Sri Abani Kumar Dutta, North 24 Parganas V. A.C.I.T Cir - 51,kolkata, Kolkata

ITA 584/KOL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100052 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2015
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 19-03-2013
• Court: TRIBUNAL
• Department Lawyers: G MALLIKARJUNA
• Assessee Lawyers: S M SURANA
• Keywords: Revision of order; Permanent establishment; Assessment record
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA [BEFORE SHRI MAHAVIR SINGH, JM & SHRI M. BALAGANES H, AM] I.T.A NO. 584/KOL/2013 ASSESSMENT YEAR: 2007-08 SHRI ABANI KUMAR DUTTA VS. ASSISTANT COMMISSIONE R OF INCOME-TAX, (PAN: ACTPD4508M) CIRCLE-51, KOLKATA. ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 16.11.2015 DATE OF PRONOUNCEMENT: 20.11.2015 FOR THE APPELLANT: SHRI S. M. SURANA, ADVOCATE FOR THE RESPONDENT: SHRI G. MALLIKARJUNA, CIT, D R ORDER PER SHRI MAHAVIR SINGH, JM: THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A)-XXXII, KOLKATA IN APPEAL NO. 169/XXXII/11-12/CIR-51/KOL DATED 17.12.2 012. ASSESSMENT WAS FRAMED BY JCIT(OSD), CIRCLE-51, KOLKATA U/S. 263/143(3) OF TH E INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR AY 2007-08 VIDE ITS O RDER DATED 27.12.2011. 2. THE ONLY ISSUE IN THIS APPEAL OF ASSESSEE IS AGA INST THE ORDER OF CIT(A) CONFIRMING THE ORDER OF AO IN RESPECT OF ADDITION ON THE GROUN D THAT THE PAYMENT WAS NOT GENUINE IGNORING THE DIRECTION OF CIT PASSED U/S. 263 OF TH E ACT TO EXAMINE THE DISALLOWABILITY ONLY WITH REFERENCE TO SEC. 40(A)(IA) OF THE ACT AS NO TAX WAS DEDUCTED BY THE ASSESSEE ON THE COMMISSION PAID. FOR THIS, ASSESSEE HAS RAISED FOLLOWING THREE EFFECTIVE GROUNDS I.E. GROUND NOS. 2, 3 AND 4: 2. FOR THAT THE LD. CIT(A) CONFIRMING THE ORDER O F THE AO WITH REGARD TO THE ADDITION OF RS.29,16,145/- ON THE GROUND THAT THE PAYMENT WAS N OT GENUINE IGNORING THE DIRECTION THE LD. CIT IN HIS ORDER U/S. 263 TO EXAMINE THE DISALL OWABILITY ONLY WITH REFERENCE TO SEC. 40(A)(IA) AS NO TAX WAS DEDUCTED BY THE APPELLANT O N THE COMMISSION PAID. 3. FOR THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION WHEN THE AO HIMSELF EXCEEDED HIS JURISDICTION IN DISALLOWING THE COMMISSION PAID BY TREATING THE SAME AS NOT GENUINE EVEN THOUGH NO TAX WAS DEDUCTIBLE ON SUCH COMMISSIO N WHICH ONLY REIMBURSEMENT AND IN ANY CASE PROVISIONS OF SEC. 40(A)(IA) WERE NOT APPL ICABLE SINCE NO AMOUNT REMAIN PAYABLE AS AT THE END OF THE YEAR. 4. FOR THAT ON THE FACTS AND CIRCUMSTANCES OF THE C ASE THE ADDITION OF RS.29,16,145/- WAS NOT JUSTIFIED. 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS DE ALING IN LOTTERY BUSINESS AND ORIGINAL ASSESSMENT WAS COMPLETED U/S. 143(3) OF TH E ACT VIDE ORDER DATED 21.05.2009, WHEREBY THE AO WITHOUT GOING INTO THE D ETAILS AND ALLOWABILITY OF EXPENSES, DISALLOWED ON ESTIMATE BASIS A SUM OF RS. 87,700/- OUT OF THE TOTAL EXPENSES. SUBSEQUENTLY, CIT-XVI, KOLKATA ISSUED SH OW CAUSE NOTICE TO REVISE THE 2 ITA NO. 584/KOL/2013 SHRI ABANI KUMAR DUTTA AY 2007-08 ASSESSMENT U/S. 263 OF THE ACT FRAMED BY AO U/S. 14 3(3) OF THE ACT FOR THE REASON THAT THE AO HAS NOT EXAMINED THE APPLICABILITY OF S ECTION 194G READ WITH SECTION 40(A)(IA) OF THE ACT IN RESPECT OF COMMISSION PAYME NTS MADE TO RETAILERS. FOR THIS, CIT WHILE REVISING THE ASSESSMENT HAS OBSERVED IN P ARA 4 AND 5 AS UNDER: 4. I HAVE CONSIDERED THE MATTER CAREFULLY. PERUS AL OF THE ASSESSMENT RECORDS SHOWS THAT THE AO HAS NOT EXAMINED THE APPLICABILIT Y OF SECTION 194G READ WITH SECTION 40(A)(IA) IN RESPECT OF THE COMMISSION PAYM ENT MADE TO THE RETAILERS DURING THE COURSE OF ASSESSMENT PROCEEDINGS. FURTHER, THE APPLICABILITY OF SECTION 194J READ WITH SECTION 40(A)(IA) IN RESPECT OF THE ACCOU NTING CHARGES PAYMENT HAS ALSO NOT BEEN EXAMINED. IN VIEW OF THESE FACTS, I AM OF THE CONSIDERED OPINION THAT THE ASSESSMENT IS ERRONEOUS AND PREJUDICIAL TO THE INTE REST OF REVENUE. 5. I, THEREFORE, SET ASIDE THE ASSESSMENT WITH A DI RECTION THAT THE AO SHOULD PASS THE ASSESSMENT ORDER AFRESH. DURING COURSE OF THE REAS SESSMENT PROCEEDINGS, THE AO IS DIRECTED TO EXAMINE ALL RELEVANT FACTS REGARDING TH E COMMISSION PAYMENTS TO THE LOTTERY RETAILERS AND THE ACCOUNTING PAYMENT CHARGE S IN LIGHT OF SECTIONS 194G AND 194J RESPECTIVELY. THE ASSESSEES EXPLANATION SHOU LD BE EXAMINED AND VERIFICATION SHOULD BE MADE WITH RESPECT TO THE CLAIM OF ARRANGE MENT WITH THE PRINCIPAL NAMELY M/S. T. S. DISTRIBUTORS. THE ASSESSMENT ORDER SHOU LD BE PASSED AFTER GRANT OF DUE OPPORTUNITY TO THE ASSESSEE. THIS REVISION ORDER U/S. 263 OF THE ACT WAS ACCEPTE D BY THE ASSESSEE AND NOT CHALLENGED IN APPEAL AND AO IN TERM OF REVISION ORDER PROCEEDE D TO ASSESS THE INCOME OF THE ASSESSEE. THE ASSESSEE HAS PAID COMMISSION OF RS.2 9,16,145/- TO VARIOUS LOTTERY AGENTS WITHOUT DEDUCTING TDS U/S. 194G OF THE ACT AND ACCO RDINGLY, THE AO DISALLOWED THE COMMISSION PAYMENTS BY INVOKING THE PROVISIONS OF S ECTION 40(A)(IA) OF THE ACT READ WITH SECTION 194G OF THE ACT AS WELL AS ON GENUINEN ESS OF PAYMENTS ALSO. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A). THE ASSES SEE BEFORE CIT(A) CLAIMED THAT THE ASSESSEE HAS FILED COMPLETE DETAILS OF COMMISSION P AYMENT TO VARIOUS PERSONS AND IN EACH CASE THE COMMISSION PAYMENT IS LESS THAN RS.10 00/-. THIS INFORMATION WAS ALSO FILED BEFORE THE AO, WHICH WAS CLAIMED BY THE ASSES SEE. BEFORE THE CIT(A) ASSESSEE ADMITTED THAT THE ASSESSEE HAS FILED THE NAME OF TH E PERSONS WHEREIN COMMISSION PAYMENTS WERE BELOW RS.1,000/- BUT COULD NOT FILE A DDRESSES AND IS UNABLE TO PRODUCE THESE RETAILERS FOR THE REASON THAT ALL THESE RETAI LERS ARE STREET HAWKERS COMING ON DAILY BASIS AND IT IS NOT POSSIBLE TO BRING THEM TO DEPAR TMENT FOR VERIFICATION. BUT CIT(A) CONFIRMED THE ADDITION BY GIVING REASONING THAT THE ASSESSEE INTENTIONALLY FILED VARIOUS NAMES AROUND 1600 WITHOUT ANY ADDRESS AND CLEARLY A DMITTED THAT HE IS UNABLE TO PRODUCE THESE RETAILERS BEFORE HIM. AGGRIEVED, ASS ESSEE IS IN SECOND APPEAL BEFORE US. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND FROM THE FACTS OF THE CASE THAT THE A SSESSEE HAS MADE COMMISSION PAYMENTS 3 ITA NO. 584/KOL/2013 SHRI ABANI KUMAR DUTTA AY 2007-08 AMOUNTING TO RS.29,16,145/- FOR SALE OF LOTTERY TIC KETS TO VARIOUS LOTTERY AGENTS. THE ASSESSEE CLAIMED TO HAVE MADE COMMISSION PAYMENT TO 1600 PERSONS AND HE HAS FILED NAMES OF THESE 1600 PERSONS BUT WITHOUT ADDRESSES O F THE COMMISSION RECIPIENTS AS THE SAID RECIPIENTS HAVE NO PERMANENT ESTABLISHMENT FRO M WHERE THEY ARE RUNNING PERMANENT BUSINESS. MOST OF THE AGENTS ARE HAWKERS AND THEY ARE SELLING LOTTERY TICKETS BY TRAVELLING. THE ASSESSEE HAS ALSO NOT FILED ANY RECEIPT OF PAYM ENT OF THE SAID COMMISSION. WE FIND THAT THE ASSESSEE IS NOT THE PRINCIPAL HERE HE IS O NLY A LIAISON OFFICER/STOCKIST WORKING ON BEHALF OF THE PRINCIPAL I.E. T. S. DISTRIBUTOR. TH E BUSINESS OF T. S. DISTRIBUTOR IS IN THE LINE OF ON-LINE LOTTERY BUSINESS. PRINCIPAL T. S. DISTR IBUTOR CONTROLS THE ENTIRE BUSINESS THROUGH INTERNET OPERATION AND PARTICULAR PROGRAMMING. AS SUCH COMMISSION OF EACH OF THE RETAILER IS RELATED TO THE PRINCIPAL WHO HAS THE LI CENSE TO USE THAT PARTICULAR ON LINE LOTTERY. IN VIEW OF THE FACTUAL MATRIX OF THE CASE, WE ARE O F THE VIEW THAT THE PAYMENTS BELOW RS 1000/- TO EACH HAWKER, THE ASSESSEE IS NOT LIABLE T O DEDUCT TAX AT SOURCE U/S 194G OF THE ACT. ACCORDINGLY, WE DELETE THE DISALLOWANCE MADE B Y AO AND CONFIRMED BY CIT(A). 5. IN RESPECT OF GENUINENESS, WE FIND FORCE IN THE ARGUMENT OF LD. COUNSEL FOR THE ASSESSEE THAT THE CIT IN HIS REVISION ORDER U/S 263 OF THE ACT ONLY DIRECTED THE AO TO EXAMINE THE APPLICABILITY OF SEC. 194G READ WITH SE CTION 40(A)(IA) OF THE ACT AND NOT GENUINENESS OF THE EXPENDITURE. THE ENTIRE PREMISE OF THE REVISION ORDER FOR MAKING DISALLOWANCE IS ONLY THE APPLICABILITY OF SECTION 4 0(A)(IA) OF THE ACT. THE CIT IN HIS REVISION ORDER HAS NO WHERE DIRECTED THE AO TO EXAM INE THE GENUINENESS OF PAYMENTS AS IS CLEAR FROM THE ABOVE REPRODUCED PARA 4 AND 5 OF THE REVISION ORDER. ACCORDINGLY, WE ACCEPT THE PLEA OF THE ASSESSEE AND THE ORDER OF CI T(A) QUA CONFIRMING THE EXPENDITURE ON THE ASPECT OF GENUINENESS IS REVERSED. ACCORDIN GLY, IN ENTIRETY THE ISSUE IS ALLOWED IN FAVOUR OF THE ASSESSEE. 6. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED . 7. ORDER IS PRONOUNCED IN THE OPEN COURT ON 20.11.2 015 SD/- SD/- (M. BALAGANESH) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 20TH NOVEMBER, 2015 JD. SR. P.S 4 ITA NO. 584/KOL/2013 SHRI ABANI KUMAR DUTTA AY 2007-08 COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT SHRI ABANI KUMAR DUTTA, 1, EAST MANIKTA LA, ICHAPUR, NORTH 24 PGS, WEST BENGAL-713111 2 RESPONDENT ACIT, CIRCLE-51, KOLKATA. 3 . THE CIT(A), KOLKATA 4. 5. CIT KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .