The ITO, Ward-9(4), Ahmedabad V. Shri Shekhar C. Mudaliar, Ahmedabad

ITA 710/AHD/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5767 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 22-06-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 14-02-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K MAUDHUSUDAN SRDR
• Assessee Lawyers: S N DIVETIA
• Keywords: Rectification of order; Assessment record; TDS

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD B BENCH BEFORE SHRI G.D. AGARWAL, VICE-PRESIDENT (AZ) AND SHRI MAHAVIR SINGH, JUDICIAL MEMBER ITA NO.710-711/AHD/2007 [ASSTT.YEARS 2004-05 & 2005-06] DATE OF HEARING:22.6.10 DRAFTED:22.6.10 INCOME TAX OFFICER, WARD-9(4) -VS- SHRI SHEKAR C M UDALIAR, VASUPUJYA CHAMBERS, PROP. M/S. GANESH ROADLINES, ASHRAM ROAD, AHMEDABAD 22, BANSIDHAR APARTMENT, B /H DENA BANK, AMRAIWADI, AHMEDABAD PAN NO.AHIPM8556C (APPELLANT) (RESPONDENT) REVENUE BY : SHRI K. MAUDHUSUDAN, SR-DR ASSESSEE BY: SHRI S.N. DIVETIA , AR O R D E R PER MAHAVIR SINGH, JUDICIAL MEMBER:- THESE TWO APPEALS BY REVENUE ARE ARISING OUT OF TH E ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-XV, AHMEDABAD IN APPEAL NO. CIT(A)-XV/ITO.WD.9(4)/59 & 96/06-07 DATED 09-11-2006. THE RECTIFICATION ORDER S PASSED BY ITO WARD-9(4) AHMEDABAD U/S.154 OF THE INCOME-TAX ACT, 1961 (HERE INAFTER REFERRED TO AS THE ACT) VIDE HER ORDER DATED 17-04-2006 AND 13-07-2006 FOR THE ASSESSMENT YEAR 2004-05 AND 2005-06 RESPECTIVELY. 2. THE ONLY COMMON ISSUE IN THESE TWO APPEALS OF TH E REVENUE IS AS REGARDS TO THE ORDER OF CIT(A) IN DIRECTING THE ASSESSING OFFI CER TO GIVE CREDIT OF TDS CLAIM ON THE GROSS RECEIPTS. FOR THIS, REVENUE HAS RAISED TH E FOLLOWING FIVE IDENTICAL GROUNDS IN BOTH THE YEARS. EXCEPT AMOUNT THE GROUNDS ARE SA ME AND FOR THE SAKE OF ITA NO.710-711/AHD/200 A.YS. 04-05 & 05-06 ITO WD-9(4) ABD V. SHS. SHEKAR C MUDALIAR PAGE 2 CONVENIENCE WE TAKE THE GROUND IN ITA NO.710/AHD/20 07 FOR THE ASSESSMENT YEAR 2004-05:- 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE RECTIFICATION ORDER PASSED U/S.154 OF THE ACT BY THE ASSESSING OF FICER IS BAD IN LAW. 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE ASSESSING OFFICER TO GIVE CREDIT OF TDS OF RS.1,63,410/-, CLA IMED ON THE GROSS RECEIPTS OF RS.82,65,271/- WITHOUT APPRECIATING THE FACT THAT T HE ASSESSEE HAD DECLARED ONLY THE COMMISSION INCOME EARNED FROM THE AFORESAI D GROSS RECEIPTS OF TRANSPORTATION IN THE PROFIT & LOSS ACCOUNT. 3. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE ASSESSING OFFICER TO GIVE CREDIT OF TDS OF RS.1,63,410/-, CLA IMED ON THE GROSS RECEIPTS OF RS.82,65,271/- INSTEAD OF ON COMMISSION INCOME EARN ED ON ACCOUNT OF GROSS RECEIPTS CREDITED TO P & L A/C. WITHOUT APPRECIATIN G THE FACT THAT AS PER THE PROVISIONS OF SECTION 199 OF THE I.T. ACT, THE CRED IT OF TDS SIS TO BE GIVEN IN RESPECT OF THE INCOME, ON WHICH, TAX HAS BEEN DEDUC TED. 4. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE ASSESSING OFFICER TO GIVE CREDIT OF TDS OF RS.1,63,410/-, CLA IMED ON THE GROSS RECEIPTS OF RS.82,65,271/- INSTEAD OF ON COMMISSION INCOME EARN ED ON ACCOUNT OF GROSS RECEIPTS CREDITED TO P & L A/C. MERELY THAT NO INTI MATION U/S.143(1) OF THE ACT WAS RECEIVED BY THE ASSESSEE; WITHOUT APPRECIATING THE FACT THAT THE RETURN WAS PROCESSED U/S.143(1) OF THE I.T. ACT, 1961 ON A ST ON 26.10.2004 AND THE CORRESPONDING INTIMATION HAS BEEN SENT BY POST ON 2 0.12.2004. 5. THE LD. CIT(A) HAS FURTHER ERRED IN LAW AND ON F ACTS IN DIRECTING THE ASSESSING OFFICER TO GIVE CREDIT OF TDS OF RS.1,63, 410/-, CLAIMED ON THE GROSS RECEIPTS OF RS.82,65,271/- INSTEAD OF ON COMMISSION INCOME EARNED ON ACCOUNT OF GROSS RECEIPTS CREDITED TO P & L A/C. M ERELY ON THE GROUND THAT NON-RECEIPT OF INTIMATION U/S.143(1) OF THE ACT DOE S TANTAMOUNT TO NON- PROCESSING OF RETURN CONTRARY TO THE FACT THAT THE RETURN WAS DULY PROCESSED ON AST ON 26.10.2004. 3. THE BRIEF FACTS ARE THAT THE ASSESSEE AN INDIVID UAL IS ENGAGED IN THE BUSINESS OF TRANSPORTATION AS BROKER-COMMISSION AGENT UNDER THE NAME & STYLE OF GANESH ROADLINES. THE ASSESSEE FOR THE ASSESSMENT YEAR 2 004-05 FILED RETURN OF INCOME ON 12-08-2004 DECLARING TOTAL INCOME AT RS.91,750/- AND CLAIMED REFUND AT RS.1,59,737/-. THE RETURN OF INCOME FOR ASSESSMENT YEAR 2004-05 WAS PROCESSED U/S.143(1) OF THE ACT ON 26-10-2004 AND REFUND WAS DETERMINED AT RS.1,65,327/-. ITA NO.710-711/AHD/200 A.YS. 04-05 & 05-06 ITO WD-9(4) ABD V. SHS. SHEKAR C MUDALIAR PAGE 3 THE FACTS EMERGING FROM THE ORDER OF CIT(A) ARE THA T REFUND INVOLVED IN THIS ASSESSMENT YEAR EXCEEDS RS.1 LAKH AND THEREFORE THE ASSESSING OFFICER SEEKS PRIOR APPROVAL OF THE RANGE JCIT/ADDL. CIT BEFORE ISSUE O F THIS REFUND. THE AO SUBMITTED A PROPOSAL TO THE ADDL. CIT RANGE-9 AHMEDABAD ON 29 -10-2004, WHICH WAS RETURN BACK BY THE RANGE ADDL. CIT ON 04-11-2004 WITH CERT AIN OBSERVATION/CLARIFICATION TO BE ASKED FROM THE ASSESSEE BY THE ASSESSING OFFICER . THE AO WROTE A LETTER TO THE ASSESSEE ON 20-12-2004 WHICH WAS REPLIED BACK BY TH E ASSESSEE ON 29-12-2004. SUBSEQUENTLY, THERE WAS NO ACTION ON THE PART OF TH E DEPARTMENT TILL 17-04-2006. THE AO PASSED THIS RECTIFICATION ORDER U/S.154 OF THE A CT, BY VIRTUE OF REFUND AMOUNT HAS BEEN REDUCED TO RS.5,720/- AS AGAINST THE ORIGINALL Y DETERMINED REFUND OF RS.1,65,327/- VIDE ORDER DATED 17-04-2006. THE CIT( A) AFTER HEARING THE LD. COUNSEL FOR THE ASSESSEE AND TAKING OBJECTION THAT THERE IS NO SERVICE OF THE INTIMATION U/S.143(1) OF THE ACT ON THE ASSESSEE, NOTED THAT T HE RECTIFICATION IS NOT POSSIBLE IN THE ABSENCE OF ANY INTIMATION. ACCORDINGLY, CIT(A) REQUIRED THE ASSESSING OFFICER TO CONFIRM FROM THE ASSESSMENT RECORDS, WHETHER INTIMA TION PASSED U/S.143(1) WAS SERVED ON THE ASSESSEE OR NOT. HE WAS ALSO REQUIRE D TO PROVIDE THE DATE OF SERVICE ALONG WITH NAME AND ADDRESS OF THE PERSON TO WHOM T HIS WAS SERVED. THE CIT(A) NARRATED THE CONTENTION OF THE ASSESSING OFFICER IN PARAA-3.2 AS UNDER:- 3.2 IN RESPONSE TO MY LETTER DATED 8 TH SEPTEMBER, 2006, THE ITO. WARD.9(4), AHMEDABAD HAS CONFIRMED IN WRITING THAT INTIMATIONS U/S.143(1) WERE SENT BY SPEED POST FOR ASSTT. YEAR 2004-05 ON 20 TH DECEMBER, 2004 AND FOR ASSTT. YEAR 2005-06 ON 3 RD JULY, 2006. THE ASSESSING OFFICER HAS ALSO MENTION ED THAT SINCE THESE INTIMATIONS WERE SENT BY SPEED POS T, THESE MUST HAVE BEEN RECEIVED BY THE APPELLANT AND THEREFORE, THE CONTEN TION OF THE APPELLANT THAT THE ORIGINAL ORDERS PASSED U/S.143(1) HAVE NOT BEEN SERVED UPON HIM, IS SOT CORRECT. THE ASSESSING OFFICER HOWEVER, HAS EXPRESS ED HIS INABILITY TO INTIMATE THE EXACT DATED/DATES OF SERVICE OF THESE ORDERS NO R COULD HE TELL THE NAME AND ADDRESS OF THE PERSONS TO WHOM THESE INTIMATION S WERE ALLEGEDLY SERVED. 4. THEN THE CIT(A) DISCUSSED THE CONTROVERSY IN PARA-3.3 OF HIS APPELLATE ORDER AS UNDER:- 3.3 THE CONTROVERSY WHETHER ORIGINAL ORDERS PASSED U/S.143(1) FOR BOTH THE YEARS WERE SERVED UPON THE APPELLANT OR NOT, NEEDS TO BE SORTED OUT BECAUSE IT GOES TO THE VERY ROOT OF THE JURISDICTION OF THE ASSESSING OFFICER ASSUMED U/S.154 OF THE ACT IN THIS CASE. I HAVE GONE THROUG H THE ASSESSMENT RECORDS FOR BOTH THE YEARS IN ORDER TO FIND WHETHER THE CON TENTION RAISED BY THE ITA NO.710-711/AHD/200 A.YS. 04-05 & 05-06 ITO WD-9(4) ABD V. SHS. SHEKAR C MUDALIAR PAGE 4 APPELLANT IN THIS RESPECT IS CORRECT OR NOT. IN SO FAR AS THE A.Y. 2004-05 IS CONCERNED, INTIMATION U/S.143(1) DATED 26 TH OCTOBER, 2004 IS LYING ON THE RECORDS IN WHICH REFUND OF RS.1,65,327/- HAS BEEN W ORKED OUT. THE INTIMATION ALONG WITH THE REFUND VOUCHER COULD NOT BE SERVED B Y THE ASSESSING OFFICER UNTIL A FORMAL APPROVAL TO ISSUE THE REFUND IS GRAN TED BY THE ADDL. CIT OF THE RANGE. IN ORDER TO COMPLY WITH THE ADMINISTRATIVE I NSTRUCTIONS IN THIS REGARD, THE ITO MOVED A PROPOSAL TO THE ADDL. CIT ON 29 TH OCTOBER, 2004 WHICH WAS RETURNED BACK BY THE ADDL. CIT ON 4/11/2004 WITH CE RTAIN OBSERVATIONS. TILL 6 TH OF APRIL 2006 WHEN THE ITO ISSUED A SHOW CAUSE LETT ER TO THE APPELLANT PROPOSING AMENDMENT TO THE ORDER PASSED U/S.1`43(1) ON 26-10-2004 ON THE BASIS OF CERTAIN CLARIFICATIONS WITH RESPECT TO THE FREIGHT RECEIPTS DECLARED IN THE RETURN, THERE IS NO PROOF OF EITHER THE ADDL. CIT G RANTING THE APPROVAL OF THE REFUND OR OF ANY SERVICE OF THE INTIMATION U/S.143( 1) ALONG WITH THE REFUND VOUCHER IN BETWEEN THE PERIOD. IN VIEW OF THESE FAC TS AVAILABLE ON RECORD, I FAIL TO UNDERSTAND HOW THE ITO WARD.9(4), AHMEDABAD HAS CONFIRMED IN WRITING THAT THE INTIMATION U/S.143(1) FOR A.Y. 2004-05 WAS SENT BY SPEED POST ON 20/12/2004. ONLY THE ASSESSING OFFICER WILL BE IN A POSITION TO TELL AS TO HOW COULD HE EFFECT THE SERVICE OF INTIMATION ALONG WIT H THE REFUND ON THE APPELLANT ALLEGEDLY ON 20-12-2004 WITHOUT THE APPROVAL OF THE RANGE ADDL. CIT IN WRITING WHICH AS PER RECORDS IS YET TO BE RECEIVED. IT WOULD RELEVANT TO MENTION HERE THAT ORIGINAL INTIMATION U/S.143(1`) DATED 26 TH OCTOBER, 2004 IN WHICH REFUND OF RS.1,65,327/- WAS WORKED OUT, IS FOUND TO BE LYING ON RECORDS EVEN ON TODAY. 5. FINALLY CIT(A) HELD THAT THERE IS NO INTIMATION U/S.143(1) WHICH WAS SERVED UPON ASSESSEE AND ACCORDINGLY HE HELD THAT SINCE TH ERE IS NO VALID SERVICE OF INTIMATION U/S.143(1) AND RECTIFICATION IS NOT POSS IBLE U/S.154 OF THE ACT, AS UNDER IN PARA-3.5 OF HIS APPELLATE ORDER:- 3.5 IN VIEW OF THE FACTS AVAILABLE ON RECORDS, THE CONTENTION RAISED BY THE APPELLANT THAT NO ORDER U/S.143(1) WAS SERVED UPON HIM FOR BOTH THE YEARS, IS FOUND TO BE ABSOLUTELY CORRECT. THE ASSESSING OFFIC ER HAS TRIED TO BRING MISLEADING FACTS ON RECORDS SO AS TO COVER UP HIS O WN MISTAKE IN NOT COMPLYING TO THE LEGAL PROVISIONS SIN ITS LETTER AN D SPIRIT BEFORE PASSING THE IMPUGNED ORDERS. I AM INCLINED TO ACCEPT THE ARGUME NT OF THE AUTHORIZED REPRESENTATIVE THAT IN THE ABSENCE OF A VALID SERVI CE OF ORIGINAL ORDERS PASSED U/S.143(1) ALONG WITH ITS REFUND VOUCHERS, NO RECTI FICATION OF THE SAME IS LEGALLY POSSIBLE TO BE CARRIED OUT U/S.154 OF THE A CT. I WOULD THEREFORE, HOLD THAT THE ORDERS PASSED U/S.154 FOR A.Y. 2004-05 AND 2005-06 ON 17/4/2006 AND 13/7/2006 RESPECTIVELY ARE ILLEGAL AND ARE LIAB LE TO BE QUASHED. THE ASSESSING OFFICER MAY BE AWARE THAT ANY INTIMATION U/S.143(1) IS TO BE SENT ONLY IN CASES WHERE EITHER THERE IS A REFUND OR A D EMAND FOUND PAYABLE BY THE ASSESSEES. THE SERVICE OF INTIMATION U/S.1434(1) TH EREFORE HAS TO BE MADE ALONG WITH THE REFUND ORDERS ORIGINALLY WORKED OUT IN THIS CASE. THE ASSESSING OFFICER IS ACCORDINGLY, DIRECTED TO SERVE THE INTIM ATIONS U/S.143(1) ALONG WITH THE REFUND AMOUNT AND ALSO THE INTEREST PAYABLE THE REON FOR THE DELAYED ITA NO.710-711/AHD/200 A.YS. 04-05 & 05-06 ITO WD-9(4) ABD V. SHS. SHEKAR C MUDALIAR PAGE 5 PERIOD FOR ASSESSMENT YEAR 2004-05 AND 2005-06 AS P ER LAW AND WITHOUT ANY FURTHER LOSS OF TIME. 6. BEFORE US LD. DR COULD NOT CONTRADICT THE FINDIN GS OF THE CIT(A) AND COULD NOT PROVE THAT THE ORDER INTIMATION U/S.143(1) SERVED O N THE ASSESSEE AND IN THE ABSENCE OF SAME WE HAVE NO ALTERNATIVE EXCEPT TO CO NFIRM THE ORDER OF CIT(A) AND THIS ISSUE OF REVENUES APPEAL IS DISMISSED. 7. SIMILARLY ARE THE FACT IN ASSESSMENT YEAR 2005-0 6 IN ASSESSEES APPEAL AND TAKING A CONSISTENT VIEW, WE CONFIRM THE ORDER OF C IT(A) IN THIS YEAR ALSO. 8. IN THE RESULT, BOTH THE APPEALS OF REVENUE ARE DISM ISSED. ORDER PRONOUNCED ON THIS DAY OF 25 TH JUNE ,2010 SD/- SD/- ( G.D.AGARWAL ) ( MAHAVIR SINGH ) (VICE PRESIDENT) (JUDICIAL MEMBER) AHMEDABAD, DATED : 25/06/2010 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)-XV, AHMEDABAD 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD