SWARANSINGH G. SOHAL Vs. D.C.I.T.

JUDGEMENT

(1.) THIS appeal filed by the assessee is directed against the order dated 15 -05 -2013 of the CIT(A) -II, Pune relating to Assessment Year 2005 -06.

(2.) FACTS of the case, in brief, are that the assessee is an individual. The original return of income for the impugned assessment year was filed by the assessee on 30 -10 -2005 declaring total income of Rs. 11,52,294/ -. The AO completed the assessment on 13 -12 -2010 u/s. 143(3) r.w.s. 263 on a total income of Rs. 22,72,430. Subsequently, the AO noticed that disallowance u/s. 40(a)(ia) remained to be made in respect of (i) sub -contractors payment (ii) interest payment and (iii) professional payment of Rs. 58,93,328/ - while passing the order u/s. 143(3) r.w.s. 263. He therefore issued a notice u/s. 154 of the I.T. Act to the assessee on 31 -03 -2011 requesting him to attend his office on 07 -04 -2011 or file written submission for reasons given in the notice u/s. 154 to rectify the mistake. In absence of any compliance by the assessee, the AO on the basis of material available on record, determined the total income at Rs. 81,66,758/ -. While doing so, he noted that the assessee has made payment to sub -contractors of Rs. 55,57,255/ - out of which an amount of Rs. 6,45,594/ - has been paid in the month of March 2005 and the balance amount of Rs. 49,11,661/ - was paid before March 2005. However, the assessee has deducted tax at source and paid the same to the credit of the Government account on 31 -10 -2005. Since the assessee has not deposited the TDS to the credit of the Central Government Account on or before 31 -03 -2005, therefore, disallowance of Rs. 49,11,661/ - has to be made u/s. 40(a)(ia) of the I.T. Act. Similarly an amount of Rs. 8,61,667/ - being amount paid to the sub -contractors was made before March 2005. According to the AO, the assessee should have deposited the TDS into the credit of the Government account within one week from last day of the month in which the deduction is made or before 31 -03 -2005 but the assessee has deposited the TDS to the credit of the Central Govt. on 31 -10 -2005 which is beyond time limit. Therefore, he disallowed an amount of Rs. 8,61,667/ - u/s. 40(a)(ia) of the Act.

(3.) HOWEVER , CIT(A) was not satisfied with the arguments advanced by the assessee. Relying on the decision of Hon'ble Supreme Court in the case of Reliance Jute Industries Ltd. v. CIT reported in, 20 ITR 921, he noted that the Hon'ble Supreme Court in the said decision has held that law to be applied is that is in force in the assessment year unless otherwise provided expressly or by necessary implications. The Ld. CIT(A) noted that in a number of cases the Hon'ble Supreme Court has held that there is no retrospectively unless expressly stated or clearly implied. He referred to the decision of the Special Bench of the Tribunal in the case of Bharati Shipyard Ltd. v. DCIT reported in 141 TTJ (Mumbai) (SB) 129 which, after taking into consideration the case of Allied Motors Pvt. Ltd., and Alom Extrusion as relied upon in the case of Virgin Creations and also other cases on the issue of retrospective application of the amended section 40(a)(ia) by the Finance Act, 2010, has held that the amendment to section 40(a)(ia) made by the Finance Act with retrospective effect from 01 -04 -2010 explaining the time limit for deposit of TDS is neither aimed at removing any intended hardship to the assessee nor is curative or declaratory of the provisions of law and therefore it cannot be given retrospective effect. According to him the Special Bench has passed the order after taking into account the decision of Hon'ble Calcutta High Court. According to him, the order of Hon'ble Calcutta High Court, being non jurisdictional, may not have that binding effect with that of the Special Bench of the Mumbai as it has more persuasive value of binding effect. He accordingly rejected the arguments advanced by the assessee and upheld the order of the AO.