M/S DINA BANDHU KUNDU AND BROTHERS,BURDWAN vs. I.T.O.,WARD-1(3), BURDWAN

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ITA 1255/KOL/2019Status: DisposedITAT Kolkata12 February 2020AY 2011-123 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the freight payments were not contractual or sub-contractual in nature, following a jurisdictional High Court decision, and directed deletion of the disallowance. Regarding cash payments, the Tribunal noted that the lower authorities did not pinpoint if the payments exceeded the statutory limit and directed re-computation.

What were the facts?

The assessee challenged the disallowance of freight charges for non-deduction of TDS and a disallowance for cash payments exceeding the threshold. The lower authorities disallowed freight charges of ₹7,64,145/- for not deducting TDS under Section 194C and also disallowed cash payments of ₹1,69,297/-. The assessee's books of account were seized.

What were the issues?

Whether freight payments required TDS deduction under Section 194C and whether cash payments exceeded the statutory limit for disallowance under Section 40A(3).

Which sections of the Income-tax Act were involved?

Section 194C,Section 40A(3),Section 133A(3)(ia)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, KOLKATA BENCH “SMC” KOLKATA

Before: Shri S.S, Godara

आदेश /O R D E R This assessee’s appeal for assessment year 2011-12, arises against the Commissioner of Income-tax (Appeals)-Burdwan’s order dated 18.03.2019 passed in case No. CIT(A)/ASL/W-1(3)/BWN/14-15, involving proceedings u/s. 143(3) of the Income Tax Act, 1961; in short ‘the Act’. Heard both the parties. Case file perused.

2.

The assessee’s former substantive grievance challenges correctness of both the lower authorities’ disallowing his freight charges payments of ₹7,64,145/- for not deducting TDS. The Assessing Officer as well as CIT(A) are of the view that the impugned payments are contractual / sub-contractual in nature u/s 194C of the Act and therefore, the assessee ought to have deducted TDS under Chapter-XVIIB of the M/s Dina Bandhu Kundu & Brothers Vs. ITO Wd-1(3), BWN Page 2 Act. Learned departmental representative fails to dispute the clinching fact that neither of the lower authorities has pin-pointed any oral or written agreement suggesting the assessee’s payees to have ever assumed any contractual liability of this taxpayer. Hon'ble jurisdictional high court in Commissioner of Income Tax Kolkata-XVI vs. M/s Stumm India in of 2009 dated 16.08.2010 upholds this tribunal’s co- ordinate bench’s order deleting an identical disallowance in similar circumstances. I therefore direct the Assessing Officer to delete the impugned disallowance going by the very analogy. The assessee succeeds in its former grievance. Necessary computation shall follow as per law.

3.

Next comes sec. 40A(3) disallowance of cash payment made to the above stated transporters amounting to ₹1,69,297/-. I notice at the outset that both the lower authorities have not pin-pointed that the impugned payments ever crossed minimum threshold limit in each payee’s case in a day. Both the learned representatives are ad idem therefore that the Assessing Officer needs to re-compute the impugned party- wise payment(s) if the same as exceeded the statutory limit or not. This ground is taken as accepted for statistical purposes.

4.

Learned authorized representative at this stage submitted that the assessee’s books of account stand seized by the department as per PCIT Burdwan’s order dated 02.03.2011 passed u/s 133A(3)(ia) of the Act. I therefore make it clear that the Assessing Officer’s consequential exercises shall make it sure that the relevant books of account are duly considered as per law.

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