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TMI Blog2019 (12) TMI 1419X X X X Extracts X X X X X X X X Extracts X X X X ..... onfirming the addition u/s. 40(a)(ia) which action is totally unnecessary, impracticable and against the principles of fair and natural justice, cannot be accepted and has to be cancelled." 3. This assessee is a firm engaged in medicines wholesale business. It has admittedly paid the impugned sales commission to 31 payees (details to this effect form part of case records) without deducting TDS u/s 194H of the Act. Its case is that the impugned sales commission payments required TDS deduction @0.01% coming to Rs. 338/-, in aggregate, only. We are taken to the case records including Government of India, Ministry of Finance's press note dated 05.01.2012 that when the refunds for amounts less than Rs. 100/- are not issued by the department, then, the demands of rupees less than 100/- should also not be collected. Learned counsel next refers to the CBDT's clarification/instruction dated 22.12.2009 No.7 of 2009 regarding certificate of lower deduction or non-deduction of tax at source vis-à-vis the corresponding jurisdiction u/s 197 of the Act. Learned authorized representative's case accordingly is that since the impugned TDS deduction required involves a very miniscule pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the sum of Rs. 74,25,129/- in the Balance Sheet of the appellant. Out of such amount, it was found that notices issued u/s. 133(6) of the Act returned unserved. The amounts consisted of negative balance of Rs. 11,993/- in respect of Solvay Pharma India Ltd., Rs. 61,054/- in respect of B.A. Brothers (ESTN) Ltd., Rs. 26,208/- in respect of Wim-Medicare P. Ltd. and a balance of Rs. 9,22,767/- in respect of Joyasri Distributors. It was submitted by the appellant that ".....However, we have already submitted you ledger copies of such parties i.e. (a) Solvay Pharma India Ltd. (b) B.A. Brothers (ESTN) Ltd. and (c) Joyasi Distibutors. We are enclosing herewith copies of such ledger again for your perusal. Transaction with such parties were genuine and payment have been made by account payee cheques only." However, the AO was not impressed by such submission of the appellant. He was of the view that since the appellant failed to establish the outstanding balance claimed in respect of these four creditors and also that the parties did not respond to the notices issued and further that the appellant did not provide any new addresses, he went on to add the sum of Rs. 9,22,767/- in respect o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gal basis at all. Therefore such addition may be deleted. 11. The issue was remanded to the AO for ascertaining the veracity of the contention of the appellant. The AO after taking into consideration the submissions made by the A/R of the appellant along with enclosures submitted his reply on the issue in the report which is as under: - "In pursuant to your kind instruction, letters u/s 133(6) were issued to the 4 sundry creditors i.e. M/s Abot India Ltd.(previously Solvey Pharma India Ltd. on 07.04.2017 to submit their reply within 3 days of receipt of the letters. However, the above letters were returned unserved by the postal authority. However, letter sent to B.A. Brothers(ESTN)Ltd returned unserved by the postal authority with remark "Company not postal verified'. No reply is received from Soluey Pharma India Ltd. On 04.07.2017, Shri Prabir Goswami, A/R of the assessee appeared and contended that the assessee had already submitted reply from Solvey Pharma India Ltd vide letter dt. 19th March, 2014, during the course of scrutiny assessment itself. He once again brought to the notice of the undersigned, the copies of the statement of accounts of Solvey Pharma India Ltd a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edit balance as on 31.3.2011 as bogus creditors. And the Submission dated 26.05,2016 may kindly be considered. The above additions were made purely on assumption and surmise only. Such addition has no legal basis at all. Therefore, such addition may be deleted. 13. The issue raised in the assessment order and the remand report of the ASSESSING OFFICER Vis-a-vis the arguments advanced by the A/R and the subsequent rejoinder of the appellant to the remand report were duly considered carefully in view of the materials adduced on record. The addition of Rs. 9,22,767 l- was made in respect of Joyasri Distributor only and not in respect of any other parties. However, in the ledger account of Joyasri Distributors, the closing balance shows at Rs.(-)61,O541- whereas in the ledger account of Solvay Pharma India Ltd. the amount is Rs. g,22,76U-. Therefore in my opinion, the addition was made in respect of Solvay Pharma India Ltd. and not Joyasri Distributor as mentioned by the AO in his assessment order. It is observed that the only basis of the AO for making and adhering to the addition of Rs. 9,22,767 1/- as bogus creditor since the appellant was unable to discharge the burden of provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so, it is construed that this is a thorough planning and design and the transactions have been orchestrated with the only intent i.e. to show these transactions as genuine. The preponderance of probabilities militated against such transactions. It was also asserted that the appellant had failed to produce any detail as desired by the A.O. in the assessment proceedings and even at the appellate stage. Therefore, the transactions undertaken by the appellant do not appear to be real. There is more than one consideration to come to a conclusion that apparent is not real. There are distinct reasons to disbelieve the transactions undertaken with Solvay Pharma India Ltd. is not being real in nature and as such, the conclusion reached by the AO basing on the surrounding circumstances to find out the reality is in consonance with law. Therefore after considering the surrounding circumstances and applying the test of human probabilities, it is concluded that the claim of the appellant in respect of the bogus creditors are not genuine and hence, the conclusions reached by the AO is liable to be upheld. 13.1 The conclusions reached in respect of the specious transactions undertaken by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nning ticket which was surrendered to the race club and in return a crossed cheque was obtained. It is a neutral circumstance, because if the appellant had purchased the winning ticket after the event she would be having the winning ticket with her which she could surrender to the race club. The observation by the Chairman of the Settlement Commission that 'fraudulent sale of winning ticket is not a usual practice but is very much of an unusual practice" ignores the prevalent malpractice that was noticed by the Direct Taxes En4uiry Committee and the recommendations made by the said Committee which led to the amendment of the Act by the Finance Act of 1972 whereby the exemption from tax that u.tas available in respect of winnings from lotteries, crossword puzzles, races, etc., u)as withdrawn^ Similarly the observation by the Chairman that if it is alleged that the tickets were obtained through fraudulent means, it is upon the alleger to prove that it is so ignores the reality. The transaction about purchase of winning ticket takes place in secret and direct evidence about such purchase would be rarely available. An inference about such a purchase has to be drawn on the basis of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o disclose cogent evidence in that regard She claims to be a commission agent. The column 5 of GTI-1 provides for deduction of commission. Therefore it should not have been difficult for the assessee to disclose the relevant evidence about the transactions allegedly made by the assessee on behalf of suppliers of fish or the trawler owners. Her failure to do so even prima facie amounts to no explanation at all." 14. Therefore taking into consideration the circumstances of the present case and the applicable legal position on the issue, it can be safely concluded that the A.O was correct in law in resorting to the addition of Rs. 9,22,767/- by applying the provisions of s. 68 of the Act since the criteria of identity of such creditor creditworthiness and the genuineness of the transaction in that respect remained unproved and after due deliberation, I am inclined to uphold the same. The ground no.3 of the appeal is hereby dismissed." 8. We have heard rival submissions. Both parties reiterate their respective stands against and in support of the impugned addition. The assessee's case is that the impugned credit balance of Rs. 9,22,767/- was in order in view of the corresponding ope ..... X X X X Extracts X X X X X X X X Extracts X X X X
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