Shri Leela Ram Bhagtani, Ajmer V. Income Tax officer, ward-1(2), Ajmer

ITA 793/JPR/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1258 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 05-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J C KULHARI JCIT DHK
• Assessee Lawyers: SUDHIR SOGANI
• Keywords: Audit objection; Difference of opinion; Change of opinion
• Section: 143(3); 154

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKWO] U;KF;D LNL; ,OA JH FOE FLAG ;K NO ] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM AND SHRI VIKRAM SING H YADAV, AM VK;DJ VIHY LA-@ ITA NO. 793/JP/2018 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2010-11. SHRI LEELA RAM BHAGTANI, 11, JANTA BAZAR, PARAO, AJMER. CUKE VS. THE INCOME TAX OFFICER, WARD 1(2), AJMER. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AARPB 8567 E VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI SUDHIR SOGANI (ADVOCATE) JKTLO DH VKSJ LS@ REVENUE BY : SHRI J.C. KULHARI (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 06.09.2018. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 10/09/2018. VKNS'K@ ORDER PER VIJAY PAL RAO, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 3 RD APRIL, 2018 OF LD. CIT (A), AJMER FOR THE ASSESSMENT YEAR 2010 -11. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS :- 1. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFI ED IN SUSTAINING THE ORDER U/S 154 OF THE IT ACT, 1961 PA SSED BY THE LEARNED ASSESSING OFFICER. 2. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CA SE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFI ED IN NOT CONSIDERING THE FACT THAT NO OPPORTUNITY HAS BEEN G IVEN BY THE LEARNED ASSESSING OFFICER BEFORE PASSING ORDER U/S 154 OF THE IT ACT, 1961. 3. THE ASSESSEE APPELLANT CRAVES TO ADD, AMEND, ALT ER, INSERT, WITHDRAW ANY GROUNDS OF APPEAL BEFORE DISPOSAL OF T HE APPEAL. 2 ITA NO. 793/JP/2018. SHRI LEELA RAM BHAGTANI, AJMER. 2. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3 ) OF THE IT ACT ON 26.03.2013 ON A TOTAL INCOME OF RS. 3,79,660/-. SU BSEQUENTLY THE AO HAS PASSED AN ORDER UNDER SECTION 154 OF THE ACT ON 14 TH MARCH, 2017 WHEREBY THE EXPENDITURE OF RENT OF RS. 1,65,846/- WAS DISALLOWED BY INVOKING T HE PROVISIONS OF SECTION 40(A)(IA) FOR WANT OF DEDUCTION OF TDS. THE ASSESSEE CHALLEN GED THE SAID ORDER PASSED BY THE AO UNDER SECTION 154 BEFORE THE LD. CIT (A) AND SUB MITTED THAT THE AO HAS INITIALLY ALLOWED THE CLAIM OF EXPENDITURE ON ACCOUNT OF RENT PAID TO THE RAJASTHAN STATE WAREHOUSING CORPORATION WHILE PASSING THE SCRUTINY ASSESSMENT UNDER SECTION 143(3). HENCE, SUBSEQUENTLY COMING TO A DIFFERENT OPINION ON THE BASIS OF AUDIT OBJECTION IS A CHANGE OF OPINION WHICH IS NOT COVER ED IN THE AMBIT OF ERROR APPARENT ON RECORD UNDER SECTION 154 OF THE ACT. THUS THE AS SESSEE CONTENDED THAT THE ORDER PASSED UNDER SECTION 154 IS BAD IN LAW AND UNJUSTIF IED. FURTHER IT WAS CONTENDED THAT THE AO PASSED THE IMPUGNED ORDER WITHOUT GIVIN G AN OPPORTUNITY TO THE ASSESSEE BEING HEARD AND, THEREFORE, SUCH ORDER AGA INST THE PROVISIONS OF SECTION 154(3) AS WELL AS IN VIOLATION OF PRINCIPLES OF NAT URAL JUSTICE IS NOT SUSTAINABLE. THE LD. CIT (A) DID NOT ACCEPT THE CONTENTION OF THE AS SESSEE AND UPHELD THE ORDER PASSED UNDER SECTION 154. 3. BEFORE US, THE LD. A/R OF THE ASSESSEE HAS REITE RATED HIS CONTENTION THAT THE AO HAS PASSED THE ORDER UNDER SECTION 154 ON THE BA SIS OF THE AUDIT OBJECTION WHICH IS NOTHING BUT CHANGE OF OPINION AND NOT FALLING IN THE AMBIT OF PROVISIONS OF SECTION 154 OF THE ACT. HE HAS FURTHER CONTENDED THAT SINC E THE PAYMENT IS MADE TO THE RAJASTHAN STATE WAREHOUSING CORPORATION (RSWC), THE REFORE, THERE CANNOT BE A CASE OF NON-CONSIDERING THE SAID AMOUNT OF RENT BY THE RSWC IN ITS TOTAL INCOME 3 ITA NO. 793/JP/2018. SHRI LEELA RAM BHAGTANI, AJMER. WHILE FILING THE RETURN OF INCOME. THEREFORE, IN V IEW OF THE SECOND PROVISO TO SECTION 40(A)(IA), NO DISALLOWANCE IS CALLED FOR UNDER SECT ION 40(A)(IA) WHEN THE RECIPIENT HAS INCLUDED THE SAID AMOUNT IN THE TOTAL INCOME AN D FILED THE RETURN OF INCOME. THE LD. A/R HAS FURTHER CONTENDED THAT THE AO HAS P ASSED THE IMPUGNED ORDER UNDER SECTION 154 AND ENHANCED THE ASSESSMENT WITHO UT GIVING AN OPPORTUNITY OF HEARING TO THE ASSESSEE. HE HAS POINTED OUT THAT T HE AO HAS NOT ISSUED NOTICE TO THE ASSESSEE PRIOR TO PASSING THE SAID ORDER UNDER SECTION 154. THUS THE ORDER PASSED BY THE AO IN VIOLATION OF PRINCIPLES OF NATU RAL JUSTICE AS WELL AS CONTRARY TO THE PROVISIONS OF SECTION 154(3) IS NOT SUSTAINABLE AND LIABLE TO BE QUASHED. 4. ON THE OTHER HAND, THE LD. D/R HAS RELIED UPON T HE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT WHEN THE ASSESSEE HAS UNDI SPUTEDLY NOT DEDUCTED TAX AT SOURCE IN RESPECT OF THE PAYMENT OF THE RENT IN QUE STION THEN THE SAID CLAIM IS HIT BY THE PROVISIONS OF SECTION 40(A)(IA) AND ALLOWING TH E SAID CLAIM WHILE PASSING THE ASSESSMENT UNDER SECTION 143(3) IS A MISTAKE APPARE NT ON RECORD WHICH WAS RECTIFIED BY THE AO WHILE PASSING THE IMPUGNED ORDE R UNDER SECTION 154 OF THE ACT. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. THE AO HAS DISALLOWED THE CLAIM OF EXPENDI TURE OF RENT OF RS. 1,65,846/- PAID TO RAJASTHAN STATE WAREHOUSING CORPORATION BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. SINCE THE RENT WAS PA ID TO THE RAJASTHAN STATE WAREHOUSING CORPORATION, THEREFORE WE FIND MERIT IN THE CONTENTION OF THE LD. A/R THAT SAID AMOUNT WAS CERTAINLY CONSIDERED FOR COMPU TING THE TOTAL INCOME AND FILING THE RETURN OF INCOME BY THE RSWC. THEREFORE, IF TH E SAID AMOUNT WAS ALREADY CONSIDERED BY THE RECIPIENT WHILE COMPUTING ITS TOT AL INCOME AND FILED THE RETURN OF 4 ITA NO. 793/JP/2018. SHRI LEELA RAM BHAGTANI, AJMER. INCOME, THEN IN VIEW OF THE SECOND PROVISO TO SECTI ON 40(A)(IA) WHICH HAS BEEN HELD AS APPLICABLE RETROSPECTIVELY BY THE VARIOUS DECISI ONS OF HONBLE HIGH COURTS INCLUDING THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. NARESH KUMAR, 362 ITR 256 (DELHI) NO DISALLOWANCE IS CALL ED FOR. HENCE WITHOUT GOING INTO THE OTHER CONTENTION RAISED BY THE LD. A/R, WE FIND THAT IF THE SAID AMOUNT OF RENT HAS BEEN CONSIDERED BY THE RSWC IN ITS TOTAL INCOME WHILE FILING THE RETURN, THEN NO DISALLOWANCE SHALL BE MADE UNDER SECTION 40(A)(IA) OF THE ACT. ACCORDINGLY WE DIRECT THE AO TO VERIFY THIS FACT AND THEN DECIDE T HE ISSUE IN THE LIGHT OF THE ABOVE OBSERVATIONS AND BINDING PRECEDENTS. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER IS PRONOUNCED IN THE OPEN COURT ON 10/09/ 2018. SD/- SD/- ( FOE FLAG ;KNO ) ( FOT; IKY JKWO (VIKRAM SINGH YADAV ) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 10/09/2018. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- SHRI LEELA RAM BHAGTANI, AJMER. 2. THE RESPONDENT THE ITO WARD 1(2), AJMER. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 793/JP/2018) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 5 ITA NO. 793/JP/2018. SHRI LEELA RAM BHAGTANI, AJMER.