Sri Sutanu Mahanty, Kolkata V. JCIT, Rg-53, Kolkata, Kolkata

ITA 302/KOL/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1477 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 11-10-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 25-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARINDAM BHATTACHARJEE
• Section: 143(3); 133(6); 194C

Judgement Text

, D , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH D KOLKATA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO.302/KOL/2015 ASSESSMENT YEAR:2010-11 SRI SUTANU MAHANTY PROP. OF DREAMZ ADVERTISING, 148, REGENT ESTATE, KOLKATA-92 [ PAN NO.AKJPM 6950 G ] / V/S . JCIT, RANG-53, AAYAKAR BHAWAN DAKSHIN, 2, GARIAHAT ROAD, (S), KOLKATA-68 /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI SUBASH AGARWAL, ADVOCATE /BY RESPONDENT SHRI ARINDAM BHATTACHARJEE, ADDL. CIT-DR /DATE OF HEARING 31-01-2018 /DATE OF PRONOUNCEMENT 19-02-2018 /O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-7, KOLKATA DATED 04.02.2015. ASSESSME NT WAS FRAMED BY JCIT, RANGE- 53, KOLKATA U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 20.03.2013 FOR ASSESSMEN T YEAR 2010-11. THE GROUNDS RAISED BY THE ASSESSEE PER ITS APPEAL ARE AS UNDER: - 1) FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS NUT JUSTIFIED IN CONFIRMING THE ADDITION OF RS .1,32,25,980/- MADE BY THE LD. AO ON ACCOUNT OF DISPLAY RENTAL PAYMENTS FOR S ITES BY WRONGLY INVOKING THE PROVISION OF SEC. 40(A)(IA). ITA NO.302/KOL/2015 A.Y. 2010-11 SRI SUTANU MAHANTY VS. JCIT, RG-53 KO L. PAGE 2 2) THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR DELETE ALL OR ANY OF THE GROUNDS OF APPEAL. SRI SUBASH AGARWAL, LD. ADVOCATE APPEARED ON BEHALF OF ASSESSEE AND SHRI ARINDAM BHATTACHARJEE, LD. DEPARTMENTAL REPRESENTATIVE APPE ARED ON BEHALF OF REVENUE. 2. THE ONLY ISSUE RAISED BY THE ASSESSEE IS THAT LD . CIT(A) ERRED IN CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFICER FOR 1,32,25,980/- ON ACCOUNT OF NON DEDUCTION OF TDS ON RENTAL PAYMENTS MADE TO VARIOUS PARTIES UNDER SECTION 40(A)(IA) OF THE ACT. 3. BRIEFLY STATED FACTS ARE THAT ASSESSEE IS AN IND IVIDUAL AND ENGAGED IN THE BUSINESS OF PROVIDING HOARDING SITES TO THE ADVERTI SING COMPANIES. THESE SITES WERE ACQUIRED BY THE ASSESSEE DIRECTLY FROM THE LICENSOR / OWNERS AND ON SUB LICENSE BASIS. THE ASSESSEE IS ALSO DEALING IN THE TRADING OF THES E ADVERTISING SITES. THE AO DURING THE ASSESSMENT PROCEEDINGS OBSERVED THAT THE ASSESS EE HAS INCURRED MAJOR EXPENSES ON DISPLAY RENTAL CHARGES FOR RS.1,77,62,130/- WHICH W ERE PAID TO THE OWNER OF THE SITES, GOVERNMENT AND TO THE SUB LICENSEE. THE ASSESSEE DE DUCTED TDS ONLY ON RS.45,36,150/- AND FAILED TO DEDUCT TDS ON THE BAL ANCE PAYMENT OF RS.1,32,25,980/-. THEREFORE, THE AO DISALLOWED THE SAME ON ACCOUNT OF NON-DEDUCTION OF TDS UNDER SECTION 40(A)(IA) OF THE ACT AND ADDED TO THE TOTAL INCOME OF ASSESSEE. 4. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A). THE ASSESSEE BEFORE LD. CIT(A) SUBMITTED THAT THERE WAS THE PAYM ENT OF DISPLAY RENTAL CHARGES TO CERTAIN PARTIES WHICH WAS BELOW THE LIMIT AS SPECIF IED UNDER SECTION 194C & 194I OF THE ACT. BUT THE AO FAILED TO CONSIDER THE SAME DUR ING THE ASSESSMENT PROCEEDINGS. SIMILARLY THE PAYMENT OF DISPLAY RENTAL CHARGES WAS PAID TO THE GOVERNMENT WHERE THE ASSESSEE WAS NOT UNDER THE OBLIGATION OF TDS UNDER SECTION 196 OF THE ACT. THE LD. CIT-A CALLED FOR THE REMAND REPORT FROM THE AO WHO, IN TURN, SUBMITTED THAT THE ASSESSEE HAS FAILED TO PRODUCE THE BOOKS OF ACC OUNTS, THEREFORE THE PAYMENT TO THE PARTIES WAS NOT VERIFIED. THE AO ALSO IN HIS REMAN D REPORT OBSERVED CERTAIN DISCREPANCIES IN THE DETAILS OF DISPLAY RENTAL CHAR GES AS PER THE STATEMENT FILED BY THE ASSESSEE ON 26.09.2014 AND STATEMENT FILED ON 14.10 .2014. IN BOTH THE STATEMENT THERE WAS DISCREPANCIES IN THE AMOUNT OF EXPENSES I.E. DI SPLAY RENTAL CHARGES CLAIMED BY THE ITA NO.302/KOL/2015 A.Y. 2010-11 SRI SUTANU MAHANTY VS. JCIT, RG-53 KO L. PAGE 3 ASSESSEE. SUCH DISCREPANCIES ARE RECORDED ON PAGE N O. 4 TO 5 OF THE LD. CIT(A) ORDER. THE AO DURING REMAND PROCEEDINGS ISSUED NOTICES U/S 133(6) OF THE ACT TO THE PARTIES FOR THE VERIFICATION OF THE EXPENSES. BUT IN MANY C ASES THE NOTICES WERE RETURNED BACK AND IN SOME CASES THERE WAS MISMATCH IN THE FIGURES SHOWN BY THE ASSESSEE AND THE PARTIES. ACCORDINGLY THE LD. CIT(A) DISREGARDED THE CONTENT IONS OF THE ASSESSEE AND CONFIRMED THE ORDER OF THE AO BY OBSERVING:- IN VIEW OF THE ABOVE FACTS IT CAN BE SAFELY CONCLU DED THAT THE STATEMENTS FILED BY THE ASSESSEE ARE INCORRECT, BASELESS AND MANIPUL ATED. THIS CONCLUSION ALSO DERIVES FORCE FROM THE FACT THAT THE ASSESSEE HAS N OT PRODUCED ANY BOOKS OF ACCOUNT SO AS TO ALLOW HIMSELF THE LEVERAGE TO CHAN GE HIS STATEMENTS AS PER REQUIREMENT. THE ASSESSEE SEEMS TO HAVE TAKEN THE PEA OF NON APP LICABILITY OF TDS AS PER SEC. 194I AND 194C AS PAYMENT MADE TO THE LICENSOR OR LICENSEE TO CREATE A FIREWALL WHICH WILL DEFLECT ANY CLAIM OF CHARGEABIL ITY OF THE TDS FROM THE RENTALS ON PAYMENTS WHICH HAVE ESCAPED TDS. THE ASS ESSEE HAS PURPOSEFULLY NEVER PRODUCED ANY BOOKS OF ACCOUNT SO THAT THE STA TEMENT FILED IS NOT VERIFIED / ASCERTAINED. SINCE MAJORITY OF THE NOTICE U/S. 133( 6) ISSUED TO VERIFY THE TRANSACTION HAVE RETURNED UNSERVED, THE TRANSACTION S WITH THE SAID PARTIES REMAIN NOT VERIFIED. AS ALREADY MENTIONED EARLIER, DISCREPANCIES HAVE BEEN NOTED WHEN SOME OF THE CONFIRMATIONS FILED IN RESPO NSE TO NOTICE U/S. 133(6) ARE CORRELATED WITH THE STATEMENT FILED BY THE ASSESSEE . THE APPELLANT NOT FILE ANY DETAIL IN SUPPORT OF HIS ARGUMENT THAT TDS DO NOT REQUIRE TO DEDUCT ON THE SAID PAYMENTS. THE APPELLA NT ALSO NOT PRODUCE THE BOOKS OF ACCOUNT BEFORE THE ASSESSING OFFICER TO VE RIFY THE DETAILS FILED BY THE APPELLANT. THE DETAILS FILED BY THE AUTHORIZED REPR ESENTATIVE OF THE APE ITSELF CONTRADICTORY AS MENTIONED BY THE ASSESSING OFFICER IN THE REMAND REPORT THAT DETAIL FILED ON 26.09.2014 ARE DIFFERENT FROM THE D ETAIL FILED ON 14.10.2014. THEREFORE, THE SUBMISSION OF THE APPELLANT HAS NO V ALUE. CONSIDERING THE ABOVE OBSERVATION AND REMAND REPORT OF THE ASSESSING OFFICER, I AM OF THE VIEW THAT THE ACTION OF THE ASSESSING O FFICER TO DISALLOW RS.1,32,25,980/- UNDER SECTION 40(A)(IA) OF THE INC OME-TAX ACT, 1961 IS AS PER LAW. THEREFORE, I CONFIRM THE ADDITION MADE BY THE ASSESSING OFFICER OF RS.1,32,25,980/- UNDER SECTION 40(A)(IA) OF THE INC OME-TAX ACT, 1961. THIS GROUND IS NOT ALLOWED. BEING AGGRIEVED BY THE IMPUGNED ORDER OF LD CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 5. THE LD. AR BEFORE US FILED A PAPER BOOK RUNNING FROM PAGES 1 TO 80 AND SUBMITTED THAT BOOKS WERE NOT PRODUCED DURING REMAN D PROCEEDING AS THE ASSESSEE ITA NO.302/KOL/2015 A.Y. 2010-11 SRI SUTANU MAHANTY VS. JCIT, RG-53 KO L. PAGE 4 WAS UNABLE TO LOCATE THEM. BUT THE BOOKS OF ACCOUNT S WERE AVAILABLE AND PRODUCED AT THE TIME ORIGINAL ASSESSMENT PROCEEDING. THE LD. A. R. IN SUPPORT OF ASSESSEES CLAIMS HAS ALSO FILED THE AFFIDAVIT WHERE IT WAS UNDERTAKE N TO PRODUCE THE BOOKS OF ACCOUNTS BEFORE THE A.O. BY THE ASSESSEE. THE LD. AR ALSO SUBMITTED THAT THERE WERE VARIOUS P ARTIES TO WHOM DISPLAY RENTAL CHARGES WERE PAID AND PAYMENT MADE TO THEM WAS BELO W THE LIMIT AS SPECIFIED U/S 194-I AS WELL AS 194-C OF THE ACT. THUS, NO DISALLO WANCE CAN BE MADE ON ACCOUNT OF PAYMENT TO SUCH PARTIES. SIMILARLY THE LD. AR ALSO SUBMITTED THAT IN RESPECT OF CERTAIN PAYMENTS THE TDS WAS DEDUCTED AT A RATE LOWER THAN THE RATE PRESCRIBED U NDER THE PROVISION OF LAW. THUS NO DISALLOWANCE CAN BE MADE IN RESPECT OF SUCH PAYMENT . THE LD AR ALSO SUBMITTED THAT CERTAIN PAYMENTS WERE SUBJECT TO DEDUCTION OF TDS U/S 194-I OF THE ACT BUT AO DISALLOWED THE ENTIRE PAYME NTS ON ACCOUNTS OF NON-DEDUCTION OF TDS U/S 194-C OF THE ACT. THUS, THE FINDING OF T HE AO IS BASED ON WRONG ASSUMPTIONS OF THE FACTS. THE LD AR IN SUPPORT OF H IS CLAIM HAS FILED THE DETAILS OF THE PAYMENT IN RESPECT OF DISPLAY RENTAL CHARGES DEPICT ING THE FOLLOWING DETAILS : 1. PARTIES TO WHOM THE PAYMENTS WAS MADE AFTER DEDUCTI ON OF TDS. 2. PARTIES TO WHOM PAYMENT WAS MADE AT LESSER RATE OF TDS, 3. DETAILS OF PARTIES WHOSE PAYMENTS ARE NOT ELIGIBLE TO DEDUCT TDS. THE CHART FILED BY THE ASSESSEE IS REPRODUCED BELOW :- A. TOTAL DISPLAY RENTAL ON WHICH TDS REQUIRED TO B E DEDUCTED U/S. 194C (AT PAGE 7 & 8 OF THE PAPER BOOK) (A) TDS DEDUCTED ON 68,68,932.00 (B) SHORT DEDUCTION OF TDS 55,26,122.00 (C) TDS NOT DEDUCTED 10,74,960.00 LESS : PAID TO AD WISE INDIA TOWARDS VINYLE MOUNTING CHARGES WONGLY ENTERED IN THE STATEMENT 92,200.00 9,82,760.00 1,33,77,814.00 B. DISPLAY RENTAL ON WHICH TDS NOT REQUIRED TO BE DEDUCTED U/S. 194C 19,54,464.00 (AT PAGE 27 & 28 OF THE PAPER BOOK) ITA NO.302/KOL/2015 A.Y. 2010-11 SRI SUTANU MAHANTY VS. JCIT, RG-53 KO L. PAGE 5 C. DISPLAY RENTAL ON WHICH TDS NOT REQUIRED TO BE DEDUCED U/S. 194I 16,80,26 4.00 (AT PAGE 28 & 29 OF THE PAPER BOOK) D. DISPLAY RENTAL ON WHICH TDS NOT REQUIRED TO BE DEDUCTED U/S.196 (GOVT / GOV T. BODY) 7,49,589.00 (AT PAGE 29 O F THE PAPER BOOK) TOTAL DISPLAY RENT 1,77,62,131.00 (AT PAGE 2 OF THE PAPER BOOK) IN VIEW OF ABOVE, LD AR PRAYED TO THE BENCH TO REST ORE THE MATTER TO THE FILE OF AO FOR FRESH ADJUDICATION IN ACCORDANCE TO THE PROVISION O F THE LAW. ON THE OTHER HAND LD DR RAISED NO OBJECTION IF THE MATTER IS RESTORED BACK TO THE FILE OF AO FOR FRESH ADJUDICATION IN ACCORDANCE TO THE P ROVISION OF LAW. 6. WE HAVE HEARD THE RIVAL CONTENTION OF BOTH PARTI ES AND PERUSED THE MATERIAL AVAILABLE ON RECORDS AS WELL AS THE PROVISIONS OF A CT RELIED UPON. THE FACTS OF THE CASE HAVE BEEN ELABORATELY EXPLAINED IN THE PRECEDING PA RAGRAPH, THEREFORE FOR THE SAKE OF BREVITY WE ARE INCLINED NOT TO REPEAT THE SAME. THE DISALLOWANCE ON ACCOUNT OF NON- DEDUCTION OF TDS WAS SUGGESTED BY THE AO IN THE REM AND REPORT ON THE GROUND THAT ASSESSEE FAILED TO PRODUCE BOOKS OF ACCOUNTS IN SUP PORTS OF HIS CONTENTION. IT IS UNDISPUTED FACTS THAT THE ASSESSEE PRODUCED BOOKS O F ACCOUNTS DURING ORIGINAL PROCEEDINGS AS EVIDENT FROM THE FINDING OF THE AO A S REPRODUCED BELOW:- IN RESPONSE TO THE NOTICES ISSUED SRI SHYAMAL DAS, ACCOUNTANT OF THE ASSESSEE ATTENDED FROM TIME TO TIME AND PRODUCED TH E BOOKS OF ACCOUNT AND OTHER DETAILS CALLED FOR. HOWEVER, THE ASSESSEE FAILED TO PRODUCE THE SAME DU RING REMAND PROCEEDINGS BECAUSE HE FAILED TO LOCATE THE SAME. IT WAS ALSO SUBMITTED THAT BOOKS WERE NOT LOCATED AS THESE PERTAIN TO THE EARLIER YEAR. HOWEVER IN VIEW OF ABO VE FINDING OF THE AO, THE POSSIBILITY OF NON-EXISTENCE OF BOOKS OF ACCOUNTS IS RULED OUT. THE DISALLOWANCE WAS MADE BY THE LOWER AUTHORITIES MAINLY DUE TO NON-PRODUCTION OF B OOKS OF ACCOUNTS. THUS ASSESSEE HAS FILED A COPY OF AFFIDAVIT UNDERTAKING TO FILE T HE SAME BEFORE THE LOWER AUTHORITIES. THE CONTENT OF THE AFFIDAVIT ARE AS UNDER:- I, SUTANU MAHANTDY, AGED ABOUT 39 YEARS, BY OCCUPA TION BUSINESS BY NATIONALITY INDIAN, BY RELIGION HINDU, RESIDING AT 148, REGENT ESTATE, KOLKATA- 700092 DO HEREBY SOLEMNLY AFFIRM AND DECLARE AS FOL LOWS: ITA NO.302/KOL/2015 A.Y. 2010-11 SRI SUTANU MAHANTY VS. JCIT, RG-53 KO L. PAGE 6 1. THAT I AM IN THE ADVERTISING BUSINESS AND MY ASS ESSMENT FOR A.Y 2010-11 WAS COMPLETED U/S. 143(3) ON 20.03.2013. 2. THAT I FILED AN APPEAL BEFORE CIT(A) AGAINST TH E SAID ASSESSMENT. 3. THAT DURING THE PENDENCY OF MY APPEAL BEFORE CIT (A)-7, MY A/RS SRI GOPAL KUMAR AND / OR SHYAMAL DAS, ACCOUNTANT APPEARED BEF ORE THE AO DURING REMAND PROCEEDINGS ON 26.09.2014 AND ON 14.10.14 AN D FILED REQUISITE DETAILS. 4. THAT THE A/RS COULD NOT PRODUCE THE BOOKS OF ACC OUNT BEFORE THE AO SINCE THE MATTER PERTAINED TO THE EARLIER YEAR 2009-10 AN D THE COMPLETE SET OF BOOKS COULD NOT BE LOCATED AT THE RELEVANT TIME. 5. THAT THE AO ISSUED NOTICES U/S. 133(6) BEHIND TH E BACK OF THE ASSESSEE AND NEVER DID HE CONFRONT THE ASSESSEE WITH THE COPIES OF REPLIES RECEIVED FROM THE PARTIES. 6. THAT THE COMPLETE SET OF BOOKS OF ACCOUNT HAVE N OW BEEN LOCATED. 7. THAT THE ASSESSEE NOW UNDERTAKES TO PRODUCE THE BOOKS OF ACCOUNT BEFORE THE AO IF PROVIDED WITH AN OPPORTUNITY. THAT THE STATEMENT MADE IN PARAGRAPHS 1 TO 6 ABOVE ARE TRUE TO THE BEST OF MY KNOWLEDGE AND BELIEF AND PARAGRAPH IS AN UNDERTAKIN G GIVEN BY ME. DEPONENT, SD/- SUTANU MA HANTY IN VIEW OF ABOVE FACTS, WE ARE INCLINED TO GIVE ONE MORE OPPORTUNITY TO THE ASSESSEE TO PRODUCE BOOKS OF ACCOUNTS BEFORE THE AO. THEREFORE IN INTEREST OF JUSTICE AND FAIR PLAY WE RESTORE THE MATTER BACK TO THE FILE OF AO FOR FR ESH ADJUDICATION IN ACCORDANCE WITH THE PROVISION OF LAW AND IN LIGHT OF ABOVE STATED D ISCUSSION. HENCE, THE GROUND OF APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATIST ICAL PURPOSES. 7. IN THE RESULT, FOR STATISTICAL PURPOSE, THE APPEAL OF ASSESSEE IS TREATED AS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 19/02/2018 SD/- SD/- ( % ') ( ') (S.S.VISWANETHRA RAVI) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER *DKP, SR.P.S ) - 19/02/2018 / KOLKATA / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-SRI SUTANU MAHANTY, PROP. OF DREAMZ ADVE RTISING, 148 REGENT ESTAT E, KOLKATA-92 2. /RESPONDENT-JCIT, RANG-53, AAYAKAR BHAWAN DAKSHIN,2 GARIAHAT ITA NO.302/KOL/2015 A.Y. 2010-11 SRI SUTANU MAHANTY VS. JCIT, RG-53 KO L. PAGE 7 ROAD, (S), KOLK AT-68 3. , - / CONCERNED CIT 4. - - / CIT (A) 5. . %%, , , / DR, ITAT, KOLKATA 6. 2 / GUARD FILE. BY ORDER/ , /TRUE COPY/ SR. PRIVATE SECRETARY HEAD OF OFFICE/DDO ,,