SHRI LAXMAN BHAI DAHYA BHAI PATEL,DURG vs. INCOME TAX OFFICER-1(1), BHILAI
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Income Tax Appellate Tribunal, RAIPUR BENCH, RAIPUR
Before: SHRI RAVISH SOOD & SHRI ARUN KHODPIA
आदेश / ORDER PER RAVISH SOOD, JM: The present appeal filed by the assessee is directed against the order passed by the CIT(Appeals)-II, Raipur dated 07.10.2019, which in turn arises from the order passed by the A.O under Sec.143(3) of the Income-tax Act, 1961 (for short ‘the Act’) dated 30.12.2017 for assessment year 2015-16. The assessee has assailed the impugned order on the following grounds of appeal before us:
“1. On the facts and in the circumstances of the case the Honorable CIT(A) has erred in sustaining the disallowance of Rs.22,05,816/-out of total disallowance of Rs.42,05,816/- on account of Tendupatta plucking expenses. The said disallowance of Rs.42,05,816/-, was already deleted by the Ld. AO by passing the rectification order u/s. 154 of the I.T.Act, 1961. Thus, the Ld CIT(A) has erred in adjudicating the disallowance which was non existent addition and beyond jurisdiction. 2. Without prejudice to the above :- On the fact and circumstances of the case, the Honorable CIT-A has erred in sustaining a disallowance of Rs.22,05,816/- out of total disallowance of Rs.42,05,816/- at Para 4.3 of the appellate order and in another paragraph 5.3 of the appellate order the Ld CIT(A) has deleted the entire expenditure of Rs.42,05,816/-. Once the entire disallowance of Rs.42,05,816/- has been deleted then taking the another view of sustaining the partial disallowance is not according to law and is also against the principle of natural justice. Therefore, the partial disallowance sustained by the Ld. CIT(A) deserves to be deleted. 3. The assessee reserves the right to add, amend or alter any grounds of appeal at any time of hearing.”
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Succinctly stated, the assessee who is engaged in the business of trading of tendu patta and tobacco had e-filed his return of income for A.Y.2015-16 on 30.09.2015, declaring an income of Rs.3,27,410/-. Subsequently, the case of the assessee was selected for scrutiny assessment u/s.143(2) of the Act.
During the course of assessment proceedings, it was observed by the A.O that the assessee had raised a claim for deduction of tendu patta plucking expenses of Rs.42,05,816/-. It was observed by the A.O that the aforesaid claim of expenses raised by the assessee during the year was nearly 6 times as in comparison to that raised by him in the immediately preceding year. On being queried about the exorbitant increase in the aforesaid expenses, it was claimed by the assessee, that the same was for the reason there was a steep hike in the wages of the labourers who were engaged in the plucking work. However, the assessee could not substantiate the manifold increase in the aforesaid expenditure on the basis of any supporting documentary evidence. Apart from that, it was observed by the A.O that the vouchers produced by the assessee with respect to the aforesaid expenditure did not reveal any direct payment to the labourers. It was noticed by the A.O that cash was given by the assessee to the supervisors who were handling tendu patta plucking work. Considering the aforesaid facts, the A.O was of the view that as the assessee had made payments to labour contractors for carrying out the aforesaid plucking work, therefore,
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he was obligated to have deducted tax at source under Sec.194C of the Act on the said payments. As the assessee had failed to deduct any tax at source within the meaning of Section 194C of the Act, therefore, the A.O disallowed u/s 40(a)(ia) of the Act 30% of the said expenditure and worked out a disallowance of Rs.15,98,210/-(sic). However, the A.O while culminating the assessment vide his order passed u/s.143(3) dated 30.12.2017, inter alia, disallowed, viz. (i) assessee’s claim for deduction of tendu patta plucking expenses : Rs.42,05,816/-; and (ii) assessee’s claim for deduction of tendu patta plucking expenses u/s.40(a)(ia) of the Act (30% of Rs. 42.05 lac) : Rs.15,98,210/- (sic). In sum and substance, the A.O not only disallowed the assessee’s entire claim for deduction of tendu patta plucking expenses of Rs.42.05 lac, but also disallowed 30% of the said expenses u/s.40(a)(ia) of the Act.
Aggrieved, the assessee carried the matter in appeal before the CIT(Appeals). The CIT(Appeals) finding favour with the claim of the assessee that the disallowance of his entire claim for deduction of tendu patta plucking expenses of Rs.42,05,816/- (supra) a/w. disallowance of 30% of the said expenses u/s.40(a)(ia) of the Act, had resulted to a double disallowance, thus, vacated the disallowance made by the A.O u/s.40(a)(ia) of the Act. At the same time, the CIT(Appeals) was of the view, that though the assessee had failed to substantiate his entire claim for deduction of tendu patta plucking expenses of Rs.42.05 lac to the satisfaction of the A.O,
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but the latter too had summarily made the disallowance without carrying out any enquiry. Considering the aforesaid facts, the CIT(Appeals) partly vacated the disallowance amounting to Rs.20 lac (out of Rs. 42.05 lac) and sustained the balance disallowance of Rs.22,05,816/-. At this stage, we may herein observe, that though the CIT(Appeals) had sustained the addition of Rs.22,05,816/- (supra) (out of total disallowance of Rs.42.05 lac) but strangely at Page 10, Para 5.3 of his order, he had recorded an observation, on the basis of which it can prima facie be inferred that he had vacated the entire disallowance of Rs.42.05 lacs (supra).
As brought to our notice by the Ld. Authorized Representative (for short ‘AR’) for the assessee, t the A.O vide his order passed u/s.154 of the Act dated 23.01.2018 had rectified the assessment order and vacated the disallowance of the assessee’s claim for deduction of tendu patta plucking expenses of Rs.42.05 lac, Page 48 of APB.
The assessee being aggrieved with the part sustaining of the disallowance of Rs.22,05,816/- of tendu patta plucking expenses by the CIT(Appeals), has carried the matter in appeal before us.
At the very outset, we may herein observe that the present appeal filed by the assessee involves a delay of 747 days. Our attention was drawn by the Ld. AR to the application filed by the assessee a/w. an affidavit explaining the reasons on the basis of which the delay involved in filing the
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present appeal was sought to be condoned. Elaborating on the reasons leading to the aforementioned delay in filing of the appeal, it was stated by the Ld. AR, that the assessee on perusal of the orders passed by the CIT(Appeals) dated 07.10.2019 and that passed by the A.O u/s.154 dated 23.01.2018, remained under a bonafide belief that as the entire disallowance of tendu patta plucking expenses amounting to Rs. 42.05 lac had been vacated in the course of the aforesaid proceedings, therefore, there remained no occasion for him to assail the order of the CIT(Appeals) any further in appeal. It was stated by the Ld. AR, that it was only when the assessee was in receipt of the order passed by the A.O u/s.271(1)(c) of the Act dated 06.01.2022, wherein, penalty u/s.271(1)(c) of the Act was imposed on him w.r.t disallowance of his claim for deduction of tendu patta plucking expenses of Rs.22,05,816/- (out of total disallowance of Rs.42,05,816/-) of the tendu patta plucking Expenses) that was stated to have been upheld by the CIT(Appeals), it was for the first time gathered by him that the addition of Rs.22,05,816/- (supra) had not been struck down and still survived. It was, thus, the claim of the Ld. AR that the assessee on learning about the aforesaid incomprehensible facts had immediately filed the present appeal on 07.10.2019. The Ld. AR on the basis of the aforesaid facts submitted, that as there was a bonafide reason in not filing of the appeal by the assessee within the stipulated time period, therefore, the delay therein involved not
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being prompted by any lackadaisical conduct or a malafide intention on his part, thus, in all fairness be condoned.
Per contra, the Ld. Departmental Representative (for short ‘DR’) objected to the condonation of delay as was sought by the assessee. It was submitted by the Ld. DR that as the delay involved in filing of the present appeal was inordinate, therefore, the same did not merit to be condoned, and the appeal of the assessee was liable to the dismissed on the said count itself.
We have heard the Ld. Authorized Representatives of both the parties as regards the reasons leading to the delay in filing of the present appeal. In our considered view, there is substance in the claim of the Ld. AR that as the assessee had remained under a bonafide belief, that as per the order of the CIT(appeals), dated 07.10.2019 and that of the A.O u/s 154 of the Act, dated 23.01.2018, the entire disallowance of his claim for deduction of tendu patta plucking expenses did no more survive, therefore, there remained no occasion for him to carry the matter any further in appeal. On a careful perusal of the aforesaid orders of the lower authorities, we find that the same duly supports the reasons given by the assessee which had led to the delay in preferring the present appeal before us. In fact, a careful perusal of Para 5.3 of the order of the CIT(Appeals), prima facie reveals that the entire addition of Rs.42.05 lac (supra) had been struck down by him. Also, the
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order passed by the A.O u/s. 154 dated 23.01.2018 clearly points out that the entire disallowance of tendu patta plucking expenses of Rs.42.05 lac was struck down by him. Considering the aforesaid facts, we are in agreement with the Ld. AR that as there was a bonafide reason for the assessee to infer that the entire disallowance had been vacated by the CIT(Appeals), therefore, there remained no occasion for him to carry the matter any further in appeal before us. In fact, the assessee on learning about the facts to the contrary, i.e. on being saddled with a penalty u/s.271(1)(c) of the Act dated 06.01.2022, had thereafter, without any further loss of time filed the present appeal before us. We, thus, on the basis of the aforesaid facts, are of the considered view, that the delay of 747 days involved in filing of the appeal by the assessee before us in all fairness merits to be condoned.
We shall now deal with the grievance of the assessee that the CIT(Appeals) had erred in sustaining the disallowance of Rs.22.05,816/- ( out of Rs.42,05,816/-) of tendu patta plucking expenses made by the A.O.
We have heard the ld. authorized representatives of both the parties, perused the orders of the lower authorities as well as the material available on record. The Ld. AR has assailed the sustaining of the disallowance of Rs.22.05 lac (supra), on the ground that now when the A.O vide his order passed u/s.154 of the Act dated 23.01.2018 had vacated the entire disallowance of tendu patta plucking expenses of Rs.42.05 lac, there was no
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justification for the CIT(Appeals) to have upheld the disallowance of Rs.22.05 lac (supra) while disposing of the appeal vide his order dated 07.10.2019. In sum and substance, it was the claim of the Ld. AR that now when the entire disallowance of tendu patta plucking expenses had been vacated by the A.O vide his order u/s.154 of the Act dated 23.01.2018, then in the absence of any such disallowance being in existence the CIT(Appeals) could not have sustained any part of the same. Alternatively, it was submitted by the Ld. AR, that the CIT(Appeals) as per Page 10, Para 5.3 of his order had vacated the entire disallowance of tendu patta plucking expenses of Rs.42.05 lac. On the basis of his aforesaid contention, it was the claim of the Ld. AR, that now when both the A.O and the CIT(Appeals) had vacated the entire disallowance of tendu patta plucking expenses of Rs.42.05 lacs, there was no justification for the CIT(Appeals) to have taken a view to the contrary and sustained a disallowance of Rs.22.05 lac (out of Rs. 42.05 lac).
Per contra, the Ld. DR relied on the orders of the lower authorities.
Ostensibly, the A.O vide his order passed u/s.154 of the Act dated 23.01.2018 had vacated the entire disallowance of tendu patta plucking expenses of Rs.42.05 lac and scaled down the assessed income of the assessee to Rs.39,41,989/-, as under:
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Particulars Amount Refer Page No. in A.O order Total income as per return filed u/s.139 3,27,407/- 6 Addition made in order passed u/s.143(3) Shortage of cash found during survey 2,62,682/- 6 added as unexplained expenditure u/s.69C Excess stock found during survey being 41,300/- 6 unexplained investment Disallowance u/s.40(a)(ia) out of Tendu 15,98,210/- 6 Patta Plucking expenses for non deduction of TDS Disallowance u/s.40(a)(ia) out of 17,12,390/- 6 supervision charges for non deduction of TDS Total income in rectification order 39,41,989/- passed u/s.154
Also, as stated by the Ld. AR and, rightly so, though the CIT(Appeals) vide Page 7, Para 4.3 of his order had sustained a disallowance of Rs.22.05 lac (supra) (out of Rs.42.05 lac of tendu patta plucking expenses) but in the same order, he had at Page 10, Para 5.3 held the said expenditure to be genuine and vacated the entire amount of disallowance. In sum and substance, the observations of the CIT(Appeals), i.e. part sustaining of disallowance of Rs.22.05 lac (supra) and vacating the entire amount of disallowance clearly militates against each other. In so far the claim of the Ld. AR, that the CIT(Appeals) had vide Para 5.3 of his order vacated the entire amount of tendu patta plucking expenses of Rs.42.05 lac (supra), we are unable to persuade ourselves to subscribe to the same. On a careful perusal of the order of the CIT(Appeals), it transpires that he had
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categorically vide Para 4.3 of his order sustained the disallowance of Rs.22.05 lac (out of disallowance of Rs.42.05 lac of tendu patta plucking expenses). At the same time, we find that the disallowance of Rs.42.05 lac of tendu patta plucking expenses had been vacated by the A.O vide his order passed u/s.154 of the Act dated 23.01.2018. As had been brought to our notice by the Ld. AR, the A.O vide his order u/s.154 of the Act dated 23.01.2018, had though retained the disallowance u/s.40(a)(ia) of the Act of Rs.15,98,210/- (out of tendu patta plucking expenses), but had vacated the entire amount of disallowance of Rs.42.05 lac that was separately made by him vide his order passed u/s.143(3) dated 30.12.2017. As is discernible from the order of the CIT(Appeals), the assessee had at no stage in the course of the appellate proceedings brought the order passed by the A.O. u/s.154 dated 23.01.2018 to the notice of the said appellate authority.
Ostensibly, as not only the observations of the CIT(Appeals) on the issue pertaining to disallowance of tendu patta plucking expenses of Rs.42.05 lacs are found to be self-contradictory and in fact militates against each other, but also considering the fact that the assessee in the course of proceedings before the CIT(Appeals) had failed to place on record the order passed by the A.O u/s.154 of the Act dated 23.01.2018, wherein, the entire disallowance of tendu patta plucking expenses of Rs. 42.05 lac had been vacated, therefore, the matter in all fairness requires to be restored to the file of the CIT(Appeals) with a direction to re-adjudicate the same. Needless
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to say, the CIT(Appeals) in the course of the set-aside proceedings shall afford a reasonable opportunity of being heard to the assessee. Thus, the Grounds of appeal No.(s) 1 & 2 raised by the assessee are allowed for statistical purposes in terms of our aforesaid observations.
Ground of appeal No.3 being general in nature is dismissed as not pressed.
In the result, appeal of the assessee is allowed for statistical purposes in terms of our aforesaid observations.
Order pronounced in open court on 29th day of May, 2023.
Sd/- Sd/- ARUN KHODPIA RAVISH SOOD (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) रायपुर/ RAIPUR ; �दनांक / Dated : 29th May, 2023 SB आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant. 2. ��यथ� / The Respondent. 3. The CIT(Appeals)-II, Raipur(C.G) 4. The Pr. CIT-II, Raipur (C.G.) 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, रायपुर ब�च, रायपुर / DR, ITAT, Raipur Bench, Raipur. गाड� फ़ाइल / Guard File. 6. आदेशानुसार / BY ORDER, // True Copy // �नजी स�चव / Private Secretary आयकर अपील�य अ�धकरण, रायपुर / ITAT, Raipur.
