ITO, New Delhi V. M/s Diamond Pocket Books Pvt. Ltd., New Delhi

ITA 5258/DEL/2012

• Counselvise Citation: 525820114 RSA 2012
• Duration Of Justice: 2 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 18-02-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 12-10-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PARWINDER KAUR
• Assessee Lawyers: SANJAY NATH
• Keywords: Additional evidence; Bad and doubtful debts; Deemed dividend
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH B BB B : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G.C. GUPTA BEFORE SHRI G.C. GUPTA BEFORE SHRI G.C. GUPTA BEFORE SHRI G.C. GUPTA, VICE , VICE , VICE , VICE PRESIDENT AND PRESIDENT AND PRESIDENT AND PRESIDENT AND SHRI SHRI SHRI SHRI T.S. KAPOOR T.S. KAPOOR T.S. KAPOOR T.S. KAPOOR, , , , ACCOUNTANT ACCOUNTANT ACCOUNTANT ACCOUNTANT MEMBER MEMBER MEMBER MEMBER ITA NO ITA NO ITA NO ITA NO. .. .5258/DEL/2012 5258/DEL/2012 5258/DEL/2012 5258/DEL/2012 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2009 2009 2009 2009- -- -10 1010 10 INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -10(3), 10(3), 10(3), 10(3), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. VS. VS. VS. VS. M/S DIAMOND M/S DIAMOND M/S DIAMOND M/S DIAMOND POCKET BOOKS POCKET BOOKS POCKET BOOKS POCKET BOOKS PVT.LTD., PVT.LTD., PVT.LTD., PVT.LTD., X XX X- -- -30, OKHLA INDUSTRIAL AREA, 30, OKHLA INDUSTRIAL AREA, 30, OKHLA INDUSTRIAL AREA, 30, OKHLA INDUSTRIAL AREA, PHASE PHASE PHASE PHASE- -- -II, II,II, II, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 020. 110 020. 110 020. 110 020. PAN : AAACD2474L. PAN : AAACD2474L. PAN : AAACD2474L. PAN : AAACD2474L. (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. PARWINDER KAUR, SR.DR. RESPONDENT BY : SHRI SANJAY NATH, CA. DATE OF HEARING : 18.02.2015 18.02.2015 18.02.2015 18.02.2015 DATE OF PRONOUNCEMENT : 04.03.2015 04.03.2015 04.03.2015 04.03.2015 ORDER ORDER ORDER ORDER PER G.C. GUPTA PER G.C. GUPTA PER G.C. GUPTA PER G.C. GUPTA, VP , VP , VP , VP : :: : THIS APPEAL BY THE REVENUE FOR THE AY 2009-10 IS D IRECTED AGAINST THE ORDER OF LEARNED CIT(A)-XIII, NEW DELHI DATED 21 ST AUGUST, 2012. 2. GROUND NO.1 OF THE REVENUES APPEAL IS AS UNDER: - ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITI ON OF RS.48,57,508/- MADE U/S 40(A)(IA) OF THE ACT ON ACC OUNT OF NON DEDUCTION OF TDS ON PAYMENTS MADE AGAINST PRINTING AND PROCESSING WORK. 3. LEARNED DR SUBMITTED THAT THE CIT(A) HAS NOT CAL LED FOR ANY REMAND REPORT IN THIS CASE AND THEREFORE, THE ORDER OF THE CIT(A) IS NOT ITA-5258/DEL/2012 2 SUSTAINABLE. SHE SUBMITTED THAT INFORMATION WAS GA THERED THAT M/S PRINT-O-PACK LTD. HAS RAISED BILLS AND COPY THEREOF SHOWS THAT THEY WERE RAISED FOR PRINTING AND PROCESSING WORK UNDERT AKEN BY THE SAID PARTY. THE ASSESSEE HAS FAILED TO MAKE ANY TDS OUT OF THE AMOUNT PAID TO THE SAID PARTY AND THEREFORE, THE PROVISION S OF SECTION 40(A)(IA) OF THE INCOME-TAX ACT, 1961 WERE RIGHTLY APPLICABLE TO THE FACTS OF THE CASE OF THE ASSESSEE. SHE SUBMITTED THAT THE WORK DONE BY THE SAID PARTY WAS IN THE NATURE OF JOB WORK AND NOT IN THE NATURE OF PURCHASES. SHE REFERRED TO PARAGRAPH 3 OF THE ASSESSMENT ORDER IN SUPPORT OF THE CASE OF THE REVENUE. SHE RELIED ON THE ORDER OF TH E ASSESSING OFFICER. 4. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IT WAS A CLEAR CASE OF TRANSACTION OF PURCHASE OF BOOKS AND NOT JO B WORK AND THEREFORE, THE PROVISIONS OF SECTION 40(A)(IA) DO N OT APPLY TO THE FACTS OF THE CASE OF THE ASSESSEE. HE SUBMITTED THAT NO REMAND REPORT WAS NECESSARY IN THIS CASE AS SUGGESTED BY THE LEARNED DR. HE RELIED ON THE ORDER OF THE CIT(A). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAV E PERUSED THE ORDER OF THE ASSESSING OFFICER AND THE CIT(A). WE FIND THAT IN THE FACTS OF THE CASE, NO REMAND REPORT WAS NECESSARY TO ADJU DICATE THE ISSUE BEFORE THE CIT(A). WE FIND THAT THE ASSESSEE HAS F ILED COPIES OF BILLS PERTAINING TO M/S PRINT-O-PACK LTD. THE SAME WERE ON ACCOUNT OF PURCHASES OF MAGAZINES AND PROMOTIONAL FORMS. THE CIT(A) HAS RECORDED THAT THESE BILLS SHOW THAT THE ASSESSEE HA S PURCHASED MAGAZINES AND PROMOTIONAL FORMS AND THE COST OF MAG AZINE ETC. INCLUDES COST OF PAPER, PRINTING AND BINDING. HE H AS FURTHER RECORDED THAT THE ASSESSEE HAS ALSO FILED CONFIRMATION FROM M/S PRINT-O-PACK LTD. VIDE LETTER DATED 28 TH NOVEMBER, 2011 WHEREIN IT IS MENTIONED THAT THE BILLS WERE RAISED FOR MAGAZINES AND BROCHURES WHICH INCLUDE THE COST OF PAPER, PRINTING AND BINDING. THE CIT(A) HAS GIVEN A FINDING THAT THE ITA-5258/DEL/2012 3 CONFIRMATION FROM M/S PRINT-O-PACK LTD. PROVES THAT THE PAYMENTS WERE MADE NOT FOR THE JOB WORK OR PRINTING CHARGES AND I N THE CASE OF THE ASSESSEE, IT WAS PURCHASE OF MAGAZINES AND PROMOTIO NAL FORMS AND THEREFORE, THERE WAS NO QUESTION OF DEDUCTING TDS. THERE BEING NO MISTAKE IN THE ORDER OF THE LEARNED CIT(A) ON THIS ISSUE, THE SAME IS CONFIRMED AND GROUND NO.1 OF THE REVENUES APPEAL I S DISMISSED. 6. GROUND NO.2 OF THE REVENUES APPEAL IS AS UNDER: - ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITI ON OF RS.7,34,316/- MADE U/S 40(A)(IA) OF THE ACT ON ACCO UNT OF NON DEDUCTION OF TDS ON PAYMENTS MADE AGAINST PACKING AND FORWARDING CHARGES WHILE ACCEPTING ADDITIONAL EVIDENCES. 7. LEARNED DR SUBMITTED THAT THE CIT(A) HAS ACCEPTE D THE ADDITIONAL EVIDENCE IN CONTRAVENTION OF THE RELEVAN T RULES. SHE SUBMITTED THAT THE ASSESSEE HAS NOT FURNISHED ANY C OPY OF BILL FROM THE PARTIES TO SUBSTANTIATE ITS CLAIM OF DEDUCTION AND ALSO NO ADDRESS OR PERMANENT ACCOUNT NUMBER WAS GIVEN OF THESE PARTIES SO AS TO ENABLE THE ASSESSING OFFICER TO MAKE INDEPENDENT ENQUIRIES . SHE SUBMITTED THAT THE ONUS WAS ON THE ASSESSEE TO PROVE WHICH TH E ASSESSEE HAS FAILED TO DISCHARGE. SHE SUBMITTED THAT THE EXPEND ITURE BEING PACKING AND FORWARDING CHARGES FALLS UNDER THE CATEGORY OF JOB WORK AND CONTRACT AND THEREFORE, THE PROVISIONS OF SECTION 1 94C WERE APPLICABLE TO THE CASE OF THE ASSESSEE. 8. LEARNED COUNSEL FOR THE ASSESSEE HAS OPPOSED THE SUBMISSIONS OF THE LEARNED DR. HE SUBMITTED THAT THE ASSESSING OFFICER NEVER REQUIRED TO PRODUCE THE BILLS BEFORE HIM AND THEREF ORE, THE SAME COULD NOT BE PRODUCED BEFORE THE ASSESSING OFFICER. HOWE VER, IT WAS A CLEAR TRANSACTION OF PURCHASES AND THEREFORE, THE PROVISI ON OF SECTION ITA-5258/DEL/2012 4 40(A)(IA) OF THE ACT IS NOT APPLICABLE TO THE CASE OF THE ASSESSEE. HE REFERRED TO THE RELEVANT PORTION OF THE APPELLATE O RDER PASSED BY THE CIT(A) IN SUPPORT OF THE CASE OF THE ASSESSEE. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE ORDER OF THE ASSESSING OFFICER AND THE CIT(A). WE FIND T HAT IT IS NOT A FIT CASE TO RESTORE THE MATTER AGAIN BEFORE THE ASSESSING OF FICER. THE ASSESSEE HAS FILED COPIES OF BILLS AND CONFIRMATIONS OF PART IES BEFORE THE CIT(A). THE CIT(A) HAS GIVEN A FINDING THAT ON GOING THROUG H THESE BILLS, IT WAS SEEN THAT THE ASSESSEE HAS PURCHASED POLY SHRINK AN D POLYTHENE BAGS FROM M/S ALLIED PLAST, BOARD FROM CHANDRA SHEKHAR ( PURANEY DABBEY WALEY) AND BALE HESSIEN CLOTH FROM GHANSHYAM JUTE T RADING CO. HE HAS RECORDED A FINDING THAT THESE ITEMS ARE PURCHAS ES OF PACKING AND FORWARDING MATERIAL AND NOT THE PAYMENT FOR PACKING AND FORWARDING AS OBSERVED BY THE ASSESSING OFFICER AND THEREFORE, ARE NOT COVERED UNDER THE PROVISIONS OF SECTION 194C OF THE ACT. I N THESE FACTS OF THE CASE, WE ARE OF THE VIEW THAT SINCE THE PAYMENTS WE RE MADE FOR PURCHASE OF PACKING AND FORWARDING MATERIAL, THE PR OVISION OF SECTION 194C WAS INAPPLICABLE AND THEREFORE, NO DISALLOWANC E UNDER SECTION 40(A)(IA) OF THE ACT COULD BE MADE. ACCORDINGLY, T HE ORDER OF CIT(A) ON THIS ISSUE IS CONFIRMED AND GROUND NO.2 OF THE REVE NUES APPEAL IS DISMISSED. 10. GROUND NO.3 OF THE REVENUES APPEAL IS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITI ON OF RS.11,55,465/- MADE ON ACCOUNT OF UNVERIFIED BAD DE BTS WHILE ACCEPTING ADDITIONAL EVIDENCES AND NOT CALLIN G FOR A REPORT FROM THE AO THEREON. ITA-5258/DEL/2012 5 11. LEARNED DR SUBMITTED THAT THE ONUS WAS ON THE A SSESSEE TO PROVE THE UNVERIFIED BAD DEBT AMOUNTS AND THE ADDIT IONAL EVIDENCE WAS ACCEPTED BY THE CIT(A). 12. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THERE WAS NO CORRESPONDENCE WITH THE DEBTOR PARTIES AND NO RECOR D OF ADDRESS OF DEBTOR PARTIES WAS AVAILABLE WITH THE ASSESSEE. HO WEVER, AS PER THE DETAILS OF THE BAD DEBTS, THE AMOUNTS DUE FROM VARI OUS PARTIES WERE VERY SMALL AND THEREFORE, IT WAS NOT ADVISABLE TO I NITIATE LEGAL PROCEEDINGS AGAINST THE SAID PARTIES. HE RELIED ON THE ORDER OF THE CIT(A). 13. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE ORDER OF THE ASSESSING OFFICER AND THE CIT(A) AND ALSO TH E DETAILS OF THE BAD DEBTS CLAIMED BY THE ASSESSEE AS FILED IN THE COMPI LATION BEFORE US. WE FIND THAT THE ASSESSEE COULD NOT FILE EVEN THE P OSTAL ADDRESS OF THE DEBTOR PARTIES. A PERUSAL OF THE DETAILS WRITTEN O FF AS FILED IN THE COMPILATION BEFORE US SHOWS THAT IT CONSISTS OF VAR IOUS DEBTOR PARTIES WHOSE AMOUNT DUE WAS RANGING FROM `513/- TO `5,80,6 01/-. ALLOWING THE SMALL AMOUNTS DUE FROM VARIOUS PARTIES AND WRIT TEN OFF BY THE ASSESSEE, THE BALANCE AMOUNTS EXCEEDING `20,000/- A RE ADDABLE DUE TO NO EVIDENCE WHATSOEVER PRODUCED BY THE ASSESSEE TO SHOW THAT THESE WERE GENUINE ITEMS OF BAD DEBTS WRITTEN OFF B Y THE ASSESSEE, THE DETAILS WHEREOF ARE AS UNDER:- SL.NO. NAME OF PARTY AMOUNT 1. VIJAYALAXMI PUBLISHERS (CHENNAI) 24,358.00 2. THE CORNER BOOK STORE (DELHI) 47,838.00 3. SECURITY DEPOSITS 27,749.00 4. POPULAR BOOK DISTRIBUTORS (TRIVENDRUM) 71,694.00 5. PEN BOOKS PVT. LTD. (ALUVA) 26,166.00 ITA-5258/DEL/2012 6 6. OSHO TIME CENTRE (RAJKOT) 24,548.00 7. ENGLISH EDITION PUBLISHERS & DISTT. (MUMBAI)(4/N) 5,80,601.00 8. CIRCLE NEWS AGENCY (GHAZIABAD) 94 24,067.00 9. CHILDREN BOOK CENTRE PVT.LTD. (PATNA)(1/A) 67,055.00 10. BALAJI BOOK DISTR IBUTOR (CHENNAI) 42,522.00 TOTAL 9,36,598.00 14. ACCORDINGLY, THE AMOUNT OF `9,36,598/- IS DISAL LOWED ON ACCOUNT OF FAILURE OF THE ASSESSEE TO PROVIDE ANY COPY OF C ORRESPONDENCE WITH THESE PARTIES AND ALSO FAILURE TO COMMUNICATE THE A DDRESS OF THESE DEBTOR PARTIES AND ADDITION IS SUSTAINED TO THAT EX TENT AND THE BALANCE ADDITION IS DELETED. ACCORDINGLY, GROUND NO.3 OF T HE REVENUES APPEAL IS PARTLY ALLOWED. 15. GROUND NO.4 OF THE REVENUES APPEAL IS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITI ON OF RS.5,40,637/- MADE U/S 2(22)(E) OF THE ACT ON ACCOU NT OF DEEMED DIVIDEND. 16. LEARNED DR SUBMITTED THAT THE CIT(A) HAS ADMITT ED ADDITIONAL EVIDENCE IN CONTRAVENTION OF RULE 46A OF THE INCOME -TAX RULES, 1962. SHE RELIED ON THE ORDER OF THE ASSESSING OFFICER. 17. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE RELEVANT DETAILS HAVE BEEN FILED AT PAGE 187 AND 188 OF THE COMPILATION FILED BEFORE THE TRIBUNAL. HE SUBMITTED THAT THE PROVISI ON OF SECTION 2(22)(E) DOES NOT APPLY TO THE FACTS OF THE ASSESSE ES CASE SINCE DEEMED DIVIDEND ADDITION COULD BE MADE ONLY IN THE HANDS OF A PERSON WHO IS A SHAREHOLDER OF THE LENDER COMPANY AND NOT IN THE HANDS OF A PERSON OTHER THAN A SHAREHOLDER. ITA-5258/DEL/2012 7 18. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE SIDES AND ALSO THE DETAILS FILED BY THE ASSESSEE IN THE COMPILATIO N BEFORE US. WE FIND THAT THE PROVISION OF SECTION 2(22)(E) WAS NOT APPL ICABLE IN THE CASE OF THE ASSESSEE AS IT IS WELL SETTLED THAT DEEMED DIVI DEND CAN BE ASSESSED ONLY IN THE HANDS OF A PERSON WHO IS A SHA REHOLDER OF THE LENDER COMPANY AND NOT IN THE HANDS OF A PERSON OTH ER THAN A SHAREHOLDER. THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF MUMBAI BENCH OF THE TRIBUNAL IN THE CAS E OF ACIT VS. BHAUMIK COLORS PVT.LTD. 27 SOT 270 (BOM). THE CI T(A) HAS DECIDED THE ISSUE CORRECTLY IN FAVOUR OF THE ASSESSEE AND A CCORDINGLY, THE ORDER OF THE CIT(A) ON THIS ISSUE IS CONFIRMED AND GROUND NO.4 OF THE REVENUES APPEAL IS DISMISSED. 19. IN THE RESULT, THE APPEAL OF THE REVENUE IS PAR TLY ALLOWED. DECISION PRONOUNCED IN THE OPEN COURT ON 4 TH MARCH, 2015. SD/- SD/- ( (( ( T.S. KAPOOR T.S. KAPOOR T.S. KAPOOR T.S. KAPOOR ) )) ) (G. (G. (G. (G. C. GUPTA C. GUPTA C. GUPTA C. GUPTA ) )) ) ACCOUNTANT ACCOUNTANT ACCOUNTANT ACCOUNTANT MEMBER MEMBER MEMBER MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VK. COPY FORWARDED TO: - 1. APPELLANT : INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -10(3), NEW DELHI. 10(3), NEW DELHI. 10(3), NEW DELHI. 10(3), NEW DELHI. 2. RESPONDENT : M/S DIAMOND POCKET BOOKS PVT.LTD., M/S DIAMOND POCKET BOOKS PVT.LTD., M/S DIAMOND POCKET BOOKS PVT.LTD., M/S DIAMOND POCKET BOOKS PVT.LTD., X XX X- -- -30, OKHLA INDUSTRIAL AREA, PHASE 30, OKHLA INDUSTRIAL AREA, PHASE 30, OKHLA INDUSTRIAL AREA, PHASE 30, OKHLA INDUSTRIAL AREA, PHASE- -- -II, II,II, II, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 020. 110 020. 110 020. 110 020. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR