Chandreswar Prasad, Asansol V. Income Tax Officer, Ward - 2(3), Asansol, Asansol

ITA 2494/KOL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99710 (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: A
• Assessment Year: 2007-2008
• Appeal Filed On: 28-10-2013
• Court: TRIBUNAL
• Department Lawyers: SNEHOTPAL DUTTA
• Assessee Lawyers: R N RAM IRSRETD
• Keywords: Opportunity of being heard; Revised return
• Section: 40A(3); 143(3); 139(5)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH SMC KOLKATA [BEFORE HON BLE S HRI MAHAVIR SINGH, JM ] ITA NO .2494 /KOL/2013 ASSESSMENT YEAR : 2007 - 08 ( A PPELLANT ) (RESPONDENT) CHANDRESWAR PRASAD - VERSUS - I.T.O., WARD - 2 (3) , ASANSOL ASANSOL (PAN: AERPP 8243 B) FOR THE APPELLANT: SHRI R.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 F ROM ORDER OF CIT(A) - ASANSOL IN APPEAL NO . 35/C.I.T.(A)/ASL/W - 2(3)/ASL/09 - 10 DATED 27.08 .2013 . ASSESSMENT WAS FRAMED BY I.T.O., WARD - 2(3), ASANSOL U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REF ERRED TO AS THE ACT ) FOR A.YR . 2007 - 08 VIDE ITS ORDE R DATED 30.09.2009. 2. THE FIRST ISSUE TO BE DECIDED IN THIS APPEAL IS WHETHER THE LD. CIT(A) IS RIGHT IN CONFIRMING ADDITION MADE IN THE SUM OF RS.1,80,057/ - ON ACCOUNT OF OUTSTANDING LIABILITY WHICH WAS CURED BY THE ASSESSEE BY SUBMITTING THE REVISE D RETURN WITHIN THE PRESCRIBED TIME LIMIT U/S 139(5) OF THE ACT. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA D SHOWN CERTAIN DUES PAYABLE TO CAPITAL PHOTO SERVICE PVT. LTD. AND SKY COMPUTER & TELECOM IN THE BALANCE SHEET AS OUTSTANDING LIA BILITY AND THE SAME WERE DULY RECTIFIED BY THE ASSESSEE BY FILING THE REVISED RETURN WHICH WAS WITHIN THE TIME LIMIT STIPULATED U/S 139(5) OF THE ACT. THE LD. AO IGNORED THE REVISED RETURN FILED BY THE ASSESSEE AND PROCEEDED TO MAKE DISALLOWANCE OF RS.1,80 ,057/ - AS FICTITIOUS LIABILITY. ITA NO. 2494/KOL/2013 CHADRESWAR PRASAD A.YR. 2007 - 08 2 AGGRIEVED BY THIS ORDER, THE ASSESSEE CHALLENGED THIS ISSUE BEFORE LD.CIT(A). THE LD. CIT(A) GAVE DIRECTION TO THE AO TO CONSIDER ALL RECEIPTS AND PAYMENTS IN RESPECT OF TRANSACTIONS WITH THESE TWO CONCERNS I.E. CAPITAL PH OTO SERVICE PVT. LTD. AND SKY COMPUTER & TELECOM BASE D ON INVOICE AND PAYMENT RECEIP TS AND IF THERE IS ANY DIFFERENCE RETAIN THIS ADDITION TO THAT EXTENT. AGGRIEVED BY THIS ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THIS TRIBUNAL ON THE FOLLOWING GRO UNDS : - 1. THAT ON THE FACT AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION MADE BY THE AO AMOUNTING TO RS.1,80,057/ - ON ACCOUNT OF OUTSTANDING LIABILITY WHICH WAS CURED BY THE APPELLANT BY SUBMITTING A REVISE RETURN WITHIN THE STIPULATED TIME WHICH THE CIT(A) ERRED IN NOT TREATING THE REVISED RETURN AS REVISED RETURN WITHOUT ADJUDICATING THE ENTRIES MADE IN THE REVISED RETURN AND WITHOUT MAKING ANY ENQUIRY ABOUT THE FIGURES MENTIONED IN THE REVISED RETURN. 2. THAT ON THE FAC T AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN NOT ACCEPTING THE VARIOUS JUDICIAL PRONOUNCEMENTS WHICH CLEARLY STIPULATES THAT WHEN THE REVISED RETURN IS FILED IN TIME THE SAME HAS BEEN SUBSTITUTED FOR ORIGINAL RETURN AND THE ASSESSMENT CAN BE COM PLETED ONLY ON THE BASIS OF REVISED RETURN AND THE SAME CANNOT BE IGNORED. 5. SHRI R.N.RAM APPEARED ON BEHALF OF THE ASSESSEE AND SHRI SNEHOTPAL DUTTA, JCIT APPEARED ON BEHALF OF THE REVENUE. 6. THE LD. AR OF THE ASSESSEE ARGUED THAT THE OUTS TANDING LIABILITIES THAT WERE THE SUBJECT MATTER OF THE ADDI TION AMOUNTING TO RS.1,80,057/ - IN RESPECT OF CAPITAL PHOTO SERVICE PVT. LTD. AND SKY COMPUTER & TELECOM WERE GENUINE AND THE SAME HAVING DULY RECTIFIED BY THE ASSESSEE BY FILING THE REVISED RETU RN WITHIN THE TIME STIPULATED U/S 139(5) OF THE ACT, IN SUPPORT OF WHICH HE HAS SUBMITTED THE FOLLOWING FACTUAL MATRIX : I)DATE OF FILING OF ORIGINAL RETURN OF INCOME 29.10.2007 II)DUE DATE OF FILING OF RETURN OF INCOME 31.10.2007 III)DATE OF FILING O F REVISED RETURN OF INCOME 19.03.2009 IV)DATE OF COMPLETION OF ASSESSMENT U/S 143(3) 30.09.2009 BASED ON THE AFORESAID FACTS AND IN VIEW OF THE REVISED RETURN BEING FILED WITHIN THE TIME LIMIT PRESCRIBED U/S 139(5) OF THE ACT , THE LD. AR ARGUED THAT TH E AO OUGHT NOT TO ITA NO. 2494/KOL/2013 CHADRESWAR PRASAD A.YR. 2007 - 08 3 HAVE MADE ADDITION IN THIS REGARD IN THE SUM OF RS.1,80,057/ - AND ACCORDINGLY PRAYED FOR DELETION OF ADDITION ON THIS ISSUE. 7. IN RESPONSE TO THIS, THE LD. DR VEHEMENTLY SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 8. I H AVE HEARD THE RIVAL SUBMISSION S . I AGREE WITH THE FACT THAT THE ASSESSEE HAS FILED THE REVISED RETURN WITHIN THE TIME LIMIT PRESCRIBED U/S 139(5) OF THE ACT IN THE INSTANT CASE BY CURING CERTAIN DEFECTS THAT WERE PREVAILING ON THE LIABILITY SIDE OF THE BAL ANCE SHEET. IT IS SEEN FROM MATERIALS AVAILABLE ON RECORD THAT THE LD. CIT(A) DID NOT GIVE ANY FINDING AS HOW THE AO IS JUSTIFIED IN MAKING THIS ADDITION. IT IS ALSO SEEN THAT THE LD. CIT(A) IN PARA - 1 5 OF HIS ORDER HAD DI RECTED THE LD. AO TO MAKE CERTAIN V ERIFICATIONS IN RESPECT OF THE SUBJECT MENTIONED ADDITION, WHICH POWER IS NOT VESTED WITH HIM AS PER THE PROVISION OF SECTION 251(1)(A) OF THE ACT WHICH READS AS UNDER : - 251(1)(A) IN DISPOSING OF AN APPEAL, THE COMMISSIONER (APPEALS) SHALL HAVE THE FOLLO WING POWERS : (A)IN AN APPEAL AGAINST AN ORDER OF ASSESSMENT, HE MAY CONFIRM, REDUCE, ENHANCE OR ANNUL THE ASSESSMENT. FROM THE ABOVE, IT IS SEEN THAT THE POWER OF SETTING ASIDE BY THE LD. CIT(A) TO THE FILE OF AO WITH OR WITHOUT DIRECTIONS HAS BEEN OMIT TED FROM STATUTE W.E.F. 01.06.2001 BY THE FINANCE ACT, 2001. HOWEVER, THE REVENUE IS NOT IN APPEAL BEFORE US ON THIS GROUND. HENCE I REFRAIN TO GIVE ANY FINDING IN THIS REGARD. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN VIEW OF THE FACT THA T THE ASSESSEE HAS DULY CUR ED THE DEFECTS BY FILING THE REVISED RETURN WITHIN THE TIME STIPULATED U/S 139(5) OF THE ACT, I DEEM IT FIT AND APPROPRIATE TO SET ASIDE THIS ISSUE TO THE FILE OF AO WITH THE DIRECTION TO CONSIDER THE REVISED RETURN AND TAKE A D ECISION IN RESPECT OF THIS ADDITION IN ACCORDANCE WITH LAW. NEEDLESS TO MENTION, THE ASSESSEE BE GIVEN REASONABLE OPPORTUNITY OF BEING HEARD. ITA NO. 2494/KOL/2013 CHADRESWAR PRASAD A.YR. 2007 - 08 4 9. T HE NEXT ISSUE TO BE DECIDED IN THIS APPEAL IS TO WHETHER THE LD. CIT(A) IS RIGHT IN UPHOLDING THIS ADDI TION AMOUNTING TO RS.8,88,556/ - MADE U/S 40A(3) OF THE ACT IN RESPECT OF CASH PAYMENTS MADE BY THE ASSESSEE TO THE VENDORS THROUGH AN AGENT. 10. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE MADE PAYMENTS BY CASH IN EXCESS OF RS.20,000/ - ON VARIO US DATES WHICH ARE MENTIONED IN PAGE - 3 OF THE ASSESSMENT ORDER TOTALING TO RS.8,88,556/ - TO VARIOUS PARTIES FOR HIS PURCHASES. THE AO INVOKED THE PROVISION OF SECTION 40A(3) OF THE ACT AND DISALLOW ED 20% OF THE TOTAL SUM IN THE ASSESSMENT. AGGRIEVED BY TH IS ORDER, THE ASSESSEE HAS CHALLENGED BEFORE THE LD.CIT(A), WHO CONFIRMED THE DISALLOWANCE MADE BY THE LD. AO REJECTING THE CONTENTIONS OF THE ASSESSEE THAT THE SUBJECT MENTIONED PAYMENTS ARE GOVERNED BY EXCEPTIONS MENTIONED IN RULE 6DD OF INCOME TAX RULE S, 1963 AS THE PAYMENTS WERE MADE BY THE ASSESSEE THROUGH AN AGENT. AGGRIEVED BY THIS ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THIS TRIBUNAL ON THE FOLLOWING GROUNDS : - 3. THAT ON THE FACT AND CIRCUMSTANCES OF THE CASE THE LD.CIT(A) ERRED IN CONFIR MING THE DISALLOWANCE OF RS.888556/ - MADE BY THE A.O. U/S 40A(3) ON ACCOUNT OF CASH PAYMENTS EXCEEDING R S.20,000/ - WHEREAS ENTIRE CASH PAYMENT WAS MADE THROUGH AN AGENT AND ANY CASH PAYMENT EXCEEDING RS.20,000/ - PAID THROUGH AN AGENT FALLS UNDER THE EXCEPT ION PROVIDED UNDER RULE 6DD(1) AND IS BEYOND THE AMBIT OF SECTION 40A(3) . 4. THAT ON THE FACT AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN NOT EXAMINING THE AGENT WHO SUBMITTED AN AFFIDAVIT THAT ENTIRE CASH PAYMENT WAS MADE THROUGH HIM AND IN VIEW OF VARIOUS JUDICIAL PRONOUNCEMENTS AN AFFIDAVIT CANNOT BE IGNORED WITHOUT EXAMINING ITS CONTENTS AND DEPONENTS. 11. THE LD. AR STATED THAT THE SUBJECT MENTIONED PAYMENT FOR PURCHASES MADE BY THE ASSESSEE WERE MADE THROUGH AN AGENT AS THE ASSESSEE STAYS IN ASANSOL AND THE PURCHASES ADMITTED LY ARE MADE FROM A PARTY IN KOLKATA AND PLEADED THAT THE SUBJECT MENTIONED PAYMENTS ARE SQUARELY COVERED UNDER THE EXCEPTION TO RULE 6DD(K) OF I.T.RULES, 1963. THE LD. AR ALSO STATED THAT DURING THE REMAND PROCEED INGS BY THE LD. CIT(A), THE LD. AO GOT CONFUSED BETWEEN THE THEN RULE 6DD(K) AND THE PRESENT ITA NO. 2494/KOL/2013 CHADRESWAR PRASAD A.YR. 2007 - 08 5 6DD(L) AND ACCORDINGLY STATED THAT THE SUBJECT MENTIONED PAYMENTS THROUGH AN AGENT DO NOT FALL UNDER THE EXCEPTIONAL CLAUSE WHICH WERE RELIED UPON BY THE LD.CIT(A) . HE FURTHER ARGUED THAT THE LD. CIT(A) DID NOT GIVE ANY FINDING TO SUPPORT THE SUSTENANCE OF DISALLOWANCE MADE BY THE LD. AO. HE FURTHER ARGUED THAT AFFIDAVIT FROM THE AGENTS WERE DULY FILED BEFORE THE LOWER AUTHORITIES AND CONFIRMATION FROM THE ULTIMATE VENDOR THAT THE PAYMENTS FOR THESE PURCHASES WERE MADE BY THE ASSESSEE THROUGH AN AGENT , WERE ALSO FILED. ON THIS ARGUMENT HE PLEADED THAT DISALLOWANCE BE DELETED. 12. IN RESPONSE TO THIS, THE LD. DR STATED THAT THERE WAS NO WRITTEN AGREEMENTS BETWEE N THE ASSESSEE AND HIS AGENT AND VEHEMENTLY SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 13. I HAVE HEARD THE RIVAL SUBMISSIONS. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, IT IS SEEN THAT THE LD. AO HAD NOT DISPUTED THE FACT THAT THE ASSESSEE STA YS IN ASANSOL AND PURCHASES FOR HIS BUSINESS ARE MADE FROM A PARTY IN KOLKATA. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE HAS MADE PAYMENTS FOR PURCHASES THROUGH AN AGENT. IT IS ALSO SEEN FROM RECORDS THAT AFFIDAVIT WAS DULY FILED BY THE AGENTS CONFIRMIN G THE RECEIPT OF MONEY FROM THE ASSESSEE IN THE CAPACITY OF AN AGENT ; THAT THE ULTIMATE SELLER HAD ALSO CONFIRMED THAT HE HAD RECEIVED THE PAYMENTS FROM THE ASSESSEE THROUGH AN AGENT . HENCE , THE SUBJECT MENTIONED PAYMENTS FALL UNDER THE EXCEPTION TO R ULE 6DD(K) OF INCOME TAX RULES, 1963 WHICH IS REPRODUCED AS UNDER : - 6DD(K) WHERE THE PAYMENT IS MADE BY ANY PERSON TO HIS AGENT WHO IS REQUIRED TO MAKE PAYMENT IN CASH FOR GOODS OR SERVICES ON BEHALF OF SUCH PERSON. HENCE, THE CASE OF THE ASSESSEE IS SQUARELY COVERED UNDER THE EXCEPTION TO RULE 6DD(K) OF I.T.RULES, 1963 AND HENCE, I HAVE NO HESITATION TO DELETE THE ADDITION MADE U/S 40A(3) OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. ITA NO. 2494/KOL/2013 CHADRESWAR PRASAD A.YR. 2007 - 08 6 14. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNC ED IN TH E COURT . SD/ - [MAHAVIR SINGH] JUDICIAL MEMBER DATE: 05.08.2015. R.G.(.P.S.) COPY OF THE ORDER FORW ARDED TO : 1 . CHANDRESWAR PRASAD, PROP. PHOTO KIGN, G.C.MITRA ROAD, ASANSOL - 713301. 2 I.T.O., WARD - 2 (3), ASANSOL. 3 . THE CIT, 4. THE CIT(A) - ASANSOL. 5 . DR, KOLKATA BENCHES, KOLKATA TRUE COPY , BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES