Art Efect , Mumbai vs Assessee

सव ी आय.पी. बंसल, या यक सद य एवं नरे कुमार ब लै या, लेखा सद य के सम

BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND

SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER

आयकर अपील सं/ I.T.A. No.1999/Mum/2013 ( नधारण वष / Assessment Year : 2005-06 Art Efect, बनाम/ The ACIT- 18(2), 19, Laxmi Woolen Mills Mumbai Vs. Co., Mumbai-400 011 थायी ले खा सं . /जीआइआर सं . /PAN/GIR No. : AAGF 1051K (अपीलाथ /Appellant) .. ( यथ / Respondent) अपीलाथ ओर से/ Appellant by: Shri Kishore V. Satwick यथ क ओर से/Respondent by: Shri Jeevanlal Lavidiya

सन ु वाई क तार ख / Date of Hearing :22.06.2015 घोषणा क तार ख /Date of Pronouncement :26.06.2015

आदे श / O R D E R

PER N.K. BILLAIYA, AM:

This appeal by the assessee is preferred against the order of the Ld. CIT(A)-29, Mumbai dt. 11.12.2012 pertaining to assessment year 2005-06.

2. The sum and substance of the grievance of the assessee is that the Ld. CIT(A) erred in rejecting the rectification application u/s. 154 on the 2 ITA. No. 1999/Mum/2013

ground that subsequent amendment to the Income-tax Act, 1961 does not constitute mistake apparent from record.

3. Briefly stated the facts of the case are that the assessee is in the business of Commercial Artists & designers. Return for the year under consideration was selected for scrutiny assessment and assessment u/s. 143(3) of the Act was made on 23.11.2007, after making inter alia, following additions u/s. 40a(ia) of the Act.

i. TDS was deducted on contract payments made of Rs.

67,27,304/- and not credited the same to the Govt. A/c within the stipulated time. Further, it is seen from the Audit Report & Statement of Income, that the assessee has already disallowed an amount of Rs. 9,38,951/- u/s. 40(a)(ia) on account of Contract payments. Therefore, the balance amount of Rs. 57,88,353/- shall be disallowed u/s. 40(a)(ia).

ii. In respect of two parties namely Creata Printers and Shubham Book Binding, the assessee has made payments of Rs. 5,08,611/-, Rs. 3,41,771/- and TDS was deducted only on 5,02,836/-, Rs. 3,34,691/- respectively. Therefore, the differences of Rs. 5,775/- and Rs. 7,080/- attracts the provisions of Sec. 40(a)(ia).

iii. On contract payments made of Rs. 5,74,571/-, TDS was not deducted and credited the same to the Govt. A/c within the stipulated time.

3 ITA. No. 1999/Mum/2013 Therefore, the amount of Rs. 63,75,779/- (Rs. 57,88,353/- +Rs.7,080/-+ Rs. 5,74,571/-) is disallowed u/s. 40(a)(ia) and added to the total income of the assessee.

4. Vide letter dt. 28.2.2011, the assessee requested for rectification of mistake in the order passed u/s. 143(3) (supra) on the ground that the amendment made to Sec. 40(a)(ia) by Finance Act, 2010 is retrospective in effect and therefore is applicable for the year under consideration and therefore no disallowance u/s. 40(a)(ia) can be made. The contention of the assessee was dismissed by the AO who was of the strong belief that only a mistake apparent from the record can be rectified u/s. 154 of the Act which means that mistake apparent from the record must be an obvious and patent mistake and not something which can be established by a long drawn process of reasoning on points on which there may be conceivably two opinions. According to the AO, the issue involved in assessee's contention is a debatable issue on point of law and therefore does not fall within the ambit of Sec. 154 of the Act. Rectification application was accordingly rejected.

5. The assessee carried the matter before the Ld. CIT(A) but without any success.

6. Before us, the Ld. Counsel for the assessee vehemently submitted that with the amendment brought by the Finance Act, 2010, and subsequent decisions of the Tribunal it has been successfully held that amendment to Sec. 40(a)(ia) is retrospective in effect therefore the Ld. CIT(A) erred in upholding the rejection of 154 application.

4 ITA. No. 1999/Mum/2013 7. Per contra, the Ld. Departmental Representative strongly supported the order of the Ld. CIT(A). It is the say of the Ld. DR that amendment to Sec. 40(a)(ia) cannot be made the mistake apparent from record rectifiable u/s. 154 of the Act.

8. We have given a thoughtful consideration to the rival submission. We have carefully perused the order of the authorities below. The undisputed fact is that the assessee has not deposited the tax deducted at source within the stipulated time. It is also an undisputed fact that Finance Act, 2010 has amended the provisions of Sec. 40(a)(ia) of the Act whereby making the provision that if the tax deducted at source is deposited with the Government on or before the due date of filing the return, the same will be allowed in the year of claim. This amendment was first considered by the Tribunal Special Bench in the case of Bharati Shipyard Ltd. Vs DCIT 132 ITD 53 wherein the Special Bench has held that amendment to Sec. 40(a)(ia) by the Finance Act 2010 is effective from 1.4.2010 and does not have retrospective effect. Subsequent to this the Hon'ble Calcutta High Court in the case of CIT Vs Virgin Creators in ITA No. 3200 of 2011 has held that the amendment by the Finance Act 2010 is retrospective with effect from 1.4.2005. Subsequent to this decision of the Hon'ble Calcutta High Court, the Bombay Tribunal in the case of Piyush Mehta Vs ACIT in ITA No. 1321 of 2009 vide order dt. 11.4.2012 has held that the judgement of Calcutta High Court being the only judgement of any High Court on this subject shall prevail.

9. With this legal background, it would be pertinent to consider the observations of the Hon'ble Supreme Court in the case of ACIT Vs Saurashtra Kutch Stock Exchange Ltd. 305 ITR 227 wherein the Hon'ble Supreme Court has observed as under:

5 ITA. No. 1999/Mum/2013 "Rectification of an order stems from the fundamental principle that justice is above all. It is exercised to remove the error and to disturb the finality.

A patent, manifest and self-evident error which does not require elaborate discussion of evidence or arguments to establish it, can be said to be an error apparent on the face of the record and can be corrected while exercising certiorari jurisdiction. An error cannot be said to be apparent on the face of the record if one has to travel beyond the record to see whether the judgment is correct or not. An error apparent on the record means an error which strikes one on mere looking and does not need a long drawn out process of reasoning on points on which there may be conceivably two opinions. Such error should not require any extraneous matter to show its incorrectness. To put it differently, it should be so manifest and clear that no court would permit it to remain on record. If the view accepted by the court in the original judgment is one of possible views, the case cannot be said to be covered by an error apparent on the face of the record."

10. The Hon'ble Supreme Court in the same breath further observed as under:

"In Satyanarayan Laxminarayan Hegde v. Mallikarjun Bhavanappa Tirumale [1960] 1 SCR 890, this court referring to Batuk K. Vyas (1953) ILR 1953 Bom 191, AIR 1953 Bom 133 and Hari Vishnu Kamath (1955) 1 SCR 1104 stated as to what cannot be said to be an error apparent on the face of the record.

The court observed :

"An error which has to be established by a long drawn process of reasoning on points where there may conceivably be two opinions can hardly be said to be an error apparent on the face of the record. As the above discussion of the rival contentions show the alleged error in the present case is far from self evident and if it can be established, it has to be established by lengthy and complicated arguments. We do not think such an error can be cured by a writ of certiorari according to the rule governing the powers of the superior court to issue such a writ."

6 ITA. No. 1999/Mum/2013 11. Coming back to the facts of the case in hand, considering these facts in the light of the ratio laid down by the Hon'ble Supreme Court as discussed hereinabove, we do not find any merit in the rectification application of the assessee. It was rightly rejected by the AO and the rejection was rightly upheld by the Ld. CIT(A). We, therefore decline to interfere.

12. In the result, the appeal filed by the assessee is dismissed.

Order pronounced in the open court at the time of hearing on 26th June, 2015

Sd/- Sd/-

(I.P. BANSAL ) (N.K. BILLAIYA) या यक सद य/JUDICIAL MEMBER लेखा सद य / ACCOUNTANT MEMBER मंब ु ई Mumbai; दनांक Dated : 26 June , 2015 th

व. न.स./ RJ , Sr. PS

आदे श क त ल प अ े षत/Copy of the Order forwarded to :

1. अपीलाथ / The Appellant

2. यथ / The Respondent.

3. आयकर आयु त(अपील) / The CIT(A)-

4. आयकर आयु त / CIT

5. वभागीय त न ध, आयकर अपील य अ धकरण, मंब ु ई / DR, ITAT, Mumbai

6. गाड फाईल / Guard file.

आदे शानस ु ार/ BY ORDER, स या पत त //True Copy// उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील य अ धकरण, मंब ु ई / ITAT, Mumbai