The ITO, Ward-1(3), RAJKOT-GUJARAT V. Shri Paras A. Modi, HUF, RAJKOT-GUJARAT

ITA 518/RJT/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1298 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 05-04-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 03-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3); 194C

Judgement Text

ITA NO . 518 / RJT/201 4 & CO NO.05/RJT/2016 ASSESSMENT YEAR: 2010 - 11 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT (CONDUCTED THROUGH E - COURT AT AHMEDABAD) BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI S.S. GODARA, JUDICIAL MEMBER I TA NO. 518 /RJT/201 4 ASSESSMENT YEAR: 20 10 - 11 INCOME TAX OFFIC ER, VS. SHRI PARAS A. MODI, HUF , WARD 1(3), RAJKOT. 2/A, AMIDHARA APARTMENT , 2, JAL A RAM PLOT, UNIVERSITY ROAD, RAJKOT. [PAN: AAKHP 3688 M] C.O. NO.05/RJT/2016 (IN ITA NO. 518 /RJT/201 4) ASSESSMENT YEAR: 20 10 - 11 SHRI PARAS A. MODI , HUF, VS. INCOME TAX OFFICER, 2/A, AMIDHARA APARTMENT, WARD 1(3), RAJKOT. 2, JALARAM PLOT, UNIVERSITY ROAD, RAJKOT. [PAN: AAKHP 3688 M] (APPELLANT S ) (RESPONDENT S ) REVENUE BY : SHRI M. J . CHARANIA , D.R. ASSESSEE : SHRI RAMESH PATEL , C.A. DATE OF HEARING : 0 5 .04.2016 DATE OF PRONOUNCEMENT : 22 .04.2016 O R D E R PER S.S. GODARA, J.M. THIS REVENUE S APPEAL AND ASSESSEE S C ROSS O BJECTION FOR A SSESSMENT Y EAR 20 10 - 11 , ARISE FROM ORDER OF THE CIT(A) - I , RAJKOT DATED 1 8 .0 6 .201 4 PASSED IN CA SE NO.CIT(A) - I/RJT/0073/13/14 , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . ITA NO . 518 / RJT/201 4 & CO NO.05/RJT/2016 ASSESSMENT YEAR: 2010 - 11 PAGE 2 OF 5 2. THE REVENUE S SOLE SUBSTANTIVE GROUND PLEADED IN THE APPEAL SEEKS TO REVIVE SECTION 40 (A)(IA) DISALLOWANCE/ADDITION OF RS.83,51,911/ - M ADE BY THE ASSESSING OFFICER IN HIS ORDER DATED 18.03.2013 QUOTING ASSESSEE S FAILURE IN DEDUCTING TDS UNDER SECTION 194C OF THE ACT ON TRANSPORT EXPENSES OF RS.83,02,441/ - . IT S GRIEVANCE IS THAT THE CIT(A) HAS ERRED IN DELETING THE SAME. THE ASSESSEE IN ITS C ROSS O BJECTION AVERS THAT THE LOWER AUTHORITY HAS ERRED IN CONFIRMING ASSESSING OFFICE R S ACTION IN INVOKING SECTION 40 (A)(IA) DISALLOWANCE OF RS.2,20,645 / - AND RS.51,960/ - 3 . WE COME TO REVENUE S APPEAL FIRST. THE ASSESSING OFFICER IN COURSE OF SCRUTINY NOTICED THE ASSESSEE NOT TO HAVE DEDUCTED TDS UNDER SECTION 194C OF THE ACT ON TRANSPORT EXPENSES OF RS.83,02,441/ - INCURRED TILL 30.09.2009 FROM SUB - CONTRACTORS/TRUCK OWNERS INSPITE OF THE FACT THAT THE CORRESPONDING PAYMENTS EXCEEDED RS.50,000/ - UNDER THE HEAD TRANSPORTATION/CARRIAGE OF GOODS. THE ASSESSEE IN TURN WOULD SUBMIT LIST OF CONTRACTORS/TRUCK OWNERS SHOWING REMARKS AS 15J SUBMITTED . IT TRIED TO EXPLAIN THAT THE TRANSPORTER IN QUESTION WERE ELIGIBLE FOR NON - DEDUCTION ON THE GROUND TH AT THEY DID NOT OWN MORE THAN TWO GOOD S CARRIAGES HAVING SUBMITTED DULY FILLED 15 - I FORMS. THE ASSESSING OFFICER OBSERVED IN ASSESSMENT ORDER DATED 18.03.2013 THAT THE ASSESSEE HAD SUBMITTED FORM J IN QUESTION BEFORE THE COMMISSIONER ON 01.03.2012 WAY AFT ER THE PRESCRIBED DATE COMING TO THE 30.06.2011. HE ACCORDINGLY INVOKED SECTION 40 (A)(IA) DISALLOWANCE OF RS.83,02,441/ - IN QUESTION. 4 . THE CIT(A) REVERSES A SSESSING OFFICER S ACTION AS UNDER : - 5.0 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT AND THE ORDER PASSED BY THE A.O. THE ONLY BASIS F OR DISALLOWANCE OF RS.83,02,441/ - U /S.40(A)(IA) BY THE A.O. IS LATE SUBMISSION OF FORM 15 J TO THE JURISDICTIONAL CIT. ITA NO . 518 / RJT/201 4 & CO NO.05/RJT/2016 ASSESSMENT YEAR: 2010 - 11 PAGE 3 OF 5 ALL OTHER STATUTORY REQU IREMENTS HAVE BEEN FOUND TO HAVE BEEN FULFILLED BY TH E APPELLANT. THE QUESTION WHICH REQUIRES TO BE DECIDED IS WHETHER THE DISALLOWANCE U/S.40(A)(IA) IS REQUIRED TO BE MADE FOR LATE SUBMISSION OF FORM 15 J WHEN ALL OTHER CONDITIONS HAVE BEEN MET . THIS ISSUE HAS BEEN SQUARELY DECIDE D BY THE HON BLE GUJ A RAT HI GH COURT IN THE CASE OF VALIBHAI KHANBHAI MANKAD (SUPRA). THE HON BLE GUJ AR AT HIGH COUR T HAS HELD AS UNDER : - 'THE EXCLUSION PROVIDED IN SUB - SECTION (3) OF SECTION 194C FROM THE LIABILITY TO DEDUCT TAX AT SOURCE UNDER SUB - SECTION (2) WOULD THUS BE COMP LETE THE MOMENT THE REQUIREMENTS CONTAINED THEREIN ARE SATISFIED. SUCH REQUIREMENTS, PRINCIPALLY, ARE THAT THE SUB - CONTRACTOR, RECIPIENT OF THE PAYMENT PRODUCES A NECESSARY DECLARATION IN THE PRESCRIBED FORMAT AND FURTHER THAT SUCH SUB CONTRACTOR DOES NOT OWN MORE THAN TWO GOODS CARRIAGES DURING THE ENTIRE PREVIOUS YEAR. THE MOMENT, SUCH REQUIREMENTS ARE FULFILLED, THE LIABILITY OF THE ASSESSEE TO DEDUCT TAX ON THE PAYMENTS MADE OR TO BE MADE T6O SUCH SUB - CONTRACTORS WOULD CEASE. IN FACT HE WOULD HAVE NO AU THORITY TO MAKE ANY SUCH DEDUCTION. 8. THE LATER PORTION OF SUB - SECTION (3) WHICH FOLLOW THE FURTHER PROVISO IS A REQUIREMENT WHICH WOULD ARISE AT A MUCH LATER POINT OF TIME. SUCH REQUIREMENT IS THAT THE PERSON RESPONSIBLE FOR PAYING SUCH SUM TO THE SUB - CONTRACTOR HAS TO FURNISH SUCH PARTICULARS AS PRESCRIBED. WE MAY NOTICE THAT UNDER RULE 29D OF THE RULES, SUCH DECLARATION HAS TO BE MADE BY T HE END OF JUNE OF THE NEXT ACCOUNTING YEAR IN QUESTION. 9. IN OUR VIEW, THEREFORE, ONCE THE CONDITIONS OF FURTH ER PROVISO OF SECTION 194C(3) ARE SATISFIED, THE LIABILITY OF THE PAYEE TO DEDUCT LAX AT SOURCE WOULD CEASE. THE REQUIREMENT OF SUCH PAYEE TO FURNISH DETAILS TO THE INCOME TAX AUTHORITY IN THE PRESCRIBED FORM WITHIN PRESCRIBED TIME WOULD ARISE LATER AND AN Y INFRACTION IN SUCH A REQUIREMENT WOULD NOT MAKE THE REQUIREMENT OF DEDUCTION AT SOURCE APPLICABLE UNDER SUB - SECTION (2) OF SECTION 194C OF THE ACT. IN OUR VIEW, THEREFORE, THE TRIBUNAL WAS PERFECTLY JUSTIFIED IN TAKING THE VIEW IN THE IMPUGNED JUDGMENT. IT MAY BE THAT FAILURE TO COMPLY SUCH REQUIREMENT BY THE PAYEE MAY RESULT INTO SOME OTHER ADVERSE CONSEQUENCES IF SO PROVIDED UNDER THE ACT. HOWEVER, FULFILLMENT OF SUCH REQUIREMENT CANNOT HE LINKED TO THE DECLARATION OF TAX AT SOURCE. ANY SUCH FAILURE THE REFORE CANNOT BE VISUALIZED B Y ADVERSE CONSEQUENCES PROVIDED UNDER SECTION 40(A)(IA) OF THE ACT. 10. WHEN ON THE BASIS OF THE RECORD IT IS NOT DISPUTED THAT THE REQUIREMENTS OF FURTHER PROVISO WERE FULFILLED, THE ASSESSEE WAS NOT REQUIRED TO MAKE ANY DED UCTION AT SOURCE ON THE PAYMENTS MADE TO THE SUB - CONTRACTORS. IF THAT BE OUR CONCLUSION, APPLICATION OF SECTION 40(A)(IA) WOULD NO T ARISE SINCE, AS ALREADY NOTICED, SECTION 40(A)(IA) WOULD APPLY WHEN THERE IS A REQUIREMENT OF DEDUCTION OF TAX AT SOURCE AND SUCH REQUIREMENT IS EITHER NOT FULFILLED OR HAVING DEDUCTED TAX AT SOURCE IS NOT DEPOSITED WITHIN PRESCRIBED TIME.' ITA NO . 518 / RJT/201 4 & CO NO.05/RJT/2016 ASSESSMENT YEAR: 2010 - 11 PAGE 4 OF 5 6.0 THE FACTS OF THE PRESENT CASE ARE SIMILAR. IN FACT, IN PARA - 3.5 OF THE ASSESSMENT ORDER, THE A.O. HIMSELF HAS CATEGORICALLY AGREED T HAT THE ISSUES INVOLVED IN THE APPELLANT'S CASE ARE SIMILAR TO THAT INVOLVED IN THE CASE OF VALIBHAI KHANBHAI MANKAD (SUPRA) WHEREIN FILING OF S L .P IS RECOMMENDED BY THE CHIEF C IT, AHME D ABAD. IT APPEARS THAT IT IS ONLY ON THIS COUNT THAT THE A. O. HAS MADE THE DISALLOWANCE IN SPITE OF THE CLEAR DECISION OF THE JURISDICTIONAL HIGH COURT. THE A.O. HAS NOT BROUGHT ON RECORD WHETHER SLP HAS BEEN FILED AND THE OPERATION OF THIS DECISION HAS BEEN CATEGORICALLY STAYED BY THE H ON'BLE APEX COURT. THE HON'BLE SUPRE ME COURT IN THE CASE OF U OI VS. KAMALAXI FINANCE CORPORATION LTD. AIR (1992) 711 (SC) HAS CATEGORICALLY STATED THAT THE PRI NCIPLE OF JUDICIAL DISCIPLINE REQUIRE THAT THE ORDERS OF HIGHER APPELLATE AUTHORITIES SHOULD BE FOLLOWED UNRESERVEDLY BY THE SUBORDIN ATE AUTHORITIES. THE MERE FACT THAT THE ORDER OF THE APPELLATE AUTHORITY IS NOT ACCEPTABLE TO THE DEPARTMENT AND IS A SUBJECT MATTER OF AN APPEAL CAN FURNISH NO GROUND FOR NOT FOLLOWING IT UNLESS ITS OPERATION HAS BEEN SUSPENDED BY A COMPETENT COURT. SIM ILAR VIEW HAS BEEN HELD BY THE HON'BLE GUJARAT HIGH COURT IN CASE OF AIR CONDITIONING SPECIALISTS PVT. LTD. VS. UOI 221 1TR 739 AND C I T VS. DADABHAI & CO. 226 ITR 922. RESPECTFULLY FOLLOWING THE JUDICIAL PRINCIPLES LAID DOWN BY THE ABOVE DECISIONS, IT IS HELD THAT THE APPELLANT'S CASE IS COVERED BY THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN CASE OF VALIBHAI KHANBHAI MANKAD (SUPRA). THE DISALLOWANCE U/S. 40(A)(IA) IS THEREFORE DIRECTED TO BE DELETED. GROUND OF APPEAL NO. 1 IS ALLOWED. 5 . LEARNED DE PARTMENTAL REPRESENTATIVE REPRESENTING R E VENUE STRONGLY ARGUES THAT THE CIT(A) OUGHT TO HAVE CONFIRMED THE A SSESSING OFFICER S ACTION IN INVOKING THE IMPUGNED DISALLOWANCES. WE PUT UP A SPECIFIC QUERY AS TO WHETHER H ON BLE JURISDICTIONAL H IGH C OURT S DECI SION IN VALIBHAI KHANBHAI| (SUPRA) APPLIES OR NOT WHEREIN THEIR L ORDSHIPS EXAMINED A CASE INVOLVING PAGE DECLARATION SUBMITTED TO THE TDS DEDUCTOR. WE ARE INFORMED THAT THE REVENUE S S PECIAL L EAVE P ETITION IS PENDING BEFORE THE H ON BLE APEX C OURT. THERE IS NO DISTINCTION ON FACTS O R LAW BEING POINTED OUT AT THE REVENUE S BEHEST. SO FAR AS APPLICATION OF H ON BLE JURISDICTIONAL H IGH C OURT S DECISION IN THE FACTS OF THE INSTANT CASE IS CONCERNED, WE DEEM IT APPROPRIATE TO OBSERVE AT THIS STAGE THAT MERE PEN DENCY OF REVENUE S S PECIAL L EAVE P ETITION BEFORE H ON BLE H IGHEST C OURT OF LAND DOES NOT FORMA A VALID GOURD TO ADOPT A DIFFERENT APPROACH. THE FACT ALSO REMAINS THAT LATE SUBMISSION OF FORM 15J TO THE JURISDICTIONAL CIT IS NOT A SUBSTANTIVE LAPSE BUT ONLY A PROCEDURAL ONE. IN ABSENCE OF ANY GRAVE PREJUDICE CAUSED TO THE ITA NO . 518 / RJT/201 4 & CO NO.05/RJT/2016 ASSESSMENT YEAR: 2010 - 11 PAGE 5 OF 5 D EPARTMENT WHEREIN CORRECTNESS THEREOF IS NOT IN DISPUTE , W E FOLLOW H ON BLE J URISDICTIONAL H IGH C OURT S CASES IN TH ESE FACTS AND CIRCUMSTANCES. THE CIT (A) S FINDINGS UNDER CHALLENGE ARE CONFIRMED. REVENUE S APPEAL ITA NO. 518/RJT/2014 FAILS. 6 . WE COME TO ASSESSEE S C ROSS O BJECTION RAISING TWIN DISALLOWANCES (SUPRA) CONFIRMED BY THE CIT(A) UNDER SECTION 40 (A)(IA) OF THE ACT. IT SEEKS TO MAKE OUT THE CASE THAT SECTION 194C DOES NOT APPLY IN ITS CASE SINCE IT S GROSS RECEIPTS DO NOT CROSS THE THRESHOLD PECUNIARY LIMITS PRESCRIBED IN THE PROVISO THEREIN. A PERUSAL OF THE CASE FILE REVEAL S THAT THIS LEGAL PLEA HAS BEEN RAISED FOR THE FIRST TIME BEFORE THE T RIBUNAL ONLY. WE DEEM IT APPROPRIATE TO REMIT BACK THE SAME TO THE A SSESSING O FFICER FOR ADJUDICATION AS PER LAW AFTER AFFORDING ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE WHO SHALL BE AT LIBERTY TO PLACE ON RECORD ALL NECESSARY SUPPORTING DETAILS. THIS ISSUE STANDS REMITTED BACK TO THE ASSESSING O FFICER. 7 . IN THE RESULT, REVENUE S APPEAL ITA NO.518/RJT/2014 IS DISMISSED. ASSESSEE S C ROSS O BJECTION N O.05/RJT/2016 THEREIN IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN C OURT TODAY ON TH E 22 ND DAY OF APRIL, 2016. SD/ - SD/ - ANIL CHATURVEDI S.S. GODARA (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, THE 22 ND DAY OF APRIL , 2016 PBN/ * COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) CO MMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT