Sabina Halder, Kolkata V. ITO, WD-53(3), KOLKATA, Kolkata

ITA 876/KOL/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4971 (ITAT-KOLKATA)
• Duration Of Justice: 8 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2016
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 16-06-2015
• Court: TRIBUNAL
• Assessee Lawyers: J M THARD
• Keywords: Opportunity of being heard; Retrospective amendment
• Section: 143(3); 263

Judgement Text

I.T.A. NO. 876/KOL./2015 ASSESSMENT YEAR: 2008-2009 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA SMC BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER I.T.A. NO. 876/KOL/ 2015 ASSESSMENT YEAR: 2008-2009 SMT. SABINA HALDER,................................ .................................APPELLANT C-519, RAMDASHATI, GARDEN REACH, KOLKATA-700 024 [PAN : AASPH 1621 E] -VS.- INCOME TAX OFFICER,................................ .............................RESPONDENT WARD-53(3), KOLKATA, AAYAKAR BHAWAN DAKSHIN, 2, GARIAHAT ROAD (SOUTH), KOLKATA-700 068 APPEARANCES BY: SHRI J.M. THARD, ADVOCATE, FOR THE ASSESSEE SHRI AMITABH CHOWDHURY, JCIT, SR. D.R., FOR THE DEP ARTMENT DATE OF CONCLUDING THE HEARING : FEBRUARY 17, 2016 DATE OF PRONOUNCING THE ORDER : MARCH 02, 2016 O R D E R THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD. CIT(APPEALS)-7, KOLKATA DATED 21.04.2015, WHERE BY HE CONFIRMED THE ADDITION OF RS.6,39,945/- MADE BY THE ASSESSING OFF ICER BY WAY OF DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT IN THE ASSESSMENT MADE UNDER SECTION 143(3) READ WITH SECTION 263. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L, WHO IS ENGAGED IN THE BUSINESS OF TRADING OF ASBESTOS-SHEET AND ACCES SORIES UNDER THE NAME AND STYLE OF HER PROPRIETARY CONCERN M/S. HALDER EN TERPRISE. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILE D BY HER ON 23.09.2009 DECLARING TOTAL INCOME OF RS.5,92,560/-. IN THE ASSESSMENT ORIGINALLY COMPLETED UNDER SECTION 143(3) VIDE AN O RDER DATED 03.12.2010, THE TOTAL INCOME OF THE ASSESSEE WAS DE TERMINED BY THE ASSESSING OFFICER AT RS.7,02,680/-. THE RECORD OF T HE SAID ASSESSMENT I.T.A. NO. 876/KOL./2015 ASSESSMENT YEAR: 2008-2009 PAGE 2 OF 5 CAME TO BE SUBSEQUENTLY EXAMINED BY THE LD. CIT(APP EALS) AND ON SUCH EXAMINATION, HE FOUND THAT THE ASPECT OF TAX DEDUCT ION AT SOURCE FROM THE PAYMENTS MADE BY THE ASSESSEE AMOUNTING TO RS.6,39, 945/- TO M/S. PAHARPUR CARRIERS ON ACCOUNT OF CARRIAGE INWARD WAS NOT VERIFIED BY THE ASSESSING OFFICER LEADING TO FAILURE TO MAKE A DISA LLOWANCE UNDER SECTION 40(A)(IA). HE, THEREFORE, INVOKED HIS POWERS UNDER SECTION 263 AND SET ASIDE THE ORDER PASSED BY THE ASSESSING OFFICER UND ER SECTION 143(3) HOLDING THE SAME TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE WITH A DIRECTION TO THE ASSESSING OFFICER T O MAKE THE SAME AFRESH AFTER EXAMINING THE ISSUE RELATING TO THE DISALLOWA NCE UNDER SECTION 40(A)(IA) AS PER THE DIRECTION GIVEN BY THE LD. CIT VIDE HIS ORDER DATED 26.03.2013 PASSED UNDER SECTION 263. 3. THE ISSUE RELATING TO THE DISALLOWANCE UNDER SEC TION 40(A)(IA) IN RESPECT OF PAYMENTS MADE BY THE ASSESSEE TO M/S. PA HARPUR CARRIERS TOWARDS CARRIAGE INWARD WAS EXAMINED BY THE ASSESSI NG OFFICER. ON SUCH EXAMINATION, HE HELD THAT THE ASSESSEE WAS REQUIRED TO DEDUCT TAX AT SOURCE FROM THE SAID PAYMENTS MADE TO M/S. PAHARPUR CARRIERS FOR TRANSPORTATION WORK AND SINCE NO SUCH DEDUCTION WAS MADE BY THE ASSESSEE, THE EXPENDITURE INCURRED ON TRANSPORTATIO N CHARGES AMOUNTING TO RS.6,39,945/- WAS LIABLE TO BE DISALLOWED UNDER SECTION 40(A)(IA). ACCORDINGLY DISALLOWANCE TO THAT EXTENT WAS MADE BY HIM IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) READ WITH SECTION 263 VIDE ORDER DATED 18.10.2013. 4. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICE R UNDER SECTION 143(3) READ WITH SECTION 263, AN APPEAL WAS PREFERR ED BY THE ASSESSEE BEFORE THE LD. CIT(APPEALS) DISPUTING THE DISALLOWA NCE MADE BY THE ASSESSING OFFICER UNDER SECTION 40(A)(IA) AND AFTER TAKING INTO CONSIDERATION THE SUBMISSIONS MADE BY THE ASSESSEE AS WELL AS THE MATERIAL AVAILABLE ON RECORD, THE LD. CIT(APPEALS) CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER SE CTION 40(A)(IA) THEREBY DISMISSING THE APPEAL OF THE ASSESSEE. AGGR IEVED BY THE ORDER OF I.T.A. NO. 876/KOL./2015 ASSESSMENT YEAR: 2008-2009 PAGE 3 OF 5 THE LD. CIT(APPEALS), THE ASSESSEE HAS PREFERRED TH IS APPEAL BEFORE THE TRIBUNAL. 5. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS SUBMITTED BY THE LD. COUNSEL FOR THE ASSESESE, AN APPEAL WAS ALSO PREFERRED BY THE A SSESSEE BEFORE THE TRIBUNAL AGAINST THE ORDER PASSED BY THE LD. CIT UN DER SECTION 263 DATED 26.03.2013 AND ALTHOUGH THE TRIBUNAL WHILE DISPOSIN G OF THE SAID APPEAL VIDE ITS ORDER DATED 22.01.2016 PASSED IN ITA NO. 1 502/KOL/2013 UPHELD THE ORDER OF THE LD. CIT UNDER SECTION 263 DIRECTIN G THE ASSESSING OFFICER TO EXAMINE THE ISSUE RELATING TO THE DISALLOWANCE U NDER SECTION 40(A)(IA), THE ALTERNATIVE CONTENTION OF THE ASSESSEE BASED ON THE AMENDED PROVISION OF SECTION 40(A)(IA) HAS BEEN ACCEPTED BY THE TRIBUNAL BY OBSERVING AS UNDER:- HOWEVER AS REGARDS THE PLEA OF THE ASSESSEE REGARD ING THE AMENDMENT OF SECTION 40(A)(IA) THAT IT IS RETROSPECTIVE IN NATUR E IS CONCERN, WE AGREE WITH THE CONTENTION OF THE LD. AR THAT THIS AMENDMENT IS BEI NG RETROSPECTIVE IN TERMS OF THE JUDGMENT OF HONBLE CALCUTTA HIGH COURT IN CIT V VIRGIN CREATIONS IN ITAT NO. 302 OF 2011, GA NO. 3200 OF 2011 DATED 232.11.2011, WHEREIN IT WAS HELD IN THE CONTEXT OF SECTION 40(A)(IA) THAT THE AMENDMENT IS REMEDIAL IN NATURE AND DESIGNED TO ELIMINATE UNINTENDED CONSEQU ENCES WHICH MAY CAUSE UNDUE HARDSHIP TO THE TAXPAYERS AND IS OF CLARIFICA TORY IN NATURE AND, THEREFORE, HAS TO BE TREATED AS RETROSPECTIVE IN NA TURE. IT IS A WELL SETTLED LAW THAT WHEN A PROVISION IS INSERTED AS A REMEDY TO MA KE THE PROVISION WORKABLE, IT IS REQUIRED TO BE CONSIDERED TO BE APPLICABLE RE TROSPECTIVELY. NOW FROM THE ORDER OF THE LD. CIT WE FIND THAT THE PLEA OF THE A SSESSEE WAS REJECTED THAT THE AMENDED PROVISIONS OF SECTION 40(A)(IA) OF THE FINA NCE ACT 2012 IS EFFECTIVE FROM 01.04.2013. BUT THE FACTUAL POSITION IS THAT T HE AMENDMENT IS RETROSPECTIVE IN TERMS OF THE ABOVE DISCUSSION. WE ARE ALSO RELYING IN ASSESSEES OWN CASE OF THIS TRIBUNAL SMC BENCH IN ITA NO. 2515/KOL/2013 DATED 06.11.2015, WHEREIN THE TRIBUNAL IN THE SIMILAR FAC TS OF THE CASE AS HELD: IN PARA 5.1:-- 5.1 I AM OF THE VIEW THAT INSERTION OF SECOND PROV ISO TO SECTION 40(A)(IA) OF THE ACT IS CURATIVE AND IT HAS RETROSP ECTIVE EFFECT W.E.F. 1 ST APRIL, 2005, BEING A DATE FROM WHICH SECTION 40(A) (IA) OF THE ACT WAS INSERTED BY THE FINANCE (NO.2) ACT, 2004. IN VI EW OF THIS, I AM OF THE VIEW THAT MATTER NEEDS FRESH ADJUDICATION IN TH E LIGHT OF THE FACT THAT THE ASSESSING OFFICER WILL CARRY OUT NECESSARY VERIFICATION IN REGARD TO RELATED PAYMENTS HAVING BEEN TAKEN INTO A CCOUNT BY THE RECIPIENT IN COMPUTATION OF ITS INCOME AND VERIFICA TION OF PAYMENT OF TAXES IN RESPECT OF SUCH INCOME AND ALSO FILING OF INCOME TAX RETURN BY THE RECIPIENT. IN TERMS OF THE ABOVE, THI S ASPECT ARGUED BY THE LD. COUNSEL IS RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER I.T.A. NO. 876/KOL./2015 ASSESSMENT YEAR: 2008-2009 PAGE 4 OF 5 AND ASSESSEE WILL PROVIDE ALL THE DETAILS IN TERMS OF SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT. IN VIEW OF ABOVE AND FROM THE FACTS THAT THE AMENDE D PROVISIONS ARE APPLICABLE WITH RETROSPECTIVE EFFECT WE MODIFY THE ORDER OF LD . CIT ON THE APPLICABILITY OF AMENDED PROVISIONS OF SECTION 40(A)(IA) OF THE ACT BY DIRECTING THE AO TO VERIFY IF THE PAYEES HAVE INCLUDED THE RECEIPTS FROM THE A SSESSEE IN THEIR RETURN OF INCOME. IF THE ASSESSEE SATISFIES THE AO IN THIS RE GARD THAT THE PAYEES HAVE INCLUDED THE SUM RECEIVED FROM ASSESSEE IN THEIR RE TURN OF INCOME THEN THE AO WILL NOT MAKE DISALLOWANCE U/S. 40(A)(IA) OF THE AC T TO THAT EXTENT. THE AO WILL OFFER OPPORTUNITY OF BEING HEARD TO ASSESSEE. 6. KEEPING IN VIEW THE ABOVE DECISION OF THE TRIBUN AL RENDERED WHILE DISPOSING OF THE APPEAL OF THE ASSESSEE FILED AGAIN ST THE ORDER UNDER SECTION 263 ACCEPTING THE ALTERNATIVE CONTENTION OF THE ASSESSEE AND DIRECTING THE ASSESSING OFFICER TO VERIFY THE SAME, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED BEFORE ME THAT THE PRESENT A PPEAL FILED BY THE ASSESSEE HAS VIRTUALLY BECOMES INFRUCTUOUS AND THE SAME MAY BE DISMISSED ACCORDINGLY. I, THEREFORE, DISMISS THE SA ME. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON MARCH 02, 20 16. SD/- (P.M. JAGTAP) ACCOUNTANT MEMBER KOLKATA, THE 2 ND DAY OF MARCH, 2016 COPIES TO : (1) SMT. SABINA HALDER, C-519, RAMDASHATI, GARDEN REACH, KOLKATA-700 024 (2) INCOME TAX OFFICER, WARD-53(3), KOLKATA, AAYAKAR BHAWAN DAKSHIN, 2, GARIAHAT ROAD (SOUTH), KOLKATA-700 068 (3) COMMISSIONER OF INCOME-TAX (APPEALS)-7, KOLKAT A (4) COMMISSIONER OF INCOME TAX, KOLKATA I.T.A. NO. 876/KOL./2015 ASSESSMENT YEAR: 2008-2009 PAGE 5 OF 5 (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.