D.C.I.T Cir - 55,kolkata, Kolkata V. Sri Santibrata Saha, Kolkata

ITA 651/KOL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100135 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2015
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 25-03-2013
• Court: TRIBUNAL
• Department Lawyers: RAJENDRA PRASAD JCITLD
• Assessee Lawyers: MIRAJ D SHAH LD
• Keywords: Revised return
• Section: 143(3); 133A

Judgement Text

ITA NO 651/KOL/2013-C-AM SRI SANTIBRATA SAHA 1 IN THE INCOME TAX APPELLATE TRIBUNAL, C BENCH, K OLKATA BEFORE : SHRI MAHAVIR SINGH,JUDICIAL MEMBER, AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER I.T.A NO. 651/KOL/2013 A.Y : 2007-08 D.C.I.T, CIRCLE-55, KOLKATA VS. SRI SANTIBRATA SAHA PAN:ALGPS 2673C (APPELLANT) (RESPONDENT) FOR THE APPELLANT/DEPARTMENT: SHRI RAJENDRA PRASAD, JCIT, LD.DR FOR THE RESPONDENT/ASSESSEE: SHRI MIR AJ D.SHAH, LD.AR DATE OF HEARING: 19-11 -2015 DATE OF PRONOUNCEMENT: 27-11-2 015 ORDER SHRI M.BALAGANESH, AM THIS APPEAL OF THE REVENUE ARISES OUT OF THE ORDER OF THE LEARNED CIT(A), XXXVI, KOLKATA IN APPEAL NO.02/CIT(A)-XXXVI/KOL/10- 11 DATED 28-01-2013 FOR THE ASSESSMENT YEAR 2007-08 PASSED AGAINST THE ORDER OF ASSESSMENT FRAMED BY THE LEARNED AO U/S. 143(3) OF THE INCOME TAX ACT, 1 961 (HEREINAFTER REFERRED TO AS THE ACT). 2. WE FIND THAT THE LEARNED DR AS WELL AS THE LEAR NED AR ADVANCED ARGUMENTS IN RESPECT OF AN ADDITION MADE TOWARDS DI SCREPANCY IN EXPENSES IN THE SUM OF RS. 11,43,899/-. THIS ADDITION WAS RESTRICT ED TO 25% BY THE LEARNED CITA AND BOTH ASSESSEE AS WELL AS THE REVENUE HAD ACCEPT ED THE SAME. WE FIND THAT NO GROUND WAS RAISED BY THE REVENUE IN THEIR APPEAL. ACCORDINGLY, THE ARGUMENTS OF THE COUNSELS ON THIS ISSUE IS IGNORED AND NOT ADJUD ICATED IN THIS ORDER IN THE ABSENCE OF GROUND TO THIS EFFECT. ITA NO 651/KOL/2013-C-AM SRI SANTIBRATA SAHA 2 3. THE FIRST GROUND TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LEARNED CITA IS JUSTIFIED IN DELETING THE ADDITION MADE ON ACCOU NT OF BOGUS CREDITORS OF RS. 70,234/- WHEN NO DETAILS WERE PRODUCED BY THE ASSES SEE BEFORE THE LEARNED AO. 3.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASS ESSEE DEALS IN MEDICINE ON WHOLESALE BASIS AND IS A PROPRIETOR OF M/S N.SAHA A GENCY AND M/S N.SAHA & CO WHICH WERE SUBJECTED TO SURVEY PROCEEDINGS U/S 133A OF THE ACT ON 3.3.2009. THE LEARNED AO OBSERVED THAT THE CLOSING BALANCE OF SUNDRY CREDITORS AS ON 31.3.2007 WAS RS. 19,60,680/- AND COMPARED THE SAME WITH THAT AS ON 31.3.2006 WHICH WAS RS. 18,90,446/- AND FOR WANT OF DETAILS B ROUGHT THE DIFFERENCE OF RS. 70,234/- ( 1960680-1890446) TO TAX AS UNVERIFIABLE CREDITORS. ON FIRST APPEAL, THE LEARNED CITA DELETED THE SAME AS THE ADDITION MADE WAS ONLY ON MERE SURMISE AND CONJECTURE. AGGRIEVED, THE REVENUE IS IN APPEA L BEFORE US ON THE FOLLOWING GROUND:- 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD.CIT(A) IS NOT JUSTIFIED BY DELETING THE ADDITION ON ACCOUNT OF BO GUS CREDITORS EVEN AFTER THE ASSESSEE FAILED TO PRODUCE THE LIST CREDI TORS DURING ASSESSMENT AS WELL AS REMAND PROCEEDINGS. 3.2. THE LEARNED DR VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED AO. IN RESPONSE TO THIS, THE LEARNED AR ARGUED THAT THE CO MPARISON MADE BY THE LEARNED AO WITH REGARD TO CLOSING BALANCE OF SUNDRY CREDITO RS OF TWO DIFFERENT YEARS IS PATENTLY WRONG DUE TO THE FACT THAT THE SUNDRY CRED ITORS HAD INCREASED BY RS. 70,234/- DURING THE YEAR DUE TO FRESH PURCHASES MAD E DURING THE YEAR. IN ANY CASE, IF AT ALL, ANY ADDITION IS TO BE MADE, IT COU LD BE MADE ONLY IN THE ASST YEAR 2006-07 AND NOT IN THE ASST YEAR 2007-08 (YEAR UNDE R APPEAL) IN RESPECT OF DISCREPANCIES IN OPENING BALANCE OF SUNDRY CREDITOR S, IF ANY. HE FURTHER ARGUED THAT THE LEARNED AO HAD ACCEPTED THE GROSS PROFIT D ECLARED BY THE ASSESSEE IN THE REVISED RETURN FILED PURSUANT TO SURVEY AND WHEN TR ADING RESULTS ARE ACCEPTED, ITA NO 651/KOL/2013-C-AM SRI SANTIBRATA SAHA 3 WHERE IS THE QUESTION OF MAKING ANY SEPARATE ADDITI ON TOWARDS UNVERIFIABLE CREDITORS. 3.3. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND LOT OF FORCE IN THE ARGUMENTS OF THE LEARNED AR IN RESPECT OF THIS ADDITION THAT WHEN THE TRADING RESULTS ARE ACCEPTED BY THE LEARNED AO BASED ON REVISED RETURN FILED BY THE ASSESSEE, THERE IS NO SCOPE FOR DISPUTING THE VERACITY OF THE TRADE CR EDITORS AS ADMITTEDLY THE TRADE CREDITORS HAD EMANATED ONLY OUT OF PURCHASES MADE B Y THE ASSESSEE. MOREOVER, WE FIND THAT IN ANY CASE, THERE IS NO SCOPE FOR MAKING ANY ADDITION TOWARDS THE DISCREPANCIES, IF ANY, IN THE OPENING BALANCE OF SU NDRY CREDITORS IN THE ASSESSMENT YEAR UNDER APPEAL. WE FIND THAT THE LEARNED CITA H AD GIVEN A FINDING THAT THE SUNDRY CREDITORS IN ASST YEAR 2006-07 HAS BEEN ACCE PTED BY THE LEARNED AO AND NOT DISPUTED. IN THESE CIRCUMSTANCES, WE FIND NO I NFIRMITY IN THE ORDER OF THE LEARNED CITA AND ACCORDINGLY, THE GROUND NO. 1 RAIS ED BY THE REVENUE IS DISMISSED. 4. THE NEXT GROUND TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE PROVISIONS OF SECTION 194H READ WITH SECTION 40(A)(IA) OF THE ACT WOULD BE APPLICABLE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 4.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASS ESSEE DEBITED A SUM OF RS. 9,57,884/- IN THE PROFIT AND LOSS ACCOUNT OF M/S N. SAHA & CO AS COMMISSION ON SALES. THE LEARNED AO INVOKED THE PROVISIONS OF SE CTION 40(A)(IA) OF THE ACT AND MADE DISALLOWANCE OF THE SAME. ON FIRST APPEAL, BE FORE THE LEARNED CITA, THE ASSESSEE FILED A LEDGER ACCOUNT OF COMMISSION ON SA LES REFLECTING THEREIN DATE WISE PAYMENTS TO SEVERAL DISTRIBUTORS. IT WAS SUBMITTED BY THE ASSESSEE THAT THE COMMISSION PAID WAS NOT TO AGENTS BUT TO THE PERSON S WHO HAD PURCHASED MOBILE RECHARGE COUPONS FROM THE ASSESSEE AND PLEADED THAT THE SAME IS ACTUALLY A TURNOVER DISCOUNT BUT WRONLY NOMENCLATURED IN THE P ROFIT AND LOSS ACCOUNT AS ITA NO 651/KOL/2013-C-AM SRI SANTIBRATA SAHA 4 COMMISSION ON SALES. THE LEARNED CITA RIGHTLY FORW ARDED THIS LEDGER ACCOUNT AND OTHER DETAILS SUBMITTED BEFORE HIM FOR THE FIRS T TIME TO THE LEARNED AO AND CALLED FOR A REMAND REPORT. THE LEARNED AO IN REMA ND PROCEEDINGS DID NOT ACCEDE TO THE PLEA OF THE ASSSESSEE THAT THE SUBJEC T MENTIONED PAYMENTS ARE ONLY TURNOVER DISCOUNT BUT NOT COMMISSION, BUT HOWEVER, ACCEPTED THAT PAYMENTS IN EXCESS OF RS. 2,500/- ALONE WOULD BE SUBJECTED TO D ISALLOWANCE U/S 40(A)(IA) READ WITH SECTION 194H OF THE ACT WHICH WAS WORKED OUT A T RS. 5,29,539/- . THE LEARNED CITA HELD THAT THE PAYMENTS ARE MADE BY A P RINCIPAL TO ITS AGENT AND NOT PRINCIPAL TO PRINCIPAL. HE ALSO GAVE A CATEGORICAL FINDING THAT THE SUBJECTMENTIONED PAYMENTS ARE ONLY DISCOUNT PAID TO PURCHASERS OF RECHARGE COUPONS AND THE NOMENCLATURE IN THE BOOKS OF ACCOUN TS WOULD NOT BE THE DETERMINING FACTOR FOR FRAMING AN ADDITION AND ACCO RDINGLY DELETED THE ADDITION OF RS. 9,57,884/-. AGGRIEVED, THE REVENUE IS IN APPEA L BEFORE US ON THE FOLLOWING GROUND:- 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD.CIT(A) IS NOT JUSTIFIED BY DELETING THE ADDITION U/S. 40(A)(IA) FOR NON-DEDUCTION OF TDS ON COMMISSION ON SALES BY TREATING IT AS TRADE DISCOUNT TO CUSTOMERS COMPLETELY IGNORING THE MATERIAL BROUGHT ON RECORDS BY THE AO DURING REMAND STAGE TH AT THE ASSESSEE HIMSELF TERMED IT AS COMMISSION ON SALES. 4.2. THE LEARNED DR ARGUED THAT THE FINDING GIVEN BY THE LEARNED CIT(A) THAT PAYMENTS ARE MADE BASED ON PRINCIPAL TO PRINCIPAL R ELATIONSHIP WAS MADE WITHOUT GIVING ANY OPPORTUNITY TO THE LEARNED AO AND HENCE THERE IS VIOLATION OF RULE 46A OF THE IT RULES IN THIS REGARD. IN RESPONSE TO THIS, THE LEARNED AR ARGUED THAT THE REMAND REPORT WAS CALLED FOR BY THE LEARNED CIT A AND THE ENTIRE DETAILS SUBMITTED BY THE ASSESSEE BEFORE HIM WAS DULY SUBMI TTED BEFORE THE LEARNED AO ALSO IN REMAND PROCEEDINGS. THE LEARNED AO IN REMA ND REPORT DID NOT ACCEPT THE CONTENTIONS OF THE ASSESSEE. HENCE THE ARGUMENT OF THE LEARNED DR IN THIS REGARD IS FACTUALLY INCORRECT. ITA NO 651/KOL/2013-C-AM SRI SANTIBRATA SAHA 5 4.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. WE FIND FROM THE STATEMENT OF FACTS AND GR OUNDS OF APPEAL OF THE REVENUE, THE OBSERVATIONS MADE BY THE LEARNED AO IN HIS REMA ND REPORT ON THIS IMPUGNED ISSUE IS ALSO ATTACHED ALONG WITH THE APPEAL MEMO. HENCE IT IS INCORRECT ON THE PART OF THE LEARNED DR TO STATE THAT THERE IS VIOLA TION OF RULE 46A OF IT RULES. EVEN OTHERWISE WE FIND THAT THERE IS NO SPECIFIC GR OUND RAISED BY THE REVENUE WITH REGARD TO VIOLATION OF RULE 46A IN THEIR GROUNDS OF APPEAL. WITH REGARD TO THE MERITS OF THE CASE, WE ARE IN TOTAL AGREEMENT WITH THE FINDING GIVEN BY THE LEARNED CITA THAT THE SUBJECT MENTIONED PAYMENTS MADE BY TH E ASSESSEE ARE ONLY DISCOUNT PAID TO THE PURCHASERS OF RECHARGE COUPONS THOUGH W RONGLY CATEGORIZED AS COMMISSION ON SALES IN THE BOOKS OF ACCOUNTS. WE A LSO AGREE THAT THE NOMENCLATURE IN BOOKS OF ACCOUNTS WOULD NOT BE THE DETERMINATIVE FACTOR FOR UNDERSTANDING THE REAL NATURE OF THE TRANSACTION AN D IT IS WELL SETTLED THAT SUBSTANCE WOULD ALWAYS PREVAIL OVER ITS FORM. WE HOLD THAT I N THESE FACTS AND CIRCUMSTANCES, THE PAYMENTS MADE BY THE ASSESSEE IS IN THE CATEGOR Y OF PRINCIPAL TO PRINCIPAL AND THE PROVISIONS OF SECTION 194H OF THE ACT WOULD COM E INTO PLAY ONLY WHEN THE PAYMENT IS FROM PRINCIPAL TO AGENT. HENCE WE FIND NO INFIRMITY IN THE ORDER OF THE LEARNED CITA IN THIS REGARD. ACCORDINGLY, THE GROU ND NO. 2 RAISED BY THE REVENUE IS DISMISSED. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON 27 / 11/ 2015 SD/- ( MAHAVIR SINGH, JUDICIAL MEMBER ) SD/- (M. BALAGANESH, ACCOUNTANT MEMBER) DATE 27/ 11/2015 ITA NO 651/KOL/2013-C-AM SRI SANTIBRATA SAHA 6 COPY OF THE ORDER FORWARDED TO: 1.. THE APPELLANT:DCIT,CIR-55, 54/1 RAFI AHMED KID WAI ROAD, 4 TH FL., KOL-16. 2 THE RESPONDENT-SRI SANTIBRATA SAHA 1/1 SOURIN RO Y ROAD, KOL-34. 3 4.. /THE CIT, / THE CIT(A) 5. DR, KOLKATA BENCH 6. GUARD FILE. TRUE COPY, BY ORDER, ASSTT REGISTRAR ** PRADIP SPS