M/s. R.K. Industries , Burdwan V. ACIT, Circle - 2, Burdwan , Burdwan

ITA 1461/KOL/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4978 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 09-07-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANDEEP LAKRA
• Assessee Lawyers: K M ROY
• Keywords: Corroborative evidences
• Section: 40A(3); 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : KOLKATA [BEFORE HONBLE SHRI A T VARKEY, JM, & SHRI M.BAL AGANESH, AM] I.T.A NO. 1461/KOL/20 18 ASSESSMENT YEAR : 2011-1 2 M/S R.K. INDUSTRIES -VS- ACIT, CIRCLE-2, BUR DWAN [PAN: AADFR 2831 B ] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI K.M ROY, FCA FOR THE RESPONDENT : SHRI SANDEEP LAKRA, ADDL . CIT SR. DR DATE OF HEARING : 25.09.2018 DATE OF PRONOUNCEMENT : 24.10.2018 ORDER PER M.BALAGANESH, AM 1. THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-BURDWAN [IN SHORT THE LD CIT(A) ] IN APPEAL NO. 251/CIT(A)/ASL/ACIT/CIR-2/BWN/2014-15 DATED 23.05.2 018 AGAINST THE ORDER PASSED BY THE ACIT, CC-VI , KOLKATA [ IN SHORT THE LD AO] UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 29.03.201 4 FOR THE ASSESSMENT YEAR 2011-12. 2. THE FIRST ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD CITA WAS JUSTIFIED IN UPHOLDING THE DISALLOWANCE MADE IN THE SUM OF RS 48,500/- U/S 40A(3) OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 2 ITA NO.1461/KOL/2018 M/S R.K. INDUSTRIES A.YR. 2011-12 2 2.1. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE ASS ESSEE IS A PARTNERSHIP FIRM RUNNING A RICE MILL AND HAD FILED ITS RETURN OF INCOME FOR THE ASS T YEAR 2011-12 ON 27.9.2011 DECLARING TOTAL INCOME OF RS 5,09,968/-. THE LD AO OBSERVED IN HIS ORDER THAT THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED FROM TIME T O TIME IN THE ASSESSMENT PROCEEDINGS AND FURNISHED THE REQUISITE DETAILS THAT WERE CALLE D FOR. THE LD AO OBSERVED FROM THE LEDGER OF LOADING AND UNLOADING CHARGES THAT ASSE SSEE HAD PAID AN AMOUNT OF RS 48,500/- IN CASH IN A SINGLE DAY AND FOR WANT OF SA TISFACTORY EXPLANATION REGARDING THE REASONS FOR PAYING THE SAME IN CASH, THE LD AO DISA LLOWED THE SAME U/S 40A(3) OF THE ACT. THE ASSESSEE DURING THE APPELLATE PROCEEDINGS SUBMITTED THAT LOADING AND UNLOADING OPERATIONS DEMAND INVOLVEMENT OF MANY PER SONS IN A SINGLE DAY AND THAT PAYMENT HAS BEEN MADE TO VARIOUS LABOURERS BUT ENTE RED IN THE CASH BOOK AS AMOUNT PAID TO A SINGLE PERSON. THE LD CITA DISMISSED TH E GROUND OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE HAD NOT SUBMITTED ANY DOCU MENTARY EVIDENCE OR EVEN DETAILS AS TO WHO WERE THE PERSONS TO WHOM SUCH PAYMENT OF LOA DING AND UNLOADING CHARGES WERE MADE. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 2.2. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND T HAT THE LD AR ARGUED THAT THE GENUINITY OF EXPENSES WAS NOT DOUBTED BY THE REVENU E AND HENCE THE EXPENDITURE THOUGH PAID IN EXCESS OF RS 20,000/- IN CASH SHOULD NOT BE DISALLOWED U/S 40A(3) OF THE ACT. IN THIS REGARD, WE FIND THAT THE LD AO NEVER HAD AN OC CASION TO GO INTO THE GENUINENESS OF TRANSACTIONS NOR THE ASSESSEE FURNISHED ANY DETAILS WITH SUPPORTING EVIDENCES TO EVEN LOOK INTO THE SAME. IN FACT THE LD CITA HAD DISMIS SED THIS GROUND FOR WANT OF FURNISHING OF DETAILS BY THE ASSESSEE. EVEN BEFORE US, EXCEPT MAKING A BALD STATEMENT, NO EVIDENCES WERE SUBMITTED BY THE ASSESSEE FOR INC URRENCE OF THE SAID EXPENDITURE. HENCE WE HOLD THAT THE LD CITA HAD RIGHTLY CONFIRME D THE DISALLOWANCE U/S 40A(3) OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. ACCORDINGLY, THE GROUND NO.1 RAISED BY THE ASSESSEE IS DISMISSED. 3 ITA NO.1461/KOL/2018 M/S R.K. INDUSTRIES A.YR. 2011-12 3 3. THE NEXT ISSUE TO BE DECIDED IN THIS APPEAL IS A S TO WHETHER THE LD CITA WAS JUSTIFIED IN CONFIRMING THE ADDITION OF RS 2,05,217/- TOWARDS UNDISCLOSED INCOME IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3.1. THE BRIEF FACTS OF THIS ISSUE ARE THAT DURING THE ASSESSMENT PROCEEDINGS, THE LD AO NOTED THAT THE ASSESSEE DID NOT DISCLOSE TDS AMOUNT ING TO RS 4,649/- AND CORRESPONDING INCOME OF RS 2,05,217/- RECEIVED FROM FOOD CORPORAT ION OF INDIA, KRISHNAGAR, NADIA. HENCE THE SUM OF RS 2,05,217/- WAS ADDED TO THE TOT AL INCOME OF THE ASSESSEE BY THE LD AO FOR WANT OF SATISFACTORY EXPLANATION. DURING TH E APPELLATE PROCEEDINGS, THE ASSESSEE SUBMITTED THAT THE LEVY RICE WAS SUPPLIED TO FOOD C ORPORATION OF INDIA (FCI IN SHORT) AND TRANSPORT CHARGES INCURRED BY IT WERE REIMBURSE D IN FULL AT THE END OF THE SEASON BY FCI. THE BILL FOR THE SAME WAS RAISED ON 9.9.2010 FOR RS 2,05,217/- AND CHEQUE WAS RECEIVED FOR RS 2,00,568/- AND DIFFERENCE OF RS 4,6 49/- WAS ACCOUNTED BY THE ASSESSEE AS DISCOUNT ALLOWED IN THE ABSENCE OF ANY ADVICE OR INTIMATION OR TDS CERTIFICATE FROM FCI ACCOMPANYING THE CHEQUE. IT WAS CONTENDED THA T THE TRANSPORT CHARGES BEING REIMBURSED IN FULL, SUCH TRANSACTION WAS NOT REFLEC TED IN PROFIT AND LOSS ACCOUNT. THE LD CITA OBSERVED THAT ASSESSEE HAD NOT ENTERED THE ACC OUNT IN THE APPROPRIATE ACCOUNTING HEADS. HAD IT BEEN A CASE OF ACTUAL REIMBURSEMENT, THE CONCERNED EXPENSE ACCOUNT AS WELL AS THE PARTYS LEDGER ACCOUNT SHOULD HAVE SHOW N ENTIRES EVIDENCING THE ACTUAL TRANSACTION. THE ASSESSEES CONTENTION OF THE SUM BEING DISCOUNT IS FACTUALLY INCORRECT AS IT WAS A CASE OF TDS OF RS 4,649/- . THE LD CIT A OBSERVED THAT THE LEDGER OF TRANSPORT CHARGES RECOVERY ACCOUNT NOW PRODUCED IS A SQUARED OFF ACCOUNT DURING THE YEAR. SINCE NO VOUCHERS, TRUCK RECEIPTS OR ANY OF THE ACKNOWLEDGEMENT BY FCI WERE TENDERED AS AN EVIDENCE, HE CONFIRMED THE ADDITION MADE BY THE LD AO AS UNDISCLOSED INCOME IN THE SUM OF RS 2,05,217/-. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 3.2. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND T HAT THE ASSESSEE HAD FURNISHED THE LEDGER ACCOUNT OF TRANSPORT CHARGES RECOVERY ACCOUN T BEFORE THE LD CITA AND THE LD 4 ITA NO.1461/KOL/2018 M/S R.K. INDUSTRIES A.YR. 2011-12 4 CITA ACKNOWLEDGES THAT IT IS A SQUARED OFF ACCOUNT. THIS GOES TO PROVE THAT THE TRANSPORT CHARGES INCURRED BY THE ASSESSEE ON BEHAL F OF FCI HAD BEEN DEBITED IN A SEPARATE ACCOUNT IN BALANCE SHEET ( AND NOT ROUTED THROUGH PROFIT AND LOSS ACCOUNT AS AN EXPENSE) AND THEREAFTER THE SAME WAS REIMBURSED BY FCI TO THE ASSESSEE AND ON SAID REIMBURSEMENT, THE ACCOUNT GETS SQUARED OFF. SINCE FCI HAD PAID TRANSPORT CHARGES , IT HAD DEDUCTED TDS OF RS 4,649/-. EVEN THOUGH THE SA ID SUM OF RS 4,649/- HAS BEEN WRONGLY ACCOUNTED AS DISCOUNT ALLOWED BY THE ASSESS EE INSTEAD OF TDS, THE SAME WOULD NOT AUTOMATICALLY RESULT IN ADDITION OF UNDISCLOSED INCOME OF RS 2,05,217/- IN THE FACTS OF THE INSTANT CASE. WE HOLD THAT THE SUM OF RS 2,0 0,568/- ACTUALLY RECEIVED BY THE ASSESSEE TOGETHER WITH TDS THEREON OF RS 4,649/- IS ONLY REIMBURSEMENT OF EXPENSES WHICH HAD BEEN ROUTED OFF AS A BALANCE SHEET ITEM A ND WHICH ACCOUNT HAD BEEN SQUARED OFF IN THE SAID LEDGER DURING THE YEAR, CANNOT BE B ROUGHT TO TAX IN THE HANDS OF THE ASSESSEE. WE FIND THAT THE LD CITA HAVING ACCEPTED THE FACT THAT THE LEDGER OF TRANSPORT CHARGES RECOVERY ACCOUNT PRODUCED BY THE ASSESSEE I S SQUARED OFF ACCOUNT, OUGHT NOT TO HAVE EXPECTED THE ASSESSEE TO FIRST CLAIM THE EXPEN SE INCURRED AS AN EXPENDITURE IN ITS PROFIT AND LOSS ACCOUNT AND THEREAFTER CREDIT THE S AME ON RECEIPT OF REIMBURSEMENT OF EXPENSES. IN EITHER CASE, THE EFFECT ON THE NET PR OFITS WOULD BE THE SAME. HENCE WE HAVE NO HESITATION IN DIRECTING THE LD AO TO DELETE THE SAID ADDITION OF RS 2,05,217/- IN THE ASSESSMENT BUT CORRESPONDINGLY THE LD AO SHOULD DISALLOW THE SUM OF RS 4,649/- WHICH WAS WRONGLY CLAIMED AS DISCOUNT ALLOWED IN TH E RETURN OF INCOME. ACCORDINGLY, THE GROUND NO.2 RAISED BY THE ASSESSEE IS PARTLY A LLOWED. 4. THE LAST ISSUE TO BE DECIDED IN THIS APPEAL IS A S TO WHETHER THE LD CITA WAS JUSTIFIED IN UPHOLDING THE DISALLOWANCE OF RS 6,852/- TOWARDS DELAYED PAYMENT OF PROVIDENT FUND IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 4.1. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE LD AO FROM THE PERUSAL OF THE TAX AUDIT REPORT OBSERVED THAT THE ASSESSEE HAD MADE DELAYED REMITTANCE OF EMPLOYEES PROVIDENT 5 ITA NO.1461/KOL/2018 M/S R.K. INDUSTRIES A.YR. 2011-12 5 FUND TO THE TUNE OF RS 19,460/- BEYOND THE DUE DATE S PRESCRIBED UNDER THE PF ACT. ACCORDINGLY, THE SAME WAS DISALLOWED IN THE ASSESSM ENT. THE LD CITA OBSERVED FROM THE CHART OF DATE OF PAYMENTS FOR EACH MONTH, THAT THE PAYMENTS HAVE BEEN MADE BEFORE THE DUE DATES TAKING INTO ACCOUNT THE GRACE PERIOD OF 5 DAYS BY PLACING RELIANCE ON CPFCS CIRCULAR NO. E.128(1) 60-III DATED 19.3.1964 AS MODIFIED BY CIRCULAR NO. E11/128(SECTION 14-B AMENDMENT)/73 DATED 24.10.1973 . ACCORDINGLY, HE GRANTED RELIEF TO THE EXTENT OF RS 12,608/- TAKING INTO ACC OUNT THE GRACE PERIOD FO 5 DAYS AND CONFIRMED THE REMAINING SUM OF RS 6,852/- WHICH WER E PAID BEYOND THE GRACE PERIOD OF 5 DAYS. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFO RE US. 4.2. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE DATES OF REMITTANCE OF PF ARE DULY RECORDED IN THE ASSESSMENT ORDER. FROM THE SAME, I T IS SEEN THAT THE PF HAD BEEN DULY REMITTED BEFORE THE END OF THE PREVIOUS YEAR ITSELF , OF COURSE WITH SOME DELAY. THIS ISSUE HAS BEEN HELD IN FAVOUR OF THE ASSESSEE BY TH E HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF VIJAY SHREE CEMENT REPORTED IN 43 TAXMA NN.COM 396 (CAL HC). RESPECTFULLY FOLLOWING THE SAME, WE DIRECT THE LD A O TO GRANT DEDUCTION OF RS 6,852/- TO THE ASSESSEE. ACCORDINGLY, THE GROUND NO. 3 RAISED BY THE ASSESSEE IS ALLOWED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 24.10.2 018 SD/- SD/- [A T VARKEY] [ M.BALAGANESH ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 24.10.2018 SB, SR. PS 6 ITA NO.1461/KOL/2018 M/S R.K. INDUSTRIES A.YR. 2011-12 6 COPY OF THE ORDER FORWARDED TO: 1. M/S R.K. INDUSTRIES, LICHUTALA, P.O.-NIBHUJIBAZA R, P.S.-KALNA, DIST. BURDWAN- 713434 2. ACIT, CIRCLE-2, BURDWAN, COURT COMPOUND, BURDWAN -713101. 3. C.I.T(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSIST ANT REGISTRAR ITAT, KOLKA TA BENCHES