Abhoy Kumar Pandey, Howrah V. ITO, Ward 47(4), Kolkata, Kolkata

ITA 484/KOL/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 3073 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-03-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 14-03-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RADHEY SHYAM
• Assessee Lawyers: M D SHAH
• Keywords: Business expenditure; Principle of natural justice; Corroborative evidences; TDS
• Section: 43B; 143(3); 40(a)(ia); 194C; 37; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B, BENC H KOLKATA BEFORE SHRI A.T.VARKEY, JM &DR. A.L.SAINI, AM ./ITA NO.484/KOL/2017 ( / ASSESSMENT YEAR: 2012-13) ABHOY KUMAR PANDEY 9, AKSHOY DUTTA LANE, BALLY, HOWRAH-711201 VS. ITO, WARD-47(4), KOLKATA ./ ./PAN/GIR NO.: AFSPP 7087 H (ASSESSEE) .. (REVENUE) ASSESSEE BY : SHRI M.D. SHAH, AR RESPONDENT BY : SHRI RADHEY SHYAM, CIT DR / DATE OF HEARING : 31/12/2018 /DATE OF PRONOUNCEMENT : 06/03/2019 / O R D E R PER DR. A. L. SAINI: THE CAPTIONED APPEAL FILED BY THE ASSESSEE PERTA INING TO ASSESSMENT YEAR 2012-13, IS DIRECTED AGAINST AN ORDER PASSED BY T HE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-14, KOLKATA (IN SHORT THE LD. CIT(A)], WHICH IN TURN ARISES OUT OF AN ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT) DATED 18.0 3.2015. 2. THE GRIEVANCE RAISED BY THE ASSESSEE ARE AS FOLL OWS: ABHOY KUMAR PANDEY ITA NO.484/KOL/2017 ASSESSMENT YEAR:2012-13 P PP PA AA AG GG GE EE E | || | 2 22 2 1. FOR THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN LAW IN UPHOLDING ADDITION OF RS. 5,82,626/ - ON ACCOUNT OF NON-RECONCILIATION OF COMMISSION RECEIVED FROM BSNL MERELY RELYING ON ENTRY IN 26AS STATEMENT COMPLETELY IGNORING THE RATIO OF THE JUDGEMENT OF HON'BLE DELHI HIGH CO URT IN THE CASE OF 'COURT ON ITS OWN MOTION V. UOI AND ORS(W.P.)(C) 2659/2012 & W. P.(C) 5443/2012 DATED 14-3-2013. 2. FOR THAT THE LD. CIT(A) DID NOT APPRECIATE THE P ETITIONER'S WRITTEN SUBMISSION IN PROPER PERSPECTIVE AND HE WAS NOT JUS TIFIED IN ARBITRARILY SUSTAINING ESTIMATED DISALLOWANCE OF DISCOUNT TO FI ELD STAFF AND SALARY TO STAFF TO THE TUNE OF 15% OF THE EXPENSES MADE. 3. FOR THAT THE LD. CIT(A) ERRED IN LAW IN SUSTAINI NG DISALLOWANCE TO THE TUNE OF RS. 1,33,500/- ON ACCOUNT OF ADVERTISEMENT CHARGES U/S 40(A)(IA) ALTHOUGH NO TDS WAS DEDUCTIBLE UNDER THE LAW ON THE SAID EXPENSES AS THE SUMS WERE PAID TO VARIOUS ADVERTISERS THROUGH AGENT AND EACH PAYMENT BEING BELOW THRESHOLD LIMIT FOR DEDUCTION OF TDS. 4. FOR THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN SU STAINING 15% OF AD HOC DISALLOWANCE OF BONA FIDE AND GENUINE SUPERVISION C HARGES WITHOUT BRINGING ANY MATERIAL ON RECORD FOR CONFIRMING SUCH DISALLOWANCE. 5. FOR THAT THE LD. CIT(A) FAILED TO APPRECIATE THA T THE LEGAL CHARGES PAID AMOUNTING TO RS. 34,700/- TO ADVOCATE WHICH WA S INCLUSIVE OF VARIOUS REIMBURSEMENT OF EXPENSES AND SUCH PAYMENT CANNOT B E SUBJECTED FOR TAX DEDUCTED AT SOURCE. 6. FOR THAT THE LD. CIT(A) OMITTED TO ADJUDICATE TH E APPELLANT'S SUBMISSION AND GROUNDS OF APPEAL IN RELATION TO DIS ALLOWANCE OF RENT U/S 40(A)(IA) AMOUNTING TO RS. 3,98.193/- PAID TO THREE DIFFERENT OWNERS CASH PAYMENT BEING BELOW THE THRESHOLD LIMIT PRESCRIBED FOR DEDUCTION OF TAX FOR RENT. ABHOY KUMAR PANDEY ITA NO.484/KOL/2017 ASSESSMENT YEAR:2012-13 P PP PA AA AG GG GE EE E | || | 3 33 3 7. FOR THAT THE LD. AUTHORITY BELOW MOST ARBITRARIL Y UPHELD THE DISALLOWANCE TO THE TUNE OF 15% ON GENUINE AND BONA FIDE BUSINESS EXPENSES AGGREGATING TO RS. 30,56,072/- ON ACCOUNT OF CONVEYANCE, GENERAL CHARGES, MISC. EXPENSES, PRINTING, REPAIRS AND MAINTENANCE. TOUR EXPENSES WHICH DISALLOWANCE IS LIABLE TO BE DE LETED AT THIS FORUM. 8. FOR THAT THE LD. CIT(A) ERRED IN LAW IN NOT APPR ECIATING PETITIONERS SUBMISSION OR SERVICE TAX LIABILITY OF RS. 20,90,72 9/- WITHOUT AT ALL CONSIDERING THE CITED CASE LAW AND FACTS AND CIRCUM STANCES OF THE CASE. YOUR APPELLANT CRAVES LEAVE TO ADD SUPPLEMENT OR AM END FURTHER GROUND OR GROUNDS AT THE TIME OF HEARING. 3. GROUND NO. 1 RAISED BY THE ASSESSEE RELATES TO A DDITION OF RS. 5,82,626/- ON ACCOUNT OF NON-RECONCILIATION OF COMMISSION RECEIVE D FROM BSNL. 4. BRIEF FACTS QUA THE ISSUE ARE THAT THE ASSESSEE IS THE PROPRIETOR OF M/S INTERNATIONAL TELECOM NETWORK AND IS SERVING AS A B SNL FRANCHISEE AND THE MARKETING PARTNER OF BSNL. IN RESPECT OF COMMISSION AND DISCOUNT RECEIVED FROM BSNL A SUM OF RS. 1,65,71,193/-, THE ASSESSEE FILED SANCTION MEMOS THAT OUT OF RS. 1,65,71,193/-, RS. 20,94,135/- RECEIVED AS SERV ICE TAX ON 24.02.2012 AS REFLECTED IN ITS DETAILS, AND RS. 65,67,998/- RECEI VED AS SERVICE TAX ON 31.03.2012 AS REFLECTED IN ITS DETAILS. BUT THE ASSESSEE HAS ALSO FILED ANOTHER TWO SANCTION MEMOS OF SERVICE TAX OF RS. 2,92,131/- AND 19,956/- WHICH WERE NOT TALLIED WITH PAYMENTS AS REFLECTED IN ITS DETAILS . AND AS SUCH , THESE TWO MEMOS OF SERVICE TAX ARE NOT CONSIDERED. THEREFORE, OUT OF COMMISSIO N AND DISCOUNT RECEIVED OF RS. 1,65,71,193/- (RS. 20,94,135/- + RS. 65,67,998/-) R S. 86,62,133/- WAS RECEIVED AS SERVICE TAX. HENCE GROSS RECEIPT OF COMMISSION AND DISCOUNT OF THE ASSESSEE IS RS. 79,09,070/- (RS. 1,65,71,193/- - RS. 86,62,123/ -). BUT THE ASSESSEE HAS SHOWN ITS GROSS RECEIPTS OF COMMISSION AND DISCOUNT OF RS . 73,26,444/- IN HIS RETURN OF INCOME. HENCE, AN AMOUNT OF RS. 5,82,626/- (RS. 79 ,09,070/- - RS. 73,26,444/-) AS ABHOY KUMAR PANDEY ITA NO.484/KOL/2017 ASSESSMENT YEAR:2012-13 P PP PA AA AG GG GE EE E | || | 4 44 4 COMMISSION AND DISCOUNT HAS ESCAPED ASSESSMENT. A S SUCH RS. 5,82,626/- WAS ADDED BACK TO ITS TOTAL INCOME AS UNDISCLOSED COMM ISSION AND DISCOUNT. 5. AGGRIEVED BY THE ADDITION MADE BY THE ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. 6. AGGRIEVED BY THE ORDER OF THE LD. CIT(A) THE ASS ESSEE IS IN APPEAL BEFORE US. 7. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW WHEREAS THE LD. THE LD. DR HAS PR IMARILY REITERATED THE STAND TAKEN BY THE ASSESSING OFFICER WHICH WE HAVE DISCUS SED IN OUR EARLIER PARA AND THE SAME IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. WE NOTE THAT THE ASSESSEE WAS UNABLE TO RECONCILE T HE DIFFERENCE IN FORM 26AS AND LD. COUNSEL ALSO FAIRLY AGREED WITH US THAT ASS ESSEE HAS FAILED TO RECONCILE THE DIFFERENCE. HOWEVER THE COUNSEL SUBMITTED BEFORE US THAT THE ENTIRE DIFFERENCE OF RS. 5,82,626/- SHOULD NOT BE TREATED AS INCOME OF T HE ASSESSEE. ONLY THE GROSS PROFIT RATE SHOULD BE APPLIED ON RS. 5,82,626/-. TH E ASSESSING OFFICER AS WELL AS LD. CIT(A) BOTH WERE WRONGLY TREATED THE ENTIRE REC EIPT AS UNDISCLOSED INCOME OF THE ASSESSEE INSTEAD TO TAX THE PROFIT ELEMENT. WE NOTE THAT THE GROSS PROFIT RATE OF ASSESSEE IS 5% THEREFORE TO MEET THE END OF JUSTICE , WE ARE OF THE VIEW THAT AD HOC DISALLOWANCE @ 6.5% SHOULD BE SUSTAINED ON THE DIFF ERENTIAL AMOUNT OF 26AS TO THE TUNE OF RS. 5,82,626/- WHICH COMES TO RS. 37,87 0/-. THEREFORE WE DIRECT THE ASSESSING OFFICER TO DISALLOW, ONLY 6.5% OF RS. 5,8 2,626/-. ACCORDINGLY, WE ALLOW THIS GROUND PARTLY. 9. GROUND NO. 2 RAISED BY THE ASSESSEE RELATES TO E STIMATED DISALLOWANCE OF DISCOUNT TO FIELD STAFF AND SALARY TO STAFF TO THE TUNE OF 15% OF THE EXPENSES MADE. ABHOY KUMAR PANDEY ITA NO.484/KOL/2017 ASSESSMENT YEAR:2012-13 P PP PA AA AG GG GE EE E | || | 5 55 5 10. BRIEF FACTS QUA THE ISSUE ARE THAT THE ASSESSEE CLAIMED DISCOUNT AND SALARY PAID TO FIELD STAFF AT RS. 31,90,617/- AND RS. 19,52,536 /- RESPECTIVELY AND SUPPORT OF SUCH CLAIM THE ASSESSEE HAS FILED BEFORE ASSESSING OFFICER VARIOUS NAMES AND PHONE NUMBERS OF EASY RECHARGE PROVIDER BUT ASSESSI NG OFFICER NOTED THAT THEY WERE NOT AT ALL STAFF OF THE ASSESSEE. VERIFICATION OF PHONE NUMBERS WERE MADE AND REPORTED THAT THEY ARE ALL EASY RECHARGE PROVIDERS OF LOCALITY AND GETTING 2.5% DISCOUNT ON RECHARGE AMOUNT FROM THE BSNL FRANCHISE E ASSESSEE CONCERN AND THEY WERE NOT GETTING ANY SALARY FROM THE ASSESSEE. IN T HIS RESPECT ASSESSING OFFICER ISSUED SHOW CAUSE NOTICE. IN RESPONSE TO SHOW CAUSE NOTICE, ASSESSEE HAS MADE A REPLY WITHOUT ANY SUPPORTING EVIDENCES, THEREFORE ASSESSING OFFICER DID NOT ACCEPT THE SAME. THE ASSESSEE WAS GIVEN SECOND OPP ORTUNITY BY GIVING AN ANOTHER SHOW CAUSE NOTICE DATED 10.03.2015 DULY SERVED ON 1 1.03.2015 BUT THE ASSESSEE COULD NOT SUBSTANTIATE ITS CLAIM AS REASONABLE. THE ASSESSEE MADE SALES OF RS. 9,44,97,724/- AND ALLOWED DISCOUNT @ 2.5% I.E. RS. 23,62,443/- TO THE EASY RECHARGE PROVIDER. HENCE RS. 27,80,709/- (RS. 31,9 0,617/- + RS. 19,52,536/- - RS. 23,62,443/-) WAS DISALLOWED AND ADDED BACK TO THE T OTAL INCOME. 11. AGGRIEVED BY THE ADDITION MADE BY THE ASSESSING OFFICER THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS PARTLY ALLOWED THE GROUNDS RAISED BY THE ASSESSEE. 12. AGGRIEVED BY THE ORDER OF THE LD. CIT(A) THE A SSESSEE IS IN FURTHER APPEAL BEFORE US. THE LD. THE LD. DR FOR THE REVENUE HAS PRIMARILY REITERATED THE STAND TAKEN BY THE ASSESSING OFFICER WHICH WE HAVE ALREAD Y NOTED IN OUR EARLIER PARA AND THE SAME IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. ON THE OTHER HAND, LD. COUNSEL RELIED ON THE SUBMISSIONS MADE BEFORE AUTHO RITIES BELOW. 13. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE NOTE THAT THE ASSESSING OFFICER HAS NOT QUOTED V ARIOUS CASES IN RESPECT OF SALARY PAID BY THE ASSESSEE FOUND TO BE BOGUS. HE HAS NOT POINTED OUT ANY REASON BY WHICH IT CAN BE INFERRED THAT THE ASSESSEES EMP LOYMENT OF PERSONS ON SALARY ABHOY KUMAR PANDEY ITA NO.484/KOL/2017 ASSESSMENT YEAR:2012-13 P PP PA AA AG GG GE EE E | || | 6 66 6 WOULD HAVE BEEN FOR NON-BUSINESS PURPOSES AND TO IN FLATE THE EXPENSES. APART FROM THIS WE NOTE THAT THE DISCOUNT ALLOWED TO FIEL D STAFF WERE FOR THE PURPOSE OF ASSESSEES BUSINESS THEREFORE IT IS ALLOWABLE EXPEN SES U/S 37 OF THE ACT. WE NOTE THAT THE ASSESSING OFFICER COULD HAVE VENTURED INTO ESTIMATION ONLY AFTER REJECTING BOOKS OF ACCOUNTS OF THE ASSESSEE U/S 145(3) AND TH EREAFTER BY BEST JUDGMENT ASSESSMENT U/S 144 OF THE ACT. HERE IN THIS CASE, T HE ASSESSING OFFICER HAS NOT PASSED ANY ORDER U/S 144 OF THE ACT. THE ASSESSING OFFICER THUS WITHOUT REJECTING BOOKS OF ACCOUNTS OF THE ASSESSEE HAS GONE FOR ESTI MATION ON SUSPICION AND CONJECTURES THAT THE ASSESSEE MAY BE INFLATING ITS EXPENSES BY PAYING SALARY TO STAFF AND ALLOWING DISCOUNT TO FIELD STAFF. THEREFORE, AC TION OF THE ASSESSING OFFICER IS NOT ACCEPTABLE. ON APPEAL BY THE ASSESSEE, THE LD. CIT(A) HELD THAT IN ORDER TO PROTECT THE INTEREST OF REVENUE, IT WOULD BE SUFFIC E TO MAKE AN ESTIMATED DISALLOWANCE OF 15% OF THE CLAIM OF THE SALARY. WE NOTE THAT LD. CIT(A) ALSO SUSTAINED THE ADDITION BASED ON ESTIMATION WHICH IS NOT ACCEPTABLE FOR THE REASONS GIVEN ABOVE. AS REGARDS THE DISCOUNT CLAIMED BY THE ASSESSEE THE LD. CIT(A) NOTED THAT DISCOUNT ALLOWED BY THE ASSESSING OFFICER AS PER HIS OWN EST IMATES IS MORE THAN THE AMOUNT CLAIMED BY THE ASSESSEE, THEREFORE LD. CIT(A) RESTR ICTED THE CLAIM OF THE ASSESSEE TO THE LESSER OF THE TWO FIGURES. HOWEVER, WE NOTE THAT ASSESSEE CLAIMED DISCOUNT GIV EN TO FIELD STAFF AT RS. 31,90,617/- AND SALARY PAID AT RS. 19,52,536/-. THE ASSESSING OFFICER COMPUTED THE DISCOUNT @ 2.5% AT RS. 9,44,97,724/- WHICH COM ES TO RS. 23,62,443/-; AS AGAINST THE CLAIM OF THE ASSESSEE TO THE TUNE OF RS . 31,90,617/-. THUS, THE ASSESSING OFFICER MADE THE TOTAL DISALLOWANCE OF RS . 27,80,709/- (31,90,617 + 19,52,536 23,62,443) WHICH IS HEREBY DELETED. 14. GROUND NOS. 3 AND 4 RAISED BY THE ASSESSEE REL ATE TO DISALLOWANCE TO THE TUNE OF RS. 1,33,500/- ON ACCOUNT OF ADVERTISEMENT CHAR GES U/S 40A(IA) OF THE ACT AND 15% AD HOC DISALLOWANCE OF SUPERVISION CHARGES RS. 1,69,207/- (15% OF RS. 11,28,047/-). ABHOY KUMAR PANDEY ITA NO.484/KOL/2017 ASSESSMENT YEAR:2012-13 P PP PA AA AG GG GE EE E | || | 7 77 7 15. THE BRIEF FACTS QUA THE ISSUE ARE THAT THE ASSE SSEE HAS CLAIMED THE ADVERTISEMENT CHARGE PAID TO MR. SUBIR DAS AT RS. 6,28,978/- DURING THE F.Y. 2011-12. ASSESSEE ALSO PAID LEGAL CHARGES TO MR. L EGUM JURE AT RS. 2,41,500/-. IN SHOW CAUSE NOTICE ISSUED BY THE ASSESSING OFFICE R THE ASSESSEE WAS ASKED TO OFFER EXPLANATION AS TO WHY ADVERTISEMENT CHARGE PA ID TO MR. SUBIR DAS AND LEGAL CHARGES PAID TO MR. LEGUM JURE SHOULD NOT BE DISA LLOWED U/S 40A(IA) OF THE ACT. IN RESPONSE THE ASSESSEE SUBMITTED EXPLANATION BUT THE ASSESSING OFFICER REJECTED THE ASSESSEES EXPLANATION AND MADE ADDITION OF RS. 6,28,978/- AND RS. 2,41,500/- RESPECTIVELY. THE ASSESSING OFFICER HAS ALSO DISALLOWED SUPERVISI ON CHARGES OF RS. 11,28,044/- U/S 40A(IA) OF THE ACT ON THE GROUND THAT NO TDS WA S DEDUCTED ON CONTRACTUAL PAYMENTS TO SUPERVISORS. 16. ON APPEAL, THE LD. CIT(A) DELETED THE ADDITION PARTLY. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 17. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE NOTE THAT THE LD. CIT(A) DELETED THE ADDITION OF RS. 4,95,478/- WHICH PERTAINS TO ADVERTISEMENT EXPENSES, AS THE EXPENSES WERE REL ATED TO PURCHASE OF GOODS/ MATERIAL ON WHICH NO TDS IS REQUIRED TO BE DEDUCT ED. HOWEVER, LD. CIT(A) HAS CONFIRMED THE ADDITION FOR THE BALANCE AMOUNT OF RS . 1,33,500/- (RS. 6,28,978/- - RS. 4,95,478/-) HOWEVER FOR THE BALANCE AMOUNT OF RS. 1,33,500/- AS CONFIRMED BY LD. CIT(A), THE LD. COUNSEL EXPLAINED THE BENCH THAT THE RECIPIENT OF THE SAID AMOUNT HAS SHOWN IN HIS RETURN OF INCOME, AS INCOME AND OFFERED THE TAXES THEREON. WE FIND MERIT IN THE SUBMISSIONS MADE BY THE COUNSEL THAT IF THE PAY EE HAS INCLUDED THE RECEIPTS OF RS. 1,33,500/- IN HIS BOOKS OF ACCOUNTS AND HAS OF FERED FOR TAXES THEN DISALLOWANCE ON ACCOUNT OF NON-DEDUCTION OF TDS, WILL NOT ARISE. THE LD. DR FOR THE REVENUE HAS FAIRLY AGREED WITH THE SUBMISSION MADE BY LD. COUNSEL, THEREFORE, WE REMIT THIS ISSUE BACK TO THE FILE OF ASSESSING OFFICER WITH THE DIRECTION TO ABHOY KUMAR PANDEY ITA NO.484/KOL/2017 ASSESSMENT YEAR:2012-13 P PP PA AA AG GG GE EE E | || | 8 88 8 EXAMINE WHETHER RECEIPTS OF RS. 1,33,500/- HAS BEEN OFFERED FOR TAXATION BY THE PAYEE. IF THE PAYEE HAS OFFERED FOR TAXATION THEN N O DISALLOWANCE SHALL BE MADE IN RESPECT OF RECEIPTS OF RS. 1,33,500/- IN RESPECT OF SUPERVISION CHARGES OF RS. 11,28,047/ - THE LD. CIT(A) DISALLOWED, ON AD HOC BASIS 15% OF THE SAID SUPERVISION CHARGES. WE NOTE THAT LD. ASSESSING OFFICER DISALLOWED THE SUPERVISION CHARGES ON THE G ROUND THAT NO TDS WAS DEDUCTED ON CONTRACTUAL PAYMENTS TO SUPERVISORS. HO WEVER, THE LD. COUNSEL POINTED OUT BEFORE THE BENCH THAT THESE SUPERVISORS ARE REGULAR EMPLOYEES AND EACH PAYMENT IS BELOW THE THRESHOLD LIMIT FOR DEDUC TION OF TDS. WE NOTE THAT ASSESSING OFFICER HAS NOT DENIED IN THE ASSESSMENT ORDER THAT SUPERVISION CHARGES WERE NOT PAID. WE NOTE THAT THESE PAYMENTS ARE NOT CONTRACTUAL IN NATURE THEREFORE PROVISIONS OF SECTION 194C DOES NOT APPLY. HENCE, W E DELETE THE ENTIRE ADDITION MADE BY ASSESSING OFFICER AT RS. 11,28,047/-. 18. GROUND NO. 5 RAISED BY THE ASSESSEE RELATES TO ADDITION ON ACCOUNT OF LEGAL CHARGES PAID BY THE ASSESSEE AMOUNTING TO RS. 34,70 0/- TO ADVOCATE. 19. THE BRIEF FACTS QUA THE ISSUE ARE THAT THE ASS ESSEE HAS PAID LEGAL CHARGES TO DIFFERENT LAWYERS OF A SOLICITOR FIRM LEGUM JURE. P AYMENTS WERE MADE DIRECTLY TO THE INDIVIDUAL ADVOCATES. A LIST OF WHICH IS AVAILA BLE IN THE WRITTEN SUBMISSION AND PAPER BOOK. THE ASSESSEES EXPLANATION WAS REJECTED BY THE ASSESSING OFFICER IN LIMINE WITHOUT ASCRIBING ANY REASON OR DISCUSSION S. AS PER ASSESSEES PAPER BOOK A SUM OF RS. 34,700/- WAS PAID TO ADV. AMITAVA GHO SH. THIS PAYMENT DISALLOWANCE WAS CONFIRMED U/S 40(1)(IA) OF THE AC T. 20. ON APPEAL THE LD. CIT(A) PARTLY DELETED THE ADD ITION. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 21. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE NOTE THAT THE PAYMENTS WERE MADE DIRECTLY TO THE GOVERNMENT ADVOCATES AND THE ASSESSEE SUBMITTED THE LIST OF ADVOCATES DURING THE APPELLATE PROCEEDINGS. THE ASSESSEES EXPLANATION WAS REJECTED BY THE LD. CIT( A) WITHOUT ASCRIBING ANY ABHOY KUMAR PANDEY ITA NO.484/KOL/2017 ASSESSMENT YEAR:2012-13 P PP PA AA AG GG GE EE E | || | 9 99 9 DETAILED REASONING. WE NOTE THAT THE LD. COUNSEL SU BMITTED BEFORE THE BENCH THAT THIS PAYMENT IS AGAINST THE REIMBURSEMENT OF EXPENS ES AND DOES NOT CONTAIN ANY INCOME ELEMENT THEREFORE NO TDS IS REQUIRED. WE FIN D MERIT IN THE SUBMISSIONS OF THE ASSESSEE THAT THE SAID ADVANCE IS AGAINST THE R EIMBURSEMENT OF EXPENSES WHICH DOES NOT REQUIRE DEDUCTION OF ANY TDS, HENCE, WE DE LETE THE ADDITION OF RS. 34,700/-. 22. GROUND NO. 6 RAISED BY THE ASSESSEE RELATES TO DISALLOWANCE OF RENT U/S 40A(IA) OF THE ACT TO THE TUNE OF RS. 3,98,193/- PAID TO TH REE DIFFERENT OWNERS. 23. AT THE OUTSET ITSELF WE NOTE THAT THE ASSESSEE HAS PAID RENT BELOW THRESHOLD LIMIT TO THREE PERSONS THE DETAILS OF WHICH ARE GIVEN BEL OW: SMT. SUR RS. 1,71,000.00 MR. YOGESH NIGAM RS. 75,731.00 MR. ABHISHEKH NIGAM RS. 75,731.00 MS. ANKITA NIGAM RS. 75,731.00 RS. 3,98,193.00 WE NOTE THAT ALL THE PAYMENTS TO EACH PERSON IS BEL OW THRESHOLD LIMIT OF RS. 1,80,000/-, AND SINCE IT IS BELOW THRESHOLD LIMIT THEREFORE THIS DOES NOT REQUIRE ANY DEDUCTION OF TDS. HOWEVER, CONSIDERING THE PRINCI PLE OF NATURAL JUSTICE AND FAIR PLAY WE REMIT THIS ISSUE BACK TO THE FILE OF THE LD . ASSESSING OFFICER TO EXAMINE WHETHER EACH PAYMENT TO THESE THREE LAND LORD IS BE LOW THRESHOLD LIMIT OF RS. 1,80,000/- OR NOT, IF IT IS BELOW RS. 1,80,000/- NO DISALLOWANCE WOULD BE MADE. THEREFORE WE DIRECT THE LD. ASSESSING OFFICER TO E XAMINE THE PAYMENTS AND ADJUDICATE THIS ISSUE IN ACCORDANCE WITH LAW. HENCE WE ALLOW THIS GROUND RAISED BY THE ASSESSEE FOR STATISTICAL PURPOSES. 24. GROUND NO. 7 RAISED BY THE ASSESSEE RELATES TO AD HOC DISALLOWANCE TO THE TUNE OF RS. 30,56,072/- ON ACCOUNT OF GENERAL EXPENSES, MISCELLANEOUS EXPENSES, CONVEYANCE EXPENSES, PRINTING, REPAIRS AND MAINTEN ANCE EXPENSES. ABHOY KUMAR PANDEY ITA NO.484/KOL/2017 ASSESSMENT YEAR:2012-13 P PP PA AA AG GG GE EE E | || | 1 11 10 00 0 25. THE BRIEF FACTS QUA THE ISSUE ARE THAT THE ASSE SSING OFFICER MADE THE ESTIMATED DISALLOWANCE @ 20% OF BUSINESS EXPENSES LIKE CONVE YANCE, GENERAL EXPENSES, MISC. EXPENSES, PRINTING, REPAIR AND MAINTENANCE AN D TOUR EXPENSES. ON APPEAL, THE LD. CIT(A) REDUCED IT TO 15%. WE NOTE THAT THE ASS ESSING OFFICER HAS NOT POINTED OUT ANY COGENT REASONING FOR MAKING THESE DISALLOWA NCES. WE NOTE THAT ASSESSEES BOOKS OF ACCOUNTS ARE NOT REJECTED BY ASSESSING OFF ICER U/S 145(3) OF THE ACT AND THE ASSESSMENT WAS CARRIED OUT U/S 143(3) OF THE AC T. MOREOVER, THE ASSESSING OFFICER HAS NOT EXAMINED THE GENUINENESS OF THESE E XPENSES ITEM WISE. THE ASSESSING OFFICER OUGHT TO DISALLOW ONLY THOSE EXPE NSES FOR WHICH THE ASSESSEE HAS NOT SUBMITTED BILLS AND VOUCHERS TO SUBSTANTI ATE THE BONA FIDE OF THE CLAIM. WE NOTE THAT WITHOUT REJECTING THE BOOKS OF ACCOUNT S OF THE ASSESSEE AND TO MAKE ESTIMATED DISALLOWANCE IS NOT JUSTIFIABLE AND IT NE EDS TO BE DELETED. ACCORDINGLY, WE DELETE THE DISALLOWANCE OF RS. 30,56,072/-. 26. GROUND NO. 8 RAISED BY THE ASSESSEE RELATES TO SERVICE TAX LIABILITY OF RS. 20,90,729/-. 27. AT THE OUTSET ITSELF, WE NOTE THAT AT THE ASSES SMENT STAGE NO DOCUMENTARY EVIDENCE IN SUPPORT OF HIS CLAIM WAS FURNISHED BY T HE ASSESSEE THEREFORE ASSESSING OFFICER TREATED THE SAME AS BOGUS LIABILITY OF RS. 20,90,279/-. THE COUNSEL EXPLAINS BEFORE US THAT THE SAME PERTAINS TO SERVIC E TAX LIABILITY WHICH WAS DIRECTLY PAID BY BSNL AFTER YEAR END FROM DEDUCTION OF THEIR ACCOUNT. HOWEVER NO DOCUMENTARY EVIDENCE IN SUPPORT OF THIS CLAIM COULD BE BROUGHT ON RECORD IN THE ASSESSMENT STAGE AND EVEN AT THE APPELLATE STAGE. IN THE ABSENCE OF DOCUMENTARY EVIDENCE THIS GROUND WAS DISMISSED. WE NOTE THAT L D. DR FOR THE REVENUE DISPUTED THAT IT IS NOT CERTAIN WHETHER IMPUGNED AMOUNT OF R S. 20,90,729/- IS A SERVICE TAX LIABILITY OR NOT. THEREFORE WE ARE OF THE VIEW THAT THIS FACT NEEDS TO BE EXAMINED BY ASSESSING OFFICER WHETHER THE IMPUGNED AMOUNT OF RS . 20,90,729/- IS PERTAINED TO SERVICE TAX LIABILITY OR NOT. IF IT IS A SERVICE T AX LIABILITY NO DISALLOWANCE IS WARRANTED U/S 43B OF THE ACT. THEREFORE WE SET ASID E THE ORDER OF LD. CIT(A) FOR THIS ISSUE AND REMIT THE ISSUE BACK TO THE FILE OF ASSESSING OFFICER TO ADJUDICATE THE ABHOY KUMAR PANDEY ITA NO.484/KOL/2017 ASSESSMENT YEAR:2012-13 P PP PA AA AG GG GE EE E | || | 1 11 11 11 1 ISSUE IN ACCORDANCE WITH LAW. STATISTICAL PURPOSES, THIS GROUND OF THE ASSESSEE IS TREATED TO BE ALLOWED. 28. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 06.03 .2019 SD/- ( A.T.VARKEY ) SD/- (A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA; / DATE: 06 /03/2019 ( SB, SR.PS ) COPY OF THE ORDER FORWARDED TO: 1. ABHOY KUMAR PANDEY 2. ITO, WARD-47(4), KOLKATA 3. C.I.T(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. 6. GUARD FILE. TRUE COPY BY ORDER ASSIST ANT REGISTRAR ITAT, KOLKA TA BENCHES