TMI Blog2015 (6) TMI 809X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment proceedings explaining the discrepancy in the original cash book furnished during the assessment proceedings. The Assessing Officer has discredited the said cash book without examining the same. We therefore, direct that while conducting fresh examination, the Assessing Officer would look into the explanation tendered and the revised cash book and not merely discredit the same. Accordingly, the issue of addition regarding unexplained deposit in the cash book of the appellant is restored to the file of the Assessing Officer for denova examination and adjudication after granting necessary opportunity to the appellant. - Decided in favour of assessee for statistical purposes. Addition on alleged difference in sundry creditors accounts - Held that:- The appellant could not produce these parties inspite of several opportunities. But for furnishing the bills of these parties, no efforts were made to prove his version. In the rejoinder to the remand report, the assessee contended that complete address, telephone/FAX No. and bank a/c no. was furnished to the AO during the remand proceedings but the AO has not taken any steps to enquire at his own level. We further find that Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Highways Constructions Co. Pvt. Ltd. Vs. Commissioner of Income Tax [1992 (11) TMI 86 - GAUHATI High Court] held that notional interest cannot be charged. 20% disallowances of expenses under various heads - Held that:- CIT(A) has observed that a fact finding has been given by the AO that some of the expenses are unvouched or not properly vouched. The Assessee’s counsel has not contravened these observations of the AO. Therefore, in view of the above factual finding of the AO and Ld. CIT(A), Ld. CIT(A) upheld the disallowance of 20% of the expenses, which does not need any interference on our part - Decided against assessee. Addition under house hold expenses - Held that:- The house hold withdrawals of ₹ 1.00 lakh are quite low in response to which the assessee stated that theirs is an agriculture based family and he has only two school going dependent children and the withdrawals are quite reasonable and justice. Ld. CIT(A) further observed that having regard to the status and life style enjoyed by the family, the AO estimated the expenses at ₹ 10000/- per month and made an addition of ₹ 20,000/-. In our considered opinion, Ld. CIT(A) was qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ach other. 3. The grounds raised in ITA No. 2222/Del/2012 (A.Y. 2009-10) read as under:- 1. That the Learned CIT (A) Rohtak has erred in confirming the addition of ₹ 1321034/- alleged difference in the account of Mls Venus Stone, Spain. He has further erred in ignoring all the facts, figures and relevant documents. 2. That the confirming of addition of ₹ 6' lacs which was made by the Learned AO u/s 40A(3) by the Learned CIT (A) Rohtak is quite arbitrary, excessive, against facts and Law of the case. The Learned CIT (A) Rohtak is also erred in not considering the reply, bank statement and other documents on record. 3. That the Learned CIT (A) Rohtak has erred in confirming the additions of ₹ 1531108/- the payment made to M/s Pooja Freight Forwarders, the intermediary agent on the behalf of appellant regarding in land haulage charges/Freight charges etc. to foreign agents and Govt. agencies where the provisions of Section 194C i.e. TDS not applicable. 4. That the Learned CIT (A) Rohtak has also grossly erred in enhancing the freight charges at ₹ 1803881/- which were paid for exporting the goods outside India to shipping agent exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heads are quite arbitrary and without any findings. 9. That the confirming the addition of ₹ 20000/- under house hold expenses by the Learned CIT (A) Rohtak without any concrete findings and detection on record. 10. That the appellant craves the right to amend, delete or add any now grounds of appeal before and during hearing of appeal. ITA NO. 467/DEL/2011 (AY 2007-08) 4. The brief facts of the case are that the Return declaring total income of ₹ 7,37,090/- was filed on 2.11.2007. The return was processed u/s. 143(1) on returned income. Assessee is running two proprietorship concerns in the name and style of M/s Mosaic House (India) M/s Diler Stone, VPO Majra, Kund, Rewari. M/s Mosaic House (India) is a new concern and M/s Diler Stone is a existing concern of the assessee. The assessee deals in domestic and foreign sale of stone tiles. Statutory notice u/s. 143(2) and 142(1) were issued along with questionnaire on 12.9.2008 for 10.10.2008. On 10.10.2008, none attended the proceedings. Again notice u/s. 142(1) was issued on 22.4.2009 for 1.4.2009 on 1.4.2009 also no body attended the assessment proceedings nor filed any application for seekin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12,67,193 5 to 7 (2.3 to 2.5) 6-7 (6 to 6.1) 2. Addition made on account of alleged unexplained cash deposits in bank account of M/s Diler Stone 3,86,041/- 7 (2.6) 7 (707.1) 3. Additions on account of payment to sundry creditors outside books of account u/s 68 of the Act. 1,07,939 8(3) 7 (8 8.1) 4. Disallowance of expenditure incurred on export of goods through agents of freight shipping companies 18,72,599 9 (4.2) 8-9 (9-9.2) 5. Adhoc disallowance of 50% of following expenses 1,54,665 9 (5) 9(10) 1.5 Ground wise submission is as under:- 2. Addition of ₹ 12,67,193/- 2.1 Manner of Computation: Perusal of cash book (pages 65 -75 of Paper Book) of Mosaic House (India) reveals that the following position: Particulars Amount (Rs.) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... saic House filed alognwith return of income on 2.11.2007 shows an addition of ₹ 11,50,0001- against property. The balance sheet is dated 20.10.2007 and, is duly audited, as would be evident from page 5 of Paper Book. ii) That books of accounts have been accepted and, not rejected u/s 145(3) of the Act iii) That cash-in-hand as on 31.3.2007 as per balance sheet is ₹ 45,228/- (page 5 of Paper Book), which is also the balance as per cash book (page 75 of Paper Book) iv) That even the original cash book, which has been made the basis of addition shows advance of ₹ 11,50,000/- (page 75 of Paper Book) and, transfer from capital account (Rs. 1,74,506/- (page 75 of Paper Book)., This transfer is however reflected on 313.2007 on account of virus in the computer v) That the difference of ₹ 12,67,193/- is explained out of the following: a) Advance against land ₹ 11,50,000/- b) Transfer from Diler stone Rs . 1,95,320/- vi) The fact of advance of ₹ 11,50,0001- having been received is evident from following evidences: a) Agreement to sell dated 26.3.206 (pages 77-78 of Paper Book) b) . Cash flow statement ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ages 91 to 96 of Paper Book) which also shows clearly cash in hand of ₹ 1,13,966 (pages 96 of Paper Book) c) Show cause notice dated 11.12.2009 (pages 34-35 of Paper Book) d) Reply dated 15.12.2009 (page 38 of Paper Book) e) Copy of revised cash book (pages 97 to 103 of Paper Book) f) Submissions: i) Dated 15.3.2010 (page 47 of Paper Book) ii) Dated 26.5.2010 (page 54 of Paper Book) iii) Dated 16.8.2010 (page 63 of Paper Book) g) Remand Report: i) Dated 3.5.2010 (page 51 of Paper Book) ii) 23.7.2010 (page 57 of Paper 3.4 Contentions-in-brief: i) A sum of ₹ 4,00,000/- was transferred for Mosaic House (India) on 23.5.2006 (pages 80 of Paper Book) ii) Once revised cash book (pages 97-103 of Paper Book) of Diler Stone and at (pages 79 to 90 at page 80 of Paper Book) of Mosaic House was placed on record, the learned Assessing Officer/Commissioner of Income Tax (Appeals) cold not automatically discredit the same. In view thereof, addition made may kindly be deleted. 4 Ground No.3: Addition of ₹ 1,07,939/- The learned Assessing Officer has held at page 8 paras 3 to 3.2 have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of ₹ 1,82, 72,599/~ on account of shipping freight outward 5.1 The learned Assessing Officer has held that (page 9 para 4.2) no evidence was filed to prove that payment made to agents of shipping companies and, in absence thereof, appellant obliged to deduct TDS U/S 194C of the Act and, since no TDS has been deducted, sum was disallowed U/S 40(a)(ia) of the Act 5.2 The CIT(A) pages 8-9 paras 9 to 9.2) 5.2.1 The learned CIT(A) has also upheld the disallowance on the ground that Mls. Pooja Freight and Forwarders were not agents of non resident shipping companies and therefore, appellant was obliged to deduct TDS un:der section 40a(ia) of the Act. 5.3 It is submitted that the appellant in support of the submission that appellant was not obliged to deduct TDS had placed on record following evidences and replies: a) Reply dated 15.12.2009 (pages 39 to 40 of Paper Book) b) Certificate from Pooja Freight and Forwarders (page 45 of Paper Book) c) Rejoinder submissions dated 16.8.201 (page 64 of Paper Book) in respect of the remand report of the Aa dated 23.7.2010 wherein Shri Maman Singh had admitted that they were not agents of non reside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e order passed by the CIT(A) and deleting the disallowance, it has been specifically observed by the tribunal that in fact the expenses were incurred by the agent on behalf of the assessee for transportation and other charges, which has been spelt out in the bill itself including the commission to the agent. The learned tribunal also observed that the relation between the assessee and the agent is principal and an agent. The learned tribunal also observed that so far as the obligation to deduct tax at source from the payment of transport charges and other charges is concerned, the same was complied with by the agent, who had made payment on its behalf. On the aforesaid facts the learned tribunal also observed that the circular relied upon by the revenue that it is the liability of the assessee as principal agent to deduct the TDS will not be applicable and the said circular would be applicable for payment made to principal to principal. Considering the aforesaid facts and circumstances of the case, when the learned tribunal has confirmed the order passed by the CIT(A) quashing and setting aside the order passed by the Assessing Officer in deleting the disallowance of ₹ 6,93,3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sement of expenses, assessee is not liable to deduct tax at source. Section 194C of the Income-tax Act, 1961 - Deduction of tax at source - Contractors/subcontractors, payments to [Reimbursement of expenses] - Assessment year 2002-03 - Assessee entered into an agreement with 'NLP' to work as an agent for assessee - Assessing Officer having information that assessee had not deducted tax at source on' certain payment to 'NLP' disallowed said amount - Whether payment made to NLP as an agent in pursuance of agreement for supply of trucks were merely reimbursement, and assessee had already deducted tax at source under section 194C on contractual payment of freight, nothing was to be deducted from reimbursement - Held, yes - Whether as amounts in question were never claimed as expenditure by assessee, assessee was not liable to tax deduction at source under section 194C - Held, yes - Whether as payment made of reimbursement of expenses were purely for business expenses, impugned disallowance made by Assessing Officer was to be deleted - Held, yes [Para 6] [In favour of assessee] iv) ITA No.32911Ahd72008 dated 11.11.2009 ITO vs. Mls Yash Enterprise Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 412/2013 (Guj) Om Prakash R. Chaudhary vi) ITA No. 1056IMum/2011 A.Y. 2006-07 dated 26.11.2014 Dr. Adi R. Nazir vs. ACIT vi) ITA No. 18521Pune/2012 dated 6.1.2014 A.Y. 2008-09 ITO vs. Mls Gaurimal Mahajan Sons vii) 149 ITD 363 (Agra) Rajeev Kumar Aggarwal 5.14 In view of the aforesaid disallowance made may kindly be deleted. Ground NO. 6 : Adhoc disallowance of Expenses The learned Assessing Officer has disallowed 50% of following expenses (page 9 para 5) Sr. No. Nature of expenses Amount (Rs.) i) Diwali Expenses 16,500 ii) Painting White wash 14,600 iii) Publicity 45,000 iv) Travelling 1,02,890 v) Entertainment 91,590 vi) Printing and Stationery 24,250 Total 3,09, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e heard both the counsel and perused the relevant records available with us, especially the orders passed by the revenue authorities alongwith the Written Synopsis filed by the assessee as well as the case laws cited by him. After going through the assessment order, we are of the view that the additions in dispute have been made by the AO for want of evidence and for non-production of evidence, as required by him. Similarly, Ld. CIT(A) has also upheld the order of the AO, because the assessee has not produced any evidence before him also. 10. Ground 1 and 2 relate to additions of ₹ 12,67,193/- and ₹ 3,86,041/- on account of unexplained cash payments reflected in cash book of M/s. Mosaic House and M/s Diler Stone, proprietorship concerns of the appellant. From the perusal of the cash book of M/s. Mosaic House, the Assessing Officer noted that there is no opening cash in hand and payments in cash upto 30.3.2007 were of ₹ 17,97,141/-; whereas the cash receipts amounted to only ₹ 5,29,948/- and as such, there was a difference of ₹ 12,67,193/- which was added as income. Further, the cash book of M/s Diler Stone for the period l.4.2006 to 3l.3.2007 reveal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. He thus rejected explanation of the assessee and made the impugned additions. 10.2 On appeal, the CIT(A) directed the Assessing Officer to furnish a remand report whereby the Assessing Officer admitted that appellant furnished affidavits of all the persons who had advanced the sums to the appellant. He also admitted that one of the persons Shri Santosh Kumar attended and admitted to have advanced ₹ 1,15,000/- - though not as an advance against the property. As regards Shri Rajesh Kumar, another person produced before the Assessing Officer, the Assessing Officer did not record any statement as name of the person in the agreement was Rajesh Chauhan and not Rajesh Kumar. The CIT(A) thus rejected the explanation of the appellant on the ground that there is a denial of the sole purchaser produced before the Assessing Officer of entering into any such agreement and appellant failed to produce remaining parties. 10.3. As regards ground nos. 1 and 2, having gone through the record, we find that the balance sheet of M/s. Mosaic House furnished along with return of income shows the addition of ₹ 1,50,000/- against the property. Moreover it is not in dispute that assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he letters as comeback un-served. Under these circumstances, onus is on the appellant to prove that the liability exists by producing them or furnishing reconciliation statement etc. Instead the assessee has merely given the address etc. of the creditors which was already available with AO. In the background of the aforesaid discussions, we find that the Ld. CIT(A) was right in upholding the addition of ₹ 1,07,939/-, which does not need any interference on our part, hence, we uphold the order of the Ld. CIT(A) on this issue and dismiss the ground no. 3 raised by the assessee. 12. Ground 4 of the Grounds of Appeal relates to disallowance of ₹ 18,72,599/- representing expenditure incurred on export of goods through agents of freight shipping companies. The Assessing Officer has held that no evidence was filed to prove that payments were made to agents of shipping companies and therefore, since appellant did not deduct TDS under section 194C of the Act, the same is not allowable under section 40(a)(ia) of the Act. During the course of appellate proceedings, the appellant highlighted page 45 which is a certificate from M/s. Pooja Freight Forwarders stating that M/s. Pooj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 6,93,372/-and ₹ 76,00,509/- claimed by the assessee under Section 40(a)(ia) of the Income Tax Act, we see no reason to interfere with the same. No error has been committed by the learned tribunal in confirming the order passed by the CIT(A). No question of law, much less substantial question of law, arises in the present appeal. Hence, the present appeal deserves to be dismissed and is accordingly dismissed. 12.1. Also, Jodhpur Bench in the case of ACIT vs. Minpro Industries 143 TTJ 331 (Jodh) has held as under: 8.2 We have gone through the Board Circular No. 723, copy of which is placed on record and contents of the same have been tabulated in the order of learned CIT(A) also and found that about certain payments it has been clarified by the Board that on these payments provisions of ss. 194C and 195 will not apply and provisions of s. 172 will be applicable. The learned CIT(A) has taken into consideration this circular and found that certain payments made by the assessee to the C and F agents who have already made the payment on behalf of the assessee were not covered either under s. 194C or under s. 195, as they are covered under the provisions of s. 172. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent. It is further seen that provisions of s. 172 were very clear that such type of payments which are made by assessee had been held that they are not part of regular income and, therefore, provisions of ss. 194C and 195 are not applicable and Board has clarified the same. Therefore, there is no question of making any TDS on the part of the assessee and learned CIT(A) was justified in deleting the disallowance. One more decision has been relied on by the learned Departmental Representative in case of Associated Cement Co. Ltd. (supra) and we find that facts in this case are also distinguishable. In this case also we find that facts are totally different from the facts involved in the case in hand. Moreover, the payments made by assessee are covered by s. 172 where provisions of ss. 194C and 195 are not applicable as clarified by the Board vide Circular No. 723, dt. 19th Sept., 1995. The AO has placed reliance on the Circular No. 715 which is of earlier date from the Circular No. 723. The learned CIT(A) has observed that this circular was wrongly applied by AO as Circular No. 723 is applicable on the facts of the present case. Nature of payments has already been discussed by learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... horities below, we hold that since the payments have been made as reimbursement of expenses to the agents of the appellant, therefore, appellant was not obliged to deduct TDS under section 194C of the Act and as such, no disallowance is warranted u/s 40(a)(ia) of the Act. Having regard to the above, we delete the addition and allow the ground raised by the appellant. 13. With regard to ground no. 5 relating to confirmation of addition of ₹ 1,54,665/- is concerned, we find that the AR of the counsel has submitted that all the expenses claimed are supported with vouchers. The action of the AO in disallowing 50% of the expenditure without pointing out any defect is arbitrary and unjustified. Ld. CIT(A) has considered the issue and the submissions made by the AR and observed that the AO made a categorical finding regarding the genuineness, reasonableness and verifiability of the bills. The Revenue Authority below has come to the conclusion against the assessee, after verifying the vouchers produced by the assessee. Keeping in view of the facts and circumstances, Ld. CIT(A) has rightly held that the disallowance made by the AO was treated as fair and reasonable and thus the add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome Tax 199 ITR 702 held that notional interest cannot be charged. This ground is allowed. 18. The ground no. 7 relating to confirmation of addition of ₹ 95830/- is not pressed before us, hence, the same is dismissed, as not pressed. 19. With regard to ground no. 8 relating to confirmation of addition of ₹ 33900/- i.e. 20% disallowances of expenses under various heads is concerned, we find that the Ld. CIT(A) has observed that a fact finding has been given by the AO that some of the expenses are unvouched or not properly vouched. The Assessee s counsel has not contravened these observations of the AO. Therefore, in view of the above factual finding of the AO and Ld. CIT(A), Ld. CIT(A) upheld the disallowance of 20% of the expenses, which does not need any interference on our part, hence, we uphold the order of the Ld. CIT(A) on this issue and decide the issue against the assessee by dismissing the ground no. 8 raised in its appeal. 20. With regard to ground no. 9 relating to confirmation of addition of ₹ 20000/- under house hold expenses is concerned, we find that the Ld. CIT(A) has observed that the AO noted that the house hold withdrawals of ₹ 1.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
