MANUBHAI P KAMDAR, MUMBAI V. ITO 24(2)(4), MUMBAI

ITA 7237/MUM/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0452 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 22-12-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 05-12-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PRAKASH R MANE
• Keywords: Opportunity of being heard
• Section: 143(3); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I MUMBAI BEFORE SHRI AMARJIT SINGH (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 7237/MUM/2014 ASSESSMENT YEAR: 2009 - 10 MR. MANUBHAI P KAMDAR VS. ITO 24(2)(4) 16, 3 RD FLOOR, PRITI APT. MUMBAI KHANDWALA LANE, MALAD (E) MUMBAI 400 09 7 PAN NO. AAPPK2958L (APPELLANT) (RESPONDENT) ASSESSEE BY : MS. NEHA PARANJPE , A R REVENUE BY: MR. PRAKASH R. MANE , D R DATE OF HEARING : 11/05 /2017 DATE OF PRONOUNCEMENT: 07/08/2017 ORDER PER N.K. PRADHAN, AM THIS IS AN APPEAL FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEAR IS 2009 - 10. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 34, MUMBAI AND ARISES OUT OF ORDER U/S 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT). 2 . BEFORE US, THE LD. COUNSEL OF THE ASSESSEE SUBMITS THAT THE ASSESSEE WOULD NOT LIKE TO PRESS THE 1 ST , 3 RD AND 4 TH GROUND OF APPEAL. ACCORDINGLY, THE ABOVE GROUNDS OF APPEAL ARE DISMISSED AS NOT PRESSED. THE ONLY GROUND OF APPEAL LEFT IS THE 2 ND ONE AND IT READS AS UNDER : ADDITION OF DISALLOWANCE U/S 40(A)(1A) RS. 5,02,128.00 THE ASSESSING OFFICER HAS ERRED IN DISALLOWING RS. 502128 U/S 40(A)(IA) ON ACCOUNT OF NOT DEDUCTING THE TDS ON RS. 502128, (A/C ITA NO. 7237 /MUM/201 4 2 CHARGES RS. 20000, COMMISSION RS. 311350, PR OFESSIONAL FEES 20000, TRANSPORT CHARGES RS. 75178 AND INTEREST PAYMENT RS. 75600) AS THE ASSESSEE WHO WAS INDIVIDUAL AND THUS NOT LIABLE TO DEDUCT THE TDS AS PER THE PROVISO TO SECTION 194A, 194C, 194H & 194J WHICH PROVIDES FOR DEDUCTION OF TDS IN THE FIN ANCIAL YEAR 2008 - 09, IF THE INDIVIDUAL ASSESSEE IS COVERED BY TAX AUDIT IN THE PRECEDING FINANCIAL YEAR 2007 - 08. IN THE ABOVE CASE, THE TURNOVER OF THE ASSESSEE IS RS. 34.67 LACS IN THE FINANCIAL YEAR 2007 - 08 AND THE TAX AUDIT U/ 44AB IS NOT ATTRACTED IN F INANCIAL YEAR 2007 - 08 AND IN VIEW OF THE ABOVE, THE TDS PROVISIONS ARE NOT APPLICABLE TO THE ASSESSEE FOR THE FINANCIAL YEAR 2008 - 09 (ASSESSMENT YEAR 2009 - 10). IN VIEW OF THE ABOVE, THE DISALLOWANCE OF RS. 502128 MAY BE DELETED. 3. THE AO NOTICED THAT THE ASSESSEE HAD DEBITED (I) EXPENSES ON ACCOUNT OF ACCOUNANCY CHARGES OF RS. 20,000/ - , (II) COMMISSION PAYMENT OF RS.3,11,350/ - , (III) PROFESSIONAL FEES OF RS.20,000/ - , (IV) TRANSPORT CHARGES OF RS. 75,178/ - AND (V) INTEREST PAYMENT OF RS.75,600/ - , THUS TOTAL LING TO RS. 5,02,128/ - HE ASKED THE AR OF THE ASSESSEE TO FURNISH THE DETAILS OF THE SALE AND CLARIFY WHETHER THE ASSESSEE HAD MADE TDS ON THE SAID PAYMENTS. IN RESPONSE TO IT THE AR OF THE ASSESSEE HAS SUBMITTED BEFORE THE AO THAT THE IMPUGNED ASSESSMENT YEAR IS THE FIRST YEAR OF AUDIT AND AS SUCH THE SAID PROVISIONS ARE NOT APPLICABLE. THE AO HAVING EXAMINED THE ABOVE EXPLANATION OF THE ASSESSEE CAME TO A FINDING THAT THE ASSESSEE HAD NOT MADE TDS ON THE AFORESAID PAYMENTS AND THEREFORE, THE CLAIM OF EXPE NSES IS NOT TENABLE U/S 40(IA) OF THE ACT. THEREFORE, THE AO MADE A DISALLOWANCE OF THE ABOVE PAYMENT OF RS.5,02,128/ - . 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A). REGARDING THE DISALLOWANCE OF RS.5,02,128/ - , T HE LD. CIT(A) OBSERVED THAT IN THE AY 2007 - 08, THE ASSESSEE HAD ACCEPTED THE FACT THAT HIS ACCOUNTS WAS SUBJECT TO AUDIT. HENCE, THE ITA NO. 7237 /MUM/201 4 3 PLEA OF THE ASSESSEE THAT AY 2009 - 10 WAS THE FIRST YEAR OF AUDIT WAS NOT CORRECT. AS THE ASSESSEE HAD NOT MADE TDS ON THE S AID PAYMENTS KNOWINGLY, THE LD. CIT(A) CONFIRM ED THE DISALLOWANCE MADE BY THE AO. 5. BEFORE US, THE LD. COUNSEL OF THE ASSESSEE FILES A PAPER BOOK (P/B) CONTAINING (I) COPY OF PROFIT & LOSS ACCOUNT AND BALANCE SHEET AS ON 31.03.2009, (II) COPY OF PROFIT & LOSS ACCOUNT AND BALANCE SHEET AS ON 31.03.2008 AND (III) COPY OF A SUBMISSION DATED 29.01.2014 FILED BEFORE THE LD. CIT(A). 5.1 THE LD. COUNSEL ALSO SUBMITS THAT THE ASSESSEE, AN INDIVIDUAL WAS NOT LIABLE TO MA K E TDS AS PER THE PROVISO TO SECTION 194A, 1 94C, 194H AND 194J WHICH PROVIDES FOR DEDUCTION OF TAX, IF THE INDIVIDUAL ASSESSEE IS COVERED BY TAX AUDIT IN THE PRECEDING FINANCIAL YEAR. IT IS STATED BY THE LD. COUNSEL THAT THE TURNOVER OF THE ASSESSEE WAS RS.34.67 LAKHS IN THE FINANCIAL YEAR 2008 - 09 R ELEVANT TO THE ASSESSMENT YEAR 2009 - 10 AND THEREFORE, THE DISALLOWANCE OF RS.5,02,128/ - MADE BY THE AO U/S 40(A)(IA) BE DELETED. 6. ON THE OTHER HAND, THE LD. DR RELIES ON THE ORDER PASSED BY THE LD. CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PER USED THE RELEVANT MATERIAL ON RECORD. WE OBSERVE THAT THE NEWLY INSERTED (W.E.F. 01.06.2002) PROVISO TO SECTION 194C(2), BEFORE EXPLANATION 1, BY THE FINANCE ACT, 2002 (20 OF 2002), MAKES IT OBLIGATORY FOR AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY TO DEDUC T TAX U/S 194C (2) IN A CASE WHERE TOTAL SALES, GROSS RECEIPTS OR TURNOVER FROM THE BUSINESS OR PROFESSION CARRIED ON BY HIM EXCEED THE MONETARY LIMITS SPECIFIED UNDER CLAUSE (A) OR CLAUSE (B) OF SECTION 44AB DURING THE FINANCIAL ITA NO. 7237 /MUM/201 4 4 YEAR IMMEDIATELY PRECEDING THE FINANCIAL YEAR IN WHICH SUCH SUM IS CREDITED OR PAID TO THE ACCOUNT OF THE SUB - CONTRACTOR. SIMILAR IS THE POSITION IN RESPECT OF SECTION 194A, 194H AND 194J. 7.1 WE FIND THAT NEITHER THE AO NOR THE LD. CIT(A) HAS EXAMINED THE ABOVE ASPECT IN RELATI ON TO TOTAL SALES, GROSS RECEIPTS OR TURNOVER FROM THE BUSINESS OF THE ASSESSEE. THEREFORE, WE SET ASIDE THE ORDER OF THE LD. CIT(A) ON THE ABOVE ISSUE AND RESTORE THE SAME TO THE FILE OF THE AO TO MAKE A FRESH ASSESSMENT IN THE LIGHT OF OUR OBSERVATION MA DE AT PARA 7 HERE - IN - ABOVE AFTER GIVING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE DIRECT THE ASSESSEE TO FILE DETAILS WITH REGARD TO HIS TOTAL SALES, GROSS RECEIPTS OR TURNOVER FROM THE BUSINESS BEFORE THE AO. THUS THE 2 ND GROUND OF APPE AL IS ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN C OURT ON 07/08/2017. SD/ - SD/ - ( AMARJIT SINGH) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI : DATED: 07/08/2017 RAHUL SHARMA , SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, ITA NO. 7237 /MUM/201 4 5 //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI