IQBAL M. SAIYED, NAVI MUMBAI V. ACIT 22(3), NAVI MUMBAI

CO 80/MUM/2012

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7691 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 23 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 21-09-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Next Hearing Date: 25-09-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 29-05-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI I BENCH MUMBAI BENCHES, MUMBAI BEFORE SHRI RAJENDRA SINGH, AM & SHRI VIJAY PAL R AO, JM ITA NO. 7774/MUM/2010 (ASST YEAR 2007-08) & CROSS OBEJCTION NO. 80-/MUM/2012 THE ASST COMMR OF INCOME TAX 22(3), MUMBAI VS SHRI IQBAL M SAYED 416 B PEREPOLES PLOT NO.74 SECTOR 17 VASHI NAVI MUMBAI 703 (APPELLANT/RESPONDENT ) (RESPONDENT/CROSS OBJECTOR ) PAN NO. AMZPS2897Q ASSESSEE BY NONE REVENUE BY SH K N KUTTY DT.OF HEARING 11 TH SEPT 2012 DT OF PRONOUNCEMENT 21 ST , SEPT 2012 PER VIJAY PAL RAO, JM THIS APPEAL BY THE REVENUE AND THE CROSS OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 27.8.2010 OF THE C OMMISSIONER OF INCOME TAX (APPEALS) FOR THE ASSESSMENT YEAR 2007-08. 2 NONE APPEARED ON BEHALF OF THE RESPONDENT ASSESSE E DESPITE SERVING OF NOTICE; THEREFORE, WE PROPOSE TO DISPOSE OFF THIS A PPEAL AS WELL AS CO EXPARTE. 3 THE ONLY EFFECTIVE GROUND RAISED BY THE REVENUE I N THIS APPEAL IS AS UNDER: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD COMMISSIONER OF INCOME TAX(APPEALS) ERRED IN RESTRICTING THE DISALL OWANCE MADE U/S 40(A)(IA) TO THE EXTENT OF ` 12,60,630/- INSTEAD OF THE TOTAL DISALLOWANCE OF ` . 35,18,024/- WITH A DIRECTION TO VERIFY WHETHER THE CLAIM TO THE EXTENT OF ` 22,57,394/- PERTAINING TO PAYMENTS MADE TO MUKADAMS UNDER THE PURVIEW OF SEC. 40(A)(IA). THUS DIRECTION OF THE LD COMMISSIONE R OF INCOME TAX(APPEALS) AMOUNTS TO PARTIAL SET SIDE/RESTORATION BACK TO THE F ILE OF THE ASSESSING OFFICER WHICH IS NOT WITHIN THE PURVIEW OF THE POWER OF THE COMMISSIONER OF INCOME TAX(APPEALS). THE LD CITIA) HAS FAILED TO APPRECIATE THE FACT THAT THE ASSESSING OFFICER HAD VERY CLEARLY BROUGHT OUT THE QUA NTUM AND NATURE OF EXPENSES WHILE COMPLETING THE ASSESSMENT AND HAD VE RIFIED ALL THE FACTS BEFORE CONCLUDING THAT THE ASSESSEE HAD NOT DEDUCTE D TAX AT SOURCE AS PER PROVISIONS OF SEC 194 OF THE ACT.. ITA NO.7774/M/2010 CO 80/M/12 SHRI IQBAL M SAYED 2 4 WE HAVE HEARD THE LD DR AND CONSIDERED THE RELE VANT MATERIAL ON RECORD. THE ASSESSING OFFICER DISALLOWED THE PAYMENT OF ` 35,18,024/- U/S 40(A)(IA) AS NO TAX WAS DEDUCTED BY THE ASSESSEE. 4.1 ON APPEAL, THE COMMISSIONER OF INCOME TAX(APPEA LS) NOTED THAT SOME OF THE PAYMENTS MADE BY THE ASSESSEE ARE REGARDING MUK ADAM, WHO ARE ACTUALLY LEADING THE GANG OF LABOURERS AND THEREFORE, THE PA YMENT TO EACH LABOUR DOES NOT EXCEED MORE THAN ` 20,000/- PER TRANSACTION WHICH IS NOT SUBJECTED T O TDS U/S 194C. 4.2 IN RESPECT OF OTHER PAYMENTS MADE TO THE SIX PA RTIES, THE COMMISSIONER OF INCOME TAX(APPEALS) HAS CONFIRMED THE DISALLOWANCE TO THE EXTENT OF ` 12,60,630/- BECAUSE THESE PAYMENTS WERE MORE THAN ` 20,000/- TO EACH PARTY. 4.3 THE LD DR HAS SUBMITTED THAT THE COMMISSIONER O F INCOME TAX(APPEALS) HAS DIRECTED THE ASSESSING OFFICER TO VERIFY THESE PAY MENTS WHICH DO NOT FALL UNDER THE PURVIEW OF SEC 40(A)(IA) OF THE AC AND GIVE THE BE NEFIT TO THE ASSESSEE WHEREAS UNDER THE PROVISIONS OF LAW, THE COMMISSIONER OF I NCOME TAX(APPEALS) HAS NO JURISDICTION TO SET ASIDE THE ISSUE TO THE ASSESSIN G OFFICER AND THE PROPER COURSE OF ACTION WAS TO ASK THE REMAND REPORT FROM THE ASSESS ING OFFICER, WHICH WAS NOT DONE BY THE COMMISSIONER OF INCOME TAX(APPEALS). 5 WE FIND FORCE IN THE CONTENTION OF THE LD DR BEC AUSE THE COMMISSIONER OF INCOME TAX(APPEALS) WITHOUT CALLING THE REMAND REPO RT HAS ASKED THE ASSESSING OFFICER TO VERIFY THE PAYMENTS AND THEN DECIDE THE SAME IN PARA 7.1 AS UNDER: 7.1 ON THE OTHER HAND THE APPELLANT HAS CLAIMED THA T MOST OF THESE PAYMENTS ARE MADE TO VARIOUS PARTIES THROUGH MUKADA M WHOSE NAMES ARE GIVEN IN THE CHART. THEY ARE ABDULLAH, AMRITLAL BARMA, ARJUN FITTER, BINAY MANDAL,, NAKA LABOURERS, CHANDAN, HAIDER FITTER, MAN GESH RATHOD, MOHAN REDDY, NIRMAL YADAV, PRAKASH CARPENTER, RAJKUMAR, RAM SHINGARE, S.K. MIRDHA, SARKAR AND SHAKIR FITTER. IN SUPPORT OF THE STAN D TAKEN BY THE APPELLANT THAT THESE MUKADAMS ARE ACTUALLY LEADING THE GANG OF LABOURERS, A ZEROX COPY OF CASH REGISTER HAS ALSO BEEN FURNISHED. FURTH ER, IN SUPPORT OF THIS PLEA TAKEN BY THE APPELLANT, CASE LAWS IN FAVOUR OF THE A PPELLANT STATING THAT SECTION 40(A)(IA) IS NOT ATTRACTED IN THE CASE OF T HE PAYMENTS MADE TO LABOUR THOUGH THESE MUKADAMS HAS ALSO BEEN CITED. IT IS SE EN THAT IN A.Y. 2006-07 ITA NO.7774/M/2010 CO 80/M/12 SHRI IQBAL M SAYED 3 ALSO THE ISSUE WAS RAISED. SINCE SUCH PAYMENT TO EAC H LABOURER DOES NOT EXCEED MORE THAN RS.20,000/- PER TRANSACTION THERE WAS NO LIABILITY TO DEDUCT TDS U/S 195C OF THE ACT. THE APPELLANT HAS EXPLAINE D THAT EACH LABOURER IS PAID ON A DAILY BASIS AND HIS SIGNATURE AND THUMP I MPRESSION IS TAKEN FOR THE AMOUNT PAID TO HIM ON EACH DAY. FOR THE PAYMENT MAD E BY HIM, THE APPELLANT HAS SUBMITTED A COPY OF LABOUR REGISTER FO R VERIFICATION WHEREIN DATE WISE AND NAME WISE PAYMENT HAS BEEN MADE TO EA CH LABOURER. FROM THE DETAILS SUBMITTED BY THE APPELLANT, I FIND THAT BY AND LARGE THE APPELLANTS CLAIM IS CORRECT. THE ASSESSING OFFICER IS DIRECTED TO VERIFY THE SAME AND IF THESE PAYMENTS DO NOT FALL UNDER THE PU RVIEW OF SECTION 40(A)(IA) THEN GIVE BENEFIT TO THE APPELLANT. 6 SINCE THE PAYMENT WHICH WAS LESS THAN ` 20,000/- PER TRANSACTION POINTED OUT BY THE COMMISSIONER OF INCOME TAX(APPEALS), ARE REQ UIRED TO BE VERIFIED AT THE LEVEL OF THE ASSESSING OFFICER; THEREFORE, IN THE F ACTS AND CIRCUMSTANCES OF THE CASE, WE SET ASIDE THE SAME TO THE RECORD OF THE ASSESSIN G OFFICER AND THEREBY THE IRREGULARITY COMMITTED BY THE COMMISSIONER OF INCOM E TAX(APPEALS) STANDS REGULARISED. 7 NOW WE TAKE UP THE CROSS OBJECTION FILED BY THE A SSESSEE AND RAISED THE FOLLOWING GROUNDS I) BECAUSE LD COMMISSIONER OF INCOME TAX(APPEALS) ER RED IN LAW AND ON FACTS IN CONFIRMING HE DISALLOWANCE MADE BY ASSESSING OFFI CER FOR ` 12.60,630/- BY INVOKING SECTION 40(A)(IA) OF THE I T ACT, 1961, IG NORING THAT THE APPELLANT HAD NO LIABILITY TO DEDUCT TDS U/S 194C OF THE ACT ON S UCH EXPENSES. II) BECAUSE THE LD CIT(AA0 ERRED IN LAW AND ON FACT S IN CONFIRMING THE ABOVE DISALLOWANCE IGNORING THE FACT THAT THE EXPENSES WH ICH HAS ALREADY BEEN PAID BY THE APPELLANT WITHIN THE RELEVANT PREVIOUS Y EAR DOES NOT ATTRACT THE RIGOURS OF SECTION 40(A)(IA) 8 THE COMMISSIONER OF INCOME TAX(APPEALS) HAS BROUG HT OUT THE FACT REGARDING THE PAYMENTS IN PARA 7.2 AS UNDER: 7.2 AT THE SAME TIME THERE IS NO DISPUTE ON THE FA CT THAT THE APPELLANT HAS MADE PAYMENTS TO SOME MORE PARTIES FOR VARIOUS TYPE S OF WORK. THEY HAVE GIVEN SERVICES BUT TDS HAS NOT BEEN DEDUCTED BY THE APPELLANT. THEY ARE R.K. ENTERPRISES, SAIF PAINTING WORK, STRUCTURAL FABRICA TORS, S.N. TRANSPORT AND PAVANKUMAR TRANSPORT. THE APPELLANT ALSO HAS NOT CL AIMED FOR THESE PARTIES I.E. R.K. ENTERPRISES, SAIF PAINTING WORK, STRUCTUR AL FABRICATORS AND S.N. TRANSPORT ITA NO.7774/M/2010 CO 80/M/12 SHRI IQBAL M SAYED 4 AND PAVANKUMAR TRANSPORT; THAT THEY ARE LABOUR MUKA DAM AND PAYMENTS HAVE BEEN MADE TO THE LABOURERS THROUGH THE GANG LE ADER. AT THE SAME TIME, THE APPELLANT HAS NOT BEEN ABLE TO GIVE ANY R EASON WHY PROVISIONS OF SECTION 40(A)(IA) ARE NOT ATTRACTED FOR THEM. IN OT HER WORDS, THERE IS NO DISPUTE IN RESPECT OF DISALLOWANCES MADE FOR THE AMOUNT PAI D TO THESE PARTIES HENCE, DISALLOWANCE MADE U/S. 40(A)(IA) FOR THESE P ARTIES GIVEN BELOW 8.1 IT IS CLEAR THAT THE PAYMENT MADE BY THE ASSESS EE TO THE SIX PARTIES AS MENTIONED ABOVE ARE CERTAINLY EXCEEDING TO THE MINI MUM LIMIT, NOT SUBJECTED TO TAX AND THEREFORE, THESE PAYMENTS ARE SUBJECTED TO TAX. SINCE THE ASSESSEE HAS NOT DEDUCTED THE TDS; THEREFORE, WE FIND NO ERROR OR IL LEGALITY IN THE ORDER OF THE CIT(A) IN CONFIRMING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER U/S 40(A)(IA) TO THE EXTENT THE PAYMENT OF ` 12,60,630/-. ACCORDINGLY, THE CO FILED BY THE ASS ESSEE IS DISMISSED. 9 IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSE AND THE CROSS OBJECTION FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 21 ST , DAY OF SEPT 2012. SD/- SD/- ( RAJENDRA SINGH ) ACCOUNTANT MEMBER ( VIJAY PAL RAO ) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 21 ST SEPT 2012 RAJ* ITA NO.7774/M/2010 CO 80/M/12 SHRI IQBAL M SAYED 5 COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI