Sri Tutul Chowdhury, Kolkata V. ACIT, Circle-50, Kolkata, Kolkata

ITA 2328/KOL/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1588 (ITAT-KOLKATA)
• Duration Of Justice: 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 09-12-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S M SURANA
• Keywords: Assessment record
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : KOLKATA [BEFORE HONBLE SRI A.T.VARKEY, JM & SHRI M.BALAG ANESH, AM ] I.T.A NO. 2328/KOL/20 16 ASSESSMENT YEAR : 2012-1 3 SRI TULTUL CHOWDHURY -VS.- A.C.I.T/D.C.I .T., CIRCLE-50, KOLKATA KOLKATA [PAN : AEPPC 0271 A] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI S.M.SURANA, A DVOCATE FOR THE RESPONDENT : NONE DATE OF HEARING : 14.06.2017. DATE OF PRONOUNCEMENT : 07.07.2017 ORDER PER M.BALAGANESH, AM 1. THIS APPEAL OF THE ASSESSEE ARISES OUT OF THE OR DER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) -15, KOLKATA [ IN SHORT THE LD CITA] IN APPEAL NO. 13/CIT(A)- 15/15-16/CIR-50/KOL DATED 25.10.2016 AGAINST THE OR DER PASSED BY THE A.C.I.T., CIRCLE- 50, KOLKATA [ IN SHORT THE LD AO] UNDER SECTION 143 (3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) DATED 04.03 .2015 FOR THE ASST YEAR 2012-13. 2. THE FIRST ISSUE TO BE DECIDED IN THIS APPEAL OF THE ASSESSEE IS AS TO WHETHER THE LD CITA WAS JUSTIFIED IN UPHOLDING THE ADDITION MADE I N THE SUM OF RS 1,59,79,491/- TOWARDS UNRECONCILED DIFFERENCE OF TRANSPORT RECEIP TS BETWEEN THE BOOKS AND FORM 26AS IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 2.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSE SSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS RELATING TO TRANSPORTATION, HANDLING, LOGI STICS WITH VARIOUS MULTI-NATIONAL TELECOM COMPANIES IN THE NAME & STYLE OF M/S ATC IN DIA. THE ASSESSEE HAD FILED THE 2 ITA NO.2328/KOL/2016 SRI TULTUL CHOWDHURY A.YR.2012-13 2 RETURN OF INCOME FOR THE ASST YEAR 2012-13 ON 16.6. 2012 DECLARING TOTAL INCOME OF RS 75,73,920/- WHICH WAS PROCESSED U/S 143(1) OF THE A CT. THE LD AO OBSERVED THAT THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTI NG AND THE TOTAL TURNOVER DECLARED BY THE ASSESSEE IN THE RETURN WAS RS 6,99,49,897/- DUR ING THE YEAR UNDER CONSIDERATION. THE LD AO OBSERVED THAT THE ASSESSEE IS ALSO A DIRECTOR IN M/S ATC LOGISTICS PVT LTD, ATCIS TECHNOLOGY PVT LTD AND PRAMA BUILTECH PVT LTD FROM WHERE REMUNERATION OF RS 18 LAKHS WAS RECEIVED BY THE ASSESSEE AND DULY OFFE RED TO TAX. APART FROM THIS, THE ASSESSEE HAD DERIVED INTEREST INCOME ON FIXED DEPOS ITS WHICH WERE ALSO OFFERED UNDER THE HEAD INCOME FROM OTHER SOURCES. THE LD AO O BSERVED THAT AS PER FORM 26AS, THE FOLLOWING RECEIPTS WERE STATED TO HAVE BEEN GIVEN T O ASSESSEE TOWARDS INTEREST INCOME AND CONTRACT RECEIPTS :- S.NO. NAME OF PARTIES FROM WHOM INCOME EARNED TDS MADE U/S AS PER 26 AS RECEIPTS TDS 01. ORIENT BANK OF COMMERCE 194A 177971 17798 02. HDFC BANK 194A 1490296 149032 1668267 03. RAHIMAFROOZ BATTERIES LTD. 194C 194I 344281 208000 3447 20800 04. DISHNET WIRELESS LTD. 194C 5995456 70512 05. DHL LEMIUR LOGISTICS PVT.LTD. 194C 223545 2492 06. BHARTI TELEMEDIA LTD. 194C 194J 1583655 187540 18590 18758 07. TRANSCEND INFRASTRUCTURE PVT.LTD 194C 194I 1255842 688968 17577 6 8896 08. NOKIA SIEMENS NETWORKS PVT.LTD 194C 39038630 780771 09. BHARTI AIRTEL LTD. 194C 194I 194J 25814679 281697 390735 272725 28170 39077 10. NOKIA SOLUTIONS AND NETWORKS INDIA PVT. LTD. 194C 15979491 319591 TOTAL CONTRACT RECEIPT 9,19,92,519 1828236 2.2. THE LD AO OBSERVED THAT THE ASSESSEE HAD DECLA RED CONTRACT RECEIPTS IN THE PROFIT AND LOSS ACCOUNT ONLY TO THE TUNE OF RS 6,99,49,897 /- WHEREAS AS PER FORM 26AS, IT WAS 3 ITA NO.2328/KOL/2016 SRI TULTUL CHOWDHURY A.YR.2012-13 3 RS 9,19,92,519/- . HE ALSO OBSERVED THAT THE ASSES SEE HOWEVER HAD CLAIMED THE FULL CREDIT FOR TDS AMOUNT AS DISCLOSED IN FORM 26AS. SIMILARLY THE LD AO OBSERVED THAT AS PER FORM 26AS, THE INTEREST INCOME DERIVED BY TH E ASSESSEE WAS RS 16,68,267/- WHEREAS THE INTEREST CREDITED IN PROFIT AND LOSS AC COUNT WAS ONLY RS 13,47,584/-. THE ASSESSEE WAS ASKED TO RECONCILE THE SAID DIFFERENCE . IN RESPONSE THE ASSESSEE SUBMITTED HIS REPLY AS UNDER:- PLEASE FIND-ATTACHED LEDGER COPY OF SUNDRY DEBTOR S OF M/S ATC LOGISTICS PVT. LTD. WHERE CLEARLY MENTIONED THAT THEY HAVE CONSIDE RED THE AMOUNT IN THE NAME OF M/S NOKIA SOLUTIONS AND NETWORKS INDIA PVT LTD. AS GT THOUGH THE SAID COMPANY (M/S NOKIA SOLUTIONS AND NETWORKS INDIA PRIVATE LTD ) UNFORTUNATELY BOOKED THEIR TDS RETURN IN THE NAME OF ATC INDIA. I FURTHER STATE THAT SOME OF BILLS RAISED BY M/S A TC LOGISTICS PVT LTD IN FAVOUR OF M/S NOKIA SOLUTIONS AND NETWORKS INDIA PVT LTD BUT UNFORTUNATELY THE SAID COMPANY BOOKED AND RELEASED PAYMENT IN FAVOUR OF AT C INDIA INSTEAD OF A TC LOGISTICS PVT LTD'. IT IS MY HUMBLE REQUEST TO YOU TO KINDLY CONSIDER T HE CASE AT YOUR LENIENT VIEW AND NOT TO CHARGE ANY TAX FOR ABOVE MENTIONED CASES AND ALSO EXPECT TO BE CONTINUED WITH MY ELEVATED IMAGE.' 2.3. THE ASSESSEE SUBMITTED STATEMENT OF PARTY WISE RECEIPTS AND FROM THE SAME THE LD AO OBSERVED THAT THE ASSESSEE DID NOT PROVIDE ANY L OGICAL REASON IN SUPPORT OF CERTAIN RECEIPTS REMAINING UNACCOUNTED FOR IN THE PROFIT AN D LOSS ACCOUNT OF ASSESSEE THOUGH THE TDS FOR THE SAME HAD BEEN DULY CLAIMED IN THE RETUR N OF INCOME. THE LD AO ACCORDINGLY OBSERVED THAT THE DIFFERENCE TO THE TUN E OF RS 2,99,57,204/- TOWARDS CONTRACT RECEIPTS FROM NOKIA SIEMENS NETWORKS PVT L TD AND NOKIA SOLUTIONS AND NETWORKS INDIA PVT LTD REMAINED UNRECONCILED AND UN ACCOUNTED IN THE BOOKS OF ASSESSEE AND ACCORDINGLY BROUGHT THE SAME TO TAX AS UNDISCLOSED RECEIPT OF THE ASSESSEE. THE LD AO ALSO OBSERVED THAT IT IS PERTINENT TO MEN TION THAT THE ASSESSEE CLAIMED ALL THE EXPENSES RELATED TO EARNING OF THE UNDISCLOSED RECE IPT IN THE PROFIT AND LOSS ACCOUNT AND HENCE FULL AMOUNT OF UNDISCLOSED RECEIPT WOULD HAVE TO BE CONSIDERED AS UNDISCLOSED PROFIT OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERA TION. 4 ITA NO.2328/KOL/2016 SRI TULTUL CHOWDHURY A.YR.2012-13 4 2.4. THE LD AO SIMILARLY BROUGHT THE DIFFERENCE IN INTEREST INCOME ON DEPOSITS AS ABOVE TO THE TUNE OF RS 3,20,683/- AS UNDISCLOSED INTERES T RECEIPTS AND BROUGHT THE SAME TO TAX . 2.5. BEFORE THE LD CITA, THE ASSESSEE SUBMITTED THA T THERE WAS A GROUP COMPANY IN THE NAME OF M/S ATC LOGISTICS PVT LTD IN WHICH ASSESSEE WAS ONE OF THE DIRECTORS. THIS COMPANY WAS INCORPORATED IN ASST YEAR 2009-10 AND I T CARRIED ON THE SAME BUSINESS ACTIVITIES. DIFFERENCE IN GROSS RECEIPT WAS DUE T O THE FACT THAT ACTUAL PAYMENT WAS MADE TO M/S ATC LOGISTICS PVT LTD BUT TDS WAS UPLOADED I N THE NAME OF THE PROPRIETORY CONCERN, ATC LOGISTICS. IT WAS FURTHER SUBMITTED TH AT DURING ASSESSMENT PRCOEEDIGNS IN THE CASE OF ATC LOGISTICS PVT LTD, THE AO NOTICED T HAT NOKIA GROUP HAD MADE A PAYMENT OF RS 2,73,57,525/- TO THIS COMPANY BUT NO TAX WAS DEDUCTED ON THESE PAYMENTS AND THIS AMOUNT DID NOT APPEAR IN FORM 26A S AS WELL. ACCORDINGLY THE ASSESSEE SUBMITTED THAT THERE IS STILL AN UNRECONCI LED AMOUNT OF RS 25,99,979/-. IT WAS ALSO ALTERNATIVELY SUBMITTED THAT IN ANY CASE THE E NTIRE DIFFERENCE ON ACCOUNT OF TURNOVER CANNOT BE ADDED AS UNDISCLOSED INCOME OF THE ASSESS EE AND ONLY THE NET PROFIT THEREON SHOULD BE BROUGHT TO TAX. RELIANCE IN THIS REGARD WAS PLACED ON SEVERAL DECISIONS. THE ASSESSEE ALSO SUBMITTED THAT THE ADDITIONAL PROFIT OF THE ASSESSEE MAY REASONABLY BY ESTIMATED AT 6.4% OF THE DIFFERENCE IN GROSS RECEIP TS. 2.6. THE LD CITA OBSERVED IN HIS ORDER AS UNDER:- I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSIONS OF THE ASSESSEE. PERUSAL OF THE ASSESSMENT ORDER IN THE CA SE OF M/S A TC LOGISTICS PVT. LTD. FOR ASSESSMENT YEAR 2012-13, SHOWS THAT AMONG MANY OTHER ISSUES, ADDITION OF RS. 90,10,087/- HAS BEEN MADE FOR SUPPRESSION OF GR OSS RECEIPTS BY THE CONCERNED COMPANY. IN THE RECONCILIATION STATEMENT, SUBMITTED DURING THE ASSESSMENT PROCEEDINGS BY M/S A TC LOGISTICS PVT. LTD. THAT CO MPANY HAS SHOWN RECEIPTS OF RS. 2,73,57,525/- FROM NOKIA SIEMENS NETWORKS PVT. LTD, WHEREAS FORM 26AS DID NOT REPORT ANY RECEIPTS FROM THIS PARTY. ASSESSEE H AS SHOWN RECEIPTS OF RS.2,50,60,917 FROM THIS PARTY BUT FORM 26AS SHOWS RECEIPT OF RS.3,90,38,630/-. THUS UNDER REPORTING OF RECEIPT FROM NOKIA SIEMENS NETWORKS PVT. LTD. WHEN WE CONSIDER THE ASSESSMENT RECORDS OF M/S ATC LOGISTIC S PVT. LTD. STANDS EXPLAINED WHEN WE CONSIDER THE ASSESSMENT RECORDS OF M/S ATC LOGISTICS PVT. LTD. HOWEVER, 5 ITA NO.2328/KOL/2016 SRI TULTUL CHOWDHURY A.YR.2012-13 5 ASSESSEE HAS ALSO RECEIVED RS. 1,59,79,491/-, AS P ER FORM 26AS, FROM NOKIA SOLUTIONS AND NETWORKS INDIA PVT. LTD. NO RECEIPTS ARE SHOWN IN THE BOOKS OF M/S ATC LOGISTICS PVT. LTD. FROM THIS PARTY. HENCE, ENT IRE AMOUNT APPEARS TO BE SUPPRESSED INCOME. ASSESSEE HAS TRIED TO NARROW THE GAP BY CLUBBING RECEIPTS FROM BOTH NOKIA GROUP COMPANIES, BUT IT IS NOT ACCEPTABL E. M/S ATC LOGISTICS PVT. LTD. HAS NOT SHOWN EVEN A SINGLE RUPEE OF RECEIPTS FROM M/S NOKIA SOLUTIONS AND NETWORKS INDIA PVT. LTD. HENCE, NOT ONLY TO THE EXT ENT OF RECONCILED DIFFERENCE OF RS.25,99,979/-, BUT ENTIRE RECEIPTS OF RS. 1,59,79, 491/- FROM NOKIA SOLUTIONS AND NETWORKS INDIA PVT. LTD. REMAINS UNRECONCILED. HENC E, IT IS HELD TO BE THE SUPPRESSED INCOME OF THE ASSESSEE. A.O. IS ALSO DIRECTED TO RESTRICT CREDIT FOR TDS IN THE CASE OF NOKIA SIEMENS NETWORKS PVT. LTD. CORRESPONDING TO THE RECEIPT OF RS. 2,50,60,917/- AND ALLOW FULL TDS CREDIT IN THE CASE OF NOKIA SOLUTIONS AND NETWO RKS INDIA PVT. LTD. NOW COMING TO THE ALTERNATIVE SUBMISSION O F THE ASSESSEE, I WOULD LIKE TO MENTION HERE THAT THE JUDGMENTS/DECISIONS CITED BY THE ASSESSEE ARE IN RESPECT OF SALE OF GOODS/ PROPERTIES. IN THESE CASES SUPPRESSI ON OF SALE WAS DETECTED AND UNDER THE FACTS AND CIRCUMSTANCES OF THAT PARTICULA R CASE, IT HAS BEEN HELD THAT ONLY THE PROFIT ELEMENTS IN THE SUPPRESSED SALE SHOULD B E BROUGHT TO TAX. HOWEVER, IN ASSESSEE'S CASE SERVICES HAVE BEEN PROVIDED AND REC EIPTS IN RESPECT OF THESE SERVICES HAVE BEEN SUPPRESSED. AO HAS MENTIONED THA T ASSESSEE HAS CLAIMED ALL THE EXPENSES RELATED TO THE EARNING OF THE UNDISCLOSED RECEIPTS. APPELLANT HAS NOT BROUGHT ANYTHING ON RECORD TO REBUT THIS CONTENTION OF THE AO. AS ALL THE EXPENSES HAVE BEEN CLAIMED, THE RATIO OF THE JUDGMENTS/DECIS IONS ARE NOT APPLICABLE TO THE FACTS OF ASSESSEE'S CASE AND ADDITION TO THE EXTENT OF RS. 1,59,79,491/- IS CONFIRMED. 2.7. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS :- 2.FOR THAT THE LD. CI.T(A) ERRED IN CONFIRMING THE ADDITION OF RS. 15979491/ - AS UN-RECONCILED DIFFERENCE WHEN SUCH DIFFERENCE WAS D ULY EXPLAINED. 3. FOR THAT EVEN OTHERWISE THE LD. CI.T(A) ERRED IN CONFIRMING THE ENTIRE ADDITION OF RS. 15979491/- AND RS. 3,05037/- AS UN-RECONCILE D DIFFERENCE AND SHOULD HAVE ADDED ONLY THE PROFIT ON DIFFERENCE OF FREIGHT RECE IPTS IF ANY. 2.8. THE LD AR REITERATED THE SUBMISSIONS MADE BEFO RE THE LD CITA AND PRAYED FOR ADOPTION OF NET PROFIT ON THE UNRECONCILED DIFFEREN CES IN THE SUM OF RS 1,59,79,491/- AT 6.4% THEREON TOWARDS FREIGHT RECEIPTS. HE STATED T HAT THE NET PROFIT DECLARED BY THE ASSESSEE WAS 6.4%. AND HENCE THE SAME MAY KINDLY BE ADOPTED. HE PLACED RELIANCE ON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T VS S.M.OMER REPORTED IN ( 1992) 201 ITR 608 (CAL) . NONE APPEARED ON BEHALF OF THE REVENUE WHEN 6 ITA NO.2328/KOL/2016 SRI TULTUL CHOWDHURY A.YR.2012-13 6 THE CASE WAS CALLED FOR HEARING AND NO ADJOURNMENT PETITION WAS EVEN PREFERRED BY THE REVENUE BEFORE US. HENCE WE PROCEED TO DISPOSE OFF THE APPEAL AFTER HEARING THE LD AR. 2.9. WE HAVE HEARD THE LD AR.. THE FACTS STATED HER EINABOVE REMAIN UNDISPUTED AND HENCE THE SAME ARE NOT REITERATED FOR THE SAKE OF B REVITY. THE SHORT POINT THAT ARISES FOR OUR CONSIDERATION IS AS TO WHETHER THE NET PROFIT O N UNRECONCILED FREIGHT RECEIPTS COULD BE BROUGHT TO TAX IN THE FACTS AND CIRCUMSTANCES OF THE CASE. IT IS TRUE THAT THE ASSESSEE WAS NOT ABLE TO RECONCILE THE DIFFERENCE IN FREIGHT RECEIPTS BETWEEN FORM 26AS AND PROFIT AND LOSS ACCOUNT. BUT AT THE SAME TIME, WE HOLD THAT NOKIA SIEMENS NETWORKS PVT LTD HAVING MADE THE PAYMENT TO M/S ATC LOGISTIC S PVT LTD HAD UPLOADED THE TDS RETURN BY MENTIONING THE PAN OF THE ASSESSEE INSTEA D OF PAN OF THE SAID COMPANY. THIS MISTAKE HAS BEEN ACCEPTED AS GENUINE BY THE L D CITA. WE FIND THAT THERE IS NO BASIS FOR THE FINDING OF THE LD AO THAT THE ASSESSE E CLAIMED ALL THE EXPENSES RELATED TO EARNING OF UNDISCLOSED RECEIPT IN THE PROFIT AND LO SS ACCOUNT. IN THESE CIRCUMSTANCES, WE HOLD THAT ONLY THE PROFIT ON UNRECONCILED FREIGHT R ECEIPTS ARE TO BE BROUGHT TO TAX.. THE ASSESSEE HAD REPORTED NET PROFIT OF 6.4% AND HENCE WE DIRECT THE LD AO TO ADOPT THE NET PROFIT OF 6.4% ON THE UNRECONCILED FREIGHT RECEIPT OF RS 1,59,79,491/- AND DETERMINE THE INCOME OF THE ASSESSEE ACCORDINGLY. WITH REGARD TO THE ADDITION MADE IN THE SUM O F RS.3,05,037/- TOWARDS VARIATION IN TRANSPORTATION CHARGES IS CONCERNED, WE FIND THAT T HE LD. AO HAD NOTICED THAT THE ASSESSEE CLAIMED RS.6,29,57,169/- UNDER TRANSPORTAT ION HANDLING (LOADING/UNLOADING) SCROT AND OTHER HANDLING CHARGES, WHEREAS HE SUBMIT TED DETAILS OF TRANPORTATION CHARGES TO THE TUNE OF RS.6,32,62,206/- THEREBY LEADING TO A DIFFERENCE OF RS.3,05,037/- WHICH WAS ADDED BY THE LD. AO. THIS ACTION WAS CONFIRMED BY THE LD. CIT(A). WE FIND THAT OUR FINDINGS GIVEN TOWARDS THE DIFFERENCE IN FREIGHT CH ARGES ABOVE WOULD APPLY WITH EQUAL FORCE FOR THIS ADDITON ALSO. ACCORDINGLY WE DIRECT THE LD. AO TO ADOPT THE NET PROFIT OF 6.4% ON THE UNRECONCILED TRANSPORTATION CHARGES OF RS.3,05,037/- AND DETERMINE THE 7 ITA NO.2328/KOL/2016 SRI TULTUL CHOWDHURY A.YR.2012-13 7 INCOME OF THE ASSESSEE IN THIS REGARD. ACCORDINGLY, THE GROUND NO. 2 RAISED BY THE ASSESSEE IS DISMISSED AND GROUND NO. 3 IS PARTLY AL LOWED. 3. THE NEXT ISSUE TO BE DECIDED IN THIS APPEAL IS A S TO WHETHER THE LD CITA WAS JUSTIFIED IN CONFIRMING THE ADDITION MADE U/S 2(22)(E) OF THE ACT IN THE SUM OF RS 1,00,98,555/- IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3.1. THE LD AO OBSERVED THAT THE ASSESSEE HAD OVERD RAWN A SUM OF RS 1,00,98,555/- FROM M/S ATC LOGISTICS PVT LTD, A COMPANY IN WHICH HE IS A DIRECTOR AND ALSO HOLDING 86.66% OF VOTING POWER. HE ALSO OBSERVED THAT THE SAID COMPANY HAS GOT ACCUMULATED PROFITS AS ON 31.3.2012 TO THE TUNE OF RS 3,19,70,6 05/-. ACCORDINGLY, HE SOUGHT TO INVOKE THE PROVISIONS OF SECTION 2(22)(E) OF THE AC T FOR THE EXCESS AMOUNT DRAWN BY THE ASSESSEE SHAREHOLDER AS LOAN . IN RESPONSE TO THE SHOW CAUSE NOTICE THEREON, THE ASSESSE REPLIED AS UNDER:- DURING THE A.Y. 2012-13 M/S ATC LOGISTICS LTD HAS ADVANCE TO ATC INDIA A SUM OF RS.1,00,98,555/- AGAINST TRANSPORTATION AND HAND LING CHARGES. THE SAID AMOUNT WAS ADJUSTED IN THE FOLLOWING A.Y. 2013-14 AGAINST SERVICES RENDERED. ACCORDINGLY THE ABOVE AMOUNT IS NOT COVERED UNDER S ECTION 2(22)(E) OF THE INCOME TAX ACT 1961 AS THIS WAS FOR BUSINESS PURPOSE AS PA RT OF REGULAR BUSINESS TRANSACTION. ACCORDINGLY THE ASSESSEE CLAIMED THAT THE SAID LEND ING WAS DONE BY M/S ATC LOGISTICS PVT LTD AS TRADE ADVANCES IN THE NORMAL COURSE OF B USINESS WHICH HAS BEEN ADJUSTED WITH SERVICES RENDERED IN ASST YEAR 2013-14 AND HENCE IS OUTSIDE THE PURVIEW OF PROVISIONS OF SECTION 2(22)(E) OF THE ACT. THE LD AO HOWEVER DID NOT AGREE TO THIS CONTENTION OF THE ASSESSEE AND MADE AN ADDITION U/S 2(22)(E) OF T HE ACT IN THE SUM OF RS 1,00,98,555/- IN THE ASSESSMENT. 8 ITA NO.2328/KOL/2016 SRI TULTUL CHOWDHURY A.YR.2012-13 8 3.2. BEFORE THE LD CITA, IT WAS PLEADED THAT THE AS SESSEE IS MAINTAINING A CURRENT ACCOUNT WITH M/S ATC LOGISTICS PVT LTD AND ACCORDIN GLY THE SAME WOULD BE OUTSIDE THE PURVIEW OF PROVISIONS OF SECTION 2(22)(E) OF THE AC T. BUT THE LD CITA DID NOT AGREE TO THIS CONTENTION AND UPHELD THE ADDITION MADE BY THE LD AO. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUND:- 4. FOR THAT THE LD. CI.T(A) ERRED IN CONFIRMING TH E ADDITION OF RS.10098555/ - U/S 2(22)(E). 3.3. THE LD AR ARGUED THAT THE ADVANCE WAS MADE IN THE NATURE OF TRADE IS QUITE EVIDENT FROM THE FACT THAT THE SAID ADVANCES WERE DULY ADJU STED WITH THE TRANSPORTATION AND HANDLING SERVICES RENDERED BY THE ASSESSEE TO M/S A TC LOGISTICS PVT LTD. IT IS NOT IN DISPUTE THAT BOTH THE ASSESSEE AS WELL AS ATC LOGIS TICS PVT LTD IS ENGAGED IN THE SAME LINE OF BUSINESS. HENCE THE ADVANCE TAKES THE CHAR ACTER OF TRADE ADVANCES AND ONCE IT IS IN THE NATURE OF TRADE ADVANCE, THE ISSUE IS COVERE D BY THE RECENT CIRCULAR OF THE CBDT VIDE CIRCULAR NO. 19/2017 DATED 12.6.2017. 3.4. WE HAVE HEARD THE LD AR. WE FIND THAT THE ISS UE AS TO WHETHER THE SUBJECT MENTIONED ADVANCE IS A TRADE ADVANCE OR NOT HAS NOT BEEN EXAMINED IN THE RIGHT PERSPECTIVE BY THE LOWER AUTHORITIES. THE LD AR AL SO HAD NOT PRODUCED ANY EVIDENCE TO PROVE THAT THE SAID ADVANCE HAS BEEN DULY ADJUSTED WITH THE RENDERING OF SERVICES IN ASST YEAR 2013-14 (I.E THE SUBSEQUENT ASST YEAR). IT IS NOT CLEAR FROM THE RECORDS THAT WHETHER ANY EVIDENCES TO THIS EFFECT WERE FILED BEFORE THE LD AO OR BEFORE THE LD CITA BY THE ASSESSEE. ONCE IT TAKES THE CHARACTER OF TRADE AD VANCE, THEN WE AGREE WITH THE LD AR THAT THE ISSUE WOULD BE COVERED BY THE RECENT CIRCU LAR OF THE CBDT SUPRA. ACCORDINGLY, WE DEEM IT FIT AND APPROPRIATE, IN THE INTEREST OF JUSTICE AND FAIR PLAY, TO SET ASIDE THIS ISSUE TO THE FILE OF THE LD AO TO GIVE A CLEAR FINDING AS TO WHETHER THE SAID ADVANCE IS A TRADE ADVANCE OR NOT IN THE LIGHT OF E VIDENCES TO BE SUBMITTED BY THE ASSESSEE. ACCORDINGLY, THE GROUND NO. 4 RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 9 ITA NO.2328/KOL/2016 SRI TULTUL CHOWDHURY A.YR.2012-13 9 4. THE LAST ISSUE TO BE DECIDED IN THIS APPEAL IS A S TO WHETHER THE LD CITA WAS JUSTIFIED IN UPHOLDING THE DISALLOWANCE OF DONATION AND SUBSC RIPTION PAID TO SMALL POOJA COMMITTEE IN THE SUM OF RS 1,22,000/- IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 4.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE LD A O OBSERVED THAT THE ASSESSEE DEBITED AN AMOUNT OF RS 1,22,000/- IN THE PROFIT AND LOSS ACCO UNT ON ACCOUNT OF DONATION & SUBSCRIPTION DURING THE YEAR. IN SUPPORT OF THE CL AIM, THE ASSESSEE SUBMITTED COPY OF ACCOUNT OF DONATION & SUBSCRIPTION ACCOUNT WHEREIN THE ENTIRES WERE SHOWN WITHOUT ANY NARRATION. THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS WITH NARRATION AND EVIDENCES. IN THE ABSENCE OF THESE DETAILS, THE LD AO PROCEEDED TO DISALLOW THE SAME IN THE ASSESSMENT. THE LD CITA OBSERVED FROM PERUSAL OF THE LEDGER ACCOUNT THAT MOST OF THE PAYMENTS HEREIN WERE MADE IN CASH AND WERE MADE RIGHT FROM APRIL 2011 TO FEB 2012. HE OBSERVED THAT DURGA PUJA CELEBRATIONS OCC UR DURING THE MONTH OF OCTOBER- NOVEMBER AND HENCE IT IS APPARENT THAT PAYMENTS ARE NOT ONLY FOR PUJA CELEBRATION. ACCORDINGLY HE UPHELD THE DISALLOWANCE MADE BY THE LD AO. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUND:- 5. FOR THAT THE LD. CI.T(A) ERRED IN CONFIRMING THE ADDITION OF RS.1,22,000/ - BEING DONATION AND SUBSCRIPTION PAID TO SMALL POOJA COMMI ITTEES WHICH WAS ALLOWABLE DEDUCTION. 4.2. THE LD AR ARGUED THAT THE ISSUE IS COVERED BY THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN FAVOUR OF THE ASSESSEE IN THE CASE OF BATA INDIA LTD REPORTED IN 201 ITR 884 (CAL). 4.3. WE HAVE HEARD THE LD AR. WE FIND THAT THE DET AILS WERE NOT SUBMITTED WITH NARRATION AND EVIDENCES IN THE FORM OF RECEIPTS BEF ORE THE LOWER AUTHORITIES. FROM THE PERUSAL OF THE CASE RELIED UPON BY THE LD AR IN THE CASE OF CIT VS BATA INDIA LTD REPORTED IN (1993) 201 ITR 884 (CAL), WE FIND THAT THE ISSUE BEFORE THE HONBLE CALCUTTA HIGH COURT WAS WHETHER THE INTEREST PAID ON SECURIT Y DEPOSIT TO EMPLOYEES WOULD FALL 10 ITA NO.2328/KOL/2016 SRI TULTUL CHOWDHURY A.YR.2012-13 10 WITHIN THE AMBIT OF DISALLOWANCE U/S 40A(8) OF THE ACT. FOR THE SAKE OF CONVENIENCE, THE HEAD NOTES IS REPRODUCED BELOW:- SECTION 40A(8) OF THE INCOME-TAX ACT, 1961 BUSINE SS DISALLOWANCE INTEREST ON DEPOSITS - ASSESSMENT YEAR 1984-85 WHETHER SECURI TY DEPOSITS RECEIVED FROM SHOP MANAGERS, WHO WERE EMPLOYEES OF ASSESSEE COMPANY, D ID NOT FALL WITHIN MEANING OF 'DEPOSIT' GIVEN IN EXPLANATION TO SECTION 40A(8) - HELD, YES WHETHER, THEREFORE INTEREST PAID ON AFORESAID SECURITY DEPOSITS SHOULD NOT BE D ISALLOWED UNDER SECTION 40A(8) - HELD, YES HENCE WE HOLD THAT THE SAID CASE DOES NOT SUPPORT T HE CASE OF THE ASSESSEE AS THE FACTS ARE TOTALLY DISTINGUISHABLE. WE FIND THAT THE ASSE SSEE WAS NOT ABLE TO PRODUCE ANY DETAILS FOR THE SAME EVEN BEFORE US. HENCE WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LD CITA. ACCORDINGLY, THE GROUND NO. 5 RAISED BY THE ASSESSEE IS DISMISSED. 5. THE GROUND NO.1 , 6 & 7 RAISED BY THE ASSESSEE A RE GENERAL IN NATURE AND DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 07.07.2017 SD/- SD/- [A.T.VARKEY] [ M.BALAGANESH ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 07.07.2017 [RG PS] 11 ITA NO.2328/KOL/2016 SRI TULTUL CHOWDHURY A.YR.2012-13 11 COPY OF THE ORDER FORWARDED TO: 1.SRI TULTUL CHOWDHURY, BASUNAGAR, GATE NO.1, 4 TH LANE, MADHYAMGRAM, 24 PGS (N), KOLKATA-700019. 2. A.C.I.T/D.C.I.T., CIRCLE-50, KOLKATA. . 3..C.I.T.(A)-15, KOLKATA 4. C.I.T.-17, KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S