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Income Tax Appellate Tribunal, KOLKATA ‘C’ BENCH, KOLKATA
Before: Shri P.M.Jagtap & Shri S.S. Viswanethra Ravi
Per Shri S.S. Viswanethra Ravi :- This appeal filed by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-XXIV, Kolkata dated 06.11.2012 for the assessment year 2008-09 on the following grounds:- “1. For that on the facts and in the circumstances of the case, the ld. CIT(A) was not justified in confirming the Rahul Jain1
addition of Rs.12,80,000/- made by the AO on account of alleged undisclosed receipt of rent/hire charges. 2. For that the ld. CIT(A) erred in rejecting the assessee’s contention that TDS was deducted twice on Rs.12,80,000/-, once as payment of stitching charges and again as payment of rent/hire charges on the same amount.
The only issue in this appeal to be decided is as to whether the CIT-A justified in confirming the addition of Rs.12,80,000/- made on account of undisclosed receipts of towards machine rent/hire charges.
The brief facts of the case are that the Assessee is an Individual and derives income from business, salary, H.P, capital gains and other sources. The Assessee had filed his return of income for the A.Y. 2008-09 on 29.09.2008 declaring a total income at Rs.10,620/-. Under scrutiny, notices under section 143(2) and 142(1) were issued to the assessee. In response to the said notices, ld. A.R. of the assessee appeared and submitted supporting documents and explained the return.
During the year under consideration the assessee was engaged in the business of garments manufacturing and embroidery works on job work. In the course of assessment proceedings the AO called upon assessee to produce details of evidences towards embroidery and stiching charges receipts, details of rent received, bank statements, details of expenses claimed in the profit and loss account. On perusal of the same the AO noticed from that the certificate issued by Prateek Apparels Pvt Ltd showed the assessee has received Rs.1,69,65,591/- on account of contractual receipt and Rs. 12,80,000/- on account of rent. The AO observed that the assessee has Rahul Jain2 shown receipt of Rs.57,62,485.40 on account of embroidery charges and Rs.93,21,693.45 on account of stitching charges from Prateek Apparels Pvt. Ltd, but did not include the receipt of Rs.12,80,000/- on account of rent. The assessee also claimed TDS on total receipt to the tune of Rs.1,82,45,591/- from Prateek Apparels Pvt.Ltd. According to the AO the assessee had received total amount of Rs. 1,82,45,591/- from Prateek Apparels Pvt. Ltd on contractual receipt and rent but offered Rs.1,50,84,178.85 as his income, according to AO the assessee was asked to reconcile the such discrepancy and the assessee did not reconcile the same, thereby, the AO treated Rs.31,61,412/- (the difference between Rs.1,82,45,591- Rs.1,50,84,178.85) as income and added to the total income of the assessee.
Aggrieved by the order of AO, in appeal before the CIT-A the asssessee filed additional evidence on 15-11-2011 which is reproduced herein under: "With reference to above please note that during the relevant A.Y 2008-09 we have made a total turnover of Rs.1,56,69,678/- out of which we have made a sale of Rs.1,50,84,179/- to Prateek Apparels Pvt. Ltd This sales is inclusive of Rs.12,80,000/-, treated by the party as machine hire charges.
They have made a payment of Rs.l,69,65.591/- during the year. On these payments they have deducted TDS u/s.194C on the entire payment which is inclusive of payment of Rs.12,80, 000/-. However in addition to that the party have been again deducted TDS on Rs. 12,80,000/- u/s.194I at the time of making entry in the books of accounts (Rs.1, 60, 000/-)
Thus they have made a double taxation on Rs.12,80,000/- once u/s.194C at the time of payment and secondly u/s.194I at the time of making entry in the books of accounts.”
The CIT-A has sought remand from the AO and considering the same observed as under: I have duly considered the assessment order, submission of the A/R additional evidence, remand report of the Assessing Officer and its rejoinder of the appellant. In the submission the appellant tried to reconcile the receipts and he filed statement which is as under:- Income declared Rs.15,084,179/- Old Balance Rs.14,40,874/- T.D.S deducted one At the time of payment made (u/s. 194C) and one Rs.12,80,000/- at the time of billing u/s.194I Debit note of stiching charge Rs. 1,50,494/- Power & Fuel charge Rs. 1,98,150/- Total receipts as per Books of Accounts Rs.1,81,53,697/- Total credit as per TDS certificate Rs.1,82,45,591/- On perusal of the above statement of the appellant i found that there is some weightage in the submission. The appellant shown opening balance of Rs.14,40,874/- of Pareek Apparels Pvt. Ltd. The opening balance of Rs.14,40,874/- is already offered for taxation in last year because the appellant is following the mercantile system of accounting if this amount included in this year thus this is double taxation of the same income. The AO did not comment any single word on this issue in the remand report. Similarly debit notes of stiching charges of Rs.1,50,494/- and power and fuel charges of Rs.1,98,150/-, the AO did not consider these debit notes in the assessment order as well as in his remand report. The AO is silent on this issue in his remand report. On going through the record I found that Rs.14,40,874/- is related to the last year receipts and debit notes on stiching Rahul Jain4
charges of Rs.1,50,494/- and Rs.1,98,150/- of power and fuel should be deducted from the receipts. Hence, the action of the Assessing Officer is not as per law to consider the above three items in the receipt of the appellant for this year. The third issue of the reconciliation is Rs.12,80,000/- that the TDS deducted twice of the same amount. This contention of the appellant is not acceptable because the deductor deducted TDS u/s. 194I of Rs.12,80,000/- as rent/hire charges and TDS deducted u/s. 194C on Rs.12,80,000/- as stiching charges. These are two separate receipt head of the appellant. He also claimed the TDS on both the receipts. His plea is that he did not received the amount from the deductor is not tenable and without any basis. The appellant did not bring this fact in the notice of the department before assessment proceedings Considering the above finding and facts of the case, I am of the view that the addition made by the AO of Rs. 12,80,000/- as receipt not shown as rent/hire charges are as per law and I confirm the amount of rs.12,80,000/- as undisclosed receipt of rent/hire charges. The balance amount of Rs.12,89,518/-, which includes the opening balance of the Pareek Apparells Pvt. Ltd of Rs.14,40,874/- and debit notes of Sticjhing charges of Rs.1,50,494/- and Rs.1,98,150/- as power and Fuel charges. I do not agree with the action of the AO. Hence, I delete the addition of Rs.17,89,518/-. This ground is partly allowed.”
The assesse challenging the order of CIT-A filed additional evidence before us which is reproduced herein below: “3. The additional evidence submitted herewith (marked as Annexure: A) is a clarificatory letter from M/s. Prateek Apparels (P) Ltd clarifying the value of services received from the appellant assessee and the amount of TDS deducted by the said party. “
We have heard both parties and admit the additional evidence. The contention of the assesse is that the addition involving of Rs.12,80,000/- was deducted twice U/Sec 194I and 194C of the Act by the Prateek Apparels Pvt Ltd while making payments for rent/hire charges for machines and stitching charges respectively. We find, that in the letter issued by the said Prateek Apparels Pvt Ltd stating that they wrongly entered under the head machinery hire charges at the time of entry in the books of account instead of embroidery and stitching charges and deducted TDS u/s 194I and 194C of the Act. We are conscious of the fact that the said letter was undated as rightly pointed out by the Ld.DR, but, in the circumstances stated in the Petition and as well as in the said undated letter Prateek Apparels Pvt Ltd, we remand the case to the file of AO for verification of said details from the records of Prateek Apparels Pvt Ltd by affording an opportunity of being heard and the assesse shall have the liberty to file evidence before the AO, if any, and shall not seek any adjournments, accordingly, the grounds raised by the assesse are allowed.
In the result, the appeal of the assesse is allowed for statistical purposes. Order pronounced on.27-07-2016.