Atharva Builders Pune Private Ltd.,, ... vs Assessee

Income Tax Officer, M/s. Atharva Builders Ward - 1(1), Pune Pune Pvt. Ltd., Atharva Feryes Plaza, Vs. Opp. Shankar Maharaj Math, Pune Satara Road, Pune-411043 (Appellant) (Respondent) PAN No. AADCA8304R

CO No. 12/PN/2015 Assessment Year : 2006-07

M/s. Atharva Builders Income Tax Officer, Pune Pvt. Ltd., Ward - 1(1), Pune Atharva Feryes Plaza, Vs. Opp. Shankar Maharaj Math, Pune Satara Road, Pune-411043 (Appellant) (Respondent) PAN No. AADCA8304R

Revenue By: Shri Santosh Kumar Assessee By: Shri Sushant Padhye

Date of hearing : 28-04-2015 Date of pronouncement : 30-04-2015

ORDER

PER VIKAS AWASTHY, JM:-

The appeal has been filed by the Revenue assailing the order of

Commissioner of Income Tax (Appeals)-I, Pune dated 20-02-2013 for the

assessment year 2006-07. The Revenue in its appeal has assailed the

findings of Commissioner of Income Tax (Appeals) in deleting the 2 ITA No. 966/PN/2013 & CO No. 12/PN/2015, A.Y. 2006-07

disallowance of Rs.83,36,363/- u/s. 40(a)(ia) of the Income Tax Act,

1961 (hereinafter referred to as "the Act"). The assessee has filed Cross

Objection impugning the disallowance of Rs.4,92,869/- u/s. 40(a)(ia)

confirmed by the Commissioner of Income Tax (Appeals).

2. The brief facts of the case as emanating from records are: The

assessee is a Builder and Developer. The assessee filed its return of

income for the assessment year 2006-07 on 28-11-2006, declaring total

income of Rs.3,12,620/-. The case of the assessee was selected for

scrutiny and notice u/s. 143(2) was issued to the assessee on

29-09-2007. During the course of scrutiny assessment, the Assessing

Officer observed that on the payments made to contactors amounting to

Rs.83,36,363/-, the assessee had deducted tax at source (TDS)

Rs.1,83,400/-. The said TDS was deposited vide cheque on 31-03-2006,

however the challan was issued on 03-04-2006. The assessee had made

another payment of Rs.4,92,869/- towards advertising expenses and

professional fees. On the said payments, tax of Rs.7,341/- was deducted

at source. The amount of TDS was deposited in the Government account

on 07-11-2006. The Assessing Officer held that the aforesaid deposit of

TDS is hit by the provisions of Section 40(a)(ia), therefore, the amounts

are not deductible. Thus, the amount of Rs.88,29,232/- was added back

in the total income of the assessee.

Aggrieved by the assessment order dated 30-12-2008, the assessee

preferred an appeal before the Commissioner of Income Tax (Appeals).

The Commissioner of Income Tax (Appeals) held that the provisions of

Section 40(a)(ia) are not applicable on the TDS amount of Rs.1,83,400/-

deposited on 31-03-2006. However, TDS of Rs.7,341/- deducted on

advertising and professional fees and paid to Government ex-chequer on 3 ITA No. 966/PN/2013 & CO No. 12/PN/2015, A.Y. 2006-07

07-11-2006 is not eligible for deduction. The Commissioner of Income

Tax (Appeals) while partly allowing the appeal to the assessee confirmed

the disallowance of Rs.4,92,869/- u/s. 40(a)(ia).

Against the findings of the Commissioner of Income Tax (Appeals)

both, the Revenue and the assessee have come in appeal before the

Tribunal.

3. Shri Santosh Kumar representing the Department vehemently

supported the assessment order and submitted that the assessee had

deposited the TDS amount in the Government ex-chequer after

31-03-2006. The assessee is hit by the provisions of Section 40(a)(ia)

and therefore, the amount of Rs.83,36,363/- is not deductible.

4. On the other hand Shri Sushant Padhye appearing on behalf of the

assessee supported the findings of the Commissioner of Income Tax

(Appeals) with respect to relief granted on the amount of Rs.83,36,363/-.

The Learned Authorized Representative (AR) submitted that TDS

deducted on Rs.83,36,363/- was deposited in the bank on 31-03-2006

by cheque. The Chief Manager of State Bank of India, Erandwana

Branch, Pune where the cheque was deposited has supported the case of

the assessee. Further, the Ld. AR in order to fortify his submissions

placed reliance on the judgment of Hon'ble Calcutta High Court in the

case of Commissioner of Income Tax Vs. Virgin Creations, ITAT No. 302

of 2011, GA 3200/2011 decided on 23-11-2011.

5. Defending Cross Objection, the Ld. AR submitted that the

Commissioner of Income Tax (Appeals) has erred in upholding the

disallowance of Rs.4,92,869/- u/s. 40(a)(ia). The Ld. AR contended that 4 ITA No. 966/PN/2013 & CO No. 12/PN/2015, A.Y. 2006-07

there was delay in filing of the Cross Objection as the assessee was

under the impression that the disallowance could not be reversed at the

appellate stage. The assessee was also not aware of the decision of the

Co-ordinate Bench of the Tribunal in the case of ACIT, Ahmednagar

Circle Vs. Kukadi Sahakari Sakhar Karkhana Ltd. in ITA

No. 1529/PN/2013. In the said case the assessee had deposited TDS on

31-05-2007 in respect of assessment year 2007-08. The Tribunal

allowed the appeal of the assessee by following the decision rendered in

the case of ACIT Vs. M/s. Mulay Brothers Ltd., ITA No. 1375/PN/2013

decided on 20-08-2014. The facts and circumstances of the assessee's

case are similar to the one adjudicated by the Tribunal in the aforesaid

appeals.

The Learned Departmental Representative (DR) vehemently

opposed the application for condonation of delay in filing of the Cross

Objection beyond the period of limitation. The Ld. DR submitted that

there has been delay of 352 days in filing of the Cross Objection and the

delay has not been explained by the assessee. The assessee cannot

claim the relief merely on the ground that the assessee was not aware of

the decision on the similar issue subsequently passed by the Tribunal.

In support of his submissions the Ld. DR placed reliance on the decision

of the judgment of Hon'ble Bombay High Court in the case of Somerset

Place Co-operative Housing Society Ltd. Vs. Income Tax Officer in ITA

(LODG) No. 874 of 2014 decided on 13-02-2015.

6. We have heard the submissions made by the representatives of

both the sides and have perused the orders of the authorities below. We

have also examined the decisions on which reliance has been placed by

both the sides. We will first take up the appeal of the Revenue. It is an 5 ITA No. 966/PN/2013 & CO No. 12/PN/2015, A.Y. 2006-07

undisputed fact that the assessee has deposited TDS to the tune of

Rs.1,83,400/- on payments of Rs.83,36,363/- to the contractors much

before the due date of filing of return as specified u/s. 139(1) of the Act.

As per the contentions of the assessee the said amount was deposited in

the bank by cheque on 31-03-2006. However, the challan was generated

on 03-04-2006. The Manager of the Bank, where cheque was deposited

has vouched the statement of assessee. The Commissioner of Income

Tax (Appeals) in his order has observed that the facts have been verified

from the records and are seen to be correct.

7. The Hon'ble High Court of Gujarat in the case of Kangold (India)

Ltd. Vs. CIT reported as 239 ITR 842 has dealt with a similar issue,

where the cheque was deposited on 30-03-1998 and the challan was

generated on 03-04-1998. The Hon'ble Court held that the payment of

amount shall be deemed to have been made on the date of delivery of the

cheque and not the date of encashment of cheque.

8. Further, a perusal of the provisions of Section 40(a)(ia) makes it

abundantly clear, that the tax deductible at source under Chapter XVII-

B has to be paid in Government account on or before the due date

specified in sub-section (1) of Section 139. Thus, no disallowance u/s.

40(a)(ia) could be made where the TDS has been paid before the due date

of filing of return of income. The aforesaid provisions were amended by

the Finance Act, 2010. The Hon'ble Calcutta High Court in the case of

Commissioner of Income Tax (Appeals) Vs. Virgin Creations (supra) held

that the amendment to Section 40(a)(ia) is retrospective in nature.

In the facts of the case and the decisions of the Hon'ble High

Courts discussed above, we do not find any infirmity in the impugned 6 ITA No. 966/PN/2013 & CO No. 12/PN/2015, A.Y. 2006-07

order of the Commissioner of Income Tax (Appeals). Accordingly, the

findings of the Commissioner of Income Tax (Appeals) on this issue are

confirmed and the appeal of the Revenue is dismissed being devoid of

merit.

CO No. 12/PN/2015

9. The Cross Objection filled by the asses is time barred by 352 days.

The assessee has filed application for condonation of delay. The reasons

given by the assessee for delay in filing of the Cross Objection are:

- the assessee was under impression that the disallowance could not be

reversed at the appellate level; and

- the assessee was unaware of the order of the Co-ordinate Bench of the

Tribunal in the case of ACIT, Ahmednagar Circle Vs. Kukadi Sahakari

Sakhar Karkhana Ltd. (supra).

Except for above two reasons, no other reason has been given by the

assessee for the delay in filing of the Cross Objection.

10. We are well aware of the judicial principle that the condonation of

delay is a rule and denial an exception. However, the party to the lis

filing appeal has to reasonably explain the reasons causing delay in filing

of the appeal. The assessee cannot come out of the slumber at his own

convenience and file appeal much after the expiry of limitation period.

The assessee cannot claim the condonation of delay as a matter of right.

The reasons resulting in delay of filing appeal has to be explained. In the

present case, there is inordinate delay of 352 days. The assessee has

not given any reason worth considering for condoning such huge delay in

filing of the appeal. Ignorance of law is no excuse specially when the

assessee is a juristic person and has the advantage of getting legal advice 7 ITA No. 966/PN/2013 & CO No. 12/PN/2015, A.Y. 2006-07

from the professionals. It would be relevant to mention here that the

impugned order was passed on 20-02-2013, the decision on which the

assessee has placed reliance for claiming relief in Cross Objection was

passed by the Co-ordinate bench of the Tribunal on 25-08-2014 i.e.

almost after the elapse of one year of limitation for filing of the appeal.

In our considered view, ignorance of subsequent order passed by the

Tribunal cannot be a valid ground for condoning delay in filing of Cross

Objection. The Hon'ble Bombay High Court in the case of Somerset

Place Co-operative Housing Society Ltd. Vs. Income Tax Officer (supra)

while dealing with the similar situation has observed as under:

"7. We are of the opinion that the reasons as shown by the applicant cannot fall within the parameters of sufficient cause so as to confer a benefit of condonation to the applicant. This is for the reason that the applicant had taken a well considered decision not to move further proceedings against the order dated 31.10.2008. Applying the test of a prudent litigant it cannot be held that once the applicant by his own volition had decided to accept a judicial order, the applicant can at any time assail the same may be for the reason that subsequently new decisions are rendered on that issue. Section 5 of the Limitation Act cannot be stretched to bring about a situation of unsettling judicial decisions which stood accepted by the parties. If the contention of the applicant is accepted, it would create a situation of chaos and unsettling various orders passed from time to time by the Tribunal as accepted by the parties. The legislative mandate in stipulating a limitation to file an appeal within the prescribed limitation cannot be permitted to be defeated when a litigant has taken a decision not to pursue further proceedings. A new ruling is no ground for reviewing a previous judgment. If this is permitted, the inevitable consequence is confusion, chaos, uncertainty and inconvenience as then no orders can ever attain finality though accepted by parties."

11. In view of the facts of the case and the judgment of the Hon'ble

jurisdictional High Court, we do not find any reason to condone 8 ITA No. 966/PN/2013 & CO No. 12/PN/2015, A.Y. 2006-07

inordinate delay of 352 days in filing of the Cross Objection.

Accordingly, the same is dismissed being barred by limitation.

12. In the result, the appeal of the Revenue and the Cross Objection of

the assessee are dismissed.

Order pronounced on Thursday, the 30th day of April, 2015

at Pune

Sd/- Sd/-

(R.K. PANDA) (VIKAS AWASTHY) ACCOUNTANT MEMBER JUDICIAL MEMBER

Pune, Dated: 30th April, 2015 RK/PS

Copy to

1 Assessee 2 Department 3 The CIT(A)-I, Pune 4 The CIT-I, Pune 5 The DR, ITAT, "B" Bench, Pune. 6 Guard file.

//True Copy// By Order

Assistant Registrar, Income Tax Appellate Tribunal, Pune