2017 (1) TMI 1547

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.... and ambit of the provisions of s. 40 (a)(ia) of the Income tax Act, 1961, the Ld. Commissioner of Income Tax (Appeals)- Burdwan was absolutely in error in upholding the action of the W. Income Tax Officer. Ward 2(4). Burdwan in resorting to the impugned addition of Rs, 4.10.090/- on account of alleged infringement of s. 194C of the Act on extraneous parameters which are not amenable to reason and the purported findings on that behalf is absolutely arbitrary, unreasonable and perverse. 2. FOR THAT on the facts and in the circumstances of the instant case, the Ld. Commissioner of Income Tax (Appeals)-Burdwan acted unlawfully in upholding the impugned addition in the sum of Rs, 4.10,090/- resorted to by the Ld. Income Tax Officer. Ward 2(4....

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....s. 4,10,090/- made for violation of Section 194C of the Act. 5. In course of assessment proceedings, the AO found from the income and expenditure account that the Assessee debited an amount of Rs. 5,67,300/- under the head 'Travelling expenses' and out of such amount a sum to an extent of Rs. 4,10,090/- were paid to payments on account of car and four wheeler hire charges without any deduction of tax at source as required u/s. 194C of the Act to following parties: (i) Achintya Mukherjee of Rs. 1,00,122/-, (ii) Obhinoy Maji of Rs. 68,530/-, (iii) Pradip Kumar Keshari of Rs. 70,375/-, (iv) Biswajit Bhattacharyya of Rs. 1,08,670/- (v) Somenath Banerjee of Rs. 62,393/-   Rs. 4,10,090/-   6.....

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.... such parties does not fall within the scope of Sec 194C of the Act for deduction of tax at source and no addition U/Section 40(a)(ia) of the Act is maintainable. The Ld.AR argued that no disallowance is maintainable if the assessee complies with the provisions of Section 194C(6) of the Act and placed reliance on the order 09-09-2016 of Coordinate Bench of this Tribunal in ITA No. 1420/Kol/2015 in the case of Soma Rani Ghosh Vs. DCIT. On the other hand, the Ld.DR relied on the order of AO. 8. Heard rival submissions and perused the material available on record. It is an admitted fact that since all the payees submitted their Permanent Account Numbers in the assessment proceedings. The provision contemplated in Sec 194C(6) permits no dedu....

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....of the Act, in our opinion there is violation of section 194C(7) and disallowance under section 40(a)(ia) does not arise as held by the Coordinate Bench supra, accordingly, the impugned addition made thereon shall go and thus, ground no's 2 and 3 raised by the Assessee are allowed. 10. Ground no's -3 and 4 are related to an addition of Rs. 1,24,500/- made on account of GIFT treating the same as bogus expenses. 11. The AO found that the Assessee debited an amount of Rs. 1,24,500/- and the AO asked the Assessee to explain the nexus between the gift of Rs. 1,24,500/- in his accounts vis-a-vis his commission earning activities. In support of the same, the Assessee produced evidences of advance payments in respect of diary, calendar and pe....

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.... and shirt and trouser pieces to some. The Ld.AR argued that the gift to customers stand fully proved and were incurred wholly, necessarily and exclusively for the purpose of business and as such the expenditure claimed under head "Gift to Customers" was claimed rightly and is fully allowable u/s. 37(1) of the Act. 13. Heard rival submissions and perused the material evidence on record. In course of assessment proceedings the AO disallowed such sum on observing that the said payments were shown as credit entry in the books of Assessee and whereas on perusal of the documents as filed by the Assessee along with written submissions such sum was paid by the Assessee as advance, which according to him is a contradictory stand. It is an undisp....