M/s. Anil International, Ahmedabad V. The Income Tax Officer, Ward-9(4), Ahmedabad

MA 80/AHD/2014

AI Insights

The case revolves around the assessee, M/s. Anil International, who faced scrutiny under section 143(3) of the Income Tax Act for not deducting tax at source on certain payments. The Assessing Officer (AO) disallowed these payments under section 40(a)(ia) due to non-deduction of tax at source. The assessee's appeals to the CIT(A) and subsequently to the ITAT were unsuccessful, leading to the filing of a Miscellaneous Application. The ITAT found that crucial documents and facts were not considered in their previous decision, leading to the allowance of the Miscellaneous Application and a recall of the order.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 134533 (ITAT-AHMEDABAD)
• Duration Of Justice: 8 year(s) 7 month(s) 18 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 10-01-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 13-10-2022
• Assessment Year: 2008-2009
• Appeal Filed On: 22-05-2014
• Other Referred Cases: M/s Merilyn Shipping & Transport in ITA No. 477/Viz/2008, GOLDEN MEADOWS PROPERTIES (P.) LTD vs, ITO, Rakesh Ramani vs. ITO
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Corroborative evidences; TDS; Set aside
• Section: 143(3); 40(a)(ia); 194C; 254(2); 194A

Judgement Text

आयकर अपीलीय अिधकरण, अहमदाबाद ᭠यायपीठ IN THE INCOME TAX APPELLATE TRIBUNAL, ‘’ D’’ BENCH, AHMEDABAD BEFORE Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER And SHRI WASEEM AHMED, ACCOUNTANT MEMBER M.A No.80/Ahd/2014 In आयकर अपील सं./In ITA No. 694/Ahd/2013 िनधाᭅरण वषᭅ/Asstt. Year: 2008-2009 M/s. Anil International, Nr. Bharat Petrol Pump, Opp. Shrinath Transport Nagar, Aslali Road, Ahmedabad-382427. PAN: AAKFA8446J Vs. I.T.O, Ward-1(4), Ahmedabad. (Applicant) (Respondent) Assessee by : Shri Dhaval Limbani, A.R Revenue by : Shri Urjit Shah, Sr. D.R. सुनवाई कᳱ तारीख/Date of Hearing : 14/10/2022 घोषणा कᳱ तारीख /Date of Pronouncement: 11/01/2023 PER WASEEM AHMED, ACCOUNTANT MEMBER: This Miscellaneous Application has been directed at the instance of the assessee against the order of ITAT dated 07-03-2014 in ITA No. 694/Ahd/2013. 2. The facts in brief are that the assessee was subject to scrutiny assessment proceedings under section 143(3) of the Act. The AO in the assessment proceedings M.A No.80/AHD/2014 In ITA No.694/Ahd/2013 Asstt. Year 2008-09 2 found that the assessee has made payment of interest expenses amounting to Rs. 5,85,582/- to private financial institution without deducting tax at source under section 194A of the Act. Likewise the assessee also made payment of Rs. 57,000/- to Smt. Shakuntla against truck freight charges but failed to deduct tax at source under section 194C of the Act. Finally the AO vide order dated 08-12-2010 in the absence of any explanation from the assessee side disallowed the interest expenses and truck freight charges by invoking the provision of section 40(a)(ia) of the Act. 3. The assessee carried the matter before CIT(A) and submitted that interest payment includes an amount of Rs. 5,08,998/- paid to M/s BHW Home Finance which is registered under National Housing Bank Act 1987, therefore it was not required to deduct tax under the provision of section 194A(3)(iii) of the Act on such payment. It was also submitted that the payment of interest as well as truck freight charges are not outstanding, therefore, in view of ratio laid down by the Special Bench of Vishakhapatnam ITAT in the case of M/s Merilyn Shipping & Transport in ITA No. 477/Viz/2008, the provisions of section 40(a)(ia) of the Act are not applicable. However, the learned CIT(A) rejected the contention of the assessee for the reason that the assessee was not able to produce documentary evidences w.r.t. payment to M/s BHW Home Finance. Likewise, the ratio of special bench of Vishakhapatnam was suspended by Andhra Pradesh High Court (in I.T.T.A.M.P No. 908 of 2012 in I.T.T.A. No 384 of 2012). Thus, the learned CIT(A) confirmed the disallowances made by the AO. 3.1 Thereafter, the assessee was in appeal before this tribunal in ITA No. 694/Ahd/2013. The learned AR for the assessee with regard to interest expenses of Rs. 5,85,582/- contended that loan from financial institution was taken by the partner which was finally credited in the account of the assessee firm and the payment of interest to partner is not subject to the provision of TDS. However, the bench found that the learned AR was not able to substantiate his argument based M.A No.80/AHD/2014 In ITA No.694/Ahd/2013 Asstt. Year 2008-09 3 on evidences that the partners have introduced personal loan after borrowing from financial institutions. 4. Likewise, the learned AR with regard to payment of truck freight charges contended that payment was in nature of rent made to partner on utilization of her truck. As such, the payment was below the monetary limit prescribed under section 194I of the Act. However, the bench found that assessee has changed its stand and the copy of account was also not enclosed with the paper books. Thus, the appeal of the assessee was dismissed by the bench of tribunal. 5. Now the assessee is in miscellaneous applications before us for the reason that there are certain mistake in the order which are apparent from the record. The learned AR for the assessee submitted that before the Tribunal, it was contended that loan from financial institution was taken by the partner. Thus, the assessee firm was not required to deduct tax under section 194A of the Act, as there was no relationship of borrower & lender between the assessee and financial institution. In support of the contention, the loan sanction letter was also furnished and the same was available on page 3 to 8 of paper book. However, the Tribunal rejected the contention by holding that the contention of AR was not supported by evidences. Hence the tribunal erred in holding that there was no supporting evidence which is a mistake apparent from the record. 6. Likewise with regard to payment of Rs. 57,000/- to Smt. Shakuntaladevi, a partner was in nature of rent on utilization of her personal vehicle. This contention was also rejected by the tribunal by holding that copy of account was not available whereas the ledger copy of Smt. Shakuntaladevi was available on page 10 to 11 of the paper books. Hence, the same constitute a mistake in the order which is apparent from the record. M.A No.80/AHD/2014 In ITA No.694/Ahd/2013 Asstt. Year 2008-09 4 7. In view of the above, the learned AR before us contended that the order of the ITAT suffers from apparent mistakes and therefore, the same needs to be recalled within the provisions of section 254(2) of the Act. 8. On the other hand, the learned DR for the Revenue before us vehemently supported the order of the ITAT. 9. We have duly considered the rival contentions and gone through the records carefully. It is settled position of law that power for rectification under section 254(2) of the Act can be exercised only when mistake, which is sought to be rectified, is an obvious and patent mistake, which is apparent from the record and not a mistake, which is required to be established by arguments and long drawn process of reasoning on points, on which there may conceivably be two opinions. We also note that if a crucial fact and argument brought on record by any party of the appeal which may have impacted the final outcome of the appeal not considered or omitted to be considered will amount mistake apparent from record. In holding so we draw support and guidance from the order of coordinate bench of Mumbai Tribunal in case GOLDEN MEADOWS PROPERTIES (P.) LTD vs, ITO reported in 149 Taxman 17 where it was held as under: Section 254(2) specifically empowers the Tribunal to rectify any mistake which is apparentfrom the record. The Tribunal has inherent power to set aside an order where an appeal has been decided on wrong grounds. The inherent power to rectify a mistake committed by the Tribunal is not really speaking a power to review. It is the atonement to the wronged party by the Court or the Tribunal for the wrong that it has itself committed. It is a basic principle of jurisprudence that if there is a mistake committed by the Tribunal, it needs to be rectified as no one should suffer or come to grief on account of the mistake committed by the Court. Even the rules of procedure and technicalities should not come in the way in rendering justice to the parties by correcting the mistake committed by the Tribunal. The purpose of the Tribunal is to render justice and not to negate it. The principles of law as enunciated by various decisions are summarized as follows : 1.That where there is a wrong assumption of facts it will constitute mistake apparent from record. 2.Where there is a failure to consider certain evidence brought on record it would also constitute a mistake apparent from record. 3.Where there is an omission on the part of the Tribunal to consider the principles of law enunciated by the decisions of various Courts on which reliance was placed in the course of hearing, it will also constitute mistake apparent from record. M.A No.80/AHD/2014 In ITA No.694/Ahd/2013 Asstt. Year 2008-09 5 9.1 We also find support and guidance from the order of Mumbai Tribunal in case of Rakesh Ramani vs. ITO reported in 5 SOT 547 wherein it was held as under: The principles of law are : (1) where there is a wrong assumption of facts, it will constitute a mistake apparent from record, (2) where there is a failure to consider certain evidence brought on record, it would also constitute a mistake apparent from record, and (3) where there is omission on the part of the Tribunal to consider the principles of law enunciated by the decisions of various Courts on which reliance is placed by the assessee, it will also constitute mistake apparent from record. In the light of the above principles of law, it could be found that mistakes had occurred in the Tribunal’s appellate order as various facts and materials brought on record had not been considered by the Tribunal while deciding the appeal. In the instant case, there had inadvertently been non-consideration of vital facts, brought on record and judicial decisions, cited during arguments of appeal, which all went to the root of the matter and were so crucial as might even tilt the balance of decision. Accordingly, in passing the impugned appellate order, mistake apparent from record had occurred, rendering the said appellate order of the Tribunal liable to be rectified by essentially recalling the same by passing a fresh order. Therefore, the Tribunal’s appellate order was liable to be set aside/recalled and the related appeal fixed so as to be decided afresh. [Para 7] 9.2 In the light of the above discussion we proceed to adjudicate the issues raised by the assessee. From the preceding discussion, we note that the ITAT on the previous occasion has dismissed the appeal of the assessee on two counts. Firstly, there was the change in the stand of the assessee before the AO/CIT(A) viz a viz before the tribunal and secondly the necessary supporting documents in support of the contention raised by the assessee were not furnished. However, we note that the assessee has furnished the necessary documents before the ITAT as evident from the exhibits II and III of the paper book. These documents were certainly crucial to decide the issue but the same has not been considered by the ITAT at the time of hearing inadvertently. Thus it appears that non consideration of the important documents by the ITAT and the same amounts to a mistake apparent from record. 9.3 With respect to the 1st observation of the ITAT that there was change in the stand of the assessee, in this regard we note that there is no provision under the provisions of law which prohibit the assessee to raise a fresh contention before the higher forum in support of his claim. In view of the above, we hold that there is a M.A No.80/AHD/2014 In ITA No.694/Ahd/2013 Asstt. Year 2008-09 6 mistake apparent from the record in the order of the ITAT within the meaning of the provisions of section 254(2) of the Act. Hence the Miscellaneous Application filed by the assessee is allowed. Hence, the ITAT order is recalled and registry is directed to fix the same for hearing under intimation to both the parties. 10. In the result, the Miscellaneous Application filed by the assessee is allowed. Order pronounced in the Court on 11/01/2023 at Ahmedabad. Sd/- Sd/- (SUCHITRA KAMBLE) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER (True Copy) Ahmedabad; Dated 11/01/2023 Manish