M/s. Lakhotia Co. Pvt. Ltd., Kolkata V. DCIT, Circle-14(2), Kolkata, Kolkata

ITA 1922/KOL/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4709 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 07-09-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ROBIN CHOUDHUR Y
• Keywords: Corroborative evidences

Judgement Text

1 ITA NO. 1922/KOL/2017 LAKHOTIA TRANSPORT CO. PVT. LTD. AY 2011-12 , B , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA ( ) . . , . ' # $% % , '( ) [BEFORE SHRI A. T. VARKEY, JM & DR. A. L. SAINI, A M] I.T.A. NO. 1922/KOL/2017 ASSESSMENT YEAR: 2011-12 M/S. LAKHOTIA TRANSPORT CO. PVT. LTD. (PAN: AAACL8147J) VS. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-14(2), KOLKATA. APPELLANT RESPONDENT DATE OF HEARING 06.09.2018 DATE OF PRONOUNCEMENT 26.10.2018 FOR THE APPELLANT SHRI SUNIL SURANA, FCA FOR THE RESPONDENT SHRI ROBIN CHOUDHURY, ADDL. CIT , SR. DR ORDER PER SHRI A.T.VARKEY, JM THIS APPEAL PREFERRED BY THE ASSESSEE IS AGAINST TH E ORDER OF THE LD. CIT(A)-5, KOLKATA DATED 16.06.2017 FOR AY 2011-12. 2. GROUND NOS. 1 AND 2 ARE GENERAL IN NATURE AND DO NOT REQUIRE ANY ADJUDICATION. 3. GROUND NO. 3 OF ASSESSEES APPEAL IS AGAINST TH E ACTION OF LD. CIT(A) IN CONFIRMING THE DISALLOWANCE OF RS.6,69,777/- BEING 10% OF THE LIABILITY FOR LORRY HIRE CHARGES ON AD HOC BASIS AS MADE BY THE AO. 3.1. BRIEFLY STATED FACTS ARE THAT A SUM OF RS.6,69 ,777/- BEING 10% OF THE LIABILITY FOR LORRY HIRE CHARGES UNDER THE HEAD CURRENT LIABILITI ES AMOUNTING TO RS.66,97,775/- HAS BEEN ADDED BACK BY THE AO TO THE INCOME ON ESTIMATE BASI S BY STATING THAT THE GENUINENESS OF THE SAID SUNDRY CREDITORS COULD NOT BE PROVED FULLY AND FOR THE SAME BEING NOT VERIFIABLE. ON APPEAL, THE LD. CIT(A) CONFIRMED THE ACTION OF T HE AO. AGGRIEVED, ASSESSEE IS BEFORE US. 2 ITA NO. 1922/KOL/2017 LAKHOTIA TRANSPORT CO. PVT. LTD. AY 2011-12 3.2. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THRO UGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT A SUM OF RS.6,69,777/- BEIN G 10% OF THE LIABILITY FOR LORRY HIRE CHARGES UNDER THE HEAD CURRENT LIABILITIES AMOUNTIN G TO RS.66,97,775/- HAS BEEN ADDED BACK BY THE AO TO THE INCOME ON ESTIMATE BASIS BY STATIN G THAT THE GENUINENESS OF THE SAID SUNDRY CREDITORS COULD NOT BE PROVED FULLY AND FOR THE SAME BEING NOT VERIFIABLE. WE NOTE THAT ASSESSEE HAD FILED THE DETAILS OF THE LORRY HI RED BY IT LIKE REGISTRATION NUMBER, XEROX COPY OF R.C. BOOK AND COPIES OF CHALLAN BEFORE THE AO. THE AO HAS NOT DOUBTED THE GENUINENESS OF THE CLAIM AND HAS ONLY DISALLOWED ON THE SPECIES PLEA THAT ASSESSEE FAILED TO PRODUCE ALL CHALLANS, WHICH ACTION OF AO CANNOT BE COUNTENANCED. AD HOC DISALLOWANCE IS AN ARBITRARY EXERCISE OF POWER WHICH HAS NO SANCTI ON OF LAW, SO IT NEEDS TO BE DELETED. SO WE ORDER FOR DELETION OF THE SAME. 4. GROUND NOS. 4, 5 AND 6 ARE AGAINST THE ACTION OF LD. CIT(A) IN CONFIRMING THE DISALLOWANCE OF RS.1,85,736/- BEING 10% OF TOTAL EX PENDITURE TOWARDS MISC. EXPENSES AMOUNTING TO RS.18,57,360/- ON ESTIMATE BASIS. LIK EWISE, AO DISALLOWED 10% OF TRAVELLING EXPENSES OF RS.7,53,839 AND AO DISALLOWED RS.16,500 /- OUT OF RS.2,98,163/- CLAIMED ON ACCOUNT OF LABOUR THAPI EXPENSES. 4.1. BRIEFLY STATED FACTS ARE THAT A SUM OF RS.1,85 ,736/- BEING 10% OF THE TOTAL EXPENDITURE TOWARDS MISC. EXPENSES AMOUNTING TO RS. 18,57,360/- HAS BEEN DISALLOWED BY THE AO ON ESTIMATE BASIS BY STATING THAT THE EXPENS ES ARE NOT FULLY VERIFIABLE. LIKEWISE, FOR TRAVELLING EXPENSES AO DISALLOWED 10% OF THE CLAIM. HOWEVER FOR LABOUR THAPI EXPENSES CLAIMED THE AO DISALLOWED RS 16,500/- SIN CE ASSESSEE FAILED TO PRODUCE ANY BILL FOR RS.16,500/-. ON APPEAL, THE LD. CIT(A) CONFIRME D THE ACTION OF AO. AGGRIEVED, ASSESSEE IS BEFORE US. 4.2 WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT A SUM OF RS.1,85,736/- BEING 10% OF THE TOTAL EXPENDITURE TOWARDS MISC. EXPENSES AMOUNTING TO RS.18,57,360/- HAS BEEN DISALLOWED BY THE AO ON ESTIMATE BASIS BY STATING THAT THE EXPENSES ARE NOT FULLY VE RIFIABLE. ON APPEAL, THE LD. CIT(A) CONFIRMED THE ACTION OF AO. WE NOTE THAT ASSESSEE HAD SUBMITTED LEDGER COPY OF LABOUR 3 ITA NO. 1922/KOL/2017 LAKHOTIA TRANSPORT CO. PVT. LTD. AY 2011-12 THAPI EXPENSES, TRAVELLING EXPENSES AND MISC. EXPEN SES. THE AO ACKNOWLEDGES THAT ASSESSEE PRODUCED SUPPORTING EVIDENCE IN RESPECT OF ABOVE EXPENSES ON 21.02.2014. ONLY BECAUSE CASH PAYMENT OF RS.16,500/- WAS PAID BY ASS ESSEE OUT OF TOTAL EXPENSES OF RS.2,98,163/- UNDER HEAD LABOUR HEAD THAPI EXPENSES AND ASSESSEE FAILED TO PRODUCE SOME BILLS/VOUCHERS, THE AO ORDERED AD-HOC DISALLOWANCE, WHICH ACTION CANNOT BE COUNTENANCED. AD HOC DISALLOWANCE IS AN ARBITRARY EXERCISE OF PO WER WHICH HAS NO SANCTION OF LAW, SO IT NEEDS TO BE DELETED HOWEVER SINCE ASSESSEE FAILED T O PRODUCE ANY EVIDENCE FOR CASH PAYMENT MADE TO THE TUNE OF RS.16,500/-, WE CONFIR M THE ACTION OF LD CIT(A) CONFIRMING THE DISALLOWANCE OF THE SAID AMOUNT. THE OTHER AD- HOC DISALLOWANCE ON ACCOUNT OF MISC. EXPENSES AND TRAVELLING EXPENSES ARE ORDERED TO BE DELETED. 5. GROUND NO. 7 IS AGAINST THE ACTION OF LD. CIT(A) IN CONFIRMING THE DISALLOWANCE OF RS.35,520/- OUT OF INTEREST PAID TO CALCUTTA GOODS TRANSPORT ASSOCIATION BY INVOKING SEC. 40(A)(IA) OF THE ACT. 5.2 BRIEFLY STATED FACTS ARE THAT A SUM OF RS.35,52 0/- HAVE BEEN DISALLOWED OUT OF INTEREST PAID TO CALCUTTA GOODS TRANSPORT ASSOCIATI ON BY INVOKING SEC. 40(A)(IA) OF THE ACT STATING THAT THE ASSESSEE HAD FAILED TO DEDUCT TAX AT SOURCE. ON APPEAL, THE LD. CIT(A) CONFIRMED THE ACTION OF AO. AGGRIEVED, ASSESSEE IS BEFORE US. 5.3 WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT A SUM OF RS.35,520/- HAVE BE EN DISALLOWED OUT OF INTEREST PAID TO CALCUTTA GOODS TRANSPORT ASSOCIATION BY INVOKING SE C. 40(A)(IA) OF THE ACT STATING THAT THE ASSESSEE HAD FAILED TO DEDUCT TAX AT SOURCE. ON AP PEAL, THE LD. CIT(A) CONFIRMED THE ACTION OF AO. BEFORE US THE LD. AR HAS RESTRICTED HIS ARG UMENT TO ONE POINT ONLY THAT ADDITION MAY BE RESTRICTED TO 30% OF THE TOTAL ADDITION AS P ER AMENDMENT IN SECTION 40(A)(IA) OF THE ACT. IN SUPPORT OF THE SAID CONTENTION HE HAS RELIE D UPON ORDER OF THE ITAT, JAIPUR BENCH IN THE CASE OF SHRI RAJENDRA YADAV VS. ITO IN ITA NO. 895/JP/2012 ASSESSMENT YEAR 2007-08 DATED 29 TH JANUARY, 2016 IN WHICH IN PARA 6.1 AND 7, THE APPEAL OF THE ASSESSEE HAS BEEN PARTLY ALLOWED ON THIS ISSUE. THE SAME PARAS ARE RE PRODUCED AS UNDER :- 4 ITA NO. 1922/KOL/2017 LAKHOTIA TRANSPORT CO. PVT. LTD. AY 2011-12 6.1 RECENTLY IN THE MAT ITA NO. 6312/DEL/2016 SMT. KANTA YADAV VS. ITO PAGE 3 OF 4 SECTION (1) OF SECTION 139, SUCH SUM SHALL BE ALLOWED AS A DEDU CTION IN COMPUTING THE INCOME OF PREVIOUS YEAR, SUCH SUM SHALL BE ALLOWED AS A DEDUCTION IN COMPUTI NG THE INCOME OF PREVIOUS YEAR, AND FURTHER, SECTION 40(A)(IA) HAS BEEN SUBSTITUTED WHEREIN THE 30% OF ANY SUM PAYABLE TO A RESIDENT HAS BEEN SUBSTITUTED. IN THE PRESENT CASE, THE AUTHORITIES B ELOW HAS ADDED THE ENTIRE SUM OF RS. 7,51,322/- BY DISALLOWING THE WHOLE OF THE AMOUNT. THOUGH THE SUB STITUTION IN SECTION 40 HAS BEEN MADE EFFECTIVE WITH EFFECT FROM 1.4.2015, IN OUR VIEW THE BENEFIT OF THE AMENDMENT SHOULD BE GIVEN TO THE ASSESSEE EITHER BY DIRECTING THE ASSESSING OFFICER TO CONFIR M FROM THE CONTRACTORS, NAMELY, M/S. GARVIT STONEX, M/S. CHANDA MARBLES AND M/S. NIDHI GRANITES AS TO WHETHER THE SAID PARTIES HAVE DEPOSITED THE TAX OR NOT AND FURTHER OR RESTRICT THE ADDITION TO 30% OF RS. 7,51,322/-. IN OUR VIEW, IT WILL BE TIED OF JUSTICE IF THE DISALLOWANCE IS ONLY RESTRIC TED TO 30% OF RS. 7,51,322/-. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED IN THE ABO VE SAID MANNER. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 5. 4 HE HAS FURTHER SUBMITTED THAT SAID ORDER HAS B EEN FOLLOWED BY ITAT JAIPUR BENCH IN THE CASE OF SMT. SONU KHANDELWAL VS. ITO IN ITA NO. 597/JP/2013 DATED 13TH MAY, 2016. HE HAS THEREFORE SUBMITTED THAT DISALLOWANCE MAY BE RESTRICTED TO 30% OF THE TOTAL DISALLOWANCE. ON THE OTHER HAND LD. DR RELIED UPON ORDERS OF THE AUTHORITIES BELOW. 6. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND FIND T HAT ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY ORDER OF ITAT JAIPUR BENCH IN THE CASE OF SHRI RAJENDRA YADAV VS. ITO AND SMT. SONU KHANDELWAL VS. ITO. IN THESE ORDERS IT WA S HELD THAT THE DISALLOWANCE U/S 40(A)(IA) TO BE RESTRICTED TO 30% OF THE ADDITION. IN THESE ORDERS THE TRIBUNAL HAS CONSIDERED THE AMENDED PROVISIONS OF SECTION 40(A)(IA) OF I.T. ACT. IN THESE ORDERS THE ASSESSMENT YEARS INVOLVE WAS 2007-08 AND 2008-09. IN THE PRES ENT APPEAL THE ASSESSMENT YEAR IS 2011-12 AND THE FACTS ARE IDENTICAL. IN THIS VIEW O F THE MATTER AND FOLLOWING THE ABOVE DECISIONS OF JAIPUR BENCH, WE SET ASIDE AND MODIFY THE ORDERS OF THE AUTHORITIES BELOW AND DIRECT THE ASSESSING OFFICER TO RESTRICT THE ADDITI ON TO 30% OF THE TOTAL ADDITION MADE ON ACCOUNT OF DEDUCTION OF TDS U/S 40(A)(IA) OF THE AC T. 7. IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALL OWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 26/10/201 8 SD/- SD/- (DR. A. L. SAINI) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 26 TH OCTOBER, 2018 5 ITA NO. 1922/KOL/2017 LAKHOTIA TRANSPORT CO. PVT. LTD. AY 2011-12 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 APPELLANT M/S. LAKHOTIA TRANSPORT CO. PVT. LTD., 26, TARACHAND DUTTA STREET, GROUND FLOOR, KOLKATA-700 073. 2 RESPONDENT DCIT, CIRCLE-14(2), KOLKATA. 3 4 5 . CIT(A)-5, KOLKATA. (SENT THROUGH E-MAIL) CIT, KOLKATA. DR, KOLKATA BENCHES, KOLKATA (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, SR. PVT. SECRETARY