M/s Volvo India Pvt. Ltd., Hosakote V. CIT, Bangalore

ITA 687/BANG/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8692 (ITAT-BANGALORE)
• Duration Of Justice: 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 30-12-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 06-05-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: BINOD KUMAR SINGH
• Assessee Lawyers: P DINESH
• Keywords: Search and seizure; Non-deduction of tax; Prejudicial to interest
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, BANGALORE BEFORE S MT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NO. 687/ BANG/20 15 (ASSESSMENT YEAR: 2008 - 09 ) M/S.VOLVO INDIA PVT. LTD., YALACHNAHALLY, TAVAREKERE POST, HOSKOTE - 562 122. PAN:AAACV 6747 N VS. APPELLANT COMMISSIONER OF INCOME - TAX LARGE TAX PAYERS UNIT , BANGALORE. RESPONDENT APPELLANT BY: SHRI P.DINESH, ADVOCATE. RESPONDENT BY: SHRI BINOD KUMAR SINGH, CIT(DR) DATE OF HEARING : 30/12/2015 DATE OF PRONOUNCEMENT : 20 /01/2016 O R D E R PER I NTURI RAMA RAO, AM : THIS APPEAL BY THE ASSESSEE - COMPANY IS DIRECTED AGAINST THE ORDER PASSED U/S 263 OF THE INCOME - TAX ACT, 1961 [ THE ACT FOR SHORT] DATED 19/ 3/2015 OF THE LEARNED COMMISSIONER OF INCOME - TAX , L ARGE TAX PAYERS UNIT (LTU) , BANGALORE FOR THE ASSESSMENT YEAR 2008 - 09. ITA NO . 687 / BANG/201 5 PAGE 2 OF 7 2. THE ASSESSEE - COMPANY RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. IN LAW, THE COMMISSIONER OF INCOME - TAX OUGHT TO HAVE APPRECIATE D THAT THE IMPUGNED ASSESSMENT ORDER WAS NOT AMENABLE TO THE DIVISIONAL JURISDICTION U/S. 263 AND THEREFORE, THE IMPUGNED ORDER PASSED BY HIM U/S 263 IS NOT SUSTAINABLE. 2. ON THE FACTS THERE BEING NO ERROR MUCH LESS AN ERROR PREJUDICIAL TO THE INTEREST OF T HE REVENUE, THE LEARNED COMMISSIONER OF INCOME - TAX OUGHT TO HAVE REFRAINED FROM INVOKING THE PROVISIONS OF SEC.263 OF THE ACT. 3. WITHOUT PREJUDICE, THE LEARNED COMMISSIONER ERRONEOUSLY DISALLOWED THE EXPENDITURE OF RS. 2,36,07,661/ - AS DEDUCTION WITHOUT CON SIDERING THE FACT THAT THE AO HAD CONSIDERED THE EXPLANATION OF THE APPELLANT AND HAD PASSED A SPEAKING ORDER U/S 143(3) R.W.SEC 144C OF THE ACT. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE COMMISSIONER ERRED IN NOT APPRECIATING THE FACT THAT T HE TDS WAS EFFECTED ON ACTUAL INVOICE VALUE WHICH WAS ALSO REMITTED TO THE GOVERNMENT WITHIN APPROPRIATE DUE DATE. 5. ON THE FACTS OF THE CASE , T HE LEARNED COMMISSIONER OUGHT TO HAVE APPRECIATED THAT THE AMOUNT WHICH IS DISALLOWED BY THE ORDER OF LEARNED COM MISSIONER ON CHALLENGE, REPRESENTS THE REVERSAL OF THE PROVISION MADE IN THE AY 2007 - 08 AND OFFERED THE SAME TO TAX IN AY 2007 - 08 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER FAILED TO CONSIDER THE CASE OF PFIZER WHEREIN THE TRIBUNAL HAS SETTLED THE PRINCIPLES THAT THE DISALLOWANCE OF EXPENSES IS NOT REQUIRED U/SEC. 40(A)(IA) IF THE IDENTITY OF THE PARTIES ARE NOT KNOWN, WHICH IS VERY MUCH SIMILAR WITH THE PRESENT CASE. 7. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TI ME OF HEARING OF THE APPEAL THE APPELLANT PRAYS THAT THE APPEAL MAY BE ALLOWED. ITA NO . 687 / BANG/201 5 PAGE 3 OF 7 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY REGISTERED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956. IT IS ENGAGED IN THE BUSINESS OF MANUFACTURE AS WELL AS DEALING IN TRACTORS, TRAILERS AND BUS - CHAS S IS. RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008 - 09 WAS FILED ON 30/09/2008 DECLARING A TOTAL INCOME OF RS.311,55,75,940/ - . AFTER ISSUING NOTICE U/S 143(2) OF THE INCOME - TAX ACT,1961 [ THE ACT FOR S HORT], THE ASSESSMENT WAS COMPLETED U/S 143(3) R.W.S.144C OF THE ACT ON 18/10/2012 ON A TOTAL INCOME OF RS.347,04,06,832/ - AFTER MAKING SEVERAL DISALLOWANCES. BEING AGGRIEVED BY THE DISALLOWANCE, AN APPEAL WAS FILED AND PENDING DISPOSAL. AS THE MATTER S TOOD THUS, THE LD.CIT (LTU) HAD ISSUED NOTICE U/S 263 DATED 4/2/2015 CALLING UPON THE ASSESSEE - COMPANY TO SHOW CAUSE AS TO WHY THE ASSESSMENT ORDER CANNOT BE REVISED, AS THE AO HAD FAILED TO DISALLOW A SUM OF RS.2,36,07,661/ - AS NO TAX DEDUCTION WAS MADE. IN RESPONSE TO SHOW CAUSE NOTICE, ASSESSEE - COMPANY SUBMITTED VIDE LETTER DATED 11/3/2015 THAT PROVISION FOR EXPENSES WAS MADE AT THE END OF THE ACCOUNTING YEAR WITHOUT ANY REFERENCE TO ANY VENDOR AND I N THE BEGINNING OF THE NEXT ACCOUNTING YEAR , THIS PROVISION WAS REVERSED AND ACTUAL INVOICE WAS RAISED FOR THE ACTUAL EXPENDITURE INCURRED. ONLY AT THE TIME OF RAISING THE ACTUAL INVOICE, TDS IS E FFECTED AND THEREFORE, THE TDS PROVISIONS ARE NOT APPLICABLE AND THE ASSESSMENT CANNOT BE TERMED AS ERRONEOUS AND PREJ UDICIAL TO THE INTERESTS OF REVENUE. THE LD.CIT(LTU), AFTER CONSIDERING THE ITA NO . 687 / BANG/201 5 PAGE 4 OF 7 EXPLANATION OF THE ASSES SEE - COMPANY OBSERVED THAT TDS ON AN AMOUNT OF RS.2,36,07,661/ - WAS NOT MADE IN ANY OF THE YEARS BUT IT IS CLAIMED AS DEDUCTION IN THE YEAR UNDER CONSIDERAT ION AND THEREFORE, HELD THAT THE AMOUNT CANNOT BE CLAIMED AS A DEDUCTION UNDER THE PROVISIONS OF SEC.40(A)(IA) OF THE ACT. THE LD.CIT(LTU) HELD THAT THIS CLAIM OF THE ASSESSEE WAS NOT EXAMINED BY THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THEREF ORE, HE SET ASIDE THE ASSESSMENT ORDER TO EXAMINE THIS ISSUE AFTER AFFORDING AN OPPORTUNITY OF HEARING TO THE ASSESSEE - COMPANY. 4. BEING AGGRIEVED BY THIS ORDER OF REVISION, THE ASSESSEE - COMPANY IS BEFORE US IN THE PRESENT APPEAL. 4.1 LEARNED COUNS EL FOR THE ASSESSEE SUBMITTED THAT THE PROVISIONS OF SEC.TDS ARE NOT APPLICABLE TO THE IMPUGNED PROVISION AS THE PROVISION WAS MADE ON AN AD HOC BASIS WITHOUT ANY REFERENCE TO ANY PERSON AND IN THIS CONNECTION, HE RELIED ON THE DECISION OF THE MUMBAI TRIBU NAL IN THE CASE OF PFIZER VS. ITO (TDS) REPORTED IN 55 SOT 277. 4.2 ON THE OTHER HAND, LEARNED CIT(DR) SUPPORTED THE ORDER OF THE LD.CIT(LTU) PASSED U/S 263 OF THE ACT. 4.3 WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. TH E ONLY ISSUE THAT ARISES FOR OUR CONSIDERATION IN THE PRESENT APPEAL IS WHETHER THE LD.CIT(LTU) WAS JUSTIFIED IN ASSUMING JURISDICTION UNDER THE PROVISIONS OF SEC.263 OF THE ACT. THE ONLY GROUND ON WHICH THE LD.CIT(LTU) ITA NO . 687 / BANG/201 5 PAGE 5 OF 7 EXERCISED THE POWER OF REVISION U/S 263 WAS THAT THE CLAIM OF ALLOWANCE OF RS.2,36,07,661/ - UNDER THE PROVISIONS OF SEC. 40(A)(IA) WAS NOT EXAMINED BY THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. LEARNED COUNSEL FOR THE ASSESSEE COULD NOT DEMONSTRATE BEFORE US THAT THE ISSUE WAS EXA MINED BY THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IT IS SETTLE D PRINCIPLE OF LAW THAT NON - ENQUIRY BY THE AO ON AN ISSUE CONFER S JURISDICTION ON THE CIT TO REVISE THE ASSESSMENT. T HE HON BLE JURISDICTIONAL HIGH COURT , IN THE CASE OF CIT VS. INF OSYS TECHNOLOGIES LTD. (341 ITR 293), FOLLOWING THE JUDGMENT OF THE HON BLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. VS. CIT (243 ITR 83) , HELD THAT W HERE DEDUCTION WAS ALLOWED BY THE AO WITHOUT INDICATING THE BASIS , THAT COULD BE CONSIDERED AS A N ORDER BOTH ERRONEOUS AND PREJUDICIAL TO INTERESTS OF REVENUE VIDE PARAS.27 & 28 WHICH READ AS UNDER: 27. THE ASSESSING AUTHORITY PERFORMS A QUASI - JUDICIAL FUNCTION AND THE REA SONS FOR HIS CONCLUSIONS AND FINDINGS SHOULD BE FORTHCOMING IN THE ASSESS MENT ORDER. THOUGH IT IS URGED ON BEHALF OF THE ASSESSEE BY ITS LEARNED COUNSEL THAT REASONS SHOULD BE SPELT OUT ONLY IN A SITUATION WHERE THE ASSESSING AUTHORITY PASSES AN ORDER AGAINST THE ASSESSEE OR ADVERSE TO THE INTERESTS OF THE ASSESSEE AND NO NEED FOR THE ASSESSING AUTHORITY TO SPELL OUT REASONS WHEN THE ORDER IS ACCEPTING THE CLAIM OF THE ASSESSEE AND THE LEARNED COUNSEL SUBMIT THAT THIS IS THE LEGAL POSITION ON AUTHORITY, WE ARE AFRAID THAT TO ACCEPT A SUBMISSION OF THIS NATURE WOULD BE TO GIVE A FREE HAND TO THE ASSESSING AUTHORITY, JUST TO PASS ORDERS WITHOUT REASONING AND TO SPELL OUT REASONS ONLY IN A SITUATION WHERE THE FINDING IS TO BE AGAINST THE ASSESSEE OR ANY CLAIM PUT FORTH BY THE ASSESSEE IS DENIED. ITA NO . 687 / BANG/201 5 PAGE 6 OF 7 28. WE ARE OF THE CLEAR OPINIO N THAT THERE CANNOT BE ANY DICHOTOMY OF THIS NATURE AS EVERY CONCLUSION AND FINDING BY THE ASSESSING AUTHORITY SHOULD BE SUPPORTED BY REASONS, HOWEVER BRIEF IT MAY BE, AND IN A SITUATION WHERE IT IS ONLY A QUESTION OF COMPUTATION IN ACCORDANCE WITH THE REL EVANT ARTICLES OF A DOUBLE TAXATION AVOIDANCE AGREEMENT AND THAT SHOULD BE CLEARLY INDICATED IN THE ORDER OF THE ASSESSING AUTHORITY, WHETHER OR NOT THE ASSESSEE HAD GIVEN PARTICULARS OR DETAILS OF IT. IT IS THE DUTY OF THE ASSESSING AUTHORITY TO DO THAT A ND IF THE ASSESSING AUTHORITY HAD FAILED IN THAT, MORE SO IN EXTENDING A TAX RELIEF TO THE ASSESSEE, THE ORDER DEFINITELY CONSTITUTES AN ORDER NOT MERELY ERRONEOUS BUT ALSO PREJUDICIAL TO THE INTERESTS OF THE REVENUE AND, THEREFORE, WHILE THE COMMISSIONER WAS JUSTIFIED IN EXERCISING THE JURISDICTION UNDER SECTION 263 OF THE ACT, THE TRIBUNAL WAS DEFINITELY NOT JUSTIFIED IN INTERFERING WITH THIS ORDER OF THE COMMISSIONER IN ITS APPELLATE JURISDICTION. WHEN THE LD.CIT REMANDED THE MATTER TO THE AO TO EXAMIN E THE ISSUE AFRESH, IT CANNOT BE TERMED AS BEYOND THE JURISDICTION OF THE CIT. RESPECTFULLY FOLLOWING THE JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF INFOSYS TECHNOLOGIES LTD. (SUPRA), WE HOLD THAT THE LD.CIT(LTU) WAS JUSTIFIED IN ASSU MING JURISDICTION U/S 263 OF THE ACT AND DIRECTING FOR DE NOVO ASSESSMENT. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE - COMPAY IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 20 TH DAY OF JANUARY, 2016 SD/ - SD/ - (SMT.ASHA VIJAYARAGHAVAN) (INTU RI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE : BANGALORE D A T E D : 20 /01/2016 SRINIVASULU, SPS ITA NO . 687 / BANG/201 5 PAGE 7 OF 7 COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A) - II BANGALORE 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLATE TRIBUNAL BANGALORE