS DEBITED INTEREST PAID AT R S.7,64,315/- TO SH. MRIDUL KHANNA & SONS, HUF AND RS.19,185/- TO HIS SON, SH. SAHIL KHANNA OUT OF ITA NO.425(ASR)/2012 3 NET PROFIT OF RS.9,62,645/- WITHOUT DEDUCTING THE T DS REQUIRED U/S 194A OF THE ACT. WHEN REQUIRED TO TENDER EXPLANATION WITH D EFAULT IN VIEW OF THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT, THE AS SESSEES REPLY DATED 26.11.09 WHEREIN THE ASSESSEE HAS IMPLIEDLY ACCEPTE D THE DEFAULT UNDER THE IMPRESSION THAT NO TDS WAS LIABLE TO BE DEDUCTED O N INTEREST PAID AT RS.7,83,645/- IN THIS REGARD IN RESPONSE TO ORDER S HEET QUERY DATED 16.11.09 DID NOT FIND FAVOUR WITH THE AO WHO IN TURN MADE TH E ADDITION OF RS.7,83,645/- U/S 40(A)(IA) OF THE ACT WHICH IS OBL IGATORY ON THE PART OF THE ASSESSEE. IT IS SEEN FROM PERUSAL OF THE PENULTIM ATE AT PAGE 4 OF THE AOS ASSTT. ORDER UNDER APPEAL, THE AO INTENDED TO DISA LLOW AND ADD BACK RS.7,64,515/- FOR THE DEFAULT OF NON DEDUCTION AND NON-DEPOSIT OF TDS U/S 194A, HOWEVER, IN THE COMPUTATION OF INCOME SUCH AD DITION HAS BEEN MADE AT RS.7,83,645/-. 4. THE LD. CIT(A) CONFIRMED THE ACTION OF THE A.O. VIDE PARA 6 & 7 OF HIS ORDER WHICH FOR THE SAKE OF CONVENIENCE IS REPR ODUCED AS UNDER: 6. I HAVE CAREFULLY CONSIDERED THE APPELLANTS SUBMISS IONS AND HAVE ALSO GONE THROUGH THE FINDINGS GIVEN BY THE AO IN HIS ASSESSMENT ORDER UNDER APPEAL. VIDE GROUNDS OF APPEAL NO. 1 TO 4, THE APPELLANT HAS CONTESTED THE ADDITIONS OF RS.7,83,645/- U/S 40 (A)(IA) OF THE ACT AND RS.96,454/- FOR LOW GP RATE IN A CONSOLIDATED M ANNER AND THE SAME ARE ADJUDICATED UPON HEREUNDER ISSUE-WISE ONE BY ONE: 7. FIRST ADDITION CONTESTED IS OF RS.7,83,6545/- MADE BY THE AO ITA NO.425(ASR)/2012 4 FOR APPARENT AND ESTABLISHED DEVIATION AND INFRINGE MENT OF THE OBLIGATORY AND MANDATORY PROVISIONS OF SECTION 40(A )(IA) BY NEITHER DEDUCTING NOR DEPOSITING THE REQUISITE TDS U/S 194 A ON HUGE PAYMENT OF INTEREST TO BOTH THE DEPOSITORS AMOUNTIN G TO RS.7,83,645/-. AFTER PERUSING THE BARE PROVISIONS OF SECTION 194A R/W ITS PROVISO VIS- -VIS- SECTION 40(A)(IA) OF THE ACT, I AM OF THE CO NSIDERED OPINION THAT THE AO IS QUITE JUSTIFIED IN HIS ACTION OF MAKING A N ADDITION OF RS.7,45,683/- FOR THE NON-COMPLIANCE AND INFRINGEME NT OF PROVISIONS OF SECTION 40(A)(IA) OF THE ACT AS IN ACCORDANCE WI TH THE PROVISIONS OF SECTION 194A R/W ITS PROVISO, ALTHOUGH THE APPELLA NTS STATUS BEING PROPRIETOR OF A CONCERN ENJOYS STATUS AS AN INDIVID UAL, BUT SINCE ITS OWN DECLARED TURNOVER FAR EXCEEDED THE PRESCRIBED L IMIT OF RS.40 LACS AND THE ACCOUNTS ARE LIABLE TO BE AUDITED UNDER TH E PROVISIONS OF SECTION 44AB OF THE ACT, IT IS OBLIGATORY ON THE PA RT OF THE APPELLANT TO DEDUCT AND DEPOSIT TDS ON THE INTEREST PAID BY HIM, IF THE INTEREST SO PAID EXCEEDS THE MINIMUM LIMIT OF RS.10,000/- TO EA CH DEPOSITOR. FURTHER, VIDE ITS REPLY DATED 26.11.09 FILED DURIN G ASSTT. PROCEEDINGS, THE APPELLANT HAS HIMSELF IMPLIEDLY ACCEPTED BEFORE THE AO THAT HE WAS UNDER BONAFIDE IMPRESSION THAT HE WAS NOT LIABL E TO MAKE ANY TDS ON THE AMOUNT OF INTEREST PAID TO THE DEPOSITOR S OF RS.7,64,515/-. ACCORDINGLY, IT WOULD BE IN THE FITNESS OF THINGS A ND QUITE JUSTIFIED TO CONFIRM THE ADDITION OF RS.7,83,645/- MADE BY THE A O U/S 40(A)(IA) OF THE ACT, HAVING BEEN MADE QUITE IN ACCORDANCE WITH LAW AND AS PER FACTS AND MATERIAL AVAILABLE ON RECORD. I FEEL THAT NO INTERFERENCE IS INVALID AND CALLED FOR, ON THIS SCORE. 5. THE LD. COUNSEL FOR THE ASSESSEE, SH. SALIL KAPO OR, ADVOCATE, AT THE OUTSET, ARGUED THAT IT IS A DEPOSIT WHICH WAS TAKEN BY THE HUF FROM THE INDIVIDUAL AT THE FIRST INSTANCE AND THEREAFTER, TH E INDIVIDUAL HAS TRANSFERRED THE MONEY TO ITS PROPRIETORSHIP CONCERN. THEREFORE, THE PROVISIONS OF TDS ARE NOT APPLICABLE ON THE INDIVIDUAL. ITA NO.425(ASR)/2012 5 5.1. THE LD. COUNSEL FOR THE ASSESSEE ALTERNATIVELY ARGUED IF AT ALL TDS IS DEDUCTIBLE, THE ASSESSEE IS NOT DEEMED TO BE AN ASS ESSEE IN DEFAULT UNDER THE FIRST PROVISO TO SECTION 201(1). HE INVITED OUR ATT ENTION THE AMENDMENT MADE BY FINANCE ACT,2012 W.E.F. 01.07.2012, WHICH FOR TH E SAKE OF CLARITY IS REPRODUCED AS UNDER: [ PROVIDED THAT ANY PERSON, INCLUDING THE PRINCIPAL OFFICER O F A COMPANY, WHO FAILS TO DEDUCT THE WHOLE OR ANY PART OF THE TAX IN ACCORDANCE WITH THE PROVISIONS OF THIS CHAPTER ON THE SUM PAID TO A RESIDENT OR ON THE SUM CREDITED TO THE ACCOUNT OF A RESIDENT SHALL NOT BE DEEMED TO BE AN ASSESSEE IN DEFAULT IN RESPECT OF SUCH TAX IF SUCH RESIDENT ( I ) HAS FURNISHED HIS RETURN OF INCOME UNDER SECTION 139 ; ( II ) HAS TAKEN INTO ACCOUNT SUCH SUM FOR COMPUTING IN COME IN SUCH RETURN OF INCOME; AND ( III ) HAS PAID THE TAX DUE ON THE INCOME DECLARED BY HI M IN SUCH RETURN OF INCOME, AND THE PERSON FURNISHES A CERTIFICATE TO THIS EFFE CT FROM AN ACCOUNTANT IN SUCH FORM AS MAY BE PRESCRIBED: 5.2. THE LD. COUNSEL FOR THE ASSESSEE FURTHER ARG UED THAT AMENDMENT MADE IS APPLICABLE WITH RETROSPECTIVE EFFECT AND SIMILAR AMENDMENT HAS BEEN MADE IN SECTION 40(A)(IA) OF THE ACT , WHICH IS CLARIFICATORY IN NATURE. HE RELIED UPON THE DECISION OF ITAT, RAJKOT BENCH IN ITA NO.425(ASR)/2012 6 THE CASE OF GUJARAT PIPAVAV PORT LIMITED VS. DCIT, TDS CIRCLE, RAJKOT IN ITA NOS. 614 & 6159RAJ)/2012 FOR THE ASSESSMENT YEA RS 2006-07 & 2007- 08 DATED 23.08.2013. THE COPY OF THE SAID DECISION IS PLACED ON RECORD. THE LD. COUNSEL, THEREFORE PRAYED TO SET ASIDE THE ISSU E TO THE FILE OF THE AO WHO WILL CONSIDER THE ISSUE IN VIEW OF THE DECISION OF RAJKOT BENCH OF ITAT IN THE CASE OF GUJARAT PIPAVAV PORT LIMITED VS. DCIT, TDS CIRCLE, RAJKOT. HE FURTHER ARGUED THAT THE PROVISIONS CONTAINED IN SEC TION 40(A)(IA) OF THE ACT ARE BENEFICIAL PROVISIONS, THEREFORE, HAVE TO BE APPLIED RETROSPECTIVELY. 6. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE O RDERS OF THE AUTHORITIES BELOW AND ARGUED THAT NONE OF THE CONDI TIONS UNDER THE PROVISO TO SECTION 201(1) OF THE ACT HAS BEEN COMPLIED WITH BY THE ASSESSEE I.E. THE ASSESSEE HAS NOT PLACED ON RECORD THE INCOME TAX RE TURN FILED BY THE RESPONDENT. SIMPLY SUBMITTING COMPUTATION OF INCOME DOES NOT ESTABLISH THE FILING OF THE RETURN. THEREFORE, THE ALTERNATE ARGUMENT SHOULD NOT BE ACCEPTED AND THE ORDER OF THE LD. CIT(A) SHOULD BE CONFIRMED. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. AS REGARDS THE ARGUMENTS MADE BY THE LD. COUNSEL F OR THE ASSESSEE, MR. SALIL KAPOOR THAT THE ASSESSE-HUF HAS PAID THE MONE Y TO THE INDIVIDUAL AND NOT TO THE PROPRIETORSHIP CONCERN CANNOT BE ACCEPTE D SINCE IT IS THE INDIVIDUAL WHO IS PROPRIETOR OF PROPRIETORSHIP CONCERN AND BY TAKING THE MONEY ITA NO.425(ASR)/2012 7 PERSONALLY TO THE PROPRIETORSHIP CONCERN WILL TANTA MOUNT TO ONE AND SAME AND THEREFORE, WHEN THE ASSESSEE IS FILING THE INCO ME TAX RETURN IN HIS INDIVIDUAL CAPACITY AS PROPRIETOR OF THE PROPRIETOR SHIP CONCERN, THE MONEY WILL BE DEEMED TO HAVE BEEN RECEIVED BY HIM, WHICH IN FACT HAS BEEN RECEIVED BY THE PROPRIETORSHIP CONCERN. THEREFORE, THIS ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE CANNOT BENEFIT THE ASSESSE E AND ACCORDINGLY THE DECISION OF THE LD. CIT(A) IS REASONED ONE AND WE F IND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A). 7.1. AS REGARDS THE ALTERNATE ARGUMENT MADE BY THE LD. COUNSEL FOR THE ASSESSEE, MR. SALIL KAPOOR, WE ARE CONVINCED WITH T HE ARGUMENTS MADE BY THE LD. DR THAT NONE OF THE CONDITIONS UNDER PROVI SO TO SECTION 201(1) HAVE BEEN FULFILLED BY THE ASSESSEE AND NO DOCUMENT TO E STABLISH THE CONDITION UNDER THE PROVISO HAS BEEN PLACED ON RECORD. WHET HER THE ASSESSEE HAS SUBMITTED THE RETURN OF INCOME UNDER SECTION 139 AN D HAS DECLARED THE INCOME RECEIVED BY HIM AND TAXES HAVE BEEN PAID IS NOT ON RECORD. ALSO NO CERTIFICATE FROM THE ACCOUNTANT IN THE FORM OF PRES CRIBED RULE 31ACB OF THE I.T.RULES, IN FORM NO.26A HAS BEEN PLACED ON RECOR D. IN SUCH CIRCUMSTANCES, THE ALTERNATE ARGUMENT MADE BY SH.S ALIL KAPOOR, ADVOCATE, CANNOT BE ACCEPTED. ACCORDINGLY, WE FIND NO INFIRMI TY IN THE ORDER OF THE LD. ITA NO.425(ASR)/2012 8 CIT(A) AND THE SAME IS UPHELD. THUS, ALL THE GROUN DS OF THE ASSESSEE ARE DISMISSED. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA NO.425(ASR)/2012 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14TH FEBRUARY, 2014. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 14TH FEBRUARY, 2014 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:MARIDUL KHANNA PROP. M/S. TELCO FAB, 4 2, GREEN AVENUE, AMRITSAR. 2. THE ITO WARD IV(3), ASR 3. THE CIT(A), ASR. 4. THE CIT, ASR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR