The DCIT, Circle-1, Bhavnagar V. M/s. Universal Associates, Bhavnagar

ITA 534/AHD/2012

• Counselvise Citation: 53420514 RSA 2012
• Duration Of Justice: 3 year(s) 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 20-07-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 02-03-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NARENDRA SINGH
• Assessee Lawyers: TUSHAR HEMANIAR
• Keywords: Principle of natural justice

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD .. , ( .) , BEFORE SHRI G.D. AGARWAL,VICE PRESIDENT (AZ) AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ I.T.A. NO.534/AHD/2012 ( / ASSESSMENT YEAR : 2008-09) THE DCIT CIRCLE-1 BHAVNAGAR / VS. UNIVERSAL ASSOCIATES 305, MADHAV HILL WAGHAWADI ROAD BHAVNAGAR-364 001 % & ./ ./ PAN/GIR NO. : AAFBU 0560 G ( %( / APPELLANT ) .. ( )*%( / RESPONDENT ) AND CO NO.90/AHD/2012 AY 2008-09 (IN ITA NO.534/AHD/2012 AY 2008-09) UNIVERSAL ASSOCIATES, VS. THE DCIT BHAVNAGAR CIRCLE-1, AHMEDABAD (CROSS OBJECTOR) .. (RESPONDEN T) REVENUE BY : SHRI NARENDRA SINGH, SR.DR ASSESSEE BY : SHRI TUSHAR HEMANI, AR +, - .& / DATE OF HEARING 20/07/2015 /012 - .& / DATE OF PRONOUNCEMENT 23 /0 7 /2015 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL AND CROSS-OBJECTION BY THE REVENUE AND THE ASSESSEE RESPECTIVELY AGAINST THE ORDER OF THE LD.COMMISSION ER OF INCOME TAX(APPEALS)-XX, AHMEDABAD (CIT(A) IN SHORT) DATED 28/12/2011 ITA NO.534/AHD/2012 (BY REVENUE) AND CO NO.90/AHD/2012(BY ASSESSEE) DCIT VS. UNIVERSAL ASSOCIATES ASST.YEAR 2008-09 - 2 - PERTAINING TO ASSESSMENT YEAR (AY) 2008-09. THE APP EAL AND THE CROSS OBJECTION ARE TAKEN UP TOGETHER AND ARE BEING DISPO SED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST, WE TAKE UP THE APPEAL FILED BY THE REVENU E, I.E. ITA NO.534/AHD/2012 FOR AY 2008-09. THE REVENUE HAS RAI SED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE LD.CIT(A)-XX, AHMEDABAD HAS ERRED IN LAW AN D ON FACTS IN DELETING THE ADDITION OF RS.1,28,66,733/- IN RESPEC T OF ESTIMATION OF NET PROFIT. 1.2. FURTHER, THE RELIEF GRANTED BY THE LD.CIT(A) I S EXCESSIVE AND WITHOUT APPRECIATION OF THE FULL FACTS OF THE CASE. 2. IT IS THEREFORE, PRAYED THAT THE ORDER OF THE CIT(A) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED TO THE AB OVE EXTENT. 3. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE AS SESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143( 3) OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 27/12/2010 THEREBY THE ASSESSING OFFICER (AO IN SHORT) REJECTE D THE BOOKS OF ACCOUNTS AND THE NET PROFIT OF THE ASS ESSEE WAS ESTIMATED @ 10% ON THE GROSS RECEIPTS OF RS.13,23,43,633/-. H OWEVER, THE AO GAVE SET OFF OF RS.3,67,830/- OF THE NP ALREADY OFFERED BY THE ASSESSEE. THE AO FURTHER MADE ADDITION BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT FOR LATE DEPOSIT OF THE TDS OF RS.22,487 ,076/-. AGAINST THE SAID ASSESSMENT ORDER, ASSESSEE FILED AN APPEAL BEF ORE THE LD.CIT(A), WHO ITA NO.534/AHD/2012 (BY REVENUE) AND CO NO.90/AHD/2012(BY ASSESSEE) DCIT VS. UNIVERSAL ASSOCIATES ASST.YEAR 2008-09 - 3 - AFTER CONSIDERING THE SUBMISSIONS ADOPTED THE GROSS PROFIT AT 6.71% AND WORKED OUT THE ADDITION TO RS.4,23,499/-. HOWEVER, THE LD.CIT(A) CONFIRMED THE ADDITION MADE ON ACCOUNT OF LATE DEPO SIT OF TDS OF RS.22,48,076/-. AGAINST THE ORDER OF THE LD.CIT(A) , BOTH THE REVENUE AND ASSESSEE ARE IN APPEAL AND CROSS-OBJECTION RESP ECTIVELY BEFORE US. 3.1. IN REVENUES APPEAL, THE ONLY EFFECTIVE GROUND IS AGAINST THE DELETION OF ADDITION OF RS.1,28,66,733/- MADE IN RE SPECT OF ESTIMATION OF NET PROFIT. THE LD.SR.DR VEHEMENTLY ARGUED THAT T HE LD.CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION. HE SUBMITTED T HAT THE AO HAS GIVEN A SPECIFIC FINDING WITH REGARD TO THE DETAILS FILED B Y THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. HE SUBMITTED THAT THE AO H AS ALSO GIVEN A FINDING THAT THE VOUCHERS SUBMITTED BY THE ASSESSEE WERE BOGUS. HE, THEREFORE, STRONGLY SUPPORTED THE ORDER OF THE AO. 3.2. ON THE CONTRARY, LD.COUNSEL FOR THE ASSESSEE S UBMITTED THAT THE AO HAS ADOPTED THE NET PROFIT RATIO AT 10%. HOWEVER, IN THE PRECEDING YEARS, THE REVENUE, IN SCRUTINY ASSESSMENT, HAS ACC EPTED THE NP RATIO AT 2.87% IN AY 2005-06, AT 0.31% IN AY 2006-07 AND 0.3 0% IN AY 2007- 08. 3.3. IN REJOINDER, THE LD.SR.DR SUBMITTED THAT EVER Y YEAR IS AN INDEPENDENT YEAR. ITA NO.534/AHD/2012 (BY REVENUE) AND CO NO.90/AHD/2012(BY ASSESSEE) DCIT VS. UNIVERSAL ASSOCIATES ASST.YEAR 2008-09 - 4 - 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE AO HAS ADOPTED THE NP RATIO AT 10% . HOWEVER, IN AY 2006-07 IN THE SCRUTINY ASSESSMENT, THE NP WAS AT 0 .31% WHICH HAS BEEN ACCEPTED BY THE REVENUE AND IN THE AY 2007-08 THE N P RATIO (AT 0.30%) SHOWN BY THE ASSESSEE WAS ALSO ACCEPTED BY THE REVE NUE IN THE SCRUTINY ASSESSMENT. THEREFORE, WE ARE OF THE CONSIDERED VI EW THAT THE NP AS ADOPTED BY THE AO AT THE RATE OF 10%APPEARS TO BE E XCESSIVE UNDER THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. HENCE , TAKING A HOLISTIC VIEW, WE DIRECT THE AO TO ADOPT 2% OF THE NP IN THE YEAR UNDER CONSIDERATION AND, ACCORDINGLY, COMPUTE THE NET PRO FIT. THUS, THIS GROUND OF REVENUES APPEAL IS PARTLY ALLOWED. 5. IN THE RESULT, REVENUES APPEAL IS PARTLY ALLOWED A S PER DISCUSSION MADE HEREINBOVE. 6. NOW, WE TAKE UP THE ASSESSEES CROSS OBJECTION NO.90/AHD/2012 FOR AY 2008-09 (ARISING OUT OF ITA NO.534/AHD/2012 F OR AY 2008-09), WHEREIN FOLLOWING GROUNDS HAVE BEEN TAKEN:- 1. LD. CIT(A) HAS ERRED IN LAW IN CONFIRMING THE ACTION OF ID. AO IN DISALLOWING EXPENDITURE OF RS.22,48,076/- U/S 40(A) (IA) OF THE ACT, EVEN THOUGH THE TAX HAS BEEN DEDUCTED AT SOURCE AND DEPO SITED BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME. 2. LD. CIT(A) OUGHT TO HAVE APPRECIATED THAT THE AMENDMENT MADE BY THE FINANCE ACT, 2010 IN PROVISIONS OF S.40(A)(IA) OF T HE ACT IS A REMEDIAL AND CLARIFICATORY IN NATURE AND IN VIEW OF THAT ONCE TH E TAX HAS BEEN DEDUCTED AT ITA NO.534/AHD/2012 (BY REVENUE) AND CO NO.90/AHD/2012(BY ASSESSEE) DCIT VS. UNIVERSAL ASSOCIATES ASST.YEAR 2008-09 - 5 - SOURCE AND DEPOSITED BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME, DISALLOWANCE U/S 40(A)(IA) OF THE ACT CANNOT BE MAD E. 3. IN ANY CASE, THE PAYMENT OF THE EXPENDITUR E HAS BEEN MADE DURING THE YEAR UNDER CONSIDERATION AND IS NOT PAYABLE AT THE END OF FINANCIAL YEAR AND THEREFORE NO DISALLOWANCE U/S 40(A)(IA) OF THE ACT CAN BE CALLED FOR. 4. ALTERNATIVELY AND WITHOUT PREJUDICE TO ABOV E, BOTH THE LOWER AUTHORITIES OUGHT TO HAVE APPRECIATED THAT ONCE THE BOOKS OF AC COUNTS ARE REJECTED AND ADDITION HAS BEEN MADE ON ESTIMATION BASIS, NO FURT HER DISALLOWANCE U/S 40(A)(IA) OF THE ACT CAN BE CALLED FOR. 5. BOTH THE LOWER AUTHORITIES HAVE ERRED IN L AW AND ON FACTS IN NOT PROPERLY APPRECIATING AND CONSIDERING VARIOUS SUBMI SSIONS, EVIDENCES AND SUPPORTING PLACED ON RECORD DURING THE COURSE OF TH E ASSESSMENT PROCEEDINGS AND NOT PROPERLY APPRECIATING VARIOUS FACTS AND LAW IN ITS PROPER PERSPECTIVE AND FURTHER ERRED IN PASSING ORDERS IN GROSS VIOLAT ION OF THE PRINCIPLES OF NATURAL JUSTICE. 6. LEARNED CIT(A) HAS ERRED IN LAW AND ON FAC TS OF THE CASE IN CONFIRMING THE ACTION OF AO IN CHARGING INTEREST U/S 234A/B/C/ D OF THE ACT. 7. LEARNED CIT(A) HAS ERRED IN LAW AND ON FAC TS IN NOT ADJUDICATING UPON THE GROUND CHALLENGING THE ACTION OF AO IN INITIATI NG PENALTY UNDER SECTION 271(1)(C) OF THE ACT WITHOUT RECORDING MANDATORY SA TISFACTION AS CONTEMPLATED UNDER THE ACT. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, EDIT, DEL ETE, CHANGE OR MODIFY ALL OR ANY OF THE GROUND BEFORE OR AT THE TIME OF HEARI NG. 7. GROUND NOS.1 TO 4 ARE INTER-CONNECTED AND, THER EFORE, THE SAME ARE DECIDED TOGETHER. THE ASSESSING OFFICER MADE THE D ISALLOWANCE ON THE BASIS THAT THE TAX WAS DEPOSITED BY THE ASSESSEE I N THE GOVERNMENT ACCOUNT BEYOND THE PRESCRIBED TIME. THE LD.COUNSE L FOR THE ASSESSEE SUBMITTED THAT THE HONBLE GUJARAT HIGH COURT IN TH E CASE OF CIT VS. ITA NO.534/AHD/2012 (BY REVENUE) AND CO NO.90/AHD/2012(BY ASSESSEE) DCIT VS. UNIVERSAL ASSOCIATES ASST.YEAR 2008-09 - 6 - OMPRAKASH R.CHAUDHARY REPORTED AT (2015) 57 TAXMANN .COM 38 (GUJ.) HAS HELD THAT AMENDMENT MADE IN SECTION 40(A)(IA) B Y FINANCE ACT, 2010 IS CURATIVE IN NATURE AND THE SAME HAS RETROSPECTIV E EFFECT FROM 01/04/2005. HE SUBMITTED THAT BOTH THE LOWER AUTHO RITIES HAVE FAILED TO APPRECIATE THAT SUCH TDS HAS BEEN DEPOSITED ON 07/0 4/2008 I.E. PRIOR TO THE DUE DATE OF FILING RETURN OF INCOME FOR THE YEA R UNDER CONSIDERATION AND, HENCE, NO DISALLOWANCE IS CALLED FOR U/S.40(A) (IA) OF THE ACT. 8. ON THE OTHER HAND, THE LD.SR.DR SUPPORTED THE OR DERS OF THE AUTHORITIES BELOW. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE CONTENTION OF THE LD.COUNSEL FOR THE ASSESSEE I S THAT THE TDS HAD BEEN DEPOSITED BY THE ASSESSEE IN THE GOVERNMENT ACCOUNT BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME. THIS ISSUE REQUIRE S VERIFICATION AT THE END OF THE AO. THEREFORE, WE RESTORE THIS ISSUE BACK T O THE FILE OF AO FOR VERIFICATION AND IF THE AO FINDS THAT THE TAX WAS DEPOSITED BY THE ASSESSEE IN THE GOVERNMENT ACCOUNT PRIOR TO THE DUE DATE OF FILING THE RETURN OF INCOME, THEN HE WOULD DELETE THE DISALLOW ANCE ACCORDINGLY. THUS, GROUND NOS.1 TO 4 ARE ALLOWED FOR STATISTICA L PURPOSES. 10. GROUND NOS.5 TO 7 ARE GENERAL IN NATURE WHICH R EQUIRE NO INDEPENDENT ADJUDICATION. ITA NO.534/AHD/2012 (BY REVENUE) AND CO NO.90/AHD/2012(BY ASSESSEE) DCIT VS. UNIVERSAL ASSOCIATES ASST.YEAR 2008-09 - 7 - 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS PAR TLY ALLOWED AS PER DISCUSSION MADE HEREINABOVE AND CROSS-OBJECTION FIL ED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON THURSDAY, THE 23 RD DAY OF JULY, 2015 AT AHMEDABAD. SD/- SD/- ( .. ) ( ) ( . ) ( G.D. AGARWAL ) ( KUL BHARAT ) VICE PRESIDENT (AZ) JUDICIAL MEMBER AHMEDABAD; DATED 23/ 07 /2015 5...+, .+../ T.C. NAIR, SR. PS !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. %( / THE APPELLANT 2. )*%( / THE RESPONDENT. 3. 678 9 / CONCERNED CIT 4. 9 ( ) / THE CIT(A)-XX, AHMEDABAD 5. :; )+78 , . 782 , 6 / DR, ITAT, AHMEDABAD 6. ;< =, / GUARD FILE. / BY ORDER, *: ) //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 20.7.15 (DICTATION-PAD 10- PAGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER ..21.7.15 3. OTHER MEMBER... 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.23.7.15 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 23.7.15 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER