Rizwanahmed Mohmed Usmain Shaikh, Surat V. Income Tax Officer, Ward -1(2)(6), Surat

ITA 46/SRT/2018

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 2421 (ITAT-SURAT)
• Duration Of Justice: 4 year(s) 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 07-03-2022
• Assessment Year: 2009-2010
• Appeal Filed On: 23-01-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ANUPMA SINGLA
• Keywords: TDS
• Section: 147; 148; 143(3); 40(a)(ia); 201; 194A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER ITA No.46/SRT/2018 (A.Y:- 2009-10) (Hearing in Virtual Court) Rizwanahmed Mohmed Usmain Shaikh Hasina, Manjil, Harinagar-1, Udhna, Surat. PAN: ADAPS 5725 P Vs The ITO, Ward-1(2)(6), Surat. Appellant/ assessee Respondent/ Revenue Assessee by None Revenue by Ms Anupma Singla- Sr.DR Date of hearing 08/03/2022 Date of pronouncement 08/03/2022 PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by the Assessee is directed against order of ld.Commissioner of Income Tax(Appeals)-2(hereinafter referred as “ld.CIT(A)”- Suratdated 01.12.2017 for the assessment year 2009-10.The assessee raised following grounds of appeal:- “1. The assessment order is bad in law and in fact. 2. The re-opening of case u/s 147 for the asst. year 2009-10 is bad in law because, the same is time barred as notice u/s 148 was issued on 2 nd march, 2015 which is beyond the time limit prescribed in view of proviso to section 147, as all the material facts was disclosed during the original assessment u/s 143(3) made on 26.12.2011. The fact of non-deduction of TDS on interest paid to NBFC has been found by hon’ble assessing Officer from case records of the relevant assessment year and no additional material has been gathered by AO for reopening of the case. ITA No.46/SRT/2018 Rizwanahmed Mohmed Usmain Shaikh 2 3. The issue is relating to Non-deduction of TDS on interest paid to the following non-banking finance company namely L&T Finance Company Limited, Mahindra & Mahindra Finance Limited, Tata Finance Limited totally to Rs. 5,48,450/-. Here it to be noted that all the financers are reputed NBFC of India and must be filing there return of income and paying of tax on the same and in view of sec. 201 of the Act deductor will not be an assessee in default if the payee has furnished the return of income and pay due tax on its income Sec. 40(a)(ia) also does not attract where the deductor is not an assessee in default within the meaning of Sec.201. 4.The interest paid to NBFC during the A.Y. 2009-10 had actually been paid in that year and nothing was payable as on last day i.e. 31.03.2009 and in view of various judicial pronouncements disallowance u/s 40(a)(ia) is applicable only to the amount payable as on the last day and not on amount already paid in that Assessment year.” 2. Brief facts of the case are that the assessee is a transporter, filed his return of income for the assessing year 2009-10 dated 30.09.2009 and declaring total income of Rs. 5,68,600/-. Initially the return was processed under section 143(1) of the Act. Subsequently, the case was reopened under section 147 by recording reasons on 02.03.2015. The notice under section 148 dated 02.03.2015 was issued and duly served upon the assessee. In response, to notice under section 148, the assessee filed its reply dated 29.07.2015 stating that return of income filed on 30.09.2009 be treated as return in response to said notice. The reasons recorded were provided to the assessee. The assessee raised objection against reassessment as bad in law being time barred. The objection of assessee was rejected by Assessing Officer in ITA No.46/SRT/2018 Rizwanahmed Mohmed Usmain Shaikh 3 holding that notice was issued on 02.03.2015 after taking prior approval of the ld. CIT-1. 3. The Assessing Officer proceeded for reassessment and recorded that the assessee has made payment of interest of Rs. 3,88,650/- to L&T Finance, Mahindra & Mahindra Finance Ltd, and Tata Finance Ltd. i.e. Non-Banking Finance Company (NBFC). The assessee has also paid transport maintenance charges of Rs. 1,59,800/- to M/s Swami Tires. The assessee failed to make TDS on interest payment in contravention of provisions of section 194A of the Act. The assessee was issued show cause notice as to why such payment be not disallow. The contents of details show cause notice is referred in para 6 of the assessment order. The assessee filed its reply dated 01.12.2015. The assessee contended by the financer is reputed Non-Banking Finance Companies, must be fielding return of income and paid tax thereon and if the recipient has paid the tax thereon, in view of the provisions of section 201, deductor will not be treated in default, if the recipient of interest has furnished the return of income and paid the due tax on its income. The reply of the assessee was not accepted by assessing officer holding that proviso to section 40(a)(ia) provides for submission of a certificate of CA in form no. 26A (Rule 31ABC) to enable the assessee to claim benefit of said proviso. Simply stating that NBFCs are reputed ITA No.46/SRT/2018 Rizwanahmed Mohmed Usmain Shaikh 4 companies may be filing return of income does not entitled the assessee to claim such benefit. The proper certificate is must. The assessee failed to proceed tax as per section 40(a)(ia) of total expenses of Rs. 3,88,450/- +Rs. 1,59,800/- is total Rs. 5,48,450/- liable for disallowance. 4. Aggrieved by the addition and reopening, the assessee filed in appeal before the ld. CIT(A). Before ld. CIT(A), the assessee challenged the validity of reopening as well as addition only on merit. Against the validity of reopening, the assessee stated that reopening is bad in law and time barred has noticed under section 148 issued on 02.03.2015. A time limit in view of proviso to Section 147. All the material facts was disclosed during the original assessment. The fact for non-deduction of TDS has been found by Assessing Officer from the case record. The assessee further stated that he has basically challenged the inherent jurisdiction of the Assessing officer that reopening was made after 4 years from the end of the relevant assessment year and not challenged the jurisdiction of Assessing Officer. The ld. CIT(A) after consideration the submission of assessee held that on receipt of notice under section 148 dated 02.03.2015. The assessee submitted his letter dated nil on 29.07.2015 stating there in that original filed on 30.09.2015, in compliance of notice under section 148 of the Act. No return of income was filed within the statutory period of 30 days. Thus, the ITA No.46/SRT/2018 Rizwanahmed Mohmed Usmain Shaikh 5 objection raised by the assessee regarding jurisdiction of AO is devoid on merit. The assessee filed his return of income after stipulated period and hence, it is treated as ‘non-est’. On addition, the ld. CIT(A) held that assessee during the assessment, the assessee stated that financer are reputed by NBFC’s of India and must be filing return of income of income and paid tax and in view of section 201, deductee will not be an assessee in default, if the payee has furnished the return of income and paid due tax on it. During the assessee failed to furnish necessary certificate that recipient of interest has paid tax on the income as the assessee even during the appellate proceedings would not be any such evidence that NBFC to whom payments have been made filed the return of income by including interest income will be there income. Aggrieved by the order of ld. CIT(A), the assessee filed present appeal before us. 5. None appeared on behalf of the assessee despite service of notice through RPAD. On perusal of record show that the assessee has short adjournment on more than 3 occasions. Today neither adjournment application is filed nor Authorized Representative (AR) of assessee appeared before us. Therefore, we left no option to except to decide the appeal on the basis of material available on record. ITA No.46/SRT/2018 Rizwanahmed Mohmed Usmain Shaikh 6 6. On the other hand, ld. Senior Departmental Representative (DR) for the Revenue submits that assessee failed to deduct tax at source on payment of interest to NBFCs. The assessee also paid transport maintenance charges to Swami Tires. Before ld. CIT(A) the assessee took plea that NBFC may have paid tax on the interest income but failed to file necessary CA certificate from to substantiate that recipient of the interest income has included the income in their total income and paid due tax to the Revenue. The assessee failed to discharge onus cast upon him either before first appellate authority as well as before this Tribunal. 7. We have considered the rival submission of ld. Sr. DR for the Revenue and has gone through the orders of lower authorities. As recorded above, the Assessing Officer made addition under section 40(a)(ia) on account non- deduction of tax at source on payment of interest to NBFC. Similarly, the assessee made payment of Rs. 1,59,800/- to Swami Tires on account of maintenance charges. No tax was deducted tax at source on such payments. The assessee neither before Assessing Officer nor before ld. CIT(A)/ first appellate authority discharge his onus to substantiate his plea that the recipient of income has included the interest income in their total income or not. No certificate of their CA is filed and in absence of any documentary evidence, we do not any merit in the grounds of appeal raised by assessee ITA No.46/SRT/2018 Rizwanahmed Mohmed Usmain Shaikh 7 either on the disallowance of interest expenses or on the maintenance charges expense. 8. In the result, appeal of the assesseeis dismissed. Order announced on 08 th March, 2022 in the open Court and by placing the result on the notice board. Sd/- Sd/- (Dr ARJUN LAL SAINI) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat, Dated: 08/03/2022 /SKM* Copy to: 1. Appellant 2. Respondent 3. CIT(A) 4. CIT 5. DR 6. Guard File By order // True Copy // Sr.Pvt. Secretary, ITAT, Surat