M/S. SUKUMAR DUTTA,BURDWAN vs. ITO, WARD - 2(3), BURDWAN, BURDWAN

This appeal filed by the assessee is directed against the order of ld. Commissioner of Income Tax (Appeals), Burdwan dated 30.06.2017, whereby he confirmed all the three additions made by the Assessing Officer to the total income of the assessee.

1. That on the fact in the circumstances of the case the Ld. C.I.T. (Appeals) Burdwan erred in confirming the disallowance and addition made by the Ld. AO of ward- 2(3) u/s.40A(3) of the Income Tax Act, 1961, though the appellant has immunity as provided by the law.

2. That on the fact and circumstances of the case, the Ld.CIT (Appeals), Burdwan erred in confirming the disallowance and addition made by the Ld. AO of ward- 2(3), Burdwan u/s 40(a)(ia) of the Income Tax Act,1961 though he could not establish any contract between the payer and the payee but only assumed to have one.

3. That on the fact and circumstances of the case, the Ld.CIT (Appeals), Burdwan erred in confirming the disallowance of 10% of the total amount shown as sundry debtors and consequently addition of Rs.6,28,580/- to the total income of the appellant as made by the Ld. AO. of ward 2(3), Burdwan because the appellant has all the details as sought for and if given another chance the appellant can produce it for proper adjudication”.

4. I have heard the arguments of both the sides and also perused the relevant material available on record. It is observed that the cash payment of Rs.41,730/- against purchases made from a single party on the same date was in contravention of section 40A(3) and this position is not disputed at the time of hearing before the Tribunal even by the ld. counsel for the assessee. He has also not been able to point out any exceptional circumstances under which the said payment was made in cash as specified in Rule 6DD of Income Tax Rules, 1962. I, therefore, find no justifiable reason to interfere with the impugned order of the ld. CIT(Appeals) confirming the disallowance made by the Assessing Officer under section 40A(3) and upholding the same on this issue, I dismiss Ground No. 1 of the assessee’s appeal.

5. As regards the issue involved in Ground No. 2 relating to the disallowance under section 40(a)(ia), the ld. counsel for the assessee has submitted that Sri Rama Roadlines was not a regular transporter and the said transporter was engaged by the assessee for transportation of goods only once in the year under consideration. As rightly contended by him, the transportation of goods by Sri Rama Roadlines thus was only one off transaction and in the absence of any written or verbal contract with the said party, the assessee was not under an obligation to deduct tax at source from the one off payment made to Sri Rama Roadlines under section 194C of the Act. The disallowance made by the Assessing Officer under section 40(a)(ia), in my opinion, therefore, was not sustainable and the ld. CIT(Appeals) was not justified to confirm the same. I, therefore, delete the said disallowance made by the Assessing Officer and confirmed by the ld. CIT(Appeals) and allow Ground No 2 of the assessee’s appeal.

6. As regards the issue involved in Ground No. 3 relating to the disallowance made by the Assessing Officer out of sundry debtors, the ld. counsel for the assessee has submitted that the relevant details are now available with the assessee and the matter may be sent back to the Assessment Year: 2008-2009 Assessing Officer for verification. He has also furnished such details at pages no.23 to 25 of his paper book and a perusal of the same shows that the addresses of the debtors given therein are not complete address so as to enable the Assessing Officer to make the verification. Moreover, a period of about 10 years has already lapsed in between making the verification by the Assessing Officer a very difficult exercise. As rightly contended by the ld. D.R., sufficient opportunity was given by the Assessing Officer to the assessee to furnish the relevant details of sundry debtors and there is no satisfactory explanation offered by the ld. counsel for the assessee for the failure of the assessee to produce the relevant details either before the Assessing Officer or even before the ld. CIT(Appeals). I, therefore, do not find this case to be a fit case for giving one more opportunity to the assessee by sending the matter back to the Assessing Officer for verification. I, however, find merit in the alternative contention raised by the ld. counsel for the assessee that there is a mistake in the order of the Assessing Officer in making final disallowance of 25% of the sundry debtors instead of 10% as observed by the Assessing Officer himself in the assessment order. I, therefore, direct the Assessing Officer to restrict the disallowance out of sundry debtors to 10%. Ground No.3 of the assessee’s appeal is thus partly allowed.

Senior Private Secretary, Head of Office/DDO, Income Tax Appellate Tribunal Kolkata Benches, Kolkata Laha/Sr. P.S.