ACIT, CHENNAI V. Nandan Nahar, CHENNAI

ITA 555/CHNY/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2491 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 13-06-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 01-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T N BETGIRI
• Assessee Lawyers: D ANAND
• Section: 143(3)

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL C BENCH, CHENNAI. BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER & SHRI V. DURGA RAO, JUDICIAL MEMBER ITA NO. 555/MDS/2013 ASSESSMENT YEAR : 2008-09 THE ASSISTANT COMMISSIONER OF INCOME TAX, BUSINESS CIRCLE XI, KANNAMMAI BUILDING, CHENNAI. VS. SHRI NANDAN NAHAR, NO. 5/4, THANDAVARAYAN PILLAI STREET, SOWCARPET, CHENNAI 600 079. [PAN:AABPN8301Q] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI T.N. BETGIRI, JCIT RESPONDENT BY : SHRI D. ANAND, ADVOCATE DATE OF HEARING : 13 .0 6 .2013 DATE OF PRONOUNCEMENT : 20.06.2013 O R D E R PER V. DURGA RAO, JUDICIAL MEMBER : THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)- IV, CHENNAI D ATED 20.11.2012 RELEVANT TO THE ASSESSMENT YEAR 2008-09. 2. THE ONLY EFFECT GROUND RAISED IN THE APPEAL OF THE REVENUE IS THAT THE LD. CIT(APPEALS) HAS ERRED IN DELETING THE DISALLOW ANCE MADE BY THE ASSESSING OFFICER UNDER SECTION 40(A)(IA) OF THE IN COME TAX ACT. 3. FACTS IN BRIEF ARE THAT THE ASSESSEE IS AN INDI VIDUAL, ENGAGED IN THE I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.555/MDS/13 555/MDS/13 555/MDS/13 555/MDS/13 2 BUSINESS OF TRADING IN PAPER AND PAPER PRODUCTS IN THE NAME OF PROPRIETORSHIP FIRM S.R. AGENCY. DURING THE YEAR UN DER CONSIDERATION, THE ASSESSEE HAD FILED RETURN DECLARING TOTAL INCOME OF ` .9,37,400/- ON 30.09.2008. INITIALLY, THE ASSESSMENT WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. SUBSEQUENTLY, AFTER ISSUING NOTICE UNDER S ECTION 143(2), THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF TH E ACT BY DISALLOWING AN AMOUNT OF ` .28,43,035/- UNDER SECTION 40(A)(IA) OF THE ACT. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, TH E ASSESSING OFFICER HAS OBSERVED THAT ON VERIFICATION OF THE BALANCE SH EET FOR THE YEAR UNDER REFERENCE, IT IS SEEN THAT THE ASSESSEE HAD ADMITTE D A SUM OF ` .2,06,208/- AS TDS PAYABLE. ON PERUSAL OF THE PROFIT AND LOSS ACCO UNT FOR THE YEAR ENDING 31.03.2008, THE ASSESSEE HAD CLAIMED AN AMOUNT OF ` .28,43,035/- AS EXPENSES. ON VERIFICATION OF THE TDS DEDUCTION DETA ILS FILED BY THE ASSESSEE ON 28.10.2010 IN ANNEXURE IV, IT WAS FOUND THAT THE ASSESSEE HAS EFFECTED THE TDS PAYMENT MENTIONED ABOVE. THE TDS WAS EFFECT ED, BUT NOT REMITTED TO GOVERNMENT OF INDIA ACCOUNT WITHIN THE SPECIFIED DATE. THEREFORE, THE ASSESSING OFFICER HAS DISALLOWED THE ENTIRE EXPENSE S OF ` .28,43,035/- BY INVOKING SECTION 40(A)(IA). 5. ON BEING AGGRIEVED, THE ASSESSEE CARRIED THE MAT TER BEFORE THE CIT(APPEALS). I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.555/MDS/13 555/MDS/13 555/MDS/13 555/MDS/13 3 6. IT WAS SUBMITTED BEFORE THE CIT(APPEALS) THAT A S PER PROVISIONS OF LAW, TDS WAS DEDUCTED AND EXPENDITURE INCURRED AND REMIT TED THE SAME TO THE GOVERNMENT ACCOUNT WITHIN THE DUE DATE. THE LD. CIT (APPEALS), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, HAS OB SERVED THAT THE PROVISIONS OF SECTION 40(A)(IA) AS THEY STOOD PRIOR TO THE AMENDMENTS MADE BY THE FINANCE ACT, 2010 WERE RESULTING INTO UNINTE NDED CONSEQUENCES AND CAUSING GRAVE AND GENUINE HARDSHIPS TO THE ASSESSEE WHO HAD SUBSTANTIALLY COMPLIED WITH THE RELEVANT TDS PROVISIONS BY DEDUCT ING THE TAX AT SOURCE AND BY PAYING THE SAME TO THE CREDIT OF THE GOVERNM ENT BEFORE THE DUE DATE OF FILING OF RETURN UNDER SECTION 139(1A) OF THE AC T. IN ORDER TO REMEDY THIS POSITION AND TO REMOVE THE HARDSHIPS BEING CAUSED T O THE ASSESSEE BELONGING TO SUCH CATEGORY, AMENDMENTS HAVE BEEN MA DE TO THE PROVISIONS OF SECTION 40(A)(IA) BY THE FINANCE ACT, 2010. THE SAID AMENDMENT WAS CLEARLY CURATIVE IN NATURE AND THE SAME WOULD, THER EFORE APPLY RETROSPECTIVELY WITH EFFECT FROM 01.04.2005. IN THE CASE OF R.B. JODHA MAL KUTHIALA V. CIT [82 ITR 570], IT WAS HELD BY THE HO NBLE SUPREME COURT THAT A PROVISO WHICH IS INSERTED TO REMEDY UNINTENDED CO NSEQUENCES AND TO MAKE THE PROVISION WORKABLE, REQUIRES TO BE TREATED AS RETROSPECTIVE IN OPERATION SO THAT A REASONABLE INTERPRETATION CAN B E GIVEN TO THE SECTION AS A WHOLE. HENCE, THE AMENDMENT BY FINANCE ACT, 2010 IS ONLY A REMEDIAL AND CURATIVE IN NATURE AND HENCE THE SAID PROVISIONS AR E TO BE APPLIED EVEN TO THE EARLIER ASSESSMENT YEARS. I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.555/MDS/13 555/MDS/13 555/MDS/13 555/MDS/13 4 7. IN THE INSTANT CASE, THE LD. CIT(APPEALS) HAS O BSERVED THAT THE ASSESSEE HAS DEDUCTED THE TDS DURING THE FINANCIAL YEAR AND REMITTED THE SAME TO THE GOVERNMENT OF INDIA ON 08.04.2008, WITH IN THE STATUTORY PERIOD OF 2 MONTHS AVAILABLE, THE ASSESSEE IS DEEMED TO HA VE COMPLIED WITH THE PROVISIONS OF SEC.40(A)(IA) OF THE ACT AS IT STOOD TODAY, AND ELIGIBLE FOR DEDUCTION OF THE EXPENSES. THEREFORE, THE LD. CIT(A PPEALS) HAS HELD THAT THE ASSESSING OFFICER'S ACTION IN DISALLOWING THE ABOVE EXPENSES IS NOT JUSTIFIED AND ALSO HELD THAT THE ASSESSING OFFICER IS FREE TO EXAMINE THE REMITTANCES OF THE SAID TDS IN TO THE GOVT. ACCOUNT AND IF IT I S FOUND THAT ANY OF THE TDS WAS NOT REMITTED WITHIN THE DUE DATE UNDER SECTION 139(1) OF THE ACT, THE CORRESPONDING EXPENSES CAN BE DISALLOWED UNDER SECT ION 40(A)(IA) OF THE ACT. 8. AGGRIEVED, THE REVENUE PREFERRED APPEAL BEFORE THE TRIBUNAL. 9. THE LD. DR STRONGLY SUPPORTED THE ORDER PASSED BY THE ASSESSING OFFICER AND SUBMITTED THAT THE ASSESSEE FAILED TO C OMPLY WITH THE TDS PROVISIONS OF THE ACT. 10. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASS ESSEE HAS SUBMITTED THAT THE ASSESSEE HAS COMPLIED WITH THE TDS PROVISI ONS AND DEDUCTED THE TDS AND DEPOSITED THE SAME IN CENTRAL GOVERNMENT AC COUNT ON 08.04.2008 AND PHOTO COPIES OF THE BANK STATEMENT WERE FILED B EFORE US. I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.555/MDS/13 555/MDS/13 555/MDS/13 555/MDS/13 5 11. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE A SSESSEE IS IN THE BUSINESS OF TRADING OF PAPER AND PAPER PRODUCTS AND HAS INCURRED VARIOUS EXPENSES I.E. COMMISSION, INTEREST, GODOWN RENT AND LORRY FREIGHT OF ` .28,43,035/-. ON THAT, THE ASSESSEE HAS DEDUCTED TD S OF ` .2,06,208/-. THE DEDUCTED AMOUNT OF ` .2,06,208/- WAS DEPOSITED IN THE CENTRAL GOVERNMENT ACCOUNT BY THE ASSESSEE ON 08.04.2008. ACCORDING TO THE ASSESSING OFFICER, THE ASSESSEE HAS FAILED TO COMPLY WITH THE PROVISIO NS OF THE TDS AND THERE IS A DELAY IN DEPOSITING THE AMOUNT AND DISALLOWED THE ENTIRE EXPENSES INCURRED BY THE ASSESSEE. ON APPEAL, THE LD. CIT(AP PEALS) HAS OBSERVED THAT THE ASSESSEE HAS COMPLIED WITH THE PROVISIONS OF SE CTION 40(A)(IA) OF THE ACT AND THE ACTION OF THE ASSESSING OFFICER IN DISALLOW ING THE ENTIRE EXPENDITURE IS NOT JUSTIFIED AND DIRECTED THE ASSESSING OFFICER TO EXAMINE WHETHER THE TDS WAS REMITTED WITHIN THE DUE DATE OF FILING OF R ETURN UNDER SECTION 139(1) OF THE ACT AND AFTER EXAMINATION, IF IT IS FOUND TH AT ANY OF THE TDS WAS NOT REMITTED WITHIN THE DUE DATE, CORRESPONDING EXPENSE S CAN BE DISALLOWED UNDER SECTION 40(A)(IA) OF THE ACT. IT IS AN ADMITT ED FACT THAT THE ASSESSEE HAD DEDUCTED TDS AND DEPOSITED THE SAME TO THE CENT RAL GOVERNMENT ACCOUNT ON 08.04.2008. WE FIND THAT THE ACTION OF T HE ASSESSING OFFICER IN DISALLOWING THE ENTIRE EXPENDITURE IS NOT JUSTIFIED . THEREFORE, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A PPEALS) AND HENCE, THE GROUNDS RAISED BY THE REVENUE IS DISMISSED. I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.555/MDS/13 555/MDS/13 555/MDS/13 555/MDS/13 6 12. IN THE RESULT, THE APPEAL OF THE REVENUE IS DI SMISSED. ORDER PRONOUNCED ON THURSDAY, THE 20 TH OF JUNE, 2013 AT CHENNAI. SD/ - SD/ - (ABRAHAM P. GEORGE) ACCOUNTANT MEMBER (V. DURGA RAO) JUDICIAL MEMBER CHENNAI, DATED, THE 20.06.2013 VM/- TO: THE ASSESSEE//A.O./CIT(A)/CIT/D.R.