TMI Blog2010 (11) TMI 485X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration - Decided against the assessee - ITA No. 1543/Kol/2010 - - - Dated:- 3-11-2010 - Diva Singh, B.K. Haldar, JJ. S. Haldar for the Appellant P. Kolhe for the Respondent ORDER B.K. Haldar: This is an appeal filed by the assessee against the order of the learned Commissioner of Income-tax [Appeals]-XIV, Kolkata dated 12.04.2010 for the assessment year 2006-07. 2. The appellant has taken following grounds of appeal:- (1) That in the facts, circumstances as well as under the law, the A.O. and learned CIT(A), were not justified in making addition of Rs.77656 u/s4OA(3) and learned CIT(A), in confirming the same. (2) That in the facts circumstances as well as under the law, the learned A.O. erred in making addition of Rs.259103 as 'bogus' liability and the upholding of the same by learned CIT (A). (3) That in the facts circumstances as well as under the law, addition of Rs.6030352 u/s 40(a)(ia) by A.O. and confirming of the same by Id. CIT(A) were fully unwarranted and hence liable to be deleted. (4) That in the facts circumstances as well as under the law, the learned CIT(A) was not justified in enhancing the income by Rs.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Popatlal and Co Rs.1,45,523/- b. M/s. Techno Electric Corporation Rs.1,13,580/- Total: Rs.2,59,103/- 5.2 As these parties have filed the copies of account of assessee in their respective books of account, wherein no amount was shown as due from the assessee, the assessee was asked by the AO to explain the discrepancy. The assessee, however, did not file any explanation before him. The AO, therefore, added the amount of Rs.2,59,103/- as bogus liability shown by the assessee in the balance sheet. 5.3 In the P and L account, the assessee debited an amount of Rs.40,47,655/- on a/c of job processing charges and an amount of Rs.19,82,697/- being labour charges. As the above payments were made to contractors, the assessee was asked to explain why the above amount should not be added back as per section 40(a)(ia) of the I.T.Act'61, as no TDS was deducted from the same. The assessee replied as under:- "This is to inform you that we have not deducted any TDS on Job Processing and Labour charges for the assessment year 06-07. Because of non getting any PAN no from the filler. Now we are Getting PAN no. Hence, we will deduct T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were treated as violation of section 40A(3) of the Act. The assessee submitted the ledger A/cs. of the said party in which it was shown that only on 4 occasions cash payments exceeding Rs.20,000/were made which in total was amounted to Rs.1,32,920/-. The other payments were by cash below Rs.20,000/- in 5 occasions amounting to Rs.63,275/- and one by A/c, Payee of Rs.40,000/- as on 13.02.2006 drawn on Bank of Baroda. Thus the total payments were mode for an amount of Rs.2,36,196/- leaving an amount of Rs.1,45,523/- unpaid duly shown as creditors in the accounts. Though the same were in records the AO. had not given any cognizance to the fact but relying on the information supplied by the party he added Rs.2,30,824/- u/s.40A(3). In the case of(ii) purchases were made for an amount of Rs.1,57,455/- and no payment was made by cash but only one payment of Rs.43,875/- by A/c. payee cheque drawn on Bank of Baroda as on 11.02.2006 and the balance of Rs.1,13,580/- as usual shown under the head Sundry Creditors as apparent from the ledger A/c. of the said party submitted before the A.O. The A.O. being biased relied on the information of the party and invoked the provisions of section 40A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration and M/s.D. Popatlal and Co to the assessee and individual bills as shown by the said parties and the assessee tallied. However, the parties disclosed that all sales were made in cash whereas the assessee disclosed that payments were made in cash and balance payments were made by cheque. In the bank statement of the assessee names of these parties were also appeared. The ld.CIT(A), therefore, asked the AO for remand report on the issue. In the remand proceedings the impugned parties reiterated their stand and when the assessee was given opportunity during remand proceeding, the same was not availed of by the assessee. The ld.CIT(A), therefore, confirmed the impugned addition of Rs.77,656/- u/s.40A(3) of the I.T.Act'61. 9. On the issue of addition of Rs.2,53,103/- on a/c of fictitious liability, the submission of the assessee before the ld.CIT(A) was as under:- "As per accounting principles the addition of discrepancies found in the sundry creditors accounts as fictitious and deemed income of the appellant is wrong. The discrepancies were found in the accounts of M/s. D. Popatlal and Co. and M/s. Techno Electric Corporation of whose accounts were already considered whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deducted u/s. 40(a)(ia) even in the cases where the payee partie had no taxable income. In this regard you are also requested to consider whether the ratio of the Supreme Court decision in the case of Hindustan Coca Cola Beverage Pvt. Ltd. v/s. CIT [2007] 293 ITR 226 (SC) is equally applicable for disallowance of expenses u/s. 40(a)(ia). Without prejudice to the above it is submitted that the disallowances/additions made by the A.O. are riot based on any 'conclusive proof' but rebut table by evidence to the contrary. The ordinary presumption of law is that the apparent state of affairs is real unless the contrary is proved. Law is settled that the fact of the assessee cannot be decided by the revenue on the basis of surmise, suspicion, or probabilities. Thus, if you permit, it is humbly submitted before your Honour that the only course open to in such circumstances is to investigate the claim of the asessee by giving another opportunity afresh to prove the genuineness of the claim with a view to helping the assessee to get it verified and allow the same if so proved to be a genuine claim. It could be left to the wisdom of the parties as to how the case should be placed and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts and the circumstances of the case and the legal provisions applicable and delete the addition made by the A.O." 12. The ld.CIT(A) held that PAN No. and income of the receiver is not relevant for the purpose of deduction of TDS. If the receiver did not have taxable income, it was his responsibility to get the certificate for non deduction of TDS from the AO having jurisdiction. As there was no such certificate available, the argument of the assessee in this respect was not accepted by him. 13. As regards the submission of the assessee that section 40(a)(ia) is applicable only on the amount, which was outstanding as on the last day of the previous year i.e. 31-03-2006, the proposition was not accepted by the ld.CIT(A). According to him the simple meaning of the word 'payable' is amount of liability to be paid to some one. The simple dictionary meaning of the said word is 'amount which is required to be paid'. Thus, in section 40(a)(ia), the word 'payable' is used to mean the amount which is required to be paid for carrying out any work done during the previous year under consideration. It includes the amount, which is actually paid during the year as well as the am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exceeding Rs.20,000/- and all such bills were from parties situated in places, where banking facilities were available. The ld.CIT(A) worked out the total amount of such bills amounting to Rs.45,58,094/- and disallowed 20% of the same i.e. Rs.9,11,619/-. u/s.40(a)(ia) 20. As regards the disallowance of Rs.7,21,481/- u/s. u/s.40A(3) of the I.T.Act'61 the ld.CIT(A), after considering the submission of the assessee and the facts on record held that only with reference to the party, M/s. Bajrang Steel to whom the payment of Rs.2,28,693/- was made, section.40A(3) would be applicable He, therefore, confirmed the disallowance of Rs.45,738/- being 20% of Rs.2,28,693/- u/s. 40A(3) of the Act. 21. Aggrieved the assessee filed appeal before the Tribunal. 22. Before us the ld.AR for the assessee, in addition to relying on the submissions made before the authorities below, has made certain additional submissions, specifically with reference to interpretation of section 40(a)(ia) of the Act. The same are enumerated hereunder:- a. The view of the Hon'ble ITAT, Jaipur Bench, Jaipur in the case of Jaipur Vidyut Nigam Ltd vs. DCIT [123 TTJ 888] is further supported by the Taxman's co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erally means that which should be paid. In the context of section 273A the word 'payable' would mean that the assessee is liable to pay a particular sum as penalty Even if the liability to pay the penalty is discharged, it would not mean that he is not entitled to get relief u/s.273A, as otherwise no assessee would pay the penalty till the proceedings u/s. 273A are over." 23.2 It was submitted by the ld.DR that the above interpretation of the word 'payable' would apply the present case. 23.3 Further reliance was placed by him on the followings:- i. Hon'ble ITAT, Kolkata Bench's order dated 15-01-10 in ITA No.1418/Kol/2009 in the case of Poddar Son's Ex.L(P) Ltd vs. ITO W 7(2), Kolkata ii. Hon'ble ITAT, Bangalore Bench's order in ITA No.1204/Bang/08 in the case of Smt. J.Rama vs. ITO 23.4 On the interpretation of section 40A(3) of the Act, the ld.DR placed his reliance on the following case laws:- i. Attar Singh Gurmukh Singh V. ITO 191 ITR 667(SC) ii. C.V George and Sons V. ACIT 286 ITR 389(Ker) iii. Bagmari Tea Co. Ltd vs. CIT 251 ITR 640(Cal) iv. Neghi Lal vs. CIT 167 ITR 139(Raj) and other case laws as per the written submission filed by h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and confirmed by the ld.CIT(A). We, therefore, reject this ground of the assessee. 24.5 As regards the ground no.4 relating to enhancement made by the ld. CIT(A), the appellant has also failed to show as to how the enhancement made by the ld. CIT(A) was unjustified. As such we have narrated the facts and circumstances in which such enhancement was made by the ld.CIT(A) in the earlier part of this order. We find that the ld.CIT(A) was quite reasonable in making the impugned enhancement. In this view of the matter, we reject this ground taken by the appellant. 24.6 As regards the ground no.5 taken by the appellant, we find that the disallowance with reference to M/s. Bajrang Steel has only been upheld by the ld.CIT(A). The facts and circumstances in which the above addition was sustained by the ld.CIT(A) has been narrated by us in the earlier portion of this order. No evidence has been brought on record by the appellant to repudiate the finding of the ld.CIT(A) in this respect. In view of the above, we uphold the impugned order of the ld.CIT(A) on this issue also and reject the ground taken by the assessee. 25. In the result, the appeal of the assessee is dismissed. - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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