Shri. Rajshekar H. Kalal, Belgaum V. Commissioner of Income Tax, Belgaum

ITA 7/PAN/2013

• Counselvise Citation: 724114 RSA 2013
• Duration Of Justice: 1 year(s) 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 13-11-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 21-01-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RATNAKAR
• Assessee Lawyers: J D KALPAVRIKSHA
• Keywords: Revision of order; Reasonable cause
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI P.K. BANSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NO. 7 & 8/PNJ/2013 : (ASST. YEAR : 2008 - 09) SHRI RAJSHEKHAR H. KALAL PROP. POORNIMA BAR, MAHANTESH NAGAR, BELGAUM (APPELLANT) PAN : AIAPK8189Q VS. COMMISSIONER OF INCOME TAX BELGAUM (RESPONDENT) ASSESSEE BY : J.D. KALPAVRIKSHA, CA REVENUE BY : RATNAKAR, DR DATE OF HEARING : 13/11/2014 DATE OF PRONOUNCEMENT : 9 /1 2 /2014 O R D E R PER P.K. BANSAL 1. BOTH THESE APPEALS SINCE RELATE TO THE SAME ASSESSEE, THEREFORE, THEY ARE BEING DISPOSED OFF BY THIS COMMON ORDER. IN BOTH THE APPEALS THERE HAS BEEN DELAY. THE ASSESSEE EXPLAINED THE REASONS FOR THE DELAY IN FILING THE APPEAL S AND ALSO FILED AN AFFIDAVIT IN THIS REGARD. AFTER HEARING BOTH THE PARTIES, WE FOUND THAT THE ASSESSEE WAS PREVENTED BY REASONABLE CAUSE TO FILE THE APPEALS IN TIME. WE, THEREFORE, CONDONE THE DELAY. ITA NO. 7/PNJ/2013 : 2. THIS APPEAL HAS BEEN FIL ED AGAINST ORDER OF CIT DT. 1.5.2012 PASSED U/S 263 OF THE INCOME TAX ACT CHALLENGING THE ORDER BOTH ON MERIT AS WELL AS ON LEGALITY. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSMENT WAS PASSED U/S 2 ITA NOS. 7 & 8/PNJ/2013 (A.Y 2008 - 09) 143(3) FOR THE IMPUGNED ASSESSMENT YEAR. CIT NOTED CA LLED FOR THE RECORD THAT THE ASSESSEE H AS DEBITED INTEREST AMOUNTING TO RS.7,62,576/ - TO ITS PROFIT & LOSS ACCOUNT WHICH CONSISTS OF RS. 75,200/ - PAID TO VEER RANI CHANNAMMA URBAN CO - OP. SOUHARD SOCIETY AND RS.6,37,746/ - PAID TO KALIDAS SOUHARD CO - OP. SOCIE TY. CIT WAS OF THE VIEW THAT THE ASSESSEE WAS BOUND TO DEDUCT TDS U/S 194A. SINCE THE ASSESSEE DID NOT DEDUCT THE TDS, THE SAID SUM WAS DISALLOWED U/S 40(A)(IA). WHEN THE SHOW CAUSE NOTICE WAS ISSUED, THE ASSESSEE IN REPLY THERETO ACCEPTED THAT THE INTE REST STANDS DEBITED TO THE PROFIT & LOSS ACCOUNT AND INADVERTENTLY NO TDS HAS BEEN DEDUCTED. CIT DIRECTED THE AO TO ADD BACK THE SUM WHILE GIVING EFFECT TO THE ORDER PASSED U/S 263. 3. WE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME AL ONGWITH THE ORDER OF THE CIT PASSED U/S 263. WE HAVE ALSO GONE THROUGH THE PROVISIONS OF SEC. 194A. WE NOTED THAT FOR INVOKING JURISDICTION U/S 263 BOTH THE CONDITIONS THAT THE ORDER PASSED IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REV ENUE MUST BE COMPLIED WITH. THE ASSESSEE ALTHOUGH AN INDIVIDUAL BUT IN HIS CASE SINCE TAX AUDIT WAS TO BE CARRIED OUT, THEREFORE, THE PROVISIONS OF SEC. 194A ARE CLEARLY APPLICABLE AND THE ASSESSEE WAS REQUIRED TO DEDUCT TDS U/S 194A ON THE INTEREST PAID TO BOTH THESE SOUHARD CO - OPERATIVE SOCIETIES. WE DO NOT AGREE WITH THE CONTENTION OF THE LD. AR THAT BOTH THE CO - OPERATIVE SOCIETIES WERE ENGAGED IN CARRYING ON BUSINESS OF BANKING AND THEREFORE THE ASSESSEE WAS NOT REQUIRED TO DEDUCT ANY TDS U/S 194A OF THE INCOME TAX ACT. NO EVIDENCE OR MATERIAL WAS BROUGHT TO OUR KNOWLEDGE THAT BOTH THE SOUHARD CO - OPERATIVE SOCIETIES ARE ENGAGED IN CARRYING ON BUSINESS OF BANKING. IN VIEW OF THIS FACT, IN OUR OPINION, SINCE THERE WAS ERROR IN THE ORDER OF THE AO AND T HE ORDER PASSED BY THE AO IS PREJUDICIAL TO THE INTEREST OF THE REVENUE, THE CIT HAS RIGHTLY INVOKED THE JURISDICTION U/S 263 OF THE INCOME TAX ACT. WE ACCORDINGLY CONFIRM THE ACTION OF CIT AND DISMISS THE GROUND TAKEN 3 ITA NOS. 7 & 8/PNJ/2013 (A.Y 2008 - 09) BY THE ASSESSEE SO FAR AS IT RELATES TO THE VALIDITY OF THE ORDER PASSED U/S 263 OF THE INCOME TAX ACT. ITA NO. 8/PNJ/2013 : 4. THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DT. 26.10.2012 PASSED BY CIT U/S 271(1)(C) LEVYING PENALTY ON THE ASSESSEE AMOUNTING TO RS. 2,59,20 0/ - , EQUAL TO THE AMOUNT OF TAX SOUGHT TO BE EVADED ON THE SUM OF RS.7,62,576/ - , BY REASON OF FURNISHING INACCURATE PARTICULARS OF INCOME AS THE SAID AMOUNT WAS NOT DEDUCTIBLE IN VIEW OF THE PROVISIONS OF SEC. 40(A)(IA) BUT THE ASSESSEE IGNORED THE SAID PR OVISION AND CLAIMED DEDUCTION OF THE SAID AMOUNT WHILE COMPUTING HIS TAXABLE INCOME. 5. WE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME. WE NOTED THAT THERE IS AN EXCEPTION PROVIDED U/S 194A(3)(III). AS PER THIS EXCEPTION, THE ASSESSEE IS NOT REQUIRED TO DEDUCT TAX AT SOURCE FROM THE INCOME BY WAY OF INTEREST AT THE TIME OF CREDITING SAID SUM TO THE ACCOUNT OF THE PAYEE OR AT THE TIME OF PAYMENT THEREOF IN CASH OR BY ISSUE OF CHEQUE OR DRAFT OR BY ANY OTHER MODE IN CASE SUCH INCOME IS CREDITED OR PAID TO ANY BANKING COMPANY TO WHICH THE BANKING REGULATION ACT, 1949 APPLIES OR ANY CO - OPERATIVE SOCIETY ENGAGED IN CARRYING ON BUSINESS OF BANKING. WE FIND FORCE IN THE SUBMISSION OF THE LD. AR THAT WHENEVER A PERSON BORROWED FROM A CO - OPERATIVE SOCIETY WHICH IS ENGAGED IN ADVANCEMENT OF LOAN THE ASSESSEE IS TO PRESUME THAT THE CO - OPERATIVE SOCIETY IS ENGAGED IN CA RRYING ON BUSINESS OF BANKING AND A PERSON OF ORDINARY PRUDENCE CANNOT UNDERSTAND THE INTRICACIES AND COMPLEXITIES OF THE WORD BANKING USED IN THE INCOME TAX ACT AND, THEREFORE, IN OUR OPINION, THE ASSESSEE WAS UNDER BONA FIDE BELIEF THAT NO TDS WAS DEDU CTIBLE. WE ACCORDINGLY DELETE THE PENALTY IMPOSED U/S 271(1)(C). IN THE RESULT, THIS APPEAL FILED BY THE ASSESSEE IS ALLOWED. 4 ITA NOS. 7 & 8/PNJ/2013 (A.Y 2008 - 09) 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER PASSED U/S 263 IS DISMISSED WHILE THE APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER PASSED U/S 271(1)(C) IS ALLOWED. 7. ORDER PRONOUNCED IN THE OPEN COURT ON 9 /12/2014. S D / - S D / - (D.T.GARASIA) JUDICIAL MEMBER (P.K. BANSAL) ACCOUNTANT MEMBER PLACE : PANAJI / GOA DATED : 9 /12/2014 SSL COPY TO : (1) APPELLANT (2) RESPONDENT (3) CIT CONCERNED (4) CIT(A) CONCERNED (5) D.R (6) GUARD FILE TRUE COPY, BY ORDER