TaxTMI 
TaxTMI 
2015 (6) TMI 809
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....erred in confirming the addition of Rs. 386041/- by ignoring that the said amount was out of withdrawals entry of Rs. 4 Lacs from the books of M/s Mosaic House (India) Kund. 3. That the addition of Rs. 107939/- the alleged difference in sundry creditors accounts confirmed by the learned CIT(A) Rohtak is against the facts, written submissions and documents on record. 4. That the learned CIT (At Rohtak has grossly erred in confirming the disallowance the expenditure claimed at Rs. 1872599/- incurred in exporting in goods out of India by foreign shipping companies through Indian Agents while all the relevant documents and certificates are on record. 5. That the confirming of 50% disallowance of expenses at Rs. 154665/- out of Rs. 309330/- by the learned CIT (Appeal) Rohtak ignoring and without discussing that the expenses are under various heads and quite relevant to the business activities and none of the same are of capital or personal in nature. 6. That the appellant craves the leave to add, modify, amend or delete any of the ground of appeal at the time of hearing. Further all the grounds of appeal as above are without prejudice to each other. 3. The grounds raised ....
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....ions of interest on trade advances to M/s Vipin Stone, Kund, confirmed by the Learned CIT (A) Rohtak is quite arbitrary, ignoring all the facts and figures on record. 7. That the confirming of addition of Rs. 95830/- i.e. agricultural income supported with documents on record by the Learned CIT (A) Rohtak is quite arbitrary. He has further erred in ignoring the reply, documents and submissions which are very well on record. 8. That the confirming the additions of Rs. 33900/- i.e. 20% disallowances of expenses under various heads are quite arbitrary and without any findings. 9. That the confirming the addition of Rs. 20000/- under house hold expenses by the Learned CIT (A) Rohtak without any concrete findings and detection on record. 10. That the appellant craves the right to amend, delete or add any now grounds of appeal before and during hearing of appeal." ITA NO. 467/DEL/2011 (AY 2007-08) 4. The brief facts of the case are that the Return declaring total income of Rs. 7,37,090/- was filed on 2.11.2007. The return was processed u/s. 143(1) on returned income. Assessee is running two proprietorship concerns in the name and style of M/s Mosaic House (India) ....
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.... CIT(A) 1. Addition made on account of alleged unexplained sources of cash payments reflected in the cash books of M/s Mosaic House. 12,67,193 5 to 7 (2.3 to 2.5) 6-7 (6 to 6.1) 2. Addition made on account of alleged unexplained cash deposits in bank account of M/s Diler Stone 3,86,041/- 7 (2.6) 7 (707.1) 3. Additions on account of payment to sundry creditors outside books of account u/s 68 of the Act. 1,07,939 8(3) 7 (8 - 8.1) 4. Disallowance of expenditure incurred on export of goods through agents of freight shipping companies 18,72,599 9 (4.2) 8-9 (9-9.2) 5. Adhoc disallowance of 50% of following expenses 1,54,665 9 (5) 9(10) 1.5 Ground wise submission is as under:- 2. Addition of Rs. 12,67,193/- 2.1 Manner of Computation: Perusal of cash book (pages 65 -75 of Paper Book) of Mosaic House (India) reveals that the following position: Particulars Amount (Rs.) Opening balance Nil Receipts 5,29,948 (upto 30.3.2007) Total 5,29,948/- Less: payment 17,97,141/- (upto 30.3.2007) Difference added as income from undisclosed sources 12,67,193 ....
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....ance as per cash book (page 75 of Paper Book) iv) That even the original cash book, which has been made the basis of addition shows advance of Rs. 11,50,000/- (page 75 of Paper Book) and, transfer from capital account (Rs. 1,74,506/- (page 75 of Paper Book)., This transfer is however reflected on 313.2007 on account of virus in the computer v) That the difference of Rs. 12,67,193/- is explained out of the following: a) Advance against land Rs. 11,50,000/- b) Transfer from Diler stone Rs . 1,95,320/- vi) The fact of advance of Rs. 11,50,0001- having been received is evident from following evidences: a) Agreement to sell dated 26.3.206 (pages 77-78 of Paper Book) b) . Cash flow statement (page 76 of Paper Book) c) Revised cash book (pages 79-90 of Paper Book) vii) The learned Assessing Officer has admitted that even as per cash book the advance was received of Rs. 11,50,000/-. According to him however such advance was received on 31.3.2007 and, on 31.3.2006+ as is stated in cash book. The finding is contradictory. It is submitted that factum of receipt of advance cannot be deemed, as the same id duly reflected in financial statements/cash book. It is submit....
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....dia) on 23.5.2006 (pages 80 of Paper Book) ii) Once revised cash book (pages 97-103 of Paper Book) of Diler Stone and at (pages 79 to 90 at page 80 of Paper Book) of Mosaic House was placed on record, the learned Assessing Officer/Commissioner of Income Tax (Appeals) cold not automatically discredit the same. In view thereof, addition made may kindly be deleted. 4 Ground No.3: Addition of Rs. 1,07,939/- The learned Assessing Officer has held at page 8 paras 3 to 3.2 have been paid in cash out of the books and, therefore such payments have been treated as income from undisclosed sources U/S 68 of the Act Sr. No. Name of creditors Amount (Rs.) Pages of Paper Book (showing Closing balance in balance sheet) Explanation of assessee Pages Of paper book Ledger account i) Haryana Engineering Store, Jaipur 22,000 19 47 209 and 210 ii) Pratibha Granites, Bhilwara 2,1696 19 48 210 and 207 iii) Nabera Granites, Bilwara Gra 41,409 19 48 211 and 208 iv) Mahadev Stones 22,834 7 48 205 Tot....
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.... company. d) Note on expenses of M/s. Pooja Freight & Forwarders (pages 104 to 105 of Paper Book) e) Details of charges remittances by the appellant to Mls. Pooja Freight & Forwarders (pages 106-107 of Paper Book) f) Copy of ledger account of Mls. Pooja Freight & Forwarders (pages 212 to 217 of Paper Book) showing the closing balance of Rs. 1,18,758/- g) Copy of payments of Pooja Frieght & Forwarded (pages 218 to 257 of Paper Book) 5.4 He held that the aforesaid sum represented payment 'made outside books of accounts. The learned Assessing officer issued notice dated 11.12.2009 and, in response to which reply was furnished on 17.12.2009 (page 38 of Paper Book), whereby cash flow statement (page 76 of paper Book) placed on record. The difference was explained on account of following reasons: a) Advance against land: Rs. 11,50,000/- b) Transfer from Diler Stone Rs. 1,95,320/- The claim was supported by an agreement to sell dated 26.3.2006 (pages 77-78 of Paper Book) and raised cash book (pages 79 to 90 of Paper Book) The learned Assessing Officer (para 2.4 and 2.5) however held that explanation tendered is not acceptable on account of following reasons:....
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....Tax Act, we see no reason to interfere with the same" ii) 61 SOT 102 (Chd) ITO vs. Bhogal Export (pages 287-291 of Paper Book) iii) 158 TT J 4 (Jodh) Shree Rajasthan Syntex Ltd. (pages 294- 303 of Paper Book) iv) 143 TTJ 331 (Jodh) ACIT vs. Minpro Industries (pages 263- 274 of Paper Book) v) ITA No. 2278/Ahd/2009 (Ahd) dated 30.6.2011 ITO vs. Shri Saniani Vivek Gope (pages 304-323 of Paper Book) vi) ITA No. 1948/Ahd/2009 (Ah) DCIT vs. Harsh Geochem Ltd. (pages 324-347 of Paper Book) 5.7 Apart from the above, it is well settled law that provision of section 194C of the Act are not attracted on payments made to agents of non resident shipping companies as has been held in following judgments: i) 163 Taxman 479 (Del) CIT vs. Continental Carriers (P) Ltd. (pages 292-293 of Paper Book) ii) 103 TTJ 103 (Del) ITO vs. Freight Systems (India) Pvt. Ltd. iii) 271 CTR 165 (Cal) Poddar Sons Ex. L. (P) Ltd. vs. CIT (pages 277- 280 of Paper Book) 5.8 In view of the aforesaid, it is prayed that no disallowance be made under section 40a(ia) of the Act as the issue involved is squarely covered by the decisions and judgments cited above and there is no distinguishing fea....
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.... iii) 146 ITD 745 (Mum) ITO vs. Vishinda Diamonds iv) 134 ITD 486 (Ahd) Karnavati Co-op. Bank Ltd. vs. DCIT v) 209 Taxman 18 (Del) CIT vs. Expeditors International (India).(P.) Ltd. 5.10 Apart from the above it is submitted that since sum stood declared as income by the payee therefore assessee was not obliged to deduct TDS uls 194C of the Act since second proviso to section 40(a)(ia) of the Act is retrospective. Reliance is placed on the following judgments: i) 357 ITR 642 (All) CIT vs. Mls Vector Shipping Services (P) Ltd CIT vs. Vector Shipping Services (P) Ltd. wherein SLP has been dismissed by Apex Court in order dated 02.07.2014. Also, Civil Misc. Review Application No. 248688 of 2013 (All) CIT vs. Mls Vector Shipping Services (P) Ltd. has been dismissed. ii) 146 TTJ 1 (SB) (Vishakapatnam) (SB) Merilyn Shipping and Transports vs. Addl. CIT iii) ITA No. 249 of 2013 (AP) CIT vs. New Bombay Goods Transport iv) 123 TTJ 888 (Jaipur) Jaipur Vidyut Vitran Nigam Ltd. vs. DCIT v) ITA No. 228/2014 (O&M) (P&H) dated 20.11.2014 CIT vs. Mls Rajinder Parshad Jain (pages 348-352 of Paper Book) vi) ITA No. 52/2014 (Hyd) CIT vs. Janapriya Engineers Syndicate (pages....
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....DTR 116 (TM) (Agra) ITO vs. Mayur Aggarwal c) 254 ITR 673 (Guj) Dinesh Mills Ltd. vs. Commissioner Of Income Tax. d) 73 ITD 189 (Del) Goodyear India Ltd v ITO e) 106 TTJ 1065 (Del) Hughes Escorts Communications Limited. Vs Joint Commissioner of Income-tax. f) 94 TTJ 423 (Asr) Sunder Mal Sat Pal vs. Income Tax Officer g) 81 TTJ 448 (Jodh) DCIT vs. Surface Finishing Equipment h) 12 TTJ 485 (Cal) Trimurti Salt Compnay v ITO 6.5 It is further submitted that, in absence of any basis given by the learned Assessing Officer, the disallowance is not tenable. Reliance is placed on the judgment of State of Orissa v. Maharaja Shri B.P.Singh Deo (1970) reported in 76 ITR 690 (SC) 6.6 Moreover it is not a case where books of accounts have been produced alongwith vouchers. It is submitted that vouchers are always self *generated and suspicion howsoever strong cannot be basis to disallowance an eligible expenditure. Reliance is placed on the following judicial pronouncements: a) 37 ITR 151(SC) Omar Salay Mohammad Sait v CIT b) 26 ITR 736 (SC) Dhirajlal Girdharilal v CIT, Bombay c) 26 ITR 775 (SC) Dhakeshwari Cotton Mills Itd. v CIT d) 37 ITR 288 (SC) La....
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....ing difference in inflow of cash of Rs. 12,67,193/- in Mosaic House (India), it is submitted that while considering the inflow you have not considered the amount of Rs. 11,50,000/- received as advance against land property and further a sum of Rs. 1,95,320/- was also transferred from the books of Diler Stone, if the same are considered the difference will automatically reconcile. The advance against land property was taken in the month of March 2006 and it was entered in the cash book but unfortunately at the time of feeding/printing or virus my view I am enclosing copy of agreement and detailed cash flow of Mosaic House (India) for your kind consideration. 2 That as regard to cash difference of Rs. 3,86,041/- in the books of Diler Stone as mentioned in the above notice, it is submitted that there was opening balance of Rs. 75,959/- and thereafter a sum of Rs. 4,00,000/- was transferred from the cash book of Mosaic House (India) and out of these amounts a sum of Rs. 4,50,000/- was deposited in the bank. Both the accounts were maintained in same computer. But due to virus problem unfortunately these entry was disturbed and due to over sight of these entries both the cash book wer....
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....hat appellant has furnished revised cash book during the assessment proceedings explaining the discrepancy in the original cash book furnished during the assessment proceedings. The Assessing Officer has discredited the said cash book without examining the same. We therefore, direct that while conducting fresh examination, the Assessing Officer would look into the explanation tendered and the revised cash book and not merely discredit the same. Accordingly, the issue of addition regarding unexplained deposit in the cash book of the appellant is restored to the file of the Assessing Officer for denova examination and adjudication after granting necessary opportunity to the appellant. 11. With regard to ground no. 3 relating to confirmation of addition of Rs. 1,07,939/- is concerned, we find that Ld. CIT(A) has observed that the assessee was afforded one more opportunity to produce the said creditors before the AO during the remand proceedings. The appellant could not produce these parties inspite of several opportunities. But for furnishing the bills of these parties, no efforts were made to prove his version. In the rejoinder to the remand report, the assessee contended that com....
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....as liable for TDS. We find that the issue involved in the instant case is no longer res integra. The Hon'ble Gujarat High Court in the case of CIT vs. Gujarat Narmada Valley Corporation reported in 361 ITR 192 was considering a case where assessee claimed deduction of Rs. 6,93,372/- towards reimbursement of CHA charges paid of C&F agents and Rs. 76,00,509/- towards reimbursement expenses towards consignment agents. The High Court upheld the deletion of the addition by the CIT(A) and the Tribunal on the ground that expenses were incurred by the agents on behalf of the assessee for transportation as no other parties which has been felt out in the bills including commission to the agent. It was therefore, held as under: "The learned tribunal also observed that the relation between the assessee and the agent is principal and an agent. The learned tribunal also observed that so far as the obligation to deduct tax at source from the payment of transport charges and other charges is concerned, the same was complied with by the agent, who had made payment on it's behalf. On the aforesaid facts the learned tribunal also observed that the circular relied upon by the revenue that i....
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....9,816 on account of other expenses on which TDS was not applicable. In this way, the entire addition of Rs. 1,60,41,692 was deleted by learned CIT(A). The learned CIT(A) has discussed each item in detail and then only it has been held that assessee was not liable to make deduction of TDS on reimbursement of expenses. Various Benches of the Tribunal are taking a consistent view that if the payments are made on account of reimbursement, then no TDS is liable to be deducted on behalf of the payer i. e. assessee. 12.2. The learned Departmental Representative placed reliance on the decision of Hon'ble Karnataka High Court in case of Kamataka Urban Infrastructure Development Finance Corporation (supra). 12.3 We have gone through the ratio of this decision and found that the same is distinguishable. In this case on bona fide belief of the assessee company which was wholly-owned by State of Karnataka had not deducted TDS on account of non-resident company by observing that the amount spent towards accommodation and conveyance of the officer/employee of the non-resident company was not required to be treated as a part of their income, whereas it was a part of their income. Therefo....
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....es for storage Rs. 3,52,869.81 Landing charges charged by shipping companies owned by govt. Rs.8,04,085 Transportation charges which are bill wise and amount is below Rs. 20,000/- and paid to truck wise not to the co. Rs.23,400 Inland haulage charges to container corporation of India who is exempted for tax deduction at sources and other shipping coy. Certificates furnished. Rs.61,224 Shipping bill for material charges charged by govt. Rs.19,495 Certificate charges by govt. On documents furnished for export Rs.13,500 Loading and unloading charges, petty in nature Rs.75,000 Certificate fee charges by govt. Rs.11,000 Fumigation charges on storage to prevent the goods for damages Rs.6,100 License fee charges bill wise Rs.2,42,608.50 Misc. And Petty charges Sea/Air freight not subject to TDS Total : Rs. 18,70,773.01 12.5. A perusal of the above chart demonstrates that most of the payments are reimbursement of expenses. When expenditure is reconciled there is no element of income to the recipient. 12.6. Having regard to the above factual position which is not disp....
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..... With regard to ground no. 2 relating to confirmation of addition of Rs. 6 lacs u/s. 40A(3) is concerned, we find that Ld. CIT(A) has observed that it has not been disputed by the assessee that the cheques are not bearer cheques. The assessee's counsel failed to lead only evidence and submissions as to how the particular transactions are covered under Rule 6DD. In our considered opinion, Ld. CIT(A) was right in observing that mere statement that the purchasers have no bank account a/c at that very place has no meaning without explaining the circumstances under which the assessee had to issue bearer cheques and as to how the transactions are covered under Rule 6DD. In view of above, Ld. CIT(A) has force in his finding in holding that in the absence of any evidence led by the assessee, the action of the AO in disallowing the amount u/s. 40A(3) was upheld, which does not need any interference on our part, hence, we uphold the same and dismiss the ground no. 2 raised by the assessee. 17. Ground no.6 is addition on account of notional interest. It is well settled law that the Hon'ble Gauhati High Court in the case of Highways Constructions Co. Pvt. Ltd. Vs. Commissioner of Income Ta....