ITO 21(3)(3), MUMBAI V. M.R. M ENTERPRISES, MUMBAI

ITA 8524/MUM/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71984 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 18-12-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 08-12-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SU RENDRA KUMAR
• Assessee Lawyers: HARIDAS BHAT
• Keywords: Additional evidence; Corroborative evidences
• Section: 194C

Judgement Text

, CH CHCH CH INCOME TAX APPELLATE TRIBUNAL,MUMBAI - B BENCH. . .. . . .. . , ,, , !'#$ !'#$ !'#$ !'#$ , ' ' ' ' %& %& %& %& BEFORE S/SH.H.L.KARVA,PRESIDENT & RAJENDRA,ACCOUNTA NT MEMBER /. ITA NO. 8524/MUM/2010 , ' ' ' ' ( ( ( ( / ASSESSMENT YEAR-2006-07 ITO 21(3)(3), C-11, BUILDING, 5 TH FLOOR, PRATYAKSHAKAR BHAVAN, BKC, BANDRA(E) MUMBAI- 400051 VS. M.R.M. ENTERPRISES 10 VIJAY BUILDING, NEXT TO ORKAY MILLS, SAKINAKA, A.K.ROAD, MUMBAI- 400072 PAN:AAGFM8570P ( )* / APPELLANT ) ( +,)* / RESPONDENT ) )* )* )* )* - - - - ' '' ' / APPELLANT BY : SHRI SURENDRA KUMAR +,)* . - ' / RESPONDENT BY : SHRI HARIDAS BHAT ' ' ' ' . .. . /0 /0 /0 /0 / DATE OF HEARING : 18 -12-2013 12( . /0 / DATE OF PRONOUNCEMENT : 18-12-2013 PER RAJENDRA, A.M. CHALLENGING THE ORDER DT.23.9.2010 OF THE CIT(A)-32 ,MUMBAI,ASSESSING OFFICER(AO) HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW,THE LD. CIT(A) HAS ERRED IN RESTRICTING THE DISALLOWANCES OF RS.13,31,684/- MAD E BY THE ASSESSING OFFICER U/S 40(A) (IA) OF THE I T ACT, 1961 TO RS. 1,36,295/-. I.BY DOING SO, THE LD. CIT(A) HAS ERRED IN ACCEPTIN G FRESH EVIDENCE IN RESPECT OF PARTY WISE TDS PAYMENT DETAILS WHICH WERE NOT SUBMITTED BEFORE THE ASSESSING OFFICER DURING THE ASSTT. PROCEEDINGS THEREBY VIOLATING THE PROVISIONS OF RUL E 46A OF THE INCOME-TAX RULES. II.THE LD. CIT(A) HAS ERRED BY IN LINKING THE PAYME NTS MADE WITH REFERENCE TO DIFFERENT BILLS. THE LD. CIT(A) HAS STATED VIDE PARA 3.1 OF HIS ORDE R THAT THE LIMIT OF RS. 20,000/- FOR DEDUCTION OF TDS HAS TO BE RECKONED FOR EACH CONTRACTUAL CRED IT OR PAYMENT AND THAT TDS WILL BE DEDUCTED ONLY IF THE INDIVIDUAL BILL IS MORE THAN R S. 20,000/- DESPITE THE FACT THAT SUMS OF MORE THAN RS. 20,000/- HAVE BEEN PAID WHEREIN TDS IS DED UCTIBLE AS PER SECTION 194C(5) OF THE I T ACT, 1961. III.THE LD. CIT(A) HAS ALSO ERRED IN STATING IN PAR A 3.2 THAT EXCEPT FOR PAYMENT OF RS. 1,36,925/- TO 3 PARTIES, NO OTHER SINGLE BILL CREDI TED TO ANY PARTY ACCOUNT IS MORE THAN RS. 20,000/- AND IN NO CASE, THE AGGREGATE PAYMENT TO A NY PARTY DURING THE WHOLE YEAR EXCEEDS RS. 50,000/-, BUT THE ASSESSING OFFICER HAS STATED THAT ON PERUSAL OF ASSESSEES BANK ACCOUNT STATEMENT, FOLLOWING PAYMENTS ABOVE RS. 50,000/- AR E APPEARING IN DECCAN MERCHANTS CO-OP. BANK, GOREGAON BRANCH, MUMBAL WHICH IS CONTRADICTOR Y. 16/01/2006 RS. 52,893/- 01/12/2005 RS. 73,385/- 02/12/2005 RS. 60,000/- 22/07/2005 RS. 67,706/- 08/07/2005 RS. 51,813/- 13/06/2005 RS. 91,101/ - 2 ITA NO.8524/MUM/2010 M.R.M. ENTERPRISES TOTAL: RS. 3,96,898/- 2.THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE A.O. BE RESTORED. 3.THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND, WHICH MAY BE NECESSARY. 2. ASSESSEE-FIRM,ENGAGED IN THE BUSINESS OF ARRANGING VEHICLES,FILED ITS RETURN OF INCOME ON 26. 10.2006 DECLARING TOTAL INCOME OF RS.1,56,460/-.ASS ESSING OFFICER (AO) FINALISED THE ASSESSMENT ORDER U/S.143(3) OF THE ACT,ON 10.12.200 8,DETERMINING THE TOTAL INCOME AT RS.25.42 LACS.EFFECTIVE GROUND OF APPEAL PERTAINS TO RESTRIC TING THE DISALLOWANCES OF RS.13,31,684/- ;MADE BY THE AO,U/S 40(A)(IA) OF THE ACT; TO RS. 1, 36,295/-.DURING THE ASSESSMENT PROCEEDINGS AO FOUND THAT THE ASSESSEE HAD RECEIVED HIRE CHARGE S FOR CARS SUPPLIED TO VARIOUS ORGANISATIONS,MAINLY TO MUNICIPAL CORPORATION OF GR EATER MUMBAI,THAT THE ASSESSEE HAD ARRANGED CARS FOR HIRING FROM OTHER PARTIES, THAT A N AMOUNT OF RS.66,05,460/- HAD BEEN DEBITED AS HIGHER CHARGES PAID IN THE P&L FOR THAT PURPOSE BY THE ASSESSEE.AO DIRECTED THE ASSESSEE TO GIVE THE PARTY-WISE BREAK-UP AND THE APPLICATION OF TDS WITH REGARD TO THE SAID PAYMENTS.AS PER THE AO IN SPITE OF REPEATED OPPORTUNITIES GIVEN TO THE ASSESSEE-FIRM,IT NEVER GAVE ANY PARTYWISE BREAK-UP OF THE PAYMENTS MADE.IN REGARD TO APPLICABILITY OF TDS WHEN HE EXAMINED THE BANK ACCOUNT OF THE ASSESSEE HE FOUND THAT MANY A PAYMENTS WERE FOR AN AMOUNT OF MORE THAN RS.20,000/-.HE ASKED AN EXPLANATION TO THE ASS ESSEE IN THIS REGARD.VIDE ITS LETTER DT.10.12.2008 ASSESSEE GAVE LIST OF CHEQUES ISSUED FOR HIRING CHARGES PAID BUT THE LIST WAS SUBMITTED WITHOUT ANY NAMES OF PARTIES OR ANY FURTH ER SUPPORTING EVIDENCE.CONSIDERING THESE FACTS HE HELD THAT THE AUDIT HAD NOT BEEN CONDUCTED IN THE PROPER MANNER AND THE SAME COULD NOT BE RELIED ON.HE FOUND THAT EXPENSES LIABLE FOR TDS TO BE DEDUCTED THE DETAILS;AS PER THE LIST OF PAYMENTS CHEQUES ISSUED BY THE ASSESSEE-FIRM THA T WERE ABOVE RS.20,000/-;AMOUNTED TO RS.13.31LACS.AS A RESULT,INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT,HE MADE A DISALLOWANCE OF RS.13,31,684/-. 2.1. AGAINST THE ORDER OF THE AO ASSESSEE PREFERRED AN A PPEAL BEFORE THE FIRST APPEAL AUTHORITY (FAA).AFTER CONSIDERING THE SUBMISSIONS OF THE ASSE SSEE AND THE ASSESSMENT,HE DECIDED TO VERIFY THE CLAIM OF THE ASSESSEE THAT NO INDIVIDUAL BILL FOR ANY PARTY EXCEEDED RS 20,000 AND THAT THE AGGREGATE PAYMENT DURING THE FULL YEAR TO ANY PARTY WAS NOT IN EXCESS OF RS 50,000/- .HE THEREFORE DIRECTED THE ASSESSEE TO FURNISH PART Y WISE DETAILS OF AMOUNTS CREDITED AND PAYMENTS MADE. A DETAILED PARTY WISE ACCOUNT FOR TO TAL AMOUNT OF PAYMENT OF RS 66,05,460/- AS APPEARING IN THE BOOKS OF ACCOUNTS OF THE ASSESS EE WAS SUBMITTED BY IT ALONG WITH THE BREAKUP OF EACH PAYMENT LINKING TO ENTRIES OF THE B ANK A/C.CONSIDERING THESE FACTS HE HELD THAT EXCEPT FOR PAYMENT OF RS 1,36,925 TO 3 PARTIES, NO OTHER SINGLE BILL CREDITED TO ANY PARTY A/C WAS MORE THAN 20,000 AND IN NO CASE THE AGGREGATE P AYMENT TO ANY PARTY DURING THE WHOLE YEAR EXCEEDS RS 50,000/-.HE FURTHER HELD THAT THE LIMIT OF RS 20,000/- HAD TO BE RECKONED FOR EACH BILL AND NOT MORE THAN ONE BILL PUT TOGETHER,THAT I N THE CASE UNDER CONSIDERATION AGGREGATE PAYMENT TO ANY PARTY DID NOT EXCEED RS 50,000/-,THA T INCIDENCE OF TDS WAS ATTRACTED ONLY WHEN A SUM WAS CREDITED OR PAID, WHICHEVER IS EARLI ER AND ONCE THE INCIDENCE OF TDS WAS NOT ATTRACTED AT THE TIME OF CREDIT, IT WOULD NOT COME INTO PLAY AT THE TIME OF MAKING PAYMENT SUBSEQUENTLY FROM ACCUMULATED BALANCE STANDING TO T HE CREDIT OF THOSE PARTIES EVEN IF THE AMOUNT PAID WAS MORE THAN RS 20,000/-, PROVIDED THE AGGREGATE PAYMENT DURING THE YEAR DID NOT EXCEED RS 50,000/-.FINALLY,HE HELD THAT THE PRO VISIONS OF 194C OF THE ACT DID NOT COME INTO OPERATION EXCEPT FOR THE PAYMENTS OF RS 1,36,925/-. UPHOLDING THE ADDITION FOR THE SAID AMOUNT,HE DELETED THE BALANCE DISALLOWANCE. 2.2. BEFORE US,DEPARTMENTAL REPRESENTATIVE (DR) SUBMITTE D THAT DETAILS WERE NOT FILED BY THE ASSESSEE BEFORE THE AO,THAT FAA HAD ADMITTED ADDITI ONAL EVIDENCES IN CONTRAVENTION OF THE 3 ITA NO.8524/MUM/2010 M.R.M. ENTERPRISES RULE 46A OF THE INCOME-TAX RULES,1962(RULES),THAT H E DID NOT CALL FOR ANY REMAND REPORT FROM THE AO THAT AO HAD NO OPPORTUNITY TO VERIFY THE COR RECTNESS OF THE CLAIMS MADE BY THE ASSESSEE.AUTHORISED REPRESENTATIVE(AR) SUBMITTED TH AT DETAILS WERE SUBMITTED DURING THE ASSESSMENT PROCEEDINGS, THAT NAMES OF THE PERSONS C ONCERNED WERE NOT PROVIDED,THAT FAA HAD CONSIDERED THE EVIDENCES PRODUCED BY THE ASSESSEE. 2.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT AO HAD SPECIFICALLY MENTIONED THAT IN SPITE OF REPEATE D OPPORTUNITIES GIVEN TO THE ASSESSEE,IT DID NOT FILE DETAILS REQUIRED BY HIM.EVEN THE LIST OF T HE PERSONS TO WHOM PAYMENT MORE THAN 20,000/- WAS MADE WAS NOT FURNISHED.WE FURTHER FIND THAT FAA HAD MENTIONED THAT THE ASSESSEE HAD SUBMITTED PARTY WISE LIST BEFORE HIM.F ROM THE PAPER BOOK FILED BY THE IT IS CLEAR THAT MATERIAL PRODUCED BY THE ASSESSEE BEFORE HIM W AS FURNISHED BEFORE THE AO.FAA HAS SUBSTANTIALLY REDUCED THE DISALLOWANCE MADE BY THE AO,AFTER CONSIDERING THE PAPERS THAT WERE PRODUCED BEFORE HIM FOR THE FIRST TIME.WE ARE AWARE THAT FAA CAN ADMIT FRESH EVIDENCES/MATERIAL UNDER RULE 46A(4)IN CERTAIN CIRC UMSTANCES,BUT IN HIS ORDER HE HAS NOT MENTIONED AS WHAT WERE THE CIRCUMSTANCES THAT LED H IM TO ADMIT NEW MATERIAL WITHOUT REFERRING TO THE AO.COURTS HAVE HELD THAT THOUGH THE FAA HAVE CO-TERMINUS POWER OF THE AO,HE SHOULD NOT ADMIT ADDITIONAL EVIDENCES WITHOUT CONFRONTING THE AO-ONLY EXCEPTION IS SUB-RULE 4.AS THE FAA HAS DECIDED THE APPEAL ON THE BASIS OF THE DOCU MENTS NOT EXAMINED BY THE AO,SO IN THE INTEREST OF THE JUSTICE,WE WOULD LIKE TO REMIT BACK THE MATTER TO THE FILE OF THE AO FOR FRESH ADJUDICATION.AO IS DIRECTED TO AFFORD A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE AND ASSESSEE-FIRM IS DIRECTED TO EXTEND FULL CO-OPERATI ON TO THE AO. EFFECTIVE GROUND OF APPEAL IS ALLOWED IN FAVOUR OF THE AO. AS A RESULT,APPEAL FILED BY THE AO STANDS ALLOWED FOR STATISTICAL PURPOSES. 3 &4 ' 3/ VF/KDKJH VF/KDKJH VF/KDKJH VF/KDKJH . 5. 67'8 ' !9 . !/ :;. ORDER PRONOUNCED IN THE OPEN COURT TODAY I.E. 18 TH DECEMBER,2013 . %'< . 12( ' # = >%' 18 FNLACJ FNLACJ FNLACJ FNLACJ , 2013 2 . ?. SD/- SD/- ( . . - H.L.KARWA) ( !'#$ !'#$ !'#$ !'#$ / RAJENDRA) / PRESIDENT ' ' ' ' %& %& %& %& /ACCOUNTANT MEMBER / MUMBAI, >%' /DATE: 18 TH DECEMBER,2013 SK %'< %'< %'< %'< . .. . +/@ +/@ +/@ +/@ A'@(/ A'@(/ A'@(/ A'@(/ / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / )* 2. RESPONDENT / +,)* 3. THE CONCERNED CIT (A) / B C , 4. THE CONCERNED CIT / B C 5. DR B BENCH, ITAT, MUMBAI / @D? +/' CH CHCH CH , . . # . 6. GUARD FILE/ ? E 4 ITA NO.8524/MUM/2010 M.R.M. ENTERPRISES ,@/ ,@/ ,@/ ,@/ +/ +/+/ +/ //TRUE COPY// %'<' / BY ORDER, 6 / : ! DY./ASST. REGISTRAR , /ITAT, MUMBAI