M/S THE RAIGANJ CO-OPERATIVE MARKETING SOCIETY LTD.,UTTAR DINAJPUR vs. ACIT, MALDA RANGE, MALDA, MALDA

At the outset, it is noted that there is a delay of 35 days on the part of the assessee in filing this appal before the Tribunal. In this regard, the assessee has filed an application seeking condonation of the said delay and keeping in view the reasons given therein, I am satisfied that there was a sufficient cause for the delay on the part of the assessee in filing this appeal before the Tribunal. The said delay is, therefore, condoned and this appeal of the assessee is being disposed of on merit.

Grounds No. 1, 4 & 5 raised by the assessee in this appeal are general, which do not call for any specific adjudication.

The issue raised in Ground No. 2 relates to the disallowance of Rs.2,50,000/- made by the Assessing Officer and confirmed by the ld. CIT(Appeals) on account of professional charges. 5. The assessee in the present case is a Cooperative Society, which filed its return of income for the year under consideration on 31.03.2012 declaring total income of Rs.2,90,580/-. In the Profit & Loss Account filed along with the said return, a sum of Rs.2,50,000/- was debited by the assessee on account of professional fees paid towards appeal proceedings charges, scrutiny proceeding charges and return submission charges. In order to verify the genuineness of the said expenditure and examine the applicability of TDS provisions, the assessee was called upon by the Assessing Officer to furnish the details of professional fees paid along with supportive documents. Since the assessee could not produce the details or documents as required by him, the Assessing Officer held that the genuineness of expenditure in question incurred towards professional fees was not established by the assessee and a disallowance of Rs.2,50,000/- was made by him on this count.

The disallowance of Rs.2,50,000/- made by the Assessing Officer on account of professional fees was disputed by the assessee in the appeal filed before the ld. CIT(Appeals). During the course of appellate proceedings before the ld. CIT(Appeals), it was submitted by the assessee that the amount of Rs.2,50,000/- in question was paid to the Panel of Advocates/Tax Consultants through Shri Sanjay Kumar Sharma of Malda. The details of such Advocates and Tax Consultants (9 in numbers) were also furnished by the assessee along with the confirmations of 8 such Advocates/Tax Consultants. It was contended by the assessee before the ld. CIT(Appeals) that since none of the payments made to any person towards professional fees was exceeding Rs.30,000/-, there was no requirement of deduction of tax at source and the disallowance made by the Assessing Officer on this issue was not justified. This contention of the assessee was not found acceptable by the ld. CIT(Appeals). According to him, the amount in question was entirely paid by the assessee to a

I have heard the arguments of both the sides and also perused the relevant material available on record. The ld. counsel for the assessee at the time of hearing has raised a limited contention that all the recipients of the legal/professional fees in question having offered the said amounts to tax in their respective returns of income and paid tax thereon, the assessee cannot be held to be in default for its failure to deduct tax at source and the question of disallowance under section 40(a)(ia) would not arise as per the 1st Proviso to Section 201(1) read with 2nd Proviso to Section 40(a)(ia). As held in the various judicial pronouncements cited by the ld. counsel for the assessee, the said provisions are applicable to the year under consideration having retrospective effect and the case of the assessee on this issue is required to be reconsidered after verifying the claim of the assessee in the light of the said provisions. I, therefore, set aside the impugned order of the ld. CIT(Appeals) on this issue and restore the matter back to the Assessing Officer for deciding the same afresh in the light of the first proviso to section 201(1A) and second proviso to section 40(a)(ia) after verifying the claim of the assessee that the concerned recipients have already offered the amounts in questions in their respective returns and also paid tax thereon. Ground No. 2 is accordingly treated as allowed for statistical purposes.

The issue raised in Ground No. 3 relates to the addition of Rs.3,00,000/- made by the Assessing Officer and confirmed by the ld. CIT(Appeals) on account of the difference in balance in the account of one party, namely Shri Tapash Paul.

In order to verify the sundry creditors shown by the assessee, enquiry was conducted by the Assessing Officer through his Inspector, which revealed that the amount of Rs.3,00,000/- in question was already adjusted by one creditor namely Shri Tapash Paul against the purchases claimed to be made from the assessee in the month of September and the closing balance was shown at ‘nil’ after such adjustment. The Assessing Officer, therefore, held the credit balance of Rs.3,00,000/- shown by the assessee in the name of Shri Tapash Paul as bogus liability and added the same to the total income of the assessee.

The addition of Rs.3,00,000/- made by the Assessing Officer by treating the credit balance in the name of Shri Tapash Paul as bogus liability was challenged by the assessee before the ld. CIT(Appeals). It was submitted on behalf of the assessee before the ld. CIT(Appeals) that the amount in question was received by it from Shri Tapash Paul as advance on 23.09.2010 and the same was adjusted against goods sold to the said party in the month of June, 2012. It was contended that the credit balance appearing in the name of Shri Tapash Paul, therefore, was a genuine liability and the Assessing Officer was not justified to treat the same as a bogus liability merely on the basis of result of some enquiry made by the Inspector of the said party, which was not even confronted by the Assessing Officer to the assessee. This stand of the assessee was not found acceptable by the ld. CIT(Appeals) in the absence of any documentary evidence to support and substantiate the same and relying on the finding of the enquiry made by the Inspector with Shri Tapash Paul, he confirmed the addition of Rs.3,00,000/- made by the Assessing Officer on this issue.

I have heard the arguments of both the sides and also perused the relevant material available on record. The ld. counsel for the assessee has submitted that the amount of Rs.3,00,000/- in question was adjusted by the assessee against the sale made by it to Shri Tapash Paul in the month of June, 2012 and although this claim made by the assessee for the first