KAZI ZAINAL ABSAR,ASANSOL vs. ITO, WARD-1(1), ASANSOL

It was submitted that the assessee was not aware of the appeal order. Considering the condonation application and the reasons stated therein, we are satisfied that the assessee had a reasonable and sufficient cause and was prevented from filing the instant appeal within the statutory time limit. We, therefore, condone the delay and admit the appeal for adjudication.

The assessee is in appeal raising the following grounds of appeal: “1) For that on the facts of the case the Ld. CIT (A) was not justified in sustaining the addition of Rs. 6,29,865/- for non deduction of TDS u/s 40(a)(ia), for payments made against interest u/s 194-I of the Act 61 to NBFC, ignoring the certificates filed in Form 26A, which testifies that the said income has already been considered by the payee, in their total income, and as such the addition may please be deleted. 2) For that on the facts of the case the Ld. CIT (A) was not justified in sustaining the addition of Rs.7,36,800/- for non deduction of TDS u/s 40(a)(ia), for payments made against machine spare parts and maintenance, and the addition may please be deleted. 3) For that on the facts of the case the Ld. CIT (A) was not justified in sustaining the addition of Rs.6,76,500/- for non deduction of TDS u/s 40(a)(ia), for payments made for heavy machine hire charges, when payments to each parties are less than the stipulated limit, and the addition may please be deleted. 4) For that on the facts of the case the CIT(A) was not justified in sustaining the loan of Rs. 15,00,000/- taken from Ms Anju Das (through bank channel), a part of which was repaid during the year (through bank channel), and the Loan confirmation, containing full particulars are on record, and the same is rejected, without verification, the addition may please be deleted. 5) For that the appellant craves leave to add, alter, amend any further grounds of appeal before or at the time of hearing.”

Brief facts of the case are that the assessee is an individual and his main business is Explosive Dealership in the name of OTIF India and he also earned rental income from magazine which was used for renting to the Explosives Manufacturers for keeping their explosives I.T.A. No.: 348/KOL/2024 Assessment Year: 2017-18 Kazi Zainal Absar. and earned contractual income by hiring Heavy Earth Moving Machineries. The assessee had e-filed his return of income showing total income of Rs. 6,26,730/-. The case was taken up for complete scrutiny through CASS and additions for non-deduction of TDS on interest payment, repair and maintenance charges, machine hire charges and addition u/s 68 of the Act for loan of Rs. 15 Lakh were made. Another sum of Rs. 9,14,991/-, being 25% of the expenses claimed on account of explosive stock destroyed due to lightning (Fire) was also made. Aggrieved with the assessment order the assessee filed an appeal before the Ld. CIT(A) who confirmed the addition on account of non-deduction of TDS and also the addition u/s 68 of the Act but deleted the addition on account of destruction of stock due to fire from lightning and the appeal was partly allowed. The addition on account of non-deduction of TDS was confirmed as the assessee did not file any evidence despite sufficient opportunities being granted in support of the claim that section 201 of the Act was not attracted or the provisions of section 194C and 194-I were not applicable. Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal.

Rival contentions were heard, the paper book filed and the submissions made have been examined. During the course of appeal, it was submitted that the assessee had furnished certificate in the form of Form No.- 26AS for which the assessee also produced certificate under the first proviso to sub-section (1) to section 201 of the Act by the Chartered Accountant on Annexure-‘A’ of Form No.-26A in respect of payment to Tata Capital Financial Services Limited and Srei Equipment Finance Limited which are at pages 19 to 20 of the paper book in which a sum of Rs. 15,67,146/- is mentioned by Tata Capital Financial Services Limited to be taken into account while filing the return of I.T.A. No.: 348/KOL/2024 Assessment Year: 2017-18 Kazi Zainal Absar. income by the payee. It is certified in the indexation of the paper book that this document was submitted before the lower authorities. Another certificate from M/s. Srei Equipment Finance Limited relating to interest of Rs. 15,41,823/- and on which Rs. 1,54,182/- was the tax deductible but was not deducted but has been considered in the return filed by the payee has also been filed. It is mentioned in the certificates that the income has been considered in the returns of income filed by both the payees and the tax on the same has been paid.

We have considered the submissions made. As per the second proviso to sub-clause (ia) of clause (a) of section 40 of the Act where an assessee fails to deduct the whole or any part of the tax in accordance with the provisions of Chapter XVII-B on any such sum on which tax is deductible at source but is not deemed to be an assessee in default under the first proviso to sub-section (1) of section 201, then, for the purposes of this sub-clause, it shall be deemed that the assessee has deducted and paid the tax on such sum on the date of furnishing of return of income by the payee referred to in the said proviso. Similarly, the first proviso to subsection (1) to section 201 of the Act states that any person, including the principal officer of a company who fails to deduct the whole or any part of the tax in accordance with the provisions of Chapter XVII-B on the sum paid to a payee or on the sum credited to the account of a payee shall not be deemed to be an assessee in default in respect of such tax if such payee has furnished his return of income under section 139, has taken into account such sum for computing income in such return of income and has paid the tax due on the income declared by him and the person furnishes a certificate to this effect from an accountant in such form as may be prescribed i.e. Form No.- 26A. Since the requisite forms have been furnished and the I.T.A. No.: 348/KOL/2024 Assessment Year: 2017-18 Kazi Zainal Absar. assessee has not been deemed to be in default, therefore, in view of the provisions of the Act and the evidence filed, the addition on account of non-deduction of TDS for interest paid to Tata Capital Financial Services Limited of Rs. 15,67,146/- and to M/s. Srei Equipment Finance Limited at Rs. 15,41,823/-, 30% of which has been disallowed by the Ld. AO, is hereby deleted.

As regards the interest paid to Volvo Financial Service and HDB Financial Service amounting to Rs. 1,51,648/- and Rs. 74,057/- respectively, since no evidence has been filed in respect of the TDS on interest paid to Volvo Financial Service and HDB Financial Service therefore, only the disallowance made out of the total interest paid to Tata Capital Financial Services Limited amounting to Rs. 13,46,882/- and Srei Equipment Finance Limited at Rs. 5,26,964/- considered by the Ld. AO on which disallowance of Rs. 4,04,064/- and Rs. 1,58,089/- i.e. Rs. 5,62,153/- is deleted out of the total addition of Rs. 6,29,865/- and the rest of the addition is confirmed in the absence of any supporting evidence and this ground of appeal is partly allowed.

As regards ground no. 2 relating to TDS on repairs and maintenance, it was submitted that only the spares were purchased and no contractual payment was made and in this respect our attention was drawn to pages 22, 23 & 24 of the paper book in which total sum of Rs. 24,56,348.69 has been paid for such purchases and the bills and vouchers have also been enclosed. The Ld. AO is directed to verify and delete the addition in case all the expenses are relating to purchase of spares material as they are prima facie not in the nature of contractual payment and therefore, there was no liability to deduct tax at source.

Ground no. 3 relates to disallowance of Rs. 6,76,500/- for Heavy Machine Hire charges. It is submitted that payments to each parties are less than the stipulated limit and there was no liability to deduct any TDS. The assessee has paid total sum of Rs. 22,55,000/- but it was not demonstrated as to how much amount was paid to each of the parties. No ledger-wise copy of the sum of Rs. 22.55 Lakh paid as machine hire charges was filed before the Ld. CIT(A) as well. The assessee is directed to furnish evidence for the tax paid on the amount by the payee or in support of the claim that no TDS was liable to be charged on the sum and the Ld. AO is directed to delete the addition in case the requisite evidence is filed before him in support of the claim that there was no liability to deduct tax at source on the amount paid as machine hire charges. Hence, this ground of appeal is allowed for statistical purposes.

Ground no. 4 relates to the addition of Rs. 15 Lakh u/s 68 of the Act. The assessee contends that the creditor is an income-tax payer and the amount has been paid by cheque. The copy of return of Ms. Anju Das has also been filed and the balance sheet shows a sum of Rs. 15 Lakh as loan and advance in the name of M/s. OTIF India, Asansol, West Bengal. The total income returned is Rs. 2,95,160/- but the total capital of the creditor is Rs. 49,35,802/-. Apparently, apart from a sum of Rs. 6,56,065.38 from K.C. Das and Rs. 8,000/- from Jayanta (Mumbai) as loans, there is no other liability appearing in the balance sheet therefore, the amount has been paid out of the capital of the creditor who is an income-tax payer. The ledger account shows that the money has been received by cheque of ICICI Bank from 20.12.2016 till 20.01.2017 and has also been repaid on 25.01.2017 for Rs. 8 Lakh and the total amount of loan is Rs. 15 Lakh. The assessee’s bank account shows that the addition was confirmed by the Ld. CIT(A) as the identity I.T.A. No.: 348/KOL/2024 Assessment Year: 2017-18 Kazi Zainal Absar. of the creditor, creditworthiness to advance money and the genuineness of the transaction was not satisfactorily explained for which necessary evidence has been filed before us and the transaction appears to be out of the own capital of the assessee. Hence, in view of the evidence furnished the addition of Rs. 15 Lakh u/s 68 of the Act on account of loan is hereby deleted and this ground of appeal is allowed.

In view of the discussion made above, the appeal is partly allowed for statistical purposes besides the relief as mentioned in the preceding paragraphs.

In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 24th April, 2025. [George Mathan] [Rakesh Mishra] Judicial Member Accountant Member Dated: 24.04.2025 Bidhan (P.S.) I.T.A. No.: 348/KOL/2024 Assessment Year: 2017-18 Kazi Zainal Absar. Copy of the order forwarded to:

CIT(A)-NFAC, Delhi.

CIT-

CIT(DR), Kolkata Benches, Kolkata.

Guard File. //// By order