Shri Ram Autar Lath, Bahraich V. Income Tax Officer-2 , Bahraich

ITA 480/LKW/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2807 (ITAT-LUCKNOW)
• Duration Of Justice: 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SB
• Assessment Year: 2012-2013
• Appeal Filed On: 31-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: POOJA RAJ
• Assessee Lawyers: B P YADAV COST ACCOUNTANT
• Keywords: Retrospective amendment; Tax effect
• Section: 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH SMC , LUCKNOW BEFORE SHRI. T.S. KAPOOR, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER ITA NO. 480/LKW/2018 ASSESSMENT YEAR: 2012 - 13 SHRI RAM AUTAR LATH PROP. M/S LATH ENTERPRI SES MOHALLA BRAHMANI PURA BAHRAICH V. INCOME TAX OFFICER - 2 BAHRAICH T AN /PAN : AAFPL6092A (APP ELL ANT) (RESPONDENT) APPELLANT BY: SHRI B.P. YADAV, COST ACCOUNTANT RESPONDENT BY: SMT. POOJA RAJ, D.R. DATE OF HEARING: 14 08 201 8 DATE OF PRONOUNCEMENT: 24 08 201 8 O R D E R PER P ARTHA SARATHI CHAUDHURY, J.M : THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LD. CIT(A) - I, LUCKNOW DATED 8/3/2018 AS PER FOLLOWING GROUNDS OF APPEAL: - 1 . THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - L, L UCKNOW (HEREINAFTER REFERRED TO 'AS' THE LD. CI T(A) E RRED ON FACTS AND IN LAW IN CONFIRMING THE ADDITION OF RS.5,55,294/ - MADE BY THE LD. A.O. BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE I . T. ACT, 1961 WITHOUT APPRECIATING THE FACTS OF THE CASE THAT THE PAYEES HAD INCLUDED THE AGGREGATE AMOUNT OF INTEREST OF RS.5,55,294/ - IN THEIR RESPECTIVE RETURN OF INCOME AND TAX STOOD ALREADY PAID BY THEM ON THEIR RESPECTIVE INCOME. ITA NO.480/LKW/2018 PAGE 2 OF 7 2 . ON THE FACTS STATED IN THE STATEMENT OF FACTS, THE LD. CIT(A) WAS NOT AT ALL JUSTIFIED IN CONFIRMING THE ADDITION OF RS.5,55,294/ - MADE BY THE LD. A.O. AND HENCE ADDITION SO MADE DESERVES TO BE DELETED. 3 . THE LD. A.O. ERRED ON FACTS AND IN LAW IN NOT PROVIDING THE APPELLANT THE PROPER ADEQUATE OR SUFFICIENT OPPORTUNITY TO HAVE IT SAY OR MAKE NECESSARY COMPLIANCE OF THE REASONS RELIED UPON BY HIM MAKING ADDITION. 4 . THE APPELLANT RESERVES ITS RIGHT TO ADVANCE SUCH OTHER GROUNDS BEFORE OR AT THE HEARING, WHICH IT MAY CONSIDER FIT AND APPROPRIATE, FOR WHICH IT CRAVES LEAVE TO AMEND, ALTER O R OTHERWISE MODIFY THE GROUNDS APPEARING HEREINBEFORE WITH THE KIND PERMISSION OF THE CIT (A). 2 . THE CRUX OF THE GRIEVANCE IN THE GROUNDS OF APPEAL BY THE ASSESSEE IS AGAINST CONFIRMATION OF ADDITION OF RS.5,55,294/ - UNDER SECTION 40(A)(IA) OF THE ACT WITH R EGARD TO INTEREST PAID ON LOAN TAKEN FROM THREE PARTIES. 3 . FACTS OF THE CASE ARE THAT THE ASSESSEE HAS CREDITED INTEREST OF RS. 1,84,387/ - IN CASE OF RAM AUTAR NITISH KUMAR, RS. 1,84,393/ - IN CASE OF NITISH LATH AND RS. 1,86,514 IN CASE OF MANJULA DEVI SHARAD K UMAR. ON THE INTEREST PAID TO THESE PAYEES, PAYEES HAVE ISSUED FORM 15G IN ALL THESE CASES TO THE ASSESSEE AND, THEREFORE, ASSESSEE HAS NOT DEDUCTED TAX AT SOURCE ON THE INTEREST PAID. IT IS THE CASE OF THE ASSESSING OFFICER THAT SINCE INTEREST INCOME OF EACH OF THE PAYEE EXCEEDS MAXIMUM AMOUNT OF EXEMPTION DURING THAT RELEVANT YEAR, RS. 1,80,000 / - , THEREFORE, ASSESSEE CANNOT TAKE THE BENEFIT OF 15G AND HE WAS SUPPOSED TO DEDUCT TAX AT SOURCE AND SINCE THERE IS A DEFAULT FOR NON - DEDUCTION, ASSESSING OFFICER ADDED THE AMOUNT OF RS.5,55,294/ - TO THE TOTAL INCOME OF THE ASSESSEE UNDER SECTION 40(A)(IA) OF THE ACT. ITA NO.480/LKW/2018 PAGE 3 OF 7 4 . LD. CIT(A) AFTER CONSIDERING THE FACTS OF THE CASE, SUBMISSIONS OF THE ASSESSEE AND THE ASSESSMENT ORDER REITERATED THE FINDINGS OF THE ASSESSING OF FICER AND HELD THAT ASSESSEE WAS LIABLE TO DEDUCT TAX AT SOURCE WHICH HE HAS NOT DONE AND, THEREFORE, CONFIRMED THE ADDITION OF RS.5,55,294/ - . 5 . AT THE TIME OF HEARING BEFORE US, LD. A.R. OF THE ASSESSEE VEHEMENTLY ARGUED THAT DISALLOWANCE MADE UNDER SECTION 40(A)(IA) OF THE ACT IN THE CASE OF THE ASSESSEE IS NOT APPLICABLE SINCE THEY ARE COVERED BY SECOND PROVISO TO SECTION 40(A)(IA) READ WITH FIRST PROVISO TO SECTION 201 OF THE ACT . LD. A.R. OF THE ASSESSEE , IN ORDER TO DEMONSTRATE THE APPLICABILITY OF THE SE PROVISIONS THROUGH DOCUMENTARY EVIDENCE FILED BEFORE THE SUBORDINATE AUTHORITIES , STATED THAT COPY OF RELEVANT ITRS OF EACH OF THE THREE PAYEES ALONG WITH FORM NO.26A I.E. CERTIFICATE OF CHARTERED ACCOUNTANT HAVE ALREADY BEEN FILED BEFORE THE REVENUE AU THORITIES. SIMILARLY, LD. A.R. OF THE ASSESSEE PLACED RELIANCE UPON THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. ANSAL LAND MARK TOWNSHIP (P) LTD. [2015] 377 ITR 635 (DELHI) AND HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF PR. CIT VS . MANOJ KUMAR SINGH [2018] 402 ITR 238 (ALLD). ON THE BASIS OF THESE JUDICIAL PRONOUNCEMENTS, LD. A.R. OF THE ASSESSEE SUBMITTED THAT THEIR CASE PERTAINS TO ASSESSMENT YEAR 2012 - 13 WHEREAS SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT IS APPLICABLE FROM ASSESSMENT YEAR 2014 - 15 AND FIRST PROVISO TO SECTION 201 OF THE ACT IS APPLICABLE FROM ASSESSMENT YEAR 2013 - 14. HOWEVER, HON'BLE HIGH COURTS HAVE HE L D THAT SINCE FIRST PROVISO TO SECTION 201 OF THE ACT AND SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT HA VE BEEN INSERTED FOR THE BENEFIT OF THE ASSESSEES AND, THEREFORE, THEY SHALL HAVE RETROSPECTIVE EFFECT FROM 1/4/2005 AND ACCORDINGLY THESE PROVISIONS ARE APPLICABLE FOR THE ASSESSMENT YEAR 2012 - 13 ALSO . ITA NO.480/LKW/2018 PAGE 4 OF 7 6 . THE LD. D.R., ON THE OTHER HAND, RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 7 . WE HAVE PERUSED THE CASE RECORDS, HEARD THE RIVAL CONTENTIONS. PROVISIONS OF SECTION 40 (A)(IA) OF THE ACT PROVIDE S THAT CERTAIN AMOUNT SHALL NOT BE DEDUCTED IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD PROFIT AND GAINS FRO M BUSINESS AND PROFESSION AND ALSO THE PROVISIONS SPECIFICALLY STATES 30% OF THE SUM PAYABLE TO RECIPIENT ON WHICH TAX IS DEDUCTIBLE AT SOURCE AND SUCH TAX HAS NOT BEEN DEDUCTED. SECOND PROVISO CLEARLY SPELLS OUT THAT IF AN ASSESSEE HAS COMPLIED WITH THE CONDITIONS LAID DOWN IN FIRST PROVISO TO SECT I ON 201 OF THE ACT , THEN IN SUCH CASE IT SHALL BE DEEMED THAT ASSESSEE HAS DEDUCTED AND PAID TAX ON SUCH SUM ON THE DATE OF FURNISHING OF RETURN OF INCOME BY THE RECIPIENT PAYEE REFERRED TO IN FIRST PROVISO TO S ECTION 201 OF THE ACT. THEREFORE, SECTION 40(A ) (IA) OF THE ACT IS A PROVISION WHERE ADDITIONS CAN BE MADE BY THE REVENUE ON CERTAIN CONDITIONS AS SPECIFIED THEREIN AND SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT PROVIDES BENEFIT TO THE ASSESSEE STATING THAT IF HE HAS FULFILLED THE CONDITIONS OF THE FIRST PROVISO TO SECTION 201 OF THE ACT, THEN THE RIGOURS OR CHARGEABILITY OF SECTION 40(A)(IA) OF THE ACT WILL NOT BE APPLICABLE TO THE ASSESSEE. FIRST PROVISO TO SECTION 201 OF THE ACT PROVIDES UNDER WHAT CIRCUMSTANCES ASSESSEE WILL NOT BE DEEMED TO BE AN ASSESSEE IN DEFAULT. CONDITIONS ARE THAT PERSON TO WHOM AMOUNTS HAVE BEEN PAID , THAT PAYEE SHOULD HAVE FURNISHED HIS RETURN OF INCOME UNDER SECTION 139 OF THE ACT AND IN THAT RETURN OF INCOME PAYEE SHOULD HAVE INCORPORATED TAX ELEMENT ON THE AMOUNT PAID BY THE PAYER I.E. ASSESSEE AND PAYEE HAS ALSO PAID TAX DUE ON SUCH INCOME DECLARED IN THE RETURN OF INCOME AND A CERTIFICATE IN FORM NO.26A BY THE CHARTERED ACCOUNT SHOULD ALSO BE GIVEN. WE OBSERVE AS FACT S ON RECORD APPEARING WITHIN THE ORDER OF THE LD. CIT(A) THAT ASSESSEE HAS FILED ITR COPY OF EACH OF THE THREE PAYEES ALONG WITH ITA NO.480/LKW/2018 PAGE 5 OF 7 CERTIFICATE FROM CHARTERED ACCOUNTANT IN FORM NO.26A. IN THE PAPER BOOK FILED BEFORE US , ASSESSEE HAS ALSO PLACED COPY OF THE SAID INCOME TAX RETURNS OF EACH OF THE THREE PAYEES AND ON A PERUSAL WE FIND THAT IN THE COLUMN INCOME FROM OTHER SOURCES EACH OF THE PAYEE HAS TAKEN INTO ACCOUNT THE AMOUNT RECEIVED AS INTEREST FROM ASSESSEE AND HAS PAID REQUISITE TAX THEREIN. COPY OF TA X PAID CHALLAN IS ALSO ENCLOSED. SIMILARLY FORM NO.26A DULY CERTIFIED BY THE CHARTERED ACCOUNTANT IS ALSO FILED IN THE PAPER BOOK . THESE DOCUMENTS WERE ALREADY FILED BEFORE THE REVENUE AUTHORITIES AS ON RECORD. BOTH THE ASSESSING OFFICER AND THE LD. CIT (A) HAVE DISALLOWED THE CLAIM OF THE ASSESSEE AND HAVE HELD ASSESSEE IN DEFAULT ONLY ON THE GROUND THAT THOUGH 15G WAS ISSUED TO THE ASSESSEE BY EACH OF THE PAYEE BUT SINCE INTEREST INCOME RECEIVED BY THE PAYEE WAS MORE THAN EXEMPTION LIMIT APPLICABLE DURI NG THAT RELEVANT YEAR, THEREFORE, 15G WAS NOT ALLOWABLE TO THE ASSESSEE AND HENCE DISALLOWANCE WAS MADE. NONE OF THE AUTHORITIES HAVE ANALYSED APPLICABILITY OF SECOND PROVISO TO SECTION 40(A)(IA) READ WITH FIRST PROVISO TO SECTION 201 OF THE ACT AND WHETH ER ASSESSEE COMES WITHIN THE PURVIEW OF BENEFICIARY PROVISIONS. WE HAVE EXAMINED THAT WHATEVER REQUIREMENTS PROVIDED IN THE FIRST PROVISO TO SECTION 201 OF THE ACT, THAT HAS BEEN COMPLIED WITH BY THE ASSESSEE AND DETAILS HAVE BEEN FURNISHED BEFORE THE REV ENUE AND ONCE THIS HAS DONE AUTOMATICALLY ASSESSEE IS COVERED WITHIN SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT. REGARDING APPLICABILITY OF THESE PROVISIONS IN THE CASE OF THE ASSESSEE FOR ASSESSMENT YEAR 2012 - 13 , DECISION OF THE HON'BLE DELHI HIGH CO URT IN THE CASE OF CIT VS. ANSAL LAND MARK TOWNSHIP (P) LTD. (SUPRA) AND THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF PR. CIT VS. MANOJ KUMAR SINGH (SUPRA) ARE ABSOLUTELY CLEAR THAT IN THE REALM OF WELFARE LEGISLATION , WHICH IS MAIN OBJ ECTIVE OF THE INCOME TAX ACT BENEFICIAL PROVISIONS, WHICH ARE BENEFICIAL TO THE ASSESSEE , SHALL HAVE ITA NO.480/LKW/2018 PAGE 6 OF 7 RETROSPECTIVE EFFECT AND THESE PROVISIONS SHALL HAVE APPLICABILITY FROM 2005 ONWARDS. THEREFORE , IN ASSESSMENT YEAR 2012 - 13 CASE OF THE ASSESSEE IS COVERE D WITHIN THESE PROVISIONS AND IT IS DEEMED THAT ASSESSEE HAS DEDUCTED AND PAID TAX ON THE AMOUNT PAID AS INTEREST , SINCE ALL THE PAYEES HAVE PAID TAXES ON SUCH INCOME . INTENT OF THE LEGISLATOR IS ABSOLUTELY CRYSTAL CLEAR THAT THERE SHOULD NOT BE ANY LOSS TO THE REVENUE IN ANY TRANSACTION BETWEEN ASSESSEE AND ANOTHER PERSON. IF THERE IS TAX EFFECT AND IF THE ASSESSEE HAS NOT COMPLIED WITH, AT LEAST THE PERSON TO WHOM PAYMENT HAS BEEN MADE SHOULD HAVE PAID THE TAX SO THAT REVENUE IS PROTECTED FROM INCURRING ANY LOSS . READING THE SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT AND FIRST PROVISO TO SECTION 201 OF THE ACT, IT PUT FORTH CERTAIN CONDITIONS WHERE THE PAYEE IN HIS RETURN OF INCOME HAS SHOWN AMOUNT RECEIVED FROM ASSESSEE AND HAS PAID TAX THEREON WHI CH IS ALSO CERTIFIED BY QUALIFIED CHARTERED ACCOUNTANT, THAT SIGNIFIES THAT THERE IS NO LOSS TO THE REVENUE AND IN SUCH CIRCUMSTANCES SECOND PROV ISO TO SECTION 40(A)(IA) OF THE ACT AUTOMATICALLY COMES INTO PLAY AND THE ASSESSEE WILL BE DEEMED TO BE AN ASSE SSEE WHO HAS DEDUCTED AND PAID TAX. WITH THESE OBSERVATIONS, WE ARE OF THE CONSIDERED VIEW THAT ADDITIONS MADE IN THE HANDS OF THE ASSESSEE IS ARBITRAR Y, HARSH, ILLEGAL AND PERVERS E AND THEREFORE, WE SET ASIDE THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND ALLOW THE APPEAL OF THE ASSESSEE. 8 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 / 0 8 / 201 8 . SD/ - SD/ - [ T.S. KAPOOR ] [PARTHA SARATHI CHAUDHURY ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 24 TH AUGUST , 201 8 JJ : 1408 ITA NO.480/LKW/2018 PAGE 7 OF 7 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR