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Income Tax Appellate Tribunal, “C” BENCH : KOLKATA
Before: Hon’ble Shri J. Sudhakar Reddy., AM & Hon’ble Shri S.S. Godara, JM]
ORDER Shri S.S. Godara, JM:
This Assessee’s appeal for assessment year 2009-10 arises against the CIT(A), 13, Kolkata’s order dated 30-03-2016 passed in case no. 1043/CIT(A)-13/2014-15/Kol involving proceedings u/s 143(3) of the Income-tax Act, 1961 ( in short ‘the Act’).
Heard both the parties. Case file perused.
It transpires at the outset that the CIT(A) in his order under challenge has not condoned the delay of 73 days in assessee’s lower appeal stated to be attributable to the fact that although his accountant had handed over the case file on the date of receipt of assessment order on 29-12-2016 itself, the same had been misplaced in his office. We conclude in these facts that assessee’s foregoing averments sufficiently indicate that there existed circumstances beyond his control leading to the delay in question of 73 days in filing the lower appeal. We therefore treat the same as duly explained.
Shri Vishal Kumar Arya It further emerges during the course of hearing that the CIT(A) has also affirmed the Assessing Officer’s action making various disallowances/ additions on merits. We therefore proceed to take up the instant appeal on merits as well.
Learned authorized representative does not press for assessee’s first four substantive grounds that the CIT(A) had not afforded adequate opportunity of hearing.
The assessee’s 5th to 7th substantive grounds challenge correctness of both the 4. lower authorities’ action disallowing freight charges of Rs.43,26,190/- paid to M/s. Maa Kamaksha Minerals Ltd and M/s. S.K.D P.Ltd. The Assessing Officer as well as CIT(A) have treated the impugned payments as contractual in nature inviting TDS deduction u/s. 194C of the Act. They have invoked section 40(a)(ia) of the Act for the purpose of disallowing the above stated payments.
Learned Departmental Representative vehemently contends during the course of hearing that the assessee’s impugned payments made at regular intervals indicate oral agreement of freight duty between them. We do not see any such fact in the case that merely because assessee’s freight transaction involve multiple instances during the relevant previous year. We make it clear that Revenue’s stand an oral agreement having entered between assessee and the payee(s) in absence of any material to draw such inference leads to perversity only. Coupled with this, there is also material on record that the assessee’s payees had undertaken any contractual liability on his behalf. We therefore decline the Revenue’s supportive arguments in favour of the impugned disallowance. Hon’ble jurisdictional high court’s decision in 2009 CIT v/s M/s. STUMM INDIA dated 16th August, 2010 holds that section 194C r.w.s 40(a)(ia) of the Act does not apply in absence of any oral/written agreement between the parties. We
Shri Vishal Kumar Arya therefore direct the Assessing Officer to delete the impugned disallowance of Rs.43,26,190/- .
The Assessee’s 8th substantive ground seeks to delete 10% estimated 6. disallowance of loading/unloading of Rs.6,64,337/ coming to Rs. 64,833/- made during the course of assessment as affirmed in lower appellate proceedings. It transpires during that the course of hearing that neither the assessee has filed the entire supportive details nor the department had drawn any comparison thereof vis-à-vis in preceding and succeeding assessment years. We therefore see no merit to agree with either party ‘s arguments in entirety and deem it appropriate to restrict the impugned disallowance from 10% to 5% only with a rider that our instant estimation shall not be treated as a precedent in any other assessment year. Necessary computation to follow as per law.
Next comes bad debts disallowance of Rs.3,55,686/- in case of M/s. AML Steel & Power Ltd. The Assessing Officer admittedly quoted section 36(2) of the Act to hold that the impugned sum has nowhere been recognized as income since the relevant transactions between the parties relate to FY 2008-09 only. The Revenue fails to dispute that assessee has written off the impugned sum as non-recoverable in the corresponding ledger in case of above stated party. Learned Counsel has also filed necessary P & L account & trading account to this effect. We conclude in this factual backdrop that assessee’s impugned bad debts claim of Rs. 3,55,686/- deserves to be accepted. We order accordingly.
Lastly come assessee’s 10th to 12th substantive grounds that both the lower 8. authorities have erred in treating sundry creditors of Rs.8,64,882/- on account of re- conciliation in case of M/s. Sree Balaji Mining P.Ltd. as bogus. Learned Counsel submits that corresponding purchases in case of above stated parties have nowhere been disputed either in assessment or in the lower appellate proceedings. Hon’ble apex court’s decision in (1999) 102 Taxman 713(sc) CIT V/s. Sugauli Sugar Works (P) Ltd. 3
Shri Vishal Kumar Arya holds that mere transfer in the account is not sufficient ground to invoke section 41(1) of the Act. We find that this is essentially a reconciliation issue which requires fresh factual verification at the Assessing Officer’s end. We therefore restore the assessee’s instant last grievance back to the Assessing Officer for finalizing consequential verification as per law within three effective hearings in the light of hon’ble apex court’s foregoing decision.
This Assessee’s appeal is partly allowed in above terms. Order pronounced in the Court on 13 -09-2019 Sd/- Sd/- [ J. Sudhakar Reddy ] [ S.S.Godara ] Accountant Member Judicial Member Dated : 13-09-2019 **PRADIP, Sr. PS Copy of the order forwarded to:
1. 1. Appellant/Assessee: Shri Vishal Kumar Arya C/o Rajshree Steelmet P.Ltd. Metro Tower, 170, C.R Avenue, 5th Fl., 5GH, Kolkata-7.
2. Respondent/Department: I.T.O., Ward 44(3), Kolkata 3 Govt Pl (W), Kolkata-7. 3..C.I.T(A).- 4. C.I.T.- Kolkata.
5. CIT(DR), Kolkata Benches, Kolkata.