MAHANADI METAL AND CHEMICALS PRIVATE LIMITED,ROURKELA vs. ITO, WARD-1, ROURKELA

per Section 194H of the Act, the assessee should have been deducted

@10% on the entire payments made but he has deducted only 2%

instead of 10% and the authorities below have rightly applied the

provisions of Section 40A(3) of the Act for payments exceeding

Rs.20,000/- in cash. Therefore, this ground of appeal should be

dismissed.

available on record and the orders of the authorities below, we noticed

that the assessee has made the payments to Shri Khagesh Patel. On

5 ITA No.496/CTK/2017 perusal of the documents submitted before us, we notice that the

assessee has not deducted TDS as per Section 194H of the Act. He has

deducted @2% instead of 10%. It is also mentioned before us that

major turnover has been achieved by the assessee from the public

sector undertakings and how and why the assessee has paid

commission to Shri Khagesh Patel for selling of goods. The entire

payments have been received by the assessee in his bank accounts

through cheques/RTGS. Further on perusal of the TDS return filed by

the assessee along with details filed by the assessee, which is placed at

paper book pages No.16 to 40, we noticed that in the case of many

instances the tax has been deducted @1% or 2% as per Section 194C of

the Act which is clear from the exact break up of TDS return. He has

also deducted TDS @2% u/s.194C of the Act. Further on perusal of the

copies of Income Tax Return produced by the assessee of Shri Khagesh

Patel in the form of ITR-IV, It is clear that Shri Khagesh Patel has

offered the amount received from the assessee company as per Section

44AD of the Act. Section 44AD of the Act relates to the civil contract

works but not for the commission received. We noted from the

documents and submissions of the assessee, there is contradictory in

the submissions of the assessee as the assessee has taken plea before

the authorities below that it is a commission payment towards selling

of goods, whereas as per TDS return as well as copy of ITR-IV of Shri

6 ITA No.496/CTK/2017 Khagesh Patel, which is in the nature of contract payments. Therefore,

in our considered opinion, to avoid confusion we think it fit to send

back this issue to the file of AO for finding out the correct nature of

payments made to Shri Khagesh Patel by the assessee company after

providing reasonable opportunity of being heard to the assessee and

the assessee is also directed to provide the documents and avoid in

taking unnecessary adjournments. Therefore, this ground of appeal of

the assessee is allowed for statistical purposes.

has shown sundry creditors of Rs.3,85,36,367/- which includes an

amount of Rs.1,30,52,427/- towards Black Diamond Explosives Ltd. It

was noticed by the AO that besides manufacturing activities, he was

also engaged in trading activity. The assessee had made trading

purchase from Asansol, Dhanbad and Rourkela. It was also noticed by

the AO that the creditor should have been shown in the name of Black

Diamond instead of Black Diamond Explosives Pvt. Ltd. The assessee

had purchased explosive items from one M/s Black Diamond

Explosives Pvt. Ltd. for its Asansol purchase and he has also purchased

Black Diamond, both ledger copies were produced before the AO but

there was a difference noted by the AO and the closing balance of

Rs.1,25,17,151/-, Black Diamond Pvt. Ltd. has been transferred into the

ledger account of Dhanbad purchase. However, the assessee could not

7 ITA No.496/CTK/2017 furnished the details of VAT returns for its Asansol and Dhanbad

purchase. The AO calculated total purchase from Asansol and Dhanbad

and he concluded that there was a difference of Rs.7,67,375/- and

Rs.9,24,312/-. Therefore, he treated it as a discount receipt from the

vendor, therefore, he disallowed the claim of Rs.16,91,687/-.

before the CIT(A). The assessee filed details of VAT return and

documents as an additional evidence but the CIT(A) denied to accept

the additional evidence stating that in spite of providing ample

opportunities to the assessee the assessee could not provide VAT

returns and documents in support of his claim, therefore, he did not

accept the additional evidence filed by the assessee and dismissed the

appeal of the assessee.

additional evidence filed before him. It was not an additional evidence

which was a part of the record, which goes to the root of the matter,

therefore, these documents should be accepted by the Bench and he

requested for sending back the matter to the file of AO for

readjudication of the issue.

evidence filed by the assessee and submitted that the AO had given

ample opportunity to provide the details, however, the assessee has

8 ITA No.496/CTK/2017 shown his inability to produce the same, therefore, it would be clear cut

violation of Rule 46A of the Income Tax Rules, 1962.

available on record, we noted that the documents provided by the

assessee go to the root of the matter which are part of the records,

therefore, the contention of the assessee is accepted and the matter is

sent back to the file of AO for consideration of the documents and

decide the issue as per law. The assessee is directed to cooperate with

the department for early disposal of the case. This ground of appeal of

the assessee is allowed for statistical purposes.

proceedings, noticed that the assessee failed to produce copy of VAT

return in the case of Asansol and Dhanbad purchase. He noticed that

the VAT return was calculated at 12.5% on the purchased as shown by

the assessee whereas as per the information of the AO which should

have been calculated on the backward method. Accordingly, he

calculated the VAT return amount of Rs.9,99,390/- on account of

Asansol and Dhanbad purchases. The assessee was failed to produce

the VAT return, therefore, he added to the total income of the assessee.

return but the CIT(A) held that it is an additional evidence and

dismissed the appeal of the assessee.

9 ITA No.496/CTK/2017 15. Before us, ld. AR of the assessee requested that it was not an

additional evidence which were part of the record, therefore, he

requested for sending the matter back to the file of AO for

reconsideration to the issue to which the ld. DR objected to accept the

VAT return filed.

available on record and the records produced before us, we find that

the documents filed by the assessee before us go to the root of the

matter, therefore, copy of the VAT return is accepted and accordingly,

we send the issue back to the file of AO for adjudication of this issue.

The assessee is directed to cooperate with the AO to file necessary

documents before the AO for early disposal of the case.

assessee has purchased raw material for manufacturing of slurry

explosives worth of Rs.3,15,09,272/-. The assessee was asked to

produce the copy of ledger accounts from whom the raw materials

have been purchased. The assessee filed the same but the AO noticed

that the desired information have not been filed by the assessee,

therefore, he issued show cause notice which has been incorporated in

the assessment order. The assessee was repeatedly asked by the AO to

reconcile the difference noted by him but the ld. AR of the assessee also

expressed his inability to furnish the additional details. Accordingly,

10 ITA No.496/CTK/2017 the difference noted by the AO to the tune of Rs.27,99,978/- was

claimed as bogus purchase and added to the total income of the

assessee.

submissions and submitted that the discrepancy in purchases is due to

comprising of purchase with doubt and purchase without doubt. The

assessee filed also a chart with due element along with ledger copies

but these documents were not filed before the AO, therefore, he did not

accept the documents filed before him and he dismissed the appeal of

the assessee.

The CIT(A) should have accepted to proper adjudication on the issue. It

does not file as additional evidence and he requested for sending back

to the file of AO for proper adjudication.

documents filed by the assessee. He submitted that an ample

opportunity was given by the AO as well as the AO issued show cause

notice to the assessee to reconcile the difference submitted by the

department, therefore, he requested the order of the authorities below

should be restored.

available on record and the documents submitted by the assessee,,

11 ITA No.496/CTK/2017 which were filed before the AO and CIT(A) with proper documentary supports. Therefore, the documents filed by the assessee are hereby accepted and this issue is also sent back to the file of AO for proper adjudication of the issue. The assessee is directed to cooperate with the AO with necessary documents. This ground of appeal is allowed for statistical purposes. 22. In the result, appeal of the assessee is allowed for statistical purposes.

Order pronounced in the open court on 18/03/2020. Sd/- Sd/- (C.M.GARG) (L.P.SAHU) न्यानयक सदस्य / JUDICIAL MEMBER ऱेखा सदस्य / ACCOUNTANT MEMBER कटक Cuttack; ददनांक Dated 18/03/2020 Prakash Kumar Mishra, Sr.P.S. आदेश की प्रनिलऱपप अग्रेपषि/Copy of the Order forwarded to : अऩीऱाथी / The Appellant- 1. M/s Mahanadi Metal And Chemicals Private Limited, T/4/26/Civil Township, Rourkela-769004 प्रत्यथी / The Respondent- 2. ITO, Ward-1, Rourkela आयकर आयुक्त(अऩीऱ) / The CIT(A), 3. आयकर आयुक्त / CIT 4. ववभागीय प्रयतयनधध, आयकर अऩीऱीय अधधकरण, कटक / DR, ITAT, 5. Cuttack गार्ग पाईऱ / Guard file. 6. सत्यावऩत प्रयत //True Copy// आदेशािुसार/ BY ORDER,

(Senior Private Secretary) आयकर अपीऱीय अधिकरण, कटक / ITAT, Cuttack