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Income Tax Appellate Tribunal, “A” BENCH, MUMBAI
Before: SHRI R.C. SHARMA, AM & SHRI RAVISH SOOD, JM
आदेश / O R D E R
PER RAVISH SOOD, JM:
The present appeal filed by the assessee arises out of the order passed by the CIT(A)-16, Mumbai, dated 14.06.2011, which in itself arises from the order passed by the A.O u/s 143(3) of the Income-tax act, 1961 (for short ‘Act’), dated.31.08.2009 in relation the assessment year 2007-08, therein raising the following grounds of appeal:-
“GROUNDS OF APPEAL
AGAINST ORDER U/S.143
1. The appellant prays that the delay in filing this appeal be condoned as appellant was prevented by reasonable cause in not able to file the appeal within the statutory time limit.
2. On the facts and in the circumstances of the case, the learned CIT(A) erred in confirming the addition made of Rs.15,10,071/- u/s 40 (a)(ia) r.w.s. 200 (1) of the Act. The appellant prays that, the addition made be deleted.
3. The learned CIT(A) and the assessing officer erred in observing that no tax was deducted and failed to appreciate that, the amount of T.D.S. deducted have been paid before the statutory due date of filing of return as per Section 139(1) of the Act and hence, the addition made be deleted.
4. The learned CIT(A) erred in not following the decision of the Bombay Tribunal and the appellant prays that, as held by Bombay Tribunal in the case of Bansal Parivahan (I) Pvt. Ltd., the addition made be deleted.
5. The appellant craves leave to add amend or alter any or all of the grounds of appeal
.”
2. That the present appeal filed by the assessee involves a delay of 384 days. The assessee had filed an application seeking condonation of delay, which is supported by an ‘Affidavit’ of the Managing director of the assessee company, viz. Mr. Abdul Haffez Shaikh, therein deposing the facts leading to delay in filing of the appeal. It is claimed that though the appeal of the assessee company was heard by the CIT(A) and order was passed on 14.06.2011, however no copy of the said order was received by the assessee. It is claimed that it was only when the assessee had last requested as on 13.07.2012 for a copy of the said order, though the same was made available, but the assessee was informed that the said order had already been dispatched and delivered on 08.07.2011. It is submitted by the assessee that the order of the CIT(A) which as stated by the latters office to have been delivered on 08.07.2011, had not been received or was misplaced, and as such on receiving the photocopy of the aforesaid order, the assessee had therein immediately filed an appeal with the Tribunal. Thus in the backdrop of the aforesaid facts stated in the application seeking condonation of delay in filing of the appeal, which is supported by a duly affirmed affidavit, it was requested that the delay involved in filing of the appeal may therein be condoned.
2.1 We have duly considered the aforesaid facts as averred by the assessee, which we find are supported by an affidavit of the Managing director. We though are not oblivious of the settled position of law that the right to file an appeal is a creature of law, and as such the failure on the part of an appellant to file an appeal within the stipulated time period contemplated therein would divest him of the said right, but then such a delay in filing of the appeal has to be looked into in the backdrop of the sufficiency of the cause leading to the same. The Hon’ble Supreme Court in the case of : Collector, Land acquisition Vs. Mst. Katiji & Ors. (1987) 167 ITR 471 (SC) referring to Sec. 5 of the Limitation Act, 1963, had at length looked into the scope of the powers conferred on the appellate courts to condone the delay in filing of appeals, and after laying down a set of parameters which should be borne in mind while adjudicating on the said issue, had therein held that in order to enable the Courts to do substantial justice to the parties by disposing of matters on "merits", a liberal approach should be adopted while considering the sufficiency of the cause which had led to delay in filing of the appeal, i.e in a manner which sub serves the ends of justice. Thus in the backdrop of the aforesaid guidelines, we herein look into the sufficiency of the cause which had led to a delay of 384 days in filing of the present appeal before us. Though at the first blush the delay involved in filing of the present appeal is found to be substantial, but then as we peruse the reason leading to the delay in the filing of the appeal, we find that nothing has been placed on record by the department which could go to belie the contention of the assessee that the order of the CIT(A) was not received, or had been misplaced, and as such would go to prove otherwise or persuade us to raise any doubts as regards the genuineness of the aforesaid claim of the assessee. Thus in light of the claim of the assessee, which all the more is supported by an ‘Affidavit’ of the Managing director of the assessee company, we are persuaded to accept the reason given by the assessee as regards the delay in filing of the present appeal before us. We are of the considered view that in the absence of any material being made available on record by the department on the basis of which the aforesaid claim of the assessee could be dislodged, the delay of 384 days in filing of the present appeal is not found to be prompted by any lapses or laches on the part of the assessee, therefore the same deserves to be condoned. The application filed by the assessee seeking condonation of delay of 384 days in filing the present appeal is thus allowed.
Briefly stated, the facts of the case are that the assessee company which is engaged in the business of Engineering Contractors/labour Job had filed its return of income on 24.10.2007 declaring total income of Rs.46,191/- which was processed as such u/s. 143(1) of the ‘Act’. The case of the assessee was thereafter taken up for scrutiny proceedings u/s. 143(2), in the course of which proceedings it was observed by the A.O that the assessee had made the following contractual payments without deduction of tax at source:-
Sr. No. Name of the payee Expenses Date of Due date for Date of amount credit/pay TDS deposit deposit of (Rs) ment TDS 1 Savitra Steel Fabricators 50000 12.06.2006 07.07.2006 10.04.2007
2 20000 12.06.2006 07.07.2006 10.04.2007 3 80000 22.07.2006 07.08.2006 10.04.2007 4 540000 10.09.2006 07.10.2006 10.04.2007 5 180000 16.10.2006 07.11.2006 10.04.2007 6 100000 14.11.2006 07.12.2006 10.04.2007 7 10000 25.11.2006 07.12.2006 10.04.2007
8 7497 25.11.2006 07.12.2006 10.04.2007 200000 21.04.2006 07.05.2006 10.04.2007 9 Mehboob Constructions
100000 09.05.2006 07.06.2006 10.04.2007 10 165000 12.06.2006 07.07.2006 10.04.2007 11 35000 12.06.2006 07.07.2006 10.04.2007 12 9675 19.10.2006 07.11.2006 10.04.2007 13 40000 24.11.2006 07.12.2006 10.04.2007 14 73000 10.06.2006 07.07.2006 10.04.2007 15 Jyoti Constructions co. 50000 06.10.2006 07.11.2006 10.04.2007 16 23000 06.10.2006 07.11.2006 10.04.2007 17 79149 24.11.2006 07.12.2006 10.04.2007 18 85000 24.11.2006 07.12.2006 10.04.2007 19 50000 23.12.2006 07.01.2007 10.04.2007 20
21 Pratima Engineering 37800 07.06.2006 07.07.2006 10.04.2007 works 22 22200 16.12.2006 07.11.2006 10.04.2007
23 18750 20.12.2006 07.01.2007 10.04.2007 24 20000 01.01.2007 07.02.2007 10.04.2007 Total 15,10,071
4. The assessee on being confronted by the A.O as regards the aforesaid default, therein submitted that as it had received the bills from the aforesaid parties in the month of March, therefore after deduction of the tax at source the same was duly deposited by him with the government treasury as on 10.04.2007, i.e well within the stipulated time period contemplated under Chapter XVIIB of the ‘Act’. The aforesaid explanation of the assessee did not find favor with the A.O, who being of the view that as the advance payments to the aforesaid parties had already been made by the assessee on the basis of completion of partial jobs, therefore the liability of the assessee to comply with the statutory obligation as regards the TDS provisions crystallized on the said respective dates itself, and therefore could not be deferred and as such related to the month of March, 2007. The A.O thus on the basis of his aforesaid conviction, being of the view that the assessee had failed to comply with the provisions of Sec. 40(a)(ia) r.w Sec. 200(1) of the ‘Act’, therein disallowed the same as an expenditure in the hands of the assessee, and consequently made an addition of Rs. 15,10,071/-(supra). The A.O thereafter deliberating on certain other issues, assessed the income of the assessee at Rs.19,72,670/-.
The assessee being aggrieved with the assessment order therein carried the matter in appeal before the CIT(A).That it was averred by the assessee that as the tax deducted at source by the assessee during the year under consideration was deposited with the government treasury as on 10.04.2007, i.e prior to the ‘due date’ of filing of the return of income u/s. 139(1) of the ‘Act’, therefore no disallowance of Rs. 15,10,071/- was called for u/s 40(a)(ia). The assesssee in support of his aforesaid contention relied on the order of the ITAT, ‘B’ Bench Mumbai in the case of: M/s Bansal Parivahan (India) Pvt. Ltd. Vs. ITO, Ward 8(I), Mumbai (ITA No. 2355/Mumbai/2010, AY 2006- 07), dated 22.09.2010, wherein a coordinate bench of the Tribunal had held that the amendment of Section 40(a)(ia) vide the Finance Act, 2010, with effect from 01.04.2010, being in the nature of a remedial/curative provision which was made available on the statute, was thus to be given a retrospective effect, and as such had to be construed as if the same was available on the statute with effect from 1st April, 2005, had held as under:-
“The provisions of Section 40(a)(ia) as stood prior to the amendments made by the Finance Act, 2010 thus were resulting into unintended consequences and causing grave and genuine hardships to the assesses who had substantially complied with the relevant TDS provisions by deducting the tax at source and by paying the same to the credit of the Government before the due date of filing of their returns u/s. 139(1). In order to remedy this position and to remove the hardships which was being caused to the assessees belonging to such category, amendments, have been made in the provisions of Section 40(a)(ia) by the Finance Act 2010. The said amendment, in our opinion thus are clearly remedial/curative in nature as held by Hon’ble Supreme Court in the case of Allied Motors Pvt. Ltd. (supra) and Alom Extrusions Ltd. (supra) and the same therefore would apply retrospectively w.e.f. 1st April, 2005.” The CIT(A) however not finding favor with the contention of the assessee, and rather holding a conviction that the extended period of depositing the TDS up to the ‘due date’ specified u/s. 139(1) was only available with respect to those amounts where the TDS had been deducted during the last month of the previous year, therefore upheld the order of the A.O and dismissed the appeal of the assessee.
The Assessee being aggrieved with the order of the CIT(A) had thus carried the matter in appeal before us. That at the very outset of the hearing of the appeal it was submitted by the ld. Authorized Representatives for the assessee (for short ‘A.R’) that as the tax was deducted at source by the assessee company during the year under consideration, which thereafter was deposited with the government treasury much prior to the ‘due date’ of the filing of the return of income u/s.139(1),therefore, in light of the clearly worded Section 40(a)(ia) of the ‘Act’, no disallowance under the said statutory provision was called for in the hands of the assessee company. The ld. A.R rebutting the observation of the CIT(A) that the amendment of Section 40(a)(ia) vide the Finance Act, 2010, which therein relaxed the rigors of the said statutory provision by extending the period for depositing the TDS during the year to the ‘due date’ of filing of the return of income u/s 139(1), was applicable prospectively, i.e was to be given effect from A.Y. 2010-11, therein submitted that as the said amendment was in the nature of a remedial/curative provision which was made available on the statute, the same thus had to be given a retrospective effect and construed as if the same was available on the statute with effect from 1st April, 2005, therein relied on the judgment of the Hon’ble Gujarat High Court in the case of CIT Vs. J.K. Construction company (2014) 361 ITR 181 (Guj), wherein the Hon’ble High Court dealing with the case involving assessment year 2005-06, had upheld the view of the Tribunal that by virtue of the amendment made to section 40(a)(ia) with effect from 01.04.2005, the deposit of the TDS by the assessee before the ‘due date’ specified in subsection (1) of Section 139 of the ‘Act’ was to be construed to be well within the parameters contemplated under the aforesaid statutory provision, and as such no disallowance u/s. 40(a)(ia) with respect to the said amount was called for in the hands of the assessee. The Hon’ble High Court clearly expressing its view that the amendment with respect to the deposit of the TDS up to the ‘due date’ specified in section 139(1), though was made available on the statute vide the Finance Act, 2010, w.e.f. 01.04.2010, the same was however to be given a retrospective effect, i.e w.r.e.f. 01.04.2005, had therein held as under:- “In the background of the above undisputed facts, the Tribunal was of the opinion that by virtue of the amended provisions of section 40(a)(ia) of the Income tax Act, 1961, the assessee has not breached the requirement of the deduction and depositing of TDS.
3. Section 40(a)(ia) of the Act, as amended with effect from April 1, 2005, read as under: “(ia) any interest commission or brokerage, rent, royalty, fees for professional services or fees for technical services payable to a resident, or amounts payable to a contractor or sub-contractor, being resident, for carrying our any work (including supply of labour for carrying out any work), on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or after deduction, has not been paid on or before the due date specified in sub section (1) of section 139.”
Plainly speaking, the assessee had to make deduction before 31st march of the year in question and as long as such amounts were deposited before the last date of filing of the return, requirements of law would be fulfilled. It was on this basis that the Tribunal was of the opinion that the assessee committed no wrong and was, therefore entitled to seek deduction of Rs.32,94,149/- from the income which amount the assessee had deducted from payments of contractors and had also deposited with the Revenue before the last date of filing of the return. We do not find any illegality in the order of the Tribunal. The tax appeal is, therefore, dismissed.” Thus in the backdrop of the facts involved in the present case, it was averred by the ld. A.R that now when the assessee company had deposited the TDS much before the ‘due date’ for filing of its return of income u/s. 139(1) of the ‘Act’, therefore, in light of the amendment to section 40(a)(ia) vide the Finance 2010, which as held by the Hon’ble High Court of Gujarat has to be given a retrospective effect, therefore no default on the part of the assesssee as regards the compliance of the TDS provisions contemplated u/s. 40(a)(ia) r.w.s. 200(1) of the Act, had thus emerged, as a result whereof no disallowance of the expenses aggregating to Rs. 15,10,071/- was called for u/s 40(a)(ia) in the hands of the assessee company. That on the other hand the ld. Departmental Representatives (for short ‘D.R’) heavily relied on the orders of the lower authorities.
We have heard the Ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and the material produced before us. That before adverting further, it would be relevant to point out that in light of the very fact that the A.O had held the assessee company to have defaulted the provisions of Sec. 40(a)(ia) r.w.s 200(1), therefore it emerges that it is a matter of conceded fact that the A.O had held that though the assessee had deducted the tax at source during the year under consideration, but had failed to deposit the same within the stipulated time period contemplated u/s 200(1). Thus in light of the aforesaid facts as emerges from the body of the assessment order, the sole issue that survives for adjudication before us is as to whether in the backdrop of the fact that now when the assessee company after deducting the tax at source during the year under consideration had deposited the same as on 10.04.2007, i.e though beyond the period specified u/s. 200(1) of the ‘Act’, but before the ‘due date’ of filing of its return of income u/s. 139(1), the same would call for a disallowance u/s. 40(a)(ia), or not. We have given a thoughtful consideration to the facts of the case and are of the considered view that as the assessee company after deducting the tax at source pertaining to the aforesaid amount aggregating to Rs. 15,10,071/-(supra) during the year under consideration, had thereafter deposited the same with the government treasury before the ‘due date’ for filing of the return of income u/s.139(1) of the Act, therefore in light of the amendment made to section 40(a)(ia) vide the finance Act 2010, which as held by the Hon’ble High Court of Gujarat in the case of J.K. Construction company (supra) has to be given a retrospective effect, and thus has to be construed as if the same was available on the statute with effect from 1st April, 2005, therefore are of the considered view that now when in the present case the TDS had been deposited by the assessee company as on 10.04.2007, i.e much prior to the ‘due date’ for filing of its return of income u/s. 139(1), therefore no disallowance u/s.40(a)(ia) of the amounts relatable thereto was called for in the hands of the assessee company. Thus in light of our aforesaid observations, we herein set aside the order of the CIT(A) who had sustained the addition/disallowance of Rs.15,10,071/- so made by the AO u/s 40(a)(ia) of the ‘Act’.
The appeal of the assessee is allowed.