Vimal Microns Ltd., Mehsana V. The ACIT, Mehsana Circle, Mehsana

ITA 469/AHD/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8426 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 04-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MAHESH JIWADE
• Assessee Lawyers: GULAB THAKOR
• Keywords: Retrospective amendment
• Section: 40A(3); 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENCH AHMEDABAD BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO. 469/AHD/2015 (ASSESSMENT YEAR: 2010-11) VIMAL MICRONS LTD., PLOT NO. 19, GIDC ESTATE, PHASE-II, DEDIYASAN, MEHSANA 384002 APPELLANT VS. ACIT, MEHSANA CIRCLE, AAYAKAR BHAVAN, MEHSANA 384002 RESPONDENT PAN: AAACV6289M /BY ASSESSEE : SHRI GULAB THAKOR, A.R. /BY REVENUE : SHRI MAHESH JIWADE , SR. D.R. /DATE OF HEARING : 04.09.2017 /DATE OF PRONOUNCEMENT : 22.09.2017 ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2010-11 ARISES AGAINST THE CIT(A)-8, GANDHINAGARS ORDER DATED 05.11.2014, IN CASE NO. CIT(A)/GNR/130/2013-14, UPHOLDING SECTION 40(A)(IA ) DISALLOWANCE OF RS.7,04,010/- ON ACCOUNT OF NON DEDUCTION OF TDS, S ECTION 40A(3) DISALLOWANCE OF ITA NO. 469/AHD/15 (VIMAL MICRONS LTD. VS. ACIT) A.Y. 2010-11 - 2 - FREIGHT OUTWARD EXPENDITURE OF RS.2,90,636/- AND FR EIGHT INWARD EXPENDITURE OF RS.11,89,328/-; RESPECTIVELY MADE IN ASSESSMENT ORD ER DATED 05.03.2013, IN PROCEEDINGS U/S. 143(3) OF THE INCOME TAX ACT, 1961 ; IN SHORT THE ACT. HEARD BOTH SIDES. CASE FILE PERUSED. 2. WE COME TO FORMER ISSUE OF SECTION 40(A)(IA) DIS ALLOWANCE OF RS.7,04,010/- ON ACCOUNT OF ASSESSEES INACTION IN DEDUCTING TDS UPON THE FREIGHT/COMMISSION PAYMENTS IN QUESTION. THERE IS NO DISPUTE ABOUT TH E IMPUGNED NON DEDUCTION OF TDS. THE ASSESSING OFFICER THEREFORE INVOKED THE D ISALLOWANCE PROVISION U/S.40(A)(IA) OF THE ACT. THE ASSESSEE PLEADED IN COURSE OF THE LOWER APPELLATE PROCEEDINGS HAT THIS DISALLOWANCE IS NOT TO BE MADE QUA THE AMOUNT ALREADY PAID AS ON 31.03.2010 BUT THE SAME HAS TO BE RESTRICTED TO THE SUM REMAINING PAYABLE ON THE SAID DATE. THE CIT(A) QUOTES HONBLE JURISDICT IONAL HIGH COURTS DECISION IN CIT VS. SIKANDARKHAN N TUNVAR ITA NO. 218 OF 2013 D ECIDED ON 02.05.2013 ADJUDICATING THE INSTANT ISSUE IN REVENUES FAVOUR. HE THEREAFTER PARTLY ACCEPTS ASSESSEES CLAIM IN DIRECTING THE ASSESSING OFFICER TO VERIFY ACTUAL TDS PAYMENTS IN ASSESSMENT YEAR 2013-14 QUA THE INSTANT ISSUE. 3. LEARNED COUNSEL REPRESENTING ASSESSEE REITERATES THE ABOVE LEGAL ARGUMENT OF PAID AND PAYABLE ASPECT. THE SAME IS NO LONGER R ES INTEGRA IN VIEW OF HONBLE APEX COURTS RECENT JUDGMENT IN M/S. PALAM GAS SERV ICE VS. CIT CIVIL APPEAL NO. 5512 OF 2017 DECIDED ON 03.05.2017 AGAIN ADJUDICATI NG THE ISSUE IN REVENUES FAVOUR. WE THEREFORE FIND NO MERIT IN ASSESSEES I NSTANT LEGAL ARGUMENT. 4. LEARNED COUNSEL THEREAFTER SUBMITS THAT THE PAYE ES IN QUESTION ALREADY STAND ASSESSED QUA THE IMPUGNED FREIGHT/COMMISSION PAYMEN T. IT IS NO MORE STATED TO BE AN ASSESSEE IN DEFAULT U/S.40(A)(IA) SECOND PROVISO R.W.S. 201 OF THE ACT STIPULATING NON APPLICATION OF THE FORMER DISALLOWANCE PROVISIO N IN CASE AN ASSESSEE IS NOT THE ASSESSEE IN DEFAULT U/S.201(1) OF THE ACT. THE REV ENUE ON THE OTHER HAND CONTENDS THAT THE ABOVE SECOND PROVISO TO SECTION 40(A)(IA) APPLIES ONLY W.E.F. 01.04.2013 ITA NO. 469/AHD/15 (VIMAL MICRONS LTD. VS. ACIT) A.Y. 2010-11 - 3 - AND NOT WITH RETROSPECTIVE EFFECT. WE FIND THAT A CO-ORDINATE BENCH IN CASE OF RAJEEV KUMAR AGARWAL VS. ADDL.CIT, ITA NO. 337/AGRA /2013 HAS UPHELD IN EXTEMPORE AND HONBLE DELHI HIGH COURTS DECISION I N CIT V. ANSAL LANDMARK TOWNSHIPS PVT. LTD. [2015] 377 ITR 635 (DEL) HAS A LREADY SETTLED THE LAW THAT THE ABOVE SECOND PROVISO CARRIES RETROSPECTIVE EFFECT S INCE CURATIVE IN NATURE. WE THEREFORE ACCEPT ASSESSEES ARGUMENTS IN PRINCIPLE AND REMITTING THE ISSUE BACK TO THE ASSESSING OFFICER FOR CARRYING OUT NECESSARY VE RIFICATION AS PER LAW AFTER AFFORDING ADEQUATE OPPORTUNITY TO THE ASSESSEE FOR PRODUCING NECESSARY DETAILS. THIS FIRST SUBSTANTIVE GROUND IS TAKEN AS ACCEPTED FOR STATISTICAL PURPOSES. 5. WE NOW ADVERT TO ASSESSEES LATTER SUBSTANTIVE G ROUND SEEKING TO DELETE SECTION 40A(3) DISALLOWANCE(S) OF RS.2,90,636/- AND RS.11,89,328/- PERTAINING TO FREIGHT OUTWARD AND INWARD EXPENDITURE. THE CIT(A) UPHOLDS ASSESSING OFFICERS ACTION AFTER HOLDING THAT THE ASSESSEES EXPLANATIO N IN QUESTION DOES NOT COME UNDER VARIOUS GENUINE AND BONAFIDE INSTANCES ENUMERATED U NDER RULE 6DD OF THE INCOME TAX RULES. THIS LEAVES THE ASSESSEE AGGRIEVED. 6. BOTH THE LEARNED REPRESENTATIVES REITERATE THEIR RESPECTIVE CASES IN THE COURSE OF HEARING AGAINST AND IN SUPPORT OF IMPUGNED DISAL LOWANCE. WE NOTICE IN THIS BACKDROP THAT NEITHER THE ASSESSING OFFICER NOR THE CIT(A) ADVERT TO ASSESSEES BONAFIDE REQUIREMENTS IN MAKING THE IMPUGNED CASH P AYMENTS EXCEEDING RS.29000/- INVITING THE DISALLOWANCE IN QUESTION. WE REITERATE THAT THE ASSESSEES CASE HAS BEEN THAT IT HAD PAID ITS TRANSPORT SERVIC E PROVIDER HIRING OUTSIDE TRUCK IN CASH. WE FIND THAT HONBLE JURISDICTIONAL HIGH COU RTS DECISION IN ANUPAM TELE SERVICES VS. ITO (2014) 366 ITR 122 (GUJ) CONSIDERS THE IMPUGNED DISALLOWANCE PROVISION TO HOLD THAT RULE 6DD DOES NOT INTEND TO RESTRICT AN ASSESSEES BUSINESS EXPEDIENCY AND OTHER RELEVANT FACTORS IN MAKING BON AFIDE AND GENUINE BUSINESS TRANSACTIONS THROUGH CASH PAYMENTS. WE OBSERVE IN VIEW OF ALL THESE FACTS THAT LARGER INTEREST OF JUSTICE WOULD BE MADE IN CASE TH E ASSESSING OFFICER REEXAMINES THE INSTANT ISSUE AS WELL AS PER LAW AFTER AFFORDIN G ADEQUATE OPPORTUNITY OF HEARING ITA NO. 469/AHD/15 (VIMAL MICRONS LTD. VS. ACIT) A.Y. 2010-11 - 4 - TO THE ASSESSEE FOR EXPLAINING RELEVANT FACTS AND C IRCUMSTANCES INVITING CASH PAYMENTS SUBJECT MATTER OF THE INSTANT ISSUE. 7. THIS ASSESSEES APPEAL IS ACCEPTED FOR STATISTIC AL PURPOSES. [PRONOUNCED IN THE OPEN COURT ON THIS THE 22 ND DAY OF SEPTEMBER, 2017.] SD/- SD/- ( MANISH BORAD ) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL M EMBER AHMEDABAD: DATED 22/09/2017 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )*+ ,--. . /0 / DR, ITAT, AHMEDABAD 1 +23 45 / GUARD FILE. BY ORDER / . // . /0