TMI Blog2016 (2) TMI 1154X X X X Extracts X X X X X X X X Extracts X X X X ..... ce the payee has discharged in tax obligation in accordance with law, operation of section 40(a)(ia) stands dispensed with. The Assessing Officer is directed to adjudicate the issue in accordance with law after affording reasonable opportunity of hearing to the assessee. Thus, on this Ground assessee succeeds for statistical purposes. - ITA No.954/PN/2011, 194/PN/2014, 228/PN/2014 - - - Dated:- 29-2-2016 - Sushma Chowla And Shri Pradip Kumar Kedia, JJ. Assessee by : Shri M. K. Kulkarni Department by : Smt. Ann Kaptuama ORDER Pradip Kumar Kedia, There are three captioned appeals, two appeals filed by the assessee and one cross-appeal filed by the Revenue. ITA No.954/PN/2011 (By Assessee) : 2. First, we shall take-up the appeal filed by the assessee in ITA No.954/PN/2011 relating to assessment year 2007-08, which is directed against the order of CIT(A)-III, Pune dated 29.10.2010 passed under section 143(3) of the Income Tax Act, 1961 (in short the Act ). 3. In this appeal, the assessee has raised the following Grounds of Appeal :- 1) On the facts and circumstances of the case and in law the Ld. C.I.T. (A) erred in confirming the action of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... locally from farmers and petty traders and selling to various wholesalers. The assessee also often imports pulses like Rajma from China, Pakistan and Burma. The trading activities are mainly carried out from Satara through proprietary concern, Radhesham Bherulal Bhandari and also from Delhi through another proprietary concern, Bhandari Agri Sales . During the assessment proceedings, the Assessing Officer found that the assessee derived major turnover from trading of Ghevada/Rajma. The trading results in respect of two items from centres carried out from Satara and Delhi were found to be as under :- Turnover Gross Profit Gross Profit % Satara Centre 10.63 Crores Rs.38,98,819/- 3.67% Delhi Centre 10.58 Crores Rs.18,51,628/- 1.74% 5. The Assessing Officer observed that there is drastic difference in the gross profit ratio of both the concerns being Satara Centre and Delhi Centre. He also observed that in the immediately preceding year, the G.P. percentage for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ongly objected to the rejection of books of account and consequent addition on account of alleged lower G.P. ratio. He submitted that the Assessing Officer did not consider the practical difficulties and business considerations / exigencies while maintaining the books of account. It was stated that maintaining variety/quality-wise stock register was not possible for following reasons :- The suppliers simply mention Ghewda / Rajma in their Bills. Variety of Ghevda is not at all mentioned. Same is the case while selling Ghewda. Sales patti s are prepared by Commission Agents or Adatiyas at Delhi Market. They too do not mention variety of Ghewda traded. Farmers and local petty suppliers also do not mention variety of Ghewda supplied by them when they handover Ghewda to local Adatiyas at local Market yards in respective areas. No trader in India known to appellant maintains separate variety-wise trading account. This is normal trade practice followed over the years by all traders in India. 7. It was pointed out by the assessee before the CIT(A) that during the assessment proceedings that the details of quantitative/month-wise purchases and sales and stock as well as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer has not pointed out any specific defect in the books of account duly audited by different set of Chartered Accountants for different centres and has simply resorted to the provisions of section 145(3) on the ground that the quantitative details is not available to his satisfaction. 11. The Ld. Departmental Representative for the Revenue, on the other hand, relied upon the order of the CIT(A) and submitted that the relief entitled to the assessee has already been granted in this regard. 12. We have carefully considered the rival submissions, orders of the authorities below and material placed on record. The issue agitated before us is to ascertain whether the Revenue was justified in comparing the gross profit margin at Delhi centre vis- -vis another centre located at Satara (Maharashtra). We find that details of purchase bills, sale bills, quantity-wise stock register and other information having been provided is not disputed. The primary grievance of the Revenue is that quality-wise stock register has not been maintained which may lead to under-valuation of closing stock. The Assessing Officer accordingly rejected the book results of the assessee concerning its Delhi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- made by the Assessing Officer invoking section 40(a)(ia) of the Act. 13.1 The relevant facts concerning the issue are that the assessee made certain interest payments to various co-operative credit societies on loan taken from them as under :- S.No. Name of the Institution Amount paid Paying Unit 01. Vyapari Patsanstha 1,92,179 Bhandari Agri Sales 02. Mahesh NSPS Sanstha 4,05,143 Bhandari Agri Sales 03. Mahesh NSPS Sanstha 1,54,690 B.R. Bhandari 04. Parshwanath NSPS 2,76,666 B.R. Bhandari 13.2 The Assessing Officer disallowed the same invoking section 40(a)(ia) of the Act as the assessee has failed to deduct due tax at source from the said payment. While doing so, it was observed by the Assessing Officer that the co-operative credit societies cannot be equated with banks as they are not empowered to carry out banking activi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lea raised by the assessee in view of second proviso to section 40(a)(ia) of the Act, which was inserted by the Finance Act, 2012. The Tribunal in ACIT Vs. Bhavook Chandraprakash Tripathi (2015) 43 CCH 292 (Pune-Trib) while adjudicating similar issue had observed as under:- 4. Following the aforesaid precedent, we hereby reverse the decision of the CIT(A). However, at the time of hearing, the Ld. Representative for the respondent-assessee made a new legal argument that second proviso to section 40(a)(ia) of the Act was inserted by Finance Act, 2012 w.e.f. 01.04.2013, whereby it is provided that the disallowance u/s 40(a)(ia) of the Act would not be made if the assessee is not deemed to be an assessee in default under the first proviso to section 201(1) of the Act. The stand of the assessee is that the said proviso should be understood as retrospective in nature as it has been introduced to eliminate unintended consequences which may cause undue hardships to the tax payers. It was pointed out that in similar circumstances, the Pune Bench of the Tribunal in the case of ITO vs. M/s Gaurimal Mahajan Sons vide ITA No.1852/PN/2012 dated 06.01.2014 following the decision of the Coch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to assessment year 2007-08 is partly allowed. ITA No.194/PN/2014 (By Revenue) : ITA No.228/PN/2014 (By Assessee) : 17. Now, we shall take-up the cross appeals filed by the Revenue and the assessee for assessment year 2008-09. The cross appeals filed by the Revenue and the assessee are against the order of CIT(A)-III, Pune dated 21.11.2013 relating to assessment year 2008-09 passed under section 143(3) Act. 18. The cross appeals filed by the Revenue and the assessee were heard together and are being disposed of by this consolidated order. 19. The Ld. Departmental Representative for the Revenue fairly admitted that the appeal of the Revenue in ITA No.194/PN/2014 relating to assessment year 2008-09 is covered by recent CBDT Circular No.21 of 2015 dated 10th December, 2015. Since the tax effect in respect of disputed issues raised by the Revenue in its appeal is less than the revised monetary limit of ₹ 10 lakhs prescribed by the CBDT Circular, the aforesaid appeal of the Revenue in ITA No.194/PN/2014 is not maintainable. 20. In view of expressed Circular of the CBDT (supra), the appeal of the Revenue in ITA No.194/PN/2014 stands dismissed. 21. Now, we sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... round as in assessment year 2007-08 that as the assessee has failed to deduct due tax at source from the said payment. 26. The CIT(A) confirmed the disallowance on the reasoning similar to assessment year 2007-08. Aggrieved by the order of the CIT(A), the assessee is in appeal before us. 27. The limited issue that arises for our consideration is whether the Assessing Officer is justified in resorting to section 40(a)(ia) of the Act in respect of expenditure towards interest charges attributable to Nagri/ Gramin Sahakari Patsansthas. The issue involved being identical to assessment year 2007-08 (supra), our decision in assessment year 2007-08 shall apply mutatismutandis to this assessment year i.e. 2008-09 also. Accordingly, the Assessing Officer is directed to adjudicate the issue in accordance with law after affording reasonable opportunity of hearing to the assessee. Thus, on this Ground assessee succeeds for statistical purposes. 28. In the result, the appeal of the assessee in ITA No.228/PN/2014 relating to assessment year 2008-09 is partly allowed. 29. Resultantly, both the captioned appeals of the assessee are partly allowed and the appeal of the Revenue is dismis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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