Income Tax Appellate Tribunal - Kolkata
Sunil Baran Dey. ,Kolkata vs Ito,Ward-3(1), Bankura. , Bankura on 4 May, 2026
IN THE INCOME TAX APPELLATE TRIBUNAL
KOLKATA 'A' BENCH AT KOLKATA
Before
SHRI GEORGE MATHAN, JUDICIAL MEMBER
&
SHRI RAKESH MISHRA, ACCOUNTANT MEMBER
ITA No(s). 1108/KOL/2023
Assessment Year(s) 2012-13
Sunil Baran Dey ITO, Ward-3(1), Bankura
Vs.
(Appellant) (Respondent)
PAN: ABGPD3653B
Appearances:
Assessee represented by : Subhash Agrawal, Adv.
Department represented by : Sallong Yaden, Addl. CIT, Sr DR.
Date of concluding the hearing : 19-March-2026
Date of pronouncing the order : 04-May-2026
ORDER
PER RAKESH MISHRA, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') for AY 2012-13 dated 04.09.2023.
2. The assessee is in appeal before the Tribunal raising the following grounds of appeal:
"1. For that the Ld. CIT(A) was not justified in confirming the addition of Rs.1,53,94,200/- and Rs. 38,14,814/- made by the A.O. by wrongly invoking the provisions of section 40A(3) where the payments were covered by exceptions provided by Rule 6DD.
2. For that the Ld. CIT(A) was not justified in confirming the addition of Rs.45,750/- made by the A.O. under section 40(a)(ia) on account of accounting charges paid.
3. For that the Ld. CIT(A) was not justified in confirming the addition of Rs.35.871/- made by the A.O. under section 40(a)(ia) on account of interest on loan.
4. For that the Ld. CIT(A) was not justified in confirming the addition made by the A.O. of Rs.29, 170/- being 20% of Travelling Expenses, Rs. 6,029/-
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being 20% of Conveyance Expenses/- and Rs. 40,292/- being 20% of Sales Promotion Expenses.
5. For that the Ld. CIT(A) was not justified in confirming the addition of Rs.1,87,097/- made by the A.O. u/s 69B on account of alleged difference in closing balance of trade creditor viz., M/s S.V.P. Corporation.
6. For that the Ld. CIT(A) was not justified in confirming the addition of Rs.1,00,000/-, Rs. 6,548/- & Rs. 5,000/- made by the A.O. on account of claim of deductions u/s 80C, 80D and 80GGC respectfully made by the assessee.
7. For that the Ld. CIT(A) was not justified in confirming the addition of Rs.5,59,159/- made by the A.O. u/s. 69B on account of the alleged difference in the closing balance with M/s Venkatarama Poultry (P) Ltd.
8. For that the Ld. CIT(A) was not justified in not allowing the claim of Freight and Carriage expenses of Rs. 41,25,650/- in full but restricting the disallowance to Rs. 4,12,565/-.
9. The appellant craves leave to add further grounds of appeal or alter the grounds at the time of hearing."
3. Brief facts of the case are that the assessee is an individual and engaged in the business of wholesale trading of eggs. The assessee filed his return of income for AY 2011-12 showing total income of ₹8,50,490/-. The case was selected for scrutiny and notices u/s 143(2) and 142(1) of the Act were issued to the assessee, which were complied with. The Assessing Officer (hereinafter referred to as Ld. 'AO') noted various discrepancies and assessed the total income of the assessee at ₹2,34,24,169/- u/s 143(3) of the Act after making certain additions and raised a demand of ₹96,30,460/-. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A) who vide order dated 04.09.2023 partly allowed the appeal of the assessee.
4. Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal.
5. Rival contentions were heard and the submissions made have been examined.
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6. Ground No. 1 relates to the Ld. CIT(A) confirming the addition of ₹1,53,94,200/- and ₹38,14,814/- as the payments were not covered under the exceptions provided by Rule 6DD of the IT Rules. Before us the assessee has filed a paper book containing the details of the returns for AY 2010-11 to AY 2013-14 and also ground-wise details in support of the claim that such expenses are allowable.
6.1 The Ld. AO noted during the course of the scrutiny proceedings, while examining the ledger account of M/s. Venkatrama Poultry (P) Ltd. maintained in the books of the assessee vis-a-vis the statement of the company as called for u/s 133(6) of the Act, that the assessee had made payments exceeding ₹20,000/- in cash amounting to ₹1,53,94,200/- as per the details mentioned from page 2 to 5 of the assessment order and the assessee was required to show cause as to why the amount should not be disallowed u/s 40A(3) of the Act. It was also conveyed that the payments do not come under the purview of Rule 6DD(e) of the IT Rules nor could it be established that M/s. Venkatrama Poultry (P) Ltd. was the producer in respect of poultry. Since the assessee did not furnish the reply in response to the show cause notice issued in this regard a sum of ₹1,53,94,200/- was disallowed and added to the income of the assessee.
6.2 Before the Ld. CIT(A), the assessee claimed that the payment was falling under Rule 6DD(e)(ii) of the IT Rules being payment to the producer of poultry farm. The Ld. CIT(A), as per the discussion in para 7.7 of his order held that the appellant is not covered under Rule 6DD(e)(ii) of the IT Rules and even if it is presumed that the cash was deposited into the bank account of the seller's local branch of the assessee and no money was handed over to the seller, it does not come to the rescue of the assessee in view of the decision of the Hon'ble Page | 4 ITA No(s). 1108/KOL/2023 Assessment Year(s) 2012-13 Sunil Baran Dey.
Madras High Court in the case of Commissioner of Income-tax, Madurai vs. Venkatadhri Constructions [2013] 31 taxmann.com 71 (Madras)/[2013] 213 Taxman 180 (Madras) (Mag.)/[2013] 255 CTR 385 (Madras)[29-06-2012] which squarely applies to the facts of the case. Accordingly, the addition of ₹1,53,94,200/- in the case of M/s. Venkatrama Poultry (P) Ltd. and ₹38,14,814/- in the case of M/s. Bharati Poultry (P) Ltd. was confirmed and since the payments were partly made by cheque and partly by cash, the ceiling was held to apply to the cash portion only as per the decision of M.A. Nek Mohd. & Sons vs. Commissioner of Income-tax [1982] 10 Taxman 298 (Allahabad)/[1982] 135 ITR 501 (Allahabad)[20-11-1981] 6.3 Before us, the Ld. AR stated that the payments were made to the suppliers of the eggs and our attention was drawn to page 2 of the assessment order in which the submission of the assessee that the assessee is engaged in the wholesale trading of eggs is stated. It was stated that the Ld. AO issued notice u/s 133(6) of the Act to M/s. Venkatrama Poultry (P) Ltd. but no confirmation was received from the supplier that they were producer of poultry farming and therefore, the disallowance of ₹1,53,94,200/- was made u/s 40A(3) of the Act. The order was passed within 10 days and another amount of ₹38,14,814/- paid to M/s. Bharati Poultry (P) Ltd. was also disallowed as the correspondence made with M/s. Bharati Poultry (P) Ltd. seeking information along with corroborating documentary evidence regarding it being the producer in respect of poultry firm did not yield any confirmation in this regard. The assessee was required to satisfy the criteria of the CBDT circular No. 4/2006 dated 29.03.2006 and circular no. 8/2006 dated 06.10.2006 by producing documentary evidence in this regard. Since no reply was received, the amount of ₹38,14,814/-
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was also disallowed. Our attention was drawn to para 7.4 at page 52 of the order of the Ld. CIT(A) in which it is mentioned that in the written reply the assessee submitted that the payment to M/s. Venkatrama Poultry (P) Ltd. and M/s. Bharati Poultry (P) Ltd. are covered under Rule 6DD(e) of the IT Rules and the assessee had filed a declaration issued by M/s. Venkatrama Poultry (P) Ltd. and M/s. Bharati Poultry (P) Ltd. which are on record. However, the Ld. CIT(A), despite both the documents being filed, upheld the disallowance on the ground of lack of commercial expediency whereas no such claim was made by the assessee. Part of the payment was made in cash and since the addition was not liable to be made in view of the exception provided under Rule 6DD(e)(ii) of the IT Rules, such a ground of the applicability of Rule 6DD(j) of the IT Rules was neither claimed nor the sun-rule is applicable. It was stated that in the earlier A.Y. 2010-11, the Ld. AO did not make any addition for the transactions with the same party and in the subsequent year the Ld. CIT(A) had allowed the relief. Our attention was drawn to the paper book at Sl. No. 5 for the show cause notice for AY 2010-11, Sl. No. 6 being the assessment order in the assessee's own case for AY 2010-11 and Sl. No. 7 being the appellate order for AY 2013- 14 in the assessee's own case. Our attention was also drawn to page 115 of the paper book being the copy of the appellate order which was placed before the Ld. CIT(A) but no cognizance was given to the same by him, it was stated. The Ld. AR also draw our attention to page 101 onward of the paper book, which is the table of the payments made being cash deposited directly in the seller's bank account and in respect of which the show cause notice was issued, page number 108 of the paper book being part of the assessment order in which the name of M/s. Venkatrama Poultry (P) Ltd. being the same party is mentioned Page | 6 ITA No(s). 1108/KOL/2023 Assessment Year(s) 2012-13 Sunil Baran Dey.
and page 107 of the paper book being the assessment order for A.Y. 2010-11 in which no addition was made. It was stated that the ground of commercial expediency was not even required for adjudicating the issue. The alternate argument was raised that the supplier had insisted on cash payment and reliance was placed upon the decision of the Coordinate Bench of the Tribunal in the case of Aminia Restaurant vs. ITO in ITA No. 1580/KOL/2011 order dated 16.07.2012.
6.4 The Ld. DR relied upon the order of the Ld. CIT(A).
6.5 We have considered the facts of the case, the submissions made and the details filed and have also gone through sub-clause (ii) of clause
(e) of Rule 6DD of the IT Rules, 1962 which specifically exempts the payment made for the purchase of the produce of animal husbandry including livestock, meat, hides and skins or dairy or poultry farming to the cultivator, grower or producer of such articles, produce or products. The assessee claims that the disallowance under section 40A(3) of the Act was not warranted and the claim is supported by the declarations issued by M/s. Venkatrama Poultry (P) Ltd. and M/s. Bharati Poultry (P) Ltd. as per page 99 and 98 of the paper book in which both have mentioned that they were producers of poultry farming and involved in the business of manufacturing and trading of eggs. The certificates are reproduced as under:
BHARATI POULTRY PRIVATE LIMITED Rastala, PS-Chhatna, Bankura-722101 (M) 91-94340-07800 Email: [email protected] CIN:U01222WB2003PTC095893 TO WHOM IT MAY CONCERN It is to certify that Bharati Poultry Private Limited (CIN-
U01222WB2003PTC095893) having its registered office at Rastala, PS-
Page | 7 ITA No(s). 1108/KOL/2023 Assessment Year(s) 2012-13 Sunil Baran Dey.
Chhatna, Bankura-722101 is a producer of poultry farming. It is involved in the business of manufacturing and trading of eggs For & On behalf of Bharati Poultry Private Limited VENKATRAMA POULTRIES PVT LTD.
TO WHOM IT MAY CONCERN It is to certify that Venkatrama Pouttries Private Limited (CIN- 001222AP1995PTC019290) having its registered office al D. No. 5-87-39/1, Near Nayar Hotel, Lakshmipuram Main Rood. Guntur-522006 is a producer of poultry farming. It is involved in the business of manufacturing and trading of eggs.
For Venkatrama Poultries Pvt. Ltd.
6.6 Apparently, these certificates were not filed before the Ld. AO and therefore, the Ld. CIT(A) could not consider the same as even in the remand report it could not be established that the suppliers were producers of the produce of the poultry farming; therefore, since the required evidence was not produced before the Ld. AO, in the interest of justice and fair play, the order of the Ld. CIT(A) on this issue is hereby set aside and this issue is remanded to the Ld. AO to examine the evidence by carrying out necessary verification, if required, and in case the suppliers are falling under the exception as per Rule 6DD(e)(ii) of the IT Rules, the addition is directed to be deleted in both the cases. Hence, this ground of appeal is allowed for statistical purposes.
7. Ground No. 2 relates to confirmation of the addition of ₹45,750/- made by the Ld. AO u/s 40(a)(ia) of the Act on account of accounting charges paid to Shri Ritesh Saha as according to the Ld. AO the payment was made to a single person in the year exceeding ₹30,000/-, but no TDS was made on such payment nor any reply was filed by the assessee in response to the show cause notice issued in this regard. The Ld. AR drew our attention to page 5 of the assessment order and page Page | 8 ITA No(s). 1108/KOL/2023 Assessment Year(s) 2012-13 Sunil Baran Dey.
65 of the appellate order para 7.16 that the same related to salary payment accrued @ ₹3,500/- per month which was booked quarterly @ ₹15,250/- while ₹3,750/- was accrued and booked as bonus to one Shri Ritesh Saha, Accountant. The Ld. CIT(A) upheld the disallowance as the assessee had failed to substantiate with evidence that the Accountant was employed to maintain the accounts of the assessee and was not a part-time Accountant engaged for maintaining the regular books of account, since the salary is accrued monthly and not quarterly and there was no evidence to prove that ESI, PF, professional tax were deducted from the salary therefore, the Ld. CIT(A) held that he had engaged for part time job and was not a regular employee of the assessee. It was submitted that the explanation to section 194J of the Act was applicable as the salary was paid to part-time accountant who was not a qualified Chartered Accountant, therefore, section 194J of the Act was not applicable while section 194C may be applicable and reliance was placed upon the decision of M/s. Chunder Khatore & Associates vs. ITO in ITA No. 2489/KOL/2013 for A.Y. 2007-08 order dated 17.06.2016. On a query from the Bench as to whether any appointment order had been issued to Shri Ritesh Saha, the Ld. AR stated that no appointment order was issued to the accountant. Our attention was drawn to page 161 of the paper book for payment to Shri Ritesh Saha.
7.1 The Ld. DR relied upon the order of the Ld. CIT(A).
7.2 We have considered the facts of the case, the submissions made and the documents filed. The Ld. AR contends that since the recipient was not a qualified chartered accountant, therefore he is not covered u/s 194J of the Act; however, his attention was drawn to the Explanation to section 194J of the Act, which is as under:
Page | 9 ITA No(s). 1108/KOL/2023 Assessment Year(s) 2012-13 Sunil Baran Dey.
"194J. Explanation- For the purposes of this section,-
(a) "professional services" means services rendered by a person in the course of carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or advertising or such other profession as is notified by the Board for the purposes of section 44AA or of this section;
(b) "fees for technical services" shall have the same meaning as in Explanation 2 to clause (vii) of sub-section (1) of section 9;
[(ba) "royalty" shall have the same meaning as in Explanation 2 to clause
(vi) of sub-section (1) of section 9;]
(c) where any sum referred to in sub-section (1) is credited to any account, whether called "suspense account" or by any other name, in the books of account of the person liable to pay such sum, such crediting shall be deemed to be credit of such sum to the account of the payee and the provisions of this section shall apply accordingly.]"
7.3 The explanation does not specifically mention that the accountant has to be a chartered accountant so as to fall under the mischief of section 194J of the Act. Since there is no evidence that any TDS was made, therefore, the payment to the accountant was also liable to be subject to TDS u/s 194J of the Act. As regards the decision relied upon, the same was rendered on different facts and is not applicable to the facts of the case of the assessee. Since it could not be established before us that the recipient was an employee of the assessee, there is no justified reason to interfere with the findings of the Ld. CIT(A) whose findings on this issue is upheld and Ground No. 2 is dismissed.
8. Ground No. 3 relates to the disallowance of ₹35,871/- u/s 40(a)(ia) of the Act. Our attention was drawn to page 7 of the assessment order. It was stated that EMI was paid to Tata Motors, therefore, no addition was called for as the recipient must have paid tax on this amount. Our attention was drawn to the order in the case of Shri Navubha J. Chavda vs. ITO in ITA No. 592/RJT/2014 for AY 2009-10 and it was stated Page | 10 ITA No(s). 1108/KOL/2023 Assessment Year(s) 2012-13 Sunil Baran Dey.
that Tata Motors is a reputed company and must have offered this amount for tax. It was also argued that since the amount was small, such a big company will not cooperate by issuing the Chartered Accountant's certificate and a considered view may be taken by the Bench.
8.1 The Ld. DR relied upon the order of the Ld. CIT(A).
8.2 We have considered the facts of the case, the submissions made and the documents filed. As per the proviso to section 40(a)(ia) of the Act, the disallowance is not called for in case the assessee furnishes a certificate that the recipient has included the amount in his income. The Ld. AR has taken a very sweeping argument that Tata Motors being a reputed company must have offered this amount for tax which is a presumption and not based upon any evidence required as per law. However, in order to be fair to both the assessee and the Ld. AO, this issue is remanded to the Ld. AO and the assessee shall submit necessary evidence that the recipient M/s. Tata Motors have included this amount in its income by furnishing the required certificate. Hence, this ground of appeal is partly allowed for statistical purposes.
9. Ground No. 4 relates to the confirmation of the addition of ₹29,170/- being 20% of travelling expenses, ₹6,029/- being 20% of the conveyance expenses and ₹40,292/- being 20% of the sales promotion expenses. Our attention was drawn to page 172 of the paper book and it was stated that compared to the turnover, in the earlier years, the expenses claimed under these heads were either lower than in the past or they were reasonable and therefore should be allowed.
9.1 The Ld. DR relied upon the order of the Ld. CIT(A).
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9.2 We have considered the facts of the case, the submissions made and the documents filed. The Ld. AO made additions as per page 8 of the assessment order and the Ld. CIT(A) confirmed the additions as per page 66 of the appellate order as the required evidences were not furnished. However, the Bench was of the view that 20% of the disallowance is excessive and the disallowance of 10% would be reasonable. Hence, the Ld. AO is directed to recompute the disallowance to 10% of the claim under the three heads and deleted the rest of the addition.
10. Ground No. 5 relates to the confirmation of the addition of ₹1,87,097/- made u/s 69B of the Act on account of alleged difference in closing balance of trade creditor viz. M/s. SVP Corporation. Our attention in this regard was drawn to page 9 of the assessment order and page 67 of the appeal order. It was stated that the difference was brought forward from earlier year, the remand report was called for but there were no transactions during the year. The Ld. AR drew our attention to page 173 and 174 of the paper book being the ledger account of M/s. SVP Corporation and page 56 to 65 of the paper book in which it is mentioned that there were no transactions during the year.
10.1 We have considered the facts of the case, the submissions made and the documents filed. Since no transactions had taken place during the year, the disallowance u/s 69B of the Act on account of alleged difference in closing balance of trade creditor was not called for in the current assessment year and the addition, if any, could have been made only in the year in which the difference had arisen. Hence, Ground No. 5 of the appeal is allowed.
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11. Ground No. 6 was not pressed; hence, it is dismissed as not pressed.
12. Ground No. 7 relates to the confirmation of the addition of ₹5,59,159/- on account of alleged difference in the closing balance of M/s. Venkatrama Poultry (P.) Ltd. The Ld. AR stated that the goods were received in April for which the entries in the books of account were made subsequently in FY 2012-13 but the sum of ₹5,59,159/- was debited in the books of the supplier on 31.03.2012 leading to the discrepancy. Our attention was drawn to page 13 of the assessment order and page 68 of the appeal order and the explanation as per the written submission filed before the Ld. CIT(A) as per page 64 of the paper book which is the extract of the remand report as under:
"Para-17: The AO in this show caused letter stated that there is a difference of Rs.5,59,159 in the closing balance of Venkatrama Poultry Pvt. Ltd as on 31.3.2012 and observed that why the same shall not be treated as undisclosed investment u/s 69B. In his reply, the assessee stated that he records purchases in his books only after receiving the goods. In this case, the assessee maintain that he received the good after 31.03 2012 and same were taken as purchases for the financial year 2012-2013. But the assessee didn't furnished any documentary evidence in support of his claims. Hence, the addition of Rs.5,59,159 made by the AO seems to be justified."
12.1 The Ld. DR relied upon the order of the Ld. CIT(A).
12.2 We have considered the facts of the case, the submissions made and the documents filed. Since the assessee states that the goods were received in April, 2012 and the entries were made in the books of account subsequently in FY 2012-13 but the ledge of subsequent year produced before the Ld. CIT(A) did not reflect it as purchase nor any supporting evidence like road challan, date of receipt etc. could be produced in support of the claim though found to be logical but for want of any material on record the addition was upheld. In the interest of Page | 13 ITA No(s). 1108/KOL/2023 Assessment Year(s) 2012-13 Sunil Baran Dey.
justice and fair play, the issue is remanded to the Ld. AO for verification of the claim of the assessee and the Ld. AO is directed to delete the addition in case the claim of the assessee is found to be correct. Thus, Ground No. 7 is allowed for statistical purposes.
13. Ground No. 8 relates to disallowance of 20% of claim of freight and carriage expenses out of ₹41,25,650/- made by the Ld. AO which has been restricted to 10% by the Ld. CIT(A). It was submitted that the disallowance of 10% is excessive and the same may be reduced to 5%.
13.1 The Ld. DR relied upon the order of the Ld. CIT(A).
13.2 We have considered the facts of the case, the submissions made and the documents filed. Since the assessee could not file any details and vouchers, therefore, the disallowance of 10% upheld by the Ld. CIT(A) is found to be reasonable and the same is hereby confirmed as even before us no further evidence could be filed by the assessee. Hence, this ground of appeal is dismissed.
14. In the result, the appeal filed by the assessee is partly allowed for statistical purposes.
Order pronounced in the open Court on 4th May, 2026.
Sd/- Sd/-
[George Mathan] [Rakesh Mishra]
Judicial Member Accountant Member
Dated: 04.05.2026
Bidhan (Sr. P.S.)
Page | 14
ITA No(s). 1108/KOL/2023
Assessment Year(s) 2012-13
Sunil Baran Dey.
Copy of the order forwarded to:
1. Sunil Baran Dey., C/o. Subash Agarwal & Associates, Advocates Siddha Gibson, 1, Gibson Lane, Suite 213, 2nd Floor, Kolkata, West Bengal, 700069.
2. ITO, Ward-3(1), Bankura.
3. CIT(A)-NFAC, Delhi.
4. CIT-
5. CIT(DR), Kolkata Benches, Kolkata.
6. Guard File.
//True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata