Appeal details
Counselvise Citation
[2014] 140 COUNSELVISE.COM (IT) 74338 (ITAT-DELHI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 5 month(s) 7 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
14-03-2014
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
H
Next Hearing Date
01-01-2014
Assessment Year
2008-2009
Appeal Filed On
07-10-2011
Judgement Text
INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H: NEW DELHI BEFORE SHRI J. S REDDY, ACCOUNTANT MEMBER AND SHRI A. T. VARKEY, JUDICIAL MEMBER ITA NO. 4507 /DEL/ 2011 (ASSESSMENT YEAR: 2008 - 09) WINGS CORPORATE SERVICES INDIA PVT. LTD, C/O KAPIL GOEL, ADVOCAT E, A - 1/25, SECTOR - 15, ROHINI, DELHI PAN AAACW7235L VS. ITO WARD - 18(3), ROOM NO. 248, CR BUILDING, NEW DELHI (APPELLANT) (RESPONDENT) APPELLANT BY : KAPIL GOEL, ADV. RESPONDENT BY: SAMEER SHARMA, SR. DR O R D E R PER A. T. VARKEY , JUDICIAL MEMBER THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE LD CIT(A) - XXI, NEW DELHI DATED 18.08.2011 FOR THE ASSESSMENT YEAR 2008 - 09. 2. THE GROUNDS OF APPEAL ARE AS FOLLOWS: - 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LEARNED LD CIT(A) ERRED IN AFFIRMING THE DISPUTED SERVICE OF NOTICE U/S 143(2) ON ASSUMED GROUND OF NON FILING OF OBJECTION BEFORE ASSESSING OFFICER WITHOUT TAKING MINIMUM PAINS TO SEE OUR OBJECTION LETTER FILED BEFORE ASSESSING OFFICER DURING THE AS ST. DATED 30.04.2010. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LEARNED CIT(A) ERRED IN AFFIRMING THE DISALLOWANCE U/S 43B OF THE ACT AMOUNTING TO RS. 11,72,233/ - ON MERE BASIS ON ADMISSION BEFORE LD ASSESSING OFFICER WITHOUT AP PRECIATING THAT THERE IS NO ESTOPPELS AGAINST THE STATUTE. 3. APROPOS GROUND NO. 2. 4. BRIEF FACTS OF THE CASE IS AS FOLLOWS. THE ASSESSEE FILED RETURN OF INCOME OF RS.7,470/ - IN RESPECT OF ASSESSMENT YEAR 2008 - 09 WHICH WAS E - FILED ON 30.09.2008. THE CA SE WAS PROCESSED U/S 143(1), OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) PAGE NO. 2 SUBSEQUENT TO SELECTION OF THE SCRUTINY UNDER CASS. THE ASSESSEE COMPANY WAS MAINLY INVOLVED IN RUNNING OF A CALL CENTER ON BEHALF OF ABN AMRO BANK DURING THE RELEVANT ASSESS MENT YEAR. THE ASSESSEE HAS ALSO DONE WORK OF COLLECTION OF DEBTS ON BEHALF OF SOME OTHER BANKS AND COMPANIES. EXPENSES DEBITED TO THE PROFIT AND LOSS ACCOUNT HAVE BEEN CLAIMED BY THE ASSESSEE. DURING THE ASSESSMENT PROCEEDING THE ASSESSING OFFICER FOUND THAT CERTAIN SERVICE TAX PAYMENT WAS OUTSTANDING AS ON 31.03.2008 AND WHEN HE COMPARED THE SERVICE TAX RETURN ALONG WITH SERVICE TAX PAYMENT CHALLANS IT WAS FOUND THAT AN AMOUNT OF RS. 11 , 72,233 / - WHICH WAS DUE TO BE REMITTED BEFORE THE DUE DATE WAS OUT - S TANDING AT THE TIME OF FILING OF THE RETURN OF INCOME AND IT HAS BEEN PAID AFTER THE DUE DATE. WHEN ASKED TO EXPLAIN THE ASSESSEE EXPLAINED TO THE ASSESSING OFFICER THAT DUE TO CLERICAL MISTAKE THE SAID OUT - STANDING SERVICE TAX WAS NOT ADDED TO THE INCOME OF THE ASSESSEE COMPANY AT THE TIME OF FILING OF THE INCOME TAX RETURN. THE ASSESSING OFFICER TOOK THE VIEW THAT OMISSION TO INCLUDE THE SAID OUT - STANDING SERVICE TAX IN THE RETURN WAS A CLEAR VIOLATION OF THE PROVISIONS OF SECTION 43B OF THE ACT AND THERE FORE RS. 11,72,233/ - WAS ADDED TO THE INCOME OF THE ASSESSEE . 5. AGGRIEVED BY THE SAID ADDITION THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD CIT(A) ON THE FOLLOWING GROUNDS: - 1. THAT THE APPELLANT DENIES ITS LIABILITY TO BE ASSESSED AT INCOME OF RS. 11 ,79,703/ - AND ACCORDINGLY DENIES ITS LIABILITY TO PAY TAX, INTEREST SURCHARGE AND EDUCATION CESS DEMANDED THEREON. 2. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD A.O. HAS ERRED IN LAW AND ON FACTS IN FRAMING IMPUGNED ASSESSMENT WITHO UT SERVING THE MANDATORY NOTICE U/S 143(2) AND WITHOUT ASSUMING THE JURISDICTION AS PER LAW TO FRAME THE ASSESSMENT. 3. THAT THE APPELLANT CRAVES THE LEAVE TO ADD, MODIFY, AMEND OR DELETE ANY OF THE GROUNDS OF APPEAL AT THE TIME OF HEARING AND ALL THE ABO VE GROUNDS ARE WITHOUT PREJUDICE TO EACH OTHER. 6. THE LD CIT(A), BY THE IMPUGNED ORDER DATED 18.08.2011 HAS OBSERVED IN RESPECT OF GROUND NO. 2, I E, REGARDING ASSESSEES PLEA OF NON - RECEIPT OF NOTICE U/S 143(2) THAT THE SAID GROUND CANNOT BE RAISED BY IT BEFORE HIM , AFTER DULY PARTICIPATING IN THE ASSESSMENT PROCEEDING S BEFORE THE ASSESSING OFFICER, AND POINTED OUT SECTION 292BB OF THE ACT AND DISMISSED THE SAID GROUND OF THE ASSESSE ; AND IN RESPECT OF GROUND NO. PAGE NO. 3 3, THE LD CIT(A) WAS OF THE VIEW THAT S INCE THE IMPUGNED ADDITION WAS MADE BY THE ASSESSING OFFICER WAS BASED ON THE ADMISSION OF THE ASSESSEE, THE SAID GROUND ALSO CANNOT BE RAISED IN THE APPEAL PREFERRED U/S 246A (1) AND HELD THAT SUCH A GROUND CANNOT BE ENTERTAINED AT ALL; AND ADVI SED THE AS SESSEE TO FILE REVISION BEFORE COMMISSIONER OF INCOME TAX U/S 264 OF THE ACT AND DISMISSED THAT GROUND ALSO . AGGRIEVED BY THE SAID ORDER OF THE LD CIT(A) THE ASSESSEE IS BEFORE US. 7 . THE LD AR SUBMITTED THAT THE ASSESSEE WAS NOT DEBITING THE SERVICE TAX A MOUNT TO THE PROFIT AND LOSS (P&L) ACCOUNT AS AN EXPENDITURE IN ORDER TO CLAIM AS DEDUCTION. THEREFORE ACCORDING TO HIM THE QUESTION OF MAKING AN ADDITION WOULD NOT ARISE EVEN IF SERVICE TAX HAS NOT BEEN DULY REMITTED AND CITED THE JUDGEMENT IN CIT VS. NO BLE AND HEWITT INDIA (P) LTD (2008) 605 ITR 324 (DEL). ON THE OTHER HAND, THE LD DR APPEARING FOR THE REVENUE HAS RELIED UPON THE REASONING GIVEN BY THE LD CIT(A) AND SUPPORT ED THE DECISION OF THE LD CIT(A). 8 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE RECORDS, AND THE CASE LAWS CITED BY BOTH THE SIDES. IT IS THE STAND OF THE APPELLANT THAT HE HAS NOT EVEN CLAIMED ANY DEDUCTION ON THE GROUND OF REMITTANCE OF SERVICE TAX AND HAS NOT DEBITED THE SAID AMOUNT TO ITS PROFIT AND LOSS ACCOUNT AND IN A SI MILAR CASE IN CIT VS. NOBLE & HEWITT (SUPRA), THE HONBLE HIGH COURT OF DELHI HAS HELD AS UNDER: - HERE WE ARE CONCERNED WITH AN ASSESSEE WHO HAS NOT EVEN CLAIMED ANY DEDUCTION ON THE GROUND OF SERVICE TAX AND HAS NOT DEBITED THE AMOUNT TO ITS PROFIT AND LOSS ACCOUNT. MOREOVER THE PROVISONS OF SECTION 43B OF THE ACT ARE QUITE CLEAR IN THIS REGARD. THE DECISION OF THE CALCUTTA HIGH COURT IN CHOWRINGHEE SALES BUREAU WAS NOT IN THE CONTEXT OF THE ASSESSMENT PROCEEDING APPLICABILITY OF SECTION 43B OF THE ACT. IN OUR OPINION SINCE THE ASSESSEE DID NOT DEBIT THE AMOUNT TO THE PROFIT AND LOSS ACCOUNT AS AN EXPENDITURE NOR DID THE ASSESSEE CLAIM ANY DEDUCTION IN RESPECT OF THE AMOUNT AND CONSIDERING THAT THE ASSESSEE IS FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTIN G, THE QUESTION OF DISALLOWING THE DEDUCTION NOT CLAIMED WOULD NOT ARISE. LEARNED COUNSEL FOR THE REVENUE SUBMITS THAT THE ASSESSEE HAS SOUGHT TO EVADE TAX UNDER THE MERCANTILE SYSTEM OF ACCOUNTING. WE ARE OF THE VIEW THAT IT IS NOT FOR THE REVENUE AUTHORI TIES TO TELL THE ASSESSEE HOW TO MAINTAIN ITS ACCOUNTS. WE CANNOT FIND ANY FAULT IN THE VIEW TAKEN BY THE TRIBUNAL AND FIND NO MERIT IN THIS APPEAL. 9 . THE REASONING GIVEN BY THE LD CIT(A) IN NOT ENTERTAINING THIS GROUND IN THE APPELLATE PROCEEDING WAS ON THE REASONING THAT THE ASSESSEE HA D OFFERED THE SUM OF PAGE NO. 4 RS.11,72,233/ - FOR TAXATION BEFORE THE ASSESSING OFFICER AND IT WAS A CASE WHERE THE ASSESSEE HIMSELF HAS ADMITTED SO BEFORE THE ASSESSING OFFICER. THEREFORE, THE LD CIT(A) HELD THAT THIS GROUND IS NOT APPEALABLE U/S 246A(1)(A) . HERE WE WOULD LIKE TO REFER TO THE DECISION OF THE MADRAS HIGH COURT IN CASE OF M/S M. NARAYANAN & BROS VS. ASST. COMMISSIONER OF INCOME TAX BY THE LD AR , IN WHICH THE HONBLE HIGH COURT RELIED UPON THE DECISION OF THE HONB LE SUPREME COURT IN THE CASE OF PULLANGODE RUBBER PRODUCE VS. ST. OF KERALA AND ANOTHER REPORTED IN (1973) 91 ITR 18 AND HELD THAT IT WAS ALWAYS OPEN TO A PERSON, WHO MADE THE ADMISSION, TO SHOW THAT THE STATEMENT TO OFFER INCOME WAS INCORRECT AND HAD MA TERIAL TO SUBSTANTIATE SO, WE HOLD THAT THE TRIBUNAL IS NOT JUSTIFIED IN PLACING UNDUE EMPHASIS ON THE CONFESSION STATEMENTS MADE BY THE ASSESSEE. 10 . FROM A PERUSAL OF THE ASSESSMENT ORDER WE FIND THAT AN EXPLANATION WAS SOUGHT FROM THE ASSESSEE IN RES PECT TO NON - PAYMENT OF OUTSTANDING SERVICE TAX AS ON 31.03.2008 , AND SINCE IT WAS FOUND BY THE AO THAT A N AMOUNT OF RS. 11,72,233/ - (SERVICE - TAX) WHICH WAS DUE TO BE PAID BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME HAD BEEN REMITTED AFTER THE DUE DATE . TO THIS QUERY THE ASSESSEE HAD EXPLAINED THAT DUE TO CLERICAL MISTAKE THIS AMOUNT WAS NOT ADDED TO THE INCOME OF THE ASSESSEE COMPANY AT THE TIME OF FILING OF THE INCOME TAX RETURN. THE LD CIT(A) IN HIS APPELLATE ORDER ALSO RELIED UPON THE SAID EXPLANATI ON GIVEN BY THE AR BEFORE THE ASSESSING OFFICER AND CAME TO A CONCLUSION IN THE IMPUGNED ORDER THAT THE SAID EXPLANATION W AS AN ADMISSION ON THE PART OF THE ASSESSEE AND HAS PROCEEDED AND HELD THAT THE GROUND OF APPEAL IN WHICH THE ASSESSEE DENIED ITS LIAB ILITY TO BE ASSESSED AT AN INCOME OF RS. 11,79,703/ - CANNOT BE ENTERTAINED. HOWEVER, WE DO NOT FIND THAT THE SAID EXPLANATION GIVEN BY THE ASSESSEE IN ANY MANNER AMOUNTS TO AN ADMISSION TO TAX THE SAID OUT - STANDING SERVICE TAX . THE CLAIM OF THE ASSESSEE TH ROUGHOUT WAS THAT THE SERVICE TAX EXPENDITURE HAS NOT BEEN DEBITED IN P&L ACCOUNT AND SINCE THE ASSESSEE HAS NOT CLAIMED THE SAID AMOUNT AS EXPENDITURE, THE QUESTION OF DISALLOWANCE U/S 43B OF THE ACT DOES NOT ARISE. WE FIND FORCE IN THE SAID CONTENTION OF THE LD AR AND WE SET ASIDE THE ORDER OF THE LD CIT(A) AND REMAND THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO VERIFY THE SAID CLAIM OF THE ASSESSEE THAT NO SUCH EXPENDITURE HAS BEEN DEBITED IN ITS P&L ACCOUNT, AND IF THE ASSES SING OFFICER FINDS THE PAGE NO. 5 SAID CLAIM OF THE ASSESSEE AS CORRECT THEN THE QUESTION OF DISALLOWANCE U/S 43B DOES NOT ARISE AND CONSEQUENTLY THE ASSESSING OFFICER SHALL DELETE THE SAID ADDITION AND PASS FRESH ASSESSMENT ORDER IN THIS RESPECT IN ACCORDANCE TO LAW . 11 . IN RESPECT TO GROUND NO. 1, WE DIRECT THE ASSESSING OFFICER, TO LOOK INTO THE SAID GRIEVANCE ALSO WHEN HE PASS ES THE FRESH ORDER AS DIRECTED BY US ABOVE. 12 . IN THE RESULT THE APPEAL PREFERRED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPO SE. ORDER PRONOUNCED IN THE OPEN COURT ON 14 . 03 .2014. - SD/ - - SD/ - ( J. S REDDY) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED :14 / 03 / 2014 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI
