Dilip Kr. Chatterjee, Kolkata vs Department Of Income Tax

IN THE INCOME TAX APPELLATE TRIBUNAL "A" BENCH: KOLKATA [Before Shri P.K.Bansal, A.M. & Shri Mahavir Singh, J.M.]

I.T.A. No.1042/Kol/2011 : Assessment Year : 2008-09

DCIT, Circle-33, Kolkata -Vs- Mr. Dilip Kr. Chatterjee (Appellant) (PAN:ACDPC 5437A).. (Respondent)

Date of concluding the hearing : 29.05.2015 Date of pronouncing the Order : 10.06.2015

Appearances :For the Department : Shri Pinaki Mukherjee, Sr.DR :For the Assessee : Shri Subash Agarwal, Advocate

ORDER

Per Shri P.K.Bansal, A.M.

This appeal has been filed by the Revenue against the order of the C IT(A)-XX, Kolkata dated 31.05.2011 for the a sse ssment year 2008-09 by taking the following effective ground of appeal.

"Under the fact and circumstances of the case, whether the Ld. CIT(A)-XX, Kol. is justified in deleting the addition of Rs.2,05,71,294/- u/s.40A(2)(b) of the I.T. Act, 1961 when the assessee failed to justify that the paym ent were made as per the fair market value of the goods purchased and services availed and as per the legitimate needs of the business and the Tax Audit Report of the Auditor in Fo rm No.3CD showed 'NIL' related party transaction u/s 40A(2)(b) of the I.T. Act, 1961".

2. Brief facts relating to this ground are that the AO noted that the assessee is a contractor who has sho wn contract receipts of

1 2 ITA No.1042/Kol/2011 Mr. Dilip Kr. Chatterjee : A. Yr: 2008-09

Rs.17,04,38,555/- and declared an income of Rs.1,08,65,789/-. During the yea r, the assessee has made payments to various persons specified under section 40A(2)(b) amounting to Rs.10,28,56,471/-, which have not been incorporated in the tax audit report, the detail s of which are a s under:-

Person s sp ecified Nature of Amount u/s 40A(2)(b) transaction (Rs.) 1. Chatterjee Civil Construction (P) Ltd . Material Purchase 60,64,256 Sub-contract 2,59,70,236 2. Santima Civil Constru ction (P) Ltd. Material Purchase 40,26,856 Sub-contract 2,72,60,554 3. Mousumi Chatterjee Sub-contract 75,66,551 4. Santi Ch atterjee Sub-contract 1,64,87,920 5. Abh ijit Ch atterjee Hire ch arges 4,80,098 6. M/s. Santima Filling Power & Fu el 1,50,00,000 Station 10,28,56,471

2.1 The a sse ssee did not justify the payments made to these persons whether the ra te a t which the payment was made represent s the fair market rate. The AO, therefore, proposed to make a disallo wance @15% but ultimately in the computation, he made a disallo wance @20%. When the matter went before the CIT(A), the CIT(A) deleted the disallowance.

3. We heard the rival submissions and carefully considered the same. We have also gone through the provisions of sectio n 40A(2)(b). We are of the view that the burden of proof lies on the AO to bring evidence on record that the payments made to the persons specified under section 40A(2)(b) are excessive or unreasonable, having regard to the fair market value of the goods or services or were otherwise than for the legitimate needs of the business. The AO simply presume d and made the disallowance 3 ITA No.1042/Kol/2011 Mr. Dilip Kr. Chatterjee : A. Yr: 2008-09

@20% without discha rging the onus or bringing any material or evidence on record to prove that the prices paid to these parties are much more than the fair market value. In vie w of this fact, in our opinion, no interference is called for in the order of the CIT(A). The C IT(A) has rightly deleted the disallowance. The ld.DR before us even though vehemently relied on the order of the AO but could not convince us that the onus lies o n the assessee to prove tha t the prices which they have paid to these parties represent the fair market value and are not excessive or unrea sonable. We, therefore, confirm the order of the CIT(A).

3. In the result, the appeal filed by the Revenue stands dismissed.

Order pronounced in the Open Court on 10.06.2015.

Sd/- Sd/- (Mahavir Singh) (P.K.Bansal) Judicial Member Accountant Member Dated : 10.06.2015

Talukdar(Sr.P.S.)

Copy of the order forwarded to:

1. Mr. Dilip Kr. Chatterjee, 158, Lenin Sarani, Kolkata - 700 013. 2 DCIT, Circle-33, Kolkata

3. The CIT(A),

4. CIT,

5. DR, True Copy, By order,

Asstt. Registrar, ITAT, Kolkata 4 ITA No.1042/Kol/2011 Mr. Dilip Kr. Chatterjee : A. Yr: 2008-09