SHARMA STEEL ROLLING MILLS, JAIPUR V. DEPUTY COMMISSIONER OF INCOME TAX, JAIPUR

ITA 68/JPR/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7392 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 18-01-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K C GUPTA JCIT DHK
• Keywords: Unexplained investment; Unexplained expenditure; Corroborative evidences; TDS; Set aside
• Section: 271(1)(c); 40(a)(ia); 201; 139

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES A, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO ] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA - @ ITA NO. 68/JP/2018 FU/KZKJ.K O'KZ @ ASSESSMENT YEAR : 2013-14 SHARMA STEEL ROLLING MILLS, 127, INDUSTRIAL AREA, JHOTWARA, JAIPUR. CUKE VS. D.C.I.T., CIRCLE-3, JAIPUR. LFKK;H YS[KK LA -@THVKBZVKJ LA -@ PAN/GIR NO.: AAFFS 2909 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : NONE (DATE WAS NOTED) JKTLO DH VKSJ LS @ REVENUE BY : SHRI K.C. GUPTA (JCIT) LQUOKBZ DH RKJH[K @ DATE OF HEARING: 30/01/2020 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 31/01/2020 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 22/12/2017 OF THE LD. CIT(A)-I, JAIPUR FOR THE A.Y. 2013-14. 2. NONE HAS APPEARED ON BEHALF OF THE ASSESSEE WHEN THIS APPEAL WAS REPEATEDLY CALLED FOR HEARING AND EVEN AT 1.30 PM WHEN THE APPEAL WAS AGAIN CALLED FOR HEARING DESPITE THE FACT THAT ON THE LAST DATE OF HEARING I.E. 03/01/2020, THE LD AR OF THE ASSESSEE HAS SOUGHT ADJOURNMENT AND DULY NOTED THE DATE OF HEARING FOR TODAY I.E. 30/01/2020. THUS, IN VIEW OF THE FACTS AND CIRCUMSTANCES, WE PROPOSE TO HEAR AND DISPOSE OFF THIS APPEAL OF THE ASSESSEE EX PARTE. 2 ITA NO. 68/JP/2018 SHARMA STEEL ROLLING MILLS VS DCIT 3. IN THIS APPEAL, THE ASSESSEE HAS RAISED FOLLOWING GROUNDS: 1. THAT THE LD. CIT(A)-I, JAIPUR HAS ERRED IN LAW AS WELL AS ON FACTS IN CONFIRMING THE ADDITION OF RS.4,72,167/- ON ACCOUNT OF DISALLOWANCE OF INTEREST DUE TO NON DEDUCTION OF TDS WITHOUT CONSIDERING THE FACTS OF THE CASE AS PRODUCED DURING THE TIME OF HEARING. 2. THAT THE LD. CIT(A)-I, JAIPUR HAS ERRED IN LAW AS WELL AS ON FACTS IN CONFIRMING THE ADDITION OF RS. 76,07,414/- ON ACCOUNT OF UNEXPLAINED INVESTMENT WITHOUT CONSIDERING THE FACTS OF THE CASE AS PRODUCED DURING THE TIME OF HEARING. 3. THAT THE LD. CIT(A)-I, JAIPUR HAS ERRED IN LAW AS WELL AS ON FACTS IN HOLDING THAT IT IS PREMATURE TO BE DECIDED ABOUT ISSUING THE NOTICE U/S 271(1)(C) OF THE INCOME TAX ACT, 1961. 4. THAT THE APPELLANT CRAVES THE RIGHT TO ADD, DELETE, AMEND OR ABANDON ANY OF THE GROUNDS OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING OF APPEAL. 4. GROUND NO. 1 OF THE APPEAL IS REGARDING THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF INTEREST PAID TO NBFCS DUE TO NON-DEDUCTION OF TDS U/S 40(A)(IA) OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT). THE ASSESSEE HAS PAID INTEREST ON LOAN TAKEN FROM NBFCS NAMELY RELIGARE FINVEST, BARCLAY INVEST AND BAJAJ FINANCE LTD.. THE A.O. DISALLOWED INTEREST OF RS. 4,72,167/- FOR WANT OF DEDUCTION OF TDS AND CONSEQUENTLY INVOKING PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. THE ASSESSEE CHALLENGED THE ACTION OF THE A.O. BEFORE THE LD. CIT(A) AND SUBMITTED THAT THE ASSESSEE WAS PAYING INTEREST AND REPAYING PRINCIPAL AMOUNT ON MONTHLY BASIS ONCE THE EMI IS FIXED THEN THE DEDUCTION OF TDS ON INTEREST WAS NOT POSSIBLE. THE LD. CIT(A) DID NOT ACCEPT THIS CONTENTION OF THE ASSESSEE AND SUSTAINED THE DISALLOWANCE MADE BY THE A.O. 3 ITA NO. 68/JP/2018 SHARMA STEEL ROLLING MILLS VS DCIT 5. WE HAVE HEARD THE LD DR AND CONSIDERED THE ARGUMENTS RAISED BY THE ASSESSEE BEFORE THE AUTHORITIES BELOW. AT THE OUTSET WE NOTE THAT THE ASSESSEE HAS RAISED CONTENTION BEFORE THE AUTHORITIES BELOW THAT SINCE THE EMI WAS FIXED FOR REPAYMENT OF LOAN ALONGWITH INTEREST, THEREFORE, IT WAS NOT POSSIBLE FOR THE ASSESSEE TO DEDUCT TDS ON PAYMENT OF INTEREST. THE CONTENTION OF THE ASSESSEE CANNOT BE ACCEPTED WHEN THE STATUTE CAST AN OBLIGATION ON THE PAYMENT OR CREDIT OF THE INTEREST TO DEDUCT TAX AT SOURCE. THE ASSESSEE HAS NOT PRODUCED ANY OTHER DOCUMENTARY EVIDENCE TO SHOW THAT THE NBFCS TO WHOM THE INTEREST WAS PAID HAVE CONSIDERED THE SAID AMOUNT AS PART OF THEIR INCOME AND FILED RETURN OF INCOME U/S 139 OF THE ACT. THE LD. CIT(A) HAS CONSIDERED THE SUBMISSIONS OF THE ASSESSEE AND GIVEN THE FINDING AS UNDER: (II) I HAVE DULY CONSIDERED THE SUBMISSIONS OF THE APPELLANT, ASSESSMENT ORDER AND THE MATERIAL PLACED ON RECORD. IT IS AN ADMITTED FACT THAT THE APPELLANT HAS NOT MADE TDS WHILE MAKING INTEREST PAYMENT TO M/S RELIGARE FINVEST LTD., BARCLAYS INVEST & LOANS AND BAJAJ FINSERV LTD. THE CONTENTION OF THE APPELLANT THAT THESE NBFCS MUST HAVE INCLUDED THE INCOME IN THEIR RETURN OF INCOME IS A STATEMENT WITHOUT ANY SUPPORTING EVIDENCE. IT IS TO BE NOTED THAT THE SECOND PROVISO TO SECTION 40(A)(IA) INSERTED BY FA, 2012 W.E.F. 01.04.2013 HAS PROVIDED THAT WHERE AN ASSESSEE FAILS TO DEDUCT TAX ON THE SUM PAID TO THE RESIDENT BUT SUCH RESIDENT PAYEE HAS FURNISHED THE RETURN, TAKEN INTO ACCOUNT SUCH SUM FOR COMPUTING INCOME AND HAS PAID THE TAX DUE ON THE INCOME DECLARED BY HIM THEN IT WILL BE DEEMED THAT ASSESSEE HAS DEDUCTED AND PAID THE TAX ON SUCH SUM ON THE DATE OF FURNISHING 4 ITA NO. 68/JP/2018 SHARMA STEEL ROLLING MILLS VS DCIT OF RETURN BY THE RESIDENT PAYEE. IT MAY BE MENTIONED THAT AS PER THE PROVISO TO SECTION 201 INSERTED W.E.F. 01.07.2012, THE APPELLANT WOULD NOT BE TREATED AS ASSESSEE IN DEFAULT IF THE CONCERNED PERSONS (I) HAS FURNISHED ITS RETURN OF INCOME U/S 139; (II) HAS TAKEN INTO ACCOUNT SUCH SUMS FOR COMPUTING INCOME IN SUCH RETURN OF INCOME; AND (III) HAS PAID THE TAX DUE ON THE INCOME DECLARED BY IT IN SUCH RETURN OF INCOME AND THE PERSON FURNISHES A CERTIFICATE TO THIS EFFECT FROM AN ACCOUNTANT IN SUCH FORM AS MAY BE PRESCRIBED (FORM N. 26A) (III) IT IS PERTINENT TO MENTION HERE THAT IN THE INSTANT CASE UNDER CONSIDERATION, THE APPELLANT HAS NOT SUBMITTED ANY CERTIFICATE FROM A CHARTERED ACCOUNTANT IN FORM NO. 26A IN RESPECT OF INTEREST PAYMENT TO ANY OF THESE NBFCS. THEREFORE, IN VIEW OF THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, I DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDINGS OF THE AO AS RECORDED IN THE ASSESSMENT ORDER AND CONSEQUENTLY, THE DISALLOWANCE OF RS. 4,72,167/- MADE BY THE AO U/S 40(A) (IA) OF THE ACT IS HEREBY SUSTAINED. SINCE THE ASSESSEE HAS FAILED TO DEDUCT TDS IN RESPECT OF PAYMENT OF INTEREST AND ALSO FAILED TO PRODUCE ANY CERTIFICATE IN THE FORM NO. 26A THEN THE A.O. WAS BOUND TO FOLLOW THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT AND MAKE THE DISALLOWANCE. ACCORDINGLY, WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE IMPUGNED ORDER OF THE LD. CIT(A) QUA THIS ISSUE. 6. GROUND NO. 2 OF THE APPEAL IS REGARDING ADDITION MADE BY THE A.O. ON ACCOUNT OF UNEXPLAINED INVESTMENT BASED ON THE REPORT OF CUSTOM & EXCISE DEPARTMENT REGARDING EXCESS STOCK FOUND WITH THE ASSESSEE. 5 ITA NO. 68/JP/2018 SHARMA STEEL ROLLING MILLS VS DCIT 7. WE HAVE HEARD THE LD DR AND CAREFULLY PERUSED THE RELEVANT RECORD. THE A.O. HAS MADE ADDITION ON ACCOUNT OF EXCESS STOCK BY TREATING THE SAME AS UNEXPLAINED EXPENDITURE TO THE TUNE OF RS. 76,07,414/- BASED ON THE VERIFICATION OF THE CUSTOM & CENTRAL EXCISE CARRIED OUT ON 07/09/2012 AT THE PREMISES OF THE ASSESSEE RESULTING EXCESS STOCK OF GOODS. THE ASSESSEE CHALLENGED THE SAID ACTION OF THE A.O. BEFORE THE LD. CIT(A) AND SUBMITTED THAT CESTAT HAS ALREADY GRANTED THE RELIEF IN THE APPEAL FILED BY THE ASSESSEE AND SET ASIDE THE ORDER OF THE CUSTOM & EXCISE AUTHORITIES INCLUDING THE COMMISSIONER, CENTRAL EXCISE FOR FRESH ADJUDICATION. WE FIND THAT THE ASSESSEE HAS CLEARLY GIVEN THE PARTICULARS OF THE FINAL ORDER PASSED BY THE CESTAT DATED 31/12/2015 WHEREBY THE ORDER OF THE COMMISSIONER, CENTRAL EXCISE WAS SET ASIDE FOR FRESH ADJUDICATION. ONCE THE ORDER OF THE COMMISSIONER, CENTRAL EXCISE WAS SET ASIDE BY THE CESTAT AND THE MATTER WAS REMANDED FOR FRESH ADJUDICATION THEN THE ADDITION MADE BY THE A.O. ON ACCOUNT OF EXCESS STOCK BASED ON THE RECORD OF THE CENTRAL EXCISE WOULD NOT SURVIVE AS THE SAID ORDER ITSELF WAS NO MORE INEXISTENCE. HOWEVER, THE OUTCOME OF THE SET ASIDE PROCEEDINGS AS PER THE ORDER OF THE CESTAT WOULD DETERMINE THE FATE OF ADDITION ON ACCOUNT OF EXCESS STOCK IF ANY. ACCORDINGLY, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE SET ASIDE THIS ISSUE TO THE RECORD OF THE A.O. TO ADJUDICATE THE SAME AFRESH AFTER CONSIDERING THE OUTCOME OF THE 6 ITA NO. 68/JP/2018 SHARMA STEEL ROLLING MILLS VS DCIT SET ASIDE PROCEEDINGS IN THE CUSTOM & EXCISE DEPARTMENT. NEEDLESS TO SAY THAT THE ASSESSEE BE GIVEN REASONABLE OPPORTUNITY OF HEARING. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST JANUARY, 2020. SD/- SD/- FOE FLAG ;KNO FOT; IKY JKO (VIKRAM SINGH YADAV) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 31 ST JANUARY, 2020 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHARMA STEEL ROLLING MILLS, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE D.C.I.T., CIRCLE-3, JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 68/JP/2018) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR