Vishal Jalan, Chinsuraha V. ITO, wd. 45(4),., Kolkata

ITA 464/KOL/2020

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 9637 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-01-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 30-07-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Non-deduction of tax; TDS
• Section: 68; 40(a)(ia); 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘SMC’ BENCH, KOLKATA {VIRTUAL COURT HEARING} (BEFORE SHRI P.M. JAGTAP, HON’BLE VICE-PRESIDENT, KZ) ITA No. 464/Kol/2020 Assessment Year: 2013-14 Vishal Jalan....................................................................................................................................Appellant C/o. S.N. Ghosh Associates, Advocates Seben Brothers’ Lodge P.O. Buroshibtala P.S. Chinsurah Dist. Hooghly Pin- 712 105 West Bengal [PAN : ACFPJ 9905 L] Vs. Income Tax Officer, Ward-45(4), Kolkata.........................................................................Respondent Appearances by: Shri Somnath Ghosh, Advocate, appeared on behalf of the assessee. Shri Biswanath Das, Addl. CIT, D/R, appearing on behalf of the Revenue. Date of concluding the hearing : December 9 th , 2021 Date of pronouncing the order : January 27 th , 2022 ORDER Per P.M. Jagtap, Vice-President, KZ :- This appeal filed by the assessee is directed against the order of the Ld. Commissioner of Income Tax (Appeals) – 13, (hereinafter the ‘ld. CIT(A)’), dt. 21/07/2020, for the Assessment Year 2013-14, passed u/s 250 of the Income Tax Act, 1961 (‘the Act’). 2. The common issue involved in Ground Nos. 1 & 2 of this appeal relates to the addition of Rs.17,15,795/- made by the Assessing Officer and confirmed by the ld. CIT(A) by invoking provisions of Section 40(a)(ia) of the Act, for the alleged failure of the assessee to deduct tax at source from the payment of commission u/s 194H of the Act. 3. The assessee in the present case is an individual who is engaged in the business of providing data and telecom services under the name and style of his proprietary concern M/s. Vishal’s. The return of income for the year under consideration was filed by him on 29/09/2013 declaring total income of Rs.1,94,940/-. As noted by the Assessing Officer during the course of assessment proceedings, the assessee had received commission of Rs.24,57,890/- from Sistema Shyam Teleservices Ltd., on which TDS was deducted by the said party and the amount so deducted at source was credited to the assessee’s PAN. The assessee had also paid commission of Rs.17,15,795/- during the year under consideration to the various parties but no tax at source was deducted by the assessee from the payment of commission made as required by Section 194H of the Act. The assessee, therefore, was called upon by the Assessing Officer as to why the commission of Rs.17,15,795/ failure to deduct tax at source from the payment thereof. The assessee, however, failed to offer any explanation to the satisfaction of the Assessing Officer and consequently the Assessing Officer invoked the provisions of Section 40(a)(ia) of the Act and made a disallowance of Rs.17,15,795/ to deduct tax at source from the payment thereof as required u/s 194H of the Act. On appeal, the ld. CIT(A) confirmed the said disallowance made by the Assessing Officer. 4. I have heard the arguments of both the sides on this issue and also perused the relevant material available on record. The limited contention raised by the ld. Counsel for the assessee by relying on the decision of the Hon’ble Supreme Court in the case of Hindustan Coca Cola Beverage P. Ltd. v. CIT ( having offered the commission income respective returns of income and also held to be liable to deduct tax thereon and Section 40(a)(ia) cannot be invoked. He has submitted that this claim made by the assessee for the first time on behalf of the assessee before the Tribunal may be verified by the Assessing Officer before allowing the appropriate relief to the assessee. 5. The ld. D/R, on the other hand, has submitted that the number of parties to whom the commission in question was paid by the assessee during the year under consideration is very large and it will be difficult for t aspect and that too after a lapse of about 8 assessee has submitted that the assessee will furnish the relevant details relating to all the parties for the verification of 6. After considering the rival submissions, I consider it fair and proper to this issue to the file of the Assessing Officer for the limited purpose of verifying the claim made by the assessee by relying on the decision of t Ltd. v. CIT (supra). As undertaken by the ld. Counsel for the assessee, the assessee collect and furnish all the relevant details commission in question was paid during the year under consideration and after verifying the same, the Assessing Officer shall allow appropriate relief to the assessee 2 the year under consideration to the various parties but no tax at source was deducted by from the payment of commission made as required by Section 194H of the Act. The assessee, therefore, was called upon by the Assessing Officer as to why the commission of Rs.17,15,795/- should not be disallowed u/s 40(a)(ia) of the Act for his duct tax at source from the payment thereof. The assessee, however, failed to offer any explanation to the satisfaction of the Assessing Officer and consequently the Assessing Officer invoked the provisions of Section 40(a)(ia) of the Act and made a owance of Rs.17,15,795/- on account of commission for the failure of the assessee to deduct tax at source from the payment thereof as required u/s 194H of the Act. On the ld. CIT(A) confirmed the said disallowance made by the Assessing Officer. I have heard the arguments of both the sides on this issue and also perused the relevant material available on record. The limited contention raised by the ld. Counsel for the assessee by relying on the decision of the Hon’ble Supreme Court in the case of Hindustan Coca Cola Beverage P. Ltd. v. CIT (293 ITR 226), is that the concerned parties having offered the commission income received by them from the assessee in their respective returns of income and also paid tax thereon, the assessee again cannot be eld to be liable to deduct tax thereon and Section 40(a)(ia) cannot be invoked. He has submitted that this claim made by the assessee for the first time on behalf of the assessee before the Tribunal may be verified by the Assessing Officer before allowing the appropriate relief to the assessee. The ld. D/R, on the other hand, has submitted that the number of parties to whom the commission in question was paid by the assessee during the year under consideration is very large and it will be difficult for the Assessing Officer to verify this aspect and that too after a lapse of about 8-9 years. In this regard, the ld. Counsel for the assessee has submitted that the assessee will furnish the relevant details relating to all parties for the verification of the Assessing Officer. After considering the rival submissions, I consider it fair and proper to this issue to the file of the Assessing Officer for the limited purpose of verifying the claim made by the assessee by relying on the decision of the Hindustan Coca Cola Beverage P. As undertaken by the ld. Counsel for the assessee, the assessee collect and furnish all the relevant details related to the parties to whom commission in question was paid during the year under consideration and after the Assessing Officer shall allow appropriate relief to the assessee ITA No. 464/Kol/2020 Assessment Year: 2013-14 Vishal Jalan the year under consideration to the various parties but no tax at source was deducted by from the payment of commission made as required by Section 194H of the Act. The assessee, therefore, was called upon by the Assessing Officer as to why the should not be disallowed u/s 40(a)(ia) of the Act for his duct tax at source from the payment thereof. The assessee, however, failed to offer any explanation to the satisfaction of the Assessing Officer and consequently the Assessing Officer invoked the provisions of Section 40(a)(ia) of the Act and made a on account of commission for the failure of the assessee to deduct tax at source from the payment thereof as required u/s 194H of the Act. On the ld. CIT(A) confirmed the said disallowance made by the Assessing Officer. I have heard the arguments of both the sides on this issue and also perused the relevant material available on record. The limited contention raised by the ld. Counsel for the assessee by relying on the decision of the Hon’ble Supreme Court in the case of that the concerned parties from the assessee in their paid tax thereon, the assessee again cannot be eld to be liable to deduct tax thereon and Section 40(a)(ia) cannot be invoked. He has submitted that this claim made by the assessee for the first time on behalf of the assessee before the Tribunal may be verified by the Assessing Officer before allowing The ld. D/R, on the other hand, has submitted that the number of parties to whom the commission in question was paid by the assessee during the year under he Assessing Officer to verify this 9 years. In this regard, the ld. Counsel for the assessee has submitted that the assessee will furnish the relevant details relating to all After considering the rival submissions, I consider it fair and proper to restore this issue to the file of the Assessing Officer for the limited purpose of verifying the claim Hindustan Coca Cola Beverage P. As undertaken by the ld. Counsel for the assessee, the assessee shall related to the parties to whom the commission in question was paid during the year under consideration and after the Assessing Officer shall allow appropriate relief to the assessee after keeping in view the decision of the Hon’ble Supreme Court in the case of Coca Cola Beverage P. Ltd. v. CIT partly allowed for statistical purposes. 7. The issue involved in Ground No. 3 relates to the addition of Rs.8,32,380/ by the Assessing Officer on account o treating the same as fictitious sundry creditor. 8. During the course of assessment proceedings, the sundry creditors appearing in the balance sheet of the assessee were verification, he found from the ledger account of one M/s. Asha Communication furnished by the assessee that the said party was actually a customer of the assessee which was stated to have given advance to the assessee. The Assessing Officer accordingly noted that the said party was wrongly classified by the assessee in the balance sheet and instead of show it was classified as a sundry creditor. He also noted that huge advance was given by the said party to the assessee in the immediately preceding year and against the said advance, purchases of only Rs. during the year under consideration. He further noted that the said party had made a substantial purchase of Rs.8,32,380/ immediately succeeding assessment year. Keeping in view all these unusual facts noticed by him, the Assessing Officer treated the credit balance of Rs.8,32,380/ appearing in the name of M/s. Asha Communication as fictitious sundry creditor and added the same to the total income of the assessee. On appeal the said addition made by the Assessing Officer for the same reasons as given by the Assessing Officer. 9. I have heard the arguments of both the sides on this issue and also perused the relevant material available on record. It is observed that the amount of Rs.8,32,380/ appearing in the name of M/s. Asha Communication was actually received by the assessee during the immediately preceding year assessee and this factual position is not disputed either by the authorities below in th respective orders or even by the ld. D/R at the time of hearing before the Tribunal. rightly pointed out by the ld. Counsel for the assessee cannot be added as unexplained cash credit u/s 68 during the year under consideration 3 after keeping in view the decision of the Hon’ble Supreme Court in the case of Coca Cola Beverage P. Ltd. v. CIT (supra). Ground Nos. 1 & 2 are accordingly treated as partly allowed for statistical purposes. The issue involved in Ground No. 3 relates to the addition of Rs.8,32,380/ by the Assessing Officer on account of amount payable to M/s. Asha Communication by treating the same as fictitious sundry creditor. During the course of assessment proceedings, the sundry creditors appearing in the balance sheet of the assessee were verifited by the Assessing Officer. On verification, he found from the ledger account of one M/s. Asha Communication furnished by the assessee that the said party was actually a customer of the assessee which was stated to have given advance to the assessee. The Assessing Officer gly noted that the said party was wrongly classified by the assessee in the balance sheet and instead of showing the amount in question as advance from customer, it was classified as a sundry creditor. He also noted that huge advance was given by the party to the assessee in the immediately preceding year and against the said purchases of only Rs.33,938/- were made by the said party during the year under consideration. He further noted that the said party had made a al purchase of Rs.8,32,380/- during the period of only two months in the immediately succeeding assessment year. Keeping in view all these unusual facts the Assessing Officer treated the credit balance of Rs.8,32,380/ of M/s. Asha Communication as fictitious sundry creditor and added the same to the total income of the assessee. On appeal, the ld. CIT(A) confirmed the said addition made by the Assessing Officer for the same reasons as given by the I have heard the arguments of both the sides on this issue and also perused the relevant material available on record. It is observed that the amount of Rs.8,32,380/ appearing in the name of M/s. Asha Communication was actually received by the immediately preceding year as pointed out by the ld. Counsel for the assessee and this factual position is not disputed either by the authorities below in th or even by the ld. D/R at the time of hearing before the Tribunal. rightly pointed out by the ld. Counsel for the assessee, the said amount, therefore, cannot be added as unexplained cash credit u/s 68 during the year under consideration ITA No. 464/Kol/2020 Assessment Year: 2013-14 Vishal Jalan after keeping in view the decision of the Hon’ble Supreme Court in the case of Hindustan Ground Nos. 1 & 2 are accordingly treated as The issue involved in Ground No. 3 relates to the addition of Rs.8,32,380/- made f amount payable to M/s. Asha Communication by During the course of assessment proceedings, the sundry creditors appearing in by the Assessing Officer. On such verification, he found from the ledger account of one M/s. Asha Communication furnished by the assessee that the said party was actually a customer of the assessee which was stated to have given advance to the assessee. The Assessing Officer gly noted that the said party was wrongly classified by the assessee in the ing the amount in question as advance from customer, it was classified as a sundry creditor. He also noted that huge advance was given by the party to the assessee in the immediately preceding year and against the said were made by the said party from the assessee during the year under consideration. He further noted that the said party had made a during the period of only two months in the immediately succeeding assessment year. Keeping in view all these unusual facts the Assessing Officer treated the credit balance of Rs.8,32,380/- of M/s. Asha Communication as fictitious sundry creditor and the ld. CIT(A) confirmed the said addition made by the Assessing Officer for the same reasons as given by the I have heard the arguments of both the sides on this issue and also perused the relevant material available on record. It is observed that the amount of Rs.8,32,380/- appearing in the name of M/s. Asha Communication was actually received by the as pointed out by the ld. Counsel for the assessee and this factual position is not disputed either by the authorities below in their or even by the ld. D/R at the time of hearing before the Tribunal. As the said amount, therefore, cannot be added as unexplained cash credit u/s 68 during the year under consideration and even the ld. D/R has not been able to re not been able to point out any provision made by the Assessing Officer and confirmed by the ld. CIT( fictitious creditor can be justified or supported. Moreover, as pointed out by the ld. Counsel for the assessee from the relevant details placed at page no. 34 of the paper book, the assessee has made substantial sale to M/s. A two months of the immediately succeeding year and the amount in question received as advance from the said party was fully adjusted declared by the assessee in his return of income filed f year. Keeping in view all these facts and circumstances, I am of the view that the addition of Rs.8,32,380/- made by the Assessing Officer and confirmed by the ld. CIT(A) on account of the alleged fictitious sundry creditor is deleted allowing Ground No. 3 of the assessee 10. In the result, appeal of the assessee is treated as partly allowed for statistical purposes. Pronounced in the Court after conclusion of hearing on the Dated: 27.01.2022 {SC SPS} 4 and even the ld. D/R has not been able to rebut or controvert this position not been able to point out any provision of the Income Tax Act under which the addition made by the Assessing Officer and confirmed by the ld. CIT(A) on account of the alleged fictitious creditor can be justified or supported. Moreover, as pointed out by the ld. Counsel for the assessee from the relevant details placed at page no. 34 of the paper book, the assessee has made substantial sale to M/s. Asha Communication in the first two months of the immediately succeeding year and the amount in question received as advance from the said party was fully adjusted against the said sale which was duly declared by the assessee in his return of income filed for the immediately succeeding Keeping in view all these facts and circumstances, I am of the view that the made by the Assessing Officer and confirmed by the ld. CIT(A) on account of the alleged fictitious sundry creditor is not sustainable and the same is deleted allowing Ground No. 3 of the assessee’s appeal. In the result, appeal of the assessee is treated as partly allowed for statistical Pronounced in the Court after conclusion of hearing on the 27 th day of January, 2022. Sd/- [P.M. Jagtap] Vice-President ITA No. 464/Kol/2020 Assessment Year: 2013-14 Vishal Jalan t or controvert this position. He has also the Income Tax Act under which the addition A) on account of the alleged fictitious creditor can be justified or supported. Moreover, as pointed out by the ld. Counsel for the assessee from the relevant details placed at page no. 34 of the paper sha Communication in the first two months of the immediately succeeding year and the amount in question received as said sale which was duly or the immediately succeeding Keeping in view all these facts and circumstances, I am of the view that the made by the Assessing Officer and confirmed by the ld. CIT(A) not sustainable and the same is In the result, appeal of the assessee is treated as partly allowed for statistical Pronounced in the Court after conclusion of hearing on Copy of the order forwarded to: 1. Vishal Jalan C/o. S.N. Ghosh Associates, Advocates Seben Brothers’ Lodge P.O. Buroshibtala P.S. Chinsurah Dist. Hooghly Pin- 712 105 West Bengal 2. Income Tax Officer, Ward-45(4), Kolkata 3. CIT(A)- 4. CIT- , 5. CIT(DR), Kolkata Benches, Kolkata. 5 Associates, Advocates 45(4), Kolkata . CIT(DR), Kolkata Benches, Kolkata. Assistant Registrar/DDO ITAT, Kolkata Benches ITA No. 464/Kol/2020 Assessment Year: 2013-14 Vishal Jalan True copy By order Assistant Registrar/DDO ITAT, Kolkata Benches