M/s Lakshmi das Nandy & sons, Raiganj V. Income Tax Officer, Ward - 3(1), Asansol, Asansol

ITA 2493/KOL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99709 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2015
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 28-10-2013
• Court: TRIBUNAL
• Department Lawyers: SNEHOTPAL DUTTA
• Assessee Lawyers: SHRIR N RAM IRSRETD
• Keywords: Additional evidence; Onus to prove
• Section: 143(3); 133(6); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH SMC , KOLKATA [BEFORE HON BLE SHRI MAHAVIR SINGH, JM ] IT A NO.2493 /KOL/2013 ASSESSMENT YEAR : 2008 - 09 ( A PPELLANT ) (RESPONDENT) LAKSHMI DAS NANDY & SONS - VERSUS - I.T.O., WARD - 3(1), RA NIGANJ ASANSOL (PAN: AACFL 2492 D) FOR THE APPELLANT: SHRIR.N.RAM (IRS)(RETD.) FOR THE RESPONDENT: SHRI SNEHOTPAL DUTTA, JCIT DATE OF HEARING : 30 .07 .2015. DATE OF PRONOUNCEMENT : 05.08.2015. ORDER THIS APPEAL OF ASSESSEE ARISES FROM ORDER OF LD. CIT(A) - ASANSOL IN APPEAL NO . 131/C.I.T.(A)/ASL/W - 3(1)/ASL/10 - 11 DATED 30.08 .2013 . ASSESSMENT WAS FRAMED BY I.T.O., WARD - 3(1), ASANSOL U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REF ERRED TO AS THE ACT ) FOR A.Y . 2008 - 09 VIDE ITS ORDER DATED 09.11.2010. 2. THE FIRST ISSUE TO BE DECIDED IN THIS APPEAL IS WHETHER THE LD.CIT(A) IS RIGHT IN CONFIRMING ADDITION OF RS.3,15,767/ - MADE BY THE LD. AO IN RESPECT OF PAYMENTS MADE BY THE ASSE S SEE TO THREE KARIGARS ON THE BASIS OF LETTERS SENT BY THE LD.AO TO THOSE PERSONS WHICH RETURNED UNSERVED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A JEWELLER AND HAD MADE PAYMENTS TO THREE KARIGARS TOWARDS MAKING CHARGES OF JEWELLERY. THE DETAILS OF THE SAME ARE GIVEN BEL OW : - I) SHRI BIJAY KR.ROY : RS.1,05,628/ - II)SHRI AJIT KR.BERA : RS.1,05,977/ - III)PARBATI CHARAN DAS : RS.1,04,162/ - TOTAL : RS.3,15,767/ - ITA NO. 2493/KOL/2013 LAKSHMI DAS NANDY & SONS . A.YR. 2008 - 09 2 THE LD. AO , DURING THE COURSE OF ASSESSMENT PROCEEDINGS BASED ON THE DETAILS OF THE NAMES AND ADDRESS ES OF THE PERSONS TO WHOM THE PAYMENTS MADE BY THE ASSESSEE PRODUCED, RESORTED TO MAKE VERIFICATION U/S 133(6) OF THE ACT AND IT WAS FOUND THAT THE LETTERS ADDRESS ED TO THE AFORESAID THREE PARTIES RETURNED UNSERVED AND THE LD. AO ACCORDINGLY DECIDED THAT THE PARTIE S ARE NOT EXISTING AND DOUBTED THE GENUINENESS OF THE PAYMENTS MADE BY THE ASSESSEE AND MADE THE ADDITION. THE LD. AO ALSO MADE A COMPARATIVE CHART OF THE GROSS PROFIT RATIO AND NET PROFIT RATIO BY COMPARING WITH THE OTHER JEWELLER OF THE SAME LOCALITY TO JUSTIFY HIS ADDITION. AGGRIEVED BY THIS ORDER THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A). BEFORE THE LD. CIT(A) THE ASSESSEE ARGUED THAT PAYMENTS MADE TO THESE PARTIES ARE GENUINE AND COMPARISON OF GROSS PROFIT WAS MADE BY LD. AO WITH ANOTH ER JEWELLER OF THE SAME LOCALITY WITHOUT ASCERTAINING THE EXISTENCE OF PURCHASE AND SALE OF READYMADE ORNAMENTS AND PURCHASE AND SALE MADE BY THE JEWELLER AFTER PURCHASING FRESH GOLD. ON THIS COUNT THE LD. AR OBJECTED THE METHOD OF COMPARISON MADE BY THE LD.AO FOR JUSTIFYING ADDITION IN THIS REGARD. IT WAS FURTHER PLEADED BEFORE THE LD. CIT(A) THAT THE PAYMENTS MADE TO THE KARIGARS ARE GENUINE AND IN SUPPORT OF THE SAME THE ASSESSEE HAD PRODUCED KARIGAR REGISTER ALONG WITH THE COPY OF THE PHOTO ID OF THE P ERSONS TO WHOM THE PAYMENTS WERE MADE. HOWEVER, THIS DID NOT HOLD WATER IN THE MIND OF THE LD. CIT(A) AND CONCLUDED THAT THE GENUINENESS OF THE PAYMENTS WERE NOT PROVED BY THE ASSESSEE. IRONICALLY, THE LD. CIT(A) ALSO PROCEEDED TO ADDRESS THIS ISSUE FROM ANOTHER ANGLE BY APPLYING THE PROVISION S OF SECTION 40(A)(IA) OF THE ACT READ WITH SECTION 194C OF THE ACT AND CONCLUDED THAT THE SUBJECT MENTIONED PAYMENTS WERE NOT SUBJECTED TO DEDUCTION OF TAX AT SOURCE AND ACCORDINGLY DISALLOWANCE, OTHERWISE, IS WARRA NTED U/S 40(A)(IA) OF THE ACT AND UPHELD THE ORDER OF AO IN THIS REGARD. AGGRIEVED BY THIS ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THIS TRIBUNAL ON THE FOLLOWING GROUND : - ITA NO. 2493/KOL/2013 LAKSHMI DAS NANDY & SONS . A.YR. 2008 - 09 3 1. THAT ON THE FACT AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN C ONFIRMING THE ADDITION OF RS.3,15,767/ - MADE BY THE A.O. ON THE GROUND THAT LETTER ISSUED TO 3 KARIGARS RETURNED UNSERVED WHEREAS RELEVANT PAPERS AND DOCUMENTS INCLUDING VOTER ID CARDS/RATION CARDS WERE FURNISHED BEFORE THE A.O. (COPY OF WHICH WERE ALSO SU BMITTED BEFORE THE CIT(A)). 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD.CIT(A) ERRED IN MAKING ADDITION ON ACCOUNT OF PAYMENT MADE TO KARIGARS WITH THE COMMENT THAT MAKING CHARGES WAS IN NATURE OF WORK AND NO TAX WAS DEDUCTED AT SOURCE WHEREA S THE A.O. MADE THE ADDITION ON THE GROUND OF IDENTITY AND NOT ON THE GROUND OF NON - DEDUCTION OF TAX AT SOURCE AND TDS WAS NOT A SUBJECT MATTER BEFORE THE A.O. WHEREAS THE PAYMENTS MADE TO KARIGARS WERE NOTHING BUT WAGES ON THE BASIS OF NO WORK NO PAY BASI S AND THE WAGES PAID TO THEM WITHIN THE PRESCRIBED LIMIT DOES NOT ATTRACT ANY TAX DEDUCTION AT SOURCE. 4. THE LD. AR SHRI R.N.R AM, IAS (RETD.) APPEARED ON BEHALF OF THE ASSESSEE AND SHRI SNEHOTPAL DUTTA, JCIT APPEARED ON BEHALF OF THE REVENUE. 5. THE LD. AR OF THE ASSESSEE ARGUED THAT THE PAYMENTS MADE TO THE KARIGARS ARE ALL GENUINE AND OUT OF THE TOTAL PAYMENTS MADE TOWARDS MAKING CHARGES AMOUNTING TO RS.14,63,330/ - WHICH WERE SUBJECT ED TO VERIFICATION BY THE LD. AO U/S 133(6) OF THE ACT REPRES ENTING VARIOUS PERSONS AND ONLY THREE LETTERS SENT TO THE PARTIES ARE RETURNED UNSERVED WHICH AMOUNTS TO RS.3,15,767/ - IN TOTAL. ACCORDINGLY , HE PRAYED THAT ONE MORE OPPORTUNITY BE GIVEN BEFORE THE LD.AO TO SUBSTANTIATE THE GENUINENESS OF THE PAYMENT S MADE. HE FURTHER ARGUED THAT THE LD.CIT(A) TRAVELLED BEYOND HIS JURISDICTION OF SUSTAINING THE DISALLOWANCE BY APPLYING THE PROVISION OF SECTION 40(A)(IA) OF THE ACT TO TH E SUBJECT MENTIONED TRANSACTION WHICH WAS NOT EVEN CONTEMPLATED OR SUBJECT MATTER O F THE DISALLOWANCE BY THE LD. AO. ACCORDINGLY , HE PLEADED THAT ACTION OF THE LD. CIT(A) IN ADDRESSING THIS ISSUE FROM ANOTHER ANGLE I.E. APPLYING THE PROVISION OF SECTION 40(A)(IA) OF THE ACT IS TOTALLY UNWARRANTED. 6. IN RESPONSE TO THIS, THE LD. DR VEHEMENTLY SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES AND ALSO PLEADED THAT THE PROVISION OF SECTION 40(A)(IA) OF THE ACT IS PART AND PARCEL OF THE STATUTE AND THE LD. CIT(A) IS DUTY BOUND TO FOLLOW THE PROVISION OF SECTION WHILE TAKING THE DECISION. 7. I HAVE HEARD THE RIVAL SUBMISSIONS. IT IS SEEN FROM MATERIALS AVAILABLE ON RECORD THAT ASSES SEE HAS PAID MAKING CHARGES OF R S.14,63,330/ - TO VARIOUS PERSONS WHICH ITA NO. 2493/KOL/2013 LAKSHMI DAS NANDY & SONS . A.YR. 2008 - 09 4 WERE ALL SUBJECTED TO VERIFICATION U/S 133(6) OF THE ACT AND OUT OF THIS IN RESP ECT OF THREE PARTIES AMOUNTING TO RS.3,15,767/ - THE LETTERS ADDRESSED RETURNED UNSERVED. THIS DOES NOT AUTOMATICALLY RESULT IN A SITUATION THAT THE PAYMENTS MADE TO THESE THREE PARTIES ARE INGENUINE. THE LD. AR DID NOT FILE ANY ADDITIONAL EVIDENCE TO SUBST ANTIATE HIS CONTENTIONS EVEN BEFORE THIS TRIBUNAL. HOWEVER, IN THE INTEREST OF JUSTICE AND FAIR PLAY, I FEEL THAT ONE MORE OPPORTUNITY BE GIVEN TO THE ASSESSEE TO PROVE THE GENUINENESS OF HIS PAYMENTS BEFORE THE AO AND I DEEM IT FIT AND APPROPRIATE TO SET ASIDE THIS ISSUE TO THE FILE OF AO. 7.1. IN RESPECT OF INVOKING THE PROVISION OF SECTION 40(A)(IA) OF THE ACT BY THE LD. CIT(A), IF THE ASSESSEE IS ABLE TO PROVE THE GENUINENESS OF THESE PAYMENTS BEFORE THE LD. AO ON FACTS AND ALSO TO PROVE THAT THE RECIPIENT OF THESE PAYMENTS HAD OFFERED THESE RECEIPTS IN HIS/THEIR INCOME TAX RETURNS , THEN APPLYING THE RATIO LAID DOWN BY ITAT, KOLKATA IN THE CASE OF SANTOSH KUMAR KEDIA VS ITO VIDE ITA NO.1905/KOL/2014 ORDER DATED 04.03.2015, DISALLOWANCE SHOULD NOT BE MADE IN THE HANDS OF THE ASSESSEE. ACCORDINGLY, THIS GROUND OF APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 8. THE NEXT ISSUE TO BE DECIDED IN THIS APPEAL IS WHETHER THE LD. CIT(A) IS RIGHT IN CONFIRMING DISALLOWANCE MADE IN THE SUM OF RS.78,000 / - TOWARDS SALARY PAID TO SHRI AMAR NAYAK. 9. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAS CLAIMED STAFF SALA RY AND BONUS TO THE TUNE OF RS. 2,64,000/ - AS DEDUCTION IN THE RETURN OF INCOME WHICH REPRESENTS PAYMENTS MADE TO FOUR PEOPLE. THE N AMES AND ADDRESS OF ALL THE FOUR PERSONS WERE PROVIDED BEFORE THE AO BY THE ASSESSEE. THE LD. AO RESORTED TO VERIFICATION U/S 133(6) OF THE ACT TO TWO PERSONS. I N RESPECT OF NOTICE SENT TO SHRI AMAR NAYAK THE SAME WAS RETURNED UNSERVED AND ACCORDINGLY THE LD. AO CONCLUDED THAT THE BURDEN OF PROOF AS TO WHETHER THE SAID SALARY PAYMENT IS BONAFIDE SHIFTS ON THE ASSESSEE AND PROCEEDED TO DISALLOW THE SAME IN THE ASSESSMENT. ITA NO. 2493/KOL/2013 LAKSHMI DAS NANDY & SONS . A.YR. 2008 - 09 5 AGGRIEVED BY THIS ORDER, THE ASSESSEE HAS CHALLENGED BEFORE THE LD.CIT(A), WHO UPHELD THE DISALLOWANCE MADE BY THE LD. AO IN THIS REGARD FOR WANT OF FURTHER PROOF. AGGRIEVED BY THIS ORDER, THE ASSESSEE HAS CHALLENGED THIS ISSUE BEFORE THIS TRIBUNAL ON THE FOLLOWING GROUND : - 3. THAT ON THE FACT AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A ) ERRED IN CONFIRMING THE ADDITION OF RS.78,000/ - ON ACCOUNT OF SALARY PAID TO ONE SRI AMAR NAYAR @ RS.6000/ - P.M. ON THE GROUND THAT LETTER ISSUED TO HIM RETURNED UNSERVED WHEREAS NECESSARY PAPERS AND DOCUMENTS IN RESPECT OF IDENTITY AND GENUINENESS OF TH E PAYMENTS WERE FURNISHED BEFORE THE AO AND ALSO BEFORE THE CIT(A). 10. THE LD. AR SHRI R.N.RAM, APPEARED ON BEHALF OF THE ASSESSEE AND SHRI SNEHOTPAL DUTTA, JCIT APPEARED ON BEHALF OF THE REVENUE. 11. THE LD.AR VEHEMENTLY ARGUED THAT THE TO TAL SALARY PAYMENT WORKS OUT TO 1.2% OF THE TOTAL TURNOVER OF THE ASSESSEE AND ALSO FILED CONFIRMATION FROM SHRI AMAR NAYAK TOGETHER WITH THE PROOF OF HIS VOTER ID AND ACCORDINGLY PRAYED FOR DELETION OF ADDITION. 12. IN RESPONSE TO THIS, THE LD. DR V EHEMENTLY SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 13. I HAVE HEARD THE RIVAL SUBMISSIONS. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ADDITION MADE BY THE AO ON THE BASIC PREMISE THAT THE LETTERS ADDRESSED TO CONCERNED EMPLOYEE I.E. SHRI A MAR NAYAK HAD RETURNED UNSERVED DOES NOT AUTOMATICALLY RESULT IN EXPENDITURE BEING CONSIDERED INGENUINE. IT IS ALSO SEEN FROM PAGES 33 TO 35 OF THE PAPER BOOK FILED BY THE AR THAT CONFIRMATION FROM SHRI AMAR NAYAK TOGETHER WITH VOTER ID AND ADDRESS PROOF A RE ON RECORD AND HENCE THE EXISTENCE OF THE PERSON IS PROVED BEYOND DOUBT. THIS CONFIRMATION WAS NOT REFUTED BY THE LD. DR. I ALSO AGREE THAT THE TOTAL STAFF SALARY TO THE TUNE OF RS.2,64,000/ - COMPRISING OF FOUR PERSONS WHICH , WHEN COMPARED TO THE TOTAL S ALES OF RS.2,06,24,961/ - REPORTED BY THE ASSESSEE , WORKED OUT TO 1.28% OF THE TURNOVER. IN VIEW OF THESE FACTS AND CIRCUMSTANCES OF THE CASE, I HAVE NO HESITATION TO DELETE THE ADDITION MADE IN THE SUM ITA NO. 2493/KOL/2013 LAKSHMI DAS NANDY & SONS . A.YR. 2008 - 09 6 OF RS.78,000/ - TOWARDS SALARY PAID TO SHRI AMAR NAYAK. THIS GROUND OF APPEAL IS ALLOWED. 14. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWE D . O RDER PRONOUNC ED IN TH E COURT . SD/ - [MAHAVIR SINGH] JUDICIAL MEMBER DATE: 05.08.2015. R.G.(.P. S.) COPY OF THE ORDER FORWARDED TO : 1 . M/S. LAKSHMI DAS NANDY & SONS, 57, M.G.ROAD, RANIGANJ - 713347. 2 THE I.T.O., WARD - 3(1), ASANSOL . 3 . THE CIT, 4. THE CIT(A) - ASANSOL 5 . DR, KOLKATA BENCHES, KOLKATA TRUE COPY , BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES