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TMI Blog2015 (11) TMI 1887X X X X Extracts X X X X X X X X Extracts X X X X ..... urse of assessment proceedings made addition on account of sundry creditors from whom the assessee purchased goods. The assessee has purchased heavy earth moving machineries from the following parties: Sl. No. Name Address provided by the assessee Opening Balance Addition Subtraction Closing Balance 1. D. S. Enterprises 2, Canning St., Kol- 700001 0 29.08.900 0 29.08.900 2. Durga Trading Corporation 309, B. B. Ganguly St., 1st floor, Kol-700012 0 14,56,000 0 14,56,000 3. Gem Traders P-41, Princep St., Kol- 700072 0 32,68,754 0 32,68,754 4. Kalimata Trading Complex Salap, Kalitala, Howrah- 711409 0 32,91,600 0 32,91,600 5. Radhika Steel Syndicate Kona, Benara Road, Howrah-711114 0 22,54,360 0 22,54,360 6. Sangeet Rahini Corporation 62, Bentinck St., Kolkata-69 0 9,10,000 0 9,10,000 7. Seema Enterprise 62, Bentinck St., Kolkata-700069. 0 13,52,000 0 13,52,000 The AO required the assessee to file the details of purchases and also established the identity of the creditors and genuineness of transaction as the goods were purchased on credits and payments were made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ough facts and circumstances of the case. Briefly stated facts are that the assessee has taken unsecured loans from the following persons: Sl.No. Name Opening Balance Addition Interest TDS Closing Balance 1. Bina Chaudhury 0 400,000 395 0 400,395/- 2. Brijmohan Tibrewal 0 350,000 394 0 350,345/- The AO required the assessee to provide the names, address along with evidence to prove the creditworthiness of the above unsecured loans and both the creditors have confirmed giving above loans to the assessee but assessee failed to produce the evidence in respect of creditworthiness of these parties and in the absence of the same, the AO added these unsecured loans of Rs.7.5 lacs to the returned income of the assessee. Aggrieved, assessee preferred appeal before CIT(A), who deleted the addition by relying on the decisions of Hon'ble Gujarat High court in the case of DCIT v Rohini Builders (2002) 256 ITR 360 (Guj). 7. We find from the above facts that both the creditors have confirmed the transaction and also filed details of their assessment particulars and these credits are given out of their bank account but the AO did not carry out any exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sheet/P&L account is acceptable as evidence of creditworthiness and none of these have been filed by the appellant in respect of these parties. The A.O. states that his view is based on the pronouncements of various Courts including the Hon'ble Supreme Court. If the A.O. states that his stand, that, even where confirmations of purchase transactions are available on record, a buyer has to, suo moto, produce IT Returns/Balance Sheets P&L accounts of the seller as proof of such sellers' creditworthiness, is based on judicial decisions then citations of such judicial decisions become necessary. However, no such citation has been given. In this case, in my opinion, if the A.O. felt that primary evidence of the creditworthiness was lacking, I do not see what prevented him from raising further queries. The addresses and the PA Nos. of these parties were available with him. Yet, for reasons best known to him, he is not seen to raise any further queries with these parties. He has mentioned in the order that purchase bills/mode of transportation of these purchases have not been produced. However, the appellant claims that necessary details including bills, VAT & PAN had been filed i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onfirm the order of CIT(A) and this issue of revenue's appeal is partly allowed. 11. The next issue in this appeal of revenue is against the order of CIT(A) deleting the addition made by AO on behalf of disproportionate payment of expenses made to persons specified u/s. 40A(2)(b) of the Act. For this, revenue has raised following ground no.4: "4. That the Ld. CIT(A) has erred in deleting the addition on account of u/s. 40A(2)(b) of Rs.29,50,000/- ignoring the material facts and circumstantial evidence brought on the assessment records of the assessee." 12. Briefly stated facts are that the AO noticed from audit report that the expenditure of Rs.2,29,72,459/- were paid to related persons specified u/s. 40A(2)(b) of the Act and according to him to block the possible leakage in the revenue, he disallowed on ad-hoc basis at Rs.29.50 lacs as under: "To plug the possible leakage in the revenue on the account of the above, the undersigned thinks it fit to disallow as under: Point Description of expenditures Disallowance (Rs.) 4A a) Relating to Coal Raising at Sikni Rs.10,00,000/- 4A b) Relating to sand Transportation Rs. 4,00,000/- 4A c) Relating to Road Construction a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee receives Form 15-I he is not obliged to deduct TDS but to make payment without deduction of TDS. This view of ours is fortified by the decision of Coordinate Bench of Mumbai Tribunal in the case of Vipin P. Mehta in ITA No.3317/M/2010 dated 20th May, 2011, wherein it is held as under: "6.We have carefully considered the facts and the rival contentions. Section 194A provides for deduction of tax from the interest paid by the assessee, at the appropriate rate. Section 197A(lA) provides that notwithstanding anything contained in section 194A no deduction of tax shall be made under the section if the payee of the interest furnished to the person responsible for paying the interest, a declaration in writing in duplicate in the prescribed form and verified in the prescribed manner to the effect that the tax on his estimated total income of the previous year in which the interest is to be included will be nil. Sub-section (2) provides that the person responsible for paying interest shall deliver or cause to be delivered to the CCIT or CIT one copy of the declaration submitted by the payee of the interest to the assessee on or before the seventh day of the month next followin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to reject the assessee's claim. The Assessing Officer has stated in para 4.4 of the assessment order that he found that some of the loan creditors were having taxable income but still the assessee had submitted declarations from them in form no. 15G. Unless it is proved that these forms were not in fact submitted by the loan creditors, the assessee cannot be blamed because at the time of paying the interest to the loan creditors, he has to perforce rely upon the declarations filed by the loan creditors and he was not expected to embark upon an enquiry as to whether the loan creditors really and in truth have no taxable income on which tax is payable. That would be putting an impossible burden on the assessee. That apart sub-section lA of Section 197A merely requires a declaration to be filed by the payee of the interest and once it is filed the payer of the interest has no choice except to desist from deducting tax from the interest. The sub-section uses the word "shall" which leaves no choice to the assessee in the matter. In the case of payment of leave travel concession and conveyance allowance to employees who are liable to deduct tax from the salary paid to the employees u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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