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Income Tax Appellate Tribunal, KOLKATA BENCH “A”, KOLKATA
ORDER
PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER Both these appeals filed by the assessee and the Revenue against the order dated 26.03.2018 passed by CIT(A)-11, Kolkata for AY 2014-15 respectively.
Upon hearing both the parties, we proceed to hear both the appeals together as the same were based on same identical facts and to pass a consolidated order for the sake of convenience.
First we shall take up ITA No.1195/Kol/2018.
ITA No.1012 & 1195/Kol/2018 (ASSESSMENT YEAR-2014-15) (ASSESSMENT YEAR-2014-15) 3. Heard both parties and perused material available on record. The Ld.DR relied on the order of the AO and contended that there was no opportunity afforded by the CIT(A) to the AO in granting relief to the assessee by accepting the submissions violating Rule 46A of the Income Tax Rules, 1963. In reply, the Ld. AR submits that all the details as sought by the AO were furnished in the assessment proceedings. The AO refused to take the same and taken extreme harsh steps for non- compliance. The hearings were not recorded and the assessee and his Authorized representative was pressurized to bring documents and when the same were produced, they were not been examined. The assessee ultimately field documents though post as there was no acceptance of the same in the assessment proceedings by the AO. The Ld.AR referred to page No.4 of the Paper Book and submitted that the AO sought information by show-cause notice dated 26.12.2016 and the assessee sent all the details relating to requirements numbered in 1 to 9 by registered post on 28.12.2016. Further, he referred to page No.7 to 12 and argued all such information was regarding the addition made on account of liability claimed on wages and labour charges and transport charges together amounting to Rs.1,06,70,663/- and inspite of such, the AO added the said amount to the total income of the assessee by observing that the assessee fail to prove any expenditure or credit in accounts.
Further he submitted that in the first appellate proceedings, the CIT(A) summoned the balance sheet of the De Son Marketing Pvt.Ltd. who is principal of the assessee and after examining the balance sheet, the CIT(A) restricted the disallowance to Rs.22,69,144/- under the head “transport expenses”. The contention of the Ld.AR was that the assessee produced every information regarding the objections raised by the AO under head current liabilities more specifically unpaid wages and labour chares and transportation charges but, however, no consideration was & 1195/Kol/2018 (ASSESSMENT YEAR-2014-15) given to the information supplied by the assessee, the AO proceeded to add the same to the total income of the assessee which is bad in law. Further, he placed reliance on the order dated 13.08.2014 in the case of ITO vs Sadananda Singha [2014] 151 ITD 714/49 taxmann.com 323 (Kol.- Trib.) wherein the Co-ordinate Bench of this Tribunal held when the trade creditors/sundry creditors existed in the balance sheet and there was no write off by the assessee in the accounts, the liability still exists in the books of accounts, the same cannot be added to the income of the assessee u/s 68 of the Income Tax Act, 1961 (in short “Act”).
Further referred to decision of Hon’ble High Court of Calcutta in the case of CIT vs Chandela Trading Co.P.Ltd. [2015] 372 ITR 232 (Cal.) for the proposition failure by creditors to participate any enquiry and furnish accounts does not mean that the creditors lacked identity and the said sums cannot be added under the head “cash credit” u/s 68 of the Act and brought our attention to para 3 of the said decision. We find that the AO added the impugned amount alleging that the assessee failed to substantiate his claim of sundry creditors and it is observed from the record that the CIT(A) examined the balance sheet of the principle of the assessee and given relief. It clearly shows that there was no proper examination by the AO in the assessment proceedings. Further, it is observed that the assessee placed on record the complete details of three parties relating to wages and labour charges at page No.7 and details of payments under the head “transportation” at page No.8 to 9. Further, complete details of payment under the head “labour charges” for loading and unloading from pages 10-12. We find all these documents are necessarily to be examined by the AO in terms of objections raised in the assessment proceedings. As discussed above, we find no such examination or verification, whatsoever, the case may be, by the AO. Therefore, the matter is liable to be remanded to the file of AO for his fresh consideration. & 1195/Kol/2018 (ASSESSMENT YEAR-2014-15) 6. The decisions as placed reliance by the Ld.AR were considered and in the view of the furnishing of necessary documents relating to the impugned addition made by the AO on record, we deem it proper to remand the matter to the file of AO for his fresh consideration. The assessee is at liberty to file evidence, if any, further to substantiate his claim. Thus, grounds raised by the Revenue are allowed for statistical purposes.
In the result, the appeal of the Revenue is allowed for statistical purposes.
(ASSESSMENT YEAR-2014-15) 8. In this appeal, the assessee raised Ground No.1 challenging the action of the CIT(A) in giving part relief under the head “transport charges” and for confirming the addition on wages and labour charges. While dealing the issues raised by the Revenue in its appeal, we have already taken a view in remanding the matter to the file of AO for his fresh consideration. Since the issue raised in Ground No.1 in this appeal are inter-connected and part & parcel to the issue raised by the Revenue in the appeal i.e. for AY 2014-15, therefore, Ground No.1 raised by the assessee in this appeal becomes academic and requires no adjudication.
Ground No.2 raised by the assessee questioning the action of CIT(A) in confirming the addition made by the AO on account of non- payment of charges in the facts and circumstances of the case. The contention of the Ld. AR is that the AO unilaterally made the addition on account of statement made by Kanu Mahali in respect of non-payment of labour charges. The AO did not afford an opportunity to the assessee to cross-examine the statement made by the said Kanu Mahali in assessment proceedings and without such opportunity and making addition thereon is bad in law. Ld.DR did not controvert the same. & 1195/Kol/2018 (ASSESSMENT YEAR-2014-15) Taking into consideration the submissions of the Ld.AR & Ld.DR and in the facts and circumstances of the case, we deem it proper to remand the matter to the file of AO for his fresh adjudication and to pass an order by giving adequate opportunity to the assessee. The assessee is liberty to file evidences if any in support of its claim. Thus, Ground No.2 raised by the assessee is allowed for statistical purposes.
Ground Nos. 3 & 4 raised by the assessee are consequential and general in nature and require no adjudication.
In the result, the appeal of the assessee is allowed for statistical purposes.
In the final result, both appeals filed by the Revenue and the assessee are allowed for statistical purposes.
Order pronounced in the open court on 10.05.2019.