Rajdeep Prasad Shaw, North 24 Parganas V. ITO, Ward-51(3), Kolkata, Kolkata

ITA 1237/KOL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100251 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 06-08-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 24-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NILOY BARAN SOM JCIT SRDR
• Assessee Lawyers: A K TIBREWAL
• Keywords: Opportunity of being heard; Retrospective amendment; Corroborative evidences
• Section: 40A(3); 143(3); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 1114 & 1237 / KOL / 2012 ASSESSMENT YEARS :2008-09 & 2006-07 RAJDEEP PRADSAD SHAW 29, EAST GHOSHPARA ROAD, P.O. KANKINARA, 24 PARGANAS (NORTH) PIN 743126 [ PAN NO.ALGPS 3030B ] V/S . INCOME TAX OFFICER WARD-51(3) BLOCK-DS 2 & 3 UTTARAPAN COMPLEX, MANICKTALA, CIVIC CENTRE, KOLKATA-700 054 /APPELLANT .. / RESPONDENT /BY ASSESSEE SHRI A.K.TIBREWAL, FCA /BY REVENUE SHRI NILOY BARAN SOM, JCIT-SR-DR /DATE OF HEARING 17-11-2015 ! /DATE OF PRONOUNCEMENT 11-12-2015 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- BOTH APPEALS BY THE ASSESSEE ARE ARISING OUT OF OR DER OF COMMISSIONER OF INCOME TAX (APPEALS)-XXXII, KOLKATA IN APPEAL NO .205 276/CIT(A)- XXXII/10-11/08-09/51(3)/KOL DATED 20.06.2012 & 27.1 0.2010. ASSESSMENTS WERE FRAMED BY ITO WARD-51(3), KOLKATA U/S 143(3) O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HI S ORDERS DATED 31.12.2010 FOR ASSESSMENT YEARS 2008-09 & 2006-07 RESPECTIVELY. ITA NO.1114 & 1237/KOL/2012 A.YS. 08-09 & 06-07 RAJDEEP PRASAD SHAW V. ITO WD-51(3) KOL. PAGE 2 THESE TWO APPEALS ARE FILED BY THE SAME ASSESSEE, T HEREFORE WE HEARD THEM TOGETHER. WE DEEM IT CONVENIENT TO PASS A COMMON OR DER. FIRST WE TAKE UP ITA NO. 1114/KOL/2012 A.Y. 08-09. 2. FIRST ISSUE RAISED BY ASSESSEE IN THIS APPEAL IS THAT LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF 5,24,500/- IN RESPECT OF OUTSTANDING BALANCE OF SUNDRY CREDITORS NAMELY M/S R.B. STEEL TRADERS APPE ARING IN THE BOOKS OF ACCOUNT. 3. BRIEFLY STATED FACTS ARE THAT ASSESSEE IS AN IND IVIDUAL AND ENGAGED IN BUSINESS OF CIVIL CONTRACTOR, FABRICATION JOB AND S UPPLY. DURING THE YEAR UNDER CONSIDERATION, ASSESSEE HAS SHOWN CREDITOR OF 5,24,500/- IN HIS BOOKS OF ACCOUNT IN THE NAME OF M/S R.B.STEEL TRADERS. ENQUI RING BY THE AO M/S R.B. STEEL TRADERS CONFIRMS THAT, THERE WAS NO OUTSTANDI NG BALANCE. ON QUESTION BY AO TO ASSESSEE ABOUT THE OUTSTANDING BALANCE OF THE CREDITOR, ASSESSEE SUBMITTED THAT THE OUTSTANDING BALANCE IS BROUGHT F ORWARD BALANCE PAYABLE BY ASSESSEE TO M/S R.B.STEEL TRADERS. HOWEVER, AO DISR EGARDED THE EXPLANATION MADE BY ASSESSEE AND HELD THAT ASSESSEES CLAIM IS BOGUS AND ACCORDINGLY HE ADDED IT TO THE TOTAL INCOME OF ASSESSEE. 4. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) WHO UPHELD THE ACTION OF AO BY OBSERVING AS UNDER:- THIS GROUND IS RELATED TO THE ADDITION OF RS.5,24, 500/- AS BOGUS CREDITORS IN THE NAME OF R.B. STEEL CENTRE. AT THE APPELLATE STAGE THE SUBMISSION OF THE ASSESSEE AS WELL AS THE ORDER OF THE AO DULY CONSIDERED. AT THE TIME OF ASSESSMENT PROCEEDINGS A S WELL AS APPELLATE PROCEEDINGS THE APPELLANT ACCEPTED THAT THIS OUTSTA NDING BALANCE IS BROUGHT FORWARD BALANCE FROM EARLIER YEAR AND HAS N OTHING TO DO WITH THE TRANSACTION UNDER THE YEAR UNDER CONSIDERATION. THIS PLEA OF THE APPELLANT IS NOT TENABLE BECAUSE OF ANY TRADE LIABI LITY FOUND TO BE OUT GENUINE BY THE AO FOR ANY YEAR, THE AMOUNT IS CHARG EABLE TO THE TAX IN THAT YEAR WHEN ASSESSING OFFICER FOUND BOGUS. THE S ECTION 41(1) OF THE IT ACT EMPOWERED TO THE AO TO DO SO. IN SUBMISSIONS THE A/R OF THE APPELLANT TAKEN ANOTHER ARGUMENT THE ADJUSTMENT MADE BY THE SAID PARTY RESULTING INTO NIL OUTSTANDING BALANCE AS PER THEIR BANKS OF ITA NO.1114 & 1237/KOL/2012 A.YS. 08-09 & 06-07 RAJDEEP PRASAD SHAW V. ITO WD-51(3) KOL. PAGE 3 ACCOUNT MAY BE FOR THE REASON KNOWN TO THEM AND WHI CH MAY NOT HAVE SIMULTANEOUS EFFECT IN THE BOOKS OF YOUR APPELLANT. IN SIMPLE LANGUAGE, IT IS NOT A BENEFIT IN RESPECT OF TRADING LIABILITY BY WAY OF NEITHER REMISSION NOR CESSATION OBTAINED/AVAILED BY YOUR AP PELLANT. IT IS A COMPLETELY RESULT OF UNILATERAL ACT ON THE PART OF THE SAID SUNDRY CREDITOR PARTY AND NOT ON THE PART OF YOUR APPELLANT. THIS ARGUMENT OF THE APPELLANT IS NOT TRUE. THE ADJUSTMENT MADE BY THE A PPELLANT NOT THE THIRD PARTY. SECONDLY THE APPELLANT TAKEN THE BENEFIT BY CREATING BOGUS TRADE LIABILITY. THE APPELLANT WILL NOT MAKE THE PAYMENT BECAUSE THERE IS NO OUTSTANDING BALANCE FROM THE THIRD PARTY. THIRDLY THE APPELLANT TAKEN THE SHELTER OF EXPLANAT ION 1 TO SECTION 41(1) OF THE IT ACT IS JUSTIFIED. THUS THE ADDITION MADE BY THE AO IS CONFIRMED. HENCE THIS GROUND IS NOT ALLOWED. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) ASSESSE E PREFERRED SECOND APPEAL BEFORE US. SHRI A.K. TIBREWAL, LD. AUTHORIZED REPRESENTATIVE A PPEARING ON BEHALF OF ASSESSEE AND SHRI NILOY BARAN SOM, LD. DEPARTMENTAL REPRESENTATIVE APPEARING ON BEHALF OF REVENUE. 5. WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PART IES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. LD. AR SUBMITTED PAP ER BOOK WHICH IS RUNNING IN PAGES FROM 1 TO 34 AND STATED THAT AS PER THE BO OK OF ASSESSEE THE PARTYS OUTSTANDING BALANCE IS APPEARING FOR AN AMOUNT OF 5,24,500/- AND THIS AMOUNT WAS BROUGHT FROM EARLIER YEAR AND HE REQUEST ED NOT TO MAKE ANY ADDITION. ON THE OTHER HAND, LD. DR VEHEMENTLY RELI ED ON THE ORDERS OF AUTHORITIES BELOW. FROM THE AFORESAID DISCUSSION, W E FIND THAT AO TREATED THIS OUTSTANDING BALANCE AS BOGUS BECAUSE PARTY IN HIS C ONFIRMATION STATED THAT THE OUTSTANDING BALANCE AT THE YEAR END IS NIL. WE FURTHER FIND FROM THE RECORDS THAT THIS IS THE LIABILITY AGAINST EXPENSES WHICH HAS BEEN CLAIMED IN EARLIER YEAR BY ASSESSEE AND THESE EXPENSES HAVE BE EN DULY RECORDED AND ALLOWED IN EARLIER YEAR. HOWEVER, THE PAYMENT HAS N OT BEEN MADE TO THE PARTY M/S R.B. STEEL CENTRE DURING THE RELEVANT YEAR SO I T IS APPEARING IN ASSESSEES UNDER PAYABLE ACCOUNT IN ITS BOOKS OF ACCOUNT. NOW IT IS AN ESTABLISHED LAW ITA NO.1114 & 1237/KOL/2012 A.YS. 08-09 & 06-07 RAJDEEP PRASAD SHAW V. ITO WD-51(3) KOL. PAGE 4 THAT ANY EXPENSE WHICH HAS BEEN CLAIMED IN THE RELE VANT YEAR AND CORRESPONDING THE LIABILITY IN RELATION TO THAT EXP ENSE HAS NOT CEASED TO EXIST IN THE BOOKS OF ACCOUNT OF ASSESSEE THAT HAS TO BE ADD ED IN THE INCOME OF ASSESSEE BY VIRTUE OF PROVISION U/S 41(1) OF THE AC T. WE HOWEVER FIND FROM THE RECORDS THAT THE CONFIRMATION OBTAINED FROM THE PAR TY R.B.STEEL TRADERS DURING THE ASSESSMENT PROCEEDINGS WAS NEVER CONFRONTED TO ASSESSEE. THIS FACT HAS BEEN BROUGHT BEFORE US BY THE LD. AR. SINCE THE CON FIRMATION HAS NOT BEEN CONFRONTED TO THE ASSESSEE BY THE AO. WE DEEM IT PR OPER TO SET ASIDE THE ORDER OF LD. CIT(A) ON THIS ISSUE AND REMAND THE IS SUE TO THE FILE OF AO FOR FRESH ADJUDICATION AS PER LAW AFTER PROVIDING REASO NABLE OPPORTUNITY OF BEING HEARD TO ASSESSEE THIS GROUND OF ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. 6. NEXT GROUND IN ASSESSEES APPEAL IS THAT DURING THE YEAR ASSESSEE WAS SHOWING A CREDIT LIABILITY TO M/S KEDIA PIPES IN TH E YEAR END FOR AN AMOUNT OF 65,153. ON CONFIRMATION FROM THE PARTY THE AMOUNT R ECEIVABLE WAS NIL. THEREFORE AO PRESUMED THAT PAYMENT HAS BEEN MADE BY ASSESSEE IN CASH FOR THE SAME AMOUNT AND HE DISALLOWED THE PAYMENT U /S. 40A(3) OF THE ACT AND ADDED IT TO THE TOTAL INCOME OF ASSESSEE. 7. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) WHO UPHELD THE ACTION OF AO BY OBSERVING AS UNDER:- THIS GROUND IS RELATED TO THE ADDITION OF RS.65,15 3/- U/S 40A(3) OF THE IT ACT. THE ASSESSING OFFICER IN HIS ASSESSMENT ORDER CLEARLY MENTION THAT ASSESSEE HAS WRONGLY SHOWN THE ABOVE AMOUNT AS THE CLOSING BALANCE IN HIS ACCOUNTS EVEN THOUGH HE HAS ALREADY MADE THE PAYMENT TO THE PARTY IN CASH . THIS FINDING OF THE ASSESSING OFFICER IS VERY SI GNIFICANT IT SHOWS THAT ADJUSTMENT MADE BY THE APPELLANT NOT BY THE THIRD PARTY, ONE SIDE THE APPELLANT IS MAKING THE PAYMENT IN CASH AN D ANOTHER SIDE HE IS SHOWING BOGUS TRADE LIABILITY. IT PROVES THAT THE A DJUSTMENT MADE BY THE APPELLANT AND NOT BY THE THIRD PARTY. SO THE PLEA T AKEN BY THE APPELLANT IN HIS SUBMISSION AND EXPLANATION 1 OF THE SECTION 41(1) OF THE IT ACT IS NOT APPLICABLE. SO THE ADDITION OF RS.65,153/- IS J USTIFIED. I CONFIRM THE ADDITION U/S. 41(1) OF THE IT ACT. ITA NO.1114 & 1237/KOL/2012 A.YS. 08-09 & 06-07 RAJDEEP PRASAD SHAW V. ITO WD-51(3) KOL. PAGE 5 BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) ASSESSE E PREFERRED SECOND APPEAL BEFORE US. 8. WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE SIDE AND PERUSED THE MATERIALS AVAILABLE ON RECORD. LD AR SUBMITTED THAT LIABILITY IS VERY MUCH APPEARING IN THE BOOKS OF ACCOUNT OF ASSESSEE AND N O PAYMENT WAS MADE BY ASSESSEE DURING THE RELEVANT YEAR. THE LD. AR ALSO SUBMITTED THAT THE CONFIRMATION OBTAINED WAS NEVER CONFRONTED WITH THE ASSESSEE. FROM THE AFORESAID DISCUSSION, WE FIND THAT AO HAS DISALLOWE D THE CLAIM OF ASSESSEE BECAUSE THE PARTY M/S KEDIA PIPES CONFIRMED THE AMO UNT PAYABLE BALANCE IS NIL. HOWEVER, LD. AR OF ASSESSEE CLAIMED BEFORE US THAT SAID CONFIRMATION WAS NEVER CONFRONTED BEFORE US. IN VIEW OF THE ABOV E CONSIDERATION, WE RESTORE THIS MATTER TO THE FILE OF ASSESSING OFFICE R WITH A DIRECTION TO CONFRONT THE RECEIPT FROM THE PARTY WITH THE ASSESSEE AND PA SS A SPEAKING ORDER AS PER LAW. THIS GROUND OF ASSESSEES APPEAL IS ALLOWED FO R STATISTICAL PURPOSE. 9. NEXT GROUND IS AS REGARDS THAT LD. CIT(A) HAS ER RED IN CONFIRMING THE ACTION OF AO ON ACCOUNT OF MAKING THE DISALLOWANCE ON ESTIMATE BASIS. THE ASSESSEE HAS CLAIMED SEVERAL EXPENSES IN ITS PROFIT AND LOSS ACCOUNT FOR AN AMOUNT OF 6,49,658/-. SUCH EXPENSES INCLUDE LOADING AND UNLOA DING CHARGES RS. 221905.00, GENERAL EXPENSES RS. 74343.00, POOJA EXPENSES RS. 4862.00, REPAIR AND MAINTENANCE RS. 53168.00, TRAVELLING AND CONVEYANCE RS. 32925.00, ADVERTISEMENT RS. 12100.00, ENTERTAINMENT RS. 56885.00, STAFF WELFARE RS. 60710.00, AND SUPERVISION CHARGES 13276 0.00. ON QUESTION BY AO TO ASSESSEE ABOUT THE SUPPORTING EVIDENCE IN REL ATION TO EXPENSES CLAIMED, THE ASSESSEE SUBMITTED THAT HE MAINTAINS O NLY SELF-MADE VOUCHERS IN RESPECT OF EXPENSES CLAIMED. IN ABSENCE OF EVIDENCE IN SUPPORT OF EXPENSE, ALL THE ENTIRE EXPENSES ARE NOT VERIFIABLE. THEREFO RE, 20% OF SUCH EXPENSES AMOUNTING TO 129931/- WAS DISALLOWED BY AO AND ADDED IT TO ASSES SEES INCOME. ITA NO.1114 & 1237/KOL/2012 A.YS. 08-09 & 06-07 RAJDEEP PRASAD SHAW V. ITO WD-51(3) KOL. PAGE 6 10. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) WHO UPHELD THE ACTION OF AO AFTER GIVING SOME RELIEF BY OBSERV ING BY AS UNDER:- THIS GROUND IS RELATED TO THE ADDITION ON VARIOUS EXPENSES CLAIMED BY THE APPELLANT. THE ASSESSING OFFICER MADE THE ADDIT ION OF RS.1,29,931/- AND TREATING THE VARIOUS EXPENSES AS NON GENUINE BE CAUSE APPELLANT HAVING ONLY SELF MADE VOUCHER. HENCE THE AO TREATED 20% EXPENSES AS NON GENUINE. DURING THE APPELLATE PROCEEDING THE AP PELLANT ARGUED IN HIS SUBMISSION THAT ASSESSING OFFICER HAS ALSO NOT POINTED OUT ANY SPECIFIC DEFECT. CONSIDERING THE FACT AND CIRCUMSTANCES OF THE CASE I AM OF THE VIEW THAT THE ADDITION MADE BY THE AO IS HIGHER SIDE SO I CON FIRM THE DISALLOWANCE @ 15% OF VARIOUS EXPENSES WHICH COMES TO RS.97,449/- AND THE BALANCE IS DELETED. HENCE THE GROUND IS PAR TLY ALLOWED. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) ASSESSE E PREFERRED SECOND APPEAL BEFORE US. 11. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. LD. AR SUBMITTED THAT THE SAID EXPENSES WER E DISALLOWED BY ASSESSING OFFICER SIMPLY ON SURMISE AND SUSPICIOUS BASIS AND BOOKS OF ACCOUNT OF ASSESSEE WERE MAINTAINED ALONG WITH ALL BILLS AND VOUCHERS AND SAME WERE AUDITED BY A QUALIFIED CHARTERED ACCOUNTA NT AND NO ADVERSE REMARKS WERE MADE BY CA IN RELATION TO GENUINENESS OF ITS BOOKS OF ACCOUNT. LD. DR ON THE OTHER HAND VEHEMENTLY RELIED ON THE O RDERS OF AUTHORITIES BELOW. FROM THE AFORESAID DISCUSSION, WE FIND THAT AO DISA LLOWED THE EXPENSE ON AD HOC BASIS FOR ABSENCE OF AND VOUCHERS. WE FURTHER FIND THAT NO ADVERSE REMARKS FROM THE AUDITOR REGARDING THE BOOKS OF ACC OUNTS OF THE ASSESSEE. BESIDES AO HAS NOT REJECTED THE BOOKS OF ACCOUNT OF ASSESSEE AND THERE IS NO COMMENT MADE BY AO REGARDING CORRECTNESS OF INCOME AND EXPENSES. THE AO HAS MERELY DISALLOWED THE EXPENSES ON AD HOC BASIS WHICH IS NOT AS PER THE LAW. HOWEVER WE FIND THAT THE ELEMENT OF BOGUS EXPENSES CANNOT BE DISREGARDED. IT IS THE DUTY OF THE ASSESSEE TO PROD UCE THE SUPPORTING DOCUMENTS FOR JUSTIFYING THE EXPENSES CLAIMED IN TH E BUSINESS. THEREFORE, IN ITA NO.1114 & 1237/KOL/2012 A.YS. 08-09 & 06-07 RAJDEEP PRASAD SHAW V. ITO WD-51(3) KOL. PAGE 7 VIEW OF ABOVE, WE ARE INCLINED TO LIMIT THE DISALLO WANCE OF ALL THE EXPENSES TO THE EXTENT 5%. THEREFORE WE PARTLY ALLOW THIS GROUN D OF ASSESSEES APPEAL. 12. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLO WED. COMING TO ITA NO. 1237/KOL/2012 IN ASSESSMENT YEAR 06-07. 13. SOLE ISSUE RAISED BY ASSESSEE IN THIS APPEAL IS THAT LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF ASSESSING OFFICER ON ACCOU NT OF VIOLATION OF SEC.40(A)(IA) OF THE ACT OF 5,25,529/-. 14. BRIEFLY STATED FACTS ASSESSEE HAS CLAIMED THE F ABRICATION CHARGES FOR AN AMOUNT OF 5,25,529/- IN THE NAME OF M/S D.D. ENGINEERING WORK S. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO FOUND THAT SUC H EXPENSE INCURRED BY ASSESSEE WITHOUT DEDUCTING TDS U/S. 194C OF THE ACT . ON QUESTION BY AO TO ASSESSEE FOR VIOLATION OF PROVISION OF SEC. 194-C O F THE ACT ASSESSEE ADMITTED THAT NO TAX WAS DEDUCTED. THEREFORE, AO INVOKED THE PROVISION OF SEC. 40(A)(IA) OF THE ACT AND ADDED THE SAME TO THE INCO ME OF ASSESSEE. 15. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) WHO UPHELD THE ACTION OF AO BY OBSERVING AS UNDER:- I HAVE CAREFULLY PERUSED THE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE ASSESSEE. THE CASE LAWS RELIED UPON BY THE ASSE SSEE ARE NOT APPLICABLE TO THE FACTS OF THE ASSESSEES CASE. IN HINDUSTAN COCA COLA BEVERAGE PRIVATE LTD. (SUPRA) THE ISSUE BEFORE THE HON'BLE SUPREME COURT WAS REGARDING CHARGING OF THE INTEREST U/S. 2 01(IA). IN FACT IN THAT CASE THE ASSESSEE HAD DEDUCTED TAX AT SOURCE U/S. 1 94C, WHEREAS THE ASSESSING OFFICER'S VIEW WAS THAT THE TAX SHOULD HA VE BEEN DEDUCTED U/S. 194I. THE ASSESSING OFFICER HAVING HELD THE AP PELLANT TO BE ASSESSEE IN DEFAULT FOR THE SHORTFALL IN THE AMOUNT OF TAX DEDUCTED A T SOURCE LEVIED INTEREST U/S. 210(IA) ON THE AMOUNT O F TAX SHORT DEDUCTED. THEREFORE, THAT JUDGEMENT WAS GIVEN IN CONTEXT OF C HARGING OF INTEREST U/S. 210(IA), WHEREAS THE ISSUE IN THE INSTANT CASE IS DISALLOWANCE US. 40(A)(IA) OF CLAIM OF EXPENSES ON ACCOUNT OF NON-DE DUCTION OF TAX AT SOURCE. ITA NO.1114 & 1237/KOL/2012 A.YS. 08-09 & 06-07 RAJDEEP PRASAD SHAW V. ITO WD-51(3) KOL. PAGE 8 NOW COMING TO THE FACTS OF THE CASE, IT IS AN ADMIT TED ACT THAT THE PAYMENT MADE BY THE ASSESSEE TO D.D. ENGINEERING WA S LIABLE TO DEDUCTION OF TAX AT SOURCE U/S. 194C AND THAT THE A SSESSEE FAILED TO DEDUCT SUCH TAX. THEREFORE, THE AO HAD RIGHTLY DISA LLOWED U/S. 40(A)(IA) THE CLAIM OF EXPENDITURE BY THE ASSESSEE OF THAT AM OUNTS. ACCORDINGLY, THE DISALLOWANCE MADE BY THE A.O. IS CONFIRMED AND THIS GROUND OF APPEAL IS DISMISSED. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) ASSESSE E PREFERRED SECOND APPEAL BEFORE US. 16. WE HAVE HEARD RIVAL SUBMISSIONS OF BOTH THE PAR TIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. LD. AR SUBMITTED THE PAPER BOOK WHICH IS RUNNING FROM PAGES 1 TO 15 AND STATED THAT AMOUNT P AYABLE BY ASSESSEE TO M/S D.D ENGINEERING WORKS WAS ONLY PAID 36,011/- AT THE YEAR END, WHEREAS EXPENSE CLAIMED BY ASSESSEE DURING THE YEAR WAS AT 5,25,528/- HENCE IT MEANS THAT BALANCE AMOUNT OF 4,89,557/- WAS PAID DURING THE YEAR. LD. AR FURTHER SUBMITTED THAT AMOUNT PAYABLE AT THE YEAREND WAS ONLY 36,011/- AND THEREFORE THE LIABILITY FOR NON-DEDUCT ION OF TDS SHOULD BE WORKED OUT IN RELATION TO THE OUTSTANDING BALANCE A PPEARING AT THE YEAREND IN ITS BOOKS OF ACCOUNT. LD. AR RELIED ON THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF HINDUSTHAN COCA COLA BEVERAGE PVT. LTD. VS- CIT (2007), 293 ITR 226 (SC), WHEREIN IT WAS HELD THAT IF ASSESSEE HAS PAID A TAX EVEN THOUGH ASSESSEE FAILED TO DEDUCT THE SAID TAX CANNOT BE RE COVERED ONCE AGAIN FROM THE ASSESSEE AS IT AMOUNTS TO DOUBLE DEDUCTION OF T AXES. FROM THE AFORESAID DISCUSSION, WE FIND THAT AO HAS DISALLOWED THE EXPE NSES DUE TO VIOLATION OF PROVISION OF SEC. 194-C VIS--VIS U/S. 40(A)(IA) OF THE ACT. HOWEVER, WE FIND THAT THERE IS AN AMENDMENT IN PROVISO TO SEC. 40(A) (IA) R.W.S. 1 ST PROVISO TO SEC. 201, WHEREIN, IF ANY PAYEE HAS PAID THE TAXES BY OFFERING / DISCLOSING THE SAID RECEIPT IN HIS / HER RETURN OF INCOME, THEN TH E PAYER (THE ASSESSEE HEREIN) SHOULD NOT BE TREATED AS ASSESSEE IN DEFAULT AND NO DISALLOWANCE U/S 40(A)(IA) OF THE ACT COULD OPERATE IN THAT SCENARIO. THE SAID PROVISO THOUGH INSERTED BY THE FINANCE ACT, 2012 W.E.F. 01.04.2013 HAS BEEN HE LD TO BE RETROSPECTIVE IN ITA NO.1114 & 1237/KOL/2012 A.YS. 08-09 & 06-07 RAJDEEP PRASAD SHAW V. ITO WD-51(3) KOL. PAGE 9 OPERATION BY RECENT DECISION OF THE HON'BLE DELHI H IGH COURT IN THE CASE OF CIT V. ANSAL LAND MARK TOWNSHIP (P) LTD . REPORTED IN (2015) TAXMANN.COM 45 (DEL) WHEREIN THE QUESTION RAISED BEFORE THE COURT AND THE DECISION RENDERED THEREON IS REPRODUCED HEREIN BELOW FOR THE SAKE OF CLARITY: QUESTION : WHETHER THE SECOND PROVISO TO SECTION 40(A)(IA) ( INSERTED BY THE FINANCE ACT, 2012), WHICH STATES THAT TDS SHALL BE DEEMED TO BE DEDUCTED AND PAID BY A DEDUCTOR IF RESIDENT RECIPIE NT HAS DISCLOSED THE AMOUNT IN HIS RETURN OF INCOME AND PAID TAX THEREON , IS RETROSPECTIVE IN NATURE OR NOT? HELD : SECTION 40(A)(IA) WAS INTRODUCED BY THE FINANCE (NO.2) ACT, 2004 TO ENSURE THAT AN EXPENDITURE SHOULD NOT BE ALLOWED AS DEDUCTION IN THE HANDS OF AN ASSESSEE IN A SITUATION WHERE INCOME EM BEDDED IN SUCH EXPENDITURE HAS REMAINED UNTAXED DUE TO TAX WITHHOL DING LAPSES BY THE ASSESSEE. HENCE, SECTION 40(A)(IA) IS NOT A PENALTY PROVISION FOR TAX WITHHOLDING LAPSE BUT IT IS A PROVISION INTRODUCED TO COMPENSAT E ANY LOSS TO THE REVENUE IN CASES WHERE DEDUCTOR HASNT DEDUCTED TDS AN AMOUNT PAID TO DEDUCTEE AND, IN TURN, DEDUCTEE ALSO HASNT OFFE RED TO TAX INCOME EMBEDDED IN SUCH AMOUNT. THE PENALTY FOR TAX WITHHOLDING LAPSE PER SE IS SEP ARATELY PROVIDED UNDER SECTION 271C AND, THEREFORE SECTION 40(A)(IA) ISNT ATTRACTED TO THE SAME. HENCE, AN ASSESSEE COULD NOT BE PENALIZED UND ER SECTION 40(A)(IA) WHEN THERE WAS NO LOSS TO REVENUE. THE AGRA TRIBUNAL IN THE CASE OF RAJIV KUMAR AGARWAL V. ACIT (2014) 45 TAXMANN.COM 555 (AGRA-TRIB) HAS HELD THAT THE SE COND PROVISO TO SECTION 40(A)(IA) IS DECLARATORY AND CURATIVE IN NA TURE AND HA RETROSPECTIVE EFFECT FROM 1 ST APRIL, 2005, BEING THE DATE FROM WHICH SUB- CLAUSE (IA) OF SECTION 40(8) WAS INSERTED BY THE FI NANCE (NO.2) ACT, 2004, EVEN THOUGH THE FINANCE ACT, 2012 HAD NOT SPE CIFICALLY0 STATED THAT PROVISO IS RETROSPECTIVE IN NATURE. THE HIGH COURT AFFIRMED THE RATIO LAID DOWN BY THE AGRA TRIBUNAL AND HELD THAT SAID PROVISO IS DECLARATORY AND CURATIVE IN NATURE AND HAS RETROSPECTIVE EFFECT FROM 1 ST APRIL, 2005 RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF HO N'BLE DELHI HIGH COURT, WE DEEM IT FIT AND APPROPRIATE IN THE INTEREST OF JUST ICE AND FAIR PLAY TO SET ASIDE THIS ISSUE TO THE FILE OF ASSESSING OFFICER TO DECI DE THE ISSUE AFRESH IN THE LIGHT ITA NO.1114 & 1237/KOL/2012 A.YS. 08-09 & 06-07 RAJDEEP PRASAD SHAW V. ITO WD-51(3) KOL. PAGE 10 OF THE AFORESAID JUDGMENT TO ENSURE WHETHER THE DED UCTEE HAS PAID TAXES ON THEIR INCOME. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO VERIFY WHETHER THE PAYEES HAVE INCLUDED THE SUBJECT MENTIONED RECE IPTS IN THEIR RESPECTIVE RETURNS AND PAID TAXES THEREON OR NOT. IF THAT IS S O, THEN DISALLOWANCE U/S. 40(A)(IA) OF THE ACT SHALL NOT BE MADE IN THE HANDS OF THE ASSESSEE. ACCORDINGLY, THE GROUND RAISED BY ASSESSEE IS ALLOW ED FOR STATISTICAL PURPOSES. 17. IN THE RESULT, APPEAL IN ITA NO.1114/KOL/2012 IS PA RTLY ALLOWED AND THAT OF ITA NO.1237/KOL/2012 IS ALLOWED FOR STATIST ICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT 11/ 12/2015 SD/- SD/- (N.V.VASUDEVAN) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP '#$- 11 /1 2 /2015 / COPY OF ORDER FORWARDED TO:- 1. /ASSESSEE-RAJEEP PRASAD SHAW, 29, EAST GHOSHPARA RD , P.O. KANKINARA, DIST. 24-PARAGANAS (NORTH), PIN 743 126 2. /REVENUE-ITO WD.51(3) BLOCK-D2&3 UTTARAPAN COMPLEX, MANICKTALA CIVIC CENTRE, KOLK ATA 54 3.#-#./ 0 / CONCERNED CIT KOLKATA 4. 0- / CIT (A) KOLKATA 5.2 3455./, ./!, / DR, ITAT, KOLKATA 6.489:; / GUARD FILE. BY ORDER/ , /TRUE COPY/ /# ./!,