TMI Blog2018 (11) TMI 1003X X X X Extracts X X X X X X X X Extracts X X X X ..... tificate filed by ld A.R. of the assessee during the course of hearing, we find that TDS of ₹ 10,707/- was deducted out of the total payment of ₹ 10,70,713/- and the related TDS was deposited in the account of Central Government on 29.9.2012 i.e. before the due date of furnishing of return of income u/s.139(1) of the Act. The said TDS certificate is generated from the site of Income Tax Department. Assessee made a statement at bar that this TDS certificate was filed before the lower authorities was not disputed by D.R. Hence, we find that addition made by the CIT(A) was on wrong appreciation of facts and, therefore, we set aside the order of the CIT(A) and delete the addition of ₹ 10,40,713/ and allow this ground of cross objection of the assessee. Payments by the firm to the partners were in violation of section 40A(3) - Held that:- We find that there is no payment in cash by the firm to the partners. Rather, the undisputed facts are that the partners’ capital account was credited by the amount of expenditure paid by the partners on behalf o the firm. Thus, there is no payment to a particular person in excess of ₹ 20,000/- in violation of section 40A(3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of firm along with the copy of the Deed of partnership. It was also supplemented by a copy of the affidavit attested by the Notary public, Berhampur confirming drawing of such deed of partnership. Under these circumstances, the assessee's claim that it is a Firm and is to be assessed as such cannot be ignored. Hence, the presumption that the partnership was not genuine as it was not evidenced by a genuine/valid instrument of partnership deed and therefore the status of the assessee was to be treated as Association of Persons i.e. AOP, was not correct. On the above, the conclusion in the assessment order that the assessee was ineligible for claim of deduction of remuneration and interest of partners is not correct and the assessee is to be assessed as a Firm. 4.1 I have considered the matter. The AO's conclusion in his report after examination of the relevant documents is that the status of the assessee should be taken as firm and not AOP. Consequently, the disallowance of interest on partners' capital and remuneration to the partners is unwarranted. In view of this, the status of the assessee is directed to be taken as firm and salary interest payments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Audit fees payable ₹ 5,000.00 Consultancy fees payable ₹ 10,000.00 Sundry creditors Rs.4,42,82,877.00 Rs.4,42,97,877.00 Total: ₹ 5,84,37,741.00 Assets Application of funds assets Current assets, loans advances : Nil Bills receivable 1. Gopalpur Port Ltd. Rs.5,83,25,291.00 2. Sri Avantika Cont.(I)Ltd Rs.1,57,72,593.00 Rs.7,40,97,884.00 Income tax deducted at source AY 12-13: Rs.19,50,525.00 Balance in current account: ₹ 7,34,06s4.00 Cash in hand ₹ 44,842.48 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntract receipt ₹ 8,01,86,760/- in the case of GPL and ₹ 1,57,72,593/ from SACIL. The total gross contract receipts declared by the assessee in the P L A/c for the year ending 31.3.2012 has been shown as ₹ 9,57,26,243/- (GPL ₹ 7,83,86,748/- SACIL ₹ 1,73,39,495/- during F.Y. 2011-12.) The pendency in balance receivable and balance payable between the assessee and two parties have been explained by the assesse. In this respect, the books of account (said to be washed away by cyclone phylin), the assessee s production of confirmation from the two parties is treated as sufficient evidence for explaining the difference. As the assessee has declared a composite contract sum received in P L account as ₹ 9,57,26,243/-, which is inclusive of sum receivable by the assessee for the year ended 31.3.2012. In my humble opinion, no separate addition by way of recasting of balance sheet for the year ended 31.3.2012 was required to be carried out. After considering the remand report, the CIT(A) observed that there is no justification to make the addition of ₹ 1,83,89,574/- by recasting the balance sheet and deleted the same. 9. Ground No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed above, t is held that the claim of sundry creditors made by the assessee at ₹ 4,42,82,877/- is not at all genuine and correct and hence, the same is added to the income of the assessee. 7.1 The matter was remanded to the AO for fresh verification on the basis of additional evidences produced by the assessee at the time of appeal ring. After examination of the documents and accounts produced before the AO in his remand report dt.2.3.2017 has submitted as under: Addition of ₹ 4,42,82,877/- was made by disallowing the claim of sundry creditors out of the fact that it had not furnished details such as name and address of the sundry creditors opening balance as on 01.04.2011 total amount Of transactions made during the year then total amount of payment made during the year along with date wise payment and mode of payment and balance as on 31.03.2012. The assessee had at that time claimed that due to cyclone phylin, the same could not be furnished. Presently, the assessee has furnished list of sundry creditors along with copies of confirmation and Return of Income filed by the sundry creditors for the F.Y. 2012-13. (except in the case of Shri. Pratap Ranjan R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C 10,82,376.00 Rajendra Kumar Sethi DOQP53612F 16,41,164.00 Rajesh Chandra Rati ARDPP0252F 9,86,472.00 Rajib Lochan Nayak ADOPN5043R 22,43,947.00 Ranjita Mohanty AVMPM1136F 16,23,926.00 Ranjit Patra BDIPP0883Q 14,67,652.00 Saqar Rout ASQPR8912H 18,32,789.00 Sailendra Rout BBPPR8499M 8,74,238.00 Salary Allowances Payable 95,190.00 \ Subha Sankar Lenka ACKPL0821G 14,46,382.00 TDS payable 2011-12 1,92,951.00 Grand Total: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Quarrying expenses : Rs.2,51,04,671 High, stacking segregation : ₹ 99,16,913 Placement of stone : Rs.1,63,00,946 Repair maintenance : ₹ 25,02,000 Hire charges of machinery : ₹ 32,95,000 Staff salary allowance : ₹ 11,34, 000 Contract wages : ₹ 6,85,800 Total : Rs.8,72,77,179 With regard to the claim of such expenses the assessee was not able to produce bills vouchers. It has also not able to produce books of account on the plea that those were washed away in super cyclone Phallin . In absence of bills and expenses vouchers and books of account, it was not possible on the part of the undersigned to verify the genuineness and correctness of the expenses claimed under the heads mentioned above. Hence, I deem It fair and rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of RsJ127,94,542/- is confirmed and the balance of ₹ 1,90,24,753/- is deleted. 13. We have heard the rival submissions, perused the materials available on record and orders of the lower authorities. It is observed that various additions deleted by the CIT(A) were on the basis of the remand report by the Assessing Officer. In the remand report submitted by the Assessing Officer, the Assessing Officer himself after verification admitted that the addition is to be deleted. 14. On the above facts when Bench asked ld D.R. that when the Assessing officer has himself agreed to in the remand report that addition is to be deleted then what is the grievance of the revenue and why this appeal has been filed. Ld D.R. could not give any reply to the query of the Bench. In the circumstances, we do not find any good reason to interfere with the order of the CIT(A), which is hereby confirmed and appeal of the revenue is dismissed. 15. In the result, appeal of the revenue is dismissed. 16. Now, we take up the cross objections of the assessee for our adjudicatio n. 17. Ground Nos.1 to 4 of cross objection are as under: 1, the learned C.I.T.(A) is justified in confirmi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee, when the learned A.O has no Authority to suggest the learned C.I.T.(A) to disallow ₹ 10,70,413.00 by applying section 40(a)(ia) of the Act. The impugned disallowance of ₹ 10,70,413.00 being illegal needs to be deleted in the interest of justice. 22. The brief facts of the case are that the CIT(A) observed that the Assessing Officer has reported that the assessee has paid ₹ 10,70,713/- to M/s. Monalisha Parija without deduction of tax at source as per the requirement of law. Hence, this amount is required to be disallowed u/s.40(a)(ia) of the Act. The CIT(A) disallowed the expenses and made addition of ₹ 10,70,713/- to the income of the assessee by invoking the provisions of section 40(a)(ia) of the Act. 23. Before us, ld A.R. has referred to ledger copy of payment made to Monalisha Parija and Form No.16A to submit that TDS was deducted on the payments of ₹ 10,70,713/- and deposited with the Government. It was also submitted that these documents were also filed before the CIT(A), who not taking into consideration these documents has disallowed the expenses by relying on the report of the Assessing Officer. Hence, he prayed that addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 8,50,000 iv) Sabyasachi Panda : ₹ 3,30,000 28. On appeal, the CIT(A) confirmed the addition by observing as under: I have considered the matter. On the facts of the case, it is clear that the capital introduced by the partners cannot be taxed as unexplained since all the partners are assessed to tax and their creditworthiness cannot be doubted from the incomes shown by them in the returns. However, the entire capital introduction of ₹ 61,55,000/- has been made by the partners by way of journal entries passed in the name of partners who have made payments on behalf of the firm for various expenses. The expenses are fond to have been made to various parties in cash in violation of the provisions of section 40A(3). Only because the payments have been made by the partners, the firm cannot get away from the mischief of section 40A(3). Hence, though the addition on account of capital introductions by the partners is to be deleted, the addition is confirmed by way of disallowance u/s 40A(3). The addition of ₹ 61,55,000/- is confirmed u/s.40A(3). 30. We have ..... X X X X Extracts X X X X X X X X Extracts X X X X
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