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TMI Blog2016 (10) TMI 495X X X X Extracts X X X X X X X X Extracts X X X X ..... GH 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 deduct TDS and accordingly there is no default for non-deduction of TDS. Bogus purchases - Held that:- We find that AO has made the addition on the ground that there was bogus purchase in the books of the assessee. However the ld. CIT(A) deleted the same by observing that the all the transactions are genuine. From the facts we find that the lower authorities have not brought anything on record about the payment claimed by the assessee to the party. The payment was made through account payee 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... untant Member And Shri K. Narsimha Chary, Judicial Member By Assessee : Shri Rajeeva Kumar, Advocate By Respondent : Shri Satyendra Mohan Das, Addl. CIT-SR-DR ORDER Per Waseem Ahmed, Accountant Member :- Both appeals by the Revenue are against the separate orders of Commissioner of Income 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 disposed of by way of this common order for the sake of convenience. First we take up ITA No.355/Kol/2014 for A.Y 06-07. 3. The grounds raised by the assessee per its appeal are as under:- 1. 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 ₹ 2,35,500/- unexplained purchase fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 observing that party M/s KI was registered with the Govt. of West Bengal and payment was made through account payee cheque. In this connection, we find 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 account of assessee. Therefore, we do not find any reason to interfere in the order of Ld. CIT(A) and we also rely in the judgment of Hon'ble jurisdictional 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he name of M/s Bharat Somani for ₹ 4 lakhs but the same was not verified u/s 133(6) of the Act as the notice returned as un-served. On question by the AO about 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 unloading charges. During the assessment year under appeal, part payment to the extent of ₹ 4,31,748/- was made to the supplier, Bhrat Somani, which was comprised of by cheque of ₹ 4,00,000/- and cash on two dates of ₹ 16,748/- and ₹ 15,000/-, and the balance outstanding of ₹ 4,00,000/- [Rs. 8,31,748 - ₹ 4,31,748/-] was shown as sundry creditor in the balance sheet as at 31/3/2006. Copies of relevant bills, R.C of Central and State and bank statement were filed before the AO in response to his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... doubted. Therefore, we do not find any reason to interfere in the order of Ld. CIT(A) and we also rely in the judgment of Hon'ble jurisdictional High Court in the case of Diagnostics vs. CIT ANR (2011) 334 ITR 111 (Cal)(Supra). Respectfully, following the above precedents of the above case, we do not any reason to interfere in the order of the ld. CIT(A). We hold accordingly. This ground of Revenue s appeal is dismissed. 13. The last issue raised by Revenue in this appeal is that Ld. CIT(A) erred in deleting the addition made by AO on account of non-deduction of transport 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 assessee separately. Had it been the cost of purchase then it should have been added in the cost of material. Accordingly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial 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 of transportation, accordingly, there was no liability for deduction of tax source. If expenses incurred by a person on account of transportation etc. are added to the cost of the goods, it cannot be inferred that the person who is billed had paid certain amount on account of those services separately as the same becomes part of the commodity so sold [CIT (TDS) vs. Assistant Manager (Accounts), Food Corpn. of India (2010) 326 ITR 106 (P H)]. In view of the above factual matrix and numerous 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the books of account of assessee. He further submitted that in case transport charges are shown separately then how the closing stock is valued at the end of the year under consideration. In rejoinder, Ld. AR before us submitted that assessee was not liable to deduct TDS under the provision of Sec. 194C of the Act and the provision came into effect of u/s. 194C with effect from 01.06.2007 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 of TDS. In this connection we rely in the judgment of Hon ble Court of Calcutta in the case of CIT Vs. Shri Rinku Mallick ITAT no. 96 of 2012, GA No. 1368 of 2012 where it was held as under:- We have heard the learned Counsel Smt. Sinha [Das de], appearing for the appellant, and we have gone through the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 1,65,346/- 19.03.07 Bridge Material 2,53,400/- 21.03.07 Bridge material 5,16,282/- 8,85,562/- 16,55,234/- Closin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayments thereof are also found recorded in the bank details, thee was no scope left to the AO to doubt the purchases and add the 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 in the books of the assessee. However the ld. CIT(A) deleted the same by observing that the all the transactions are genuine. From the facts we find that the lower authorities have not brought anything on record about the payment claimed by the assessee to the party. The payment was made through account payee 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supplier from which it is evident that the closing balance in those two statements was in agreement, with each other. Thus, it is evident that ESS Refilling Station either omitted to give the opening balance carried forward from earlier year or in compliance to the query regarding sales made during the year, it gave details only to that extent. Whatever it may be the AO to meet the ends of justice should have further enquired from the said party about the appellant s claim, which he did not do so before coming to such an unwarranted conclusion. 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 the assessee and the party. At the outset we find that the excess balance shown by the assessee in its books of accounts is balance sheet item ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 does not stand good, which is thus directed to be deleted. Being aggrieved by this order of Ld. CIT(A) Revenue is in appeal before us. 29. 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 TDS was deducted at a rate lower than the rate prescribed under section 194-I of the Act. However the ld. CIT(A) deleted the same by observing 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 ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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