M/s Ropar Properties and Builders Pvt. Ltd., Ropar V. ITO, W-2(2), Ropar

ITA 982/CHANDI/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 4474 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 10 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 04-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHOK KHANNA
• Keywords: TDS
• Section: 40(a)(ia)

Judgement Text

, ,B IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, B CHANDIGARH , !' #$ % & ' ($ , )* BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ./ ITA NO. 982/CHD/2019 / ASSESSMENT YEAR : 2015-16 M/S ROPAR PROPERTIES AND BUILDERS PVT. LTD., SCO 12-16, SUNNY ENCLAVE, ROPAR. INCOME TAX OFFICER, WARD-2(2), ROPAR. ./PAN NO: AAACR6395N / APPELLANT /RESPONDENT HEARING THROUGH VIDEO CONFERENCING ! /ASSESSEE BY : SHRI PARIKSHIT AGGARWAL, CA ' ! / REVENUE BY : SHRI ASHOK KHANNA, ADDL.CIT # $ % /DATE OF HEARING : 04.03.2021 &'() % / DATE OF PRONOUNCEMENT : 24.05.2021 )+/ ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 26.04.2019 OF THE COMMISSIONER OF INCOM E TAX (APPEALS)-1, CHANDIGARH [HEREINAFTER REFERRED TO AS CIT(A)]. 2. IN THIS APPEAL THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL:- 1. THAT ON THE FACTS, CIRCUMSTANCES AND LEGAL POS ITION OF THE CASE, THE WORTHY CIT(A) IN APPEAL NO. 10519/17-18 HAS ERRED I N PASSING THAT ITA 982/CHD/2019 A.Y. 2015-16 PAGE 2 OF 5 ORDER IN CONTRAVENTION OF THE PROVISIONS OF S. 250( 6) OF THE INCOME TAX ACT, 1961. 2. THAT ON LAW, FACTS AND CIRCUMSTANCES OF THE CAS E, THE WORTHY CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LD. AO IN CON VERTING THE IMPUGNED ASSESSMENT FROM LIMITED SCRUTINY TO COMPLE TE SCRUTINY EVEN WHEN THERE DID NOT EXIST CIRCUMSTANCES JUSTIFYING T HE SAID CONVERSION AND ALSO THERE WAS NO INCRIMINATING OR CREDIBLE MAT ERIAL IN THE HANDS OF THE LD. AO WHICH JUSTIFIED THE ABOVE REFERRED CO NVERSION AND THEREFORE THE IMPUGNED ASSESSMENT DESERVE TO BE QUA SHED. 3. THAT ON LAW, FACTS AND CIRCUMSTANCES OF THE CASE , THE WORTHY CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LD. AO IN DIS ALLOWING EXPENSES OF RS. 4,63,553/- OUT OF THE TOTAL ADDITION OF RS. 15, 45,176/- U/S 40(A)(IA) ON ACCOUNT OF ALLEGED NON DEDUCTION OF TDS ON THE E XPENSES CLAIMED EVEN WHEN THE PAYMENTS MADE TO VARIOUS PARTIES WERE BELOW THE THRESHOLD LIMIT FOR DEDUCTING TDS AND THE APPELLANT WAS NOT COMPULSORILY REQUIRED TO DEDUCT TDS ON THE SAME. 4. THAT ON LAW, FACTS AND CIRCUMSTANCES OF THE CAS E, THE WORTHY CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LD. AO IN DIS ALLOWING EXPENSES OF RS. 11,11,174/- OUT OF THE TOTAL ADDITION OF RS. 3 ,70,579/- U/S 40(A)(IA) ON ACCOUNT OF ALLEGED NON DEDUCTION OF TDS ON THE A DVERTISEMENT EXPENDITURE CLAIMED BY THE APPELLANT. 5. THAT ON LAW, FACTS AND CIRCUMSTANCES OF THE CASE , THE WORTHY CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LD. AO IN MAK ING DISALLOWANCE OF RS. 1,80,190/- ON ACCOUNT OF CLAIM OF EXPENSES TOWA RDS DONATION IN THE GROUP 'DEVELOPMENT EXPENSES GOVIND VALLEY' 6. THAT ON LAW, FACTS AND CIRCUMSTANCES OF THE CASE , THE WORTHY CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LD. AO IN MAK ING ADDITION OF RS. 5,00,000/- ON ADHOC BASIS BY DISALLOWING CERTAIN DE VELOPMENT EXPENSES CLAIMED BY THE APPELLANT ON ACCOUNT OF NON FURNISHI NG OF CASH BILL VOUCHERS AS PER LEDGERS EVEN WHEN THE COPIES OF LED GER ACCOUNT OF VARIOUS DEVELOPMENT EXPENSES ALONG WITH THE CASH VO UCHERS WERE DULY PRODUCED AND VERIFIED BY THE LD. AO. 7. THAT THE APPELLANT CRAVES LEAVE FOR ANY ADDITION , DELETION OR AMENDMENT IN THE GROUND OF APPEAL ON OR BEFORE THE DISPOSAL OF THE SAME. 2. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE INVITING OUR ATTENTION TO THE IMPUGNED ASSESSMENT ORDER HAS SUBM ITTED THAT THE ASSESSING OFFICER (IN SHORT AO) WAS DIRECTED TO CARRY ON LIMITED SCRUTINY IN RESPECT OF REAL ESTATE BUSINESS OF THE ASSESSEE ITA 982/CHD/2019 A.Y. 2015-16 PAGE 3 OF 5 WITH HIGH CLOSING STOCK. LD. COUNSEL HAS FURTHER SUBMITTED THAT IN RESPECT OF THE ABOVE LIMITED ISSUE, NO ADDITION HAS BEEN MADE BY THE AO. HOWEVER, THE AO CONVERTED THE LIMITED SC RUTINY INTO THE FULL SCRUTINY ASSESSMENT AND MADE CERTAIN DISAL LOWANCE ON ACCOUNT OF DISALLOWANCE OF EXPENDITURE ON ESTIMATIO N BASIS IN RESPECT OF FOLLOWING ITEMS : PARTICULARS AMOUNT (IN RS.) I. VARIOUS EXPENSES 15,45,176/- II. ADVERTISEMENT EXPENSES 3,70,579/- III. TDS PENALTY 3,51,836/- IV. DONATION 1,80,190/- V. DONATION 6,000/- VI. DEVELOPMENT EXPENSES 5,00,000/- TOTAL 29,53,781/ 3. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED T HAT THE AO DID NOT HAVE ANY RELIABLE AND COGENT REASON TO CONV ERT THE LIMITED SCRUTINY ASSESSMENT INTO FULL SCRUTINY ASSESSMENT. THAT HE HAS JUST MADE CERTAIN DISALLOWANCES ON ADHOC BASIS OUT OF ROUTINE EXPENDITURE OF THE ASSESSEE AS LISTED ABOVE. 4. THE LD. COUNSEL FOR THE ASSESSEE HAS FURTHER INV ITED OUR ATTENTION TO THE INSTRUCTION OF THE CBDT INSTRUCTIO N NO. 5/2016 DATED 14.07.2016 THE RELEVANT PART OF WHICH IS REPR ODUCED AS UNDER : ' IN ORDER TO ENSURE THAT MAXIMUM OBJECTIVITY IS MA INTAINED IN CONVERTING A CASE FALLING UNDER 'LIMITED SCRUTINY' INTO A 'COMPLETE SCRUTINY' CASE, THE MATTER HAS BEEN FURTHER EXAMINE D AND IN PARTIAL MODIFICATION TO PARA 3(D) OF THE EARLIER ORDER DATE D 29.12.2015, BOARD HEREBY LAYS DOWN THAT WHILE PROPOSING TO TAKE UP 'COMPLETE SCRUTINY' IN A CASE WHICH WAS ORIGINALLY EARMARKED FOR 'LIMITED SCRUTINY', THE ASSESSING OFFICER ('AO') SHALL BE RE QUIRED TO FORM A REASONABLE VIEW THAT THERE IS POSSIBILITY OF UNDER ASSESSMENT OF ITA 982/CHD/2019 A.Y. 2015-16 PAGE 4 OF 5 INCOME IF THE CASE IS NOT EXAMINED UNDER 'COMPLETE SCRUTINY'. IN THIS REGARD, THE MONETARY LIMITS AND REQUIREMENT OF ADMINISTRATIVE APPROVAL F ROM PR. CIT/'CIT/PR. DIT/DIT, AS PRESCRIBED IN PARA 3(D) OF EARLIER INSTRUCTION DATED 29.12.2015, SHALL CONTINUE TO REM AIN APPLICABLE. FURTHER, WHILE FORMING THE REASONABLE VIEW, THE ASSES SING OFFICER WOULD ENSURE THAT: A. THERE EXISTS CREDIBLE MATERIAL OR INFORMATION AVAI LABLE ON RECORD FOR FORMING SUCH VIEW; B. THIS REASONABLE VIEW SHOULD NOT BE BASED ON ME RE SUSPICION, CONJECTURE OR UNRELIABLE SOURCE; AND C. THERE MUST BE A DIRECT NEXUS BETWEEN THE AVAILABL E MATERIAL AND FORMATION OF SUCH VIEW.' 5. A PERUSAL OF THE ABOVE INSTRUCTION OF THE CBDT S HOWS THAT TO CONVERT THE LIMITED SCRUTINY INTO COMPLETE SCRUT INY, THE ASSESSING OFFICER SHALL BE REQUIRED TO FORM A REASO NABLE VIEW THAT THERE IS A POSSIBILITY OF UNDER STATEMENT OF INCOME AND THAT VIEW SHOULD BE BASED ON CREDIBLE MATERIAL OR INFORMATION AVAILABLE ON RECORD AND SUCH A VIEW SHOULD NOT BE BASED ON MERE SUSPICION, CONJECTURE OR UNRELIABLE RESOURCES AND THERE SHOULD BE A DIRECT NEXUS BETWEEN AVAILABLE MATERIAL AND FORMATION OF V IEW. HOWEVER, THE ABOVE CONDITIONS ARE NOT FULFILLED IN THIS CASE. THE AO HAS NOT REFERRED TO ANY CREDIBLE OR RELIABLE MAT ERIAL OR INFORMATION TO FORM THE VIEW THAT THERE WAS A POSSI BILITY OF UNDER ASSESSMENT OF INCOME IN THIS CASE. THE AO HAS MERE LY MADE CERTAIN DISALLOWANCE ON ADHOC BASIS WITHOUT POINTIN G OUT ANY INFORMATION OR MATERIAL AVAILABLE TO HIM WHICH HAS A DIRECT NEXUS TO SHOW THAT THERE WAS POSSIBILITY OF UNDER ASSESSM ENT OF INCOME. ITA 982/CHD/2019 A.Y. 2015-16 PAGE 5 OF 5 6. IN VIEW OF THIS, CONVERSION OF LIMITED SCRUTINY INTO COMPLETE SCRUTINY IS AGAINST THE SPIRIT OF CBDT MANDATE WHIC H IS BINDING ON THE AO. THEREFORE, THE CONVERSION OF LIMITED SCR UTINY INTO COMPLETE SCRUTINY BEING NOT VALID, THE CONSEQUENTIA L ADDITIONS MADE BY THE AO ON ADHOC BASIS AND FURTHER CONFIRMED BY THE CIT(A) ARE NOT SUSTAINABLE IN THE EYES OF LAW. SAME ARE ORDERED TO BE DELETED. IN THE RESULT, APPEAL OF THE ASSESSEE STANDS ALLOWE D. ORDER PRONOUNCED ON 24.05. 2021. SD/- SD/- ( % & ' ($ ) ( ) (ANNAPURNA GUPTA) (SANJAY GARG) )* / ACCOUNTANT MEMBER / JUDICIAL MEMBER POONAM '* +, -, / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. # . / CIT 4. # . ( )/ THE CIT(A) 5. ,/0 1 , % 1 , 23405 / DR, ITAT, CHANDIGARH 6. 04 6$ / GUARD FILE