Sri Sunil Chowdhury, Kolkata V. ITO, Ward-33(4), Kolkata

ITA 57/KOL/2022

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 0198 (ITAT-KOLKATA)
• Duration Of Justice: 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Next Hearing Date: 31-08-2022
• Assessment Year: 2014-2015
• Appeal Filed On: 26-01-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 40A(3); 143(3); 133(6); 22

Judgement Text

आयकर अपील य अ धकरण, कोलकाता पीठ ‘एसएमसी’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH: KOLKATA ी राजेश क ु मार, लेखा सद य एवं ी संजय शमा , या यक सद य के सम [Before Shri Rajesh Kumar, Accountant Member & Shri Sonjoy Sarma, Judicial Member] I.T.A. No. 57/Kol/2022 Assessment Year : 2014-15 Shri Sunil Chowdhury (PAN: AEPPC 2716 Q) Vs. ITO, Ward-33(4), Kolkata Appellant / (अपीलाथ ) Respondent / ( !यथ ) Date of Hearing / स ु नवाई क$ त&थ 01.09.2022 Date of Pronouncement/ आदेश उ)घोषणा क$ त&थ 19.10.2022 For the Appellant/ नधा /रती क$ ओर से Shri Soumitra Chowdhury, Advocate Shri Jaydeep Chakraborty, Advocate For the Respondent/ राज व क$ ओर से Shri Partha Pratim Barman, Addl. CIT ORDER / आदेश Per Shri Rajesh Kumar, AM: This is the appeal preferred by the assessee against the order of the Ld. Commissioner of Income Tax(Appeals)-NFAC, Delhi (hereinafter referred to as the Ld. CIT(A)”] dated 03.01.2022 for the AY 2014-15. 2. The common issue raised in ground no. 1 is general in nature and therefore requires no specific adjudication. 3. The issue raised in ground nos. 2 and 3 is against the confirmation of addition of Rs. 23,17,568/- by ld CIT(A) as made by the AO u/s 40A(3) of the Act by ignoring the facts that none of the payments to any individual/entity exceeded Rs. 20,000/-. 2 I.T.A. No.57/Kol/2022 Assessment Year: 2014-15 Shri Sunil Chowdhury 4. Facts in brief are that during the course of assessment proceedings, the AO observed that the assessee is deriving income from contractual work and has made following payments exceeding Rs. 20,000/-. Accordingly a show cause notice was issued dated 02.12.2016 calling upon the assessee to explain as to why the payments exceeding Rs. 20,000/- should not be disallowed in consonance with the provisions of Section 40A(3) of the Act. The AO noted in the assessment order that though the assessee appeared before the AO during assessment proceedings but remained silent regarding this point and thus the AO presumed that the assessee has nothing to state on the issue and finally made an addition of Rs. 23,17,568/- to the income of the assessee u/s 40A(3) of the Act for incurring expenses in violation of the provisions of Rule 6DD in the assessment framed u/s 143(3) of the Act. 5. In the appellate proceedings, the Ld. CIT(A) simply confirmed the finding of the AO without giving relief to the assessee on this issue. 6. The Ld. A.R vehemently submitted before the Bench that both the authorities below have failed to take due cognizance of the evidences adduced before them as regards the breakup/details of payments made to various parties in cash. The Ld. A.R. filed breakup of all the amounts before the Bench and also pointed out from the Paper Book that all the details were also available before the authorities below but they have simply overlooked the facts on records. The Ld. A.R took us through the each and every item of expenditure qua labour charges/road purchases, general expenses and proved that all these payments were below Rs. 20,000/-. The Ld. A.R. also took us through the details of said expenditure and vouchers which are placed at page no. 468 to 592 of PB. The Ld. A.R. therefore requested that the addition as confirmed by the Ld. CIT(A) is wrong and hence may kindly be deleted. 7. The Ld. D.R. on the other hand, submitted that ceiling for making payment was Rs. 10,000/- during the year and not Rs. 20,000/- as argued by the ld. Counsel for the assesse and therefore the Ld. D.R submitted that payments were above Rs. 10,000/- 3 I.T.A. No.57/Kol/2022 Assessment Year: 2014-15 Shri Sunil Chowdhury and admittedly below Rs. 20,000/- and were rightly disallowed by the AO and confirmed by the Ld. CIT(A). 8. In the rebuttal, the Ld. Counsel for the assessee took us through the provisions of Income Tax Act thereby controverting the point made by the Ld. D.R and submitted that the ceiling of ten thousand was provided by Finance Act, 2017 w.e.f 01.04.2018 and prior to that ceiling for cash payment was twenty thousands. The Ld. A.R therefore prayed that the issue may kindly be decided accordingly as the limit during the instant year for making payment for expenses was Rs. 20,000/-. 9. Having heard the rival submissions and perusing the material on record including evidences/details/vouchers as regards cash payments in respect of expenses which are available at page nos. 468 to 592 of the paper book, we note that all these payments were made to various parties either on account of labour charges or painting work or purchases etc. and all these payments are below Rs. 20,000/-. In our opinion, the provisions of Section 40A(3) of the Act are not attracted to these payments and therefore the order of Ld. CIT(A) is wrong and cannot be sustained. We also note that all the evidences were furnished and placed before the authorities below and somehow escaped their attention. In view of these facts, we are inclined to set aside the order of Ld. CIT(A) on this issue and direct the AO to delete the addition of Rs. 23,17,568/-. 10. The issue raised in ground no. 4,5 & 6 relates to the confirmation of addition on account of closing balances by the Ld. CIT(A) as made by the AO in respect of sundry creditors. 11. In ground no. 4, the assessee has challenged the addition of Rs. 7,53,014/- by the Ld. CIT(A) as made by the AO on account of closing balance differences two sundry creditors as on 31.03.2014. 12. The AO during the course of assessment proceedings issued notice u/s 133(6) of the Act to various sundry creditors and on perusal of the ledger copies received from Mousum Hardware and Paras Aluminium, the AO noted that closing balances as 4 I.T.A. No.57/Kol/2022 Assessment Year: 2014-15 Shri Sunil Chowdhury on 31.03.2014 stood at Rs. 150,709/- and 5,44,000/- respectively whereas as per the books of account of the assessee the outstanding balances were Rs. 360,457/- and Rs. 734/- respectively as on that date resulting into difference of Rs. 7,53,014/- which was informed to the assessee vide letter dated 02.12.2016 but assessee did not reply the same and finally it was added to the income of the assessee. 13. Similarly ground no. 5 the assessee has challenged the confirmation of addition of Rs. 2,53,314/- by the Ld. CIT(A) on account of closing balance difference of sundry creditor i.e. Mondal Enterprise and similarly ground no. 6 , the addition of Rs. 10,06,328/- which was confirmed by the ld. CIT(A) was challenged. 14. Facts in brief are that on the basis of reply received in response to notice issued u/s 133(6) of the Act from Mondal Enterprise, the AO came to the conclusion that the there was a difference between the confirmation signed by Mondal Enterprise and the assessee’s books of accounts to the extent of 253,314 as on 31.03.2014. The AO added the to the income of the assessee. 15. In the appellate proceedings, the Ld. CIT(A) confirmed the order of AO thereby sustaining all these additions. 16. After hearing the rival parties and perusing the material on record and after examining the copies of account furnished by the assessee in respect of Paras Aluminium, Mousam Hardware and Sanitary and Mondal Enterprise, we note that the assessee has made various payments through cheques which were duly presented for payment in the State Bank of India. As is apparent from the copy account of Paras Aluminium , the assessee has fully discharged its liability and there was closing balance of Rs. 753,014/-.Therefore there is no room for any doubt that there is any discrepancy in the books of accounts as each and every bill was paid through cheque and was duly presented for payment in the bank account of the assessee. Similarly in the case of Mondal enterprises copy of account whereof is filed at page 134 of PB and bills and vouchers/invoices are filed at page 135 to 152 of PB, we observe from 5 I.T.A. No.57/Kol/2022 Assessment Year: 2014-15 Shri Sunil Chowdhury the examination of the evidences and records that the purchases were duly discharged by account payee cheques drawn on HDFC Bank which were duly presented for payment. We also note that the last payment made by cheque of Rs. 62,880/- on 23.03.2014 was presented in the bank on 06.05.2014 and closing balance of Rs. 2,53,314/- was also outstanding at the year end. Therefore we do not find any discrepancy in the ledger account and the payments made to this supplier as all bills were paid by account payee cheques. So in view of these facts the order of Ld. CIT(A) confirming the additions cannot be sustained. In respect of Mousam Hardware and Sanitary a copy of which is filed at page no. 182 of PB and bills and vouchers are placed from page nos. 185 to 299 of PB, we note that the said firm is a regular suppliers of the assessee. We observe that in this case also all the payments were made through banks namely Axis Bank as is placed at page no. 14 to 15 and State Bank of India placed at page no. 22 to 79 of PB and all the cheques were duly paid and presented during the year except the last cheque of Rs. 3,28,682/- issued on 23.03.2014 which was credited in next year. Therefore, considering these details, bills and vouchers and payments by cheques, we are not in agreement with the conclusion drawn by the Ld. CIT(A) on this issue and accordingly we set aside the order of Ld. CIT(A) and direct the AO to delete the addition of Rs. 7,53,014 , Rs 2,53,314/- and 10,06,328/- . Accordingly ground no. 4 ,5, and 6 are allowed. 17. The issue raised in ground no. 7 is against the confirmation of addition of Rs. 35,000/- by Ld. CIT(A) as made by the AO on account of difference of rental expenses. 18. During the course of assessment proceedings, the AO observed that the assessee claimed expenses on account of rent amounting to Rs. 3,89,273/- however on verification of records ,the AO noted that the actual expenses were Rs. 3,54,273/- only and hence added the difference of Rs. 35000/- to the income after giving the show cause notice to the assessee which was not complied with by the assessee. 6 I.T.A. No.57/Kol/2022 Assessment Year: 2014-15 Shri Sunil Chowdhury 19. The Ld. CIT(A) simply confirmed the addition made by the AO without giving any finding. 20. After hearing the rival parties and perusing the material on record, we note that assessee had paid the rent of Rs. 3,89,273/-, details whereof are attached at page nos. 179 to 181 of paper book. Out of above Rs. 3,54,273/- was towards for hiring of rooms at site of the construction and copy of ledger account is filed at page no. 179. The assessee has also paid room rent vide cheque drawn on State Bank of India amounting to Rs. 25,000/- and similarly the car parking rent of Rs. 10,000/- was paid on 4.12.2013. We note that both the authorities have not considered room rent and car parking rent paid over and above of Rs. 3,54,273/- which has attributed to the discrepancy of Rs. 35,000/-. Undisputedly all these documents as placed before us were also available before the lower authorities but somehow overlooked. Considering these facts and circumstances of the case, we are inclined to set aside the order of Ld. CIT(A) on this issue and direct the AO to delete the addition of Rs. 35,000/-. The ground no. 7 is allowed. 21. The issue raised in ground no. 8 is against the confirmation of Rs. 20,000/- by Ld. CIT(A) as made by the AO on account of architect fee. At the time of hearing the ground is not press this ground for smallness of amount and is accordingly dismissed. 22. In the result, the appeal of the assessee is partly allowed. Order is pronounced in the open court on 19 th October, 2022 Sd/- Sd/- (Sonjoy Sarma /संजय शमा ) (Rajesh Kumar/राजेश क ु मार) Judicial Member/ या यक सद य Accountant Member/लेखा सद य Dated: 19 th October, 2022 SB, Sr. PS 7 I.T.A. No.57/Kol/2022 Assessment Year: 2014-15 Shri Sunil Chowdhury Copy of the order forwarded to: 1. Appellant- Shri Sunil Chowdhury, Rudrapur, Baduria, North 24 Parganas- 743401 2. Respondent – ITO, Ward- 33(4), Kolkata 3. Ld. CIT(A)- NFAC, Delhi 4. Pr. CIT- , Kolkata 5. DR, Kolkata Benches, Kolkata (sent through e-mail) True Copy By Order Assistant Registrar ITAT, Kolkata Benches, Kolkata