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Income Tax Appellate Tribunal, KOLKATA ‘D’ BENCH, KOLKATA
Before: Sri J. Sudhakar Reddy, Hon’ble & Sri S.S. Viswanethra Ravi, Hon’ble]
This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals)-I, Kolkata (hereinafter the ‘ld. CIT (A)’), passed u/s 250 of the Income Tax Act, 1961 (the ‘Act’), dt. 12/01/2006, for the Assessment Year 2011-12.
The assessee is an advertising agency and is filed its return of income for the Assessment Year 2011-12, on 30/09/2011. The grounds of appeal filed by the assessee before us, are as follows:-
“1. That on the facts and circumstances of the case and in law, the Ld. CIT (A) was not justified in deleting the disallowance made u/s 40(a)(ia) 2. That on the facts and circumstances of the case and in law, the Ld. CIT (A) was not justified in deleting the disallowance of Rs. 5,59,11,073/- u/s 2 Assessment Year: 2011-12 M/s. Indian Publicity Bureau Private Limited 40(a)(ia) without considering the fact that the assesse has failed to prove that TDS is not applicable on the payment. The assesse even failed to prove that the entire expense claimed was genuine.
3. That on the facts and circumstances of the case and in law the Ld. CIT(A) was not justified in deleting the disallowance u/s 40(a)(ia) on the basis of ITAT, Kolkata's order in the case of M/s Matrix Glass & Structures Pvt. Ltd. - vs- ITO, Ward-6(2}, Kolkata in ITA No. 658 (Kol) of 2010 dated 28.01.2011 without considering failure of obligation of the assesse in regard to deduction of tax.
That the Department craves leave to add, modify or alter any of the grounds of appeal and/or adduce additional evidence at the time of hearing-of the case.”
We have heard, Mr. M.K. Datta, FCA, ld. Counsel on behalf of the assessee and Shri Arindam Bhattacharjee, ld. CIT, on behalf of the revenue.
3.1. After hearing submissions, perusing the papers on record and orders of the authorities below, we hold as follows:-
4. Ground No. 1, is on the issue of disallowance under section 43B of the Act. The assessee has been specifically pleading, both before the AO as well as the Ld. CIT(A), that he has not claimed the service tax paid as expenditure during the year and hence the question of disallowance under section 43B does not arise. The AO as well as the Ld. CIT(A) ignored this submission. When an assessee does not claim a particular amount as an expenditure, the question of disallowance of the same under section 43B does not arise. Hence we restore this issue to the file of the AO with a direction that he should examine whether the assessee has claimed service tax in question as an expenditure in his accounts and computation of income during the impugned Assessment Year and if he has not done so, he is directed not to make any disallowance under section 43B of the Act. In the result this ground of the assessee is allowed for statistical purpose.
Ground No. 2, is on the issue whether the assessee has claimed bogus expenditure.
The assessee has certain differences in account balances with Times of India, Bartman Ltd. & Ananda Bazar Patrika. Before us, the assessee has given a detailed submission which shows that the Assessing Officer has committed errors in reconciling the accounts of the assessee with the above 3 parties. The assessee’s case is that the transactions of Patna/Ranchi were not considered by the Assessing Officer in case of transactions with Times of India. Similarly, in case of Bartaman Ltd., opening balance has been wrongly deducted, when it was never included in the first place. Similarly, in the case of Ananda Bazar Patrika, it is explained that for a certain period in the relevant financial year, the assessee had to face an embargo on release by Newspaper Society, New Delhi, because he had not paid the amounts due, in time. Hence he published advertisements through another agency i.e. M/s. Indian Publicity Bureau. M/s. Anand Bazar Patrika, had billed Indian Publicity Bureau, who in turn directed the assessee to make the payments. Bill-wise details were furnished the same. The Assessing Officer has not correctly understood this. 5.1. The ld. D/R, submitted that these details were never filed before the lower authorities, nor the difference were explained. Hence he wanted the order of the ld. CIT(A) to be upheld.
After hearing rival contentions, we are of the considered opinion that this issue should be set aside to the file of the assessing officer, for fresh adjudication, in accordance with law, after considering the submissions of the assessee. The assessee shall file the entire details along with reconciliation statements to the satisfaction of the Assessing Officer. In the result, this ground is allowed for statistical purposes.
Ground No. 3, is on the addition of Rs. 88,195/-, as unexplained expenses. The assessee submits that this amount relates to a large number of credit notes issued to the assessee by M/s. Pratidin Prakashini (P) Ltd., which is a newspaper.
4 Assessment Year: 2011-12 M/s. Indian Publicity Bureau Private Limited Credit note-wise details have been furnished and it was submitted that, without considering these credit notes, this addition was made. We find force in the submission of the assessee. Anyhow, as this requires verification of facts, we set aside this appeal to the file of the Assessing Officer, for fresh adjudication, in accordance with law.
In the issue, the appeal of the assessee is allowed for statistical purposes.