Feedback   New User   Login      
Tax Management India. Com TMI - Tax Management India. Com
Acts / Rules Notifications Circulars Tariff/ ITC HSN Forms Case Laws Manuals Short Notes Articles SMS News Highlights
        Home        
Extracts
Home List
← Previous Next →

ACIT, Circle-33, Kolkata Versus Shri Biswajit Guha

2016 (10) TMI 495 - ITAT KOLKATA

Unaccounted purchases - addition made by Assessing Officer from M/s Konked International which was not verified u/s. 133(6) - AO has made the addition on the ground that inspector could not trace the address of the party M/s KI and notice issued u/s. 133(6) of the Act was returned un-served - Held that:- the payment was made by assessee through account payee cheque and that party was duly registered with Sales Tax Departments of Govt. of West Bengal. There was also no defect in the books of acco .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of Hon'ble jurisdictional High Court in the case of Diagnostics vs. CIT & ANR (2011 (3) TMI 15 - CALCUTTA HIGH COURT ). - TDS u/s 194C - Non-deduction of TDS on transport charges - Held that:- At the outset we find that the provisions of section 194C of the Act were made applicable to the individual assessee w.e.f. 1.6.2007 and it is admitted position that the matter relates to the assessment year 2006-07. Therefore in our considered view the assessee in the instant case was not liable to d .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

cheque. The lower authorities have not confronted the reply received from the party under section 133(6) of the Act to the assessee. There was no defect in the bills of the purchases of the party. The ld. CIT(A) has given clear finding that the payment to the P. Beriwal has been made as authorized by the party M/s SE. The ld. DR has not brought anything on record contrary to the findings of ld. CIT(A). Hence we do not find any reasons to interfere in the order of ld. CIT(A). Hence this ground o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

defect in the amount of purchases shown by the assessee in relation to the excess balance of the party. Therefore in our considered view the AO should have disallowed the amount of the purchases corresponding to the excess balance shown by the assessee. In the instant case before us the AO has admitted all the purchases as genuine in relation to the excess balance shown by the assessee for ₹ 90752.00. The AO has not taken into account the opening balance as shown by the assessee. All the t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d of appeal of the Revenue is dismissed. - Short deduction of TDS under section 194-I viz a viz 40(a)(ia) - whether the expenses claimed by the assessee are allowable deduction though the TDS on such expenses has been deducted at the lower rate? - Held that:-From the provisions of section 40(a)(ia) of the Act we find that it requires deduction of tax and deposit of tax in Government account. The provisions of section are silent to treat the assessee as defaulted in case of short deduction of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e Tax (Appeals)-XIX, Kolkata dated 12.08.2013. Assessments were framed by DCIT, Circle-33, Kolkata u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) vide his orders dated 24.12.2008 & 22.12.2009 for assessment years 2006-07 & 2007-08 respectively. Shri Satyendra Mohan Das, Ld. Senior Departmental Representative appeared on behalf of Revenue and Shri Rajeeva Kumar, Ld. Advocate appeared on behalf of assessee. 2. Both the appeals are heard together and are being .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

se and in law, the Ld. CIT(Appeals) has erred in deleting the addition made on account of outstanding liability in relation to M/s Bharat Somani as the same could not be verified. 3. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(Appeals) has erred in deleting the addition made on account of non-deduction of TDS on transport charges u/s/s 40(a)(ia) of the Income-tax Act, 1961. 4. First issue raised by Revenue is that Ld. CIT(A) erred in deleting the addition ma .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

mation but returned as un-served with the remarks that there was no such party in the given address . On question by AO the assessee failed to offer any explanation about the genuineness of the party, therefore same was disallowed and added to the total income of assessee. 6. Aggrieved, assessee preferred an appeal before Ld. CIT(A) who deleted the addition made by AO by observing that M/s KI, a registered dealer with Sales Tax Department with Govt. of West Bengal vide R.C. SBST No.BG/9471A & .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

pector report. Being aggrieved by this order of Ld. CIT(A) Revenue is in appeal before us. 7. Before us both the parties relied on the order of Authorities Below as favourable to them. We have heard rival contentions and perused the materials available on record. We find that AO has made the addition on the ground that inspector could not trace the address of the party M/s KI and notice issued u/s. 133(6) of the Act was returned un-served. However, Ld. CIT(A) granted relief to assessee by observ .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

l High Court in the case of Diagnostics vs. CIT & ANR (2011) 334 ITR 111 (Cal). The relevant portion of the judgment is reproduced below : So far as the purchases from SE and INT were concerned, the alleged payments being made in cash and the amount involved being ₹ 50,675 and ₹ 1,00,737 respectively during the relevant assessment year and at the same time, the appellant having failed to produce any of the parties except the bills alleged to be raised by those concerns, the Tribu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

and consequently, the said party did not co-operate with the AO. However, the transaction having taken place through account payee cheques, the contention of the advocate appearing for the Revenue that the transaction was a non-existent one cannot be accepted. If an assessee took care to purchase materials for his business by way of account payee cheques from a third party and subsequently, three years after the purchase, the said third party does not appear before the AO pursuant to the notice .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

by the CIT(A) accepting the said transaction as a genuine transaction. Since the payment was made by account payee cheques and was encashed through the bankers, disallowance was not called for; however, disallowance was sustainable in respect of payment made in cash to other two parties in respect of which the assessee had not been able to produce the parties to prove the genuineness. Respectfully, following the above precedents of the above case, we do not find any reason to interfere in the o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

non-service of notice assessee could not reply, accordingly, AO disallowed the same as unexplained claim and added to the total income of assessee. 10. Aggrieved, assessee preferred an appeal before Ld. CIT(A) who deleted the addition by observing as under:- 6.1 The facts on this issue are exactly similar to those of Konked International dealt with above. The appellant made purchases of raw materials (Ballast) for sum of ₹ 8.31,748/-, which was inclusive of transport and loading & unlo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

fore the AO in response to his letter dated 16.12.200, a copy of which is also filed during appellate proceedings. As in the case of Konked International, the AO alleged that the notice u/s. 133(6) of the Act could not be served by postal authorities and even by the Inspector deputed by the department, which promoted him to treat the transaction ingenuine, resulting in addition to the total income as unexplained credit. For the reasons discussed hereinabove while dealing with the addition of  .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

40(a)(ia) of the Act. If total effect of these two is taken together, the total addition would be more than the total transaction of the appellant entered with Bharat Somani. I have verified this fact and found the same true. Therefore, by the said action of the AO it emerges that the impugned addition of ₹ 4,000,000/- was made by the AO purely on assumption and addition on such hypothesis cannot be entertained on the facts and circumstances of the case and in the eye of law. That being so .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d on the order of AO. He lastly, left the issue to the discretionary of the Bench. On the other hand, Ld. AR relied on the order of Ld. CIT(A). 12. We have heard the rival contentions and perused the materials available on record. At the outset, we find that AO has made the addition on account of non-existence of the party however payment was made through account payee cheque, so the identity of the party cannot be doubted. Therefore, we do not find any reason to interfere in the order of Ld. CI .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ansport charges. The assessee for the year under consideration has claimed transport charges for ₹ 25,32,484/- on which no TDS was deducted by assessee. On question by AO about the non-deduction of TDS assessee submitted that transport charges are the part and parcel of raw material purchased by assessee. Therefore, the question of TDS deduction does not arise. However, AO disregarded the claim of assessee by observing that the transport charges have been shown in the books of account of a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the table (supra) that except in the case of Suresh Gupta, in all other cases of three suppliers, the cost of transportation was higher than the cost of materials supplied by those parties. The AR tried to explain that the suppliers were charging the price of raw materials for their convenience under different headings seemingly for the reasons that the price of such raw materials were either of negligible value or of no value and the suppliers may add their expenses with the cost of goods and .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

. It was also submitted that no addition should be made if any claim is made under a wrong notion and nomenclature, I find substance in this submission. On going through the payment details, it is found that although the suppliers had bifurcated the total payments into different heads of expenditure according to their method of billing and on which the appellant had no control, but the appellant, in fact, made payments towards purchase on the basis of total amount raised in the respective bills. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

cost of material and incidental expenses incurred on such purchases. In the instant case, the suppliers of raw materials of their own transported the goods to the appellant and naturally, therefore, the total bill raised by them would fetch the purchase price to the appellant. The expenses incurred on account of transportation were intrinsically linked with the purchase cost to the appellant. With these facts, it was found that as the appellant had not paid any amount to the suppliers on account .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

judicial pronouncements on the issue, it is amply clear that as the suppliers were not the transport contractors and the AO could not bring on record evidence establishing existence of any oral or written agreement, provisions of section 194C of the Act do not come into play warranting any disallowance u/s 40(a)(ia) of the Act. That being so, the observation of the AO in respect of default in deducting tax at source on transport charges u/s 194C of the Act is misconceived and not sustainable in .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tionship of purchaser and seller between them. The appellant purchased raw materials for the purpose of use of the same in his construction job and it was, therefore, a contract for sale and not a contract for any work. In the case of Kishak Bharati Co-op. Ltd. (2011) 10 ITR (Trib) 527, the Hon'ble I.T.A.T., Delhi has held that "The contract for supply of gas from the producers for the purpose of use of this gas for burning in the assessee's factory was a contract for sale of goods .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in the sale price of raw materials supplied by the parties, because, to reiterate, the total billed amount raised by the parties was the purchase cost to the appellant. In this view of the matter, the AO went wrong in not appreciating the facts of the instant case in proper perspective and making uncalled for disallowance in that regard. The addition of ₹ 25,32,484/- made u/s 40(a)(ia) r.w.s. 194C of the Act is, therefore, directed to be deleted. Being aggrieved by this order of Ld. CIT(A .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

2007 and the instant case pertains to AY 2006-07. 16. We have heard rival contentions and perused the materials available on record. At the outset we find that the provisions of section 194C of the Act were made applicable to the individual assessee w.e.f. 1.6.2007 and it is admitted position that the matter relates to the assessment year 2006-07. Therefore in our considered view the assessee in the instant case was not liable to deduct TDS and accordingly there is no default for non-deduction o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hat the matter relates to the assessment year 2006-07, whereas Section 194C(1) has been made applicable to the individual assessee with effect from 1.6.2007. There is no dispute that the respondent is an individual assessee. Considering the position of the law, the learned Tribunal has consistently held that Section 194C(1) cannot be made applicable for the assessment year 2006-07. On identical fact the learned Tribunal has held so in the case of Ajay Rawla vs. DCIT, Circle-28, Kolkata [ITA No.3 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

o ITA No.356/Kol/2014 for A.Y. 07-08. 17. The grounds raised by the Revenue per its appeal are as under:- 1. Whether on the facts and in law, the Ld. CIT(Appeals)has erred in deleting the addition made on account of bogus purchases from M/s Sunidhi Enterprises amounting to ₹ 14,89,888/- 2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(Appeals) has erred in deleting the addition made on account of excess liability sown in respect of ESS Refilling Station .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

erred in deleting the addition made by the AO for ₹ 14,89,888/- on account of bogus purchases from M/s Sunidhi Enterprises (for short SE). 19. The assessee during the year has shown the following transactions of purchases and corresponding payment to M/s SE. Date Particulars Debit Credit 01.12.06 Bridge - material 3,15,274/- 10.12.06 Bridge-material 2,08,562/- 30.12.06 C UBI Hazra 3,58,500/- 30.12.06 Bridge-material 3,61,716.- 19.01.07 CC UBI Hazra 3,61,716/- 20.01.07 CC UBI Hazra 1,65,34 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

gly the AO has held the difference of the purchases of ₹ 14,89,888/- as bogus and added to the total income of the assessee 20. Aggrieved, assessee preferred an appeal to ld. CIT(A) whereas assessee submitted that the payment of ₹ 3,61,716/- was made to the party (M/s SE) only but the bank has entered the short name in its statement as Sun Enterprises . Similarly, the payment of ₹ 3,58,500/- was made P. Beriwala as authorised by the party (M/s SE). The closing balances as appea .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

efore, the enquiry was not directed to the proper direction, yielding no fruitful purpose. Further, the AO before relying on such report of the Inspector ought to have given an opportunity to counter that report and/or establish his case with evidence. From the above factual matrix of the case and several documents placed on record. I have no hesitation to hold that the appellant, in fact, made purchases to the total tune of ₹ 16,55,234/-from Susnidhi Enterprise during the assessment year .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sum of ₹ 14,89,888/- as bogus purchases. The addition of the said amount made by the AO in the impugned assessment ororder is, therefore, directed to be deleted. Being aggrieved by this order of Ld. CIT(A) Revenue is in appeal before us. 21. Before us both the parties relied on the order of Authorities Below as favourable to them. We have heard rival contentions and perused the materials available on record. We find that AO has made the addition on the ground that there was bogus purchase .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

party. The ld. CIT(A) has given clear finding that the payment to the P. Beriwal has been made as authorized by the party M/s SE. The ld. DR has not brought anything on record contrary to the findings of ld. CIT(A). Hence we do not find any reasons to interfere in the order of ld. CIT(A). Hence this ground of revenue s appeal is dismissed. 22. The next issue raised by the Revenue in this appeal is that the learned CIT(A) erred in deleting the addition made by the AO for ₹ 90,752/- on acco .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sessee as income and added to the total income of the assessee. 24. Aggrieved, assessee preferred an appeal to learned CIT(A). The assessee before the ld CIT(A) submitted that the party ERS in the response to the notice u/s 133(6) of the Act has furnished the details of the purchase transactions took place during the year but failed to incorporate the opening balance of ₹ 90,752/-. The difference of ₹ 90,752/- is arising only on account of the opening balance as shown by the assessee .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

reconciliation statement in this regard before the AO which shows opening balance against that party of ₹ 90,752/- as on 01/04/2006. ESS Refilling Station only gave the details of sales made to the ape during the assessment year under appeal. Naturally, therefore, both the statements, one by the appellant and the other by the said supplier could not be said to be incorrect. The ape furnished ledger copy and statement of account of the said supplier from which it is evident that the closing .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

In such circumstances, in effect, there was no short or excess sales or purchase in this case. That being so, the addition of ₹ 90,752/0- is deleted. Being aggrieved by this order of Ld. CIT(A) Revenue is in appeal before us. 25. Before us both the parties relied on the order of Authorities Below as favourable to them. We have heard rival contentions and perused the materials available on record. We find that AO has made the addition on account of the difference in the balance shown by th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hases corresponding to the excess balance shown by the assessee. In the instant case before us the AO has admitted all the purchases as genuine in relation to the excess balance shown by the assessee for ₹ 90752.00. The AO has not taken into account the opening balance as shown by the assessee. All the transactions took place during the year are matching with the confirmation of the party as received in response to the notice issued under section 133(6) of the Act. The learned DR has not b .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

unt of short deduction of TDS under section 194-I viz a viz 40(a)(ia) of the Act. 27. The assessee for the year under consideration has incurred expenses for ₹ 21,63,339/- towards machine hire charges and deducted TDS @ 2% on such expenses whereas the liability to deduct TDS was at the rate of 10% u/s194-I of the Act. Accordingly the AO has disallowed proportionate expenses of ₹ 17,30,671/- and added to the total income of the assessee u/s 40(a)(ia) of the Act. 28. Aggrieved, assesse .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

deducted by the assessee, even under bona fide wrong impression, under wrong provisions of TDS, the provisions of section 40(a)(ia) of the Act cannot be invoked and further, nor the appellant can be declared to be an assessee in default us/s 201 of the Act [DCIT vs. S.K. Tekriwal,(2011) 48 SOT 515 (Kol)]. In view of the facts of the case and decision of Hon'ble Tribunal (supra), the addition made by the AO u/s 40(a)(ia) of the Act for application of wrong rate of TDS under wrong section doe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rving that the assessee deducted TDS at a lower rate under bona fide belief. Now the question before us arises so as to whether the expenses claimed by the assessee are allowable deduction though the TDS on such expenses has been deducted at the lower rate. From the provisions of section 40(a)(ia) of the Act we find that it requires deduction of tax and deposit of tax in Government account. The provisions of section are silent to treat the assessee as defaulted in case of short deduction of TDS. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

Discussion Forum
what is new what is new
 


Share:            

|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version