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Income Tax Appellate Tribunal, “C” BENCH : KOLKATA
Before: Hon’ble Shri S.S. Godara, JM & Hon’ble Shri Dr. Arjun Lal Saini,AM]
ORDER Shri S.S. Godara, JM:
This Revenue’s appeal for assessment year 2010-11 arises against the CIT(A), 12, Kolkata’s order dated 02-06-2016 passed in case no. 112/CIT(A)-12/Kol/Wd- 40(1)/2014-15 involving proceedings u/s 143(3) of the Income-tax Act, 1961 ( in short ‘Act ‘). Heard both the parties. Case file perused.
The Revenue’s substantive ground is that the CIT(A) has erred in law and in fact facts in reversing the Assessing Officer’s action adding an amount of 45,97,378/- on account of discrepancies in account of one, Mr. Md. Zaffar while admitting fresh statement during the course of lower appellate proceedings without giving of hearing to the assessing authority.. The CIT(A)’s detailed discussion under challenge deleting the impugned addition reads as follows:-
“The Assessing officer has made an addition of Rs.45,97,378/ on account of alleged excess claim of expenditure made by Md. Zafar, Jamshedpur and the basis of such addition is summarized as under:
Total expenditure calculated as per statement of Md. Zafar Rs.72247593.00 Less: Payments made by Tata Motors Ltd as per their confirmation in reply to notice U/s. 133(6) Rs.23425215.00 Balance Rs. 48822378.00 Less: withdrawal from HDFC Bank Ltd Rs. 40825000.00 Balance Rs.7997378.00 Less: withdrawal from Bank of India Rs.3400000.00 Balance Rs.4597378.00 The Assessing officer on the basis of the above figures came to the conclusion that there was an excess claim of expenditure to the tune of Rs.4597378/- and made the addition to the total income declared by the appellant which is abosolutely wrong and the appellant submits as under:
Md. Zafar is an employee of the firm who is posted at Jamshedpur and is managing the movement of the vehicle from the factory of Tata Motors Ltd to different destination and we are maintaining a separate ledger account of Md. Zafar in our books of accounts for payments reed. by him and expenses incurred by him. We are making payment to Md. Zafar for meeting day to day expenses on account of transportation and his account is being debited and the amount reed. from him if any and the expenses incurred by him is being credited to his account.
Detailed ledger copy of the account of Md. Zafar Jor the entire period i.e. 01.04.2009 to 31.03.2010 was filed with the AO and a copy thereof is enclosed for your honours perusal and verification.
The Assessing officer Jailed to understand and appreciate the various submissions made before him and wrongly came to the conclusion that there was excess claim oJ expenditure to the extent of Rs. 45973 8/ as computed above which is not only wrong but against the principal of law and natural justice as well and the appellant further submits as under:
The total expenditure calculated by the AO having been incurred by Md. Zafar on the basis of the ledger copy filed before him is wrong. In fact, the 2 figure adopted by the AO is the monthly total of debit () opening balance and not the expenditure incurred by Md. ZaJar.
The total expenses incurred by Md. Zafar for the accounting year 01. 04.2009 to 31.03.2010 was Rs. 66,82,793/ and not Rs. 722475931 as presumed by the AO on the basis of the ledger copy of the accounts.
The total withdrawal from HDFC Bank Ltd was Rs. 41,12,5000/ whereas the AO has calculated the total withdrawal from HDFC Bank Ltd at Rs. 4,08,25,000/.
The total amount of withdrawal from Bank of India was Rs. 3201000/ whereas the AO has adopted the withdrawal from Bank of India at Rs. 34,00,000/.
There was cash transfer rom Head office to Branch amounting to Rs. 3250000/ and Branch to Head office Rs. 9,00,000/ which the AO has not considered at all.
The amount deducted by M/s. Tata Motors Ltd on account of fuel was Rs. 23017642/ whereas the AO has considered the said figure at Rs. 23425215/ on the basis of the confirmation recd. by him from M/s. Tata Motors Ltd in response to notice U/s. 133(6) of the IT Act, 1961. In this regard a Reconciliation statement in respect of the difference of Rs. 23425215/ and Rs. 23017642/ is also enclosed.
There were opening and closing balance of liabilities for expenses in the accounts of Md. Zafar amounting to Rs. 2875690/ and Rs. 1502330/ which has not been considered by the AO.
The above mentioned difference pointed out are explained from the following documentsand state attached herewith:
Summarized ledger copy of Md. ZaJar Ale. prepared rom the detailed ledger copy of the accounts.
Day to day ledger copy of the accounts of Md. Zafar as appearing in our books of accounts for the 01.04.2009 to 31.03.2010.
Reconciliation statement in respect of the difference in the figures of Rs. 23017642/ and Rs. 23437106/ confirmed by M/s. Tata Motors Ltd. 3 Statement of payment advise and deduction statement of Rs. 23017642/ by M/s. Tata Motors Ltd n account of Diesel/Fuel.
Photo copy of Bank statement of HDFC Bank Ltd and Bank of India, Jamshedpur showing withdrawal money from Bank on different dates amounting to Rs. 41125000/ and Rs. 3201000/ respectively. Summary of ledger account on the basis of the correct figure as stated above in Paragraph 4(1) to 4(vii).
Taking into consideration all the above facts and figures and the reconciliation statement your honour will find that there is no difference in the account as alleged by the AO and the addition made amounting to Rs. 4597378/ on wrong facts and figures and without properly appreciating the submission made is wrong and requires to be deleted in full.
The AO in this regard has referred the decision of the Madras High Court in the case of Tube Investment of India (P) Ltd vs. CIT 260 ITR Page 94 and Hon’ble Supreme Court in the case of Escorts Ltd vs. Union of India 199 ITR Page 94 and Hon’ble Supreme Court in the case of Escorts Ltd vs. Union of India 199 ITR Page 43 on the presumption that this is a claim of double allowance of expenditure which is not there in our case and the AO has misunderstood the entries made in the accounts of zafar towards deduction od fules charges supplied by Tata Motors Ltd and has made addition on presumption and wrong facts and figures and the additions requires to be deleted in full.”
4.1 I have carefully considered the submission and various documents and details submitted in the Paper Book. The summary of the ledger copy of the account of Md. Zafar which is appearing in Page 24 of the paper book is reproduced below: Opening Balance as on 01.04.2009 362512.00 (Dr.) Add: Withdrawal from HDFC Bank (Jsr) 41125000.00 Withdrawal from Bank of India (Jsr) 3201000.00 Cash transfer from Head office 3250000.00 Tata Motors Debit on account of Fuel 23017642.00 Liabilities of expenses for 200910 Booked 1653037.00 72246679.00 (Dr) 72609191.00 Less; Cash transferred to H.O 900000.00 Liabilities of expenses against last year 2875690.00 Total expenses incurred 68682793.00 72458483.00 (Cr) Closing balance as on 31.03.2009 150708.00 (Dr)
The appellant had further submitted reconciliation figure of fuel charges deducted by Tata Motors Ltd placed at pages 145 to 149 of the paper book and month wise summarized ledger of Md. Zafar placed at page 165 of the paper book. The summarized ledger of Md. Zafar appears at age 165 of the paper book.
On a careful consideration of all the documents, Reconciliation statement, Bank statement it is found that the AO although convinced about the transaction and payments made m' takes in adopting the figure of withdrawal from the Bank and also failed to consider cash transfer f m Head office to Branch amounting to Rs. 32,50,000/ and cash transfer from Branch to Head office amounting to Rs. 9,00,000/ apart from other minor mistakes which resulted into addition of Rs. 45,97,378/ which is wrong in view of the submission and the documents furnished by the appellant and considering the facts of the case, the addition made amounting to Rs. 45,97,378/ is deleted. "
We have given our thoughtful consideration to the rival contentions. We make it clear that Revenue’s sole grievance canvased in former substantive ground is that the CIT(A) has admitted himself the assessee’s addition without affording opportunity of hearing. It transpires during the course of hearing that the assesse, in fact, submitted the re-conciliation statement of the amounts in issue based on relevant documents already on record filed before the Assessing Officer during scrutiny. This clinching fact has got unrebutted from the Revenue’s side. We conclude in this backdrop of facts the CIT(A) has rightly accepted the assessee’s re-conciliation statements based on relevant documents already available on record for deleting the impugned addition. The Revenue fails in its former substantive ground.
Revenue ‘s next substantive ground seeks to revive the latter addition of undisclosed income of Rs.2622390/- out of received from Tata Motors Ltd. Our attention is invited to the CIT(A)’s findings under challenge as follows:-
“The Assessing Officer on he basis of the confirmation recd. From M/s. Tata Motors Ltd has made an addition of Rs.2622390/ as undisclosed income out of receipt from M/s. Tata Motors Ltd which has been calculated as under (Please refer last paragraph of the order ): Total Transportation charges paid by Rs.103858072.00 M/s.Tata Motors Ltd as per their confirmation Rs. 333000.00 Enroutement expenses paid in Orissa Rs. 27600.00 Paid for Delayed charges Rs. 18009.00 Rs.104236681.00 Less: Debit Note issued on account of: Fuel charges Rs.23425215.00 Payment for Medical facility Rs. 731510.00 Paid for Others Rs. 192981.00 Paid for Delay charges Rs. 1200.00 Paid for Transit charges Rs. 250.00 Rs. 24351156.00 Rs. 79885525.00 Add: Payment recd. From Andaman Motors (P)Ltd Rs. 455226.00 Rs. 80340751.00 Less: Income credited as per P/L A/c Rs. 77718631.00 Difference added to the Total Income Rs. 2622120.00
In this connection without prejudice to our contention that the Assessing officer never supplied copy of the reply recd. from M/s. Tata Motors Ltd and called for any clarification or reconciliation made the addition as undisclosed income, we beg to submit as under: '
M/s. Tata Motors Ltd made a provision of Rs. 2639549/ on account of increase in Driver wages @ Rs. 20/ per day on 31.03.2010 and deducted TDS of Rs. 52791/ which is evident from Form 26AS of AY 20102011. We were not informed of such adjustment made by the company and the amount of TDS deducted by them and in our return we never claimed credit for the 6 said TDS of Rs. 52791/ nor any provision of Rs. 2639549/ as made since we never raised any bill on the said company. We recd. a payment advice dt. 03.06.2010 for the period May 2010 and we noted a reversal entry if Rs. 2639549/ in the said statement. Subsequently we recd. Form 16A dt. 21.11.2010 in which the amount credited was shown at Rs. 263 549/ and TDS was reflected at Rs. 52791/. We raised our Bill dt. 06.01.2011 towards the increase charges @ Rs. 20/ per day for driver wages for sum of Rs. 2312992/ and we reed. payment of our said invoice on 12.01.2011 and transportation charges was accordingly in our books of accounts in the FY 20102011. We claimed TDS of Rs. 52791/ in FY 20102011 but no credit was allowed since it was not appearing in 26AS in view of the fact that the payment was made in March 2010 and this amount was reflected in Form 26AS of AY 20102011. Thus. the differential amount which has been added by the AD is mainly in respect of this adjustment of Rs. 2639549/ which was never paid to us instead of which we were paid a sum of Rs. 2312992/ in the next FY which is duly reflected in or accounts. We are enclosing herewith the following documents Jor your perusal and records; Form No 26ASJor Assessment Year 20102011 Copy of payment advice dt. 03.06.2010 in respect of May 2010 Copy of Invoice dt. 06.01.2011 for Rs. 2312992/ Considering the above facts and circumstances and the reconciliation of the accounts you honour will appreciate that the addition made by the A 0 on the basis of the information furnished by M/s. Tata Motors Ltd without giving any reasonable opportunity of being heard is wrong and the addition requires to be deleted in full. Here we would like to further mention that in the course of hearing this fact of crediting of in me in the next FY was duly brought to the notice of the AO in our letter dt. 22.02.2013 (copy enclosed) but no cognigence was taken and the addition was made which is not only wrong but against the principal of law and natural justice. It has been contended by the A/R that the addition has been made by the Assessing officer 0 the basis of the statement furnished by Tata Motors Ltd without supplying a copy of the reply reed from Tata Motors Ltd in response to notice U/s. 133(6) and without affording any reasonable opportunity of being heard and/or calling for any clarification or reconciliation of the accounts. Show cause notice dt. 27.02.2015 was issued from this office and a copy of the reply dt. 20. 2.2013 recd. from Tata Motors Ltd by the Assessing 7 officer in response to notice U/s. 133(6) was also forwarded for their comments. l Show cause notice issued is reproduced below :
Appeal No. 112CIT(A)12IKolWd.56(1).201415 (Old No. 56ICIT(A)XXXVI/Kol/1201314 in the case of Mahadeolal nathmal for the AY 2 0201]) Order U/s. 143(3) PAN: AAFFM0501M Reg .. Please refer to the above.
In your case, for the Assessment Year 201011, an addition of Rs. 2622390/ was made in the assessment order as undisclosed income out of receipts from Tata Motors Ltd. This addition was ma e on the basis of reply received from Tata Motors Ltd in response to notice U/s. 133(6) of the Income Tax A t, 1961. The reply has been described in the assessment order. A copy of the reply dt. 20.02.2013 of Tata Mot rs Ltd is enclosed herewith. On the basis of the said reply the Assessing officer was of the opinion that you had received an amount of Rs. 79885525/ as business receipts from Tata Motors Ltd. In addition to t e same, business receipts from Andaman Motors Pvt. Ltd amounted to Rs. 455226/. Hence according to t Assessing officer you should have declared receipts of Rs. 803407511 in the aggregate as against with receipts of Rs.77718631/ as were declared in the P/L Alc. Hence the difference of Rs. 2622390/ was treated as undisclosed income. During the appellate proceedings you furnished an explanation to the effect that the differ, nee was on account of provision of Rs. 2639549/ booked by Tata Motors Ltd in your account on which tax of Rs. 52791/ was deducted at source. Tata Motors Ltd in their reply dt. 28.08.2014 copy of which has already been provided to you and is again enclosed herewith have clarified that the amount of Rs. 2639549/ falling under the category of provision on expenses was not part of the Vendor Ledger Extract provided by a letter dt. 20. 02.2003. Now, it is seen on examination of the said vendor Extract (copy enclosed) that Tata Motors Ltd had actual, credited transportation charges to your account as under:
Liable to TDS @ 2% Rs. 17674154/ Liable to TDS @ 33% Rs.77700800/ Not liable to TDS Rs. 8483118/ Total Rs. 103858072/- Thus, the receipt from Tata Motors Ltd amounted to Rs. 1038.58072/ and not Rs. 7988525/ as observed by the Assessing officer in the 8 Assessment order. In addition an amount of Rs. 455226/ was received from Andaman Motors Pvt. Ltd. Thus, total receipts amounted to Rs. 104313298/ as again t the receipts of Rs. 777/8631/ declared in the P/L A/c .. Thus, the sum of Rs. 265946671 being the difference between the two amounts represents understatement of receipts. by you which is liable to be added to our total income as against addition of Rs. 2622390/ made in the Assessment order. You are required to show cause as to why the addition should not be enhanced to Rs. 6594667/ in view of the above mentioned facts. Your reply in this regard may be furnished in writing through an authorized representative with supporting details on 12.03.2015 at 1230 PM The appellant A/R appeared and filed reply to the said show cause notice vide letter dt 24.03.2015 which is reproduced below: PAN No. : AAFFM 0501 M Ref. No. Your letter No. CIT(A)12/A No. 112/Kol/1415/640 Appeal No – 112/CIT(A)12/Kol/Wd. 56(1)/1415
We are in receipt of your above mentioned show cause dt. 27. 02.2015 asking us to show cause as to why the addition of Rs. 2622390/ made in the Assessment order as undisclosed income out of receipts from M/s. Motors Ltd be not enhanced to Rs. 265946671 for the reasons mentioned in the said which is reproduced as under: "Now it is seen on examination of the said vendor Extract (copy enclosed) that Tata Motors Ltd had actually credited transportation charges to your account as under:
Liable to TDS @ 2% Rs. 17674154.00 Liable to TDS @ 33% Rs. 77700800.00 Not liable to TDS Rs. 8483118.00 Total Rs. 103858072.00
Thus, the receipts from Tata Motors Ltd amounted to Rs. 103858072/ and not Rs. 79885525/ as observed by the Assessing officer in the assessment order. In addition, an amount of Rs. 455226 was received from Andaman Motors (P) Ltd. Thus, total receipts amounted to Rs. 104313298/ as again t the receipts of Rs. 77718631/ declared in the Profit & Loss A/c. Thus, the sum of Rs. 26594667/ being difference between the two amounts represents understatement of receipts by you, which is liable to be added t your total income as against addition of Rs. 2622390/ made in the assessment order. 9
You are requested to show cause as to why the addition should not be enhanced to Rs. 6594667/ in view of the above mentioned facts. " In this connection we beg to submit as under: During [he course of hearing it was explained that M/s. Tata Motors Ltd are deducting TDS on the total bills amount which is inclusive of various expenses and we are enclosing herewith copies of the following documents for your perusal and record: Copy of show cause dt. 26.10.2012 issued by ITO Ward 56(1) Copy of reply dt. 07.11.2012 Copy of reply dt. 07.12.2012 along with enclosures. Copy of show cause dt. 13.02.2013 Copy of letter dt. 22.02.2013 Copy of letter dt. 26.02.2013 Copy of letter dt. 01.03.2013 Copy of letter dt. 11.03.2013 During the course oJ hearing detailed Reconciliation statement were filed and the discrepancies were duly explained and after consideration all facts and figures the AO made an addition of Rs 2622390/ which is it dispute in the present appeal and in our earlier submission the explanation has already been furnished. The proposed enhancement is absolutely wrong and unjustified and we request for deletion the addition of Rs. 2622390/ which has been made by the AO as undisclosed income of AY 20102011.
The A/R further filed Reconciliation statement of Transportation charges as per the statement of Tata Motor Ltd and as per their Books of accounts which is reproduced below:
Appeal against order passed U/s. 143(3) for Assessment Year 2010-2011 Reconciliation Statement o(Transportation charges as per Tata Motors Ltd and as per our Records
M/s. Tata Motors Ltd in response to notice U/s. 133(6) issued by the Assessing office provided the figures of Transportation charges as under: Transportation charges after deduction of TDS @ 2% Plus Surcharge Rs. 17674154.00 Transportation charges after deduction of TDS @ 0.33% Plus Surcharge Rs. 77700800.00 Transportation charges without deduction of TDSRs. 8483118.00 Rs.103858072.00
We have recd. on mail the statement of payment made by M/s. Tata Motors Ltd during FY 20092010 which is enclosed. The said statement relates to payment of Transportation charges after deduction of TDS @ 2% plus Surcharge & TDS @ 0.33% plus Surcharge and on the basis of the said statement e total Invoice value is reflected at Rs. 95545559/ which is summarized as under: Total Invoice amount as per statement reed. from M/s. Tata Motors Ltd Rs.95545560.00 Less: Bills related to last year Jor which payment Made during the year (49231+ 14018+89380 + 17977) Rs. 170606.00 Balance Invoice Rs. 95 74954.00 The figure of Transportation charges reported by M/s. Tata Motors Ltd as under: TDS @2% Plus Surcharge Rs.17674154.00 TDS@0.33% Plus Surcharge Rs. 77700800.00 Rs. 95374954.00 Difference NIL Transportation charges without deduction of TDS Rs. 8483118.00
Thus, the total Transportation charges ( i.e Invoice value) as per M/s. Tata Motors Ltd comes to Rs.103858072/ as stated above which is reconciled from Book as under: As per Books of Accounts Total Bill raised on which TDS deducted @ 2% Plus Surcharge as per AnnexureA attached herewith Rs.20307559.00 Less: Payment not recd. during the year as Highlighted In the statement (1st page, S.l No. 9 to 15) Rs.2633405.00 Balance Rs. 17674154.00 Total Bill raised as per AnnexureB on which TDS Deducted @ 0.33% Plus Surcharge Rs. 77700800.00 Transportation charges Bill raised as per statement On which no TDS deducted annexureC Rs. 8483118.00 Total Rs. 103858072.00
Thus, the above Reconciliation shows that the figure supplied by M/s. Toto Motors Ltd exactly tallies with the Bill raised by the assessee on M/s. Tata Motors Ltd. The Bill so raised were inclusive of Enroute expenses, Service Tax, Diesel expenses, Convoy expenses etc.
As per summary transaction supplied by Tata Motors Ltd the amount of Rs. 333000/ and Rs 27600/ has been credited by the assessee in the claims ledger a copy of which is enclosed. Another amount of Rs. 18009/ is reflected in our transportation charges statement on which no TDS has been deducted.
Reconciliation of TDS amount of Rs. 695510/
As per Tata Motors Ltd as per statement attached Rs. 758064.00 Less: TDS related to last year Rs. 192.00 Rs. 757872.00 Less.' TDS on value base Rs. 62362.00 Rs. 695510.00 As per books TDS @2% as per AnnexureA Rs. 490879.00 TDS@0.33% as per AnnexureB Rs. 257301.00 Rs. 748180.00 Less: TDS deducted by co on Rs.2633405/ for which payment Rs. 52668.00 Rs. 695510.00 not recd. Difference N I L The Remand report reed from the Assessing officer has also been looked into along with the Motors Ltd ".
5.1 The submission made have been considered carefully along with the Reconciliation statement furnished with documentary evidences and the contention of the appellant is found to be correct and for reasons discussed above, the addition made amounting to Rs. 26,22,3901 on account of alleged difference in the income is hereby deleted. “
Mr. Robin Choudhury, Addl. CIT(DR)’s sole submission qua the instant issue is that the CIT(A) having not afforded adequate opportunity to the Assessing Officer regarding the assessee’s reconciliation statement. We reiterate that the assessee had merely filed reconciliation statement qua differential amount forming subject matter of addition. The same was based on all the relevant details already forming part of record before the Assessing Officer. Such reconciliation statement cannot be held in the nature of additional evidence therefore. The Revenue’s instant substantive second ground is also rejected.
This Revenue’s appeal is dismissed. Order pronounced in the Court on 10 -05-2019 Sd/- Sd/- [ A.L. Saini ] [ S.S.Godara ] Accountant Member Judicial Member Dated : 10 -05-2019 **PRADIP, Sr. PS Copy of the order forwarded to:
1. 1. Appellant/Department : I.T.O, Ward 40(1), Kolkata 3 Govt Place (W), Kolkata-1. 2.Respondent/Assessee: M/s. Mahadeolal Nathmal 40B, Princep Street, Kolkata-72. . 3..C.I.T(A).- 4. C.I.T.- Kolkata.
5. CIT(DR), Kolkata Benches, Kolkata.