The ITO, Ward-9(2), Ahmedabad V. M/s. Kailash Construction, Ahmedabad

ITA 1397/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 76747 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2014
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 28-05-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 13-05-2010
• Court: TRIBUNAL
• Department Lawyers: ROOP CHAND
• Section: 194C

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD 0 00 0 0 00 0 , , , , !'# !$ !'# !$ !'# !$ !'# !$0 00 0! !! !0 00 0 %$ %$ %$ %$, , , , &' ( &' ( &' ( &' ( & & & & BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI N.S. SAINI, ACCOUNTANT MEMBER ITA NO. 1397/AHD/2011 ASSESSMENT YEAR 2006-07 INCOME TAX OFFICER WARD-9(2), AHMEDABAD. VS M/S KAILASH CONSTRUCION A-1, ASHISH COMPLEX, DHARAMNAGAR, SABARMATI, AHMEDABAD. PAN: AACFK4098G )*/ APPELLANT ,-)* / RESPONDENT REVENUE BY : SHRI ROOPCHAND, SR. DR ASSESSEE(S) BY : NONE $'. / 0'/ // / DATE OF HEARING : 28/05/2014 123 / 0' / DATE OF PRONOUNCEMENT : 06/06/2014 &4 &4 &4 &4/ // / O R D E R PER SHRI N.S. SAINI, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) DATED 11.03.20 11. 2. THE RESPONDENT ASSESSEE FILED AN ADJOURNMENT PE TITION AND THE BENCH REJECTED THE SAME FINDING THE REASON FOR SEEK ING ADJOURNMENT AS NOT A PLAUSIBLE ONE. THE BENCH THUS PROCEEDED TO HEAR THE APPEAL EX-PARTE QUA THE RESPONDENT ASSESSEE AND DISPOSED OFF ON THE BAS IS OF MATERIALS AVAILABLE ITA NO. 1397/AHD/2011 M/S KAILASH CONSTRUCTION FOR A.Y. 2006-07 - 2 - ON RECORD AND AFTER CONSIDERING THE SUBMISSION OF D EPARTMENTAL REPRESENTATIVE. 3. GROUND NO. 1 OF THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) DELETING THE D ISALLOWANCE OF RS 6,79,267/- MADE BY THE ASSESSING OFFICER U/S. 40(A) (IA) OF THE ACT. 4. WE HAVE HEARD THE DEPARTMENTAL REPRESENTATIVE A ND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAIL ABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSING OFFICER OBSERVED THAT T HE ASSESSEE HAS MADE PAYMENTS OF RS 12,63,860/- TOWARDS CARTING EXPENSES WITHOUT DEDUCTING TAX AT SOURCE U/S. 194C OF THE ACT. IN REPLY TO SHOW C AUSE NOTICE OF THE ASSESSING OFFICER, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED DETAILS OF TAX DEDUCTED AT SOURCE AND PAID TO THE C REDIT OF THE CENTRAL GOVERNMENT ON CARTING EXPENSES OF RS 4,03,891/- OUT OF THE TOTAL CARTING EXPENSE OF RS 12,63,860/-. THE ASSESSING OFFICER, THEREFORE, HELD THAT THE ASSESSEE HAS FAILED TO DEDUCT TAX AT SOURCE ON CART ING EXPENSES OF RS 8,59,969/- AND THEREFORE, BY INVOKING THE PROVISION S OF SECTION 40(A)(IA) OF THE ACT MADE DISALLOWANCE OF THE SAME. 5. ON APPEAL, THE COMMISSIONER OF INCOME TAX (APPE ALS) OBSERVED THAT DURING THE COURSE OF THE HEARING OF THE APPEAL , IT WAS SUBMITTED THAT THE TAX WAS DEDUCTED AT SOURCE FROM PAYMENT OF RS 4 ,44,285/- MADE TO SURESH K. PATEL AND THAT THE BALANCE PAYMENT LEFT W AS RS 8,19,575/- FOR THE ITA NO. 1397/AHD/2011 M/S KAILASH CONSTRUCTION FOR A.Y. 2006-07 - 3 - CONSIDERATION OF WHICH COPY OF LEDGER ACCOUNT OF SH RI SURESH K. PATEL WAS FILED BEFORE HIM. THEREFORE, THE COMMISSIONER OF I NCOME TAX (APPEALS) DELETED THE ADDITION OF RS 40,394/- FROM OUT OF THE TOTAL DISALLOWANCE OF RS 8,59,969/- MADE BY THE ASSESSING OFFICER. 6. REGARDING BALANCE PAYMENT OF RS 8,19,575/-, THE COMMISSIONER OF INCOME TAX (APPEALS) OBSERVED THAT A SUM OF RS 7 ,17,778/- WAS CLAIMED AS FREE OF TAX DEDUCTED AT SOURCE AS FORM NO. 15J W AS FILED FOR THREE SUB- CONTRACTORS WHO DID NOT OWN MORE THAN TWO TRUCKS AN D THE ASSESSEE WAS NOT LIABLE TO DEDUCT TAX AT SOURCE ON PAYMENT MADE TO T HEM. THE REMAINING AMOUNT OF RS 1,01,797/- CONSISTED OF CARTING CHARGE S NOT EXCEEDING RS 50,000/- PAID TO VARIOUS PERSONS AND THEREFORE, TAX WAS NOT REQUIRED TO BE DEDUCTED AT SOURCE. THE COMMISSIONER OF INCOME TAX (APPEALS) OBSERVED THAT ON VERIFICATION OF FORM NO. 15J, HE FOUND THAT THE SAME WAS FILED BEFORE THE COMMISSIONER OF INCOME TAX ON 26.06.2006 IN RES PECT OF THREE SUB- CONTRACTORS AND THAT OUT OF THESE THREE SUB-CONTRAC TORS, NO PARTICULARS FOR ONE SHRI. PRAVIN R. PATEL TO WHOM PAYMENT OF RS 1,5 0,700/- HAD BEEN CLAIMED WERE FILED. ACCORDINGLY, HE CONFIRMED THE ADDITION OF RS 1,50,700/- OUT OF SUM OF RS 7,17,778/- AND DELETED THE BALANCE DISALLOWANCE OF RS 5,67,078/-. SIMILARLY, OUT OF THE PAYMENT OF RS 1 ,01,797/- CONSISTING OF SMALL AMOUNTS, NO DETAILS WERE GIVEN FOR AMOUNT OF RS 30,000/-. THEREFORE, HE CONFIRMED THE DISALLOWANCE OF RS 30,000/- AND DE LETED THE DISALLOWANCE FOR THE BALANCE PAYMENT OF RS 71,797/-. THUS, OUT OF TOTAL OF RS 8,59,696/-, ITA NO. 1397/AHD/2011 M/S KAILASH CONSTRUCTION FOR A.Y. 2006-07 - 4 - DISALLOWANCE OF RS 1,80,700/- WAS CONFIRMED AND BAL ANCE DISALLOWANCE OF RS 6,79,269/- (RS 40,394 + RS 5,67,078 + RS 71,797) WA S DELETED. 7. THE REVENUE IS IN APPEAL BEFORE US AGAINST THE DELETION OF DISALLOWANCE OF RS 6,79,269/-. 8. THE DEPARTMENTAL REPRESENTATIVE SUPPORTED THE O RDER OF THE ASSESSING OFFICER. WE FIND THAT THE COMMISSIONER O F INCOME TAX (APPEALS) DELETED THE DISALLOWANCE OF RS 40,394/- AS HE FOUND FROM THE COPY OF THE LEDGER ACCOUNT OF SHRI SURESH K. PATEL FILED BEFORE HIM THAT THE ASSESSEE DEDUCTED TAX AT SOURCE ON RS 4,44,285/- AND NOT RS 4,03,891/- AS CONTENDED BY THE ASSESSING OFFICER. WE AGREE WITH THE CONTENTION OF THE DEPARTMENTAL REPRESENTATIVE THAT FOR DELETING THE D ISALLOWANCE OF RS 40,394/-, NEW MATERIAL WAS FILED BEFORE THE COMMISS IONER OF INCOME TAX (APPEALS) WHICH WAS NOT FILED BEFORE THE ASSESSING OFFICER AND THE COMMISSIONER OF INCOME TAX (APPEALS) ADMITTED THE S AME WITHOUT ALLOWING THE ASSESSING OFFICER ANY OPPORTUNITY OF HEARING. WE, THEREFORE, SET ASIDE THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAL S) RELATING TO DELETION OF DISALLOWANCE OF RS 40,394/- AND RESTORE THE MATT ER BACK TO THE FILE OF THE ASSESSING OFFICER FOR RE-ADJUDICATION OF THIS ISSUE AFRESH AFTER VERIFICATION. THE ASSESSEE SHALL BE AT LIBERTY TO PRODUCE ALL THE MATERIALS WHICH IT WISHES TO RELY UPON BEFORE THE ASSESSING OFFICER AND THE A SSESSING OFFICER SHALL ITA NO. 1397/AHD/2011 M/S KAILASH CONSTRUCTION FOR A.Y. 2006-07 - 5 - ALLOW REASONABLE OPPORTUNITY OF HEARING TO THE ASSE SSEE BEFORE ADJUDICATING THE ISSUE AFRESH. 9. IN RESPECT OF DISALLOWANCE OF RS 5,67,078/-, WE FIND THAT THE COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE SA ME BY OBSERVING THAT THE PAYMENT WAS MADE TO THE SUB-CONTRACTORS WHO OWN ED NOT MORE THAN TWO TRUCKS AND DECLARATION IN RESPECT OF THOSE SUB- CONTRACTORS WERE FILED BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) AND CONSEQUENTLY, THE ASSESSEE WAS NOT LIABLE TO DEDUCT TAX AT SOURCE IN RESPECT OF THE SAID SUM OF RS 5,67,078/-. NO ERROR IN THE ABOVE FINDING OF TH E COMMISSIONER OF INCOME TAX (APPEALS) COULD BE POINTED OUT BY THE DEPARTMEN TAL REPRESENTATIVE. 10. FURTHER, IN RESPECT OF DELETION OF RS 71,797/- , THE COMMISSIONER OF INCOME TAX (APPEALS) OBSERVED THAT THE PAYMENT W AS MADE IN SMALL AMOUNTS IN RESPECT OF WHICH THE ASSESSEE WAS NOT LI ABLE TO DEDUCT TAX AT SOURCE U/S. 194C OF THE ACT. WE FIND THAT NO MATER IAL WAS BROUGHT BEFORE US BY THE DEPARTMENTAL REPRESENTATIVE TO SHOW ANY ERRO R IN THE ABOVE FINDING OF THE COMMISSIONER OF INCOME TAX (APPEALS). IN TH ESE CIRCUMSTANCES, WE DO NOT FIND ANY GOOD REASON TO INTERFERE WITH THE O RDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN RESPECT OF DELETION OF A MOUNT OF RS 5,67,078/- AND RS 71,797/-. THEREFORE, THIS GROUND OF APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ITA NO. 1397/AHD/2011 M/S KAILASH CONSTRUCTION FOR A.Y. 2006-07 - 6 - 11 GROUND NO. 2 OF THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) DELETING THE D ISALLOWANCE OF RS 5,67,912/- MADE BY THE ASSESSING OFFICER OUT OF CAR TING AND LABOUR CHARGES. 12. WE HAVE HEARD THE DEPARTMENTAL REPRESENTATIVE AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAIL ABLE ON RECORD. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS DEBIT ED CARTING AND TRACTOR EXPENSES OF RS 32,32,379/- AND LABOUR EXPENSES OF R S 81,25,873/-. ON VERIFICATION OF THE BILLS/VOUCHERS PRODUCED IN SUPP ORT OF EXPENDITURE CLAIMED, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE COULD NOT PRODUCE ALL THE VOUCHERS AND THAT THERE WERE CERTAIN DEFECTS IN THE VOUCHERS PRODUCED, AND THEREFORE, THE ASSESSING OFFICER MADE DISALLOWANCE OF 10% OF THE TOTAL EXPENDITURE OF RS 1,13,58,252/- AND THEREBY MADE DI SALLOWANCE OF RS 11,35,825/-. 13. ON APPEAL, THE COMMISSIONER OF INCOME TAX (AP PEALS) OBSERVED THAT IT WOULD MEET THE ENDS OF JUSTICE IF THE DISAL LOWANCE WAS RESTRICTED TO 5% OF RS 1,13,58,252/-. HENCE, HE CONFIRMED THE AD DITION TO THE EXTENT OF RS 5,67,912/- AND DIRECTED TO DELETE THE BALANCE DI SALLOWANCE OF RS 5,67,913/-. 14. THE DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER OF THE ASSESSING OFFICER. WE FIND THAT THE ASSESSING OFFI CER COULD NOT POINT OUT THE ITA NO. 1397/AHD/2011 M/S KAILASH CONSTRUCTION FOR A.Y. 2006-07 - 7 - AMOUNT OF EXPENSES FOR WHICH VOUCHERS COULD NOT BE PRODUCED BY THE ASSESSEE OR THE AMOUNT OF EXPENSES IN RESPECT OF WH ICH VOUCHERS PRODUCED WERE DEFECTIVE AND WHAT WAS THE NATURE OF DEFECT IN THE VOUCHERS. FURTHER, WE FIND THAT THE NO BASIS OF MAKING DISALLOWANCE AT THE RATE OF 10% WAS STATED IN THE ORDER OF ASSESSMENT. THUS, THE DISAL LOWANCE WAS MADE ENTIRELY ON THE BASIS OF ARBITRARY ESTIMATE OF THE ASSESSING OFFICER. IN ABSENCE OF ANY MATERIAL BROUGHT ON RECORD TO SHOW T HAT THE ESTIMATE OF DISALLOWABLE EXPENDITURE OF RS 5,67,912/- MADE BY T HE COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED AND MORE DISA LLOWANCE WAS REQUIRED, WE DO NOT FIND ANY GOOD REASON TO INTERFERE WITH TH E ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) AND THEREFORE, THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 15. IN THE RESULT, THE APPEAL OF THE REVENUE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON FRIDAY, THE 06 TH OF JUNE, 2014 AT AHMEDABAD. SD/- SD/- (G.C. GUPTA) VICE PRESIDENT ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 06/06/2014 GHANSHYAM MAURYA, SR. P.S.