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Income Tax Appellate Tribunal, KOLKATA,
Before: Shri Sanjay Garg
आदेश /O R D E R The present appeal has been preferred by the assessee against the order dated 11-09-2019 of the Commissioner of Income-tax (Appeals), 7, Kolkata [hereinafter referred to as ‘CIT(A)’]. 2. The assessee in this appeal has taken the following grounds of appeal :-
1. That the learned Commissioner of Income Tax (Appeals) 7/Kolkata has erred in confirming the addition of Rs 4,53,000/ [page6, paragraph 5.2 of the order] u/s 40a(ia) of the Income Tax Act, 1961 on a misconceived notion and belief that tax is required to be deducted u/s 194H from commission payment made to small retailers earning' nontaxable income when a full namewise list was provided at assessment stage as well as in Appellate proceedings and no verification of the claim was made either by the Assessing Officer or the Appellate Authority.
2. That the learned Commissioner of Income Tax (Appeals) 7/Kolkata has erred in confirming the addition of Rs 9,90,010/ [page8, paragraph 6.2 of the order] on a misconceived notion and belief that the said amount Sri Prityesh Kumar Das Page 2 represented an unaccounted commission when the impugned document / confirmation, stated to have been collected u/s 133(6) was not made available to the Appellant for rebuttal of the views of the Assessing Officer during the course of assessment proceedings .
3. That the learned Commissioner of Income Tax (Appeals) 7/Kolkata has erred in confirming the addition of Rs 1,06,248/ [page10, paragraph 7.3 of the order] on a misconceived notion and belief that the Assessing Officer has derived this figure during the assessment proceedings on an estimated basis on some erroneous parameters which is neither legally permitted nor supported by the decisions and verdicts delivered by various judicial authorities where it had been held that without rejecting the books of accounts, which were subject to tax audit u/s 44AB of the Income Tax Act, such estimation cannot be done.
4. That the learned Commissioner of Income Tax (Appeals) 7/Kolkata has erred in confirming the addition of Rs 5,77,216/ [page11 & 12, paragraph 8.2 of the order] on a misconceived notion and belief that the undisclosed investment in the undisclosed account was Rs 5,77,216/ when in reality only the income portion of the deposits in the accounts should have been considered at a reasonable percentage considering the nature of business carried out by the Appellant.
5. That the learned Commissioner of Income Tax (Appeals) 7/Kolkata has erred in confirming the addition of Rs 8,10,217/ [page13, paragraph 9.2 of the order] on a misconceived notion and belief that the impugned expense made from bank account had no nexus with the business of the Appellant despite explaining the nature of such expense during the assessment as well as the appellate proceedings without conducting any verification whatsoever of the claim made by the Appellant.
6. That the learned Commissioner of Income Tax (Appeals) 7/Kolkata has erred in confirming the addition of Rs 97,928/ [page14, paragraph 10.2 of the order] without appreciating the fact that the interest income has been considered on receipt basis in the year of receipt of such interest.
7. That the appellant craves leave to adduce additional grounds and/ or to amend or withdraw any of the foregoing grounds before, or at the time of hearing of appeal.
Ground No. 1:- 3. Learned Counsel for the assessee ( in short, the Ld. Counsel) at the outset has submitted that as per instruction of his client he does not press ground no. 1 of the appeal. Ground no. 1 of the appeal, therefore, is dismissed as not pressed.
Sri Prityesh Kumar Das Page 3 Ground No. 2 : 4. The assessee vide ground no.2 has contested the confirmation of addition of Rs. 9,90,010/- made by the Learned Assessing Officer ( in short, the Ld. AO) on account of unaccounted commission income.
The brief facts relating to the issue are that the Ld. AO during the assessment proceedings observed that the assessee has claimed total commission income of Rs. 54,67,423/- in P & L account; whereas the assessee has been paid aggregate commission of Rs. 57,37,502/- from M/s. Unitech Wireless P.Ltd and aggregate commission of Rs. 7,19,931/- from M/s. Idea Cellular Ltd. The total commission income worked out to Rs. 64,57,433/- against commission income shown in the P & L account for Rs. 54,67,423/-. He accordingly made an addition of Rs. 9,90,010/- into the income of the assessee on account of undisclosed commission income. The Ld. CIT(A) confirmed the addition made by the Ld. AO.
Before this tribunal, the Learned Counsel has relied upon Form 16A issued by M/s. Unitech Wireless P.Ltd and M/s. Idea Cellulor Ltd and has submitted that these documents show the total commission income from these companies received by the assessee was at Rs. 54,67,422/-, which has been taken into account into the P & L account. The Ld. Counsel for the assessee has submitted that the assessee may be given an opportunity to reconcile the figures and to explain before the Ld.AO about difference, if any, noted by the Ld. AO regarding receipt of commission. The Learned Departmental Representative ( in short, the Ld. DR) has not objected to the same. This issue is accordingly restored to the file of the Ld. AO with a direction to give an opportunity to the assessee to reconcile the figures and thereafter, to decide the issue afresh. Ground No.3: 7. Vide ground no. 3, the assessee has contested the confirmation of addition of Rs. 1,06,248/- made by the Learned Assessing Officer on account of understated and overstated purchases.
The Ld. AO sought information in this respect from M/s. Idea Cellelor & M/s Unitech Wireless Ltd, who submitted the ledger copies of the assessee in their books Sri Prityesh Kumar Das Page 4 to the Ld.AO. From the information received from the above parties, it was found that the assessee had overstated the purchases of Rs.33,659/ from M/s. Idea Cellulor Ltd and under stated the purchases from M/s. Unitech Wireless Ltd amounting to Rs. 8,37,900/-. The Ld. AO calculated the profit at Rs.72,589/- (@8.02%) on understated purchases and further added overstated purchases of Rs.33,659/- and made total addition of Rs. 1,06,248/-. The Ld. CIT(A) confirmed the addition so made by the Ld. AO.
Before this tribunal, the Ld. Counsel for the assessee has submitted that the Ld. AO did not confront the assessee with the information received from the parties. He has further submitted that the assessee has shown only 0.5% profit from simcards business and that the rate of 8.02% profit applied by the Ld. AO, was applicable on profit earned from other business and not from simcards business.
I find that the Ld. AO has applied the rate of 8.02% profit as per Tax Audit Report (TAR). I therefore do not find any merit in this ground and the same is accordingly dismissed. Ground no. 4: 11. The assessee vide ground no. 4 has contested the confirmation of addition of Rs.5,77,216/- made by the Ld. AO on account of undisclosed investment/deposit in Punjab National Bank. The Ld. AO observed that the assessee had not disclosed the said saving bank account with Punjab National Bank(PNB). He therefore added the peak balance during the year in the said account at Rs. 5,77,216/-. The Ld. CIT(A) confirmed the addition so made by the Ld. AO.
The Ld. Counsel for the assessee before this Tribunal has submitted that in the undisclosed account certain income earned from understated and overstated purchases as dealt with ground no. 3 ( as above) was also deposited. He therefore has submitted that certain relief may be granted to the assessee in view of addition made/confirmed in ground no. 3 as above.
Considering the above submissions, out of total confirmation of addition of Rs. 1,06,248/- as discussed in ground no. 3 above in respect of overstated and understated purchase, 50% of the said amount can be treated to have been deposited in the Sri Prityesh Kumar Das Page 5 undisclosed account. Therefore, it will be appropriate to give relief to the assessee of Rs. 50,000/- in this respect. Out of addition of Rs. 5,77,216/-, addition of Rs. 5,27,216/- stands confirmed. This ground is partly allowed. Ground No. 5: 14. Vide ground no. 5 the assessee has contested the addition of Rs. 8.10,217/- made by the Ld. AO on account of unexplained drawing from Central Bank of India. The Ld. AO in the assessment order observed that the bank statement of the assessee with Central Bank of India revealed several payments aggregating to Rs. 8,10,217/- have been made to various parties on different dates. However, no direct business nexus was observed on the record against those payments. He therefore, made addition of Rs. 8,10,217/- considering the same to have been made out of books.
After hearing the learned representatives of the parties, I am of the view that such addition is unwarranted. Even if the assessee has made payments to certain parties from his disclosed bank account that itself cannot be a ground to make addition unless the assessee has claimed those payments as business expenditure, which is found by the Ld. AO as not relating to the business. However, no such observation has been made by the Ld. AO in this respect. Mere withdrawal from the bank account in my view does not warrant for any addition as undisclosed income. This addition made by the Ld. AO is accordingly ordered to be deleted. Ground no. 6: 16. Vide ground no. 6 the assessee has contested the addition of Rs. 97,928/- as undisclosed interested income from Fixed deposit.
The Learened Counsel for the assessee in this respect has submitted that the Ld. AO has added the interest income from FDR on accrual basis. However, bank had credited the interest income from FDR on maturity of the FDR. That the assessee has duly accounted for interest income received from FDR being credited on maturity. This issue is accordingly restored to the file of the Ld. AO to verify the contentions made by the assessee and decide the issue accordingly.