Deputy Commissioner of Income tax, Circle- 3(1) ), Raipur V. Shri Santosh Jain, Raipur

ITA 44/RPR/2020

AI Insights

The case involves an appeal by the Revenue against the order of the Commissioner of Income Tax (Appeals)-I, Raipur, which pertained to the assessment year 2009-10. The core issue revolved around the applicability of the Second Proviso to Section 40(a)(ia) of the Income Tax Act, 1961, and whether the Assessing Officer's order was erroneous and prejudicial to the interest of the revenue concerning non-deduction of tax at source on finance charges. The ITAT had previously set aside the order under section 263, leading to the current appeal by the Revenue, which was dismissed.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 138168 (ITAT-RAIPUR)
• Duration Of Justice: 2 year(s) 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 01-11-2022
• Assessment Year: 2009-2010
• Appeal Filed On: 06-02-2020
• Other Referred Cases: Thomas Muthood V/s. CIT Kottayam, CIT V/s. Jawahar Bhattacharjee, CIT V/s. Daga Entrade Pvt. Ltd., CIT v. Ansal Land Mark Township (P) Ltd., Rajeev Kumar Agrawal vs. ACIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SHRIG.N. SINGH
• Keywords: Revision of order; TDS
• Section: 263; 143(3); 40(a)(ia)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER AND DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER ITA No.44/RPR/2020 िनधाᭅरणवषᭅ / Assessment Year : 2009-10 DCIT, Circle 3(1), Raipur Vs Shri Santosh Jain Prop. M/s. Arihant Mining Co., Raipur. PAN: ACMPJ5971B Appellant Respondent Applicant by None Respondent by ShriG.N. Singh Date of hearing 02/11/2022 Date of pronouncement 12/12/2022 आदेश/ ORDER PER DR. DIPAK P. RIPOTE, AM: This appeal filed by the Revenue isdirected against the order of ld.Commissioner of Income Tax(Appeals)-I, Raipur, dated 22.11.2019for Assessment Year 2009-10 emanating from the assessment order dated 11.02.2015 passed under section 143(3)r.w.s. 263of the Income-tax Act, 1961 (hereinafter also called as ‘the Act’). The Revenue has raised the following ground of appeal: “1. Whether the Ld. CIT(A) not erred in law and in fact byadjudicating the issue of retrospective applicability of the SecondProviso to Section 40(a)(ia) of the I. T. Act, which was not aground of appeal before the Ld. CIT(A)? 2. Whether the Ld.CIT(A) not erred in law and in facts by ignoringthe fact that the order of the AO was erroneous and prejudicial tothe interest of revenue in the light of the fact the AO did notexamine the issue of non deduction of tax at source andapplicability of provision u/s 40(a)(ia) of the I. T. Act? ITA No.44/RPR/2020, for A.Y. 2009-10 Shri Santosh Jain 2 3. Whether the Ld. CIT(A) not erred in law and in facts by ignoringthe decision of Hon'ble Kerala High Court in the case of ThomasMuthood V/s. CIT Kottayam 63 taxman.com 99[2015], in whichthe Hon'ble High Court has held that the Second Proviso toSection 40(a)(ia) introduced with effect from 01.04.2013 is notprospective? 4. Whether the Ld. CIT(A) not erred in law and in facts by ignoringthe decision of Hon'ble Guwahati High Court in the case of CITV/s. Jawahar Bhhattarcharjee reported in 24 taxman.com 215[2012] in which the Hon'ble High Court has held that the object ofSection 263 is to correct an erroneous order prejudicial to theinterest of revenue as the department has no right to file anappeal against the order of Assessing Officer? 5. Whether the Ld. CIT(A) not erred in law and in facts by ignoringthe decision of Hon'ble Guwahati High Court in the case of CITV/s. Daga Entrade Pvt. Ltd. reported in 327 ITR 467 [2010] inwhich the Hon'ble Court has held that if the order of theAssessing Officer passed in ignoring reliable relevant material,causing prejudice to the interest of the revenue, suo motorevisional jurisdiction could be exercised by the CIT? 6. Any other ground that may be adduced at the time of hearing. 2. No one has appeared on behalf of the Respondent-assessee. We heard ld. DR, perused the records. In this case, the assessment order has been passed u/s 143(3) r.w.s. 263. In the case of the assessee, there was assessment order u/s 143(3) on 12.12.2011 determining the total income at Rs.24,42,540/- on a returned income of Rs.23,92,540/-. The assessee had filed an appeal against the said assessment order dated 12.12.2011 before the CIT(A) and the CIT(A) deleted the addition. However, theLd.Commissioner of ITA No.44/RPR/2020, for A.Y. 2009-10 Shri Santosh Jain 3 Income Tax, passed an order u/s 263 of the Act directing the Assessing Officer to make disallowance of finance charges u/s 40(a)(ia) of the Act. Accordingly, after giving opportunity to the assessee, the Assessing Officer passed an order u/s 143(3) r.w.s. 263 of the Act on 11.02.2015 making disallowance of Rs.28,97,294/- u/s 40(a)(ia). In the said assessment order, the Assessing Officer observed that the assessee has paid interest amount to the tune of Rs.28,97,294/- to N.B.F.C. on account of loan obtained from them. Since TDS was not deducted, the Assessing Officer made disallowance. Aggrieved by the same, the assessee filed an appeal before the ld. CIT(A). The ld. CIT(A) in paras 6 and 7 has observed as under: “6.... It was further brought to my notice that the appellant had preferred an appealagainst the order u/s 263 before the ITAT, Raipur which adjudicated the appeal infavour of the appellant in ITA No.87/RPR/2014 for AY 2009-10 vide order dated21.06.2016 by holding as under:- "I have heard the rival contentions, perused the material on record and dulyconsidered facts of the case in the light of applicable legal position. I find thatthe plea of the Id. Counsel with regard to retrospectivity of second proviso tosection 40(a)(ia) of the Act was indeed well taken. Hon'ble Delhi High Court inthe case of CIT v. Ansal Land Mark Township (P) Ltd. (2015) 377 ITR 635 hasapproved a decision of the coordinate bench of this Tribunal in the case ofRajeev Kumar Agrawal vs. ACIT, 149 ITD 363 holding so. Their Lordshipshave held that "reasoning of the Agra Bench of ITAT (in the above case) asregards the rationale behind the insertion of the second proviso to section40(a)(ia) of the Act and its conclusion that the said proviso to be ITA No.44/RPR/2020, for A.Y. 2009-10 Shri Santosh Jain 4 declaratoryand curative and. has retrospective effect from 1st April 2005, meritacceptance". In this view of the matter and having regard to theuncontroverted contention of the assessee that the receipts of these interest andfinance charges in the hands of the recipients have been duly offered to tax, Iam of the considered view that the learned Commissioner was clearly in errorin exercising his powers under section 263 of the Act on the facts of this case. Itherefore, quash the impugned revision order under section 263. Assessee getsthe relief accordingly. 7. I have considered the grounds of appeal gone through the submissions of the appellant and seen the order of the AO and the order of the Hon’ble Tribunal against 263 proceedings. In the light of the above observations of the Hon’ble Tribunal Grounds No.2 and 3 are allowed." 3. Thus, it is observed that the ITAT has set aside the order passed u/s 263 of the Act. Since the present assessment order dated 11.02.2015 was passed to give effect to the order u/s 263 of the Act and thus, the said 263 has been quashed, the resultant assessment order does not survive. Therefore, the ld. CIT(A) has rightly directed the Assessing Officer to delete the addition made u/s 40(a)(ia) of the Act. Accordingly, the appeal of Department is dismissed. 4. In the result, the appeal of Revenue is dismissed. Order pronounced in the open Court on 12 th December, 2022. Sd/- Sd/- (RAVISH SOOD) (DR. DIPAK P. RIPOTE) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 12 th Dec, 2022 GCVSR ITA No.44/RPR/2020, for A.Y. 2009-10 Shri Santosh Jain 5 आदेशकᳱᮧितिलिपअᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Applicant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A)-I, Raipur. 4. The Pr. CIT-I, Raipur. 5. DR, ITAT, “Raipur” Bench. 6. गाडᭅफ़ाइल / Guard File. आदेशानुसार / BY ORDER, // TRUE COPY // Senior Private Secretary आयकरअपीलीयअिधकरण, पुणे/ITAT,Pune.