Sushil Kumar Gupta, Karnataka V. ACIT, Central Circle - XXVIII, Kolkata, Kolkata

ITA 2168/KOL/2010

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7866 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 06-12-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Principle of natural justice
• Section: 194C

Judgement Text

I.T.A. NO . 2168 /KOL./201 0 ASSESSMENT YEAR: 200 6 - 20 0 7 PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA C BENCH, KOLKATA BEFORE SHRI SHAMIM YAHYA (ACCOUNTANT MEMBER) , AND SHRI GEORGE MATHAN (JUDICIAL MEMBER) I.T.A. NO. 2168 /KOL . / 20 1 0 ASSESSMENT YEAR : 200 6 - 20 0 7 SUSHIL KUMAR GUPTA,........................ ......... ... ............ .. .APP ELL ANT C/O. SHANKAR SAREE STORES, 65, SIR HARIRAM GOENKA STREET, 2ST FLOOR, BANGUR ARCADE, KOLKATA700 007 [PAN : A DBPG 6819 R] ] - VS. - ASSISTANT COMMISSIONER OF INCOME TAX , ... ............. . RESPONDENT CENTRAL CIRCLE - XXVIII , KOLKATA , PODDAR COURT, 5 TH FLOOR, 18, RABINDRA SARANI, KOLKATA - 700 001 APPEARANCES BY: SHRI S UBASH AGARWAL , ADVOCATE , FOR THE ASSESSEE SHRI ANJAN PRASAD ROY , J CIT , SR. D.R. , FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : DEC EM BER 16 , 2 01 4 DATE OF PRONOUNCING THE ORDER : DEC EM BER 18 , 201 4 O R D E R PER GEORGE MATHAN : THIS IS AN APPEAL FILED BY THE ASSESSE E AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS), CENTRAL - I, KOLKATA IN APPEAL NO. 351/CIT(A) - C - I/CC - XXVIII/08 - 0 9 DATED 15.09.2010 FOR THE ASSESSMENT YEAR 200 6 - 0 7 . 2 . SHRI S UBASH AGARWAL , ADVOCATE, REPRESENTED ON BEHALF OF THE ASSESSEE AND SHRI ANJAN PRASAD ROY , J CIT , SR. D.R. , REPRESENTED ON BEHALF OF THE REVENUE. 3. IN THE ASSESSEE S APPEAL, THE ASSESSEE HAS RAIS ED THE FOLLOWING GROUNDS: - I.T.A. NO . 2168 /KOL./201 0 ASSESSMENT YEAR: 200 6 - 20 0 7 PAGE 2 OF 6 ( 1 ) THAT THE ORDER OF THE CIT(A) - CENTRAL - 1/KOLKATA IS ABSOLUTELY PERVERSE, WRONG, ILLEGAL AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. ( 2 ) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE D. CIT(A) - XXVIII, KOLKATA WAS NOT JUSTIGFIED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER FOR ADDING A SUM OF RS.10,91,559/ - TO THE TOTAL INCOME OF THE ASSESSEE ON THE ALLEGED GROUND OF UN - GENUINE PURCHASE. THE ADDITION IS AN ARBITRARY, ILLEGAL, UNJUSTIFIED AND BAD IN THE EYES OF LAW. HENCE, THE ADDITION OF RS.10,91,559/ - SHOULD BE DELETED. ( 3 ) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) - CENTRAL - 1/KOLKATA WAS NOT JUSTIFIED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER FOR ADDING A TOTAL SUM OF RS.3,94,457/ - TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF NON - DEDUCTION OF TDS ON PAYMENT U/S. 40(A)(IA). THE ADDITION IS AN ARBITRARY, ILLEGAL, UNJUSTIFIED AND BAD IN THE EYES OF LAW. HENCE, THE ADDITION OF RS.3,94,457/ - SHOULD BE DELETED. ( 4 ) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) - CENTRAL - 1/KOLKATA WAS NOT JUSTIFIED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER FOR ADDING A TOTAL SUM OF RS.1,04,618/ - TO THE TOTAL INCOME OF THE ASSESSEE BY DISALLOWING INTEREST PAID ON LOAN TAKEN FO R THE PURPOSE OF THE BUSINESS OF THE ASSESSEE. HENCE, THE ADDITION OF RS.1,04,618/ - SHOULD BE DELETED. 4. IT WAS SUBMITTED BY THE LD. A.R. THAT IN RESPECT OF GROUND NO. 2, THE ISSUE WAS AGAINST THE ACTION OF THE LD. CIT(APPEALS) IN CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFICER OF AN AMOUNT OF RS.10,91,559/ - AS UN - GENUINE PURCHASES. IT WAS THE SUBMISSION THAT IN THE COURSE OF ASSESSMENT, THE ASSESSING OFFICER HAD TREATED THE PURCHASES FROM M/S. EMBROIDERY SAREES AS UN - GENUINE PURCHASES ON THE GROUND THAT THE SAID PERSON HAD NOT RESPONDED TO THE NOTICE ISSUE UNDER SECTION 133(6). IT WAS THE SUBMISSION THAT BEFORE THE LD. CIT(APPEALS), THE ASSESSEE HAD SPECIFICALLY SUBMITTED THAT THE ASSESSING OFFICER HAD CALLED FOR THE DETAILS AT THE LAST MINUTE AND A S THE ASSESSEE WAS UNABLE TO PRODUCE THE PROPRIETOR OF M/S. EMBROIDERY SAREES, THE ADDITION HAD BEEN MADE. IT WAS THE SUBMISSION THAT THE LD. CIT(APPEALS) HAD CALLED FOR A REMAND REPORT I.T.A. NO . 2168 /KOL./201 0 ASSESSMENT YEAR: 200 6 - 20 0 7 PAGE 3 OF 6 AND IN THE REMAND PROCEEDINGS MR. RASIK SHAIK, PROPRIETOR OF M/S. EMBR OIDERY SAREES HAD APPEARED BEFORE THE ASSESSING OFFICER AND HAD CONFIRMED THE TRANSACTIONS. IT WAS THE SUBMISSION THAT THE ASSESSING OFFICER DID NOT ACCEPT THE TRANSACTIONS AGAIN ON THE GROUND THAT THE CERTIFICATE ISSUED TO SHRI RASIK SHAIK WAS HAVING A DI FFERENT SPELLING FOR EMBROIDERY SAREES AND ALSO ON THE GROUND THAT SHRI RASIK SHAIK HAD STATED THAT HE COULD SIGN HIS NAME IN BENGALI BUT SOME OF THE BILLS WERE SIGNED IN ENGLISH. IT WAS THE FURTHER SUBMISSION THAT THE ASSESSING OFFICER FURTHER HELD THAT T HE SAID RASIK SHAIK DID NOT MAINTAIN ANY BOOKS OF ACCOUNTS AND THE BILL BOOK OF SHRI RASIK SHAIK SHOWS ONLY SALES TO SHIVANGI FASHIONS AND THE ASSESSEE. IT WAS THE SUBMISSION THAT AGAINST THE SAID REMAND REPORT THE ASSESSEE HAD SPECIFICALLY REPLIED STATING THAT THE PURCHASES FROM M/S. EMBROIDERY SAREES HAD BEEN ENTERED IN THE STOCK REGISTER, WHICH IS ALSO PRODUCED BEFORE THE ASSESSING OFFICER. THEY HAD PERMANENT ACCOUNT NUMBER AND THE TRANSACTIONS WERE THROUGH ACCOUNT PAYEE CHEQUES ONLY AND THE BANK STATEME NTS OF M/S. EMBROIDERY SAREES HAD ALSO BEEN PRODUCED BEFORE THE ASSESSING OFFICER. IT WAS THE SUBMISSION THAT THE WRONG SPELLING OF EMBROIDERY SAREES IN THE CERTIFICATE ISSUED BY DAKSHIN GOURIPUR CHAKDHIR GRAM PANCHAYAT REPRESENTING THE TRADE REGISTRATION CERTIFICATE COULD NOT BE HELD AGAINST THE ASSESSEE. IT WAS THE FURTHER SUBMISSION THAT MOST OF THE BILLS HAD BEEN SIGNED IN BENGALI AND ONLY FIVE BILLS WERE SIGNED IN ENGLISH. IT WAS THE SUBMISSION THAT THE PROPRIETOR OF M/S. EMBROIDERY SAREES HAVING APPEA RED BEFORE THE ASSESSING OFFICER AND HAVING CONFIRMED THE TRANSACTIONS AND PAYMENTS HAVING BEEN DONE THROUGH ACCOUNT PAYEE CHEQUES AND THE STOCK HAVING BEEN TALLIED WITH THE STOCK REGISTER OF THE ASSESSEE, NO DISALLOWANCE WAS LIABLE TO BE MADE. IT WAS THE SUBMISSION THAT THE LD. CIT(A) HAD WITHOUT CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND HAD CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. IT WAS THE SUBMISSION THAT THE ADDITION MAY BE DELETED. 5. IN REPLY, LD. SR. D.R. VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND LD. CIT(APPEALS). I.T.A. NO . 2168 /KOL./201 0 ASSESSMENT YEAR: 200 6 - 20 0 7 PAGE 4 OF 6 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PERUSAL OF THE REMAND REPORT OF THE ASSESSING OFFICER SHOWS THAT THE PURCHASES FROM M/S. EMBROIDERY SAREES HAVE BEEN DISBELIEVED ONLY ON MERE TECHNICALITIE S. IT IS AN ADMITTED FACT THAT THE PROPRIETOR OF M/S. EMBROIDERY SAREES HAD APPEARED BEFORE THE ASSESSING OFFICER AND HAD CONFIRMED THE TRANSACTIONS. THE PROPRIETOR IS ALSO HAVING PERMANENT ACCOUNT NUMBER AND THE PAYMENTS HAVE ALL BEEN MADE ONLY THROUGH AC COUNT PAYEE CHEQUES. A PERUSAL OF THE BILLS OF M/S. EMBROIDERY SAREES ALSO SHOWS THAT ONLY THE INITIAL FOUR OR FIVE BILLS ARE SIGNED IN ENGLISH, THE REST OF THE BILLS ARE SIGNED IN BENGALI ITSELF. A PERUSAL OF THE STOCK BOOK OF THE ASSESSEE ALSO CLEARLY SH OWS THAT THE PURCHASES FROM M/S. EMBROIDERY SAREES HAVE BEEN RECORDED IN THE STOCK BOOK AND NECESSARY REDUCTION IN RESPECT OF THE SALES ARE ALSO MADE. IF THE PURCHASES FROM M/S. EMBROIDERY SAREES ARE TREATED AS UN - GENUINE, THEN STOCK DURING THE RELEVANT PE RIOD WOULD HAVE TO BE REMOVED AND IF THAT IS DONE THEN THE SALES AS MADE BY THE ASSESSEE WOULD BE AN IMPOSSIBILITY. FURTHER, THE FACT THAT THE PAYMENTS HAVE ALL BEEN MADE THROUGH ACCOUNT PAYEE CHEQUES AND EVEN THE BANK STATEMENTS OF SHRI RASIK SHAIK, THE P ROPRIETOR OF M/S. EMBROIDERY SAREES HAVING BEEN PRODUCED AND NO DEFECTS HAVING BEEN POINTED OUT IN THAT, WE ARE OF THE VIEW THAT THE ADDITION MADE BY THE ASSESSING OFFICER AND AS CONFIRMED BY THE LD. CIT(APPEALS) IS UNSUSTAINABLE AND CONSEQUENTLY DELETE TH E SAME. 7. IN THE RESULT, GROUND NO. 2 OF THE ASSESSEE S APPEAL STANDS ALLOWED. 8. IN RESPECT OF GROUND NO. 3, IT WAS SUBMITTED BY THE LD. A.R. THAT THE ISSUE WAS AGAINST THE ACTION OF THE LD. CIT(APPEALS) IN CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFICER BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT FOR NON - DEDUCTION OF TDS. LD. A.R. DREW OUR ATTENTION TO PAGE 34 OF THE PAPER BOOK, WHICH WAS THE BREAK - UP OF THE ADDITIONS. IT WAS THE SUBMISSION THAT IN MOST OF THE CASES, THE PAYMENTS D ID NOT EXCEED RS.20,000/ - AT ANY SINGLE POINT OF TIME TO A SINGLE PERSON AND RS.50,000/ - IN AGGREGATE TO A SINGLE PERSON DURING THE YEAR. IT WAS THE I.T.A. NO . 2168 /KOL./201 0 ASSESSMENT YEAR: 200 6 - 20 0 7 PAGE 5 OF 6 SUBMISSION THAT HE HAD NO OBJECTION IF THE ISSUE IS RESTORED TO THE FILE OF ASSESSING OFFICER FOR VERIFICAT ION AND RE - ADJUDICATION. 9. TO THIS SUBMISSION, LD. D.R. DID NOT RAISE ANY SERIOUS OBJECTION. CONSEQUENTLY THIS ISSUE IS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR RE - ADJUDICATION. THE ASSESSING OFFICER SHALL VERIFY AS TO WHETHER ANY SINGLE PAYMEN T TO ANY PERSON EXCEEDS RS.20,000/ - AND WHETHER THE AGGREGATE OF SUCH PAYMENT DURING THE YEAR TO SUCH SINGLE PERSON EXCEEDS RS.50,000/ - . IF EITHER OF THE CONDITIONS ARE NOT SATISFIED THEN NO DISALLOWANCE UNDER SECTION 40(A)(IA) IS LIABLE TO BE MADE ON ACCO UNT OF THE NON - DEDUCTION OF TDS UNDER SECTION 194C OF THE ACT. THE ASSESEE SHALL PRODUCE ALL SUCH DETAILS TO SUBSTANTIATE HIS CLAIM BEFORE THE ASSESSING OFFICER. 10. IN THE RESULT, GROUND NO. 3 OF THE ASSESSEE S APPEAL STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 11. IN RESPECT OF GROUND NO. 4, IT WAS THE SUBMISSION BY THE LD. A.R. THAT THE ISSUE WAS AGAINST THE ACTION OF THE LD. CIT(APPEALS) IN CONFIRMING THE DISALLOWANCE OF THE INTEREST PAID ON ACCOUNT OF GRANTING OF NON - INTEREST BEARING LOANS TO SMT. NIRMALA GUPTA. IT WAS THE SUBMISSION THAT THE ASSESSEE HAD ADEQUATE CAPITAL TO THE EXTENT OF RS.66,00,000/ - AND THE NON - INTEREST BEARING FUND PROVIDED TO SMT. NIRMALA GUPTA WAS ONLY RS.13,07,210/ - . IT WAS ALSO THE SUBMISSION THAT THE NON - INTEREST BEARING LOAN HAD BEEN GRANTED TO SMT. NIRMALA GUPTA IN THE EARLIER ASSESSMENT YEARS, NO DISALLOWANCE OF INTEREST HAD BEEN MADE DURING THE EARLIER ASSESSMENT YEARS. IT WAS THE SUBMISSION THAT IN VIEW OF THE DECISION OF THE HON BLE KARNATAKA HIGH COURT IN THE CASE O F CIT VS. - SRI D EV ENTERPRISES REPORTED IN 192 ITR 165, NO DISALLOWANCE WAS LIABLE TO BE MADE DURING THE RELEVANT ASSESSMENT YEAR. 12. IN REPLY, LD. SR. D.R. VEHEMENTLY SUPPORTED THE ORDER OF THE LD. CIT(APPEALS) AND THE ASSESSING OFFICER. I.T.A. NO . 2168 /KOL./201 0 ASSESSMENT YEAR: 200 6 - 20 0 7 PAGE 6 OF 6 1 3 . WE HAVE C ONSIDERED THE RIVAL SUBMISSIONS. AS IT IS NOTICED THAT NON - INTEREST BEARING LOAN HAS BEEN GRANTED TO SMT. NIRMALA GUPTA DURING THE EARLIER ASSESSMENT YEARS AND NO DISALLOWANCE OF INTEREST HAS BEEN MADE DURING THAT EARLIER ASSESSMENT YEARS IN VIEW OF THE DE CISION OF THE HON BLE KARNATAKA HIGH COURT IN THE CASE OF SRI D EV ENTERPRISES REFERRED TO SUPRA, THE DISALLOWANCE AS MADE BY THE ASSESSING OFFICER AND AS CONFIRMED BY THE LD. CIT(APPEALS) STANDS DELETED. 14 . IN THE RESULT, GROUND NO. 4 OF THE ASSESSEE S AP PEAL STANDS ALLOWED. 1 5 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH DEC EM BER, 2014. SD/ - SD/ - SHAMIM YAHYA GEORGE MATHAN ( ACCOUNTANT ME MBER) ( JUDICIAL MEMBER) KOLKATA, THE 18 TH D AY OF DEC EM B ER , 201 4 COPIES TO : (1) SUSHIL KUMAR GUPTA, C/O. SHANKAR SAREE STORES, 65, SIR HARIRAM GOENKA STREET, 2ST FLOOR, BANGUR ARCADE, KOLKATA700 007 (2) ASSISTANT COMMISSIONER OF INCOME T AX, CENTRAL CIRCLE - XXVIII, KOLKATA, PODDAR COURT, 5 TH FLOOR, 18, RABINDRA SARANI, KOLKATA - 700 001 (3) COMMISSIONER OF INCOME - TAX (APPEALS) (4) COMMISSIONER OF INCOME TAX ( 5 ) THE DEPARTMENTAL REPRESENTATIVE ( 6 ) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.