Sri Balaram Debnath, Nadia V. ITO, Wd-4, Nadia, Nadia

ITA 404/KOL/2014

• Counselvise Citation: 40423514 RSA 2014
• Duration Of Justice: 1 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 07-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBHRAJOTI BHATT ACHARYAY
• Assessee Lawyers: P S GUPTA; A K CHAKRABORTY
• Keywords: Non-deduction of tax
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH SMC, KOLKATA (BEFORE SHRI P. M. JAGTAP, ACCOUNTANT MEMBER) ITA NO. 404/KOL/2014 : AS STT. YEAR : 2007-2008 SRI BALARAM DEBNATH PAN: AGGPD 3813L VS ITO, WARD-4, NADIA (APPELLANT) (RESPONDENT) APPELLANT BY : S/SHRI A.K.CHAKRABORTY & P.S.GUPT A, ADVOCATE RESPONDENT BY : SHRI SUBHRAJOTI BHATT ACHARYAY, JCIT, SR.DR DATE OF HEARING : 10.09.2015 DATE OF PRONOUNCEMENT : 07.10.2015 ORDER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XXXVI, KOL KATA DATED 30.12.2013 FOR THE ASSESSMENT YEAR 2007-08. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L, WHO IS ENGAGED IN THE BUSINESS OF DEALING IN CIGARETTE AND CLOTH U NDER THE NAME AND STYLE OF HIS PROPRIETARY CONCERN M/S. J.N. TRADERS AND JAY NETAI BHANDER. THE RETURN OF INCOME FOR THE YEAR UNDER CO NSIDERATION WAS FILED BY HIM ON 31.10.2007 DECLARING TOTAL INCOME O F RS.2,51,520/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED BY THE AO FROM THE CONFIRMATION RECEIVED FROM M/S. VST INDUST RIES LTD., ONE OF THE SUPPLIERS OF THE ASSESSEE THAT CREDIT NOTES TOT ALING TO RS.18,53,325/- WERE ISSUED BY THE SAID PARTY IN FAVOUR OF THE ASSE SSEE DURING THE YEAR UNDER CONSIDERATION AND THE SAME WERE ADJUSTED AGAI NST THE AMOUNT PAYABLE BY THE ASSESSEE AGAINST THE PURCHASE MADE F ROM THE SAID PARTY. 2 ITA NO.404/KOL/2014 SRI BALARAM DEBNATH ASSESSMENT YEAR: 2007-08 IT WAS FURTHER NOTICED BY THE AO THAT THE ASSESSEE IN HIS BOOKS OF ACCOUNTS HOWEVER HAD ACCOUNTED FOR THE CREDIT NOTES ONLY OF THE VALUE OF RS.16,46,019/-. HE, THEREFORE REQUIRED THE ASSES SEE TO EXPLAIN THE DIFFERENCE OF RS.2,07,306/-. IN REPLY, A RECONCILIA TION STATEMENT WAS PREPARED AND FURNISHED BY THE ASSESSEE EXPLAINING T HE SAID DIFFERENCE. ACCORDING TO AO, THE SAID EXPLANATION HOWEVER WAS N OT VERIFIABLE IN THE ABSENCE OF SUPPORTING DOCUMENTARY EVIDENCE. HE, THEREFORE, TREATED THE DIFFERENCE OF RS.2,07,306/- AS UNDISCLOSED INCO ME OF THE ASSESSEE AND ADDED THE SAME TO HIS TOTAL INCOME. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS ALSO NOTICED BY THE AO THAT NO TAX AT SOURCE WAS DEDUCTED BY THE ASSESSEE FROM THE INTERE ST OF RS.1,08,000/- PAID ON THE UNSECURED LOAN TAKEN FROM ONE SHRI S. D EBNATH. IN THIS REGARD, EXPLANATION OFFERED BY THE ASSESSEE THAT SH RI S. DEBNATH HAS GIVEN FORM NO.15G FOR NON-DEDUCTION OF TAX WAS NOT ACCEPTED BY THE AO IN THE ABSENCE OF COPY OF SUCH FORM FILED BY THE ASSESSEE. ACCORDINGLY, HE INVOKED THE PROVISIONS OF SECTION 4 0(A)(IA) AND DISALLOWED INTEREST OF RS.1,08,000/-. THE WITHDRAWA L SHOWN BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION FOR FA MILY EXPENSES OF RS.30,500/- WERE ALSO FOUND TO BE LOW BY THE AO CON SIDERING THE STATUS OF THE ASSESSEE. HE, THEREFORE, ESTIMATED THE PERSO NAL AND HOUSEHOLD EXPENSES OF THE ASSESSEE FOR THE YEAR UNDER CONSIDE RATION AT RS.60,000/- AND ADDED THE DIFFERENCE OF RS.29,500/- TO THE TOTA L INCOME OF THE ASSESSEE ON ACCOUNT OF LOW WITHDRAWALS. ACCORDINGLY , THE TOTAL INCOME OF THE ASSESSEE WAS COMPUTED BY THE AO AT RS.5,96,3 30/- IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) VIDE AN O RDER DATED 30.12.2009. 3. AGAINST THE ORDER PASSED BY THE AO UNDER SECTION 143(3), APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LD. CIT(A) DISPUTING ALL THE 3 ITA NO.404/KOL/2014 SRI BALARAM DEBNATH ASSESSMENT YEAR: 2007-08 THREE ADDITIONS MADE BY THE AO. DURING THE COURSE O F APPELLATE PROCEEDINGS BEFORE THE LD. CIT(A), RECONCILIATION S TATEMENT WAS FURNISHED BY THE ASSESSEE EXPLAINING THE DIFFERENCE IN THE AMOUNT OF CREDIT NOTES ACCOUNTED FOR IN HIS BOOKS OF ACCOUNTS AND THE AMOUNT OF CREDIT NOTES AS PER THE CONFIRMATION OF M/S. VST IN DUSTRIES LTD. AS UNDER: TOTAL CREDIT NOTE AS PER ASSESSEE BOOKS OF ACCOUNT RS.16,46,019.41 ADD : ADVANCE PAYMENT TO VST DSL CO.PVT. LTD. AND SHOWN IN THE BOOKS OF ACCOUNTS FOR 06-07 A.Y. WHICH HAS BEEN ADJUSTED BY CREDIT NOTE BY VST INDUSTRIES LTD. FOR 07-08 A.Y. AS AMALGAMATED WITH VST DSL CO. PVT. LTD. RS. 1,43,832.65 ADD : CLAIMED CREDIT NOTE RECEIVABLE FROM THE SAID COMPANY AND SHOWN IN THE BOOKS OF ACCOUNTS FOR THE 06-07 A.Y. WHICH HAS BEEN ADJUSTED BY CREDIT NOTE BY VST INDUSTRIES LTD. FOR 07-08 A.Y. RS. 1,27,154.50 RS.19,17,006.56 LESS: CLAIMED CREDIT NOTE RECEIVABLE FROM THE COMPANY AND SHOWN IN THE BOOKS OF A/C FOR 07-08 A.Y. BUT ADJUSTED THE SAME BY CREDIT NOTE BY VST INDUSTRIES LTD. FOR 08-09 A.Y. RS. 98,829 .00 RS.18,18,177.56 ADD : CREDIT NOTE OF RS.35,146,44 HAS BEEN ADJUSTE D AS CONTRA ENTRY I.E. BY LEDGER ADJUSTMENT. AS A RE SULT THE SAME HAS NOT SHOWN IN MY BUSINESS FINAL A.VC. I.E. PROFIT & LOSS ACCOUNT. RS. 35,146.44 TOTAL CREDIT NOTE AS PER COMPANY STATEMENT RS.18,53,324.00 THE ABOVE RECONCILIATION FURNISHED BY THE ASSESSEE WAS FORWARDED BY THE LD. CIT(A) TO THE AO SEEKING THE LATTERS COMME NTS. IN THE REMAND REPORT SUBMITTED TO THE LD. CIT(A), THE AO STATED O F HAVING SEEN THE RECONCILIATION FURNISHED BY THE ASSESSEE, BUT DID N OT MAKE ANY ADVERSE COMMENTS THEREON. ALTHOUGH THIS POSITION WAS CLEARL Y POINTED OUT BY THE ASSESSEE IN THE COUNTER-COMMENTS OFFERED BEFORE THE LD. CIT(A) ON THE REMAND REPORT OF THE AO, THE LD. CIT(A) STILL P ROCEEDED TO CONFIRM THE ADDITION OF RS.2,07,306/- MADE ON ACCOUNT OF DI FFERENCE IN THE 4 ITA NO.404/KOL/2014 SRI BALARAM DEBNATH ASSESSMENT YEAR: 2007-08 AMOUNT OF CREDIT NOTES OBSERVING THAT THERE WAS NO DOCUMENTARY EVIDENCE FILED BY THE ASSESSEE IN THE FORM OF CLAIM MADE OR CONFIRMATION FROM THE COMPANY TO SUPPORT AND SUBSTA NTIATE THE EXPLANATION OFFERED IN THE RECONCILIATION STATEMENT . BEFORE THE LD. CIT(A), A COPY OF FORM NO.15G ISSUED BY SHRI S. DEB NATH DULY ACKNOWLEDGED BY THE CONCERNED I.T. AUTHORITY WAS AL SO FILED BY THE ASSESSEE. WHEN THE SAID COPY WAS FORWARDED BY THE L D. CIT(A) TO THE AO, THE LATTER DID NOT MAKE ANY ADVERSE COMMENTS TH EREON EXCEPT STATING THAT THE SAME WAS NOT PRODUCED BY THE ASSES SEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS INSPITE OF SUFFICI ENT OPPORTUNITY AFFORDED TO HIM. THE LD. CIT(A), HOWEVER DID NOT FI ND THE PHOTO COPY OF FORM 15G FILED BY THE ASSESSEE AS ADMISSIBLE EVIDEN CE AS THE SAME WAS ONLY A PHOTO COPY AND THERE WAS NO ORIGINAL COPY FI LED BY THE ASSESSEE. ACCORDINGLY, HE CONFIRMED THE DISALLOWANCE MADE BY THE AO UNDER SECTION 40(A)(IA) ON ACCOUNT OF INTEREST PAID BY TH E ASSESSEE TO SHRI S.DEBNATH. SIMILARLY, THE ADDITION MADE BY THE AO O N ACCOUNT OF LOW WITHDRAWALS WAS ALSO CONFIRMED BY THE LD. CIT(A) OB SERVING THAT THE ESTIMATION OF WITHDRAWALS OF THE ASSESSEE AS MADE B Y THE AO @RS.5,000/- PER MONTH WAS REASONABLE. ACCORDINGLY, THE APPEAL OF THE ASSESSEE WAS DISMISSED BY THE LD. CIT(A) CONFIRMING ALL THE THREE ADDITIONS MADE BY THE AO. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE T RIBUNAL ON THE FOLLOWING GROUNDS: 1) FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE APPEAL ORDER OF THE LD. C.I.T. (APPEALS)- XXXVI , KOLKATA WAS NOT FAIR AND PROPER AND ON THE OTHER HAND IT WAS MA DE CONTRARY TO LAW, SOUND AND ADEQUATE PRINCIPLES. 2) FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE, LD. C.I.T. (APPEALS) WAS NOT AT ALL JUSTIFIED IN CONFIR MING THE ADDITION OF RS. 2,07,306.00 & HE SHOULD HAVE CONSIDERED THE WRITTEN 5 ITA NO.404/KOL/2014 SRI BALARAM DEBNATH ASSESSMENT YEAR: 2007-08 SUBMISSION OF THE APPELLANT IN THIS REGARD AS WELL AS REMAND REPORT OF THE LD. I.T.O. AND THE REASONS ADDUCED IN CONFIRMING THE ADDITIONS OF RS. 2,07,306.00 ARE NOT AT ALL CONVINC ING AND AS SUCH THE SAME SHOULD BE DELETED. 3) FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. C.I.T.(APPEALS) WAS WRONG IN DISALLOWING THE SU M OF RS. 1,08,000.00 ON ACCOUNT OF INTEREST ON UNSECURED LOA N ACCOUNT U/S. 40(A)(IA) OF THE LT. ACT, WHEN THE NECESSARY EVIDEN CES WERE PRODUCED AT THE APPELLATE STAGE IN TERMS OF RULES 4 6A OF THE LT. RULES, 1962. 4) FOR THAT HAVING REGARDS TO THE FACTS OF THE CAS E THE LD. C.LT. (APPEALS) WAS NOT AT ALL JUSTIFIED IN CONFIRMING TH E ADDITION OF RS. 29,500.00 ON ACCOUNT OF LOW DRAWINGS WITHOUT CONSID ERING THE WRITTEN SUBMISSION & REJOINDER GIVEN AT THE APPELLA TE STAGE & REMAND STAGE BY THE HUMBLE APPELLANT. 5) FOR THAT BOTH THE LD. C.I.T. (APPEALS) AND THE LD. LT.O. ERRED BOTH IN POINTS OF LAW AND ON FACTS. 6) FOR THAT THE HUMBLE APPELLANT CRAVES LEAVE TO T AKE ADDITIONAL GROUNDS AND AMEND GROUNDS AT THE TIME OF HEARING. 4. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND PERUSED THE RELEVANT MATERIAL ON RECORD. AS SUBMITTED BY THE LD . COUNSEL FOR THE ASSESSEE. GROUND NOS. 1,5 AND 6 RAISED IN THIS APPE AL OF THE ASSESSEE ARE GENERAL IN NATURE, WHICH DO NOT CALL FOR ANY SPECIF IC ADJUDICATION. 5. AS REGARDS THE ISSUE RAISED IN GROUND NO.2 RELAT ING TO THE ADDITION OF RS.2,07,306/- MADE BY THE AO AND CONFIRMED BY TH E LD. CIT(A) ON ACCOUNT OF DIFFERENCE IN THE AMOUNT OF CREDIT NOTES , IT IS OBSERVED THAT A RECONCILIATION STATEMENT WAS FURNISHED BY THE ASSES SEE BEFORE THE LD. CIT(A) EXPLAINING THE SAID DIFFERENCE. WHEN THE SAI D RECONCILIATION WAS FORWARDED BY THE LD. CIT(A) TO THE AO, THE LATTER D ID NOT MAKE ANY ADVERSE COMMENTS THEREON AND ALTHOUGH THIS POSITION WAS SPECIFICALLY POINTED OUT BY THE ASSESSEE, THE LD. CIT(A) STILL C ONFIRMED THE ADDITION MADE BY THE AO ON THIS ISSUE OBSERVING THAT THERE W AS NO DOCUMENTARY 6 ITA NO.404/KOL/2014 SRI BALARAM DEBNATH ASSESSMENT YEAR: 2007-08 EVIDENCE FILED BY THE ASSESSEE IN ORDER TO ENABLE V ERIFICATION OF THE RECONCILIATION STATEMENT AS POINTED OUT BY THE AO. AT THE TIME OF HEARING BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE HAS TAKEN US THROUGH THE COPY OF REMAND REPORT SUBMITTED BY THE AO TO TH E LD. CIT(A) TO SHOW THAT THERE WAS NO SUCH ADVERSE COMMENT OFFERED BY THE AO IN HIS REMAND REPORT REGARDING LACK OF ANY DOCUMENTARY EVI DENCE AND THE RECONCILIATION STATEMENT FURNISHED BY THE ASSESSEE WAS ACTUALLY ACCEPTED BY HIM. IT IS ALSO SEEN FROM THE RECONCILIATION STA TEMENT FURNISHED BY THE ASSESSEE THAT THE MAJOR DIFFERENCE, AS EXPLAINE D BY THE ASSESSEE, WAS ON ACCOUNT OF DIFFERENCE IN THE YEARS, IN WHICH SOM E CREDIT NOTES WERE ACCOUNTED FOR BY BOTH THE SIDES. HAVING REGARD TO A LL THESE FACTS OF THIS CASE, I AM OF THE VIEW THAT THE ADDITION MADE BY TH E AO ON THIS ISSUE WAS NOT SUSTAINABLE AND THE LD. CIT(A) IS NOT JUSTI FIED TO CONFIRM THE SAME WITHOUT APPRECIATING THE RECONCILIATION STATEM ENT FILED BY THE ASSESSEE EXPLAINING THE DIFFERENCE IN THE AMOUNT OF CREDIT NOTES. IN THAT VIEW OF THE MATTER, I DELETE THE ADDITION MADE BY T HE AO AND CONFIRMED BY THE LD. CIT(A) ON THIS ISSUE AND ALLOW GROUND NO .2 OF THE ASSESSEES APPEAL. 6. AS REGARDS THE ISSUE INVOLVED IN GROUND NO.3 REL ATING TO THE DISALLOWANCE OF RS.1,08,000/- MADE ON ACCOUNT OF IN TEREST ON UNSECURED LOAN UNDER SECTION 40(A)(IA) OF THE ACT FOR NON-DED UCTION OF TAX AT SOURCE, IT IS OBSERVED THAT THE SAID DISALLOWANCE W AS MADE BY THE AO DUE TO FAILURE OF THE ASSESSEE TO FILE DURING THE C OURSE OF ASSESSMENT PROCEEDINGS FORM NO.15G CLAIMED TO BE ISSUED BY SHR I S. DEBNATH, THE RECIPIENT OF THE INTEREST. BEFORE THE LD. CIT(A), T HE ASSESSEE HOWEVER FILED A PHOTO COPY OF RELEVANT FORM NO.15G WITH A S TAMP THEREON ACKNOWLEDGING RECEIPT THEREOF BY THE CONCERNED AUTH ORITY. THE LD. CIT(A) HOWEVER DID NOT ADMIT THIS RELEVANT EVIDENCE ON THE GROUND THAT A PHOTO COPY OF FORM NO.15G WAS FILED BY THE ASSESS EE AND NOT THE 7 ITA NO.404/KOL/2014 SRI BALARAM DEBNATH ASSESSMENT YEAR: 2007-08 ORIGINAL. I AM UNABLE TO SUBSCRIBE TO THE VIEW TAKE N BY THE LD. CIT(A) ON THIS ISSUE. AT THE TIME OF HEARING, THE LD. COUN SEL FOR THE ASSESSEE HAS FILED A PHOTO COPY OF THE SAID FORM NO.15G DULY CERTIFIED AS A TRUE COPY AND KEEPING IN VIEW THE RELEVANCE OF THIS DOCU MENTARY EVIDENCE, I CONSIDER IT FAIR AND PROPER TO RESTORE THIS ISSUE T O THE FILE OF THE AO FOR DECIDING THE SAME AFRESH AFTER VERIFYING THE AUTHEN TICITY AND RELIABILITY OF THE FORM NO.15G OF SHRI S. DEBNATH FILED BY THE ASSESSEE. GROUND NO.3 IS ACCORDINGLY TREATED AS ALLOWED FOR STATISTI CAL PURPOSES. 7. AS REGARDS THE ISSUE RAISED IN GROUND NO.4 RELAT ING TO ADDITION MADE ON ACCOUNT OF LOW WITHDRAWALS, IT IS OBSERVED THAT REASONABLENESS OF THE WITHDRAWALS OF RS.29,500/- SHOWN DURING THE YEAR UNDER CONSIDERATION WAS DULY EXPLAINED BY THE ASSESSEE BE FORE THE AO AS WELL AS BEFORE THE LD. CIT(A). IN THE SAID EXPLANATION, ALL THE RELEVANT ASPECTS INCLUDING THE SINGLE STATUS OF THE ASSESSEE LIVING IN THE JOINT FAMILY LEADING A SIMPLE LIFE WERE SPECIFICALLY POIN TED OUT BY THE ASSESSEE. IT APPEARS THAT THE AO AS WELL AS LD. CIT (A), HOWEVER, HAS OVERLOOKED ALL THESE RELEVANT ASPECTS AND ESTIMATED THE WITHDRAWALS OF THE ASSESSEE FOR PERSONAL AND HOUSEHOLD EXPENSES AT RS.60,000/- WITHOUT GIVING ANY SOUND OR CONVINCING BASIS WHATSO EVER. I, THEREFORE, FIND NO JUSTIFICATION IN THE ADDITION MADE BY THE A O ON THIS ISSUE AND CONFIRMED BY THE LD. CIT(A) AND DELETING THE SAME. I ALLOW GROUND NO.4 OF THE ASSESSEES APPEAL. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED, AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH OCTOBER, 2015. SD/- ( P.M.JAGTAP) ACCOUNTANT MEMBER DATED: 07/10/2015 TALUKDAR/SR.PS 8 ITA NO.404/KOL/2014 SRI BALARAM DEBNATH ASSESSMENT YEAR: 2007-08 COPY OF ORDER FORWARDED TO: 1 SRI BALARAM DEBNATH, C/O- P.S. GUPTA (ADVOCATE), 10 0, BANK LANE, HATAR PARA, P.O. KRISHNAGAR, DIST- NADIA, PIN 741 101 2 ITO, WARD-4, NADIA 3 THE CIT(A), 4 5 CIT, 5. D.R. TRUE COPY, BY ORDER, ASSTT. REGISTRAR , ITAT, KOLKATA