Anjan Kumar, Kolkata V. I.T.O. Wd - 54(1),Kol, Kolkata

ITA 600/KOL/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7893 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 8 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2014
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 20-03-2013
• Court: TRIBUNAL
• Department Lawyers: K K TRIPATHI
• Keywords: Reasonable cause

Judgement Text

, SM C , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH: KOLKATA ( ) BEFORE , ) [BEFORE SHRI MAHAVIR SINGH, JM] / I.T.A NO. 600 /KOL/20 1 3 / ASSESSMENT YEAR : 20 0 6 - 0 7 ANJAN KUMAR VS. INCOME - TAX OFFICER, WD - 54(1), KOLKATA (PAN:A FCPK7868M ) ( /APPELLANT ) ( / RESPONDENT ) DATE OF HEARING: 2 7 . 11 .201 4 DATE OF PRONOUNCEMENT: 02 . 1 2 .201 4 FOR THE APPELLANT : SHRI SUBHAS AGARWAL & MS.SWATI BAID , ADVOCATE S FOR THE RESPONDENT : SHRI K. K. TRIPATHI , JCIT, SR. DR / ORDER THIS APPEAL BY ASSESSEE IS ARI SING OUT OF ORDER OF CIT(A) - X X XV I , KOLKATA IN APPEAL NO. 113 /CIT(A) - XX X V I / KOL/ ITO, W D - 54(1)/KOL/08 - 09/1966 DATED 07 . 0 1 .201 3 . ASSESSMENT WAS FRAMED BY ITO, WARD - 54(1) , KOLKATA U/S. 14 3(3) OF THE INCOME - TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) FOR ASSESSMENT YEAR 200 6 - 0 7 VIDE HIS ORDER DATED 29 . 0 2 .20 0 8 . 2 . AT THE OUTSET, IT IS SEEN THAT THE APPEAL IS BARRED BY LIMITATION BY 11 DAYS AND ASSESSEE HAS FILED CONDONATION PETITION STATING THE REASONS. FROM THE REASONS IT IS ASSUMED THAT THERE IS REASONABLE CAUSE FOR FILING THE APPEAL BELATEDLY. HENCE, I CONDONE THE DELAY AND ADMIT THE APPEAL. 3 . THE FIRST ISSUE IN THIS APPEAL OF ASSESSEE IS AGAINST THE ORDER OF CIT(A ) CONFIRMING THE ACTION OF AO IN MAKING DISALLOWANCE OF SERVICE CHARGES OF RS.2,36,450/ - FOR NOT DEDUCTING TDS U/S. 194J OF THE ACT READ WITH SECTIO N 40(A)(IA) OF THE ACT. 4. I HAVE HEARD BOTH THE SIDES AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. I FIND THAT THE AO NOTICED FROM THE P&L ACCOUNT THAT THE ASSESSEE HAS DEBITED A SUM OF RS.2,53,670/ - FOR SERVICE CHARGES FOR VARIOUS PROFESSIONA L JOB ASSIGNMENTS. ACCORDING TO AO, THESE SERVICE CHARGES FALL UNDER THE PURVIEW OF TDS PROVISION OF SECTION 194J OF THE ACT 2 ITA NO. 600 /K/2013 SHRI ANJAN KUMAR AY 200 6 - 0 7 AND ASSESSEE IS LIABLE TO DEDUCT TDS BUT HE FAILED TO DEDUCT THE SAME. ACCORDINGLY, INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT AND DISALLOWED SERVICE CHARGES TO THE EXTENT OF RS.2,36,450/ - FOR THE REASON THE ONLY SUM OF RS.17,250/ - IS OUT OF PURVIEW OF TDS. ACCORDINGLY, HE DISALLOWED THE SUM OF RS.2,36,450/ - . AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO CONFIRMED THE DISALLOWANCE ENTIRELY ON DIFFERENT PREMISE THAT THIS IS COMMISSION PAYMENT AND AS THE GENUINENESS OF PAYMENT WAS NOT PROVED, HE CONFIRMED THE ADDITION OF RS.2,36,450/ - BY OBSERVING AS UNDER: AO DISALLOWED A SUM OF R S.2,36,450/ - (IN FACT IT IS RS.2,36,450/ - ) U/S. 40(A)(IA) OF INCOME TAX ACT. IN APPEAL MATTER WAS FURTHER EXAMINED AND AR WAS ASKED TO PRODUCE THE PERSONS TO WHOM COMMISSION OF RS.2,36,450/ - HAS BEEN PAID TO VERIFY GENUINENESS OF SERVICES RENDERED BY THEM. BUT A/R COULD NOT PROD UCE THEM IN SPITE OF OPPORTUNITIES ON 10.9.12, 10.10.12 AND 11.12.2012 AND HAS SHOWN HIS INABILITY TO PRODUCE THEM. THUS A/R FAILED TO PRODUCE THE GENUINETY OF THE SERVICES RENDERED. AND HENCE KEEPING IN VIEW OF TOTALITY OF FACTS OF CASE, ADDITION ON ACC OUNT SERVICES CHARGES PAYMENT OF RS.2,36,400/ - IS CONFIRMED. 5. BEFORE ME LD. COUNSEL FOR THE ASSESSEE MS. S. BAID CATEGORICALLY STATED THAT THE SUM OF R S.2,35,450/ - IS ON ACCOUNT OF PAYMENT TO PART TIME ACCOUNTANT AND THIS IS SORT OF SALARY TO EMPLOYEE TO COMPLETE ACCOUNTING JOB AND OTHER WORKS. ACCORDING TO HER, NONE OF THE PART TIME EMPLOYEE IS QUALIFIED AS PROFESSIONAL SO AS TO TAKE IT AS PROFESSIONAL OR TECHNICAL SERVICES AS DEFINED U/S. 194J OF THE ACT. SHE ARGUED THAT EVEN CIT(A) HAS CHANGED THE ENTIRE DIMENSION OF THE CASE BY RAISING NEW ISSUE THAT THIS IS COMMISSION PAYMENT AND GENUINENESS OF COMMISSION IS NOT PROVED, THIS WAS NOT THE CASE OF THE ASSESSEE BEFORE AO. IN TERM OF THE ABOVE, SHE STATED THAT THE PAYMENT OF SALARY I.E. PART TIME SAL ARY WAS BELOW TAXABLE LIMIT AS IS EVIDENT FROM THE AMOUNT PAID IS AT THE MOST HIGHEST IS RS.72,500/ - IN A YEAR. SHE DREW OUR ATTENTION TO THE INFORMATION INCLUDING NAME, ADDRESS AND PAN OF THE PERSONS TO WHOM PART TIME SALARY WAS PAID AS UNDER: SL. NO. N AME OF PERSON AMOUNT PAID PAN ADDRESS 1 ANUP SANKAR BHATTACHARYA 25,000.00 ADUPB1200E 355, AMARVATEE, P.O. SODEPUR, KOL - 110 2 SHYAMAL SEN 72,500.00 ANTPS4225P 19, K. M. NASKAR ROAD, KOLKATA - 40 3 SANJIB GHOSAL 62,900.00 AJGPG2331M VILL. SOUTH THALKURTA, P.O. MAHESTALA, KOL - 141 4 SUSANTA MONDAL 40,000.00 NOT AVAILABLE NOT AVAILABLE 5 SUHRIT GHOSH TOTAL : 36,000.00 2,36,450.00 NOT AVAILABLE NOT AVAILABLE 6. I HAVE GONE THROUGH THE FACTS IN ENTIRETY AND FOUND THAT THESE PAYMENTS ARE PART TIME SALARY AND NOT SERVICE CHARGES , BECAUSE NONE OF THE PERSONS MENTIONED ABOVE IS A QUALIFIED PROFESSIONAL IN TERM OF DEFINITION OF PROFESSIONAL ACCOUNTANT. I FIND THAT THE PROFESSION CITED 3 ITA NO. 600 /K/2013 SHRI ANJAN KUMAR AY 200 6 - 0 7 BY LD. COUNSEL FOR THE ASSESSEE IS THAT OF ACCOUNTANT AND IN SECTION 44AB OF THE ACT WHEREIN ACCOUNTANT IS PRESCRIBED AND THE DEFINITION IS PROVIDED IN THE EXPLANATION TO SECTION 44AB OF THE ACT AND THE MEANING OF ACCOUNTANT SHALL HAVE THE SAME MEANING AS IN THE EXPLANATION BELOW TO SUB - SECTION (2) OF SECTION 288 OF THE ACT. THE EXPLANATION BELOW SUB - SECTION (2) OF SECTION 288 SAYS THE ACCOUNTANT MEANS A CHARTERED ACCOUNTANT WITHIN THE MEANING OF CHARTERED ACCOUNTANTS ACT, 1949 AND THE REL EVANT EXPLANATION TO SECTION 288(2) OF THE ACT READS AS UNDER: EXPLANATION IN THIS SECTION, ACCOUNTANT MEANS A CHARTERED ACCOUNTANT WITHIN THE MEANING OF THE CHARTERED ACCOUNTANTS ACT, 1949 (38 OF 1949), AND INCLUDES, IN RELATION TO ANY STATE, ANY PERSON WHO BY VIRTUE OF THE PROVISIONS OF SUB - SECTION (2) OF SECTION 226 OF THE COMPANIES ACT, 1956 (1 OF 1956), IS ENTITLED TO BE APPOINTED TO ACT AS AN AUDITOR OF COMPANIES REGISTERED IN THAT STATE. AS THE DEFINITION IS CLEAR AND THIS PART TIME ACCOUNT S ARE NOT QUALIFIED ACCOUNTANT THEY CANNOT BE BROUGHT WITHIN THE PURVIEW OF SECTION 194J OF THE ACT WHERE IT CANNOT BE SAID THAT THEY ARE RECEIVING FEE S FOR PROFESSIONAL OR TECHNICAL SERVICES AND HERE ALSO THE PROFESSIONAL SERVICES HAVE BEEN DESCRIBED IN E XPLANATION TO SECTION 194J(1) AS UNDER: (A) PROFESSIONAL SERVICES MEANS SERVICES RENDERED BY A PERSON IN THE COURSE OF CARRYING ON LEGAL, MEDICAL, ENGINEERING OR ARCHITECTURAL PROFESSION OR THE PROFESSION OF ACCOUNTANCY OR TECHNICAL CONSULTANCY OR INT ERIOR DECORATION OR ADVERTISING OR SUCH OTHER PROFESSION AS IS NOTIFIED BY THE BOARD FOR THE PURPOSES OF SECTION 44AA OR OF THIS SECTION. IN TERM OF THE ABOVE, I AM OF THE CONSIDERED VIEW THAT THE PAYMENTS MADE TO ABOVE PART TIME ACCOUNTANT S, IS WHETHER AS SALARY OR SERVICE CHARGE DOES NOT COME WITHIN THE PURVIEW OF SECTION 194J OF THE ACT AND ASSESSEE IS NOT LIABLE TO DEDUCT TDS ON THE SAME. HENCE, NO DISALLOWANCE CAN BE MADE BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. EVEN OTHERWISE TH E PROVISIONS OF SECTION 40(A)(IA) DOES NOT APPLY TO THE PAYMENT OF SALARY. ACCORDINGLY, I DELETE THE DISALLOWANCE AND ALLOW THIS ISSUE OF ASSESSEE S APPEAL. 7 . THE NEXT ISSUE RAISED BY ASSESSEE BY WAY OF ADDITIONAL GROUND REGARDING SALARY TO SELF AMOUNTI NG TO RS.1,20,000/ - WAS NOT RAISED BEFORE CIT(A). THE RELEVANT GROUND READS AS UNDER: 2 . THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE ADDITION ON ACCOUNT OF SERVICE CHARGES PAID FOR RS.2,36,450/ - IS UNFAIR, BASED ON NO EVIDENCE AND BASED ON INCONGRUOUS FACTUAL PREMISES. 4 ITA NO. 600 /K/2013 SHRI ANJAN KUMAR AY 200 6 - 0 7 8 . AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE STATED THAT HE IS NOT INTERESTED IN PROSECUTING ADDITIONAL GROUND AND THE SAME MAY BE TREATED AS WITHDRAWN. AS THE ASSESSEE HAS WITHDRAWN THIS GROUND, I DISMISS THE SAME AS WITHDRAWN. 9 . IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALLOWED . 10 . ORDER IS PRONOUNCED IN THE OPEN COURT ON 0 2 . 1 2 . 2 0 1 4 S D / - , (MAHAVIR SINGH) JUDICIAL MEMBER DATED : 2 N D DECEMBER , 201 4 JD.(SR.P.S.) - COPY OF THE ORDER FORWARDED TO: 1 . / A PPELLANT SHRI ANJAN KUMAR, C/O P. K. MATHUR, ADVOCATE, 1, DEREDITH STREET, KOLKATA - 700 072. 2 / RESPONDENT ITO, WARD - 54(1) , KOLKATA . 3 . ( )/ THE CIT(A), KOLKATA 4. 5. / CIT KOLKATA / DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, / BY ORDER, /ASSTT. REGISTRAR .