Sri Asok Kumar Pal, Kolkata V. ITO, Wd-51(3), Kolkata, Kolkata

ITA 647/KOL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4583 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-09-2016
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Next Hearing Date: 23-08-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 10-04-2014
• Court: TRIBUNAL
• Department Lawyers: AMITABH BHATTACHARYA
• Assessee Lawyers: MIRAJ D. SHAH
• Keywords: Business expenditure; Question of law
• Section: 133(6); 131; 37

Judgement Text

1 ITA NO.647/KOL/2014-SRI ASOK KUMAR PAL A.Y.2009-1 0 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH SMC K OLKATA [BEFORE HONBLE SHRI N.V.VASUDEVAN, JM ] ITA NO.647/KOL/2014 ASSESSMENT YEAR : 2009-10 SRI ASOK KUMAR PAL -VERSUS- I.T.O., WARD-51(3), KOLKATA ` KOLKATA (PAN:AJIPP 3869 K) (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI MIRAJ D.SHAH, AR FOR THE RESPONDENT: SHRI AMITABH BHATTACHARYA, JCIT DATE OF HEARING : 23.08.2016. DATE OF PRONOUNCEMENT : 02.09.2016. ORDER THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 28.01.2014 OF CIT(A)-XXXII, KOLKATA RELATING TO A.Y.2009-10. 2. GROUND NO.1 IS GENERAL IN NATURE AND CALLS FOR N O SPECIFIC ADJUDICATION. 3. GROUND NOS. 2,3 AND 5 RAISED BY THE ASSESSEE ARI SE OUT OF A SINGLE ADDITION OF RS.11,99,121/- WHICH WAS CONSEQUENT TO ENHANCEMENT POWERS EXERCISE BY THE CIT(A). THESE GROUNDS READ AS FOLLOWS :- 2. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN MAKING AN ADDITION OF RS.11, 99,121/- ON ACCOUNT OF SUPPRESSED SERVICE CHARGES OF THE APPELLANT. THE ADDITION IS U NCALLED FOR AND MUST BE DELETED. 3. WITHOUT PREJUDICE TO THE ABOVE THE ADDITION WITH RESPECT TO RS.11,99,121/- BE RESTRICTED TO THE PROFIT ON FROM SUCH TRANSACTIONS. 5. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE C ASE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN ADDING RS.4,36,258/ - ON ACC OUNT OF ECL. THE ASSESSEE DID NOT HAVE ANY TRANSACTION WITH THEM. THE ADDITION IS NOT JUSTIFIED AND THE SAME BE DELETED. 2 ITA NO.647/KOL/2014-SRI ASOK KUMAR PAL A.Y.2009-1 0 4. THE ASSESSEE IS AN INDIVIDUAL. HE IS ENGAGED IN THE BUSINESS OF SALE OF OIL FLOW METERS AND DERIVES INCOME FROM EXECUTING CONTRACT J OB WORK. IN THE COURSE OF ASSESSMENT PROCEEDINGS THE AO FOUND THAT AS PER FOR M NO.26AS DECLARATION, (WHICH IS THE DECLARATION OF TAX DEDUCTED AT SOURCE), THE CONTRACT RECEIPTS FOR EXECUTING THE JOB WORK ON WHICH TAX WAS DEDUCTED BY THE PERSONS W HO MADE PAYMENTS TO THE ASSESSEE WAS RS.50,25,326/-. WHEREAS THE ASSESSEE HAD REFLECTED THE RECEIPTS ON ACCOUNT OF EXECUTING OF JOB WORK OF ONLY RS.43,28,3 16/-. THE DIFFERENCE OF RS.7,03,010/- WAS ADDED BY THE AO AS UNDISCLOSED RE CEIPTS FROM EXECUTING THE CONTRACT JOB WORK. 5. BEFORE THE CIT(A) THE ASSESSEE SUBMITTED THERE WAS A DISCREPANCY BETWEEN THE CONTRACT RECEIPTS AS SHOWN BY THE ASSESSEE AND AS S HOWN BY THE PERSONS WHO MADE TO THE ASSESSEE. THE ASSESSEE HOWEVER SUBMITTED THAT HE HAD DONE CONTRACTUAL JOB WORK FOR M/S EASTERN COALFIELDS LTD. RAJMAHAL (ECL) FOR A TOTAL SUM OF RS.27,338/-. HOWEVER, IN THE 26AS, ECL HAS DECLARED A SUM OF RS. 4,36,258/94PS AS PAID/CREDITED TO THE ACCOUNT OF THE ASSESSEE. (A DIFFERENCE OF RS .4,08,920/94P). ACCORDING TO THE ASSESSEE, IT HAD DONE ANY OTHER WORK FOR ECL EXCEPT CONTRACT OF THE VALUE OF RS.27,338/- ONLY. THE ASSESSEE ALSO SUBMITTED THAT HE HAD WRITTEN LETTERS TO ECL TO CLARIFY THE MATTER VIDE HIS LETTER DATED 19.02.2013 . THE ASSESSEE SUBMITTED THAT THE TOTAL CONTRACTUAL RECEIPT OF THE ASSESSEE AS PER 26 AS WAS RS.50,53,527/- AS AGAINST THE TOTAL SUCH RECEIPTS DECLARED BY THE ASSESSEE IN HIS RETURN AT RS.43,22,316/-. THE ASSESSEE CLAIMED THAT IF THE ABOVE DIFFERENCE OF RS .4,08,920/94P IS EXCLUDED, THEN THE ADDITION THAT SHOULD BE SUSTAINED IS FOR THE BALANC E DIFFERENCE OF RS.3,22,291/- ONLY (RS.50,53,527/- MINUS RS. 4,08,920/- MINUS RS.43,22 ,316/-). THE ASSESSEE ALSO CLAIMED THAT THE TOTAL OF ALL HIS BANK CREDIT (BOTH DISCLOSED & UNDISCLOSED) AFTER ADJUSTING FOR TDS AND THE OPENING AND CLOSING SUM O F SUNDRY DEBTORS COMES TO RS.52,90,981/- WHEREAS HIS TOTAL TURNOVER OF BOTH C ONTRACT JOB WORK & OF TRADING DECLARED IN THE RETURN OF INCOME WAS RS.47,98,412/- . THUS THE DIFFERENCE COULD BE ONLY RS.4,92,412/- AND NOT RS.7,03,010/- AS HELD BY THE AO. THE ASSESSEE ALSO 3 ITA NO.647/KOL/2014-SRI ASOK KUMAR PAL A.Y.2009-1 0 CLAIMED POSSIBILITY OF INCOME OF OTHER YEARS BOOKED BY ECL AND HAS ALSO CLAIMED IGNORANCE ABOUT THE MANNER OF RELEASE OF PAYMENTS B Y ECL. 6. THE CIT(A) WAS OF THE VIEW THAT THE ABOVE EXPLA NATION OF THE ASSESSEE CAN LEAD TO ONLY ONE CONCLUSION AND THAT THE ACCOUNT OF THE ASS ESSEE ARE NOT CORRECT AND THE ASSESSEE HAS SUPPRESSED HIS RECEIPTS. HE ALSO OBSER VED THAT THIS FACT IS FURTHER SUPPORTED BY THE FACT THAT THE AO HAD LOCATED A HIT HERTO UNDISCLOSED BANK ACCOUNT OF THE ASSESSEE, CURRENT ACCOUNT NO. 3362, WITH UNITED BANK OF INDIA, HALISAHAR BRANCH STANDING IN THE NAME OF M/S AEON SERVICES. IN THIS UNDISCLOSED BANK ACCOUNT, SUMS TOTALLING RS.8,42,459/- WERE FOUND CREDITED DURING FINANCIAL YEAR 2008-09 AND THE AO ADDED THIS SUM ALSO AS UNDISCLOSED RECEIPTS IN THE HANDS OF THE ASSESSEE. DURING THE APPELLATE PROCEEDINGS THE ASSESSEE ADMITTED THAT TH IS BANK ACCOUNT WAS UNDISCLOSED AND THAT THIS BANK ACCOUNT HAS BUSINESS RELATED REC EIPTS BUT CLAIMED THAT THESE ARE ALSO COVERED IN 26AS, FOR WHICH THE AO HAS ALREADY MADE A SEPARATE ADDITION. THE CIT(A) HELD THAT THE ASSESSEE HAS NOT BEEN ABLE TO ADDUCE ANY EVIDENCE TO THE EFFECT THAT IT HAD DONE JOB WORK FOR ECL OF RS.27,338/- ON LY AND NOT AT LEAST RS.436258/94P FOR WHICH TDS STATEMENT IN 26AS IS AVAILABLE. NO CO NFIRMATION FROM ECL HAS BEEN FILED VALIDATING THE ASSESSEE'S CLAIMS. THE CIT(A) ALSO HELD THAT THE ASSESSEES CLAIM THAT THE RECEIPTS FOUND IN THE UNDISCLOSED BANK ACC OUNT WITH UNITED BANK OF INDIA WAS ALREADY INCLUDED IN HIS TRADING AS WELL AS JOB WORK RECEIPT WAS NOT TRUE AS THE ASSESSEE FAILED TO SUBSTANTIATE HIS CLAIM IN THIS REGARD. 7. THE AO OBTAINED A REMAND REPORT DATED 22.08.13 FROM THE AO IN WHICH THE AO POINTED OUT THAT THE TOTAL UNDISCLOSED CONTRACT REC EIPT WAS RS.55,21,437/- + RS. 8,42,459/- (FOUND IN THE UNDISCLOSED BANK ACCOUNT) AND AFTER REDUCING THE DISCLOSED CONTRACT RECEIPTS OF RS.43,22,316/-, THE NET DIFFER ENCE WAS RS.11,99,121/- AND THE ADDITION MADE BY THE AO SHOULD BE ENHANCED TO RS.11 ,99,121/-. 8. IN THE REJOINDER TO THE REMAND REPORT FILED ON 11.09.2013, THE ASSESSEE ACCEPTED THE MANNER OF CALCULATION DONE BY THE AO BUT CLAIMED TH AT SINCE THE AO HAS NOT 4 ITA NO.647/KOL/2014-SRI ASOK KUMAR PAL A.Y.2009-1 0 ACCOUNTED FOR TRADING RECEIPTS OF SPARE PARTS OF RS . 4,75253/-, THE ADDITION BE RESTRICTED TO RS.11,99,121/- MINUS RS.4,75,253/- I.E. RS.7,22, 866/- ONLY. 9. THE CIT(A) HOWEVER ENHANCED THE ADDITION MADE B Y THE AO TO RS.11,99,211 BY OBSERVING THAT WRITTEN SUBMISSION FILED ON 05.08.20 13 THE ASSESSEE ADMITTED UNDISCLOSED BANK ACCOUNT AND HAD ALSO ACCEPTED THAT THESE WERE RECEIPTS FROM EXECUTING CONTRACT JOB WORKS BUT CLAIMED THAT THESE WERE ALREADY INCLUDED IN THE CONTRACT RECEIPTS OF RS.55,21,437/- BUT FAILED TO P ROVE THE SAID CONTENTION. THE CIT(A) ALSO HELD THAT THE ASSESSEES FURTHER CLAIM IN HIS REJOINDER TO THE REMAND REPORT OF THE AO FOR FURTHER REDUCTION OF RS.4,75,2 53/- ON THE GROUND THAT THIS SUM REPRESENTS 'SALE OF SPARE PARTS' OF RS.4,75,253/- WAS AN AFTERTHOUGHT. THERE ARE SEVERAL REASONS FOR NOT ACCEPTING THE CLAIMS OF THE ASSESSEE ON THIS POINT:- (A) THE JOB WORK IS FOR MAJOR OIL COMPANIES WHICH A LWAYS PAY BY CHEQUE AND AFTER DEDUCTING TDS. (B) THE TRADING ACTIVITY RECEIPTS HAVE NOT BEEN PRO VED TO HAVE BEEN RECEIVED BY CHEQUES ONLY. THEREFORE A CONCESSION FOR THE SAME C ANNOT BE GIVEN AGAINST CHEQUE DEPOSITS IN THE UNDISCLOSED BANK ACCOUNT OF THE ASS ESSEE. (C) THE WRITTEN SUBMISSION OF THE ASSESSEE ALSO DID NOT MAKE ANY SUCH CLAIM AS MADE SUBSEQUENTLY IN THE REJOINDER. BEFORE THE AO ALSO, NO SUCH CLAIM WAS MADE. (D) NO FURTHER EVIDENCE HAS BEEN PRODUCED IN SUPPOR T OF THIS CLAIM BY THE ASSESSEE. FOR THE ABOVE REASONS, THE CIT(A) CONFIRMED THE ORD ER OF THE AO AND THE TOTAL ADDITION OF RS.7,03,0101- MADE BY THE AO WAS ENHANC ED TO RS.11,99,121/-LEADING TO AN FURTHER ADDITION OF RS.4,96,111/-. 10. AGGRIEVED BY THE ORDER OF CIT(A) THE ASSESSEE HAS RAISED GROUND NOS. 2 AND 3 BEFORE THE TRIBUNAL. AT THE TIME OF HEARING OF THE APPEAL THE LD. COUNSEL FOR THE ASSESSEE BROUGHT TO OUR NOTICE THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS M/S. ROYAL SECURITY GUARDING (P) LTD . ON G.A.NO.3488 OF 2013 JUDGMENT DATED 20.07.2014. IN THE AFORESAID DECISIO N THE QUESTION BEFORE THE HONBLE CALCUTTA HIGH COURT WAS THE CORRECTNESS OF THE ORDE R OF TRIBUNAL WHEREBY THE TRIBUNAL 5 ITA NO.647/KOL/2014-SRI ASOK KUMAR PAL A.Y.2009-1 0 HELD THAT ONLY 10% OF THE UNDISCLOSED RECEIPTS WHIC H WERE DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE SHOULD BE ADDED AS INCOME. THE TRIBUNAL HAD GIVEN THE FOLLOWING FINDINGS IN ITS ORDER :- WE OBSERVE FROM PAGE-7 OF ID. C.I.T.(A)'S ORDER TH AT AS PER BANK STATEMENT THERE WERE REGULAR MONTH-WISE CASH WITHDRAWALS TOTALLING TO RS .22,82,716/- AGAINST DEPOSIT OF AMOUNTS IN THE UNDISCLOSED BANK ACCOUNT AGGREGATING TO RS.22,89,910/- AND, THEREFORE, IT CAN BE SAID THAT THE SAID WITHDRAWALS WERE UTILI ZED TOWARDS ASSESSEE'S DIRECT AND INDIRECT EXPENSES IN RUNNING OF ITS SECURITY GUARD SERVICES, MORE SO WHEN THE AO. COULD NOT BRING ON RECORD ANYTHING CONTRARY ABOUT UTILIZA TION OF SUCH WITHDRAWALS. IN OUR CONSIDERED OPINION, THEREFORE, THE AO. WAS NOT JUST IFIED IN ADDING BACK THE ENTIRE RECEIPTS OF RS.23,28,60L/- AS UNEXPLAINED INVESTMEN T U/S. 69A OF THE ACT. WE FURTHER OBSERVE THAT THE ENTIRE DEPOSIT MADE IN THE UNDISCL OSED BANK ACCOUNT WAS RECEIVED BY CHEQUES FROM THE CLIENTS AND THE EXPENDITURE CLAIME D TO HAVE BEEN INCURRED BY THE ASSESSEE FOR ITS BUSINESS PURPOSES HAS BEEN DESCRIB ED ON PAGE-8 OF ID. C.I.T.(A)'S ORDER. AS RIGHTLY POINTED OUT BY ID. C.I.T.(A), IF THE ACT ION OF AO. IN TREATING THE ENTIRE RECEIPTS IN UNDISCLOSED BANK ACCOUNT AS INCOME OF THE ASSESS EE IS CONSIDERED TO BE CORRECT, THE RATE OF NET PROFIT OF THE DISCLOSED AND UNDISCLOSED PORTION TAKEN TOGETHER WOULD BE MORE THAN 50% OF THE GROSS RECEIPTS, WHICH IS UNLIKELY I N THE LINE OF BUSINESS THE ASSESSEE IS CARRYING ON, MORE SO WHEN THE AO. HIMSELF FOR AY. 2 007-08 HAS TAKEN THE NET PROFIT OF THE ASSESSEE AT 6%. THEREFORE, CONSIDERING THE TOTA LITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND NO INFIRMITY IN THE ORDER OF ID. C.I.T.(A) IN ESTIMATING THE NET PROFIT @ 10% ON THE AGGREGATE RECEIPTS OF BOTH THE DISCLOSED AND UNDISCLOSED PORTION. WE, THEREFORE, UPHOLD THE SAME AND DIRECT THE AO. ACCOR DINGLY. THE GROUND OF APPEAL OF THE DEPARTMENT, THEREFORE, FAILS. THE HONBLE CALCUTTA HIGH COURT IN THE APPEAL BY TH E REVENUE AGAINST THE ORDER OF THE TRIBUNAL, HELD AS FOLLOWS :- FROM THE BANK ACCOUNT OF THE ASSESSEE MAINTAINED W ITH HDFC BANK, IT APPEARS THAT THE OPENING CREDIT BALANCE AS ON 1ST APRIL, 2005 WA S RS.60,854.88P. AND THE CLOSING BALANCE AS ON 30TH MARCH, 2006 WAS RS..491.97P. IT IS POSSIBLE THAT DURING THE FINANCIAL YEAR 2005-06 AN AGGREGATE SUM OF RS.48,15 ,614/- WAS DEPOSITED, BUT IT IS ALSO A FACT THAT DURING THE AFORESAID FINANCIAL YEAR FRO M TIME TO TIME VARIOUS PAYMENTS WERE MADE. THERE IS NO FINDING RECORDED ANYWHERE THAT T HIS EXPENDITURES WERE NOT ON ACCOUNT OF BUSINESS EXPENDITURE. THEREFORE, THE POS ITION WHICH EMERGES IS THAT THE ASSESSEE HAS UNDISCLOSED INCOME AS WELL AS UNDISCLO SED EXPENDITURE. THEREFORE, DOING THE BEST, WHICH COULD BE DONE IN THE FACTS AND CIRC UMSTANCES OF THE CASE, CIT (APPEAL) HELD THAT 10% OF THE RECEIPTS ARE TO BE TREATED AS THE NET PROFIT OF THE ASSESSEE. THE AFORESAID VIEW HAS BEEN AFFIRMED BY THE LEARNED TRI BUNAL. THIS WAS WHOLLY AN ENQUIRY INTO THE FACTS OF THE CASE. AFTER GOING INTO THE FA CTS OF THE CASE, THE AFORESAID VIEW WAS TAKEN. MS. BHARGAVA, APPEARING FOR THE APPELLANT HAS NOT DRAWN OUR ATTENTION TO ANY INFIRMITY IN THE VIEW TAKEN BY THEM. WE ARE, AS SUC H, OF THE OPINION THAT THIS APPEAL IS ALTOGETHER UNMERITORIOUS. NO QUESTION OF LAW IS INV OLVED IN THIS APPEAL. THE APPEAL IS, 6 ITA NO.647/KOL/2014-SRI ASOK KUMAR PAL A.Y.2009-1 0 THEREFORE, DISMISSED. WE, THEREFORE, NEED NOT ANSWE R TO ANY QUESTIONS PROPOSED BY THE REVENUE. 11. IT WAS SUBMITTED BY HIM THAT THE DISCLOSED GRO SS PROFIT FROM THE ASSESSEES CONTRACT BUSINESS WAS 31.75% AND ONLY THIS GROSS PR OFIT RATE SHOULD BE APPLIED TO THE UNDISCLOSED SALES, AS HELD BY THE HONBLE CALCUTTA HIGH COURT. IN THIS REGARD THE LD. COUNSEL FOR THE ASSESSEE POINTED OUT THAT THE UNDIS CLOSED RECEIPTS WERE FROM THE ASSESSEES BUSINESS OF EXECUTING THE CONTRACT JOB W ORK HAS NOT BEEN DISPUTED BY THE REVENUE AUTHORITIES AND IN SUCH CIRCUMSTANCES THE E NTIRE TURN OVER CANNOT BE ADDED AS INCOME AND ONLY THE GROSS PROFIT SHOULD BE ADDED AS INCOME. 12. THE LD. DR POINTED OUT THAT THE HONBLE CALCUT TA HIGH COURT IN ITS DECISION HAS SPECIFICALLY OBSERVED THAT VARIOUS PAYMENTS WERE MA DE FROM THE DEPOSITS IN THE BANK ACCOUNT. SUCH FACTS ARE NOT PRESENT IN THE CASE OF THE ASSESSEE AND THEREFORE THE DECISION OF THE HONBLE CALCUTTA HIGH COURT SHOULD NOT BE DELETED. 13. I HAVE GIVEN A VERY CAREFUL CONSIDERATION TO T HE RIVAL SUBMISSIONS. THE PLEA PUT FORTH BY THE LD. COUNSEL FOR THE ASSESSEE HAS TO BE ACCEPTED. AS RIGHTLY CONTENDED BY THE LD. COUNSEL FOR THE ASSESSEE THE ENTIRE CONTRAC T RECEIPTS CANNOT BE ADDED AS INCOME. THE ASSESSEE DERIVES INCOME FROM EXECUTING THE CONT RACT JOB WORK AND IN DOING SO IS BOUND TO INCUR EXPENSES. IT IS NOT THE CASE OF THE REVENUE THAT ALL EXPENSES INCLUDING THE EXPENSES RELATABLE TO THE UNDISCLOSED RECEIPTS FROM EXECUTION OF CONTRACT JOB WORK HAS ALREADY BEEN TAKEN INTO CONSIDERATION WHILE ARR IVING AT THE TOTAL INCOME OF THE ASSESSEE DECLARED IN THE RETURN OF INCOME BY THE AS SESSEE. IN SUCH CIRCUMSTANCES I AM OF THE VIEW THAT THE BELIEF OF TAXING 31.75% WHICH IS THE DISCLOSED GROSS PROFIT OF THE ASSESSEE ON THE UNDISCLOSED CONTRACT RECEIPTS IS JU ST AND FAIR AND THE PLEA OF THE ASSESSEE IN THIS REGARD IS DIRECTED TO BE ACCEPTED. GROUND NOS. 2, 3 AND 5 OF THE ASSESSEE ARE PARTLY ALLOWED. 14. GROUND NO.4 RAISED BY THE ASSESSEE READS AS FO LLOWS :- 7 ITA NO.647/KOL/2014-SRI ASOK KUMAR PAL A.Y.2009-1 0 4. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ADDITION OF R S.7 ,55,200 / - U/S 40 (A)(IA) OF THE INCOME TAX ACT 1961. THE SAID DISALLOWANCE IS UNJUS TIFIED AND THE SAME BE DELETED. 15. THE ASSESSEE PAID THE FOLLOWING AMOUNTS TO DIFFEREN T PARTIES FOR SUPPLY OF TECHNICAL WORKS AND LABOURER ON A REGULAR BASIS FOR CONDUCTING AMC JOB-WORK. THOUGH THERE EXISTS NO WRITTEN AGREEMENT YET SERVIC E OF SUCH LABOURER WAS TAKEN TO CARRY OUT THE MAINTENANCE OF OIL FLOW METER IN DIFF ERENT COMPANIES. ACCORDING TO THE AO, THIS TYPE OF CONTRACT JOB FALLS WITHIN THE AMBI T OF SEE194C OF THE INCOME TAX ACT, 1961 (ACT) AND THE ASSESSEE WAS UNDER AN OBLIGATION TO DEDUCT TAX AT SOURCE ON THE PAYMENTS MADE AS ABOVE AS PAYMENT OF SUCH SUM EXCE EDED TWENTY THOUSAND RUPEES WHICH IS APPLICABLE FOR THE RELEVANT ASSTT. YEAR [S EC194C(5)]. SINCE TAX WAS NOT DEDUCTED AT SOURCE, THE AO HELD THAT THERE WAS VIOL ATION OF THE PROVISION OF SEE40(A)(IA) OF THE ACT ON THE FOLLOWING PAYMENTS F ALLING U/S.194C OF THE ACT: SHIVSAKTIENGINEERING,HALISAHAR, WB RS.100,200/- VID E CHQ.NO.470757 DT.2611.2008 -DO- RS150,000/- VIDE CHQ.NO.470776 DT.21.1.2 009 -DO- RS.155,000/- VIDE CHQ.N0470789 DT.25.2200 9 M/S. TELTECH INSTRUMENTATION PVT., RS.350,000/- VIDE CHQ.N0470000 DT.31.32009 LTD.MUMBAI. TOTAL PAYMENT RS.755,200/- SINCE NO TDS WAS MADE BY THE ASSESSEE ON THE ABOVE PAYMENT OF RS.755,200/-, THE SAME IS DISALLOWED AND ADDED BACK TO THE TOTAL INCO ME OF THE ASSESSEE. ON APPEAL BY THE ASSESSEE AGAINST THE AFORESAID DISALLOWANCE, TH E CIT(A) CONFIRMED THE ORDER OF THE AO. 16. BEFORE ME, THE ASSESSEE CLAIMED THAT THE PERS ONS TO WHOM THE PAYMENTS WERE MADE WITHOUT DEDUCTING TAX AT SOURCE AFTER FILING T HEIR RETURN OF INCOME AND SHOWED THE AMOUNTS RECEIVED FROM THE ASSESSEE AS TOTAL INC OME. IF THE PERSONS TO WHOM THE ASSESSEE MADE PAYMENTS HAVE INCLUDED THE RECEIPTS I N THEIR TOTAL INCOME THE ADDITION U/S 40(A)(IA) OF THE ACT SHOULD BE DELETED. IN THIS REGARD OUR ATTENTION WAS MADE TO THE 8 ITA NO.647/KOL/2014-SRI ASOK KUMAR PAL A.Y.2009-1 0 DECISION OF THIS BENCH RENDERED IN THE CASE OF M/S. ABHOY CHARAN BAKSHI VIDE ITA NO.1492/KOL/2015 ORDER DATED 06.04.2016 WHERE IN SI MILAR DIRECTION WAS GIVEN BY ITAT. 17. I HAVE GIVEN A CAREFUL CONSIDERATION TO THE SU BMISSIONS MADE BY THE LD. COUNSEL FOR THE ASSESSEE. THIS TRIBUNAL IN THE CASE OF M/S . ABHOY CHARAN BAKSHI (SUPRA) HAS HELD AS FOLLOWS :- 15. WE HAVE GIVEN A VERY CAREFUL CONSIDERATION TO THE RIVAL SUBMISSIONS. THE CIT(A) HAS HELD THAT THE SECOND PROVISO TO SEC.40(A)(IA) O F THE ACT WILL APPLY IN THE PRESENT CASE AND THAT APPLICABILITY OF THE SECOND PROVISO TO SEC .40(A)(IA) OF THE ACT WHICH WAS INTRODUCED BY THE FINANCE ACT, 2012 W.E.F. 1.4.2013 WAS RETROSPECTIVE IN OPERATION AND WAS TO APPLY W.E.F. 1-4-2005, BEING THE DATE FROM W HICH SUB-CLAUSE (IA) OF SECTION 40(A) WAS INSERTED BY THE FINANCE (NO. 2) ACT, 2004. T HE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ANSAL LAND MARK TOWNSHIP (I) PVT.LT D., IN ITA NO.160/2015 JUDGMENT DATED 26.8.2015 HAS TAKEN THE VIEW THAT THE INSERTI ON OF THE SECOND PROVISO TO SEC.40(A)(IA) OF THE ACT IS RETROSPECTIVE AND WILL APPLY FROM 1.4.2005. ONCE IT IS HELD THAT THE ASSESSEE IS ENTITLED TO THE BENEFIT OF 2 ND PROVISO TO SEC.40(A)(IA) OF THE ACT, THE CIT(A) OUGHT TO HAVE DIRECTED THE AO TO VERIFY WHET HER THE RECIPIENTS HAVE INCLUDED THE RECEIPTS PAID BY THE ASSESSEE IN THEIR RESPECTIVE R ETURNS OF INCOME AND ALSO PAID TAXES ON THE SAME. TO THE EXTENT THE RECIPIENTS FROM THE ASSESSEE HAVE SO INCLUDED THE SUM IN THEIR RETURNS OF INCOME AND FILED THE SAME, NO DISA LLOWANCE U/S.40(A)(IA) OF THE ACT OUGHT TO HAVE BEEN SUSTAINED BY THE CIT(A). THE C IT(A) OUGHT TO HAVE ALSO DIRECTED THE AO THAT IN CASE THE RECIPIENT PARTIES ARE NOT C OOPERATING IN PROVIDING DETAILS, THE AO SHOULD CALL FOR THE INFORMATION U/S. 133(6) OR 1 31 OF THE ACT, FOR VERIFICATION OF THE SAME. IN THIS REGARD WE ALSO FIND THAT THE ASSESSE E HAS FURNISHED ALL THE DETAILS OF ASSESSMENT PARTICULARS OF THE RECIPIENTS OF PAYMENT FROM THE ASSESSEE. THE AO THEREFORE SHOULD NOT HAVE ANY DIFFICULTY IN MAKING THE REQUIRED VERIFICATION. WE THEREFORE SET ASIDE THE ORDER OF THE CIT(A) TO THE EXTENT TO WHICH HE HAD SUSTAINED THE ORDER OF THE AO ON THE DISALLOWANCE U/S.40(A)(IA) O F THE ACT AND REMAND THE ISSUE TO THE AO TO VERIFY WHETHER THE RECIPIENTS HAVE INCLUDED T HE RECEIPTS PAID BY THE ASSESSEE IN THEIR RESPECTIVE RETURNS OF INCOME AND ALSO PAID TA XES ON THE SAME. TO THE EXTENT THE RECIPIENTS FROM THE ASSESSEE HAVE SO INCLUDED THE S UM IN THEIR RETURNS OF INCOME AND FILED THE SAME, NO DISALLOWANCE U/S.40(A)(IA) OF TH E ACT SHOULD BE MADE BY THE AO. IN CASE THE RECIPIENT PARTIES ARE NOT COOPERATING IN P ROVIDING DETAILS, THE AO SHOULD BE DIRECTED TO CALL FOR THE INFORMATION U/S. 133(6) OR 131 OF THE ACT, FOR VERIFICATION OF THE SAME. 18. I AM OF THE VIEW THAT SIMILAR DIRECTIONS AS WE RE MADE ABOVE SHOULD BE GIVEN IN THE PRESENT CASE ALSO. THE ISSUE IS ACCORDINGLY IS SET ASIDE TO THE AO FOR VERIFICATION AS DONE IN THE AFORESAID DECISION. GROUND NO.4 IS ACCO RDINGLY TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 9 ITA NO.647/KOL/2014-SRI ASOK KUMAR PAL A.Y.2009-1 0 19. GROUND NO.6 RAISED BY THE ASSESSEE READS AS FO LLOWS :- 6. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN MAKING ADDITION OF RS.79,500 /- ON ACCOUNT OF EDUCATION EXPENSES FOR THE EMPLOYEE OF THE ASSESSEE. THE SAID DISALLOW ANCE IS UNJUSTIFIED AND THE SAME BE DELETED. 20. THE ASSESSEE DEBITED AN AMOUNT OF RS.79,500/- TOWARDS ADMISSION EXPENSES. DURING THE COURSE OF HEARING IT WAS FOUND THAT ALL PAYMENTS IN SUPPORT OF THESE EXPENSES WERE MADE BY CASH AND WERE SUPPORTED ONLY BY SELF-MADE VOUCHERS. THE ASSESSEE CLAIMED THE AFORESAID EXPENDITURE RELATED TO EDUCATION EXPENSES OF EMPLOYEES CHILDREN. THE AO HOWEVER HELD THAT SINCE NO BUSINESS PURPOSE IS SERVED BY SUCH EXPENSES, THE SAME CANNOT BE ALLOWED AS A D EDUCTION U/S 37 OF THE ACT AND HE ADDED BACK THE SAID SUM TO THE TOTAL INCOME OF THE ASSESSEE. ON APPEAL BY THE ASSESSEE THE CIT(A) CONFIRMED THE ORDER OF AO. 21. BEFORE ME, THE LIMITED PRAYER OF THE LD. COUNS EL FOR THE ASSESSEE WAS THAT THE ASSESSEE SHOULD BE GIVEN AN OPPORTUNITY TO EXPLAIN THAT THE EXPENSES IN QUESTION WERE ACTUALLY INCURRED FOR THE EDUCATION OF CHILDREN OF THE EMPLOYEES OF THE ASSESSEE. IN THIS REGARD THE LD. COUNSEL FOR THE ASSESSEE PLACED BEFO RE ME THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF MYSORE KIRLOSKA R LTD. VS CIT 166 ITR 836 (KAR) WHEREIN THE HONBLE KARNATAKA HIGH COURT TOOK A VIE W THAT THE EXPENSES INCURRED FOR EDUCATION OF CHILDREN OF THE EMPLOYEE WAS ALLOWABLE AS DEDUCTION. 22. AFTER HEARING THE RIVAL SUBMISSIONS I AM OF TH E VIEW THAT IT WOULD BE JUST AND PROPER TO SET ASIDE THE ORDER OF CIT(A) ON THIS ISS UE AND REMAND TO THE AO FOR FRESH CONSIDERATION OF THE ISSUE WITH THE LIBERTY TO THE ASSESSEE TO ESTABLISH THAT THE EXPENSES IN QUESTION WERE IN FACT INCURRED FOR THE EDUCATION OF THE CHILDREN OF THE EMPLOYEES. IF IT IS SO ESTABLISHED THEN THE DEDUCTION CLAIMED SHO ULD BE ALLOWED. GROUND NO.6 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 10 ITA NO.647/KOL/2014-SRI ASOK KUMAR PAL A.Y.2009-1 0 23. IN THE RESULT THE APPEAL IS TREATED AS PARTLY ALLOWED. O RDER PRONOUNCED IN THE OPEN COURT ON 02.09.2016. SD/- [ N.V.VASUDEVAN ] JUDICIAL MEMBE R DATED : 02.09.2016. [RG PS] COPY OF THE ORDER FORWARDED TO: 1.SRI ASOK KUMAR PAL, C/O D.J.SHAH & CO., KALYAN BH AWAN, 2, ELGIN ROAD, KOLKATA- 700020. 2.I.T.O., WARD-51(3), KOLKATA.. 3. CIT(A)-XXXII, KOLKATA. 4. CIT-XVII, KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER, ASST. REGISTRAR, ITAT, KOLKATA BENCHES