ITO, Ward 14(2), Kolkata, Kolkata V. M/s B.B.C. Project Services Pvt. Ltd., Kolkata

ITA 1669/KOL/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0773 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 19-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 40(a)(ia)

Judgement Text

, B , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. A.L. SAINI, ACCOUNTANT MEMBER ITA NO. 1669 / KOL / 20 16 ASSESSMENT YEAR :2009-10 INCOME TAX OFFICER WARD-14(2), 10 TH FLOOR, R.NO. 3 AAYAKAR POORVA, 110, SHANTI PALLY, KOLKATA-107 V/S . M/S B.B.C. PROJECT SERVICES PVT LTD., 90B, S.P. MUKHERJEE ROAD, KOLKATA-26 [ PAN NO.AACB 3671 R ] /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI A.K. SINGH, CIT-DR /BY RESPONDENT NONE /DATE OF HEARING 22-11-2018 /DATE OF PRONOUNCEMENT 30-11-2018 / O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THIS REVENUES APPEAL FOR ASSESSMENT YEAR 2009-10 C HALLENGES CORRECTNESS OF COMMISSIONER OF INCOME TAX (APPEALS) -4 KOLKATAS ORDER DATED 06.06.2016, PASSED IN CASE NO.190/CIT(A)-4/WA RD-10(2)/KOL/14-15, IN PROCEEDINGS U/S. 144/264 OF THE INCOME TAX ACT, 196 1; IN SHORT THE ACT. CASE CALLED TWICE. NONE APPEARS AT ASSESSEES BEHES T. IT IS ACCORDINGLY PROCEED EX PARTE . 2. THE REVENUE RAISES TWO SUBSTANTIVE GROUNDS IN IT S INSTANT APPEAL. ITS FORMER GRIEVANCE PLEADS THAT CIT(A) HAS ERRED IN ES TIMATING ASSESSEES INCOME @ 0.4% OF THE TOTAL TURNOVER OF 48,47,08,894/- WITHOUT APPRECIATING THE RELEVANT FACTS. IT THEN SEEKS TO REVIVE SEC. 40 (A)(IA) DISALLOWANCE OF 6,64,83,650/- MADE BY THE ASSESSING OFFICER ON ACCO UNT OF NON-DEDUCTION OF TDS AND REVERSED IN LOWER APPELLATE PROCEEDINGS. ITA NO.1669/KOL/2016 A.Y. 2009-10 ITO WD-14(2) KOL VS. M/S B.B.C. PROJECT SERVICES PVT LTD. PAGE 2 3. WE FIND IN THIS BACKDROP OF PLEADINGS THAT CIT(A )S ORDER QUA THE INSTANT TWIN ISSUE(S) READS AS FOLLOWS:- 5. I HAVE CONSIDERED THE SUBMISSIONS OF THE AR OF THE APPELLANT AND HAVE ALSO GONE THROUGH THE ASSESSMENT ORDER ON THE ISSUE AT HAND. I FIND THAT FACTS EMERGING FROM RECORDS REVEAL THAT T HE APPELLANT SUBMITTED PRIMARY DOCUMENTS IN SUPPORT OF RETURN ALREADY FILE D I.E. COPY OF RETURN (ITR-6), AUDITED ACCOUNTS, TAX AUDIT REPORT U/S 44A B, COMPUTATION OF INCOME ETC. ON 02.11.2012. PERUSAL OF AUDIT REPORT I.E. FORM 3CD REVEALS THAT THE COMPANY MAINTAINED BOOKS OF ACCOUN T AS DETAILED AGAINST ITEM 9(A) & (B). IT ALSO APPEARS THAT TAX A UDIT REPORT HAS BEEN SUBMITTED BY AUDITOR AFTER DUE EXAMINATION OF ALL T HE BOOKS OF ACCOUNT AS SPECIFIED THEREIN. 5.3 I FIND FROM THE PARTICULARS AVAILABLE AT SCHEDU LE 12 THAT 6,64,83,650/- WAS DEBITED IN THE P&L A/C AS INCENTI VE TO AGENTS. THE PAYMENT OF INCENTIVES TO AGENTS CANNOT BE EQUATED A S COMMISSION PAYMENTS BY ANY MEANS. HENCE, THE PROVISION OF SECT ION 194H HAVE NO APPLICABILITY FOR SUCH PAYMENTS AND CONSEQUENTLY, T HE QUESTION OF DISALLOWANCE U/S. 40(A)(IA) DOES NOT ARISE. I FURTH ER FIND THAT THE APPELLANT HAS NOT COMPLIED BEFORE THE AO. THE APPEL LANT HAS NOT EVEN PRODUCED COMPLETE BOOKS OF ACCOUNT BEFORE ME AND I FIND FROM THE RECORD THAT THERE HAS BEEN REPEATED NON-COMPLIANCE BY THE APPELLANT BEFORE THE AO. THEREFORE THE BOOKS OF ACCOUNT ARE L IABLE TO BE REJECTED. HOWEVER, I ALSO AGREE WITH THE LOGISTIC CONTENTION OF THE AR THAT DISALLOWANCE OF ENTIRE INCENTIVE TO AGENTS AMOUNTIN G TO 6,64,83,650/- WOULD ONLY RESULT IN AN ABSURD NET PROFIT RATE OF 1 3.90% IN THIS PARTICULAR LINE OF BUSINESS IN WHICH THE APPELLANT COMPANY IS ENGAGED IN. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS THE NORMAL PROFIT RENDS IN THIS LINE OF BUSINESS, I AM OF THE VIEW THAT BOOK PROFIT DECLARED IS LIABLE TO BE REJECTED. THE INCOM E OF THE COMPANY MAY BE ESTIMATED KEEPING IN VIEW MATERIALS AVAILABLE ON RECORD. IN THIS REGARD, I HAVE ALREADY DECIDED THE APPELLANTS APPE AL FOR THE AYS 2001- 11 & 2011-12 BY ADOPTING THE THEORY OF ESTIMATION. FOLLOWING THE SAME PRINCIPLE, TOTAL INCOME IS ESTIMATED @ 0.4% OF TOTA L TURNOVER OF 48,47,08,894/- WHICH WORKS TO 19,38,835/-. THE AO IS DIRECTED ACCORDINGLY. THE APPELLANT GET A RELIEF OF 6,54,70,185/- (6,74,09,020 19,38,835). 4. LEARNED CIT-DR VEHEMENTLY CONTENDS DURING THE C OURSE OF HEARING THAT CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN ESTIMATING ASSESSEES INCOME @ 0.4% OF ITS TOTAL TURNOVER. HE FAILS TO DI SPUTE THE FACT THE CIT(A) HAS GONE BY HIS FINDINGS IN EARLIER ASSESSMENT YEARS TH EREBY ADOPTING THE JUDICIAL CONSISTENCY. THE SAID ESTIMATION IN EARLIER ASSESSM ENT YEARS HAS ADMITTEDLY ITA NO.1669/KOL/2016 A.Y. 2009-10 ITO WD-14(2) KOL VS. M/S B.B.C. PROJECT SERVICES PVT LTD. PAGE 3 ATTAINED FINALITY. THERE IS NO OTHER MATERIAL TO DI SPUTE CORRECTNESS THEREOF FAILED DURING THE COURSE OF HEARING. WE THEREFORE F IND NO FAULT IN CIT(A)S ACTION ESTIMATING THE ASSESSEES INCOME @ 0.4% OF I TS TURNOVER. 5. THE REVENUES LATTER SUBSTANTIVE GROUND SEEKING TO REVIVE U/S 40(A)(IA) (SUPRA) THAT HAS NO LEGS TO STAND SINCE THE RELEVAN T BOOKS FORMING FOUNDATION THEREOF ALREADY STAND REJECTED. THE REVENUE FAILS I N ITS BOTH SUBSTANTIVE GROUNDS ACCORDINGLY. 6. THIS REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 30/11/2018 SD/- SD/- ( %) (' %) (DR. A.L. SAINI) (S.S.GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) KOLKATA, *DKP, SR.P.S (- 30 / 11 /201 8 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-ITO WARD-14(2), 10 TH FLOOR, R.NO.3 AAYAKAR POORVA,110, SHANTI PALLY, KOLKATA-7 00 107 2. /RESPONDENT-M/S B.B.C PROJECT SERVICES PVT. LTD., 9 0B, S.P.MUKHERJEE RD.KOL-26 3. 3 4 / CONCERNED CIT KOLKATA 4. 4- / CIT (A) KOLKATA ) 5. 7 ''3, 3, / DR, ITAT, KOLKATA 6. < / GUARD FILE. BY ORDER/ , /TRUE COPY/ / 3,