M/s. Chokshi Suryakant & Babubhai & Co., Baroda V. The Income tax Officer,Ward-3(1), Baroda

ITA 624/AHD/2011

• Counselvise Citation: 62420514 RSA 2011
• Duration Of Justice: 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 08-09-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 28-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H P MEENA SR D R
• Keywords: Non-deduction of tax; Procedural lapse
• Section: 143(3)

Judgement Text

, , . .. . . .. . , , , , IN THE INCOME TAX APPELLATE TRIBUNAL : SMC BENCH : AHMEDABAD (BEFORE HONBLE SHRI T.K. SHARMA, J.M .) . / I.T.A. NO. 624/AHD./2011 ! '# ! '# ! '# ! '# / ASSESSMENT YEAR : 2006-2007 M/S.CHOKSHI SURYAKANT & BABUBHAI & CO., BARODA -VS- I.T.O.,WARD-3(1), BARODA (PAN : AABFC 3232D) $% / APPELLANT &'$% / RESPONDENT $% ( ) / APPELLANT BY NONE (WRITTEN SUBMISSION) &'$% ( ) / RESPONDENT BY SHRI H.P.MEENA, SR.D.R. *!' + ( , - / DATE OF HEARING 08.09.2011 ./# ( , - / DATE OF PRONOUNCEMENT 08.09.2011 / ORDER THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE O RDER DATED 10.11.2010 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-II , BARODA CONFIRMING THE DISALLOWANCE OF RS.1,62,755/- MADE BY THE AO UNDER SECTION 40(A)(IA) OF THE I.T. ACT, 1961 FOR THE ASSESSMENT YEAR 2006-2007. 2. BRIEFLY STATED, THE FACTS ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM CARRYING ON BUSINESS OF MANUFACTURING AND TRADING IN GOLD AND S ILVER BAR AND ITS ORNAMENTS, MONEY LENDING AND CHEQUE DISCOUNTING. FOR THE ASSESSMENT YEAR UNDER APPEAL, IT FILED THE RETURN OF INCOME ON 09.11.2006 DECLARING TOTAL INCOME OF R S.26,700/-. THE AO FRAMED THE ASSESSMENT UNDER SECTION 143(3) ON 07.10.2008 WHERE IN HE DISALLOWED RS.1,62,755/-L UNDER SECTION 40(A)(IA) ON THE GROUND THAT THE ASSE SSEE DID NOT DEDUCT ANY TDS. BEFORE THE AO, IT WAS CLAIMED THAT NO TDS WAS DEDUCTED BEC AUSE ALL THE TEN PARTIES SUBMITTED FORM NO.15H/15G WITH THE COMMISSIONER OF INCOME-TAX ON 03.12.2007. THE AO 2 ITA NO. 624-AHD-2011 OBSERVED THAT FORM NOS.15H/15G RECEIVED FROM THE DE POSITORS WERE NOT FURNISHED ON OR BEFORE THE DUE DATE. THEREFORE, HE DISALLOWED RS.1, 62,755/-. 3. ON APPEAL, THE LD. CIT(A) CONFIRMED THE DISALLOW ANCE FOR THE DETAILED REASONS GIVEN IN PARA 2.3, WHICH READS AS UNDER: 2.3 I HAVE CONSIDERED THE SUBMISSIONS OF THE AUTHO RISED REPRESENTATIVE AND THE ORDER OF THE ASSESSING OFFICER. IT IS UNDISPUTED TH AT NO TDS WAS MADE. IT IS CONTENDED THAT THE APPELLANT HAD ACQUIRED FORM NO. 15H, BUT IT WAS NOT FILED WITH THE COMMISSIONER OF INCOME-TAX AND THIS WAS MERELY A PROCEDURAL LAPSE. IT IS FURTHER CONTENDED THAT TDS RETURN WAS FILED ON 09.0 6.2006 AND THEREFORE DEPARTMENT WAS INFORMED OF NON-DEDUCTION OF TAX. TH E MAIN PLANK OF ARGUMENT IS THAT IT IS IMMATERIAL WHETHER PROVISION OF SECTION 197A(2) HAS BEEN FOLLOWED OR NOT, IF TDS RETURN IS FILED, THERE WILL BE NO LIABI LITY FOR TDS. THIS ARGUMENT IS NOT SUSTAINABLE. IF FORM NO. 15H IS NOT SUBMITTED IN TI ME, NO COGNIZANCE CAN BE TAKEN AND 'IT IS AS GOOD AS NON-EST WITH ATTENDANT CONSEQ UENCES. TIME IS OF ESSENCE IN THESE MATTER BECAUSE, IF THE CIT SO DESIRED TO TAKE ANY ACTION ON THE BASIS OF FORM NO. 15H, HE WAS PREVENTED, IF SUCH FORM IS SUBMITTE D TWO AND HALF YEARS LATE. SIMILARLY, FILING OF TDS RETURN IS NOT A SUBSTITUTE UNDER THE LAW FOR TIMELY SUBMISSION OF FORM NO. 15H. IT IS NOT MERELY A PROC EDURAL LAPSE AS CONTENDED. IT IS A SUBSTANTIAL DEFAULT. IT IS NOTED THAT FOR ASSE SSMENT YEAR 2005-06 SIMILAR DEFAULT WAS NOTED BUT THE LEARNED CIT(A) HAD ALLOWED THIS C LAIM IN THAT YEAR. HOWEVER, SUCH CONSISTENT DEFAULT SHOWS DELIBERATENESS AND NO T MERELY A ONE TIME PROCEDURAL LAPSE AS SOUGHT TO BE CANVASSED. ACCORDINGLY, THIS GROUND IS REJECTED. 4. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. AT THE TIME OF HEARING, NONE WAS PRESENT FROM TH E SIDE OF THE ASSESSEE. ONLY WRITTEN SUBMISSIONS WERE FILED. IN THE WRITTEN SUBM ISSIONS, IT WAS PLEADED THAT THE LD. CIT(A), IN THE IMPUGNED ORDER, ERRED IN NOT FOLLOWI NG HIS PREDECESSORS ORDER IN APPEAL NO.CAB/II-206/07-08 WHEREIN THE RELEVANT PORTION OF THE DECISION CONTAINED IN PARA 2.5 READS AS UNDER: ' THE PLAIN READING OF THIS SECTION SHOWS THAT THE PR IMARILY REQUIREMENT IS THAT TAX SHOULD BE 'DEDUCTIBLE'. WHERE TAX IS NOT DEDUCTIBLE ON ACCOUNT OF THE INCOME BEING BELOW TAXABLE LIMITS, IT CAN BE CONCLUDED THA T THE ASSESSEE WAS NOT LIABLE TO DEDUCT TAX AT SOURCE. THE ASSESSING OFFICER HAS NOT DOUBTED THE VERACITY OF THE FORMS 15H/ 15G PLACED BEFORE HIM. THE INFORMATION T HAT TDS HAD NOT BEEN MADE ON THE ABOVE INTEREST PAYMENTS WAS AVAILABLE WITH T HE DEPARTMENT. THE ASSESSING OFFICER'S DISALLOWANCE OF THE CLAIM OF INTEREST PAY MENTS ON A MERE TECHNICALITY CANNOT BE JUSTIFIED. SINCE THE PAYMENT OF INTEREST HAS BEEN FOUND TO BE VALID AND 3 ITA NO. 624-AHD-2011 THERE IS NO EVIDENCE ON RECORD THAT THE RECIPIENTS' OF INTEREST WERE ABOVE THE TAXABLE LIMIT, I HOLD THAT THE ASSESSING OFFICERS ACTION FOR DISALLOWING THE INTEREST PAYMENT WAS NOT JUSTIFIED AND IS THEREFORE IS DELET ED. ' 6. ON THE OTHER HAND, SHRI H.P.MEENA, SR.D.R., APPE ARING ON BEHALF OF THE REVENUE, VEHEMENTLY SUPPORTED THE ORDER OF THE LD. CIT(A). H E POINTED OUT THAT THE ASSESSEE IS A HABITUAL DEFAULTER. THEREFORE, THE VIEW TAKEN BY TH E LD. CIT(A) BE UPHELD. 7. HAVING HEARD THE LD. D.R. AND CONSIDERED THE WRI TTEN SUBMISSIONS, I HAVE CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. T HE CASE OF THE ASSESSEE IS THAT AT THE TIME OF MAKING PAYMENT TO THE VARIOUS PARTIES LISTE D BY THE LD. CIT(A), IN THE IMPUGNED ORDER, THE ASSESSEE HAS NOT DEDUCTED THE TAX BECAUS E IT HAS OBTAINED FORM NO.15H. THESE WERE NOT DEPOSITED WITH THE CONCERNED COMMISSIONER OF I.T. ON OR BEFORE THE DUE DATE. IN ASSESSEES OWN CASE IN THE IMMEDIATELY PRECEDING AS SESSMENT YEAR, IT HAS BEEN HELD THAT THE DEFAULT IN QUESTION IS MERE A TECHNICAL ONE. TH EREFORE, DISALLOWANCE OF ENTIRE PAYMENT IS NOT JUSTIFIED. IN THE ASSESSMENT YEAR UNDER APPE AL ALSO, THE PAYMENT MADE TO TEN PARTIES IS FOUND TO BE VALID AND THERE IS NO EVIDENCE ON RE CORD THAT RECIPIENTS WERE HAVING INCOME ABOVE THE TAXABLE LIMIT. IT APPEARS THAT NO CONSEQU ENT APPEAL AGAINST THE ORDER OF THE LD. CIT(A) HAS BEEN FILED BY THE REVENUE BEFORE THE TRI BUNAL. THEREFORE, I AM OF THE VIEW THAT THE LD. CIT(A) HAS CLEARLY ERRED IN NOT FOLLOW ING THE DECISION OF HIS PREDECESSOR IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2005-06 . I ACCORDINGLY DELETE THE DISALLOWANCE OF RS. 1,62,755/- MADE BY THE AO UNDER SECTION 40(A)(IA) OF THE I.T. ACT, 1961. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. 0 ( ./# 1! 2 08 / 09 /2011 / 3 ( 4+ 5 ORDER PRONOUNCED IN THE COURT ON 08.09.2011. SD/- (T.K. SHARMA) JUDICIAL MEMBER DATED : 08/09/2011 4 ITA NO. 624-AHD-2011 ( (( ( &,6 &,6 &,6 &,6 76#, 76#, 76#, 76#, / COPY OF ORDER FORWARDED TO:- 1. $% / APPELLANT 2. &'$% / RESPONDENT 3. , *; / CONCERNED CIT 4. *;- / CIT (A) 5. 6'? 4 &,!, , / DR, ITAT, AHMEDABAD 6. 4 A B 0 / GUARD FILE. BY ORDER/ , C / D , 5 TALUKDAR/SR.P.S.