ITO, Wd-35(1), Kolkata, Kolkata V. Pravina Khara, Kolkata

ITA 1067/KOL/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 4817 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 15-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROBIN CHOUDHURY CIT DR REVEN
• Assessee Lawyers: OM PRAKASH BAID
• Keywords: Business expenditure; Non-deduction of tax; Wrong claim; TDS
• Section: 143(3); 40(a)(ia); 194C; 201(1); 250; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA C BENCH, KOLKATA [BEFORE SRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER & SRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER] I.T.A. NO. 1067/KOL/2017 ASSESSMENT YEAR: 2013-14 INCOME TAX OFFICER, WARD-35(1), KOLKATA...................................................................APPELLANT VS. PRAVINA KHARA.............................................RESPONDENT 56/1, CANNING STREET KOLKATA 700 001 [PAN : AEXPK 7028 M] APPEARANCES BY: SHRI OM PRAKASH BAID, FCA, APPEARED ON BEHALF OF THE ASSESSEE. SHRI ROBIN CHOUDHURY, ADDL. CIT D/R, APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : MAY 7 TH , 2019 DATE OF PRONOUNCING THE ORDER : MAY 22 ND , 2019 O R D E R PER J. SUDHAKAR REDDY, AM :- THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 10, (HEREINAFTER THE LD. CIT (A)) PASSED U/S. 250 OF THE INCOME TAX ACT, 1961, (THE ACT), DT. 28/02/2017, FOR THE ASSESSMENT YEAR 2013-14. 2. THE ASSESSEE IS AN INDIVIDUAL AND DERIVES INCOME FROM BUSINESS UNDER THE NAME AND STYLE OF DYNAMIC SYNDICATE. HER HUSBAND, SHRI SHASHIKANT MOOLJI KHARA, WAS CARRYING ON THIS BUSINESS AS A SOLE PROPRIETOR AND CONSEQUENT TO HIS DEATH ON 13 TH JUNE 2012, THE ASSESSEE BECAME THE SOLE PROPRIETOR AND CARRIED ON THIS BUSINESS. HENCE THIS IS THE FIRST YEAR OF BUSINESS FOR THE ASSESSEE WITH THE PREVIOUS YEAR FROM 14/06/2012 TO 31/03/2013 RELATABLE TO THE ASSESSMENT YEAR 2013-14. SHE FILED HER RETURN OF INCOME ON 5/10/13 DECLARING INCOME OF RS.7,61,230/-. THE ASSESSING OFFICER COMPLETED ASSESSMENT U/S 143(3) ON 29/03/2016, DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS.3,63,00,848/- INTER ALIA MAKING A DISALLOWANCE U/S 40(A)(IA) OF THE ACT OF RS.1,27,04,090/-, DISALLOWANCE ON THE GROUND THAT THE ASSESSEE MADE A BOGUS CLAIM OF EXPENDITURE TO THE TUNE OF RS.2,03,26,223/- AND AN ADDITION OF RS.25,00,000/- ON ACCOUNT OF UNRECONCILED BALANCE IN THE ACCOUNT OF M/S PRISM CEMET II. 2 I.T.A. NO. 1067/KOL/2017 ASSESSMENT YEAR: 2013-14 PRAVINA KHARA 2.1. AGGRIEVED THE ASSESSEE CARRIED THE MATTER AND APPEAL BEFORE THE LD. CIT(A). THE LD. FIRST APPELLATE AUTHORITY, CALLED FOR A REMAND REPORT AND AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE FINDINGS OF THE ASSESSING OFFICER IN THE REMAND REPORT, DELETED ALL THE ADDITIONS AND ALLOWED THE APPEAL OF THE ASSESSEE. 3. AGGRIEVED THE REVENUE IS ON APPEAL BEFORE US ON THE FOLLOWING GROUNDS: 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A)-10, KOLKATA HAS ERRED IN DELETING THE ADDITION OF RS.1,27,040,90/- MADE BY AO ON ACCOUNT OF NON DEDUCTION OF TDS U/S 40(A)(IA). THE ASSESSEE HAS MAINTAINED THE BOOKS OF ACCOUNTS U/S 44AB IN THE PREVIOUS YEAR HENCE NO QUESTION OF NON DEDUCTION OF TAX DOES NOT ARISE IN THIS CASE. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A)-10, KOL HAS ERRED IN DELETING THE ADDITION OF RS.2,03,26,223/- MADE BY AO ON ACCOUNT OF BOGUS CLAIMED OF EXPENDITURE. LD.CIT(A) DELETED THE ADDITION WITHOUT CONSIDERING FACTS OF THIS ADDITIONS AND DELETED ONLY ON SUBMISSION OF THE ASSESSEE. THE ASSESSEE COULD NOT RECONCILE THE EXPENSES CLAIMED DURING ASSESSMENT STAGE MERE FILED OF CHALLAN PRODUCED. THE LD.CIT(A) HAS NOT GONE THROUGH THE DETAILS OF ASSESSMENT ORDER AND GOT RELIEF ONLY OF THE VIEW THAT MERE PRODUCTION OF THE SAME CHALLAN FOR VERIFICATION CANNOT LEAD TO DOUBLE CLAIM. 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ID.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.25,00,0001- MADE BY AO ON ACCOUNT OF DIFFERENCE FOUND IN THE LEDGER. THE LD.CIT(A) DELETED THE ADDITION ONLY ON THE SUBMISSION OF ASSESSEE AND WITHOUT CONSIDERING THE FACTS OF THIS CASE. 4. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ID.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.3003/- MADE BY AO ON ACCOUNT OF DISCOUNT OF PRIOR PERIOD EXPENDITURE WHICH DULY MENTIONED IN THE TAR. THE LD.CIT(A) HAS ALLOWED THE ADDITION ONLY ON THE BASIS OF AN EXPLANATION OFFERED BY THE ASSESSEE. THE LD.CIT(A) HAS NOT LOOKED IN THE POINT THAT THE CLAIM WAS OF PRIOR PERIOD WHICH CLEARLY MENTIONED IN THE TAR. 5. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.6302/- MADE BY AO ON ACCOUNT OF BANK CHARGES WHICH DULY MENTIONED IN THE TAR. THE LD.CIT(A) HAS ALLOWED THE ADDITION MENTION THAT IT WAS INCURRED FOR BUSINESS EXPENSES. THE LD.CIT(A) HAS NOT ACCEPTED THAT THE BANK CHARGES WAS INCURRED FOR EARNING INTEREST WHICH IS NOT INCIDENTAL FOR BUSINESS EXPENSES. THE EXPENSES INCURRED FOR EARNING OF INTEREST FROM BANK IS COMPLETELY FOR ASSESSEE'S PERSONAL IN NATURE. 6. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, MODIFY DELETE OR INCLUDE ANY OF THE GROUNDS OF APPEAL. 4. WE HAVE HEARD MR. ROBIN CHOUDHURY, THE LD. D/R ON BEHALF OF THE REVENUE AND MR. OM PRAKASH BAID, FCA, THE LD. COUNSEL ON BEHALF OF THE ASSESSEE. ON CAREFUL 3 I.T.A. NO. 1067/KOL/2017 ASSESSMENT YEAR: 2013-14 PRAVINA KHARA CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, PERUSAL OF THE PAPERS ON RECORD, ORDERS OF THE AUTHORITIES BELOW AS WELL AS CASE LAW CITED, WE HOLD AS FOLLOWS: 5. REGARDING THE DISALLOWANCE MADE U/S 40(A)(IA) OF THE ACT, THE LD. CIT(A) CONSIDERED THE FOLLOWING SUBMISSIONS OF THE ASSESSEE AND THE FINDINGS OF THE ASSESSING OFFICER IN THE REMAND REPORT AND THEREAFTER HELD AS FOLLOWS:- 5. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE APPELLANT AS. WELL AS THE ASSESSMENT ORDER FRAMED IN LIGHT OF THE MATERIAL AVAILABLE ON RECORD BEFORE THE LD. AO DURING THE ASSESSMENT PROCEEDINGS. I HAVE ALSO CAREFULLY PERUSED THE PAPER BOOK AND OTHER DOCUMENTS BY THE APPELLANT, ALONG WITH THE ACCOMPANYING EVIDENCES. THESE HAD BEEN FORWARDED TO THE LD. AO SEEKING HIS COMMENTS AND OBSERVATIONS ON THE VARIOUS CONTENTIONS OF THE APPELLANT. AFTER CONSIDERING THE OBSERVATIONS OF THE LD. AO IN THE REMAND REPORT, AS WELL AS THE COUNTER FILED BY THE APPELLANT, THE FOLLOWING POINTS ARE WORTH RECORDING: A. THERE WERE TWO DIFFERENT PROPRIETORS OF M/S DYNAMIC SYNDICATE IN TWO DIFFERENT YEARS. BOTH HAD SEPARATE PAN AND TAN NUMBERS. THE ACCOUNT OF THE APPELLANT WAS NOT AUDITED U/S 44AB OF THE ACT, IN THE PRECEDING YEAR, AND THEREFORE SECTION 40(A)(IA) OF THE ACT, IS NOT APPLICABLE ON THE APPLICANT FOR A.Y.2013-14. B. SINCE THE APPELLANT HAS SATISFIED THE PROVISIONS OF SECTION 194C (6) AND THE SAME HAS BEEN ADMITTED BY THE LD. A.O. IN THE ASSESSMENT ORDER, NON-COMPLIANCE OF SECTION 194C (7) DOES NOT ATTRACT DISALLOWANCE U/S 40(A)(IA) OF THE ACT. C. THE APPELLANT AS A PRECAUTIONARY MEASURE HAS ALSO SATISFIED THE REQUIREMENTS OF SECTION 194C (7) ON 12TH APRIL 2016, RULING OUT APPLICABILITY OF SECTION 40(A)(IA). D. THE APPELLANT AGAIN AS A PRECAUTIONARY MEASURE HAS COMPLIED WITH THE REQUIREMENTS AS STATED IN THE FIRST PROVISO TO SECTION 201(1) OF THE ACT ON 19.10.2016. 6. IN MY CONSIDERED VIEW OF THE MATTER SECTION 40(A)(IA) IS ATTRACTED IF ANY OF THE ABOVE CONDITIONS ARE NOT SATISFIED, BUT SINCE THE APPELLANT HAS SATISFIED MORE THAN ONE OF THE CONDITIONS LISTED FOR NOT FALLING WITHIN FOR NON-APPLICABILITY OF SECTION 40(A)(IA) OF THE ACT, AND THEREFORE THE QUESTION OF ADDITION U/S 40(A)(IA) DOES NOT ARISE. I THEREFORE DELETE THE ADDITION OF RS.1,27,04,090/- MADE BY THE LD AO UNDER SECTION 40(A)(IA) OF THE ACT FOR NON-DEDUCTION OF TAX AT SOURCE U/S 194C OF THE ACT ON PAYMENTS MADE TO TRANSPORTERS AND DEBITED UNDER THE FREIGHT CHARGES. THIS GROUND OF APPEAL STANDS ALLOWED. 6. THE LD. D/R, COULD NOT CONTROVERT THESE LEGAL AND FACTUAL FINDINGS GIVEN BY THE LD. CIT(A). THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. VALIBHAI KHANBHAI MANKAD [2013] 261 CTR 538 (GUJARAT) HELD AS FOLLOWS:- 4 I.T.A. NO. 1067/KOL/2017 ASSESSMENT YEAR: 2013-14 PRAVINA KHARA 3. WE HAVE HEARD THE LEARNED COUNSEL FOR THE REVENUE AS WELL AS FOR THE ASSESSEE. SECTION 194C OF THE ACT, AS IS WELL KNOWN, PERTAINS TO PAYMENTS TO CONTRACTORS. SUB-SECTION (1) OF SECTION 194C, AS IT STOOD AT THE RELEVANT TIME, REQUIRED THAT ANY PERSON RESPONSIBLE FOR PAYING ANY SUM TO ANY RESIDENT, CONTRACTOR FOR CARRYING OUT ANY WORK IN PURSUANCE OF A CONTRACT BETWEEN THE CONTRACTOR AND THE SPECIFIED ENTITIES, SHALL CREDIT SPECIFIED SUM AS INCOME TAX ON INCOME COMPRISED THEREIN. LIKEWISE, SUB-SECTION (2) OF SECTION 194C REQUIRED A PERSON RESPONSIBLE FOR PAYING ANY SUM TO RESIDENT-SUB-CONTRACTOR TO DEDUCT TAX AT SOURCE UNDER GIVEN CIRCUMSTANCES. IT IS NOT IN DISPUTE THAT ORDINARILY THE ASSESSEE WAS REQUIRED TO MAKE SUCH DEDUCTION ON THE PAYMENTS MADE TO THE SUB-CONTRACTORS, UNLESS HE WAS COVERED UNDER THE EXCLUSION CLAUSE CONTAINED IN SUB-SECTION (3) OF SECTION 194C OF THE ACT. SUCH PROVISION, AS IT STOOD AT THE RELEVANT TIME, READ AS UNDER:- 'SECTION 194C(3):- NO DEDUCTION SHALL BE MADE UNDER SUB-SECTION (1) OR SUB-SECTION (2) FROM - (I) THE AMOUNT OF ANY SUM CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID TO THE ACCOUNT OF, OR TO, THE CONTRACTOR OR SUB- CONTRACTOR, IF SUCH SUM DOES NOT EXCEED TWENTY THOUSAND RUPEES: PROVIDED THAT WHERE THE AGGREGATE OF THE AMOUNTS OF SUCH SUMS CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID DURING THE FINANCIAL YEAR EXCEEDS FIFTY THOUSAND RUPEES, THE PERSON RESPONSIBLE FOR PAYING SUCH SUMS REFERRED TO IN SUB-SECTION (1) OR, AS THE CASE MAY BE, SUB- SECTION (2) SHALL BE LIABLE TO DEDUCT INCOME-TAX UNDER THIS SECTION: PROVIDED FURTHER THAT NO DEDUCTION SHALL BE MADE UNDER SUB- SECTION (2), FROM THE AMOUNT OF ANY SUM CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID DURING THE PREVIOUS YEAR TO THE ACCOUNT OF THE SUB- CONTRACTOR DURING THE C OURSE OF BUSINESS OF PLYING, HIRING OR LEASING GOODS CARRIAGES, ON PRODUCTION OF A DECLARATION TO THE PERSON CONCERNED PAYING OR CREDITING SUCH SUM, IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER AND WITHIN SUCH TIME AS MAY BE PRESCRIBED, IF SUCH SUB- CONTRACTOR IS AN INDIVIDUAL WHO HAS NOT OWNED MORE THAN TWO GOODS CARRIAGES AT ANY TIME DURING THE PREVIOUS YEAR: PROVIDED ALSO THAT THE PERSON RESPONSIBLE FOR PAYING ANY SUM AS AFORESAID TO THE SUB-CONTRACTOR REFERRED TO IN THE SECOND PROVISO SHALL FURNISH TO THE PRESCRIBED INCOME- TAX AUTHORITY OR THE PERSON AUTHORISED BY IT SUCH PARTICULARS AS MAY BE PRESCRIBED IN SUCH FORM AND WITHIN SUCH TIME AS MAY BE PRESCRIBED; OR (II) ANY SUM CREDITED OR PAID BEFORE THE 1ST DAY OF JUNE, 1972; OR (III) ANY SUM CREDITED OR PAID BEFORE THE 1ST DAY OF JUNE, 1973, IN PURSUANCE OF A CONTRACT BETWEEN THE CONTRACTOR AND A CO- OPERATIVE SOCIETY OR IN PURSUANCE OF A CONTRACT BETWEEN SUCH CONTRACTOR AND THE SUB- CONTRACTOR IN RELATION TO ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK) UNDERTAKEN BY THE CONTRACTOR FOR THE CO-OPERATIVE SOCIETY. 5 I.T.A. NO. 1067/KOL/2017 ASSESSMENT YEAR: 2013-14 PRAVINA KHARA EXPLANATION - FOR THE PURPOSE OF CLAUSE (I), 'GOODS CARRIAGE' SHALL HAVE THE SAME MEANING AS IN THE EXPLANATION TO SUB-SECTION (7) OF SECTION 44AE.' 4. SECTION 40(A)(IA) OF THE ACT, IN TURN, PROVIDES THAT CERTAIN AMOUNTS SHALL NOT BE DEDUCTED IN COMPUTING THE INCOME CHARGEABLE TO TAX UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION', NAMELY, PAYMENTS MADE TOWARDS INTEREST, COMMISSION OR BROKERAGE ETC., ON WHICH TAX IS DEDUCTIBLE AT SOURCE AND SUCH TAX HAS NOT BEEN DEDUCTED OR, AFTER DEDUCTION, THE SAME HAS NOT BEEN PAID ON OR BEFORE THE DUE DATE SPECIFIED IN SUB-SECTION (1) OF SECTION 139 OF THE ACT. SECTION 40(A)(IA) OF THE ACT, INSOFAR AS IT IS RELEVANT FOR OUR PURPOSE, READS AS UNDER:- 'SECTION 40(A)(IA):- ANY INTEREST, COMMISSION OR BROKERAGE, [RENT, ROYALTY,] FEES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SERVICES PAYABLE TO A RESIDENT, OR AMOUNTS PAYABLE TO A CONTRACTOR OR SUB-CONTRACTOR, BEING RESIDENT, FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOR FOR CARRYING OUT ANY WORK), ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII-B AND SUCH TAX HAS NOT BEEN DEDUCTED OR, AFTER DEDUCTION, [HAS NOT BEEN PAID ON OR BEFORE THE DUE DATE SPECIFIED IN SUB-SECTION (1) OF SECTION 139 :]' 5. FROM THE ABOVE STATUTORY PROVISIONS, IT CAN BE SEEN THAT UNDER SECTION 40(A)(IA) OF THE ACT, PAYMENTS MADE TOWARDS INTEREST, COMMISSION OR BROKERAGE ETC. WOULD BE EXCLUDED FOR DEDUCTION IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION', WHERE THOUGH TAX WAS REQUIRED TO BE DEDUCTED AT SOURCE, IS NOT DEDUCTED OR WHERE AFTER SUCH DEDUCTION, THE SAME HAS NOT BEEN PAID ON OR BEFORE THE DUE DATE. THUS FOR APPLICATION OF SECTION 40(A)(IA) OF THE ACT, THE FOREMOST REQUIREMENT WOULD BE OF TAX DEDUCTION AT SOURCE. 6. SECTION 194C, AS ALREADY NOTICED, MAKES PROVISION WHERE FOR CERTAIN PAYMENTS, LIABILITY OF THE PAYEE TO DEDUCT TAX AT SOURCE ARISES. THEREFORE, IF THERE IS ANY BREACH OF SUCH REQUIREMENT, QUESTION OF APPLICABILITY OF SECTION 40(A)(IA) WOULD ARISE. DESPITE SUCH CIRCUMSTANCES EXISTING, SUB-SECTION (3) MAKES EXCLUSION IN CASES WHERE SUCH LIABILITY WOULD NOT ARISE. WE ARE CONCERNED WITH THE FURTHER PROVISO TO SUB- SECTION (3), WHICH PROVIDES THAT NO DEDUCTION UNDER SUB-SECTION (2) SHALL BE MADE FROM THE AMOUNT OF ANY SUM CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID TO THE SUB-CONTRACTOR DURING THE COURSE OF BUSINESS OF PLYING, HIRING OR LEASING GOODS CARRIAGES, ON PRODUCTION OF A DECLARATION TO THE PERSON CONCERNED PAYING OR CREDITING SUCH SUM IN THE PRESCRIBED FORM AND VERIFIED IT IN THE PRESCRIBED MANNER WITHIN THE TIME AS MAY BE PRESCRIBED, IF SUCH SUB-CONTRACTOR IS AN INDIVIDUAL WHO HAS NOT OWNED MORE THAN TWO GOODS CARRIAGES AT ANY TIME DURING THE PREVIOUS YEAR. 7. THE EXCLUSION PROVIDED IN SUB-SECTION (3) OF SECTION 194C FROM THE LIABILITY TO DEDUCT TAX AT SOURCE UNDER SUB-SECTION (2) WOULD THUS BE COMPLETE THE MOMENT THE REQUIREMENTS CONTAINED THEREIN ARE SATISFIED. SUCH REQUIREMENTS, PRINCIPALLY, ARE THAT THE SUB-CONTRACTOR, RECIPIENT OF THE PAYMENT PRODUCES A NECESSARY DECLARATION IN THE PRESCRIBED FORMAT AND FURTHER THAT SUCH SUB-CONTRACTOR DOES NOT OWN MORE THAN TWO GOODS CARRIAGES DURING THE ENTIRE PREVIOUS YEAR. THE MOMENT, SUCH REQUIREMENTS ARE FULFILLED, THE LIABILITY OF THE ASSESSEE TO DEDUCT TAX ON THE PAYMENTS MADE OR TO BE MADE TO SUCH SUB-CONTRACTORS WOULD CEASE. IN FACT HE WOULD HAVE NO AUTHORITY TO MAKE ANY SUCH DEDUCTION. 8. THE LATER PORTION OF SUB-SECTION (3) WHICH FOLLOW THE FURTHER PROVISO IS A REQUIREMENT WHICH WOULD ARISE AT A MUCH LATER POINT OF TIME. SUCH REQUIREMENT IS THAT THE PERSON RESPONSIBLE FOR PAYING SUCH SUM TO THE SUB-CONTRACTOR HAS TO FURNISH SUCH PARTICULARS AS PRESCRIBED. WE MAY NOTICE THAT UNDER RULE 29D OF THE RULES, SUCH 6 I.T.A. NO. 1067/KOL/2017 ASSESSMENT YEAR: 2013-14 PRAVINA KHARA DECLARATION HAS TO BE MADE BY THE END OF JUNE OF THE NEXT ACCOUNTING YEAR IN QUESTION. 9. IN OUR VIEW, THEREFORE, ONCE THE CONDITIONS OF FURTHER PROVISO OF SECTION 194C(3) ARE SATISFIED, THE LIABILITY OF THE PAYEE TO DEDUCT TAX AT SOURCE WOULD CEASE. THE REQUIREMENT OF SUCH PAYEE TO FURNISH DETAILS TO THE INCOME TAX AUTHORITY IN THE PRESCRIBED FORM WITHIN PRESCRIBED TIME WOULD ARISE LATER AND ANY INFRACTION IN SUCH A REQUIREMENT WOULD NOT MAKE THE REQUIREMENT OF DEDUCTION AT SOURCE APPLICABLE UNDER SUB-SECTION (2) OF SECTION 194C OF THE ACT. IN OUR VIEW, THEREFORE, THE TRIBUNAL WAS PERFECTLY JUSTIFIED IN TAKING THE VIEW IN THE IMPUGNED JUDGMENT. IT MAY BE THAT FAILURE TO COMPLY SUCH REQUIREMENT BY THE PAYEE MAY RESULT INTO SOME OTHER ADVERSE CONSEQUENCES IF SO PROVIDED UNDER THE ACT. HOWEVER, FULFILMENT OF SUCH REQUIREMENT CANNOT BE LINKED TO THE DECLARATION OF TAX AT SOURCE. ANY SUCH FAILURE THEREFORE CANNOT BE VISUALIZED BY ADVERSE CONSEQUENCES PROVIDED UNDER SECTION 40(A)(IA) OF THE ACT. 10. WHEN ON THE BASIS OF THE RECORD IT IS NOT DISPUTED THAT THE REQUIREMENTS OF FURTHER PROVISO WERE FULFILLED, THE ASSESSEE WAS NOT REQUIRED TO MAKE ANY DEDUCTION AT SOURCE ON THE PAYMENTS MADE TO THE SUB-CONTRACTORS. IF THAT BE OUR CONCLUSION, APPLICATION OF SECTION 40(A)(IA) WOULD NOT ARISE SINCE, AS ALREADY NOTICED, SECTION 40(A)(IA) WOULD APPLY WHEN THERE IS A REQUIREMENT OF DEDUCTION OF TAX AT SOURCE AND SUCH REQUIREMENT IS EITHER NOT FULFILLED OR HAVING DEDUCTED TAX AT SOURCE IS NOT DEPOSITED WITHIN PRESCRIBED TIME. 11. WITH RESPECT TO THE TRIBUNAL'S EARLIER JUDGMENT IN CASE OF SHREE PRAMUKH TRANSPORT CO. LTD. (SUPRA) , NEITHER SIDE COULD THROW ANY LIGHT WHETHER THE REVENUE HAD CARRIED THE SAME IN APPEAL OR NOT. HOWEVER, WE HAVE EXAMINED THE QUESTION INDEPENDENTLY AND COME TO OUR OWN CONCLUSION RECORDED HEREIN ABOVE. 7. IN VIEW OF THE ABOVE DISCUSSION AND AS THE ORDER OF THE LD. CIT(A) IS LINE WITH THE DECISION OF THE HONBLE HIGH COURT OF GUJARAT IN THE CASE OF CIT VS. VALIBHAI KHANBHAI MANKAD (SUPRA), WE DO NOT FIND ANY REASON TO INTERFERE THIS FINDING OF THE LD. CIT(A), WE UPHOLD THE SAME AND DISMISS THIS GROUND OF THE REVENUE. 8. GROUND NO. 2 IS AGAINST THE DELETION OF AN ADDITION OF RS.2,03,26,223/- MADE BY THE ASSESSING OFFICER ON THE GROUND THAT THE ASSESSEE CLAIMED BOGUS EXPENDITURE. 8.1. THE LD. CIT(A) AT PAGE 31 PARA 5 TO 8 OF HIS ORDER HELD AS FOLLOWS:- 5. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT AS WELL AS THE ASSESSMENT ORDER FRAMED IN THE LIGHT OF THE MATERIAL AVAILABLE ON RECORD BEFORE THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS. I HAVE ALSO EXAMINED THE BOOKS OF ACCOUNTS OF THE APPELLANT SUBMITTED IN THIS COPY, AND FORWARDED TO THE LD. AA FOR NECESSARY EXAMINATION AND REMAND REPORT. I FIND THAT THE MAIN PLANK OF THE LD. AO FOR ADDITION OF SAID RS.2,03,26,233/- IS THAT, SAME SETS OF CHALLANS WERE PRODUCED TWICE IN COURSE OF ASSESSMENT. THE APPELLANT ON THE OTHER HAND, RELIES ON HER AUDITED ACCOUNTS, VARIOUS SUBMISSIONS AND REJOINDER TO REMAND REPORT 7 I.T.A. NO. 1067/KOL/2017 ASSESSMENT YEAR: 2013-14 PRAVINA KHARA CONTAINING ANALYSIS OF THE ENTIRE AMOUNT OF RS.3,58,55,950/- DEBITED TO PROFIT AND LOSS ACCOUNT WHICH INCLUDES THE SAID AMOUNT OF RS.2,03,26,223/- AND SUBMITS THAT IN HIS VIEW THERETO, THERE CANNOT BE A DOUBLE DEBIT OR DOUBLE CLAIM OF THE SAME AMOUNT AS ALLEGED. 6. IT IS PERTINENT TO NOTE THAT THE AO HIMSELF HAS ADMITTED IN PAGE 4, PARA 5 OF THE ASSESSMENT ORDER THAT TAX AT SOURCE HAS BEEN DEDUCTED ON RS.2,31,31,442/-. ALSO, THE BREAK-UP AS PER THE ASSESSMENT ORDER SHOWS THAT AMOUNT OF RS.2,28,18,351/- PAID TO VSPL IS INCLUDED IN THE SAID RS.2,31,31,442/-. THEREFORE, THE DISALLOWANCE OF RS.L,92,82,747/- (RS.L,90,73,548/- + RS.2.14.542/-(CASH SUPERVISION EXPENSE) - RS,5,343/- (DEDUCTION FROM VSPL)) ON THE GROUNDS OF NON-DEDUCTION OF TDS WHICH IS A PART OF THE GROSS RECEIPTS FROM VSPL RS.2,28,18,351/- IS SELF- CONTRADICTORY AND A MISTAKE APPARENT FROM RECORDS. 7. WITH REGARD TO PAYMENT TO LAFARGE ARESMETA, PRISM CEMENT AND ULTRATECH CEMENT, IT IS NOTED THE SAME ARE ON ACCOUNT OF DEBIT NOTES AND DO NOT ATTRACT TDS PROVISIONS, AS CORRECTLY STATED IN PARA 7.3 OF THE REJOINDER TO REMAND REPORT BY THE APPELLANT. 8. CONSIDERING THE RECORDS PROVIDED BY THE LD. AO AND SUBMISSIONS OF THE APPELLANT, I AM OF THE VIEW THAT MERE PRODUCTION OF THE SAME SET OF CHALLANS FOR VERIFICATION OF TDS COMPLIANCE CANNOT LEAD TO DOUBLE CLAIM OF THE SAME EXPENDITURE. VIEW IS FORTIFIED BY THE FACT THAT LD. AO HAS ALSO RELIED ON THE SAME ACCOUNT AFTER DETAILED DELIBERATIONS IN THE ASSESSMENT ORDER. I THEREFORE, FIND NO JUSTIFICATION FOR THE IMPUGNED ADDITION OF RS.2,03,26,223/-, WHICH IN MY CONSIDERED VIEW ARE NOT SUSTAINABLE IN THE FACTS OF THE CASE. THE SAME ARE THEREFORE ORDERED TO BE DELETED . 9. WE FIND THAT THE ASSESSING OFFICER HAS ERRED IN MAKING THIS DISALLOWANCE. IN FACT SUCH AN ERROR MADE BY THE ASSESSING OFFICER HAS RESULTED IN HIGH PITCH ASSESSMENT CAUSING SEVERE HARDSHIP TO THE ASSESSEE. THE ASSESSING OFFICER ADMITS THAT THE ASSESSEE DEDUCTED TAX ON RS.2,28,18,351/- BUT AT THE SAME TIME ALLEGES THAT THE ASSESSEE HAS CLAIMED THE EXPENSE OF RS.1,92,82,747/- TWICE, WHILE WRITING IN THE NOTE THAT RS.1,90,73,548/- (WHICH IS THE CORRECT FIGURE) IS PART OF RS.2,28,18,351/-. THE ASSESSEE HAD SUBMITTED THE FOLLOWING TO THE ASSESSING OFFICER:- GROSS AMOUNT RS. 2,28,18,351/- LESS: SERVICE TAX COMPONENT (NOT ROUTED THROUGH P/L) (RS.25,09,463/-) _____________________ BALANCE FIGURE RS.2,03,08,888/- LESS: TERMINAL CHARGES (DEDUCTED FROM HANDLING & SUPERVISION) RS.12,29,440/- RECEIPTS TO THE CREDIT OF P/L A/C LESS: DEMURRAGE (SHOWN SEPARATELY IN P/L) RS.5,900/-____ RS.1,90,73,548/- 8 I.T.A. NO. 1067/KOL/2017 ASSESSMENT YEAR: 2013-14 PRAVINA KHARA 9.1. THE LD. D/R COULD NOT CONTROVERT THESE FACTUAL FINDINGS OF THE LD. CIT(A) THAT THERE IS NO CLAIM OF DEDUCTION TWICE OF THE SAME AMOUNT. HENCE, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A). THUS, WE UPHOLD THIS FINDING OF THE LD. CIT(A) AND DISMISS THIS GROUND OF THE REVENUE. 10. GROUND NO. 3 IS ON THE DELETION OF ADDITION OF RS.25,00,000/- MADE ON ACCOUNT OF DIFFERENCE FOUND IN THE LEDGER ACCOUNT WITH M/S PRISM CEMENTS II. 10.1. AT PARA 5 PAGE 37 OF HIS ORDER, THE LD. CIT(A) HELD AS FOLLOWS:- THE DOCUMENTS SUBMITTED BY THE APPELLANT SUPPORTS THE FACTUAL POSITION AS BROUGHT FORTH BY THE APPELLANT. THIS OBSERVATION IS BASED ON THE FACT THAT PROBABILITY OF HUMAN ERROR PLAYING ITS ROLE CANNOT BE RULED OUT, AND IS A LIKELY CIRCUMSTANCE. SIMILARLY, IN MY CONSIDERED VIEW OF THE SITUATION, IF THERE WAS IN FACT, ANY DIFFERENCE IN TWO ACCOUNTS, THE CLOSING BALANCE WOULD NOT TALLY AND THE CUSTOMER OF APPELLANT-ASSESSEE (PRISM CEMENT 11) WOULD NOT PAY RS.25,00,000/- OVER AND ABOVE BILL AMOUNT TO THE APPELLANT. IT IS TO BE SAID THAT THE APPELLANT HAS RIGHTLY STATED IN HIS REJOINDER TO THE REMAND REPORT THAT IF THE LD. AO CONSIDERS THE EARLIER FIGURE OF RS.46,26,749/- INSTEAD OF RS.71,26,749/- AS THE CORRECT AMOUNT OF THE SAID BILL, THE INCOME OF THE APPELLANT OUGHT TO BE REDUCED BY RS.25,00,000/- IN PLACE OF THE SAME BEING ADDED. IN THESE CIRCUMSTANCES, I FIND THAT THERE IS NO MERIT IN THE IMPUGNED ADDITION OF RS.25,00,00/-, AND THE APPELLANT IS DESERVANT OF RELIEF IN THE MATTER. IT IS ORDERED ACCORDINGLY, AND THIS GROUND OF APPEAL IS ALLOWED. 11. THE LD. D/R COULD NOT CONTROVERT THESE FACTUAL FINDINGS OF THE LD. CIT(A). IF THE DIFFERENCE AS ALLEGED BY THE LD. ASSESSING OFFICER IS CORRECT, THEN, THE INCOME OF THE ASSESSEE HAS TO BE REDUCED BY RS.25,00,000/-. THE ASSESSING OFFICER HAS COMMITTED A FACTUAL MISTAKE. THERE IS NO GROUND WHATSOEVER FOR MAKING AN ADDITION. HENCE, WE UPHOLD THE ORDER OF THE LD. CIT(A) AND DISMISS THIS GROUND OF THE REVENUE. 12. GROUND NO. 4 IS AGAINST THE DELETION OF RS.3,003/-. HERE ALSO, THE LD. CIT(A) ACCEPTED THE EXPLANATION GIVEN BY THE ASSESSEE THAT THE DISCOUNT AMOUNT HAS CRYSTALLIZED DURING THE YEAR AND IT IS NOT A PRIOR PERIOD EXPENSE. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) AND DISMISS THIS GROUND OF THE REVENUE. 13. GROUND NO. 5 IS AGAINST THE DELETION OF DISALLOWANCE OF RS.6,302/-. 13.1. THIS IS A DEDUCTION WAS CLAIMED ON THE GROUND THAT BANK CHARGES WERE INCURRED AGAINST EARNING INTEREST INCOME. THIS ADDITION IS DELETED BY THE LD. CIT(A) 9 I.T.A. NO. 1067/KOL/2017 ASSESSMENT YEAR: 2013-14 PRAVINA KHARA ON THE GROUND THAT, THE ASSESSING OFFICER WRONGLY TREATED THE PAYMENT AS PERSONAL IN NATURE. WE SEE NO REASON TO INTERFERE IN THIS FINDING OF THE LD. CIT(A) AND UPHOLD THE SAME. GROUND NO. 5 OF THE REVENUE IS DISMISSED. 14. GROUND NO. 6 OF THE REVENUE IS GENERAL IN NATURE. 15. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. KOLKATA, THE 22 ND DAY OF MAY, 2019. SD/- SD/- [S.S. VISWANETHRA RAVI] [J. SUDHAKAR REDDY] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 22.05.2019 {SC SPS} COPY OF THE ORDER FORWARDED TO: 1. PRAVINA KHARA 56/1, CANNING STREET KOLKATA 700 001 2. INCOME TAX OFFICER, WARD-35(1), KOLKATA 3. CIT(A)- 4. CIT- , 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, KOLKATA BENCHES