Ashok Kumar Budhia, Purulia V. I.T.O Wd - 3(2),Purilia, Purulia

ITA 721/KOL/2013

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3125 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2016
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 04-04-2013
• Court: TRIBUNAL
• Department Lawyers: SUCHE TA BANDHOPADHYAY JCIT LD
• Assessee Lawyers: S M SURANA LD
• Keywords: Retrospective amendment
• Section: 143(3); 37(1); 194C

Judgement Text

ITA NO. 721/KOL/2013-C-AM SHRI ASHOK KUMAR BUDHIA 1 IN THE INCOME TAX APPELLATE TRIBUNAL, C BENCH, KOLKATA BEFORE : SHRI MAHAVIR SINGH, JUDICIAL MEMBER, AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER I.T.A NO. 721/KOL/2013 A.Y 2008-09 ASHOK KUMAR BUDHIA VS. I.T.O WARD NO. 3(2), KO LKATA PAN: ADUPB0222G (APPELLANT) (RE SPONDENT) FOR THE APPELLANT: SHRI S.M SURANA, ADVOCATE , LD.AR FOR THE RESPONDENT : SMT. SUCHE TA BANDHOPADHYAY, JCIT, LD.SR.DR DATE OF HEARING: 01-02-2016 DATE OF PRONOUNCEMENT: 03-02-20 16 ORDER SHRI M.BALAGANESH, AM THIS APPEAL OF THE ASSESSEE ARISES OUT OF THE ORDER OF THE LEARNED CIT(A), DURGAPUR IN APPEAL NO. 426/CIT(A)/ASL/WD-3(2)/PURU LIA/2010-11 DATED 24-01- 2013 FOR THE ASST YEAR 2008-09 AGAINST THE ORDER OF ASSESSMENT FRAMED BY THE LEARNED AO U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 2. THE FIRST ISSUE TO BE DECIDED IN THIS APPEAL IS WITH REGARD TO DISALLOWANCE MADE U/S. 40(A)(IA) OF THE ACT IN RESPECT OF FREIGHT CHA RGES AMOUNTING TO RS.12,87,328/-. 3. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE LD.AO HAD MADE AN ADDITION OF RS.12,87,328/- U/S. 40(A)(IA) OF THE ACT ON THE PRE MISE THAT TAX IS NOT DEDUCTED AT SOURCE(TDS) IN TERMS OF PROVISIONS OF SECTION 194C OF THE ACT. THE BREAK UP OF THE SAID ADDITION IS AS BELOW:- 1) SHRI GURUDUTT INDUSTRIES(TRANSPORT AGENT) RS. 6 ,39,883/- ITA NO. 721/KOL/2013-C-AM SHRI ASHOK KUMAR BUDHIA 2 2A) M/S. SANGAM TRANSPORT RS. 32,440/- B) M/S. GANPATI ROAD LINES RS. 25,000/- RS. 57,440/- 3) SHRI GAUTOM MAJEE (TRANSPORT AGENT) RS. 3,94,0 45/- 4) AGAINST SHRI GAUTAM MAJEE RS. 1,96,000/- TOTAL RS.12,87,328/- 4. THIS ACTION OF THE LD.AO IN MAKING ADDITION WAS CONFIRMED BY THE LD.CIT(A) ON 1 ST APPEAL. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFOR E US ON THE FOLLOWING GROUND:- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE LD. COMMISSIONER (APPEALS) ERRED IN SETTING ASIDE THE M ATTER OF DISALLOWANCE OF RS.12,87,328/- U/S. 40(A)(IA) OF TH E INCOME TAX ACT, 1961 FOR FRESH VERIFICATION OF CLAIM OF A B ACK TO THE LD.AO. 5. THE LD.AR ARGUED THAT IN RESPECT OF ADDITION/DIS ALLOWANCE MADE U/S. 40(A)(IA) OF THE ACT FOR THE PAYMENTS MADE TO M/S. GURU DUTT IND USTRIES. THE ASSESSEE HAS MADE PURCHASE OF GOODS FROM M/S. GURU DUTT INDUSTRIES ( SUPPLIER OF GOODS OF THE ASSESSEE) AND AS PER THE TERMS OF THE CONTRACT WITH THE SAID SUPPLIER, THE FREIGHT IS TO BORNE BY THE SAID SUPPLIER AND IN CASE IF THE SAME IS IS PA ID BY THE ASSESSEE, THE SAME WOULD BE REDUCED FROM THE AMOUNTS PAYABLE BY THE ASSESSEE TO WARDS PURCHASE OF GOODS. ACCORDINGLY, THE ASSESSEE AS AND WHEN THE FREIGHT CHARGES HAS BEEN PAID BY HIM ON BEHALF OF THE SUPPLIER, CHOSE TO DEBIT THE SUPPLIE RS LEDGER ACCOUNT AND PAYMENT FOR PURCHASE OF GOODS IS MADE ONLY FOR THE BALANCE PORT ION I.E. AFTER DEDUCTING THE FREIGHT PAYMENTS. HENCE, IT WAS ARGUED BY HIM THAT THERE WAS NO FREIGHT EXPENDITURE INCURRED BY THE ASSESSEE WARRANTING DEDUCTION OF TAX AT SOU RCE. THE LD.DR WAS NOT ABLE TO CONTROVERT THIS ARGUMENT OF THE LD.AR BEFORE US. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD INCLUDING THE DETAILS FILED IN THE PAPER BOO K BEFORE US. WE FIND THAT THE ASSESSEE HAD ONLY MADE PURCHASE OF GOODS AND THERE WAS NO FREIGHT CHARGES INCURRED BY THE ASSESSEE ON THESE PURCHASES, WHICH IS EVIDE NT FROM THE LEDGER ACCOUNT AS FILED AT PAGES 33-39 OF THE PAPER BOOK. WE ALSO VERIFIED THE SAMPLE INVOICES, THAT ARE KEPT ITA NO. 721/KOL/2013-C-AM SHRI ASHOK KUMAR BUDHIA 3 AT PAGES 40-47 OF THE PAPER BOOK CONTAINING THE FRE IGHT CHARGES AND THE DETAILS OF THE FREIGHT CHARGES PAYABLE BY THE ASSESSEE ON BEHALF O F THE SAID SUPPLIER. HENCE, WE ARE SATISFIED THAT THE PROVISIONS OF SECTION 194C ARE N OT AT ALL ATTRACTED TO THE PRESENT FACTS OF THE CASE AND CONSEQUENTLY, THE DISALLOWANCES/AD DITIONS MADE U/S. 40(A)(IA) IS NOT WARRANTED. 7. IN RESPECT OF FREIGHT CHARGES PAID TO M/S. SANGA M TRANSPORT AMOUNTING TO RS.32,440/- AND M/S. GANPATI ROAD LINES AMOUNTING T O RS.25,000/-, THE LD.AR ARGUED THAT NO PAYMENT IS MADE TO A SINGLE PARTY EXCEEDING RS. 20,000/- ON A SINGLE DATE AND EXCEEDING RS.50,000/- IN THE AGGREGATE DURING THE P REVIOUS YEAR RELATING TO THE ASSESSMENT YEAR UNDER APPEAL. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE HAVE GON E THROUGH THE DETAILS OF PAYMENTS MADE BY THE ASSESSEE TO M/S. SANGAM AND M/S. GANPAT I ROAD LINES, WHICH ARE EXTRACTED IN PAGE 7 OF THE IMPUGNED ASSESSMENT ORDE R. WE FIND THAT THE PROVISIONS OF SECTION 194C ARE NOT AT ALL APPLICABLE IN THE FACT S OF THE PRESENT CASE. HENCE, THE DISALLOWANCE MADE U/S. 40(A)(IA) OF THE ACT IN RESP ECT OF THE ABOVE SAID PARTIES IS NOT ALSO WARRANTED. 10. IN RESPECT OF FREIGHT CHARGES PAID TO SHRI GAUT OM MAJEE AMOUNTING TO RS.3,94,045/-, THE LD.AR PLEADED THAT THE SAME MAY BE SET ASIDE TO THE FILE OF THE LD.AO FOR VERIFICATION IN THE HANDS OF THE PAYEES AS TO W HETHER THE PAYEE HAD CONSIDERED THE SAID RECEIPTS IN ITS BOOKS OF ACCOUNT AND PAID TAXE S THEREON, IF ANY. WE FIND LOT OF FORCE IN THE ARGUMENTS OF THE LD.AR IN THIS REGAR D THAT IN VIEW OF THE SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT AND IN VIEW OF THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF DECISION OF THE HONBLE DELHI HIGH COURT IN THE CAS E OF CIT VS ANSAL LAND MARK TOWNSHIP (P) LTD REPORTED IN (2015) 61 TAXMANN.COM 45/ 377 ITR 635(DEL)., WHEREIN THE QUESTION RAISED BEFORE THEIR LORDSHIPS AND THEIR DECISION RENDERED THEREON IS AS UNDER:- ITA NO. 721/KOL/2013-C-AM SHRI ASHOK KUMAR BUDHIA 4 QUESTION: THE ISSUE THAT AROSE BEFORE THE HIGH COU RT WAS- WHETHER THE SECOND PROVISO TO SECTION 40(A)(IA)( INSERTED BY THE FINANCE ACT, 2012), WHICH STATES THAT TDS SHALL BE DEEMED TO BE DEDUCTED AND PAID BY A DEDUCTOR IF RESIDENT RECIPIE NT HAS DISCLOSED THE AMOUNT IN HIS RETURN OF INCOME AND PAID TAX THE REON, IS RETROSPECTIVE IN NATURE OR NOT ? HELD : SECTION 40(A)(IA) WAS INTRODUCED BY THE FINANCE (NO.2) ACT, 2004 TO ENSURE THAT AN EXPENDITURE SHOULD NO T BE ALLOWED AS DEDUCTION IN THE HANDS OF AN ASSESSEE IN A SITUATIO N WHERE INCOME EMBEDDED IN SUCH EXPENDITURE HAS REMAINED UNTAXED D UE TO TAX WITHHOLDING LAPSES BY THE ASSESSEE. HENCE, SECTION 40(A)(IA) IS NOT A PENALTY PROVISI ON FOR TAX WITHHOLDING LAPSE BUT IT IS A PROVISION INTRODUC ED TO COMPENSATE ANY LOSS TO THE REVENUE IN CASES WHERE DEDUCTOR HA SNT DEDUCTED TDS ON AMOUNT PAID TO DEDUCTEE AND, IN TURN, DEDUCT EE ALSO HASNT OFFERED TO TAX INCOME EMBEDDED IN SUCH AMOUNT. THE PENALTY FOR TAX WITHHOLDING LAPSE PER SE IS SEP ARATELY PROVIDED UNDER SECTION 271C, AND, THEREFORE, SECTI ON 40(A)(IA) ISNT ATTRACTED TO THE SAME. HENCE, AN ASSESSEE COULD NOT BE PENALIZED UNDER SECTION 40(A)(IA) WHEN THERE WAS NO LOSS TO R EVENUE. THE AGRA TRIBUNAL IN THE CASE OF RAJIV KUMAR AGARWA L V. ACIT [2014] 45 TAXMANN. COM 555 (AGRA-TRIB) HAD HEL D THAT THE SECOND PROVISO TO SECTION 40(A)(IA) IS DECLARATORY AND CURATIVE IN NATURE AND HAS RETROSPECTIVE EFFECT FROM 1 ST APRIL, 2005, BEING THE DATE FROM WHICH SUB-CLAUSE (IA) OF SECTION 40(A) WA S INSERTED BY THE FINANCE (NO.2) ACT, 2004, EVEN THOUGH THE FINANCE A CT, 2012 HAD NOT SPECIFICALLY STATED THAT PROVISO IS RETROSPECTI VE IN NATURE. THE HIGH COURT AFFIRMED THE RATIO LAID DOWN BY THE AGRA TRIBUNAL AND HELD THAT SAID PROVISO IS DECLARA TORY AND CURATIVE IN NATURE AND HAS RETROSPECTIVE EFFECT FROM 1 ST APRIL 2005. 11. IN VIEW OF THE AFORESAID DECISION OF HONBLE DE LHI HIGH COURT IN THE CASE OF CIT VS ANSAL LAND MARK TOWNSHIP (P) LTD (SUPRA), WE DEEM IT FIT AND APPROPRIATE TO SET ASIDE THE ISSUE TO THE FILE OF THE LD.AO TO DECIDE THE SAME MADE U/S. 40(A)(IA) IN THE LIGHT OF APPLICABILITY OF SECOND PROVISO TO SECTION 40(A )(IA) AS MENTIONED HEREIN ABOVE AND IN THE LIGHT OF SAID DECISION OF THE HONBLE DELHI HIG H COURT IN THE CASE OF ANSAL LAND MARK TOWNSHIP (P) LTD (SUPRA). THE ASSESSEE IS AT LIBERT Y TO ADDUCE FRESH EVIDENCES, IF ANY, TO ITA NO. 721/KOL/2013-C-AM SHRI ASHOK KUMAR BUDHIA 5 SUBSTANTIATE ITS CONTENTIONS. ACCORDINGLY, THIS POR TION OF THE ADDITION U/S 40(A)(IA) AMOUNTING TO RS. 3,94,045/- RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 12. IN RESPECT OF FREIGHT CHARGES OF RS. 1,96,000 /- PAID TO SHRI GAUTOM MAJEE, WE FIND FROM THE PAGES 32-32A OF THE ASSESSEES PAPER BOOK CONTAINING THE LEDGER ACCOUNT OF CARRIAGE INWARDS SHOWN IN THE BOOKS OF ACCOUNT O F THE ASSESSEE THAT SUM OF RS.1,96,000/- WAS INDEED RECOVERED FROM SHRI GAUTOM MAJEE AND THE SAME IS IN THE NATURE OF INCOME OF THE ASSESSEE. ACCORDINGLY, NO EXPENDITURE TOWARDS FREIGHT CHARGES WAS CLAIMED BY THE ASSESSEE AMOUNTING TO RS. 1,96,0 00/- WARRANTING THE COMPLIANCE OF TDS PROVISION AT HIS SIDE. HENCE, THE DISALLOWAN CE MADE U/S. 40(A)(IA) OF THE ACT THEREON IS NOT WARRANTED. ACCORDINGLY, GROUND NO.1 RAISED BY THE ASSESSEE IN THIS APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. 13. NEXT GROUND IS WITH REGARD TO DISALLOWANCE MADE U/S. 40(A)(IA) AMOUNTING TO RS.67,300/- DURING THE COURSE OF HEARING BEFORE US THE LD.AR STATED THAT THIS ISSUE IS NOT PRESSED BY HIM. THE SAME IS TAKEN AS STATEMENT FROM THE BAR. ACCORDINGLY, GROUND NO. 2 RAISED BY THE ASSESSEE IS DISMISSED AS NOT PR ESSED. 14. LAST GROUND TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE DISALLOWANCE OF INTEREST AMOUNTING TO RS. 67,650/-, WE FIND THAT TH E ASSESSEE HAS BORROWED CERTAIN SUMS FROM SMT. ANITA BUDHIA, MR. SUNIL KUMAR BUDHIA ON H IS PERSONAL ACCOUNT IN THE ASSESSMENT YEAR 2004-05 AND INVESTED THE SAME IN H IS PROPRIETARY CONCERN, M/S. ASHOK TRADING CO. THE ASSESSEE PAID INTEREST TO THE SE PARTIES FROM THE BUSINESS ACCOUNT OF THE ASSESSEE ( I.E OUT OF M/S. ASHOK TRA DING CO.S PROFIT) COMMENCING FROM ASSESSMENT YEAR 2004-05. DURING THE ASSESSMENT YEAR UNDER APPEAL A SUM OF RS.67,652/- WAS PAID AS INTEREST TO THESE PARTIES B Y THE ASSESSEE OUT OF HIS BUSINESS ACCOUNT AND THE SAME WAS CLAIMED AS DEDUCTION, WHIC H WAS DISALLOWED BY THE LD.AO. ON 1 ST APPEAL, THE SAME WAS CONFIRMED BY THE LD.CIT(A). A GGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUND: ITA NO. 721/KOL/2013-C-AM SHRI ASHOK KUMAR BUDHIA 6 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE C ASE LD. COMMISSIONER (APPEALS) ERRED IN CONFIRMING DISALLOWANCE OF RS. 67, 652/0 UNDER SECTION 37(1) OF THE INCOME TAX ACT, 1961. WE FIND FROM PAGES 52-55 OF THE PAPER BOOK CONTAINI NG PERSONAL BALANCE SHEET AND THE BUSINESS BALANCE SHEET OF THE ASSESSEE, THAT THE A SSESSEE HAS BORROWED MONIES FROM SAID TWO PRIVATE INDIVIDUALS (SUPRA) ON HIS PERSONA L ACCOUNT IN THE ASSESSMENT YEAR 2004-05 AND INVESTED THE SAME IN HIS PROPRIETARY C ONCERN OF THE ASSESSEE, WHICH IS EVIDENT FROM THE PAGES 53-55 OF THE PAPER BOOK. HEN CE, IT IS PROVED BEYOND DOUBT THAT BORROWINGS MADE BY THE ASSESSEE ARE ONLY FOR THE PU RPOSE OF HIS BUSINESS. ACCORDINGLY, INTEREST THEREON IS SQUARELY ALLOWAB LE AS DEDUCTION. THERE IS NO REASON TO DISALLOW THE SUBJECT MENTIONED INTEREST. THE GRO UND NO.3 AS RAISED BY THE ASSESSEE BEFORE US IS ALLOWED. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE AS STATED ABOVE. THIS ORDER IS PRONOUNCED IN OPEN COURT ON 03-02-2 016 1.. THE APPELLANT: SHRI ASHOK KUMAR BUDHIA C/O M/S . ASHOK TRADING CO, N.C DASGUPTA ROAD, TELKOLPARA, PURULIA 723101. 2 THE RESPONDENT- THE INCOME TAX OFFICER, ITO WARD 3(2)/PURULIA, SOUTH LAKE ROAD, P.O & DIST: PURULIA-723101. 3 /THE CIT, 4.THE CIT(A ) SD/- ( MAHAVIR SINGH, JUDICIAL MEMBER ) SD/- (M. BALAGANESH, ACCOUNTANT MEMBER) DATE: DATE 03 -02-2016 COPY OF THE ORDER FORWARDED TO:- ITA NO. 721/KOL/2013-C-AM SHRI ASHOK KUMAR BUDHIA 7 5. DR, KOLKATA BENCH 6. GUARD FILE. TRUE COPY, BY ORDER, ASSTT REGISTRAR **PRADIP SPS