DCIT, Circle - 33, Kolkata, Kolkata V. Mr. Dilip Kr. Chatterjee, Kolkata

ITA 1042/KOL/2011

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0506 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 26-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Related party transaction; Fair market value; Onus to prove

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOLKATA [ BEFORE SHRI P.K.BANSAL , A . M . & SHRI MAHAVIR SINGH , J.M. ] I.T. A . NO. 1042 /KOL/20 1 1 : ASSESSMENT YEAR : 20 08 - 09 D CIT , CIRCLE - 33 , KOLKATA VS - M R. DILIP KR. CHATTERJEE ( APPELLANT) (PAN: ACDPC 5437A ) .. ( RESPONDENT ) DATE OF CONCLUDING THE HEA RING : 2 9 . 05 .201 5 DATE OF PRONOUNCING THE ORDER : 10.06. 201 5 APPEARANCES : F OR THE DEPARTMENT : SHRI PINAKI MUKHERJEE, SR. DR : FOR THE ASSESSEE : SHRI SUBASH AGARWAL, ADVOCATE O R D E R PER SHRI P.K.BANSAL, A .M. THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A) - XX , KOLKATA DATED 31 . 05 .20 1 1 FOR THE ASS ESSMENT YEAR 20 08 - 09 BY TAKING THE FOLLOWING EFFECTIVE GROUND OF APPEAL. UNDER THE FACT AND CIRCUMSTANCES OF THE CASE, WHETHER THE LD. CIT(A) - XX, KOL. IS JUSTIFIED IN DELETING THE ADDITION OF RS.2,05,71,294/ - U/S.40A(2)(B) OF THE I.T. ACT, 1961 WHEN THE ASSESSEE FAILED TO JUSTIFY THAT THE PAYMENT WERE MADE AS PER THE FAIR MARKET VALUE OF THE GOODS PURCHASED AND SERVICES AVAILED AND AS PER THE LEGITIMATE NEEDS OF THE BUSINESS AND THE TAX AUDIT REPORT OF THE AUDITOR IN FORM NO.3CD SHOWED NIL RELATED PARTY TRANSACTION U/S 40A(2)(B) OF THE I.T. ACT, 1961 . 2. BRIEF FACTS RELATING TO THIS GROUND ARE THAT THE AO NOTED THAT THE ASSESSEE IS A CONTRACTOR WHO HAS SHOWN CONTRACT RECEIPTS OF 2 IT A NO. 1042 /KOL/201 1 MR. DILIP KR. CHATTERJEE : A. Y R: 20 08 - 09 RS.17,04,38,555/ - AND DECLARED AN INCOME OF RS.1,08,65,789/ - . DURING THE YEAR, THE ASSESSEE HAS MADE PAYMENTS TO VARIOUS PERSONS SPECIFIED UNDER SECTION 40A(2)(B) AMOUNTING TO RS.10,28,56,471/ - , WHICH HAVE NOT BEEN INCORPORATED IN THE TAX AUDIT REPORT, THE DETAILS OF WHICH ARE AS UNDER: - PERSONS SPECIFIED NATURE OF AMOUNT U/S 40A(2)(B) TRANSACTION (RS.) 1 . CHATTER JEE CIVIL CONSTRUCTION(P) LTD. MATERIAL PURCHASE 60,64,256 SUB - CONTRACT 2,59,70,236 2. SANTIMA CIVIL CONSTRUCTION (P) LTD. MATERIAL PURCHASE 40,26,856 SUB - CONTRACT 2,72,60,554 3. MOUSUMI CHATTERJEE SUB - CONTRACT 75,66,551 4 . SANTI C HATTERJEE SUB - CONTRACT 1,64,87,920 5. ABHIJIT CHATTERJEE HIRE CHARGES 4,80,098 6. M/S. SANTIMA FILLING POWER & FUEL 1,50,00,000 STATION 10,28,56,471 2.1 THE ASSESSEE DID NOT JUSTIFY THE PAYMENTS MADE TO THESE PERSO NS WHETHER THE RATE AT WHICH THE PAYMENT WAS MADE REPRESENTS THE FAIR MARKET RATE. THE AO, THEREFORE, PROPOSED TO MAKE A DISALLOWANCE @15% BUT ULTIMATELY IN THE COMPUTATION, HE MADE A DISALLOWANCE @20%. WHEN THE MATTER WENT BEFORE THE CIT(A), THE CIT(A) DE LETED THE DISALLOWANCE. 3 . WE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME . WE HAVE ALSO GONE THROUGH THE PROVISIONS OF S ECTION 40A(2)(B). WE ARE OF THE VIEW THAT THE BURDEN OF PROOF LIES ON THE AO TO BRING EVIDENCE ON RECORD THAT THE PA YMENTS MADE TO THE PERSONS SPECIFIED UNDER SECTION 40A(2)(B) ARE EXCESSIVE OR UNREASONABLE, HAVING REGARD TO THE FAIR MARKET VALUE OF THE GOODS OR SERVICES OR WERE OTHERWISE THAN FOR THE LEGITIMATE NEEDS OF THE BUSINESS . THE AO SIMPLY PRESUMED AND MADE THE DISALLOWANCE 3 IT A NO. 1042 /KOL/201 1 MR. DILIP KR. CHATTERJEE : A. Y R: 20 08 - 09 @20% WITHOUT DISCHARGING THE ONUS OR BRINGING ANY MATERIAL OR EVIDENCE ON RECORD TO PROVE THAT THE PRICES PAID TO THESE PARTIES ARE MUCH MORE THAN THE FAIR MARKET VALUE. IN VIEW OF THIS FACT, IN OUR OPINION, NO INTERFERENCE IS CALLED FOR IN T HE ORDER OF THE CIT(A). THE CIT(A) HAS RIGHTLY DELETED THE DISALLOWANCE. THE LD.DR BEFORE US EVEN THOUGH VEHEMENTLY RELIED ON THE ORDER OF THE AO BUT COULD NOT CONVINCE US THAT THE ONUS LIES ON THE ASSESSEE TO PROVE THAT THE PRICES WHICH THEY HAVE PAID TO THESE PARTIES REPRESENT THE FAIR MARKET VALUE AND ARE NOT EXCESSIVE OR UNREASONABLE. WE, THEREFORE, CONFIRM THE ORDER OF THE CIT(A). 3 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDE R PRONOUNCED IN THE OPEN C OURT ON 10.06. 2 015 . SD/ - SD/ - ( MAHAVIR SINGH ) (P.K.BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 10.06. 2015 TALUKDAR(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . MR. DILIP KR. CHATTERJEE, 158, LENIN SARANI, KOLKATA 700 0 1 3. 2 D CIT , C IRCLE - 33 , KOLKATA 3 . THE CIT(A), 4. CIT, 5 . DR, TRUE COPY, BY ORDER, ASSTT. REGISTRAR , ITAT, KOLKATA 4 IT A NO. 1042 /KOL/201 1 MR. DILIP KR. CHATTERJEE : A. Y R: 20 08 - 09