TMI Blog2016 (8) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... er For the Appellant : None For the Respondent : Dr. P.K. Srihari, Addl. CIT ( DR ) ORDER Per Vijay Pal Rao, Judicial Member This appeal is directed against the order dated 29.01.2015 of the CIT(Appeals), Hubli for the assessment year 2010-11. 2. Though the assessee has raised various grounds, however, we find that the only effective grounds are Nos.10 11 as under:- 10) The Learned Commissioner of Income Tax (Appeals), Hubballi, has erred in approving the disallowance of entire expenses made by the appellant in respect of his own three vehicles at ₹ 20,72,000/-, though he himself admit that as per the provisions the entire amount cannot be added but only the profit embodied have to be added and taxed. Therefore, the disallowance of addition of entire amount including the profit at ₹ 20,72,200 is erroneous in law. 11) The Learned Commissioner of Income Tax (Appeals), Hubbali, has erred in fairly interpreting the provisions of Section 40(A)(3) and read the said provisions in isolation. The provisions of the Section 40(A)(3) are also controlled and conditioned by the spirit and letter of the provisions of Section 40A of the IT Act, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mstance of that case, the Hon'ble High Court of Allahabad had rendered the said decision. In contrast, in the instant case, it is an admitted position as borne out on records that the assessee has not deducted tax at source as required under Section 194C, 194I and 194J of the Act. However, noncompliance of the said provisions is sought to be justified on the ground that the agreement inter se between the assessee and the harvester is not a valid contract inasmuch as the farmer is not a party to the said agreement upon whose land the harvester works and whose produce is purchased by the assessee. It is also argued that the said agreement is not ratified by the farmer. In our considered view, the said argument advanced on behalf of the assessee is fallacious and is noted only to be rejected. We say so because, there is no dispute with regard to the fact that the assessee has entered into specific agreement/s for harvesting and transportation of sugarcane and the harvester has been admittedly paid harvesting and transportation charges by the assessee. This leads to an irresistible inference that the produce namely the sugarcane has been harvested and transported by the contractor. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , strict and straight jacket application of this doctrine. It may be useful to refer to the pronouncement of the Hon'ble Supreme Court in the case of Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh [1979] 18 ITR 326, wherein, it is held as follows:- '6. Secondly, it is difficult to see how, on the facts, the plea of waiver could be said to have been made out by the State Government. Waiver means abandonment of a right and it may be either express or implied from conduct, but its basic requirement is that it must be an intentional act with knowledge . Per Lord Chelmsford, L.C. in Earl of Darnley v. London, Chatham and Dover Rly. Co. [(1867) LR 3 HL 43, 57 : 16 LT 217] There can be no waiver unless the person who is said to have waived is fully informed as to his right and with full knowledge of such right, he intentionally abandons it. It is pointed out in Halsbury's Laws of England (4th Edn.) Volume 16 in para 1472 at p. 994 that for a waiver to be effectual it is essential that the person granting it should be fully informed as to his rights and Isaacs, J. delivering the judgment of the High Court of Australia in Craine v. Colonial Mutual Fire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 479 : (1937) 2 All ER 646] : the fact is that there is not and never has been a presumption that every one knows the law. There is the rule that ignorance of the law does not excuse, a maxim of very different scope and application. It is, therefore, not possible to presume, in the absence of any material placed before the Court, that the. appellant had full knowledge of its right to exemption so as to warrant an inference that the appellant waived such right by addressing the letter dated June 25, 1970. We accordingly reject the plea of waiver raised on behalf of the State Government.' So far as strict application of the maxim ignorantia juris neminem excusat is concerned, the Hon'ble Supreme Court in the case of Pankaj Jain Agencies v. Union of India AIR 1995 SC 360 while repelling an argument that the petitioner did not have knowledge of an enactment held that a publication in a gazette is a sufficient notice. Precisely, the Hon'ble Supreme Court has held as follows:- '14. In Lim Chin Aik v. Reginam [(1963) 1 All ER 223, 226 : 1963 AC 160 : (1963) 2 WLR 42 (PC)] , the Privy Council also observed: It was said on the respondent' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the sentence to be imposed for its violation. It is obvious that for an Indian law to operate and be effective in the territory where it operates, viz., the territory of India it is not necessary that it should either be published or be made known outside the country. Even if, therefore, the view enunciated by Bailhache, J. is taken to be correct, it would be apparent that the test to find out effective publication would be publication in India, not outside India so as to bring it to the notice of everyone who intends to pass through India. It was 'published' and made known in India by publication in the Gazette on the 24th November and the ignorance of it by the respondent who is a foreigner is, in our opinion, wholly irrelevant. 16. Again in B.K. Srinivasan v. State of Karnataka [(1987) 1 SCC 658, 672 : AIR 1987 SC 1059, 1067] it was observed: (SCC p. 672, para 15) There can be no doubt about the proposition that where a law, whether parliamentary or subordinate, demands compliance, those that are governed must be notified directly and reliably of the law and all changes and additions made to it by various processes. Whether law is viewed from the standpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee has no escape but to comply with various Fiscal Statues such as Income Tax, Sales Tax, Customs Act, Central Excise Act etc., and Labour Laws such as Factories Act, ESI Act, PF Act etc. Further, there is clear evidence on record to show that the assessee has paid large sums of fee to the Lawyers and availed services of Chartered Accountant also. These two aspects namely, evidence of expenditure towards fee paid to the lawyers and engagement of services of Chartered Accountant are sufficient circumstances to hold that non-deduction of tax at source is not due to ignorance of law. The pronouncements of the Hon'ble Supreme Court in the following two case are aptly applicable in the instant case. Swadeshi Cotton Mills Co. Ltd. v. Govt. of U.P. [1975] 4 SCC 378 at page 379, wherein it is held as follows: 3. We do not think that in this case it is necessary for us to consider whether Article 226 can be used for challenging the validity of the orders passed prior to January 26, 1950. But we are in agreement with the High Court on the other two grounds. As mentioned earlier, the impugned assessments were made in 1949. The writ petition was filed in 1956. The ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that this was an errata itself showed that there was something in existence which was being corrected. This aspect has also been overlooked by the High Court. 11. It was also submitted that since there was a lot of confusion and that number of parties including assessing officers were not clear as to what was the rate of tax, this Court should not interfere with the judgment of the High Court which has been passed on equitable basis. We see no substance in this submission. If the law is clear then it must be given effect to. Merely because the parties were unaware of the law does not mean that courts can ignore the law and provide to the contrary. (Underlining is by us) 31. The following judgments are relied upon by the Revenue in support of their case: (i) In the case of Thomas George Muthoot v. CIT [2015] 93 CCH 0151 Ker HC. It is held by the Hon'ble High Court of Karnataka that Section 40(a)(ia) makes it clear that the consequence of disallowance is attracted when an individual, who is liable to deduct tax on any interest payable to a resident on which tax deductible at source commit default. (ii) In the case of Sikandarkhan N. Tu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nue also emphasized that the judgment in the case of Vector Shipping Services (P.) Ltd. (supra), is not applicable to the facts of this case. He submitted that in the light of the unambiguous and admitted facts non-compliance of statutory compliance of statutory provisions of Sections 194C, 194I and 194J of the Act stand proved. Therefore, in the light of the settled position of law the only consequence that flows is to invoke Section 40(a)(ia) of the Act as has been rightly held by the Assessing Authority and affirmed by the First Appellate Authority. 33. In view of the aforesaid discussion, we are of the considered view that the impugned order passed by the Tribunal is unsustainable in law. The judgment rendered by the Hon'ble High Court of Allahabad in the case of Vector Shipping Services (P.) Ltd. (supra),. is not applicable to the facts of these cases. Consequently, the first substantial question of law, raised by the Revenue merits consideration. 34. In the result, the appeals filed by the Revenue are allowed by answering the following substantial question of law in its favour and it is held that in the facts and circumstances of this case, the Tribunal was no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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