Abhijit Majumder, Nadia V. ITO, WD-4, NADIA, Nadia

ITA 447/KOL/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9405 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2017
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Next Hearing Date: 20-12-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 20-04-2015
• Court: TRIBUNAL
• Assessee Lawyers: SOUMI TRA GHOSH; SIDDHARTHA PRATIM DUTTA
• Section: 143(3)

Judgement Text

I.T.A. NO. 447/KOL./2015 ASSESSMENT YEAR: 2009-2010 PAGE 1 OF 12 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA SMC BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER I.T.A. NO. 447/KOL/ 2015 ASSESSMENT YEAR: 2009-2010 ABHIJIT MAJUMDER,.................................. ..........,...........................APPELLANT TELIPARA, P.O. NABADWIP, DIST. NADIA-741 202 [PAN: ALGPM 0763 R ] -VS.- INCOME TAX OFFICER,................................ .....................................RESPONDENT WARD-4, NADIA, ANANTA HARI MITRA ROAD, NEDIARPARA, P.O. KRISHNANAGAR, DIST. NADIA-741 302 APPEARANCES BY: SHRI SIDDHARTHA PRATIM DUTTA, ADVOCATE & SHRI SOUMI TRA GHOSH, ADVOCATE, FOR THE ASSESSEE SHRI DULAL CHANDRA MONDAL, JCIT, SR. D.R., FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : DECEMBER 20, 2016 DATE OF PRONOUNCING THE ORDER : FEBRUARY 03, 2017 O R D E R THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-XII, KOLKATA D ATED 11.02.2015 AND THE SOLITARY ISSUE ARISING OUT OF THE SAME RELATES TO THE DISALLOWANCE OF RS.14,47,045/- MADE BY THE ASSESSING OFFICER AND CO NFIRMED BY THE LD. CIT(APPEALS) UNDER SECTION 40(A)(IA) ON ACCOUNT OF PAYMENT MADE BY THE ASSESSEE TO THE HAWKERS. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L, WHO IS ENGAGED IN THE BUSINESS OF TRADING IN NEWSPAPERS, MAGAZINES, E TC. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED B Y HIM ON 10.03.2009 DECLARING TOTAL INCOME OF RS.1,81,604/-. IN THE PRO FIT & LOSS ACCOUNT FILED ALONG WITH THE SAID RETURN, A SUM OF RS.14,47,045/- WAS DEBITED BY THE I.T.A. NO. 447/KOL./2015 ASSESSMENT YEAR: 2009-2010 PAGE 2 OF 12 ASSESSEE ON ACCOUNT OF HAWKERS COMMISSION. ACCORDIN G TO THE ASSESSING OFFICER, THE ASSESSEE WAS REQUIRED TO DEDUCT TAX AT SOURCE FROM THE SAID AMOUNT AS PER THE PROVISIONS OF SECTION 194H OF THE ACT AND SINCE THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DO SO, H E REQUIRED THE ASSESESE TO EXPLAIN AS TO WHY THE AMOUNT OF RS.14,47,045/- S HOULD NOT BE DISALLOWED UNDER SECTION 40(A)(IA). IN REPLY, THE F OLLOWING EXPLANATION WAS OFFERED BY THE ASSESSEE IN WRITING:- 'IN THIS RESPECT, I SRI AMIT MAJUMDER, A NEWS PAPER AGENT OF A.B.P. (P) LTD., DULY APPOINT BY THE SAID PAPERS MANAGEMENT. THUS, I PAY DELIVERY CHARGE ONLY WHOSOEVER, FOR THE TIME BEING, PERFORMS THE WORK OF DELIVERY OF NEWS PAPER AND MAGAZINES. IN MY BOOKS OF ACCOUNT, MY ACCOUNTANT BEING NOT CONVERSANT WITH THE TECHNICALITY OF THE 'COMMISSION ' AS PER I.T. ACT, 1961, MENTIONED THE WORD 'COMMISSION' IN MY ACCOUNT BOOK DUE TO HIS IGNORANCE. HENCE, THE WORD 'COMMISSION', IN MY BOOKS OF ACCOUN T IS A WRONG USE OF THE SAID WORD FOR WHICH I AM NOT TO BE PENALISED, AS MY IGNORANT MISTAKE OF USE OF THE WOR D 'COMMISSION' WILL NOT PROVE THAT THE DELIVERYMEN, ACTUALLY UNDERTAKE TO DELIVER THE NEWS PAPER ETC. O N THE BASIS OF 'COMMISSION'. THE DELIVERY PERSONS ARE NOT HING BUT CASUALLY ENGAGED LABOURERS WHO RECEIVED THEIR L ABOUR CHARGES FOR THE PURPOSE OF DELIVERY OF NEWS PAPERS TO THE RESPECTIVE DESTINATION AND THEY HAVE NO OTHER WORK TO PERFORM. SINCE, IT IS NOT POSSIBLE FOR ME TO MAKE DELIVERY T O ALL THE CUSTOMERS FOR THAT I ENGAGED DELIVERYMEN, TO RENDER DELIVERY OF THE NEWS PAPER AND OTHER MAGAZINES, OF THE SAID ABP PATRIKA GROUP. THE PERSONS, WHO ARE ENTRUSTED FOR THE SAID DELIVER Y OF THE NEWS PAPERS AND MAGAZINES, OF THE SAID GROUP, A RE PERSONS, PAID ONLY DELIVERY CHARGES. I HAVE NO CONTRACTUAL TERMS WITH THOSE DELIVERY PER SONS WHO ARE FREQUENTLY CHANGED OR REPLACED BY ME, ACCOR DING TO MY SUITABILITY FOR THE SAID PURPOSE. I.T.A. NO. 447/KOL./2015 ASSESSMENT YEAR: 2009-2010 PAGE 3 OF 12 THUS, I PAY DELIVERY CHARGE ONLY WHOSOEVER, FOR THE TIME BEING, PERFORMS THE WORK OF DELIVERY OF NEWS PAPER AND MAGAZINES. IN MY BOOKS OF ACCOUNT, MY ACCOUNTANT BEING NOT CONVERSANT WITH THE TECHNICALITY OF THE 'COMMISSION ' AS PER I.T. ACT, 1961, MENTIONED THE WORD 'COMMISSION' IN MY ACCOUNT BOOK DUE TO HIS IGNORANCE. HENCE, THE WORD 'COMMISSION', IN MY BOOKS OF ACCOUN T IS A WRONG USE OF THE SAID WORD FOR WHICH I AM NOT TO BE PENALISED, AS MY IGNORANT MISTAKE OF USE OF THE WOR D 'COMMISSION' WILL NOT PROVE THAT THE DELIVERYMEN, ACTUALLY UNDERTAKE TO DELIVER THE NEWS PAPER ETC. O N THE BASIS OF 'COMMISSION'. THE DELIVERY PERSONS ARE NOT ING BUT CASUALLY ENGAGED LABOURERS WHO RECEIVED THEIR L ABOUR CHARGES FOR THE PURPOSE OF DELIVERY OF NEWS PAPERS TO THE RESPECTIVE DESTINATION AND THEY HAVE NO OTHER WORK TO PERFORM. THE PRICES OF NEWS PAPERS, AS DELIVERED BY THE DELI VERY- PERSON, TO THE SPECIFIED DESTINATION, ARE COLLECTED BY ME. THE DELIVERY PERSON'S SERVICES, FOR COLLECTION OF P RICES OF NEWS PAPERS ETC. ARE NEVER USED BY ME. THE WRITTEN SUBMISSIONS, IN THIS BEHALF, HAVE ALREA DY BEEN SUBMITTED BY THOSE DELIVERY PERSONS TO YOU TO WHOM ALSO YOU ISSUED THE SHOW CAUSE LETTERS. THIS APART, MOST OF THE PERSONS HAVE ALSO AFFIRMED AFFIDAVIT AND NOTARISED BEFORE THE APPOINTED NOTARY PUBLIC. (XEROX COPIES OF AFFIDAVIT ARE ENCLOSED COL LECTIVELY MARKED 'A') THUS, OUT OF FIFTEEN DELIVERY PERSON, TO WHOM SHOW CAUSE LETTERS WERE ISSUED, ELEVEN PERSONS AFFIRMED AND EX ECUTED THE ENCLOSED AFFIDAVITS. THE REMAINING FOUR PERSONS , BEING ILLITERATE ON PERUSAL OF THE NON-JUDICIAL STAMP PAP ER GOT SCARED AND DID NOT AFFIRMED AND EXECUTED THE AFFIDA VIT THROUGH THEY HAVE SUBMITTED THEIRS REPLIES OF THE S HOW CAUSE LETTER ONLY. THE ELEVEN PERSONS' ABSENCE FROM AFFIRMATION AND EXECUTION OF AFFIDAVIT IS PURELY DU E TO THEIR IGNORANCE AND CAN NEVER INTERPRETED OTHERWISE . THEREFORE, IN CONSIDERATION OF THE ABOVE POSITION, I PRAY SIR, KINDLY, TO DROP THE PROCEEDINGS AS INITIATED U /S. 194{H) OF THE I.T. ACT, 1961 IN AS MUCH AS MY MODE OF DEALING WITH DELIVERYMEN CAN IN NO WAY BE TERMED AS 'COMMISSION'. I.T.A. NO. 447/KOL./2015 ASSESSMENT YEAR: 2009-2010 PAGE 4 OF 12 THE DELIVERY CHARGES TO DELIVERY - MEN IS A SINE QU A NON, IN THE DELIVERY OF NEWS PAPERS OTHERWISE WHICH THE DISTRIBUTION OF NEWS PAPERS, MAGAZINES ETC. ARE NOT POSSIBLE. HOPE, THE EXPLANATION SUPRA WILL CONVINCE YOU ON TH IS REGARD AND OBLIGE. 3. THE ABOVE EXPLANATION OFFERED BY THE ASSESSEE WA S NOT FOUND ACCEPTABLE BY THE ASSESSING OFFICER FOR THE FOLLOWI NG REASONS:- (I) EXPLANATION(I) BELOW 3RD PROVISO TO SECTION 19 4H STATES- COMMISSION OR BROKERAGE INCLUDES ANY PAYME NT RECEIVED OR RECEIVABLE, DIRECTLY OR INDIRECTLY, BY A PERSON ACTING ON BEHALF OF ANOTHER PERSON FOR SERVICES REN DERED (NOT BEING PROFESSIONAL SERVICES) OR FOR ANY SERVIC ES IN THE CASE OF BUYING OR SELLING OF GOODS OR IN RELATION T O ANY TRANSACTION RELATING TO ANY ASSET, VALUABLE ARTICLE OR THING, NOT BEING SECURITIES'. THOSE HAWKERS ARE ACTING ON BEHALF OF THE ASSESSEE AND PROVIDING SERVICES IN SELLING NEWSPAPERS, MAGAZINE ETC. HENCE THE PAYMENTS MADE T O THEM BY THE ASSESSEE IS COMMISSION. (II) ACCOUNTANT OF THE ASSESSEE AS STATED SUPRA, IS NOT AS IGNORANT AS IT IS CLAIMED TO BE; HE IS SUPPOSED TO BE AND IS CONVERSANT WITH THE WORD COMMISSION. IT IS AN AFTER THOUGHT TO PROJECT HIM AS AN IGNORANT PERSON WHO HAS PREPAR ED, MAINTAINED AND FORWARDED HIS BOOKS NOT ONLY TO THE AUDITOR BUT ALSO FOR PROCEEDING U/S 143(3) WHERE NO INFIRMITY HAS BEEN FOUND. HENCE, THE ASSESSEE'S CLA IM ABOUT THE ACCOUNTANT IS CONSIDERED TO BE AN AFTERTHOUGHT TO EVADE THE DISALLOWANCE U/S 40(A)(IA). SUCH CLAIM IS REJECTED BEING UNTRUE. (III) HYPOTHETICALLY .IF IT IS ADMITTED THAT HE IS IGNORANT ABOUT THE MEANING OF COMMISSION, THEN WHAT ABOUT TH E CHARTERED ACCOUNTANT WHO ENDORSED/PREPARED THE PROF IT &LOSS ACCOUNT? HENCE, THE STATEMENT THAT PAYMENTS M ADE TO HAWKERS ARE NOT COMMISSION, IS NOT ACCEPTED AS T RUE. FOR THE REASONS GIVEN ABOVE AS WELL AS OTHER REASON S GIVEN IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HELD THAT T HE AMOUNT IN QUESTION PAID BY THE ASSESSEE TO DIFFERENT HAWKERS WAS IN TH E NATURE OF COMMISSION AND THE ASSESSEE WAS LIABLE TO DEDUCT TA X AT SOURCE FROM THE I.T.A. NO. 447/KOL./2015 ASSESSMENT YEAR: 2009-2010 PAGE 5 OF 12 SAID AMOUNT. SINCE THE ASSESSEE HAD FAILED TO DO SO , THE ASSESSING OFFICER INVOKED THE PROVISIONS OF SECTION 40(A)(IA) AND MAD E A DISALLOWANCE OF RS.14,47,045/- IN THE ASSESSMENT COMPLETED UNDER SE CTION 143(3) VIDE AN ORDER DATED 27.12.2011. 4. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICE R UNDER SECTION 143(3), AN APPEAL WAS PREFERRED BY THE ASSESSEE BEF ORE THE LD. CIT(APPEALS) CHALLENGING THE DISALLOWANCE MADE BY T HE ASSESSING OFFICER UNDER SECTION 40(A)(IA). DURING THE COURSE OF APPEL LATE PROCEEDINGS BEFORE THE LD. CIT(APPEALS), THE FOLLOWING SUBMISSI ONS WERE MADE ON BEHALF OF THE ASSESSEE IN SUPPORT OF HIS CASE THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER SECTION 40(A)(IA) WA S NOT SUSTAINABLE:- THE PIVOT OF THIS APPEAL IS WHETHER THE 'HAWKERS COMMISSION' IS A MISNOMER PHRASE OF 'HAWKER'S SERVI CE CHARGE PAID BY WAY OF DISCOUNT ON THE MRP OF NEWSPA PERS SOLD BY HAWKING ON ROAD, RLY. STATIONS, MARKET PLAC ES ETC. AND/OR BY EFFECTING SUPPLY OF THEM TO THE READERS O F NEWSPAPER OR NOT. BEFORE INDULGING IN ANY DISCUSSION ON THE ABOVE ISS UE THE COMMERCIAL RELATION BETWEEN THE APPELLANT AND THE HAWKER'S WHO GET THE SUPPLY OF NEWSPAPERS FOR SALE BY HAWKING AND/OR BY SUPPLY TO REGULAR CONSUMERS/READE RS HAS TO BE CONSIDERED SERIOUSLY. THE HAWKER'S GET THE SU PPLY OF NEWSPAPER EARLY IN THE MORNING FROM THE APPELLANT W HO IS AN AGENT OF ANANDA BAZAR PAIRIKA EARNING GROSS INCO ME BY WAY OF DISCOUNT ON THE MRP OF NEWSPAPER AS EVIDENT FROM THE INVOICE OF ABP COPY OF WHICH IS ATTACHED HERETO AS ANNEXURE 'A' FOR YOUR READY REFERENCE, FOR SALE BY HAWKING & SUPPLY, THE HAWKER'S ARE NEITHER ENLISTED ON THE RE CORDS OF THE APPELLANT NOR THEY HAVE ANY CONTRACT FOR THE CO MMERCIAL DEALING IN THIS REGARD, THE PERSONS OF THE HAWKER'S DIFFER FROM TIME TO TIME. THE HAWKER'S PAY TO THE APPELLAN T THE COST PRICE OF THE PAPERS SUPPLIED TO THEM BEING THE NET AMOUNT DUE, AFTER THE DEDUCTION OF DISCOUNT ON THE MRP MENTIONED AT THE TOP OF THE 1ST SHEET OF NEWSPAPER. AS FOR THE PAPERS RETURNED TO THE APPELLANT AS UNSOLD THE AMOUNT WHICH DIFFERS FROM TIME TO TIME IN ACCORDANCE WITH THE DIRECTION OF ABP, THE PRINCIPAL OF THE APPELLANT, D ETERMINED ON THE BASIS OF THE MRP OF THE NEWSPAPERS, IS REALI SED FROM THE HAWKERS IN RESPECT OF THE SAID UNSOLD PAPERS. T HERE IS NO AGREEMENT THE APPELLANT AND THE HAWKERS GIVING OUT STIPULATED TERMS AND CONDITIONS TOUCHING THE FISCAL AND I.T.A. NO. 447/KOL./2015 ASSESSMENT YEAR: 2009-2010 PAGE 6 OF 12 TRADE RELATION, EXISTENCE OF WHICH IS NEEDED FOR EA RNING COMMISSION OR BROKERAGE AT FIXED RATE. THE APPELLAN T ENJOYS THE ALLOWANCE OF DISCOUNT ON THE MRP OF NEWSPAPER A ND AS SUCH, HE ALSO PAYS SERVICE CHARGES TO THE HAWKERS B Y WAY OF 'HAWKER'S DISCOUNT', A PHRASE APPEARING IN THE CASH BOOK AGAINST THE CHARGES PAID TO THE HAWKERS. (SOME XERO X SHEET OF CASH BOOK GIVING OUT THE MODE OF PAYMENT MADE TO HAWKERS ARE ATTACHED HERETO AS ANNEXURE 'B' FOR YOU R HONOUR'S PERUSAL AND REFERENCE). THE LD. AO WENT TH ROUGH THE CASH BOOK PRODUCED BEFORE HIM AT THE TIME OF HE ARING, WHICH IN FACT, HE KEPT WITH HIM FOR SOME DAYS FOR T HOROUGH EXAMINATION. THE ACCOUNTANT, DUE TO HIS IGNORANCE, INADVERTENCE ON THE PART OF HIM AND/OR THE OVERLOOK ING BY THE AUDITOR IN THIS REGARD, HE TERMED THE EXPENSES BEING THE PAYMENTS TO THE HAWKERS AS 'HAWKER'S COMMISSION' IN THE P&L A/ C. IGNORING THE TERM USED IN THIS REGARD IN THE CASH BOOK. THE GENUINE MISTAKE OF THE ACCOUNTANT AND THE OVERLOOKING BY THE AUDITOR WERE UTILISED BY THE LD. AO TURNING BLIND EYES TO THE FACTS AND CIRCUMSTANCES O F THE' INSTANT CASE ONLY WITH A VIEW TO VICTIMISING THE AP PELLANT WHO IS AN HONEST TAX PAYER AND WHO MAINTAINS PROPER BOOKS OF ACCOUNT AND HE BROUGHT THE EXPENSES WITHIN THE A MBIT OF THE MISCHIEF OF SEC. 194H OF THE I.T. ACT, 1961., I CRAVE LEAVE TO MENTION HERE THAT THE LD. AO DID NOT FIND ANY FA ULT IN THE MAINTENANCE OF BOOKS OF A/ C. ( SOME XEROX SHEETS O F CASH BOOK GIVING OUT THE MODE OF PAYMENT MADE TO THE HAW KERS ARE ATTACHED HERETO AS ANNEXURE- 'C' FOR YOUR HONOU R'S KIND PERUSAL). I CANNOT HELP SAYING 'THIS IS VERY UNFORT UNATE. IT IS, THEREFORE, PRAYED THAT BY PROBING INTO THE F ACTS AND CIRCUMSTANCES OF THE CASE WITH JUDICIAL PERSPECTIVE YOUR HONOUR WOULD GRACIOUSLY FIND THAT THE PHRASE HAWKE RS COMMISSION APPEARING IN P&L A/C. OF THE STATEMENTS OF A/C IS A MISNOMER OF SERVICE CHARGES PAID BY ALLOWING DISCOUNT ON MRP OF NEWSPAPERS AND ALLOW THE EXPENSES CLAIMED IN P&: A/C ON MERIT. AND FOR THIS ACT OF JUSTICE, AS I N DUTY BOUND, MY CLIENT SHALL EVER PRAY. 5. THE ABOVE SUBMISSIONS MADE BY THE ASSESSEE WERE FORWARDED BY THE LD. CIT(APPEALS) TO THE ASSESSING OFFICER FOR HIS C OMMENTS AND AFTER TAKING INTO CONSIDERATION THE COMMENTS MADE BY THE ASSESSING OFFICER AS WELL AS THE COUNTER COMMENTS THEREON MADE BY THE AS SESSEE, THE LD. CIT(APPEALS) PROCEEDED TO CONFIRM THE DISALLOWANCE OF RS.14,47,045/- MADE BY THE ASSESSING OFFICER UNDER SECTION 40(A)(I A) FOR THE FOLLOWING REASONS GIVEN IN PARAGRAPH NO. 6 OF HIS IMPUGNED OR DER:- I.T.A. NO. 447/KOL./2015 ASSESSMENT YEAR: 2009-2010 PAGE 7 OF 12 6. I HAVE CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSIONS OF THE APPELLANT AND THE ASSESSING OFFI CER. ALL THE GROUNDS OF APPEAL OTHER THAN THE LAST GENERAL G ROUND ARE AGAINST THE DISALLOWANCE OF RS.14,47,045 ON ACC OUNT OF PAYMENTS MADE TO HAWKERS OF NEWSPAPERS MADE BY THE APPELLANT TREATED BY THE ASSESSING OFFICER AS COMMI SSION AS AGAINST THE APPELLANT'S CLAIM THAT THE PAYMENTS WER E IN THE NATURE OF DISCOUNTS. THE ELABORATE DISCUSSION BY TH E APPELLANT IN THE GROUNDS OF APPEAL, STATEMENT OF FA CTS, THE DETAILED ARGUMENTS ON THE GROUNDS OF APPEAL AS ALSO THE ASSESSING OFFICER'S COMMENTS ON THE SAME AND THE APPELLANT'S COMMENTS ARE SELF-EXPLANATORY AND REPRO DUCED ABOVE WITH A VIEW TO BRING OUT CLEARLY THE CLAIMS A ND COUNTER-CLAIMS OF THE APPELLANT AND THE ASSESSING O FFICER. A LARGE PART OF THE DISCUSSION HAS BEEN DEVOTED TO TH E USE OF THE TERM 'HAWKER'S COMMISSION' IN THE P&L ACCOUNT I N RELATION TO WHICH THE APPELLANT HAS STATED THAT THE TERM USED IN THE CASH BOOK WAS 'HAWKER'S DISCOUNT AND TH E AUDITOR HAD CLARIFIED THAT THE PAYMENTS HAD BEEN WR ONGLY CHARGED IN THE ACCOUNTS AS COMMISSION INSTEAD OF DE LIVERY CHARGES. THE ASSESSING OFFICER ON HIS PART HAS CLAI MED THAT IN THE CASH BOOK ALSO, THE PAYMENTS WERE CHARGED AS COMMISSION AND THE ACCOUNTANT AND QUALIFIED AUDITOR COULD NOT BE SAID TO HAVE COMMITTED MISTAKES OUT OF IGNOR ANCE OR INADVERTENCE. I FIND THAT IT IS UNDISPUTED THAT THE TERM COMMISSION WAS USED IN THE PROFIT AND LOSS ACCOUNT. AS REGARDS THE CASH BOOK, IT IS COMPUTERISED AND A DEF INITIVE VIEW ON THE DISPUTED VERSIONS OF THE ASSESSING OFFI CER AND THE APPELLANT CANNOT BE TAKEN AT THIS STAGE HAVING REGARD TO THE FACT THAT COMPUTERISED BOOKS CAN BE EASILY EDIT ED AT ANY STAGE. THE AUDITOR HAS ALSO NOT GIVEN ANY CATEGORIC AL REMARKS REGARDING THE CASH BOOK. FURTHER, HE HAS ON LY CERTIFIED THAT THE PAYMENTS SHOULD HAVE BEEN DESCRI BED AS DELIVERY CHARGES AND NOT COMMISSION. THE AUDITOR HA S NOT CERTIFIED THAT THE PAYMENTS WERE IN THE NATURE OF D ISCOUNT. BE THAT AS IT MAY, IT IS A SETTLED POSITION OF LAW THAT ACCOUNTING ENTRIES CANNOT BE THE SOLE DETERMINANT O F THE ACTUAL NATURE OF TRANSACTIONS / EXPENSES/ RECEIPTS. WHAT IS 'THEREFORE, NECESSARY TO EXAMINE IS THE NATURE OF RELATIONSHIP BETWEEN THE APPELLANT AND HAWKERS AND THE NATURE OF PAYMENTS MADE TO THE HAWKERS. IT IS UNDIS PUTED THAT THE HAWKERS WERE DISTRIBUTING NEWSPAPERS ON BE HALF OF THE APPELLANT AND IN THEIR AFFIDAVITS, THEY HAVE DE CLARED THAT THEY RECEIVE 'DELIVERY EXPENSES' FOR DELIVERY OF NEWSPAPERS ETC. AND NOT COMMISSION FROM THE APPELLA NT. IT IS PERTINENT TO NOTE HERE THAT THEY HAVE NOT AFFIRM ED THAT THEY WERE OFFERED ANY DISCOUNT AGAINST THE PRICE OF THE NEWSPAPERS. IT. HAS ALSO BEEN DECLARED THAT THE PRI CE OF THE NEWSPAPERS IS COLLECTED BY THE NEWSPAPER DEALER (RE AD 'THE I.T.A. NO. 447/KOL./2015 ASSESSMENT YEAR: 2009-2010 PAGE 8 OF 12 APPELLANT). IT IS ALSO UNDISPUTED THAT CASH PAYMEN TS HAVE BEEN SHOWN TO HAVE BEEN MADE TO 'THE HAWKERS BY THE APPELLANT IN THE CASH BOOKS REGARDLESS OF THE NOMEN CLATURE. THE APPELLANT HAS DENIED THE ASSESSING OFFICER'S FI NDING THAT THE SAME SET OF 16 HAWKERS WAS EMPLOYED OVER A PERI OD OF MORE THAN ONE YEAR BY FURNISHING THE NAMES OF 16 HA WKERS WAS EMPLOYED OVER A PERIOD OF MORE THAN ONE YEAR B Y FURNISHING THE NAMES OF 16 HAWKERS EACH EMPLOYED IN F.Y. 2007-08, F.Y.2008-09 AND F.Y.2009-10 BUT A CAREFUL SCRUTINY THAT SAID LISTS REVEALS THAT ALL THE HAWKERS, RENDE RING SERVICE OF DELIVERY OF NEWSPAPERS ETC. TO THE APPEL LANT: I.E. THE F.Y.2008-09 AND F.Y. 2009-10 WERE SAME AND SOME OF THEM HAD CONTINUED FROM F.Y.2007-08 ONWARDS. THE APPELLANT HAS PASSINGLY ACCEPTED THAT UNSOLD NEWSPA PERS WERE RETURNED TO THE APPELLANT. THE APPELLANT AFTER BEING GIVEN DUE OPPORTUNITY OF REBUTTING THE CONTENTIONS OF THE ASSESSING OFFICER IN THE REMAND REPORT ALSO DID NOT DENY THE OBSERVATION THAT 'IT IS PERTINENT TO STATE THAT IN RESPONSE TO THE SHOW CAUSE NOTICE DATED 16-12-2011 (FOR COMPLET ION OF ASSESSMENT FOR THE A. Y. 2009-10) THE ASSESSEE STAT ED THAT HAWKERS WERE MERELY DELIVERY PERSONS AND 'THE PRICE OF NEWS PAPERS, AS DELIVERED BY THE DELIVERY PERSONS, TO THE SPECIFIED DESTINATION, ARE COLLECTED BY ME. THE DEL IVERY PERSON'S SERVICES, FOR COLLECTION OF PRICES OF NEWS PAPERS ETC. ARE NEVER USED BY ME'. THESE FACTS DO NOT SUPPORT T HE APPELLANT'S CONTENTION THAT THE RELATIONSHIP BETWEE N THE APPELLANT AND THE HAWKERS WAS THAT OF TWO PRINCIPAL S. IT IS ALSO VERY REASONABLE TO ASSUME THAT IN SUCH TRANSAC TIONS, THERE 'WOULD NOT BE A WRITTEN AGREEMENT. SUCH SERVI CES BY THEIR VERY NATURE WOULD BE RENDERED AS PER ORAL UNDERSTANDING AND THE CONTINUITY OF BUSINESS RELATI ONSHIP AS BROUGHT OUT BY THE ASSESSING OFFICER'S FINDING THAT ALL THE 16 HAWKERS ENGAGED BY THE APPELLANT IN F.Y. 2008-09 HA D CONTINUED THEIR SERVICES IN F.Y. 2009-10 ALSO. IT E MERGES VERY CLEARLY FROM THE CRUCIAL FACTS NARRATED ABOVE THAT THE HAWKERS WERE NOT ENGAGED IN THE BUSINESS OF TRADING IN NEWSPAPERS AND THE PROPERTY IN THE NEWSPAPERS DID N OT PASS AT ANY POINT IN TIME TO THE HAWKERS. IT WAS NOT AS IF THE HAWKERS WERE PURCHASING THE NEWSPAPERS AT A DISCOUN TED PRICE FROM THE APPELLANT AND SELLING THEM LATER TO THEIR OWN CUSTOMERS, BEARING THE ATTENDANT RISK OF BEING LEFT WITH UNSOLD PAPERS AND THE INCURRING THE CONSEQUENT LOSS . THE APPELLANT HAS ARGUED EXTENSIVELY BUT NOT BEEN ABLE TO ESTABLISH WITH ANY CONCRETE EVIDENCE THAT THE HAWKE RS WERE TRADING ON THEIR ACCOUNT AND DISCOUNTS WERE BEING P ASSED ON TO THEM BY THE APPELLANT. IT IS UNDISPUTED THAT THE HAWKERS WERE DELIVERING NEWSPAPERS ON BEHALF OF THE APPELLANT AND RECEIVING CASH PAYMENTS FOR SUCH SERV ICES, REGARDLESS OF THE TERMINOLOGY USED IN THE ACCOUNTS TO I.T.A. NO. 447/KOL./2015 ASSESSMENT YEAR: 2009-2010 PAGE 9 OF 12 DESCRIBE SUCH PAYMENTS AND THE EXACT TERMS AND COND ITIONS GOVERNING SUCH SERVICES, IF AT ALL THERE WERE SOME STRICT TERMS AND CONDITIONS. THE ASSESSING OFFICER HAS REF ERRED TO THE PROVISIONS OF SECTION 194H IN SUPPORT OF HIS CO NTENTIONS. THE EXPLANATION TO SECTION 194H DEFINES 'COMMISSION OR BROKERAGE' TO INCLUDE ANY PAYMENT RECEIVED OR RECEI VABLE, DIRECTLY OR INDIRECTLY, BY A PERSON ACTING ON BEHAL F OF ANOTHER PERSON FOR SERVICES RENDERED (NOT BEING PRO FESSIONAL SERVICES) OR FOR ANY SERVICES IN THE COURSE OF BUYI NG OR SELLING OF GOODS OR IN RELATION TO ANY TRANSACTION RELATING TO ANY ASSET, VALUABLE ARTICLE OR THING, NOT BEING SEC URITIES. IT IS CLEAR FROM THE DEFINITION THAT PAYMENTS RECEIVED BY ANY PERSON ACTING ON BEHALF OF ANOTHER PERSON FOR SERVI CES RENDERED ARE CATEGORIZED AS COMMISSION OR BROKERAGE FOR THE PURPOSES OF SECTION 194H. IN THE APPELLANT'S CA SE, THE PAYMENTS HAVE BEEN MADE AS DELIVERY CHARGES IN THE COURSE OF BUYING AND SELLING NEWSPAPERS ON BEHALF OF THE A PPELLANT AND THE APPELLANT HAS NOT MADE OUT ANY CASE TO SHOW THAT SUCH PAYMENTS ARE EXCLUDED FROM THE PURVIEW OF THE PROVISIONS OF SECTION 194H. THE APPELLANT'S REFEREN CE TO HIS OWN BUSINESS RELATIONSHIP AS A PRINCIPAL WITH ANAND BAZAR PATRIKA IS NOT RELEVANT IN THIS REGARD AT ALL. IN V IEW OF THE FACTUAL AND LEGAL POSITION AS AFORESAID, I HOLD THA T THE HAWKERS WERE DELIVERING NEWSPAPERS ON BEHALF OF THE APPELLANT AND FOR THESE SERVICES THEY WERE RECEIVIN G PAYMENTS FROM THE APPELLANT WHICH ARE COVERED UNDER THE DEFINITION OF 'COMMISSION OR BROKERAGE' GIVEN IN TH E EXPLANATION TO SECTION 194H OF THE ACT. IT IS NOT D ISPUTED THAT THE APPELLANT DID NOT DEDUCT ANY TAX AT SOURCE ON SUCH PAYMENTS AGGREGATING TO RS.14,47,045/- AND, THEREFO RE, SUCH EXPENSES WERE RIGHTLY DISALLOWED IN VIEW OF TH E MANDATE OF SECTION 40(A)(IA) OF THE ACT. AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 6. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER AS WELL AS THE LD. CIT(APPEALS) HAS NOT APP RECIATED THE EXACT NATURE OF AMOUNT IN QUESTION PAID BY THE ASSESSEE T O THE HAWKERS. HE SUBMITTED THAT THE ASSESSEE IS IN THE BUSINESS OF T RADING IN NEWSPAPERS AND MAGAZINES AND THE NEWSPAPERS AND MAGAZINES PURC HASED BY IT FROM ANANDA BAZAR PATRIKA ARE SOLD TO THE HAWKERS AT THE DISCOUNTED RATE ON MRP FOR FURTHER SALE OR DISTRIBUTION TO THE CUSTOME RS. HE SUBMITTED THAT I.T.A. NO. 447/KOL./2015 ASSESSMENT YEAR: 2009-2010 PAGE 10 OF 12 THESE TRANSACTIONS ARE TREATED AS SALE IN THE HANDS OF THE ASSESSEE AND PURCHASE IN THE HANDS OF THE CONCERNED HAWKERS. HE CONTENDED THAT THESE TRANSACTIONS THUS ARE CARRIED ON PRINCIPAL TO PRINC IPAL BASIS AND THE AMOUNT IN QUESTION CANNOT BE TREATED AS COMMISSION AS ENVISAGED IN SECTION 194H. HE CONTENDED THAT THE AUTHORITIES BEL OW, HOWEVER, HAVE TREATED THE SAME AS COMMISSION GOING BY THE NOMENCL ATURE USED BY THE ASSESSEE IN THE BOOKS OF ACCOUNT, WHICH IS NOT CORR ECT. HE POINTED OUT THAT THE LD. CIT(APPEALS) IN ASSESSEES OWN CASE FOR A.Y . 2010-11 HAS ACCEPTED THE STAND OF THE ASSESSEE BY DELETING THE SIMILAR A DDITION MADE BY THE ASSESSING OFFICER UNDER SECTION 40(A)(IA) AND SUBMI TTED THAT THE DEPARTMENT HAS NOT FILED ANY APPEAL AGAINST THE SAI D ORDER OF THE LD. CIT(APPEALS) BEFORE THE TRIBUNAL. 7. THE LD. D.R., ON THE OTHER HAND, CONTENDED THAT THE HAWKERS CANNOT BE TREATED AS BUYERS OF NEWSPAPERS AND MAGAZINES FR OM THE ASSESSEE AS THEY ARE SELLING THE NEWSPAPERS AND MAGAZINES ON BE HALF OF THE ASSESSEE AND NOT ON THEIR OWN. HE CONTENDED THAT THE RELATIO N BETWEEN THE ASSESSEE AND THE HAWKERS IS THUS THAT OF PRINCIPAL AND AGENT AND THE AMOUNT IN QUESTION PAID BY THE ASSESSEE TO THE HAWK ERS IS IN THE NATURE OF COMMISSION AS RIGHTLY HELD BY THE AUTHORITIES BE LOW. HE ALSO CONTENDED THAT THE FACT THAT THE UNSOLD NEWSPAPERS AND MAGAZI NES ARE RETURNED BACK BY THE HAWKERS TO THE ASSESSEE FURTHER GOES TO SHOW THAT IT IS NOT A CASE OF PURCHASE AND SALE OF NEWSPAPERS AND MAGAZINES ON PRINCIPAL TO PRINCIPAL BASIS AS SOUGHT TO BE CONTENDED BY THE LD . COUNSEL FOR THE ASSESSEE. 8. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IN ORDER TO ASCERTAIN THE EXACT NATURE OF THE AMOUNT IN QUESTION PAID BY THE ASSESS EE TO HAWKERS, IT IS NECESSARY TO CONSIDER THE MODUS OPERANDI OF THE BUS INESS OF THE ASSESSEE AS WELL AS THE FUNCTIONS PERFORMED BY THE ASSESSEE AND THE HAWKERS IN THE COURSE OF THE BUSINESS. IN THIS REGARD, IT IS O BSERVED THAT THE ASSESSEE IS IN THE BUSINESS OF TRADING IN NEWSPAPERS AND MAG AZINES AND THIS I.T.A. NO. 447/KOL./2015 ASSESSMENT YEAR: 2009-2010 PAGE 11 OF 12 POSITION IS ACCEPTED EVEN BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. THE ASSESSEE THUS PURCHASES THE NEWSPAPERS A ND MAGAZINES FROM AANANDA BAZAR PATRIKA AND SUPPLIES THE SAME TO HAWK ERS FOR FURTHER SALE TO THE CUSTOMERS. THE FUNCTION MAINLY PERFORMED BY THE HAWKERS THUS IS TO DELIVER THE NEWSPAPERS AND MAGAZINES SUPPLIED BY THE ASSESSEE TO THE CUSTOMERS AND FOR THESE SERVICES, THE HAWKERS ARE C OMPENSATED BY THE ASSESSEE BY CHARGING A DISCOUNTED PRICE OF THE NEWS PAPERS AND MAGAZINES. THE SUPPLY OR DELIVERY OF NEWSPAPERS AND MAGAZINES IS MADE BY THE HAWKERS TO THE CUSTOMERS ON THEIR OWN AND TH ERE IS NOTHING BROUGHT ON RECORD BY THE AUTHORITIES BELOW TO SHOW THAT SUCH SALE OR SUPPLY WAS MADE BY THE HAWKERS TO THE CUSTOMERS ON BEHALF OF THE ASSESSEE AS AN AGENT. THE HAWKERS GENERALLY OPERATE IN AN UNORGANIZED MANNER AND THE ONLY COMPENSATION WHICH THEY GET FOR SUPPLY OR DELIVERY OF THE NEWSPAPERS IS THE CASH DISCOUNT THAT THE ASS ESSEE OFFERS TO THEM ON THE PRINTED PRICE OF THE NEWSPAPERS AND MAGAZINES. THEIR BUSINESS ACTIVITIES INVOLVING SUPPLY OR DELIVERY OF NEWSPAPE RS AND MAGAZINES ARE DONE BY THE HAWKERS ON THEIR OWN AND THERE IS NOTHI NG ON RECORD TO SHOW THAT THE SAME ARE DONE BY THEM ON BEHALF OF THE ASS ESSEE AS AGENT. HAVING REGARD TO ALL THESE ASPECTS CONCERNING THE MODUS OP ERANDI OF THE ASSESSEES BUSINESS AS WELL AS THE FUNCTIONS PERFOR MED BY THE HAWKERS, I AM OF THE VIEW THAT THE AMOUNT IN QUESTION PAID BY THE ASSESSEE TO THE HAWKERS IS IN THE NATURE OF DISCOUNT AND THE SAME C ANNOT BE TREATED AS COMMISSION MERELY ON THE BASIS OF NOMENCLATURE USED BY THE ASSESSEE IN HIS BOOKS OF ACCOUNT. FOR THIS CONCLUSION, WE DERIV E SUPPORT FROM THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE C ASE OF AHMEDABAD STAMP VENDORS ASSOCIATION VS.- UNION OF INDIA [12 4 TAXMAN 28], WHEREIN IT WAS HELD THAT DISCOUNT IN THE NATURE OF CASH DISCOUNT ON SALE IS OUTSIDE THE EXPRESSION OF COMMISSION OR BROKERAG E AS ENVISAGED IN SECTION 194H OF THE ACT. THE ASSESSEE IN MY OPINION , THEREFORE, WAS NOT REQUIRED TO DEDUCT TAX AT SOURCE FROM THE AMOUNT IN QUESTION PAID TO THE HAWKERS AND THE QUESTION OF DISALLOWANCE UNDER SECT ION 40(A)(IA) WOULD NOT ARISE. I, THEREFORE, DELETE THE DISALLOWANCE MA DE BY THE ASSESSING I.T.A. NO. 447/KOL./2015 ASSESSMENT YEAR: 2009-2010 PAGE 12 OF 12 OFFICER UNDER SECTION 40(A)(IA) AND CONFIRMED BY TH E LD. CIT(APPEALS) AND ALLOW THIS APPEAL OF THE ASSESSEE. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON FEBRUARY 03, 2017. SD/- (P.M. JAGTAP) ACCOUNTANT MEMBER KOLKATA, THE 3 RD DAY OF FEBRUARY, 2017 COPIES TO : (1) SHRI ABHIJIT MAJUMDER, TELIPARA, P.O. NABADWIP, DIST. NADIA-741 202 (2) INCOME TAX OFFICER, WARD-4, NADIA, ANANTA HARI MITRA ROAD, NEDIARPARA, P.O. KRISHNANAGAR, DIST. NADIA-741 302 (3) COMMISSIONER OF INCOME TAX(APPEALS)-12, KOLKAT A; (4) COMMISSIONER OF INCOME TAX- , (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.