ITO, Ward - 41(4), Kolkata, Kolkata V. Ranjit Singh Kothari, Karnataka

ITA 1797/KOL/2010

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 7243 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2005-2006
• Appeal Filed On: 20-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K ROY
• Assessee Lawyers: T K NAG
• Keywords: Business income

Judgement Text

, , , , , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : K OLKATA [ ( (( ( ) )) ) . . . . , ,, , ! ! ! ! . .. .'# '#'# '#. .. . , , , , $% $% $% $% ] ]] ] [BEFORE HONBLE SRI N. VIJAYAKUMARAN JM & HONBLE SRI C. D. RAO, AM] !' !' !' !' / I.T.A NO.1797/KOL/2010 () *+ () *+ () *+ () *+/ // / ASSESSMENT YEAR : 2005-06 INCOME TAX OFFICER, WARD-41(4), -VS.- RANJIT SINGH KOTHARI KOLKATA. KOLKATA [PAN : AF QPK 4775 H] [ -. -. -. -. /APPELLANT ] ]] ] [ /0-. /0-. /0-. /0-./ // / RESPONDENT ] ]] ] 1 2 1 2 1 2 1 2 /C.O.NO.164/KOL/2010 !' !' !' !' / A/O ITA NO .1797 /KOL/2010 () *+ () *+ () *+ () *+/ // / ASSESSMENT YEAR : 2005-06 RANJIT SINGH KOTHARI -VS.- INCOME TAX OFFICER, WARD-41(4) , KOLKATA [PAN : AFQPK 4775 H] KOLKATA. [ -. -. -. -. /APPELLANT] [ 1 2 1 2 1 2 1 2 / // / CROSS OBJECTOR] -. -. -. -. / FOR THE DEPARTMENT : 3 33 3 /SHRI S. K. ROY /0-. /0-. /0-. /0-. / FOR THE ASSESSEE : 3 33 3 / SHRI T. K. NAG $4 /ORDER . . . . , ,, , PER N. VIJAYAKUMAN, J.M. THIS IS AN APPEAL OF THE REVENUE AS WELL AS CROSS OBJECTION OF THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF LD. CIT(A)-XXIV, KOLKATA DATED 15.06.2010. THE ASSESSMENT YEAR INVOLVED IS 2005-06. 2. THE GROUNDS OF APPEAL URGED BY THE REVENUE IS AS UNDER :- (1) THE LD. CIT(A) HAD ERRED IN LAW AS WELL AS ON FACT BY DELETING THE ADDITION OF RS.1,36,531/- AND RS.11,000/- AS DISALL OWANCE OF INTEREST EXPENSES AND COMMISSION EXPENSES U/S 40(A)(IA) RESP ECTIVELY. [ITA NO. 1797 & C.O. 164/KOL/2010] 2 (2) THE LD. CIT(A) HAD FAILED TO APPRECIATE THE FACT TH AT THE ASSESSEE HAD ERRED BY NOT FURNISHING THE FORM NO.15H IN THE CIT S OFFICE AND THEREFORE, HE WAS LIABLE TO DEDUCT TAX AT SOURCE ON INTEREST PAID BY HIM. THE LD. CIT(A) HAD ERRED BY DELETING THE ADDITION O F RS.1,43,846/- ON ACCOUNT OF INTEREST PAID ON UNSECURED LOAN. (3) THE LD. CIT(A) HAD ERRED ON FACT BY DELETING THE AD DITION OF RS.66,500/- ON ACCOUNT OF BOGUS LABOUR EXPENSES. (4) THE LD. CIT(A) HAD ERRED IN LAW AS WELL AS ON FACT BY DELETING THE ADDITIONS OF RS.4,56,180/- AND RS.55,499/- ON ACCOU NT OF UNDISCLOSED TRANSPORT RECEIPTS AND SALES RECEIPTS RESPECTIVELY. (5) THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FACT BY ACCEPTING FRESH EVIDENCE IN VIOLATION OF RULE 46A, WHILE DELETING T HE ADDITIONS MADE ON ACCOUNT OF UNDISCLOSED TRANSPORT RECEIPTS AND SALES RECEIPTS. 3. IN GROUND NO.1, THE DELETION OF ADDITION OF RS.1 ,36,531/- IS THE ACTUAL DELETION OF ADDITION WHEREAS IN GROUND NO.2 WAS WRONGLY MENTIONED AS RS. 1,43,846/-. 4. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND ON P ERUSAL OF THE MATERIAL AVAILABLE ON RECORD, IT IS OBSERVED THAT IT IS ONLY A DELETION O F RS.1,36,531/- OUT OF THE ENTIRE AMOUNT OF RS.1,43,846/- WHICH WAS DISALLOWED BY INVOKING SECT ION 40(A)(IA) OF THE INCOME TAX ACT. ASSESSING OFFICER FROM THE RECORD FOUND THAT ASSESS EE HAD DEBITED INTEREST PAID/CREDITED TO THE FOLLOWING PARTIES :- (1) BIMAL SINGH KOTHARI RS.45,867/- (2) KANI DEVI KOTHARI RS.80,207/- (3) SHANTI DEVI BENGANI RS. 6,823/- (4) NIRMAL KUMAR BENGANI RS. 5,097/- (5) KAMAL BENGANI RS. 8,537/- (6) MANJU GIRI RS. 7,315/- OUT OF 6 PARTIES LD. CIT(A) FOUND THAT FOR THE REMA INING 5 PARTIES FORM 15H HAS BEEN FILED. LD. CIT(A) FOUND THAT NONE OF THE CREDITORS FOR WHOM FO RM 15H HAS BEEN FILED, NO TAXABLE INCOME WAS FOUND FROM 15H FORM. THEREFORE, THE CONTENTION OF THE ASSESSEE THAT NO TDS WAS FOUND REQUIRED TO BE MADE AS FORM 15H WHICH WAS FILED BY THE ABOVE CREDITORS REQUESTING FOR NON DEDUCTION OF TDS. HOWEVER, THERE WAS A DEFAULT ON THE PART OF THE ASS ESSEE IN NOT DEPOSITING THE ABOVE FORMS BEFORE THE CONCERNED CIT/CCIT. BUT IT I S A SEPARATE PROCEEDINGS FOR PENALTY FOR NOT DEPOSITING FORM 15H WHICH WE ARE NOT AT ALL CONCERN ED WITH. BASED ON THIS, LD. CIT(A) CAME TO [ITA NO. 1797 & C.O. 164/KOL/2010] 3 THE CONCLUSION THAT OUT OF THE 6 CREDITORS, 5 DEPOS ITORS WHO HAS FILED FORM 15H, THE DISALLOWANCE IS NOT JUSTIFIED, HE, THEREFORE, DELETED THE ADDITI ON. IN THAT WAY, RS.1,36,531/- WAS GIVEN RELIEF TO THE ASSESSEE. 4.1 IN FIRST PART OF GROUND NO.1 WHICH WE AFFIRMED IN GROUND NO.1, AS THERE WAS NO OTHER MATERIAL, LD. CIT(A) ACCEPTED THE MATERIAL AVAILABL E ON RECORD. HENCE, WE HAVE NO JUSTIFICATION TO INTERFERE WITH THE ORDER OF LD. CIT(A) WHO HAS D ELETED THE ADDITION OF RS.1,36,531/-. THE SAME REASONS IS ALSO APPLICABLE TO GROUND NO.2 AS D ELETION OF ADDITION IS ONLY TO THE EXTENT OF RS.1,36,531/- AND NOT THE ENTIRE ADDITION AS URGED IN GROUND NO.1. 5. THE SECOND PART OF GROUND NO.1 IS OF THE DELETIO N OF DISALLOWANCE OF RS.11,000/-. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON RECORD. THE TOTAL DISALLOWANCE IS RS.22,165/- UNDER THE HEA D BROKERAGE AND COMMISSION PAID. THIS AMOUNT WAS DEBITED IN THE PROFIT & LOSS ACCOUNT UND ER THE HEAD COMMISSION & BROKERAGE. ASSESSING OFFICER WAS OF THE VIEW THAT ASSESSEE FAI LED TO FURNISH THE NAMES AND ADDRESSES OF THE PARTIES TO WHOM THE PAYMENTS WERE MADE AND HENCE TD S WAS NOT DEDUCTED. HE, THEREFORE, DISALLOWED. ON APPEAL BEFORE THE LD. CIT(A), IT WAS CONTENDED THAT FULL PARTICULARS OF BROKERAGE AND COMMISSION IS ON RECORD, COPY ENCLOSED. NO TDS WAS LIABLE TO BE DEDUCTED. THEREFORE, INVOKING OF SECTION 40(A)(IA) IS ACADEMIC, HYPOTHET ICAL AND SUPERFLUOUS IN CASE OF EACH OF THE PAYEES. LD. CIT(A) CAME TO THE CONCLUSION THAT COMM ISSION ACCOUNT TO THE EXTENT OF RS.11,165/- WAS PAID TO HOOGHLY MILLS PROJECTS LTD. WHICH WE AR E CONCERNED IN GROUND NO.1, LATER PART AND THIS PAYMENT WAS MADE TOWARDS LOAN ADJUSTMENT MADE AGAINST PURCHASES AND THE BALANCE OF RS.11,000/- WAS PAID TO 6 DIFFERENT PARTIES. LD. CI T(A) WAS OF THE VIEW THAT AS PER PROVISIONS OF SECTION 194H WHICH IS WITHIN THE PURVIEW OF SECTION 40(A)(IA), WHICH MADE THE LD. CIT(A) TO GRANT RELIEF PARTLY BY GIVING RELIEF OF RS.11,000/- AND THAT BEING THE FINDING OF LD. CIT(A). THIS DELETION IS QUITE JUSTIFIED AS FULL PARTICULARS OF PAYMENT OF BROKERAGE AND COMMISSION AND ASSESSEE WAS UNDER THE BONAFIDE BELIEVE THAT NO TDS WAS LIABLE TO BE DEDUCTED WHICH WAS CONFIRMED BY THE LD. CIT(A) UNDER THE ABOVE FACTS A ND CIRCUMSTANCES OF THE CASE. WE FIND NO JUSTIFICATION TO INTERFERE WITH THE ORDER OF LD. CI T(A). HENCE, GROUND NO.1 & 2 ARE DECIDED IN AGAINST REVENUE AND IN FAVOUR OF THE ASSESSEE. 7. COMING TO GROUND NO.3, REGARDING DELETION OF ADD ITION OF RS.66,500/- ON THE ALLEGED [ITA NO. 1797 & C.O. 164/KOL/2010] 4 BOGUS LABOUR EXPENSES. UNDER THIS HEAD, ASSESSEE HA D DEBITED AN AMOUNT OF RS.2,41,500/- IN THE PROFIT & LOSS ACCOUNT. ASSESSING OFFICER CARRIED O UT VERIFICATION. HOWEVER, AS STATED BY THE ASSESSEE, OUTSTANDING AMOUNT WAS NOT CONFIRMED BY T HE LABOUR SARDARS. FURTHER, ASSESSING OFFICER FOUND THAT SUM OF RS.66,500/- WAS SHOWN AS OUTSTANDING AT THE END OF 31.03.2006 I.E. AT THE END OF SUBSEQUENT YEARS ALSO. THIS MADE THE ASS ESSING OFFICER TO CAME TO THE CONCLUSION THAT LABOUR CHARGES TO THE TUNE OF RS.66,500/- WERE NEVE R INCURRED. THEREFORE, HE DISALLOWED THE SAME. ON APPEAL TO THE LD. CIT(A), IT WAS CONTENDED ON BEHALF OF THE ASSESSEE THAT DETAILS OF LABOUR CHARGES AND THE DETAILS OF PAYMENTS WERE AVA ILABLE WITH THE ASSESSING OFFICER. THEY WERE DULY CONFIRMED BY THE LABOURERS IN RESPONSE TO THE ASSESSING OFFICERS LETTER. LABOURERS MENTIONED THAT THEY ARE NOT MAINTAINING ANY BOOKS O F ACCOUNT. THERE IS NO SPECIFIC QUERY MADE BY THE ASSESSING OFFICER WITH REGARD TO THE OUTSTAN DING AMOUNT OR PAYMENTS RECEIVED IN THE SUBSEQUENT YEARS. THIS MADE THE LD. CIT(A) TO CAME TO THE CONCLUSION THAT THE QUANTITY FOR WHICH LABOUR PAYMENT HAS BEEN MADE MATCHES WITH THE TOTAL QUANTITY SOLD. THERE IS NO MATERIAL TO SUGGEST THAT THE PAYMENTS WERE INFLATED FOR THE LACK OF THESE EVIDENCES. LD. CIT(A) DELETED THE ABOVE ADDITION OF RS.66,500/- UNDER THE HEAD LA BOUR CHARGES. 8. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE ARE OF THE VIEW THAT THE ORDER OF LD. CIT(A) IS QUITE JUSTIFIED. BEFORE MAKING ANY ADDITION ASSE SSING OFFICER HAS TO SEE WHETHER THE PAYMENTS WERE MADE TO THE LABOURERS WITH REFERENCE TO THE QU ANTITY FOR WHICH LABOUR PAYMENTS HAS BEEN MADE VIS--VIS TOTAL QUANTITY SOLD. ASSESSING OFFIC ER SHOULD HAVE MADE ENQUIRY WHETHER THERE WAS ANY INFLATED PAYMENT MADE TO THE LABOURERS IN T HE ABSENCE OF ABOVE. IT IS NOT JUSTIFIED ON THE PART OF THE ASSESSING OFFICER TO MAKE ADDITION. THI S HAS BEEN RIGHTLY DELETED BY THE LD. CIT(A) WHICH REQUIRES NO INTERFERENCE. THEREFORE, GROUND N O.3 OF THE APPEAL IS DECIDED AGAINST REVENUE AND IN FAVOUR OF THE ASSESSEE. 9. COMING TO GROUND NO.4, LD. CIT(A) DELETED THE AD DITION OF RS.4,56,180/- ON ACCOUNT OF UNDISCLOSED TRANSPORT RECEIPT. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE FACTS ARE THAT DURING ASSESSMENT PROCEEDINGS, ASSESSING OFFICER FOUND THAT ASSESSEE HAD MADE SALE S OF RS.32,32,442/- TO M/S. MADHYABHARAT PAPER LTD. ON ENQUIRY AND ON THE MATERIAL AVAILABLE ON RECORD, ASSESSING OFFICER CAME TO THE CONCLUSION THAT ASSESSEE HAD SUPPRESSED THE RECEIPT S FROM M/S MADHYABHARAT PAPER LTD. OF [ITA NO. 1797 & C.O. 164/KOL/2010] 5 RS.4,56,180 & RS.55,499/- BEING UNDISCLOSED SALES. 10.1 ON APPEAL TO THE LD. CIT(A), IT WAS EXPLAINED BY THE ASSESSEE THAT THERE WAS NO SUPPRESSIONS AND ALL THE RECEIPTS WERE DULY RECORDE D AND THE RECONCILIATION SUBMITTED BEFORE THE ASSESSING OFFICER WHICH THE ASSESSING OFFICER FAILE D TO CONSIDER. THE RECONCILIATION STATEMENT AS PRODUCED IN THE LD. CIT(A)S ORDER IS REPRODUCED HE REUNDER :- TOTAL SALES DURING THE YEAR : 33,33,925/- LESS : OPENING BALANCE : 3,01,483/- [CHEQUES RECEIVED IN THIS YEAR] TOTAL SALES SHOWN : 30,32,442/- ADD : TRANSPORT PAID BY PARTY : 4,56,180/- DEBIT NOTES BY PARTY : 55,499/- SALES CONFIRMED BY PARTY : 35,44,121/- LD. CIT(A) FOUND THAT DISCREPANCY HAS BEEN VIEWED B Y THE RECONCILIATION STATEMENT. RECONCILIATION BEING DEBIT NOTES BY THE PARTY AND T HE CHEQUES RECEIVED IN THIS YEAR WHICH WILL CLEARLY SHOW THE TOTAL SALES SHOWN AND THE TOTAL SA LES DURING THE YEAR AND ULTIMATELY SALES CONFIRMED BY THE PARTY. ONCE IT IS CONFIRMED BY THE PARTY AND PARTICULARLY, SALES ARE MORE THAN RS.4,56,180/-. THERE CAN NOT BE ASSUMPTION OF SUPPR ESSION OF SALES. FURTHER, SECOND ACCOUNT OF RS.55,499/- WHICH REPRESENTS DEDUCTION ON ACCOUNT O F QUALITY WHICH IS PREVALENT IN THIS BUSINESS PRACTICE WHICH MADE THE LD. CIT(A) TO ACCEPT IT AS WELL REASONED EXPLANATION WHO ULTIMATELY DELETED THE ADDITION. 11. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND ON PERUSAL OF THE MATERIAL AVAILABLE ON RECORD, WE ARE OF THE VIEW THAT THIS OBJECTION RAIS ED BY LD. DEPARTMENTAL REPRESENTATIVE IN THE NEXT GROUND I.E. GROUND NO.5 AS THE ALLEGED RULE 46 A, WHICH IS NOT DISPUTED AND THAT THE POWER OF THE LD. CIT(A) IS CO-TERMINUS. FURTHER, IT WAS A LSO EXPLAINED THAT THE RECONCILIATION STATEMENT WAS SUBMITTED BEFORE THE ASSESSING OFFICER WHICH TH E ASSESSING OFFICER HAS NOT CONSIDERED. THAT BEING THE CASE, WE ARE OF THE VIEW THAT THERE IS NO VIOLATION OF RULE 46A. ULTIMATELY, THE DEPARTMENTAL APPEAL IS DISMISSED IN ALL COUNTS. 12. TURNING TO THE CROSS OBJECTION PREFERRED BY THE ASSESSEE, AFTER CONSIDERING THE RIVAL SUBMISSIONS AND FOR THE REASONS WE HAVE STATED IN R EVENUES APPEAL, ALL THESE GROUND I.E. GROUND NOS. 1 TO 6 ARE TO BE REJECTED. THE SAME REASON WE FOUND IN DEPARTMENTAL APPEAL WILL HOLD GOOD [ITA NO. 1797 & C.O. 164/KOL/2010] 6 FOR REJECTING GROUNDS OF CROSS OBJECTION REFERRED B Y THE ASSESSEE. ULTIMATELY, WE ARE OF THE VIEW THAT THE CROSS OBJECTION IS TO BE DISMISSED IN VIEW OF ABOVE REASONING UNDER THE GIVEN SET OF FACTS AND CIRCUMSTANCES. 13. HENCE, IN THE RESULT, BOTH REVENUES APPEAL AS WELL AS CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. $4 $4 $4 $4 5 6 78 5 6 78 5 6 78 5 6 78 ORDER PRONOUNC ED IN THE COURT ON 11.10.2010 SD/- SD/- [ . .. .'# '#'# '#. .. . , ,, , $% $% $% $% ] [ . . . . , ,, , ] [ C. D. RAO ] [ N. VIJAYAKUMARAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER (#%) DATED : 11TH OCTOBER, 2011. $4 9 /(( :$*/ COPY OF THE ORDER FORWARDED TO: 1. -. /APPELLANT- INCOME TAX OFFICER/WARD-41(4), 18, RA BINDRA SARANI, KOLKATA-700 001. 2 /0-. / RESPONDENT : RANJIT SINGH KOTHARI, 1/4C, K.C. ROA D, KOLKATA-700 002. 3. (4/ THE CIT, 4. (4 ()/ THE CIT(A), KOLKATA. 5. @(6 /(/ DR, KOLKATA BENCHES, KOLKATA [0 /(/ TRUE COPY] $4 / BY ORDER, B / ! /DEPUTY/ASSTT REGISTRAR. [KKC CD (E (F /SR.PS]