M/s R. Piyarelall Food (P) Ltd., Kolkata v. DCIT, CIR-3, KOLKATA, Kolkata

ITA 1415/KOL/2015 | 2008-2009
Pronouncement Date: 29-11-2017 | Result: Partly Allowed

Appeal Details

RSA Number 141523514 RSA 2015
Assessee PAN AADCR5989B
Bench Kolkata
Appeal Number ITA 1415/KOL/2015
Duration Of Justice 2 year(s) 3 day(s)
Appellant M/s R. Piyarelall Food (P) Ltd., Kolkata
Respondent DCIT, CIR-3, KOLKATA, Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 29-11-2017
Appeal Filed By Assessee
Tags No record found
Order Result Partly Allowed
Bench Allotted C
Tribunal Order Date 29-11-2017
Last Hearing Date 14-09-2017
First Hearing Date 14-09-2017
Assessment Year 2008-2009
Appeal Filed On 26-11-2015
Judgment Text
M/S R. PIYARELALL FOODS (P) LTD. I.T.A NO. 1415/KOL/2015 ASSESSMENT YEAR: 2008-09 PAGE | 1 IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: KOL KATA BEFORE: SHRI P.M. JAGTAP ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI JUDICIA L MEMBER I.T.A NO. 1415/KOL/2015 (ASSESSMENT YEAR: 2008-09) M/S R. PIYARELALL FOODS (P) LTD. APPELLANT PAN:[AADCR 5989 B] VS D.C.I.T CIR-3 KOLKATA RESPONDENT FOR THE APPELLANT : SHRI ASHISH RUSTAGI FCA FOR THE RESPONDENT : SHRI KALYAN NATH ADDL. CIT DATE OF HEARING : 14.09.2017 DATE OF PRONOUNCEMENT : 29.11.2017 ORDER SHRI S.S.VISWANETHRA RAVI JM: THIS APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 01.09.2015 OF COMMISSIONER OF INCOME TAX (APPEALS)-5 KOLKATA FOR THE ASSESSMENT YEAR 2008-09). 2. THE LD. AR SUBMITS THAT GROUND NOS.1 & 2 ARE GEN ERAL IN NATURE AND NEED NO ADJUDICATION. THEREFORE GROUND NOS.1 & 2 ARE DISMISSED. 3. GROUND NO.3 IS RELATING TO ADDITION OF RS.1 80 0 00/- ON ACCOUNT OF RENT PAID. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO FOUND FROM ANNEXURE-C OF TAX AUDIT REPORT FROM THE ASSESS EE THAT THE ASSESSEE PAID RENT OF RS.1 80 000/- TO ONE SHRI RAM ESH KR. AGARWAL. ACCORDING TO AO THE SAID SHRI RAMESH KR. AGARWAL I S A RELATIVE OF THE M/S R. PIYARELALL FOODS (P) LTD. I.T.A NO. 1415/KOL/2015 ASSESSMENT YEAR: 2008-09 PAGE | 2 DIRECTOR OF THE ASSESSEE-COMPANY AND SOUGHT EXPLANA TION FROM THE ASSESSEE HOW THE SAID PAYMENT IS RELATED TO ITS BUS INESS. THE ASSESSEE THROUGH ITS AUTHORIZED REPRESENTATIVE SUBM ITTED THAT THE SAID AMOUNT WAS PAID TOWARDS RENT FOR ROOM AT 5 GO KHALE ROAD KOLKATA WHICH WAS TAKEN BY THE ASSESSEE FOR OFFICIA L PURPOSE TEMPORARILY. THE AO DIRECTED THE ASSESSEE TO PRODUC E TRADE LICENCE OR SIMILAR AUTHENTIC DOCUMENTS TO PROVE THE GENUINE NESS OF THE CLAIM AND FOR NON-SUBMISSION OF THE RELEVANT EVIDENCE THE AMOUNT CLAIMED AS RENT WAS DISALLOWED AND ADDED TO THE TOTAL INCOM E OF THE ASSESSEE. 5. AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE CIT(A). BEFORE THE CIT(A) THE ASSESSEE CONTENDED THROUGH I TS WRITTEN SUBMISSIONS THAT THE ASSESSEE CONDUCTED ITS BUSINES S OPERATIONS FOR THE INITIAL SIX (6) MONTHS AT THE SAID ROOM AT 5 G OKHALE ROAD KOLKATA AND ACCORDINGLY RENT WAS PAID AT THE RATE OF 30 000/- TO THE OWNER OF THE SAID PREMISES I.E. SHRI RAMESH KR. AGA RWAL ON A TEMPORARY USE OF SAID PREMISES ON RENT. IT WAS ALSO CONTENDED THAT THE SAID INCOME WAS OFFERED TO TAX AT HIGHEST RATE IN THE HANDS OF SAID SHRI RAMESH KR. AGARWAL. THE CIT(A) OPINED THA T THE ASSESSEE WAS FAILED TO EXPLAIN HOW THE RESIDENTIAL PREMISE W ERE USED FOR BUSINESS PURPOSES AND HENCE THE CIT(A) CONFIRMED T HE ADDITION MADE BY THE AO. 6. BEFORE US THE LD. AR REITERATED THE SAME SUBMIS SIONS AS SUBMITTED BEFORE THE CIT(A) IN SUPPORTING OF WHICH THE LD. AR PLACED ON RECORD A CERTIFIED COPY OF MINUTES OF THE RESOLU TION PASSED AT THE BOARD MEETING HELD ON 16.05.2007 TO SHOW THAT THE B OARD MEETING WAS CONVENED TO INFORM AND TO RESOLVE TO CONDUCT IT S OPERATIONS AT THE PREMISES AT 5 GOKHALE ROAD KOLKATA 700 020 TEMPORARILY IN VIEW OF THE FACT THAT THE REGISTERED OFFICE OF THE ASSESSEE COMPANY WOULD BE OPERATIONAL IN A SHORT TIME AND IT WAS DEC IDED TO PAY RS.30 000/- PER MONTH TO BE PAID TO SHRI RAMESH KR. AGARWAL TOWARDS THE RENT FOR AFORESAID PREMISES AND THE BOA RD ACCEPTED THE M/S R. PIYARELALL FOODS (P) LTD. I.T.A NO. 1415/KOL/2015 ASSESSMENT YEAR: 2008-09 PAGE | 3 SAID PROPOSAL MOVED BY THE CHAIRMAN. THE LD. AR ARG UED THAT THE ASSESSEE STARTED ITS BUSINESS IN THE PREVIOUS YEAR RELEVANT TO YEAR UNDER CONSIDERATION INITIALLY AT THE TIME AS THERE WAS NO REGISTERED OFFICE READY BY THAT TIME. ACCORDINGLY IN ORDER TO CONDUCT ITS OPERATIONS THE ASSESSEE AVAILED THE AFORESAID PREM ISES FROM SHRI RAMESH KR. AGARWAL ON RENT BASIS. THEREAFTER THE A SSESSEE MOVED TO ITS REGISTERED OFFICE PREMISES AT 12 GOVERNMENT PL ACE (EAST) KOLKATA. THEREFORE THE RENT AS CLAIMED BY THE ASSE SSEE IS INCURRED TOWARDS RENT AND IS BUSINESS EXPENDITURE AND CLAIME D AS DEDUCTION. 7. THE LD. DR RELIED ON THE ORDER OF AO. 8. HEARD BOTH AND PERUSED THE MATERIALS AVAILABLE O N RECORD WE FIND THAT AT THE TIME OF INITIAL OPERATIONS THE RE GISTERED OFFICE OF THE ASSESSEE WAS NOT READY TO CONDUCT THE BUSINESS OPER ATIONS OF THE ASSESSEE AS BECAUSE THE REQUISITE INFRASTRUCTURE AN D FACILITIES WERE NOT AVAILABLE AT THE SAID OFFICE. THEREFORE THE AS SESSEE AVAILED THE PREMISES BELONGING TO A RELATIVE OF CHAIRMAN OF ASS ESSEE TEMPORARILY ON RENT BASIS IN SUPPORT OF WHICH THE LD. AR BROUGH T ON RECORD THE MINUTES OF THE BOARD MEETING IN ACCEPTING THE PROPO SAL MADE BY THE CHAIRMAN. ADMITTEDLY THIS DOCUMENT WAS NOT THERE B EFORE THE AO AND CIT(A) AND IT IS SEEN FROM THE ORDER OF AO AND CIT(A) THAT FOR NON-SUBMISSION OF ANY EVIDENCE TO THAT EFFECT THAT DISALLOWANCE AMOUNT WAS CONFIRMED BY THE CIT(A). THEREFORE IN V IEW OF THE SAME WE DEEM IT PROPER TO REMAND THE ISSUE TO THE FILE O F AO FOR HIS VERIFICATION ON AN EXAMINATION OF THE SUPPORTING DO CUMENT FILED DURING THE COURSE OF SECOND APPELLATE PROCEEDINGS B EFORE US. THE ASSESSEE IS AT LIBERTY TO FILE EVIDENCE IF ANY BEF ORE THE AO IN SUPPORT OF ITS CLAIM. M/S R. PIYARELALL FOODS (P) LTD. I.T.A NO. 1415/KOL/2015 ASSESSMENT YEAR: 2008-09 PAGE | 4 9. GROUND NO.4 IS RELATING TO DISALLOWANCES MADE ON ACCOUNT OF TRANSPORTATION & LABOUR CHARGES AND LOADING & UNLOA DING CHARGES OF GODOWN AND WRECK TOTALING TO RS.1 97 145/-. 10. THE AO FOUND FROM SCHEDULE 12 OF THE PROFIT & L OSS A/C THAT THE ASSESSEE CLAIMED AN AMOUNT OF RS.5 95 76 373/- UNDE R THE HEAD FREIGHT & TRANSPORT CHARGES. IN EXPLANATION THE ASSESSEE FURNISHED THE DETAILS IN SUPPORT OF HIS CLAIM. ACCORDING TO A O ON VERIFICATION OF THE SAID DETAILS ASSESSEE HAD CLAIMED AN AMOUNT OF RS.1 30 19 266/- UNDER THE SUB-HEAD TRANSPORTATION AND LABOUR CHARG ES OF GODOWN. ON PERUSAL OF THE PARTY-WISE DETAILS THE AO FOUND THAT THE ASSESSEE HAS PAID A SUM OF RS.1 11 659/- TO OTHER TRANSPORT ATION AND LABOUR CHARGES OF GODOWN BELOW RS.50 000/-. THEREFORE THE AO WAS OF THE OPINION THAT THE ASSESSEE DID NOT FURNISH ACTUAL DE TAILS AND AN AMOUNT RS.20 000/- WAS DISALLOWED. AGAIN THE AO ON PERUSAL OF THE LIST UNDER THE BASIC HEAD OF FREIGHT AND TRANSPORT ATION CHARGES THE ASSESSEE CLAIMED AN AMOUNT OF RS.91 69 650/- UNDER THE SUB-HEAD LOADING AND UNLOADING CHARGES OF GODOWN AND WRECK . THE AO ON PERUSAL OF THE DETAILS OF PARTY-WISE CHART FOUND TH AT THE ASSESSEE DISCLOSED EXPENSES OF RS.17 71 446/- UNDER THE SUB- HEAD OTHER LOADING AND UNLOADING CHARGES OF GODOWN AND WRECK B ELOW RS.50 000/-. THEREFORE THE AO DISALLOWED 10% OF CL AIM ON 17 71 446/- TO THE EXTENT OF RS.1 77 145/- WAS DISA LLOWED. 11. AGGRIEVED THE ASSESSEE CHALLENGED THE ACTION O F THE AO BEFORE THE CIT(A). BEFORE THE CIT(A) IT WAS CONTENDED THA T THE EXPENSES OF RS.1 77 145/- IS THE AGGREGATE OF SUCH EXPENSES EAC H BEING LESS THAN 50 000/- AND ALL THE DETAILS WERE FURNISHED TO THE AO AND THE AO CONSIDERING THE SAID AMOUNT AS A CONSOLIDATED AND A SINGLE AMOUNT AND DISALLOWED THE SAME WHICH IS ACTUALLY INCORRECT IN FACT THE PAYMENTS WERE PAID TO A NUMBER OF PARTIES. THE CIT( A) CONSIDERING THE SAME FOR NON-SUBMISSION OF GENUINE ACCOUNTS BEF ORE THE AO AS WELL AS CIT(A) AND CONFIRMED THE ADDITION MADE BY T HE AO. M/S R. PIYARELALL FOODS (P) LTD. I.T.A NO. 1415/KOL/2015 ASSESSMENT YEAR: 2008-09 PAGE | 5 12. BEFORE US THE AR STATES THAT THE ASSESSEE HAS MADE PAYMENTS OF RS.91 69 650/- ON ACCOUNT OF LOADING & UNLOADIN G CHARGES OF GODOWN AND WRECK UNDER THE HEAD FREIGHT AND TRANS PORTATION CHARGES. THE DETAILS OF THE SAME WERE FURNISHED DU RING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS AND TO MAKE THE INF ORMATION SIMPLE AN AMOUNT OF RS.17 71 446/- OUT OF THE ABOVE SAID E XPENSES WAS SHOWN AS CONSOLIDATED AND A SINGLE FIGURE AS PAYMEN TS WERE MADE TO A NUMBER OF PARTIES WHICH WERE BELOW RS.50 000/- AN D WHICH DID NOT CARRY THE LIABILITY TO DEDUCT TDS AND FOR NOT SHOWI NG THE PARTY-WISE DETAILS OF NUMBER OF PARTIES THE AO ARBITRARILY DIS ALLOWED 10% OF THESE SMALL AMOUNTS. THE LD. AR SUBMITS THAT THE PA YMENTS AGGREGATING TO RS.73 98 204/- CONSTITUTING MORE THA N 80% OF TOTAL EXPENDITURE THE DETAILS OF PARTIES WITH AMOUNT OF TAX DEDUCTED WAS FURNISHED TO THE AO AND WAS ACCEPTED WITHOUT BEING ANY DEFECT. THE NUMBER OF PARTIES WHOSE PAYMENTS WERE BELOW RS.50 0 00/- WERE NUMEROUS AND NO TDS WAS DEDUCTED FROM PAYMENTS MADE TO THEM AND THE AMOUNTS WERE CLUBBED AND SHOWN AS AN AGGREG ATE AMOUNTS OF RS.17 71 446/-. THE LD. AR FURTHER SUBMITS THAT SMALL PAYMENTS WERE CONSOLIDATED TO SIMPLIFY THE INFORMATION TO SU BMIT AND AO DID NOT FIND ANY DEFECT IN THE 80% OF PAYMENTS. IN RESP ECT OF THE BALANCE 20% NO OPPORTUNITY WAS GIVEN TO THE APPELLANT TO F URNISH FURTHER DETAILS AND NO DETAILS WERE ASKED FOR DURING THE CO URSE OF SCRUTINY PROCEEDINGS. THE CIT(A) WITHOUT VERIFYING THE DETAI LS OF PAYMENTS SUBMITTED BEFORE HIM SIMPLY CONFIRMED THE ADDITION MADE BY THE AO WHICH IS IN ACCORDANCE WITH LAW. THE LD. AR FURTHER SUBMITS WITH REGARD TO ADDITION OF RS.20 000/- UNDER THE HEAD T RANSPORTATION AND LABOUR CHARGES OF GODOWN IN SPITE OF HAVING ALL T HE DETAILS BUT GOING BY THE CONSOLIDATED SINGLE FIGURE THE AO ARBITRARI LY DISALLOWED RS.20 000/- WHICH IS NOT MAINTAINABLE. THE LD. AR P RAYED TO ALLOW THE GROUND NO.4 IN THIS REGARD. THE LD. DR RELIED ON TH E ORDER OF AO AND CIT(A). M/S R. PIYARELALL FOODS (P) LTD. I.T.A NO. 1415/KOL/2015 ASSESSMENT YEAR: 2008-09 PAGE | 6 13. HEARD BOTH PARTIES AND PERUSED THE MATERIALS AV AILABLE ON RECORD. IT IS NOTICED AS RIGHTLY POINTED OUT BY THE LD. AR THAT THE AO ACCEPTED 80% OF TOTAL EXPENDITURE UNDER THE HEAD L OADING AND UNLOADING CHARGES BUT HOWEVER DISALLOWED 10% ON T HE REMAINING 20% OF TOTAL PAYMENTS. IT WAS SUBMITTED BY THE LD. AR BEFORE US THAT ALL THE PAYMENTS UNDER THE HEAD WERE BELOW RS.50 00 0/- WHICH NEED NOT BE DEDUCTED ON TDS. BOTH THE AUTHORITIES BELOW DISALLOWED THE SAID AMOUNT ONLY ON THE IMPRESSION THAT THE ASSESSE E HAS SHOWN THE PAYMENTS AGGREGATING SINGLE FIGURE INCURRED TOWARDS THE LOADING AND UNLOADING CHARGES AND IT IS VERY DIFFICULT TO GIVE DETAILS OF NUMEROUS PARTIES TO WHOM THE PAYMENTS WERE MADE BELOW RS.50 000/-. THE SAID AMOUNT WAS SHOWN IN THE ACCOUNTS AND WAS CLAIM ED IN THE ASSESSMENT PROCEEDINGS AS AN AGGREGATING AMOUNT TO SIMPLIFY THE INFORMATION. IN OUR OPINION AS CONTENDED BY THE LD . AR THAT THERE WAS NO OPPORTUNITY FOR THE ASSESSEE TO PRODUCE THE NUMEROUS DETAILS PAYMENTS ATTRACTING BELOW RS.50 000/-. WE FIND THAT THE TOTAL INCOME OF THE ASSESSEE IS RS.1 21 84 444/- AND THERE WAS N O ADVERSE REMARK IN RESPECT OF 80% OF TOTAL PAYMENTS OR BOOKS OF ACC OUNTS TAKING INTO CONSIDERATION THE SAME DISALLOWANCE ON THE BASIS OF ESTIMATATION IS NOT PERMISSIBLE. THUS THE ADDITIONS MADE ON ACCOUN T OF LOADING AND UNLOADING CHARGES ARE LIABLE TO BE DELETED. THUS T HE GROUND NO.4 RAISED BY THE ASSESSEE IS ALLOWED AND ACCORDINGLY THE ADDITIONS MADE IN THE HEADS ABOVE ARE DELETED. 14. IN THE RESULT THE APPEAL FILED BY ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29.11.2017. SD/- SD/- P.M. JAGTAP S.S. VISWANETHRA RAVI ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 29.11.2017 PLACE : KOLKATA RS (SPS) M/S R. PIYARELALL FOODS (P) LTD. I.T.A NO. 1415/KOL/2015 ASSESSMENT YEAR: 2008-09 PAGE | 7 COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT R. PIYARELALL FOODS PVT. LTD. 12 GOVT. PLACE(E) KOLKATA - 700069 2 RESPONDENT DCIT CIRCLE-3 AAYAKAR BHAWAN P-7 CHOWRINGHEE SQUARE KOLKATA-700 069. 3 . THE CIT(A) KOLKATA 4. 5. CIT KOLKATA DR KOLKATA BENCHES KOLKATA //TRUE COPY// BY ORDER SR.PS/H.O.O ITAT KOLKATA