Sudhir Vig, New Delhi V. ACIT, New Delhi

ITA 5555/DEL/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7393 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 23-09-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SAMY AGRAWAL
• Keywords: Opportunity of being heard; Principle of natural justice; Application of stay; Retrospective amendment; Additional evidence; Reasonable cause
• Section: 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G, NEW DELHI BEFORE SH. N. K. SAINI, AM AND S H. A.T.VARKEY, JM ITA NO. 5555/DEL/2015 & STAY PETITI ON NO. 540/DEL/2015 ASSESSMENT YEAR : 2012-13 SUDHIR VIG 33, SHANTI VIHAR NEW DELHI VS ACIT, CIRCLE-55(1) NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. AAFPV4970M ASSESSEE BY : SRI SAMY AGRAWAL, C.A. REVENUE BY : SRI SU JIT KUMAR, SR. DR DATE OF HEARING :18.11.2015 DATE OF RONOUNCEMENT: 12 .01.2016 ORDER PER N.K. SAINI, A.M. THIS IS AN APPEAL BY THE ASSESSEE AND IS DIRECTED AGAINST THE ORDER DATED 25.08.2015 OF THE CIT(A)- XIX, NEW DELHI. 2. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL : 1. BECAUSE THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN DISMISSING THE APPEAL FILED BY THE APPELLANT AND TH EREBY UPHOLDING THE ADDITION OF RS. 34,43,647/- MADE BY THE LEARNED ASSESSING OFFICER. 2. BECAUSE THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THE ADDITION MADE BY THE ASSESSING OFFICE R U/S 40(A)(IA) EVEN THOUGH IT HAS BEEN HELD IN VARIOUS CASE LAWS T HAT DISALLOWANCE UNDER THE SAID SECTION CAN BE MADE ONLY WHEN THE AM OUNT REMAINS UNPAID, THOUGH IT IS AN UNDISPUTED FACT THAT THE EN TIRE AMOUNT OF INTEREST EXPENSE DISALLOWED STOOD PAID AT THE END O F THE YEAR. 3. BECAUSE THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT FOLLOWING THE DECISION OF THE JURISDICTIONAL ITAT I N THE CASE OF ITO V. ANOOP KHANDELWAL DECIDED ON 17.10.2014, AS REPORTED IN MANU/ID/0775/2014 BY ITAT DELHI. 2 ITA NO. 5555/DEL/2015 S.A. NO. 540/DEL/2015 SUDHIR VIG 3.1 BECAUSE THE LEARNED CIT(A) DOES NOT HAVE POWER TO O VERRULE DECISION OF THE JURISDICTIONAL ITAT IN ANOOP KHANDELWAL (SUP RA) DECIDED ON IDENTICAL FACTS. 4. BECAUSE THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT DEALING WITH ALL THE SUBMISSIONS MADE BY THE APPELL ANT BEFORE HIM. 4.1 BECAUSE THE LEARNED CIT(A) HAS NOT DEALT WITH THE SUBMISSIONS MADE IN THE WRITTEN SUBMISSIONS REGARDING RETROSPECTIVE APPLICABILITY OF PROVISO ADDED TO SECTION 40(A)(IA) VIDE FINANCE ACT , 2012 AS WAS LATER ALSO UPHELD BY JURISDICTIONAL HIGH COURT OF D ELHI IN ITA NO. 160/2015 AND 161/2015 VIDE ORDER DATED 26.08.2015 I N THE CASE OF CIT VS. ANSAL LAND MARK TOWNSHIP (P) LTD. 5. BECAUSE THE LEARNED CIT(A) HAS ERRED IN LAW AND O N FACTS IN NOT FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF THE COMMISSIONER OF INCOME TAX, WEST BENGAL V. VEGE TABLES PRODUCTS LTD. (1973) 88 ITR 192 (SC) WHEREIN IT H AS BEEN HELD THAT IF TWO REASONABLE CONSTRUCTIONS OF A TAXING PROVISI ON ARE POSSIBLE THAT CONSTRUCTION WHICH FAVOURS THE ASSESSEE MUST BE ADO PTED ESPECIALLY WHEN DIFFERENT VIEWS HAVE BEEN ASCRIBED BY DIFFEREN T HIGH COURTS AS WELL AS DIFFERENT BENCHES OF INCOME TAX APPELLATE T RIBUNALS 6. BECAUSE THE LEARNED CIT HAS ERRED IN LAW AND ON FAC TS IN UPHOLDING THE ADDITION MADE BY THE LEARNED ASSESSING OFFICER EVEN THOUGH THE ADDITION IS REVENUE NEUTRAL. 7. BECAUSE THE APPELLANT CRAVES FOR LEAVE TO ADD/ALTER , AMEND ANY OF THE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. 8. BECAUSE THE ORDER APPEALED AGAINST IS CONTRARY TO T HE FACTS, LAW AND PRINCIPLES OF NATURAL JUSTICE. 3 . FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE FI LED E-RETURN OF INCOME ON 26.09.2012 DECLARING AN INCOME OF RS. 2298711/- WHICH WAS PROCESSED U/S 143(1) OF THE IT ACT, 1961 (HEREINAFTER REFERRE D TO AS THE ACT). LATER ON THE CASE WAS SELECTED FOR SCRUTINY. SINCE THERE WAS INCREASE IN THE GP RATIO, THE AO ACCEPTED THE TRADING RESULTS OF THE ASSESSEE . HOWEVER, HE MADE AN ADDITION OF RS. 34,43,647/- U/S 40(A)(IA) OF THE AC T ON ACCOUNT OF INTEREST PAID TO TATA CAPITAL LTD. WITHOUT DEDUCTING TAX AT SOURCE. 4. BEING AGGRIEVED THE ASSESSEE CARRIED THE MAT TER TO THE LD. CIT(A) WHO CONFIRMED THE ACTION OF THE AO. NOW THE ASSESSEE IS IN APPEAL. 3 ITA NO. 5555/DEL/2015 S.A. NO. 540/DEL/2015 SUDHIR VIG 5. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ASSESSEE HAD TAKEN A LOAN FROM M/S. TATA CAPITAL LTD. WHICH IS A NON-BAN KING FINANCIAL COMPANY AND PAYING EQUATED MONTHLY INSTALLMENTS (EM IS) TO THE LENDER AND THE INTEREST WAS EMBEDDED IN THE PAYMENTS MADE. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE FURNISHED THE JUDGMENT OF THE ITA T DELHI IN THE CASE OF ITO VS. ANOOP KHANDELWAL ORDER DATED 17.10.2014 REP ORTED IN MANI/ID/0775/2014, HOWEVER, THE ASSESSMENT ORDER DID NOT EVEN HAVE A WHISPER OF THE SAID CASE. THE ASSESSEE MOVED AN APP LICATION DATED 17.11.2015 FOR ADMISSION OF THE ADDITIONAL EVIDENCE AND REQUESTED TO ADMIT THE ADDITIONAL EVIDENCE WHICH IS THE COPY OF A CERT IFICATE DATED 28.09.2015 U/S 201(1) ISSUED BY NSON AND COMPANY, CHARTERED AC COUNTANTS. IN THE SAID APPLICATION DATED 17.11.2015, THE ASSESSEE STA TED AS UNDER -: 1. THE APPELLANT IS AN INDIVIDUAL WHO HAS BEEN RUN NING A PROPRIETORSHIP BUSINESS UNDER THE NAME AND STYLE OF M/S TRUE FRIENDS ELECTRONICS.THE ASSESSEE HAD ALSO EARNED I NCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY, CAPITAL G AIN AND OTHER SOURCES. DURING THE YEAR UNDER APPEAL APPEL LANT E-FILED ITS RETURN OF INCOME ON 26.09.2012 VIDE E-FILING ACKNOWLEDGEMENT NO. 496396651260912, DECLARING AN I NCOME OF RS. 22,83,711/-, AFTER CLAIMING DEDUCTIONS U/S V I-A OF RS. 1,15,000/- COMPUTING A TAX LIABILITY OF RS. 5,42,00 8. THE RETURNS SO FILED WAS DULY PROCESSED AND ASSESSED UNDER SECT ION 143(1) OF THE INCOME-TAX ACT, 1961. THEREAFTER, APPELLANTS C ASE WAS SELECTED FOR SCRUTINY AND NOTICE U/S 143(2) WAS ISS UED. IN RESPONSE TO THE SAME ALL THE REQUISITE INFORMATION AS WERE CALLED FOR WERE FURNISHED BY THE APPELLANT COMPANY. 2. WHILE FRAMING ASSESSMENT LEARNED ASSESSING OFFI CER HAS MADE AN ADDITION U/S 40(A)(IA) OF RS. 34,43,647/- BEING AMOUNT PAID AS INTEREST EMBEDDED IN EQUATED MONTHLY INSTALLMENTS ( EMIS) TO TATA CAPITAL LTD. THE ASSESSEE HAD TAKEN THE LOAN F ROM M/S TATA CAPITAL LTD WHICH IS A NON-BANKING FINANCE COM PANY NBFC). THE ASSESSEE HAD BEEN PAYING EMIS TO THE LEN DER, INTEREST BEING EMBEDDED IN THE PAYMENTS MADE. THE L EARNED ASSESSING OFFICER HAS MADE A DISALLOWANCE OF THE IN TEREST PAID AS PART OF THE EMI. 4 ITA NO. 5555/DEL/2015 S.A. NO. 540/DEL/2015 SUDHIR VIG 3. THAT, FINANCE ACT, 2012 HAS ADDED THE FOLLOW ING PROVISO TO SECTION 40 OF THE INCOME-TAX ACT, IN CLAUSE (A), IN SUB-CLAUSE (IA), AFTER THE PROVISO AND BEFORE THE EXPLANATION, THE F OLLOWING PROVISO HAS BEEN INSERTED WITH EFFECT FROM THE 1 ST DAY OF APRIL, 2013, NAMELY : PROVIDED FURTHER THAT WHERE AN ASSESSEE FAILS TO DEDUCT THE WHOLE OR ANY PART OF THE TAX IN ACCORDANCE WITH THE PROVISIONS OF CHAPTER XVII-B ON ANY SUCH SUM BUT IS NOT DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER THE FIRST PROVISO TO SUB- SECTION (1) OF SECTION 201, THEN, FOR THE PURPOSE OF THIS SUB-CLAU SE, IT SHALL BE DEEMED THAT THE ASSESSEE HAS DEDUCTED AND PAID THE TAX ON SUCH SUM ON THE DATE OF FURNISHING OF RETURN OF INCOME B Y THE RESIDENT PAYEE REFERRED TO IN THE SAID PROVISO. 4. THE JURISDICTIONAL HIGH COURT OF DELHI IN I TA NO. 160/2015 AND 161/2015 VIDE ORDER DATED 26.08.2015 IN THE CAS E OF CIT V. ANSAL LAND MARK TOWNSHIP (P) - LTD. [2015] 377 ITR 635 (DEL.) HAS HELD THAT THE AFOREMENTIONED PROVISO WOULD HAVE RETROSPECTIVE EFFECT. 5. IN THIS REGARD THE APPELLANT HIGHLIGHTING TH E LEGAL BACKGROUND OF RETROSPECTIVE APPLICABILITY OF PROVIS IONS, HAD MADE THE FOLLOWING SUBMISSIONS BEFORE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) -19, NEW DELHI (HEREINAFTER REFERRED TO AS CIT(A)): 10.8 IN RELATION TO THE IMPUGNED PROVISION, IT D ESERVES TO BE HIGHLIGHTED THAT IN THE ABSENCE OF THE PROVISO ADDE D BY THE FINANCE ACT, 2012, THE PROVISION WAS LEADING TO DOU BLE TAXATION. IT DESERVES TO BE POINTED OUT THAT DOUBLE TAXATION IS SELDOM THE INTENTION OF THE LEGISLATURE. THUS, IT CAN BE SAFEL Y SAID THAT THE PROVISO INSERTED VIDE FINANCE ACT, 2012 IS MERELY C LARIFICATORY AND CURATIVE IN NATURE AND HENCE WOULD BE APPLICABL E WITH RETROSPECTIVE EFFECT. THE APPELLANT HAD TAKEN LOAN FROM M/S TATA CAPITAL LTD. WHICH IS BEING REGULARLY ASSESSED TO INCOME TAX VIDE PAN AADCP9147P. CERTIFICATE REQUIRED TO BE FILED U/S 201 IS NOT AVAILABLE WITH THE APPELLANT ON THIS DAT E OF PERSONAL HEARING I.E. 24.08.2015. HOWEVER, THE SAME WILL BE FILED IN DUE COURSE IF YOUR HONOURS SO REQUIRE. 6. IT IS WORTH MENTIONED HERE THAT EVEN THOUGH T HE APPELLANT HAD MADE DETAILED SUBMISSIONS ON THIS ISSUE FROM PA RA 10.5 TO 10.8 OF THE WRITTEN SUBMISSIONS FILED BEFORE HE LEA RNED CIT(A), APPEARING AT 38-39 OF PB, HOWEVER, NO DISCUSSION OR FINDING IS GIVEN IN THE IMPUGNED ORDER DATED 25.08.2015. MOREO VER, EVEN THOUGH IT WAS SPECIFICALLY MENTIONED THAT IF REQUIR ED, THE 5 ITA NO. 5555/DEL/2015 S.A. NO. 540/DEL/2015 SUDHIR VIG APPELLANT WOULD FILE THE CERTIFICATE MENTIONED U/S 201 OF THE ACT, THE CIT(A) DID NOT AFFORD ANY OPPORTUNITY TO THE AP PELLANT TO DO SO. 7. IN VIEW OF AFORESAID NARRATION OF FACTS, APPEL LANT WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING THE RE LATED DOCUMENT BEFORE THE LOWER AUTHORITIES AND ALSO FOR THE REASON THAT NO SUFFICIENT OPPORTUNITY WAS PROVIDED TO THE APPELLANT TO ADDUCE THE EVIDENCE RELEVANT IN RELATION TO THE SOL E ADDITION MADE IN THE ASSESSMENT OF THE APPELLANT. ACCORDINGL Y, THE CERTIFICATE AS MENTIONED U/S 201 OF THE ACT IS BEIN G FILED BEFORE YOUR HONOUR. 8. IN VIEW OF THE SUBMISSION MADE IN THE FOREGO ING PARAGRAPHS, IT IS PRAYED THAT YOUR HONOUR BE PLEASE TO ADMIT THE SAME FOR CONSIDERATION AT THE TIME OF HEARING OF AP PEAL. 6. DURING THE COURSE OF HEARING THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE CONTENTS OF THE AFORESAID APPLICATION AND ALSO SUBMITTED THAT THE CERTIFICATE DATED 28.09.2015 U/S 201 OF THE ACT WAS NOT AVAILABLE TO THE ASSESSEE AT THE TIME OF ASSESSMENT PROCEEDINGS OR T HE APPELLATE PROCEEDINGS BEFORE THE LD. CIT(A). IT WAS CONTENDED THAT THE AD DITIONAL EVIDENCE NOW FURNISHED, GOES TO THE ROOT OF THE MATTER AND THE A SSESSEE WAS PREVENTED BY THE REASONABLE CAUSE IN NOT PRODUCING THE SAME BEFO RE THE AO AS WELL AS THE LD. CIT(A). HE, FURTHER, REQUESTED THAT THE ADDITIO NAL EVIDENCE MAY BE ADMITTED. 7. IN HIS RIVAL SUBMISSION, THE LD. DR OBJECTED TO THE ADMISSION OF THE ADDITIONAL EVIDENCE AND STATED THAT THE ASSESSEE DI D NOT FURNISH THE CERTIFICATE WHICH NOW FURNISHED AS AN ADDITIONAL E VIDENCE, EITHER BEFORE THE AO OR THE LD. CIT(A) IN SPITE OF THE FACT THAT AMPL E OPPORTUNITIES OF BEING HEARD WERE GIVEN BY THEM. 8. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESEN T CASE IT APPEARS THAT THE 6 ITA NO. 5555/DEL/2015 S.A. NO. 540/DEL/2015 SUDHIR VIG ASSESSEE REQUESTED THE LD. CIT(A) VIDE PARA 10.8 O F THE WRITTEN SUBMISSION FURNISHED BEFORE HIM THAT THE CERTIFICATE REQUIRED TO BE FILED U/S 201 OF THE ACT WOULD BE FURNISHED IN DUE COURSE, IF SO REQUIR ED, AS THE SAME WAS NOT AVAILABLE AT THE RELEVANT TIME. HOWEVER, THE LD. C IT(A) NEITHER ACCEPTED THE REQUEST OF THE ASSESSEE NOR DECLINED THE SAME. NOW THE ASSESSEE HAS FILED THE SAID CERTIFICATE WHICH GOES TO THE ROOT OF THE MATTER. WE, THEREFORE, DEEM IT APPROPRIATE TO SET ASIDE THIS ISSUE BACK TO THE FILE OF THE AO TO BE DECIDED AFRESH INACCORDANCE WITH LAW AFTER PROVIDING DUE AN D REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE AO SHOULD ALSO CONSIDER THE AFORESAID CERTIFICATE NOW FURNISHED BY THE ASS ESSEE WHILE DECIDING THE ISSUE UNDER CONSIDERATION AFRESH. 9. SINCE WE HAVE ADJUDICATED THE APPEAL OF THE ASSESSEE, THEREFORE, THE STAY APPLICATION BECOMES INFRUCTUOUS, WE ORDER ACCO RDINGLY. 10. IN THE RESULT APPEAL OF THE ASSESSEE ALLOW ED FOR STATISTICAL PURPOSES AND THE STAY APPLICATION IS DISMISSED AS INFRUCTUOU S. (ORDER PRONOUNCED IN THE COURT ON 12/01/2016) SD/- SD/- (A.T.VARKEY) (N. K. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 12 /01/2016 *BINITA* COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(APPEALS) 5.DR: ITAT ASSISTANT R EGISTRAR 7 ITA NO. 5555/DEL/2015 S.A. NO. 540/DEL/2015 SUDHIR VIG DATE INITIAL 1. DRAFT DICTATED ON 04/01/2016 2. DRAFT PLACED BEFORE AUTHOR 04/01/2016 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 5. APPROVED DRAFT COMES TO THE SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 12/01/2016 7. FILE SENT TO THE BENCH CLERK 13/01/2016 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.