M/s Baynee Industries, Kolkata V. ACIT, Circle-44, Kolkata, Kolkata

ITA 1013/KOL/2012

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8017 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2012
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 29-06-2012
• Court: TRIBUNAL
• Department Lawyers: SHRI D K RAKSHIT
• Assessee Lawyers: S L KOCHAR
• Keywords: Non-deduction of tax
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE , ! /AND ' #!' , ) [BEFORE SHRI PRAMOD KUMAR, AM & SHRI MAHAVIR SINGH, JM] !$ !$ !$ !$ / I.T.A NO. 1013/KOL/2012 #%& '( #%& '( #%& '( #%& '(/ // / ASSESSMENT YEAR: 2007-08 M/S. BAYNEE INDUSTRIES VS. ASSISTANT COMMISSION ER OF INCOME-TAX, (PAN: AADFB1024E) CIRCLE-44, KOLKATA. (*+ /APPELLANT ) (,*+/ RESPONDENT ) DATE OF HEARING: 09.11.2012 DATE OF PRONOUNCEMENT: 16.11.2012 FOR THE APPELLANT: SHRI S. L. KOCHAR FOR THE RESPONDENT: SHRI SHRI D. K. RAKSHIT - / ORDER PER MAHAVIR SINGH, JM ( ' #!' ' #!' ' #!' ' #!', , , , ) THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A)-XXX, KOLKATA IN APPEAL NO.278/CIT(A)-XXX/CIR-44/2009-10 DATED 23.03.2012. ASSESSMENT WAS FRAMED BY DCIT, CIR-44, KOLKATA U/S. 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2007-08 VIDE HIS ORDER DATED 31 .12.2009. 2. AT THE OUTSET, IT IS TO BE NOTICED THAT THE ASS ESSEE HAS RAISED AS MANY AS NINE GROUNDS OF APPEAL AND BY WAY OF LETTER DATED 02.11.2012 REQUES TED TO TAKE UP ONLY GROUND NOS. 7 AND 8 AND ALL OTHER GROUNDS MAY BE TREATED AS WITHDRAWN. REL EVANT TEXT OF THE LETTER READS AS UNDER: MOST RESPECTFULLY, WE BEG TO STATE THAT THE AFORES AID APPEAL IS FIXED FOR HEARING ON THE 9 TH DAY OF NOVEMBER, 2012 BEFORE THE HONBLE BENCH. WE HAVE TAKEN ALTOGETHER NINE GROUNDS OF APPEAL. A FTER GOING THROUGH THE RECORDS WE HEREBY SUBMIT THAT EXCEPT GROUND NO. 7 & 8 ALL THE GROUNDS MAY BE ALLOWED TO BE WITHDRAWN. WE HAVE INSTRUCTED OUR COUNSEL TO PLACE ARGUMENTS O NLY ON THE ISSUES INVOLVED VIDE GROUND NO. 7&8. AS THE ASSESSEE HAS WITHDRAWN THE OTHER GROUNDS AND LD. SR. DR HAS NOT OBJECTED TO THE SAME, WE PERMIT THE WITHDRAWAL AND ADJUDICATE GROUND NOS. 7 AND 8 ONLY. 2 ITA 1013/K/2012 M/S.BAYNEE INDUSTRIES A.Y.07-08 3. THE FIRST ISSUE IN GROUND NO. 7 IS AGAINST THE O RDER OF CIT(A) CONFIRMING THE ADDITION OF RS.8,89,490/- AND RS.1,61,935/- BY INVOKING THE PRO VISION OF SECTION 40(A)(IA) OF THE ACT FOR NON-DEDUCTION OF TDS. THE FOLLOWING IS THE GROUND NO.7: 7. FOR THAT THE LD. CIT(A) OUGHT TO HAVE ACCEPTED EXPLANATION TENDERED BY THE APPELLANT IN RESPECT OF NON-DEDUCTION OF TAX AT SOURCE AND OUGHT NOT TO HAVE CONFIRMED ADDITIONS OF RS.8,89,490/- AND RS.1,61,935/- MADE BY AO U/S. 40( A)(IA). 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. AT THE OUTSET, IT IS STATED THAT ASSESSEE HAS FILED PAPER BOOK WHEREIN COMPLETE DETAIL OF EXPENDITURE DISALLOWED BY AO FOR NON-DEDUCTION OF T AX BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT HAVE BEEN FILED. IT WAS CLAIM ED BY ASSESSEES COUNSEL THAT THE ENTIRE AMOUNT WAS PAID WITHIN THE FINANCIAL YEAR AND NOTHI NG REMAINS PAYABLE AS ON 31.03.2007. WE HAVE GONE THROUGH THE DETAILS FILED AND FIND THAT T HE DETAILS OF PAYMENT MADE ARE AVAILABLE IN THE PAPER BOOK. WHEN A QUERY WAS PUT TO LD. SR. DR , HE FAIRLY CONCEDED THAT THE ISSUE CAN BE REMITTED TO THE FILE OF AO FOR VERIFICATION OF DETA ILS WHETHER THE AMOUNTS WERE PAID WITHIN THE DUE DATE OR NOT. ON THIS, LD. COUNSEL FOR THE ASSE SSEE DREW OUR ATTENTION TO THE REMAND REPORT OF THE AO DATED 16.12.2011 VIDE NO. CIR-44/REMAND/AADF B1024E/11-12/828 DATE 16,12,2011 FILED BEFORE CIT(A)-XXX, KOLKATA IN WHICH IT WAS AD MITTED THAT THE PAYMENTS OF RS.8,89,490/- HAVE BEEN PAID DURING THE YEAR. THE RELEVANT OBSER VATIONS OF THE AO IN REMAND REPORT READS AS UNDER: THE ASSESSEE HAS FURNISHED THE DETAILS OF MANUFACT URING EXPENSES. THE SAID DETAILS INCLUDED PURCHASE OF PARTS AMOUNTING TO RS.2432176/ -. THE ASSESSEE ALSO PRODUCED A CERTIFICATE FROM THE AUDITOR IN SUPPORT OF THE SAME . IT IS SEEN THAT THE ASSESSEE HAS DEDUCTED TAX AT SOURCE IN RESPECT OF LABOUR CHARGES AMOUNT TO RS.4276377/-. THE ASSESSEE HAS MADE PAYMENTS OF RS.1844092/- WHERE TH E TOTAL PAYMENTS TO EACH PARTY DID NOT EXCEED RS.50000/-. IT IS FACT THAT MAJOR PARTS OF THESE EXPENSES ARE SUPPORTED BY SELF-MADE VOUCHERS. HOWEVER, IT IS SEEN THAT THE A SSESSEE HAS MADE PAYMENT OF RS.898490/- TO THREE PERSONS WITHOUT DEDUCTING TAX AT SOURCE. THE ASSESSEE HAS CLAIMED THAT THEY ARE CASUAL LABOURS BUT THE SAME IS NOT PR OVED BY ANY TENABLE EVIDENCE. RATHER, IT IS FOUND THAT THE PERSONS WORKED ON CONTRACT BAS IS. AS SUCH THE ASSESSEE WAS LIABLE TO DEDUCT TAX AT SOURCE ON SUCH PAYMENT OF RS.889490/- WHICH THE ASSESSEE FAILED TO DO. THEREFORE, THE ACTUAL AMOUNT DISALLOWABLE U/S. 40(A )(IA) IS RS.889490/-. 5. IN RESPECT TO THE AMOUNT OF RS.1,61,935/- I.E. P AYMENT MADE TO DET NORSKE VERITAS WAS MADE WITHOUT DEDUCTION OF TAX AT SOURCE BUT THE DETAILS IN RESPECT OF THE SAME IS NOT AVAILABLE EITHER IN THE ASSESSMENT ORDER OR IN THE ORDER OF CIT(A). EVEN IN REMAND REPORT, THE DETAILS ARE NOT AVAILABLE BUT THE ASSESSEE HAS FILED NOW THE DETAILS BEFORE US THAT THE SAME ARE PAID WITHIN THE FINANCIAL YEAR RELEVANT TO THIS ASSESSMENT YEAR UNDER APPEAL. SINCE THESE DETAILS ARE FILED BEFORE US FOR THE FIRST TIME QUA THE PAYMENT OF RS.161935/-, THIS NEEDS VERIFICATION AT THE LEVEL OF AO. HOWEVER, IN RESPE CT TO PAYMENT OF RS.8,89.490/- THE AO HAS VERIFIED IN THE REMAND REPORT THAT THESE ARE PAID D URING THE YEAR. HENCE, PARTLY THIS ISSUE OF 3 ITA 1013/K/2012 M/S.BAYNEE INDUSTRIES A.Y.07-08 ASSESSEES APPEAL IS ALLOWED TO THE TUNE OF RS.8,8 9,490/- AND PARTLY SET ASIDE TO THE FILE OF AO FOR VERIFICATION IN TERMS OF THE DECISION OF HONBL E SPECIAL BENCH OF THIS TRIBUNAL IN THE CASE OF MERILYN SHIPPING & TRANSPORTS VS. ADDL. CIT (VISAKH APATNAM)(SB) REPORTED IN (2012) 136 ITD 23 (SB), WHEREIN THE ISSUE IS AS REGARDS TO THE DISALLOWANCE U/S. 40(A)(IA) OF THE ACT HAS NOT TO BE MADE IN CASE THE EXPENDITURE IS PAID DURI NG THE YEAR HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE. THE RELEVANT PORTION OF THE MAJORITY VIE W IS AS UNDER: I AM OF THE FIRM VIEW THAT SECTION 40(A)(IA) OF THE ACT IS APPLICABLE ONLY TO EXPENDITURE WHICH IS PAYABLE AS ON 31 ST MARCH OF EVERY YEAR AND CANNOT BE INVOKED TO DISALLOW THE AMOUNTS WHICH HAVE ALREADY BEEN PAID DURING THE PREVIOUS YEAR, WITHOUT DEDUCTING TAX AT SOURCE. SINCE THE FACTS OF PAID OR PAYABLE WAS NOT AVAILABL E BEFORE THE LOWER AUTHORITIES, WE SET ASIDE THIS ISSUE TO THE FILE OF AO FOR VERIFICATION AND H E WILL FOLLOW THE PRINCIPLE LAID DOWN IN MERILYN SHIPPING & TRANSPORTS (SUPRA). THIS ISSUE OF REVEN UE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 6. THE NEXT ISSUE IN THIS APPEAL OF ASSESSEE RAISED BY WAY OF GROUND NO. 8 IS THE ESTIMATED DISALLOWANCE CONFIRMED BY CIT(A) AT RS. 3 LACS AS A GAINST THE DISALLOWANCE MADE BY AO AT RS.5 LACS. FOLLOWING IS THE GROUND NO. 8 RAISED BY ASSESSEE: FOR THAT THE LD. CIT(A) ERRED IN CONFIRMING ADDITI ON OF RS.3,00,000/- OUT OF ESTIMATED DISALLOWANCE OF RS.5,00,000/- MADE BY THE AO. 7. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE AO HAS MADE DISALLOWANCE OF RS.5 L ACS OUT OF THE EXPENSES E.G. FACTORY CHARGES, REPAIR AND MAINTENANCE, CARRIAGE AND CARTA GE, OFFICE EXPENSES, PRINTING, TRAVELLING AND CONVEYANCE DEBITED TO P&L ACCOUNT. ACCORDING TO AO , THE ASSESSEE HAS MADE SMALL FRACTION OF EXPENSES BY WAY OF CHEQUE AND MOSTLY IN CASH AND ARE MADE ON SELF MADE VOUCHERS. ACCORDING TO AO, THE ASSESSEE COULD NOT FURNISH PAR TY WISE DETAILS OF THESE EXPENSES AND HENCE, THESE PAYMENTS ARE NOT VERIFIABLE. ACCORDINGLY, AO DISALLOWED RS.5 LACS ON AD HOC BASIS FOR WANT OF CHECKING AND VERIFICATION OF THESE EXPENSES . BEFORE CIT(A), IT WAS CONTENDED THAT THE AO HAS IMPOUNDED THE BOOKS OF ACCOUNT, BILLS AND VO UCHERS ETC. AND TILL DATE THE SAME WERE IN HIS CUSTODY UNTIL THE ASSESSMENT ORDER WAS PASSED. ACCORDING TO ASSESSEE, THERE IS NO SPECIFIC INSTANCE GIVEN BY THE AO THAT EXPENSES, WHICH IS NO T INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. ASSESSEES CONTENTION WAS THA T IT IS MANUFACTURER SPARE PARTS OF MOTOR CARS AND HAS TURNOVER OF RS.7.53 CR. AND EXPENDITUR E INCURRED ON TELEPHONE IS AT RS.2,83,099/- AND ON VEHICLES AT RS.1,04,204/-. IT WAS THE CONTE NTION OF THE ASSESSEE THAT THERE COULD BE SOME PERSONAL USER OF VEHICLES AND TELEPHONES BY THE PAR TNERS BUT ACCORDING TO HIM, AD HOC DISALLOWANCE OF RS.5 LACS BY AO, WHICH WAS RESTRICT ED BY CIT(A) RS.3 LACS IS EXCESSIVE. WE 4 ITA 1013/K/2012 M/S.BAYNEE INDUSTRIES A.Y.07-08 FIND THAT NONE OF THE AUTHORITIES BELOW HAS SPECIFI CALLY DISALLOWED ANY EXPENDITURE BUT MADE AN AD HOC DISALLOWANCE FIRST BY AO AT RS. 5 LACS AND T HEN THE SAME WAS REDUCED BY CIT(A) AT RS. 3 LACS. CONSIDERING THE DISALLOWANCE THAT THERE CA N BE PERSONAL USER OF VEHICLES AND TELEPHONES AND BOTH THE EXPENSES ARE AT RS.2,83,099/- AND RS.1 ,04,284/-, THE ENTIRE AMOUNT CANNOT BE ATTRIBUTED TO PERSONAL USER. AT THE MOST, WE CAN A TTRIBUTE RS.1 LAC EXPENDITURE TO THE PERSONAL USER, AND HENCE, SAME SHOULD HAVE BEEN DISALLOWED B Y AO. ACCORDINGLY, WE DIRECT THE AO TO RESTRICT THE DISALLOWANCE OF RS.1 LAC INSTEAD OF RS .3 LACS MADE BY CIT(A). THIS GROUND OF APPEAL OF ASSESSEE IS PARTLY ALLOWED. 8. IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALLO WED FOR STATISTICAL PURPOSES. 9. ORDER PRONOUNCED IN OPEN COURT ON 16 TH NOV., 2012. SD/- SD/- , ' #!' ' #!' ' #!' ' #!' , (PRAMOD KUMAR) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( . . . .) )) ) DATED : 16TH NOVEMBER, 2012 /0 #%12 #3 JD.(SR.P.S.) 5 ITA 1013/K/2012 M/S.BAYNEE INDUSTRIES A.Y.07-08 - 4 ##5 65'7- COPY OF THE ORDER FORWARDED TO: 1 . *+ / APPELLANT M/S. BAYNEE INDUSTRIES, C/O, S. L. KOCH AR, ADVOCATE, 86, CANNING STREET, KOLKATA-1. 2 ,*+ / RESPONDENT ACIT, CIRCLE-44, KOLKATA. 3 . #-% ( )/ THE CIT(A), KOLKATA 4. #-% / CIT, KOLKATA 5 . >#? #% / DR, KOLKATA BENCHES, KOLKATA ,5 #/ TRUE COPY, -%/ BY ORDER, ' !2 /ASSTT. REGISTRAR .