VISHAL JALAN,CHINSURAHA vs. ITO, WD. 45(4),., KOLKATA

The common issue involved in Ground Nos. 1 & 2 of this appeal relates to the addition of Rs.17,15,795/- made by the Assessing Officer and confirmed by the ld. CIT(A) by invoking provisions of Section 40(a)(ia) of the Act, for the alleged failure of the assessee to deduct tax at source from the payment of commission u/s 194H of the Act.

The assessee in the present case is an individual who is engaged in the business of providing data and telecom services under the name and style of his proprietary concern M/s. Vishal’s. The return of income for the year under consideration was filed by him on 29/09/2013 declaring total income of Rs.1,94,940/-. As noted by the Assessing Officer during the course of assessment proceedings, the assessee had received commission of Rs.24,57,890/- from Sistema Shyam Teleservices Ltd., on which TDS was deducted by the said party and the amount so deducted at source was credited to the assessee’s PAN. The assessee had also paid commission of Rs.17,15,795/- during Assessment Year: 2013-14 Vishal Jalan the year under consideration to the various parties but no tax at source was deducted by the year under consideration to the various parties but no tax at source was deducted by the year under consideration to the various parties but no tax at source was deducted by the assessee from the payment of commission made as required by Section 194H of the from the payment of commission made as required by Section 194H of the from the payment of commission made as required by Section 194H of the Act. The assessee, therefore, was called upon by the Assessing Officer as to why the Act. The assessee, therefore, was called upon by the Assessing Officer as to why the Act. The assessee, therefore, was called upon by the Assessing Officer as to why the commission of Rs.17,15,795/ commission of Rs.17,15,795/- should not be disallowed u/s 40(a)(ia) of the Act for his should not be disallowed u/s 40(a)(ia) of the Act for his failure to deduct tax at source from the payment thereof. The assessee, however, failed duct tax at source from the payment thereof. The assessee, however, failed duct tax at source from the payment thereof. The assessee, however, failed to offer any explanation to the satisfaction of the Assessing Officer and consequently the to offer any explanation to the satisfaction of the Assessing Officer and consequently the to offer any explanation to the satisfaction of the Assessing Officer and consequently the Assessing Officer invoked the provisions of Section 40(a)(ia) of the Act and made a Assessing Officer invoked the provisions of Section 40(a)(ia) of the Act and made a Assessing Officer invoked the provisions of Section 40(a)(ia) of the Act and made a disallowance of Rs.17,15,795/ owance of Rs.17,15,795/- on account of commission for the failure of the assessee on account of commission for the failure of the assessee to deduct tax at source from the payment thereof as required u/s 194H of the Act. On to deduct tax at source from the payment thereof as required u/s 194H of the Act. On to deduct tax at source from the payment thereof as required u/s 194H of the Act. On appeal, the ld. CIT(A) confirmed the said disallowance made by the Assessing Officer. the ld. CIT(A) confirmed the said disallowance made by the Assessing Officer. the ld. CIT(A) confirmed the said disallowance made by the Assessing Officer.

I have heard the arguments of both the sides on this issue and also perused the I have heard the arguments of both the sides on this issue and also perused the I have heard the arguments of both the sides on this issue and also perused the relevant material available on record. The limited contention raised by the ld. Counsel relevant material available on record. The limited contention raised by the ld. Counsel relevant material available on record. The limited contention raised by the ld. Counsel for the assessee by relying on the decision of the Hon’ble Supreme Court in the case of for the assessee by relying on the decision of the Hon’ble Supreme Court in the case of for the assessee by relying on the decision of the Hon’ble Supreme Court in the case of Hindustan Coca Cola Beverage P. Ltd. v. CIT ( Hindustan Coca Cola Beverage P. Ltd. v. CIT (293 ITR 226), is that the concerned parties that the concerned parties having offered the commission income having offered the commission income received by them from the assessee in their from the assessee in their respective returns of income and also respective returns of income and also paid tax thereon, the assessee again cannot be paid tax thereon, the assessee again cannot be held to be liable to deduct tax thereon and Section 40(a)(ia) cannot be invoked. He has eld to be liable to deduct tax thereon and Section 40(a)(ia) cannot be invoked. He has eld to be liable to deduct tax thereon and Section 40(a)(ia) cannot be invoked. He has submitted that this claim made by the assessee for the first time on behalf of the submitted that this claim made by the assessee for the first time on behalf of the submitted that this claim made by the assessee for the first time on behalf of the assessee before the Tribunal may be verified by the Assessing Officer before allowing assessee before the Tribunal may be verified by the Assessing Officer before allowing assessee before the Tribunal may be verified by the Assessing Officer before allowing the appropriate relief to the assessee. the appropriate relief to the assessee.

The ld. D/R, on the other hand, has submitted that the number of parties to The ld. D/R, on the other hand, has submitted that the number of parties to The ld. D/R, on the other hand, has submitted that the number of parties to whom the commission in question was paid by the assessee during the year under whom the commission in question was paid by the assessee during the year under whom the commission in question was paid by the assessee during the year under consideration is very large and it will be difficult for t consideration is very large and it will be difficult for the Assessing Officer to verify this he Assessing Officer to verify this aspect and that too after a lapse of about 8 aspect and that too after a lapse of about 8-9 years. In this regard, the ld. Counsel for the 9 years. In this regard, the ld. Counsel for the assessee has submitted that the assessee will furnish the relevant details relating to all assessee has submitted that the assessee will furnish the relevant details relating to all assessee has submitted that the assessee will furnish the relevant details relating to all the parties for the verification of parties for the verification of the Assessing Officer.

After considering the rival submissions, I consider it fair and proper to After considering the rival submissions, I consider it fair and proper to After considering the rival submissions, I consider it fair and proper to restore this issue to the file of the Assessing Officer for the limited purpose of verifying the claim this issue to the file of the Assessing Officer for the limited purpose of verifying the claim this issue to the file of the Assessing Officer for the limited purpose of verifying the claim made by the assessee by relying on the decision of t made by the assessee by relying on the decision of the Hindustan Coca Cola Beverage P. Hindustan Coca Cola Beverage P. Ltd. v. CIT (supra). As undertaken by the ld. Counsel for the assessee, the assessee As undertaken by the ld. Counsel for the assessee, the assessee As undertaken by the ld. Counsel for the assessee, the assessee shall collect and furnish all the relevant details collect and furnish all the relevant details related to the parties to whom related to the parties to whom the commission in question was paid during the year under consideration and after commission in question was paid during the year under consideration and after commission in question was paid during the year under consideration and after verifying the same, the Assessing Officer shall allow appropriate relief to the assessee the Assessing Officer shall allow appropriate relief to the assessee the Assessing Officer shall allow appropriate relief to the assessee

The issue involved in Ground No. 3 relates to the addition of Rs.8,32,380/ The issue involved in Ground No. 3 relates to the addition of Rs.8,32,380/ The issue involved in Ground No. 3 relates to the addition of Rs.8,32,380/- made by the Assessing Officer on account o by the Assessing Officer on account of amount payable to M/s. Asha Communication by f amount payable to M/s. Asha Communication by treating the same as fictitious sundry creditor. treating the same as fictitious sundry creditor.

During the course of assessment proceedings, the sundry creditors appearing in During the course of assessment proceedings, the sundry creditors appearing in During the course of assessment proceedings, the sundry creditors appearing in the balance sheet of the assessee were the balance sheet of the assessee were verifited by the Assessing Officer. On by the Assessing Officer. On such verification, he found from the ledger account of one M/s. Asha Communication verification, he found from the ledger account of one M/s. Asha Communication verification, he found from the ledger account of one M/s. Asha Communication furnished by the assessee that the said party was actually a customer of the assessee furnished by the assessee that the said party was actually a customer of the assessee furnished by the assessee that the said party was actually a customer of the assessee which was stated to have given advance to the assessee. The Assessing Officer which was stated to have given advance to the assessee. The Assessing Officer which was stated to have given advance to the assessee. The Assessing Officer accordingly noted that the said party was wrongly classified by the assessee in the gly noted that the said party was wrongly classified by the assessee in the gly noted that the said party was wrongly classified by the assessee in the balance sheet and instead of show balance sheet and instead of showing the amount in question as advance from customer, ing the amount in question as advance from customer, it was classified as a sundry creditor. He also noted that huge advance was given by the it was classified as a sundry creditor. He also noted that huge advance was given by the it was classified as a sundry creditor. He also noted that huge advance was given by the said party to the assessee in the immediately preceding year and against the said party to the assessee in the immediately preceding year and against the said party to the assessee in the immediately preceding year and against the said advance, purchases of only Rs. purchases of only Rs.33,938/- were made by the said party were made by the said party from the assessee during the year under consideration. He further noted that the said party had made a during the year under consideration. He further noted that the said party had made a during the year under consideration. He further noted that the said party had made a substantial purchase of Rs.8,32,380/ al purchase of Rs.8,32,380/- during the period of only two months in the during the period of only two months in the immediately succeeding assessment year. Keeping in view all these unusual facts immediately succeeding assessment year. Keeping in view all these unusual facts immediately succeeding assessment year. Keeping in view all these unusual facts noticed by him, the Assessing Officer treated the credit balance of Rs.8,32,380/ the Assessing Officer treated the credit balance of Rs.8,32,380/ the Assessing Officer treated the credit balance of Rs.8,32,380/- appearing in the name of M/s. Asha Communication as fictitious sundry creditor and of M/s. Asha Communication as fictitious sundry creditor and of M/s. Asha Communication as fictitious sundry creditor and added the same to the total income of the assessee. On appeal added the same to the total income of the assessee. On appeal, the ld. CIT(A) confirmed the ld. CIT(A) confirmed the said addition made by the Assessing Officer for the same reasons as given by the the said addition made by the Assessing Officer for the same reasons as given by the the said addition made by the Assessing Officer for the same reasons as given by the Assessing Officer. 9. I have heard the arguments of both the sides on this issue and also perused the I have heard the arguments of both the sides on this issue and also perused the I have heard the arguments of both the sides on this issue and also perused the relevant material available on record. It is observed that the amount of Rs.8,32,380/ relevant material available on record. It is observed that the amount of Rs.8,32,380/ relevant material available on record. It is observed that the amount of Rs.8,32,380/- appearing in the name of M/s. Asha Communication was actually received by the appearing in the name of M/s. Asha Communication was actually received by the appearing in the name of M/s. Asha Communication was actually received by the assessee during the immediately preceding year immediately preceding year as pointed out by the ld. Counsel for the as pointed out by the ld. Counsel for the assessee and this factual position is not disputed either by the authorities below in th assessee and this factual position is not disputed either by the authorities below in th assessee and this factual position is not disputed either by the authorities below in their respective orders or even by the ld. D/R at the time of hearing before the Tribunal. or even by the ld. D/R at the time of hearing before the Tribunal. or even by the ld. D/R at the time of hearing before the Tribunal. As rightly pointed out by the ld. Counsel for the assessee rightly pointed out by the ld. Counsel for the assessee, the said amount, therefore, the said amount, therefore, cannot be added as unexplained cash credit u/s 68 during the year under consideration cannot be added as unexplained cash credit u/s 68 during the year under consideration cannot be added as unexplained cash credit u/s 68 during the year under consideration

In the result, appeal of the assessee is treated as partly allowed for statistical In the result, appeal of the assessee is treated as partly allowed for statistical In the result, appeal of the assessee is treated as partly allowed for statistical purposes.