ITO 32(1)(4), MUMBAI V. D.J. ENTERPRISES, MUMBAI

ITA 973/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0914 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-04-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 12-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J SRAVANAN
• Keywords: Opportunity of being heard; Retrospective amendment
• Section: 143(3); 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D MUMBAI BEFORE SHRI SAKTIJIT DEY (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 973/MUM/2015 ASSESSMENT YEAR: 2010-11 ITO 32(1)(4) VS. M/S. D.J. ENTERPRISES R. NO. 308 BLDG NO C-10 C-510 PATEL SHOPPI NG CENTRE BKC BANDRA (EAST) CHANDAVARKAR RD. BORIVAL I(W) MUMBAI 400051 MUMBAI - 400092 PAN NO. AACFD0812B (APPELLANT) (RESPONDENT) REVENUE BY : SHRI J. SRAVANAN, DR ASSESSEE BY: SHRI RAJESH KOTHARI, AR DATE OF HEARING : 01/02 /2017 DATE OF PRONOUNCEMENT : 19/04/2017 ORDER PER N.K. PRADHAN, AM THIS IS AN APPEAL FILED BY THE REVENUE. THE RELEVAN T ASSESSMENT YEAR IS 2010-11. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER (APPEALS) 44, MUMBAI AND ARISES OUT O F ORDER U/S 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT. 2. THE GROUNDS OF APPEAL FILED BY THE REVENUE READ AS UNDER: I. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION ON ACCOUN T OF PAYMENT OF RS. 71,17,450/- ON WHICH TDS WAS NOT DEDUCTED AS RE QUIRED U/S 40(A)(IA) OF THE INCOME TAX ACT, 1961. II. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN NOT APPRECIATING THE FACT THAT THE SECOND ITA NO. 973/MUM/2015 2 PROVISO TO SECTION 40(A)(IA) HAS BEEN INSERTED BY T HE FINANCE ACT, 2012, W.E.F. 01.04.2013. III. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) ERRED IN NOT FOLLOWING THE DECISION OF H ONBLE ITAT SPECIAL BENCH IN THE CASE OF BHARTI SHIPYARD VS. DC IT WHEREIN THE HONBLE ITAT HAS HELD THAT PROVISO TO SECTION 40(A) (IA) WAS INSERTED VIDE FINANCE ACT 2010 W.E.F. 01.04.2010 AN D NOT RETROSPECTIVE EFFECT FROM 01.04.2005. IV. THE APPELLANT PRAYS THAT THE ORDER OF THE LD. C IT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. THE ASSESSEE FIRM FILED ITS RETURN OF INCOME F OR THE A.Y. 2010- 11 ON 28.09.2010 DECLARING TOTAL INCOME AT RS. 12,3 8,730/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (AO) NOTICED THAT THE ASSESSEE HAD INCURRED EXPENSES OF RS. 71,17,450/- ON WHICH NO TDS HAS BEEN MADE. THE DETAILS ARE (I) PRINTING CHARGES OF RS. 69,63,579/-, (II) TRANSPORTATION CHARGES OF RS. 1,40,933/- AND (III) BROKERAGE / COMMISSION PAID OF RS.12,938/-. S INCE THERE WAS A VIOLATION OF THE PROVISIONS OF CHAPTER XVIIB AND TH E ASSESSEE WAS UNABLE TO GIVE ANY CREDIBLE EXPLANATION, THE AO DIS ALLOWED THE ENTIRE EXPENSES OF RS. 71,17,450/-. 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE F ILED AN APPEAL BEFORE THE LEARNED CIT(A). SINCE THE DOCUMENTS SUBM ITTED BY THE ASSESSEE DURING THE COURSE OF APPEAL HAD NOT BEEN S EEN BY THE AO, THE LEARNED CIT(A) REMANDED BACK THE MATTER TO THE AO ON 24.06.2014 FOR VERIFICATION. THE LEARNED CIT(A) REC EIVED THE REMAND REPORT FROM THE AO ON 31.10.2014. THE LEARNED CIT(A ) THEN OBSERVED THAT NECESSARY TAX HAS BEEN PAID BY THE DE DUCTEES AND THEREFORE, AS ALREADY VERIFIED BY THE AO, THERE IS NO LOSS CAUSED TO THE EXCHEQUER. THE LEARNED CIT(A) OBSERVED THAT THE AME NDMENT TO ITA NO. 973/MUM/2015 3 SECTION 40(A)(IA) IN TERMS OF THE INSERTION OF THE PROVISO WOULD BE APPLICABLE TO THE ASSESSEE ALSO. THEREFORE, THE LEA RNED CIT(A) ALLOWED THE APPEAL FILED BY THE ASSESSEE. 5. BEFORE US, THE LEARNED DR SUBMITS THAT THE SECON D PROVISO TO SECTION 40(A)(IA) HAS BEEN INSERTED BY THE FINANCE ACT, 2012 W.E.F. 01.04.2013. HE SUPPORTED THE ORDER OF THE AO. 6. THE LEARNED COUNSEL OF THE ASSESSEE FILES A PAPE R BOOK STATING THAT THE SECOND PROVISO TO SECTION 40(A)(IA) APPLIE S RETROSPECTIVELY. RELIANCE WAS PLACED BY HIM ON THE DECISION IN THE C ASE OF (I) CIT VS. ANSAL LAND MARK TOWNSHIP P. LTD. (2015) 377 ITR 635(DEL.) (II) PR. CIT VS. TIRUPATI CONSTRUCTION (GA NO. 2146 OF 2016 (III) RAJEEV KUMAR AGARWAL VS. ADDL. CIT (2014) 165 TTJ (AGRA) 228 (IV) R.K.P. COMPANY VS. ITO (ITA NO. 106/RPR/2016)(ITAT- RAIPUR) (V) MAHESH KR. NARULA VS. JCIT (ITA NO. 1094/KOL/2016)(ITAT- KOLKATA) (F) DCIT VS. JAGJIT SINGH SAYAL (ITA NO. 2274/MUM/2014)(ITAT- MUMBAI). THE LEARNED COUNSEL ALSO STATES THAT SECTION 40(A) (IA) AS AMENDED BY FINANCE ACT, 2010 APPLIES RETROSPECTIVEL Y. RELIANCE WAS PLACED BY HIM ON THE DECISION IN CIT VS. HARISH CHAND AHUJA (2015) 280 CTR (RAJ.) 403, CIT VS. NARESH KUMAR (2013) 262 CTR (DEL.) 389, CIT VS. SANTOSH KUMAR SHETTY (2014) 89 CCH 199 (KAR HC), CIT VS. B.M.S. PROJECTS P. LTD . (2014) 361 ITR 195(GUJ.). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE BEGIN WITH THE DECISIONS REL IED ON DURING THE COURSE OF HEARING BEFORE US. IN THE CASE OF ANSAL LAND MARK TOWNSHIP P. LTD ., THE FOLLOWING ISSUE WAS URGED BY THE REVENUE PER TAINING TO THE RETROSPECTIVITY OF THE SECOND PROVISO TO SECTIO N 40(A)(IA) OF THE ACT WHICH READS AS UNDER: ITA NO. 973/MUM/2015 4 PROVIDED FURTHER THAT WHERE AN ASSESSEE FAILS TO D EDUCT THE WHOLE OR ANY PART OF THE TAX IN ACCORDANCE WITH THE PROVISIO NS OF CHAPTER XVII-B ON ANY SUCH SUM BUT IS NOT DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER THE FIRST PROVISO TO SUB-SECTION (1) OF SECTION 201 , THEN, FOR THE PURPOSE OF THIS SUB-CLAUSE, IT SHALL BE DEEMED THAT THE ASS ESSEE HAS DEDUCTED AND PAID THE TAX ON SUCH SUM ON THE DATE OF FURNISHING OF RETURN OF INCOME BY THE RESIDENT PAYEE REFERRED TO IN THE SAID PROVI SO. THE HON'BLE HIGH COURT AGREED WITH THE REASONING O F ITAT AGRA BENCH IN THE CASE OF RAJIV KUMAR AGARWAL VS. ACIT (ITA NO. 337/AGRA/2013) HOLDING THAT THE SECOND PROVISO TO S ECTION 40(A)(IA) WAS DECLARATORY AND CURATIVE IN NATURE AN D SHOULD BE GIVEN RETROSPECTIVE EFFECT FROM 01.04.2005. IN M/S. TIRUPATI CONSTRUCTION (SUPRA) , THE HON'BLE CALCUTTA HIGH COURT HELD AS UNDER: WE DEEM IT FIT AND APPROPRIATE, TO SET ASIDE THE I SSUE TO THE FILE OF THE LD. A.O. TO DECIDE THE IMPUGNED ISSUE U/S 40(A)(IA) IN THE LIGHT OF APPLICABILITY OF SECOND PROVISO TO SECTION 40(A)(IA ) AS MENTIONED HEREIN ABOVE AND IN THE LIGHT OF SAID DECISION OF THE HON' BLE DELHI HIGH COURT IN THE CASE OF ANSAL LAND MARK TOWNSHIP (P) LTD. (SUPR A). THE ASSESSEE IS AT LIBERTY TO ADDUCE FRESH EVIDENCES, IF ANY, TO SU BSTANTIATE ITS CONTENTIONS. NEEDLESS TO MENTION THAT THE ASSESSEE BE GIVEN REASONABLE OPPORTUNITY OF BEING HEARD. ACCORDINGLY, THE GROUND S RAISED BY THE ASSESSEE IN THIS REGARD ARE ALLOWED FOR STATISTICAL PURPOSES. 7.1. WE FIND SIMILAR CONCLUSION HAS BEEN ARRIVED AT BY THE TRIBUNAL IN THE ORDERS CITED HERE-IN-ABOVE. 8. IN VIEW OF THE ABOVE, WE UPHOLD THE ORDER OF THE LEARNED CIT(A) AND DISMISS THE APPEAL FILED BY THE REVENUE. ORDER PRONOUNCED IN THE OPEN COURT ON 19/04/2017 SD/- SD/- (SAKTIJIT DEY) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBE R ITA NO. 973/MUM/2015 5 MUMBAI: DATED: 19/04/2017 BISWAJIT, SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI