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Income Tax Appellate Tribunal, KOLKATA BENCH “D” KOLKATA
Before: Hon’ble Shri Waseem Ahmed & Shri S.S.Viswanethra Ravi
आदेश /O R D E R
Per Waseem Ahmed, AM
This appeal by the assessee is against the order of Commissioner of Income Tax (Appeals)-9, Kolkata dated 25.02.2015. Assessment was framed by I.T.O., Ward-33(3), Kolkata u/s 143(3) of the Income tax Act, 1961 (hereinafter referred to as ‘the Act ‘) vide his order dated 28.03.2013 for assessment year 2010-11. Shri K.M. Roy, Ld. Authorized Representative appeared on behalf of assessee and Shri Prabal Choudhury, Ld. Departmental Representative represented on behalf of Revenue.
The Assessee has raised the following grounds of appeal :
1. That on the facts and in the circumstances of the case, the Ld CIT( Appeals) did not provide reasonable opportunity of being heard. -M/s. Vishal Impex A.Y.2010-11 2
2. That on the facts and in the circumstances of the case, the Ld CIT(Appeals) has erred in dismissing the appeal without proper consideration in respect of disallowance of Rs 2163590/- u/s-40(a)(ia) of the I.T.ACT 1961. The Recipient has taken the above receipts into their account and has paid the due taxes on such receipts.
3. That on the facts and in the circumstances of the case, the Ld CIT(Appeals) has erred in dismissing the appeal in respect of "Bogus Purchase of Rs 19792/-
4. That on the facts and in the circumstances of the case, the Ld CIT(Appeals) has erred in dismissing the appeal in respect of disallowance of Rs 619108/- without reasonable consideration.”
3. First issue in ground No.1 is general in nature and does not require any separate adjudication.
4. It was observed at the time of hearing that Ground No. 2 and 4 are common except figure of amount, therefore they are clubbed together to pass consolidate order for the sake of convenience. The issue raised in ground No. 2 and 4 by the assessee in this appeal is that the ld. CIT(A) erred in confirming the order of the AO by sustaining the disallowance of Rs. 21,63,590/- & Rs.6,19,108/- on account of non deduction of tax.
The facts in brief are that the assessee is a partnership firm which is engaged in the wholesale business of ladies suits. The assessee in the year under consideration has incurred an expense of Rs. 2163590/- and Rs.6,19,108/- towards freight and forwarding expenses in the name of M/s. Indian Air Express. The AO during the course of assessment proceedings observed that the above expenses have been incurred without deducting Tax Deducted at Source (TDS for short) under the provision of section 194C of the Act. Accordingly, the AO disallowed the said expenditures u/s 40(a)(ia) of the Act and adding the same to the total income of the assessee.
Aggrieved, the assessee preferred an appeal before ld. CIT(A). The assessee before the ld. CIT(A) submitted that M/s. Indian Air Express never provided the bill to the assessee. Therefore, the tax was not deducted. However, the ld. CIT(A) disregarded the contention of the assessee and confirmed the order of the AO by observing as under :- -M/s. Vishal Impex A.Y.2010-11 3
“After going through the facts and circumstances of the case, submission of the appellant and also perusal assessment order, I find that tax was required to be deducted by the appellant the time of Credit of such sum or at the time of payment whichever is earlier but the appellant has not done the same. Therefore the A.O. was justified to invoke Sec.40(a)(ia). Further, so far the judgment of Special Bench of the Tribunal in the case of M/s. Merilyn Shipping and Transport and also the judgment of Allahabad High Court in the case of CIT vs Victor Shipping Pvt. Ltd. Is concerned, the jurisdiction Hon’ble Kolkata High Court has not approved the decision of Special Bench of ITAT, hence, the case Laws relied upon the appellant are not followed in this case. Under these circumstances, the A.O. was justified to invoke Sec.40(a)(ia) of the I.T.Act.”
Being aggrieved by the order of ld. CIT(A) the assessee is in second appeal before us.
The ld. AR before us submitted that the recipient has offered the taxes on the above amount and accordingly requested to restore the issue to the file of AO for further verification. However, the learned DR vehemently relied in the order of authorities below.
We have heard the rival contentions of both the parties and perused the materials available on record. At the outset, it was observed that Assessing Officer disallowed the expenses of ₹ 23,52,612/- u/s. 40(a)(ia) of the Act i.e. non-deduction of TDS. Before us Ld AR submitted various case laws and frankly requested the Bench to restore the matter back to the file of Assessing Officer with a direction to verify that whether the recipient of the above income has paid the taxes in their individual hands. We find that on the similar facts and circumstance this Hon’ble Tribunal in the case of Vas Electronics v. ACIT in dated 24.11.2015 restored the file to the AO for fresh adjudication in the light of amended provisions of the Act. The relevant extract of the order is reproduced below:- “5. We have heard rival submissions and gone through facts and circumstances of the case. We are inclined to set aside the issue to the file of the AO and accordingly, we direct the AO to verify whether the recipients have included the income in their respective returns and also paid taxes on the same. The assessee will provide the details of recipients i.e, their assessment particulars etc., to the AO so that the AO can verify. In case the recipient parties are not cooperating in providing details, the AO can call for the information u/s 133(6) of the Act for verification of the same. -M/s. Vishal Impex A.Y.2010-11 4
Accordingly, this issue is remitted back to the file of AO to decide in terms of the above directions. This issue of assessee’s appeal is allowed for statistical purposes.”
Taking a consistent view, of the matter in the case of Vas Electronics (supra) we restore the matter to the file of AO with the direction to adjudicate the matter afresh as per law in the light of amended provisions of Finance Act 2012. It is not needless to mention that assessee should co-operate in the assessment proceedings. In this regard, both common ground of assessee’s appeal is allowed for statistical purpose.
The second issue raised by the assessee in ground No. 3 in this appeal is that the ld. CIT(A) has erred in confirming the order of the AO by treating the purchases of Rs.19,792/- as bogus.
The assessee has shown purchases for Rs. 36,22,692/- from M/s. Heritage whereas the party has shown sales of Rs. 36,02,900/- in its books of accounts. This information was revealed in consequence to the notice issued u/s 133(6) of the Act. As a result, the difference of Rs.19,792/- was observed and which was treated as income of the assessee.
Aggrieved the assessee preferred an appeal before ld. CIT(A). The assessee before the ld. CIT(A) explained that the difference is arising out of account of credits notes/discounts as such there was no undisclosed purchases. However, the ld. CIT(A) disregarded the plea of the assessee by observing that no documentary evidence was submitted for the reconciliation of the discrepancy observed by the AO. The ld. CIT(A) confirmed the order of the AO.
Being aggrieved by the ld. CIT(A) the assessee is in second appeal before us.
The ld. AR before us submitted that the difference is arising on account of credits note issued by the parties and there was no bogus purchase. The ld. AR before us prayed to restore the issue to the file of the AO. -M/s. Vishal Impex A.Y.2010-11 5 On the other hand, the ld. DR vehemently supported the orders of the authorities below.
We have heard the rival contentions of both the parties and perused the materials available on record. At the outset, it was observed that the assessee has shown excess purchases from the party M/s. Heritage. The ld. AR before us submitted that the effect of credit note was not given therefore the difference arose in the balance of the parties. After considering the submissions and in the interest of justice we are inclined to restore this issue to the file of the AO for fresh adjudication in accordance with law. This ground of appeal is allowed for statistical purposes.
In the result the appeal of the assessee is allowed for statistical purposes. Order pronounced in the Court on 10.03.2017. Sd/- Sd/- [S.S.Viswanethra Ravi] [Shri Wassem Ahmed] Judicial Member Accountant Member Dated : 10.03. 2017 Dkp* Sr.P.S. Copy of the order forwarded to:
1. 1. Appellant – M/s. Vishal Impex7/1C, Lindsay Street, Surana Manson, Kolkata-87 2. Respondent –I.T.O. Ward –33(3) Middleton Row, Kolkata-71 3. CIT(A)- Kolkata.
4. CIT – , Kolkata.
5. CIT(DR), Kolkata Benches, Kolkata.