M/S M/S D.C. CONSTRUCTION, BILASPUR(CG) V. THE DY. COMMISSIONER OF INCOME TAX, BILASPUR(CG)

ITA 176/BIL/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 4925 (ITAT-RAIPUR)
• Duration Of Justice: 2 year(s) 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 12-07-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D K JAIN
• Assessee Lawyers: G S AGARWAL
• Keywords: TDS; Set aside
• Section: 40(a)(ia); 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR BEFORE SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER AND DR. MITHA LAL MEENA, ACCOUNTANT MEMBER . / ITA NO. 176 /RPR/20 16 / ASSESSMENT YEAR : 2011 - 12 M/S. D.C CONSTRUCTION, B - 1, PARIJAT EXTENSION, NEHRU NAGAR, BILASPUR (C.G.) - 495001 PAN : AAFFD8842E ....... / APPELLANT / V/S. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 1(1), BILASPUR(C.G.) / RESPONDENT A SSESSEE BY : SHRI G.S. AGARWAL REVENUE BY : SHRI D.K. JAIN / DATE OF HEARING : 1 6 .05 .2019 / DATE OF PRONOUNCEMENT : 17 .05 .2019 / ORDER PER PARTHA SARATHI CHAUDHU RY, JM : THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS), BILASPUR (C.G.) DATED 28.03.2016 FOR THE ASSESSMENT YEAR 2011 - 12 AS PER THE FOLLOWING GROUNDS OF APPEAL ON RECORD: 2 ITA NO. 176 / RPR /20 16 A.Y. 2011 - 12 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CON FIRMING THE DISALLOWANCE OF RS. 10,91,652/ - MADE BY TH E LEARNED ASSESSING OFFICER U/S. 40(A)(IA) FOR NON - DEDUCTION OF TAX ON FINANCE CHARGES PAID TO NBFCS, REJECTING THE EXPLANATIONS FILED. PRAYED THAT NO AMOUNT IS PAYABLE AS ON THE END OF THE YEAR AND THAT THE DEDUCTEES HAVE CONSIDERED THE INCOME IN THEIR RETURN OF INCOME AND PA ID THE TAXES, FOR WHICH CERTIFICATES OF CHARTERED ACCOUNTANTS WERE FILED. PRAYED THAT DISALLOWANCE OF RS. 10,91,652/ - IS UNJUSTIFIED AND BE DELETED. 2. THE LEARNED ASSESSING OFFICER FURTHER ERRED IN CONFIRMIN G THE ADHOC DISALLOWANCE OF RS. 2,00,000/ - MADE B Y THE LEARNED ASSESSING OFFICER OUT OF LABOUR PAYMENT WHICH IS WITHOUT ANY BASIS. PRAYED TO DELETE THE SAME. 2. THE BRIEF FACTS IN THIS CASE ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN CIVIL CONSTRUCTION WORK FILED ITS RETURN OF INCOME ON 30.0 9.2011 DECLARING TOTAL INCOME OF RS.13,95,110/ - . THE CASE WAS SELECTED FOR SCRUTINY THROUGH CASS AND ACCORDINGLY, NOTICE U/S.143(2) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS ISSU ED AND SERVED UPON THE ASSESSEE. IN RESPONSE TO THE NOTICE, THE LD. AR OF THE ASSESSEE APPEARED BEFORE THE ASSESSING OFFICER FROM TIME TO TIME AND DISCUSSED THE CASE WITH THE ASSESSING OFFICER. THE ASSESSING OFFICER FINALLY COMPLETED THE ASSESSMENT BY MAKING CERTAIN ADDITIONS/DISALLOWANC ES AS APPEARING IN THE ASSESSMENT ORDER. 3 ITA NO. 176 / RPR /20 16 A.Y. 2011 - 12 3. AT THE TIME OF HEARING, THE LD. AR OF THE ASSESSEE WITH REGARD TO THE GROUND NO.1 INVITED OUR ATTENTION TO PAGE 2 OF THE ORDER OF THE LD. CIT(APPEALS) WHEREIN IT IS STATED AS UNDER : THE AO HAD DISCUSSED THE I SSUE IN PARA - 3 OF HIS ASSESSMENT ORDER. THE LD. AR BEFORE ME FILED FRESH EVIDENCE UNDER RULE 46A OF I.T. ACT WITH THE REQUEST TO ADMIT THE SALE. THE FRESH EVIDENCES COULD NOT BE MADE AVAILABLE DURING ASSESSMENT PROCEEDINGS AS THESE ARE THE CERTIFICATES OF CHARTERED ACCOUNTANTS OF M/S. TATA MOTORS FINANCE LIMITED AND OF M/S. MA GMA F INCORP LIMITED ALONG WITH ITR OF M/S. MAGMA FINCORP LIMITED. I HAVE GONE THROUGH THE FRESH EVIDENCES CAREFULLY AND DUE TO INCOMPLETE AN D IMPROPER CERTIF ICATES IN VIEW OF THE RULE 37ACB, I DO NOT ADMIT THE SAME AS THESE ARE NOT COMPLETE AND AS PER RULE 37ACB AND FORM NO. 26A OF I.T. RULE, 1962 . 4. THAT BY PLACING RELIANCE ON THE DECISION OF THE CO - ORDINATE BENCH OF THE TRIBUNAL, RAIPUR IN ITA NO.69/RPR/2015 FOR THE ASSESSMENT YEAR 2010 - 11 IN THE CASE OF PRADEEP CHANDRA JHA VS. DCIT , THE LD. AR OF THE ASSESSEE SUBMITTED THAT THIS ISSUE WAS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR THE PURPOSE OF VERIFICATION. IT IS THE CONTENTION OF THE LD. AR OF THE ASSESSEE THAT CERTIFICA TES FROM CHARTERED ACCOUNTANTS WAS NOT ACCEPTED BY THE LD. CIT(APPEALS) AND IN THE INTEREST OF JUSTICE, THE ASSESSING OFFICER MAY VERIFY THE VERACITY OF THESE CERTIFICATES OF THE CHARTERED ACCOUNTANTS AND FOR THIS LIMITED PURPOSE, THE MATTER MAY BE RESTORE D TO THE FILE OF THE ASSESSING OFFICER. 5. PER CONTRA, THE LD. DR HAS PLACED RELIANCE ON THE ORDERS OF THE SUB - ORDINATE AUTHORITIES. 4 ITA NO. 176 / RPR /20 16 A.Y. 2011 - 12 6. WE HAVE PERUSED THE CASE RECORDS AND HEARD THE RIVAL CONTENTIONS AND WE OBSERVED THAT IN THE CASE OF THE ASSESSEE, CE RTIFICATES OF THE CHARTERED ACCOUNTANTS WAS NOT ACCEPTED BY THE LD. CIT(APPEALS). ON THE SIMILAR ISSUE IN ITA NO.69/RPR/2015 (SUPRA.), THE CO - ORDINATE BENCH OF THE TRIBUNAL HAS HELD AS FOLLOWS: 9.WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. IN RESPECT OF THE FIRST DISPUTED ISSUE U/S.40(A)(IA) OF THE ACT, THE CONTENTION OF THE LD. AR THAT THE ASSESSEE IS HAVING CERTIFICATE OF C.A. ISSUED IN RESPECT OF TDS AND DEMONSTRATED BEFORE US IN PA PER BOOK AT PAGE 1 TO 4 EXPLAINING FORM NO.27A ISSUED BY THE C.A. ON THIS ISSUE, THE LD. DR SUBMITTED THAT THIS INFORMATION WAS NOT AVAILABLE WITH THE ASSESSING OFFICER. CONSIDERING THE OVERALL ASPECT OF THE FACT THAT NBCSS HAVE OFFERED ITS INCOME, THE MAT TER HAS TO BE VERIFIED BY THE ASSESSING OFFICER. ACCORDINGLY, WE REMIT THE ISSUE TO THE ASSESSING OFFICER TO VERIFY THE CLAIM OF THE ASSESSEE AND PASS ORDER AS PER LAW. RESPECTFULLY, FOLLOWING THE SAME PROPOSITION, WE SET ASIDE THE ORDER OF THE LD. CIT(APPEALS) ON THIS ISSUE AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR VERIFICATION OF THE CERTIFICATES OF THE CHARTERED ACCOUNTANTS. THE ASSESSING OFFICER SHALL GRANT REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE IN ACCORDANCE WITH LAW. HENCE, GROUND NO.1 RAISED IN APPEAL BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . 7. WITH REGARD TO GROUND NO.2, THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER VIDE PARA 5 OF ASSESSMENT ORDER NOTICED THAT THE ASSESSEE HAS CL AIMED OF RS.81,81,853/ - UNDER THE HEAD LABOUR PAYMENTS 5 ITA NO. 176 / RPR /20 16 A.Y. 2011 - 12 AND SUCH LABOUR PAYME NTS HAVE BEEN SUPPORTED BY THUM B IMPRESSION WITHOUT TAKING ANY PROOF OF DISBURSEMENT OF WAGES TO THE LABOUR. FURTHER, THE ASSESSING OFFICER NOTICED THAT COMPLETE ADDRESSES OF THE R ECIPIENTS ARE ALSO NOT AVAILABLE IN THE MUSTER ROLL. UNDER THESE CIRCUMSTANCES, THE GENUINENESS OF THE EXPENDITURE CANNOT BE FULLY PROVED BEYOND DOUBT AND THE ASSESSING OFFICER THEREFORE MADE ADDITION ON THE GROUND OF LABOUR PAYMENT EXPENSES AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE AND THE SAME WAS CONFIRMED BY THE LD. CIT(APPEALS). 8. THE LD. AR OF THE ASSESSEE VEHEMENTLY ARGUED THAT THESE EXPENSES WERE DISALLOWED SINCE THERE WAS THUMB IMPRESSION OF THE LABOUR. BUT IN A PECULIAR NATURE OF SUCH EXP ENSES, FOR THE LABOURERS, IT IS ONLY THE THUMB IMPRESSIONS THAT ARE GENERALLY USED FOR VERIFYING THE STATEMENTS. FURTHERMORE, THE REVENUE AUTHORITIES HAVE NOT BROUGHT IN ANY SPECIFIC ENQUIRY FOR SUCH DISBURSEMENT OF WAGES TO THE LABOUR. THE LD. AR OF THE A SSESSEE FURTHER SUBMITTED THAT NO AD - HOC DISALLOWANCE IS PERMISSIBLE WITHIN THE FRAME WORK OF INCOME TAX ACT. IN SUPPORT OF HIS CONTENTIONS, THE LD. AR OF THE ASSESSEE HAS PLACED RELIANCE ON THE DECISION OF THE CO - ORDINATE BENCH OF THE TRIBUNAL, RAIPUR IN THE CASE OF ACIT VS. M/S. MANGILAL PAGARIA IN ITA NO.54/BLPR/2011 FOR THE ASSESSMENT YEAR 2007 - 08. 6 ITA NO. 176 / RPR /20 16 A.Y. 2011 - 12 9. PER CONTRA, THE LD. DR ON THIS ISSUE HAS RELIED ON THE ORDER OF SUB - ORDINATE AUTHORITIES. 10. WE HAVE PERUSED THE CASE RECORDS AND HEARD THE RIVAL CONTENT IONS. WE OBSERVE THAT THE REVENUE HAS NOT CONDUCTED ANY SPECIFIC ENQUIRY OR HAS NOT BROUGHT IN ANY MATERIAL ON RECORD TO SUBSTANTIATE THAT THESE LABOUR PAYMENTS WERE NOT GENUINE. JUST BECAUSE THUMB IMPRESSION IS THERE, IT CANNOT BE SAID THAT THE TRANSACTIO NS WERE NOT GENUINE SINCE IN INDIA WHEN THE DEALING IS DONE WITH LABOURERS, PRACTICALITY DEMANDS THAT THE MONEY RECEIPT IS THE THUMB IMPRESSIONS TO THE CONCERN LABOURERS. THE REVENUE SHOULD BRING OUT COGENT MATERIAL FOR MAKING SUCH DISALLOWANCES. WE TAKE G UIDANCE FROM THE DECISION OF THE CO - ORDINATE BENCH OF THE TRIBUNAL , RAIPUR IN THE CASE OF ACIT VS. M/S. MANGILAL PAGARIA IN ITA NO.54/BLPR/2011 WHEREIN THE TRIBUNAL HAS HELD AS UNDER: 9.WE H AVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT ASSE S SEE - FIRM HAD FURNISHED BOOKS OF ACCOUNT AND AUDITED STATEMENT OF ACCOUNTS AND THE AO WAS NOT ABLE TO PIN - POINT THE DEFECTS IN SUCH DOCUMENTS, THAT THE QUANTITY OF MATERIAL USED IN LABOUR CHARGES INCURRED WERE CERTIFIED FROM TIME TO TI ME BY THE COMPETENT AUTHORITIES AND THE AO WAS NOT ABLE TO NEGATE THE CLAIM MADE BY THE ASSESSEE. IT IS ALSO FOUND THAT THE AO HAD NOT DISPUTED ABOUT THE LABOUR AND CONTINGENCY PAYMENT THOUGH HE HAD MADE AN AD - HOC DISALLOWANCE. WE ARE OF THE OPINION THAT T HE TAX LIABILITY CANNOT BE FASTENED TO THE ASSESSEE BY THE AO WITHOUT BRINGING SOME POSITIVE EVIDENCE AGAINST THE ASSESSEE ON RECORD, THAT THE DISALLOWANCE OF ADDITION HAS TO BE BACKED BY SOME DOCUMENTARY/ORAL EVIDENCE WHICH COULD PROVE THAT THE CLAIM MADE BY IT OF AN EXPENDITURE WAS NOT GENUINE. IN THE CASE UNDER CONSIDERATION, THE AO HAS MADE A LUMP SUM DISALLOWANCE, BUT SAME IS NOT BACKED BY ANY EVIDENCE. CONSIDERING THE PECULIAR FACTS AND CIRCUMSTANCES OF THE 7 ITA NO. 176 / RPR /20 16 A.Y. 2011 - 12 CASE UNDER CONSIDERATION, WE ARE OF THE OPIN ION THAT THE ORDER OF THE FAA DOES NOT SUFFER FROM ANY LEGAL OR FACTUAL INFIRMITY .THEREFORE, CONFIRMING HIS ORDER, WE DECIDE GROUND NO. 2 AGAINST THE AO. RESPECTFULLY, FOLLOWING THE AFORESAID DECISION OF THE CO - ORDINATE BENCH OF THE TRIBUNAL, WE ALLOW THE GROUND NO.2 RAISED IN APPEAL BY THE ASSESSEE. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORD ER PRO NOUNCED ON 17 TH DAY OF MAY , 201 9 . SD / - SD/ - MITHA LAL MEENA PARTHA SARATHI CHAUDHURY ACCOUNTANT MEMBER JUDICIAL MEMBER / RAIPUR ; / DATED : 17 TH MAY, 2019. SB / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE COMMISSIONER OF INCOME TAX (APPEALS), BILASPUR (C.G.) 4. THE COMMISSIONER OF INCOME TAX, BILASPUR (C.G.) 5. , , , / DR, ITAT, RAIPUR BENCH, RAIPUR. 6. / GUARD FILE. // TRUE COPY // / BY ORDER, / PRIVATE SECRETARY , / ITAT, RAIPUR.