M/s. SRS Agri Foods, Tuticorin V. DCIT, Tuticorin

ITA 964/CHNY/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64132 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 01-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR S MOHARANA
• Assessee Lawyers: N DEVANATHAN
• Keywords: Reasonable cause; Assessment record
• Section: 263; 63

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE SHRI ABRAHAM P.GEORGE, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ITA NO.964/MDS/2012 (ASSESSMENT YEAR: 2007-08) M/S. SRS AGRI FOODS, 19, SOUTH RAJA STREET, TUTICORIN-628 001. PAN:AARFS1966L VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-I, 19A, W.G.C ROAD, TUTICORIN. (APPELLANT) (RESPONDENT) APPELLANT BY : MR. N.DEVANATHAN, ADVO CATE RESPONDENT BY : DR. S. MOHARANA, CIT DR DATE OF HEARING : 12 TH JULY, 2012 DATE OF PRONOUNCEMENT : 8 TH AUGUST, 2012 O R D E R PER VIKAS AWASTHY, JUDICIAL MEMBER: THE APPEAL HAS BEEN FILED BY THE ASSESSEE IMPUGNIN G THE ORDER OF THE CIT-I, MADURAI DATED 1 ST FEBRUARY, 2012 PASSED UNDER SECTION 263 OF THE INCOME TAX ACT, 196 1. 2. T HE PRESENT APPEAL HAS BEEN FILED WITH A DELAY OF O NE DAY. APPLICATION FOR CONDONATION OF DELAY, CITING R EASONS FOR THE DELAY HAS ALSO BEEN FILED ALONG WITH THE APPEAL. BE ING SATISFIED ABOUT THE EXISTENCE OF REASONABLE CAUSE AND IN THE INTEREST OF JUSTICE, WE CONDONE THE DELAY OF ONE DAY IN FILIN G OF THE APPEAL AND ADMIT THE SAME FOR DISPOSAL ON MERITS. ITA NO.964/MDS/2012 2 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A PARTNERSHIP FIRM CARRYING ON BUSINESS OF TRADING IN PULSES. THE ASSESSEE FILED ITS RETURN OF INCOME RELEVANT TO THE ASSESSMENT YEAR 2007-08 ON 29.10.2007 ADMITTING TOTAL INCOME O F ` 15,91,730/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) WAS ISSUED TO THE ASSESSEE ON 18.9.2008. THE ASSESSING OFFICER VIDE ASSESSMENT ORDER DATED 30.12.2009 DISALLOWED PAYM ENTS MADE TO THE TUNE OF ` 12,00,000/- ON ACCOUNT OF WANT OF CONCRETE EVIDENCES. AS PER THE ASSESSING OFFICER MO ST OF THE PAYMENTS WERE SUPPORTED BY SELF-MADE VOUCHERS WHICH ARE NOT CAPABLE OF CROSS VERIFICATION. THE CIT ON 5.12.2011 ISSUED NOTICE UNDER SECTION 2 63 OF THE INCOME TAX ACT ON THE FOLLOWING GROUNDS:- ON VERIFICATION, IT IS SEEN FROM THE ASSESSMENT RECORDS THAT IN RESPECT OF VARIOUS PAYMENTS AMOUNTING TO ` 29,98,474/- TDS WAS DEDUCTED AND PAID INTO GOVT. ACCOUNT AFTER DUE DATE SPECIFIED U/S.200(1) OF THE ACT. AS PER THE PROVISIONS OF SECTION 40(A)(IA) OF THE I.T.ACT , IF TDS IS PAID I NTO GOVT. ACCOUNT AFTER THE EXPIRY OF TIME PRESCRIBED U/S.200(1) OF THE IT ACT THEN THE EXPENDITURE SHALL BE ALLOWED AS DEDUCTION ONLY IN THE YEAR IN WHICH SUCH TAX HAS BEEN PAID. ITA NO.964/MDS/2012 3 IN THIS CASE THE TDS AMOUNT IS PAID INTO THE GOVERNMENT ACCOUNT BELATEDLY AND HENCE THE BELATED AMOUNT OF ` 29,91,730/- MAY BE DISALLOWED IN THE CURRENT ASSESSMENT YEAR AND ADDED BACK TO INCOME FOR THE ASSESSMENT YEAR 2007-08. THE CIT IN HIS IMPUGNED ORDER OBSERVED THAT AS PER THE PROVISIONS OF SECTION 40(A)(IA), THE TAX HAS TO B E PAID ON OR BEFORE THE LAST DATE OF THE PREVIOUS YEAR I.E. 31.3 .2007. WHEREAS IN THE INSTANT CASE, THE TAX WAS DEDUCTED B ETWEEN 30.04.2006 AND 28.02.2007 BUT PAID ON 7.5.2007. TH EREFORE, ALLOWANCE OF THE SAID AMOUNT IN THE ASSESSMENT YEAR 2007-08 WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF TH E REVENUE. THE CIT HELD THAT SUB-CLAUSE (IA) OF SECTION 40 OF THE ACT WAS AMENDED WITH EFFECT FROM 1.4.2010. THEREFORE, THE A SSESSEES CONTENTION WAS VALID AND APPLICABLE ONLY WITH EFFEC T FROM 1.4.2010 ONWARDS. AMENDED PROVISIONS OF SUB-CLAUSE CANNOT OPERATE RETROSPECTIVELY UNLESS THE PROVISIONS ARE A MENDED SO. THEREFORE, THE AMOUNT DEDUCTED ON DIFFERENT DAT ES HAVE TO BE PAID INTO GOVERNMENT ACCOUNT ON OR BEFORE 31 .03.2007. SINCE THIS WAS NOT DONE, THE CIT DIRECTED THE ASSES SING OFFICER TO PASS FRESH ASSESSMENT ORDER. ITA NO.964/MDS/2012 4 4. THE COUNSEL APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE AMENDMENT HAS TO BE APPLIED RETROSPECTIVELY. HE FURTHER CONTENDED THAT THE PROV ISIONS OF SECTION 263 IS NOT APPLICABLE IN THE FACTS AND CIRC UMSTANCES OF THE CASE,AS THE ORDER PASSED BY THE ASSESSING OFFIC ER IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST O F THE REVENUE AS THE AMOUNT STANDS DEPOSITED INTO GOVERNM ENT ACCOUNT AND THE SAME IS ALLOWABLE IN THE SUBSEQUENT YEAR. MOREOVER, THE AMOUNT HAS BEEN PAID WITHIN THE TIME ALLOWED UNDER THE PROVISIONS OF SECTION 40(A)(IA). THE COUN SEL SUBMITTED THAT THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE ORDER OF THE CO-ORDINATE BENCH OF THE TRIBUN AL IN THE CASE OF M/S. TRV GLOBAL TRADING IN ITA NO.325/MDS/2 012 DATED 14 TH MAY, 2012. 5. ON THE OTHER HAND, THE DR APPEARING ON BEHALF O F THE REVENUE STRONGLY SUPPORTED THE ORDER OF THE CIT PAS SED UNDER SECTION 263 OF THE ACT. THE D.R. SUBMITTED TH AT THE AMENDMENT TO SECTION 40(A)(IA) IS NOT RETROSPECTIVE . THE AMENDMENT IS EFFECTIVE FROM 1.4.2010 ONWARDS, THER EFORE, ITA NO.964/MDS/2012 5 THE ASSESSEE CANNOT TAKE THE BENEFIT OF AMENDMENT I N THE ASSESSMENT YEAR 2007-08. 6. WE HAVE HEARD THE SUBMISSIONS MADE BY THE PARTIE S AND HAVE GONE THROUGH THE IMPUGNED ORDER PASSED BY THE CIT. WE HAVE ALSO EXAMINED THE JUDGEMENT RELIED ON BY THE COUNSEL FOR THE ASSESSEE. IN ORDER TO DETERMINE WHE THER THE AMENDMENT HAS ITS APPLICATION WITH RETROSPECTIVE EF FECT OR NOT, IT IS NECESSARY TO EXAMINE THE AMENDMENT. THE SAID AMENDMENT HAS BEEN MADE EFFECTIVE WITH EFFECT FROM 1.4.2010 BY THE FINANCE ACT, 2010. THE DIVISION BE NCH OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. VIRGIN CREATIONS REPORTED AS 2012-TIOL-181-HC-KOL-IT RELYI NG ON THE JUDGEMENT OF THE HONBLE SUPREME COURT OF INDIA IN THE CASES OF ALLIED MOTORS PVT. LTD. HAS HELD THAT THE PROVISIONS, WHICH HAS INSERTED THE REMEDY TO MAKE THE PROVISI ON WORKABLE, REQUIRES TO BE TREATED WITH RETROSPECTIVE OPERATION SO THAT REASONABLE DEDUCTION CAN BE GIVEN TO THE SE CTION AS WELL. 7. THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CAS E OF M/S. TRV GOLBAL TRADING (SUPRA) FOLLOWING THE JUDG EMENT OF ITA NO.964/MDS/2012 6 THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF VIRG IN CREATIONS(SUPRA) HAS HELD THAT THE RELEVANT AMEND MENT BROUGHT INTO THE STATUE IS RETROSPECTIVE AND THERE FORE, ALL SUCH PAYMENTS OF TDS MADE BEFORE DUE DATE OF FILING OF T HE RETURN WOULD BE OUTSIDE THE PURVIEW OF APPLICABILITY OF SE CTION 40(A)(IA). WE ARE OF THE OPINION THAT THE CASE OF T HE ASSESSEE IS COVERED BY THE JUDGEMENT OF THE HONBLE CALCUTTA HIGH COURT IN VIRGIN CREATIONS CASE (SUPRA), AS WELL AS RESPECTFULLY FOLLOWING THE ABOVE ORDER OF THE TRIBUNAL, WE SET A SIDE THE IMPUGNED ORDER OF THE CIT PASSED UNDER SECTION 263 OF THE ACT AND ALLOW THE APPEAL OF THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON WEDNESDAY, THE 8 TH DAY OF AUGUST, 2012 AT CHENNAI. SD/- SD/- ( ABRAHAM P.GEORGE ) ( VIKAS AWASTHY ) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 8 TH AUGUST, 2012. SOMU COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT (4) CIT(A) (5) D.R. (6) G.F .