M/S. BARNALA STEELS INDUSTRIES LIMITED,NEW DELHI vs. DCIT, MUZAFFARNAGAR

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ITA 6118/DEL/2014Status: DisposedITAT Delhi05 May 2017AY 2009-105 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the issue of TDS liability on the payments was debatable and not a mistake apparent from the record. Therefore, the AO could not assume jurisdiction under Section 154 to make such additions.

What were the facts?

The Assessing Officer (AO) made an addition to the assessee's income under Section 154, citing a lack of documentary evidence for TDS payments on certain advertisement and maintenance contracts. The CIT(A) upheld this addition.

What were the issues?

Whether the AO can use Section 154 for rectification when the issue of TDS liability is debatable and not a mistake apparent from the record.

Which sections of the Income-tax Act were involved?

Section 154,Section 143(3),Section 194C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH: ‘A’ NEW DELHI

Before: SHRI G.D. AGRAWAL, HON’BLE & SHRI K.N. CHARY

Hearing: 03.05.2017Pronounced: 05.05.2017

ORDER PER K. NARSIMHA CHARY, J.M. This is an appeal challenging the order dated 11.09.2014 in appeal no. 14/2014-15/MZR/764 passed by the Commissioner of Income Tax (Appeals)-Muzaffar Nagar.

2.

Brief facts of the case are that the assessee is a company deriving income from the business of manufacturing of M.S. Bars and TMT Steel. Assessment of income u/s 143(3) of the Act for the AY 2009-10 was complete by order dated 29.12.2011 computing the income at Rs. 1,44,52,756/-. However, stating that no documentary evidences regarding payment of TDS on certain payments under the head “Advertisement publicity and 1

annual maintenance contracts was found to have been enclosed” in respect of AY 2009-10, the AO passed a rectification order dated 03.03.2014 u/s 154/251/143(3) of the Act thereby making an addition of Rs. 6,43,056/- to the income of the assessee.

Appeal filed against such rectification order was dismissed by the Ld. CIT (A) by way of impugned order.

3.

Aggrieved by the orders of the authorities below and more particularly challenging the impugned order, the assessee carried the matter in this appeal stating that there was no mistake apparent on the face of record in the order u/s 143(3) of the Act that could have been rectified u/s 154 of the Act, as such the assumption of jurisdiction by the AO u/s 154 of the Act to make additions on the ground that no documents supporting the payment of TDS on certain payments were enclosed.

4.

It is the argument of the Ld. AR that in this matter the assessment was u/s 143(3) of the Act and all the record was available before the AO when he passed such an order u/s 143(3) of the Act, the question whether the TDS was liable or not on the payments enumerated by the AO in the order u/s 154 of the Act is a debatable one and not available to the AO for Section 154 of the Act for making any additions. Per contra, Ld. DR vehemently relied on the orders of the authorities below stating that the orders are well reasoned ones.

5.

We have carefully gone through the record. Relevant portion of the order u/s 154 is as follows:

It is observed that no documentary evidences regarding payment of TDS on the following payments under the head Advertisement & Publicity and Annual Maintenance Contract was found enclosed in the case record of the assessee for AY 2009-10: 1. Bijan Cinemax P. Ltd., Delhi 22.06.2008 62,885/- Advertisement & Publicity 2. Inder Kr. Art Services 19.09.2008 24,900/- Advertisement & Publicity 3. Print House,Muzaffarnagar 22.10.2008 83,630/- Advertisement & Publicity 4. Dr. Balraj 10.11.2008 1,20,000/- Advertisement & Publicity 5. Prabhari Zila Krishi & Udyog Pradarshani 22.01.2009 50,000/- Advertisement & Publicity 6. Kalanidhi Printing Press 24.01.2009 71,750/- Advertisement & Publicity 7. Print House 02.02.2009 1,50,000/- Advertisement & Publicity 8. Ushodaya Enterprises P. ltd. 31.03.2009 25,000/- Advertisement & Publicity 9. Nutek System & Control 54,000/- AMC Total 6,43,056/-

6.

No doubt the liability to deduct and pay TDS on these payments is a debatable one and has to be decided after affording an opportunity to the assessee, and hence, it cannot be said that it is a mistake apparent on the face of record. Section 154 of the Act clearly reads that with a view to rectifying any mistake apparent from record, any Income Tax Authority may amend any order passed by it. Since, we are of the firm opinion that the question involved in this matter sought to be rectified u/s 154 of the Act is not a mistake apparent from the record, but a debatable issue, we hold that it is not available to the AO to make additions u/s 194C of the Act under the guise of rectification of mistake apparent from record. With this view of the matter, we find that the orders of the authorities below cannot be sustained and accordingly quash the same. Additions made under the order dated 03.03.2014 u/s 154 of the Act are directed to be deleted.

7.

In the result, the appeal of the assessee is allowed.

Order pronounced in the open court on 5th May, 2017

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