ACIT, Circle-40, Kolkata, Kolkata V. Rahul Saraf (HUF), Kolkata

ITA 710/KOL/2017

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 8804 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 8 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 11-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SOURABH KUMAR
• Keywords: Unexplained investment; Unexplained expenditure; Non-deduction of tax
• Section: 69C; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : KOLKATA [BEFORE HONBLE SHRI J. SUDHAKAR REDDY, AM & SHRI S.S. GODARA, JM] I.T.A NO. 710/KOL/201 7 ASSESSMENT YEAR : 2012- 13 ACIT, CIRCLE-40, KOLKATA -VS- RAHUL SA RAF (HUF) [PAN: AADHR 2300 F] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI SOURABH K UMAR, ADDL. CIT SR. DR FOR THE RESPONDENT : SHRI SOUMITRA CHOUD HURY, ADVOCATE DATE OF HEARING : 03.12.2018 DATE OF PRONOUNCEMENT : 28.12.2018 ORDER PER S.S. GODARA, JM 1. THIS REVENUES APPEAL FOR ASSESSMENT YEAR 2012-13 A RISES AGAINST THE CIT(A)-12, KOLKATAS ORDER DATED 02.01.2017 PASSED IN CASE NO. 54/ CIT(A)-1/KOL/CIRCLE-40/2015- 16, INVOLVING PROCEEDING U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. THE REVENUES FIRST SUBSTANTIVE GROUND PLEADS TH AT THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN REVERSING ASSESSING OFFICERS ACTION DI SALLOWING THE SUM IN QUESTION OF RS. 60,665/- RELATING TO OTHER EXPENSES. THE CIT(A)S F INDING QUA THIS ISSUE READ AS UNDER: 2 ITA NO.710/KOL/2017 RAHUL SARAF (HUF) A.YR.2012-13 2 6. IN REGARD TO THE GROUND NO. 6, RELEVANT OBSERVA TION OF THE ASSESSING OFFICER MADE IN THE ASSESSMENT ORDER DATED 31.03.2015 IS REPRODUCED BELOW: 'OTHERS: IT IS SEEN THAT THE ASSESSEE CLAIMED RS.60, 665/- O N ACCOUNT OF 'OTHERS' IN ITS' P&L A/C. DURING THE COURSE OF HEARING, THE ASSESSEE WAS ASKED TO PRODUCE THE DETAILS OF SUCH EXPENDITURE ALONG WITH SUPPORTIVE D OCUMENTS AND HE WAS ALSO ASKED TO EXPLAIN THE NATURE OF SUCH EXPENSES. IN RE SPONSE TO THIS, THE ASSESSEE HA JUST PROVIDED THE NAME TO WHOM SUCH PAYMENTS ARE MA DE BUT FAILED TO PRODUCE THE SUPPORTIVE DOCUMENTS. THEREFORE, THE SAME IS BE ING ADDED BACK TO THE INCOME OF THE ASSESSEE. ' 6.1. IN REGARD TO THE GROUND NO.6 STATED ABOVE, THE APPELLANT HAS SUBMITTED THE FOLLOWING: 'THAT IN GROUND NO. '6', RELATE TO ADDITION OF RS. 60, 665/- ON ACCOUNT OF OTHER EXPENSES I.E. TEA & TIFFIN FOR THE EMPLOYEES. THE A SSESSEE HAS PRODUCED THE OTHER EXPENSES DETAILS AT THE TIME OF SCRUTINY ASSESSMENT TO THE TUNE OF RS. 60, 665/- AND THE A.O. HAS NOWHERE MENTIONED THAT THERE IS AN Y ELEMENT OF EXPENDITURE WHICH IS PERSONAL AND CAPITAL IN NATURE, THEREFORE, THE OTHER EXPENSES AMOUNTING TO RS. 60, 665/- SHOULD BE ALLOWED. 6.2. I HAVE CONSIDERED THE FACTS OF THE CASE AND TH E SUBMISSIONS OF THE APPELLANT. DETAILS OF EXPENSES RELATING TO RS. 60,665/- HAVE B EEN SUBMITTED AND VERIFIED AND THERE IS NO BASIS FOR THE DISALLOWANCE AND HEN CE DELETED . 3. WE HAVE HEARD RIVAL CONTENTIONS. THE REVENUES O NLY ARGUMENT RAISED DURING THE COURSE OF HEARING IS THAT THE ASSESSEE COULD NOT PR OVE ITS MAIN EXPENDITURE BY WAY OF SUPPORTIVE DOCUMENTS AS WELL AS NATURE THEREOF. IT FAILS TO DISPUTE THE CIT(A)S CLINCHING FINDING OF FACT THAT THE CIT(A)S DETAILS OF SAID E XPENSES HAD BEEN SUBMITTED THE DETAILS AS PER THE LOWER APPELLATE FINDINGS. THE REVENUE HA S NOT PLACED ON RECORD EVEN THE RELEVANT LIST OF ASSESSEES DOCUMENTS PLACING PARA OF THE GUARD FILE. WE THEREFORE AFFIRM THE CIT(A)S FINDING SUPPORTING MAIN DISALLOWANCE. 4. NEXT COMES TO REVENUES SECOND SUBSTANTIVE GROUN D SEEKING TO REVIVE SECTION 40A(IA) DISALLOWANCE OF RS. 2,55,465/-. THE ASSESSING OFFIC ER HAD INCLUDED THE IMPUGNED 3 ITA NO.710/KOL/2017 RAHUL SARAF (HUF) A.YR.2012-13 3 DISALLOWANCE QUA THE INTEREST PAID ON UNSECURED LOA N ON ACCOUNT OF NON-DEDUCTION OF TDS. THE CIT(A) HAS DELETED THE DISALLOWANCE AS FOL LOWS: 10. IN REGARD TO THE GROUND NO. 10, RELEVANT OBSE RVATION OF THE ASSESSING OFFICER MADE IN THE ASSESSMENT ORDER DATED 31.03.20 15 IS REPRODUCED BELOW: UNSECURED LOAN: IT IS SEEN FROM CONFIRMATION OF UNSECURED LOAN FOR THE YEAR UNDER CONSIDERATION WHICH WAS SUBMITTED BY THE AR THAT TH E ASSESSEE HAS FAILED TO DEDUCT TAX AT SOURCE AGAINST THE INTEREST ACCRUE D OR PAID ON UNSECURED LOAN. THE ASSESSEE HAS ALSO NOT PRODUCED FORM 15G / FORM 15H IN THIS REGARD. THE LIST OF THESE IS AS FOLLOWS: THEREFORE, CLAIM OF INTEREST OF RS. 2,55,465/- IN C ASE OF NON-DEDUCTION OF TAX AT SOURCE IS NOT ALLOWABLE CLAIM HENCE THE SAME EXPENDITURE DISALLOWED AND ADDED BACK U/S 40A(IA) OF THE IT ACT . 10.1. IN REGARD TO THE GROUND NO. 10 STATED ABOVE, THE APPELLANT HAS SUBMITTED THE FOLLOWING: THAT IN GROUND NO. 10 RELATED TO DISALLOWANCE U/ S 40A(IA) AMOUNTING TO RS. 2,55,465/- AS NON-DEDUCTION OF TDS ON UNSECU RED LOAN. IN THIS REGARD, I AM FILING HEREWITH FORM NO. 15G OF PRASH ANT MASKARA, DILIP KUMAR KEJRIWAL (HUF), MANJU KEJRIWAL, INDIRA MASKAR A, JYOTI AGARWAL, CHANDRA KALA DEVI JAISWAL, CHAMPA DEVI JAISWALMANJ U DHAR, SARAWGI & SONS (HUF). SO CONSIDERING THE ABOVE FACTS THE D ISALLOWANCE U/S 40A(IA) AMOUNTING TO RS. 2,55,465/- AS NON-DEDUCTIO N OF TDS U/S 194A SHOULD BE ALLOWED IN FULL. 4 ITA NO.710/KOL/2017 RAHUL SARAF (HUF) A.YR.2012-13 4 10.2. I HAVE CONSIDERED THE FACTS OF THE CASE AND T HE SUBMISSIONS OF THE APPELLANT. THE ASSESSING OFFICER DISALLOWED CLAIM OF INTEREST OF RS. 2,55,465/- AS NO TDS HAD BEEN DEDUCTED. THE APPELLANT HAS SUBMITTED THAT FORM NO. 15G WERE FILED AND HENCE SHOULD BE ALLOWED IN FULL. I FIND FORCE IN THE CONTENTION OF THE APPELLANT AND HENCE THE ADDITION IS DELETED. 5. WE HAVE HEARD THE RIVAL CONTENTIONS. SUFFICE TO SAY, THE ASSESSEE HAD DISCHARGED ITS BURDEN IN SUPPORT OF NON-DEDUCTION OF TDS BY PLACIN G ON RECORD THE PAYEES CERTIFICATE IN THE FORM NO. 15G OF THE INCOME TAX RULES. NO RE BUTTAL THERETO IS COMING FROM THE REVENUE SIDE QUA THE SAME. IT IS ONLY THE CASE IS T HAT THE SAID FORM 15G RELATED TO ASSESSMENT YEAR 2013-14 ARE THAN THE IMPUGNED ASSES SMENT YEAR. THE REVENUE HAS NOT PLACED ON RECORD THE SAID FORMS IN SUPPORT OF ITS A RGUMENTS. WE THEREFORE SEE NO REASON TO AFFIRM THE MAIN DISALLOWANCE IN THESE FACTS AND CIRCUMSTANCES. THE CIT(A)S FINDING RECORDING THE SECOND ISSUE ARE CONFIRMED ACCORDINGL Y. 6. THE REVENUES THIRD SUBSTANTIVE GROUND PLEADS TH AT THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING RENT PAYMENT DISALLOWANCE OF R S. 65,83,460/- ON ACCOUNT OF NON- DEDUCTION OF TDS U/S 40A(IA) OF THE ACT AS UNDER: 12. IN REGARD TO THE GROUND NO.12, RELEVANT OBSERV ATION OF THE ASSESSING OFFICER MADE IN THE ASSESSMENT ORDER DATED 31.03.2015 IS REPRODU CED BELOW: RENT: THE ASSESSEE HAS MADE PAYMENT AS RENT TO DIFFERENT PARTIES WHICH COME UNDER THE PREVIEW OF THE SECTION 194I OF THE ACT. FROM TH E SUBMISSION, IT IS FOUND THAT WHILE MAKING PAYMENT AS RENT, IN THE FOLLOWING CASE S, THERE IS SHORTFALL IN DEDUCTION OF TAX AT SOURCE : NAME OF PARTY AMOUNT PAID/PAYABLE DURING THE YEAR AMOUNT ON WHICH TAX DEDUCTED AT SOURCE DIFFERENCE 1 2 3 (2-3) DALMIA EDUCATION TRUST 16,29,444 2,71,574 13,57,870 DALMIA 68,19,720 22,73,240 45,46,480 5 ITA NO.710/KOL/2017 RAHUL SARAF (HUF) A.YR.2012-13 5 MANAV SEVA TRUST NORTHERN BENEVOLENT FUND 8,14,932 1,35,822 6,79,110 TOTAL 65,83,460 THEREFORE, CLAIM OF INTEREST OF RS. 65,83,460/- IN CASE OF NON-DEDUCTION OF TAX AT SOURCE IS NOT ALLOWABLE CLAIM AND HENCE THE SAME EXPENDITURE IS D ISALLOWED AND ADDED BACK TO THE INCOME OF THE ASSESSEE U/S 40A(IA) OF THE ACT. 12.1 IN REGARD TO THE GROUND NO..12 STATED ABOVE, T HE APPELLANT HAS SUBMITTED THE FOLLOWING: THAT IN GROUND NO. 12, RELATE TO DISALLOWANCE U/S 40A(IA) AMOUNTING TO RS. 65,83,460/- AS NON-DEDUCTION OF TDS ON RENT. IN THI S REGARD, I AM FILING HEREWITH FORM NO. 16A ISSUED TO NAME OF THE DEDUCTEE VIZ. DALMIA EDUCATION TRUST, DALMIA MANAV SAVA TRUST, 1971 CERTIFICATE DATED 26.07.2011 & 05. 07.2011 IN REGARD NORTHERN BENEVOLENT FUND, DETAIL STATEMENT OF RENT PAID DURI NG THE YEAR. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE PRODUCED THE SA ME BUT THE A.O. PASSED THE ORDER WITHOUT APPLICATION OF MIND AND NOT JUDICIAL VIEW. SO CONSIDERING THE ABOVE FACTS THE DISALLOWANCE U/S 40A(IA) AMOUNTING TO RS. 65,83,46 0/- AS NON-DEDUCTION OF TDS SHOULD BE ALLOWED IN FULL. 12.2 I HAVE CONSIDERED THE FACTS OF THE CASE AND TH E SUBMISSIONS OF THE APPELLANT. THE ASSESSING OFFICER HAS DISALLOWED AN AMOUNT OF RS. 65,83,460/- AS NO TDS WAS DEDUCTED ON RENT PAID TO THREE PARTIES. THE APPELLANT HAS SUBMITTED THAT I AM FILING HEREWITH FORM NO. 16A ISSUED TO NAME OF THE DEDUCTEE VIZ. DALMIA EDUCATION TRUST, DALMIA MANAV SEVA TRUST, 197 CERTIFICATE DATED 26.07.2011 & 05.07.2011 IN REGARD NORTHERN BE NEVOLENT FUND, DETAIL STATEMENT OF RENT PAID DURING THE YEAR.THE DISALLOWANCE HAS THUS NO BASIS AND IS DELETED IN FULL. 7. WE HAVE HEARD THE RIVAL CONTENTIONS. SUFFICE TO SAY, THAT IT HAS COME ON RECORD THAT THE ASSESSEE HAS FILED FORM NO. 16A IN THE NAME OF PAYEE/DEDUCTEE M/S DALMIA EDUCATION TRUST, DALMIA MANAV SEVA TRUST DURING THE COURSE OF ASSESSMENT. THE ASSESSING OFFICER NOWHERE CONSIDERED THE SAME IN AS SESSMENT ORDER BEFORE MAKING THE IMPUGNED DISALLOWANCE. WE THEREFORE FIND NO REASON TO INTERFERE WITH LD. CIT(A)S CONCLUSION THE IMPUGNED DISALLOWANCE AS THE ASSESSE E / DEDUCTOR HAD SUFFICIENTLY DISCHARGED ITS ONUS. THE REVENUE FAILS IN ITS THIRD GRIEVANCE AS WELL THEREFORE. 6 ITA NO.710/KOL/2017 RAHUL SARAF (HUF) A.YR.2012-13 6 8. THIS LEAVES US WITH REVENUES LAST SUBSTANTIVE G ROUND SEEKING TO REVIVE UNEXPLAINED EXPENDITURE AN ADDITION OF RS. 2,08,001/- MADE BY T HE ASSESSING OFFICER U/S 69C OF THE ACT. THE RELEVANT LOWER APPELLATE DISCUSSION TO THI S EFFECT PLEADS AS UNDER: 13. IN REGARD TO THE GROUND NO.L3, RELEVANT OBSERV ATION OF THE A.O. MADE IN THE ASSESSMENT ORDER DATED 31-03-2015 IS REPRODUCED BEL OW.- 'UNEXPLAINED EXPENDITURE : IT IS FOUND FROM THE SUBMISSION MADE DURING THE ASS ESSMENT PROCEEDINGS, THAT THE ASSESSEE HAS DEDUCTED TAX AT SOURCE ON PAYMENT TO NIS MANAGEMENT PVT. LTD. OF RS.14,20,372/- UNDER THE HEAD OF 'HOUSEKEEP ING CHARGES '. HOWEVER, THE ASSESSEE HAS DEBITED EXPENDITURE OF &.12,12,371/- I N ITS 'P&LA/C. AGAINST NIS MANAGEMENT PVT. LTD. THUS, THERE IS A DIFFERENCE OF &.2,08,001/- WHICH IS UNEXPLAINED EXPENDITURE. THEREFORE, AS PER PROVISIO NS OF SECTION 69C OF THE ACT, RS.2, 08,001/- IS BEING ADDED BACK TO THE INCOME OF THE ASSESSEE.' 13.1. IN REGARD TO THE GROUND NO. 13 STATED ABOVE, THE APPELLANT HAS SUBMITTED THE FOLLOWING: 'THAT GROUND NO. '13', RELATES TO ADDITION ON ACCOU NT OF UNEXPLAINED EXPENDITURE AMOUNTING TO RS.2,08,001/- THE SAID ADD ITION IS COMPLETELY WRONG AS THERE WAS NO BOGUS EXPENDITURE AND THE BOOKS OF ACCOUNTS HAVE NOT BEEN REJECTED, MOREOVER, THE ASSESSEE PAID RS.14,20,372/ - TO NIS MANAGEMENT PVT. LTD. AS HOUSEKEEPING CHARGES AND DEDUCTED TDS U/S. 194C, THEREFORE, NO ADDITION U/S. 69C SHOULD BE MADE ON UNEXPLAINED EXP ENDITURE. I AM FILING HEREWITH THE TDS CERTIFICATE TOWARDS HOUSEKEEPING C HARGES. 13.2. I HAVE CONSIDERED THE FACTS OF THE CASE AND T HE SUBMISSIONS OF THE APPELLANT. THE SUBMISSION OF THE APPELLANT HAS BEEN CONSIDERED AND I FIND FORCE IN IT AS NO UNEXPLAINED EXPENDITURE HAS BEEN MADE O UT AS THE ASSESSEE PAID RS.14,20,372/-; TO NIS MANAGEMENT PVT. LTD. AS HOUS EKEEPING CHARGES AND DEDUCTED TDS U/S, 194C. THE DISALLOWANCE HAS THUS N O BASIS AND IS DELETED IN FULL. 9. WE HAVE CONSIDERED THE RIVAL CONTENTIONS. THE RE VENUES ENDEAVOUR IN THE INSTANT ISSUE IS TO TREAT THE ASSESSEES EXPENDITURE HENCE CAN BE EXPLAINED INVESTMENT WHEREAS THE SAID PAYMENT HAD BEEN MADE TO M/S NIS MANAGEMEN T PVT. LTD. AFTER DEDUCTING TDS. ALL THE RELEVANT SOURCE THEREOF STAND EXPLAINE D IN ASSESSEES REGULARLY MAINTAINED BOOKS OF ACCOUNTS. WE THEREFORE CONCLUDE THAT THE A SSESSING OFFICER HAD ERRED IN 7 ITA NO.710/KOL/2017 RAHUL SARAF (HUF) A.YR.2012-13 7 TREATING THE SAME TO BE UNEXPLAINED INVESTMENTS U/S 69C OF THE ACT. THE REVENUE FAILS IN ITS LAST SUBSTANTIVE GROUND AS WELL. 10. THIS REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 28.12.2018 SD/- SD/- [J. SUDHAKAR REDDY] [ S.S.GODARA ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 28 .12.2018 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. ACIT, CIRCLE-40, KOLKATA, 2 ND FLOOR, 3, GOVT. PLACE (W), KOLKATA-700001.. 2. RAHUL SARAF (HUF), 4/1, RED CROSS PLACE, KOLKATA -700001. 3..C.I.T(A).- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASS ISTANT REGISTRAR ITAT, KOLKATA BENCHES