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Income Tax Appellate Tribunal, “A” BENCH : KOLKATA
Before: Hon’ble Shri S.S. Godara, JM & Shri M.Balaganesh, AM ]
ORDER Per M.Balaganesh, AM
This appeal by the Assessee arises out of the order of the Learned Commissioner of Income Tax(Appeals)-5, Kolkata [in short the ld CIT(A)] in Appeal No. 198/CIT(A)- 5/Wd-13(2)/15-16 dated 07.03.2017 against the order passed by the ITO, Ward-13(2), Kolkata [ in short the ld 30.03.2015 for the Assessment Year 2012-13.
The first issue to be decided in this appeal is as to whether the Ld. CIT(A) was justified in upholding the addition of Rs. 6,05,32,441/- towards purchase transaction with Kalpana Industries Ltd, in the facts and circumstances of the case.
The brief facts of this issue is that the assessee is a company engaged in the business of trading of plastic granules. The assessee filed its return of income for the assessment
M/s Jelenta Polytraders Pvt. Ltd. A.Yr. 2012-13 year 2012-13 declaring total income of Rs. 87,590/-. During the assessment year under consideration, the assessee company made purchases from different units of M/s Kalpana Industries Ltd aggregating to Rs. 66,13,37,085/- including excise duty and VAT. The ld. AO, on verification of the unit wise ledgers of Kalpana Industries Ltd in the books of the assessee and party wise purchase statement filed before him, came to a conclusion that the ledger account showed gross purchase from the said party at Rs. 66,13,37,085/- including excise duty, VAT etc. There was a difference of Rs. 6,05,32,441/- between the value shown in the unit wise ledger and value as per the purchases statement. This was sought to be taxed as unexplained cash credit u/s 68 of the Act by the ld. AO. The assessee submitted that there was no mismatch in purchases shown at Rs. 66,13,37,085/- and the difference of Rs. 6,05,32,441/- comprised of the following items which are duly recorded in the ledger of the assessee as under:
The ld. AO further did not accede to the contention of the assessee and proceeded to make addition of Rs. 6,05,32,441/- u/s 68 of the Act which was upheld by the Ld. CIT(A). Aggrieved the assessee is in appeal before us.
We have heard the rival submissions. We have gone through the materials available on record including paper book filed before us. It is not in dispute that the documents submitted in the paper book were also filed before the lower authorities. We find that the figure of Rs. 72,18,69,526/- mentioned by the ld. AO as purchases amount is M/s Jelenta Polytraders Pvt. Ltd. A.Yr. 2012-13 nothing but the grand total of total credits in all the ledgers of different units of M/s Kalpana Industries Ltd, the summary of which as appearing in page 8 of the assessment order is reproduced below:
This figure of Rs. 72,18,69,526/- is segregated by the assessee in the ledgers of different units of M/s Kalpana Industries Ltd. in the following heads:
We also find the details of handling charges, LC charges and bank charges in the ledgers of different unit of Kalpana Industries Ltd. as appearing in the books of the assessee are as under:
M/s Jelenta Polytraders Pvt. Ltd. A.Yr. 2012-13 We find from the perusal of the aforesaid details filed by the assessee. The same could be tabulated as under:
M/s Jelenta Polytraders Pvt. Ltd. A.Yr. 2012-13 Hence it could be safely concluded that there was no unreconciled difference as alleged by the ld. AO. The purchase and handling charges of Rs. 66,13,37,086/- in respect of M/s Kalpana Industries Ltd. are as per the statement of unit wise purchases which is duly disclosed in the profit and loss account under the head purchases. In respect of advance receipt of Rs. 6crores from Silvasa Unit of Kalpana Industries Ltd., the said advance was received by the assessee by a/c payee cheques in order to meet its urgent business requirements and repayments were also made to M/s Kalpana Industries Ltd. of Silvasa Unit which are duly supported by entries in the bank statement of M/s Kalpana Industries Ltd., Silvasa Unit enclosed in pages 50 to 86 of additional paper book. The details of advances received from M/s Kalpana Industries ltd. , Silvasa unit are as under:
09.05.2011 Rs. 60 lacs 19.01.2012 Rs. 70 lacs 01.03.2012 Rs. 30 lacs 09.03.2012 Rs. 90 lacs 10.03.2012 Rs. 2 crores 19.03.2012 Rs. 1.50 crores Total Rs. 6 crores.
M/s Jelenta Polytraders Pvt. Ltd. A.Yr. 2012-13 We find from the details that out of said advance of Rs. 6 crores, a total of Rs. 1,30,00,000/- was refunded as under: 23.05.2011 Rs. 60 lacs 19.01.2012 Rs. 70 lacs The balance advance of Rs. 4,70,00,000/- was shown together with the additional sum of Rs. 4,50,000/- as sundry creditors of the balance sheet. It was submitted that this advance has no link or relation with the purchases made from different units of M/s Kalpana industries Ltd. In respect of LC charges and bank charges of Rs. 5,32,440/- the same has been duly shown under the head bank charges in the profit and loss account.
4.1. We find from the aforesaid facts that the ld. AO did not find any discrepancy in respect of purchases. Probably he was carried away by the advance transaction of Rs. 6 crores received from Silvasa unit of Kalpana Industries Ltd. which was found recorded in the ledger as part of purchase amount whereas in the unit wise statement, the actual purchase figure which was exclusive of advance, LC charges and bank charges as per the advance of Rs. 6 crores was an item of sundry creditor and the balance outstanding as at the end of the year was separately shown in the balance sheet. We also find that the ld. AO erroneously included the expenditure of Rs. 4,95,005/- and Rs. 37,435/-on account of LC charges and bank charges respectively as part of purchases which were separately accounted for in the profit and loss account.
4.2. In view of the aforesaid observations in the facts of the instant case, we hold that there is no discrepancy in transaction with Kalpana Industries Ltd. to the tune of Rs. 6,05,32,441/- warranting any addition thereon. Accordingly, we direct the ld. AO to delete the same. Hence the grounds raised by the assessee in this regard are allowed.
M/s Jelenta Polytraders Pvt. Ltd. A.Yr. 2012-13 5. The last issue to be decided in this appeal is as to whether the Ld. CIT(A) was justified in upholding the disallowance of Rs. 3,75,000/- u/s 40a(ia) of the Act, in the facts and circumstances of the case.
The brief facts of this issue are that the assessee made total payment of Rs. 3,75,000/- towards rent to Shri Ramchandra Parolia and deducted tax at source u/s 194I of the Act to the tune of Rs. 34,876/-. This fact is evident from Form no. 16A and from the TDS remittance challans evidencing the payment. The ld. AO however ignoring this fact alleged that the said payment was not subjected to deduction of tax at source and accordingly proceeded to disallow the same u/s 40a(ia) of the Act. This action of the ld. AO was upheld by the Ld. CIT(A). Aggrieved the assessee is in appeal before us.
We have heard the rival submissions. We find from the copy of form no. 16A (TDS- Traces) enclosed in pages 47 to 51 of the paper book together with TDS remittance challans that, the assessee had duly deducted and remitted the TDS on rent payments made to Shri Ramchandra Parolia. Accordingly, there is no question of invoking the disallowance u/s 40a(ia) of the Act in respect of the same. Hence, we direct the ld. AO to delete the disallowance made u/s 40a(ia) of the Act. Accordingly, the grounds raised by the assessee in this regard are allowed.
In the result, the appeal of the assessee is allowed.
Order pronounced in the Court on 12.10.2018