TaxTMI 
TaxTMI 
2016 (11) TMI 732
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....f Rs. 2,41,530/- in respect of alleged payment of commission made on an illegal reference to the provisions of s. 40(a)(ia) of the Income Tax Act, 1961 by the Ld. Income Tax Officer, Ward 49(1), Kolkata and the adverse conclusion reached on that behalf without considering the proper factual matrix of the instant case and basing on subjective issues not amenable to reason is wholly erroneous, wrong and flawed in the circumstances of the case." 3. As far as the aforesaid grounds are concerned, the AO disallowed a sum of Rs. 2,41,530/- which was payment on account of commission on which the assessee failed to deduct tax at source as required u/s 194H of the Income Tax Act, 1961 (Act). In view of the provisions of Sec.40(a)(ia) of the Act which provides that where tax has not been deducted as required in law, the corresponding expenditure on which tax was not deducted will not be allowed as a deduction, the AO disallowed a sum of Rs. 2,41,530/- and added the said sum to the total income of the Assessee. The order of AO was confirmed by the CIT(A) giving raise to Gr.No.1 & 2 by the Assessee before the Tribunal. 4. At the time of hearing of the appeal, the limited prayer of the ld. Co....
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....cation of the same. In this regard we also find that the Assessee has furnished all the details of assessment particulars of the recipients of payment from the Assessee. The AO therefore should not have any difficulty in making the required verification. We therefore set aside the order of the CIT(A) to the extent to which he had sustained the order of the AO on the disallowance u/s.40(a)(ia) of the Act and remand the issue to the AO to verify whether the recipients have included the receipts paid by the assessee in their respective returns of income and also paid taxes on the same. To the extent the recipients from the Assessee have so included the sum in their returns of income and filed the same, no disallowance u/s.40(a)(ia) of the Act should be made by the AO. In case the recipient parties are not cooperating in providing details, the AO should be directed to call for the information u/s. 133(6) or 131 of the Act, for verification of the same." 6. I am of the view that similar directions as were made above should be given in the present case also. The issue is accordingly set aside to the AO for verification as done in the aforesaid decision. Ground nos.1 and 2 are allowed f....
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.... bran outside the books of accounts. 9. The AO Vide this office letter dt.21/12/2011 requested the Assessee to show cause why the aforesaid addition should not be made based on the allegations made by the AO as stated in the earlier paragraph. In response, assessee vide his written submission dt.26-12-2011 stated that "....I carry on a Mini Rice Mill that is called Husking Mill not Rice Mill." He also stated that no bran was produced during the year under consideration. 10. The AO however rejected the contention of the Assessee and he held that the Assessee failed to substantiate that the Assessee was not owning "Mini Rice Mill" and that what he owned should only be treated as 'Husking Mill'. The AO held that the Assessee sold bran produced in the process of milling paddy outside the books of accounts and added a sum of Rs. 15,56,820/- to the total income of the Assessee. 11. Before CIT(A) the assessee contended that findings of the AO in respect of Income from undisclosed sale of Bran for Rs. 15,56,820 cannot be sustained as it is based on conjectures and surmises. It was submitted that the AO failed and/or neglected to appreciate that the Assessee was carrying on Busin....
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....erate a husking mill. In any case, the range of operations in a Mini Rice Mill are nearly the same as a regular Rice Mill and the difference is largely of the capacity. As the assessee has not been able to rebut the findings of the AO with any evidence, the ground of appeal No.3 is dismissed." 13. Aggrieved by the order of CIT(A) the assessee has raised ground Nos.3 and 4 before the Tribunal. 14. The ld. Counsel for the assessee drew my attention to the balance sheet of the assessee which shows that the plant and machinery owned by the assessee was only of the value of Rs. 24,894/-. It was submitted by him that it was unrealistic on the part of the revenue authorities to presume that the assessee was carrying on rice mill with sophisticated equipments and therefore the assessee ought to have obtained bran from rice mill and sold them outside the books of account. He pointed out that before the AO the assessee specifically submitted that the assessee was only carrying out husking of paddy whereby the paddy is first boiled and later dried and whatever is derived as bran in the process of husking is used as a fuel by the assessee for the purpose of boiling the paddy. The other s....
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.... submit details and basis on which such shortage in handling was arrived at by the Assessee. According to the AO, the Assessee failed to give proper explanation. The AO noticed that the Assessee had shown closing stock of paddy of Rs. 1,41,100/- and following the FIFO method, quantity of stock comes to 156.77 qntl. (Rs.1,41,100/Rs.900)(Rs.900 - Purchase as on 28-02-09 of Rs. 13,95,000/1550 qntl.). Hence, quantity of rice produced was calculated by the AO as under :- Opening stock of paddy (as shown) 4000.00 qntl. Add: Purchase of paddy 27116.57 qntl. 31116.57 qntl. Less : Closing stock calculated above 156.77 qntl. 30959.80 qntl. The AO further held that as per govt. norms, assessee could produce rice out of milling of paddy of 30959.80 qntl. @68% of 21052.66 qntl. But assessee sold 21175.00 qntl which indicate that assessee produced rice nearly 68.40% hence according to the AO the entire produced rice has been sold and stock of paddy is kept intact. In the light of the above, shortage of handling of Rs. 1,98,145/- was concluded by the AO as bogus and without any basis. He therefore disallowed the same and added to the total income of the assessee. ....