Global Enterprises, Kolkata V. JCIT, R-34, KOLKATA, Karnataka

ITA 845/KOL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1632 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 9 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-02-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 30-12-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 27-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RANU BISWAS D IT
• Keywords: Additional evidence
• Section: 40A(3); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BE NCH : KOLKATA [BEFORE HONBLE SRI N.V.VASUDEVAN, JM ] I.T.A NO. 845/KOL/201 6 ASSESSMENT YEAR : 2010-1 1 GLOBAL ENTERPRISES -VS.- J.C.I.T., RANGE -34, PVT. LTD., KOLKATA KOLKATA [PAN : AAFFG 0012 M] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI SOUMITR A CHOUDHURY, ADVOCATE FOR THE RESPONDENT : SMT. RANU BISWAS, ADDL D IT DATE OF HEARING : 24.01.2018. DATE OF PRONOUNCEMENT : 02.02.2018. ORDER THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 03.02.2016 OF CIT(A)- 10, KOLKATA RELATING TO A.Y.2010-11. 2. GROUND NOS. 1 AND 6 RAISED BY THE ASSESSEE ARE G ENERAL IN NATURE AND CALLS FOR NO ADJUDICATION. 3. GROUND NO.2 RAISED BY THE ASSESSEE READS AS FOLL OWS :- 2. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED C.I.T (A) AS WELL AS THE ASSESSING OFFICER HAS ERRED IN ASSUM ING EXPENSES INCURRED IN CASH IN EXCESS OF RS.20000/- U/S 40A(3) FOR RS.444527/- IS ADDED TO THE INCOME OF THE ASSESSEE WHICH IS UNTOWARD & LIABLE TO BE DELETED. 4. THE ASSESSEE IS A PARTNERSHIP FIRM. THE ASSESSEE ACTS AS DEL CREDRE AGENT IN SUPPLYING CEMENT OF M/S. J.K.LAKSHMI CEMENT LIMITED . IN THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTICED THAT THE ASSESSEE HAD MA DE SEVERAL CASH PAYMENTS IN EXCESS OF RS..20,000/-. AS PER THE PROVISION OF SECTION 40 A(3) OF THE INCOME TAX ACT, 1961 (ACT) WHERE THE ASSESSEE INCURS ANY EXPENDITURE IN RESPECT OF WHICH A PAYMENT OR AGGREGATE OF PAYMENT MADE TO A PERSON IN A DAY OTHE RWISE THEN BY WAY OF ACCOUNT PAYEE CHEQUE IS IN EXCESS OF RUPEES TWENTY THOUSAND, NO D EDUCTION SHALL BE ALLOWED IN RESPECT 2 ITA NO.845/KOL/2016 GLOBAL ENTERPRISES A.YR.2010-11 2 OF SUCH EXPENDITURE. THE ASSESSEE HAD INCURRED A SU M OF RS.4,44,527/- AS EXPENSES ON ACCOUNT OF LORRY EXPENSES WHICH WERE PAID IN CASH. 5. BEFORE THE AO THE ASSESSEE SUBMITTED THAT EACH O F THE PAYMENTS IN A DAY DID NOT EXCEED RS.20,000/- AND THAT EACH PAYMENTS WERE BELO W RS.20,000/- EVIDENCED BY CASH MEMOS. THE ASSESSEE ALSO SUBMITTED THAT THE RECIEPI ENTS DID NOT HAVE BANKING FACILITIES AND HENCE PAYMENTS WERE MADE BY CASH. ANOTHER STAND TAKEN BY THE ASSESSEE WAS THAT THE PAYMENTS ALSO INCLUDE COST OF PETROL AND DIESEL AND SUCH PAYMENTS IN ANY EVENT WILL BE OUTSIDE THE PURVIEW OF SECTION 40A(3) OF THE ACT . 6. THE AO NOTICED THAT THE LORRY EXPENSES WERE INCU RRED BY THE ASSESSEE FOR PURCHASE OF SPARE PARTS OF TRUCK FROM A SINGLE PERS ON M/S KHALSA MOTOR STORES, JAIPUR. THE REMAINING EXPENSES WERE ON ACOCUNT OF PURCHASE OF FUEL FOR TRUCKS WHICH WAS AGAIN INCURRED BY MAKING PAYMENTS MADE TO A SINGLE PERSON M/S KALRA BUS SERVICE, JAIPUR. THE AO FOUND THAT NONE OF THE CIRCUMSTANCES MENTION ED BY THE ASSESSEE FOR MAKING PAYMENT IN CASH WILL FALL WITHIN THE AMBIT OF EXCEP TION FROM THE APPLICATION OF THE PROVISION OF SECITON 40A(3) OF THE ACT. THE AO ACCO RDINGLY DISALLOWED A SUM OF RS.4,44,525/- . ON APPEAL BY THE ASSESSEE THE CIT(A ) CONFIRMED THE ORDER OF AO. 7. BEFORE ME THE LD. COUNSEL FOR THE ASSESSEE FILED COPY OF THE CONFIRMAITON FROM M/S. KALRA BUS SERVICE, JAIPUR WITH REGARD TO SUPPL Y OF DIESEL. THIS CONFIRMATION STATES THAT DIESEL WERE SUPPLIED IN DRUMS. AS PER THIS CO NFIRMATIUON NONE OF THE PAYMNTS IN A DAY EXCEED RS.20,000/-. THE CONFIRMAITON FILED BY T HE ASSESSEE IS ADMITTED AS AN ADDITIONAL EVIDENCE FOR THE PURPOSE OF ADJUDICATING THE ISSUE INVOLVED IN THE APPEAL. THE AO DID NOT HAVE THE BENEFIT OF LOOKING AT THE ADDIT IOANL EVIDENCE. THE ADDITION CONFIRMED BY THE CIT(A) IS SET ASIDE AND THE ISSUE IS REMANDED TO THE AO FOR FRESH CONSIDERATION. WE MAY ALSO ADD THAT BEFORE THE AO A ND CIT(A) THE EXPENDITURE OF RS.4,44,527/- WAS STATED TO BE FOR PURCHASE OF SPAR E PARTS OF THE TRUCK. NOW A DIFFERENT 3 ITA NO.845/KOL/2016 GLOBAL ENTERPRISES A.YR.2010-11 3 STAND IS TAKEN BY THE ASSESSEE. THIS ASPECT MAY ALS O BE TAKEN NOTE OF BY THE AO IN THE SET ASIDE PROCEEDINGS. 8. GROUNDS NO.3 RAISED BY THE ASSESSEE READS AS FOL LOWS :- 3. FOR THAT ON THE FACT AND IN THE CIRCUMSTANCE OF THE CASE RS.L1 0000/- WAS PAID FOR WAGES WAS DISALLOWED AND ADDED-TO-THE TOTAL INC OME OFTHE ASSESSEE IS LIABLE TO BE DELETED. 9. THE AO DISALLOWED A SUM OF RS.1,10,000/- BEING P AYMENTS MADE TO M/S. KATHAT FREIGHT SERVICES TOWARDS SUPPLY OF LABOUR ON THE GR OUND THAT THE ASSESSEE FAILED TO DEDUCT TAX AT SOURCE ON THE PAYMENT U/S 194C OF THE ACT. THE AO MADE DISALLWOANCE AS PER THE PROVISION OF SECTION 40(A)(IA) OF THE ACT W HICH LAYS DOWN THAT IF TDS IS NOT MADE ON AN EXPENDITURE CLAIMED AS A DEDUCTION, THEN THE EXPENDITURE CANNOT BE ALLOWED AS DEDCUITON IN COMPUTING INCOME FROM BUSINESS. TH E CIT(A) CONFIRMED THE ORDER OF THE AO. 10. BEFORE ME THE LIMITED PRAYER OF THE LD. COUNSEL FOR THE ASSESSE WAS TO SET ASIDE THE ORDER OF CIT(A) AND REMAND THE ISSUE TO THE AO TO ENABLE THE ASSESSEE TO SHOW BEFORE THE AO THAT M/S. KATHAT FREIGHT SERVICES HAD SHOWN RECEIPTS FROM THE ASSESSEE IN THE RETURN OF INCOME FILED FOR THE RELEVANT ASSESSM ENT YEAR. THE PRAYER OF THE LD. COUNSEL FOR THE ASSESEE IS BASED ON THE SECOND PROV ISO TO SECTION 40(A)(IA) OF THE ACT WHICH PROVIDES THAT IF THE PAYEE HAS SHOWN THE RECE IPTS FROM THE ASSESSEE IN HIS RETURN OF INCOME AND PAID TAX ON SUCH RECEIPTS AND HAS FUR NISHED IN THE RETURN OF INCOME THEN NO DISALLOWANCE CAN BE MADE U/S 40(A)(IA) OF THE AC SHOULD BE MADE. THIS PROVISO WAS INSERTED BY THE FINANCE ACT, 2012 W.E.F. 01.04.2013 . THIS AMENDMENT WAS HELD TO BE APPLICABLE RETROSPECTIVLEY BY THE HONBLE DELHI CUR T IN THE CASE OF ANASAL LAND MARK TOWNSHIP (P)LTD (2016) 61 TAXMANN.COM 45 (DELHI). I AM OF THE VIEW THAT IN THE LIGHT OF THE AFORESAID SUBMISSIO, THE ADDITON CONFIRMED B Y THE CIT(A) SHOULD BE SET ASIDE AND THE ISSUE REMANDED TO THE AO FOR FRESH CONSIDER ATION IN THE LIGHT OF THE SUBMISISONS MADE BY THE ASSESSEE BEFORE ME. 4 ITA NO.845/KOL/2016 GLOBAL ENTERPRISES A.YR.2010-11 4 11. GROUND NO.4 WAS NOT PRESSED AND HENCE DISMISSED AS NOT PRESSED. 12. GROUND NO.5 RAISED BY THE ASSESSEE READS AS FOL LOWS :- 5. FOR THAT ON THE FACT AND IN THE CIRCUMSTANCE OF THE CASE RS.L00000/- WAS DISALLOWED OF WAGES IS LIABLE TO BE DELETED. 13. THE AO MADE AN ADDITION OF RS.2,50,000/- BY WAY OF DISALLOWANCE OF WAGES ON THE FOLLOWING GROUNDS :- 7.1. ON VERIFICATION OF RELEVANT DOCUMENTS PRODUC ED BY THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE, IT WAS OBSERVED THA T ALL THE EXPENSES RELATING TO WAGES WERE PAID IN CASH THROUGH SELF MADE VOUCHERS, WHICH ARE BEYOND THE SCOPE OF VERIFICATION. FURHTER, PAYMENTS TO TRANSPORTERS HAVE ALSO BEEN MADE IN CASH. THEREFORE A LUMP SUM OF RS.2,50,000/- IS DISALLOWED AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2010 -11. SIMILAR ADDITONS HAVE BEEN MADE IN EARLIER YEARS FOR WHICH THE ASSESSEE H AS NOT PREFERRED ANY APPEAL. [ ADDITION : RS.2.,50,000/-] 14. ON APPEAL BY THE ASESSEE THE CIT(A) WAS OF THE VIEW THAT NON VERIFIABILITY OF VOUCHERS DOES NOT CALL FOR DISALLWOANCE OF A SUM OF RS.2,50,000/-. HE WAS OF THE VIEW THAT SUCH QUANTUM OF DISALLOWANCE IS EXCESSIVE. HE ALSO FOUND THAT NO SPECIFIC INSTANCES OF UNVERIFIABLE NATURE OF VOUCHERS WAS POINTED OUT BY THE AO AND NO SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE IN THIS REGARD. THE CIT( A) THEREFORE RESTRICTED THE ADDTON TO A SUM OF RS.1,00,000/-. 15. BEFORE ME THE SUBMISISONS OF THE LD. COUNSEL FO R THE ASSESSEE WAS THAT THE ADDITION IS BASED ON ESTIMATION AND THEREFORE SHOUL D BE DELETED. I AM OF THE VIEW THAT THE ADDITON SUSTAINED BY THE CIT(A) DESERVES TO BE DELETED BECAUSE THE BOOKS OF ACOCUNTS HAVE BEEN PRODUCED ALONG WITH THE VOUCHERS BY THE ASSESSEE BEFORE THE AO. SPECIFIC INSTANCES OF UNVERIFABLE VOUCHERS WAS NOT POINTED OUT BY THE AO . THIRDLY, THE AO DID NOT EVEN CALL UPON THE ASSESSEE TO SHOW CASU E AS TO WHY DISALLOWANCE SHOULD 5 ITA NO.845/KOL/2016 GLOBAL ENTERPRISES A.YR.2010-11 5 NOT BE MADE BEFORE MAKING THE DISALLOWANCE. FOR TH ESE REASONS THE ADDITION SUSTAINED BY THE CIT(A) IS DIRECTED TO BE DELETED. 16. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE COURT02.02.2018. SD/- [ N.V.VASUDEVAN ] JUDICIAL MEMBER DATED : 02.02.2018. [RG SR.PS] COPY OF THE ORDER FORWARDED TO: 1. GLOBAL ENTERPRISES, K.K.PODDAR & ASSOCIATES, 135 A, B.R.B.BASU ROAD, 2 ND FLOOR, KOLKATA-700001. 2. J.C.I.T., RANGE-34, KOLKATA. 3. CIT(A)-10, KOLKATA 4. C.I.T-12, KOLKA TA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVATE SECR ETARY HEAD OF OFFICE/ D.D.O., ITAT KOLKATA BENCHES