IDEALAKE INFORMATION TECHNOLOGIES P.LTD, MUMBAI V. ITO 5(2)(1), MUMBAI

ITA 7172/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9322 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Assessment Year: 2003-2004
• Appeal Filed On: 24-10-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHEKHAR L GAJBHI JE
• Assessee Lawyers: VISWAS V MEHENDALE
• Keywords: Retrospective amendment
• Section: 43B; 5(2); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH I, MUMBAI BEFORE SHRI I.P.BANSAL,JUDICIAL MEMBER & SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO. 7172/MUM/2011(A.Y. 2003-04) M/S. IDEALAKE INFORMATION TECHNOLOGIES PVT. LTD. 2 ND FLOOR, R.R.HOUSE, MATHURDAS MILL COMPOUND, LOWER PAREL, MUMBAI - 400 013. PAN: AAACI 7536A (APPELLANT) VS. THE ITO 5(2) (1), MUMBAI. (RESPONDENT) APPELLANT BY : SHRI VISWAS V. MEHENDALE RESPONDENT BY : SHRI SHEKHAR L. GAJBHI JE DATE OF HEARING : 19/11/2012 DATE OF PRONOUNCEMENT : 2 3/11/2012 ORDER PER I.P.BANSAL, J.M THIS IS AN APPEAL FILED BY THE ASSESSEE. IT IS DI RECTED AGAINST THE ORDER PASSED BY THE LD. CIT(A -9, MUMBAI DATED 18/08/20 11 FOR ASSESSMENT YEAR 2003-04. THE GROUND OF APPEAL READS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE HON. COMMISSIONER OF INCOME TAX-APPEALS WAS NOT JUSTIFIE D IN CONFIRMING THE ORDER OF ASSESSING OFFICER REJECTING RECTIFICATION APPLICATION OF THE APPELLANT. 2. THE DETAILS REGARDING IMPUGNED DISALLOWANCE ARE MENTIONED IN PARA -4 OF THE ASSESSMENT ORDER IN THE TABLE, WHICH IS REPR ODUCED HEREIN BELOW FOR THE SAKE OF CONVENIENCE. ITA NO. 7172/MUM/2011(A.Y. 2003-04) 2 MONTH AMOUNT (RS.) DUE DATE DATE OF PAYMENT MAY 2002 17 21.6.2002 22.10.2002 JUNE 2002 70,987 21.7.2002 23.07.2002 JUNE 2002 1,492 21.7.2002 22.10.2002 JUNE 2002 5,690 21.7.2002 19.02.2003 JUNE 2002 4,913 21.7.2002 NOT PAID SEPT.2002 94,615 21.10.2002 22.10.2003 OCT.2002 88,094 21.11.2002 19.02.2003 NOV.2002 83,733 21.12.2002 19.02.2003 DEC.2002 76,505 21.1.2003 07.04.2003 DEC.2002 194 21.1.2003 NOT PAID JAN.2003 72,766 21.2.2003 10.04.2003 JAN.2003 907 21.2.2003 NOT PAID FEB.2003 29,664 21.3.2003 29.05.2003 FEB.2003 33,111 21.3.2003 28.07.2003 FEB.2003 1,536 21.3.2003 NOT PAID MARCH 2003 63,961 21.4.2003 28.6.2003 TOTAL 6,28,185 - - 2.1 THE AFOREMENTIONED AMOUNTS WERE DISALLOWED BY THE AO ONLY ON THE GROUND THAT THE AFOREMENTIONED AMOUNTS WERE NOT DEP OSITED BY THE ASSESSEE BEFORE DUE DATE PRESCRIBED UNDER THE PROVIDENT FUND ACT. THE ASSESSMENT ORDER WAS DATED 30/12/2005. IT MAY BE MENTIONED HERE THAT ON THE DATE WHEN THE AO MADE THE DISALLOWANCE A DISPUTE WAS PRE VAILING AS TO WHETHER BELATED PAYMENTS, IF NOT PAID BY THE DUE DATE AS PR ESCRIBED UNDER THE RELEVANT ACT CAN BE DISALLOWED. THE AO MADE THE DISALLOWANC E AS THESE PAYMENTS WERE NOT MADE WITHIN THE DUE DATE AS PRESCRIBED IN RESPE CTIVE ACTS. IT IS THE CASE OF THE ASSESSEE THAT RECTIFICATION APPLICATION WAS FIL ED WITH THE AO ON 18/01/2008 ON THE BASIS OF DECISION OF HONBLE SUPREME COURT I N THE CASE OF VINAY CEMENT LTD. 213 CTR 268 (SC), WHEREIN IT WAS HELD THAT DIS ALLOWANCE UNDER SECTION 43BOF THE INCOME TAX ACT,1961(THE ACT) CANNOT BE MA DE IN RESPECT OF CONTRIBUTION TO PF IF IT IS DEPOSITED BEFORE THE D UE DATE OF FILING THE RETURN. THE SAID DECISION WAS PRONOUNCED ON 7/3/2007. THE AO REJECTED THE SAID APPLICATION MADE BY THE ASSESSEE VIDE HIS ORDER DAT ED 6/2/2008 AND LD. CIT(A) HAS CONFIRMED THE ASSESSMENT ORDER VIDE HIS ORDER D ATED 17/8/2009. AGAIN ASSESSEE FILED AN APPLICATION FOR RECTIFICATION ON 1/12/2009 WHICH IS ALSO WITHIN THE PRESCRIBED TIME UNDER SECTION 154 OF THE ACT AND THE ASSESSEE RELIED ITA NO. 7172/MUM/2011(A.Y. 2003-04) 3 UPON THE DECISION OF HONBLE SUPREME COURT IN THE C ASE OF CIT VS. ALOM EXTRUSION LTD., WHICH IS DATED 25/11/2009, REPORTED IN 319 ITR 306(SC), IN WHICH IT HAS BEEN HELD THAT OMISSION OF 2 ND PROVISO TO SECTION 43B BY THE FINANCE ACT 2003 WILL HAVE RETROSPECTIVE APPLICATI ON W.E.F. 1/4/1988 AND IT IS NOT PROSPECTIVE FROM 1/4/2004. HOWEVER, THE AO REJ ECTED SUCH APPLICATION ALSO AND LD. CIT(A) HAS CONFIRMED HIS ORDER. 3. WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTENT IONS HAVE CAREFULLY BEEN CONSIDERED. ACCORDING TO DEPARTMENT THERE IS NO MI STAKE APPARENT FROM RECORD, HENCE AO WAS RIGHT IN REJECTING THE APPLICA TION FILED BY THE ASSESSEE. 4. ON THE OTHER HAND, IT IS THE CASE OF THE ASSESSE E THAT DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. ALOM EXTRUSION HAS MADE IT CLEAR THAT IF THE PAYMENT IS MADE BY THE ASSESSEE BEFORE THE DUE DATE OF FILING THE RETURN, THE SAME CANNOT BE DISALLOWED. HE SUBMITTED THAT T HE ACTION OF AO IN THE ORIGINAL ASSESSMENT WAS CONTRARY TO THE LAW EXPLAIN ED BY HONBLE SUPREME COURT IN THE CASE OF ALOM EXTRUSION (SUPRA). HE SU BMITTED THAT ACCORDING TO THE HONBLE SUPREME COURT IN THE CASE OF ACIT VS. SAURASHTRA KUTCH STOCK EXCHANGE LTD. 305 ITR 227, THE JUDICIAL DECISION AC T RETROSPECTIVELY TO CONTEND THAT NON-CONSIDERATION OF DECISION OF JURISDICTIONA L HIGH COURT OR SUPREME COURT IS A MISTAKE APPARENT FROM RECORD WHICH CAN B E RECTIFIED. 5. AFTER HEARING BOTH PARTIES AND AFTER CONSIDERING THEIR SUBMISSIONS, WE FIND THAT IN THE CASE OF CIT VS. ALOM EXTRUSIONS (S UPRA) IT HAS BEEN CLEARLY HELD BY HONBLE SUPREME COURT THAT THE 2 ND PROVISO TO SECTION 43B, WHICH IS AMENDED BY THE FINANCE ACT,2003 WILL OPERATE RETROS PECTIVELY W.E.F. 1/4/1988. THUS IT HAS BEEN MADE CLEAR THAT IF THE PAYMENT IS MADE BEFORE THE DUE DATE OF FILING THE RETURN, DISALLOWANCE COULD NOT BE MADE U NDER SECTION 43B OF THE ACT. IN THE CASE OF ACIT VS. SAURASHTRA KUTCH STOCK EXC HANGE LTD. (SUPRA) IT HAS BEEN HELD BY HONBLE SUPREME COURT THAT ACCORDING T O WELL SETTLED LAW A JUDICIAL DECISION WILL ACT RETROSPECTIVELY. IT IS NOT THE FUNCTION OF THE COURT TO ITA NO. 7172/MUM/2011(A.Y. 2003-04) 4 PRONOUNCE NEW RULE BUT TO MAINTAIN AND EXPOUND O LD ONE. IN OTHER WORDS, JUDGES DO NOT MAKE LAW, THEY ONLY DISCOVER OR FIND THE CORRECT LAW. THE LAW HAS ALWAYS BEEN THE SAME. IF THE SUBSEQUENT DECISI ON ALTERS THE EARLIER ONE, LATER DECISION DOES NOT MAKE NEW LAW. IT ONLY DI SCOVERS THE CORRECT PRINCIPLE OF LAW WHICH IS TO BE APPLIED RETROSPECTIVELY. TO PUT IT DIFFERENTLY, EVEN WHERE AN EARLIER DECISION OF THE COURT OPERATED FOR QUITE SOMETIME, THE DECISION RENDERED LATER ON WOULD HAVE RETROSPECTIVE EFFECT C LARIFYING THE LEGAL POSITION WHICH WAS EARLIER NOT CORRECTLY UNDERSTOOD. IT HA S FURTHER BEEN HELD THAT THE PATENT, MANIFEST SELF EVIDENT ERROR WHICH DOES NOT REQUIRE ELABORATE DISCUSSION OR EVIDENCE OR ARGUMENTS TO ESTABLISH, CAN BE SAID TO BE AN ERROR APPARENT ON THE FACE OF RECORD AND CAN BE CORRECTED WHILE EXERC ISING CERTIORARI JURISDICTION. AN ERROR CANNOT BE SAID TO BE APPARENT ON THE FACE OF THE RECORD IF ONE HAS TO TRAVEL BEYOND THE RECORD TO SEE WHETHER THE JUDGMEN T IS CORRECT OR NOT. AN ERROR APPARENT ON THE FACE OF RECORD MEANS AN ERRO R WHICH STRIKES ON MERE LOOKING AND DOES NOT NEED LONG DRAWN PROCESS OF REA SONING ON POINTS WHERE THERE MAY CONCEIVABLY TWO OPINION. SUCH ERROR SHOU LD NOT REQUIRE ANY EXTRANEOUS MATTER TO SHOW ITS INCORRECTNESS. TO PU T IT DIFFERENTLY, IT SHOULD BE SO MANIFEST AND CLEAR THAT NO COURT WOULD PERMIT IT TO REMAIN ON RECORD. 5.1 THEIR LORDSHIPS HAVE ALSO HELD THAT NON-CONSIDE RATION OF A DECISION OF JURISDICTIONAL HIGH COURT OR OF SUPREME COURT CAN B E SAID TO BE A MISTAKE APPARENT ON RECORD WHICH CAN BE RECTIFIED. THEY A GREED WITH THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF SUHRID GEIGY LIMITED V. COMMISSIONER OF SURTAX, GUJARAT, (1999) 237 ITR 834 IN WHICH IT WAS HELD THAT A DECISION OF JURISDICTIONAL HIGH COURT RENDERED PRIO R OR EVEN SUBSEQUENT TO THE ORDER OF RECTIFICATION, CAN BE SAID TO HAVE GIVEN R ISE TO A MISTAKE APPARENT FROM RECORD. 5.2 CONSIDERING THE FACTS OF THE PRESENT CASE IN TH E LIGHT OF AFOREMENTIONED JUDICIAL PRONOUNCEMENTS, WE FOUND THAT MISTAKE COMM ITTED IN THE ASSESSMENT ORDER WHILE DISALLOWING THE IMPUGNED SUM IS MANIFES T AND CLEAR. IT IS A ITA NO. 7172/MUM/2011(A.Y. 2003-04) 5 MISTAKE APPARENT ON THE FACE OF THE RECORD WHICH S TRIKES ON MERE LOOKING AND DOES NOT NEED LONG DRAWN PROCESSING OF REASONING ON POINTS WHERE THERE MAY CONCEIVABLY TWO OPINIONS. SUCH MISTAKE DOES NOT RE QUIRE ANY EXTRANEOUS MATTER TO SHOW ITS INCORRECTNESS. THE DUE DATE AND DATE OF PAYMENT ARE ALREADY DESCRIBED IN THE ASSESSMENT ORDER ITSELF. THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF ALOM EXTRUSION (SUPRA) HAS CLEARLY LAID DOWN THE LAW THAT OMISSION OF 2 ND PROVISO WILL ACT RETROSPECTIVELY HENCE, IF THE PAY MENTS ARE MADE BEFORE THE DUE DATE OF FILING THE RETURN T HE DISALLOWANCE UNDER SECTION 43B CANNOT BE MADE. THEREFORE, WE HOLD THAT AO WAS BOUND TO ADMIT THE APPLICATION OF THE ASSESSEE FOR RECTIFICATION OF MI STAKE AND THE PAYMENTS WHICH HAVE BEEN MADE BEFORE DUE DATE OF FILING THE RETURN ARE TO BE ALLOWED. IT MAY BE MENTIONED THAT THE TABLE DESCRIBED BY THE AO HAS ALREADY BEEN REPRODUCED IN THIS ORDER AND IT IS FOUND THAT EXCEPT FOUR ITEM S NAMELY ITEMS OF RS.4913/-, RS.194/-, RS. 907/- AND RS.1536/- THE DATES OF PAYM ENTS HAVE BEEN MENTIONED , WHICH DOES NOT GO BEYOND THE DUE DATE O F FILING THE RETURN. IN RESPECT OF ABOVE MENTIONED FOUR AMOUNTS DETAILS ARE NOT AVAILABLE WHETHER THEY WERE ALSO PAID BEFORE DUE DATE OF FILING THE RETU RN, THEREFORE, THE DISALLOWANCE TO THE EXTENT OF ABOVE MENTIONED AMOUNT IS RESTR ICTED IN RESPECT OF WHICH RECTIFICATION CANNOT BE EXERCISED AS THOSE AMOUNTS ARE NOT SHOWN TO BE PAID. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. THE DISALLOWANCE IS RESTRICTED ONLY TO A SUM OF RS.7,55 0/-, WHICH IS AN AGGREGATE OF AFOREMENTIONED FOUR ITEMS, WHICH HAVE NOT SHOWN TO BE PAID BEFORE DUE DATE OF FILING THE RETURN. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON TH E 23RD DAY OF NOV. 2012 SD/- SD/- (RAJENDRA ) (I.P.BANSAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 23 RD NOV. 2012 ITA NO. 7172/MUM/2011(A.Y. 2003-04) 6 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CITY CONCERNED 4. THE CIT(A)- CONCERNED 5. THE D.R I BENCH. (TRUE COPY) BY ORDER ASST. REGISTRAR, I TAT, MUMBAI BENCHES MUMBAI. VM.