SHIVKUMAR VELAN, MUMBAI V. ITO 22(2)(2, MUMBAI

ITA 6559/MUM/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0270 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 30-10-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SOMNATH S UKKALI
• Assessee Lawyers: FIROZE ANDHYARUJINA

Judgement Text

, INCOME-TAX APPELLATE TRIBUNAL -EBENCH MUMBAI , , , BEFORE S/SHRI RAJENDRA,ACCOUNTANT MEMBER A ND RAM LAL NEGI,JUDICIAL MEMBER ./I.T.A./6559/MUM/2014, /ASSESSMENT YEAR: 2010-11 SHRI SHIVKUMAR VELAN 3 / 4, SHINDE BUILDING, ASHA NAGAR PESTOM SAGAR, ROAD NO.3, CHEMBUR MUMBAI-400 089. PAN:ABVPV 6559 M VS. INCOME TAX -22 (2)(2) MUMBAI. ( /APPELLANT ) ( / RESPONDENT ) REVENUE BY: SHRI SOMNATH S. UKKALI ASSESSEE BY: SHRI FIROZE ANDHYARUJINA / DATE OF HEARING: 31.05.2017 / DATE OF PRONOUNCEMENT: 09.08.2017 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER DATED 18/7/2014 OF CIT(A)-33, MUMBAI, THE ASSESSEE HAS FILED THE PRESENT APPEAL. ASSESSEE, AN INDIVIDUAL,ENGAGED IN BUSINESS OF PLYING VEHICLE ON RENTAL BASIS, IS PROPRIETOR OF M/S. SHRI VELAN AUTOMOBILES.HE FIL ED HIS RETURN OF INCOME ON 22/09/2010 DECLARING RS.11.35 LAKHS.THE ASSESSING OFFICER (AO )COMPLETED ASSESSMENT U/S.143(3) OF THE ACT,ON 23/01/2013,DETERMINING THE INCOME OF THE ASS ESSEE AT RS.24.86 LAKHS. VIDE HIS LETTER,DATED 11/05/17,THE ASSESSEE HAS FI LED ADDITIONAL GROUND OF APPEAL STATING THAT ISSUES RAISED BY HIM WOULD GO TO THE ROOT OF THE MA TTER. 2. DURING THE COURSE OF HEARING BEFORE US,THE AUTHORIS ED REPRESENTATIVE (AR) STATED THAT THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE DID NOT R EQUIRE VERIFICATION OF FACTS. HE REFERRED TO THE CASE OF NATIONAL THERMAL POWER CO. LTD.(229ITR3 83). THE DEPARTMENTAL REPRESENTATIVE (DR)OPPOSED THE ADMISSION OF ADDITIONAL GROUNDS.WE FIND THAT IN ONE OF THE ADDITIONAL GROUNDS THE ASSESSEE GO TO THE ROOT OF THE MATTER AND IS OF LEGAL NATURE,HENCE, WE ADMIT THE SAME.ABOUT THE OTHER GROUND WE WOULD DISCUSS IN THE SUBSEQUENT PARAGRAPHS. 3. FIRST GROUND OF APPEAL IS ABOUT PASSING AN EXPARTE ORDER.THE ASSESSEE HAD FILED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA),WHO FIXE D THE HEARING ON 05/03/2014 VIDE HIS NOTICE,DATED 25/02/2014.THE ASSESSEE FILED AN APPL ICATION FOR ADJOURNMENT OF THE CASE AND SOUGHT TIME OF 10 DAYS.ACCORDINGLY,THE MATTER WAS A DJOURNED TO 18/03/2014. AS PER THE FAA 6559/M/14-SHIVKUMAR VELAN 2 NOBODY APPEARED ON THE ADJOURNED DATE NOR ANY REQUE ST FOR ADJOURNMENT WAS FILED TILL THE DATE OF ORDER.HE HELD THAT ASSESSEE WAS NOT INTERESTED I N PROSECUTION OF THE APPEAL. THEREFORE,HE HELD THAT APPEAL SHOULD BE DISMISSED. 3.1. BEFORE US,THE AR COULD NOT SUBMIT ANY REASONABLE CA USE FOR NOT APPEARING BEFORE THE FAA FROM 18.03.2014 TO 18/07/2014.IF THE ASSESSEE H AD FILED APPLICATION FOR ADJOURNMENT IT WAS HIS DUTY TO FIND OUT THE NEXT DATE AND MAKE SUB MISSIONS.IT IS NOT ALLEGED THAT THE ASSESSEE WAS NOT AWARE ABOUT HEARING ON 18.03.2014.AFTER FIL ING ADJOURNMENT APPLICATION IT DID NOT FOLLOW THE HEARING OF APPEAL.HIS BEHAVIOR IS OF NOT A VIGILANT APPELLANT.NO EXPLANATION HAS BEEN FILED FOR NOT FILING ANY WRITTEN SUBMISSION BE FORE THE FAA.IN THESE CIRCUMSTANCES,THE FAA WAS FULLY JUSTIFIED IN DISMISSING THE APPEAL FI LED BY THE ASSESSEE.HE HAS DEALT THE ISSUE OF NON FILING OF REPLY AND NON REPRESENTATION OF MA TTER IN DETAIL.WE DO NOT FIND ANY LEGAL INFIRMITY IN HIS ORDER,SO,WE DECIDE FIRST GROUND AG AINST THE ASSESSEE. 4 .SECOND GROUND OF APPEAL IS ABOUT DISALLOWANCE OF R S.12.50 LAKHS MADE U/S.40(A)(IA) OF THE ACT ON ACCOUNT OF NON- PAYMENT OF TDS ON INTEREST. DURING THE ASSESSMENT PROCEEDINGS THE AO FOUND THAT THE ASSESSEE HAD PAID INTEREST TO SOME COMPANIES WITHOUT DEDUCTING ANY TAX AT SOURCE. HE DIRECTED THE ASSESSEE TO EXPLAIN AS TO WHY THE AMOUNT OF INTEREST SHOULD NOT BE DISALLOWED IN VIEW OF PROVISIONS OF SECTION 40(A)(I A) OF THE ACT. AS PER THE AO THE AR IN THE ORDER SHEET NOTING,DATED 22/01/03 AGREED FOR THE DI SALLOWANCE.ACCORDINGLY,HE ADDED SUM OF RS.12,50,541/- TO THE INCOME OF THE ASSESSEE. 4.1. THE ASSESSEE HAD NOT FILED ANY WRITTEN SUBMISSION B EFORE FAA,THEREFORE,HE WENT THROUGH THE STATEMENT OF FACTS FILED ALONGWITH FORM NO.35.A FTER CONSIDERING THE SAME AND ORDER OF AO,HE HELD THAT ASSESSEE HAD CONTENDED THAT ONLY ON AMOUNT THAT WERE PAYABLE AS ON 31 ST , MARCH ,ON WHICH TDS WAS APPLICABLE AND TAX WAS NOT DEDUCTED COULD BE DISALLOWED UNDER SECTION 40 OF THE ACT. THE ASSESSEE RELIED UPON THE CASE OF MERILIN SHIPPING AND TRANSPORTS. THE FAA REFERRED TO THE CBDT CIR. NO. 10/DV/2013, D ATED 16.12.2013 AND THE CASE OF RISHI STOCK AND SHARES P.LTD.(ITA/112/MUMBAI/2012).HE ALS O REFERRED TO THE DECISIONS OF HONORABLE HIGH COURT OF GUJARAT AND CALCUTTA WHO HA D HELD THAT TDS PROVISIONS WERE APPLICABLE FOR THE PAYMENTS MADE AS WELL AS FOR THE AMOUNTS PAYABLE. 4.2. BEFORE US,THE AR WE ARE THE SAME SUBMISSIONS THAT W ERE MADE IN FORM NUMBER 35. THE DR RELIED UPON THE JUDGMENT OF THE HONORABLE SUPREM E COURT DELIVERED IN THE CASE OF PALAM GAS SERVICE(CIVIL APPEAL NUMBER 5512 OF 2017,DTD.03 /05/2017).IN OUR OPINION THE LIABILITY TO DEDUCT TAX AT SOURCE ARISES NOT ON ACCOUNT OF AS SESSEE BEING LIABLE TO THE PAYEE-BUT ONLY 6559/M/14-SHIVKUMAR VELAN 3 UPON THE LIABILITY BEING DISCHARGED IN THE CASE OF AN ASSESSEE FOLLOWING THE CASH SYSTEM AND UPON CREDIT BEING GIVEN BY AN ASSESSEE FOLLOWING TH E MERCANTILE SYSTEM. EXCEPT FOR THE JUDGMENT OF HONORABLE ALLAHABAD HIGH COURT ALL OF T HE HIGH COURTS HAD HELD THAT PROVISIONS WERE APPLICABLE FOR BOTH THE EVENTUALITIES I.E. FOR TAXES PAID AND FOR THE TAXES PAYABLE. AS THE ORDER OF THE FAA DOES NOT SUFFER FROM ANY PERVERSIT Y,SO,UPHOLDING HIS ORDER WE DECIDE THE SECOND GROUND OF APPEAL AGAINST THE ASSESSEE. 5. IN THE FIRST ADDITIONAL GROUND,THE ASSESSEE HAS ARG UED THAT PAYMENTS MADE TO TWO NONBANKING FINANCE COMPANIES WERE NOT HIT BY THE PR OVISIONS OF SECTION 40(A)(IA). THE AR REFERRED TO THE CHART OF THE AO APPEARING IN PARAGR APH NUMBER THREE OF THE ASSESSMENT ORDER AND STATED THAT AMOUNT PAID TO CENTURION BANK OF IN DIA AND BARCLAYS WERE OUTSIDE THE PURVIEW OF TDS PROVISIONS.THE DR STATED THAT ISSUE COULD BE DECIDED ON MERITS. IN OUR OPINION THE ISSUE OF PAYMENT MADE TO TWO NBF CS REQUIRES FURTHER VERIFICATION.SO,IN THE INTEREST OF JUSTICE,WE ARE RESTORING THAT THE I SSUE TO THE FILE OF THE AO FOR FRESH ADJUDICA - TION.HE IS DIRECTED TO AFFORD A REASONABLE OPPORTUN ITY OF HEARING TO THE ASSESSEE. WE WANT TO MAKE IT CLEAR THAT MATTER HAS BEEN RESTORED BACK FO R THE PAYMENTS MADE TO CENTURION BANK OF INDIA AND BARCLAYS.AS FAR AS THE REMAINING DISALLOW ANCE IS CONCERNED,WE HAVE ALREADY DISCUSSED THE ISSUE IN THE EARLIER PART OF OUR ORDE R AND HAVE CONFIRMED THE ORDER OF THE FAA. 6. SECOND ADDITIONAL GROUND OF APPEAL IS ABOUT AD HOC DISALLOWANCE OF RS. 1 LAKH FROM PETROL AND DIESEL EXPENSES.WE FIND THAT THE GROUND IS NOT ARISING OUT OF THE ORDER OF THE FAA AND IT WOULD REQUIRE VERIFICATION THE FACTS.AS THE GROUND IS NOT LEGALLY NATURE,SO,WE ARE NOT INCLINED TO ADMIT IT AS ADDITIONAL GROUND.EVEN ON MERITS,WE FIND THAT THE AO HAD GIVEN A FINDING OF FACT THAT EXPENSES WERE INCURRED IN CASH AND WERE N OT FULLY VERIFIABLE. HE HAD DISALLOWED ONLY RS. 1 LAKH OUT OF THE TOTAL EXPENDITURE OF RS.79.10 LAKHS. SECOND ADDITIONAL GROUND OF APPEAL STANDS DISMISSED. AS A RESULT,APPEAL FILED BY THE ASSESSEE STANDS PAR TLY ALLOWED ORDER PRONOUNCED IN THE OPEN COURT O N 09 TH AUGUST, 2017. , 2017 SD/- SD/- ( / RAM LAL NEGI ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; /DATED : 09.08 .2017. JV.SR.PS. 6559/M/14-SHIVKUMAR VELAN 4 / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR E BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.