Swastika Enterprises, Kolkata V. Income Tax Officer -ward 37(2), Kolkata, Kolkata

ITA 44/KOL/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99659 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2015
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 10-01-2014
• Court: TRIBUNAL
• Department Lawyers: RANU BISWAS
• Keywords: Opportunity of being heard
• Section: 201(1); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH SMC , KOLKATA [BEFORE HON BLE SHRI MAHAVIR SINGH, JM ] IT A NO.44/KOL/2014 ASSESSMENT YEAR : 2006 - 07 ( A PPELLANT ) (RESPONDENT) SWASTIKA ENTERPRISES - VERSUS - I.T.O., WARD - 37 (2) KOLKAT A KOLKATA (PAN: AAKFS 4180 P) FOR THE APPELLANT: NONE FOR THE RESPONDENT: SMT.RANU BISWAS, JCIT DATE OF HEARING : 21 .07 .2015. DATE OF PRONOUNCEMENT : 03.08.2015. ORDER THIS APPEAL OF ASSESSEE IS ARISING OUT OF ORDER OF CIT(A) - XXIV, KOLKATA IN APPEAL NO . 1046 /C.I.T.(A) - XXIV / 37(2)/11 - 12 DATED 04.10 .2013 . ASSESSMENT WAS FRAMED BY I.T.O., WARD - 37(2), KOLKATA U/S 144 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REF ERRED TO AS THE ACT ) FOR A.Y . 2006 - 07 VIDE ITS ORDER DATED 24.10.2011. 2. THE ONLY ISSUE INVOLVED IN THIS APPEAL IS DISALLOWANCE OF INTEREST PAYMENT ON UNSECURED LOAN AMOUNTING TO RS.2,24,007/ - U/S 40(A)(IA) OF THE ACT . FOR THIS THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS : - 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD.CIT(A) IS WRONG AND UNJUSTIFIED IN RELYING ON IRRE LEVANT AND EXTRANEOUS CONSIDERATION IN CONFIRMING DISALLOWANCE OF INTEREST PAYMENT ON UNSECURED LOAN AMOUNTING TO RS.2,24,007/ - U/S 40(A) (IA) OF IT ACT, 1961. 2. THAT THE ORDER OF LD. CIT(A) C ONFIRMING DISALLOWANCE U/S 40(A) (IA) OF IT ACT, 1961 IS OTHERWISE NOT SUSTAINABLE IN LAW. 3. THE BRIEF FACTS OF THE CASE ARE THAT T HE ASSESSEE IS A PARTNERSHIP FIRM AND PAID INTEREST ON UNSECURED LOAN TO THE TUNE OF RS.11,85,594/ - DURING ASSESSMENT YEA R UNDER APPEAL AND OUT OF WHICH A SUM OF RS.2,24,007/ - HAS BEEN PAID AS INTEREST TO SOME PARTIES WITHOUT DEDUCTION OF TAX AT SOURCE ON THE PRETEXT THAT THESE PARTIES HAD FILED FORM NO.15G OR 15H TO THE ASSESSEE. THE ASSESSEE HAD NOT RESPONDED TO VARIOUS ST ATUTORY NOTICES AND SHOW CAUSE NOTICE BEFORE AO AND THE ASSESSMENT ORDER WAS ITA NO. 44/KOL/2014 SWASTIKA ENTERPRISES A.YR. 2006 - 07 2 ACCORDINGLY COMPLETED U/S 144 OF THE ACT ON 24.10.2011 DISALLOWING THE INTEREST PAYMENT OF RS.2,24,007/ - U/S 40(A)(IA) OF THE ACT. 4. AGGRIEVED BY THIS ORDER , ASSESSEE PREF ERRED AN APPEAL BEFORE LD. CIT(A). ASSESSEE S REPRESENTATIVE HAD CLAIMED BY WAY OF WRITTEN SUBMISSIONS BEFORE LD. CIT(A) THAT COPIES OF FORM 15G AND 15H WERE DULY SUBMITTED BEFORE INCOME TAX OFFICE IN DUE TIME AND HOWEVER, SOUGHT SOME TIME TO PRODUCE THE SAME BEFORE LD. CIT(A). THIS FACT IS MENTIONED IN PAGE - 4 PARA - (G) OF THE LD. CIT(A) S ORDER. HOWEVER EVEN BEFORE LD. CIT(A) , THE ASSESSEE SOUGHT NOT TO FILE THE COPIES OF FORM NO.15G AND FORM NO.15H WHICH IT CLAIMS TO HAVE FILED BEFORE INCOME TAX OFFICE PREVIOUSLY. THE LD.CIT(A)FOR WANT OF ANY EVIDENCE CONFIRMED THE ADDITION MADE BY AO FOR VIOLATION OF THE PROVI SION OF SECTION 194A OF THE ACT AND CONSEQUENTIAL DISALLOWANCE U/S 40(A)(IA) OF THE ACT WAS UPHELD. AGGRIEVED BY THIS ORDER OF LD. CIT(A) , ASSES SEE PREFERRED APPEAL BEFORE ME. 5. ON THE DATE OF HEARING NONE APPEARED ON BEHALF OF THE ASSESSEE. AN ADJOURNMENT LETTER DATED 20.07.2015 WAS AVAILABLE IN THE FILE. AS THE ADJOURNMENT IS SOUGHT ONLY TO GATHER THE NECESSARY DETAILS, DOCUMENTS AND CLARIFICA TIONS THAT ARE REQUIRED FOR PROPER REPRESENTATION OF THE APPEAL , I DEEM IT FIT THAT THE SAID DETAILS AND DOCUMENTS EVEN IF P RESENTED BEFORE ME SHALL ONLY CONSTITUTE FRESH EVIDENCE AND IN THE INTEREST OF JUSTICE NEEDS TO BE SET AS IDE TO THE AO FOR HIS REBU TTAL OR VERIFICATION. IN THE INTEREST OF JUSTICE, I FEEL THAT ANOTHER OPPORTUNITY IS TO BE PROVIDED TO THE ASSESSEE TO FILE THE COPIES OF FORM 15G/15H BEFORE THE LEARNED AO FOR BETTER CONSIDERATION OF THE ISSUE UNDER APPEAL. IN THE FACTS AND CIRCUMSTANCES OF THE CASE , SINCE IT IS DEEMED FIT TO SET ASIDE THE ISSUE UNDER APPEAL TO THE FILE OF AO , THE ADJOURNMENT SOUGHT BY THE LD. COUNSEL FOR THE ASSESSEE IS REJECTED. HOWEVER, THE LD. DR VEHEMENTLY SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES AND PLEADED THAT THE DISALLOWANCE MADE BY THE AO BE CONFIRMED AS NO FRESH EVIDENCE IS BROUGHT BY THE ASSESSEE EVEN AT THE SECOND STAGE OF APPELLATE PROCEEDINGS. ITA NO. 44/KOL/2014 SWASTIKA ENTERPRISES A.YR. 2006 - 07 3 6. I HAVE HEARD THE LD. DR AND HAVE GONE THROUGH THE MATERIALS AVAILABLE ON RECORD. FOR THE SAKE OF CONVENIENC E THE PROVISO INTRODUCED INSERTED BY THE FINANCE ACT 2012 IS REPRODUCED HEREIN BELOW : PROVIDED FURTHER THAT WHETHER THE ASSESSEE FAILS TO DEDUCT THE WHOLE OR ANY PART OF THE TAX IN ACCORDANCE WITH THE PROVISIONS OF CHAPTER XVII - B O N ANY SUCH SUM BUT IS DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER THE FIRST PROVISO TO SUB - SECTION (1) OF SECTION 201 , THEN , FOR THE PURPOSE OF THIS SUB - CLAUSE IT SHALL BE DEEMED THAT THE ASSESSEE HAS DEDUCTED AND PAID THE TAX ON SUCH SUM ON THE DATE OF FURNISHING OF RETURN OF IN COME BY THE RESIDENT PAYEE REFERRED IN THE SAID PROVISO. CORRESPONDING LY REFERRING TO SECOND PROVISO TO SECTION 201(1) , PROVISO INSERTED BY FINANCE ACT 2012 WHICH IS ALSO REPRODUCED HEREIN BELOW FOR THE SAKE OF CONVENIENCE : P ROVIDED THAT ANY PERSON, INCLUDING THE PRINCIPAL OFFICER OF A COMPANY, WHO FAILS TO DEDUCT THE WHOLE OR ANY PART OF THE TAX IN ACCORDANCE WITH THE PROVISION S OF THIS CHAPTER ON THE SUM PAID TO A RESIDENT OR ON THE SUM CREDITED TO THE ACCOUNT OF A RESIDENT, SH ALL NOT BE DEEMED TO B E ASSESSEE IN DE FAULT IN RESPECT OF SUCH TAX IF SUCH RESIDENT ( I ) HAS FURNISHED HIS RETURN OF INCOME U/S 139; ( II ) HAS TAKEN INTO ACCOUNT SUCH SUM FOR COMPUTING INCOME IN SUCH RETURN OF INCOME ; AND ( III ) HAS PAID THE TAX DUE ON THE INCOME DECLARED BY HIM IN SUCH RE TURN OF INCOME, AND THE PERSON FURNISHES A CERTIFICATE TO THIS EFFECT FROM AN ACCOUNTANT IN SUCH FORM AS MAY BE PRESCRIBED. FROM READING OF THE AFORESAID TWO PROVISO , IT IS VERY CLEAR THAT WHAT IS TO BE EXAMINED BY THE LD.AO IS WHETHER THE RECIPIENT HAS SATISFIED THE CONDITIONS IN TERMS OF THE PROVISO TO SECTION 201(1) OF THE ACT BY OFFERING THE SUBJECT MENTIONED RECIPIENT IN HIS RETURN OF INCOME TOGETHER WITH COMPLIANCE WITH OTHER CONDITIONS STATED THEREIN. NOW THE NEXT POINT WHICH ARISE FOR OUR CONSID ERATION IS AS TO WHETHER THE PROVISO INTRODUCED BY THE FINANCE ACT, 2012 HAS TO BE CONSTRUED AS RETROSP ECTIVE IN NATURE OR NOT. FOR THIS PURPOSE , I PLACE RELIANCE ON THE DETAILED ORDER PASSED BY THIS TRIBUNAL IN THE CASE OF SANTOSH KUMAR KEDIA VS ITO VIDE ITA NO.1905/KOL/2014 FOT A.YR.2007 - 08 ORDER DATED 04.03.2015. THE RELEVANT OPERATIVE PORTION OF THE SAID ORDER IS REPRODUCED HEREIN BELOW : - I AM OF THE VIEW THAT THE INSERTION OF SE COND PROVISO TO SECTION 40(A)(IA ) OF THE ACT IS CURATIVE AND IT HAS RET ROSPECTIVE EFFECT W.E.F. 1 ST APRIL, 2005, BEING A DATE FROM WHICH SECTION 40(A)(IA) OF THE ACT WAS INSERTED BY THE FINANCE (NO.2) ACT 2004. IN VIEW OF THIS, I AM OF THE VIEW THAT THE MATTER NEEDS FRESH ADJUDICATION IN THE LIGHT OF THE FACT THAT AO WILL CAR RY OUT NECESSARY VERIFICATION IN REGARD TO RELATED PAYMENTS HAVING BEEN TAKEN ITA NO. 44/KOL/2014 SWASTIKA ENTERPRISES A.YR. 2006 - 07 4 INTO ACCOUNT BY THE RECIPIENT IN COMPUTATION OF ITS INCOME AND VERIFICATION OF PAYMENT OF TAXES IN RESPECT OF SUCH INCOME AND ALSO FILING OF INCOME TAX RETURN BY THE RECIPIENT. IN VIEW OF THE AFORESAID FACTS AND CIRCUMSTANCES AND IN VIEW OF THE DECISION OF THIS TRIBUNAL IN THE CASE OF SANTOSH KUMAR KEDIA VS ITO (SUPRA) I N THE INTEREST OF JUSTICE , I DEEM IT FIT TO RESTORE THE ISSUE TO THE FILE OF AO TO ADJUDICATE THE SAME IN ACCO RDANCE WITH THE SECOND PROVISO TO SECTION 40(A)(IA) READ WITH PROVISO TO SECTION 201(1) OF THE ACT AND PASS ORDER IN ACCORDANCE WITH LAW. NEEDLESS TO MENTION THE ASSESSEE BE GIVEN REASON ABLE OPPORTUNITY OF BEING HEARD . 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. O RDER PRONOUNC ED IN TH E COURT . SD/ - [MAHAVIR SINGH] JUDICIAL MEMBER DATE: 03.08.2015. R.G.(.P.S.) COPY O F THE ORDER FORWARDED TO : 1 . SWASTIKA ENTERPRISES, 19/1, VIDYASAGAR STREET, KOLKATA - 700009. 2 THE I.T.O., WARD - 37(2), KOLKATA. 3 . THE CIT, 4. THE CIT(A) - XXIV, KOLKATA. 5 . DR, KOLKATA BENCHES, KOLKATA TRUE COPY , BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES