The ITO, Ward-1(4), RAJKOT-GUJARAT V. M/s. Bhoomi Construction, RAJKOT-GUJARAT

ITA 601/RJT/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 72614 (ITAT-RAJKOT)
• Duration Of Justice: 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 21-01-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 06-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR JAYANT B JHAVERI
• Keywords: Retrospective amendment
• Section: 143(3); 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBULAL: RAJKOT BENCH: RAJKOT BEFORE SHRI T K SHARMA, JM AND SHRI D K SRIVASTAVA, AM ITA NO. 601/RJT/2012 ASSESSMENT YEAR: 2006-07 ITO, WARD 1(4), RAJKOT V. M/S. BHOOMI CONSTRUCTION PAN : AACFB 0164 G MA NO. 31/RJT/2013 (ARISING OUT OF ORDER IN ITA NO.601/RJT/2012) ASSESSMENT YEAR: 2006-07 M/S. BHOOMI CONSTRUCTION PAN : AACFB 0164 G V. ITO, WARD 1(4), RAJKOT DATE OF HEARING : 10.09.2013 DATE OF PRONOUNCEMENT : 15.10.2013 ASSESSEE BY : SHRI SUMIT SHINGALA, CA REVENUE BY : DR JAYANT B JHAVERI, DR ORDER D K SRIVASTAVA: THE ASSESSEE IS A PARTNERSHIP FIRM. IT IS ENGAGED I N THE BUSINESS AS CIVIL CONTRACTOR. IT FILED ITS RETURN O F INCOME FOR ASSESSMENT YEAR 2006-07 ON 22.12.2006 RETURNING TOTAL INCOME AT RS.1,37,383 /-. ASSESSMENT U/S 143(3) WAS COMPLETED BY THE ASSESSING OFFICER ON 17.11.2008 AS SESSING THE TOTAL INCOME OF THE ASSESSEE AT RS.1,62,380/- AFTER DISALLOWING A SUM O F RS.25,000/- OUT OF VARIOUS EXPENSES. NOTICE U/S 147/148 WAS SUBSEQUENTLY ISSU ED ON 25.03.2010 AND SERVED UPON THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED BY THE ASSESSING OFFICER THAT A SUM OF RS.57,48,265 /- WAS PAID BY THE ASSESSEE TOWARDS JOB WORK WITHOUT DEDUCTING THE TAX AT SOURC E IN THE YEAR UNDER APPEAL AS REQUIRED BY SECTION 194C. HE THEREFORE INVOKED SECT ION 40(A)(IA) OF THE INCOME-TAX ACT AND DISALLOWED THE SAID SUM OF RS.57,48,265/-. 2. AGGRIEVED BY THE AFORESAID ORDER, THE ASSESSEE C ARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). BY HIS ORDER DATED 20.06.201 1 (HERE-IN-AFTER REFERRED TO AS FIRST ORDER), THE LD. CIT(A) DELETED THE IMPUGNED DISALLO WANCE WITH THE FOLLOWING OBSERVATIONS:- 3.2 I HAVE CAREFULLY CONSIDERED THE FINDING GIVEN BY THE ASSESSING OFFICER AND THE SUBMISSION OF THE AR OF THE APPELLANT. I FI ND FORCE IN THE SUBMISSION OF THE AR OF THE APPELLANT. THE AR POINTED OUT THAT SECTION 40(A)(IA) WAS AMENDED BY THE FINANCE ACT, 2008 WITH RETROSPECTIVE EFFECT FROM 1/4/2005, AND THEREFORE, THE A.O. WAS NOT CORRECT IN INVOKING PROVISIONS OF SECTION 2 354 OF 2011 & CO61, 601 OF 2012& MA31, 503 OF 2012 & CO32- BHOOMI CONSTRUCTION 40(A)(IA) AS IT STOOD PRIOR TO THE SAID AMENDMENT. THE AR CONTENDED THAT THE TAX SO DEDUCTED HAS BEEN DEPOSITED BEFORE THE DUE D ATE OF FILING RETURN OF INCOME FOR THE RELEVANT YEAR, I.E. 31/10/2006. THE AR ALSO POINTED OUT THAT THE PROVISIONS OF SECTION 40(A)(IA) HAVE BEEN FURTH ER AMENDED BY THE FINANCE ACT, 2010 W.E.F. 1/4/2010, WHICH ALSO SUPPO RTS THE ABOVE CONTENTIONS OF THE APPELLANT. I HAVE NOTICED THAT W HILE PASSING ORDER U/S 143(3) R.W.S. 147 OF THE ACT ON 29/7/2010 THE A.O. WRONGLY APPLIED THE PROVISIONS OF SECTION 40(A)(IA) AS IT STOOD PRIOR T O AMENDMENT BY THE FINANCE ACT, 2008 WITH RETROSPECTIVE EFFECT OF 1/4/2005. TH EREFORE, FOR A.Y. 2006-2007 AMENDED PROVISIONS WERE APPLICABLE. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE ITAT, B BENCH, AHMEDABADS DECISION IN ITA NO.3983/AHD/2008 IN THE CASE OF SHRI KANUBHAI RAMJIBHAI MAKWANA FOR A.Y. 2005-06, I HOLD THAT THE A.O. WAS NOT CORRECT IN INVOKING THE PROVISIONS OF SECTION 40(A) (IA) AND THEREBY DISALLOWING THE EXPENDITURE OF RS.57,48,265/-. THE ADDITION MAD E BY THE A.O. IS ORDERED TO BE DELETED. 3. AGGRIEVED BY THE AFORESAID ORDER PASSED BY THE L D CIT(A) ON 20.06.2011, THE REVENUE FILED APPEAL BEARING ITA NO. 354/RJT/2011 B EFORE THIS TRIBUNAL IN WHICH THE FOLLOWING GROUNDS OF APPEAL WERE TAKEN:- 1. THE LEARNED CIT(A)-I HAS ERRED IN LAW AND ON FA CT OF THE CASE IN DELETING THE ADDITION TO THE EXTENT OF RS.57,48,265 /- U/S 40(A)(IA) MADE BY THE AO ON ACCOUNT OF TAX NOT BEEN DEDUCTED OR PAID DURI NG THE PREVIOUS YEAR. 2. THE LEARNED CIT(A)-I HAS ALSO ERRED ON FACT OF T HE CASE IN DELETING THE ADDITION OF RS.57,48,265/- U/S 40(A)(IA) MADE BY TH E AO, AS THE DATE ON WHICH TAX WAS DEDUCTED IS NOT AVAILABLE ON RECORD A ND EVEN DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE FAIL ED TO SUBMIT SUCH EVIDENCE REGARDING THE DATE ON WHICH TAX WAS ACTUAL LY DEDUCTED. 3. ON FACT OF THE CASE, LEARNED CIT(A)-I, OUGHT TO HAVE UPHELD THE ORDER OF THE AO. 4. IT IS, THEREFORE PRAYED THAT THE ORDER OF THE LE ARNED CIT(A)-I MAY BE SET-A-SIDE AND THAT OF ASSESSING OFFICER BE RESTORE D. 3 354 OF 2011 & CO61, 601 OF 2012& MA31, 503 OF 2012 & CO32- BHOOMI CONSTRUCTION 4. THE ASSESSEE ALSO FILED MEMORANDUM OF CROSS-OBJE CTIONS BEING CO NO.61/RJT./2011 SUPPORTING THE ORDER PASSED BY THE LD CIT(A). THE ASSESSEE TOOK THE FOLLOWING GROUNDS IN ITS MEMORANDUM OF CROSS-OB JECTIONS:- 1. LD. ITO HAS ERRED IN LAW AS WELL AS IN FACTS IN CHALLENGING THE ORDER OF LD. CIT(A) THAT DATE ON WHICH TAX DEDUCTED IS NOT A VAILABLE IN RECORDS AND WAS NOT FURNISHED BY THE ASSESSEE, WHEREAS THE FACT IS ALL THE DETAILS INCLUDING THE DATE OF DEDUCTION WAS FURNISHED AND T HE SAME IS FILED ON RECORD. 2. LD. ITO HAS ERRED IN NOT CONSIDERING THE FACTS T HAT THE TAX IS DEDUCTED DURING THE LAST MONTH OF THE PREVIOUS YEAR UNDER RE FERENCE AND THE SAME WAS PAID BEFORE DUE DATE OF FILING RETURN OF INCOME. 3. THE LD. ITO HAS ERRED IN LAW IN NOT READING THE SEC. 40(A)(IA) IN HARMONY WITH INTENTION OF ITS ENACTMENT AS WELL AS OTHER PROVISIONS OF THE ACT AND VARIOUS JUDICIAL PRONOUNCEMENTS. 5. THE AFORESAID APPEAL FILED BY THE REVENUE AND TH E MEMORANDUM OF CROSS- OBJECTIONS FILED BY THE ASSESSEE WERE DISPOSED OF B Y THIS TRIBUNAL BY ITS ORDER DATED 30.04.2012 BY WHICH THE MATTER WAS RESTORED TO THE FILE OF THE LD CIT(A) WITH THE FOLLOWING OBSERVATIONS:- 8. WE HAVE HEARD BOTH THE PARTIES. THE LD. AUTHORI ZED REPRESENTATIVE FOR THE ASSESSEE SUBMITS THAT NONE OF THE AFORESAID EXP ENSES WAS PAYABLE AS ON 31 ST MARCH AND THEREFORE NO DISALLOWANCE WAS CALLED FOR U/S 40(A)(IA) IN TERMS OF THE DECISION OF A SPECIAL BENCH OF THIS TR IBUNAL IN M/S. MERILYN SHIPPING & TRANSPORTS V. A.C.I.T. (SUPRA) IN WHICH IT HAS BEEN HELD THAT SEC. 40(A)(IA) WOULD APPLY ONLY TO THE EXPENDITURE WHICH IS PAYABLE AS ON 31 ST MARCH AND NOT TO THE EXPENSES WHICH HAVE ALREADY BE EN PAID DURING THE YEAR ITSELF. HE CLAIMED THAT THE ASSESSEE HAS NOT SHOWN ANY OF THE AFORESAID EXPENSES AS PAYABLE AS ON 31 ST MARCH OF THE RELEVANT PREVIOUS YEAR AND THEREFORE NO DISALLOWANCE WAS CALLED FOR. ACCORDING TO HIM, ENTIRE EXPENDITURE WAS PAID WITHIN THE YEAR ITSELF. HOWEVE R, THE SUBMISSION OF THE ASSESSEE THAT ENTIRE EXPENDITURE WAS ACTUALLY PAID BY THE ASSESSEE DURING 4 354 OF 2011 & CO61, 601 OF 2012& MA31, 503 OF 2012 & CO32- BHOOMI CONSTRUCTION THE PREVIOUS YEAR ITSELF NEEDS VERIFICATION. IN THI S VIEW OF THE MATTER, THE ORDER PASSED BY THE C.I.T.(A) IS SET ASIDE AND THE MATTER IS RESTORED TO HIS FILE FOR A FRESH DECISION IN CONFORMITY WITH LAW AFTER BRINGIN G RELEVANT FACTS ON RECORD. REASONABLE OPPORTUNITY OF HEARING SHALL BE GIVEN TO BOTH THE PARTIES. APPEAL FILED BY THE DEPARTMENT AND THE MEMORANDUM OF CROSS -OBJECTIONS FILED BY THE ASSESSEE ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 6. THUS, THE ISSUES RAISED BY BOTH THE PARTIES IN T HEIR RESPECTIVE APPEAL AND CROSS OBJECTION BEING ITA NO.354/RJT/2011 AND CO NO .61/RJT/2011 RESPECTIVELY WERE RESTORED BY THIS TRIBUNAL TO THE FILE OF THE L D. CIT(A) FOR FRESH ADJUDICATION IN THE LIGHT OF THE DIRECTIONS GIVEN BY THIS TRIBUNAL. 7. THE AFORESAID ORDER PASSED BY THIS TRIBUNAL IN I TA NO.354/RJT/2011 AND CO NO.61/RJT/2011 WAS CHALLENGED BY THE REVENUE BEFORE THE HONBLE JURISDICTIONAL HIGH COURT. BY ITS ORDER DATED 02.05.2013 IN TAX AP PEAL NO.710 OF 2012, THE HONBLE HIGH COURT HAS SET ASIDE THE AFORESAID ORDE R PASSED BY THIS TRIBUNAL ON 30.04.2012 WITH THE FOLLOWING OBSERVATIONS:- 38. IN THE RESULT, WE ARE OF THE OPINION THAT SECT ION 40(A)(IA) WOULD COVER NOT ONLY TO THE AMOUNTS WHICH ARE PAYABLE AS ON 31 ST MARCH OF A PARTICULAR YEAR BUT ALSO WHICH ARE PAYABLE AT ANY TIME DURING THE YEAR. OF COURSE, AS LONG AS THE OTHER REQUIREMENTS OF THE SAID PROVISIO N EXIST. IN THAT CONTEXT, IN OUR OPINION THE DECISION OF THE SPECIAL BENCH OF TH E TRIBUNAL IN THE CASE OF M/S MERLLYN SHIPPING AND TRANSPORTERS VS. ACIT (SUP RA), DOES NOT LAY DOWN CORRECT LAW. 39. WE ANSWER THE QUESTIONS AS UNDER:- QUESTION (1) IN THE NEGATIVE I.E. IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEES. QUESTION (2) ALSO IN THE NEGATIVE I.E. IN FAVOUR OF REVENUE AND AGAINST THE ASSESSEES. 40. ALL TAX APPEALS ARE ALLOWED. DECISIONS OF THE T RIBUNAL UNDER CHALLENGE ARE REVERSED. IN THE EARLIER PORTION OF THE JUDGMEN T, WE HAD RECORDED THAT THE TRIBUNAL IN ALL CASES HAD PROCEEDED ONLY ON THIS SH ORT BASIS WITHOUT 5 354 OF 2011 & CO61, 601 OF 2012& MA31, 503 OF 2012 & CO32- BHOOMI CONSTRUCTION ADDRESSING OTHER ISSUES. WE, THEREFORE, PLACE ALL T HESE MATTERS BACK BEFORE THE TRIBUNAL FOR FRESH CONSIDERATION OF OTHER ISSUE S, IF ANY, REGARDING DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT. AL L APPEALS ARE DISPOSED OF ACCORDINGLY. 8. AS A RESULT OF THE AFORESAID ORDER OF THE HONBL E HIGH COURT, THE ORDER PASSED BY THIS TRIBUNAL ON 30.04.2012 IN ITA NO.354/RJT/20 11 AND CO NO.61/RJT/2011 STOOD SET ASIDE AND THE MATTER RESTORED TO THE FILE OF THIS TRIBUNAL FOR FRESH ADJUDICATION. RESULTANTLY, THE APPEAL FILED BY THE REVENUE AND MEMORANDUM OF CROSS-OBJECTIONS FILED BY THE ASSESSEE WERE FIXED F OR HEARING ON 08.07.2013, 23.07.2013, 24.07.2013, 12.08.2013, 14.08.2013, 22. 08.2013, 23.08.2013 AND 10.09.2013. THE HEARING ULTIMATELY TOOK PLACE ON 10 .09.2013. 9. IN THE MEANTIME, THE LD. CIT(A) PASSED A FRESH A PPELLATE ORDER ON 31.08.2012 PURSUANT TO THE DIRECTIONS GIVEN BY THIS TRIBUNAL I N ITS ORDER DATED 30.04.2012, BY WHICH THE LD. CIT(A) ONCE AGAIN DELETED THE DISALLO WANCE MADE BY THE ASSESSING OFFICER. THE AFORESAID ORDER PASSED BY THE LD. CIT( A) WAS CHALLENGED BY THE REVENUE BEFORE THIS TRIBUNAL VIDE ITS APPEAL BEARIN G ITA NO.601/RJT/2012. THE AFORESAID APPEAL CAME UP FOR HEARING ON 21.01.2013. NONE OF THE PARTIES BROUGHT IT TO THE NOTICE OF THIS TRIBUNAL THAT ITS EARLIER ORD ER DATED 30.04.2012 HAS BEEN CHALLENGED BY THE REVENUE BEFORE THE HONBLE HIGH C OURT. UNAWARE OF THE PROCEEDINGS IN PROGRESS BEFORE THE HONBLE HIGH COU RT, THIS TRIBUNAL PROCEEDED TO DISPOSE OF THE APPEAL BEARING ITA NO.601/RJT/2012 F ILED BY THE REVENUE AND ACCORDINGLY DISPOSED OF THE SAME BY ITS ORDER DATED 08.02.2013 IN FAVOUR OF THE REVENUE. THE ASSESSEE HAS NOW FILED A MISCELLANEOUS APPLICATION BEARING MA NO.31/RJT/2013 SEEKING RECALL OF THE SECOND ORDER P ASSED BY THIS TRIBUNAL ON 08.02.2013. THE MISCELLANEOUS APPLICATION DESERVES TO BE ALLOWED FOR THE REASON THAT THE ORDER PASSED BY THIS TRIBUNAL ON 30.04.201 2 IN ITA NO.354/RJT/2011 AND CO NO.61/RJT/2011 HAS ITSELF BEEN SET ASIDE BY THE HONBLE HIGH COURT BY ITS JUDGMENT DATED 02.05.2013 (SUPRA) WITH THE RESULT T HAT ALL CONSEQUENTIAL PROCEEDINGS TAKEN IN PURSUANCE OF THE AFORESAID ORD ER DATED 30.04.2012 PASSED BY THIS TRIBUNAL WOULD AUTOMATICALLY STAND SET ASIDE. IN THIS VIEW OF THE MATTER, THE MA BEARING NO.31/RJT/2013 FILED BY THE ASSESSEE IS ALL OWED. AS A RESULT OF THE JUDGMENT 6 354 OF 2011 & CO61, 601 OF 2012& MA31, 503 OF 2012 & CO32- BHOOMI CONSTRUCTION OF THE HONBLE HIGH COURT, THE INCOME-TAX APPEAL FI LED BY THE REVENUE BEARING ITA NO.601/RJT/2012 HAS ALSO BECOME INFRUCTUOUS, WHICH, FOR STATISTICAL PURPOSES, SHALL BE TREATED AS DISMISSED. ORDER PRONOUNCED ON 15.10.2013 SD/- SD/- (T. K. SHARMA) ( D. K. SRIVASTAVA) JUDICIAL MEMBER ACCOUNTANT MEMBER RAJKOT: 15.10.2013 BT COPY OF ORDER FORWARDED TO:- 1. APPELLANT ITO, WARD 1(4), RAJKOT 2. RESPONDENT- M/S. BHOOMI CONSTRUCTION, 1 ST FLOOR, SHRADDHA COMPLEX, OPP GANGA HALL, AMIN MARG, RAJKOT 3. CONCERNED CIT-I, RAJKOT 4. CIT(A)-I, RAJKOT 5. DR, ITAT, RAJKOT 6. GUARD FILE. BY ORDER TRUE COPY PRIVATE SECRETARY, ITAT, RAJKOT