Surinder Kumar Prop., Rewari V. ITO, Rewari

ITA 1612/DEL/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7150 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2009-2010
• Appeal Filed On: 19-03-2015
• Result in Favour of: Set Aside
• Court: TRIBUNAL
• Department Lawyers: K TEWARI
• Keywords: Question of law; Notional interest
• Section: 40A(3); 194C

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER I.T.A. NOS. 1611 & 1612/DEL/2015 AYRS. 2007-08 & 2009-10 SURINDER KUMAR, PROP. MOSAIC HOUSE (INDIA) C/O SH. ML GULATI, AVOCATE, GANJ BAZAR, REWARI-HARYANA (PAN: AIHPK9865G) VS. ITO, WARD-2, AAYAKAR BHAWAN, MODEL TOWN, REWARI (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE DEPARTMENT BY : SH. K. TEWARI, SR. DR. ORDER PER H.S. SIDHU : JM THE ASSESSEE HAS FILED THESE APPEALS AGAINST THE SEPARATE IMPUGNED ORDERS DATED 23.1.2014 & 29.1.201 5 RESPECTIVELY PERTAINING TO AYRS 2007-08 & 2009-10 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS), RO HTAK. SINCE SOME ISSUES INVOLVED IN BOTH THE APPEALS ARE COMMON, HENCE, WE ARE DISPOSING OF THE APPEALS BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. THE GROUNDS RAISED IN (A.Y. 2007-2008) READ AS U NDER:- 2 1. THAT THE ORDER PASSED BY THE LD. CIT(A) ROHTAK VIDE DATED 23.1.2015 IS BAD IN LAW. FURTHER THE SAID ORDER IS CONTRARY TO THE FACTS AND SUBMISSIONS ON RECORD. 2. THAT THE CONFIRMING THE PENALTY U/S. 271(1)(C) A T RS. 1240582/- IS QUITE ARBITRARY, EXCESSIVE, UNJUSTIFIED , AGAINST FACTS AND LAW OF THE CASE. 3. THAT THE LD. CIT(A) ROHTAK HAS GROSSLY IGNORED ERRED IN NOT CONSIDERING THE ADDITIONS EXPLANATIONS AND DISALLOWANCE OF PAYMENTS MADE UNDER THE HEAD OF INLAND HAULAGE TO THE INTERMEDIATERY ALONGWITH RELEVANT DOCUMENTARY EVIDENCE. 4. THAT NOT CONSIDERING THE QUOTED CITATIONS NOR AN Y CONTRADICTIONS MADE BY THE LD. CIT(A) ROHTAK ARE QUITE ARBITRARY, EXCESSIVE AND UNJUSTIFIED. FURTHE R TO SAY THAT ADDITIONS ARE HELD IN APPEAL BEFORE CIT(A) ROHTAK DOES NOT AMOUNT TO WILFULLY CONCEALED THE PARTICULARS NOR FURNISHING INACCURATE PARTICULARS SUBJECT TO PENALTY PROVISIONS OF SECTIO N 271(1)(C). 3 3. THE GROUNDS RAISED IN (A.Y. 2009-10) READ AS UND ER:- 1. THAT THE ORDER PASSED BY THE LD. CIT(A) ROHTAK VIDE DATED 29.1.2015 IS BAD IN LAW. FURTHER THE SAID ORDER IS CONTRARY TO THE FACTS AND SUBMISSIONS ON RECORD. 2. THAT THE CONFIRMING THE PENALTY OF RS. 1618000/ - U/S. 271(1)(C) IS QUITE ARBITRARY, EXCESSIVE AND UNJUSTIFIED. 3. THAT THE LD. CIT(A) ROHTAK HAS GROSSLY IGNORED T HE FACTS AND SUBMISSION REGARDING DIFFERENCE IN PARTY ACCOUNT, CASH DISALLOWANCE U/S. 40A(3) AND FREIGHT EXPENSES PAID TO MEDIATOR. 4. THAT NOT CONSIDERING THE QUOTED CITATIONS NOR A NY CONTRADICTION MADE BY THE LD. CIT(A) ROHTAK ARE QUITE ARBITRARY, EXCESSIVE AND UNJUSTIFIED. FURTHER TO SAY THAT ADDITIONS ARE HELD IN APPEAL BEFORE CIT(A) ROHTAK DOES NOT AMOUNT TO WILFULLY CONCEALED THE PARTICULARS NOR FURNISHING INACCURATE PARTICULARS SUBJECT TO PENALTY PROVISIONS OF SECTIO N 271(1)(C). 4 4. FACTS NARRATED BY THE REVENUE AUTHORITIES ARE NO T DISPUTED, HENCE, THE SAME ARE NOT REPEATED HERE FOR THE SAKE OF BREVITY. 5. NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE SENDING THE NOTICE BY RPAD. HOWEVER, THE WRITTEN SUBMISSIONS DATED 28.6.2018 IN BOTH THE APPEALS HAVE BEEN FILED WHICH ARE PLACED ON RECORD. 6. LD. DR RELIED UPON THE ORDER OF THE AUTHORITI ES BELOW AND FILED THE WRITTEN SUBMISSIONS. 7. IN THIS CASE, NOTICE OF HEARING TO THE ASSESSEE WAS SENT BY THE REGISTERED AD POST, IN SPITE OF THE SAME, AS SESSEE, NOR ITS AUTHORIZED REPRESENTATIVE APPEARED TO PROS ECUTE THE MATTER IN DISPUTE, NOR FILED ANY APPLICATION FOR A DJOURNMENT. KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND THE ISSUE INVOLVED IN THE PRESENT APPEAL, WE ARE OF THE VIEW THAT NO USEFUL PURPOSE WOULD BE SERVED TO ISSUE NOTICE AGAIN AND AGAIN TO THE ASSESSEE, THEREFORE, WE ARE DECIDING THE PRESENT APPEAL EXPARTE QUA ASSESSEE, A FTER HEARING THE LD. DR AND PERUSING THE RECORDS. 5 8. WE HAVE HEARD THE LD. DR AND PERUSED THE RECORDS ESPECIALLY THE IMPUGNED ORDERS AS WELL AS THE WRITT EN SUBMISSIONS. WE FIND THAT ITAT, G BENCH, NEW DELH I VIDE ITS ORDER DATED 16.6.2015 IN ITA NO. 467/DEL/2011 (AY 2 007- 08) AND IN ITA NO. 2222/DEL/2012 (AY 2009-10) IN QU ANTUM APPEALS IN ASSESSEE OWN CASE HAS PARTLY ALLOWED FO R STATISTICAL PURPOSES AND PARTLY ALLOWED THE APPEALS RESPECTIVELY. FOR THE SAKE OF CONVENIENCE, THE REL EVANT PARAS OF THE TRIBUNAL DECISION ARE REPRODUCED HER EUNDER:- 9. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RELEVANT RECORDS AVAILABLE WITH US, ESPECIALLY THE ORDERS PASSED BY THE REVENUE AUTHORITIES ALONGWITH THE WRITTEN SYNOPSIS FILED BY THE ASSESSEE AS WELL AS THE CASE LAWS CITED BY HIM. AFTER GOING THROUGH THE ASSESSMENT ORDER, WE ARE OF THE VIEW THAT THE ADDITIONS IN DISPUTE HAVE BEEN MADE BY THE AO FOR WANT OF EVIDENCE AND FOR NON- PRODUCTION OF EVIDENCE, AS REQUIRED BY HIM. SIMILARLY, LD. CIT(A) HAS ALSO UPHELD THE ORDER 6 OF THE AO, BECAUSE THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE BEFORE HIM ALSO. 10. GROUND 1 AND 2 RELATE TO ADDITIONS OF RS. 12,67,193/- AND RS. 3,86,041/- ON ACCOUNT OF UNEXPLAINED CASH PAYMENTS REFLECTED IN CASH BOOK OF M/S. MOSAIC HOUSE AND M/S DILER STONE, PROPRIETORSHIP CONCERNS OF THE APPELLANT. FROM THE PERUSAL OF THE CASH BOOK OF M/S. MOSAIC HOUSE, THE ASSESSING OFFICER NOTED THAT THERE IS NO OPENING CASH IN HAND AND PAYMENTS IN CASH UPTO 30.3.2007 WERE OF RS. 17,97,141/-; WHEREAS THE CASH RECEIPTS AMOUNTED TO ONLY RS. 5,29,948/- AND AS SUCH, THERE WAS A DIFFERENCE OF RS. 12,67,193/- WHICH WAS ADDED AS INCOME. FURTHER, THE CASH BOOK OF M/S DILER STONE FOR THE PERIOD L.4.2006 TO 3L.3.2007 REVEALED THAT ASSESSEE HAS MADE CASH DEPOSIT OF RS. 4,62,000/- BUT CASH IN HAND ON THE SAID DATE WAS RS. 75,959/- AND THEREFORE, THE ADDITION WAS MADE ON ACCOUNT OF UNEXPLAINED CASH DEPOSIT 7 OF RS. 3,86,041/-. THE APPELLANT EXPLAINED THAT DIFFERENCE OF RS. 12,67,193/- WAS MET OUT OF THE ADVANCE OF RS. 11,50,000/- RECEIVED AGAINST LAND AND TRANSFER OF RS. 1,95,320/- FROM M/S DILER STONE. THE APPELLANT IN SUPPORT OF THE ABOVE FURNISHED AGREEMENT TO SELF DATED 26.3.2006, CASH FLOW STATEMENT AND REVISED CASH BOOK. IN A REPLY DATED 15.12.2009 FURNISHED BY THE APPELLANT, IN RESPONSE TO LETTER DATED 11.12.2009 OF THE ASSESSING OFFICER, IT WAS STATED AS UNDER: '1 THAT AS REGARDS TO YOUR QUERY REGARDING DIFFERENCE IN INFLOW OF CASH OF RS. 12,67,193/- IN MOSAIC HOUSE (INDIA), IT IS SUBMITTED THAT WHILE CONSIDERING THE INFLOW YOU HAVE NOT CONSIDERED THE AMOUNT OF RS. 11,50,000/- RECEIVED AS ADVANCE AGAINST LAND PROPERTY AND FURTHER A SUM OF RS. 1,95,320/- WAS ALSO TRANSFERRED FROM THE BOOKS OF DILER STONE, IF THE SAME ARE CONSIDERED THE DIFFERENCE WILL AUTOMATICALLY RECONCILE. THE ADVANCE AGAINST 8 LAND PROPERTY WAS TAKEN IN THE MONTH OF MARCH 2006 AND IT WAS ENTERED IN THE CASH BOOK BUT UNFORTUNATELY AT THE TIME OF FEEDING/PRINTING OR VIRUS MY VIEW I AM ENCLOSING COPY OF AGREEMENT AND DETAILED CASH FLOW OF MOSAIC HOUSE (INDIA) FOR YOUR KIND CONSIDERATION. 2 THAT AS REGARD TO CASH DIFFERENCE OF RS. 3,86,041/- IN THE BOOKS OF DILER STONE AS MENTIONED IN THE ABOVE NOTICE, IT IS SUBMITTED THAT THERE WAS OPENING BALANCE OF RS. 75,959/- AND THEREAFTER A SUM OF RS. 4,00,000/- WAS TRANSFERRED FROM THE CASH BOOK OF MOSAIC HOUSE (INDIA) AND OUT OF THESE AMOUNTS A SUM OF RS. 4,50,000/- WAS DEPOSITED IN THE BANK. BOTH THE ACCOUNTS WERE MAINTAINED IN SAME COMPUTER. BUT DUE TO VIRUS PROBLEM UNFORTUNATELY THESE ENTRY WAS DISTURBED AND DUE TO OVER SIGHT OF THESE ENTRIES BOTH THE CASH BOOK WERE PRINTED WITHOUT NOTICING THESE ENTRIES. ' 9 10.1 THE LEARNED ASSESSING OFFICER EXAMINED THE AGREEMENT FURNISHED BY THE APPELLANT AND HELD THAT IT IS A SELF SERVING DOCUMENT AND DOES NOT HAVE ANY EVIDENTIARY VALUE AND MOREOVER, SINCE THE PROPERTY IS THE PERSONAL PROPERTY, ANY AMOUNT RECEIVED AGAINST THE PERSONAL PROPERTY HAS TO BE INTRODUCED IN THE CAPITAL ACCOUNT OF THE ASSESSEE AND NOT IN THE BALANCE SHEET OF THE FIRM AS ADVANCE AGAINST PROPERTY. HE THUS REJECTED EXPLANATION OF THE ASSESSEE AND MADE THE IMPUGNED ADDITIONS. 10.2 ON APPEAL, THE CIT(A) DIRECTED THE ASSESSING OFFICER TO FURNISH A REMAND REPORT WHEREBY THE ASSESSING OFFICER ADMITTED THAT APPELLANT FURNISHED AFFIDAVITS OF ALL THE PERSONS WHO HAD ADVANCED THE SUMS TO THE APPELLANT. HE ALSO ADMITTED THAT ONE OF THE PERSONS SHRI SANTOSH KUMAR ATTENDED AND ADMITTED TO HAVE ADVANCED RS.1,15,000/- - THOUGH NOT AS AN ADVANCE AGAINST THE 10 PROPERTY. AS REGARDS SHRI RAJESH KUMAR, ANOTHER PERSON PRODUCED BEFORE THE ASSESSING OFFICER, THE ASSESSING OFFICER DID NOT RECORD ANY STATEMENT AS NAME OF THE PERSON IN THE AGREEMENT WAS RAJESH CHAUHAN AND NOT RAJESH KUMAR. THE CIT(A) THUS REJECTED THE EXPLANATION OF THE APPELLANT ON THE GROUND THAT THERE IS A DENIAL OF THE SOLE PURCHASER PRODUCED BEFORE THE ASSESSING OFFICER OF ENTERING INTO ANY SUCH AGREEMENT AND APPELLANT FAILED TO PRODUCE REMAINING PARTIES. 10.3. AS REGARDS GROUND NOS. 1 AND 2, HAVING GONE THROUGH THE RECORD, WE FIND THAT THE BALANCE SHEET OF M/S. MOSAIC HOUSE FURNISHED ALONG WITH RETURN OF INCOME SHOWS THE ADDITION OF RS. 1,50,000/- AGAINST THE PROPERTY. MOREOVER IT IS NOT IN DISPUTE THAT ASSESSEE IS AN OWNER OF THE PROPERTY ALTHOUGH A PERSONAL PROPERTY. IT IS ALSO A MATTER OF RECORD THAT APPELLANT HAS FURNISHED AFFIDAVITS OF ALL THE EIGHT PARTIES IN SUPPORT OF THE CLAIM 11 OF ADVANCE AGAINST LAND. NO DOUBT, APPELLANT HAS FAILED TO PRODUCE THE PARTIES BEFORE THE ASSESSING OFFICER DURING THE REMAND PROCEEDINGS YET IT IS A MATTER OF RECORD THAT ONE OF THE PERSONS WHO WAS PRODUCED ADMITTED TO HAVE ADVANCED RS. 1,50,000/- TO THE APPELLANT. THE AFFIDAVITS AND THE STATEMENT AS RECORDED HAVE NOT BEEN PLACED BEFORE US. WE THEREFORE ACCEPT THE CONTENTION OF THE COUNSEL OF THE APPELLANT THAT THE ISSUE BE RESTORED TO THE FILE FOR THE ASSESSING OFFICER FOR VERIFICATION AFTER EXAMINATION OF THE PERSONS WHO HAVE ADVANCED TO THE APPELLANT. WE ALSO NOTICE THAT APPELLANT HAS FURNISHED REVISED CASH BOOK DURING THE ASSESSMENT PROCEEDINGS EXPLAINING THE DISCREPANCY IN THE ORIGINAL CASH BOOK FURNISHED DURING THE ASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER HAS DISCREDITED THE SAID CASH BOOK WITHOUT EXAMINING THE SAME. WE THEREFORE, DIRECT THAT WHILE CONDUCTING FRESH 12 EXAMINATION, THE ASSESSING OFFICER WOULD LOOK INTO THE EXPLANATION TENDERED AND THE REVISED CASH BOOK AND NOT MERELY DISCREDIT THE SAME. ACCORDINGLY, THE ISSUE OF ADDITION REGARDING UNEXPLAINED DEPOSIT IN THE CASH BOOK OF THE APPELLANT IS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR DENOVA EXAMINATION AND ADJUDICATION AFTER GRANTING NECESSARY OPPORTUNITY TO THE APPELLANT. 11. WITH REGARD TO GROUND NO. 3 RELATING TO CONFIRMATION OF ADDITION OF RS. 1,07,939/- IS CONCERNED, WE FIND THAT LD. CIT(A) HAS OBSERVED THAT THE ASSESSEE WAS AFFORDED ONE MORE OPPORTUNITY TO PRODUCE THE SAID CREDITORS BEFORE THE AO DURING THE REMAND PROCEEDINGS. THE APPELLANT COULD NOT PRODUCE THESE PARTIES INSPITE OF SEVERAL OPPORTUNITIES. BUT FOR FURNISHING THE BILLS OF THESE PARTIES, NO EFFORTS WERE MADE TO PROVE HIS VERSION. IN THE REJOINDER TO THE REMAND REPORT, THE ASSESSEE CONTENDED THAT COMPLETE ADDRESS, 13 TELEPHONE/FAX NO. AND BANK A/C NO. WAS FURNISHED TO THE AO DURING THE REMAND PROCEEDINGS BUT THE AO HAS NOT TAKEN ANY STEPS TO ENQUIRE AT HIS OWN LEVEL. WE FURTHER FIND THAT LD. CIT(A) HAS OBSERVED THAT IT COULD BE SEEN THAT THE AO MADE ADDITION IN RESPECT OF THE PARTIES WHO HAVE DENIED TO HAVE ANY OUTSTANDING AMOUNT WITH THE APPELLANT. IT IS NOT THE CASE OF NOT RECEIVING ANY RESPONSE FROM THE CREDITORS OR RETURN OF THE LETTERS AS COMEBACK UN-SERVED. UNDER THESE CIRCUMSTANCES, ONUS IS ON THE APPELLANT TO PROVE THAT THE LIABILITY EXISTS BY PRODUCING THEM OR FURNISHING RECONCILIATION STATEMENT ETC. INSTEAD THE ASSESSEE HAS MERELY GIVEN THE ADDRESS ETC. OF THE CREDITORS WHICH WAS ALREADY AVAILABLE WITH AO. IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS, WE FIND THAT THE LD. CIT(A) WAS RIGHT IN UPHOLDING THE ADDITION OF RS. 1,07,939/-, WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, WE UPHOLD 14 THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND DISMISS THE GROUND NO. 3 RAISED BY THE ASSESSEE. 12. GROUND 4 OF THE GROUNDS OF APPEAL RELATES TO DISALLOWANCE OF RS. 18,72,599/- REPRESENTING EXPENDITURE INCURRED ON EXPORT OF GOODS THROUGH AGENTS OF FREIGHT SHIPPING COMPANIES. THE ASSESSING OFFICER HAS HELD THAT NO EVIDENCE WAS FILED TO PROVE THAT PAYMENTS WERE MADE TO AGENTS OF SHIPPING COMPANIES AND THEREFORE, SINCE APPELLANT DID NOT DEDUCT TDS UNDER SECTION 194C OF THE ACT, THE SAME IS NOT ALLOWABLE UNDER SECTION 40(A)(IA) OF THE ACT. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE APPELLANT HIGHLIGHTED PAGE 45 WHICH IS A CERTIFICATE FROM M/S. POOJA FREIGHT FORWARDERS STATING THAT M/S. POOJA FREIGHT FORWARDERS IS AN INTERNATIONAL FREIGHT FORWARDING COMPANY WHICH NEGOTIATES OCEAN FREIGHT WITH THE CARRIERS/SHIPPING LINES ON BEHALF OF THE 15 EXPORTER FOR THEIR OUT BOUND SHIPMENT. IT HAS BEEN CONFIRMED THAT SHIPMENTS FROM THE APPELLANT HAVE BEEN BOOKED THROUGH MEDITERRANEAN SHIPPING COMPANY SA AND M/S. POOJA FREIGHT FORWARDERS HAS PAID FREIGHT TO THE SHIPPING LINE ON BEHALF OF THE APPELLANT. IT HAS BEEN CLARIFIED THAT MEDITERRANEAN SHIPPING COMPANY IS A GENEVA, ITALY BASED SHIPPING LINE AND THEY HAVE A TAX EXEMPTION CERTIFICATE FROM THE INCOME TAX DEPARTMENT. THE CIT(A) HOWEVER HELD THAT SINCE M/S. POOJA FREIGHT FORWARDERS IS NOT A AGENT OF ANY FOREIGN SHIPPING COMPANIES AND THEREFORE, THE PAYMENTS MADE BY THE APPELLANT TO M/S. POOJA FREIGHT FORWARDERS WAS LIABLE FOR TDS. WE FIND THAT THE ISSUE INVOLVED IN THE INSTANT CASE IS NO LONGER RES INTEGRA. THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. GUJARAT NARMADA VALLEY CORPORATION REPORTED IN 361 ITR 192 WAS CONSIDERING A CASE WHERE ASSESSEE CLAIMED DEDUCTION OF RS.6,93,372/- 16 TOWARDS REIMBURSEMENT OF CHA CHARGES PAID OF C&F AGENTS AND RS.76,00,509/- TOWARDS REIMBURSEMENT EXPENSES TOWARDS CONSIGNMENT AGENTS. THE HIGH COURT UPHELD THE DELETION OF THE ADDITION BY THE CIT(A) AND THE TRIBUNAL ON THE GROUND THAT EXPENSES WERE INCURRED BY THE AGENTS ON BEHALF OF THE ASSESSEE FOR TRANSPORTATION AS NO OTHER PARTIES WHICH HAS BEEN FELT OUT IN THE BILLS INCLUDING COMMISSION TO THE AGENT. IT WAS THEREFORE, HELD AS UNDER: THE LEARNED TRIBUNAL ALSO OBSERVED THAT THE RELATION BETWEEN THE ASSESSEE AND THE AGENT IS PRINCIPAL AND AN AGENT. THE LEARNED TRIBUNAL ALSO OBSERVED THAT SO FAR AS THE OBLIGATION TO DEDUCT TAX AT SOURCE FROM THE PAYMENT OF TRANSPORT CHARGES AND OTHER CHARGES IS CONCERNED, THE SAME WAS COMPLIED WITH BY THE AGENT, WHO HAD MADE PAYMENT ON IT'S BEHALF. ON THE AFORESAID FACTS THE LEARNED TRIBUNAL ALSO OBSERVED THAT THE CIRCULAR RELIED 17 UPON BY THE REVENUE THAT IT IS THE LIABILITY OF THE ASSESSEE AS PRINCIPAL AGENT TO DEDUCT THE TDS WILL NOT BE APPLICABLE AND THE SAID CIRCULAR WOULD BE APPLICABLE FOR PAYMENT MADE TO PRINCIPAL TO PRINCIPAL. CONSIDERING THE AFORESAID FACTS AND CIRCUMSTANCES OF THE CASE, WHEN THE LEARNED TRIBUNAL HAS CONFIRMED THE ORDER PASSED BY THE CIT(A) QUASHING AND SETTING ASIDE THE ORDER PASSED BY THE ASSESSING OFFICER IN DELETING THE DISALLOWANCE OF RS.6,93,372/-AND RS. 76,00,509/- CLAIMED BY THE ASSESSEE UNDER SECTION 40(A)(IA) OF THE INCOME TAX ACT, WE SEE NO REASON TO INTERFERE WITH THE SAME. NO ERROR HAS BEEN COMMITTED BY THE LEARNED TRIBUNAL IN CONFIRMING THE ORDER PASSED BY THE CIT(A). NO QUESTION OF LAW, MUCH LESS SUBSTANTIAL QUESTION OF LAW, ARISES IN THE PRESENT APPEAL. HENCE, THE PRESENT APPEAL DESERVES TO BE DISMISSED AND IS ACCORDINGLY DISMISSED. 18 12.1. ALSO, JODHPUR BENCH IN THE CASE OF ACIT VS. MINPRO INDUSTRIES 143 TTJ 331 (JODH) HAS HELD AS UNDER: '8.2 WE HAVE GONE THROUGH THE BOARD CIRCULAR NO. 723, COPY OF WHICH IS PLACED ON RECORD AND CONTENTS OF THE SAME HAVE BEEN TABULATED IN THE ORDER OF LEARNED CIT(A) ALSO AND FOUND THAT ABOUT CERTAIN PAYMENTS IT HAS BEEN CLARIFIED BY THE BOARD THAT ON THESE PAYMENTS PROVISIONS OF SS. 194C AND 195 WILL NOT APPLY AND PROVISIONS OF S. 172 WILL BE APPLICABLE. THE LEARNED CIT(A) HAS TAKEN INTO CONSIDERATION THIS CIRCULAR AND FOUND THAT CERTAIN PAYMENTS MADE BY THE ASSESSEE TO THE C AND F AGENTS WHO HAVE ALREADY MADE THE PAYMENT ON BEHALF OF THE ASSESSEE WERE NOT COVERED EITHER UNDER S. 194C OR UNDER S. 195, AS THEY ARE COVERED UNDER THE PROVISIONS OF S. 172. THEREFORE, WE HOLD THAT LEARNED CIT(A) WAS JUSTIFIED IN HOLDING THAT ON CERTAIN PAYMENTS THE PROVISIONS OF SS. 194C AND 195 WERE NOT 19 APPLICABLE AND, THEREFORE, ASSESSEE WAS NOT LIABLE TO DEDUCT TDS. SUCH PAYMENTS HAVE BEEN DISCUSSED BY LEARNED CIT(A) IN HIS ORDER. THEY WERE ON ACCOUNT OF SEA FREIGHT TRANSPORT WHICH WERE AT RS. 1,16,11,550, CCI CHARGES, STEAMER FREIGHT CHARGES, REPO CONTAINER CHARGES. REMAINING EXPENSES REIMBURSED BY THE ASSESSEE WERE ON ACCOUNT OF TRANSPORTATION CHARGES AT RS.20,31,226 AND ON THIS AMOUNT THE AGENT HAS DEDUCTED TDS BEFORE MAKING PAYMENT TO THE PRINCIPAL. SIMILARLY, TDS HAS BEEN DEDUCTED ON SHIPPING BILL OF RS. 2,18,718, AGENCY CHARGES OF RS. 3,61,550 PAID BY ASSESSEE ON WHICH TDS HAS BEEN DEDUCTED BY ASSESSEE. THERE WERE OTHER SMALL PAYMENTS OF RS. 9,816 ON ACCOUNT OF OTHER EXPENSES ON WHICH TDS WAS NOT APPLICABLE. IN THIS WAY, THE ENTIRE ADDITION OF RS. 1,60,41,692 WAS DELETED BY LEARNED CIT(A). THE LEARNED CIT(A) HAS DISCUSSED EACH ITEM IN DETAIL AND THEN ONLY IT HAS BEEN 20 HELD THAT ASSESSEE WAS NOT LIABLE TO MAKE DEDUCTION OF TDS ON REIMBURSEMENT OF EXPENSES. VARIOUS BENCHES OF THE TRIBUNAL ARE TAKING A CONSISTENT VIEW THAT IF THE PAYMENTS ARE MADE ON ACCOUNT OF REIMBURSEMENT, THEN NO TDS IS LIABLE TO BE DEDUCTED ON BEHALF OF THE PAYER I. E. ASSESSEE. 12.2. THE LEARNED DEPARTMENTAL REPRESENTATIVE PLACED RELIANCE ON THE DECISION OF HON'BLE KARNATAKA HIGH COURT IN CASE OF KAMATAKA URBAN INFRASTRUCTURE DEVELOPMENT FINANCE CORPORATION (SUPRA). 12.3 WE HAVE GONE THROUGH THE RATIO OF THIS DECISION AND FOUND THAT THE SAME IS DISTINGUISHABLE. IN THIS CASE ON BONA FIDE BELIEF OF THE ASSESSEE COMPANY WHICH WAS WHOLLY-OWNED BY STATE OF KARNATAKA HAD NOT DEDUCTED TDS ON ACCOUNT OF NON-RESIDENT COMPANY BY OBSERVING THAT THE AMOUNT SPENT TOWARDS ACCOMMODATION AND CONVEYANCE OF THE OFFICER/EMPLOYEE OF THE NON-RESIDENT 21 COMPANY WAS NOT REQUIRED TO BE TREATED AS A PART OF THEIR INCOME, WHEREAS IT WAS A PART OF THEIR INCOME. THEREFORE, HON'BLE KARNATAKA HIGH COURT HELD THAT ON THIS AMOUNT TDS WAS DEDUCTIBLE. HOWEVER, IN THE PRESENT CASE THE FACTS ARE ENTIRELY DISTINGUISHABLE. THERE IS NO COMPONENT OF INCOME ON THE AMOUNT PAID BY ASSESSEE ON ACCOUNT OF REIMBURSEMENT. WHATEVER THE AMOUNT WAS PAID BY THE AGENT, THAT WAS REIMBURSED BY THE ASSESSEE. THEREFORE, THERE WAS NO INCOME COMPONENT IN THE HANDS OF AGENT. IT IS FURTHER SEEN THAT PROVISIONS OF S. 172 WERE VERY CLEAR THAT SUCH TYPE OF PAYMENTS WHICH ARE MADE BY ASSESSEE HAD BEEN HELD THAT THEY ARE NOT PART OF REGULAR INCOME AND, THEREFORE, PROVISIONS OF SS. 194C AND 195 ARE NOT APPLICABLE AND BOARD HAS CLARIFIED THE SAME. THEREFORE, THERE IS NO QUESTION OF MAKING ANY TDS ON THE PART OF THE ASSESSEE AND LEARNED CIT(A) WAS JUSTIFIED IN DELETING THE DISALLOWANCE. ONE 22 MORE DECISION HAS BEEN RELIED ON BY THE LEARNED DEPARTMENTAL REPRESENTATIVE IN CASE OF ASSOCIATED CEMENT CO. LTD. (SUPRA) AND WE FIND THAT FACTS IN THIS CASE ARE ALSO DISTINGUISHABLE. IN THIS CASE ALSO WE FIND THAT FACTS ARE TOTALLY DIFFERENT FROM THE FACTS INVOLVED IN THE CASE IN HAND. MOREOVER, THE PAYMENTS MADE BY ASSESSEE ARE COVERED BY S. 172 WHERE PROVISIONS OF SS. 194C AND 195 ARE NOT APPLICABLE AS CLARIFIED BY THE BOARD VIDE CIRCULAR NO. 723, DT. 19TH SEPT., 1995. THE AO HAS PLACED RELIANCE ON THE CIRCULAR NO. 715 WHICH IS OF EARLIER DATE FROM THE CIRCULAR NO. 723. THE LEARNED CIT(A) HAS OBSERVED THAT THIS CIRCULAR WAS WRONGLY APPLIED BY AO AS CIRCULAR NO. 723 IS APPLICABLE ON THE FACTS OF THE PRESENT CASE. NATURE OF PAYMENTS HAS ALREADY BEEN DISCUSSED BY LEARNED CIT(A) AT P. 11 OF HIS ORDER. THEREFORE, WE ARE NOT REPEATING THOSE DETAILS AGAIN AND IN THESE DETAILS IT HAS BEEN CLARIFIED THAT THE ENTIRE 23 PAYMENTS ARE COVERED BY CIRCULAR NO. 723, DT. 19TH SEPT., 1995 AND ON REMAINING PAYMENT, THE AGENT HAS DEDUCTED TDS OR THE ASSESSEE HAS DEDUCTED THE TDS. THEREFORE, IN VIEW OF THESE FACTS AND CIRCUMSTANCES AND IN VIEW OF DETAILED REASONING GIVEN BY LEARNED CIT(A) WHICH HAS BEEN REPRODUCED IN THIS ORDER, WE HOLD THAT LEARNED CIT(A) WAS JUSTIFIED IN HOLDING THAT ASSESSEE WAS NOT LIABLE TO DEDUCT TDS ON THE AMOUNT REIMBURSED BY THE ASSESSEE. ACCORDINGLY, WE CONFIRM THE ORDER OF LEARNED CIT(A). ' 12.4. DURING THE COURSE OF HEARING, ASSESSEE HIGHLIGHTED THAT THE BREAKUP OF THE PAYMENTS OF RS.18,70,771/- IS AS UNDER: RS.95, 545 WARE HOUSE CHARGES TO GOVT. AGENCIES FOR STORAGE RS. 3,52,869.81 LANDING CHARGES CHARGED BY SHIPPING COMPANIES OWNED BY GOVT. RS.8,04,085 TRANSPORTATION CHARGES WHICH ARE BILL WISE AND AMOUNT IS BELOW RS.20,000/- AND PAID TO TRUCK WISE NOT TO THE CO. RS.23,400 INLAND HAULAGE CHARGES TO CONTAINER CORPORATION OF INDIA WHO IS EXEMPTED FOR TAX DEDUCTION AT SOURCES AND OTHER SHIPPING COY. 24 CERTIFICATES FURNISHED. RS.61,224 SHIPPING BILL FOR MATERIAL CHARGES CHARGED BY GOVT. RS.19,495 CERTIFICATE CHARGES BY GOVT. ON DOCUMENTS FURNISHED FOR EXPORT RS.13,500 LOADING AND UNLOADING CHARGES, PETTY IN NATURE RS.75,000 CERTIFICATE FEE CHARGES BY GOVT. RS.11,000 FUMIGATION CHARGES ON STORAGE TO PREVENT THE GOODS FOR DAMAGES RS.6,100 LICENSE FEE CHARGES BILL WISE RS.2,42,608.50 MISC. AND PETTY CHARGES SEA/AIR FREIGHT NOT SUBJECT TO TDS TOTAL : RS.18,70,773.01 12.5. A PERUSAL OF THE ABOVE CHART DEMONSTRATES THAT MOST OF THE PAYMENTS ARE REIMBURSEMENT OF EXPENSES. WHEN EXPENDITURE IS RECONCILED THERE IS NO ELEMENT OF INCOME TO THE RECIPIENT. 12.6. HAVING REGARD TO THE ABOVE FACTUAL POSITION WHICH IS NOT DISPUTED BY AUTHORITIES BELOW, WE HOLD THAT SINCE THE PAYMENTS HAVE BEEN MADE AS REIMBURSEMENT OF EXPENSES TO THE AGENTS OF THE APPELLANT, THEREFORE, APPELLANT WAS NOT OBLIGED TO DEDUCT TDS UNDER SECTION 194C OF THE ACT AND AS SUCH, NO DISALLOWANCE IS WARRANTED U/S 40(A)(IA) OF THE ACT. HAVING REGARD TO THE ABOVE, WE DELETE 25 THE ADDITION AND ALLOW THE GROUND RAISED BY THE APPELLANT. 13. WITH REGARD TO GROUND NO. 5 RELATING TO CONFIRMATION OF ADDITION OF RS. 1,54,665/- IS CONCERNED, WE FIND THAT THE AR OF THE COUNSEL HAS SUBMITTED THAT ALL THE EXPENSES CLAIMED ARE SUPPORTED WITH VOUCHERS. THE ACTION OF THE AO IN DISALLOWING 50% OF THE EXPENDITURE WITHOUT POINTING OUT ANY DEFECT IS ARBITRARY AND UNJUSTIFIED. LD. CIT(A) HAS CONSIDERED THE ISSUE AND THE SUBMISSIONS MADE BY THE AR AND OBSERVED THAT THE AO MADE A CATEGORICAL FINDING REGARDING THE GENUINENESS, REASONABLENESS AND VERIFIABILITY OF THE BILLS. THE REVENUE AUTHORITY BELOW HAS COME TO THE CONCLUSION AGAINST THE ASSESSEE, AFTER VERIFYING THE VOUCHERS PRODUCED BY THE ASSESSEE. KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES, LD. CIT(A) HAS RIGHTLY HELD THAT THE DISALLOWANCE MADE BY THE AO WAS TREATED AS FAIR AND REASONABLE AND THUS THE 26 ADDITION OF RS. 1,54,665/- WAS SUSTAINED BY THE LD. CIT(A), WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, WE UPHOLD THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND DISMISS THE GROUND NO. 5 RAISED BY THE ASSESEE IN ITS APPEAL. IN THE RESULT, THE ASSESSEES BEING ITA NO. 467/DEL/2011 (A.Y. 2007-08) STANDS PARTY ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 2222/DEL/2012 (A.Y. 2009-10) 14. WITH REGARD TO GROUND NOS. 3, 4 AND 5 IN THE ASSESSEES OWN CASE THE ISSUE IS THE SAME AS DEALT WITH BY US IN THE ORDER FOR THE AY 2007-08 AT PARAGRAPHS 12 TO 12.5. CONSISTENT WITH THE VIEW TAKEN THEREIN, WE DELETE THE SAID DELETION. GROUNDS ALLOWED. 15. WITH REGARD TO GROUND NO. 1, THE LD.CIT(A) OBSERVES THAT THERE IS A DIFFERENCE OF ACCOUNTS. THE SALES IN THIS CASE IS RS.1.08 27 CRORES AND THE LEDGER ACCOUNT REFLECTS RS.1.21 CRORES. AT PAGE 18 OF THE PAPER BOOK THE ASSESSEE FURNISHED A COPY OF THE RECONCILIATION. THE OPENING BALANCE IS RS.13,21,034/-. ALL THESE ARE EXPORT SALES AND A PERUSAL OF THIS COPY OF THE LEDGER OF M/S VENUS STORES, SPAIN DEMONSTRATES THAT THE FIGURES HAVE BEEN RECONCILES, THE DISCREPANCY EXPLAINED. IN THE RESULT GROUND NO.1 IS ALLOWED. 16. WITH REGARD TO GROUND NO. 2 RELATING TO CONFIRMATION OF ADDITION OF RS. 6 LACS U/S. 40A(3) IS CONCERNED, WE FIND THAT LD. CIT(A) HAS OBSERVED THAT IT HAS NOT BEEN DISPUTED BY THE ASSESSEE THAT THE CHEQUES ARE NOT BEARER CHEQUES. THE ASSESSEES COUNSEL FAILED TO LEAD ONLY EVIDENCE AND SUBMISSIONS AS TO HOW THE PARTICULAR TRANSACTIONS ARE COVERED UNDER RULE 6DD. IN OUR CONSIDERED OPINION, LD. CIT(A) WAS RIGHT IN OBSERVING THAT MERE STATEMENT THAT THE PURCHASERS HAVE NO BANK 28 ACCOUNT A/C AT THAT VERY PLACE HAS NO MEANING WITHOUT EXPLAINING THE CIRCUMSTANCES UNDER WHICH THE ASSESSEE HAD TO ISSUE BEARER CHEQUES AND AS TO HOW THE TRANSACTIONS ARE COVERED UNDER RULE 6DD. IN VIEW OF ABOVE, LD. CIT(A) HAS FORCE IN HIS FINDING IN HOLDING THAT IN THE ABSENCE OF ANY EVIDENCE LED BY THE ASSESSEE, THE ACTION OF THE AO IN DISALLOWING THE AMOUNT U/S. 40A(3) WAS UPHELD, WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, WE UPHOLD THE SAME AND DISMISS THE GROUND NO. 2 RAISED BY THE ASSESSEE. 17. GROUND NO.6 IS ADDITION ON ACCOUNT OF NOTIONAL INTEREST. IT IS WELL SETTLED LAW THAT THE HONBLE GAUHATI HIGH COURT IN THE CASE OF HIGHWAYS CONSTRUCTIONS CO. PVT. LTD. VS. COMMISSIONER OF INCOME TAX 199 ITR 702 HELD THAT NOTIONAL INTEREST CANNOT BE CHARGED. THIS GROUND IS ALLOWED. 18. THE GROUND NO. 7 RELATING TO CONFIRMATION OF ADDITION OF RS.95830/- IS NOT 29 PRESSED BEFORE US, HENCE, THE SAME IS DISMISSED, AS NOT PRESSED. 19. WITH REGARD TO GROUND NO. 8 RELATING TO CONFIRMATION OF ADDITION OF RS. 33900/- I.E. 20% DISALLOWANCES OF EXPENSES UNDER VARIOUS HEADS IS CONCERNED, WE FIND THAT THE LD. CIT(A) HAS OBSERVED THAT A FACT FINDING HAS BEEN GIVEN BY THE AO THAT SOME OF THE EXPENSES ARE UNVOUCHED OR NOT PROPERLY VOUCHED. THE ASSESSEES COUNSEL HAS NOT CONTRAVENED THESE OBSERVATIONS OF THE AO. THEREFORE, IN VIEW OF THE ABOVE FACTUAL FINDING OF THE AO AND LD. CIT(A), LD. CIT(A) UPHELD THE DISALLOWANCE OF 20% OF THE EXPENSES, WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, WE UPHOLD THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND DECIDE THE ISSUE AGAINST THE ASSESSEE BY DISMISSING THE GROUND NO. 8 RAISED IN ITS APPEAL. 20. WITH REGARD TO GROUND NO. 9 RELATING TO CONFIRMATION OF ADDITION OF RS. 20000/- UNDER HOUSE HOLD EXPENSES IS CONCERNED, WE FIND THAT THE LD. CIT(A) HAS OBSERVED THAT THE AO NOTED THAT THE HOUSE HOLD WITHDRAWALS OF RS. 1.00 LAKH ARE QUITE LOW IN RESPONSE TO WHICH THE ASSESSEE STATED THAT THEIRS IS AN AGRICULTURE BASED FAMILY AND HE HAS ONLY TWO 30 SCHOOL GOING DEPENDENT CHILDREN AND THE WITHDRAWALS ARE QUITE REASONABLE AND JUSTICE. LD. CIT(A) FURTHER OBSERVED THAT HAVING REGARD TO THE STATUS AND LIFE STYLE ENJOYED BY THE FAMILY, THE AO ESTIMATED THE EXPENSES AT RS. 10000/- PER MONTH AND MADE AN ADDITION OF RS. 20,000/-. IN OUR CONSIDERED OPINION, LD. CIT(A) WAS QUITE REASONABLE IN SUSTAINING THE ESTIMATING ADDITION OF RS. 10,000/-, WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, WE UPHOLD THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND DECIDE THE GROUND NO. 10 AGAINST THE ASSESSEE. 21. IN THE RESULT, THE ITA NO. 467/DEL/2011 (A.Y. 2007-08) IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND ITA NO. 2222/DEL/2012 (A.Y. 2009-10) IS PARTLY ALLOWED, FILED BY THE ASSESSEE. 6. AFTER GOING THROUGH THE AFORESAID FINDINGS OF T HE TRIBUNAL, WE ARE OF THE VIEW THAT IN THE QUANTUM AP PEALS THE ISSUES IN DISPUTE HAS BEEN SET ASIDE AND RESTO RED BACK TO THE AO FOR DENOVO PROCEEDINGS AND SOME OF THE IS SUES WERE ALLOWED AND DISMISSED, IN THE AFORESAID MANNER , THEREFORE, THE PENALTY IN QUESTION INVOLVED IN BO TH THE APPEALS ARE SET ASIDE TO THE FILE OF THE AO WITH TH E LIBERTY TO 31 INITIATE THE FRESH PENALTY PROCEEDINGS, IF ANY, AS PER RULES IN BOTH THE APPEALS AND PASS A SPEAKING ORDERS. 7. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE STAND ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 05/07/2018. SD/- SD/- [N.K. BALLAIYA] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 05/07/2018 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES