SUSHILA DEVI JAISWAL,KOLKATA vs. DCIT, CIRCLE-48, KOLKATA, KOLKATA

IN THE INCOME TAX APPELLATE TRIBUNAL “D”, BENCH KOLKATA BEFORE SHRI S.S.VISWANETHRA RAVI, JM & DR. A.L.SAINI, AM आयकर अपील सं./ITA No.2064/Kol/2016 (�नधा�रण वष� /Assessment Year:2008-09) Sushila Devi Jaiswal, Vs. DCIT, Circle-48, C/o D J Shah & Co., Kolkata Kalyan Bhavan, 2 Elgin Road, Kolkata-700020 �थायी लेखा सं./जीआइआर सं./PAN/GIR No.: ACWPJ 6786 G .. (अपीलाथ� /Appellant) (��यथ� / Respondent) Assessee by : Shri Miraj D Shah, Advocate Revenue by : None सुनवाई क� तार�ख / Date of Hearing : 13/01/2017 घोषणा क� तार�ख/Date of Pronouncement 22/02/2017 आदेश / O R D E R Per Dr. Arjun Lal Saini, AM: The captioned appeal filed by the assessee pertaining to the Assessment Year 2008-09, is directed against the order passed by ld. CIT(A)-14, Kolkata in Appeal No.223/CIT(A)-XXX/Cir-487/2010-11, dated 03.07.2015, which in turn arises out of an order passed by the Assessing Officer (AO) Under Section 143(3) of the Income Tax Act 1961, (hereinafter referred to as the ‘Act’), dated 27.12.2010. 2. Brief facts of the case qua the assessee are that the assessee filed its return of income for assessment year 2008-09 on 29.09.2008 declaring total income of Rs.16,70,339/- and the same was processed u/s.143(1) of the Act on 23.03.2009. Later on assessee’s case was selected for scrutiny u/s.143(3) of the Act and the AO has completed the assessment by making the disallowance u/s.40(a)(ia) of the Act at Rs.5,65,097/- and disallowance of other charges Rs.40,060/-.

2 ITA No.2064/16 Sushila Devi Jaiswal 3. Aggrieved from the order of Assessing Officer, the assessee filed

an appeal before the ld. CIT(A), who has confirmed the order passed by

the AO observing the followings :-

“Decision: The appellant's has claimed that provisions under section 194C were not applicable in the assessee's case. It was stated firstly that the impugned payments to parties were including supply of material and therefore such payments could not be reflected to deduction u/s. 194C of the I.T. Act. However, the assessee's assertion in this regard is not found to be tenable as no supporting evidences or copies of bills were produced to indicate that the payments made included supply of material nor was such a plea raised before the A.O. Moreover, the assessee was also unable to substantiate the alternate plea that single or aggregate payments made to parties enumerated above were below the prescribed Unlit as no substantive evidence was produced to substantiate this claim with documentary evidence before the AO or during appellate proceedings. Hence, the contentions made by the appellant's A.R. in this regard are found to be devoid of substance and. the claims made thereupon are found to be not acceptable. Further, the appellant's A.R has cited several judicial decisions that the assessee was not liable for disallowance under sec 40(a) (ia) keeping in view the issue that amendments to the Finance Act,2010 were held to have retrospective effect and provisions u/s 40(a)(ia) were not attracted if the payments under 192 C were made before the due date of filing of return of income. The Case laws cited were: "Calcutta High Court in case of CIT v. Virgin Creations [IT Appeal No. 302 of 2011, dated 23-11-2011] has also expressed similar view. In this case assessee deducted tax at source from the paid charges between 1-4-2005 and 28-4-2006 and the same was deposited in July and August, 2006, i.e., well before the due date of filing of the return of income for the year under consideration. This factual position was undisputed. It was held that in view of the authoritative pronouncement of SC in case of Allied Motors (P.) Ltd. v. CIT [1997] 224 ITR 677/ 91Taxman 205 and also in the case CIT v. Alom Extrusions' Ltd. [2009] 319 ITR 306/ 185Taxman416 (SC) section 40(a)(ia) had to be given retrospective application. Similar view was held by the Hon'ble Karnataka High Court in the case of ITO Vs Anil Kumar & Co. 31 Taxmann.com .370 (2013) and the Hon'ble Gujarat High Court in the case of CIT Vs Ashok J Patel (2014) 43 Taxmann.com 227 dated 02/12/2013.” In addition, it was contended that in view of amendment made by Finance Act. 2010 which provided that if the TDS was deducted before the due date filing return u/s. 139(1) of the Act, then the

3 ITA No.2064/16 Sushila Devi Jaiswal disallowance u/s 40(a)(ia) of the Act shall not apply. The Appellant has cited several cases laws, viz. CIT vs. Rajinder Kumar (2013)39 taxman 126 [Delhi] and CIT vs. Virgin Creations [IT Appeal No.302 of 2011etc. in support of its contention that amendment made to Section 40(a)(ia) by Finance Act, 2010 and Finance Act 2012 would have retrospective effect. However, the appellant's AR has. not produced any supporting evidence before the A.O during the assessment proceedings or in appellate proceeding to support the contention that TDS was in fact deducted u/s.192C and deposited before due date of filing of return for the relevant' assessment year: 2008-09 under consideration. Hence, the ratio of the case laws cited are found to be not applicable to the appellant as facts and circumstances of its case are found to be distinguishable. Therefore, the disallowance made by the A.O.u/s 40(a)(ia) of the Act is confirmed. This ground of appeal is dismissed. 5.3. Ground Nos. 3:. For the in the facts and circumstances of the case the assessing officer erred in making addition of Rs.40,060/- being 5% of delivery charged expenses. The addition made is uncalled for, unjustified and unwarranted and hence the same be deleted. Decision: The A.O is found to have made the disallowance of an estimated 5% of the expenditure debited as delivery expenses to the P&L a/c holding that the supporting vouchers were not properly vouched. It is well settled that the onus lies upon the assessee to substantiate the claim for deduction of expenditure with proper documentary evidence, considering the totality of facts of the case the disallowance made by the A.O appears to be reasonable. The appellant has not pressed this ground and no written submission was filed in support of this ground of appeal. The addition of Rs.40,060/- made by the A.O. is confirmed. This ground is dismissed.”

further appeal before us and has taken the following grounds of appeal :-

4 ITA No.2064/16 Sushila Devi Jaiswal 4. For that in the facts and circumstances of the case the Ld. CIT Appeal erred in making addition of Rs.40,060/- 5% of delivery charged expenses. The addition made is uncalled for, unjustified and unwarranted and hence the same be deleted. 5. For that the interest computed u/s 234B of the IT Act 1961 is over charged and wrongly calculated and or is not applicable to the assessee case hence the interest be deleted and or correctly computed. 6. For that the Ld. CIT Appeal did not grant proper credit for pre paid taxes the Ld. CIT Appeal be directed to allow the same as per law. 7. The appellant craves leave to press new, additional grounds of appeal or modify, withdraw any of the above grounds at the time of hearing of the appeal.

5.1 Although, in this appeal the assessee has raised multiple grounds of

appeal, but at the time of hearing, the main grievance of the assessee has

been confirmed to ground No.3 & 4 and other grounds were not pressed.

5.2. The third ground relates to addition made by ld. CIT(A) of

Rs.5,65,097/- u/s. 40(a)(ia) of the Act.

5.3 Ld. AR for the assessee has submitted before us that the above

payments were including supply of material and therefore such payments

could not be subject to deduction u/s 194C of the Act. The AO merely

went by the nomenclature given in the Profit Loss Account. Had the AO

examined the bills then it would be seen that substantial portion of the

payments were for supply of material with labor and in such cases no TDS

u/s 194C of the Act is required. Even if it held that on labor portion the

TDS was to be deducted then the AO had to exclude the material portion

in the bills and then examine if the balance payment of labor charges

attract the TDS limit. Only if the singly or aggregate payment exceeds the

TDS limit then the provisions of Section 194C of the Act would apply.

5 ITA No.2064/16 Sushila Devi Jaiswal Thus the AO be directed to examine the bills and then adjudicate the

matter in lines of the above submissions.

The ld AR for the assessee has pointed out that in the case under

consideration the Recipient of the income has paid the taxes on behalf of

the assesse therefore it would be sufficient compliance. For that, the ld

AR for the assesse has relied on the following judgments:

The Hon`ble ITAT Kolkata Bench in the case of M/s Vas Electronics Vs.

ACIT, ITA No.662/Kol/2013, dated 24.11.2015, wherein it has been held

as under :-

The ld AR for the assesse submitted that in the assessee`s case under

consideration, the recipient of the income had paid the taxes on behalf of

the assesse (Deeuctee) and this aspect had not been verified by the

6 ITA No.2064/16 Sushila Devi Jaiswal Assessing Officer, during the assessment proceedings, therefore, he

requested the Bench to send the matter back to the file of the Assessing

Officer to verify the same.

5.4. Ld. DR for the revenue has also primarily relied on the findings of

the AO which we have already noted in our earlier para and is not being

repeated for the sake of brevity.

5.5. Having heard the rival submissions, perused the material on record,

we are of the view that there is merit in the submissions of the assesse,

as the proposition canvassed by ld. AR for the assessee are supported by

the decision of ITAT in the case of Vas Electronics (supra) and the facts

narrated by him above. The Ld. AR for the assessee has rightly pointed

out that applicability of second proviso to Section 40(a)(ia) of the Act

which is held to be retrospective by Hon'ble Delhi High Court in the case

of CIT Vs. Ansal Land Mark Township P. Ltd. (2015) 377 ITR 635 (Del),

wherein the AO is directed to verify whether the recipients have included

the receipts paid by the assessee in their respective returns of income

and also paid taxes on the same. Therefore, we incline to set aside the

issue to the file of AO and accordingly, we direct the AO to verify as to

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. Accordingly, this issue is remitted back to the

7 ITA No.2064/16 Sushila Devi Jaiswal file of AO to decide in terms of the above directions. This issue of

assessee's appeal is allowed for statistical purposes.

5.6 In the result, the appeal filed by the assesse on ground No.3 is

allowed for statistical purposes.

delivery charges made by the AO.

6.1 Ld. AR for the assessee has submitted that AO was wrong in making the

addition on adhoc basis @5% of delivery charges. The assessee has submitted

the vouchers and evidence to the AO and without brining any specific defects in

the vouchers and submissions, the adhoc disallowance @5% is not permitted.

The AO without rejecting the books of accounts made the adhoc addition, which

is not permissible under the Act. In addition to this, ld. AR for the assessee has

relied on the judgment of Hon`ble ITAT Kolkata Bench in the case of Amrik

Singh, ITA No.987/Kol/2010, wherein it was held as under :-

8 ITA No.2064/16 Sushila Devi Jaiswal 3.1. We have heard the parties and perused the material placed before us. The only reason given by the AO for disallowing the said expenditure was that all bills were not produced in support of the respective expenses. He made the adhoc addition on estimate 'basis and, in our opinion, for justifying such addition, the AO. should have brought on record the specific item of expenditure for which, in his opinion, supporting bills were not produced. The assessee's accounts are duly audited and he submitted evidences in support of the expenditure claimed. That being so, we decline to interfere with the order of Id. C.I T.(A) deleting the aforesaid additions. His order on these three additions is, therefore, upheld and the grounds of appeal of the Revenue are dismissed.

6.2. On the other hand, ld. DR for the Revenue has primarily reiterated

the stand taken by the AO, which we have noted already in our earlier

para and is not being repeated for the sake of brevity.

6.3. Having heard the rival submissions, perused the material on record,

we are of the view that there is merit in the submissions of the assesse,

as the proposition canvassed by ld. AR for the assessee are supported by

the decision of ITAT in the case of Amrik Singh (supra) and the facts

narrated by him above. Ld. AR for the assessee has pointed out that the

AO has made disallowance under the head delivery charges on adhoc

basis. The AO has made adhoc deduction based on surmise and

conjecture. The AO has failed to point out specific instances of the

expenditure for which the bills were not produced. It is a matter of fact on

record that the books of accounts as well as bills and vouchers were

produced before the AO and, hence, he was not in a position to

specifically point out the discrepancies, however, he has chosen to make

disallowance on estimated basis. The AO cannot make the disallowance

without giving opportunity to the assessee and without pointing out the

specific amounts for which bills were not produced. In view of the above,

9 ITA No.2064/16 Sushila Devi Jaiswal we delete the addition made by Assessing Officer and confirmed by ld. CIT(A). 6.4. In the result, appeal filed by the assesse on ground No. 4, is allowed. Order pronounced in the open court on this 22/02/2017. Sd/- Sd/- (S.S.VISWANETHRA RAVI) (DR. A.L.SAINI) �या�यक सद�य / JUDICIAL MEMBER लेखा सद�य / ACCOUNTANT MEMBER कोलकाता /Kolkata; �दनांक Dated 22/02/2017 �काश �म�ा/Prakash Mishra,�न.स/ PS आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant-Sushila Devi Jaiswal 2. ��यथ� / The Respondent.- DCIT, Circle-48, Kolkata 3. आयकर आयु�त(अपील) / The CIT(A), Kolkata. 4. आयकर आयु�त / CIT �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, कोलकाता / DR, ITAT, Kolkata 5. आदेशानुसार/ BY ORDER, 6. गाड� फाईल / Guard file. स�या�पत ��त //True Copy// उप/सहायक पंजीकार (Asstt. Registrar) आयकर अपील�य अ�धकरण, कोलकाता / ITAT, कोलकाता