TIRUMALARAO P MOKASHI,BIJAPUR vs. ASSISTANT COMMISSIONER OF INCOME TAX, BELGAUM

per the directions of the Ld.CIT to disallow the amount of Rs. 2,73,06,000/-

u/s. 40(a)(ia) of the Act therefore, held that the ld. CIT(A) being a parallel

authority has no jurisdiction vested in him u/s. 246A of the Act to

adjudicate the consequential order giving effect to the order of ld. CIT and

accordingly dismissed the appeal of the assessee. Against which the

assessee filed appeal before this Tribunal with delay of 1872 days.

Counsel for the assessee advised that the order of the ld. CIT cannot

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agitated before the ITAT in the light to the fact that there was no error

committed by the AO in following the directions of ld. CIT in making the

disallowance. Therefore, with a bonafide impression that the order of the

ld. CIT was final the assessee did not prefer the appeal before the ITAT.

Ld.AR submitted that the assessee got relief from the Hon’ble High court

of Karnataka for the earlier appeals. The ld. AR further submitted that

before the Hon’ble High Court of Karnataka the assessee had mentioned

the issue with regard to the pendency of this appeal before and the

Hon’ble High Court has directed the ITAT to dispose the pending appeal in

accordance with law. The AR placed the copy of the Hon’ble High Court

order before us. The Ld.AR submitted that the delay was purely due to the

misguidance of the counsel and not intentional. Hence, requested to

condone the delay and admit the appeal. The ld. AR also relied on the

decision of Hon’ble Supreme Court in the case of Ram Nath Sao Alisa

Ram Nath Sahu and others vs. Gobardhan Sao and Others in (2002) 3 Supreme court cases 195 in civil appeal No.1704 of 2992 dated 27th

February 2002 and submitted that the Hon’ble Apex Court while deciding

the issue with regard to the sufficient cause for delay held as under:

“12. Thus it becomes plain that the expression "sufficient cause" within the meaning of Section 5 of the Act or Order 22 Rule 9 of the Code or any other similar provision should receive a liberal construction so as to advance substantial justice when no negligence or inaction or want of bona fide is imputable to a party. In a particular case whether explanation furnished would constitute "sufficient cause" or not will be dependant upon facts of each case. There cannot be a straitjacket formula for accepting or rejecting explanation furnished for the delay caused in taking steps. But one thing is clear that the courts should not proceed with the tendency of finding fault with the cause shown and reject the petition by a slipshod order in over jubilation of disposal drive. Acceptance of explanation furnished should be the rule and refusal an

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exception more so when no negligence or inaction or want of bona fide can be imputed to the defaulting party. On the other hand, while considering the matter the courts should not lose sight of the fact that by not taking steps within the time prescribed a valuable right has accrued to the other party which should not be lightly defeated by condoning delay in a routine like manner. However, by taking a pedantic and hyper technical view of the matter the explanation furnished should not be rejected when stakes are high and/or arguable points of facts and law are involved in the case, causing enormous loss and irreparable injury to the party against whom the lis terminates either by default or inaction and defeating valuable right of such a party to have the decision on merit. While considering the matter, courts have to strike a balance between resultant effect of the order it is going to pass upon the parties either way.”

stakes involved are high and if the delay is not condoned, the same would

cause financial injury to the assessee therefore, requested to condone the

delay and admit the appeal. On the other hand, the ld. DR vehemently

opposed for condoning the delay.

record. We are of the considered view that in the facts and circumstances

of the case it is a fit case for condoning the delay, since, the Hon’ble

Jurisdictional High Court held that the disallowance u/s. 40(a)(ia) of the

Act not was examined by the AO with regard to it;s retrospective nature.

Therefore, in the interest of justice,we condone the delay and admit the

appeal.

record. In the instance case, the ld. AR submitted that the issue involved

in this case is the disallowance u/s. 40(a)(ia) of the Act. The assessee

made the payment of Rs. 2,73,06,000/- towards sub-contract payments

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without deduction of tax at source as required u/s. 194C of the Act, which

attracts the disallowance u/s. 40(a)(ia) of the Act. The assessee

submitted before the AO that recipients have admitted the income in their

hands and paid the taxes thereon, thus contended that as per second

proviso to s. 40(a)(ia) of the Act inserted by Finance Act, 2012, no addition

is warranted. According to the ld. AR, the amendment made to second

proviso to section 40(a)(ia) of the Act is held to be declaratory, curative and has retrospective effect from 1st April, 2005 by various Hon’ble High

Courts including the Hon’ble Jurisdictional High Court in the assessee’s

own case. The issue in the impugned appeal is also identical. The

Hon’ble Jurisdictional High Court in assessee’s appeal No.200001/2016

dated 23/09/2019 directed the ITAT to pass the appropriate orders in

pending appeal. In the instant case, the AO did not accept the contention

of the assessee that the amendment was retrospective. The Hon’ble High

Court in its order stated to be held that amendment has retrospective

effect. For the sake of clarity and convenience, we extract paral No.3 & 4

of the order of the Hon’ble Jurisdictional High Court in the order cited,

supra, dated 23.08.2019, which reads as under:

“3. Appeal No.724/Bng/2016 filed by the assessee is pending before the ITAT against the order giving effect to, the order passed under section 263 of the Act by the Commissioner of Income Tax. 4. In view of the second proviso to s. 40(a)(ia) of the Act is held to be declaratory and curative and has retrospective effect from 1st April, 2005 by various Hon’ble High Court including the jurisdictional High Court in ITA No.100056/2014 disposed of today, the order giving effect to, the order of CIT under section 263 of the Act requires to be considered in the pending appeal before the ITAT being uninfluenced by any of the observations made in the said order i.e., order passed under section 263(1) as well as the order in ITA No.503(BH)/2009 dated 30.09.2009 by

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ITAT. Hence, the Hon’ble IAT shall dispose of the pending appeal No.724/Bng/2016 in accordance with law relating to the assessment year 2005-06 as aforesaid.”

40(a)(ia) of the Act for non deduction of tax at source, in the light of the

judgement of Hon’ble jurisdictional High court we consider it appropriate to

remit he matter back to the file of AO to examine whether the assessee

has deducted the tax at source and remitted to the Government account or

whether the recipient have admitted the income and paid the taxes as

provided in the amendment made to Finance Act and decide the issue

afresh on merits. The ld. AR is directed to place the copy of relevant

orders of Hon’ble High Court before the AO for consideration. Accordingly,

we set aside the order of ld. CIT(A) and allow the appeal of the assessee

for statistical purpose.

Order pronounced in the open court on 29th November, 2019.

Sd/- Sd/- (N.V. VASUDEVAN) (D.S. SUNDER SINGH) VICE PRESIDENT ACCOUNTANT MEMBER Bengaluru, Dated: 29-11-2019 EDN

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Copy to 1. The appellant 2. The Respondent 3. CIT (A) 4. Pr. CIT 5. DR, ITAT, Bangalore. 6. Guard File By order

Assistant Registrar Income-tax Appellate Tribunal Bangalore