SITANGSHU DAS,SOUTH TWENTY FOUR PARGANAS vs. ITO, WARD - 26(1),, KOLKATA

The assessee is in appeal before the Bench raising the following grounds of appeal: “1) Payment of Wages wrongly considered as Contractor Payment of Rs.15,21,238/- 30% taxed: That on the facts and in the circumstances of the case, the assessing officer/appellate authority went wrong in charging Section 40(a)(ia) of the Income Tax Act, 1961, where the Assessee paid the Labour Charges of Rs.15,21,238/- to 57 Nos of Workers throughout the whole year on an average of Rs.2,224/- per month which was given to the Labour Family Head [15 Nos. as per Assessment Order) not to be treated as Labour Contractor Payment and does not cover Under the provision 194C of the Income Tax Act, 1961, he is not liable to deduct TDS and the assessing officer/appellate authority treating this amount as labour payments as per provision 194C, which is unjust and arbitrary. 2) Travelling & Recruitment: Rs.3,19,668/-/-@30% taxed: That on the facts and in the circumstances of the case, the assessing officer/ appellate authority went wrong in charging Section 194C of the Income Tax Act, 1961, where the Assessee paid consolidated Air Fare, Passport Charges, Visa Charges, Foreign Country Insurance Premium, Ship Freight, Ship Period Fooding and various other expenses etc. which was paid to the Travel Agent which includes Expenses Reimbursement as Pure Agent and thus the question of TDS Under Section 40(a)(ia) of the Income Tax Act, 1961 does not arise. 3) Courier Expenses of Rs.2,28,000/-/-@30% taxed: That on the facts and in the circumstances of the case, the assessing officer / appellate authority went wrong in charging Section 40(a)(ia) of the Income Tax Act, 1961, the Expenses incurred by the Assessee includes foreign courier and domestic courier charges. Within the West Bengal the courier rate per letter was Rs.15/- and within the Country the rate was on and average of Rs.60/- per consignment. In case of Foreign Country, the rate was variable as per the Country concerned. The total Amount paid to M/S. Sunil Kumar Halder was shared by him among the Local Courier Firms, Country wide Courier Companies and International Courier Companies. On an average per month the expenses being Rs. 19,000/- much below the threshold limit and does not attract the question of TDS Under Section 40(a)(ia) of the Income Tax Act, 1961. 4) Commission Paid: Rs. 12,80,000/-/-@30% taxed That on the facts and in the circumstances of the case, the assessing officer/appellate authority went wrong in charging Section 40(a)(ia) of the Income Tax Act, 1961, where the Assessee paid the commission of Rs. 12,80,000/- to the Recruiting Agents which involves Travelling Expenses, Visa Charges, Immigration Charges, Training Charges, Language Learning and other Reimbursement of Expenses required to appoint one illiterate person for different suitable posts in Foreign Hotels. All details and supporting were duly submitted at the time of Assessment and Appeal but not being considered and does not attract the question of TDS Under Section 40(a)(ia) of the Income Tax Act, 1961. 5) Drawings Disallowed:-of Rs. 1,05,580/- That on the facts and in the circumstances of the case, the assessing officer/appellate authority disallowed the drawings of Rs. 1,05,580/- (average drawings of AY: 2014-15 and 2015-16 being Rs. 1,50,000/- Less (-) Actual Drawings shown as Rs.44,150/-), without considering the fact that the other family members of the Proprietor was engaged in Regular Monthly Earning are thus the Addition of Rs. 1,05,580/- which imaginary, hypothetical and arbitrary. 6) Various Expenses without Supporting Vouchers :- Rs.14,29,742/- That on the facts and in the circumstances of the case, the assessing officer/appellate authority disallowed of Rs. 1,42,974/- which is 10% of expenses reported in Profit and Loss Account on the distance stretch of Imagination of the Non-Genuinity of the Actual Expenses incurred as Banquet & Venue Rentals, Meeting related general expenses/Guest amenities, Gift, Travelling Recruitment expense (Local Bus & train tickets), details of which were fully submitted at the time of Hearing which is unjust and arbitrary. 7) Arbitrary Income Added in Computation Sheet as Income from other Source of Rs.2,18,117/-: No Such Income was Mentioned in the Assessment Order, but the Assessing Officer while Calculating Total Income Computation, Added Rs.2,18,117/- without any reference and Imaginary Income Tax has been charged on the said arbitrary Income should be deleted in full. 8) That on the facts and in the circumstances of the case, the assessing officer went wrong in imposing Penalty u/s.271(1)(c) of the Income Tax Act, 1961, on the ground that the daily cash deposited into Bank was from Undisclosed Source of Income. 9) That the appellant craves leave to file any additional ground or amend the ground already taken either before or at the time of hearing of the appeal.

Brief facts of the case are that the assessee is a proprietor of P.K. Consultancy which is stated to be a “Man Power Recruitment Agent”. During the financial year relevant to the assessment year 2016-17, the assessee had shown income from business in the return of income disclosing the total income at Rs.5,04,750/-. The return was selected Ι.Τ.Α. No.: 2656/KOL/2024

In the first appeal, the Ld. Addl./Joint CIT(A) confirmed the disallowance of the expenses for non-deduction of TDS from the payment made to labourers, addition on account of low drawings, disallowance of 10% of the expenses for non-production of bills and disallowance of 30% of commission expenses under section 40(a)(ia) for non-deduction of tax at source u/s. 194H of the Act and deleted the addition of Rs. 2,00,000/- made under section 68 of the Act and the appeal was partly allowed. Aggrieved with the order of the Ld. Addl./Joint CIT(A), the assessee has filed the appeal before the Tribunal. Ι.Τ.Α. No.: 2656/KOL/2024

Rival submissions were heard and the record and the submissions made have been examined.

Before us, the Ld. AR requested that the assessee has sufficient evidences for the claim of payments which have been disallowed and confirmed by the Ld. Addl./Joint CIT(A) as either they do not attract the provisions of TDS u/s 194C/194H_etc. or there was no liability for deduction of tax at source or disallowance of part of the expenses debited to the profit and loss account as required details are in the possession of the assessee and the same can be submitted if another opportunity is granted to the assessee. The Bench noted that since during the course of the appeal, proper submissions could not be made, another opportunity may be granted to the assessee to explain the claim of expenses made. It was further submitted that arbitrary income has been computed as income from other sources of Rs.2,18,117/- which has not been adjudicated upon by the Ld. Addl./Joint CIT(A) and the assessee has sufficient evidence to substantiate his claims. However it is noted that relief on account of addition of Rs. 2,00,000/- made u/s 68 has been allowed by the Ld. Addl./Joint CIT(A) and only a sum of Rs. 18,117/- added on account of interest has not been adjudicated upon.

In reply, Ld. Sr. DR supported the orders of the lower authorities.

We have considered the rival submissions made and also perused the record. Admittedly, the required vouchers/evidences were not before the Assessing Officer, who has disallowed the expenses on account of non-deduction of TDS and non-production of bills/vouchers. The Ld. AR claimed that either the TDS was not warranted or the payee had included the income in his return of income and had paid the taxes on the same, hence there was no question of any disallowance to be made. It was also submitted that the assessee has supporting vouchers for the expenses claimed. Hence, in the interest of justice and as requested by Ld. AR that the assessee has sufficient evidence to substantiate the claims, the order of ld CIT(A), who has partly allowed the appeal, is hereby set aside along with the order of the Ld. AO and all the issues in this appeal are restored to the file of the Assessing Officer, who shall consider the evidences filed that either the payees had paid the taxes after including the same in their income and also other evidences to justify the expenditure claimed in the profit and loss account and after granting another opportunity of hearing to the assessee and after verification shall make the assessment. If the explanation of the assessee is not satisfactory or no evidence is filed, the addition as made and confirmed by the Ld. Addl./Joint CIT(A) shall stand confirmed. Hence, all the Grounds of appeal of the assessee are allowed for statistical purposes except Ground No. 7 which is partly allowed for statistical purposes.

In the result, the appeal of the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 26th May, 2025. [Sonjoy Sarma] Judicial Member [Rakesh Mishra] Accountant Member Dated: 26.05.2025 Bidhan (P.S.) Ι.Τ.Α. No.: 2656/KOL/2024

Addl/JCIT(A)-2, Mumbai.

CIT-

CIT(DR), Kolkata Benches, Kolkata.

Guard File. //// By order