Koley Construction-SCTPL-Blue View(JV), Hooghly V. ITO, Ward-24(4), Hooghly, Hooghly

ITA 943/KOL/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1663 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 04-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KALYAN NATH
• Assessee Lawyers: J M THARD
• Keywords: Additional evidence; Assessment record
• Section: 143(3); 133(6); 194C; 201(1); 139

Judgement Text

ITA NO.943/KOL/2017-KOLEY CONSTRUCTION SCTPL BL UE VIEW (JV) A.Y.2012-13 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH B KOL KATA [BEFORE HONBLE SHRI N.V.VASUDEVAN, JM & SHRI WAS EEM AHMED, AM ] ITA NO.943/KOL/2017 ASSESSMENT YEAR : 2012-13 KOLEY CONSTRUCTION SCTPL -VERSUS- I.T.O., WARD-24(4) BLUE VIEW (JV), HOOGHLY HOOGHLY (PAN: AALFK 6590 J) (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI J.M.THARD, ADVOCATE FOR THE RESPONDENT: SHRI KALYAN NATH, ADDL. CIT(DR) DATE OF HEARING : 22.08.2017. DATE OF PRONOUNCEMENT : 25.08.2017. ORDER PER N.V.VASUDEVAN, JM: THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 28.02.2017 OF CIT(A)-6, KOLKATA RELATING TO AY 2012-13. 2. GROUNDS OF APPEAL RAISED OF THE ASSESSEE READS A S FOLLOWS :- 1. FOR THAT THE ORDER PASSED BY THE LD. CIT(APPEAL S) IS WRONG, ARBITRARY AND BAD-IN-LAW. 2. FOR THAT THE LD. CIT(APPEALS) ERRED IN CONFIRMIN G THE DISALLOWANCE U1S.40(A)(IA) OF RS.1,69,89,200/- ON IRRELEVANT CON SIDERATIONS BY WRONGLY INTERPRETING THE PROVISIONS OF SEC.40(A)(IA) AND SE C.201(1). 3. FOR THAT THE LD. CIT(APPEALS) WAS WRONG IN CONFI RMING THE DISALLOWANCE U/S.-40(A)(IA) OF RS.1,69,89,200/- EVEN THOUGH THE FORM 26A WAS FURNISHED TO HIM. THE LD. CIT(APPEALS) WRONGLY INTERPRETED THE D ECISION OF ABHOY CHARAN BAKSHI (ITA NO. 1492/KOL/2015 DTD.06.04.2016. 4. FOR THAT THE APPELLANT CRAVES LEAVE TO ALTER, AM END, MODIFY ANY OF THE GROUNDS AND/OR TAKE ADDITIONAL GROUNDS BEFORE OR AT THE TIM E OF HEARING OF THIS APPEAL. 3. THE ASSESSEE IS A PARTNERSHIP FIRM. IT IS ENGAGE D IN THE BUSINESS OF EXECUTING CONSTRUCTION CONTRACTS. IN THE COURSE OF ASSESSMENT PROCEEDINGS U/S 143(3) OF THE INCOME TAX ACT, 1961 (ACT), THE AO NOTICED THAT THE ASSESSEE HAD PAID A SUM OF RS.1,69,89,200/- AS LABOUR CHARGES TO M/S. KOLEY CO NSTRUCTION, SOLE PROPRIETOR SHRI ITA NO.943/KOL/2017-KOLEY CONSTRUCTION SCTPL BL UE VIEW (JV) A.Y.2012-13 2 BANAMALI KOLEY. THE PAYMENT IN QUESTION WAS IN THE NATURE OF PAYMENT FOR CARRYING OUT WORK AND THE ASSESSEE WAS BOUND TO DEDUCT TAX A T SOURCE IN TERMS OF SECTION 194C OF THE ACT. SINCE THE ASSESSEE FAILED TO DEDUCT TAX AT SOURCE THE AO DISALLOWED THE SUM OF RS.1,69,89,200/- WHICH WAS CLAIMED AS EXPENSES B Y THE ASSESSEE IN THE PROFIT AND LOSS ACCOUNT BY INVOKING THE PROVISION OF SECTION 4 0(A)(IA) OF THE ACT. 4. BEFORE CIT(A) THE ASSESSEE SUBMITTED THAT AS THE SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT READ WITH PROVISO TO SECTION 2 01(1) OF THE ACT INSERTED BY FINANCE ACT 2012 W.E.F. 01.04.2013 AND 01.07.2012 RESPECTIV ELY, IF IT IS ESTABLISHED THAT THE PERSON TO WHOM MADE THE PAYMENTS MADE ARE DISALLOWE D U/S 40(A)(IA) OF THE ACT HAS FURNISHED RETURN OF INCOME U/S 139 OF THE ACT AND H AS ALSO TAKEN INTO ACCOUNT THE SUM RECEIVED FROM THE ASSESSEE IN COMPUTING IN SUCH RET URN OF INCOME AND IF HE HAD PAID TAX ON THE INCOME DECLARED BY HIM ON SUCH INCOME AN D FURNISHED THE CERTIFICATE TO THE ABOVE EFFECT TO THE ACCOUNTANT IN FORM NO.26A, THEN THE ASSESSEE CANNOT BE DEEMED TO BE AN ASSESSEE IN DEFAULT U/S 201(1) OF THE ACT AND NO DISALLOWANCE U/S 40(A)(IA) OF THE ACT SHOULD BE MADE. IN THIS REGARD THE ASSESSEE PLA CED RELIANCE ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS ANSA L LAND MARK TOWNSHIP PVT. LTD. 377 ITR 635 (DEL) WHEREIN IT WAS HELD THAT THE AFOR ESAID AMENDMENTS TO THE PROVISO TO SECTION 201(1) AND 40(A)(IA) OF THE ACT WERE RET ROSPECTIVE AND WERE APPLICABLE RIGHT FROM THE TIME WHEN SECTION 40(A)(IA) OF THE ACT WER E ENACTED. THE ASSESSEE FILED CERTIFICATE IN FORM NO.26A AS REQUIRED BY THE PROVI SO TO SECTION 201(1) OF THE ACT AND PRAYED THAT THE ADDITIONS MADE BY THE AO MAY BE DEL ETED. 5. SINCE ADDITIONAL EVIDENCE IN THE FORM OF CER TIFICATE OF A CHARTERED ACCOUNTANT WAS FILED BY THE ASSESSEE BEFORE CIT(A), CIT(A) CAL LED FOR THE REMAND REPORT FROM THE AO. IN THE REMAND REPORT THE MAIN CONTENTION OF THE AO WAS THAT IN THE REMAND PROCEEDINGS HE HAD CALLED FOR THE EVIDENCE FROM SHR I BANAMALI KOLEY, PROPRIETOR OF M/S. KOLEY CONSTRUCTION TO WHOM THE PAYMENTS IN QUE STION WERE MADE BY THE ASSESSEE TO SHOW ENTRIES IN HIS BOOKS OF ACCOUNT BY WHICH A SUM OF RS.1,69,89,200/- RECEIVED FROM THE ASSESSEE AS LABOUR CHARGES HAD BE EN ACCOUNTED FOR. TO SUCH AN ENQUIRY OF THE AO, SHRI BANAMALI KOLEY MERELY RELIE D ON THE PROVISO TO SECTION 201(1) OF THE ACT AND THE CERTIFICATE OF THE CHARTE RED ACCOUNTANT IN FORM NO.26A AND ITA NO.943/KOL/2017-KOLEY CONSTRUCTION SCTPL BL UE VIEW (JV) A.Y.2012-13 3 FAILED TO PRODUCE THE BOOKS OF ACCOUNTS AS DEMANDED BY THE AO. THE AO ACCORDINGLY IN HIS REMAND REPORT WAS OF THE VIEW THAT HE WAS NO T IN A POSITION TO SAY AS TO WHETHER SHRI BANAMALI KOLEY HAD INCLUDED THE PAYMENT RECEIV ED FROM THE ASSESSEE COMPUTING HIS INCOME FOR A.Y.2012-13. 6. THE ASSESSEE REITERATED BEFORE CIT(A) THAT FU RNISHING OF FORM NO.26A SHOULD BE TREATED AS CONCLUSIVE IN THE MATTER AND CIT(A) IN T HE LIGHT OF THE SAID CERTIFICATE WAS BOUND TO DELETE THE DISALLOWANCE U/S 40(A)(IA) OF T HE ACT. THE ASSESSEE CONTENDED THAT THE AO IS NOT REQUIRED TO CHECK THE BOOKS OF ACCOUN T OF THE RECIPIENTS. 7. THE CIT(A) ON A CONSIDERATION OF THE REMAND REPORT AND THE SUBMISSIONS ON BEHALF OF THE ASSESSEE WAS OF THE VIEW THAT FAILURE OF SHRI BANAMALI KOLEY TO PRODUCE THE NECESSARY DOCUMENTS AND DETAILS TO SHOW THAT TH E SUM OF RS.1,69,89,200/- HAD BEEN ACCOUNTED FOR AND TAKEN INTO ACCOUNT IN COMPU TING THE INCOME DECLARED IN THE RETURN FILED U/S 139(1) OF THE ACT FOR A.Y.2012-13 WAS FATAL AND IN THE SAID CIRCUMSTANCES IT CANNOT BE SAID WITH CERTAINTY THAT THE ASSESSEE WAS ENTITLED TO THE BENEFIT OF SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT. THE CIT(A) ALSO HELD THAT EVEN IF A CERTIFICATE OF AN ACCOUNTANT IS FURNISHED IN FORM NO.26A, THE AO HAS THE RIGHT TO MAKE FURTHER ENQUIRIES TO VERIFY THE CORRE CTNESS OF THE AFORESAID CERTIFICATE. SINCE THE AO COULD NOT MAKE THE REQUIRED VERIFICATI ON DUE TO FAILURE OF SHRI BANAMALI KOLEY TO GIVE THE REQUIRED DETAILS CIT(A) WAS OF TH E VIEW THAT THE ASSESSEE CANNOT BE GIVEN THE BENEFIT OF SECOND PROVISO TO SECTION 40(A )(IA) OF THE ACT. THE ADDITION MADE BY THE AO WAS CONFIRMED BY CIT(A). 8. AGGRIEVED BY THE ORDER OF CIT(A) THE ASSESSE E HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE SH ORT POINT THAT AROSE FOR CONSIDERATION IS AS TO WHETHER FILING OF FORM NO.26A NAMELY THE C ERTIFICATE OF THE CHARTERED ACCOUNTANT AS PRESCRIBED UNDER THE PROVISO TO SECTI ON 201(1) OF THE ACT CAN BE TAKEN AS A CONCLUSIVE PROOF THAT THE RECIPIENTS OF THE PA YMENT FROM THE ASSESSEE HAS TAKEN INTO ACCOUNT THE SUM RECEIVED FROM AN ASSESSEE ON W HICH NO TAX HAD BEEN DEDUCTED AT SOURCE FOR COMPUTING HIS INCOME IN SUCH RETURN OF I NCOME. THE PROVISO TO SECTION ITA NO.943/KOL/2017-KOLEY CONSTRUCTION SCTPL BL UE VIEW (JV) A.Y.2012-13 4 201(1) OF THE ACT INSERTED BY THE FINANCE ACT 2012 W.E.F. 01.07.2012 READS AS FOLLOWS :- PROVIDED THAT ANY PERSON, INCLUDING THE PRINCIPAL OFFICER O F A COMPANY, WHO FAILS TO DEDUCT THE WHOLE OR ANY PART OF THE TAX IN ACCORDANCE WITH THE PROVISIONS OF THIS CHAPTER ON THE SUM PAID TO A RESIDENT OR ON THE SUM CREDITED TO THE ACCOUNT OF A RESIDENT SHALL NOT BE DEEMED TO BE AN ASSESSEE IN DEFAULT IN RESPECT OF SUCH TAX IF SUCH RESIDENT (I) HAS FURNISHED HIS RETURN OF INCOME UNDER SECITON 13 9; (II) HAS TAKEN INTO ACCOUNT SUCH SUM FOR COMPUTING INCOM E IN SUCH RETURN OF INCOME; AND (III) HAS PAID THE TAX DUE ON THE INCOME DECLARED BY HIM IN SUCH RETURN OF INCOME, AND THE PERSON FURNISHES CERTIFICATE TO THIS EFFEC T FORM AN ACCOUNTANT IN SUCH FORM AS MAY BE PRESCRIBED] 10. IN THE PRESENT CASE THE ASSESSEE HAS FILED A CERTIFICATE IN FORM NO.26A OF A CHARTERED ACCOUNTANT. IN THE FIRST PART OF THE CER TIFICATE THERE APPEARS TO BE A MISTAKE IN AS MUCH AS INSTEAD OF MENTIONING THE NAME OF SHR I BANAMALI KOLEY THE ASSESSEE HAS MENTIONED HIS OWN NAME. NEVERTHELESS ANNEXURE-A TO FORM NO.26A WHICH IS A CERTIFICATE GIVEN BY A CHARTERED ACCOUNTANT CLEARLY CONFIRMS THAT SHRI BANAMALI KOLEY HAS INCLUDED THE SUM OF RS.1,69,89,200/- RECEIVED A S LABOUR CHARGES FROM THE ASSESSEE IN THE GROSS RECEIPT ACCOUNTED FOR BY HIM IN HIS BO OKS OF ACCOUNT OF RS.7,87,57,116/-. IN THE REMAND PROCEEDINGS THE AO HAD CALLED FOR INF ORMATION FROM SHRI BANAMALI KOLEY U/S 133(6) OF THE ACT NAMELY THE DETAILS WITH DOCUMENTS REGARDING INCLUSION OF RS.1,69,89,200/- IN HIS RETURN OF INCOME FILED FOR A.Y.2012-13. SHRI BANAMALI KOLEY IN HIS LETTER DATED 21.11.2016 HAS POINTED OUT THAT THE SAME AO HAD COMPLETED HIS ASSESSMENT FOR A.Y.2012-13 U/S 143(3) OF THE ACT DA TED 30.03.2015 AND THE COMPLETE BOOKS OF ACCOUNT, BILLS AND VOUCHERS , BANK STATEME NTS AND OTHER DOCUMENTS WERE SUBMITTED BEFORE THE AO IN SUCH PROCEEDINGS. THIS F ACT IS NOT DISPUTED BY THE REVENUE. THE AO HAS HOWEVER OBSERVED AS FOLLOWS IN HIS REMAN D REPORT DATED 29.11.2016: HOWEVER, ON GOING THROUGH THE ASSESSMENT RECORD OF SRI BANAMALI KOLEY FOR A.Y. 2012-13 IT APPEARS THAT SRI KOLEY, PROP. OF KO LEY CONSTRUCITON CREDITED IN THE PROFIT & LOSS ACCOUNT AS ON 31/03/2012 (1) GORS S CONTRACT AMOUNT RECEIVED RS.7,87,57,116/- & (2) HIRE CHARGES RECEIVED RS.12, 07,210/- , BUT WHETHER SRI KOLEY INCLUDED OF RS.1,69,89,200/- RECEIVED FROM M/ S. KOLEY CONSTRUCTION- ITA NO.943/KOL/2017-KOLEY CONSTRUCTION SCTPL BL UE VIEW (JV) A.Y.2012-13 5 SCTPL-BLUE VIEW (JV) DURING THE F.Y. 2011-12 IN HIS GROSS CONTRACT AMOUNT RS.7,87,57,116/- OR NOT IS NOT CLEAR FROM THE ABOVE VERIFICATION. 11. ON A PERUSAL OF THE AFORESAID STAND TAKEN BY THE AO IN THE REMAND REPORT WE ARE OF THE VIEW THAT THE STAND TAKEN BY THE AO IS Q UITE VAGUE. FORM NO.26A CLEARLY SPECIFIES THAT THE SUM OF RS.1,69,89,200/- IS PART OF THE GROSS CONTRACT AMOUNT OF RS.7,87,57,116/- DECLARED BY SHRI BANIMALI KOLEY AS HIS CONTRACT RECEIPTS IN THE RETURN OF INCOME FILED FOR A.Y.2012-13. IT IS ALSO CLEAR F ROM THE REMAND REPORT OF THE AO THAT IT CANNOT BE SAID THAT THE ASSESSEE HAS NOT INCLUDE D THE SUM OF RS.1,69,89,200/- RECEIVED FROM THE ASSESSEE IN HIS GROSS RECEIPTS. T HE AO DID NOT EXAMINE SHRI BANIMALI KOLEY, IF HE HAD ANY DOUBTS IN THIS REGARD . HE HAS HOWEVER NOT CHOSEN TO DO SO BUT HAS GIVEN A REMAND REPORT WHICH IS VERY VAGU E. IN THE GIVEN CIRCUMSTANCES WE ARE OF THE VIEW THAT THE CERTIFICATE IN FORM NO.26A HAS TO BE ACCEPTED AS CORRECT. IN THAT VIEW OF THE MATTER WE ARE OF THE VIEW THAT DIS ALLOWANCE SUSTAINED BY CIT(A) U/S 40(A)(IA) OF THE ACT SHOULD BE DELETED. IN THE LIGH T OF THE ABOVE CONCLUSIONS WE ARE OF THE VIEW THAT IT IS UNNECESSARY TO DECIDE THE QUEST ION WHETHER FORM NO.26A NAMELY CERTIFICATE OF A CHARTERED ACCOUNTANT IS CONCLUSIVE IN THE MATTER OF APPLICABILITY OF PROVISO TO SECTION 201(1) AND SECOND PROVISO TO SEC TION 40(A)(IA) OF THE ACT. THE ADDITION SUSTAINED BY CIT(A) IS ACCORDINGLY DIRECTE D TO BE DELETED. THE APPEAL OF THE ASSESSEE IS ALLOWED. 12. IN THE RESULT THE APPEAL BY THE ASSESSEE I S ALLOWED. O RDER PRONOUNCED IN THE COURT ON 25.08.2017. SD/- SD/- [WASEEM AHMED] [ N.V.VASUDEVAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 25.08.2017. [RG PS] ITA NO.943/KOL/2017-KOLEY CONSTRUCTION SCTPL BL UE VIEW (JV) A.Y.2012-13 6 COPY OF THE ORDER FORWARDED TO: 1.KOLEY CONSTRUCTION SCTPL-BLUE VIEW (JV), ARAMBA GH WARD NO.13, VIVEKANANDA PALLY, P.O.ARAMBAGH, HOOGHLY 712601. 2.I.T.O.-WARD-24(4), HOOGHLY. 3. C.I.T.(A)- 6, KOLKATA 4. C.I.T-4, K OLKATA 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER, SENIOR PRIVATE SECRETARY HEAD OF OFFICE/D.D.O, ITAT KOLKATA BENCHES