M/s Ganguly Infotech, Kolkata V. ITO, WD- 1, Nadia, Nadia

ITA 1308/KOL/2014

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7874 (ITAT-KOLKATA)
• Duration Of Justice: 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2014
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 09-06-2014
• Court: TRIBUNAL
• Department Lawyers: VARINDER MEHTA
• Assessee Lawyers: D K BANDYOPADHYAY
• Keywords: Assessment record
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH B , KOLKATA [BEFORE HON BLE SRI MAHAVIR SINGH, JM& HON BLE SRI SHAMIM YAHYA , A M ] ITA NO.1308/KOL/2014 ASSESSMENT YEAR : 2009 - 10 ( A PPELLANT ) (RESPONDENT) M/S.GANGU LY INFOTECH - VS - C.I.T.,KOL - XXI, KOLKATA KOLKATA (PAN: AAHFG 1618 F) FOR THE APPELLAN T SHRI D.K.BANDYOPADHYAY, FCA FOR THE RESPONDENT SHRI VARINDER MEHTA, CIT DATE OF HEARING : 09 .12 .2014 DATE OF PRONOUNCEMENT : 12.12.2014. ORDER PER SHRI SHAMIM YAHYA, AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF L D. C.I.T. - KOLKATA - XXI, KOLKATA PASSED U/S 263 OF THE I.T.ACT DT. 25.03.2014 AND PERTAIN S TO ASSESSMENT YEAR 2009 - 10. 2. IN THIS CASE THE LD. CIT OBSERVED THAT FOR ASSUMPTION OF JURISDICTION THE ISSUE AND POINT WHICH WAS NOT EXAMINED/VERIFIED BY THE ASSESSING OFFICER AT THE TIME OF PASSING ORDER U/S 143(3) IS AS FOLLOWS : (I) THE ASSESSEE HAS CLAIMED THE COMMISSION AMOUNT OF RS.23,31,593/ - AS EXPENSES DURIN G YEAR BUT TDS THEREON HAS NOT BEEN MADE U/S 194H OF THE INCOME TAX ACT THOUGH THE AMOUNT OF COMMISSION CREDITED OR PAID TO VARIOUS PARTIES EXCEEDING OF RS.2,500/ - IN WHOLE YEAR. UNDER THE CIRCUMSTANCE, THE AMOUNT ON WHICH TDS WAS NOT DEDUCTED U/S 194H IS NOT ALLOWABLE AS DEDUCTION IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD PROFITS & GAINS OF BUSINESS OR PROFESSION OF U/S 40(A)(IA) OF THE ACT. THEREFORE, IT HAS RESULTED IN THE UNDER ASSESSMENT OF INCOME. ITA.NO.1308/K/2014 M/S.GANGULY INFOTECH A.YR. 2009 - 10 2 THE MISTAKES AS MENTIONED ABOVE OF THE ASSESS ING OFFICER AMOUNT TO INADEQUATE SCRUTINY OF THE DETAILED FACTS AND MAKING ASSESSMENTS WITHOUT EXAMINATION OF SUCH FACTS AND DETAILS ON RECORD RENDERING IT TO BE AN ORDER WHICH IS NOT ONLY ERRONEOUS BUT ALSO PREJUDICIAL TO THE INTEREST OF THE REVENUE. 2. 1. IN RESPONSE THERETO ASSESSEE SUBMITTED THAT THE ISSUE OF DEDUCTION OF TDS WAS DULY EXAMINED BY THE AO. AO HAS ALSO DEPUTED AN INSPECTOR IN THIS REGARD TO MAKE THE EXAMINATION. PURSUANT TO SUCH EXAMINATION AO HAS DISALLOWED A SUM OF RS.2,93,049/ - . HENCE IT WAS SUBMITTED THAT SINCE THE MATTER HAS BEEN DULY EXAMINED BY THE AO ASSUMPTION OF JURISDICTION MAY BE DROPPED. HOWEVER, THE LD. CIT WAS NOT SATISFIED. HE REFERRED TO THE ASSESSMENT RECORDS AND THE DOCUMENTS AND GAVE A DETAIL OF COMMISSION EXCEEDING RS. 2,500/ - PAID TO VARIOUS SUB - DEALERS. THE TOTAL NUMBER OF SUB - DEALERS CAME TO 815 AND THE TOTAL AMOUNT PAID WAS RS.27,16,071/ - . THE LD. CIT HELD THAT THE TOTAL AMOUNT ON WHICH TDS WAS NOT DEDUCTED U/S 194H OF THE ACT WAS RS.27,16,071/ - . SINCE TDS WAS NOT DE DUCTED THE AMOUNT WAS LIABLE TO BE DISALLOWED U/S 40(A)(IA) OF THE ACT. HE HELD THAT AO HAS DISALL OWED ON RANDOM BASIS BY SELECTING 31 PERSONS AND HAS DISALLOWED A SUM OF RS.2,93,049/ - . THE LD. CIT CONCLUDED AS UNDER : - THE ASSESSING OFFICER IS THEREFORE, DIRECTED TO EXAMINE THE APPLICABILITY OF SECTION 40(A)(IA) R.W.S. 194H OF THE INCOME TAX ACT, 1961 AND DISALLOW EXPENDITURE AFTER SET - OFF OF THE AMOUNT OF ADDITION IN ASSESSMENT ORDER OF RS.2,93,049/ - , AFRESH AFTER DUE VERIFICATION OF BILLS/VOUCHERS OF EX PENSES FOR COMMISSION PAYMENT EXCEEDING RS.2,500/ - AS THE ASSESSING OFFICER HAS FAILED TO VERIFY & EXAMINE THE REASONS FOR NOT DEDUCTING TAX AT SOURCE ON EXPENSES UNDER THE HEAD OF COMMISSION EXPENSES DURING ASSESSMENT PROCEEDINGS. AGAINST THE ABOVE ORDE R THE ASSESEE IS IN APPEAL BEFORE US. 3. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. THE LD. COUNSEL OF THE ASSESEE SUBMITTED THAT THE LD. CIT HAS ERRED IN ASSUMING JURISDICTION U/S 263 OF THE ACT. HE SUBMITTED THAT THE ASSESSEE IN THIS CASE D ERIVED INCOME FROM WHOLESALE AND RETAIL BUSINESS OF AIRCEL CASH CARDS AND SIM CARDS. HE SUBMITTED THAT TAX WAS DEDUCTIBLE UNDER THE PROVISION OF SECTION 194H OF THE ACT ON SUCH PAYMENT IS ITSELF A DEBATABLE MATTER. HENCE HE SUBMITTED THAT ASSUMPTION OF JUR ISDICTION BY THE LD. CIT IN ITA.NO.1308/K/2014 M/S.GANGULY INFOTECH A.YR. 2009 - 10 3 THIS CASE IS NOT SUSTAINABLE. HE FURTHER SUBMITTED THAT AO HAS DULY EXAMINED THIS ISSUE OF DEDUCTION OF TDS AND HAS DISALLOWED A SUM OF RS.2,93,049/ - AFTER DUE EXAMINATION. HENCE HE SUBMITTED THAT CIT S DIRECTION THAT AO SHOULD MAKE VERIFICATION AFRESH AND THEREAFTER MAKE DISALLOWANCE IS WITHOUT ANY BASIS AND NOT SUSTAINABLE. 4. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE ORDERS OF THE LD. CIT. 5. UPON CAREFUL CONSIDERATION WE NOTE THAT IT IS NOT AT ALL THE CASE OF THE AO T HAT TDS WAS NOT DEDUCTIBLE ON THE PAYMENT MADE BY THE A SSESSEE U/S 194H OF THE ACT. AO WAS OF THE OPINION THAT TDS WAS DEDUCTIBLE ON THE COMMISSION MADE TO SUB - DEALERS , AND FOR THE VERIFICATION THEREOF, AO DEPUTED DEPARTMENTAL INSPECTOR TO VERIFY THE NUMB ER OF SUB - DEALERS WHERE THE AMOUNT PAID EXCEEDED RS.,2500/ - . AO FOUND THAT IN ALL THOSE CASES THE ASSESSEE FIRM HAD NOT DEDUCTED ANY TDS AND THUS THERE WAS VIOLATION OF SECTION194H OF THE ACT. HENCE THE AO DISALLOWED THE AMOUNT INVOLVED WHICH RELATE S TO 31 PERSONS AMOUNTING TO RS.2,93,049/ - , U/S 40(A)(IA) OF THE ACT . NOW THE LD. CIT HAS FOUND THAT LIST OF PERSONS TO WHOM PAYMENT EXCEEDED RS.2500/ - WAS MADE WAS VERY LONG AND THE LD. CIT HAS REPRODUCED 815 NUMBER OF PERSONS WHEREIN THE PAYMENT EXCEEDED RS.250 0/ - . THE TOTAL OF THESE PAYMENTS CAME TO RS.27,16,071/ - . THE LD. CIT HAS ALSO OBSERVED THAT ASSESSEE S REPRESENTATIVE WAS ASKED TO GIVE SUBMISSIONS AND EXPLANATIONS AS TO WHY TDS WAS NOT DEDUCTED ON THE COMMISSION PAYMENTS. THE ASSESSEE S COUNSEL HAD NOT G IVEN ANY EXPLANATION IN THIS REGARD. HENCE THE LD. CIT S OBSERVATIONS THAT AO HAS DISALLOWED ON RANDOM BASIS BY SELECTING 31 PERSONS AND AN AMOUNT OF RS.2,93,049/ - U/S 40(A)(IA) OF THE ACT IS CORRECT. IN THESE CIRCUMSTANCES THE LD. CIT S DIRECTION TO THE A O TO RE - EXAMINE THE ISSUE AND RECOMPUTE THE ASSESSEE S INCOME AFTER MAKING FURTHER ENQUIRIES DO NOT APPEAR TO BE IN CORRECT. APPARENTLY THERE IS AN ERROR IN THE ORDER OF THE AO AS THE AO HAS SELECTED AND DISALLOWED PAYMENT TO ONLY 31 PERSONS WHEREAS THE LD. CIT HAS FOUND THAT THERE ARE 815 SUCH PERSONS. IN THESE CIRCUMSTANCES IT CANNOT BE SAID THAT BY MERELY VERIFYING 31 PERSONS WHERE ALL PAYMENTS WERE FOUND TO BE LIABLE FOR DEDUCTION OF TDS AO HAS DISCHARGED HIS DUTY. THE FACT THAT WHEN ALL THE SELECTED PAY MENTS WERE FOUND TO BE LIABLE FOR DEDUCTION OF TDS IT WAS INCUMBENT ON THE AO TO EXAMINE OTHER PAYMENTS ITA.NO.1308/K/2014 M/S.GANGULY INFOTECH A.YR. 2009 - 10 4 ALSO. THIS IS FURTHER SUPPORTED BY FINDING OF THE LD. CIT THAT THERE ARE 815 SUCH PAYMENTS. IN THESE CIRCUMSTANCES IN OUR CONSIDERED OPINION THERE IS NO INFIRMI TY IN THE ORDER OF THE LD. CIT DIRECTING THE AO TO EXAMINE THE ISSUE AFRESH. ACCORDINGLY WE UPHOLD THE SAME. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE STANDS DISMISSED. ORDER PRONOUNCE D IN THE COURT ON 1 2/12/2014. SD/ - SD/ - [ MAHAVIR SINGH ] [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 12/12/2014. R.G.(.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . M/ S.GANGULY INFOTECH, C/O D.K.B ANDYOPADHYAY & CO., CHARTERED ACCOUNTANTS, 87, LENIN SARANI, 2 ND FLOOR, KOLKATA - 700013. 2 C.I.T., KOL - XXI, KOLKATA 3 . CI T(DR) KOLKATA BENCHES, KOLKATA. TRUE COPY, BY ORDER, ASST. REGISTRAR , ITAT, KOLKATA BENCHES