Seed Innovations Private Limited , Hyderabad V. Income Tax Officer, Ward-3(1), Hyderabad

ITA 742/Hyd/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 2520 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 25-10-2021
• Assessment Year: 2014-2015
• Appeal Filed On: 10-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Business income; Opportunity of being heard; TDS
• Section: 143(3); 40(a)(ia)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD (THROUGH VIRTUAL CONFERENCE) BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER IT A NO. 742 /H/20 19 ASSESSMENT YEAR: 2 0 1 4 - 1 5 SEED INNOVATIONS PVT. LTD., HYDERABAD. PAN A AICS0120J VS. INCOME - TAX OFFICER, WARD 3 ( 1 ), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY: S HRI P. MURALI MOHAN RAO REVENUE BY: S HRI ROHIT MUJUMDAR DATE OF HEARING: 25 / 10/ 2021 DATE OF PRONOUNCEMENT: 29 / 10 /2021 O R D E R PER L.P. SAHU, A.M. : TH IS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST CIT (A) - 9 , HYDERABAD S ORDER DATED 07 / 0 3 / 20 19 FOR AY 20 1 4 - 1 5 INVOLVING PROCEEDINGS U/S 143(3) OF THE INCOME TAX ACT, 1961 ; IN SHORT THE ACT . 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED 10 GROUNDS OF APPEAL, THE SUM AND SUBSTANCE OF WHICH IS AGAINST THE ACTION OF THE CIT(A) IN CONFIRMING THE ADDITION OF RS. 70,49,405/ - MADE BY THE AO U/S 40(A)(IA) OF THE ACT. I TA NO. 742 /HYD /20 19 SEED INNOVATIONS PVT. LTD., HYD. : - 2 - : 3. BRIEFLY, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE ENGAGED IN THE BUSINESS OF RESEARCH, DEVELOPMENT, PROCESSING AND MARKETING OF HYBRID SEEDS HAD FILED ITS RETURN OF INCOME FOR THE AY 2014 - 15 ON 30/11/2014 ADMITTING TOTAL INCOME OF RS. 1,58,818/ - . SUBSEQUENTLY, THE CASE WAS SELECTED FOR S CRUTINY UNDER CASS TO VERIFY THE LARGE INCREASE IN SUNDRY CREDITORS AGAINST REDUCTION IN BUSINESS INCOME AS COMPARED TO PRECEDING YEAR AND MISMATCH OF AMOUNT PAID TO RELATED PERSONS U/S 40A(2)(B) REPORTED IN AUDIT REPORT AND ITR. ACCORDINGLY, STATUTORY N OTICES WERE ISSUED TO THE ASSESSEE, AGAINST WHICH THE AR OF THE ASSESSEE FURNISHED THE INFORMATION CALLED FOR. 3.1 ON VERIFICATION OF THE INFORMATION SUBMITTED BY THE ASSESSEE, THE AO NOTICED THAT THE ASSESSEE HAD MADE PAYMENTS TO THE EXTENT OF RS. 70,49 ,905/ - TOWARDS CONTRACT PAYMENTS, INTEREST PAYMENTS, COMMISSION PAYMENTS, RENT PAYMENTS AND CONSULTANCY FEE. THE AO NOTED THAT THE ASSESSEE HAD MADE TDS ON THE ABOVE PAYMENTS BUT HAD NOT CREDITED TO THE CENTRAL GOVT. ACCOUNT AND THE ABOVE FACTS WERE EVEN R EPORTED IN THE AUDIT REPORT. SINCE THE ASSESSEE FAILED TO REMIT THE TDS TO THE CENTRAL GOVT. ACCOUNT IN VIOLATION OF PROVISION, THE CLAIM OF THE EXPENDITURE OF RS. 70,49,905/ - WAS DISALLOWED U/S 40(A)(IA) BY THE AO. I TA NO. 742 /HYD /20 19 SEED INNOVATIONS PVT. LTD., HYD. : - 3 - : 4. WHEN, THE ASSESSEE PREFERRED AN APP EAL BEFORE THE CIT(A), THE CIT(A) CONFIRMED THE ADDITION MADE BY THE AO. 5. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD AS WELL AS GONE THRO UGH THE ORDERS OF REVENUE AUTHORITIES. THE ONLY ISSUE TO BE ADJUDICATED IN THIS APPEAL IS DISALLOWANCE U/S 40(A)(IA) OF THE ACT. THE CONT ENTION OF THE ASSESSEE IS THAT THE PAYEES HAD ALREADY OFFERED THE RECEIPTS OF RS. 70,49,405/ - IN THEIR RESPECTIVE RETURNS OF INCOME AND, THEREFORE, THE PROVISIONS OF SECTION 40 ( A)(IA) OF THE ACT ARE NOT APPLICABLE TO BE INVOKED IN THE HANDS OF THE ASSESSEE . WHEREAS, THE REVENUE AUTHORITIES GRIEVANCE IS THAT THE ASSESSEE FAILED TO SUBSTANTIATE ITS CLAIM BY WAY OF DOCUMENTARY EVIDENCE THAT THE PAYEES HAVE FILED THEIR RETURNS OF INCOME OR NOT AND OFFERED THE RECEIPTS IN THEIR RETURNS OF INCOME. IN VIEW OF TH E ABOVE OBSERVATIONS, WE REMIT THE ISSUE BACK TO THE FILE OF AO WITH A DIRECTION TO DECIDE THE APPEAL BASED ON THE DOCUMENTARY EVIDENCE THAT WILL BE FURNISHED BY THE AO BEFORE HIM , IN ACCORDANCE WITH LAW AND ON MERITS AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN THE MATTER. THE ASSESSEE IS DIRECTED TO FURNISH THE PROOF THAT THE PAYEES HAVE OFFERED THE RECEIPTS IN THEIR RETURNS OF INCOME. THE INTEREST U/S 201(1A) , IF APPLICABLE, I TA NO. 742 /HYD /20 19 SEED INNOVATIONS PVT. LTD., HYD. : - 4 - : SHALL ALSO BE CALCULATED. ACCORDINGLY, THE GROUNDS RAISED BY THE ASS ESSEE ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES IN ABOVE TERMS. PRONOUNCED IN THE OPEN COURT ON 29 TH OCTOBER , 2021 . SD/ - SD/ - ( S.S. GODARA ) (L . P . SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDE RABAD, DATED : 29 TH OCTOBER , 20 2 1 . K V C OPY TO : 1 SEED INNOVATIONS PVT. LTD., C/O P. MURALI & CO., CAS, 6 - 3 - 655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD 82 2 ITO, WARD 3 ( 1 ), HYDERABAD. 3 C I T(A) - 9 , HYDERABAD 4 PR. CIT 3, HYDERABAD 5 ITAT, DR, HYDERABAD. 6 GUARD FILE.