Atma Ram Auto Enterprises, Agra V. ACIT(TDS), Agra

ITA 6/AGR/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0791 (ITAT-AGRA)
• Duration Of Justice: 3 year(s) 4 month(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 15-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reasonable cause; Condonation of delay; Ignorance of law; TDS
• Section: 194C; 12; 11

Judgement Text

IN THE INCOME - TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI A.D. JAIN, JUDICIAL MEMBER AND SHRI D R . MITHA LAL MEENA, ACCOUNTANT MEMBER ITA NO. 06 & 0 7 /AGRA/2016 ASSESSMENT YEAR S : 20 11 - 12 & 20 12 - 13 ATMA RAM AUTO ENTERPRISES, 37/1, BYE PASS ROAD, AGRA (APPELLANT) VS. ACIT (TDS) AGRA (RESPONDENT) APPELLANT BY SHRI SAHEB P. SATSANGI, CA RESPONDENT BY SHRI WASEEM ARSHAD, SR. DR ORDER PER BENCH : 1 . THE SE APPEAL S , BY ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX, (APPEALS) - I , AGRA , [ HEREIN AFTER REFERRED TO AS THE CIT(A)], DATED 14 . 0 8.2015 IN RESPECT OF A SSESSMENT Y EAR S 20 11 - 12 AND 20 12 - 13 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. BECAUSE THE LEARNED CIT(A) - 1, AGRA HAS ERRED BOTH ON FACTS AND IN LAW IN REJECTING THE PRAYER FOR CONDONATION OF DELAY IN FILING THE APPEAL AND THEREBY DISMISSING THE DATE OF HEARING 12 .0 9 .2017 DATE OF PRONOUNCEMENT 26 . 09.2017 ITA 06 & 0 7 /AGRA/2016 2 APPEAL OF THE ASSESSEE. THE APPEAL BE DIRECTED TO BE ADMITTED. 2. BECAUSE THE LEARNED CIT(A) - 1, AGRA HAS ERRED BOTH ON FACTS AND IN LAW IN NOT APPRECIATING THE REASON THAT THE DELAY IN FILING THE APPEAL BY 5 MONTHS WAS NOT ATTRIBUTABLE TO THE ASSESSEE AS IT WAS ONLY ON ACCOUNT OF THE RECEIPT OF THE SHOW CAUSE NOTICE AND THE LIKEHOOD OF IMPOSITION OF PENALTY UNDER SECTION 271, THE APPEAL WAS FILED. 2 . THE BRIEF FACTS OF THE CASE ARE THAT A SSESSEE IS ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF HERO HONDA MOTORCYCLES, MAHINDRA VEHICLES AND SPARE PARTS. DURING THE COURSE OF SURVEY CONDUCTED, IT WAS NOTICED THAT THE ASSESSEE HAS DEBITED PAYMENTS OF COMMISSION MADE TO VARIOUS PERSONS WITHOUT DEDUCTING TAX AT SOURCE AS ENVISAGED UNDER SECTION 194H OF THE INCOME TAX ACT. FOR THESE PAYMENTS, IT W AS CONTENDED BEFORE THE AO THAT THESE PAYMENTS ARE IN THE NATURE OF CONTRACTUAL PAYMENTS MADE TO SMALL BROKERS, MECHANICS, STAFF ETC FOR ADVERTISEMENT AND BRINGING THE CUSTOMERS TO THE SHOWROOM, BUT IT WAS NOTICED BY THE AO THAT ASSESSEE HIMSELF HAS DEBITE D THESE PAYMENTS UNDER THE HEAD COMMISSION. ASSESSEE ALSO TOOK A STAND THAT NATURE OF PAYMENTS MADE TO THE PERSONS ON SALE OF TWO/FOUR WHEELERS FELL UNDER SECTION 194C AND THE PAYMENTS MADE ON SALE OF SPARE PARTS HAVE BEEN PAID TO THE STAFF OF THE ITA 06 & 0 7 /AGRA/2016 3 ASSESSEE WHICH FORMS THE PART AND PARCEL OF SALARIES OF THOSE EMPLOYEES AND HENCE, THE ASSESSEE WAS NOT UNDER THE OBLIGATION TO DEDUCT TAX U/S 194C / 194H ON THESE PAYMENTS. HOWEVER, IT WAS SEEN THAT NEITHER THE PROVISION FOR ANY SUCH PAYMENT WAS MENTIONED IN THE EMPLOYMENT AGREEMENT OF THESE EMPLOYEES NOR SUCH PAYMENTS WERE DEBITED UNDER THE HEAD SALARY. INTERESTINGLY ASSESSEE HAS HIMSELF SHOWN THEM AS COMMISSION AND DEDUCTED TDS ON SOME OF SUCH PAYMENTS TREATING THE SAME AS COMMISSION PAID IN HIS BOOKS OF ACCOUNT S. 3 . LD. CIT(A) HAS CONFIRMED THE APPEAL INTERALIA OBSERVING AS UNDER: IT IS HELD IN THE CASE OF SURENDRA BOVEJA VS CWT (2006) 287 ITR 52 (DELHI HIGH COURT) THAT WANT OF DUE CARE, IGNORANCE OF LAW OR FAILURE TO SEEK LEGAL ADVICE ARE NOT SUFFICIENT GROUNDS FOR CONDONATION OF DELAY. SIMILAR VIEW HAS BEEN TAKEN BY THE HON'BLE MADRAS HIGH COURT IN MADHU DADHA VS ACIT (2009) 317 ITR 458 (MADRAS). A THIRD MEMBER DECISION OF THE TRIBUNAL IN JCIT VS TFE LTD. (2007) 104 ITD 149 (CHENNAI) (TM) ALSO SUPPORTS T HE SAME VIEW. HON'BLE ITAT, DELHI BENCH A, IN THE CASE OF DCIT VS BRIJWASI IMPEX PVT LTD, ITA NO. 361/DEL/2011 DATED 30.09.2014 ALSO CONFIRMS THE VIEW THAT ADVISE OF THE COUNSEL CANNOT BE A DECIDING FACTOR FOR TREATING THE SAME AS REASONABLE CAUSE FOR ALLO WING CONDONATION OF DELAY IN FILING APPEAL. ITA 06 & 0 7 /AGRA/2016 4 ADVERTING TO THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE THAT THE COUNSEL OF THE ASSESSEE DID PROPERLY GUIDE THE ASSESSEE, DOES NOT SEEM TO BE A REASONABLE CAUSE FOR DELAY IN FILING THE APPEAL. THE THEORY OF MISTAKE OF COUNSEL PROPOUNDED BY THE ASSESSEE IS ABSOLUTELY WITHOUT ANY FOUNDATION, WHEN HE IS STILL CONTINUING WITH THE SAME COUNSEL FOR FILING THIS APPEAL. AS REGARDS IMPOSITION OF PENALTY, WHEN INITIATION OF PENALTY WAS PART OF ASSESSMENT ORDER, ASSESSE E'S CONFIDENCE THAT PENALTY WOULD NOT BE LEVIED AND THAT BEING THE CAUSE FOR LATE FILING OF APPEAL IS NEITHER UNDERSTANDABLE NOR REASONABLE. THERE IS NO VALUE OF ANY ORAL ASSURANCE BY AO FOR NOT FOLLOWING THE COURSE OF LAW, AND IN ANY CASE AO HAS INITIATED PENALTY IN THIS CASE. THE ASSERTION SO MADE IN THE APPLICATION FOR CONDONATION OF DELAY IS A MERE SELF SAVING STATEMENT. IN VIEW OF FOREGOING DISCUSSION, I AM OF THE CONSIDERED OPINION THAT THERE IS NO SUBSTANCE IN THE PLEA FOR CONDONATION OF DELAY WHICH IS TO THE EXTENT OF 5 MONTHS. ACCORDINGLY, THE APPLICATION FILED BY THE ASSESSEE FOR CONDONATION OF DELAY IN FILING THIS APPEAL IS HEREBY DISMISSED. 6. IN THE RESULT, APPEALS OF THE ASSESSEE FOR BOTH THE ASSESSMENT YEARS ARE DISMISSED. 4 . LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF HERO HONDA MOTORCYCLES, MAHINDRA VEHICLES AND SPARE PARTS. DURING THE COURSE OF SURVEY / SPOT VERIFICATION UNDER SECTION 133A(1) ON 22.11.2012, IT WAS NOTICED THAT THE ASSESSEE HAS DEBITED PAYMENTS MADE TO VARIOUS PERSONS / ENTITIES UNDER THE HEAD COMMISSION. IT WAS EXPLAINED THAT THE ASSESSEE WAS UNDER A BONA - FIDE BELIEF THAT THERE ITA 06 & 0 7 /AGRA/2016 5 WAS NO OBLIGATION TO DEDUCT TAX TO SUCH PERSONS AS THESE PAYMENT WERE IN THE FORM OF CONTRACTUAL PAYMENTS MADE TO SMALL BROKERS, DRIVERS, MECHANICS ETC. FOR ADVERTISEMENTS, BRINGING CUSTOMERS TO THE SHOWROOM AND SUCH TYPE OF CUSTOMARY PAYMENTS ARE WITHIN THE TRADE PRACTICE IN THE NATURE OF BUSINESS CARRIED ON BY THE ASSESSEE. SUCH ACTIVITY HAS BEEN UNDERTAKEN TO PROMOTE THE SALES OF THE VARIOUS PRODUCTS IN WHICH THE ASSESSEE DEALS AND BY ADOPTING SUCH SALES PROMOTION SCHEME, THE ASSESSEE WAS ABLE TO BOOST HIS SALES AND KEEP PACE WITH THE GROWING COMPETITION IN THE MARKET. DURING THE COURSE OF THE PROCEEDINGS, IT WAS EXPLAINED THAT THESE PAYMENTS VARIED FROM RS. 2,000 TO RS. 2,500 PER PERSON IN CASE OF FOUR WHEELERS AND RS. 200 TO RS. 500 PER PERSON IN CASE OF SALE OF TWO WHEELERS AND IT WAS ALSO SUBMITTED THAT EVEN THOUGH THE AMOUNT HAS BEEN DEBITED AND CLAIMED UNDER THE HEAD COMMISSION EXPENSES BUT THE BOOK ENTRIES CANNOT BE THE BASIS OF THE TRANSACTION. FURTHER, PAYMENTS MADE ON SALE OF SPARE PARTS WERE IN RESPECT OF PAYMENT TO STAFF AND THE SAME FORMS PART OF THE SALARIES TO EMPLOYEES. LD. COUNSEL FOR THE ASSESSEE ALSO CONTENDED THAT ASSESSEE FIRM HAS ALWAYS BEEN COMPLIANCE TO THE PROVISIONS OF LAW AND THE DELAY IN FILING THE APPEAL BEFORE LD. CIT(A) WAS NOT DELIBERATE IN NATURE OR ITA 06 & 0 7 /AGRA/2016 6 GROSS NEGLIGENCE. THEREFORE, THE DELAY IN FILING THE APPEAL MAY BE CONDONED. 5 . THE LD. DR, ON THE OTHER HAND RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 6 . WE HAVE H EARD BOTH THE SIDES AND PERUSED THE RELEVANT MATERIAL ON RECORD . I T IS PERTINENT TO MENTION THAT THE ASSESSEES APPEALS ARE DELAYED BY 150 DAYS BEFORE THE CIT(A). THE ASSESSEE HAS FILED AN APPLICATION FOR CONDONATION OF DELAY ALONG WITH AN AFFIDAVIT STATING THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF HONDA TWO WHEELERS, MAHINDRA FOUR WHEELERS AND SPARE PARTS HAVE ENGAGED SERVICE OF SMALL BROKERS, MECHANICS AND STAFF. DURING THE COURSE OF THE PROCEEDINGS BEFORE ACIT(TDS) AGRA FOR THE FINAN CIAL YEAR 2010 - 11 AND 2011 - 12, WE WERE APPRAISED THAT THE DEPARTMENT PROPOSED TO CONSIDER SUCH PAYMENTS FALLING UNDER SECTION 194H OF THE ACT. IT WAS ALSO ASSURED BY THE DEPARTMENT THAT AFTER DEPOSIT OF THE TAX LIABILITY FOR BOTH THE YEARS, NO PENALTY WILL BE LEVIED AS THE DEPOSIT HAS BEEN MADE PRIOR TO THE ORDER PASSED U/S 201(1)/201(1A) OF THE ACT. THERE WAS SUFFICIENT - CAUSE FOR THE INORDINATE DELAY IN FILING THE APPEAL S WHICH HAS NOT BEEN APPRECIATED BY THE LEARNED CIT ( A ) AND THE APPEAL S HA VE BEEN ITA 06 & 0 7 /AGRA/2016 7 DISMI SSED IN LIMINE. THE COUNSEL WAS CONTACTED IMMEDIATELY BUT BY THAT TIME, THE LIMITATION OF FILING OF APPEAL EXPIRED. THE DELAY IN FILING THE APPEAL S WAS NOT WITH ANY MALAFIDE INTENTIONS . NO OBJECTION WAS TAKEN BY THE LD. DR TO CONDONE THE DELAY. 7 . IN VIEW OF ABOVE FACTS AND CIRCUMSTANCES, W E ARE OF THE OPINION THAT CAUSE SHOWN IN THE AFFIDAVIT IS SUFFICIENT TO CONDONE THE DELAY IN FILING THE APPEAL S. T HEREFORE, THE DELAY IS CONDONED AND THE APPEAL S ARE RESTORED BACK TO THE CIT(A) TO DECIDE THEM ON MERI TS , IN ACCORDANCE WITH LAW, ON AFFORDING DUE AND ADEQUATE OPPORTUNITY TO THE ASSESSEE . 8. IN THE RESULT, BOTH THE APPEAL S OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. SD/ - SD/ - (A.D. JAIN) (D R . MITHA LAL MEENA) JU DICIAL MEMBER ACCOUNTANT MEMBER DATED: 26 .09.2017 AKS/ - COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ITA 06 & 0 7 /AGRA/2016 8 ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA ITA 06 & 0 7 /AGRA/2016 9 DATE 1. DRAFT DICTATED / 26 .09.2017 PS 2. DRAFT PLACED BEFORE AUTHOR 26 .09.2017 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK PS 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.