Assessment year: 2009-2010 Page 1 of 5 IN INCOME TAX APPELLATE TRIBUNAL, KOLKATA A(SMC) BENCH, KOLKATA Before Shri P.M. Jagtap, Accountant Member I.T .A. No. 1422 /KOL/ 2015 Assessment Year: 2009-2010 Siddhartha Kandar,. Appellant C/o. D.J. Shah & Co., Kalyan Bhavan, 2, Elgin Road, Kolkata-700 020 [PAN : APJPK 5180 R] -Vs.- Income Tax Officer, Respondent Ward-3, H aldia-721 604, Appearances by: Shri Miraj D. Shah , A.R., fo r assessee Shri Uday Kumar Sardar, JCIT, D.R., for Department Date of concluding th e hearing : Ju ly 26, 2016 Date of pronouncing order : September 28, 2016 O R D E R This appeal filed by assessee is directed against order of ld. Commissioner of Income Tax (Appeals)-7, Kolkata dated 18.08.2015 for assessment year 2009-10 and grounds raised by assesese therein read as under:- (1) For th at Ld. CIT Appeal has passed th e order wit hout considering writt en submission on records which was filed on 10/06/2015. Thus th e order of Ld. CIT(Appeals) be set aside. (2) For that in facts and circumstances of case appellat e order passed was in violation of principals of natural just ice hence is bad in law and be quashed. (3) Fo r that in facts and circumstances of case Ld. CIT Appeal erred in adding sum of Rs.1,75,200/- on ac count of disclosed sundry debt ors. Such addition is unwarranted, unjustified and uncalled for hence same be deleted. Assessment year: 2009-2010 Page 2 of 5 (4) Fo r that in facts and circumstances of case Ld CIT Appeal erred in adding sum of Rs.9 ,00,000/- on account of bus hire charges and other expenses reimbursement s u/s. 40(a)(ia) of IT Act 1961 . Such addition is unwarranted, unjustified and uncalled fo r hence same be deleted. 5. Fo r that interest computed u/s. 234 B/C/D of IT Act 1961 is over charged and wrongly calcul ated and or is not applicable to assessee s case h ence th e interest be deleted and o r co rrectly comput ed. 2. We have heard arguments of both sides and also perused relevant material available on record. Grounds No. 1 & 2 raised by assessee in this appeal are not pressed by ld. counsel for assessee at time of hearing before me. same are accordingly dismissed as not pressed. 3. As regards issue involved in Ground No. 3 relating to addition of Rs.1,75,200/- made by Assessing Officer and confirmed by ld. CIT(Appeals) on account of alleged bogus damages, it is observed that in balance-sheet filed along with his return of income for year under consideration, sundry debtors of Rs.1,75,200/- were shown by assessee. On verification, Assessing Officer, however, found that said debtors shown by assessee were bogus and therefore, he made addition of Rs.1,75,200/- to total income of assessee on account of alleged bogus sundry debtors. On appeal, ld. CIT(Appeals) confirmed said addition made by Assessing Officer observing that assessee must have collected amounts due from concerned debtors outside books of account. 4. I have heard arguments of both sides on this issue and also perused relevant material on record. As rightly contended by ld. counsel for assessee, fact that amount in question was shown by assessee in his books of account as sundry debtors by itself is sufficient to show that said amount was booked as sale by assessee and duly offered to tax as his income. As further contended by Assessment year: 2009-2010 Page 3 of 5 ld. counsel for assessee, even if allegation of ld. CIT(Appeals) that said amount must have been collected by assessee from concerned party outside books of account is taken to be true, such collection from debtors outside books of account could not give rise to any income chargeable to tax in hands of assessee. Moreover, ld. counsel for assessee has also submitted that amount received from concerned debtors at fag end of year under consideration, was duly accounted for by assessee in books of account of next year. Keeping in view all these facts of case, I am of view that addition of Rs.1,75,200/- made by Assessing Officer and confirmed by ld. CIT(Appeals) on account of alleged bogus sundry debtors is not sustainable and deleting same, I allow Ground No. 3 of assessee s appeal. 5. As regards issue involved in Ground No. 4 relating to disallowance of Rs.9,00,000/- made by Assessing Officer and confirmed by ld. CIT(Appeals) under section 40(a)(ia) on account of payments of bus hire charges, it is observed that payment on account of bus hire charges aggregating to Rs.9,00,000/- was made by assessee to five bus owners amounting to Rs.1,80,000/- each without deduction of tax at source. According to Assessing Officer, assessee was liable to deduct tax at source from said payments and since assessee had failed to do so, he invoked provision of section 40(a)(ia) and made disallowance of Rs.9,00,000/- on account of bus hire charges. On appeal, ld. CIT(Appeals) confirmed said disallowance made by Assessing Officer. 6. I have heard arguments of both sides on this issue and also perused relevant material available on record. limited contention raised by ld. counsel for assesese by relying on second proviso to section 40(a)(ia) is that concerned recipients having been included amount in question paid by assessee on account of bus hire charges in their total income offered to tax, no disallowance under Assessment year: 2009-2010 Page 4 of 5 section 40(a)(ia) can be made. In support of this contention, he has relied on decision of this Tribunal rendered in case of M/s. Abhoy Charan Bakshi vs.- DCIT vide its order dated 06.04.2016 passed in ITA No. 1492/KOL?2015 and submitted that this matter may be sent to file of Assessing Officer for deciding same afresh in light of said decision of Tribunal after necessary verification. In said decision, effect of second proviso inserted under section 40(a)(ia) was considered by Tribunal and it was held as under:- 15. We have given very careful considerat ion to rival submissio ns. C IT (A) h as h eld that th e second proviso to Sec.40(a)(ia) of Act will apply in present case and that applicability of second proviso to Sec.40(a)(ia) of Act which was int roduced by Finance Act , 2012 w.e.f. 1.4.2013 was ret rospective in operatio n and was to apply w.e.f. 1 -4- 2005, being dat e fro m which sub-cl ause (ia) of section 40(a) was inserted by Finance (No. 2) Act , 2004. Hon'ble Delhi High Co urt in case of C IT Vs. Ans al Land Mark Township (I) Pvt . Lt d., in IT NO.16012015 judgment dated 26.8.2015 has taken view that th e insertion of second pro viso to Sec 40(a)(ia) of Act is retrospective and will apply fro m 1.4 .2005. Once it is held th at th e Assessee is entitled to benefit of 2nd pro viso to Sec. 40(a)(ia) of Act, th e CIT(A) o ught to have directed AO to verify whether recipients have included receipt s paid by assessee in their respective returns of income and also paid taxes on same. To extent recipient s fro m Assessee have so included sum in t heir ret urns of income and filed same, no disallowance u/s. 40(a)(ia) of Act ought to have been sust ained by C IT(A). C IT(A) ought to have also directed AO that in case recipient part ies are not cooperating in pro viding det ails, AO should call for t he informatio n u/s. 133(6) or 131 of Act, for verificat ion of same. In this regard we al so find that Assessee h as furnished all details of assessment particulars of recipients of payment from Assessee. AO therefo re should not have any difficult y in making t he required verification. We th erefore set aside order of t he CIT(A) to ext ent to which he h ad sust ained order of AO on disallowance u/s. 40(a)(ia) of th e Act and remand issue to AO to verify whether recipient s have included receipt s paid by assessee in their respective ret urns of income and al so paid taxes on same. To extent recipient s from Assessee have so incl uded sum in th eir returns of income and filed same, no disallowance u/s. 40(a)(ia) of Act should be made by th e AO. In case th e recipient part ies are not cooperating in pro viding det ails, AO sh ould be directed to call for th e information u/s. 133(6) or 131 of Act, for verificat ion of same . Assessment year: 2009-2010 Page 5 of 5 I, accordingly, restore issue relating to disallowance of Rs.9,00,000/- under section 40(a)(ia) on account of payment of bus hire charges to file of Assessing Officer for deciding same afresh in light of decision of Tribunal in case of Abhoy Charan Bakshi (supra) after verifying claim of assessee that concerned recipients of bus hire charges have already offered to tax entire amount in question in their returns of income. Ground No.4 is accordingly treated as allowed for statistical purposes. 7. issue raised in Ground No. 5 relating to levy of interest under sections 234B, 234C and 234D is consequential and Assessing Officer is accordingly directed to allow consequential relief to assessee on this issue. 8. In result, appeal of assessee is partly allowed. Order pronounced in open Court on September 28, 2016. Sd/- (P.M. Jagtap) Accountant Member Kolkata, 28 t h day of September, 2016 Copies to : (1)Shri Si ddhartha Kandar, C/o. D.J. Shah & Co., Kalyan Bhavan, 2, Elgin Road, Kolkata-700 020 (2) Income Tax Officer, Ward-3, H aldia-721 604, (3) Commissioner of Income Tax (Appeals)-7, Kolkata; (4) Commissio ner of Income Tax- , (5) Depart ment al Represent ative (6) Guard File By order Assistant Registrar, Income Tax Appellate Tribunal, Kolkata Benches, Kolkata Laha/Sr. P.S. Siddhartha Kandar v. Income-tax Officer, Ward-3, Haldia