ITO(TDS),Wd-46(1),Kolkata, Kolkata V. M/s. Classic Rubber, Howrah

ITA 1298/KOL/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3198 (ITAT-KOLKATA)
• Duration Of Justice: 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2013
• Appeal Filed By: Department
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 10-09-2012
• Court: TRIBUNAL
• Department Lawyers: SANJAY BHATTACHARYA FCA LD
• Assessee Lawyers: D K SONOWEL JCIT LD
• Keywords: Unexplained cash credit
• Section: 143(3); 194C

Judgement Text

ITA NOS. 1255, 1298/KOL/12-B-MVS 1 , B IN THE INCOME TAX APPELLATE TRIBUNAL, B BENCH: KO LKATA BEFORE SHRI N.S. SAINI, AM & SHRI MAHAVIR SINGH, J M () . . , ! ! ! ! ' #!' , !$ / I.T.A NO.1255/KOL/2012 #% &'/ ASSESSMENT YEAR : 200 7-08 M/S. CLASSIC RUBBER VS. I.T.O WARD 46(1), KOLKATA PAN: AADFC 8529M (+, /APPELLANT ) (-.+,/ RESPONDENT ) & !$ / I.T.A NO. 1298/KOL/2012 #% &'/ ASSESSMENT YEAR : 200 7-08 I.T.O WARD 46(1), KOLKATA VS. M/S. CLASS IC RUBBER (+, /APPELLANT ) (-.+,/ RESPONDENT ) +, / FOR THE APPELLANT/: 0 / SHRI SANJAY BHATTACHARYA, FCA, LD. AR: -.+, / FOR THE RESPONDENT: 0 / SHRI D.K. SONOWEL, JCIT, LD. SR.DR 1 2 3 4 /DATE OF HEARING: 14-06-2013 5& 3 4 /DATE OF PRONOUNCEMENT: 21-06-2013 6 /ORDER ' #!' , SHRI MAHAVIR SINGH, JUDICIAL MEMBER: THESE CROSS APPEALS, ONE BY ASSESSEE AND ONE BY RE VENUE ARE ARISING OUT OF ORDER OF CIT(A), XXX, KOLKATA IN APPEAL NO. 447/CI T(A)-XXX/WARD-46(1)/2009-10 DATED 02-05-2012. ASSESSMENT WAS FRAMED BY I.T.O WARD 46 (1), KOLKATA U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS T HE ACT) VIDE HIS ORDER DATED 29.12.2009 FOR ASSESSMENT YEAR 2007-08. ITA NOS. 1255, 1298/KOL/12-B-MVS 2 FIRST WE TAKE THE REVENUES APPEAL NO. 1298/KOL/201 2 A.Y 2007-08. 2. THE ONLY ISSUE IN THIS REVENUES APPEAL IS AGAIN ST THE ORDER OF CIT(A) IN DELETING THE DISALLOWANCE OF JOB CHARGES MADE BY AO BY INVOKIN G THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT FOR NON DEDUCTION OF TDS U/S. 194C(1) OF TH E ACT. FOR THIS, REVENUE HAS RAISED FOLLOWING GROUNDS :- 1. THAT THE LD. CIT(A) -XXX, KOL. HAS ERRED IN FAC TS AND CIRCUMSTANCES OF THE CASE BY DELETING THE. ADDITION OF RS.18,07,485/- MA DE BY THE A.O. U/S. 40(A)(IA) READ WITH SEC. 194C(1) OF THE 2 THAT THE LD. CIT(A) -XXX, KOL. HAS ERRED IN FACTS AND CIRCUMSTANCES OF THE CASE THAT THE ADDITION OF RS.18,07,485/- WAS MADE AS THE ASSE SSEE HAD FOILED TO DEDUCT TAX FROM PAYMENT MODE TO PARTIES WHO PERFORMED LABOUR J OBS ACCORDING TO THE SPECIFICATIONS OF THE ASSESSEE WHICH INTER ALIA IS CONTRACT AND AS SUCH THE SAID PAYMENTS COME UNDER THE PROVISIONS OF SEC. 194C(1) OF THE ACT . 3. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. THE AO NOTICED THAT THE ASSESSEE HAS PAID LAB OUR CHARGES TO M/S. MONDAL ENTERPRISES AT RS.6,51,155/-, M/S. S.N PLASTICS AT RS. 5,44,150/- AND M/S. DAS ENTERPRISES AT RS.6,12,180/- DURING THE YEAR UNDER CONSIDERATIO N, BUT NO TDS WAS DEDUCTED U/S. 194C(1) OF THE ACT. THE ASSESSEE BEFORE THE AO CO NTENDED THAT THE JOB WORK DONE BY ASSESSEE INCLUDING MATERIALS SUPPLIED BY THE ASSESS EE TO THESE PARTIES AND IT WAS NOT ONLY LABOUR CHARGES. BUT THE AO HAS NOT ACCEPTED THE PLE A OF THE ASSESSEE AND MADE DISALLOWANCE OF ENTIRE JOB CHARGES AMOUNTING TO R S.18,07,485/- BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT FOR NON -DEDUCTION OF TDS U/S. 194C(1) OF THE ACT. 4. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A), WHO DELETED THE ADDITION AFTER NOTING CLARIFICATIONS FROM THESE CONCERNS TO WHOM ASSESSEE HAS MADE THE PAYMENTS OF JOB WORK CHARGES THAT THEY WERE FOR MANUFACTURIN G AND SUPPLYING THE MATERIALS BY THE ASSESSEE. ACCORDING TO CIT(A), MANUFACTURING CONTR ACT DOES NOT COME WITHIN THE PURVIEW OF SECTION 194C OF THE ACT AND HE DELETED THE DISAL LOWANCE MADE BY THE AO. AGGRIEVED, NOW REVENUE CAME IN APPEAL BEFORE US. ITA NOS. 1255, 1298/KOL/12-B-MVS 3 5. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THESE THREE PARTIES ARE DOING J OB WORK ON BEHALF OF ASSESSEE INCLUDING THE MATERIAL SUPPLIED BY ASSESSEE ON CONTRACT OF MA NUFACTURING OF GOODS. WE FIND THAT THESE 3 PARTIES (MENTIONED ABOVE) ARE CARRYING OUT JOB WORK ON THE BASIS SUPPLY OF MATERIALS. WE HAVE VERIFIED FROM THE BILLS/VOUCHER S AS PRODUCED BY ASSESSEE BEFORE US, WHEREIN SOME OF BILLS I.E. ABC CLAMP HALF MOULD ( INCLUSIVE OF MATERIAL & LABOUR CHARGES) IN MAKING THE PAYMENT ON BEHALF OF M/S. DAS ENTERPR ISES. SIMILARLY, IN THE CASES OF S.N PLASTIC & M/S. MONDAL ENTERPRISE, THE ASSESSEE HAS MADE THE PAYMENTS. IN VERY RECENT DECISION OF THE HONBLE SUPREME COURT, WHEREIN IT H AS BEEN CONSIDERED IN CIVIL APPEAL NO. 18012/2009 ARISING OUT OF THE ORDER OF THE HONBLE DELHI HIGH COURT DATED 11-11-08 IN ITA NO. 1259/07 IN THE CASE OF CIT XVII, DEL VS. SILVER OAK LABORATORIES PVT. LTD. AS UNDER:- ON EXAMINING THE TERMS AND CONDITIONS, INVOICES, P URCHASE ORDERS AND CHAILANS INDICATING PAYMENT OF EXCISE DUTY, THERE I S NO MATERIAL ON RECORD TO INDICATE THAT THE TRANSACTION IN QUESTION IS A CON TRACT FOR CARRYING OUT WORKS. HENCE, S. 194C IS NOT ATTRACTED. S. 194C HAS BEEN A MENDED BY THE FINANCE (NO.2) ACT, 2009, W.E.F. 1.10.2009 TO PROVIDE THAT WORK INCLUDES MANUFACTURING OR SUPPLYING A PRODUCT ACCORDING TO THE REQUIREMENT OR SPECIFICATION OF A CUSTOMER BY USING MATERIAL PURCHASED FROM SUCH CUST OMER. IT IS CLARIFIED THAT THE DEFINITION OF TILE WORD WORK WILL NOT INCLUDE MAN UFACTURING OR SUPPLYING A PRODUCT ACCORDING TO THE REQUIREMENT OR SPECIFICATI ON OF A CUSTOMER BY USING MATERIAL PURCHASED FROM A PERSON OTHER THAN SUCH CU STOMER. RESPECTFULLY FOLLOWING THE SAID DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF CIT VS. SILVER OAK LABORATORIES PVT. LTD., REFERRED TO SUPRA, WE DISMISS THIS APPEAL OF THE REVENUE. ITA NO.1255/KOL/2012 A.Y 2007-08 (BY THE ASSESSEE ) 6. THE ONLY ISSUE IN THIS ASSESSEES APPEAL IS AG AINST THE ORDER OF CIT(A) CONFIRMING THE ADDITION OF CASH PAYMENT RECEIVED BY ASSESSEE FROM SUPREME & CO. LTD AMOUNTING TO RS. 10,37,000/-. FOR THIS, ASSESSEE HAS RAISED FOL LOWING GROUNDS:- 1)THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) WAS WRONG IN CONFIRMING THE ADDITION OF RS.10,37,000/- MADE BY THE ASSESSING OF FICER IN RELATION TO THE CASH PAYMENTS RECEIVED BY THE APPELLANT FROM M/S SUPREME & CO. LTD. ITA NOS. 1255, 1298/KOL/12-B-MVS 4 2) THAT WITHOUT PREJUDICE TO THE CONTENTION RAISED IN GROUND NO.! ABOVE, THE COMMISSIONER OF INCOME-TAX (APPEALS) FAILED TO APPR ECIATE THAT THE APPELLANT HAD DULY ADJUSTED THE PAYMENTS RECEIVED FROM M/S SU PREME & CO. LTD. AGAINST THE APPELLANTS DUES FROM THE SAID COMPANY AND THUS HE ERRED IN NOT ACCEPTING THE APPELLANTS SUBMISSION THAT RS.10,37,000/- HAD BEEN RECEIVED FROM M/S SUPREME & CO. LTD. TOWARDS REALISATJON OF DEBTS. 7. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE AO DURING THE COURSE OF EXA MINATION OF BOOKS OF ACCOUNT NOTED THAT THE ASSESSEE HAS RECEIVED A SUM AGGREGATING TO RS. 10.37 LAKHS FROM SUPREME & CO. LTD. THE ASSESSEE EXPLAINED THAT IT HAD COLLECTED SALE P ROCEEDS FROM SALE OF PROPERTIES OF SUPREME & CO. LTD FOR THE PURPOSE OF SETTLEMENT OF DUES. THE ASSESSEE HAS STATED THAT THE SUM OF RS. 10.37 LAKHS REPRESENTS SUCH COLLECTION, WHICH HAS BEEN SET OFF AGAINST DUES OF SUPREME & CO. LTD. THE ASSESSEE COULD NOT OFFER ANY EXPLANATION BEFORE THE AO. THUS, HE MADE THE ADDITION. 8. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT( A), WHO HAS CONFIRMED THE ACTION OF AO BY OBSERVING AS UNDER :- 3.2 THE SUBMISSIONS OF THE APPELLANT HAVE BEEN CON SIDERED AND IT IS S EN THAT THE EVIDENCE PRESENTED BY IT IN THE FORM OF LETTERS FRO M M/S. SUPREME & CO. PVT. LTD. ALLEGEDLY AUTHORIZING IT TO COLLECT CASH ON THEIR B EHALF FOR SALE OF LAND BY THIS PARTY WHICH WAS CLAIMED TO HAVE BEEN ADJUSTED BY IT AGAIN ST T E AMOUNT DUE FROM M/S. SUPREME & CO. PVT. LTD. HOWEVER, THE AUTHENTICITY F THESE LETTERS CANNOT BE CONSIDERED AS THE SAME HAS NOT BEEN CORROBORATED AC COUNTING ENTRIES IN THE BOOKS OF ACCOUNTS OF M/S. SUPREME & CO. PVT. LT THIS CONC ERN HAS IN FACT CONFIRMED ON INDEPENDENT INQUIRY BY THE A.O. OF A OUTSTANDING AM OUNT OF RS.14,85,811/- AS PAYABLE TO THE APPELLANT AND HA NOT ADJUSTED THE AL LEGED AMOUNT COLLECTED BY THE APPELLANT AGAINST THE BALANCE PAYABLE TO THE APPELL ANT. THE CONTENTION OF THE APPELLANT CANNOT B ACCEPTED AS IT IS NEITHER CORROB ORATED FROM THE BOOKS OF ACCOUNTS OF THE PARTY I.E. M/S. SUPREME & CO. PVT. LTD. ON WHOSE BEHALF IT HAS CLAIMED T HAVE COLLECTED THE CASH AMOUNT NOR HAS TH ERE BEEN ANY JUSTIFICATION OR EVIDENCE GIVEN OF THE ALLEGED SALE OF PROPERTIES OF THIS CONCERN AGAINST WHICH PAYMENTS HAVE BEEN ALLEGEDLY COLLECTED BY THE APPEL LANT AND ADJUSTED AGAINST THE OUTSTANDING BALANCE OF M/S.. SUPREME & CO. PVT. LTD . THE /CONCILIATION OF ACCOUNTS FILED IN APPEAL HAS ALSO NOT BEEN CONFIRMED BY M/S. SUPREME & CO. PVT. LTD. IT IS NOT SUFFICIENT EVIDENCE JUST TO CLAIM THAT CASH AS COLLECTED ON BEHALF OF ANOTHER PARTY WHEN THERE IS NO CORRESPONDING ENTRY OF THE B OOKS OF ACCOUNTS OF THE PARTY NOR IS THE PARTY CREDITING THE /APPELLANT TOWARDS T HE AMOUNT ALLEGEDLY COLLECTED ON ITS BEHALF. IT IS HELD THAT THE LETTERS CLAIMED TO HAVE BEEN ISSUED BY M/S. SUPREME & CO. PVT. LTD. RELIED UPON BY THE APPELLANT ARE S ELF-SERVING DOCUMENTS WHICH ARE NEITHER SUBSTANTIATED INDEPENDENTLY NOR BACKED BY CORRESPONDING EVIDENCES OR ITA NOS. 1255, 1298/KOL/12-B-MVS 5 ENTRIES IN THE BOOKS OF ACCOUNTS BF M/S. SUPREME & CO. PVT. LTD. AND THEREFORE CANNOT BE RELIED UPON AS EVIDENCE OF CASH PAYMENT C OLLECTION BY THE APPELLANT ON BEHALF OF M/S SUPREME & CO. PVT. LTD. IT IS THEREFO RE SEEN THAT THERE IS INSUFFICIENT EVIDENCE TO VINDICATE THE STAND OF THE APPELLANT TH AT THE CASH AMOUNTS TOTALING TO RS.1O,37,000/- WERE COLLECTED ON BEHALF OF ITS DEBT OR AND WAS ADJUSTED AGAINST THE OUTSTANDING BALANCE RECEIVABLE FROM M/S. SUPREME & CO. PVT. LTD. THEREFORE, THE EXPLANATION IS REJECTED AND THE ADDITION MADE BY TH E A.O. OF THE TOTAL AMOUNT OF RS.1O,37,000/- AS CASH RECEIPT IN THE BOOKS OF THE APPELLANT DURING THE RELEVANT FINANCIAL UNEXPLAINED CASH CREDIT U/S.68 IS CONFIRM ED. 9. EVEN BEFORE US THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE AND THE LD. COUNSEL FOR THE ASSESSEE HAS SHOWN ITS INABILITY TO PRODUCE ANY EVIDENCE IN SUPPORT OF CLAIM OF COLLECTION OF AMOUNTS FROM 6 PERSONS FOR AND ON BE HALF OF SUPREME & CO. LTD. AGAINST ITS DUES. SINCE THE ASSESSEE COULD NOT PRODUCE ANY EVID ENCE, WE HAVE NO ALTERNATIVE EXCEPT TO CONFIRM THE FINDING OF CIT(A) ON THIS ISSUE. TH IS ISSUE OF ASSESSEES APPEAL IS DISMISSED. 10. IN THE RESULT, BOTH THE APPEALS OF REVENUE AND ASSESSEE ARE DISMISSED. ' 6 1 7 1 8 ' 4 21-6-2013 ORDER PRONOUNCED IN THE OPEN COURT ON 21-06-2013 SD/- SD/- [ . . , ] [ ' #!' , ] [N.S. SAINI, ACCOUNTANT MEMBER] M AHAVIR SINGH, JUDICIAL MEMBER] (4) DATED : 21-06-2013 *PP 9: #;< #= /SR.P.S 6 3 -##> ?>&@- COPY OF THE ORDER FORWARDED TO: 1 . +, /APPELLANT- ITO, WARD 46(1), KOL 3 GOVT. PL (W), KOL-1. 2 -.+, / RESPONDENT : M/S. CLASSIC RUBBER VILL: SURIKHALI, P.O PANCHLA DIST : HOWRAH PIN 711322. 3 . #6 / THE CIT, 4 . #6 ( )/ THE CIT(A), KOLKATA 5 . F#8 -# / DR, KOLKATA BENCHES, KOLKATA .> -#/ TRUE COPY, 61/ BY ORDER, ' !< /ASSTT. REGISTRAR