Income-tax Officer, Bathinda V. Sh. Mohan Lal, Bathinda

ITA 170/ASR/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5770 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 20-06-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 01-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S KANWAL
• Assessee Lawyers: P N ARORA
• Section: 69C; 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. T. S. KAPOOR, ACCOUNTANT MEMBER AND SH. N. K. CHOUDHRY, JUDICIAL MEMBER I.T.A. NO. 170/(ASR)/2015 ASSESSMENT YEAR: 2011-12 PAN: AAJPL8560B INCOME TAX OFFICER, WARD-1(2), BATHINDA. VS. SH. MOHAN LAL PROP. M/S RAMJI DASS BKO, VILL. BHAGIWANDER, TEHSIL TALWANDI SABO, DISTT. BATHINDA. (APPELLANT) (RESPONDENT) APPELLANT BY : SH. S. S. KANWAL (D. R.) RESPONDENT BY: SH. P. N. ARORA (ADV.) DATE OF HEARING: 05.10.2017 DATE OF PRONOUNCEMENT: 03.01.201 8 ORDER PER T. S. KAPOOR (AM): THIS IS AN APPEAL FILED BY REVENUE AGAINST THE ORDE R OF LD. CIT(A), BATHINDA, DATED 12.01.2015 FOR ASST. YEAR: 2011-12. 2. THE GROUNDS OF APPEAL TAKEN BY REVENUE ARE REPRO DUCED BELOW: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE AND DELETING TH E ADDITION OF RS.33,73,963/- AND RS.8,70,016/- BY OBSERVING THAT NIKASI ALSO I NCLUDES CHUNAI AND KERI AND THERE CANNOT BE A NIKASI WITHOUT CHUNAI AND KERI . THE OBSERVATION MADE BY THE LD. CIT(A), BATHINDA DOES NOT APPEAR TO BE CORRECT AS THE ASSESSEE HAS NOWHERE TAKEN THIS PLEA DURING THE COURSE OF ASSESSMENT PRO CEEDINGS. HOWEVER, THE PLEA TAKEN BY THE ASSESSEE AT THE STAGE OF APPELLATE PRO CEEDINGS IS NOTHING BUT AFTER THOUGHT. THUS THE ORDER OF THE LD. CIT(A), BATHINDA IS PERVERSE TO THE FACTS OF THE CASE AND DOCUMENTS IMPOUNDED DURING THE COURSE OF S URVEY. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE AND DELETING TH E ADDITION OF RS.3,10,754/- BY OBSERVING THAT THE JAMADARS NAMELY S/SH. BIKKAR SIN GH & CHAMA SINGH WERE EMPLOYEES OF THE ASSESSEE AND THE INDIVIDUAL LABOUR PAYMENTS MADE THROUGH THEM ARE NOT COVERED UNDER THE PROVISIONS OF SECTIO N 194C AND CONSEQUENTLY ITA NO. 170(ASR)/2015 ASSESSMENT YEAR: 2011-12 2 IMMUNE FROM THE OPERATION OF SECTION 40(A)(IA). DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS ADMITTED BY THE ASSESSEE THAT N O TAX WAS DEDUCTED ON THESE PAYMENTS AND WHEN CONFRONTED IN THIS REGARD, IT WAS ARGUED THAT ALTHOUGH THE PAYMENTS MADE FOR BHARAI, NIKASI ETC. WERE MADE TO THE ABOVE PERSONS, YET THEY FURTHER ENGAGE LABOURERS FOR THIS WORK AND DISBURSE THE PAYMENTS; HENCE THERE WAS NOT TDS LIABILITY. FURTHER, DURING THE COURSE O F ASSESSMENT PROCEEDINGS, IT WAS NEVER CONTENDED BY THE ASSESSEE THAT THE ABOVE PERSONS WERE HIS REGULAR EMPLOYEES AND THEY MAKE THE PAYMENTS TO LABOURERS O N HIS BEHALF. MOREOVER, THE ASSESSEE HAS NOT PRODUCED ANY DOCUMENTARY EVIDENCE IN THE SHAPE OF MUSTARD ROLLS TO SUBSTANTIATE HIS CLAIM. 3. THE APPELLANT CRAVES THE LEAVE TO ADD, AMEND, ALTER OR WITHDRAW ANY GROUND OF APPEAL BEFORE THE SAME IS FINALLY HEARD. 3. AT THE OUTSET, THE LD. DR SUBMITTED THAT THE CAS E UNDER CONSIDERATION RELATES TO A BRICK KILN OWNER WHO IS INTO THE BUSINESS OF MANUFACTURING BRICKS. DURING THE YEAR UNDER CONSIDE RATION, A SURVEY U/S 133A(1) OF THE ACT HAD TAKEN PLACE AND SOME IMP ORTANT DOCUMENTS WERE IMPOUNDED. THE LD. DR SUBMITTED THAT A DOCUMEN T SHOWING PAYMENT TO CHARNA SINGH, JAMADAAR AMOUNTING TO RS.2 ,58,000/- FOR NIKASI WAS IMPOUNDED WHEREAS THE AMOUNT RECORDED IN THE BOOKS OF ACCOUNT WAS RS.234024/-, AND THEREFORE THE ASSESSIN G OFFICER HAD MADE AN ADDITION OF RS.23976/-. THE LD. DR FURTHER SUBMI TTED THAT ON THE BASIS OF PAYMENT OF RS. 2,58,000/- MADE TO CHARNA S INGH ON ACCOUNT OF NIKASI, THE ASSESSING OFFICER WORKED OUT THE MANUFA CTURE OF BRICKS TO THE TUNE OF 3582354/- WHEREAS THE ASSESSEE HAD SHOWN NI KASI OF BRICKS AT 2184535/- AND THEREFORE THE LD. ASSESSING OFFICER H AD RIGHTLY MADE THE ADDITIONS FOR UNRECORDED SALES. THE LD. DR FURTHER SUBMITTED THAT THE OTHER ADDITIONS MADE BY ASSESSEE RELATES TO GROSS P ROFIT AT THE RATE OF 20.50% ON THE UNRECORDED MANUFACTURE AND SALE OF BR ICKS WHICH WAS ALSO WRONGLY DELETED BY LD. CIT(A). THE LD. DR FURT HER SUBMITTED THAT ITA NO. 170(ASR)/2015 ASSESSMENT YEAR: 2011-12 3 ASSESSEE HAD VIOLATED PROVISIONS OF SECTION 40(A)(3 ) OF THE ACT IN MAKING PAYMENTS EXCEEDING RS. 50,000 TO VARIOUS CONTRACTOR S AND THEREFORE ASSESSING OFFICER HAD RIGHTLY MADE THE ADDITIONS, I T WAS SUBMITTED THAT LD. CIT(A) HAS WRONGLY DELETED THESE ADDITIONS AND THEREFORE THE ORDER OF THE ASSESSING OFFICER BE UPHELD. 4. THE LD. AR ON THE OTHER HAND SUBMITTED THAT ASSE SSING OFFICER HAD MADE THE ADDITIONS ON THE BASIS OF ASSUMPTIONS AND SURMISES AS HE HAD CONCLUDED THE NUMBER OF BRICKS MANUFACTURED ON THE BASIS OF PAYMENT MADE TO CHARNA SINGH EMPLOYEE WHO HAD DEPOSED DURIN G THE COURSE OF SURVEY PROCEEDINGS AND IN HIS STATEMENT, HE HAD CON FIRMED THAT HE WAS PAID AT THE RATE OF RS. 67 FOR NIKASI OF 1,000/- BR ICKS. THE LD. AR SUBMITTED THAT ON THE BASIS OF THE STATEMENT, THE A SSESSING OFFICER WORKED OUT THE BRICKS MANUFACTURED AND COMPARED WIT H THE BRICKS DECLARED BY THE ASSESSEE AND DIFFERENCE OF WHICH WA S ADDED U/S 69C OF THE ACT FURTHER ADDITION OF 20.5% ON SO CALLED UNAC COUNTED SALES TO THE TUNE OF RS.9,23,752/- WAS MADE ON ACCOUNT OF PROFIT EARNED ON SUCH SALES. THE LD. AR SUBMITTED THAT ASSESSING OFFICER DID NOT APPRECIATE THAT THE ASSESSEE HAD FOLLOWED GOVT. APPROVED RATES OF NIKASI AND GOVT. RATES FOR CHUNAI WALA WAS RS.21.23 PER 1000 BRICKS AND RATE OF KAIRI WAS RS.17.89 PER 1000 BRICKS. IT WAS POINTED OUT TO THE LD. CIT(A) THAT NIKASI WITHOUT CHUNAI AND KAIRI CANNOT BE DONE AND THE AGG REGATE OF THESE THREE WORKED OUT TO RS.101 PER THOUSAND BRICKS AND THUS RS.101 PER THOUSAND BRICKS INCLUDED THE PAYMENT MADE TO THE CH UNAI WALA, KAIRIWALA AND NIKASIWALA. IT WAS SUBMITTED THAT ON THE BASIS OF AMOUNT ITA NO. 170(ASR)/2015 ASSESSMENT YEAR: 2011-12 4 DEBITED IN THE P & L ACCOUNT, THE AVERAGE RATE WORK S OUT TO BE RS.108 PER 1000 BRICKS WHICH IS VERY WELL COMPARABLE WITH RS. 101 AND THEREFORE THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITIONS AS THE SE RATES ARE FIXED BY THE GOVT. AND IT IS NOT POSSIBLE FOR BRICK KILN OWNER T O MAKE THE PAYMENT LESS THAN THOSE PRESCRIBED BY THE GOVT. AS REGARDS THE ADDITIONS ON ACCOUNT OF NON DEDUCTI ON OF TDS U/S 40(A)(IA) OF THE ACT, THE LD. AR SUBMITTED THAT THE PROVISIONS OF SECTION 40A(IA) WERE NOT ATTRACTED AT ALL AS NONE OF THESE PAYMENTS MADE TO INDIVIDUAL WORKERS EXCEEDED RS.20,000/- AT A TIME A ND AGGREGATED TO RS.50,000/- IN A YEAR. IT WAS SUBMITTED THAT THE BU SINESS OF BKO IS A LABOUR INTENSIVE ONE AND THE GOVT. HAS REGULATED TH E PAYMENT OF WAGES TO LABOUR BY FIXING THE RATES FOR EACH OF THE PROCE SSES INVOLVED IN THE MANUFACTURE OF BRICKS LIKE BHARI, NIKASI ETC. IT WA S SUBMITTED THAT PAYMENTS MADE TO THESE PERSONS WERE TO BE DISTRIBUT ED TO OTHER LABOURERS AND THESE JAMADARS DISTRIBUTED SUCH PAYME NTS TO LABOURERS AND RECORD WAS MADE IN ROKDI KHARCHA AND THEREFOR E IN VIEW OF THESE FACTS AND CIRCUMSTANCES, THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITIONS. 5. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH OUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT DURING SURVEY A DOCU MENT WAS IMPOUNDED WHICH REFLECTED A PAYMENT OF RS.2,58,000/ - FOR NIKASI TO CHARNA SINGH JAMADAR. THE STATEMENT OF CHARNA SINGH WAS ALSO RECORDED AND WHERE HE HAD DEPOSED THAT HE HAD RECEI VED PAYMENT FOR NIKASI AT THE RATE OF RS.67 PER BRICKS AND IN VIEW OF THE ABOVE STATEMENT ITA NO. 170(ASR)/2015 ASSESSMENT YEAR: 2011-12 5 THE ASSESSING OFFICER CALCULATED NIKASI OF BRICKS W HICH DIFFERED FROM THAT DECLARED BY THE ASSESSEE AND THEREFORE THE ASSESSIN G OFFICER CALCULATED THE ADDITIONS BY CALCULATING THE SALE OF BRICKS WHI CH IN HIS OPINION, THE ASSESSEE HAD NOT RECORDED. THE ASSESSING OFFICER FU RTHER MADE ADDITIONS ON ACCOUNT OF GP ON THESE UNRECORDED SALES. THE ASS ESSING OFFICER FURTHER FOUND THAT ASSESSEE HAD MADE PAYMENTS EXCEE DING RS.50,000/- TO JAMADARS AND THEREFORE WAS LIABLE TO DEDUCT TDS AND WHICH HE HAS NOT DEDUCTED AND THEREFORE HE DISALLOWED THE PAYMEN T IN ACCORDANCE WITH THE PROVISIONS OF SECTION 40A(IA) OF THE ACT. BEFORE THE LD. CIT(A) DETAILED SUBMISSIONS WERE MADE AND LD. CIT(A) DELET ED THE ADDITIONS BY HOLDING AS UNDER: 10. THE ISSUE IN DISPUTE HAS BEEN CONSIDERED. IT I S AXIOMATIC THAT IF NIKASI IS TO BE PAID, CHUNAI AND KERI HAS TO B E PAID OF THE PURPOSES OF BRICKS COMING OUT OF THE KILN. IT HAS ALSO BEEN PRO VED THAT THESE RATES ARE FIXED AND IT WOULD NOT BE POSSIBLE FOR A BRICK KILN OWNER TO MAKE PAYMENT OF LABOUR OF ANY AMOUNT LESS THAN THAT PRESCRIBED B Y THE GOVT. BESIDES, THE ASSESSING OFFICER COULD NOT POINT OUT THE DEBIT OF THESE EXPENDITURE BY THE APPELLANT ANYWHERE ELSE IN THE BOOKS. NOR HAS HE BE EN ABLE TO ADDUCE ANY OTHER EVIDENCE TO SHOW THAT BRICKS MANUFACTURED BY THE APPELLANT WERE MORE THAN THAT AS DECLARED IN THE BOOKS OF ACCOUNTS . IT THEREFORE FOLLOWS THAT THE ASSESSING OFFICERS CALCULATION OF UNACCOU NTED BRICKS BASED ON ONLY THE RATE OF NIKASI, WITHOUT CONSIDERING THE RATES OF CHUNAI AND KERI WAS PREDICATED ON INAPPROPRIATE APPRECIATION OF FACTS AND THE ACTUAL PRACTICE IN THE TRADE OF BRICK KILN. IN THIS VIEW O F THE MATTER, IT IS HELD THAT THE ASSESSING OFFICERS ACTION IN MAKING ADDITION O F PURPORTED UNACCOUNTED MANUFACTURE OF BRICKS UNDER THE PROVISIONS OF SECTI ON 69C AND CALCULATION OF PROFIT ON SALE OF SUCH UNACCOUNTED BRICKS WAS BA SED ON PRESUMPTION WHICH, NEEDLESS TO SAY, CANNOT BE UPHELD. THE ASSES SING OFFICER IS DIRECTED TO DELETE BOTH THE AFORESAID ADDITIONS. 11. APROPOS THE GROUND OF APPEAL AS AT SERIAL (B) A BOVE, IT IS NOTICED THAT THE ASSESSING OFFICER HAS MADE A DISALLOWANCE OF RS . 3,10,754/-, WHICH AMOUNT REPRESENTED PAYMENT OF JOB-WORK OF BHARAI AND NIKASI WITHOUT SUBJECTING THE SAME TO TDS AS PER THE PROVISIONS OF SECTION 194C OF THE ACT, WHICH ATTRACTED THE MISCHIEF OF THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. THE APPELLANT CONTESTS THIS DISALLOWANCE ON TH E GROUND THAT THESE REPRESENTED LABOUR CHARGES FOR JOB WORK OF BHARAI AND NIKASI WHICH WERE DISBURSED THROUGH THE APPELLANTS EMPLOYEE JAM ADARS, SRI BIKKAR ITA NO. 170(ASR)/2015 ASSESSMENT YEAR: 2011-12 6 SINGH AND SRI CHARNA SINGH AND THAT NONE OF THESE P AYMENTS TO INDIVIDUAL WORKERS EXCEEDED RS. 20,000/- AT A TIME OR AGGREGAT ED TO RS.50,000/- IN A YEAR. IT WAS THUS AVERRED THAT NEITHER THE PROVIS IONS OF SECTION 194C, NOR SECTION 40(A)(IA) ARE APPLICABLE IN THE CIRCUMSTANC ES. 12. THE MATTER HAS BEEN CONSIDERED. IT IS UNDENIABL E THAT THE BUSINESS OF BRICK KILN IS A LABOUR INTENSIVE ONE AND THE GOVERN MENT HAS REGULATED THE PAYMENT OF WAGES TO LABOUR BY FIXING THE RATES FOR EACH OF THE PROCESSES INVOLVED IN THE MANUFACTURE OF BRICKS LIKE BHARAI NIKASI ETC. BESIDES, THE APPELLANT AS A BRICK KILN OWNER IS ALSO EXPECTE D TO ENGAGE THE SERVICES OF EMPLOYEE JAMADAR OR MUNSHI TO HANDLE LABOUR PAYM ENTS AT THE BRICK KILN SITE. SRI BIKKAR SINGH AND SRI CHARAN SINGH WE RE UNDOUBTEDLY EMPLOYEES OF THE APPELLANT IN AS MUCH AS THEY LOOSE LY RECORDED THE EXPENSES ON BEHALF OF THE APPELLANT WHICH HAS BEEN IMPOUNDED DURING THE SURVEY OPERATION. THE IMPOUNDED DOCUMENTS ALSO BETR AY THE FACT THAT INDIVIDUAL LABOURS WERE PAID THROUGH THE TWO JAMADA RS WHO MAINTAINED A LOOSE ACCOUNT ROKDI KHARCHA. THE A/R REFERRED TO PAGE 20 OF DOCUMENT NO. 1 TO DEMONSTRATE THIS FACT. THIS PAGE SHOWS THA T BIKKAR SINGH MADE DAILY SMALL PAYMENTS TO ONE BANSA BAILDAR AND OBT AINED HIS SIGNATURE. CONSIDERING THERE FACTS, IT IS HELD THAT THE APPELL ANT WAS NOT OBLIGATED TO SUBJECT SUCH INDIVIDUAL LABOUR PAYMENTS MADE THROUG H EMPLOYEE JAMADARS TO THE PROVISIONS OF SECTION 194C AND CONS EQUENTLY IMMUNE FROM THE OPERATION OF SECTION 40(A)(IA) OF THE AC I N RESPECT OF SUCH PAYMENTS. THE A.O. IS THUS DIRECTED TO DELETE THIS ADDITION. 13. THE LAST CAUSE OF GRIEVANCES OF THE APPELLANT I S ON ACCOUNT OF ADDITION OF RS. 23,956/- MADE UNDER SECTION 69C OF THE ACT. THE A.O. ON HIS EXAMINATION OF PAGE 25 AND 1 OF THE IMPOUNDED DOCUM ENTS 2 AND 6 RESPECTIVELY CONCLUDED THAT AN AMOUNT OF RS. 2,58,0 00/- WAS PAID TO SH. CHARANA SINGH JAMADAR AS AGAINST RS. 2,34,024/- REC ORDED IN THE REGULAR BOOKS OF ACCOUNTS AND PROCEEDED TO ADD THE DIFFEREN CE OF RS. 23,956/- AS UNDISCLOSED INCOME. DURING THE APPELLATE PROCEEDING S, THE SAID DOCUMENTS WERE REAPPRAISED IN THE PRESENCE OF THE A.O. AND TH E APPELLANTS A/R. ON PAGES 25 AND 26 OF DOCUMENT 2, CHARNA SINGH IS SEEN TO HAVE RECEIVED A RUNNING PAYMENT OF RS. 1,66,000/- TILL 15-02-2011. ON PAGE NO. 1 OF DOCUMENT NO. 6, THREE FIGURES ARE RECORDED IN RESPE CT OF SH. CHARANA SINGH JAMADAR RS.84,000/- - 20-02-2011 - ROKAD TUTAT RS. 2,000/- - 25-02-2011 - ROKAD KHARCHA RS. 6,000/- - 02-03-2011 - ROKAD KHARCHA 14. THE A.O. APPEARS TO HAVE TOTALED UP THE AFORESA ID THREE FIGURES AND AGGREGATED IT WITH RS. 1,66,000/- TO ARRIVE AT THE FIGURE OF RS. 2,58,000/- WHICH WAS PURPORTED TO HAVE BEEN PAID TO CHARNA SIN GH. HERE, THE A.O. HAS APPARENTLY OVERLOOKED THE NARRATION IN RESPECT OF THE FIGURE OF RS. 84,000/- RECORDED ON 20-02-2011. THE NARRATION IS ROKAR TUTAT WHICH ON TRANSLATION WOULD MEAN BALANCE REMAINING WITH CHARN A SINGH AS ON 20- 02-2011. THERE CANNOT BE ANY OTHER INFERENCE OF THI S NARRATION. IF THE SAID AMOUNT OF RS. 84,000/- IS EXCLUDED, CHARNA SINGH IS SEEN TO HAVE BEEN PAID RS. 1,66,000/- PLUS RS. 8,000/- AS PER THE IMP OUNDED DOCUMENTS, WHICH IS WAY LESS THAN RS. 2,34,024/- RECORDED IN T HE BOOKS. THE ITA NO. 170(ASR)/2015 ASSESSMENT YEAR: 2011-12 7 ASSESSING OFFICER PRESENT DURING THE APPELLATE PROC EEDINGS COULD NOT DISPEL THE AFORESAID CONCLUSION BASED ON IMPOUNDED DOCUMEN TS. THE A.O. IS THUS DIRECTED TO DELETE THIS ADDITION OF RS.23,976/-. TH E APPELLANT SUCCEEDS ON ALL GROUNDS OF APPEAL. WE FIND THAT LD. CIT(A) HAS PASSED A SPEAKING AND WELL REASONED ORDER AND HAS RIGHTLY HELD THAT ASSESSING OFFICER H AD MADE THE ADDITIONS ON THE BASIS OF ASSUMPTIONS ONLY AND WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT(A). 6. IN VIEW OF THE ABOVE, THE APPEAL FILED BY REVENU E IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 03.01.2018 SD/- SD/- (N. K. CHOUDHRY) (T. S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 03.01.2018. /GP/SR. PS . COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER