ITO, Ward - 28(3), Kolkata, Kolkata V. M/s. Mobile Media, Kolkata

ITA 375/KOL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99840 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2015
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 09-03-2012
• Court: TRIBUNAL
• Department Lawyers: SANJAY M UKHERJEE JCITLD
• Assessee Lawyers: MURTHY FCA LD
• Keywords: Unexplained cash credit; Opportunity of being heard; Non-deduction of tax
• Section: 68; 143(3); 194C

Judgement Text

ITA NO. 375/KOL/2012-C-AM M/S. MOBILE MEDIA, KOL. 1 IN THE INCME TAX APPELLATE TRIBUNAL, C BENCH, KO LKATA BEFORE : SHRI MAHAVIR SINGH,JUDICIAL MEMBER, AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER I.T.A NO. 375/KOL/2012 A.Y : 2007-08 I. T. O WARD 28(3), KOLKATA VS. M/S. MOBILE MEDIA, KOLKATA PAN: AAJFM 0397D (APPELLANT) (RESP ONDENT) FOR THE APPELLANT/DEPARTMENT: SHRI SANJAY M UKHERJEE, JCIT/LD.DR FOR THE RESPONDENT/ ASSESSEE: SHRI M .S MURTHY, FCA, LD.AR DATE OF HEARING: 07-10-2015 DATE OF PRONOUNCEMENT: 12 -10-20 15 ORDER SHRI M.BALAGANESH, AM THIS APPEAL OF THE REVENUE ARISES OUT OF THE ORDER OF THE LEARNED CITA IN APPEAL NO. 280/CIT(A)-XIV/KOL/09-10 DATED 26-12-20 11 FOR THE ASST YEAR 2007-08 PASSED AGAINST THE ORDER OF ASSESSMENT FRAMED BY TH E LEARNED AO U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS TH E ACT). 2. SHRI.SANJAY MUKHERJEE, JCIT, THE LEARNED DR ARG UED ON BEHALF OF THE REVENUE AND SHRI. M.S.MURTHY, FCA, THE LEARNED AR ARGUED ON BEHALF OF THE ASSESSEE. 3. THE FIRST ISSUE TO BE DECIDED IN THIS APPEAL I S THAT WHETHER THE DISALLOWANCE U/S 40(A)(IA) OF THE ACT AMOUNTING TO RS. 1,85,714/- TO WARDS REPAIRS AND MAINTENANCE COULD BE MADE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE AS SESSEE CLAIMED A DEDUCTION TOWARDS REPAIRS AND MAINTENANCE CHARGES OF RS. 2,69,714/- P AID TO M/S A.B. ENTERPRISES . THE SAME WAS DISALLOWED BY THE LEARNED AO U/S 40(A)(IA) FOR NON-DEDUCTION OF TAX AT ITA NO. 375/KOL/2012-C-AM M/S. MOBILE MEDIA, KOL. 2 SOURCE ON THE PRETEXT THAT THE SAME IS DEBITED UNDE R THE HEAD REPAIRS AND MAINTENANCE AND ACCORDINGLY IT IS LIABLE FOR DEDUCTION OF TAX A T SOURCE IGNORING THE SUBMISSIONS OF THE ASSESSEE. ON FIRST APPEAL, THE LEARNED CITA HE LD THAT RS. 84,000/- PAID TO M/S A.B. ENTERPRISES WOULD COME UNDER THE AMBIT OF TDS PROVISIONS AND THE BALANCE SUM OF RS. 1,85,714/- REPRESENTS PURCHASE OF MATERIALS ON VARIOUS DATES AND HENCE THE SAME ARE NOT LIABLE FOR DEDUCTION OF TAX AT SOURCE. AGG RIEVED, THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUND:- 1. THAT THE LD. CIT(A) ERRED IN LAW AS WELL AS ON FACTS IN DELETING THE DISALLOWANCE OF RS.1,85,714/- MADE BY THE AO U/S. 194C READ WITH 40(A)9IA) UNDER THE HEAD REPAIR AND MAINTENANCE CHARGES ON THE PLEA THAT THE SAID PAYMENT PERTAIN S TO PURCHASE OF MATERIALS ON WHICH TDS PROVISIONS ARE NOT APPLICABL E, WHEREAS THE FACTS SHOW THAT THE PAYMENT MADE BY THE ASSESSEE UN DER THE SAID HEAD, CLEARLY ATTRACTED THE PROVISIONS OF SEC. 194C . 3.2. THE LEARNED DR VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED AO. IN RESPONSE TO THIS, THE LEARNED AR ARGUED THAT A CLEAR FINDING HAS BEEN GIVEN BY THE LEARNED CITA IN PARA 5.2 OF HIS ORDER AND NO INTERFERENCE I S CALLED FOR IN THIS REGARD. 3.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE FINDINGS GIVEN BY THE LEA RNED CITA IS NOT REFUTED BY THE REVENUE BEFORE US . WE FIND THAT A SUM OF RS. 1,85 ,714/- PERTAINS TO PURCHASE OF ELECTRICAL ITEMS FOR WHICH OBVIOUSLY NO DEDUCTION O F TAX AT SOURCE IS WARRANTED AND HENCE NO DISALLOWANCE U/S 40(A)(IA) OF THE ACT COUL D BE INVOKED ON THE SAME. HENCE WE ARE NOT INCLINED TO INTERFERE WITH THE FINDINGS OF THE LEARNED CITA IN THIS REGARD. ACCORDINGLY, THE GROUND NO. 1 RAISED BY THE REVENUE IS DISMISSED. 4. THE SECOND ISSUE TO BE DECIDED IN THIS APPEAL I S THAT WHETHER THE DISALLOWANCE U/S 40(A)(IA) OF THE ACT AMOUNTING TO RS. 7,39,000/- TO WARDS PRINTING CHARGES COULD BE MADE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. ITA NO. 375/KOL/2012-C-AM M/S. MOBILE MEDIA, KOL. 3 4.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASS ESSEE CLAIMED A DEDUCTION TOWARDS PRINTING CHARGES AMOUNTING TO RS. 14,53,092/- PAID TO M/S CALCUTTA CHROMOTYPE PVT LTD (RS. 11,66,880/-) FOR PURCHASE OF BUSINESS DIRE CTORY AND TO THE STATESMAN (RS. 2,86,212/-) FOR PUBLISHING VARIOUS ADVERTISEMENTS O F CLIENTS. THE SAME WAS DISALLOWED BY THE LEARNED AO U/S 40(A)(IA) FOR NON- DEDUCTION OF TAX AT SOURCE. ON FIRST APPEAL, THE LEARNED CITA HELD THAT NO EVIDENC ES WERE SUBMITTED BY THE ASSESSEE EVEN BEFORE HIM EXCEPT PRODUCING BILLS FOR PURCHASE OF INFOPAGES BOOKS FROM CALCUTTA CHROMOTYPE PVT LTD TO THE TUNE OF RS 7,39,000/- ( 3 82000+357000) AND GRANTED RELIEF TO THAT EXTENT AS THE SAME WOULD NOT BE LIABLE FOR DEDUCTION OF TAX AT SOURCE. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US ON TH E FOLLOWING GROUND:- 2. THAT THE LD. CIT(A) ERRED IN LAW AS WELL AS ON FACTS IN DELETING THE DISALLOWING OF RS.7,39,000/- MADE BY T HE AO U/S. 194C READ WITH 40(A)(IA) UNDER THE HEAD PRINTING CHARGE S PAIDON THE GROUND THAT THE SAID PAYMENT PERTAINS TO PURCHASE O F MATERIALS ON WHICH TDS PROVISIONS ARE NOT APPLICABLE, WHEREAS, T HE FACTS SHOW THAT THE PAYMENT MADE BY THE ASSESSEE UNDER THE SAI D HEAD CLEARLY ATTRACTED THE PROVISIONS OF SEC. 194C. 4.2. THE LEARNED DR VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED AO. IN RESPONSE TO THIS, THE LEARNED AR ARGUED THAT A CLEA R FINDING HAS BEEN GIVEN BY THE LEARNED CITA IN PARA 6.3 OF HIS ORDER AND NO INTERF ERENCE IS CALLED FOR IN THIS REGARD. 4.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE FINDINGS GIVEN BY THE LEA RNED CITA IS NOT REFUTED BY THE REVENUE BEFORE US . WE FIND THAT A SUM OF RS. 7,39 ,000/- PERTAINS TO PURCHASE OF DIARIES FOR BUSINESS DIRECTORY FOR WHICH OBVIOUSLY NO DEDUCTION OF TAX AT SOURCE IS WARRANTED AND HENCE NO DISALLOWANCE U/S 40(A)(IA) O F THE ACT COULD BE INVOKED ON THE SAME. HENCE WE ARE NOT INCLINED TO INTERFERE WITH THE FINDINGS OF THE LEARNED CITA IN THIS REGARD. ACCORDINGLY, THE GROUND NO. 2 RAISED BY THE REVENUE IS DISMISSED. ITA NO. 375/KOL/2012-C-AM M/S. MOBILE MEDIA, KOL. 4 5. THE THIRD ISSUE TO BE DECIDED IN THIS APPEAL I S WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ADDITION U/S 68 OF T HE ACT COULD BE MADE IN THE SUM OF RS. 41,03,182/- IN RESPECT OF LOANS RECEIVED BY THE ASSESSEE FROM VARIOUS PARTIES. 5.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE AS SESSEE WAS IN RECEIPT OF FOLLOWING LOANS FROM THE FOLLOWING PARTIES :- NAME OF THE PARTY AMOUNT OF LOAN (RS.) DATE OF SUBMISSION OF CONFIRMATION M/S. M.S.GRAPHICS PVT LTD 15,00,000/- 15-12-2009 SRI BISWANATH MUKHERJEE 1,00,000/- 15.12.2009 M/S.BABCOCK ENGINEERING SERVICES 8,00,000/- 22-12-2009 MS. NITASHA SHAH 5,00,000/- 22-12-2009 M/S. NEVADA UDYOG 11,75,000/- 22-12.2009 THE ASSESSEE PLEADED THAT ALL THESE LOANS WERE RECE IVED BY IT BY WAY OF ACCOUNT PAYEE CHEQUES FROM THE AFORESAID PARTIES . THE ASSESSEE PRODUCED THE NAMES AND ADDRESSES FROM WHOM THE LOANS WERE RECEIVED BY IT DURING THE ASSESSMENT YEAR BEFORE THE LEARNED AO. THE LEARNED AO NOTICED THAT THE CONFIR MATIONS WERE FILED FOR FIRST TWO PARTIES WHICH WAS DEFECTIVE AS ONE PARTY HAD NOT EV EN SIGNED THE CONFIRMATION AND THE OTHER PARTY SRI BISWANATH MUKHERJEES PAN DETAILS W ERE NOT GIVEN FOR VERIFICATION. THE CONFIRMATIONS FOR THE BALANCE THREE PARTIES WER E FILED ON 22.12.2009 WHICH WAS AFTER THE DATE OF COMPLETION OF ASSESSMENT ON 21.12 .2009. THE LEARNED AO FOUND THAT IDENTITY OF PARTIES , CREDITWORTHINESS OF PARTIES A ND GENUINITY OF THE TRANSACTIONS WHICH ARE THREE ESSENTIAL INGREDIENTS OF SECTION 68 OF TH E ACT WERE NOT PROVED BY THE ASSESSEE DESPITE GIVING SEVERAL OPPORTUNITIES TO THE ASSESSE E AND ACCORDINGLY ADDED THE SAME U/S 68 OF THE ACT. ON FIRST APPEAL, THE ASSESSEE PRODU CED ALL THE LOAN CONFIRMATIONS BEFORE THE LEARNED CITA WHO ALSO SOUGHT CLARIFICATIONS FRO M THE LEARNED AO WITH REGARD TO CONFIRMATIONS RECEIVED FROM M/S M.S.GRAPHICS PVT LT D AND SRI BISWANATH MUKHERJEE AND ALSO HELD THAT IN RESPECT OF ALL THE PARTIES , THE ASSESEE HAD DULY FILED THE NAMES, ITA NO. 375/KOL/2012-C-AM M/S. MOBILE MEDIA, KOL. 5 ADDRESS, CONFIRMATIONS, PAN DETAILS AND INFORMATION THAT THE MONIES RECEIVED BY ACCOUNT PAYEE CHEQUES. ACCORDINGLY THE LEARNED CI TA FELT THAT THE ASSESSEE HAD DULY DISCHARGED HIS ONUS IN TERMS OF SECTION 68 OF THE A CT AND DELETED THE ADDITION. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US ON TH E FOLLOWING GROUND:- 3. THAT THE LD.CIT(A) ERRED IN LAW AS WELL AS ON F ACTS IN DELETING THE ADDITION OF RS.41,03,182/- MADE BY THE AO, UNDER THE HEAD UNEXPLAINED CASH CREDIT SIMPLY RELYING ON TH E LOAN CONFIRMATION AND A CASE LAW, CIT VS. LOVELY EXPORT (P) LTD 216 ITR 195(SC) WITHOUT CONSIDERING THE FACTS THAT THE CONTENTS OF THE SAID LOAN CONFIRMATION DID NOT ESTABLISH THE IMPUGN ED LOAN CONCLUSIVELY. 5.2. THE LEARNED DR VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED AO. IN RESPONSE TO THIS, THE LEARNED AR ARGUED THAT THE ASSESSEE HA D FULLY DISCHARGED ITS ONUS IN TERMS OF SECTION 68 OF THE ACT BY PROVING THE IDENTITY OF THE PARTIES , GENUINITY OF THE TRANSACTIONS AND CREDITWORTHINESS OF THE PARTIES. HE FURTHER STATED THAT THE LEARNED AO HAD AGREED FOR THE FIRST TWO INGREDIENTS BUT HAD ON LY DOUBTED THE CREDITWORTHINESS OF THE PARTIES. HE ARGUED THAT THE ONUS SHIFTS ON THE REVENUE TO MAKE FURTHER ENQUIRIES, IF NEED BE, TO SATISFY THEMSELVES ABOUT THE CREDITWORT HINESS OF THE PARTIES WHO HAD ADVANCED MONIES TO THE ASSESSEE. 5.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE HAD GIVEN THE NA MES AND ADDRESSES OF THE PARTIES FROM WHOM LOANS WERE RECEIVED BY HIM TOGETHER WITH THE CONFIRMATIONS AND PAN DETAILS OF THOSE PARTIES. HOWEVER, WE FIND THAT TH E LEARNED AO HAD DOUBTED THE CREDITWORTHINESS OF THE PARTIES WHO HAD ADVANCED MO NIES TO THE ASSESSEE. WE FIND THAT THE ENTIRE LOANS HAVE BEEN RECEIVED ONLY BY ACCOUNT PAYEE CHEQUES WHICH FACT IS NOT DISPUTED BY THE REVENUE. WE FIND THAT THE ASSESSE E HAD FILED CONFIRMATIONS FROM ALL THE FIVE PARTIES. HOWEVER, IN RESPECT OF CONFIRMA TION FROM LAST THREE PARTIES NAMELY BABCOCK ENGINEERING SERVICES, MS. NITASHA SHAH AND NEVADA UDYOG, THE SAME WERE ITA NO. 375/KOL/2012-C-AM M/S. MOBILE MEDIA, KOL. 6 FILED BEFORE THE LEARNED AO AFTER THE COMPLETION OF ASSESSMENT. HENCE OBVIOUSLY THE SAME WERE NOT AVAILABLE FOR VERIFICATION BY THE LEA RNED AO. IN RESPECT OF CONFIRMATION FILED FROM FIRST TWO PARTIES FILED BEF ORE THE LEARNED AO, NO VERIFICATION WAS CARRIED OUT ON THE SAME BY HIM. HENCE WE DEE M IT FIT AND APPROPRIATE IN THE INTEREST OF JUSTICE AND FAIR PLAY, TO SET ASIDE THI S ISSUE TO THE FILE OF THE LEARNED AO AND VERIFY THE VERACITY OF THE CONFIRMATIONS FILED BY T HE ASSESSEE FROM THE FIVE PARTIES AND DECIDE THIS ISSUE AFRESH UNINFLUENCED BY EARLIER DE CISION AFTER GIVING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE A SSESEE IS GIVEN LIBERTY TO ADDUCE FRESH EVIDENCES AND DOCUMENTS TO SUPPORT HIS CONTEN TIONS. ACCORDINGLY, THE GROUND NO. 3 RAISED BY THE REVENUE IS ALLOWED FOR STATISTI CAL PURPOSES. 6. THE LAST ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER ADDITION OF RS. 12,44,819/- COULD BE MADE UNDER THE HEAD BUSINESS PROMOTION EXPENSES IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 6.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE LEA RNED AO DISALLOWED A SUM OF RS. 12,44,819/- TOWARDS BUSINES PROMOTION EXPENSES ON T HE PRETEXT THAT IT WAS ON THE HIGHER SIDE AS COMPARED TO THE TURNOVER OF THE BUSI NESS FOR THE CURRENT YEAR VIS A VIS THE IMMEDIATELY PRECEDING PREVIOUS YEAR. MOREOVER, THE ASSESSEE ALSO HAD NOT PRODUCED ANY BILLS AND EVIDENCES TO JUSTIFY THE CLA IM OF DEDUCTION BEFORE THE LEARNED AO. ON FIRST APPEAL, THE ENTIRE BILLS AND VOUCHERS TOGETHER WITH SUPPORTING DOCUMENTS WERE FILED BY THE ASSESSEE BEFORE THE LEARNED CITA WHO IN TURN OBTAINED THE REMAND REPORT FROM THE LEARNED AO FOR THE SAME AND DELETED THE ADDITION. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GRO UND:- 4. THAT THE LD. CIT(A) ERRED IN LAW AS WELL AS ON FACTS IN DELETING THE ADDITION OF RS.12,44,819/-, MADE BY TH E AO UNDER THE HEAD BUSINESS PROMOTION EXPENSESWITHOUT CONSIDER ING THE FACTS AS NARRATED BY THE AO IN HIS REMAND REPORT. ITA NO. 375/KOL/2012-C-AM M/S. MOBILE MEDIA, KOL. 7 6.2. THE LEARNED DR VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED AO. IN RESPONSE TO THIS, THE LEARNED AR ARGUED THAT THE AS SESSEE HAD FILED THE COMPLETE DETAILS OF BUSINESS PROMOTION EXPENSES BEFORE THE L EARNED CITA WHICH WERE ALSO SUBJECTED TO VERIFICATION BY THE LEARNED CITA DURIN G REMAND PROCEEDINGS AND ACCORDINGLY PLEADED FOR NON-INTERFERENCE IN THE ORD ER OF THE LEARNED CITA IN THIS REGARD. 6.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE LEARNED CITA HAD DELETED T HE ADDITION AFTER OBTAINING THE REMAND REPORT FROM THE LEARNED AO IN THIS REGARD. WE ALSO FIND FROM THE REMAND REPORT, NO ADVERSE REMARKS WERE MADE BY THE LEARNED AO WITH REGARD TO THE SUBJECT MENTIONED BUSINESS PROMOTION EXPENSES. THE REVENU E HAD NOT REFUTED THE FINDINGS OF THE LEARNED CITA THAT THE SAID EXPENDITURE WERE INC URRED WHOLLY AND EXCLUSIVELY ONLY FOR THE BUSINESS PURPOSES OF THE ASSESSEE. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, WE HOLD THAT THE ORDER OF THE LEARNED CITA IN THIS REG ARD DOES NOT REQUIRE ANY INTERFERENCE. ACCORDINGLY, THE GROUND NO. 4 RAISED BY THE REVENUE IS DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS PART LY ALLOWED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON 12 / 10 /2015 SD/- ( MAHAVIR SINGH, JUDICIAL MEMBER ) SD/- (M. BALAGANESH, ACCOUNTANT MEMBER) DATE 12 /10/2015 ITA NO. 375/KOL/2012-C-AM M/S. MOBILE MEDIA, KOL. 8 COPY OF THE ORDER FORWARDED TO: 1.. THE APPELLANT: I T O W 28(3), AAYKAR BHAVAN DA KSHIN 3 RD FL., 2 GARIAHAT ROAD SOUTH, KOL-68. 2 THE RESPONDENT-M/S. MOBILE MEDIA 55 PANCHANANTAL A LANE, BEHALA, KOL-34 3 4.. /THE CIT, / THE CIT(A) 5. DR, KOLKATA BENCH 6. GUARD FILE. TRUE COPY, BY ORDER, ASSTT REGISTRAR ** PRADIP SPS