Case Law Details

Case Name : Sri Sachin Sharma Vs ACIT (ITAT Ranchi)
Appeal Number : ITA No. 260/Ran/2017
Date of Judgement/Order : 30/11/2018
Related Assessment Year : 2011-12
Courts : All ITAT (6156) ITAT Ranchi (4)

Sri Sachin Sharma Vs ACIT (ITAT Ranchi)

A perusal of provisions of section 194C of the Act shows that a person is liable to deduct TDS when a contract for work is of an amount more than Rs.30,000/- or where payment for work is made to a person more than Rs.75,000/- during the financial year. The Assessing Officer has brought no material on record to show that either of the above condition was satisfied in the instant case. Therefore, it is not open to the Assessing Officer in a proceedings u/s.154 of the Act to hold that the assesse was obliged to deduct ITDS on job work and consequently, the disallowance made u/s. 40(a)(ia) of the Act it outside the jurisdiction of section 154 of the Act.

FULL TEXT OF THE ITAT JUDGMENT

This is an appeal filed by the assessee against the order of the CIT(A), Ranchi, dated 14.8.2017 for the assessment year 2011- 12.

2. The assesse has raised the following grounds of appeal:

1. For that Ld. CIT(A) was not justified in passing an ex-parte order without giving reasonable opportunity of hearing. The appeal was dismissed without considering the merits of the case and grounds of appeal submitted, as such, the action of Ld. CIT(A) is illegal, unjustified and uncalled for.

2. For that in facts of the case Ld. CIT(A) should have considered the merits of the case. Appeal was filed against the order U/s 154. Ld. A.O. went out of the way in suggesting that there was a mistake apparent from record, as such, order passed U/s 154 was illegal and unjustified.

3. For that Ld. A.O. has not served order passed U/s 154. Further from show cause notice its presumed that order U/s 154 was passed for making addition U/s 43(b) on the ground of non payment of service Tax. The service Tax stands fully paid before .due date for filing of return. Further addition was made for non deduction of TDS in job work. Appellant was not liable for making deduction U/s 194C, as such, neither of the reasons were mistakes apparent from record.

4. For that the order was passed U/s 144 r.w.s. 143(3), as such, the mistake said to have been apparent from record is Ld. A.O. issued notice U/s 154, two years after completion of the assessment for looking to the assessment record. The order passed U/s 154 was ab initio void on merits as there were no valid reasons for addition made.

5. That interest u/s 234A and 234B should have been charged on the returned income and not on the assessed income following the decision of Hon’ble Jharkhand High Court..’

3. In the instant case, the Assessing Officer made an addition of 9,60,672.97 relating to service tax by invoking the provisions of section 43B and also made addition of Rs,.15,53,218 on account of job work charges by invoking the provisions of section 40(a)(ia) of the Act in a proceedings which was initiated u/s.154 of the Act.

4. On appeal, the CIT(A) confirmed the action of the Assessing Officer.

4. Before me, ld Authorised Representative submitted that both the issues on which addition was made by the assesse was highly debatable and, therefore, were outside the jurisdiction of section 154 of the Act. He placed reliance on the decision of Hon’ble Supreme Court in the case of  T. S. Balaram v. Volkart Brothers, 82 ITR 50 (SC).

5. On the other hand, ld Departmental Representative supported the orders of lower authorities.

6. After considering the rival submissions, I find that the additions under appeal were made in a proceedings initiated u/s.154 of the Act. Section 154 allows rectification of a mistake apparent from the record. Thus, an issue for adjudication of which investigation of further facts, which is not on record is required or an issue on which two views are possible are clearly out of the ambit of section 154 of the Act.

7. In the instant case, it is observed that the Assessing Officer observed that Rs.9,60,672/- has been shown as outstanding liability on account of service tax in the balance sheet and finding that there was no evidence available of payment of the same with the time limit prescribed u/s.139(1) of the Act, added the same to the income of the assesse in view of the provisions of section 43B of the Act. It is an established position that disallowance u/s.43B can be made of an amount which has been claimed as deduction by the assesse. In other words, when deduction has not been claimed, question of making disallowance by invoking the provisions of section 43B does not arise.

8. In the instant case, no material has been brought on record to show that Rs.9,60,672/- as service tax expenditure was claimed by the assesse. Thus, disallowance u/s.43B can be made only of an amount which was a sum payable. The relevant law under the service tax was payable on cash basis. No material is available to show that the liability of Rs.9,60,672/- as service tax was incurred before the end of the relevant previous year under the service tax In the circumstances, in my considered view, the addition of Rs.9,60,672/- by invoking the provisions of section 43B in a proceeding u/s.154 of the Act is impermissible.

9. Further, the Assessing Officer has observed from the profit and loss account that a sum of Rs.15,53,218/- was debited under the head job work charges. By observing this, he held that the assessee was obliged to deduct ITDS thereon u/s.194C of the Act and consequently, added Rs.15,53,218/- on the ground tof non-deduction of ITDS u/s.194C of the Act.

10. A perusal of provisions of section 194C of the Act shows that a person is liable to deduct TDS when a contract for work is of an amount more than Rs.30,000/- or where payment for work is made to a person more than Rs.75,000/- during the financial year. The Assessing Officer has brought no material on record to show that either of the above condition was satisfied in the instant case. Therefore, it is not open to the Assessing Officer in a proceedings u/s.154 of the Act to hold that the assesse was obliged to deduct ITDS on job work and consequently, the disallowance made u/s. 40(a)(ia) of the Act it outside the jurisdiction of section 154 of the Act. I, therefore, delete both the additions made by the Assessing Officer and allow the grounds of appeal of the assesse.

11. In the result, appeal of the assesse is allowed.

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