ACIT, Jaipur V. SJAO;EMDRA GARG, Jaipur

ITA 587/JPR/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2098 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Next Hearing Date: 28-06-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 01-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Keywords: Non-deduction of tax
• Section: 43B; 143(3)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH HKKXPUN] YS[KK LNL; ,OA JH DQY HKKJR] U;KF;D LNL; DS LE{K BEFORE: SHRI BHAGCHAND, AM AND SHRI KUL BHARAT, JM VK;DJ VIHY LA-@ ITA NO. 587/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2011-12. THE ACIT, CIRCLE-6, JAIPUR. CUKE VS. SHRI SHAILENDRA GARG, C/O M/S. GARMENT CRAFT INDIA (P) LTD., F-47, MALVIYA IND. AREA, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. ACQPG 4440 E VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI R.A. VERMA (ADDL. CIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : NONE (DEPARTMENTAL A/D ON RECORD) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 14.08.2017. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 18/08/2017. VKNS'K@ ORDER PER SHRI KUL BHARAT, JM : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LD. CIT (A)-2, JAIPUR DATED 22.03.2016 PERTAINING TO ASSESSMEN T YEAR 2011-12. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS :- (I) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE CIT (APPEALS) HAS ERRED IN DELETING THE DISALLOWANCE OF RS. 66,37,834/- U/S 40(A)(IA) FOR NON-DEDUCTION OF TAX AT SOURCE, HOLDING THE SAME NOT TO BE COVERED U/S 194H OF THE I.T. ACT. (II)(A) WHETHER ON THE FACTS AND IN THE CIRCUMSTANC ES OF THE CASE AND IN LAW, THE LD. CIT (APPEALS) HAS ERRED IN DELETING ADDITION OF RS. 1,79,838/- MADE FOR DEPOSITING THE EMPLOYEES CONTR IBUTION TO EPF & ESI BEYOND THE PRESCRIBED TIME LIMIT PROVIDED IN THE RESPECTIVE ACTS. (B) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD. CIT (APPEALS) HAS ERRED IN HOLDING THAT EMPLOYEES CONTRIBUTION TO EPF & ESI ARE GOVERNED B Y THE 2 ITA NO. 587/JP/2016 SHRI SHAILENDRA GARG, JAIPUR. PROVISION OF SECTION 43B AND NOT BY SECTION 36(1)(V A) R.W.S. 2(24)(X) OF I.T. ACT. (III) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS. 7,24,527/- ON ACCOUNT OF INTEREST EXPENSES PAID TO HDFC BANK LOAN AGAINST PROPERTY. (IV) THE APPELLANT CRAVES ITS RIGHTS TO ADD, AMEND OR ALTER ANY OF THE GROUNDS ON OR BEFORE THE HEARING. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMEN T UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS TH E ACT) WAS FRAMED VIDE ORDER DATED 10 TH MARCH, 2014. WHILE FRAMING THE ASSESSMENT, THE A O MADE ADDITIONS IN RESPECT OF DISALLOWANCE ON ACCOUNT OF NON DEDUCTION OF TAX UNDER SECTION 194H BY INVOKING PROVISIONS OF SECTION 40(A)(IA) OF THE ACT OF RS. 66,37,834/-, DELAYED PAYMENT OF PF AND ESI OF RS. 1,79,838/-, UNRECOGNIZ ED LIABILITY LYING IN THE SHAPE OF SUSPENSE AMOUNT RS. 10,02,378/-, INTEREST ON LOAN A GAINST PROPERTY OF RS. 7,24,527/-, BUSINESS PROMOTION EXPENSES OF RS. 1,03 ,750/-, DISALLOWANCE ON ACCOUNT OF SALES TAX AND INCOME TAX PAYMENT OF RS. 3,113/- AND DISALLOWANCE OF TELEPHONE EXPENSES OF RS. 33,159/-. BEING AGGRIEVED, THE ASS ESSEE PREFERRED AN APPEAL BEFORE LD. CIT (A), WHO AFTER CONSIDERING THE SUBMISSIONS PARTLY ALLOWED THE APPEAL. WHILE PARTLY ALLOWING THE APPEAL, THE LD. CIT (A) DELETED THE ADDITION MADE ON ACCOUNT OF NON-DEDUCTION OF TAX BY INVOKING PROVISIONS OF SECT ION 40(A)(IA) OF RS. 66,37,834/- AND DELETED THE ADDITION MADE ON ACCOUNT OF DELAYED PAYMENT OF PF & ESI CONTRIBUTION. HE, HOWEVER, CONFIRMED THE ADDITIONS MADE ON ACCOUNT OF DISALLOWANCE OF TELEPHONE EXPENSES AND BUSINESS PROMOTION EXPENS ES. FURTHER, THE LD. CIT (A) 3 ITA NO. 587/JP/2016 SHRI SHAILENDRA GARG, JAIPUR. DELETED THE ADDITION MADE ON ACCOUNT OF INTEREST EX PENSES OF RS. 7,24,527/- AND CONFIRMED THE ADDITION MADE ON ACCOUNT OF MONEY LYI NG ON SUSPENSE ACCOUNT OF RS. 10,02,378/-. 3. NOW THE REVENUE IS IN APPEAL BEFORE US. 4. NO ONE APPEARED ON BEHALF OF THE ASSESSEE. ON T HE LAST DATE OF HEARING ON 28.06.2017 DIRECTIONS WERE GIVEN TO ISSUE THE NOTIC E OF HEARING TO THE ASSESSEE THROUGH D/R OFFICE. IN TOKEN OF HAVING SERVED THE N OTICE OF HEARING ON THE ASSESSEE, THE D/R OFFICE HAS PLACED THE DEPARTMENTAL A/D ON R ECORD. THEREFORE, THE APPEAL WAS TAKEN UP FOR HEARING IN THE ABSENCE OF THE ASSE SSEE. 5. GROUND NO. (I) IS AGAINST DELETING DISALLOWANCE OF RS. 66,37,834/- ON ACCOUNT OF NON-DEDUCTION OF TAX AT SOURCE. 5.1. THE LD. D/R VEHEMENTLY SUPPORTED THE ORDER OF THE A.O. AND SUBMITTED THAT THE LD. CIT (A) WAS NOT JUSTIFIED IN DELETING THE A DDITION. 5.2. WE HAVE HEARD THE LD. D/R, PERUSED THE MATERIA L AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES. THE LD. CIT (A) WHILE DELETING THE ADDITION HAS OBSERVED AS UNDER :- 3.3. I HAVE PERUSED THE FACTS OF THE CASE, THE AS SESSMENT ORDER AND THE SUBMISSIONS OF THE APPELLANT. IT HAS BEEN STATE D BY THE APPELLANT THAT THIS ISSUE IS COVERED IN HIS FAVOUR BY THE ORD ER OF THE CIT (A)-II, JAIPUR IN THE CASE OF THE (LATE) FATHER OF THE APPE LLANT SHRI BHIM SAIN GARG IN A.Y. 2007-08 AND 2008-09 AND ALSO IN THE CA SE OF THE APPELLANT IN A.Y. 2009-10 (APPEAL NO. 523-11-12, DATED 07.12. 2012). IN THESE APPEAL ORDERS, THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE APPELLANT BY RELYING UPON THE DECISION OF THE ITAT, CUTTACK BENC H IN THE CASE OF ACIT VS. SAMAJ (2001) 77 ITD 358 WHEREIN THE ITAT H ELD THAT THIS 4 ITA NO. 587/JP/2016 SHRI SHAILENDRA GARG, JAIPUR. PAYMENT TO ADVERTISEMENT AGENCIES WAS NOT COVERED U NDER SECTION 194H OF THE I.T. ACT, 1961 SINCE THIS TRANSACTION B ETWEEN THE ASSESSEE AND THE AGENCIES WAS ENTERED INTO ON A PRINCIPAL TO PRINCIPAL BASIS. RESPECTFULLY FOLLOWING THE ABOVE ORDERS, THE ADDITI ON MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE I.T. ACT, 1961 IS NOT SUSTAINED AS THE DISCOUNT GIVEN TO THE ADVERTISING AGENCIES IS NOT COMMISSION OR BROKERAG E WITHIN THE MEANING OF SECTION 194H. GROUND NO. 2 IS ALLOWED. IN VIEW OF THE ABOVE OBSERVATIONS OF LD. CIT (A) AN D FOLLOWING THE COORDINATE BENCH DECISION OF THE TRIBUNAL, SUPRA, WE FIND NO INFIRMI TY IN THE ORDER OF LD. CIT (A), WHICH IS HEREBY AFFIRMED. THE GROUND OF THE DEPARTMENT IS REJECTED. 6. GROUND NO. (II)(A) & (B) RELATE TO DELETION OF A DDITION OF RS. 1,79,838/- ON ACCOUNT OF DELAYED PAYMENT OF EPF AND ESI. 6.1. THE LD. D/R SUPPORTED THE ORDER OF THE A.O. 6.2. WE HAVE HEARD LD. D/R AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ISSUE IS WELL SETTLED BY THE VARIOUS JUDIC IAL PRECEDENTS INCLUDING THE JUDGMENT OF HONBLE RAJASTHAN HIGH COURT IN THE CAS E OF CIT VS. SBBJ (2014) 265 CTR 471 (RAJ.), JAIPUR VIDHYUT VITHRAN NIGAM LTD., 265 CTR 62 (RAJ.), ACIT VS. OM METALS & MINERALS PVT. LTD. XLII TAX WORLD 51 (JP) IN FAVOUR OF THE ASSESSEE. THEREFORE, CONSIDERING THAT THE EMPLOYEES CONTRIBU TION OF EPF AND ESI HAS BEEN DEPOSITED BEFORE DUE DATE OF FILING OF THE RETURN, THE ASSESSEE IS ENTITLED FOR DEDUCTION. THUS THE ADDITION IS DELETED. THE GROUN DS OF THE DEPARTMENT ARE REJECTED. 7. GROUND NO. (III) RELATES TO DELETION OF ADDITION OF RS. 7,24,527/- ON ACCOUNT OF INTEREST EXPENSES PAID TO HDFC BANK LOAN AGAINST PR OPERTY. 5 ITA NO. 587/JP/2016 SHRI SHAILENDRA GARG, JAIPUR. 7.1. THE LD. D/R SUPPORTED THE ORDER OF THE A.O. 7.2. WE HAVE HEARD LD. D/R, PERUSED THE MATERIAL AV AILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE L D. CIT (A) HAS DELETED THE ADDITION BY OBSERVING AS UNDER :- 6.3. I HAVE PERUSED THE FACTS OF THE CASE, THE A SSESSMENT ORDER AND THE SUBMISSIONS OF THE APPELLANT. AN AMOUNT OF RS. 7,63,334/- WAS FOUND DEBITED UNDER THE HEAD INTEREST TO OTHERS A ND INCLUDED AN AMOUNT OF RS. 7,24,527/- PAID TO HDFC BANK BEING TH E AMOUNT OF INTEREST ON LOAN AGAINST PROPERTY. AS NOTED BY THE ASSESSING OFFICER, THE ASSESSEE WAS REQUIRED TO FURNISH THE DETAILS OF LOAN ALONGWITH THE PURPOSE AND UTILIZATION OF SUCH LOAN. HOWEVER, NO D ETAILS WERE PRODUCED BEFORE THE ASSESSING OFFICER AND THIS FACT HAS BEEN ADMITTED IN APPELLATE PROCEEDINGS ALSO THAT THE DETAILS WERE NOT SUBMITTED BEFORE THE ASSESSING OFFICER DUE TO OVERSIGHT. HOWE VER, IN THE PRESENT PROCEEDINGS ALSO NO DETAILS HAVE BEEN SUBMITTED. TH E AUTHORIZED REPRESENTATIVE HAS PLEADED THAT SINCE THE ASSESSEE IS BEHIND BARS DUE TO SOME LEGAL CASES, HE IS UNABLE TO PRODUCE ANY FU RTHER DETAILS. THE ASSESSING OFFICER HAD OPINED THAT THE ASSESSEE IS L IABLE TO PROVE THAT THE EXPENSES (INTEREST ON LOAN) WERE INCURRED WHOLL Y AND EXCLUSIVELY FOR THE PURPOSE OF THE BUSINESS, AND IN THE ABSENCE OF THE SAME, HAS DISALLOWED THIS EXPENDITURE. THE AUTHORIZED REPRESE NTATIVE HAS SUBMITTED THAT THE BOOKS OF ACCOUNT WERE PRODUCED D URING THE ASSESSMENT PROCEEDINGS AND THE LOAN IS STILL OUTSTA NDING TO AN EXTENT OF RS. 1,93,54,731/- AND APPEARING IN SCHEDULE 2 OF THE AUDITED BALANCE SHEET OF M/S. GARMENT CRAFTS. WHILE IT IS T RUE THAT THE DETAILS OF THIS LOAN WERE NOT SUBMITTED DURING ASSESSMENT P ROCEEDINGS BUT THE SAME IS APPEARING IN THE BOOKS OF ACCOUNTS WHICH WE RE PRODUCED AN EXAMINED BY THE ASSESSING OFFICER. THE ASSESSING OF FICER HAS NOT BROUGHT OUT ANY REASON AS TO HOW HE HAS CONCLUDED T HAT THE LOAN WAS 6 ITA NO. 587/JP/2016 SHRI SHAILENDRA GARG, JAIPUR. NOT USED FOR THE PURPOSE OF BUSINESS. SINCE, THE LO AN AS WELL AS THE INTEREST AMOUNT IS APPEARING IN THE AUDITED BOOKS O F ACCOUNT, THERE IS NOTHING ON RECORD TO SHOW THAT THE AMOUNTS WERE UTI LIZED FOR OTHER THAN BUSINESS PURPOSES, THE DISALLOWANCE MADE BY TH E ASSESSING OFFICER IS DELETED. THIS GROUND OF APPEAL IS ALLOWE D. THE LD. D/R HAS NOT BROUGHT ON RECORD ANY CONTRARY MATERIAL TO CONTROVERT THE ABOVE FINDINGS OF THE LD. CIT (A). THEREFORE, CONSIDERING THE ABOVE OBSERVATIONS, WE FIND NO REASON TO INTERFERE IN THE ORDER OF LD. CIT (A), WHICH IS HEREBY AFFIRMED. THE GROUND OF THE REVENUE IS REJECTED. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER IS PRONOUNCED IN THE OPEN COURT ON 18.08.2 017. SD/- SD/- ( HKKXPUN ( DQY HKKJR ) ( BHAGCHAND) ( KUL BHARAT ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 18/08/2017. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- THE ACIT, CIRCLE-6, JAIPUR. 2. THE RESPONDENT SHRI SHAILENDRA GARG, JAIPUR. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 587/JP/2016) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 7 ITA NO. 587/JP/2016 SHRI SHAILENDRA GARG, JAIPUR.