JANAVI BUILDERS & DEVELOPERS, PALGHAR V. ITO WD 4(2), MUMBAI

ITA 6728/MUM/2016

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 8073 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2012-2013
• Appeal Filed On: 17-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJIV GUBGOTRA
• Assessee Lawyers: VAISHALI MEHTA
• Keywords: Additional evidence; Non-deduction of tax; Validity of assessment
• Section: 271(1)(c); 143(3); 234B; 40(a)(ia); 194C

Judgement Text

1 ITA 6728/MUM/2016 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F, MUMBAI BEFORE SHRI SAKTIJIT DEY (JUDICIAL MEMBER) AND SHRI G MANJUNATHA (ACCOUNTANT MEMBER) ITA NO 6728/MUM/2016 (ASSESSMENT YEAR 2012-13) JANAVI BUILDERS & DEVELOPERS 5B, WALIV VILLAGE, OPP WALIV TALAV, VASAI (E), DIST. PALGHAR 401 208 PAN : AAHFJ-485F VS ITO, WD. 4(2), THANE APPELLANT RESPONDEDNT APPELLANT BY SHRI VAISHALI MEHTA RESPONDENT BY SHRI RAJIV GUBGOTRA DATE OF HEARING 10-12-2018 DATE OF PRONOUNCEMENT 21-12-2018 O R D E R PER G MANJUNATHA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-3, THANE DATED 15-07-2016 AND IT PERTAINS TO AY 2012-13. THE ASSESSEE HAS RAISED TH E FOLLOWING GROUNDS OF APPEAL:- GROUND 1 - ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND IN L AW, THE COMMISSIONER OF INCOME-TAX (APPEALS) - 3, THANE (HEREINAFTER REFERRED TO AS 'HON'BLE CIT(A)') IN CONFIRMING THE ASSESSMENT MADE BY THE INCOME-TAX OF FICER, WARD 4(2), 2 ITA 6728/MUM/2016 THANE (HEREINAFTER REFERRED TO AS 'THE LEARNED AO') UNDER SECTION 143(3) OF THE ACT BY NOT FOLLOWING DIRECTIONS AND GUIDELINES PROVIDED IN INSTRUCTION NO. 7/2014 ISSUED BY THE CBDT WHICH IS BINDING ON THE L EARNED AO IN THE CASES WHERE THE ASSESSMENT IS BEING MADE PURSUANT TO THE NOTICE/S ISSUED UNDER COMPUTER AIDED SCRUTINY SELECTION (CASS). IT IS, THEREFORE, PRAYED THAT THE ASSESSMENT MADE B Y THE LEARNED AO, AND CONFIRMED BY THE HON'BLE CIT(A), BE CONSIDERED AS V OID AB INITIO AS THE LEARNED AO HAS FAILED TO FOLLOW DIRECTIONS AND GUID ELINES PROVIDED IN INSTRUCTION NO. 7/2014 ISSUED BY THE CBDT. GROUND 2 - WITHOUT PREJUDICE TO GROUND NO.1 ABOVE, ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND IN LAW, THE HON'BLE CIT(A) HAS ERRED IN CO NFIRMING THE ADDITION OF RS.55,21,109 MADE BY THE LEARNED AO UNDER SECTION 4 0(A)(IA) OF THE ACT WITHOUT EXAMINING THAT THE FACT THAT THE NECESSARY TAXES WE RE PAID BY THE DEDUCTEE/PAYEE AND THERE WAS NO LOSS TO THE REVENUE AND THAT THE APPELLANT HAD NOT CO-OPERATED DURING THE COURSE OF THE ASSESS MENT PROCEEDINGS. IT IS, THEREFORE, PRAYED THAT THE LEARNED AO BE DIR ECTED TO DELETE THE ADDITIONS MADE OF RS.55,21,109 TOWARDS SECTION 40(A)(IA) OF T HE ACT. GROUND 3 - ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND IN LA W, THE LEARNED AO HAS ERRED IN COMPUTING INTEREST UNDER SECTION 234A, 234B AND 234C OF THE ACT. GROUND 4 - ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND IN LA W, THE LEARNED AO HAS ERRED IN INITIATING THE PENALTY PROCEEDINGS UNDER S ECTION 271(1)(C) OF THE ACT. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF BUILDERS AND DEVELOPERS, FILED ITS RETURN OF INCOME FOR AY 2012-13 ON 18-01-2013 DECLARING TOTAL INCOME AT RS.3,90,628. THE ASSESSMENT HAS BEEN COMPLETED U/S 143(3) ON 18-03-2 015 DETERMINING TOTAL INCOME AT RS.59,11,737 BY MAKING ADDITION TOWARDS D ISALLOWANCE OF CERTAIN EXPENSES U/S 40(A)(IA) FOR FAILURE TO DEDUCT TAX AT SOURCE UNDER RESPECTIVE PROVISIONS OF THE ACT. 3. AGGRIEVED BY THE ASSESSMENT ORDER, ASSESSEE PREF ERRED APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE ASSESSEE HAS CH ALLENGED THE ASSESSMENT ORDER PASSED BY THE AO ON TECHNICAL GROUNDS IN THE LIGHT OF CBDT INSTRUCTION 3 ITA 6728/MUM/2016 NO. 7 OF 2014 TO ARGUE THAT WHEN CASE HAS BEEN SELE CTED FOR SCRUTINY UNDER CASS, THE SCOPE OF ASSESSMENT IS LIMITED TO ITEMS S PECIFIED IN CASS, IN LIGHT OF CERTAIN JUDICIAL PRECEDENTS. BUT, THE ASSESSEE HAS NOT MADE ANY SUBMISSIONS ON MERITS IN RESPECT OF DISALLOWANCE MADE BY THE AO U/S 40(A)(IA). THE LD.CIT(A), AFTER CONSIDERING SUBMISSIONS OF THE ASS ESSEE AND ALSO BY FOLLOWING CERTAIN JUDICIAL PRECEDENTS, DISMISSED APPEAL FILED BY THE ASSESSEE WHEREIN HE HAS REJECTED LEGAL GROUND TAKEN BY THE ASSESSEE CHA LLENGING VALIDITY OF ASSESSMENT ORDER PASSED IN LIGHT OF CBDT INSTRUCTIO N NO.7 OF 2014 BY HOLDING THAT THE LD.AR FOR THE ASSESSEE FAILED TO DIFFERENT IATE LIMITED SCRUTINY AND COMPLETE SCRUTINY AND THE CASE LAW RELIED UPON WHIC H WAS IN THE CONTEXT OF LIMITED SCRUTINY, WHEREAS IN THE CASE OF THE ASSESS EE, A COMPLETE SCRUTINY FOR WHICH THE AO CAN LOOK INTO OTHER ISSUES AND NEED NO T RESTRICT HIM TO A PARTICULAR ISSUE. INSOFAR AS ADDITION MADE BY THE AO TOWARDS DISALLOWANCE OF CERTAIN EXPENSES U/S 40(A)(IA) FOR FAILURE TO DEDUC T TAX AT SOURCE, THE LD.CIT(A), BY FOLLOWING THE DECISION OF PUNJAB & HARYANA HIGH COURT IN THE CASE OF PMS DIESELS (TS-346-HC-2015) P&H HELD THAT THERE IS NO ERROR IN THE FINDING OF THE AO IN DISALLOWING EXPENSES FOR FAILURE TO DEDUCT TA X AT SOURCE U/S 40(A)(IA) OF THE ACT. THE RELEVANT OBSERVATIONS OF THE LD.CIT(A ) ARE AS UNDER:- 6.0 GROUND NO.2 IS WITHOUT PREJUDICE TO GROUND NO.L AND IS DIRECTED AGAINST THE ADDITION/DISALLOWANCE OF RS.55,21,109/- U/S.40(A)(IA) OF THE ACT. (I) I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELL ANT, THE OBSERVATIONS OF THE AO IN THE ASSESSMENT ORDER AND THE FACTS OF THE CAS E. 4 ITA 6728/MUM/2016 (II) IN THE FIRST PLACE, BEFORE AO, THE APPELLANT HAS NO T PRODUCED ANY SUPPORTING DOCUMENTARY EVIDENCE EXCEPT LEDGER ACCOU NTS, THEREFORE, IN THE ABSENCE OF BILLS FOR THE AFORESAID EXPENSES, THE AO COULD NOT VERIFY FURTHER. IT IS QUITE SURPRISING THAT THE APPELLANT COULD NOT PR ODUCE THE RELEVANT DOCUMENTS FROM THE DATE OF SCRUTINY SELECTION I.E. 07.08.2013 TILL THE PASSING OF ASSESSMENT ORDER ON 18.03.2015. THEREFORE, THE E XPENSES INCURRED ITSELF IS IN DOUBT AND THE DISALLOWANCE MADE BY THE AO IS FUL LY JUSTIFIED. (III) EVEN BEFORE ME, THE AR OF THE APPELLANT HAS N OT FILED ANY DETAILS IN SUPPORT OF THE CLAIM OF THE EXPENSES, WHEREAS THE A R WAS HARPING ONLY ON INSTRUCTION NO. 7/2014.THEREFORE, THIS SHOWS THAT T HE EXPENSES INCURRED ITSELF IS IN DOUBT. (IV)AS FAR AS DISALLOWANCE OF EXPENSES U/S.40(A)(IA ) OF THE ACT IS CONCERNED, I W