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Income Tax Appellate Tribunal, JAIPUR BENCHES, ‘’A” JAIPUR
Before: SHRI SANDEEP GOSAIN, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA No. 484 & 485/JP/2019
आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, ‘’A” JAIPUR Jh lanhi xkslkbZ] U;kf;d lnL; ,oa Jh foØe flag ;kno] ys[kk lnL; ds le{k BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA No. 484 & 485/JP/2019 fu/kZkj.k o"kZ@Assessment Year : 2013-14 & 2014-15 cuke Shri Vikram Singh Shekhawat The DCIT Vs. M/s. V.S. Stone, E-172/A, Uttam Tower Circle – Sikar Ramesh Marg, C-Scheme, Jaipur Sikar LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AQVPS 7734 G vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri Shrawan Kumar Gupta, Advocate jktLo dh vksj ls@ Revenue by: Shri K.C. Gupta, JCIT DR lquokbZ dh rkjh[k@ Date of Hearing : 21/01/2020 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 23 /01/2020 vkns'k@ ORDER PER SANDEEP GOSAIN, J.M. Both these appeals have been filed by the assessee against separate orders of CIT(A) -4, Jaipur dated 30-01-2019 and 31-01-2019 for the assessment year 2013-14 & 2014-15 respectively. The assessee has raised the following grounds of appeal in respective appeals. ITA No. 484/JP/2019 – A.Y. 2013-14 ‘’1. The impugned rectification assessment order u/s 154 r.w.s. 143(3) dated 19-03-2018 as well as the action taken by the AO u/s 154 and confirmed by the ld. CIT(A) is
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bad in law and on facts of the case for want of jurisdiction, being debatable issue and various other reasons and hence the same may kindly be quashed.
Rs.46,14,664/-: The ld. CIT(A) has grossly erred in law as well as on the facts of the case in confirming the disallowance of Rs. 46,14,664/- claimed on account of additional depreciation on new machinery purchased during the year. Hence, the disallowance so made by the AO and sustained by the ld. CIT(A) is being totally contrary to the provisions of law and facts on record and hence the same may kindly be deleted in full.
The AO has grossly erred in law as well as on the facts of the case in charging interest u/s 234A.B.C. the appellant totally denies it liability of charging of any such interest. The interest so charged, being contrary to the provisions of law and facts, may kindly be deleted in full.’’
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‘’1.1 The impugned rectification assessment order u/s 154 r.w.s. 143(3) dated 26-12-2016 is bad in law and on facts of the case for want of jurisdiction, being debatable issue and various other reasons and hence the same may kindly be quashed.
2.1 Rs.2,00,000/-: The ld. CIT(A) has grossly erred in law as well as on the facts of the case in invoking the provision of section145(3).The provision so invoked by the AO and confirmed by the ld. CIT(A) is totally contrary to the provisions of law and facts on record and hence the same may kindly be quashed. 3.1 Alternatively and without prejudice the AO further erred in law as well as on the facts of the case in partly sustaining lumpsum trading addition of Rs. 2.00 lacs
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out of Rs. 5.00 lacs made by the AO. Hence the addition so made by the AO and partly sustained by the ld. CIT(A) is being totally contrary to the provisions of law and facts on record and hence the penalty may kindly be deleted in full.
Rs.1,48,229/-: The ld. CIT(A) has grossly erred in law as well as on the facts of the case in confirming the disallowance of Rs. 1,48,229/- claimed on account of interest payment on delayed deposit of TDS claimed in the P&L account. Hence, the disallowance so made by the AO and confirmed by the ld. CIT(A) is being totally contrary to the provisions of law and facts on record and hence the same may kindly be deleted in full.
Rs.15,97,572/-: The ld. CIT(A) has grossly erred in law as well as on the facts of the case in confirming the disallowance of Rs. 15,97,572/- on account of non- deduction of TDS on interest payment of Rs. 15,97,572/- by ignoring the facts, settled legal position etc. Hence, the disallowance so made by the AO and confirmed by the ld. CIT(A) is being totally contrary to the provisions of law and facts on record and hence the same may kindly be deleted in full.
The AO has grossly erred in law as well as on the facts of the case in charging interest u/s 234A.B.C. the appellant totally denies it liability of charging of any such interest. The interest so charged, being contrary to the provisions of law and facts, may kindly be deleted in full.’’
2.1 First of all, we take up the appeal of the assessee in ITA
No.484/JP/2019 for the Assessment Year 2013-14 for adjudication.
3.1 Brief facts of the case are that the assessee is engaged in the
business of Mine Contractor, manufacturing and trading of Marble Block.
ITA No. 484/JP/2019 Shri Vikram Singh Shekhawat vs DCIT Circle –Sikar
The assessee has filed his return of income declaring the total income of
Rs.1,70,88,620/- on dated. 30.03.2015 and the assessment was completed
u/s 143(3) on dated 29.02.2016 at the total income of Rs.2,32,35,180/-
against which the assessee has also filed the appeal before the ld. CIT(A)-
3, Jaipur. During the course of original assessment proceedings the
assessee has filed all the details and reply. Thereafter the AO has
completed the assessment after making the trading addition, disallowance
u/s 40(a)(ia) and vat. However thereafter the AO has issued the notice u/s
154 of the Act dated 29.01.2018 on the ground that additional
depreciation @20% of Rs.46,14,664/- claimed as per provision of Sec.
32(1)(iia) of the Act on addition of Rs.2,30,73,318/- in plant and
machinery and as per decision of Supreme Court in the case of CIT v/s
Lucky Minerals Pvt. Ltd 2001 the business of mining & trading of
marble block does not cover under the business of manufacture and
production of any article or things, therefore the add. Depreciation @20%
of Rs.46,14,664/- is not allowable and required to be added in the total
income. In response thereto, the assessee has objected the same and filled
the detailed reply dated 19-12-2018 (PB12-14) and also reproduced at
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page No. 1-3 of the impugned order. However the ld. AO did not feel
satisfied with the reply and made disallowance of Rs. 46,14,664/-.
3.2 Against the order of the AO, the assessee has filed the appeal
before the ld. CIT(A) and filed the detailed written submission (PB1-11)
and legal position of law. The written submission is also reproduced at
page 3-12 of CIT(A)’s order. The assessee has submitted that the issue is
a debatable and no action u/s 154 can be taken on the debatable issue and
the assessee is a manufacturer. In support the aassessee furnished various
decision of Hon'ble High Courts and Supreme Courts on the debatable
issue. However the ld. CIT(A) did not feel satisfied and confirmed the
action of the AO by observing as under:
‘’6.2……I am of the view that AO has correctly invoked and applied provisions of sec. 154 of the Act as judgment of the Honble Apex Court delivered on 03.08.2000 was law of land and overlooked while framing the assessment. Further argument that the CIT(A) has passed an order and hence rectification cannot be carried out has no merits as issue of depreciation or additional depreciation was never subject matter before the CIT(A). I am constraint to observe that the disallowance is legally and factually correct and submissions are made to oppose the action of AO on technical grounds, though futile. That being the case and on the facts and in the circumstances the action of the AO is upheld. Appellant’s Ground No. 1 is dismissed.”
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3.3 Aggrieved by the order of the ld. CIT(A), the assessee has
preferred this appeal before us on the grounds mentioned hereinabove.
4.1 The Ground No. 1 and 2 of the assessee are interrelated and
interconnected and relates to challenging the order of the ld. CIT(A) in
confirming the order passed by the AO u/s 154 r.w.s. 143(3) of the Act.
4.2 At the outset of the hearing, the ld.AR appearing on behalf of the
assessee reiterated the same arguments as were raised by him before the
ld. CIT(A) and the same are contained in para 5 of the ld. CIT(A)’s order
which is reproduced as under:-
‘’1. Invalid Action u/s 154: At the very outset it is submitted that the action taken by the ld. AO u/s 154 is invalid and illegal because of following reasons:- 1.1 Debatable issue cannot be rectified u/s 154: At the very outset it is submitted that section 154 allows the AO to rectify mistakes which are apparent from record and therefore only glaring and obvious mistakes which are self evident and does not require either a process of argument or investigation. The mistakes which are not apparent but has to be discovered after interpretation of a certain section and investigation of certain facts cannot be rectified u/s 154 of the Act. In the present matter the Ld. AO disallowed the additional depreciation charged @ 20% on the machinery purchased during the year u/s 154 of the Act. The purchase of the machinery is not disputed. The matter was very well assessed u/s 143(3) of the Act. No addition was made in the assessment on that account it means that the said additional depreciation was not disputed at the time of assessment u/s 143(3) of the Act. But later on the Ld. AO discovered that additional depreciation is not allowed since the 6
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assessee is into mining industry and not manufacturing anything and applied the decision of the Hon’ble Supreme court in the matter of Lucky Minerals Pvt. Ltd. We had also submitted that the assessee is producing things and since the production is a bigger term and includes manufacture also. We had also referred some decisions of various High Courts and Supreme Courts also. Now we want to submit that the matter is debatable that whether the mining of marble block is manufacturing or not and therefore it cannot be rectified u/s 154 of the Act. The assessee intimated the Ld. AO, the following modus- operendi in support of his claim to be covered under mining and manufacturing activity: “With regard to the admissibility of additional depreciation on the purchase of loader we wish to submit as under: 1. That section 32(iia) provides as (iia) in the case of any new machinery or plant (other than ships and aircraft), which has been acquired and installed after the 31st day of March, 2005, be an assessee engaged in the business of manufacture or production of any article or thing or in the business of generation, transmission, or distribution of power, a further sum equal to twenty percent of the actual cost of such machinery or plant shall be allowed as deduction under clause (ii)
Please note that the above definition covers both the activities of manufacture and production of any article or thing.
The word ‘produce’ is defined in Webster new international dictionary to mean “ something which is brought forth or yielded either naturally or as a result of effort and work”. In shorter oxford dictionary, the meaning given is “ To bring forward, bring forth or out; to bring into being or existence.” In Black’s Law Dictionary, the expression “produce” is “ to bring forward; to show or exhibit; to bring into view or notice; to bring to surface.” 4. The definition includes anything which is yielded either naturally or as a result of effort or work under production. 7
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Please note that mining is also a result of work for yielding marble or any other thing from earth. For the excavation of marble following process are followed : White Gold Locating a potential quarrying site is the first step in the mining process. An outcrop of exposed marble is the surest way for a geologist to locate a potential vein. Once marble has been located, diamond-tipped drill bits take core samples to determine the best location for digging the quarry, as well as the expected quality and purity of the marble. Next, a mining company needs to apply for all of the required licenses form the local, state, and central government, a process that can take months to years. Hitting and Motherload Once mining has begun, there may be several months of digging before any marble is extracted from the quarry, Overburden, or dirt on top of the desirable ore, needs to be extracted before blocks of marble can be removed. In addition, establishing roads or tunnels for vehicle access is critical to the profitability and efficiency of the mine. A quarry manager needs to oversee each cut made from the quarry; marble mined along the “vein” of the deposit will have a very different look than marble that is “cross-cut” across the vein. Forming the Bench Mining marble blocks from the wall of the quarry starts with a “bench wall.” The bench wall is a large section of marble along a vertical wall that is cut with diamond cables, drills, and torches. It loosens the bench wall from the side of the quarry, and the separated wall can then be processed and cut into individual, uniform blocks. A marble block usually weighs between 15,000 and 25,000 pounds. Processing the Stone After the blocks are extracted from the quarry, they’ll go through further processing to match their intended purpose. For titles, the marble is cut into stone billets and polished to a smooth 8
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sheen. Marble slabs for construction or sculpture are cut using diamond wires or a gang saw, which uses multiple diamond-tipped blades to slice a marble block into more manageable slabs. Often, a resin applied to fill in cracks in the marble’s surface. After polishing, only 1 percent of the surface will be coated in resin, maintaining the purity and beauty of the finished stone.” It is further submitted that the issue was assessed u/s 143(3) of the Act and wherein the Ld. AO did not objected the same but the same was rectified u/s 154 of the Act lateron. From the above it is very clear that the assessee has not sold the article in the same position ie. as purchase and sale of the same thing without any addition and working . The assessee has to perform so many activities as mentioned above hence it cannot be said that the assessee only do the trading activity. Further the issue is debatable as to whether the assessee is manufacturing or not and for purpose firstly it should be decided that whether mining of marble block is manufacturing or not and when the interpretation of manufacturing is not been decided in the case of the assessee, then how it can be said that the assessee is not a manufacturer. From the various facts it is on record of the AO that the issue is debatable. And the issue which has been rectified by the ld. AO u/s 154 is highly debatable and it is the settled legal preposition and law that a debatable issue cannot be rectified u/s 154 and cannot be said mistake apparent on record. Our view is supported by the order of Hon’ble ITAT Lucknow in the matter of Dy. Commissioner of Income Tax-6, Kanpur Vs. M/s JK Cement, Kamla Tower in [45 ITR 50] wherein it was held that where additional depreciation was granted on plant and machinery used for generation and distribution of power in original assessment, same could not be disallowed by invoking provisions of section 154. Our view is further supported by the order of Hon’ble Chandigarh ITAT in the matter of S.R. Industries Ltd. Vs. ACIT Circle-3(1) Chandigarh in 156 ITD 125 wherein the reliance was placed on the decision of Calcutta High Court in 2006 284 ITR 42 9
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in which it was stated that “It is settled law that rectification proceedings u/s 154 can be resorted to, only to correct glaring and obvious mistakes of fact and law. If all facts are on record and no further calculation or ascertainment is necessary and if on these facts it is clear that an error of law or facts has been made, that error can be rectified u/s 154. Conversely mistakes which can be discovered only by a complicated process of investigation, argument, elucidation or debate cannot be said to be “apparent mistakes” and in such cases 154 cannot be resorted to.” 2.1 In the case of Volkart Bros. & Ors . vs. ITO (1967) 65 ITR 0179(SC) the Honble Supreme Court has held that Rectification—Mistake apparent—An error which is not obvious and patent and can only be discovered as a result of an argument, cannot qualify as an error apparent from the record—Assessee a registered non-resident firm and assessed on the slab rates applicable to registered firms in the respective Finance Acts— Rectification sought on the ground of non-application of the provision of s. 17(1) of the 1922 Act or corresponding provisions of s. 113 of the 1961 Act—Not permissible—Applicability or otherwise of s. 17(1) of 1922 Act or s. 133 of 1961 Act to non- resident registered firms was capable of decision only after elaborate arguments and hence was not an error apparent on record—Orders of rectification passed by the ITO are, therefore, without jurisdiction 2.2 In the case of D.S. SRINIVAS vs. ITO & ANR. 262 ITR 0209 : (2003) KarHC Rectification—Mistake apparent— Depreciation—Allowing of depreciation after verification of books of accounts cannot be equated to a 'mistake' in terms of s. 154—In the guise of a mistake the authorities are trying to set aside one view of the assessing authority—Sec. 154 was not available to the authorities—Impugned orders set aside—ITO vs. Volkart Bros. (1971) 82 ITR 50 (SC), CIT vs. South India Bank (2001) 166 CTR (SC) 216 : (2001) 249 ITR 304 (SC) and M.D. Narayan vs. Agrl. ITO (1974) 95 ITR 452 (Mys) relied on.
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2.3 In the case of Pr. CIT vs. Raigunj Central Co- Operative Bank Ltd. (2017) 98 CCH 0078 KolHC HELD Business Expenditure—Provision for Bad and Doubtful Debts in Respect of Rural Advances of Certain Banks—Rectification—In computation of income in assessment order disallowances was taken twice—These sums included sum of Rs.67,33,445— Computation also provided for a deduction u/s 36(1)(viia) of said sum of Rs.2,91,93,886 as admissible—Assessee applied for rectification u/s 154—Rectification regarding amount of Rs.2,91,93,886 taken twice was made as sought for in said application— However further rectification, not applied for, was made by deleting sum of Rs.67,33,445 from sum of Rs.2,91,93,886 allowed as a deduction u/s 36(1)(viia)—On appeal CIT(A) observed that said two provisions were not allowable as per Act— Tribunal, held that if interest was debited to borrowed account but for any reason interest had not actually realized, account was to be treated as NPA as per guidelines issued by RBI—In that eventuality, amount was unrealized, unrealized interest so taken to income should be reversed by debiting to P & L Account and crediting to overdue interest reserve account—It was claim of assessee that during year unrealized interest taken to income had been reversed by debiting P & L Account and crediting to provision for overdue interest account following guidelines issued by RBI—Tribunal found that this issue was highly debatable and it could not be adjudicated while acting u/s 154—AO should have made disallowance only while framing regular assessment or reassessment, which was made prior to resorting to this rectification—This disallowance could not be made while acting u/s 154 reason being this was not prima facie mistake it was a highly debatable issue—Held, it was clear from above that deletion of Rs.67,33,445 allowed as deduction u/s 36(1)(viia) could not be said to have been made in rectification of an error apparent in assessment order—Court had no reason to interfere with impugned order and, therefore, did not find that any substantial question of law was involved in this case—Application and appeal dismissed 2.4 In the case of Harbans Lal Malhotra & Sons (P) Ltd. vs. ITO & ANR. (1972) 83 ITR 0848 KolHC held that
ITA No. 484/JP/2019 Shri Vikram Singh Shekhawat vs DCIT Circle –Sikar
Rectification—Debatable issue—Rate of depreciation—Mistake that is proposed to be rectified is dependent on the question whether the machinery used for production of safety razor blades can be said to be part of "Iron & Steel Industry" and can come within category (b) mentioned hereinafter—This requires interpretation of the expression "other machinery and plant"—This is surely a question which requires, firstly, an interpretation of the expression "other machinery and plant" and, secondly, the nature of the machinery and plant used by the petitioner-company and whether they come within the expression "other machinery and plant" or as well as under the items mentioned within the brackets—This will require investigation, both of facts as well as interpretation of law—It is a mistake which has to be discovered after interpretation of a certain section and investigation of certain facts—In the premises there cannot be any jurisdiction for the ITO to take proceedings under s. 154 in view of the facts disclosed The short question is whether the mistake proposed to be rectified comes within the purview of s. 154 of the IT Act, 1961. Appendix I of the IT Rules, Part I, provides the statement at which depreciation is allowed. Item III is in the following terms "Machinery and plant" and the general rate allowed as mentioned is 7 per cent. In cl. (ii) of item III certain items have been mentioned where special rates are to be applied to the whole of the machinery and plant used in certain named concerns and under the heading "I" comes the "Iron & Steel Industry" which has three sub-clauses. The Iron & Steel Industry is divided into two heads—one is rolling mill rolls which is category (a) where the depreciation is nil and the other is category (b) which is "other machinery and plant (blast furnace plant, steel making plant, steel rolling plant, forges, generators, boilers and sheet mills)". These are allowed depreciation at 10 per cent. From the petition and the averments made therein and the statements made in the affidavit-in-opposition it is apparent that the mistake that is proposed to be rectified is dependent on the question whether the machinery used for production of safety razor blades can be said to be part of "Iron & Steel Industry" and can come within category (b) mentioned hereinafter. This requires interpretation of the expression "other 12
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machinery and plant". It was contended that other machinery and plant was intended to cover all machinery used in iron & steel industry apart from the rolling mill rolls. It was urged that otherwise there was no purpose of using the expression "other". It was further urged that in respect of this machine-rolling mill roll only nil depreciation was allowed for special reasons mentioned in the column of remarks. On the other hand it was urged on behalf of the respondent that the particular items mentioned within the brackets in III(i)(1)(3)(b) of Appendix I mentioned hereinbefore were exhaustive of the other machinery and plant included in the heading "Iron & Steel Industry". This is surely a question which requires, firstly, an interpretation of the expression "other machinery and plant" and, secondly, the nature of the machinery and plant used by the petitioner-company and whether they come within the expression "other machinery and plant" or as well as under the items mentioned within the brackets. This will require investigation, both of facts as well as interpretation of law. It is not necessary to decide the question whether the petitioner's plant and machinery used for safety razor blades merit depreciation under this head or come under the general head of plant and machinery. But in view of the language used it appears that it cannot be said that it is an obvious and apparent mistake which is self-evident and does not require either a process of argument or investigation. If that is the position in law then, proceedings under s. 154 cannot be initiated. The mistake, if any, in this case is one which cannot be called either obvious or glaring or self- evident. It is a mistake which appears from the record, but it is not apparent. It is a mistake which has to be discovered after interpretation of a certain section and investigation of certain facts. In the premises there cannot be any jurisdiction for the ITO to take proceedings under s. 154 in view of the facts disclosed.— Maharana Mills (P) Ltd. vs. ITO (1959) 36 ITR 350 (SC) : TC53R.275, National Rayon Corporation Ltd. vs. G.R. Bahmani, ITO (1965) 56 ITR 114 (Bom) : TC53R.145, Volkart Bros. vs. ITO (1967) 65 ITR 179 (Bom) : TC53R.168 and P.M. Bharucha & Co. vs. G.S. Venkatesan, ITO (1969) 74 ITR 513 (Guj) : TC33R.480 relied on.
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2.5 In the case Coates Of India Ltd. vs. DCIT & ORS (1995) 214 ITR 0498 (Kol. HC) Assessment—Rectification of intimation under s. 143(1)(a)—Where order under s. 143(1)(a) is followed by a regular assessment under s. 143(3), order under s. 143(1)(a), in so far as it is contrary to regular assessment, ceases to be executable and becomes ineffective—That cannot be rectified under s. 154—Further, Assessing Officer could not decide any debatable issue under s. 143(1)(a)—By the impugned notice under s. 154, Assessing Officer seeking to correct intimation under s. 143(1)(a) on a debatable issue— Impugned notice set aside 2.6 In the case of CIT vs. R.T.C.L. LTD. (2012) 348 ITR 0120 (Del.) Held that Rectification—Book profits—Rectification of mistake apparent from record—Debatable issue outside the purview of section 154—Assessee was following straight line method of depreciation prior to the AY 2002-03—In the year in question, it changed the method to written down value method— Difference due to change in method of depreciation was shown in the profit and loss account under the head 'Expenditure— Depreciation'—Due to this change, book profits got reduced to Rs. 13,14,552/-—Issue is whether AO can examine and go into the aspect of adjustment of prior period expenses against book profits for calculating tax u/s 115JB of the Act while exercising jurisdiction u/s 154—Held, there was considerable controversy on aspect of adjustment of prior period expenses against book profits for calculating tax u/s 115JB—Jurisdiction u/s 154 is confined to rectification of errors apparent from the record—AO cannot go into a debatable issue on which two or more views are possible and pass an order on merits—Appeal dismissed 2.7 In the case of CIT vs. Cello writing instruments & containers (p) ltd.(2009) 319 ITR 0063 MumHC held that Rectification of mistake—Mistake apparent from record— Computation of deduction under s. 80-IB—Deduction of depreciation from eligible profits—On this issue, the Division Bench of the jurisdictional High Court had referred the matter to a Larger Bench—Fact that the Court itself is divided on the issue, whatever be the merits of the matter, the AO at least had no jurisdiction to exercise his jurisdiction under s. 154—As and when 14
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there is conflict of opinion amongst the Benches the same cannot amount to an error apparent on the face of the record—Exercise of jurisdiction by the AO under s. 154 was without jurisdiction 2.8 In the case of CIT vs. TTK PHARMA LTD. 2008) 300 ITR 0346 Chen HC held that Rectification—Debatable issue— Carry forward of loss vis-a-vis assessment under s. 115J— Assumption of jurisdiction under s. 154 is permissible only to correct an error which is apparent and not where a debatable issue is involved—Views of different High Courts were not uniform on the issue involved in the instant case at the time when the rectification proceedings were taken—Issue was settled by the Supreme Court long thereafter—Hence, the proceedings are unsustainable 2.9 In the case of Royal Cushion Vinyal vs. CIT (2009) 227 CTR 0663 (Mum. HC) held that Rectification—Debatable issue—Deduction under s. 80HHC—Issue regarding deduction of unabsorbed depreciation and unabsorbed losses from the profits and gains of business or profession while computing deduction under s. 80HHC was a debatable issue—Therefore, Dy. CIT had no jurisdiction to pass the impugned order under s. 154 holding that the assessee-company is entitled to deduction under s. 80HHC at nil as there is no positive income after setting off the unabsorbed depreciation and unabsorbed business losses of the earlier years 2.10 In the case of CIT vs. Nonmag Wires (P) Ltd. held that (2007) 292 ITR 0557 Chen HC Rectification—Debatable issue—Computation of book profit under s. 115J—Rectification made to restrict the set off of unabsorbed business loss to the extent of business income only—Not justified—There were conflicting opinions on the question of working of book profit under s. 115J on the date when the proceedings were taken under s. 154—Matter was considered and settled by the apex Court long after the AO invoked jurisdiction under s. 154—Debatable issue, including a point of law, is not a mistake apparent from the record—Plea of the Revenue to sustain the order of assessment under any other provision of the Act cannot be accepted
ITA No. 484/JP/2019 Shri Vikram Singh Shekhawat vs DCIT Circle –Sikar
2.11 In the case of CIT vs. Investment Trust of India Ltd. (2009) 77 CCH 0725 PHHC it has been held that Rectification—Mistake apparent from record—Depreciation— Depreciation granted in original assessment—In the earlier year, depreciation was disallowed on the ground that the asset did not exist—In the rectification proceedings of current year, depreciation originally granted, withdrawn on the same ground—Issue of disallowance of depreciation was a debatable one—Cannot be the subject matter of depreciation—Withdrawal of depreciation in rectification proceedings is not proper—Addl. CIT vs. Kanta Behan (1982) 27 CTR (Del) 40 : (1983) 140 ITR 187 (Del) distinguished In the case of CIT vs. Shiv Narain Karmendra Narain 1124 All HC 280 ITR 0355 Rectification—Debatable issue—Rate of depreciation on generator—Question as to whether the generator is electrical installation and depreciation at the rate of 20 per cent is allowable thereon or not is a question of debate—In fact Tribunal has allowed depreciation on generator @ 20 per cent to the assessee in the subsequent assessment year—Therefore, depreciation @ 20 per cent allowed in the original assessment could not be reduced to 10 per cent as it was not a mistake which could be rectified by invoking s. 154 3. On perusal of all above Supreme Courts and High Court orders it is now very settled and legal position when there is any issue in hand is debatable then the same cannot rectified 4. Hence in view of the above facts, circumstances, submissions and legal position the action taken u/s 154 the impugned order may kindly be quashed. 5. Further the ld. AO without examination the facts, nature of the business of the assessee and without bring any material in support to establish that the assessee is not manufacture has disallowed the claim of the assessee. Which is against the principle of law.
ITA No. 484/JP/2019 Shri Vikram Singh Shekhawat vs DCIT Circle –Sikar
Contradictory approach of the ld. AO: Further when the ld. AO has disallowed the additional depreciation in this year, despite this he has not given any credit of this additional depreciation in next year years by rectifying the same for which the assessee is eligible as per law. It shows the contradictory approach of the ld. AO and the same resultant double disallowance and taxation of same income, which is not permissible in law. It also proves that as per the action of the ld. AO itself proved that the assessee has rightly claim the additional depreciation, otherwise he could have given the effect of this disallowance in the subsequent years. 7. Alternatively and without prejudice to the above the ld. AO may kindly be directed to allow this claim in subsequent years and grant the refund in next year by giving this effects. 8. Order of the ld. AO merged in the order of CIT(A): Further the assessee had filed the appeal against the original assessment order before the ld. CIT(A) who decided the appeal on dt. 01.08.2018. When the order of the AO has merged before the ld. CIT(A) no order of rectification can be done. 9. Books of account rejected no other disallowance can be made: Further it is also settled when books has been rejected by invoking provision of Se.c145(3) and profit has been estimated no addition can be made under any other heads of for other disallowance kindly refer ACIT Circle 1 Udaipur V/s Mahendra Singh Chudhary in ITA No. 285/Jd/2013 dt.09.06.2014 Similarly, the similar and identical issue has been decided by the Hon’ble ITAT, Jaipur Bench, Jaipur vide their order dated 28/11/2014 in the case of Shri Bhagchand Choudhary v/s ACIT in appeal No.ITA No. 506/JP/2012. In both the above cases it has been held that on the basis of numerous discrepancies pointed out by the Ld. AO in the assessment order suggest the implied or deemed invocation of section 145(3) of the Act and also held that normally additions under section 143(3) should be limited to the estimation of gross profit rate or net profit rate only, based on the relevant past history of the assessee and there is no further scope for making separate additions on different related grounds. The 17
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above decisions were based on the ratio of judgment of Hon’ble ITAT, Jaipur Bench, Jaipur in the case of M/s. Choudhary and Brothers in ITA No. 1177/JP/2010 dated 1/5/2011 where in the Hon’ble Tribunal had disapproved the multiple additions and had viewed that a composite addition to the GP/NP ratio would be sufficient to take care of all such discrepancies. The facts and circumstances of the present case are totally similar and identical of the above said cases and hence the ratio of judgment is fully applicable in this case also. Therefore in view of the above facts and circumstances the disallowance so made may kindly be deleted in full and oblige.’’
4.3 On the other hand, the ld. DR relied on the orders passed by the
lower authorities.
4.4 We have heard the ld. counsel of both the parties, perused the
materials placed on record, orders passed by the Revenue authorities and
the judgement cited by the respective parties. As per present facts of the
case the AO disallowed the additional depreciation charged @ 20% on
the machinery purchased during the year u/s 154 of the Act. The purchase
of the machinery and used in the business is not disputed. The matter was
assessed u/s 143(3) of the Act and during the course assessee has filed the
audited accounts and all the books of accounts vide page 1-2 of the
assessment order (PB19-20) and duly examined by the AO and the AO
made the trading additions. But no disallowance or addition was made in
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the assessment on that account of claim of additional depreciation which
mean that the said additional depreciation was not disputed at the time of
assessment u/s 143(3) of the Act. However, later on the AO discovered
that additional depreciation is not allowed since the assessee is involved
into mining industry and not manufacturing anything and applied the
decision of the Hon’ble Supreme court in the matter of Lucky Minerals
Pvt. Ltd. (supra). In our view the provisions of Section 154 of the Act
allows the AO to rectify the mistakes which are apparent from record and
thus only the glaring and obvious mistakes which are apparent which are
self evident and does not require either a process of argument of
investigation. The mistakes which are not apparent but has to be
discovered after interpretation of a certain section and investigation of
certain facts cannot be rectified u/s 154 of the Act. As per the assessee, he
has not sold the article in the same position i.e. as purchase and sale of
the same thing without any addition and working. According to the
assessee, he has to perform so many activities such as locating a potential
quarrying site in the first step in the mining process, hitting and mother
load, forming the Bench, processing the stone etc. Hence, it cannot be
said that the assessee is only doing the trading activity. We have also
ITA No. 484/JP/2019 Shri Vikram Singh Shekhawat vs DCIT Circle –Sikar
noticed that according to the assessee, he is producing things and sicne
the production is a bigger term and includes manufacture also. In this
respect the assessee had referred to some decisions of various Hon'ble
High Courts and Hon'ble Supreme Courts also. Therefore, the matter
raised before us is debatable as to whether the mining of marble block is
manufacturing or not and assessee had also intimated the AO. Therefore,
the modus operandi in support of the claim is to be covered under the
mining and manufacturing activity. Therefore, the matter being debatable
cannot be rectified u/s 154 of the Act. We further noticed that since the
issue is debatable as to whether the assessee is manufacturing or not and
for purpose firstly it should be decided that whether mining of marble
block is manufacturing or not and when the interpretation of
manufacturing has not been decided in the case of the assessee, then as to
how it can be said that the assessee is not a manufacturer. From the
various facts, it is on record of the AO that the issue is debatable and the
issue which has been rectified by the AO u/s 154 is highly debatable and
it is the settled legal preposition of law that a debatable issue cannot be
rectified u/s 154 and cannot be said mistake apparent on record. Our view
is supported by following case laws.
ITA No. 484/JP/2019 Shri Vikram Singh Shekhawat vs DCIT Circle –Sikar
(i) Hon’ble ITAT Lucknow in the matter of DCIT-6, Kanpur Vs. M/s JK Cement, Kamla Tower in [ 45 ITR 50] wherein it was held that where additional depreciation was granted on plant and machinery used for generation and distribution of power in original assessment, same could not be disallowed by invoking provisions of section 154. (ii) Hon’ble Chandigarh ITAT in the matter of S.R. Industries Ltd. Vs. ACIT Circle-3(1) Chandigarh in 156 ITD 125 wherein the reliance was placed on the decision of Calcutta High Court in 2006 284 ITR 42 in which it was stated that “It is settled law that rectification proceedings u/s 154 can be resorted to, only to correct glaring and obvious mistakes of fact and law. If all facts are on record and no further calculation or ascertainment is necessary and if on these facts it is clear that an error of law or facts has been made, that error can be rectified u/s 154. Conversely mistakes which can be discovered only by a complicated process of investigation, argument, elucidation or debate cannot be said to be “apparent mistakes” and in such cases 154 cannot be resorted to.” (iii) In the case of Volkart Bros. & Ors . vs. ITO (1967) 65 ITR 0179(SC) the Honble Supreme Court has held that Rectification—Mistake apparent—An error which is not obvious and patent and can only be discovered as a result of an argument, cannot qualify as an error apparent from the record—Assessee a registered non-resident firm and assessed on the slab rates applicable to registered firms in the respective Finance Acts— Rectification sought on the ground of non-application of the provision of s. 17(1) of the 1922 Act or corresponding provisions of s. 113 of the 1961 Act— Not permissible—Applicability or otherwise of s. 17(1) of 1922 Act or s. 133 of 1961 Act to non-resident registered firms was capable of decision only after elaborate arguments and hence was not an error apparent on record—Orders of rectification passed by the ITO are, therefore, without jurisdiction (iv) In the case of D.S. SRINIVAS vs. ITO & ANR. 262 ITR 0209 : (2003) Kar HC Rectification—Mistake apparent—Depreciation— Allowing of depreciation after verification of books of accounts cannot be equated to a 'mistake' in terms of s. 154—In the guise of a mistake the authorities are trying to set aside one view of the assessing authority—Sec. 154 was not available to the authorities—Impugned orders set aside—ITO vs. Volkart Bros. (1971) 82 ITR 50 (SC), CIT vs. South India Bank (2001) 166 CTR (SC) 216 : (2001) 249 ITR 304 (SC) and M.D. Narayan vs. Agrl. ITO (1974) 95 ITR 452 (Mys) relied on. In the present case the books of account has also been examined by the ld. AO during the course of original assessment. Hence the same position is here.
(v) 2.3 In the case of Pr. CIT vs. Raigunj Central Co-Operative Bank Ltd. (2017) 98 CCH 0078 KolHC HELD Business Expenditure— 21
ITA No. 484/JP/2019 Shri Vikram Singh Shekhawat vs DCIT Circle –Sikar
Provision for Bad and Doubtful Debts in Respect of Rural Advances of Certain Banks—Rectification—In computation of income in assessment order disallowances was taken twice—These sums included sum of Rs.67,33,445— Computation also provided for a deduction u/s 36(1)(viia) of said sum of Rs.2,91,93,886 as admissible—Assessee applied for rectification u/s 154— Rectification regarding amount of Rs.2,91,93,886 taken twice was made as sought for in said application— However further rectification, not applied for, was made by deleting sum of Rs.67,33,445 from sum of Rs.2,91,93,886 allowed as a deduction u/s 36(1)(viia)—On appeal CIT(A) observed that said two provisions were not allowable as per Act—Tribunal, held that if interest was debited to borrowed account but for any reason interest had not actually realized, account was to be treated as NPA as per guidelines issued by RBI— In that eventuality, amount was unrealized, unrealized interest so taken to income should be reversed by debiting to P & L Account and crediting to overdue interest reserve account—It was claim of assessee that during year unrealized interest taken to income had been reversed by debiting P & L Account and crediting to provision for overdue interest account following guidelines issued by RBI—Tribunal found that this issue was highly debatable and it could not be adjudicated while acting u/s 154—AO should have made disallowance only while framing regular assessment or reassessment, which was made prior to resorting to this rectification—This disallowance could not be made while acting u/s 154 reason being this was not prima facie mistake it was a highly debatable issue—Held, it was clear from above that deletion of Rs.67,33,445 allowed as deduction u/s 36(1)(viia) could not be said to have been made in rectification of an error apparent in assessment order—Court had no reason to interfere with impugned order and, therefore, did not find that any substantial question of law was involved in this case—Application and appeal dismissed
(vi) In the case of Harbans Lal Malhotra & Sons (P) Ltd. vs. ITO & ANR. (1972) 83 ITR 0848 KolHC held that Rectification—Debatable issue— Rate of depreciation—Mistake that is proposed to be rectified is dependent on the question whether the machinery used for production of safety razor blades can be said to be part of "Iron & Steel Industry" and can come within category (b) mentioned hereinafter—This requires interpretation of the expression "other machinery and plant"—This is surely a question which requires, firstly, an interpretation of the expression "other machinery and plant" and, secondly, the nature of the machinery and plant used by the petitioner-company and whether they come within the expression "other machinery and plant" or as well as under the items mentioned within the brackets—This will require investigation, both of facts as well as interpretation of law—It is a mistake which has to be discovered after interpretation of a certain section and investigation of certain facts—In the premises there cannot be any jurisdiction for the ITO to take proceedings under s. 154 in view of the facts disclosed.’’
ITA No. 484/JP/2019 Shri Vikram Singh Shekhawat vs DCIT Circle –Sikar
In view of our discussions that the issue in hand is debatable, thus the
same cannot be rectified by invoking the provisions of Section154 of the
Act by the AO and the AO without examining the facts, nature of the
business of the assessee and without bringing any material in his support
to establish that the assessee was not manufacturer, had disallowed the
claim of the assessee which is against the principles of law. We therefore,
allow these grounds raised by the assessee and quash the decisions of the
lower authorities on this issue.
5.1 The Ground No. 3 of the assessee is regarding charging of interest
u/s 234A, 234B and 234C. Since we have quashed Ground No. 1,
therefore, this ground being consequential in nature has become
infructuous.
Thus the appeal of the assessee in ITA No484/JP/2019 is allowed.
6.1 Now we take up the appeal of the assessee in ITA No. 485/JP/2019
for the Assessment Year 2014-15 for adjudication.
7.1 The Ground No. 1 of the assessee is general in nature which does
not require any adjudication.
ITA No. 484/JP/2019 Shri Vikram Singh Shekhawat vs DCIT Circle –Sikar
8.1 The Ground No. 2 of the assessee is regarding invoking the
provisions of section 145(3) and confirming the trading addition of Rs.
2.00 lacs.
8.2 Brief facts of the case are that the assessee is engaged in the
business of Mining of sand stone and export the production of the mines
in the name of M/s V.S. Stones and also manufacturing and trading of
Marble Block. The assessee has filed his return of income declaring the
total income Rs. 1,21,52,190/- on 19.09.2015. During the year under
consideration, the assessee has declared gross profit of Rs.3,55,23,467/-
giving G.P. rate of 33.35% on the turnover of Rs.10,65,32,579/- and net
profit of Rs. 1,18,24,765/-giving the NP rate of 11.09% as against gross
profit of Rs.5,29,08,115/- giving G.P. rate of 33.06% on the turnover of
Rs.16,00,18,539/- and Net profit at Rs. 1,69,16,388/- Giving NP rate of
10.57% in last year. The AO alleged that the auditor in Audit report has
mentioned that the assessee has not maintained the day to day stock
register. The AO has further noted that assessee did not maintain
quantitative and qualitative details of stock. Hence the AO has asked to
the assessee as to why the books of accountant may not be rejected by
invoking the provisions of Sec. 145(3). In response thereto, the assessee
ITA No. 484/JP/2019 Shri Vikram Singh Shekhawat vs DCIT Circle –Sikar
submitted that its purchases and sales are fully vouched and its total
production is exported out of India. The production is done on the basis
of export order. However the AO did not feel satisfied with the reply and
invoked the provisions of Sec. 145(3) of the Act and made the lump sum
trading addition of Rs.5,00,000/-
8.3 In first appeal the ld. CIT(A) has confirmed the rejection of books
of accounts made by the AO u/s 145(3). The ld. CIT(A) has held that
even in past rejection books was made by the AO u/s 145(3) and was
upheld by CIT(A), though the quantum of estimation was reduced. Facts
being same, rejection of books of account u/s 145(3) of the Act is
sustainable and addition of Rs.5.00 is reduced to Rs.2.00 Lakhs.
8.4 During the course of hearing, the ld.AR of the assessee submitted
that the ground raised by the assessee is squarely covered by the decision
Hon'ble Jurisdictional High Court wherein the Hon'ble High Court in the
case of Shri Kishan Kumar Saraiwalavs CIT in DBIT No. 325 and
338/2011 dated 28-08-2017 has taken a view that average G.P./N.P. rate
of 5 years should be taken in the case of business. Accordingly, as per
facts of the present case the average G.P./N.P. rate of last five years
comes to 8.97%. In this respect, the comparative chart of N.P. Rate of last
ITA No. 484/JP/2019 Shri Vikram Singh Shekhawat vs DCIT Circle –Sikar
five years has already been filed by the assessee in his written
submission. It was further submitted that during the year under
consideration the assessee has already declared very high N.P. Rate of
11.09% as against average N.P. Rate of 8.97% but the ld. CIT(A) has
ignored the said facts, although the same chart was also furnished before
him. It was further submitted that even the Coordinate Bench of ITAT,
Jaipur in the case of ITO, Bundi vs Rameshwar Meena in ITA
No.420/JP/2017 dated 30-04-2019 had followed the above decision of
Hon'ble Jurisdictional High Court. Therefore, in such circumstances, no
addition is required to be made and the entire addition is liable to be
deleted. It was further submitted that during the assessment proceeding[
the audited balance sheet, profit and loss account, trading account
alongwith all the annexure, audit report and report in form 3CD, quantity
details were filed before the AO and complete books of account namely
cash vouchers, Journal, Vouchers and bills etc. The ld.AR further
submitted that bank statements were filed from time to time. It was
submitted that since complete details were filed and the same were
regularly maintained by the assessee and there is no change in the method
of accounting and even no defect was found by the AO. Thus, it was
ITA No. 484/JP/2019 Shri Vikram Singh Shekhawat vs DCIT Circle –Sikar
submitted that no disallowance should have been sustained by rejecting
the books of account of the assessee.
8.5 On the other hand, the ld. DR relied on the orders of the lower
authorities.
8.6 We have heard the rival contentions and perused the materials
available on record. We noticed that the Coordinate Bench in ITA No.
420/JP/2017 (vide order dated 30-04-2019)for the Assessment Year
2012-13 in the case of ITO vs Shri Rameshwar Meena has already dealt
with the identical issue in para 8 of its order which is reproduced as
under:-
‘’8. We have heard the rival contentions and perused the material available on record. We are of the view that the books of account have been rightly rejected by the Assessing Officer as the assessee failed to produce the books of account for verification and in absence thereof, it is difficult for the Assessing Officer to determine whether the trading results so declared by the assessee are true and correct. Regarding estimation of profits, we find that the assessee has declared better net profit rate as compared to earlier years and therefore, even where the books of account are rejected, given better results declared by the assessee as compared to average of last five years, the trading addition so made is directed to be deleted. In the result, the Ground No. 1 of the Revenue’s appeal is allowed and the Ground No. 2 is dismissed. ‘’
ITA No. 484/JP/2019 Shri Vikram Singh Shekhawat vs DCIT Circle –Sikar
In this case the books of account of the assessee are rejected in spite of
declaring better n.p. rate of last 05 years as compared to average of last
years. We are of the view that no trading addition is sustainable.
Therefore, keeping in view the principle as laid down by the ITAT
Coordinate Bench in ITA No. 420/JP/2017 (supra) which in turn has
based its findings by the decision of Hon'ble Jurisdictional High Court in
thecase of Shri Kishan Kumar Saraiwalavs CIT(supra). Hence, we
restore the matter back to the file of the AO to verify the results declared
and attained finality by the assessee by comparing the average results of
last 05 years and in case it is found by the AO that the assessee has
declared better n.p. rate as compared to earlier years then in that
eventuality no trading additionis called for. It is needless to mention that
before passing the afresh order on this issue by the AO, the assessee will
be provided adequate opportunity of hearing by the AO and the assessee
will submit the necessary details before him. Thus this Ground No. 2 of
the assessee is allowed for Statistical purposes.
9.1 The Ground No. 3 of the assessee is regarding disallowance of Rs.
1,48,229/- towards interest on TDS.
ITA No. 484/JP/2019 Shri Vikram Singh Shekhawat vs DCIT Circle –Sikar
9.2 Brief facts of this ground is that the AO during the course of
assessment proceeding noted that assessee had debited a sum of
Rs.1,48,229/- toward the interest on TDS which is not allowable as
revenue expenditure.. In first appeal,, the ld. CIT(A) held that the
interest payment for delayed deposit of TDS is a nature of penalty and
thus the same is not allowable.
9.3 During the course of hearing, the ld.AR of the assessee reiterated
the same arguments as were raised by him before the ld. CIT(A) which is
contained in para 14 of the ld. CIT(A)’s order and the same is reproduced
as under:-
‘’1. The ld. AO has noted that assessee has debited a sum of Rs.1,48,229/- toward the interest on TDS, which is not allowable as revenue expenditure and the ld. AO has disallowed the same without giving any show cause notice. 2. No Show cause given: At the very out set we may submit that the AO made the disallowance without providing any opportunity of being heard to the assessee nor he issued any show cause notice before making the disallowance. During the course of assessment proceeding the ld. AO only required the assessee to file the details and reasons of shortage. In response thereto the assessee filed details and reasons of the same. After receiving details and reasons of shortage he did not ask the assessee that the shortage claimed by you is excessive and why not the same should be restricted to .25%. The AO must have issued show cause notice in the interest of natural justice but he did not do so and made a huge disallowance. It is very settled legal position that a person(assessee) is entitled to opportunity to show cause as to why 29
ITA No. 484/JP/2019 Shri Vikram Singh Shekhawat vs DCIT Circle –Sikar
not the income of the assessee is determined in the manner as proposed by the assesseeing officer but in the instant case no such type of opportunity had been provided hence the addition so made may kindly be deleted in full kindly refer Sanghi Brothers (Indore)Limited v/s Inspecting ACIT 122 CTR 19(MP), Malik Packaging v/s CIT 284 ITR (All), T.C.N. Menon v/s ITO 96 ITR 148(Ker).
Sir, the appellant had complied with all of the provisions related to deduction and deposit of TDS and filing of returns etc. except in some cases, where there was delay in deposit of TDS and he duly deposited the interest on such delays. The Ld AO did not accepted the interest on account of delayed deposit of TDS and made addition of Rs. 148229. Here we wish to state that the interest for the delay in making the payment of TDS is compensatory in nature. As such the interest on delayed payment is not in the nature of penalty in the instant case on hand. The issue of delay in the payment of service tax is directly covered by the judgment of Hon’ble Apex Court in the case of Lachmandas Mathura Vs. CIT reported in 254 ITR 799 in favour of assessee. The relevant extract of the judgment is reproduced below : “The High Court has proceeded on the basis that the interest on arrears of sales tax is penal in nature and has rejected the contention of the assessee that it is compensatory in nature. In taking the said view the High Court has placed reliance on its Full Bench's decision in Saraya Sugar Mills (P.) Ltd. v. CIT [1979] 116 ITR 387 (All.) The learned counsel appearing for the appellant- assessee states that the said judgment of the Full Bench has been reversed by the larger Bench of the High Court in Triveni Engg. Works Ltd. v. CIT [1983] 144 ITR 732 (All.) (FB), wherein it has been held that interest on arrears of tax is compensatory in nature and not penal. This question has also been considered by this Court in Civil Appeal No. 830 of 1979 titled Saraya Sugar Mills (P.) Ltd. v. CIT decided on 29-2-1996. In that view of the matter, the appeal 30
ITA No. 484/JP/2019 Shri Vikram Singh Shekhawat vs DCIT Circle –Sikar
is allowed and question Nos. 1 and 2 are answered in favour of the assessee and against the revenue.” In view of the above judgment, there remains no doubt that the interest expense on the delayed payment of service tax is allowable deduction. The above principles can be applied to the interest expenses levied on account of delayed payment of TDS as it relates to the expenses claimed by the assessee which are subject to the TDS provisions. The assessee claims the specified expenses of certain amount in its profit & loss account and thereafter the assessee from the payment to the party deducts certain percentage as specified under the Act as TDS and pays to the Government Exchequer. The amount of TDS represents the amount of income tax of the party on whose behalf the payment was deducted & paid to the Government Exchequer. Thus the TDS amount does not represent the tax of the assessee but it is the tax of the party which has been paid by the assessee. Thus any delay in the payment of TDS by the assessee cannot be linked to the income tax of the assessee. It was held in the matter of DCIT Vs Narayani Ispat Pvt Ltd. By ITAT Kolkata in ITA No. 2127/Kol/2014 that “we hold that the Assessing Officer in the instant case has wrongly applied the principle laid down by the Hon'ble Supreme Court in the case of Bharat Commerce Industries Ltd.(supra). We also find that the Hon'ble Supreme Court in the case of Lachmandas Mathura (Supra) has allowed the deduction on account of interest on late deposit of sales tax u/s 37(1) of the Act. In view of the above, we conclude that the interest expenses claimed by the assessee on account of delayed deposit of service tax as well as TDS liability are allowable expenses u/s 37(1) of the Act. In this view of the matter, we find no reason to interfere in the order of Ld. CIT(A) and we uphold the same. Hence, this ground of Revenue is dismissed.” In view of the above, we request your honour to allow the payment of interest on delayed deposit of TDS to the tune of Rs. 148229/-.’’
ITA No. 484/JP/2019 Shri Vikram Singh Shekhawat vs DCIT Circle –Sikar
9.4 On the other hand, the ld. DR relied on the orders of the lower
authorities.
9.5 We have heard the rival contentions and perused the materials
available on record. We are of the view that the interest payment for
delayed deposit of TDS is in fact in the nature of penalty and the same is
not found allowable. The Legislature expects from the assessee to adhere
the various laws of land and in case of any violation of same and financial
consequences thereof cannot be allowed in the ambit of Section 37 of the
Act. The case laws cited by the ld.AR of the assessee are not applicable in
the present facts and circumstances of the case of the assessee. It is an
admitted fact that disallowance/ addition made by the AO on account of
payment of interest on delayed deposit of TDS is penal in nature. The
ld.AR of the assessee relied on the decision of Hon'ble Supreme Court in
the case of Bharat Commerce Industries Ltd. vs CIT (1998) 230 ITR 733
which does not find force in this ground of the assessee. Hence, the
Ground No. 3 of the assessee is dismissed.
ITA No. 484/JP/2019 Shri Vikram Singh Shekhawat vs DCIT Circle –Sikar
10.1 The Ground No. 4 of the assessee is regarding disallowance of
rs15,97,572/- u/s 40(a)(ia) of the Act.
10.2 In this case, the AO noted that the assessee paid interest of Rs.
15,75,572/- to M/s. SREI Equipment Finance Ltd. ad Rs. 21,944/- to M/s.
AU Finance on which no TDS was deducted. For want of justification by
the assessee, the disallowance was made by the AO on account of non-
deduction of TDS on total amount of interest paid of Rs. 15,97,572/-
which was confirmed by the ld. CIT(A) in first appeal before him.
10.3 During the course of hearing, the ld.AR of the assessee reiterated
the same arguments as were raised before the ld. CIT(A) which is
contained in para 17 and the same is reproduced as under:-
‘’1. Payee already paid tax on payment made by assessee: It is further submitted that the ld. AO has not disputed that the payee’s had already considered and taken into account the interest income charged from the assessee. The payee has duly included the same in its income and also paid tax thereupon. Kindly ref. certificates received from them attached herewith. Once the entire tax payable on such income (subjected to TDS), has already been admittedly paid, even if there is no TDS made by the appellant payer, there cannot be any disallowance u/s 40(a)(ia). And in the Act also there is an amendment of Sec. 40(a)(ia) and u/s 201(1) in the finance Act 2012 which provides Second proviso to Section 40(a)(ia), introduced with effect from 1st April 2013, provides, that " where an 33
ITA No. 484/JP/2019 Shri Vikram Singh Shekhawat vs DCIT Circle –Sikar
Assessee fails to deduct the whole or any part of the tax in accordance with the provisions 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 Assessee 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 sa id proviso". And after this amendment the Honble IATA Agra Bench in the case of Rajeev Kumar Agrawal V/s Add. CIT 165 TTJ 228(Agra) held that Second proviso to Section 40(a)(ia), introduced with effect from 1st April 2013, provides, that " where an Assessee fails to deduct the whole or any part of the tax in accordance with the provisions 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 Assessee 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 sa id proviso". In other words, as long as the Assessee cannot be treated as an Assessee in default, the disallowance under section 40(a)(ia) cannot come into play either. To understand the effect of this proviso, it is useful to refer to first proviso to section 201(1), which is also introduced by the Finance Act 2012and effective1st July 2012, and which provides that "any person, including the principal officer of 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 section 139; (ii) has taken into account such sum for computing income 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 a certificate to this effect from an accountant in such form as may be prescribed." The unambiguous underlying principle seems to 34
ITA No. 484/JP/2019 Shri Vikram Singh Shekhawat vs DCIT Circle –Sikar
be that in the situations in which the Assessee’s tax withholding lapse have not resulted in any loss to the exchequer, and this fact can be reasonably demonstrated, the Assessee cannot be treated as an Assessee in default. The bigger picture as it emerges after insertion of second proviso to section 40(a)(ia), it is beyond doubt that the underlying objective of section 40(a)(ia) was to disallowdeduction in respect of expenditure in a situation in which the income embedded in related payments remains untaxed due to non-deduction of tax at source by the Assessee. In other words, deductibility of expenditure is made contingent upon the income, if any, embedded in such expenditure being brought to tax, if applicable. Section 40(a)(ia) cannot be seen as intended to be a penal provision to punish the lapses of non-deduction of tax at source from payments for expenditure- particularly when the recipients have taken into account income embedded in these payments, paid due taxes thereon and filed income tax returns in accordance with the law. On a conceptual note, primary justification for such a disallowance is that such a denial of deduction is to compensate for the loss of revenue by corresponding income not being taken into account in computation of taxable income in the hands of the recipients of the payments. Such a policy motivated deduction restrictions should, therefore, not come into play when an Assessee is able to establish that there is no actual loss of revenue. This disallowance does deincentivize not deducting tax at source, when such tax deductions are due, but, so far as the legal framework is concerned, this provision is not for the purpose of penalizing for the tax deduction at source lapses. The scheme of Section 40(a)(ia), as ITAT see it, is aimed at ensuring that an expenditure should not be allowed as deduction in the hands of an Assessee in a situation in which income embedded in such expenditure has remained untaxed due to tax withholding lapses by the Assessee. It is not, in ITAT’s 35
ITA No. 484/JP/2019 Shri Vikram Singh Shekhawat vs DCIT Circle –Sikar
considered view, a penalty for tax withholding lapse but it is a sort of compensatory deduction restriction for an income going untaxed due to tax withholding lapse. The penalty for tax withholding lapse per se is separately provided for in Section 271 C, and, section 40(a)(ia) does not add to the same. Accordingly, ITAT hold that the insertion of second proviso to Section 40(a)(ia) is declaratory and curative in nature and it has retrospective effect from 1st April, 2005, being the date from which sub clause (ia) of section 40(a) was inserted by the Finance (No. 2) Act, 2004. Fit and proper to remit the matter to the file of the AO for fresh adjudication in the light of ITAT’s above observations and after carrying out necessary verifications regarding related payments having been taken into account by the recipients in The above case has been affirmed by the Honble Delhi High Court in the case of CIT v/s Ansal Land Mark Towenship (P) Ltd dt. 279 CTR 384(Del) 28.08.2015 copy is enclosed. Hence the issue now till is settled. In the present case the assessee had submitted the certificate from the payee and the ld. AO has not disputed the same. 1.2 It is submitted that the underlying idea and basic concept of TDS was to ensure an early and fast recovery of the taxes. It is designed so that the payer itself should make a deduction of tax at source on the income of the payee. Thus, it was an advance collection and recovery of the tax for on and behalf of the payee, in whose hand, after including the subjected amount of income, there is going to be a liability of tax thereupon. If either there is no liability to pay tax or because of the tax already stood paid by the payee, there is no further liability of the payer. The very purpose of making deduction of tax at source and depositing with the Govt., stands fulfilled. It is under this background, the Hon’ble Supreme Court in the case of Hindustan Coca Cola
ITA No. 484/JP/2019 Shri Vikram Singh Shekhawat vs DCIT Circle –Sikar
Beverage Pvt. Ltd. v/s CIT 293 ITR 226 followed in Children’s Education Society v/s DCIT & Anr 34 DTR 145(Ker)- has held that no penalty u/s 271C or interest u/s 201 can be charged in such cases. The principle so propounded equally and squarely applies on the facts of the present case also. Hence the entire disallowance be deleted in full. Also refer CIT v/s Intel Tech India(P) Ltd 55 DTR 173(Kar) CIT v/s Sony India Pvt Ltd 17 Taxman .com 126 (Kar). And in Sec. 201 an amendment has also been made by the Finance Act. 2012 on the basis of decision of Hindustan Coca Cola Beverage Pvt. Ltd. v/s CIT(Supra), wherein it has been provided that the assessee shall not be deemed to be default in respect of such tax if such person (i)has furnished his return of income u/s 139, (ii) has taken into account such sum for computing income in such return of income and, (iii) has paid tax due on the income declared by him in such return of income. The above matter is also directly covered by the decision of this Honble Tribunal in the case of Sh. Rahul Sethi v/s ITO in ITA No. 175/Jodh/2012 dt. 07.06.2013 and followed in the case of ACIT v/s Sh. Ravindra Kumar Yadav ITA No. 341/Jodh/12 dt. 10.01.2014, wherein the facts and circumstances are identical and same 2. It may also be pointed out that second proviso to section 40(a)(ia) inserted by FA, 2012 w.e.f.01.04.2013 has provided that where an assessee fails to deduct tax on the sum paid to the resident but such resident payee has furnished the return, taken into account such sum for computing income and has paid the tax due on the income declared by him then it will be deemed that assessee has deducted and paid the tax on such sum on the date of furnishing of return by the resident payee. All the finance companies to which assessee have paid interest are large company and assessed to tax. Therefore, the presumption is that these companies have included the interest paid by the
ITA No. 484/JP/2019 Shri Vikram Singh Shekhawat vs DCIT Circle –Sikar
assessee to them in their income and paid tax thereon. The Delhi High Court in case of CIT Vs. Trans Bharat Aviation Pvt. Ltd. 320 ITR 671 has held that since deductee is a Government undertaking, the taxes may be presumed to have been paid lastly by the due date of filing of the return of income and, therefore, the liability of the assessee to pay interest on the amount which was to be deducted as TDS ends with the due date of filing of the return by the deductee. Therefore, considering the above amendment which is introduced to remove unintended hardship, the department may be directed to verify this fact and where finance companies has paid tax on such interest, no disallowance u/s 40 (a)(ia) be made in the hands of the assessee. It is a settled law that second proviso to section 40 (a)(ia) inserted w.e.f.01.04.2013 has retrospective effect as held in Bangalore Bench in case of Sh. G. Shankar Vs. ACIT in ITA No. 1832/Bang/2013 dt. 10.10.2014, Agra Bench in case of Rajeev Kumar Agarwal Vs. ACIT (2014) 34 ITR (Trib.) 479, Delhi Bench in case of ITO Vs. Dr. Jaideep Kumar Sharma (2014) 34 ITR (Trib.) 565, Bangalore Bench in case of DCIT Vs. Ananda Marakala (2014) 150 ITD 323 as the amendment was made to remove the undue hardship. 3. Books Rejected No disallowance u/s 40(a)(ia): Further Sec. 145(3) has already been invoked and trading addition has already been made hence no further disallowance can be made u/s 40(a)(ia). Further alternatively it is submitted that as in the above cases the books of accounts has been rejected by the ld. AO by invoking the provisions of Sec. 145(3) and after rejection of books of accounts he has estimated the trading income due to defects founds in the books of accounts. When the books of accounts has been rejected and provisions of S. 145(3) of the Act are invoked, no such separate additions can be made in respects of disallowance of interest expenses, unsecured loans or creditors, trade creditors on account of exp. etc. and the best course of is to 38
ITA No. 484/JP/2019 Shri Vikram Singh Shekhawat vs DCIT Circle –Sikar
estimate the fair profit by taking into consideration various factors. In ITO v/s Nardev Kumar Gupta 35 CCH 203(Jp)(2013) it has been held that When income of the assessee was computed by applying the gross profit rate, there was no need to look into the provision of Section 40A(3) of the Act. The CIT(A) had rightly deleted separate addition made by the AO u/s 40A(3) of the Act. CIT vs. G.K. Contractor,19 DTR 305; CIT vs. PravinAnd Co. 274 ITR 534; Choudhary Bros in ITA No. 1177/JP/2010 vide order dated 31-05-2010; CIT vs. BanwariLal Banshidhar, 229 ITR 229(Raj.), relied on. In the case of ITO v/s Sadhwani Brothers held that AO having rejected the books of account and applied the net profit rate for the purpose computing the income, no disallowance can be made u/s 40A(3). In the case of ITO v/s Mr. Naresh H. Shah ITA No. 3187/M/2010 dt. 15.07.2011 in this case the AO after rejecting the books of accounts he estimated the profit by applying the N.P. rate, there apart he has also made addition inter alia on account of unsecured loans u/s 68, on account of non-deduction of TDS u/s 40(a)(ia) and on account of disallowance of depreciation and stamp duty also reduced the closing work-in-progress, while deciding the appeal the ld. CIT(A) and the Honble ITAT held that when the books of accounts are rejected the by the AO and the income of the assessee is determined on estimated basis no further addition can be made to the income so estimated by relying on the same rejected books of accounts. Also refer CIT v/s Purshottamlal Tamrakar Uchehra 270 ITR 314/84(MP). Thus when the books of accounts has been rejected and provisions of S. 145(3) of the Act are invoked, no such separate additions can be made in respects of deposits in banks u/s 68/69, disallowance of interest expenses, unsecured loans or creditors, trade creditors on account of 39
ITA No. 484/JP/2019 Shri Vikram Singh Shekhawat vs DCIT Circle –Sikar
exp. etc. and the best course of is to estimate the fair profit by taking into consideration various factors. Alternatively, without prejudice to the above submission we have to further submit in this respect that, where income is assessed at N.P. rate by rejecting the books of the assessee U/s 145(3) proviso, no disallowance and addition can be made separately for determination of income. Kindly refer CIT v/s Banwarilal Bansidhar 229 ITR 229 (All), Gupta Construction Co. v/s ACIT 84 TTJ (All) 46, ACIT VS. KPS Construction ITA No. 657/JU/2007 ITAT, Jodhpur. We further rely on the judgment in the case of Teja Construction v/s ACIT (2010)36 DTR 220 (ITAT), Hyderabad “A” Bench, where in it is held that the books of accounts of the appellant was not relied, and rejected by the AO. Based on the reliance on the same books, for the purpose of invoking the provision s of section 40(a)(ia) is improper. The estimation of income takes care of the irregularities committed by the appellant. Further addition by invoking section 40(a)(ia) amounts to punishing the appellant for a same offence on double occasions, which is not permitted by law, as stipulated in the decision given in the case of Devi Prasad Vishwanath Prasad (1969) 72 ITR 194(SC). Further, recently in the case of ACIT V/s M/s. Choudhary & Brothers, Jaipur in ITA No.879/JP/2011the Tribunal has observed that by implication, books of accounts were rejected by the AO and upheld by the CIT(A). Relying on the judgment in the case of Banwarilal Bansidhar reported at (1998) 229 ITR 229 It has been held that if the profit of the assessee has been estimated by applying net profit rate than no spate disallowance can be made on account of any expenditure claimed under Profit and Loss account. After rejection of books of accounts under section 145(3) of the Act, the only option left with the AO was to frame best judgment under section 144 of the Act. It is further held that where income of appellant was computed while applying the gross profit rate there was no need to look into the other provisions related to allowability of expenses. Hence, considering the 40
ITA No. 484/JP/2019 Shri Vikram Singh Shekhawat vs DCIT Circle –Sikar
implication of rejection of books, we request your good self to please delete the same in the interest of equity and justice. Hence in view of the above facts submissions and legal position the disallowance so made may kindly be deleted in full.’’
10.4 On the other hand, the ld. DR supported the orders of the lower
authorities.
10.5 We have heard the rival contentions and perused the materials
available on record. From the records, we noticed that the addition u/s
40(a)(ia) of the Act was upheld by the ld. CIT(A) by holding that
although the assessee had submitted the certificate form auditor which
indicated a payment of Rs. 16,05,842/- on which TDS was to be deducted
yet no deducted. However, it was found by the ld. CIT(A) that there is a
mismatch as according to the ld.AR the payment of Rs. 15,75,572/- was
made by the assessee while the auditor’s certificate indicates that a
payment of Rs. 16,05,842/- was made. However, after scrutinizing the
records, we found that because of meager difference the entire claim of
the assessee could not have been denied. We noticed that the recipient has
shown more income than paid by the assessee. Thus in this way, there
ITA No. 484/JP/2019 Shri Vikram Singh Shekhawat vs DCIT Circle –Sikar
was no loss to the Revenue and simultaneously it is also not in dispute
that payee has paid the tax on the entire income. As per the ld.AR, the
payee has duly included the interest income in its income and also paid
tax thereon. In this respect, the ld.AR of the assessee has drawn our
attention to the certificate in order to demonstrate that once entire tax
payable on such income (subject to TDS) has already been paid, even if
there is no TDS made by the assessee and thus there cannot be any
disallowance u/s 40(a)(ia) of the Act. We have also gone through the
amendment of Section 40(a)(ia) and u/s 201(1) in Financne Act, 2012
which provides Second Proviso to Section 40(a)(ia) of the Act,
introduced w.e.f. Ist April 2013 which provides that " where an Assessee
fails to deduct the whole or any part of the tax in accordance with the
provisions 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
Assessee 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
proviso". We have also noticed that after this amendment the ITAT,Agra
Bench in the case of Rajeev Kumar Agarwal vs Addl. CIT , 165 TTH
ITA No. 484/JP/2019 Shri Vikram Singh Shekhawat vs DCIT Circle –Sikar
228( Agra) held that ‘’that Second proviso to Section 40(a)(ia),
introduced with effect from 1st April 2013, provides, that " where an
Assessee fails to deduct the whole or any part of the tax in accordance
with the provisions 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 Assessee 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 sa id proviso". In other words, as long as the Assessee cannot be
treated as an Assessee in default, the disallowance under section 40(a)(ia)
cannot come into play either. To understand the effect of this proviso, it is
useful to refer to first proviso to section 201(1), which is also introduced
by the Finance Act 2012and effective1st July 2012, and which provides
that "any person, including the principal officer of 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 section 139; (ii) has taken into account such
ITA No. 484/JP/2019 Shri Vikram Singh Shekhawat vs DCIT Circle –Sikar
sum for computing income 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 a certificate to this effect from an accountant in such
form as may be prescribed." The unambiguous underlying principle
seems to be that in the situations in which the Assessee’s tax withholding
lapse have not resulted in any loss to the exchequer, and this fact can be
reasonably demonstrated, the Assessee cannot be treated as an Assessee
in default.The bigger picture as it emerges after insertion of second
proviso to section 40(a)(ia), it is beyond doubt that the underlying
objective of section 40(a)(ia) was to disallowdeduction in respect of
expenditure in a situation in which the income embedded in related
payments remains untaxed due to non-deduction of tax at source by the
Assessee. In other words, deductibility of expenditure is made contingent
upon the income, if any, embedded in such expenditure being brought to
tax, if applicable.Section 40(a)(ia) cannot be seen as intended to be a
penal provision to punish the lapses of non-deduction of tax at source
from payments for expenditure- particularly when the recipients have
taken into account income embedded in these payments, paid due taxes
thereon and filed income tax returns in accordance with the law.On a
ITA No. 484/JP/2019 Shri Vikram Singh Shekhawat vs DCIT Circle –Sikar
conceptual note, primary justification for such a disallowance is that such
a denial of deduction is to compensate for the loss of revenue by
corresponding income not being taken into account in computation of
taxable income in the hands of the recipients of the payments. Such a
policy motivated deduction restrictions should, therefore, not come into
play when an Assessee is able to establish that there is no actual loss of
revenue. This disallowance does deincentivize not deducting tax at
source, when such tax deductions are due, but, so far as the legal
framework is concerned, this provision is not for the purpose of
penalizing for the tax deduction at source lapses. The scheme of Section
40(a)(ia), as ITAT see it, is aimed at ensuring that an expenditure should
not be allowed as deduction in the hands of an Assessee in a situation in
which income embedded in such expenditure has remained untaxed due
to tax withholding lapses by the Assessee. It is not, in ITAT’s considered
view, a penalty for tax withholding lapse but it is a sort of compensatory
deduction restriction for an income going untaxed due to tax withholding
lapse. The penalty for tax withholding lapse per se is separately provided
for in Section 271 C, and, section 40(a)(ia) does not add to the same.
Accordingly, ITAT hold that the insertion of second proviso to Section
ITA No. 484/JP/2019 Shri Vikram Singh Shekhawat vs DCIT Circle –Sikar
40(a)(ia) is declaratory and curative in nature and it has retrospective
effect from 1st April, 2005, being the date from which sub clause (ia) of
section 40(a) was inserted by the Finance (No. 2) Act, 2004.Fit and
proper to remit the matter to the file of the AO for fresh adjudication in
the light of ITAT’s above observations and after carrying out necessary
verifications regarding related payments having been taken into account
by the recipients.’’
10.5.1 Keeping in view our above discussions and also keeping in view
the facts that the assessee had submitted the certificate from the payees
and the AO has not disputed the same. Even otherwise the underlying
idea and basic concept of TDS was to ensure an early and fast recovery of
the taxes. It is designed so that the payer itself should make a deduction
of tax at source on the income of the payee. Thus, it was an advance
collection and recovery of the tax for on and behalf of the payee, in
whose hand, after including the subjected amount of income, there is
going to be a liability of tax thereupon. If either there is no liability to pay
tax or because of the tax already stood paid by the payee, there is no
further liability of the payer. The very purpose of making deduction of tax
at source and depositing with the Govt., stands fulfilled. It is under this
ITA No. 484/JP/2019 Shri Vikram Singh Shekhawat vs DCIT Circle –Sikar
background, the Hon’ble Supreme Court in the case of Hindustan Coca
Cola Beverage Pvt. Ltd. v/s CIT 293 ITR 226 followed in Children’s
Education Society v/s DCIT & Anr 34 DTR 145(Ker)- has held that no
penalty u/s 271C or interest u/s 201 can be charged in such cases. The
principle so propounded equally and squarely applies on the facts of the
present case also. Hence the entire disallowance be deleted in full. Also
refer CIT v/s Intel Tech India(P) Ltd 55 DTR 173(Kar) CIT v/s Sony
India Pvt Ltd 17 Taxman .com 126 (Kar). In Sec. 201 an amendment has
also been made by the Finance Act. 2012 on the basis of decision of
Hindustan Coca Cola Beverage Pvt. Ltd. v/s CIT(Supra), wherein it has
been provided that the assessee shall not be deemed to be default in
respect of such tax if such person (i)has furnished his return of income u/s
139, (ii) has taken into account such sum for computing income in such
return of income and, (iii) has paid tax due on the income declared by him
in such return of income. The above matter is also directly covered by
the decision of this Honble Tribunal in the case of Sh. Rahul Sethi v/s
ITO in ITA No. 175/Jodh/2012 dt. 07.06.2013 and followed in the case of
ACIT v/s Sh. Ravindra Kumar Yadav ITA No. 341/Jodh/12 dated
10.01.2014 wherein the facts and circumstances are identical and same. In
ITA No. 484/JP/2019 Shri Vikram Singh Shekhawat vs DCIT Circle –Sikar
view of the above deliberations, the addition made by the AO is deleted. Thus Ground No. 4 of the assessee is allowed. 11. In the result, the appeals filed by the assessee in ITA No. 484/JP/2019 is allowed and ITA No.485/JP/2019 is partly allowed for
with no order as to cost. Order pronounced in the open court on 23 /01/2020.
Sd/- Sd/- ¼lanhi xkslkbZ½ ¼foØe flag ;kno½ (Vikram Singh Yadav) (Sandeep Gosain) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member
Tk;iqj@Jaipur fnukad@Dated:- 23/01/2020.
*Mishra आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1.vihykFkhZ@The Appellant- Shri Vikram Singh Shekhawat, Jaipur 2.izR;FkhZ@ The Respondent- DCIT, Circle – Sikar 3. vk;dj vk;qDr@ CIT vk;dj vk;qDr@ CIT(A) 4. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत. 4. xkMZ QkbZy@ Guard File {ITA No. 484/JP/2019} 5. vkns'kkuqlkj@ By order, सहायक पंजीकार@Aेेजज. त्महपेजतंत