ACIT, CIRCLE-3, SURI, BIRBHUM, BIRBHUM vs. SRI SAROJIT KUMAR DEY, BIRBHUM

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH ‘D’, KOLKATA [Before Shri P.M. Jagtap, AM & Shri S.S. Viswanethra Ravi, JM] I.T.A. No. 2218/Kol/2014 Assessment Year: 2010-11 ACIT, Circle-3, Suri.............................……………………………………………………Appellant Aayakar Bhawan, Lalkuthipara Suri, Birbhum -731101 Shri Sarojit Kr. Dey……………….......................................................................Respondent Ahmadpur, Birbhum West Bengal, Pin - 731201 [PAN: ADQPD8637B] Appearances by: Shri Kalyan Nath, Addl. CIT appearing on behalf of the Revenue. None appearing on behalf of the Assessee. Date of concluding the hearing : September 14, 2017 Date of pronouncing the order : September 22, 2017 ORDER Per P.M. Jagtap, AM This appeal is preferred by the revenue against the order of Learned CIT (Appeals) Asansol dated 13.10.2014 on the following grounds: 1. On the facts and circumstances of the case, the Ld. CIT (A) was not justified in holding rejection of the assessee’s default in complying the provisions of section 194C(6) & (7). 2. On the facts and in the circumstances of the case the Ld. CIT (A) erred in deleting the addition of Rs. 75,82,759/- and Rs. 38,11,909/-. 3. On the facts and circumstances of the case the Ld. CIT (A) was not correct in law as well as in fact in deleting the addition of Rs. 7,00,000/- taking the plea of section 40(a)(ia) which was quoted by mistake in his order though the AO at the beginning narrated the expenses as per section 192 of the I.T. Act, 1961. 2. The assessee in the present case is an individual who is engaged in the business of running country spirit bottling plant cum warehouse. The return of income for the year under consideration

2 I.T.A. No. 2218/Kol/2014 Assessment Year: 2010-11 Shri Sarojit Kr. Dey was filed by him on 11.10.2010 declaring a total income of Rs. 1,65,46,960/-. In the profit and loss account filed along with the said return, the sums of Rs. 1,29,65,314/- and Rs. 96,40,345/- were debited by the assessee on account of inward transport charges and outward transport charges respectively. During the course of assessment proceedings, it was noticed by the AO that the assessee has not deducted tax at source from the payments of inward transport charges and outward transport charges to the extent of Rs. 75,82,759/- and Rs. 38,11,909/-. In this regard, it was submitted by the assessee by relying on section 194C(6) of the Act that the concerned parties having furnished their PAN, there was no obligation to deduct tax at source for the period from 01.10.2009 to 31.03.2010. According to the AO, the assessee however was required to comply with the provisions of section 194C(7) and furnish to prescribed income-tax authority or the person authorised by it, such particulars, in such form and within such time as may be prescribed in section 194C of the Act. Since the assessee had failed to comply with the provisions of section 194C(7) of the Act, the AO disallowed the inward transport charges and outward transport charges to the extent of Rs. 75,82,759/- and Rs. 38,11,909/- by invoking the provision of section 40(a)(ia). He also made further disallowance of Rs. 7,00,000/- u/s 40(a)(ia) on account of salary paid by him to Shri Asit Baran Dey for the failure of the assessee to deduct tax at source from the payment of the said salary. Accordingly the total income of the assessee was determined by the AO at Rs. 2,87,06,656/-. In the assessment completed the u/s 143(3) vide an order dated 06.03.2013.

3 I.T.A. No. 2218/Kol/2014 Assessment Year: 2010-11 Shri Sarojit Kr. Dey 3. Against the order of the AO passed u/s 143(3), an appeal was filed by the assessee before the Ld. CIT (A) and after considering the submission made by the assessee as well as the material available on record, the Ld. CIT (A) deleted the entire disallowance made by the AO u/s 40(a)(ia) for the following reasons given in paragraph no 5 & 6 of his impugned order. “5. The Form as per section 194C(7)has not been prescribed. When is form is not prescribed the assessee is not duty bound to furnish and even if desires to file one, cannot file. Therefore there is no default in complying with provisions of section 194C(7). This being the case the disallowance is not in order. Further, I find that the appellant has filed form 26Q which corresponds to rule 31A and section 200(3). Since there is no default in complying with provisions of section 194C(7). I direct Assessing Officer to delete the addition of Rs. 75,82,759/- and Rs. 38,11,909/-. Grounds 1 to 4, 6 and 7 are allowed. 6. Ground 5 is against disallowance under section 40(a)(ia) on salary payment. Salary is not an item covered in section 40(a)(ia) for disallowance for the relevant A.Y. Hence the disallowance made is not in order. Accordingly I direct the Assessing Officer to delete the addition of Rs. 7,00,000/-. This ground is allowed.” Aggrieved by the order of the Ld. CIT (A), the Revenue has preferred this appeal before the Tribunal. 4. At the time of hearing fixed before the Tribunal none has appeared on behalf of the assessee, this appeal of the revenue is therefore being disposed of ex-parte qua the respondent assessee after hearing the arguments of the learned DR and perusing the relevant material available on record. It is observed that the

4 I.T.A. No. 2218/Kol/2014 Assessment Year: 2010-11 Shri Sarojit Kr. Dey disallowance on account of inward and outward transport charges was made by the AO u/s 40(a)(ia) denying the relief claimed by the assessee by relying on section 194C (6) as there was a failure of the assessee to comply with the requirement of section 194C (7) and furnish such particulars in such form and within such time as may be prescribed. As found by the Ld. CIT (A), no such form however was prescribed at the relevant time and in the absence of the same, he held that the assessee could not be held to be guilty of not complying with in the provision of section 194C (7). He accordingly deleted the disallowance made by the AO u/s 40(ia) on account of inward and outward transport charges. At the time of hearing before us, the learned DR has not been able to bring anything on record to rebut or controvert the. The finding of fact given by the Ld. CIT (A) while giving relief to the assessee on this issue. We therefore find no justifiable reason to interfere with the impugned order of the Ld. CIT (A) on this issue and upholding the same, and we dismiss ground no 1 and 2 of the revenue’s appeal. 4. As regards the issue involved in ground no 3, it is observed that the disallowance made by the AO u/s 40(a)(ia) on account salary payment has been deleted by the Ld. CIT (A) on the ground that the salary is not an item covered in section 40(a)(ia) of the Act as applicable to the order under consideration and this position evident from the relevant provisions is not disputed by the learned DR. We, therefore, find no infirmity in the impugned order of the Ld. CIT (A) deleting the disallowance made by the AO on account of salary

5 I.T.A. No. 2218/Kol/2014 Assessment Year: 2010-11 Shri Sarojit Kr. Dey payment u/s 40(a)(ia) and upholding the same, we dismiss ground no 3. 5. In the result, the appeal of the revenue is dismissed. Order Pronounced in the Open Court on 22nd September, 2017. Sd/- Sd/- (S.S. Viswanethra Ravi) (P.M. Jagtap) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 22/09/2017 Biswajit, Sr. P.S. Copy of order forwarded to: 1. Shri Sarojit Kumar Dey, Ahmadpur, Birbhum. 2. ACIT, Circle – 3, Birbhum. 3. The CIT(A) 4. The CIT 5. DR True Copy, By order, Sr. P.S. / H.O.O. ITAT, Kolkata