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Income Tax Appellate Tribunal, RAIPUR BENCH, RAIPUR
Before: SHRI RAVISH SOOD & SHRI JAMLAPPA D BATTULL
आदेश / ORDER PER RAVISH SOOD, JM : The present appeal filed by the assessee is directed against the order passed by the CIT(Appeals)-II, Bilaspur, dated 29.03.2016, which in turn arises from the order dated 27.01.2014 passed by the A.O under Sec. 143(3)/147 of the Income-tax Act, 1961 (in short ‘the Act’) for assessment year 2008-09. Before us the assessee has assailed the impugned order on the following grounds of appeal:
“1. That under the facts and in law, the learned Commissioner of Income Tax (Appeals) erred in holding that proceedings u/s.147 and the issue of notice u/s.148 was according to law. Prayed that re-opening of case u/s.147 and issue of notice u/s.148 is not according to law and therefore, the assessment order is void authorities below-initio and be cancelled. 2. That under the facts and the law, the learned Commissioner of Income Tax (Appeals) further erred in confirming the disallowance of Rs.3,71,587/- made by the learned Assessing Officer u/s.40(a)(ia) for non deduction of tax on fiancé charges paid to NBFC, rejecting the explanations. Prayed that the deductees have considered the income in that return of income and paid the taxes and that no amount is outstanding as payable as on end of the year to the deductees. 3. That the Ld. CIT(Appeals) further erred in not considering the supporting with regard to inclusion of income by the deductees in their return of income, payment of taxes and filing of return. Prayed that disallowance of Rs.3,71,587/-.”
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Succinctly stated, original assessment in the case of the assessee was framed by the Assessing Officer vide his order passed u/s.143(3) of the Act dated 21/12/2010 assessing the total income of the assessee at Rs.1,85,943/-. Observing that the assessee having failed to deduct tax at source on the interest/finance charges of Rs.3,71,587/- that was paid to a NBFC, viz. M/s. Magna Fincorp Limited had rendered the said amount liable for disallowance u/s 40(a)(ia) of the Act, the Assessing Officer re- opened his case u/s.147 of the Act. As the assessee had failed to deduct tax at source u/s 194A of the Act on the aforesaid amount of interest/finance charges, therefore, the Assessing Officer vide his order passed u/s. 143(3)/147 of the Act, dated 27.01.2014 disallowed the same u/s. 40(a)(ia) of the Act and determined the total income of the assessee at Rs.5,57,530/-.
Aggrieved the assessee carried the matter in appeal before the Ld. CIT (Appeals). However, the Ld. CIT (Appeals) not finding any infirmity in the view taken by the Assessing Officer, therein, upheld the disallowance made by him u/s. 40(a)(ia) of the Act and dismissed the appeal.
The assessee being aggrieved with the order of the CIT (Appeals) has carried the matter in appeal before us.
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At the time of hearing of the appeal the Ld. Authorized Representative (in short ‘AR’) for the assessee took us through an application that was filed by the assessee for admission of additional evidence u/Rule 29 of the Income-Tax Appellate Tribunal Rules, 1962. Adverting to the contents of the aforesaid application, it was submitted by the Ld. AR that the same comprised of a certificate of a Chartered Accountant, dated 19.12.2014, wherein he had certified that the payee, i.e, M/s. Magna Fincorp Limited had duly filed its return of income and deposited the corresponding taxes pertaining to the aforesaid amount of interest received from the assessee. It was submitted by the Ld. AR that as the aforesaid documentary evidence would have a substantial bearing on the adjudication of the issue in hand, therefore, the same may kindly be admitted.
Per contra, the ld. D.R did not raise any objection to the admission of the aforesaid additional evidence filed by the assessee.
We have given a thoughtful consideration to the aforesaid issue before us and, are of the considered view, that as the aforesaid certificate of the Chartered Accountant, dated 19.12.2014 (supra) as had been filed by the assessee as an additional evidence would have a substantial bearing on the adjudication of the issue before us, therefore, the same merits to be admitted. We, thus, in terms of our aforesaid observations admit the
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additional evidence placed on our record by the assessee under Rule 29 of the Income Tax Appellate Tribunal Rules, 1963.
Adverting to the solitary issue, i.e, disallowance made by the Assessing Officer of Rs. 3,71,587/- u/s 40(a)(ia) of the Act, it was submitted by the Ld. AR that as the payee, viz. M/s Magna Fincorp Limited (supra) had duly accounted for the aforesaid interest/finance charges received from the assessee in its return of income for the year under consideration and had paid the corresponding taxes on the same, therefore, the said amount was not liable for disallowance u/s.40(a)(ia) of the Act. In order to support his submission the Ld. AR had relied on the judgment of the Hon'ble Supreme Court in the case of M/s. Hindustan Coca Cola Beverages Pvt. Ltd. Vs. CIT, CA NO.3765 of 2007 dated 16.08.2007. It was submitted by the Ld. AR that the Hon'ble Apex Court in its aforesaid order had after considering the Circular No. 275/201/95- IT(B), dated 29.1.1997 issued by the Central Board of Direct Taxes (CBDT), observed, that once it is proved that the payee had paid the taxes due on the amount in question, then, recovery of the demand visualized u/s 201(1) of the Act cannot be enforced against the assessee, i.e, the deductor. Backed by his aforesaid contention, it was submitted by the Ld. AR, that as the certificate issued by the Chartered Accountant, dated 19.12.2014 (supra) proved to the hilt that the payee, i.e, M/s Magna
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Fincorp Limited (supra) had duly accounted for the interest/finance charges received from the assessee in its return of income for the year under consideration and had paid the taxes on the said amount, therefore, the assessee cannot be held as an assessee-in-default within the meaning of sub-section (1) of Section 201 of the Act, and resultantly, the said amount could not be disallowed u/s.40(a)(ia) of the Act. In order to drive home his aforesaid claim the Ld. AR had drawn our attention to the “2nd proviso” to Sec. 40(a)(ia) of the Act.
We have heard the ld. Authorized Representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the Ld. AR in support of his aforesaid contention. Admittedly, it is a matter of fact borne from the record that the assessee had failed to deduct tax at source on the interest/finance charges of Rs.3,71,587/- that was paid/credited by it to M/s Magna Fincorp Limited (supra). However, we find that the aforementioned payee, viz. M/s Magna Fincorp Limited (supra) had duly accounted for the aforesaid interest/finance charges received from the assessee in its return of income for the year under consideration and had paid the corresponding taxes on the same. The aforesaid factual position can safely be gathered from the certificate of the Chartered Accountant,
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dated 19.12.2014(supra) that has been filed by the assessee before us. In our considered view, now when the aforesaid payee, viz. M/s Magna Fincorp Limited(supra) had duly accounted for the interest/finances charges in its return of income and had paid the corresponding taxes, therefore, as per the “2nd proviso” to Sec.40(a)(ia) of the Act the aforementioned amount could not have been brought within the realm of the disallowance contemplated under the said statutory provision. Apart from that, as stated by the Ld. AR, and rightly so, we find that the Hon'ble Supreme Court in the case of M/s. Hindustan Coca Cola Beverages Pvt. Ltd. (supra.), had observed, that in case the payee of the amount in question had paid the taxes on the same, then, the payer cannot be held as an “assessee-in-default” as regards the said amount for the purpose of enforcing the recovery of the corresponding tax liability u/s. 201(1) of the Act. We, thus, in terms of our aforesaid observations are unable to subscribe the disallowance of Rs. 3,71,587/-made by the Assessing Officer u/s.40(a)(ia) of the Act. Accordingly, we herein set-aside the order of the CIT (Appeals) and vacate the disallowance of Rs.3,71,587/- made by the Assessing Officer. The Grounds of appeal No(s).2 & 3 are allowed in terms of our aforesaid observations.
As the ld. A.R had not raised any contention as regards the Ground 10. of appeal No.1 wherein the validity of jurisdiction assumed by the
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Assessing Officer for reopening of the assessee’s case u/s.147 of the Act had been challenged before us, therefore, the same is dismissed as not pressed.
Resultantly, the appeal of the assessee is allowed in terms of our aforesaid observations.
Order pronounced on 21st day of February, 2022.
Sd/- Sd/- JAMLAPPA D BATTULL RAVISH SOOD ACCOUNTANT MEMBER JUDICIAL MEMBER रायपुर/ RAIPUR ; �दनांक / Dated : 21st February, 2022 **SB आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to :- 1. अपीलाथ� / The Appellant. 2. ��यथ� / The Respondent. 3. The Raipur CIT(Appeals), Bilaspur(C.G) 4. The CIT,Bilaspur (C.G) 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण,रायपुरब�च, रायपुर / DR, ITAT, Raipur Bench, Raipur. 6. गाड� फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // �नजी स�चव / Private Secretary आयकरअपील�यअ�धकरण, रायपुर / ITAT, Raipur.
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Date 1 Draft dictated on 04.02.2022 Sr.PS/PS 2 Draft placed before author 08.02.2022 Sr.PS/PS 3 Draft proposed and placed JM/AM before the second Member 4 Draft discussed/approved by AM/JM second Member 5 Approved draft comes to the Sr.PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr.PS/PS 7 Date of uploading of order Sr.PS/PS 8 File sent to Bench Clerk Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order