Sri C M Mallad, Bijapur V. Assistant Commissioner of Income tax, Belgaum

ITA 727/BANG/2016

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4805 (ITAT-BANGALORE)
• Duration Of Justice: 3 year(s) 10 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 05-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Retrospective amendment; Set aside
• Section: 143(3); 40(a)(ia); 194C; 40a(ia)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI A. K. GARODIA, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI , JUDICIAL MEMBER ITA NO. 727 /BANG /201 6 ASSESSMENT YEAR : 2005-06 SHRI CHANNABASAPPA M MALLAD, VIJAYANAGAR COLONY, SOLAPUR ROAD, BIJAPUR. PAN : A JLPM 7802 L VS. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1, BELGAUM. APPELLANT RESPONDENT ASSESSEE BY : SHRI. NARENDRA SHARMA, ADVOCATE REVENUE BY : SHRI. SHAHNAWAZ UL RAHMAN , J CIT (DR)(ITAT), BENGALURU DATE OF HEARING : 1 2 . 0 2 .20 20 DATE OF PRONOUNCEMENT : 24 . 0 2 .20 20 O R D E R PER A.K. GARODIA, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE ASSESSEE AND THE SAME IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-VI, BENGALURU, DATED 21.12.2010, FOR THE ASSESSMENT YEAR 2005-06. 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS OF APPEAL BUT THE ONLY GRIEVANCE OF THE ASSESSEE IS REGARDING DISALLOWANCE MADE BY THE AO UNDER SECTION 40A(IA) OF THE INCOME TAX ACT, 1961 OF RS.29,55,600/-. THIS APPEAL IS FILED BY THE ASSESSEE AFTER A DELAY OF 1872 DAYS AND THE ASSESSEE HAS MOVED AN APPLICATION FOR CONDONATION OF DELAY. ITA NO.727/BANG/2016 PAGE 2 OF 4 3. IN THE COURSE OF HEARING, LEARNED AR OF THE ASSESSEE SUBMITTED A COPY OF THE TRIBUNAL ORDER RENDERED IN A SIMILAR CASE OF A RELATIVE I.E, IN THE CASE OF SHRI. TIRUMALARAO P. MOKASHI VS. ACIT IN ITA NO.724/BANG/2016 DATED 29.11.2019 AND SUBMITTED THAT IN THIS CASE ALSO, THERE WAS A DELAY OF 1872 DAYS IN FILING THE APPEAL AND IN THAT CASE ALSO, THE DISALLOWANCE WAS MADE BY AO UNDER SECTION 40A(IA) OF THE IT ACT, 1961 IN THE ORDER PASSED BY THE AO UNDER SECTION 143(3) R.W.S. 263 OF IT ACT, 1961 AS IN THE PRESENT CASE. HE SUBMITTED THAT UNDER SIMILAR FACTS, THE TRIBUNAL IN THAT CASE CONDONED THE DELAY AND RESTORED THE MATTER BACK TO THE FILE OF THE AO TO DECIDE THE ISSUE AFRESH AS PER DIRECTIONS GIVEN IN PARA 7 OF THAT TRIBUNAL ORDER. HE POINTED OUT THAT PARAS 5, 6 AND 7 ARE RELEVANT IN THE PRESENT CASE ALSO AND THE DELAY SHOULD BE CONDONED AND THE MATTER SHOULD BE RESTORED BACK TO THE FILE OF AO FOR A FRESH DECISION WITH SIMILAR DIRECTIONS. LEARNED DR OF THE REVENUE SUPPORTED THE ORDER OF CIT(A). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT NO DIFFERENCE IN FACTS COULD BE POINTED OUT BY LEARNED DR OF THE REVENUE IN THE PRESENT CASE AND IN THE CASE CITED BY LEARNED AR OF THE ASSESSEE. WE FIND THAT IN THAT CASE ALSO, THE APPEAL WAS FILED BEFORE TRIBUNAL AFTER A DELAY OF 1872 DAYS AND IN THAT CASE ALSO, THE DISALLOWANCE WAS MADE BY AO UNDER SECTION 40A(IA) OF THE IT ACT, 1961 IN THE ORDER PASSED BY HIM UNDER SECTION 143(3) R.W.S. 263 OF THE IT ACT, 1961. HENCE, IN OUR CONSIDERED OPINION, THIS TRIBUNAL ORDER IS SQUARELY APPLICABLE IN THE PRESENT CASE. WE REPRODUCE PARAS 5 TO 7 OF THIS TRIBUNAL ORDER FOR READY REFERENCE. IT READS AS UNDER: 5. WE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL PLACED ON RECORD. WE ARE OF THE CONSIDERED VIEW THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE IT IS A FIT CASE FOR CONDONING THE DELAY, SINCE, THE HONBLE JURISDICTIONAL HIGH COURT HELD THAT THE DISALLOWANCE U/S. 40(A)(IA) OF THE ACT NOT WAS EXAMINED BY THE ITA NO.727/BANG/2016 PAGE 3 OF 4 AO WITH REGARD TO ITS RETROSPECTIVE NATURE. THEREFORE, IN THE INTEREST OF JUSTICE, WE CONDONE THE DELAY AND ADMIT THE APPEAL. 6. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PLACED ON RECORD. IN THE INSTANCE CASE, THE ID. AR SUBMITTED THAT THE ISSUE INVOLVED IN THIS CASE IS THE DISALLOWANCE U/S. 40(A)(IA) OF THE ACT. THE ASSESSEE MADE THE PAYMENT OF RS. 2,73,06,000/- TOWARDS SUB-CONTRACT PAYMENTS WITHOUT DEDUCTION OF TAX AT SOURCE AS REQUIRED U/S. 194C OF THE ACT, WHICH ATTRACTS THE DISALLOWANCE U/S. 40(A)(IA) OF THE ACT. THE ASSESSEE SUBMITTED BEFORE THE AO THAT RECIPIENTS HAVE ADMITTED THE INCOME IN THEIR HANDS AND PAID THE TAXES THEREON, THUS CONTENDED THAT AS PER SECOND PROVISO TO S. 40(A)(IA) OF THE ACT INSERTED BY FINANCE ACT, 2012, NO ADDITION IS WARRANTED. ACCORDING TO THE ID. AR, THE AMENDMENT MADE TO SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT IS HELD TO BE DECLARATORY, CURATIVE AND HAS RETROSPECTIVE EFFECT FROM 1 ST APRIL, 2005 BY VARIOUS HON'BLE HIGH COURTS INCLUDING THE HON'BLE JURISDICTIONAL HIGH COURT IN THE ASSESSEE'S OWN CASE. THE ISSUE IN THE IMPUGNED APPEAL IS ALSO IDENTICAL. THE HON'BLE JURISDICTIONAL HIGH COURT IN ASSESSEE'S APPEAL NO.200001/2016 DATED 23/09/2019 DIRECTED THE ITAT TO PASS THE APPROPRIATE ORDERS IN PENDING APPEAL. IN THE INSTANT CASE, THE AO DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE THAT THE AMENDMENT WAS RETROSPECTIVE. THE HON'BLE HIGH COURT IN ITS ORDER STATED TO BE HELD THAT AMENDMENT HAS RETROSPECTIVE EFFECT. FOR THE SAKE OF CLARITY AND CONVENIENCE, WE EXTRACT PARAL NO.3 & 4 OF THE ORDER OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE ORDER CITED, SUPRA, DATED 23.08.2019, WHICH READS AS UNDER: '3. APPEAL NO.724/BNG/2016 FILED BY THE ASSESSEE IS PENDING BEFORE THE ITAT AGAINST THE ORDER GIVING EFFECT TO, THE ORDER PASSED UNDER SECTION 263 OF THE ACT BY THE COMMISSIONER OF INCOME TAX. 4. IN VIEW OF THE SECOND PROVISO TO S. 40(A)(IA) OF THE ACT IS HELD TO BE DECLARATORY AND CURATIVE AND HAS RETROSPECTIVE EFFECT FROM 1 ST APRIL, 2005 BY VARIOUS HON'BLE HIGH COURT INCLUDING THE JURISDICTIONAL HIGH COURT IN ITA NO.100056/2014 DISPOSED OF TODAY, THE ORDER GIVING EFFECT TO, THE ORDER OF CIT UNDER SECTION 263 OF THE ACT REQUIRES TO BE CONSIDERED IN THE PENDING APPEAL BEFORE THE ITAT BEING UNINFLUENCED BY ANY OF THE OBSERVATIONS MADE IN THE SAID ORDER I.E., ORDER PASSED UNDER SECTION 263(1) AS WELL AS THE ORDER IN ITA NO.503(BH)/2009 DATED 30.09.2009 BY ITAT. HENCE, THE HON'BLE 1AT SHALL DISPOSE OF THE PENDING APPEAL NO.724/BNG/2016 IN ACCORDANCE WITH LAW RELATING TO THE ASSESSMENT YEAR 2005-06 AS AFORESAID.' 7. SINCE, THE ISSUE INVOLVED IN THIS APPEAL IS THE ADDITION MADE U/S. 40(A)(IA) OF THE ACT FOR NON DEDUCTION OF TAX AT SOURCE, IN THE LIGHT OF ITA NO.727/BANG/2016 PAGE 4 OF 4 THE JUDGEMENT OF HON'BLE JURISDICTIONAL HIGH COURT WE CONSIDER IT APPROPRIATE TO REMIT HE MATTER BACK TO THE FILE OF AO TO EXAMINE WHETHER THE ASSESSEE HAS DEDUCTED THE TAX AT SOURCE AND REMITTED TO THE GOVERNMENT ACCOUNT OR WHETHER THE RECIPIENT HAVE ADMITTED THE INCOME AND PAID THE TAXES AS PROVIDED IN THE AMENDMENT MADE TO FINANCE ACT AND DECIDE THE ISSUE AFRESH ON MERITS. THE ID. AR IS DIRECTED TO PLACE THE COPY OF RELEVANT ORDERS OF HON'BLE HIGH COURT BEFORE THE AO FOR CONSIDERATION. ACCORDINGLY. WE SET ASIDE THE ORDER OF ID. CIT(A) AND ALLOW THE APPEAL OF THE ASSESSEE FOR STATISTICAL PURPOSE. 5. RESPECTFULLY FOLLOWING THIS TRIBUNAL ORDER, WE CONDONE THE DELAY AND RESTORE THE MATTER BACK TO THE FILE OF AO FOR A FRESH DECISION WITH SAME DIRECTIONS AS WERE GIVEN BY THE TRIBUNAL IN THAT CASE AS PER THE RELEVANT PARAS REPRODUCED ABOVE. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE. SD/- SD/- ( BEENA PILLAI ) (A.K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED: 24 TH FEBRUARY, 2020. /NS/* COPY TO: 1. APPELLANTS 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.