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Income Tax Appellate Tribunal, “C” BENCH, MUMBAI
Before: SHRI PAWAN SINGH & SHRI RAMIT KOCHAR
आदेश / O R D E R
PER RAMIT KOCHAR, Accountant Member: These two appeals, filed by assessee, being ITA No. 6002 & 6001/Mum/2017 are for assessment year 2008-09. The appeal in ITA No. 6002/Mum/2017 is directed against appellate order dated 23.09.2011 in appeal no. CIT(A)-24/ACIT13(1)/167/10-11, passed by learned Commissioner of Income Tax (Appeals)-24, Mumbai (hereinafter called “the CIT(A)”), for assessment year 2008-09, the appellate proceedings had arisen before learned CIT(A) from the assessment order dated 01.12.2010 passed by learned Assessing
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Officer (hereinafter called “the AO”) u/s 143(3) of the Income-tax Act, 1961 (hereinafter called “the Act”) for AY 2008-09 .
1.1. The second appeal in ITA No. 6001/Mum/2017 is directed against appellate order dated 20th June 2017 in appeal no. CIT(A)- 28/IT-337/ACIT-17(2)/2013-14 , passed by learned Commissioner of Income Tax (Appeals)-28, Mumbai (hereinafter called “the CIT(A)”), for assessment year 2008-09, the appellate proceedings had arisen before learned CIT(A) from the penalty order dated 30.03.2013 in appeal no. DCIT 13(1)/271(1)(c)/PCJ/12-13 passed by learned Assessing Officer (hereinafter called “the AO”) u/s 271(1)(c) of the 1961 Act for AY 2008-09.
First, we shall take up the appeal of the assessee in ITA No. 6002/Mum/2017 for AY 2008-09 which is against quantum assessment . The grounds of appeal raised by assessee in the memo of appeal filed with the Income-Tax Appellate Tribunal, Mumbai (hereinafter called “the tribunal”) read as under:- “Being aggrieved by the orders of the Assistant Commissioner of Income Tax, 13 (1), Mumbai, and learned Commissioner of Income-tax (Appeal) - 24, Mumbai this appeal petition is filed on the following amongst other grounds of appeal, which it is prayed may be considered without prejudice to one another. 1. On the facts, and in circumstances of the case, and in law, the Assessing Officer erred in disallowing clearing and forwarding charges of RS. 133,569 without appreciating that income credited to the concerned service provider did not exceed the thresholds of per bill amount of RS. 20,000 or aggregate amount of RS. 50,000 provided under section 194C of the Income-tax Act 1961 as applicable to the relevant Assessment Year, as the total agency fees paid was RS. 21,000 under different bills, and the balance amount was paid towards service tax and receipted out of pocket expenses which did not attract provisions of TDS. 2. On the facts, and in circumstances of the case, and in law, the Assessing Officer erred in disallowing Terminal Handling charges of RS. 154,028 without appreciating that income credited to the concerned service provider did not exceed the
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thresholds of per bill amount of RS. 20,000 or aggregate amount of RS. 50,000 provided under section 194C of the Income-tax Act 1961 as applicable to the relevant Assessment Year, as the total agency fees paid was RS. 15,000 under different bills, and the balance amount was paid towards service tax and receipted out of pocket expenses which did not attract provisions of TDS 3. On the facts, and in circumstances of the case, and in law, the Assessing Officer erred in disallowing courier charges of RS. 98,307 without appreciating that the total courier charges paid were RS. 87,493 under different bills, and the balance amount of RS. 10,814 was paid towards service tax which did not attract provisions of TDS. 4. On the facts, and in circumstances of the case, and in law, the Assessing Officer erred in disallowing transport charges of RS. 129,740. 5. On the facts, and in circumstances of the case, and in law, the Assessing Officer erred in disallowing hamali charges of RS. 85,131 without appreciating that the concerned person on whose name the amount was debited was only the main person who collected Hamali for various labourers and distributed it, and there was as such no contract with him; and thus individual payments were less than RS. 20,000 which in turn did not attract TDS provisions. 6. On the facts, and in circumstances of the case, and in law, the Assessing Officer erred in not appreciating that at the best default of non deduction was to the tune of RS. 3,384, and if concerned parties had paid their taxes on their income, there was no justification in disallowing the entire expenditure. 7. Your Appellant craves leave to add to, amend, alter, modify, and / or delete any of the above grounds of appeal at or before final disposal of appeal.”
The assessee is engaged in the business as exporter of food stuff, provisions etc. . The assessee had made following payments towards expenses during the previous year relevant to the impugned assessment year , on which no income-tax was deducted at source( hereinafter called “ the TDS”) as required under provisions of Section 194C of the 1961 Act for which additions were made by the AO to the income of the assessee for infringement of section 40(a) (ia) of the 1961 Act , vide assessment order dated 01.12.2010 passed by the AO u/s 143(3) of the 1961 Act, disallowing following expenses claimed by the assessee in its Profit and Loss:-
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3.2. Clearing and forwarding charges of Rs. 1,33,569/- on which no income-tax was deducted at source u/s 194C. The assessee claimed that the C&F charges of Rs. 1,33,569/- were paid to C&F agent M/s Rajgor Shipping Agency which were disallowed by the AO u/s 40(a)(ia) due to non-deduction of TDS u/s 194C and included in business income while the assessee claimed that since income comprised in total payment of clearing and forwarding charges is less than Rs. 50,000/- being only Rs. 21,000/- disallowance was not warranted.The AO relied on the provisions of Section 194C to hold that for clearing and forwarding expenses , the TDS is required to be deducted on total payment. 3.3. Disallowance of Terminal Handling Charges to the tune 1,54,028 on account of non-deduction of TDS u/s 194C. The assessee has claimed to have paid Terminal Handling Charges of Rs. 1,54,028/- to M/s Swift Freight (I) P. Ltd. which was disallowed by the AO u/s. 40(a)(ia) due to non-deduction of TDS u/s. 194C of the 1961 Act and added to business income of the assessee. The assessee had claimed that each container movement is less than Rs. 20,000/- disallowance was not warranted. The AO relied on CBDT circular number 715 dated 08.08.1995 to reject contention of the assessee 3.4 Disallowance of Courier & Parcel charges of Rs. 98,307/- on account of non- deduction of TDS u/s 194C. The assessee has claimed Courier & Parcel charges of Rs. 98,307/- paid to KMB Services which were disallowed u/s 40(a)(ia) due to non-deduction of TDS u/s 194C and added to business income of the assessee. The assessee claimed that it had a bonafide belief that courier charges are akin to postage hence deduction of income-tax at source was not required and under the circumstances disallowance was not warranted The AO
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relied on CBDT circular number 715 dated 08.08.1995 to reject contention of the assessee 3.5. Disallowance of Transport and Hamali Charges charges of Rs. 2,61,540/- on account of non-deduction of TDS.The assessee claimed Transport & Hamali charges of Rs. 1,29,740/- paid to M/s Sunil Transport Services and Rs. 85,131/ paid to Mr. Pratap Shinde for loading the goods on container and unloading into warehouse which were disallowed u/s 40(a)(ia) due to non-deduction of TDS u/s 194C and added to business income of the assessee. The assessee claimed that there is no contractual agreement with the transport service provider and each payment is less than Rs. 20,000/- , no disallowance is warranted under these circumstances . The assessee relied on CBDT circular no 715 dated 08.08.1995. The AO held that these payments exceeded threshold limits and TDS u/s 194C is applicable.
The assessee being aggrieved by assessment framed by the AO vide assessment order dated 01.12.2010 passed u/s 143(3) of the 1961 Act , filed first appeal with learned CIT(A) and filed letter dated 12.09.2011 wherein it was stated by the assessee before Ld. CIT(A) that the assessee did not wish to pursue its appeal with respect to aforesaid four disallowance of expenses which were raised in memo of appeal vide ground of appeal number 2,3,4 and 5 filed with learned CIT(A). The Ld. CIT(A) was pleased to dismiss the appeal of the assessee challenging disallowance of aforesaid four heads of expenses based on the prayers of the assessee to dismiss its appeal. Thus disallowance of these four heads of expenses attained finality vide appellate order dated 23.09.2011 passed by Ld. CIT(A). The assessee had also paid due taxes to Revenue on these additions and the matter was set to rest as the assessee did not filed any appeal with the
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tribunal against the appellate order passed by learned CIT(A). The learned CIT(A) vide appellate order dated 23.09.2011 had dismissed appeal of the assessee by holding as under:- “ 4. As regards Ground Nos. 2,3,4 & 5, during the course of the appellate proceedings, the assessee has filed letter dt. 12/09/2011 wherein it has stated that it would not like to press the above grounds and, hence, may not be considered for relief. In view of the same, Ground Nos. 2,3,4 & 5 are dismissed as not pressed.”
Now, the assessee has filed an appeal with tribunal on 25.09.2017 against quantum assessment challenging appellate order dated 23.09.2011 passed by learned CIT(A) which appeal with tribunal is filed late by 2119 days beyond the limitation of time stipulated u/s 253 (3) of the I.T Act 1961, and now prayer is made before the Bench to condone this delay of 2119 days and affidavit dated 14.09.2017 of the assessee is filed in support of its contention to condone the delay of 2119 days , wherein main cause for this delay of 2119 days is shown by the assessee is that while preparing for filing an appeal with tribunal challenging penalty levied by the AO u/s 271(1)(c) of the 1961 Act which stood confirmed by learned CIT(A), the consultant of the assessee advised the assessee that keeping in view amendments made in Section 40(a)(ia) of the 1961 Act by insertion of second proviso by Finance Act, 2012 wef 01.04.2013 to section 40(a)(ia), the assessee should file an appeal against quantum assessment as it has a good case more so amendment made by Finance Act, 2012 were held to be clarificatory in nature and are applicable retrospectively from 01.04.2005. The assessee has also filed an affidavit from its Chartered Accountant Mr. Jagdish J. Mathani who explained that he was not aware of legal points/legal cases relatable to additions made by the Revenue when he appeared before learned CIT(A) and he took spontaneous decision of withdrawing appeal of the assessee against quantum assessment. It is pertinent to mention that for giving relief for non deduction of income-tax at source, the assessee is required to 6
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demonstrate that payee had included such income in return of income filed with Revenue and paid due taxes to Revenue for which it has to file a certificate from the payee certified by its accountant in accordance with Rule 31ACB of Income-tax Rules, 1962 in form no. 26A, as provided by Section 201 of the 1961 Act. The assessee has not filed any such evidences evidencing that payee has included such income in return of income filed with the Revenue and paid due taxes on such income to Revenue nor prescribed accountant certificate in Form No. 26A as mandated under Rule 31ACB of the 1962 Rules is filed even before us at this stage and only bald statement is made that amended provisions of the statute has relaxed the rigors of Section 40(a)(ia) of the 1961 Act read with Section 201 of the 1961 Act and it is claimed that the payee must have paid due taxes on such income to Revenue. The assessee is working on assumed hypothesis and conjectures without bringing on record any cogent material as is required under. Thus, in nutshell no evidence is filed before us to that effect. The learned DR objected to the condonation of delay as the appeal is filed late by 2119 days beyond time prescribed by Section 253(3) of the 1961 Act. It is submitted by learned DR that the assessee itself conceded before learned CIT(A) with respect to quantum additions to dismiss its appeal on these grounds relating to disallowance of expenses on these four heads of expenses. The condonation of delay in filing this appeal is sought by the assessee from the Bench of 2119 days which translates into delay of almost six years in filing this appeal beyond the limitation prescribed u/s 253(3) of the 1961 Act on bald statement without any cogent evidences for inclusion of said payments by the payee in return of income filed with Revenue nor prescribed certificate from accountant in Form No. 26A as provided under Rule 31ACB of the 1962 Rules is filed . The assessee itself conceded vide letter dated 12.09.2011 before learned CIT(A) to dismiss its appeal and now the assessee after a gap of almost six years is resiling from its own position and that too without any cogent evidences on record based merely on bald statements. The
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assessee has also relied upon decision of Hon’ble Supreme Court in the case of Collector Land Acquisition, Anantnag & Anr. v. MST. Katji & ORS. Reported in 1987 AIR 1353 , 1987 SCR(2)387 and prayers are made to condone delay in the interest of justice . It is claimed that technicalities should not over-ride justice. The assessee has also placed reliance upon decision of Hon’ble Delhi High Court in the case of CIT v. Ansal Landmark Township Private Limited (2015) 377 ITR 635(Del.) wherein it is held that second proviso inserted by Finance Act, 2012 is declaratory and clarificatory in nature and shall be retrospective with effect from 01.04.2005. The said judgment was rendered on 26.08.2015 while this appeal is filed with tribunal on 25.09.2017 i.e. as late as two years from the date of this judgment pronounced by Hon’ble Delhi High Court. Hon’ble Supreme Court is pleased to grant SLP against this judgment vide orders dated 05.08.2016 reported in (2016) 242 Taxman 5 (SC) . The assessee has not filed any evidence of payee including payment made by the assessee in its return of income filed with the Revenue as their income and having made the payment of due taxes to Revenue on such income. No certificate from accountant of the payee in Form No. 26A as stipulated by Rule 31ACB of the 1962 Rules has been filed. The assessee also relied upon decision of Hon’ble Supreme Court in the case of CIT v. Calcutta Export Company to contend that amendment made to Section 40(a)(ia) by Finance Act 2010 is clarificatory and retrospective in nature. We are afraid that this contention of the assessee cannot be accepted because Hon’ble Supreme Court in Calcutta Export Company was seized of interpreting first proviso to Section 40(a)(ia) of the 1961 Act which was amended by Finance Act, 2010 and Hon’ble Supreme Court never decided the issue so far as second proviso to Section 40(a)(ia) of the 1961 Act is concerned which was inserted by Finance Act, 2012 wef 01.04.2013. The reliance on this judgment is , thus, not correct.There is no dispute that when technicalities are pitted against substantial justice, the courts will lean in favour of doing substantial justice . But at the same time , the
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litigants have to be vigilant in persuing their disputes and merely because the consultant has advised after almost six years that there is some possibility of winning the appeal cannot be a ground to file an appeal almost 2119 days beyond the limitation prescribed u/s 253(3) of the 1961 Act. The assessee itself conceded before learned CIT(A) vide letter dated 12.09.2011 to dismiss grounds of appeal concerning these four heads of disallowance of expenses which resulted in dismissal of these grounds of appeal by learned CIT(A) vide appellate order dated 23.09.2011. The assessee has now taken a u-turn almost six years after dismissal of its appeal by learned CIT(A) by filing this appeal before tribunal . There has to be an end to litigation as the other party in whose favour the issue is decided in litigation has also right to enjoy the fruits of litigation. There are certain rights which get vested in the litigant in whose favour the dispute is decided and this vested right cannot be unsettled in an casual manner. In our considered view based on the factual matrix of the case before us and our detailed discussions as contained in this order, no sufficient cause is made out by the assessee to condone delay of 2119 days which translates into delay of almost six years and appeal of the assessee is dismissed on this short ground only. The assessee fails in this appeal. We order accordingly. 6. In the result , appeal in ITA no. 6002/Mum/2017 filed by the assessee stand dismissed.
Assessee’s Appeal in ITA no. 6001/Mum/2017 for AY 2008-09 7. The appeal in ITA No. 6001/Mum/2017 for AY 2008-09 is filed against penalty levied by the AO u/s 271(1)(c) which was later confirmed by learned CIT(A). The penalty u/s 271(1)(c) of the 1961 Act was levied on the disallowance of expenses under four heads which are discussed by us in preceding para’s while adjudicating appeal in ITA no 6002/Mum/2017 in this order. These expenses stood
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disallowed by the AO while framing assessment u/s 143(3) by invoking provisions of Section 40(a)(ia) of the 1961 Act as the assessee failed to deduct income-tax at source as is contemplated u/s 194C of the 1961 Act on all these payment for expenses. The learned CIT(A) dismissed the quantum appeal of the assessee as the assessee has itself prayed before the learned CIT(A) for dismissal of its quantum appeal challenging disallowance of expenses under four heads for non deduction of income-tax at source by invocation of Section 40(a)(ia) of the 1961 Act for non deduction of TDS u/s 194C of the 1961 Act. The assessee did not file any appeal before tribunal against learned CIT(A) appellate order in quantum and matter was set to rest and attained finality. The assessee with a delay of 2119 days beyond limitation period as prescribed u/s 253(3) of the 1961 Act filed an appeal against quantum assessment before tribunal on 25.09.2017 i.e. almost six years later, which appeal has now stood dismissed by tribunal vide this common order , in ITA no. 6002/Mum/2017 for AY 2008-09. 8. The AO imposed penalty of Rs. 3,71,334/- being 200% of the tax sought to be evaded with respect to disallowance of expenses under the aforesaid four heads, vide penalty order dated 30.03.2013 bearing number DCIT 13(1)/271(1)(c)/PCJ/12-13, by holding as under: “ 3. I have considered the submission of the assessee. However, certain important facts are found necessary which may not fit in the ratio of decisions sought to be relied on by the assessee. The assessee's- case is covered by section 44AB and tax audit report has also been furnished by the assessee. In respect of column No.27 of the Tax audit report, the assessee's auditor has claimed that question of the assessee complying with provisions of Chapter XVIIB is not applicable. In the further columns 27(b) all the four items are mentioned as NIL, though the main point at 27(a) was reported negatively. Therefore, even the deductibility of the question regarding deducibility or otherwise of the above amounts under section 194, neither the assessee, nor the auditor has made any qualifying observation. The very purpose of incorporating section 44AB with effect from A.Y.1985-86 is to ensure that all the important provisions of the Act are complied duly. The very debate on this point was initiated 10
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only at and after the assessment proceedings and never before that, by way of any qualifying observation by the auditor or by a foot note to the return of income etc. It is also pertinent to note here that the mandatory respect of the Audit report is not maintained. 4. The provisions of section 194C are also unambiguous insofar as it speaks of "any payment" and does not take out payments of any particular nature. Therefore, if the assessee's case had not come under scrutiny, the entire amount of Rs. 6,00,865/- would have gone untaxed. Therefore, the very audit report and the computation statement in the return of income would constitute inaccurate particulars by all standards, it is held. Considering the explanation of the assessee, it is found unacceptable as satisfactory explanation and accordingly, 'he assessee is hereby held to be in default under section 271(1)(c) and his is a fit case for levy of the penalty. 5. In view of the above discussion, the tax on the concealed income of Rs. 6,00,865/-is held to be the tax sought to be evaded as per Explanation 4 below section 271(1)(c). The minimum penalty @100% comes to Rs.1,85,666/- and the maximum @ 300% comes to Rs.5,57,000/- Considering that the addition have been confirmed by the Ld. CIT(A), and the sanctity of the Audit Report not maintained. I am constrained to take a midcourse and levy 200% of the penalty. The same will send the right signal to the professionals and assesses that the Audit report needs to be given proper importance. 6. Penalty on the above sum, being 200% of the tax sought to be evaded of Rs.3,71,334/- (Rupees Three lakhs Seventy One Thousand Three Hundred Thirty Four only) is therefore imposed on the assessee under sec.271(1)(c) of the Act. Demand notice issued accordingly. 9. Aggrieved by the penalty levied by the AO u/s 271(1)(c) of the 1961 Act vide penalty order dated 30.03.2013 , the assessee filed first appeal with Ld. CIT(A) which appeal stood dismissed by Ld. CIT(A) vide appellate order dated 20.06.2017 bearing number CIT(A)-28/IT- 337/ACIT-17(2)/2013-14 , by holding as under:- “5. There cannot be any general proposition of law that penalty cannot be imposed for failure to deduct tax at source and consequent disallowance.
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I am aware of numerous judgments holding that in case of 40(a)(ia) addition, the penalty was deleted. But these cases turn on their own facts. The primary and key issue is "bonafide belief" that no TDS was required to be deducted. In case of M/s.Syndicate Labels v/s. ACIT in ITA No.4386/Del/2014 A.Y. 2008-09 dtd. 21.10.15, the appellant was under bonafide belief that amount paid to 'M' being a subsidiary of a Danish Co covered under 100% DIT relief was governed by section 172 and not 194C. Likewise in Tanushree Basu v/s. ACIT (2013) 36 CCH 89 (Mum) the hon'ble ITAT gave similar belief due to bonafide belief that amount in question were not liable to TDS. No such plea has been made before me. I am thus unable to accept, as a general proposition of law, that penalty cannot be levied for such infractions. Reliance Petro judgment was about claim unsustainable in law. Here it is more of a technical breach but one the appellant could have walked away with had it not been under scrutiny. On facts, and holding respectfully that cited judgments and those quoted by me (supra) are not applicable on facts, no bonafide belief having been pleaded. The penalty is accordingly confirmed. In the result, the appeal is DISMISSED.” 10. Being aggrieved by the appellate order dated 20.06.2017 passed by learned CIT(A) confirming penalty levied by the AO u/s 271(1)(c) of the 1961 Act, the assessee has filed an appeal with the tribunal. The assessee has now claimed that the expenses as were claimed under the four heads which were disallowed in quantum by AO by invocation of Section 40(a)(ia) of the 1961 Act for non deduction of TDS u/s 194C not only contained the income component but it also included reimbursement of expenses as well service tax component. It is now claimed that the assessee was under bonafide belief that income-tax is to be deducted only on the income component and not on reimbursement of expenses/service tax and since the amount of income component was below threshold limits as prescribed u/s 194C for the impugned assessment year, the assessee did not deduct income-tax at source u/s 194C based on this bonafide belief. The assessee has filed paper book which contained invoices for these
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expenses which are placed in page 10-105/pb. It is claimed that if the income component is only considered , majority of the additions would not have been made and it was this bonafide belief which led the assessee not to deduct TDS and hence the penalty levied by the AO u/s 271(1)(c) is not sustainable keeping in view Explanation 1 to Section 271(1)(c) of the 1961 Act. It is also claimed that amendments made to Section 40(a)(ia) of the 1961 Act are held to be declaratory in nature and were held to be applicable retrospectively from 01.04.2005. The assessee relied upon decision of Hon’ble Delhi High Court in the case of Ansal Landmark Township Private Limited(supra) The assessee also relied upon Hon’ble Bombay High Court decision in the case of Pr. CIT v. Perfect Circle India Private Limited in ITA no. 707 of 2016 , vide judgment dated 07.01.2019. Thus, prayer was made to delete penalty as levied by the AO u/s 271(1)(c) of the 1961 which stood confirmed by learned CIT(A). The assessee has also filed an affidavit of its Chartered Accountant Jagdish J Mithani, CA explaining under what circumstances the said learned CA conceded before learned CIT(A) as he was not aware of the legal points/legal cases and took spontaneous decision of praying for dismissal of its appeal. 10.2 The Ld. DR objected to the deletion of penalty as levied by the AO u/s 271(1)(c) of the 1961 Act which stood confirmed by learned CIT(A) and relied upon the appellate order passed by learned CIT(A). 11. We have considered rival contentions and perused the material on record . The assessee is engaged in the business as exporter of food stuff, provisions etc. . The assessee had made following payments towards expenses during the previous year relevant to the impugned assessment year which found debited in its Profit and Loss Account as revenue expenses, on which no income-tax was deducted at source as required under provisions of Section 194C of the 1961 Act for which additions were made by the AO to the income of the assessee for infringement of section 40(a) (ia) of the 1961 Act by disallowing following expenses claimed by the assessee in its Profit and Loss:-
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11.2.1 Clearing and forwarding charges of Rs. 1,33,569/- on which no income-tax was deducted at source u/s 194C. The assessee claimed that the C&F charges of Rs. 1,33,569/- were paid to C&F agent M/s Rajgor Shipping Agency which were disallowed by the AO u/s 40(a)(ia) due to non-deduction of TDS u/s 194C and included in business income while the assessee claimed that since income comprised in total payment of clearing and forwarding charges is less than Rs. 50,000/- being only Rs. 21,000/- disallowance was not warranted.The AO relied on the provisions of Section 194C to hold that for clearing and forwarding expenses , the TDS is required to be deducted on total payment. 11.2.2. Disallowance of Terminal Handling Charges to the tune 1,54,028 on account of non-deduction of TDS u/s 194C. The assessee has claimed to have paid Terminal Handling Charges of Rs. 1,54,028/- to M/s Swift Freight (I) P. Ltd. which was disallowed by the AO u/s. 40(a)(ia) due to non-deduction of TDS u/s. 194C of the 1961 Act and added to business income of the assessee. The assessee had claimed that each container movement is less than Rs. 20,000/- disallowance was not warranted. The AO relied on CBDT circular number 715 dated 08.08.1995 to reject contention of the assessee 11.2.3. Disallowance of Courier & Parcel charges of Rs. 98,307/- on account of non- deduction of TDS u/s 194C. The assessee has claimed Courier & Parcel charges of Rs. 98,307/- paid to KMB Services which were disallowed u/s 40(a)(ia) due to non-deduction of TDS u/s 194C and added to business income of the assessee. The assessee claimed that it had a bonafide belief that courier charges are akin to postage hence deduction of income-tax at source was not required and under the circumstances disallowance was not warranted The AO
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relied on CBDT circular number 715 dated 08.08.1995 to reject contention of the assessee 11.2.4. Disallowance of Transport and Hamali Charges charges of Rs. 2,61,540/- on account of non-deduction of TDS.The assessee claimed Transport & Hamali charges of Rs. 1,29,740/- paid to M/s Sunil Transport Services and Rs. 85,131/ paid to Mr. Pratap Shinde for loading the goods on container and unloading into warehouse which were disallowed u/s 40(a)(ia) due to non-deduction of TDS u/s 194C and added to business income of the assessee. The assessee claimed that there is no contractual agreement with the transport service provider and each payment is less than Rs. 20,000/- , no disallowance is warranted under these circumstances . The assessee relied on CBDT circular no 715 dated 08.08.1995. The AO held that these payments exceeded threshold limits and TDS u/s 194C is applicable.
11.3 The assessee being aggrieved by assessment framed by the AO filed first appeal with learned CIT(A) against quantum assessment and filed letter dated 12.09.2011 wherein it was stated by the assessee before Ld. CIT(A) that the assessee did not wish to pursue its appeal with respect to aforesaid four disallowance of expenses which were raised in memo of appeal vide ground of appeal number 2,3,4 and 5 filed with learned CIT(A). The Ld. CIT(A) was pleased to dismiss the appeal of the assessee challenging disallowance of aforesaid four heads of expenses based on the prayers of the assessee to dismiss its appeal. Thus disallowance of these four heads of expenses attained finality vide appellate order dated 23.09.2011 passed by Ld. CIT(A). The assessee had also paid due taxes to Revenue on these additions and the matter was set to rest as the assessee did not filed any appeal with the tribunal against the appellate order passed by learned CIT(A).
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The learned CIT(A) vide appellate order dated 23.09.2011 had dismissed appeal of the assessee against quantum assessment , by holding as under:- “ 4. As regards Ground Nos. 2,3,4 & 5, during the course of the appellate proceedings, the assessee has filed letter dt. 12/09/2011 wherein it has stated that it would not like to press the above grounds and, hence, may not be considered for relief. In view of the same, Ground Nos. 2,3,4 & 5 are dismissed as not pressed.”
11.4The assessee later filed an appeal with tribunal challenging decision of learned CIT(A) on quantum wherein the appeal before tribunal was filed on 25.09.2017 with an delay of 2119 days beyond the limitation period stipulated u/s 253(3) of the 1961 Act. We have already dismissed this appeal vide this common order on the grounds that no sufficient cause is made out by the assessee for condoning delay of 2119 days. In the meantime , the AO invoked penalty provisions as are contained in Section 271(1)(c) of the 1961 Act and levied penalty @200% on the tax sought to be evaded. The penalty is later confirmed by learned CIT(A). Before us, the assessee has filed an affidavit from Chartered Accountant explaining that he was not aware of the legal points/legal case laws which led him to take spontaneous decision to withdraw appeal. It is also claimed that the payments made by the assessee under these four heads of expenses not only included income component for the assessee but also included reimbursement of expenses and service tax component on which TDS is not required to be deducted. Large number of the invoices for these expenses are
I.T.A. No.6002 & 6001/Mum/2017
filed in paper book filed with tribunal which are placed in page 10-105/pb.These invoices require verification by the authorities as also it is to be seen whether the contentions of the assessee are true. It is also claimed that rigors of Section 40(a)(ia) has been liberalised by insertion of second proviso to Section 40(a)(ia) of the 1961 Act by Finance Act, 2012 which is held to be retrospective from 01.04.2005. Reliance is placed on the decision of Hon’ble Delhi High Court in the case of Ansal Landmark Township Private Limited and decision of Hon’ble Jurisdictional High Court decision in the case of Perfect Circle India Private Limited. We are of the considered view keeping in view factual matrix of the case before us that the assessee deserve one more opportunity to explain its case . We are inclined to set aside and restore issues in this appeal to the file of the AO for fresh adjudication on merits in accordance with law . The evidences/explanations submitted by the assessee in its defence shall be admitted by the AO who shall adjudicate the same on merits in accordance with law. Needless to say proper and adequate opportunity of being heard shall be provided by the AO to the assessee in denovo proceedings in accordance with principles of natural justice in accordance with law . The appeal of the assessee in ITA No. 6001/Mum / 2017 is allowed for statistical purposes. We order accordingly.
In the result, appeal of the assessee in ITA no. 6001/Mum/2017 is allowed for statistical purposes.
I.T.A. No.6002 & 6001/Mum/2017
In the result, appeal of the assessee in ITA no. 6002/Mum/2017 for AY 2008-09 stood dismissed while appeal of the assessee in ITA no. 6001/Mum/2017 for AY 2008-09 is allowed for statistical purposes. Order pronounced in the open court on 27.03.2019. आदेश की घोषणा खुऱे न्यायाऱय में ददनांकः 27.03.2019 को की गई Sd/- Sd/- (PAWAN SINGH) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER
Mumbai, dated: 27.03.2019
Nishant Verma Sr. Private Secretary
copy to… 1. The appellant 2. The Respondent 3. The CIT(A) – Concerned, Mumbai 4. The CIT- Concerned, Mumbai 5. The DR Bench, 6. Master File // Tue copy// BY ORDER DY/ASSTT. REGISTRAR ITAT, MUMBAI