PSLR Engineers Pvt. Ltd., Noida V. ITO, New Delhi

ITA 1414/DEL/2015

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 2869 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2007-2008
• Appeal Filed On: 11-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ATIQUE AHMED
• Keywords: Additional evidence; Non-deduction of tax; TDS; Set aside
• Section: 271(1)(c); 40(a)(ia); 194C

Judgement Text

ITA NO.-1414/DEL/2015 PSLR ENGINEERS PVT. LTD. PAGE 1 OF 7 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: F: NEW DELHI) BEFORE SHRI SUDHANSHU SRIVASTAVA, JUDICIAL M EMBER AND SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEM BER ITA NO:- 1414/DEL/2015 ( ASSESSMENT YEAR: 2007-08) PSLR ENGINEERS PVT. LTD. C/O. MNM LEGAL, D-184, SECTOR-47 NOIDA UTTAR PRADESH, PIN-201304 VS. ITO WARD-14(1) NEW DELHI PAN NO: AA DCP2324G APPELLANT RESPONDENT REVENUE BY : SH. ATIQUE AHMED, SR. DR ASSESSEE BY : SH. TAPAS MISHRA, ADV. PER ANADEE NATH MISSHRA, AM (A) THIS APPEAL BY ASSESSEE IS FILED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- 7 [LD. CIT(A), FOR SHORT], DATED 23.12.2014 FOR ASSESSMENT YEAR 2007-08. GROUNDS TAKEN IN THIS APPEAL OF ASSE SSEE ARE AS UNDER: ITA NO.-1414/DEL/2015 PSLR ENGINEERS PVT. LTD. PAGE 2 OF 7 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE CIT(A) ERRED ON FACTS AND IN LAW IN CONFIRMING THE DISALLO WANCE OF RS. 49,88,608/- ON ACCOUNT OF ALLEGED FAILURE TO DEDUCT TAX ON THE PAYMENT OF RS. 48,38,330/- MADE TO SUB-CONTRACTOR AND RS. 1,50,278 /- FOR JOBWORK. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE CIT(A) ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT THE SA ID SUM OF RS. 48,38,330/- INCLUDED RS. 22,98,330 BEING PAYMENTS M ADE TO VARIOUS VENDORS FOR PURCHASE OF MATERIAL ON WHICH THERE WAS NO NEED FOR DEDUCTION OF TAX AT SOURCE. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE CIT(A) ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THE F ACT THAT THE CONTRACTEE HAD PAID, AFTER DEDUCTING TAX, RS. 25,44,000/- TO S UBCONTRACTORS DIRECTLY, AND HENCE THE APPELLANT WAS NOT RESPONSIBLE UNDER S ECTION-194C OF THE ACT FOR DEDUCTION OF TAX. 3.1 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT THE APPELLANT, NOT BEING THE PERSON RESPONSIBLE FOR PAYING THE SUB-CONTRACTO RS AND NOT BEING LIABLE UNDER SECTION 194C OF THE ACT TO DEDUCT TAX, COULD NOT BE SUBJECTED TO DISALLOWANCE U/S 40(A)(IA) OF THE ACT. 3.2 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE CIT(A) ON FACTS AND IN LAW IN NOT APPRECIATING THAT THE CONTR ACTEE, M/S MEAT PRODUCTS OF INDIA LIMITED, A PUBLIC SECTOR UNDERTAKING, HAD CONFIRMED HAVING PAID DIRECTLY TO THE SUB-CONTRACTORS. 4. THAT ON THE FACTS AND IN THE CIRUCMSTNACES OF T HE CASE, THE CIT(A) ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT THERE WAS NOTHING ON RECORD THAT COULD JUSTIFY DISALLOWANCE OF RS. 1,50, 278 TO JOB WORKERS AND THAT THE ASSESSING OFFICER HAD BROUGHT NOTHING ON R ECORD TO SUGGEST THAT ANY TAX WAS DEDUCTIBLE (AND NOT DEDUCTED) FROM THE SAME. THE APPELLANT CRAVES LEAVE TO ADD TO, ALTER, AMEND OR VARY FROM THE AFORESAID GROUNDS OF APPEAL AT OR BEFORE THE TIME O F HEARING. (B) THE ASSESSEE IS IN THE BUSINESS OF CONTRACTOR OF WA STE WATER TREATMENT . THE DISPUTES IN THE PRESENT APPEAL BEFORE US PERTAIN TO DISALLOW ANCE AMOUNTING TO RS. 49,88,608 (WHICH INCLUDED RS. 48,38,330/- BEING PAYMENTS TO SUB-CONT RACTORS AND RS. 1,50,278/- BEING JOB- WORK PAYMENTS) MADE BY THE ASSESSING OFFICER (AO FOR SHORT) UNDER SECTION 40(A)(IA) OF INCOME TAX ACT, 1961 (IT ACT FOR SHORT) ON THE GR OUND THAT THE ASSESSEE FAILED TO DEDUCT ITA NO.-1414/DEL/2015 PSLR ENGINEERS PVT. LTD. PAGE 3 OF 7 TAX AT SOURCE. THE FAILURE OF THE ASSESSEE TO DEDUC T TAX AT SOURCE WAS REPORTED BY STATUTORY AUDITOR IN THE AUDIT REPORT. RELEVANT PORTION OF AS SESSMENT ORDER IS REPRODUCED BELOW : 3. AS IN THE PAST, THE ASSESSEE COMPANY CONTINUES TO ENGAGED IN THE BUSINESS OF CONTRACTOR OF WASTE WATER TREATMENT FOR PVT. / GOVT. DEPARTMENT. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE COMPANY HAS DECLARED INCOME FROM BUSINESS ONLY AND NO OTHER INCOME HAS BEEN DECLARED BY THE ASSESSEE COMPANY. 4. DURING THE COURSE OF ASSESSMENT PROC EEDINGS IT WAS OBSERVED THAT DURING THE YEAR ASSESSEE COMPANY HAS DEBITED AN AMOUNT OF RS. 66,06,324/- ON ACCOUNT OF OTHER PROJ ECT EXPENSES UNDER DIRECT EXPENSES. THE ASSESSEE COMPANY WAS ASKE D TO FURNISH THE DETAILS THEREOF ALONG WITH BILLS AND DETAILS OF TDS VIDE ORDER SHEET ENTRY DATED 14.12.2009. THE AR OF THE ASSESSEE COMPANY FU RNISHED THE DETAILS OF DIRECT EXPENSES WHICH IS AS UNDER : CARTAGE PAID RS. 4,290/- JOBWORK PAID RS. 1,50,278/- LABOUR CHARGES PAID RS. 86,560/- SITE EXPENSES RS.15,26,866/- SUB-CONTRACTORS RS. 48,38,330/- TOTAL 66,06,324/- IT WAS OBSERVED THAT THE ASSESSEE COMPANY HAD NOT DEDUCTED TAX ON THE PAYMENT OF JOB-WORK AND PAYMENT TO SUB-CONTR ACTOR THEREBY ATTRACTING THE PROVISIONS CONTAINED IN SECTION 40(A )(IA). ACCORDING TO THIS SECTION, ANY INTEREST, COMMISSION OR BROKERAGE , FEES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SERVICE S PAYABLE TO A RESIDENT, OR AMOUNTS PAYABLE TO A CONTRACTOR OR SUB-CONTRACTO R, BEING RESIDENT, FOR CARRYING OUT ANY WORK), ON WHICH TAX IS DEDUCTI BLE AT SOURCE UNDER CHAPTER XVII-B AND SUCH TAX HAS NOT BEEN DEDUCTED O R, AFTER DEDUCTION, HAS NOT BEEN PAID DURING THE PREVIOUS YEAR, OR IN T HE SUBSEQUENT YEAR BEFORE THE EXPIRY OF THE TIME PRESCRIBED UNDER SUB SECTION (1) OF SECTION 200, THEN THE SAME WILL NOT BE ALLOWABLE IN THE P.Y. THE LD. AUDITORS OF THE COMPANY HAVE REPORTED THIS FACT IN THEIR AUDIT REPORT. THE ASSESSEE WAS ASKED TO FURNISH DETAILS OF TDS MA DE/ DEPOSIT THEREOF, IF ANY. THEREFORE, AN AMOUNT OF RS. 1,50,2 78/- PAID ON ACCOUNT OF JOB-WORK AND RS. 48,38,330/- ON ACCOUNT OF PAYME NT MADE TO SUBCONTRACTOR ON WHICH TAX WAS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII-B AND SUCH TAX HAVE NOT BEEN DEDUCTED, ARE DI SALLOWED U/S 40(A)(IA). I AM SATISFIED THAT THE ASSESSEE COMPANY TO CONCEAL THE TAXABLE INCOME AND FURNISHED INACCURATE PARTICULARS OF INCOME, HENCE, IS LIABLE TO PENALTY PROCEEDINGS U/S 271(1)(C) OF T HE I.T.ACT, 1961. ITA NO.-1414/DEL/2015 PSLR ENGINEERS PVT. LTD. PAGE 4 OF 7 (C) THE AFORESAID DISALLOWANCE OF RS. 49,88,608/- WAS CONFIRMED BY LD. COMMISSIONER OF INCOME TAX (APPEALS) [LD. CIT(A) , FOR SHORT] VID E HER IMPUGNED APPELLATE ORDER DATED 23.12.2014; HOLDING AS UNDER : 5. GROUND NO. 2 & 3 IS IN RESPECT OF ADDITION OF R S. 49,88,608/-. THE APPELLANT WAS AWAREDED A CONTRACT FROM M/S. MEAT PR ODUCT OF INDIA LTD. FOR CONSTRUCTION OF EFFLUENT TREATMENT PLANT IN KER ALA. THE APPELLANT ENGAGED TWO LOCAL SUB-CONTRACTORS M/S. LEE BUILDERS AND M/S. POWER ON ENGINEERS FOR THE EXECUTION OF THE CONTRACTS. THE AP PELLANT CLAIMED AN AMOUNT OF RS.66,06,324/- AS OTHER PROJECTS EXPENSES . THE APPELLANT STATED THAT M/S. MEAT PRODUCT OF INDIA LTD. MADE PA YMENT DIRECTLY TO THE SUB-CONTRACTORS. M/S. LEE BUILDERS AND M/S. POWER O N ENGINEERS OF RS.25,40,000/- AND DEDUCTED TDS. FURTHER THE APPELL ANT STATED THAT HE MADE PURCHASES OF CONTRACT MATERIAL FOR RS.22,98,33 0/-. THE APPELLANT IS STATING THAT THE WORK WAS GIVEN TO SUB-CONTRACTORS AND HE IS SHOWING RS.48,38,330/- AS PAYMENT MADE TO SUB-CONTRACTORS. THE APPELLANT HAD ALSO SHOWN RS.1,50,278/- AS, OTHER PROJECTS EXPENSE S ON WHICH NO TDS WAS DEDUCTED AND IT WAS DISALLOWED U/S 40(A)(IA). 5.2. THE APPELLANT HAS CLAIMED PAYMENT MADE TO SUB- CONTRACTORS AT RS.48,38,330/- AS AN EXPENSE. IN VIEW THEREOF TDS W AS TO BE DONE BY THE APPELLANT. NO TAX HAS BEEN DEDUCTED BY THE APPELLAN T ON PAYMENT MADE TO SUB-CONTRACTORS. THE APPELLANT WAS ALSO REQUIRED TO DEDUCT TDS ON JOB WORK OF RS.1,50,278/- WHICH WAS NOT DONE. THE A CTION OF THE AO IN DISALLOWING THE AMOUNT OF RS.49,88,608/- IS CONFIRM ED. THE GROUND OF APPEAL IS RULED AGAINST THE APPELLANT. (D) AT THE TIME OF HEARING BEFORE US, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AFORESAID AMOUNT OF RS. 48,38,330/- INCLUDED PAYMEN T OF RS. 25,40,000/- WHICH WAS PAID BY THE CONTRACTEE DIRECTLY TO THE SUB-CONTRACTORS, DUE TO WHICH THERE WAS NO REQUIREMENT FOR THE ASSESSEE TO DEDUCT TAX AT SOURCE. HE FURTHE R SUBMITTED THAT THE AFORESAID AMOUNT OF RS. 48,38,330/- INCLUDED RS.22,98,330/- WHICH WAS T HE PAYMENT MADE FOR PURCHASE OF CONTRACT MATERIAL, AND NOT FOR WORK; BECAUSE OF WHI CH THE ASSESSEE WAS UNDER NO ITA NO.-1414/DEL/2015 PSLR ENGINEERS PVT. LTD. PAGE 5 OF 7 REQUIREMENT TO DEDUCT TAX AT SOURCE. IN RESPECT OF THE AFORESAID AMOUNT OF RS. 1,50,278/- HE SUBMITTED THAT IT INCLUDED SMALLER AMOUNTS EACH OF WHICH WAS EITHER BELOW THE THRESHOLD LIMIT OF RS. 20,000/- AS PROVIDED U/S 194 C(5) OF IT ACT OR WAS PAYMENT MADE FOR PURCHASE OF MATERIALS FOR THE PROJECT; DUE TO WHICH THE ASSESSEE WAS NOT REQUIRED TO DEDUCT TAX AT SOURCE. IN VIEW OF THE FOREGOING, HE SUBMITTED THAT AFORESAID DISALLOWANCES TOTALING RS. 49,88,608/- BE DELETED. THE LEARNED SE NIOR DEPARTMENTAL REPRESENTATIVE (LD. SR. DR, FOR SHORT) RELIED ON THE ORDERS OF LD. CIT (A) AND AO. (E) WE HAVE HEARD BOTH SIDES. WE HAVE PERUSED THE M ATERIALS ON RECORD. WE FIND FROM THE PERUSAL OF THE ASSESSMENT ORDER OF THE AO THAT THE SUBMISSIONS MADE BEFORE US HAVE NOT BEEN MENTIONED IN THE ASSESSMENT ORDER PASSED B Y AO. IT IS THE ASSESSEES CASE, VIDE LETTER DATED 14.07.2014 ADDRESSED TO LD. CIT(A) THA T THE AO DID NOT MAKE ANY INQUIRY INTO THE BREAK-UP OF EXPENSES AND UNKNOWN TO THE ASSESSE E, THE ASSESSEES AUTHORIZED REPRESENTATIVE DID NOT VOLUNTEER FURTHER INFORMATIO N. ALSO, THOUGH THESE SUBMISSIONS HAVE BEEN MENTIONED IN THE IMPUGNED ORDER OF LD. CIT(A); WE FIND THAT THE LD. CIT(A) HAS NOT COMMENTED ON IT. WE ALSO FIND THAT VIDE LETTER DATE D 14/07/2014 THE ASSESSEE MADE APPLICATION FOR ADMISSION OF ADDITIONAL EVIDENCE DU RING APPELLATE PROCEEDINGS BEFORE LD. CIT(A). HOWEVER, ON PERUSAL OF ORDER OF LD. CIT(A), WE FIND THAT SHE HAS NOT MADE ANY RECORDING UNDER RULE 46(2) OF INCOME TAX RULES, 1 962. IN VIEW OF THE FOREGOING, THERE IS LACK OF CLARITY ABOUT FACTS. WE ARE OF THE VIEW THA T SUBMISSIONS MADE BEFORE US ON ASSESSEES BEHALF BY THE LD. COUNSEL FOR THE ASSESS EE ARE FACTUAL IN NATURE; AND REQUIRE DETAILED FACTUAL VERIFICATION. AS WE DO NOT HAVE TH E BENEFIT OF SUCH DETAILED FACTUAL ITA NO.-1414/DEL/2015 PSLR ENGINEERS PVT. LTD. PAGE 6 OF 7 VERIFICATION IN THE ORDERS PASSED BY EITHER THE AO OR THE LD. CIT(A); WE ARE INCLINED TO REMAND THE MATTER TO AO FOR DETAILED VERIFICATION O F FACTS OF THE CASE; UNDER THE FACTS AND CIRCUMSTANCES OF THE PRESENT APPEAL BEFORE US. IN V IEW OF THE FOREGOING, WE SET ASIDE THE ISSUES IN DISPUTE IN THE PRESENT APPEAL BEFORE US; TO THE FILE OF THE AO WITH THE DIRECTION TO PASS FRESH ORDER ON THESE SPECIFIC ISSUES, AS PER L AW; AFTER PROVIDING REASONABLE OPPORTUNITY TO THE ASSESSEE. THIS APPEAL IS DISPOSE D OFF IN ACCORDANCE WITH AFORESAID DIRECTIONS. FOR STATISTICAL PURPOSES THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 02/03/2021. SD/- SD/- (SUDHANSHU SRIVASTAVA) (ANAD EE NATH MISSHRA) JUDICIAL MEMBER ACCOUN TANT MEMBER DATED: 02/03/2021 *BINITA* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI