RAVIRAJ LAXMAN RELEMPAADU, MUMBAI V. ACIT 23(1), MUMBAI

ITA 5680/MUM/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7374 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 21-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V VIDHYADHAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH G, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NOS.5679 & 5680/M/2016 ASSESSMENT YEARS: 2010-11 & 2011-12 SHRI RAVIRAJ LAXMAN RELEMPAADU, ROOM NO.402, 4 TH FLOOR, PRATHAMESH BUILDING, SUBHASH ROAD, IN FRONT OF CEAT MAIN GATE, NAHUR, MUMBAI-400 078 PAN: AFDPR 4214B VS. ACIT 23(1), NEW CHARGE:ACIT-29(1), MUMBAI (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : SHRI DEVENDRA JAIN, A.R. REVENUE BY : SHRI V. VIDHYADHAR, D.R. DATE OF HEARING : 17.04.2018 DATE OF PRONOUNCEMENT : 27.04.2018 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE ABOVE TITLED TWO APPEALS HAVE BEEN PREFERRED B Y THE ASSESSEE AGAINST THE COMMON ORDER DATED 21.06.2016 O F THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER R EFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT YEARS 2010 -11 & 2011-12. 2. AT THE OUTSET, THE LD. A.R. OF THE ASSESSEE SUBMIT TED THAT THERE IS A DELAY OF 15 DAYS IN FILING THE APPEAL WH ICH IS DUE TO THE IGNORANCE OF THE ASSESSEE. AN AFFIDAVIT WAS ALS O FILED EXPLAINING THE REASONS FOR FILING LATE APPEAL. THE LD. A.R. ITA NOS.5679 & 5680/M/2016 SHRI RAVIRAJ LAXMAN RELEMPAADU 2 SUBMITTED THAT THE ASSESSEE WAS NOT EVEN AWARE OF T HE FACT THAT THE ASSESSMENT ORDER IS TO BE APPEALED BEFORE THE ITAT AND ONLY WHEN THE MATTER WAS BROUGHT TO THE NOTICE OF THE CONSULTING CHARTERED ACCOUNTANT WHO ADVISED THE ASS ESSEE TO FILE THE APPEAL IMMEDIATELY AND HENCE THE DELAY OF 15 DAYS HAS OCCURRED AND PRAYED THAT THE SAME SHOULD BE CON DONED IN THE INTEREST OF JUSTICE AND FAIRPLAY AND THE MATTER BE HEARD ON MERIT. 3. THE LD. D.R. STRONGLY OBJECTED TO THE CONTENTIONS OF THE ASSESSEE THAT THE DELAY IN FILING THE APPEAL IS NOT ATTRIBUTABLE TO THE REASON THAT IT IS BEYOND CONTROL OF THE ASSE SSEE AND THEREFORE BOTH THE APPEALS SHOULD BE DISMISSED. 4. WE HAVE HEARD THE SUBMISSIONS OF BOTH THE PARTIE S AND PERUSED THE RELEVANT RECORDS. IN OUR OPINION, THE D ELAY IN FILING THE APPEAL IS OF 15 DAYS WHICH IS DUE TO BON AFIDE BELIEF OF THE ASSESSEE THAT ORDER OF LD. CIT(A) IS NOT APPEAL ABLE. IN OUR OPINION THE ASSESSEE SHOULD NOT BE DENIED JUSTICE D UE TO TECHNICAL REASONS SUCH AS DELAY IN FILING THE APPEA L. THE PREDOMINANT MOTO OF PROVIDING FOR MECHANISM OF APPE AL IS TO AFFORD THE ASSESSEE A FULL OPPORTUNITY SO THAT THE ASSESSEE COULD BE IMPARTED JUSTICE FOR ANY WRONG APPLICATION OF LAW OR WRONG DOING BY AUTHORITIES AND THUS JUSTICE IS NOT DENIED FOR MINOR DELAYS/DEFECTS. THE RELIANCE IS PLACED IN TH E CASE OF NATIONAL THERMAL POWER LTD. (1998) 229 ITR 383 (SC) AND JUTE CORPORATION INDIA VS. CIT (1991) 187 ITR 687 (S C). KEEPING IN VIEW OF THE FACTS OF THE CASE WE ARE OF THE VIEW THAT THIS A CASE WHERE THE DELAY DESERVED TO BE CON DONED. ITA NOS.5679 & 5680/M/2016 SHRI RAVIRAJ LAXMAN RELEMPAADU 3 WE ARE, THEREFORE, INCLINED TO CONDONE THE DELAY AND ADMIT BOTH THE APPEALS FOR ADJUDICATION ON MERIT. 5. AT THE OUTSET, THE LD. COUNSEL SUBMITTED THAT GROU ND NO.3 IS NOT PRESSED AND THEREFORE THE SAME IS DISMI SSED AS NOT PRESSED. 6. THE ISSUE RAISED IN GROUND NO.1 IS AGAINST THE CONFIRMATION OF ACTION OF AO CONFIRMING THE ADDITIO N OF RS.60,60,799/- BEING THE DIFFERENCE BETWEEN THE REC EIPTS AS PER P & L ACCOUNT AND 26AS AS UNEXPLAINED INCOME DE SPITE THE FACT THAT THE ASSESSEE HAS OFFERED THE SAME IN THE SUBSEQUENT ASSESSMENT YEAR 2011-12. 7. THE FACTS IN BRIEF ARE THAT THE AO DURING THE COU RSE OF ASSESSMENT PROCEEDINGS NOTICED THAT THE ASSESSEE HA S SHOWN TURNOVER OF RS.5,73,28,054/- WHEREAS AS PER 26AS IT IS SEEN THAT THE GROSS TURNOVER WAS OF RS.6,92,90,061/- ON WH ICH A TDS OF RS.10,37,548/- WAS DEDUCTED BY THE RESPECTIVE PARTIES. THE AO HAS GIVEN THE BREAKUP OF THE SAID T URNOVER PARTY WISE IN PARA 4 OF THE ASSESSMENT ORDER. ACCO RDINGLY, THE ASSESSEE WAS ISSUED A SHOW CAUSE NOTICE WHICH WAS R EPLIED VIDE LETTER DATED 21.03.2013 SUBMITTING THAT THE DET AILS OF DEDUCTION OF TAX AT SOURCE BY PETRON ENGINEERING CO NSTRUCTION LTD. WAS NOT AVAILABLE AS THIS WAS NOT REFLECTED IN 26AS. THE SAID AMOUNT WAS IN DISPUTE WITH THE SAID COMPANY AN D WAS NOT RECEIVED. THE SAID AMOUNT WAS RELEASED BY THE S AID COMPANY IN FINANCIAL YEAR 2010-11 RELEVANT TO A.Y. 2 011-12 AND DULY SHOWN IN THE RETURN OF INCOME AND THE DUE TAXES ITA NOS.5679 & 5680/M/2016 SHRI RAVIRAJ LAXMAN RELEMPAADU 4 WERE ALSO PAID. THE REPLY OF THE ASSESSEE DID NOT F IND FAVOUR WITH THE AO AND HE ADDED RS.60,60,799/- BEING THE DIFFERENCE BETWEEN BOOKS OF ACCOUNTS OF THE ASSESSE E AND FORM 26AS BY REJECTING THE CONTENTION MADE BY THE A SSESSEE. 8. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) ALSO DISMISSED THE APPEAL OF THE ASSESSEE BY HOLDING THA T THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTI NG AND RECEIPTS OF INCOME HAS TO BE ACCOUNTED FOR ON THE A CCRUAL BASIS. THE LD. CIT(A) NOTED THAT THE ASSESSEE HAS RENDERED SERVICES TO THE SAID COMPANY IN F.Y. 2009-10 NOTWITH STANDING THE FACT THAT THE AMOUNT WAS IN DISPUTE WITH THE SA ID COMPANY AND INCOME HAS ACCRUED IN A.Y. 2010-11 AND THUS JUS TIFIED THE CONFIRMATION OF ADDITION. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE MATERIAL ON RECORD. THE UNDISPUTED FACTS ARE THAT THE ASSESSEE HAS RENDERED HIS SERVICES TO M/S. PETRON EN GINEERING CONSTRUCTION LTD. DURING F.Y. 2009-10 WHICH WAS DISPU TED BY THE SAID COMPANY AND NO PAYMENT WAS MADE DURING THE YEAR. THE SAID PAYMENT WAS RELEASED BY THE SAID COMPANY I N THE SUBSEQUENT FINANCIAL YEAR 2010-11 AND THE ASSESSEE HAS DULY SHOWN THE SAME IN THE BOOKS OF ACCOUNTS AND PAID TH E DUE TAXES THEREON. AT THE TIME OF FILING THE RETURN THE SAID ENTRY WAS ALSO NOT APPEARING IN FORM 26AS WHICH WAS UPLOA DED BY THE SAID COMPANY IN THE SUBSEQUENT YEAR. TAKING INT O ACCOUNT THE TOTALITY OF FACTS AND CIRCUMSTANCES, WE ARE OF T HE VIEW THAT WHEN THE ASSESSEE HAS PAID THE TAXES AND RETURNED T HE INCOME IN THE A.Y. 2011-12 THE SAME SHOULD NOT BE AD DED IN ITA NOS.5679 & 5680/M/2016 SHRI RAVIRAJ LAXMAN RELEMPAADU 5 A.Y. 2011-12 FOR THE TECHNICAL REASONS THAT ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. IN THIS CASE THERE WAS NO EVASION OF TAX ON THE SAID INCOME. TAKING IN TO ACCOUNT THE ALL THE FACTS , WE ARE ACCEPTING THE CONTENTION OF THE ASSESSEE WITHOUT GOING INTO THE ALTERNATIVE PLEA RA ISED BY THE ASSESSEE THAT IF THE ADDITION IS CONFIRMED IN THE I NSTANT YEAR THE SAME SHOULD BE DIRECTED TO BE EXCLUDED FROM ASS ESSMENT YEAR 2011-12 TO AVOID DOUBLE TAXATION . ACCORDINGLY DIRECT THE AO TO DELETE THE ADDITION MADE OF RS.60,60,799/-. 10. THE ISSUE RAISED IN 2 ND GROUND OF APPEAL IS AGAINST THE DISALLOWANCE OF INTEREST EXPENDITURE OF RS.6,22,541/ - BY LD. CIT(A) AS MADE BY THE AO UNDER SECTION 40(A)(IA) ON ACCOUNT OF NON DEDUCTION OF TDS. 11. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THE PAYEES HAVE ALREADY FILED THE RETURNS OF INCOME AND DULY DISCLOSED THE SAID INTEREST INCOME IN THEIR RESPECT IVE RETURNS OF INCOME AND THEREFORE, THE ISSUE IS COVERED IN FAVOU R OF THE ASSESSEE BY 2 ND PROVISO TO SECTION 40(A)(IA) OF THE ACT WHICH PROVIDES THAT IF THE PAYEE HAS INCLUDED THE AMOUNT OF INCOME PAID BY THE ASSESSEE WITHOUT DEDUCTION OF TAX AT SO URCE AND DUE TAXES ARE PAID AS PER APPLICABLE LAW THEN THE A SSESSEE CANNOT BE TREATED AS ASSESSEE IN DEFAULT IN RESPECT OF THAT PAYMENT. THE LD. A.R. REQUESTED THAT THE ISSUE BE RE STORED TO THE FILE OF AO FOR VERIFICATION AND ALLOWING THE CL AIM OF THE ASSESSEE AS PER FACTS AND LAW. 12. THE LD. D.R. FAIRLY AGREED TO THE PRAYER OF THE A SSESSEE. ITA NOS.5679 & 5680/M/2016 SHRI RAVIRAJ LAXMAN RELEMPAADU 6 13. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL RECORD. IN THIS CASE THE A SSESSEE HAS PAID A SUM OF RS.6,22,541/- TO SIX FINANCE COMPANI ES AS HAS BEEN DETAILED IN PARA 5.1 OF THE ASSESSMENT ORD ER. WE FIND MERIT IN THE CONTENTIONS OF THE ASSESSEE THAT IF THE PAYEES COMPANIES HAVE RETURNED THE SAID AMOUNT OF INTEREST IN THEIR RESPECTIVE RETURNS OF INCOME AND PAID THE TAXES THEREON THEN NO DISALLOWANCE UNDER SECTION 40(A)(IA ) IS CALLED FOR AS THE ASSESSEE CANNOT BE TREATED IN DEFAULT I N TERMS OF 2 ND PROVISO TO SECTION 40(A)(IA) OF THE ACT. ACCORDIN GLY, WE RESTORE THIS ISSUE BACK TO THE FILE OF AO WITH A DI RECTION TO VERIFY WHETHER THE PAYEES COMPANIES HAVE RETURNED THE INTERESTS IN THEIR RESPECTIVE RETURNS OF INCOME, IF SO, THE OF THE ADDITION OF RS.6,22,541/- WILL NOT SURVIVE AND HAS T O BE DELETED. THE AO IS DIRECTED AS STATED HEREINABOVE. 14. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO.5680/M/2016 (FOR A.Y. 2011-12) 15. THE ONLY ISSUE RAISED IN GROUND NO.1 IS AGAINST THE DISALLOWANCE OF INTEREST EXPENDITURE OF RS.20,76,807 /- UNDER SECTION 40(A)(IA) OF THE ACT ON ACCOUNT OF NON DEDU CTION OF TAX AT SOURCE. 16. WE HAVE ALREADY DECIDED IDENTICAL ISSUE IN ITA NO.5679/M/2016 (SUPRA) AND THEREFORE OUR FINDINGS I N THE SAID APPEAL, MUTATIS MUTANDIS, WOULD APPLY TO THIS APPEAL AS WELL. ITA NOS.5679 & 5680/M/2016 SHRI RAVIRAJ LAXMAN RELEMPAADU 7 ACCORDINGLY, THE ISSUE IS RESTORED TO THE FILE OF A O AND AO IS DIRECTED TO ALLOW THE SAME, IF THE PAYEE HAS OFFERE D THE SAID INTEREST AMOUNT IN THEIR RESPECTIVE RETURNS. 17. IN THE RESULT, ASSESSEES APPEALS I.E. ITA NO.5679/M/2016 FOR A.Y. 2010-11 IS PARTLY ALLOWED FO R STATISTICAL PURPOSE AND ITA NO.5680/M/2016 FOR A.Y.20 11-12 IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 27.04.2018. SD/- SD/- (SAKTIJIT DEY) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 27.04.2018. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.