Ajaya Kumar Nayak, Jagatsinghpur V. ACIT, Cuttack

ITA 426/CTK/2012

• Counselvise Citation: 42622114 RSA 2012
• Duration Of Justice: 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 15-06-2012
• Court: TRIBUNAL
• Department Lawyers: S C MOHANTY
• Assessee Lawyers: P R MOHANTYD K SWAINARS
• Section: 142(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , S HRI K.S.S.PRASAD RAO, JUDICIAL MEMBER / I.T.A.NO. 426/CTK/2012 / ASSESSMENT YEAR 2008 - 09 AJAY KUMAR NAYAK, TARINI GADA, BIJAYA CHANDRAPUR, ATHARBANKI, PARADEEP, JAGATSINGHPUR PAN: AAOFA 7337 C. - - - VERSUS - ASST.COMMISSI ONER OF INCOME - TAX,CIRCLE 1(2), CUTTACK. ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI P.R.MOHANTY/D.K.SWAIN,ARS / FOR THE RESPONDENT: / SHRI S.C.MOHANTY, DR / DAT E OF HEARING: 22.08.2012 / DATE OF PRONOUNCEMENT: 31.08.2012 / ORDER . . , , SHRI K.K.GUPTA, ACCOUNTANT MEMBER. THIS APPEAL BY THE ASSESSEE IS ON THE SOLITARY GROUND THAT THE CREDIT FOR THE TAX DEDUCTED AT SOU RCE ON THE BASIS OF GROSS RECEIPTS NOTED BY THE AO OBSERVED IN FORM NO.AS - 26 HAS NOT BEEN GIVEN TO THE FIRM WHEN THE ASSESSING OFFICER HAS SOUGHT TO TAX THE INCOME OF THE FIRM IN THE STATUS OF INDIVIDUAL. 2. THE BRIEF FACTS AS HAVE BEEN BROUGHT ON RECORD A RE THAT THE ASSESSEE IS A FIRM. IT FURNISHED RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION ON 28.9.2008 DECLARING A TOTAL INCOME OF 6,07,040 AND THE SAME WAS PROCESSED U/S.143(1). SUBSEQUENTLY IT WAS SELECTED FOR SCRUTINY. DURING THE SCRUTINY ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOT GETTING ANY RESPONSE TO THE NOTICES U/S.143(2) AND 142(1) PROCEEDED TO PASS THE ORDER U/S.144 B Y BRINGING TO TAX THE INCOMES BEING THE GROSS RECEIPTS RECEIVED BY AN INDIVIDUAL CONTRACTOR S IN THE HANDS OF THE ASSESSEE IN VIEW OF 2 THE FA C T THAT THE TDS CERTIFICATES WERE IN THE NAME OF INDIVIDUAL BEING ONE OF THE PARTNERS. HE PROCEEDED TO DISALLOW EXPEN SES CLAIMED BY THE FIRM IN THE FOLLOWING MANNER. PROFIT TRANSFERRED TO PARNTERS CAPITAL ACCOUNT 4,17,490 ADD: 1. PROVISON FOR TAX 1,87,575 2. PROVISION FOR FBT 1,974 3. PARTNERS REMUNERATION: 4,86,000 4. INTEREST ON CAPITAL: 90,000 5. INTEREST ON BANK DEPOSITS 75,971 6. UNEXPLAINED INTRODUCTIONOF CAPITAL 7,50,000 7. DISCREPANCY IN G ROSS RECEIPTS 10,54,711 26,46,231 TOTAL INCOME 30,63,721 TOTAL INCOME (ROUNDED OFF UNDER SECTION 288A) 30,63,720 AND CREATED A DEMAND OF 12,66,008 WHEN HE HELD THAT THE TDS INFORMATION AS PER FORM AS - 26 AMOUNTING TO 4,92,351 COULD NOT BE GIVEN CREDIT TO THE FIRM. 3. AGGRIEVED THE ASSESSEE APPEALED BEFORE THE FIRST APPELLATE AUTHORITY, WHO CONSIDERED THAT THE AS SESSING OFFICER WAS TO BRING TO TAX THE INCOME EARNED BY SHRI AJAYA KUMAR NAYAK , PARTNER AND THE INCOME EARNED BY M/S. AJAY A KUMAR NAYAK (HUF) SEPARATELY AFTER GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE. HE ALSO DIRECTED THE AO TO CONSIDER THE CLAIM OF THE ASSESSEE AS TO WHOM THE CREDIT FOR TDS AMOUNTING TO 4,92,351 WAS TO BE GIVEN. 4. AS MENTIONED ABOVE, THE SOLITARY ISSUE BEFORE US IS WITH RESP E CT TO THE GRANTING OF CREDIT OF TDS INSOFAR AS THE APPEAL EFFECT GIVEN BY THE ASSESSING OFFICER ON THE ORDER OF THE LEARNED CIT(A) HAS BEEN GIVEN CREDIT TO THE FIR M WITH A CONDITION THAT THE ASSESSEE WILL FURNISH AN UNDERTAKING THAT THE SAME WILL NOT BE CLAIMED IN THE INDIVIDUAL CAPACITY. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW AND THE MATERIAL AVAILABLE ON REC ORD. WE FIND THAT 3 THE ASSESSING OFFICER ON THE CREDIT TO BE GIVEN TO THE FIRM OR INDIVIDUAL WHILE GIVING EFFECT TO THE APPELLATE ORDER HAS NOTED THE FOLLOWING. THE WORKS CONTRACT HAS BEEN AWARDED TO SRI AJAYA KUMAR NAYAK, INDIVIDUAL (PAN ACSPN814OL). B UT THE ASSESSEE BY VIRTUE OF A PARTNERSHIP DEED EXECUTED ON 1.4.2007 HAS SHOWN THE ENTIRE RECEIPT IN THE HANDS OF THE FIRM WHERE SRI AJAYA KUMAR NAYAK IS THE MANAGHING PARTNER. ON VERIFICATION OF THE INDIVIDUAL RETURN OF SRI AJAYA KUMAR NAYAK FOR THE ASST. YEAR 2008 - 09 FILED ON 31.10.2008 VIDE RECEIPT NO. 5187 BEFORE THE ITO, WARED - 2, PARADEEP, IT IS SEEN THAT SRI AJAYA KUMAR NAYAK HAS SHOWN TOTAL INCOME OF 4,80,393 ( 2,40,000 AS SALARY FROM THE FIRM, 36,000 AS INTEREST FROM THE FIRM AND 2,04,393 AS PROFIT FROM INDIVIDUAL BUSINESS) AS PER AUDITED REPORT. THEREFORE CREDIT FOR TDS AMOUNTING TO 5,16,219 ON THE GROSS CONTRACT RECEIPT OF 2,27,82,407 AS PER 26AS DOWNLOADED FROM LTD APPLICATION IS HEREBY GIVEN IN THE HANDS OF THE RF ALTHOUGH THE TDS CERTIFICATE STANDS IN THE NAME OF SRI AJAYA KUMAR NAYAK, INDIVIDUAL SUBJECT TO THE CONDITION THAT THE ASSESSEE WILL FURNISH UNDERTAKING THAT THE ABOVE TDS SHAL L NOT BE CLAIMED IN HIS INDIVIDUAL CAPACITY. REGARDING THE TDS OF 7,825 ON THE INTEREST INCOME FROM INDIAN OVERSEAS BANK AMOUNTING TO 75,971, THE ASSESSEE HAS SHOWN INTEREST INCOME OF 75,971 IN THE INDIVIDUAL RETURN AND CLAIMED TDS AMOUNTING TO 1,593. SINCE THE ASSESSEE HAS SHOWN INTEREST INCOME OF 75,971 IN TH E INDIVIDUAL RETURN, THE CREDIT FOR TDS FROM INTEREST WILL BE CONSIDERED IN THE HANDS OF SRI AJAYA KUMAR NAYAK, INDIVIDUAL. ORDER GIVING APPEAL EFFECT IS NOT AN APPEALABLE ORDER AND WE ARE INCLINED TO HOLD THAT THE GROUND RAISED BY THE ASSESSEE BEFORE US NOW IS WITH RESPECT TO THE CONFUSION CREATED BY THE ASSESSING OFFICER WHEN THE ASSESSMENT OF A FIRM W AS TO ALLOW SALARY AND INTEREST PAID TO THE PARTNERS WHICH ARE TAXABLE IN THE HANDS OF THE PARTNER RECEIVING THE SAME. THE INDIVIDUAL HAVING FILED THE RET URN INCLUDING THE SALARY AND INTEREST TO THE PARTNERS WHICH SHARE OF INCOME OF THE FIRM WAS NOT TAXABLE HAS BEEN INCLUDED IN THE ;HANDS OF THE FIRM AT 4,17,490 AGAINST THE FIRM FILI NG THE RETURN OF INCOME AT 6,0 7,040. IN OTHER WORDS, THE ASSESSING OFFICE R HAS GIVEN CREDIT FOR TAXATION OF INCOMES WHICH HAVE BEEN BROUGHT TO TAX TWICE. WE DO FIND THAT THE ISSUE REQUIRES CONSIDERATION BY THE ASSESSING OFFICER AFTER GIVING THE APPEAL EFFECT ON THE DIRECTION OF THE LEARNED CIT(A) WHO HAS CLEARLY HELD THAT THE A SSESSING 4 OFFICER WAS DIRECTED TO BRING TO TAX THE INCOME EARNED BY SHRI AJAYA KUMAR NAYAK AND THE INCOME EARNED BY SHRI AJAYA KUMAR NAYAK FIRM SEPARATELY AFTER GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE. IN THIS VIEW OF THE MATTER, WE SET ASIDE THE IMPU GNED ORDER OF THE LEARNED CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR SEGREGATING THE INCOME TO BE GIVEN CREDIT IN ACCORDANCE WITH THE PROVISIONS OF THE I.T.ACT AND NOT CONDITIONAL GRANTING OF CREDIT FOR TDS INSOFAR AS THE CREDIT FOR THE TAX DEDUCTED AT SOURCE ON THE GROSS RECEIPTS IN THE HANDS OF THE FIRM HAVE BEEN ADJUSTED BY THE FIRM ITSELF AS PER THE DIRECTION OF THE LEARNED CIT(A). THE CONDITION THEREFORE CANNOT BE FULFILLED BY THE ASSESSEE WHICH CONDITION AS PUT FORTH BY THE ASSESSING OFFICER IN THE ORDER GIVING APPEAL EFFECT WAS TO BE ADDRESSED BY HIM AS PER THE DIRECTION OF THE LEARNED CIT(A). 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. SD/ - SD/ - ( . . . ) , (K.S.S.PRASAD RAO), JUDICIAL MEMBER ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( ) DATE: 31.08.2012 - COPY OF THE ORDER FORWARDED TO: 1 . / THE APPELLANT : 2 / THE RESPONDENT: 3 . / THE CIT, 4 . ( )/ THE CIT(A), 5 . / DR, CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY, / BY ORDER, ( ), (H.K.PADHEE), SENIOR.PRIVATE SECRETARY. 5 APPENDIX XVII SEAL TO BE AFFIXED ON THE ORDER SHEET BY THE SR. P.S./P.S . AFTER DICTATION IS GIVEN 1. DATE OF DICTATION 29.08.2012 . 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 30.09.2012 OTHER MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S . 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.... 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S 31.08.2012 . 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 31.08.2012 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER ................ 9. DATE OF DESP ATCH OF THE ORDER ..