TaxTMI 
TaxTMI 
2024 (4) TMI 353
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....ant. Without prejudice to this it is submitted that no notice(s) came to be served on the appellant at the designated email stated in Form No. 35 for the purpose of service of notice(s). 2. The Ld. CIT(A)-NFSC erred on facts and in law in not deciding the appeal on merits in terms of provisions of section 250(6) r.w.s. 251(1)(a) has held by Hon'ble Bombay High Court in the case of CIT vs Premkumar Arjundas Luthra (HUF) 297 CTR 614 (Bom) 3. The Ld. CIT(A)-NFAC erred on facts and in law in not directing the Assessing Officer to rectify order passed u/s 154 in view of judgement of Hon'ble Supreme Court holding the amendments in section 40(a)(ia) to be curative and retrospective in nature. 4. The Ld. CIT(A)-NFAC erred on facts and in law in confirming addition of Rs. 2,30,59,781/- made u/s 40(a)(ia) without taking cognisance of amendment made in Finance Act, 2012 even though appellant had furnished requisite certificates to the Assessing Officer in compliance thereof. 5. The Ld. CIT(A)-NFAC erred on facts and in law in confirming demand of Rs. 99,02,550/- including interest u/s 234B of Rs. 16,86,412/-and u/s 234D of Rs. 2,95,121/- imposed on ....
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....f the assessee was found to be not an assessee in default on account of the fact that payees had paid taxes on the said receipts and the fulfilment of other conditions. It is this rectification sought by the assessee which was denied by the Assessing officer stating that the mistake is not apparent from record and, before the ld. CIT(A), since no representation as such was made by the assessee, the appeal was dismissed for non-prosecution. 6. The assessee though detailed all facts relating to the issue in its statements of facts filed as part of its appeal in Form No.35 to the ld. CIT(A), there are certain pertinent facts which further need to be brought out in relation to the impugned issue. The impugned assessment year before us is AY 2005-06. The disallowance has been made u/s 40(a)(ia) of the Act for non-deduction of tax at source. The first proviso in lieu of which the assessee was granted relief by the ITAT to the tune of Rs. 32,18,58,199/- was brought on the statute by Finance Act, 2010 with effect from 01.04.2010 and the provision so amended reads as under:- "(ia) any interest, commission or brokerage, rent, royalty, fees for professional services or fees for te....
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....as a mistake apparent from the record. In this regard, he has referred to the following decisions before us. a) With respect to the proposition that the introduction of second proviso to Section 40(a)(ia) was retrospective in nature, reliance was placed on the following decisions:- (i) PCIT vs. Perfect Circle India Pvt. Ltd, Income-tax Appeal No. 707 of 2016 dated 07.01.2019 (Bombay High Court); "2. It is not necessary to record background facts since the question of law raised by the Revenue is whether the second proviso to Section 40(a)(ia) of the Income Tax Act, 1961 ("the Act" for short) would have retrospective effect. We may notice that the said proviso was inserted w.e.f 1.4.2013 and in essence, it provides that where an assessee fails to deduct whole or any part of the tax at source but is not deemed to be an assessee in default under the first proviso to Section 201(1), then for the purpose of clause 40(a)(ia), it shall be deemed that the assessee has deducted and paid the tax on such sum on the date of furnishing of return of income by the payee. The Revenue would content that the benefit of this proviso would be available to the assessee only p....
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....ideration before the coordinate bench in the case of Dipak R. Gondaliya Vs. ITO in ITA No.3313/Ahd/2015 & Another order dated 16.03.2016 cited on behalf of the assessee in the course of hearing. The relevant para dealing with the issue by the coordinate bench reads as under: "3. The common grievance in both these appeals relates to the holding that the amendment to Section 40(a)(ia) by the Finance Act, 2012 w.e.f. 01.04.2013 is prospective and by holding so the assessee is aggrieved by the disallowance of interest expenditure. 4. While scrutinizing the return of income, the A.O. noticed that the assessee has taken loan for purchase of property from Reliance Capital and has also taken Car loan from Kotak Mahindra Ltd. The A.O. further noticed that the assessee has made interest payment to these parties without making any deduction of tax at source. Assessee was asked to explain on the disallowance of interest expenditure should not be made u/s. 40(a)(ia) of the Act. 5. Assessee filed a detailed reply claiming that if the payee have offered the income for tax and has paid taxes thereon provisions of Section 40(a)(ia) are not applicable because of the amendm....
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....rant to interfere with the same. 5. In view of the aforesaid findings of fact recorded by the two revenue authorities, we are of the view that we should not interfere with the impugned order passed by the appellate tribunal." b) With respect to the proposition that subsequent interpretation of law by Courts would constitute a mistake apparent from record and recitificatory action u/s 154 of the Act would be in order. Our attention was drawn to CBDT Notification No.68[F.No.245/17/71- A&PAC] dated 17.11.1971 which reads as under: "899. Mistakes apparent from records - Whether can be treated as such on the basis of subsequent decision of Supreme Court 1. The Board are advised that a mistake arising as a result of a subsequent interpretation of law by the Supreme Court would constitute "a mistake apparent from the records" and rectificatory action under section 35/154 of the 1922 Act/the 1961 Act would be in order. It has, therefore, been decided that where an assessee moves an application under section 154 pointing out that in the light of a later decision of the Supreme Court pronouncing the correct legal position, a mistake has occurred in any of ....
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....the State authorities should not raise technical pleas if the citizens have a lawful right and the lawful right is being denied to them merely on technical grounds. The State authorities cannot adopt the attitude which private litigants might adopt." (d) For the proposition that a claim to which an assessee is undeniably entitled can be claimed at any stage even in later point of time, reliance was placed on the decision of the Hon'ble jurisdictional High Court in the case of Gopalbhai Babubhai Parikh Vs. PCIT in SCA No.7434 of 2019 dated 20.01.202, [2021] 127 taxmann.com 245 (Gujarat). "Section 10(10C) of the Income-tax Act, 1961 - Voluntary retirement payments (Illustration) - Assessee, an employee of a bank, opted for scheme of early voluntary retirement as declared by bank and received a sum of certain amount - He filed his return of income without claiming benefit of exemption under section 10(10C) on said amount - Same was processed under section 143(3) and an assessment order was passed - In meantime, Supreme Court in a case of another employee of same bank passed a dictum that he was entitled to exemption under section 10(10C) on amount received under earl....
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....ed in its case to the effect that the disallowance u/s 40(a)(ia) of the Act of Rs. 2,30,59,781/- on payment made without deduction of tax at source be allowed in terms of the second proviso to Section 40(a)(ia) of the Act, which proviso undeniably was brought on the statute much after the impugned assessment year before us. The assessment year before us is AY 2005-06, and the second proviso to Section 40(a)(ia) of the Act, whose benefit is being sought by the assessee by way of rectification application, was introduced on the Statute by Finance Act, 2012, with effect from 01.04.2013. The effect of this proviso, as is evident from a bare perusal of the same reproduced above in our order, was that if the assessee is able to demonstrate that the payee had paid taxes on the amounts paid to it, no disallowance u/s 40(a)(ia) of the Act needed to be made in the hands of the payer-assessee for non-deduction of tax at source. The assessee had filed all necessary documents to the Assessing Officer evidencing the said fact regarding the applicability of the second proviso to the payments disallowed u/s 40(a)(ia) of the Act amounting to Rs. 2,30,59,781/- . 10. The ld. Counsel for the assess....
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....) of the Act sought subsequently by the assessee by way of rectification application was allowed by the Hon'ble High Court holding that it was a mistake apparent from the record. The facts and circumstances in which the Hon'ble High court upheld the rectification sought by the assessee is we find identical to the present case. In the said case the assessee vide its rectification application had sought the benefit of the first proviso to section 40(a)(ia) of the Act which was brought on the statute subsequent to the assessment year to which the issue pertained and the grounds for seeking rectification was that the said proviso had been held by the jurisdictional High Court to have effect retrospectively. The Hon'ble High court found merit in the assessee's claim holding as under: "7. It is this judgement of the Tribunal which the Revenue has challenged. In our opinion, the Tribunal committed no error. As noted, admitted facts are that the assessee having deducted tax at source deposited in the government only after the end of the year under consideration but before the due date for filing of the return. In view of the amended provision of Section 40(a)(ia) of the Act by vir....