I.TO Ward-53(1)kol, Kolkata V. Sri Soumitra Dasgupta, Kolkata

ITA 1627/KOL/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3083 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-04-2013
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2004-2005
• Appeal Filed On: 08-11-2012
• Court: TRIBUNAL
• Department Lawyers: RAJENDRA PRASAD
• Assessee Lawyers: S K TULSIYAN
• Keywords: Bogus purchase; Wrong claim
• Section: 143(3); 194C; 147

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH C , KOLKATA [ () . .. . . .. . , ,, , , !' #! $'# #! $'# #! $'# #! $'#, ,, , ] ]] ] [BEFORE HONBLE SRI K.K.GUPTA, AM & HONBLE SRI MAHAVIR SINGH, JM] '& '& '& '& /ITA NOS.1627 & 1628/KOL/2012 $'( !)*/ ASSESSMENT YEARS : 2004-05 & 2005-06 (,- / APPELLANT ) - !' - ( /0,- /RESPONDENT) I.T.O., WARD-53 (1), . SRI SOUMITRA DASGUPTA KOLKATA -VERSUS- KOLKATA (PAN: ADTPD 1778 J) ,- 1 2 / FOR THE APPELLANT SHRI RAJENDRA PRASAD, SR.DR /0,- 1 2 / FOR THE RESPONDENT SHRI S.K.TULSIYAN, ADVOCATE '!3 1 4 /DATE OF HEARING : 17.04.2013 5) 1 4 /DATE OF PRONOUNCEMENT : 19.04.2013. 6 / ORDER PER SHRI K.K.GUPTA, AM THESE TWO APPEALS BY THE REVENUE FOR THE RESPECTIVE ASSESSMENT YEARS RAISED THE GROUNDS WHICH READ AS UNDER :- ITA NO.1627/KOL/2012 (A.Y.2004-05): 1. THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE THE CIT(A) ERRED IN ACCEPTING THE PARTIES AS GENUINE MERELY ON THE BASIS OF THEIR NEW ADDRESSES PROVIDED BY THE ASSESSEE WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE FAI LED TO PRODUCE THEM DURING THE ORIGINAL ASSESSMENT AND ALSO DURING THE REMAND PROC EEDINGS. THE LD. CIT(A) FURTHER FAILED TO APPRECIATE THAT THE SAID PARTIES WERE EIT HER CLAIMED TO BE SUNDRY CREDITORS OR CLAIMED TO HAVE PAID IN CASH AND ACCORDINGLY COULD NOT BE HELD TO BE GENUINE WITHOUT PROPER IDENTIFICATION. ITA NO.1628/KOL/2012 (A.Y.2005-06): 1. THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE THE CIT(A) ERRED IN ACCEPTING THE PARTIES AS GENUINE MERELY ON THE BASIS OF THEIR NEW ADDRESSES PROVIDED BY THE ASSESSEE ITA NOS.162 7&1628./KOL/2012 2 WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE FAI LED TO PRODUCE THEM DURING THE ORIGINAL ASSESSMENT AND ALSO DURING THE REMAND PROC EEDINGS. THE LD. CIT(A) FURTHER FAILED TO APPRECIATE THAT THE SAID PARTIES WERE EIT HER CLAIMED TO BE SUNDRY CREDITORS OR CLAIMED TO HAVE PAID IN CASH AND ACCORDINGLY COULD NOT BE HELD TO BE GENUINE WITHOUT PROPER IDENTIFICATION. 2. THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE CA SE THE CIT(A) ERRED IN APPRECIATING THE FACT THAT THE ASSESSEE WAS RECEIVING PAYMENT FO RM M/S. TWINING PVT. LTD. ON MONTH TO MONTH BASIS AS PER TDS CERTIFICATE AND THEREFORE , THE ASSESSEES CLAIM OF HAVING RECEIVED EARLIER YEARS PAYMENT TO THE EXTENT OF NE ARLY RS.5 LAKHS IN THE CURRENT YEAR WAS WITHOUT BASIS UNLESS CONFIRMED BY THE PAYER. 3. THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE CA SE THE CIT(A) FAILED TO APPRECIATE THE FACT THAT M/S. KIRAN ELECTRIC WAS CLAIMED TO HAVE B EEN PAID FOR MAINTENANCE AND SERVICE CHARGES AND M/S. SUKLA TRANSPORT & LABOUR SUPPLIERS WAS PAID FOR SUPPLY OF TRANSPORT VEHICLES, WHICH BY THEIR VERY NATURE ARE REGULARLY REQUIRED SERVICES IN THE TYPE OF BUSINESS RUN BY THE ASSESSEE AND ARE INVARIABLY SUP PLIED UNDER ORAL CONTRACT TERMS. 2. THE BRIEF FACTS AS HAVE BEEN BROUGHT ON RECORD ARE THAT THE ASSESSMENT HAD BEEN MADE U/S 143(3) OF THE ACT WHEN ON THE BASIS OF TAX EVASION PETITION THE IMPUGNED ASSESSMENT YEARS WERE CONSIDERED FOR INVOKING THE P ROVISION OF SECTION 147/148 OF THE ACT. THE AO IN THE RESPECTIVE YEARS HAD TRIED TO CO NSIDER THE TAX EVASION PETITION BY ANALYZING THE CLAIM OF THE ASSESSEE WITH RESPECT TO EXPENDITURE WHETHER COULD BE ALLOWED AS BOGUS CLAIMED ON ACCOUNT OF THE AMOUNT R EMAINING PAYABLE AT THE END OF THE RESPECTIVE CLOSURE OF THE FINANCIAL YEARS. HE A LSO CONSIDERED THE CASE OF THE ASSESSEE ON THE BASIS OF RECONCILING THE TAX DEDUCT ION AT SOURCE WHETHER WAS IN COMPLIANCE THE SERVICES WHICH INDICATE THE INCOME T HE ASSESSEE BEING IN THE BUSINESS OF TEA BLENDING AND PACKAGING. FOR THE ASSESSMENT Y EAR 2004-05 HE CONSIDERED THE PARTIES WHOSE CREDIT BALANCE HAD BEEN SHOWN WHEN TH E PAYMENTS TO THEM WERE DISTINGUISHED BUT DISALLOWED RS.10,71,154/-. HE WAN TED TO VERIFY THE EXPENDITURE BY OBTAINING INFORMATION UNDER THE PROVISION OF SECTIO N 131/133(6) OF THE ACT WHEN AFTER HAVING OBTAINED THE ADDRESSES HE REQUIRED THE CONFI RMATION TO BE BROUGHT ON RECORD BUT THE ASSESSEE FAILED TO MEET THE DEADLINE OF LI MITATION THE AO PASSED THE ORDER MAKING AN ADDITION OF RS.10,71,154/- WHEREAS FOR A. YR. 2005-06 INTER ALIA HOLDING THE SAME PARTIES WHICH WHETHER HAVE BEEN SQUARED OFF OR WHETHER EXPENDITURE NOT CLAIMED WERE CONSIDERED AS A CLAIM OF BOGUS EXPENDITURE BY COMPARING THE TWO YEARS LEDGER ACCOUNT BRINGING TO TAX A SUM OF RS.9,60,899/-. HE ALSO DISALLOWED THE EXPENDITURE CLAIMED U/S 40(A)(IA) OF THE ACT IN RESPECT TO TWO PARTIES AND FURTHER DISALLOWANCE OF RS.5,55,000/- WAS MADE UNDER THE PROVISION OF SECTI ON 40A(2B) OF THE ACT ON ITA NOS.162 7&1628./KOL/2012 3 VERIFICATION OF THE TDS CERTIFICATES, HE BROUGHT TO TAX UNDECLARED PORTION OF THE GROSS RECEIPTS THERE FROM AMOUNTING TO RS.4,74,308/-. 3. AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL BEFOR E THE FIRST APPELLATE AUTHORITY FOR BOTH THE YEARS, WHO PASSED SEPARATE ORDERS FOR THE TWO YEARS ON 13.08.2012 ALLOWING THE ASSESSEE APPELLANTS CONTENTION ON THE BASIS OF FACTS BROUGHT ON RECORD AND FURTHER MORE ON HAVING OBTAINED REMAND REPORT F ROM THE LD. AO. 4. THE LD. DR HAS RELIED ON THE ORDER OF THE AO AND SUPPORTED THE GROUNDS RAISED BY HIM BEFORE US AS MENTIONED ABOVE. THE LD. COUNS EL FOR THE ASSESSEE HAS RELIED ON THE ORDER OF THE LD. CIT(A) FOR BOTH THE ASSESSMENT YEARS, IN SO FAR A, A COPY OF THE REMAND REPORT HAS BEEN FURNISHED AND PLACED ON RECO RD. THE LD. CIT(A) CONSIDERED THE CASE OF THE ASSESSEE APPELLANT BY DISTINGUISHING TH E EVIDENCES PRODUCED BY THE ASSESSEE APPELLANT NOT IN VIOLATION OF RULE 46A(3) OF IT RULES, 1962. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULL Y PERUSED THE MATERIAL AVAILABLE ON RECORD. ON CAREFUL PERUSAL OF THE FACT S AND CIRCUMSTANCES OF THE CASE, WE ARE INCLINED TO HOLD THAT IT WAS THE DUTY OF THE AO FOR HAVING CONSIDERED THE TAX EVASION PETITION (TEP) TO BRING ON RECORD THE MATER IAL HAVING ESCAPED ASSESSMENT WHEN DURING THE COURSE OF ASSESSMENT HE REQUIRED TH E ASSESSEE TO FURNISH THE DETAILS OF THE ADDRESS AND CONFIRMATION OF THE PARTIES, WHO HE LD CREDIT BALANCE WHETHER WERE BEING BROUGHT FORWARD AGAINST BOGUS PURCHASES OR FO R EXPENDITURE NOT TO BE ALLOWED, IN SO FAR AS, THE CONTENTION WAS THAT THE PURCHASES ARE BOGUS AND THEREFORE TDS CERTIFICATES WAS NOT THE ONLY CRITERIA FOR ADJUDICA TING THE INCOME FOR DISALLOWANCE. THE LD. COUNSEL FOR THE ASSESSEE HAVING PERUSED THE ORD ER OF THE LD. CIT(A), IN SO FAR AS, HE POINTED OUT THAT BY WAY OF THE REMAND REPORT THE AO HIMSELF HAS INTIMATED THAT HE WAS TO DRAW DECISIVELY EITHER ANY ADVERSE OR FAVOURABLE INFERENCE AS TO THE GENUINENESS OF THE TRANSACTION IN THE ABSENCE OF BOOKS OF ACCOUNTS BEING NOT VERIFIABLE AT THIS STAGE. IT ALSO MENTIONED THAT IT WAS THE MISINTERPRETATION OF THE FACTS BROUGHT ON RECORD BY THE ASSESSEE, IN SO FAR AS, THE PARTIES WITH WHOM NO TR ANSACTIONS HAD BEEN MADE HAD NOT BEEN CLAIMED AS EXPENDITURE. THEREFORE THE GROUND O F DISALLOWANCE AS BOGUS WAS NOT ITA NOS.162 7&1628./KOL/2012 4 TO BE DISALLOWED IN THE CASE OF THE ASSESSEE FOR TH E RESPECTIVE ASSESSMENT YEARS. THE LD. CIT(A) THEREFORE FURTHER NOTED THAT THIS MATTER OF RECONCILIATION BETWEEN TDS CERTIFICATES OR ALLOWING GROSS RECEIPT AGAINST TA X DEDUCTION AT SOURCE BY THE DEDUCTOR HAS BEEN CREATED BY THE AO ITSELF AS IN THE ORIGINA L ASSESSMENT U/S 143(3) OF THE ACT IT WAS NOT DENIED. THEREFORE IT WAS NOT A MATTER OF RE VISITING THE PROVISION OF ASSESSMENT U/S 147 OF THE ACT WHEN THE AMOUNTS THAT HAD NOT BE EN CLAIMED AS EXPENDITURE CAN BE DISALLOWED AS BOGUS EXPENDITURE WAS CONSIDERED BY T HE LD. CIT(A) FOR A.YR. 2004-05. IN A.YEAR 2005-06 THE LD. CIT(A) CONSIDERED THE VAR IOUS OTHER DISALLOWANCES AS WELL BY HOLDING A VIEW THAT THE ADDRESSES WHICH WERE GIV EN AT THE TIME OF ASSESSMENT U/S 147 WERE THE ADDRESSES WHICH WERE KNOWN ORIGINALLY TO THE AO U/S 143(3). THEREFORE THE AOS INABILITY TO OBTAIN CONFIRMATION WAS NOT T O BE IN SO FAR AS RESIDUAL CREDIT BALANCE OF THE PARTIES WHICH HAVE BEEN COMBINED FRO M THE EARLIER YEAR WAS NOT TO BE FOR DISALLOWANCE. IN OTHER WORDS THE PAYMENTS TO TH OSE PARTIES HAVE NO BEARING FOR DISALLOWANCE IN THE IMPUGNED ASSESSMENT YEAR WAS CO NSIDERED BY THE LD. CIT(A) APPROPRIATE FOR DELETING THE ADDITION. IN RESPECT O F THE RECONCILIATION OF THE GROSS RECEIPT AND THE TDS CERTIFICATES THE LD. CIT(A) OBS ERVED THAT THE RECEIPTS OBTAINED TO RENDER TO TAX IN THE EARLIER YEAR WERE TO BE CLAIME D IN ACCORDANCE WITH THE TDS IN THE IMPUGNED ASSESSMENT YEAR AND DOES NOT REQUIRE ANY F URTHER DELIBERATION. HE ALSO NOTED THAT THE BOOKS OF ACCOUNTS ARE AUDITED AND TH E FINANCIAL STATEMENTS WERE FURNISHED TO THE AO WHEN HE REQUIRED THE BOOKS OF ACCOUNTS FOR VERIFICATION IN SO FAR AS THE AUDITED BALANCE SHEET AND FINANCIAL STATEMEN TS HAD NOT INDICATED THE CLAIM OF SUCH CREDITORS OR OF HAVING CLAIMED BOGUS EXPENDITU RE. IN RESPECT OF DISALLOWANCE U/S 40(A)(IA) OF THE ACT THE LD. CIT(A) HELD THAT THE L ABOUR PAYMENTS AND THE TRANSPORT CHARGES DID NOT REQUIRE THE INVOKING THE PROVISION OF SECTION 194C OF THE ACT WAS THEREFORE DELETED BY THE LD CIT(A). THE LD. CIT(A) THEREAFTER DELIBERATED ON THE ISSUE ON THE NATURE OF THE EXPENDITURE WHETHER IT COULD B E TERMED AS INVOKING THE PROVISION OF SECTION 194C OF THE ACT FIRST OR ON ACCOUNT OF B OGUS EXPENDITURE NOT CLAIMED HELD BY THE AO LATER TO COME BACK FOR THE PURPOSE OF FIN DING OF TAX DEDUCTION AT SOURCE U/S 194C OF THE ACT. THE LD. COUNSEL BEFORE US SUBMITTE D THAT THE CREDIT FOR TAX NON- DEDUCTION AT SOURCE IS ON ACCOUNT OF THE INCOME AND NOT EXPENDITURE, IN SO FAR AS THE TAX DEDUCTION AT SOURCE ON EXPENDITURE IS CLAIMED A S CREDIT BY THE DEDUCTEE WAS ITA NOS.162 7&1628./KOL/2012 5 CONSIDERED BY THE LD. CIT(A) IN HIS ORDER WHICH MAY KINDLY BE PERUSED. IN THIS VIEW OF THE MATTER THE SPECIFIC GROUND RAISED BY THE REVENU E BEFORE US, THE LD. DR HAD NOT BEEN ABLE TO CONTROVERT THE FINDINGS AS PER THE CIT(A) W HETHER CAN BE SUBJECTED TO THE PROVISION OF SECTION 194C OF THE ACT ALONE FOR THE PURPOSE OF DISALLOWANCE U/S 40(A)(IA) OF THE ACT IN CONSEQUENCE THERETO. 6. CONCLUDING WE ARE OF CONSIDERED VIEW THAT THE GR OUNDS RAISED BY THE REVENUE FOR BOTH THE YEARS DO NOT HAVE MERIT IN SO FAR AS T HE ORDER OF THE LD. CIT(A) DOES NOT SUFFER FROM ANY INFIRMITY, AS HE HAS FACTUALLY COLL ABORATED THE FINDING TO THE EXTENT OF CORRELATING THE REMAND REPORT WHICH THE AO HIMSELF AGREED CANNOT BE CONSIDERED IN FAVOUR OR AGAINST THE ASSESSEE WAS NOTED BY THE LD. CIT(A) WHICH WE ARE INCLINED TO UPHOLD. 7. IN THE RESULT THE APPEALS OF THE REVENUE FOR BO TH THE A.YEARS ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 19.04.2013. SD/- SD/- [ .#! $'# , ] [ .., ,, , ] [MAHAVIR SINGH ] [K.K.GUPTA] JUDICIAL MEMBER ACCOUNTANT MEMBER ( (( (4 4 4 4) )) ) DATE: 19.04.2013. R.G.(.P.S.) 6 1 /$$7 87)9- COPY OF THE ORDER FORWARDED TO: 1. SRI SOUMITRA DASGUPTA, SANTOSHPUR GOVT. COLONY, P.O . SANTOSHPUR, 24-PARGANAS (SOUTH). 2 I.T.O., WARD-53(1), KOLKATA. 3 . CIT KOLKATA 4 . CIT(A)-XXXIII, KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. 07 /$/ TRUE COPY, 6'/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES ITA NOS.162 7&1628./KOL/2012 6