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Income Tax Appellate Tribunal, “D” BENCH: KOLKATA
Before: Shri Waseem Ahmed & Shri S.S. Viswanethra Ravi
ORDER Shri S.S.Viswanethra Ravi, JM:
This appeal by Assessee is arising out of order dated 16-02-2016 of CIT(A), 7, Kolkata for the assessment year 2011-12.
It is noticed that though the assessee has raised as many as four grounds of appeal among which effective ground no.1 relates to rejection of claim of Rs.90,584/- being 1% of TCS on the total sum of Rs.90,58,764/- paid towards purchase of liquor/wines as per 26AS. Ground no.2 rejection of aggregate sum of Rs.18,79,000/- paid in cash to creditors u/s. 40A(3) of the Act. Ground no.3 relates to inclusion of TCS components of Rs.27,960/- in the valuation of closing stock while the same was not included the purchase by the assessee.
The assessee has also raised additional ground of appeal relates to adjustment of demand of Rs.1,54,930/- as raised by the AO for the AY 2011-12 against the refund of AY 2012-13 without giving prior intimation u/s. 245 of the Act is bad and not tenable in law.
4. Regarding ground no.1, on perusal of details of purchase made by the assessee and sales made by the supplier to the assessee the AO found difference of Rs.1,28,693/- and Rs.90,584/- from M/s. Ajudhia Distillery and M/s.United Spirits and accordingly, an amount of Rs.2,19,277/- was added to the total income of assessee being inflated purchase by the assessee.
The CIT-A after verifying the information as per form 26AS restricted the addition to Rs.90,584/- by stating as under:- “I verified the information as per the form 26AS and find difference only in the case of Sen Law & Company. The appellant has accounted Rs.91,49,348/- as purchases whereas both the supplier and Form 26AS shown the supplies at Rs.90,58,764/- and there was a difference of Rs.90,584/- for which the authorized representative of the appellant could not furnish any explanation. Therefore, out of the total addition of Rs.2,19,277/- the amount of Rs.90, 584/- is confirmed and the balance is deleted. This ground of appeal is partly allowed. “
The ld.AR before us submits that the assessee collected TCS to an extent of Rs.90,584/- i.e. 1% (approx) on the amount of Rs.90,58,764/-, which was paid towards purchase of liquor and wine. But, however, the AO mistakenly found the total amount of Rs.91,49,348/- paid towards purchase of said goods. He also argued that an amount of Rs.90,584/- is included in the amount of Rs.91,49,348/-. Therefore, there was no difference/violation in purchases as found by the AO/CIT-A and urged to allow this ground of appeal.
The ld.DR relied on the order of the AO.
Heard rival submissions and perused the material available on record. We find that the assessee submitted the relevant material showing TCS collection by its suppliers. The CIT-A examined the form 26AS and found the difference only in the case of M/s. Sen Law & Company. For which the assessee failed to produce any further evidence/explanation and as such he restricted the addition to Rs.90,584/- as against Rs.2,19,227 by the AO. We find that the CIT-A was justified in doing so. Accordingly, we uphold the same. Ground no.1 is dismissed. 2 M/s. Tamluk FL Off Shop
Ground no. 2 relates to addition rejecting of claim of Rs.18,79,000/- by the CIT-A made for violation of provisions of section 40A(3) of the Act.
During the course of scrutiny proceedings the AO found that the assessee has paid cash to an extent of Rs.10,95,000/- and Rs.11,04,000/- totaling to Rs.21,99,000/- to M/s.VTR Marketing & M/s. Sen Law & Co towards purchase of foreign liquors. Basing on the information as furnished by said two parties u/s. 133(6) of the Act, the AO found that the assessee has made the cash payments exceeding Rs.20,000/- on a single day by violation of provisions of section 40A(3) of the Act and accordingly, he disallowed the sum of Rs.21,99,000/- us/ 40A(3) of the Act and added the same to the total income of the assessee.
Before the CIT-A the assessee contended that the information as supplied u/s. 133(6) of the Act by the said two entities was wrong and claimed before him that the payments were made to the said entities on various dates in cash below Rs.20,000/- per day. The suppliers have accounted the consolidated amount in cash as per details discussed in the assessment order. Before him the assessee claimed that the some payments were paid in cash on Sundays and holidays to an extent of Rs. 2,20,000/- cash on 14-11-2010 and Rs. 1 lakh cash on 25-12-2010. The CIT-A after considering the submissions of assessee restricted the addition to Rs.18,79,000/- as against Rs.21,99,000/- by the AO by stating as under:- 4.2 I have considered the submissions made by the appellant but do not find force in the arguments of the appellant. The appellant has made purchases from M/s. VTR Marketing and M/s. Sen Law & Co. As per the information furnished by the suppliers the cash payments were made to the extent of Rs.10,95,000/- to M/s. VTR Marketing Co. and Rs.11,04,000/- to M/s. Sen Law & Co on various dates in excess of Rs.20,000/- as per the information submitted by the suppliers whereas the appellant claimed that the payments were not made in a sum exceeding Rs.20,000/- on a single day. The appellant contended that his books of account are correct and the entries made in the suppliers' account were wrong. The appellant failed to furnish any evidence in support of his claim except the cash book maintained by the appellant. The appellant is stationed at Haldia in the District of Purba Medinipur and M/s. VTR Marketing is located at Kharagpur in the district of Paschim Medinipur and M/s. Sen, Law & Company is located in Kolkata which is far away from Purba Medinipur. Both are more than 80 kms away from Purba Medinipur and the appellant cannot make daily payments to the suppliers. Though the appellant stated that the payments were made to the dealers of suppliers at Purba Medinipur no evidence has been furnished in support of its claim. The appellant failed to furnish any evidence from M/s. VTR Marketing or from M/s. Sen, Law & Company 3 M/s. Tamluk FL Off Shop
confirming the payment in less than Rs.20,000/-. Both the appellant and the suppliers are having bank accounts and having regular transactions with them. Therefore, there is no need to make the cash payments to the suppliers in violation of the provisions of section 40A(3) of Income Tax Act, 1961. Accordingly I hold that the appellant has made the cash payments in excess of Rs.20,000/- as stated by the suppliers. The appellant's contention that the amounts were paid less than Rs.20,000/- on a single day is without any evidence. Therefore, the appellant has violated the provisions of section 40A(3) of Income Tax Act, 1961 and disallowance required to be made under section 40A(3) of Income Tax Act, 1961. However, the appellant has made cash payment of Rs.1.00 lakh on 25.12.10 and Rs.2,20,OOO/- on 14.11.2010 both being holidays and the payments were covered by the exception. Therefore, out of the total amount of Rs.21,99,000/- the amount of addition of Rs.3,20,000/- is deleted and the balance amount of Rs.18,79,000/- is confirmed. This ground of appeal is partly allowed.”
The ld.AR of the assessee reiterated the same submissions as made before the CIT-A. On the other hand, the ld.DR relied on the order of the AO.
Heard rival submissions and perused the material available on record. We find that neither the assessee produced any evidence contrary to the information as supplied by the said two entities i.e. M/s. VTR Marketing and M/s. Sen, Law & Company u/s. 133(6) of the Act before the AO nor before the CIT-A. We find that the payments were made in a day less than 20,000/- in cash. It is also noticed that the assessee produced the evidence to an extent of Rs. 1,00,000/- and 2,20,000/- being paid on Sundays/holidays. The CIT-A considering the submissions of the assessee granted relief to that effect. But, however, we do not find anything on record to show that the information as furnished by the said two parties M/s. VTR Marketing and M/s. Sen, Law & Company u/s. 133(6) of the Act are wrong. We do not find any infirmity in the impugned of the CIT-A. We uphold the same. This ground of assessee’s appeal is dismissed.
Ground no.3 relates to collection of TCS components of Rs.27,960/- on valuation of closing stock.
The AO found that the assessee did not include the TCS component amount in closing stock. Accordingly, an amount of Rs.27,960/- was added back to the total income of the assessee.
Before the CIT-A the assessee contended that TCS components on value of closing stock is recoverable and adjustable against income tax payable and contended that the addition made thereon is bad in law.
The CIT-A on verification of the purchases found that the assessee included the component of TCS in purchases and accordingly he confirmed the same as made by the AO by observing as under:- “5.0 This ground of appeal is related to the valuation of closing stock. While valuing the closing stock the appellant has excluded the element of TCS amounting to Rs.27,960/-. The appellant has objected for inclusion of TCS in valuing the closing stock. However, on verification of purchases the appellant has included the element of TCS in purchases. Therefore, it is obvious that the TCS has to be included while valuing the closing stock. Therefore, the addition made by the Assessing Officer is confirmed and this ground of appeal is dismissed.
The ld.AR reiterated the same submissions as made before the CIT- A and referred to the statement of facts filed before the CIT-A.
On the other hand, the ld. DR relied on the order of the AO.
Heard rival submissions and perused the material available on record. We find that the CIT-A examining the relevant evidence so furnished by the assessee before him found that the assessee included the TCS component in purchases. We find no infirmity in the impugned order of the CIT-A. Accordingly, it is held to be justified. Ground no.3 is dismissed.
In the result, the appeal of the assessee is dismissed. Order pronounced in the open court on 19-04-2017