ASSISTATN COMMISSIONER OF INCOME TAX CENTRAL CIRCLE -2(1), NAGPUR vs. SHRI MAHESH GUPTA, NAGPUR

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ITA 224/NAG/2018Status: DisposedITAT Nagpur15 October 2019AY 2009-108 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that since the Section 263 order was quashed, the assessment based on it lacked legal basis and any consequent additions were deleted. Regarding penalty appeals, the Tribunal upheld the CIT(Appeals)'s relief under Section 273B, finding reasonable cause for delayed return filing.

What were the facts?

The Revenue appealed against orders of the CIT(Appeals) concerning disallowances under Section 40(a)(ia) and deletion of penalties under Section 271F. The primary issue involved a Section 263 revision order which was later quashed by the Tribunal.

What were the issues?

Whether additions made based on a quashed Section 263 order are sustainable, and whether penalty under Section 271F can be waived under Section 273B due to reasonable cause.

Which sections of the Income-tax Act were involved?

Section 40(a)(ia),Section 194C,Section 263,Section 143(3),Section 271F,Section 139,Section 273B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, BENCH, NAGPUR

Before: SHRI D. KARUNAKARA RAO, AM & SHRI PARTHA SARATHI CHAUDHURY, JM

For Appellant: Shri Manoj Moryani &, Shri Rajesh Loya
For Respondent: Dr. Milind Bhusari
Hearing: 15.10.2019Pronounced: 15.10.2019

Heard together (2 matters)

ITA No. 96/NAG/2018
ITA No. 226/NAG/2018

Read from the judgment's own cause title. This page is filed under one of them.

आदेश / ORDER

PER PARTHA SARATHI CHAUDHURY, JM :

1.

These appeals preferred by the Revenue emanates from the respective orders of the Ld.CIT(Appeals) for the assessment years as captioned hereinabove and as per the grounds of appeal on record.

2.

These cases were heard together. Since facts common, issues are similar, these cases are being disposed of vide this consolidated order. In all these cases, the Revenue has not pressed the Tax Effect Issue. Therefore, all these cases are heard and adjudicated on merits.

First, we would take up for the assessment year 2009-10 for adjudication.

ITA No.96/NAG/2018 A.Y.2009-10

3. The brief facts in this case are that the assessee is engaged in the business of manufacturing cement pipes and also undertakes works allotted by PWD and other government department on contract basis. Return of income was filed on 30.09.2009 declaring net taxable income at Rs.29,75,293/-. The assessment u/s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) was completed on 30.12.2011 determining total income of Rs.42,04,455/-. The addition of Rs.12,29,162/- on account of disallowance u/s.40(a)(ia) of the Act was made in the assessment with a finding that assessee has paid total of Rs.12,29,162/- for site development expenses to various parties where assessee should have made TDS u/s.194C of the Act but had failed to do.

4. Thereafter, the assessee preferred appeal against the assessment order before the Ld. CIT(Appeals), Nagpur. The said appeal was withdrawn later. The Ld. CIT(Appeals) therefore passed order on 06.08.2015 dismissing the appeal. The assessee further preferred appeal against such order of the Ld. CIT(Appeals) before the Income Tax Appellate Tribunal, Nagpur Bench, Nagpur stating that he had been misguided and had wrongly withdrawn his appeal before the Ld. CIT(A) and the Tribunal vide order dated 29.12.2016 in allowed the appeal holding that the assessee was not required to deduct TDS and no disallowance u/s.40(a)(ia) of the Act was warranted.

5. Meanwhile, notice u/s.263(1) of the Act was issued by the Ld. CIT-IV, Nagpur on 19.02.2014 stating the order passed by the ACIT, Circle-1, Nagpur u/s.143(3) of the Act was prima facie erroneous and prejudicial to the interest of the revenue. The Ld. CIT-IV, Nagpur passed order u/s.263 on 10.03.2014 stating that since the Assessing Officer has not disallowed the said expenses i.e. bay way of payments to sub-contracts and since TDS was not deducted u/s.40(a)(ia) of the Act, assessment was held to be erroneous and prejudicial to the interest of the revenue. That consequence to this, order passed u/s.263 of the Act, the Assessing Officer passed assessment order u/s.143(3) r.w.s.263 on 12.03.2015 and made disallowance for the said sum of Rs.66,64,466/- by rejecting the contention of the assessee.

6.

That when the matter travelled before the Ld. CIT(Appeals), as per reasoning given in his order which is on record, the Ld. CIT(Appeals) restricted the disallowance @ 30% of the total sub-contracts expenses of Rs.66,64,466/- i.e. at Rs.19,99,339/- whereby the assessee got partial relief.

7.

At the time of hearing before us through e-Court, the Ld. AR of the assessee invited our attention to the order of Tribunal in in assessee’s own case for assessment year 2009-10 wherein the very 263 order passed by the Ld. Commissioner was quashed by the Tribunal. It is the contention of the Ld. AR that since very basis of the assessment order passed u/s.143(3) r.w.s.263 of the Act is quashed, therefore, assessment does not have any legs to stand.

8.

The Ld. DR fairly conceded to these statements of facts.

9.

We have perused the case records and heard the rival contentions. We find that in the assessment order which was framed u/s.143(3) r.w.s.263 of the Act, addition of Rs.66,64,466/- was made by the Assessing Officer and the Ld. CIT(Appeals) restricted the disallowance @ 30% of the said amount i.e. Rs.19,99,339/-. Now, we also find the Tribunal in (supra.) has quashed the 263 order itself and therefore, the assessment framed on the basis of 263 order of the Ld. Commissioner looses its very basis and therefore cannot sustain legally. Meaning thereby, any addition consequent thereof in such assessment also gets deleted. We order accordingly.

10.

In the result, appeal of the Revenue in is dismissed. to 226/NAG/2018 A.Ys.2009-10 & 2010-11

11.

In all these appeals filed by the Revenue are against the deletion of penalty imposed u/s.271F of the Act. Section 271F spells out that “ if a person who is required to furnish a return of his income, as required under sub section (1) of Section 139 or by the proviso to that sub section, fails to furnish such return before the end of the relevant assessment year, the Assessing Officer may direct that such person shall pay, by way of penalty, a sum of five thousands rupees.”

In all these cases, the facts remain undisputed that return was not filed within the specified time which therefore attracted the penalty u/s.271F of the Act. However, in all these cases, the Ld. CIT(Appeals) has provided relief to the assessee as per Section 273B of the Act by holding that the assessee has proved that there was reasonable cause for failure to furnish return in due time and which failure cannot be attributed to any deliberate intention or act of the assessee. Rather, he was compelled by circumstantial factors for such delay in filing return of income.

12.

The Revenue is therefore aggrieved and has preferred these appeals before us.

13.

We have perused the case records and heard the rival contentions. We have also given considerable thought to the findings arrived at by the Ld. CIT(Appeals) in all these cases. That facts clearly demonstrates the delay in filing return was absolutely unintentional and due to circumstantial factors. The assessee has all throughout acted bona-fide. The reasonable cause has been well examined by the First Appellate Authority in the order passed under Section 271F r.w.s 273B of the Act. Accordingly, we do not find any infirmity with the findings given in the respective orders of the Ld. CIT(Appeals) and relief provided therein to the assessee is hereby sustained.

14.

In the result, appeals of the Revenue in to 226/NAG/2018 are dismissed.

15.

In the combined result, all the appeals of the Revenue are dismissed.

Order pronounced on 15th day of October, 2019.

Sd/- Sd/- D. KARUNAKARA RAO PARTHA SARATHI CHAUDHURY ACCOUNTANT MEMBER JUDICIAL MEMBER ऩुणे / Pune; ददनाांक / Dated : 15th October, 2019. SB आदेश की प्रनिलऱपप अग्रेपषि / Copy of the Order forwarded to : अऩीऱाथी / The Appellant. 1. प्रत्यथी / The Respondent. 2.

3.

The CIT(Appeals)-1, Nagpur.

4.

The Pr. CIT-1, 2, 3, Nagpur.

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