M/s Creative Foundation, Kolkata V. Income Tax Officer -ward 52(2), Kolkata, Kolkata

ITA 17/KOL/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100158 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 11 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-12-2015
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 03-01-2014
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Retrospective amendment
• Section: 194C; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH: KOLKATA [BEFORE SHRI MAHAVIR SINGH, JM] I.T.A NO.17/KOL/2014 ASSESSMENT YEAR: 2006-07 M/S. CREATIVE FOUNDATION VS. INCOME-TAX OFFICER , WD-52(2), KOLKATA (PAN: AAEFC5580D) ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 08.12.2015 DATE OF PRONOUNCEMENT: 08.12.2015 FOR THE APPELLANT: SHRI RIP DAS, ADVOCATE FOR THE RESPONDENT: SHRI TANUJ NIYOGI, JCIT, SR. DR ORDER THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A)-XXXIII, KOLKATA VIDE APPEAL NO. 267/CIT(A)-XXXIII/ITO WD-52(2)/KOL/08-09 DATED 23.08.2013. ASSESSMENT WAS FRAMED BY ITO, WARD-52(2), KOLKATA U /S. 251/143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FO R ASSESSMENT YEAR 2006-07 VIDE HIS ORDER DATED 13.09.2013. 2. THE FIRST ISSUE IN THIS APPEAL OF ASSESSEE IS AG AINST THE ORDER OF CIT(A) CONFIRMING THE ACTION OF AO IN TREATING THE SUNDRY CREDITORS A S UNEXPLAINED CASH CREDITS TO THE TUNE OF RS.10,86,681/-. 3. I HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. I FIND THAT THE AO NOTICED FROM THE BALANCE SHEET THAT THE ASSESSEE HAS SHOWN SUNDRY CREDITORS FOR GOODS AT RS.14,96,440/- OUT OF WHICH AN AMOUNT OF RS.10,86,681/- PERTAINS TO THE SUNDRY CREDITORS WITH THE REMARK D IFFERENT CASH PARTY. THE ASSESSEE CLAIMED TO HAVE MADE PURCHASES FROM THESE PARTIES A S GOODS RECEIVED BUT THE AO WAS NOT CONVINCED AND HE ADDED THE SUM OF RS.10,86,681/ - AS UNEXPLAINED CASH CREDIT U/S. 68 OF THE ACT. THE CIT(A) EXACTLY ON SAME REASONING C ONFIRMED THE ADDITION. 4. I FIND FROM THE FACTS OF THE CASE THAT THE ASSES SEE HAS FILED COMPLETE DETAILS IN ITS PAPER BOOK AT PAGE 19 WHEREIN SUNDRY CREDITORS TO W HOM PAYMENTS WERE MADE IN CASH ARE ENCLOSED. THESE PARTIES WERE OUTSTANDING DURIN G THE YEAR AND NO PAYMENT WAS MADE AND THIS WAS SHOWN AS SUNDRY CREDITORS AMOUNTING TO RS.10,86,681/- AND ASSESSEE HAS FILED COMPLETE NAME AND ADDRESS IN THE LIST. THE D ETAILS WERE MADE AVAILABLE BEFORE THE 2 ITA NO.17/K/2014 M/S. CREATIVE FOUNDATION AY 2006-07 AO ALSO. I FIND THAT THESE SUNDRY CREDITORS PERTAI NED TO SMALL SUPPLIERS WHO SUPPLY MATERIAL TO THE ASSESSEE BEING LOCAL VENDORS AND TH E SUPPLY IS NOT ACCOMPANIED BY ANY CASH MEMO OR BILL BUT IT IS A SETTLED POSITION THAT THERE WILL BE OUTSTANDING AT THE END OF THE YEAR. IN THE IMMEDIATE NEXT YEAR THESE PAYMENT S ARE MADE, WHICH WAS CONTENDED BY ASSESSEES COUNSEL NOW BEFORE ME AND HE STATED THAT IN THE NEXT YEAR THE PAYMENTS WERE MADE. I FIND NO INFIRMITY IN THE CONTENTION OF THE ASSESSEE AND ACCORDINGLY THIS ADDITION IS DELETED. THIS GROUND OF APPEAL OF ASSESSEE IS A LLOWED. 5. THE NEXT ISSUE IN THIS APPEAL OF ASSESSEE IS AGA INST THE ORDER OF CIT(A) CONFIRMING THE DISALLOWANCE OF CONTRACTUAL PAYMENTS MADE WITHOUT DEDUCTION OF TDS U/S. 194C OF THE ACT THEREBY INVOKING THE PROVISION S OF SECTION 40(A)(IA) OF THE ACT AMOUNTING TO RS.2,45,907/-. 6. I HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. I FIND THAT THE ASSESSEE HAS MADE PAYMENTS I N RESPECT TO TWO CONTRACTORS NAMELY, SHRI BABLU MAITY AMOUNTING TO RS.1,06,000/- AND MR. ANABUL SEIKH AMOUNTING TO RS.1,39,907/- THEREBY THE TOTAL OF RS.2,45,907/-. T HE ASSESSEE IS LIABLE TO DEDUCT TDS U/S. 194C OF THE ACT ON THESE PAYMENTS BUT HE FAILE D TO DO SO. THE AO BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT MADE DIS ALLOWANCE AND CIT(A) CONFIRMED THE SAME. NOW BEFORE ME, LD. COUNSEL FOR THE ASSESSEE O NLY REQUESTED FOR SETTING ASIDE THIS ISSUE TO THE FILE OF AO IN VIEW OF AMENDMENT IN SEC TION 40(A)(IA) OF THE ACT BY BRINGING THE SECOND PROVISO BY FINANCE ACT, 2012 IS HELD TO BE RETROSPECTIVE BY HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ANSAL LAND MARK T OWNSHIP (P) LTD., ITA NOS. 160 & 161/2015 DATED 26.08.2015, WHEREIN IT HAS BEEN HELD AS UNDER: NO S. 40(A)(IA) DISALLOWANCE FOR FAILURE TO DEDUCT TDS ON PAYMENT IF PAYEE HAS OFFERED AMOUNT TO TAX. SECOND PROVISO TO S. 40(A)(I A) INSERTED BY FINANCE ACT 2013 W.E.F. 1.4.2013 SHOULD BE TREATED AS CURATIVE AND T O HAVE RETROSPECTIVE EFFECT FROM 1.4.2005. ITAT PRAISED FOR 'THOROUGH ANALYSIS' OF T HE PROVISION 7. IN VIEW OF THE ABOVE, THE ISSUE NEEDS TO BE SET ASIDE TO THE FILE OF AO. ON QUERY FROM THE BENCH, LD. SR. DR HAS NOT OBJECTED TO THE PROPOSAL. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, WE ARE OF THE CONSIDERED VIEW TH AT LET THE AO EXAMINE THE DETAILS OF RECIPIENTS OF PAYMENTS, WHICH ARE TO BE FILED BY AS SESSEE AND IN CASE THESE RECEIPTS ARE INCLUDED IN THEIR RESPECTIVE RETURN OF INCOME AND P AID TAXES THEREON, THE AO WILL DELETE THE DISALLOWANCE MADE U/S. 40(A)(IA) OF THE ACT IN VIEW OF THE DECISION IN THE CASE OF 3 ITA NO.17/K/2014 M/S. CREATIVE FOUNDATION AY 2006-07 ANSAL LAND MARK TOWNSHIP (P) LTD., SUPRA. THIS ISS UE OF ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED PAR TLY FOR STATISTICAL PURPOSES. 9. ORDER IS PRONOUNCED IN THE OPEN COURT. SD/- (MAHAVIR SINGH) JUDICIAL MEMBER DATED : 8 TH DECEMBER, 2015 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1. APPELLANT M/S. CREATIVE FOUNDATION, 1/147, NA KTALA, KOLKATA-700 047 2 RESPONDENT ITO, WARD-52(2), KOLKATA. 3. THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .