CHANDRAKANT C. GANHDI, MUMBAI V. ITO 25(10(3), MUMBAI

ITA 4737/MUM/2011

• Counselvise Citation: 473719914 RSA 2011
• Duration Of Justice: 3 year(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 08-04-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 13-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Difference of opinion; Bonafide mistake

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C, MUMBAI BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NO. 4737/MUM/2011 ASSESSMENT YEAR: 2008-09 CHANDRAKANT C. GANDHI B-1/503, SARASWATI CO-OP. HSG, SOC. LTD., N. G. ACHARYA MARG, NR. ACHARYA COLLEGE, CHEMBUR GOVANDI ROAD, CHEMBUR (E), MUMBAI-400 071 PAN: AADPG 2460 P VS. ITO-25 (10)(3) PRATYAKSHKAR BHAVAN, BANDRA KURLA COMPLEX BANDRA (E) MUMBAI-400 050 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SUNIL NAHTA REVENUE BY : SHRI SANJEEV JAIN DATE OF HEARING : 08.04.2014 DATE OF PRONOUNCEMENT : 17.06.2014 O R D E R PER DR. S.T.M. PAVALAN, JM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE LD. CIT(A)-35, MUMBAI DATED 27.04.2011 FOR THE ASSESSME NT YEAR 2008-09. 2. IN GROUND NO. 1, THE ASSESSEE HAS AGITATED THE D ECISION OF THE LD.CIT(A) IN UPHOLDING THE DISALLOWANCE OF RS.8,84,500/- MADE BY THE AO U/S 40(A)(IA) OF THE INCOME TAX ACT IN RESPECT OF PAYMENTS MADE TO M/S. JINDAL ROADWAYS P. LTD AND M/S SHYAM TRAILOR AND TRANSPORT WITHOUT DEDUCTION O F TAX AT SOURCE U/S 194(C). 2.1 BRIEFLY STATED, THE ASSESSEE IS AN INDIVIDUAL E NGAGED IN THE BUSINESS OF TRANSPORT IN THE NAME AND STYLE OF M/S. CHETAN ROAD LINES. IN THE ASSESSMENT FRAMED U/S 143(3), THE AO NOTICED THAT THE ASSESSEE HAD PAID HIRE CHARGES OF RS.18,72,025/- TO M/S. SHYAM TRAILOR AND TRANSPORT, OUT OF WHICH THE ASSESSEE DID ITA NO. 4737/MUM/2011 CHANDRAKANT C. GANDHI ASSESSMENT YEAR: 2008-09 2 NOT DEDUCT TAX IN RESPECT OF RS.11,000/-. THE AO FU RTHER NOTICED THAT THE ASSESSEE HAD PAID HIRE CHARGES OF RS.43,73,530/- TO M/S. JIN DAL ROADWAYS PVT. LTD, OUT OF WHICH TDS WAS NOT DEDUCTED IN RESPECT OF RS.8,73,50 0/-. THEREFORE, THE AO DISALLOWED A SUM OF RS.8,84,500/- (RS.11000+8,73,50 0) U/S 40(A)(IA) OF THE ACT. ON APPEAL, THE LD. CIT(A) CONFIRMED THE DISALLOWANCE M ADE BY THE AO AS REJECTING THE CONTENTION OF THE ASSESSEE THAT SINCE THE PAYMENT I TSELF WAS RS.11,000/-, THERE WAS NO LIABILITY TO DEDUCT TAX. AS REGARDS THE PAYMENTS TO M/S. JINDAL ROADWAYS P. LTD, THE LD. CIT(A) CONFIRMED THE DISALLOWANCE BY REJECT ING THE CLAIM OF THE ASSESSEE THAT THE ASSESSEE WAS ONLY ACTING AS AGENT AND RECE IVED COMMISSION FOR ARRANGEMENT OF TRANSPORT. AGGRIEVED BY THE IMPUGNED DECISION, THE ASSESSEE HAS RAISED THIS GROUND IN THE APPEAL BEFORE US. 2.2 HAVING HEARD BOTH THE SIDES AND PERUSED THE MAT ERIAL ON RECORD, AS REGARDS THE PAYMENT OF RS.18,72,025/- TO M/S. SHYAM TRAILER OUT OF WHICH THE ASSESSEE HAS NOT DEDUCTED THE TDS FOR THE SUM OF RS.11,000/-, IT IS THE CONTENTION OF THE ASSESSEE THAT THE NON DEDUCTION OF TDS ON THE AMOUN T HAS TO BE TREATED AS SHORTFALL IN DEDUCTING THE TDS AND RELIED ON THE DECISION OF THE CALCUTTA HIGH COURT IN THE CASE OF CIT V. S.K. TEKRIWAL [IT APPEAL NO. 183 OF 2012]. ON THE OTHER HAND, IT IS THE CONTENTION OF THE LD.DR THAT THE ASSESSEE HAS NOT B ROUGHT ANYTHING ON RECORD TO ESTABLISH THAT DUE TO ANY DIFFERENCE OF OPINION AS TO THE TAXABILITY OF ANY ITEM OR THE NATURE OF PAYMENTS FALLING UNDER VARIOUS TDS PROVIS IONS THE SAID SHORTFALL IN DEDUCTING THE TDS HAS HAPPENED. CONSIDERING THE SUB MISSIONS MADE BY BOTH THE PARTIES, WE ARE OF THE CONSIDERED OPINION THAT THE CASE OF THE ASSESSEE IN NOT DEDUCTING THE TDS IN RESPECT OF AN AMOUNT OF RS.11, 000/- IS A SHORT FALL IN DEDUCTING THE TDS AND IF THERE IS ANY SHORTFALL IN DEDUCTING TDS, THE ASSESSEE CAN BE DECLARED TO BE AN ASSESSEE IN DEFAULT U/S 201 OF THE ACT AND NO DISALLOWANCE CAN BE MADE BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT AS HELD BY THE CALCUTTA HIGH COURT IN THE CASE OF S.K. TEKRIWAL (SUPRA). IN VIEW OF THAT MATTER, WE DELETE THE DISALLOWANCE OF RS.11,000/-MADE/CONFIRMED BY THE AO /LD.CIT(A) ON THIS COUNT. 2.2.1 SO FAR AS THE NON DEDUCTION OF TDS IN RESPECT OF THE PAYMENT OF RS.8,73,500/- MADE TO M/S. JINDAL ROADWAYS PVT. LTD TRANSPORT, IT IS THE CONTENTION OF THE ASSESSEE THAT THE DEPARTMENT HAS ISSUED THE CERTIFICATE FOR NON DEDUCTION OF ITA NO. 4737/MUM/2011 CHANDRAKANT C. GANDHI ASSESSMENT YEAR: 2008-09 3 TAX AT SOURCE U/S 197 AND THE ASSESSEE HAS INADVERT ENTLY OMITTED TO DEDUCT TAX AT SOURCE FOR THE AMOUNT OF RS.8,73,500 PAID IN EXCESS OF RS.35,00,000/-, WHICH IS A BONAFIDE MISTAKE OF THE ASSESSEE. IN THIS CONNECTIO N, THE LD.AR HAS RELIED ON THE DECISION OF THE TRIBUNAL IN THE CASE OF HERO MOTOCORP VS ACIT, [2013] 60 SOT 25 (DELHI-TRIBUNAL) WHEREIN IT HAS HELD THAT WHERE THE CERTIFICATE U/S 197 HAS BEE N ISSUED, THE ASSESSEE CAN CLAIM THAT IT HAS A BONAFI DE BELIEF THAT TAX IS NOT REQUIRED TO BE DEDUCTED ON THE BASIS OF THE CERTIFICATE FOR THE PAYMENT EXCEEDS THE EXEMPTION LIMIT SPECIFIED IN THE CERTIFICATE. CONSIDERING THA T THE RATIO LAID DOWN BY THE TRIBUNAL IS SQUARELY APPLICABLE TO THE FACT OF THE CASE IN H AND, WE ARE OF THE CONSIDERED OPINION THAT THE LD.CIT(A) IS NOT JUSTIFIED IN CONF IRMING THE DISALLOWANCE MADE BY THE AO ON THIS COUNT. THEREFORE, THE DISALLOWANCE O F A SUM OF RS.8,73,500/- MADE/CONFIRMED BY THE AO/ LD.CIT(A) STANDS DELETED. THUS, GROUND NO 1 IS ALLOWED . 3. IN GROUND NO.2, THE ASSESSEE HAS AGITATED THE DE CISION OF THE LD. CIT(A) IN UPHOLDING THE DISALLOWANCE OF RS.37,17,686/- MADE B Y THE AO UNDER SECTION 40A (3) OF THE ACT, BEING CASH PAYMENT EFFECTED BY THE ASSE SSEE IN AGGREGATE EXCEEDING RS.20,000/- ON A SINGLE DAY TO VARIOUS TRANSPORTERS . 3.1 BRIEFLY STATED, THE AO, IN THE ASSESSMENT ORDE R, TABULATED THE IMPUGNED PAYMENTS AND THE CONCLUDED THAT THE ASSESSEE MADE A SINGLE PAYMENT BUT THE VOUCHER WERE PREPARED IN A WAY THAT THE PAYMENTS WE RE MADE ON DIFFERENT OCCASIONS ON THE SAME DAY. THEREFORE, THE AO BY INV OKING SECTION 40A (3) DISALLOWED THE IMPUGNED AMOUNT OF RS.37,17,686/-. O N APPEAL, THE LD.CIT(A) UPHELD THE DISALLOWANCE MADE BY THE AO. AGGRIEVED B Y THE IMPUGNED DECISION, THE ASSESSEE HAS RAISED THIS GROUND IN THE APPEAL BEFOR E US. 3.2 HAVING HEARD BOTH THE SIDES AND PERUSED THE MAT ERIAL ON RECORD, IT IS THE CONTENTION OF THE LD.AR THAT PAYMENTS HAVE BEEN MAD E ON DIFFERENT OCCASIONS ON A SINGLE DAY AND EACH PAYMENT HAS BEEN LESS THAN RS.2 0,000/-. FURTHER, FOR THE PURPOSES OF SECTION 40A (3) AS APPLICABLE IN THE AS SESSMENT YEAR UNDER CONSIDERATION, ONLY SINGLE PAYMENT DURING THE DAY H AS TO BE CONSIDERED WHEREAS THE AUTHORITIES BELOW HAVE AGGREGATED ALL THE PAYMENTS MADE IN A SINGLE DAY WHICH IS PERMISSIBLE UNDER THE AMENDED PROVISION ONLY. ON TH E OTHER HAND, IT IS THE ITA NO. 4737/MUM/2011 CHANDRAKANT C. GANDHI ASSESSMENT YEAR: 2008-09 4 CONTENTION OF THE REVENUE THAT THE CASH BOOK AND VO UCHERS REVEALS THAT THE PAYMENTS HAVE BEEN MADE IN 3-4 TIMES A DAY TO THE S AME PERSON UNDER THE SAME BILL AND VOUCHER NUMBER, WHICH SUGGESTS THAT THE VO UCHERS HAVE BEEN PREPARED IN SUCH A WAY THAT THE PAYMENTS HAVE BEEN MADE ON DIFF ERENT OCCASIONS THOUGH THE ASSESSEE HAS MADE A SINGLE PAYMENT. AFTER CONSIDERI NG THE CONTENTIONS OF BOTH THE SIDES, IT IS PERTINENT TO MENTION THAT SECTION 40A (3) HAS BEEN W.E.F 01/04/2009 PROVIDING THAT ALL THE PAYMENTS MADE TO A PERSON IN A SINGLE DAY WOULD BE CONSIDERED FOR MAKING THE DISALLOWANCE. THE SAID AM ENDMENT IS NOT APPLICABLE SO FAR AS THE CASE IN HAND BEING RELATED TO THE AY 2008-09 . IN THE ABSENCE OF A PROVISION CONFERRING THE POWER TO AGGREGATE ALL THE PAYMENTS MADE IN A SINGLE DAY FOR MAKING THE DISALLOWANCE DURING THE YEAR UNDER CONSIDERATIO N AND IN VIEW OF THE POSITION THAT SECTION 40A (3) AS APPLICABLE IN FOR THE ASSESSMENT YEAR UNDER CONSIDERATION PERMITS ONLY SINGLE PAYMENT DURING THE DAY HAS TO BE CONSID ERED FOR DISALLOWANCE, WE ARE OF THE CONSIDERED OPINION THAT THE LD.CIT(A) IS NOT JU STIFIED IN CONFIRMING THE ACTION OF THE AO IN AGGREGATING THE SUMS PAID ON A DAY FOR MA KING THE SAID DISALLOWANCE. IN VIEW OF THAT MATTER, THE AO IS DIRECTED TO IDENTIFY EACH OF THE PAYMENT MADE BY THE ASSESSEE LESS THAN RS.20,000/- AND ACCORDINGLY ALLO W THE EXPENDITURE. RESULTANTLY, GROUND NO 2 IS ALLOWED FOR STATISTICAL PURPOSE. 4. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 17 TH DAY OF JUNE, 2014. SD/- SD/- (P.M. JAGTAP) (DR. S.T.M. PAVALAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 17.06.2014. *SRIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR C BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.