Shri Pramod Kumar Tekriwal, Kolkata V. Income Tax Officer, Ward - 30(4), Kolkata, Kolkata

ITA 2458/KOL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4515 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 18-10-2013
• Court: TRIBUNAL
• Assessee Lawyers: S K KANODI FCA LD
• Keywords: Retrospective amendment; Corroborative evidences; Onus to prove
• Section: 133(6); 194C; 139

Judgement Text

ITA NO. 2458/K/13 SHRI PRAMOD KUMAR TEKRIWAL1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A BENCH, KOLKATA BEFORE SHRI P.M.JAGTAP, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 2458/KOL/ 2013 ASSESSMENT YEAR: 2009-2010 SHRI PRAMOD KUMAR TEKRIWAL C/O SHRI KISHAN KANDOI 15, GANGADHAR BABU LANE 2 ND FLOOR, ROOM NO.204 KOLKATA-700012 .............. .................APPELLANT [PAN: ABUPT 3079K] -VS.- INCOME TAX OFFICER, .............. ...............RESPONDENT WARD-30(4), KOLKATA, AAYKAR BHAVAN DAKSHIN 2 GARIAHAT ROAD (SOUTH) KOLKATA-700068 KOLKATA APPEARANCES BY: SHRI S.K. KANODI, FCA, LD. AR FOR THE ASSESSEE SHRI SUDIPTA GUHA, JCIT, LD. SR. D.R., FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : 24-05- 2016 DATE OF PRONOUNCING THE ORDER : 27 -07-2016 O R D E R PER SHRI S.S. VISWANETHRA RAVI :- THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-XIV, KOLKAT A DATED 08- 08-2013 FOR THE ASSESSMENT YEAR 2009-10 ON THE FOLL OWING GROUNDS:- ITA NO. 2458/K/13 SHRI PRAMOD KUMAR TEKRIWAL2 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. C.I.T.(A) IS NOT JUSTIFIED IN CONFIRMING THE ADDITI ON U/S 40(A)(IA) OF PAYMENT MADE TOWARDS LABOUR CHARGES AMOUNTING T O RS. 13,99,171/- WITH TOTAL DISREGARD TO JURISDICTIONAL CALCUTTA HIGH COURT ION IN THE CASE OF C.I.T VS. M/S VIRGIN CREAT IONS (CAL.)(ITA T NO.302 OF 2011). 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LD. C.I.T.(A) IS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.8 ,76,4001- UNDER THE HEAD PURCHASE DISCOUNT WITHOUT ANY BASIS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LD.C.I.T (A) IS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF 20% OF MOTOR CAR EXPENSES AND TELEPHONE EXPENSES I. E .. 20% O F( RS. 3,18,848/- + RS. 76,211 ) = RS. 79,011/- AND 100% O F MOBILE EXPENSES RS. 43,910, THUS AGGREGATING TO RS. 1,22,9 21. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE C.I.T (A) IS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE U/S 24 OF THE ACT OF INTEREST OF RS. 52,771/- ON THE HOUSING LOAN WITH T OTAL DISREGARD TO THE PROVISIONS OF SEC 26. 2. GROUND NO. 1 RELATES TO CONFIRMATION OF ADDITION MADE U/S. 40(A)(IA) OF THE ACT. IN THE COURSE OF ASSESSMENT PROCEEDINGS FOR TH E A.Y. 2009-10, THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAD MADE PA YMENTS OF LABOUR CHARGES OF RS.13,99,171. THE ASSESSEE WAS LIABLE TO DEDUCT TAX AT SOURCE ON SUCH PAYMENTS U/S. 194C OF THE ACT. THE ASSESSEE DEDUCT ED TAX AT SOURCE ON THE PAYMENTS MADE TO SUB-CONTRACTORS AND PAYMENT OF THE TAX SO DEDUCTED WAS PAID TO THE CREDIT OF THE GOVERNMENT ONLY ON 22.7.2009. AS PER THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT, ANY PAYMENTS MADE TO A CONTRACTOR OR A SUB- CONTRACTOR WHO IS A RESIDENT FOR CARRYING OUT ANY W ORK ON WHICH TAX IS NOT DEDUCTED AT SOURCE AS PER THE PROVISIONS OF SECTION 194C OF THE ACT, OR IF TAX IS DEDUCTED BUT NOT PAID ON OR BEFORE 31 ST MARCH OF THE PREVIOUS YEAR, THEN THE AFORESAID PAYMENT TO THE SUB-CONTRACTOR CANNOT BE C LAIMED AS DEDUCTION BY THE ASSESSEE WHILE COMPUTING INCOME FROM BUSINESS. SEC TION 40(A)(IA) PROVIDES AN ITA NO. 2458/K/13 SHRI PRAMOD KUMAR TEKRIWAL3 EXCEPTION INSOFAR AS THE PAYMENT MADE IN THE MONTH OF MARCH OF THE PREVIOUS YEAR. THE TAX DEDUCTED ON PAYMENTS MADE IN THE MON TH OF MARCH OF THE PREVIOUS YEAR CAN BE PAID ON OR BEFORE THE DUE DATE FOR FILING THE RETURN OF INCOME. SINCE TAX DEDUCTED ON THE AFORESAID PAYMEN T WAS NOT DEPOSITED TO THE CREDIT OF THE GOVERNMENT BEFORE 31.03.2009, THE ASS ESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE FOR DEDUCTION OF RS.13,99 ,171. ON APPEAL BY THE ASSESSEE, THE CIT(APPEALS) UPHELD THE ORDER OF THE AO. BEFORE THE CIT(A), THE ASSESSEE HAD SUBMITTED THAT SINCE TAX DEDUCTED HAS BEEN PAID ON 22.7.2009, I.E., ON OR BEFORE THE DUE DATE FOR FILING THE RETURN OF INCOME U/S.139(1) OF THE ACT, DEDUCTION HAS TO BE ALLOWED IN THE A.Y. 2009-10. T HE CIT(A) REJECTED THE PLEA RAISED BY THE ASSESSE. 3. AS FAR AS THE MERITS OF THE ISSUE RAISED BY THE ASSESSEE IN HIS APPEAL IS CONCERNED, THE SAME RELATES TO THE QUESTION AS TO W HETHER AN AMOUNT OF RS.13,99,171 ON WHICH TAX WAS DEDUCTED BUT PAID ON 22.7.2009 CAN BE DISALLOWED BY INVOKING THE PROVISIONS OF SECTION 40 (A)(IA) OF THE ACT? FOR DECIDING THIS QUESTION, A BRIEF HISTORY OF THE PROV ISIONS OF SECTION 40(A)(IA) OF THE ACT IS REQUIRED TO BE NARRATED. 4. THE LEGISLATIVE HISTORY OF THE PROVISIONS OF SE C.40(A)(IA) OF THE ACT IS AS FOLLOWS: SECTION 40 HAS CERTAIN CLAUSES PROVIDING F OR THE AMOUNTS WHICH ARE NOT DEDUCTIBLE. SUB-CLAUSE (IA) OF CLAUSE (A) OF SECTIO N 40 WAS INSERTED BY THE FINANCE (NO.2) ACT, 2004 WITH EFFECT FROM 1ST APRIL , 2005 READING AS UNDER:- 40. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN SE CTIONS 30 TO 38, THE FOLLOWING AMOUNTS SHALL NOT BE DEDUCTED IN COMPUTED THE INCOME CHARGEABLE UNDER THE HEAD `PROFITS AND GAINS OF BUS INESS OR PROFESSION. .. ITA NO. 2458/K/13 SHRI PRAMOD KUMAR TEKRIWAL4 (IA) ANY INTEREST, COMMISSION OR BROKERAGE, FEES FO R PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SERVICE S PAYABLE TO A RESIDENT, OR AMOUNTS PAYABLE TO A CONTRACTOR OR SUB -CONTRACTOR, BEING RESIDENT, FOR CARRYING OUT ANY WORK (INCLUDIN G SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK), ON OR, AFTER DED UCTION, HAS NOT BEEN PAID DURING THE PREVIOUS YEAR, OR IN THE SUBSE QUENT YEAR BEFORE THE EXPIRY OF THE TIME PRESCRIBED UNDER SUB- SECTION (1) OF SECTION 200 : PROVIDED THAT WHERE IN RESPECT OF ANY SUCH SUM, TAX HAS BEEN DEDUCTED IN ANY SUBSEQUENT YEAR OR, HAS BEEN DEDUCT ED IN THE PREVIOUS YEAR BUT PAID IN ANY SUBSEQUENT YEAR AFTER THE EXPIRY OF THE TIME PRESCRIBED UNDER SUB-SECTION (1) OF SECTIO N 200, SUCH SUM SHALL BE ALLOWED AS A DEDUCTION IN COMPUTING THE IN COME OF THE PREVIOUS YEAR IN WHICH SUCH TAX HAS BEEN PAID. EXPLANATION. FOR THE PURPOSES OF THIS SUB-CLAUSE, - (I)COMMISSION OR BROKERAGE SHALL HAVE THE SAME ME ANING AS IN CLAUSE (I) OF THE EXPLANATION TO SECTION 194H ; (II)FEES FOR TECHNICAL SERVICES SHALL HAVE THE SA ME MEANING AS IN EXPLANATION 2 TO CLAUSE (VII) OF SUB-SECTION (1) OF SECTION 9; (III)PROFESSIONAL SERVICES SHALL HAVE THE SAME ME ANING AS IN CLAUSE (A) OF THE EXPLANATION TO SECTION 194J; (IV)WORK SHALL HAVE THE SAME MEANING AS IN EXPLAN ATION III TO SECTION 194C; 5. THE MEMORANDUM EXPLAINING THE PROVISIONS IN TH E FINANCE BILL EXPLAINED THE RATIONALE OF THE INSERTION OF THE NEW PROVISION IN FOLLOWING WORDS :- WITH A VIEW TO AUGMENT COMPLIANCE OF TDS PROVISION S, IT IS PROPOSED TO EXTEND THE PROVISIONS OF SECTION 40(A)(I) TO PAY MENTS OF INTEREST, COMMISSION OR BROKERAGE, FEES FOR PROFESSIONAL SERV ICES OR FEES FOR TECHNICAL SERVICES TO RESIDENTS, AND PAYMENTS TO A RESIDENT CONTRACTOR OR SUB-CONTRACTOR FOR CARRYING OUT ANY WORK (INCLUD ING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK), ON WHICH TAX HAS NOT BEEN ITA NO. 2458/K/13 SHRI PRAMOD KUMAR TEKRIWAL5 DEDUCTED OR AFTER DEDUCTION, HAS NOT BEEN PAID BEFO RE THE EXPIRY OF THE TIME PRESCRIBED UNDER SUB-SECTION (1) OF SECTION 20 0 AND IN ACCORDANCE WITH THE OTHER PROVISIONS OF CHAPTER XVI I-B. IT IS ALSO PROPOSED TO PROVIDE THAT WHERE IN RESPECT OF PAYMEN T OF ANY SUM, TAX HAS BEEN DEDUCTED UNDER CHAPTER XVII-B OR PAID IN A NY SUBSEQUENT YEAR, THE SUM OF PAYMENT SHALL BE ALLOWED IN COMPUT ING THE INCOME OF THE PREVIOUS YEAR IN WHICH SUCH TAX HAS BEEN PAID. THE PROPOSED AMENDMENT WILL TAKE EFFECT FROM 1ST DA Y OF APRIL, 2005 AND WILL, ACCORDINGLY, APPLY IN RELATION TO TH E ASSESSMENT YEAR 2005- 2006 AND SUBSEQUENT YEARS. [CLAUSE 11] 6. THEREAFTER THE FINANCE ACT, 2008 MADE AMENDMENT TO CLAUSE (A) IN SUB- CLAUSE (IA) IN SECTION 40 WITH RETROSPECTIVE EFFECT FROM 1ST APRIL, 2005. THE SECTION AS AMENDED BY THE FINANCE ACT, 2008 READ AS UNDER:- (IA) ANY INTEREST, COMMISSION OR BROKERAGE, RENT, ROYALTY, FEES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SERVICE S PAYABLE TO A RESIDENT, OR AMOUNTS PAYABLE TO A CONTRACTOR OR SUB -CONTRACTOR, BEING RESIDENT, FOR CARRYING OUT ANY WORK (INCLUDING SUPP LY OF LABOUR FOR CARRYING OUT ANY WORK), ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII-B AND SUCH TAX HAS NOT BEEN PAID,- (A) IN A CASE WHERE THE TAX WAS DEDUCTIBLE AND WA S SO DEDUCTED DURING THE LAST MONTH OF THE PREVIOUS YEAR, ON OR B EFORE THE DUE DATE SPECIFIED IN SUB-SECTION (1) OF SECTION 139 ; OR (B) IN ANY OTHER CASE, ON OR BEFORE THE LAST DAY OF THE PREVIOUS YEAR. PROVIDED THAT WHERE IN RESPECT OF ANY SUCH SUM, TAX HAS BEEN DEDUCTED IN ANY SUBSEQUENT YEAR, OR HAS BEEN DEDUCT ED- (A) DURING THE LAST MONTH OF THE PREVIOUS YEAR BUT PAID AFTER THE SAID DUE DATE ; OR (B) DURING ANY OTHER MONTH OF THE PREVIOUS YEA R BUT PAID AFTER THE END OF THE SAID PREVIOUS YEAR, SUCH SUM SHALL BE AL LOWED AS A DEDUCTION ITA NO. 2458/K/13 SHRI PRAMOD KUMAR TEKRIWAL6 IN COMPUTING THE INCOME OF THE PREVIOUS YEAR IN WHI CH SUCH TAX HAS BEEN PAID. ; 7. THE FINANCE ACT, 2008 BROUGHT OUT AMENDMENT TO SECTION 40(A)(IA) W.R.E.F. 1.4.2005 BY RELAXING EARLIER POSITION TO SOME EXTEN T. IT MADE TWO CATEGORIES OF DEFAULTS CAUSING DISALLOWANCE ON THE BASIS OF THE P ERIOD OF THE PREVIOUS YEAR IN WHICH TAX WAS DEDUCTIBLE. THE FIRST CATEGORY OF DIS ALLOWANCES INCLUDED THE CASES IN WHICH TAX WAS DEDUCTIBLE AND WAS SO DEDUCTED DUR ING THE LAST MONTH OF THE PREVIOUS YEAR BUT THERE WAS FAILURE TO PAY SUCH TAX ON OR BEFORE THE DUE DATE SPECIFIED IN SUB-SECTION (1) OF SECTION 139 OF THE ACT. IN OTHER WORDS, IF ANY AMOUNT ON WHICH TAX WAS DEDUCTIBLE DURING LAST MONT H OF THE PREVIOUS YEAR, THAT IS MARCH 2005, BUT WAS PAID BEFORE 31ST OCTOBER, 20 05, BEING THE DUE DATE U/S 139(1), THE DEDUCTIBILITY OF THE AMOUNT WAS KEPT IN TACT. THE SECOND CATEGORY INCLUDED CASES OTHER THAN THOSE GIVEN IN CATEGORY F IRST. TO PUT IT SIMPLY, IF TAX WAS DEDUCTIBLE AND WAS SO DEDUCTED DURING THE FIRST ELEVEN MONTHS OF THE PREVIOUS YEAR, THAT IS, UP TO FEBRUARY, 2005, THE D ISALLOWANCE WAS TO BE MADE IF THE ASSESSEE FAILED TO PAY IT BEFORE 31ST MARCH, 20 05. 8. THEN CAME THE AMENDMENT TO SECTION 40(A)(IA) BY THE FINANCE ACT, 2010 WITH RETROSPECTIVE EFFECT FROM 1ST APRIL, 2010. THE PROV ISION SO AMENDED, NOW READS AS UNDER :- (IA) ANY INTEREST, COMMISSION OR BROKERAGE, RENT, ROYALTY, FEES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SERVICE S PAYABLE TO A RESIDENT, OR AMOUNTS PAYABLE TO A CONTRACTOR OR SUB -CONTRACTOR, BEING RESIDENT, FOR CARRYING OUT ANY WORK (INCLUDING SUPP LY OF LABOUR FOR CARRYING OUT ANY WORK), ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII-B AND SUCH TAX HAS NOT BEEN DEDUCTED O R; AFTER DEDUCTION, HAS NOT BEEN PAID ON OR BEFORE THE DUE D ATE SPECIFIED IN SUB- SECTION (1) OF SECTION 139. ITA NO. 2458/K/13 SHRI PRAMOD KUMAR TEKRIWAL7 PROVIDED THAT WHERE IN RESPECT OF ANY SUCH SUM, TAX HAS BEEN DEDUCTED IN ANY SUBSEQUENT YEAR, OR HAS BEEN DEDUCT ED DURING THE PREVIOUS YEAR BUT PAID AFTER THE DUE DATE SPECIFIED IN SUB-SECTION (1) OF SECTION 139, SUCH SUM SHALL BE ALLOWED AS A DEDUCTI ON IN COMPUTING THE INCOME OF THE PREVIOUS YEAR IN WHICH SUCH TAX HAS B EEN PAID. 9. FROM THE ABOVE PROVISION AS AMENDED BY THE FINA NCE ACT, 2010 WITH RETROSPECTIVE EFFECT FROM 1ST APRIL, 2010 IT CAN BE SEEN THAT THE ONLY DIFFERENCE WHICH THIS AMENDMENT HAS MADE IS DISPENSING WITH TH E EARLIER TWO CATEGORIES OF DEFAULTS AS PER THE FINANCE ACT, 2008, AS DISCUSSED IN THE EARLIER PARA, CAUSING DISALLOWANCE ON THE BASIS OF THE PERIOD OF THE PREV IOUS YEAR DURING WHICH TAX WAS DEDUCTIBLE. THE FIRST CATEGORY OF DISALLOWANCES INCLUDED THE CASES IN WHICH TAX WAS DEDUCTIBLE AND WAS SO DEDUCTED DURING THE L AST MONTH OF THE PREVIOUS YEAR BUT THERE WAS FAILURE TO PAY SUCH TAX ON OR BE FORE THE DUE DATE SPECIFIED IN SUB-SECTION (1) OF SECTION 139. THE FINANCE ACT, 20 10 HAS NOT TINKERED WITH THIS POSITION. THE SECOND CATEGORY OF THE FINANCE ACT, 2 008 WHICH REQUIRED THE DEPOSIT OF TAX BEFORE THE CLOSE OF THE PREVIOUS YEA R IN CASE OF DEDUCTION DURING THE FIRST ELEVEN MONTHS, AS A PRE-CONDITION FOR THE GRANT OF DEDUCTION IN THE YEAR OF INCURRING EXPENDITURE, HAS BEEN ALTERED. THE HIT HERTO REQUIREMENT OF THE ASSESSEE DEDUCTING TAX AT SOURCE DURING THE FIRST E LEVEN MONTHS OF THE PREVIOUS YEAR AND PAYING IT BEFORE THE CLOSE OF THE PREVIOUS YEAR UP TO 3 1ST MARCH OF THE PREVIOUS YEAR AS A REQUIREMENT FOR GRANT OF DEDUCTI ON IN THE YEAR OF INCURRING SUCH EXPENDITURE, HAS BEEN EASED TO EXTEND SUCH TIM E FOR PAYMENT OF TAX UP TO DUE DATE U/S 139(1) OF THE ACT. AS PER THE NEW AMEN DMENT, THE DISALLOWANCE WILL BE MADE IF AFTER DEDUCTING TAX AT SOURCE, THE ASSESSEE FAILS TO PAY THE AMOUNT OF TAX ON OR BEFORE THE DUE DATE SPECIFIED I N SUB-SECTION (1) OF SECTION 139 OF THE ACT. THE EFFECT OF THIS AMENDMENT IS THA T NOW THE ASSESSEE DEDUCTING TAX EITHER IN THE LAST MONTH OF THE PREVIOUS YEAR O R FIRST ELEVEN MONTHS OF THE PREVIOUS YEAR SHALL BE ENTITLED TO DEDUCTION OF THE EXPENDITURE IN THE YEAR OF ITA NO. 2458/K/13 SHRI PRAMOD KUMAR TEKRIWAL8 INCURRING IT, IF THE TAX SO DEDUCTED AT SOURCE IS P AID ON OR BEFORE THE DUE DATE U/S 139(1). THIS IS THE ONLY DIFFERENCE WHICH HAS BEEN MADE BY THE FINANCE ACT, 2010. 10. THE QUESTION AS TO WHETHER THE AMENDMENT BY TH E FINANCE ACT, 2010 AS AFORESAID IS PROSPECTIVE OR RETROSPECTIVE FROM 1.4. 2005 CAME UP FOR CONSIDERATION BEFORE THE MUMBAI SPECIAL BENCH ITAT IN THE CASE OF BHARATI SHIPYARD LTD . BEFORE THE SPECIAL BENCH IT WAS ARGUED THAT THE AMENDMENT WAS MADE WITH A VIEW TO REMOVE THE UNNECESSARY HARDSHIP CAUSED TO THE ASSESSEE BY THE EARLIER PROVISION. THE SPECIAL BENCH BY ITS ORD ER DATED 9.9.2011 HOWEVER HELD THAT THE AMENDMENT CARRIED OUT BY THE FINANCE ACT, 2010 WITH RETROSPECTIVE EFFECT FROM ASSESSMENT YEAR 2010- 2011 CANNOT BE HE LD TO BE RETROSPECTIVE FROM ASSESSMENT YEAR 2005-2006. THE SPECIAL BENCH HELD THAT THE AMENDMENT BROUGHT OUT BY THE FINANCE ACT, 2010 TO SECTION 40( A)(IA) W.E.F. 01.04.2010, IS NOT REMEDIAL AND CURATIVE IN NATURE. 11. PRIOR TO THE DECISION OF THE SPECIAL BENCH, I DENTICAL ISSUE HAD COME UP FOR CONSIDERATION BEFORE THE ITAT KOLKATA BENCH IN THE CASE OF VIRGIN CREATIONS VS. ITO, WARD 32(4), KOLKATA ITA NO. 267/KOL/2009 F OR AY 05-06. THE ISSUE THAT AROSE FOR CONSIDERATION WAS DISALLOWANCE OF EX PENSES U/S.40(A)(IA)CLAIMED AS DEDUCTION WHILE COMPUTING INCOME FROM BUSINESS B EING EMBROIDERY CHARGES, DYEING CHARGES, INTEREST ON LOAN AND FREIGHT CHARGE S WITHOUT DEDUCTING TAX AT SOURCE. THE EMBROIDERY CHARGES WERE PAID BETWEEN 2 2ND MAY, 2004 TO 30.11.2004. TAX HAD BEEN DEDUCTED AT SOURCE BUT WE RE PAID TO THE GOVERNMENT ONLY ON 28.10.2005 AND NOT WITHIN THE TIME CONTEMPL ATED BY SECTION 200(1) OF THE ACT. THE DYEING CHARGES WERE PAID BETWEEN 5.4. 2004 TO 20.8.2004. TAX WAS DEDUCTED AT SOURCE BUT WAS PAID TO THE GOVERNME NT ONLY ON 28.10.2005. FREIGHT OUTWARD CHARGES WERE PAID WITHOUT DEDUCTION OF TAX AT SOURCE. INTEREST ITA NO. 2458/K/13 SHRI PRAMOD KUMAR TEKRIWAL9 ON LOANS WERE CREDITED TO THE CREDITORS ACCOUNT ON 31.3.2005 TO THE EXTENT THEY WERE PAID AFTER THE DUE DATE FOR FILING RETURN OF I NCOME U/S.139(1) OF THE ACT, THE DISALLOWANCE WAS MADE U/S.40(A)(IA) OF THE ACT. BE FORE THE TRIBUNAL, THE ASSESSEE CONTENTED THAT THE AMENDMENT BY THE FINANC E ACT, 2010 WITH RETROSPECTIVE EFFECT FROM 1ST APRIL, 2010 WHEREBY A MOUNT OF TAX DEDUCTED AT THE TIME OF MAKING PAYMENT IN RESPECT OF EXPENDITURE RE FERRED TO IN SEC.40(A)(IA) OF THE ACT, IF PAID TO THE GOVERNMENT ON OR BEFORE THE DUE DATE FOR FILING THE RETURN OF INCOME DUE DATE U/S 139(1) OF THE ACT SHOULD BE ALLOWED AS A DEDUCTION. IN OTHER WORDS IT WAS ARGUED THAT THE AMENDMENT BY THE FINANCE ACT, 2010 TO THE PROVISIONS OF SEC.40(A)(IA) HAS TO BE HELD TO BE RE TROSPECTIVE W.E.F. 1-4-2005. THE ITAT KOLKATA BENCH BY ITS ORDER DATED 15.12.201 0, HELD AS FOLLOWS: 8. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CAR EFUL PERUSAL OF THE MATERIALS AVAILABLE ON RECORD, KEEPING IN VIEW OF T HE FACT THAT THOUGH THE LD.D.R. SUBMITTED THAT THE DECISIONS OF THE COO RDINATE BENCHES ARE NOT BINDING AND THE KOLKATA BENCHES MAY TAKE A DIFFERENT VIEW, SINCE MUMBAI BENCH AFTER ANALYZING THE PROVISIONS O F SEC.40(A)9IA) SINCE ITS INCEPTION AND VARIOUS AMENDMENTS MADE TO THE SAME INCLUDING THE SUGGESTION MADE BY THE INDUSTRY IN TH E FORM OF REPRESENTATION IN THEIR PRE-BUDGET MEMORANDUM TO TH E HONBLE FINANCE MINISTER AND BY APPLYING THE DECISION OF TH E HONBLE APEX COURT IN THE CASE OF ALOM EXTRUSIONS LTD., HAS OBSE RVED THAT THE PROVISIONS OF SECTION 40(A)(IA) AS STOOD PRIOR TO T HE AMENDMENTS MADE BY THE FINANCE ACT 2010 THUS WERE RESULTING INTO UN INTENDED CONSEQUENCES AND CAUSING GRAVE AND GENUINE HARDSHIP S TO THE ASSESSES WHO HAD SUBSTANTIALLY COMPLIED WITH THE RE LEVANT TDS PROVISIONS BY DEDUCTING THE TAXES AT SOURCE AND BY PAYING THE SAME TO THE CREDIT OF THE GOVERNMENT BEFORE THE DUE DATE OF FILING OF THEIR RETURNS U/S.139(1). IN ORDER TO REMEDY THIS POSITI ON AND TO REMOVE THE HARDSHIPS WHICH WAS BEING CAUSED TO THE ASSESSEE BE LONGING TO SUCH CATEGORY, AMENDMENTS HAVE BEEN MADE IN THE PROVISIO NS OF SECTION 40(A)(IA) BY THE FINANCE ACT, 2010. THE SAID AMEND MENTS, IN OUR OPINION, THUS ARE CLEARLY REMEDIAL/CURATIVE IN NATU RE AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF ALLIED MOTORS PVT.LTD. (SUPRA) AND MOM EXTRUSIONS LTD. (SUPRA) AND THE SAME THEREF ORE WOULD APPLY ITA NO. 2458/K/13 SHRI PRAMOD KUMAR TEKRIWAL10 RETROSPECTIVELY W.E.F. 1ST APRIL, 2005. IN THE CAS E OF R.B.JODHA MAL KUTHIALA 82 ITR 570, IT WAS HELD BY THE HONBLE SUP REME COURT THAT A PROVISO WHICH IS INSERTED TO REMEDY UNINTENDED CONS EQUENCES AND TO MAKE THE PROVISION WORKABLE, REQUIRES TO BE TREATED AS RETROSPECTIVE IN OPERATION SO THAT A REASONABLE INTERPRETATION CA N BE GIVEN TO THE SECTION AS A WHOLE. IN THE PRESENT CASE, THE AMOUN T OF TAX DEDUCTED AT SOURCE FROM THE FREIGHT CHARGES DURING THE PERIOD 0 1/04/2005 TO 28/02/2006 WAS PAID BY THE ASSESSEE IN THE MONTH O F JULY AND AUGUST 2006 I.E., WELL BEFORE THE DUE DATE OF FILING OF IT S RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. THIS BEING THE UNDIS PUTED POSITION, WE HOLD THAT THE DISALLOWANCE MADE BY THE A.O. AND CON FIRMED BY THE LEARNED CIT(A) ON ACCOUNT OF FREIGHT CHARGES BY INV OKING THE PROVISIONS OF SECTION 40(A)(IA) IS NOT SUSTAINABLE AS PER THE AMENDMENTS MADE IN THE SAID PROVISIONS BY THE FINAN CE ACT, 2010 WHICH, BEING REMEDIAL/CURATIVE IN NATURE, HAVE RETR OSPECTIVE APPLICATION, WE FIND NO REASON TO DEVIATE FROM THE DECISIONS OF THE ITATS MUMBAI BENCH AND AHMEDABAD BENCH, IN THE ABS ENCE OF A CONTRARY VIEW, EXCEPT THE OTHER BENCHES DECISIONS O R ANY OTHER HIGH COURT. THEREFORE, RESPECTFULLY FOLLOWING THE DECIS ION OF THE COORDINATE BENCHES (SUPRA), WE ALLOW THE GROUND NOS . I TO 3 OF THE ASSESSEES APPEAL. 12. AS AGAINST THE AFORESAID DECISION THE REVENUE PREFERRED APPEAL BEFORE THE HONBLE CALCUTTA HIGH COURT. THE HONBLE CALCUTTA HIGH COURT IN ITA NO. 302 OF 2011 GA 3200/2011 DECIDED ON 23.11.2011 , HELD AS FOLLOWS: WE HAVE HEARD MR. NIZAMUDDIN AND GONE THROUGH THE IMPUGNED JUDGMENT AND ORDER. WE HAVE ALSO EXAMINED THE POINT FORMULATED FOR WHICH THE PRESENT APPEAL IS SOUGHT TO BE ADMITTED. IT IS ARGUED BY MR. NIZAMUDDIN THAT THIS COURT NEEDS TO TAKE DECISI ON AS TO WHETHER SECTION 40(A)(IA) IS HAVING RETROSPECTIVE OPERATION OR NOT. THE LEARNED TRIBUNAL ON FACT FOUND THAT THE ASSESSE E HAD DEDUCTED TAX AT SOURCE FROM THE PAID CHARGES BETWEEN THE PER IOD APRIL 1, 2005 AND APRIL 28, 2006 AND THE SAME WERE PAID BY THE AS SESSEE IN JULY AND AUGUST 2006, I.E. WELL BEFORE THE DUE DATE OF F ILING OF THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. THIS FA CTUAL POSITION WAS UNDISPUTED. MOREOVER, THE SUPREME COURT, AS HAS BEE N RECORDED BY ITA NO. 2458/K/13 SHRI PRAMOD KUMAR TEKRIWAL11 THE LEARNED TRIBUNAL, IN THE CASE OF ALLIED MOTORS PVT. LTD. AND ALSO IN THE CASE OF ALOM EXTRUSIONS LTD., HAS ALREADY DE CIDED THAT THE AFORESAID PROVISION HAS RETROSPECTIVE APPLICATION. AGAIN, IN THE CASE REPORTED IN 82 ITR 570, THE SUPREME COURT HELD THAT THE PROVISION, WHICH HAS INSERTED THE REMEDY TO MAKE THE PROVISION WORKABLE, REQUIRES TO BE TREATED WITH RETROSPECTIVE OPERATION SO THAT REASONABLE DEDUCTION CAN BE GIVEN TO THE SECTION AS WELL. IN VIEW OF THE AUTHORITATIVE PRONOUNCEMENT OF THE SUPREME COUR T, THIS COURT CANNOT DECIDE OTHERWISE. HENCE WE DISMISS THE APPEA L WITHOUT ANY ORDER AS TO COSTS. 13. IT CAN BE SEEN FROM THE ABOVE DECISION OF THE HONBLE CALCUTTA HIGH COURT THAT AMENDMENT TO THE PROVISIONS OF SEC.40(A)(IA) O F THE ACT, BY THE FINANCE ACT, 2010 AS AFORESAID WAS HELD TO BE RETROSPECTIVE FROM 1.4.2005. IF THE AMENDMENT IS CONSIDERED AS RETROSPECTIVE FROM 1.4.2 005, THE EFFECT WILL BE THAT PAYMENTS OF TDS TO THE CREDIT OF THE GOVERNMENT ON OR BEFORE THE LAST DATE FOR FILING RETURN OF INCOME U/S.139(1) OF THE ACT FOR T HE RELEVANT AY HAVE TO BE ALLOWED AS DEDUCTION. ADMITTEDLY IN THE CASE OF TH E ASSESSEE PAYMENTS WERE SO MADE BEFORE THE SAID DUE DATE AND IN TERMS OF THE D ECISION OF THE HONBLE CALCUTTA HIGH COURT NO DISALLOWANCE COULD BE MADE B Y THE AO U/S. 40(A)(IA) OF THE ACT. 14. IN VIEW OF THE ABOVE, WE HOLD FOLLOWING THE D ECISION OF THE HONBLE CALCUTTA HIGH COURT, THAT AMENDMENT TO THE PROVISIO NS OF SEC.40(A)(IA) OF THE ACT, BY THE FINANCE ACT, 2010 IS RETROSPECTIVE FROM 1.4.2005. CONSEQUENTLY, ANY PAYMENT OF TAX DEDUCTED AT SOURCE DURING PREVIO US YEARS RELEVANT TO AND FROM AY 05-06 CAN BE MADE TO THE GOVERNMENT ON OR B EFORE THE DUE DATE FOR FILING RETURN OF INCOME U/S.139(1) OF THE ACT. IF PAYMENTS ARE MADE AS AFORESAID, THEN NO DEDUCTION U/S.40(A)(IA) OF THE A CT CAN BE MADE. ADMITTEDLY IN THE PRESENT CASE, THE ASSESSEE HAD DEPOSITED THE TAX DEDUCTED AT SOURCE ON OR BEFORE THE DUE DATE FOR FILING RETURN OF INCOME U/S .139(1) OF THE ACT AND ITA NO. 2458/K/13 SHRI PRAMOD KUMAR TEKRIWAL12 THEREFORE THE IMPUGNED DISALLOWANCE DESERVES TO BE DELETED. WE ORDER ACCORDINGLY AND ALLOW GR.NO.1 OF THE APPEAL BY THE ASSESSEE. 15. GROUND NO.2 RELATES TO CONFIRMATION OF ADDITI ON OF RS.8,76,400/- UNDER THE HEAD PURCHASE DISCOUNT MADE WITHOUT ANY BASIS . IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSE WAS ASKED TO SU BMIT DETAILS OF EACH SUNDRY CREDITOR, MENTIONING THE OPENING BALANCE, TR ANSACTION MADE DURING THE F.Y. I.E., BOTH DEBIT AND CREDIT ENTRIES AND CLOSIN G BALANCE, AS WELL AS THE ASSESSE WAS ALSO REQUESTED TO SUBMIT PARTY-WISE LIS T OF PURCHASE. ON PERUSAL OF THE DETAILS FURNISHED BY THE ASSESSEE, THE AO NOTIC ED THAT THERE WAS DISCREPANCY BETWEEN THE PURCHASE AND SUNDRY CREDITO RS PARTY LEDGER IN RESPECT OF FOLLOWING CASES:- SL.NO. NAME OF THE PARTY AMOUNT (RS.) 01. E.K ENTERPRISE 6,00,000/- 02. JAI AMBE MULTI TRADE LTD 1,50,000/- 03. RIDDHI SIDDHI ENTERPRISE 1,26,400/- TOTAL 8,76,400 16. THE LEDGER COPIES OF THE PARTIES SUBMITTED BY T HE ASSESSEE WERE EXAMINED. IT WAS SEEN THAT IN THE PARTY LEDGER, THE AMOUNT OF PURCHASE ARE CREDITED AND PAYMENTS MADE TO THE PARTIES ARE DEBITED. HOWEVER, IN THREE CASES, AS MENTIONED ABOVE, SOME PAYMENTS WERE ALSO RECEIVED BY THE ASSE SSEE THE SUNDRY CREDITORS AND THAT WERE CREDITED BESIDES THE PURCHASE IN THE PARTY LEDGER AND THAT IS THE ROOT OF CAUSE OF DIFFERENCE BETWEEN THE PURCHASE AND SUN DRY CREDITORS BALANCE. IT IS SEEN FROM THE PARTY LEDGER THAT THE ASSESSEE HAD RE CEIVED PAYMENT FROM M/S. D.K ENTERPRISES FOR RS. 6,00,000/-, JAI AMBE MULTI TRAD E (P) LTD, FOR RS.1,50,000/- ITA NO. 2458/K/13 SHRI PRAMOD KUMAR TEKRIWAL13 AND FROM RIDDHI SIDDHI ENTERPRISE FOR RS. 1,26,440 /- AND THE SAME WERE CREDITED IN THE PARTY LEDGER BESIDES PURCHASE AS AGAINST PAY MENT MADE TO THE PARTY WAS DEBITED IN THE PARTY LEDGER. THE ASSESSEE WAS ASKE D TO CLARIFY THE REASON OF SUCH CREDIT ENTRIES OF AMOUNT RECEIVED FROM THE PARTIES. IN THE COURSE OF ASSESSMENT THE A/RS OF THE ASSESSEE WERE FAILED TO CLARIFY THE SAM E BY PRODUCING RELEVANT DOCUMENTS, PARTY LEDGER ETC. SO, A SHOW CAUSE LETTE R WAS ISSUED TO THE ASSESSEE REQUESTING TO CLARIFY AS TO WHY THE SAME WOULD NOT BE CONSIDERED AS INCOME EARNED BY YOU OTHERWISE WHICH WAS NOT ROUTED THROUG H P & L A/C. IN RESPONSE, THE ASSESSEE HAD SUBMITTED THAT IN FIRST TWO CASE S, CHEQUES WERE ISSUED IN EARLIER YEAR. AS THE SAID CHEQUES WERE NOT CLEARED THE SAME HAD BEEN REVERSED DURING THE YEAR AND IN THE CASE OF RIDDHI SIDDHI ENTERPRIS E THE AMOUNT WAS RECEIVED ON BEHALF OF SISTER CONCERN, M/S. AYUSH STEEL. THIS CO NTENTION OF THE ASSESSEE WAS NOT ACCEPTABLE ON THE GROUND THAT THE ASSESSEE MERE LY STATED IN ITS SUBMISSION DATED 29-11-11 THAT CHEQUES WERE ISSUED BUT NOT CL EARED AND THE SAME HAD BEEN REVERSED BACK, BUT IN SUPPORT OF HIS CONTENTION, TH E ASSESSEE DID NOT PRODUCE ANY SUPPORTING EVIDENCE TO PROVE THAT CHEQUES WERE ISSU ED EARLIER AND THE SAME HAD BEEN REVERSED BACK. MOREOVER, IF THE SAME HAD BEEN REVERSED, THEN A CONTRA ENTRY SHOULD HAVE BEEN PASSED IN THE PARTY LEDGER INSTEAD OF AMOUNT RECEIPT. MOREOVER, IN THE COURSE OF ASSESSMENT, THE LD.AR OF THE ASSES SEE ALSO FAILED TO RECONCILE THE SAME CLEARLY. A FURTHER OPPORTUNITY WAS GIVEN TO TH E ASSESSEE REQUESTING TO CLARIFY AS TO WHY SUCH AMOUNT CREDITED IN PARTY LEDGER SHOU LD NOT BE TREATED AS PURCHASE DISCOUNT IN NATURE. IN RESPONSE TO THE SAME THE LD. AR OF THE ASSESSEE IN HER SUBMISSION DATED 15-12-2011 DEPOSITED IN THE OFFIC E COUNTER SOME UNSIGNED PARTY LEDGER OF THE SUNDRY CREDITORS OF EARLIER YEA R ALONG WITH HER SUBMISSION CLAIMING THAT THESE WERE UNCLEAR CHEQUES AND THE SA ME HAS BEEN REVERSED DURING THE YEAR. THE ASSESSEE'S CONTENTION IS NOT ACCEPTAB LE ON THE GROUND THAT THE ASSESSEE MADE HER SUBMISSION IN THE OFFICE COUNTER, BUT DID NOT GET THE ITA NO. 2458/K/13 SHRI PRAMOD KUMAR TEKRIWAL14 OPPORTUNITY TO PRODUCE THE DOCUMENTS BEFORE THE ASS ESSING OFFICER SO THAT HER CLAIM COULD BE RECONCILED AND VERIFIED WITH THE LAS T YEARS PURCHASE/SUNDRY CREDITORS BALANCE, ETC., AS WELL AS, THROUGH VERIFI CATION OF BOOKS OF ACCOUNTS. MOREOVER, IN THE COURSE OF ASSESSMENT THE A/R OF TH E ASSESSEE APPEARED TO REPRESENT THE CASE AND HAD ACCEPTED HER FAILURE TO RECONCILE THE SAME. SO, MERE FILING OF UNSIGNED LEDGER COPIES OF THE PARTIES IS NOT ACCEPTABLE UNTIL AND UNLESS THE SAME ARE VERIFIED WITH OTHER BOOKS OF ACCOUNTS AND BANK STATEMENTS, ETC. SINCE THE ASSESSEE HAD FAILED TO DO THE SAME, SO, N O COGNIZANCE IS GIVEN TO SUCH UNSIGNED DOCUMENTS PRODUCED BY THE ASSESSEE. MOREOV ER, IT IS ALSO SEEN FROM THE SUBMITTED DOCUMENTS THAT IN THE CASE OF JAI AMBE MU LTI TRADE (P) LTD., IN THE LAST FINANCIAL YEAR 2007-08, A CHEQUE WAS ISSUED FOR RS . 1,50,000/- ON 12.06.2007. THE ASSESSEE CLAIMS THAT SUCH CHEQUE AMOUNT WAS REV ERSED IN THE LEDGER ACCOUNT OF THE FINANCIAL YEAR 2008- 09 ON 01.04.2008 I.E. N EAR ABOUT AFTER ONE YEAR; THE SAME WAS CREDITED. THE CONTENTION OF THE ASSESSEE I S NOT ACCEPTABLE AS NOWHERE IT IS MENTIONED AS REVERSE ENTRY ON THE CONTRARY . IN THE CONFIRMATION SUBMITTED BY THE PARTY IN RESPONSE TO NOTICE ISSUED U/S. 133(6) OF THE I. T. ACT THE SAME HAS BEEN SHOWN AS PAYMENT AND DULY REFLECTED IN THE BAN K ACCOUNT AND FOR THAT REASON THE A/R OF THE ASSESSEE ADMITTED THEIR FAILU RE TO SUBSTANTIATE THEIR , CLAIM OF REVERSAL ENTRY. AS REGARD JAI AMBE MULTI TRADE ( P) LTD. MERE ENTRIES SHOWN IN UNSIGNED PARTY LEDGER, NOT RECONCILED WITH BOOKS OF ACCOUNTS, BANK STATEMENTS, ARE NOT ACCEPTABLE AS IN THE COURSE OF ASSESSMENT I N SPITE OF SEVERAL OPPORTUNITIES GIVEN, THE; A/R OF THE ASSESSEE FAILED TO SUBSTANTI ATE THE FACTS. SO, IT IS CONSIDERED THAT THE ASSESSEE HAD RECEIVED SUCH INCOME IN THE N ATURE OF PURCHASE DISCOUNT FROM THE PARTIES THAT HAD NOT BEEN REFLECTED IN THE P& L A/C. CONSIDERING THE ABOVE, RS. 8,76,400/- IS TREATED AS INCOME OF THE A SSESSEE FOR THE RELEVANT ASSESSMENT YEAR AND THE SAME IS ADDED BACK TO THE T OTAL INCOME OF THE ASSESSEE. ' ITA NO. 2458/K/13 SHRI PRAMOD KUMAR TEKRIWAL15 17. BEFORE THE CIT(A), THE ASSESSEE SUBMITTED AS U NDER:- 'THE ASSESSEE WOULD LIKE TO HUMBLY SUBMIT THAT THE CONTENTION OF THE AO TO TREAT THE AMOUNTS CREDITED IN THE LEDGER OF CRED ITORS ON ACCOUNT OF CHEQUE ISSUED BUT NOT PRESENTED FOR PAYMENT AS PURC HASE DISCOUNT AND SUBSEQUENTLY TREAT THE SAME IS ERRONEOUS AND WITHOU T APPLICATION OF MIND. THE SAME IS NOTHING BUT RESULT OF IMAGINARY . THINKING FROM FERTILE BRAIN. FIRSTLY, EVEN IF THE UNREASONABLE CONTENTION OF AO IS ACCEPTED FOR A MOMENT THAT THE ASSESSEE HAD RECEIVED PURCHASE DISC OUNT IN THAT CASE, AS PER ELEMENTARY ACCOUNTING PRINCIPLES, THE AMOUNT S WOULD NOT HAVE BEEN CREDITED IN THE BOOKS OF SUNDRY CREDITORS BUT DEBITED IN THEIR LEDGER. THUS, THE CONTENTION OF THE AO TO TREAT CRE DIT ENTRIES AS PURCHASE DISCOUNTS IS PRIMA FACIE INCORRECT AND WITHOUT ANY LOGICAL REASONING. FROM THE SHOW CAUSE DATED 24-11-2011, YOUR HONOUR W ILL KINDLY OBSERVE THAT THERE IS NO PURCHASE FROM RIDDHI SIDDH I ENTERPRISES AND THE AO HAS TREATED ENTIRE AMOUNT OF RS.1,26,440/- A S PURCHASE DISCOUNT WITHOUT ANY PURCHASE . FURTHER, IN THE PRESENT CASE, THE ASSESSEE HAD DULY SUBMITTED THE PARTY LEDGER OF EARLIER YEARS TO SHOW THAT THE CREDIT BAL ANCES AS SHOWN IN THE LEDGERS WERE ON ACCOUNT OF PURCHASES. THE LEDGER A CCOUNT OF THE CREDITOR WAS DEBITED WHEN THE CHEQUES WERE ISSUED B UT SINCE THOSE CHEQUES WERE NOT PRESENTED FOR PAYMENT BY THE CREDI TORS TO THE BANK, THEY WERE REVERSED. IT IS NORMAL TRADE PRACTICE THA T AS AND WHEN CHEQUES ARE ISSUED TO THE PARTY, THE SAME ARE DEBITED IN TH E LEDGER ACCOUNTS OF THE PARTY. THE AO ALSO STATED IN THE ASSESSMENT ORDER THAT SIN CE THE ASSESSEE HAS FAILED TO SUBSTANTIATE THE CLAIM WITH THE HELP OF B ANK STATEMENTS IN THE COURSE OF ASSESSMENT THE CONTENTION OF THE ASSESSE E TO TREAT THE AMOUNTS AS CONTRA ENTRIES ARE NOT ACCEPTED. IN THIS REGARD, IT IS HUMBLY SUBMITTED THAT SINCE THE CHEQUES WERE NOT PRESENTED TO BANKS FOR PAYMENTS BY THE CREDITORS, NO DEBITS HAVE BEEN MADE AT THE BANK ACC OUNT OF THE ASSESSEE. THEREFORE, THE BANK STATEMENTS ARE NOT REFLECTING A NY DEBITS FOR CHEQUES WHICH HAVE NOT BEEN PRESENTED FOR PAYMENT . MOREOVER, THE ASSESSEE HAD DULY PRESENTED PARTY LEDGER WHICH CAN BE RECONCILED WITH BOOKS OF ACCOUNTS OF THE ASSESSEE. HOWEVER, DISREGARDING THE SUBMISSION OF THE ASSESSEE, THE AO HAS SIMPLY WORKED ON SUSPICION AND IGNORING THE BASIC ITA NO. 2458/K/13 SHRI PRAMOD KUMAR TEKRIWAL16 PRINCIPLES OF ACCOUNTING PROPOSED TO TREAT THE CONT RA ENTRIES AS PURCHASE DISCOUNTS. VIDE SUBMISSION DATED 15-12-2011, THE ASSESSEE HAD SPECIFICALLY REQUESTED THE AO TO MAKE DIRECT ENQUIRY FROM BOTH T HE PARTIES AS HE HAS ALREADY DONE IN CASE OF SO MANY OTHER CREDITORS. CO PY OF LEDGER FROM DK ENTERPRISES AND JAI JE MULTI TRADE PVT. LTD. FRO M 01-04-2007 TO 31- 03-2009 (I.E. 2 YEARS) AND FURTHER CERTIFICATE FR OM THEM THAT CHEQUE OF RS.1,5O,OOO/- IS REVERSAL OF CHEQUE RECEIVED IN LAS T YEAR WAS SUBMITTED IN ORIGINAL. THE COPY OF LEDGER FROM BOTH THE PARTI ES ARE ENCLOSED HEREWITH AS ANNEXURE 8 AND 9 AND CERTIFICATE FROM J AI AMBE MULTI TRADE PVT. LTD IS ENCLOSED AS ANNEXURE 10.BOTH THE PARTIES ARE ENCLOSED HEREWITH AS ANNEXURE 8 AND 9 AND CERTIFICATE FROM J AI AMBE MULTI TRADE PVT. LTD. IS ENCLOSED AS ANNEXURE 10. THE ASSESSEE HUMBLY SUBMITS THAT THE HON'BLE JURISD ICTIONAL CALCUTTA HIGH COURT IN THE CASE OF SMT. PROTIMA ROY -VS. CIT (1982) 138 ITR 536 (CAL) HAS HELD THAT WHAT IS APPARENT HAS TO BE TAKEN AS REAL UNLESS CONTRARY IS PROVED AND THE ONUS TO PROVE THE CONTRA RY IS ON THE PARTY MAKING ALLEGATION. SIMILAR VIEW HAS ALSO BEEN TAK EN IN THE CASE OF CIT -VS.- DAULAT RAM RAWATMULL (1973) 87 ITR 349 (SE) B Y THE HON'BLE APEX COURT. IN THE PRESENT CASE, THE AO IS MAKING A N ALLEGATION THAT CREDIT ENTRIES MADE IN THE LEDGER OF SUNDRY CREDITO R ACCOUNTS ARE PURCHASE DISCOUNTS, WITHOUT ANY EVIDENCE OF THE SAM E . MOREOVER, THE CONTENTION OF THE AO IS ALSO BASED ON ILLOGICAL REA SONING WHICH ARE EVIDENTLY INCORRECT. IF AT ALL, THE ASSESSEE WOULD HAVE RECEIVED ANY DISCOUNT, IT WOULD HAVE NOT BEEN CREDITED BUT DEB ITED IN THE EDGER. HENCE IT IS PLEADED BEFORE YOUR GOOD SELF TO REJECT THE FALSE AND ILLOGICAL REASONING AS ADVANCED BY THE AO AND TREATING CONTRA ENTRIES IN RELATION TO CHEQUES NOT PRESENTED FOR PAYMENT AS INCOME OF T HE ASSESSEE AND DELETE THE ADDITIONS BASED ON THEM IN THE INTEREST OF JUSTICE. ' 18. THE CIT(A) CONSIDERING THE SUBMISSIONS OF THE ASSESSEE ABOUT THE DISCREPANCIES FOUND BY THE AO WITH REGARD TO THREE PARTIES HELD AS UNDER: 4.2 I HAVE CAREFULLY EXAMINED AND CONSIDERED THE WRITTEN SUBMISSIONS MADE BY THE A.R OF THE APPELLANT AS WELL AS OBSERVA TION OF THE AO. THE CONTENTION OF THE APPELLANT IS NOT ACCEPTABLE AS NO WHERE IT IS MENTIONED ITA NO. 2458/K/13 SHRI PRAMOD KUMAR TEKRIWAL17 AS REVERSE ENTRY ON THE CONTRARY. IN THE CONFIRMAT ION SUBMITTED BY THE PARTY IN RESPONSE TO NOTICE ISSUED U/S. 133(6) OF T HE I.T ACT, THE SAME HAS BEEN SHOWN AS PAYMENT AND DULY REFLECTED IN THE BAN K ACCOUNT, AND FOR THAT REASON, THE A/R OF THE APPELLANT ADMITTED THEI R FAILURE TO SUBSTANTIATE THEIR CLAIM OF REVERSAL ENTRY. AS REGA RD JAI AMBE MULTI TRADE (P) LTD, MERE ENTRIES SHOWN IN UNSIGNED PART Y LEDGER, NOT RECONCILED WITH BOOKS OF ACCOUNTS, BANK STATEMENTS, ARE NOT ACCEPTABLE AS IN THE COURSE OF ASSESSMENT, IN SPITE OF SEVERAL OPPORTUNITIES GIVEN, THE A/R OF THE APPELLANT FAILED TO SUBSTANTIATE THE FACTS. SO, IT IS CONSIDERED THAT THE APPELLANT HAD RECEIVED SUCH IN COME IN THE NATURE OF PURCHASE DISCOUNT FROM THE PARTIES THAT HAD NOT BEE N REFLECTED IN THE P & L A/C. I AM OF THE VIEW THAT I HOLD THE ABOVE ADDITION OF RS.8,76,400/- IS TREATED AS INCOME OF THE APPELLANT FOR THE RELEV ANT ASSESSMENT YEAR AND THE SAME IS ADDED BACK TO THE TOTAL INCOME OF T HE APPELLANT AS MADE BY THE AO. THIS GROUND OF APPEAL IS DISMISSED. 19. WE HAVE HEARD THE RIVAL SUBMISSIONS. IT IS SEEN FROM THE LEDGER ACCOUNT OF JAI AMBE MULTI TRADE PVT. LTD AND & D.K ENTERPRISES FOR 2 YEARS I.E., 2007-08 AND 2008-09 THAT THE ASSESSEE OWED TO THE AFORESAID PARTIES A SUM OF RS.1,50,000/- AND RS.6,00,000/- RESPECTIVELY. THE A SSESSEE ISSUED CHEQUES TO THE AFORESAID PARTIES BUT AS THESE CHEQUES WERE NOT CLEARED THE SAME HAS BEEN REVERSED DURING THE PREVIOUS YEAR. PERUSAL OF COPY OF BANK STATEMENTS AND COMPLETE BANK BOOK SHOWS THAT NO PAYMENT HAS BEEN R ECEIVED FROM THESE PARTIES. THERE IS NO ENTRY IN BANK STATEMENT FOR RE CEIPT OF THESE SAID CHEQUES. FURTHER, THE ACCOUNT BALANCE OF JAI AMBE MULTI TRAD E PVT. LTD IS SAME AS PER ASSESSEES BOOKS OF ACCOUNTS. THEY HAVE NOT ACCOUNT ED ANY AMOUNT AS DISCOUNT GIVEN TO THE ASSESSEE. FROM THE ABOVE ONE CAN INFER THAT THE ASSESSEE HAS NOT RECEIVED ANY PURCHASE DISCOUNT. FURTHER, WHEN A CH EQUE IS REVERSED, THE SAME CAN BE ACCOUNTED ONLY BY WAY OF RECEIPT VOUCHE R IN BANK BOOK. COPY OF LEDGER ACCOUNT FROM BOTH M/S. JAI AMBE MULTI TRADE (P) LTD AND D.K ENTERPRISE FROM 01.04.2007 TO 31.03.2008 AND 01.04. 2008 TO 31.03.2009 WERE ALSO PERUSED IN THIS REGARD. A CONFIRMATION LETTE R FROM JAI AMBE MULTI TRADE (P) LTD THAT CHEQUE OF RS.1,50,000/- WAS REVE RSED, AS IT WAS NOT CLEARED IS ITA NO. 2458/K/13 SHRI PRAMOD KUMAR TEKRIWAL18 ALSO ON RECORD. THEREFORE THE ASSUMPTION THAT IT S HOULD BE INCOME BEING IN THE NATURE OF DISCOUNT IS COMPLETELY BASELESS. 20. THE PERUSAL OF RECORD SHOWS THAT THE AO DID NOT MAKE ANY ENQUIRY FROM THE ABOVE SAID THREE PARTIES. WE ARE OF THE VIEW TH AT AN ENQUIRY FROM THE AFORESAID THREE PARTIES OUGHT TO HAVE BEEN MADE BY THE AO TO FIND OUT THE TRUTH OF CLAIM MADE BY THE ASSESSEE. THE CIT-A ALSO DID NOT MAKE SUCH ENQUIRIES. WE THEREFORE, SET ASIDE THE ORDER OF CI T-A ON THIS ISSUE AND REMANDED THE SAME TO THE AO TO MAKE ENQUIRIES FRO M THE AFORESAID THREE PARTIES AND AFFORDING OPPORTUNITIES TO THE ASSESSEE AND DECIDE THE ISSUE AFRESH. GROUND NO.2 IS ALLOWED FOR STATISTICAL PURPOSES. 21. GROUND NO.3 RELATES TO CONFIRMATION OF DISALLOW ANCE ON MOTOR CAR AND TELEPHONE EXPENSES AND OTHER EXPENSES. 22. THE LD. CIT-A SUSTAINED THE ORDER OF AO ON TH E ISSUE RAISED IN GROUND NO.3 BY OBSERVING AS FOLLOWS:- 6.2 I HAVE CAREFULLY EXAMINED AND CONSIDERED THE WRITTEN SUBMISSION MADE BY THE A.R OF THE APPELLANT AS WELL AS OBSERVATION OF THE AO. THE APPELLANT HAS CLAIMED THAT ALL THE E XPENSES WERE MADE FOR WHOLLY AND EXCLUSIVELY BUSINESS PURPOSE. B UT THE APPELLANTS CONTENTION IS NOT ACCEPTABLE AS PER TAX AUDIT REPORT WHERE IN CLAUSE 17, IT IS MENTIONED THAT PERSONAL N ATURE OF EXPENSES IS INVOLVED IN TELEPHONE AND MOTOR CAR. SO 20% OF T ELEPHONE & MOTOR CAR EXPENSES DEBITED IN P & L A/C I.E 20% OF [RS.3,18,848/- + RS.76,211/-] = RS.79,011/- AND RS.3,910/- ADDITIO NALLY CLAIMED AS TELEPHONE EXPENSES, BEING TREATED AS WHOLLY PERSONA L EXPENSES, I.E TOTALLING TO RS.1,22,921/- IS DISALLOWED AND ADDED BACK TO THE TOTAL INCOME OF THE APPELLANT BY THE AO. IN VIEW OF MY OB SERVATION, I UPHOLD AND CONFIRM THE ADDITION MADE BY THE AO. TH E FAILS ON THIS GROUND AND I DISMISSED GROUND NO.4 OF THE INSTANT A PPEAL. ITA NO. 2458/K/13 SHRI PRAMOD KUMAR TEKRIWAL19 23. HEARD RIVAL SUBMISSIONS. TAKING INTO CONSIDER ATION THE FACT THAT THERE WERE SOME DEFECTS POINTED OUT IN THE TAR [TAX AUD IT REPORT] AND KEEPING IN MIND THAT THERE IS ALWAYS AN ELEMENT OF ESTIMATION INVOLVED IN MAKING SUCH DISALLOWANCES, WE ARE OF THE VIEW THAT THE DISALLOW ANCE SHOULD BE SUSTAINED AT 10% OF EXPENSES AS AGAINST 20% DISALLOWANCE MADE B Y THE REVENUE AUTHORITIES. GROUND NO. 3 IS PARTLY ALLOWED. 24. GROUND NO. 4 RELATES TO CONFIRMATION OF DISALLO WANCE MADE U/S. 24 OF THE ACT. BEFORE THE CIT-A, THE ASSESSEE SUBMITTED AS U NDER:- REGARDING DISALLOWANCE U/S. 24 OF THE ACT OF IN TEREST OF RS.52,771/- ON THE HOUSING LOAN. THE AO HAS OBSERVE D IN HIS ASSESSMENT ORDER AS UNDER:- IN THE COMPUTATION OF TOTAL INCOME, THE ASSESSEE H AD CLAIMED LOSS ON ACCOUNT OF HIS SELF-OCCUPIED HOUSE PROPERTY WHERE HE HAD CLAIMED INTEREST ON LOAN AMOUNTING TO RS.1,50,0 00/-. HOWEVER, FROM THE CERTIFICATE OF LOAN ISSUED BY ICI CI BANK, IT IS SEEN THAT THE HOUSE PROPERTY LOAN WAS SANCTIONED JOINTLY WITH MRS. SANGEETA TEKRIWAL AND INTEREST COMPONENT WAS RS. 1,94,458/- FOR THE RELEVANT FINANCIAL YEAR. SINCE THE ASSESSEE IS ENTITLED FOR LOSS CLAIMED IN RESPECT OF ONLY ONE HOUSE AS SELF-OCCUPIED PROPERTY, AS WELL A S, THE LOAN WAS GRANTED IN JOINT NAMES, SO THE ASSESSEE WAS ELI GIBLE FOR HALF OF THE INTEREST I.E FOR RS. X 1,94,458/-=RS. 97,229/- INSTEAD OF HIS CLAIM OF RS.1,50,000/-. SO, THE ADDI TIONAL CLAIM OF RS. 52,771/- IS DISALLOWED AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSE. 9.1 ON THE OTHER HAND, THE A.R. OF THE APPELLANT HA S SUBMITTED AS UNDER: 'IT IS HUMBLY SUBMITTED THAT ASSESSEE HAD TAKEN THE LOAN AND THE SAME HAS BEEN ACCOUNTED IN HIS BALANCE SHEET TH E ENTIRE INTEREST IS BEING PAID BY ASSESSEE ONLY AND HE HAS NOT RECOVERED ANY INTEREST FROM MRS. SANGEETA TEKRIWAL. THEREFORE, ASSESSEE ONLY IS ELIGIBLE FOR -DEDUCTION UNDER SECTION 24. MRS. SANGEETA TEKRIWAL IS NOT INCURRING ANY ITA NO. 2458/K/13 SHRI PRAMOD KUMAR TEKRIWAL20 INTEREST ON THE HOUSING LOAN FOR THE SAID PROPERTY AND IS THEREFORE NOT ELIGIBLE FOR ANY DEDUCTION UNDER SECT ION 24. SECTION 24 OF THE ACT NOWHERE STATES THAT DEDUCTION WILL BE ALLOWED ONLY TO AN ASSESSEE WHO HAS APPLIED LOAN WI THOUT ASSIGNING ANY CO-APPLICANT. ACTUALLY MRS. SANGEETA TEKRIWAL HAD OBTAINED ANOTHER LOAN FROM ICICI BANK WHICH W AS ACCOUNTED IN HER RETURN AND SHE HAD ALSO PAID IN HE R INDIVIDUAL CAPACITY RS.94,483/- ON ACCOUNT OF PRINC IPAL AND RS.L,2~641/- ON ACCOUNT OF INTEREST SEPARATELY. CER TIFICATE FROM ICICI BANK IS ENCLOSED AND MARKED AS ANNEX. 11. WIT HOUT PREJUDICE TO ABOVE, IF THE CONTENTION OF AO IS ACCE PTED THAT MRS.SANGEETA TEKRIWAL IS ALSO A CO-OWNER OF THE PRO PERTY, IN THAT CASE ALSO ASSESSEE WOULD BE ENTITLED TO CLAIM 100% OF INTEREST AS BORNE BY HIM FOR THE PURPOSES OF SECTIO N 24. THIS IS BECAUSE, AS PER SECTION 26, IF THE PROPERTY IS OWNE D BY CO- OWNERS IS SELF OCCUPIED BY EACH OF THE CO-OWNERS. E ACH CO- OWNER WILL BE ENTITLED TO A DEDUCTION OF RS. 150,00 0/- UNDER SECTION 24(B). THE ACTION OF THE AO TO DISALLOW 50% OF INTEREST IS NOT IN ACCORDANCE PER LAW. IN TERMS OF SECTION 24(B) ASSESSEE IS ELIGIBLE TO C LAIM RS. 1,50, 000/-. ' 9.2 IN VIEW OF THE ABOVE SUBMISSION MADE BY THE A PPELLANT AS WELL AS A.O OBSERVATION I AM OF THE VIEW THAT THE A .O. IS CORRECT IN MAKING 50% DISALLOWED OF INTEREST PAID O N BORROWED LOAN AS THE LOAN WAS SANCTION JOINTLY AND THE SAID PROPERTY IS JOINTLY OWN BY APPELLANT AND HIS WIFE. THEREFORE, I HOLD THE ADDITION OF RS.51,771/- ON THIS ACCOUNT. 25 . AFTER HEARING THE RIVAL SUBMISSIONS, WE ARE OF THE VIEW THAT THE DISALLOWANCE CANNOT BE SUSTAINED. IT APPEARS THAT THE CIT-A HAS ACCEPTED THE ASSESSEES CONTENTION, BUT DUE TO TYPOGRAPHICAL ER ROR, IT HAS BEEN MENTIONED THAT ADDITION IS SUSTAINED. THE SUBMISSION MADE BY THE ASSESSEE BEFORE THE CIT-A CLEARLY SHOWS THAT THE ASSESSEE WILL BE ENTIT LED TO CLAIM DEDUCTION U/S. ITA NO. 2458/K/13 SHRI PRAMOD KUMAR TEKRIWAL21 24(B) OF THE ACT ON THE GROUND EVEN IF THE ASSESS EE IS ASSUMED TO BE A CO- OWNER, YET U/S. 26 OF THE ACT THE CLAIM OF ASSESSEE FOR DEDUCTION OUGHT TO HAVE BEEN ALLOWED. FOR THE REASON GIVEN ABOVE, WE ALLOW GROUND NO.4 RAISED BY THE ASSESSEE. 26. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED ORDER PRONOUNCED IN OPEN COURT ON 27 /07 /2016 SD/- SD/- P.M JAGTAP S.S. VISWANETHRA RAVI ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 27 /07/2016 COPY OF THE ORDER FORWARDED TO 1.. THE APPELLANT/ASSESSEE : SHRI PRAMOD KUMAR TEKRIWAL C/O SHRI KISHAN KANDOI 15 GANGADHAR BABU LANE, 2 ND FLOOR, ROOM NO. 204, KOLKATA-700012. 2 THE RESPONDENT/DEPARTMENT: INCOME TAX OFFICER, WARD-30-(3), KOLKATA AAYKAR BHAVAN DAKSHIN, 2 GARIA HAT ROAD (SOUTH), KOLKATA-700 068. (3) CIT (4) CIT(A) (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL ** PRADIP SPS KOLKATA BENCHES, KOLKATA ITA NO. 2458/K/13 SHRI PRAMOD KUMAR TEKRIWAL22