M/s A R Industries Pvt. Ltd., Faridabad V. ACIT, Faridabad

ITA 571/DEL/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53314 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 25-11-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 05-02-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: MRS GEETMALA MOHNANY
• Keywords: Retrospective amendment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI A BENC H BEFORE SHRI I.P. BANSAL, JM & SHRI A.N. PAHUJA, AM ITA NO.571/DEL/2010 ASSESSMENT YEAR:2006-07 V/S . [PAN NO.: AABACA5358D] (APPELLANT) (RESPONDENT) ASSESSEE BY REVENUE BY MRS. GEETMALA MOHNANY, DR DATE OF HEARING 25-11-2011 DATE OF PRONOUNCEMENT 09-12-2011 O R D E R A.N.PAHUJA:- THIS APPEAL FILED ON 5 TH FEBRUARY, 2010 BY THE 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORD ER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)[CIT(A) ] IS BAD BOTH IN THE EYE OF LAW AND ON FACTS. 2(I)ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE DISALLOW ANCE OF AN AMOUNT OF ` 3,01,69,941/- ON ACCOUNT OF DELAY IN DEPOSIT OF TDS ON PAYMENTS MADE TO CONTRACTORS, INTEREST, PROFESSIONAL CHARGES AND COMMISSION UNDER SECTION 40(A)(IA). (II)THAT THE ABOVE SAID DISALLOWANCE HAS MADE DESPI TE THE FACT THAT THE TAX DEDUCTED ON THESE PAYMENTS WAS DEPOSITED BEFORE TH E FILING OF THE INCOME TAX RETURN. 3.. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER ANY OF THE GROUNDS OF APPEAL. 2. ADVERTING NOW TO GROUND NOS. 2 & 3 IN THE APPEAL , FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT E-RETURN DECLARING INCOME OF ` ` 33,23,640/- FILED ON 30 TH NOVEMBER, 2006 BY THE ASSESSEE, MANUFACTURING AND S ELLING ALUMINUM AUTOMOBILE ITA NO. 571/DEL/10 2 CASTINGS, WAS SELECTED FOR SCRUTINY WITH THE SERVIC E OF NOTICE U/S 143(2) OF THE INCOME TAX ACT 1961 (HEREINAFTER REFERRED TO AS THE ACT), ISSUED ON 23 RD NOVEMBER, 2007. DURING THE COURSE OF ASSESSMENT PROCEEDINSG, THE AS SESSING OFFICER (AO IN SHORT) NOTICED THAT THE ASSESSEE DEDUCTED TAX AT SOURCE FR OM FOLLOWING PAYMENTS BUT CREDITED THE SAME TO THE GOVT ACCOUNT BELATEDLY:- A. PAYMENT OF CONTRACTOR DATE OF DEDUCTION AMOUNT PAID/CREDITED TDS AMOUNT DATE OF DEPOSI T 30.04.2005 2370767 51933 29.06.2006 31.05.2005 2722567 60777 30.06.2006 30.06.2005 2899036 62198 01.07.2 006 31.07.2005 2652323 58318 13.07.2 006 31.08.2005 2142711 46417 14.07.20 06 30.09.2005 2452826 54509 15.07.20 06 31.10.2005 3302508 73464 17.07.2006 30.11.2005 2370499 51189 18.07.2006 31.12.2005 2950148 64825 19.07.2006 31.01.2006 2640020 58811 24.07.2006 28.02.2006 2195156 49098 25.07.2006 TOTAL 28698561 631539 B. PAYMENT OF INTEREST DATE OF DEDUCTION AMOUNT PAID/CREDITED TDS AMO UNT DATE OF DEPOSIT 30.09.2005 43567 9776 08.07.2006 31.10.2005 233127 52314 21.07.2006 TOTAL 276694 62090 ITA NO. 571/DEL/10 3 C. PAYMENT OF PROFESSIONAL CHARGES DATE OF DEDUCTION AMOUNT PAID/CREDITED TDS AMO UNT DATE OF DEPOSI T 31.10.2005 146500 7461 23 .05.2006 30.11.2005 157500 8258 23.05.2006 31.12.2005 146500 7461 23.05.2006 31.01.2006 138500 7192 23.05.2006 28.02.2006 138500 7192 23.05.2006 TOTAL 727500 37564 B. PAYMENT OF COMMISSION DATE OF DEDUCTION AMOUNT PAID/CREDITED TDS AMO UNT DATE OF DEPOSIT 31.10.2005 95384 5351 29.05.2006 30.11.2005 96086 5390 29.05.2006 31.12.2005 87680 4919 29.05.2006 31.01.2006 95166 5339 29.05.2006 28.02.2006 92870 5210 29.05.2006 TOTAL 467186 26209 GRAND TOTAL `. ` ` ` ` 3,01,69,941/- TDS `. ` ` ` ` 7,57,402/- 2.1 SINCE THE TDS WAS NOT DEPOSITED WITHIN THE STIP ULATED TIME, THE AO DISALLOWED THE CLAIM FOR DEDUCTION OF AN AMOUNT OF ` ` 3,01,69,941/- IN TERMS OF PROVISIONS OF SECTION 40A(IA) OF THE ACT. 3. ON APPEAL LD. CIT(A) UPHELD THE DISALLOWANCE IN THE FOLLOWING TERMS :- 1. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE LD. AR AND PERUSED THE ORDER OF ASSESSMENT. FROM THE SUBMISSIONS OF TH E LD. AR, IT IS QUITE EVIDENT THAT THE APPELLANT DID COMMIT THE DEFAULT O F THE TDS PROVISIONS BY EITHER NOT DEDUCTING THE TAX AT SOURCE OR AFTER DED UCTING IT, DEPOSITING LATE INTO GOVERNMENT ACCOUNT. IT IS ALSO NOT THE CASE OF THE APPELLANT THAT ANY SUCH EXPENSES OR PAYMENTS WERE SUBJECTED TO TDS IN THE MONTH OF MARCH OF THE ITA NO. 571/DEL/10 4 FINANCIAL YEAR SO THAT THE AMENDED PROVISIONS OF PR OVISO TO SECTION 40(A)(IA) MAY BE APPLIED AS PER THE FINANCE ACT, 2008 BEING A PPLICABLE RETROSPECTIVELY WITH EFFECT FROM 01.04.2005. AS PER THE LAW AVAILAB LE, THE PROVISIONS OF SECTION 40(A)(IA) CANNOT BE CONSTRUED LIBERALLY BUT ONLY ST RICTLY, GIVEN THE GRAVITY OF THE COLLECTION OF TAXES DEDUCTED AT SOURCE AS ENVISAGED IN THE STATUTORY PROVISIONS OF CHAPTER XVII-B OF THE INCOME TAX ACT, 1961. THER EFORE, THE AOS ACTION IN DISALLOWING THE EXPENSES OF RS. 3,01,69,941/- U/S 4 0(A)(IA) IS UPHELD. 4. THE ASSESSEE IS NOW IN THE APPEAL BEFORE US AGAI NST THE FINDING OF THE LD. CIT(A). AT THE OUTSET, THE LD. AR ON BEHALF OF THE ASSESSEE SUBMITTED THAT ISSUE IS SQUARELY COVERED AGAINST THE ASSESSEE BY THE DECISI ON OF MUMBAI SPECIAL BENCH IN THE CASE OF BHARTI SHIPYARD LTD. VS. DCIT,132 ITD 5 3 AND ACCORDINGLY, THE MATTER MAY BE DECIDED IN THE LIGHT OF SAID DECISION. THE L D. DR, ON THE OTHER HAND, RELIED UPON THE FINDINGS IN THE IMPUGNED ORDER. 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. WE FIND THAT THE MUMBAI SPECIAL BENCH IN THE AFORESAID DECISION DATED 9.9.2011 IN THE CASE OF BHARTI SHIPYARD LTD. VS. DCIT,132 ITD 53 WH ILE ADJUDICATING A SIMILAR ISSUE CONCLUDED THAT THE AMENDMENT TO S. 40(A)(IA) BY THE FINANCE ACT, 2010 WAS MADE APPLICABLE ONLY FROM AY 2010-11 AND NOT EARLIER. IT IS NOWHERE STATED THAT THE AMENDMENT IS CURATIVE OR DECLARATORY IN NATURE NOR IS SUCH AN INTENTION DISCERNIBLE. ORDINARILY, A SUBSTANTIVE PROVISION IS PROSPECTIVE IN OPERATION AND COURTS CANNOT GIVE IT RETROSPECTIVE EFFECT EXCEPT IN LIMITED CI RCUMSTANCES WHERE, SAY, THE AMENDMENT MAKES EXPLICIT WHAT WAS EARLIER IMPLICIT OR WHERE THE AMENDMENT WAS TO REMOVE UNINTENDED CONSEQUENCES IN THE EXISTING PROV ISION AND TO MAKE IT WORKABLE. A PROVISION GIVING RELIEF CANNOT BE REGARDED AS RET ROSPECTIVE ONLY BECAUSE THE ORIGINAL PROVISION CAUSED HARDSHIP TO THE ASSESSEE. S. 40(A)(I) CAUSED INTENDED DIFFICULTY WITH THE OBJECT OF DISCOURAGING NON-COM PLIANCE WITH THE TDS PROVISIONS. A PARTIAL RELAXATION IN ITS RIGOR, INSERTED WITH PROS PECTIVE EFFECT, CANNOT BE TREATED AS RETROSPECTIVE, THE SPECIAL BENCH CONCLUDED.. 5.1 IN THE LIGHT OF THE VIEW TAKEN IN THE AFORESAID DECISION BY THE SPECIAL BENCH AND THE SUBMISSIONS OF THE LD. AR, WE HAVE NO ALTER NATIVE BUT TO UPHOLD THE FINDINGS OF THE LD. CIT(A). THEREFORE, GROUND NOS. 2 & 3 IN THE APPEAL ARE DISMISSED. ITA NO. 571/DEL/10 5 6. GROUND NO. 1 IN THE APPEAL BEING GENERAL IN NATU RE IT DOES NOT REQUIRE ANY SEPARATE ADJUDICATION NOR ANY SUBMISSIONS HAVE BEEN MADE BEFORE US ON THIS GROUND WHILE NO ADDITIONAL GROUND HAS BEEN RAISED B EFORE US IN TERMS OF RESIDUARY GROUND NO. 3 IN THE APPEAL, ACCORDINGLY, THESE TWO GROUNDS ARE ALSO DISMISSED. 7. NO OTHER SUBMISSION OR ARGUMENT WAS MADE BEFOR E US. 8. IN THE RESULT, APPEAL IS DISMISSED. SD/- SD/- (I.P. BANSAL) (A.N. PAHUJA) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER ) VEENA COPY OF THE ORDER FORWARDED TO :- 1. . 3. CIT(A)-FARIDABAD. 4. CIT CONCERNED. 5. DR, ITAT,A BENCH, NEW DELHI 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, DELHI ORDER PRONOUNCED IN OPEN COURT