M/s. Universal Embroidery, CHENNAI V. ITO, CHENNAI

ITA 1524/CHNY/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 1249 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 11-01-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 16-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P B SEKARAN
• Assessee Lawyers: LAKSHMICHAND NAHATA
• Keywords: TDS; Set aside
• Section: 40(a)(ia); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH B CHENNAI (BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT AND SHRI HARI OM MARATHA, JUDICIAL MEMBER) ..... I.T.A. NO. 1524/MDS/2010 ASSESSMENT YEAR : 2007-08 M/S UNIVERSAL EMBROIDERY, NEW NO.14, OLD NO.11/2, VALLUVAN STREET, OLD WASHERMENPET, CHENNAI - 600 021. PAN : AABFU0671N (APPELLANT) V. THE INCOME TAX OFFICER, BUSINESS WARD VII(3), CHENNAI - 600 034. (RESPONDENT) APPELLANT BY: SHRI LAKSHMICHAND NAHATA RESPONDENT BY: SHR I P.B. SEKARAN O R D E R PER HARI OM MARATHA, JUDICIAL MEMBER : THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-IX, CH ENNAI, DATED 5.7.2010 AND PERTAINS TO ASSESSMENT YEAR 2007-08. 2. THE ASSESSEE, IN THIS CASE, IS A FIRM WHICH IS D OING EMBROIDERY WORK USING COMPUTERIZED MACHINES. THE ASSESSEE-FIR M FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2007-08 ADMITT ING A TOTAL INCOME OF ` 6,70,550/- ON 31.10.2007. THE A.O. WHILE MAKING R EGULAR I.T.A. NO. 1524/MDS/10 2 ASSESSMENT, MADE AN ADDITION OF ` 22,24,810/- UNDER VARIOUS HEADS AS UNDER:- (1) BILLS ARE NOT AVAILABLE FOR LABOUR CHARGE OUT ` 4,10,582 (2) ON VERIFICATION OF VOUCHERS/BILLS DIFFERENCE IN PURCHASES A/C ` 2,26,479 (3) ON VERIFICATION OF VOUCHERS/BILLS DIFFERENCE IN SALES A/C ` 8,924 (4) RECEIPT NOT AVAILABLE FOR ESI PREMIUM ` 679 (5) TELEPHONE EXPENSES CLAIMED IN P&L ` 47,753/- BUT CHEQUES NOT AVAILABLE FOR ` 23,043 (6) SALARY DIFFERENCE (VERIFIED THE ATTENDANCE REGISTER PRODUCED BY THE ASSESSEE) THERE IS DISCRIPANCIES ` 28,281 (7) BILLS NOT AVAILABLE FOR BHARATH AIR TEL ` 2,022 (8) TDS ON LABOUR CHARGES OUT NOT DEDUCTED. AS PER PROVISIONS OF SECTION 40(A)(IA) NOT ALLOWABLE. ` 15,24,800 ` 22,24,810 3. AGAINST THESE ADDITIONS, THE ASSESSEE FILED APPE AL BEFORE THE CIT(APPEALS) WHO ALSO DISMISSED THE GROUNDS RAISED BEFORE HIM. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND HAVE CAREFUL LY PERUSED THE ENTIRE RECORDS AVAILABLE BEFORE US. THE ABOVE DISALLOWANCES ARE RESULT OF NON PRODUCTION OF VOUCHERS/BILLS. BUT, T HE CASE OF THE ASSESSEE IS THAT THE ITO DID NOT VERIFY ANY BILLS A ND NEVER GAVE ANY OPPORTUNITY TO THE ASSESSEE TO PRODUCE THE SAME. S UCH EXPENSES ARE TO THE TUNE OF ` 6,70,550/-. AN ADDITION OF ` 15,24,800/- IS THE RESULT OF NON PRODUCTION OF TDS ON LABOUR CHARGES A S PER SECTION 40(A)(IA) OF THE ACT. THE CASE OF THE ASSESSEE IS THAT SECTION 194C HAS NO APPLICATION TO THE FACTS OF THIS CASE AND SE CTION 40(A)(IA) IS NOT I.T.A. NO. 1524/MDS/10 3 INVOCABLE. THE MAIN REASON FOR THIS PLEA IS STATED TO BE THE FACT THAT THE EMBROIDERY WORK HAS BEEN GOT DONE BY THE ASSESS EE FROM OUTSIDE EMBROIDERS BUT UNDER HIS OWN CONTROL AND SUPERVISIO N AND IT IS NOT A CASE OF SUB-CONTRACT AS HAS BEEN HELD BY THE A.O. AFTER GOING THROUGH THE ORDER APPEALED AGAINST, WE FIND THAT TH IS IS A NON- SPEAKING ORDER. THEREFORE, WE SET ASIDE THE ORDER OF THE LD. CIT(APPEALS) AND IN THE INTEREST OF JUSTICE, RESTOR E BACK THE ENTIRE ISSUES TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION THAT HE SHALL MAKE AN ASSESSMENT ORDER DE NOVO AFTER HEARING THE ASSESSEE. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT AFTER CONCLUSION OF HEARING ON THE ELEVENTH DAY OF JANUARY, 2011. SD/- SD/- (DR. O.K. NARAYANAN) (HAR I OM MARATHA) VICE PRESIDENT JUDICIAL MEMBER CHENNAI, DATED THE 11 TH JANUARY, 2011. KRI . COPY FORWARDED TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A)-IX, CHENNAI-34 (4) CIT-VII, CHENNAI-34. (5) D.R. (6) GUARD FILE