Sheveta Construction Pvt.ltd v. The Income Tax Officer, Ward 3(4), Jaipur

IN THE HIGH COURT OF JUDICATURE FOR RAJASTHANBENCH AT JAIPUR. DB INCOME TAX APPEAL NO.20/2011 Sheveta Construction Pvt.Ltd., through its Managing DirectorDinesh Kr. Choudhary, Son of Late. Sh. Ganesh lal Choudhary,aged about 55 years, resident of D-65,Chomu House, C-Scheme, Jaipur. Versus The Income Tax Officer, Ward 3(4), Jaipur. DATE OF ORDER ::: 06.12.2016. HON'BLE MR. JUSTICE K.S. JHAVERIHON'BLE MR. JUSTICE DINESH MEHTA Mr, Prakul Khurana, for the appellant.Mr. Anuroop Singhi, for the respondent . 1.By way of this appeal, the assessee has challenged thejudgment and order of the Tribunal whereby the Tribunal haspartly allowed the appeal filed by the department. 2.This Court while admitting the appeal on 04.03.2014framed the following substantial questions of law: “(i)Whether rectification of Assessmentorder sought u/s.154 of the Act on the basisof a subsequent Supreme Court judgmentcan be denied in view of amendment broughtin the statute books with retrospective effect?(ii)Under the facts and circumstances ofthe case whether the impugned orderdt.22.10.2010 passed by the ld. ITATupholding levy of interest u/s.234B of the Actas automatic do not amount to reviewing ofits earlier order dt.26.05.2006 and istherefore not without jurisdiction?” 3.The brief facts of the case are that the return in the caseof assessee company was filed on 31.12.1993 declaring incomeof Rs.2,70,719/-. Along with the return audit report dated30.09.1993 as per requirement of Section 44AB has also beenfurnished. The return was processed u/s.143(1)(a) on28.03.1994. Subsequently in the course of assessmentproceedings for the assessment year 94-95 it was found thatassessee had shown payment to Sh. Nand Kishore, brother ofSh. D.K. Choudhary, Director, on account of hire charges ofvehicle allegedly taken by the assessee from the said saidperson. On inquiries it was gathered that in fact Sh. NandKishore did not own any truck/tractor and had never worked orrendered services to assessee company. The above positionemerged on inquiry by the Inspector of the circle from Sh. NandKishire. He also denied of having any deposit with the companyor any money was paid by or due to him from the assessee.Although an affidavit of Sh. Nand Kishore was subsequentlyfiled by the assessee, but he was not produced before the A.Ofor examination despite specific requisition in this regard. It wasalso noted that in many other cases, the claimed payments ofhire charges were bogus as the persons shown as recipients ofsuch payments had no vehicles to give on hire for assessee'sbusiness. In view of the above, the claim of the assessee withregard to payment of hire charges to Sh. Nand Kishore andothers was not accepted and for the above bogus claim andother defects in accounts profit was determined by applying net profit rate rejecting book version. Claim of interest payment toSh. Nand Kishore was also disallowed. In the period relevant toA.Y. 93-94 also the assessee claimed payment of hire chargesat Rs. 73,500 to Sh. Nand Kishore from May, 1992 toSeptember, 1992 his account was further credited by Rs.47,000 on account of hire charges payable from September, 92to March, 93. For the reasons given above the claim ofpayment of hire charges to the above person was not genuinein this year also and therefore there was a case ofescapement/under assessment of income and accordinglyreassessment proceedings u/s 147 were initiated by issuingnotice u/s 148 on 4.12.97. 4.Counsel for the appellant contended that subsequentdecision which has been considered by the Madras High Courtin case of Commissioner of Income Tax Vs. Abdul Wahid AndCompany, Tax Case (Appeal) Nos.396 & 398/2010assessment year 1998-99 decided on 22.06.2010, the Division Bench has observed as under: 4.Counsel for the appellant contended that subsequentdecision which has been considered by the Madras High Courtin case of Commissioner of Income Tax Vs. Abdul Wahid AndCompany, Tax Case (Appeal) Nos.396 & 398/2010assessment year 1998-99 decided on 22.06.2010, the Division Bench has observed as under: “We are in full agreement with the principlesstated by the Tribunal while upholding the order ofthe Commissioner (Appeals). When the liability forpayment of additional tax itself was created for thefirst time, based on the subsequent amendment,in the year 2005, with retrospective effect from01.04.1998, it would be incongruent to expect theassessee to have satisfied the requirement ofpayment of advance tax as prescribed underSection 234(B) of the Income Tax Act. Therefore,while the liability for additional tax by virtue of theamendment was found to be satisfied by therespondent/assessee, the payment of interestunder Section 234(B) for failure to pay advancetax in anticipation of such liability created on a future year, based on an amendment, cannot bemade. We are, therefore, convinced that theconclusion arrived at by the C.I.T. (Appeals) aswell as that of the Tribunal cannot be found faultwith. We therefore do not find any scope toentertain these appeals. The substantial questionof law raised in these tax case appeals areanswered in favour of the assessee. Connectedmiscellaneous petition is closed.” 5.Against which SLP No.9844/2011 was dismissed on07.07.2011 and the same was followed by the Delhi High Courtin case of Vodafone Mobile Service Ltd. & Anr. vs. Union ofIndia & Ors. (2013) 356 ITR 173 (Delhi) “We are now informed by the learned counsel forthe petitioner that the matter was taken in appealby way of a Special Leave petition before theSupreme Court. The Supreme Court by an orderdated 15.04.2011 has dismissed the said SpecialLeave Petition. Thus, according to the learnedcounsel for the petitioner the said demand of 15crores by way of interest under section 234Bwould also be liable to be set aside. Here again,taking a prima facie view, we agree with thecontention raised by the learned counsel for thepetitioner. That leaves us with a balance sum of20 crores out of the total interest demand of 110crores with which we shall deal later.” 6.Counsel for the respondent contended that first issue isrequired to be answered against the assessee however for thesecond issue, the two judgments which have been cited, hecould not come out of the same. 7.We have heard both the sides. 8.It is true that normally rectification can be made on thebasis of a subsequent judgment of Supreme Court, but if therelevant statute itself has been amended to nullify the judgmentof Supreme Court, the fact that the provisions of the Act will prevail and rectification can be denied. Hence issue No.1 is decided against the assessee. 9.As far as second question is concerned, taking intoconsideration the amendment brought vide Finance Act, 2001 inSection 243-B w.e.f. 1.4.89 prima facie, the issue is required tobe answered in favour of the department, however, in view ofthe judgments of Madras High Court and Delhi High Court theinterest calculated on the tax assessed, cannot be sustained. Inthat view of the matter, the order of the Tribunal is required tobe reversed and the same is reversed. 10.The question is answered in favour of the assessee andagainst the department. The appeal stands allowed. (DINESH MEHTA), J. (K.S. JHAVERI), J. BM Gandhi06