DCIT, V. M/s Kumar A.S.Construction,

ITA 180/PAT/2012

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7774 (ITAT-PATNA)
• Duration Of Justice: 4 year(s) 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 27-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARCHANA SINHA SR S C
• Keywords: Unexplained cash credit
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PATNA BENCH, PATNA BEFORE SHRI J.SUDHAKAR REDDY (AM) & SHRI SANDEEP GOSAIN (JM) ITA NO. 180 /PAT/201 2 ASSESSMENT YEARS: 20 0 9 - 10 D CIT VS. M /S KUMAR A. S. CONSTRUCTION, , CIRCLE - 3 , ASHOK NAGAR, BHAT BIGHA, GAY A. GAYA . (APPELLANT) (RESPONDENT) PAN - AA GFK7513A AND ITA NO. 184 /PAT/2012 ASSESSMENT YEAR:2009 - 10 M/S KUMAR A. S. CONSTRUCTION. , VS. DCIT, ASHOK NAGAR, BHAT BIGHA, CIRCLE - 2, GAYA. GAYA . (APPELLANT) (RESPONDENT) PAN - AAECA0 928L DEPARTMENT BY : S MT. ARCHANA SINHA, SR. S.C. ASSESSEE BY : NONE . DATE OF HEARING: - 0 5 /10/2017 DATE OF PRONOUNCEMENT: - 06 /10/2017 ORDER PER SANDEEP GOSAIN, JUDICIAL MEMBER: BOTH THE APPEALS ARE ARI SING OUT OF THE COMMON ORDER OF THE CIT (A) - DHANBAD DATED - 2 5 .0 9 .201 2. ITA NO. 180/PAT/2012 WAS FILED BY THE REVENUE AND ITA NO.184/PAT/2012 BY THE ASSESSEE. 2 I TA NO S . - 180 & 184 / PAT /20 1 2 2. TODAY THE CASE WAS FIXED FOR HEARING BUT NONE APPEARED ON BEHALF OF THE ASSESSEE EVEN IN SPITE OF REPEATED CALLS AND NO ADJOURNMENT APPLICATION HAS BEEN FILED TODAY. ON THE OTHER HAND , THE LD. DR PRESENT IN THE COURT , IS READY FOR ARGUMENT . IN SUCH CIRCUMSTANCES, WE HAVE DECIDED TO PROCEED THE ASSESSEE EX - PARTE AND DECIDE BOTH THE APPEALS AFTER HEA RING THE LD. DR AND CONSIDERING THE MATERIAL PLACED ON THE BASIS OF RECORDS. 3. SINCE BOTH THE APPEALS ARISING OUT OF THE COMMON ORDER PASSED BY THE LD. CIT(A). THEREFORE, F IRST OF ALL , WE HAVE DECIDED TO TAKE UP APPEAL FILED BY THE REVENUE . I N ALL THERE ARE FOUR GROUNDS OF APPEAL . 4. GROUND NO. 1 IS GENERAL IN NATURE NEEDS NO ADJUDICATION. 5. GROUND NO.2 RAISED BY THE REVENUE RELATES TO CHALLENGING THE ORDER OF LD. CIT(A) IN DELETING THE ADDITIONS OF RS. 5,01,12,116/ - MADE BY THE AO U/S.40(A) (IA) OF THE INCOME - TAX ACT 6 . WE HAVE HEARD LD. DR AND PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS THE ORDERS OF THE AUTHORITIES BELOW. BEFORE WE DECID E THE MERITS OF THE CASE, IT IS NECESSARY TO EVALUATE AND ANALYSE THE ORDERS PASSED BY THE LD. CIT(A) WHILE DEALING WITH THIS GROUND. THE LD. CIT(A) HAS DEALT WITH TH ESE GROUND S IN PARA NO S . 3 TO 5 OF ITS ORDER AND THE SAME IS REPRODUCED BELOW: 3. GROUNDS OF APPEAL NUMBER 2, 3 AND 4 ARE AGAINST ADDITION OF RS.5,01,12,116/ - UNDER SECTION 40(A)(IA) OF THE INCOME - TAX ACT, 1961. THE FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER (AO) OBSERVED THAT REGARDING THE DETAILS OF LABOUR CHARGE PAYMENT OF 3 I TA NO S . - 180 & 184 / PAT /20 1 2 RS.5,01,12,116/ - , THE SAME WERE SHOWN PAID THROUGH 18 LABOUR MATES. IN THE OPINION OF THE ASSESSING OFFICER, THESE PER SONS WORKED AS LABOUR CONTRACTORS FOR THE APPELLANT AND APPELLANT SHOULD HAVE DEDUCTED TAX AT SOURCE ON PAYMENTS MADE TO THEM. SINCE THIS WAS NOT DONE, THE ENTIRE AMOUNT OF RS.5,01,12,116/ - WAS DISALLOWED UNDER 40(A)(IA) OF THE INCOME - TAX ACT, 1961. 4. IN THE ASSESSMENT PROCEEDINGS, THE SUBMISSION OF THE APPELLANT WAS THAT THESE 18 PERSONS WERE WORKING AT DIFFERENT SITES OF THE APPELLANT AND WERE THEMSELVES EMPLOYEES OF THE APPELLANT AND GOT REGULAR WAGES FROM THE APPELLANT. THE JOB OF THESE PERSONS WAS TO SUPERVISE AND IDENTIFY LABOURERS BEING ABOUT 100 IN NUMBER WORKING AT EACH OF THE SITES AND PAYMENTS WERE MADE DIRECTLY TO SUCH LABOURERS. IN THE APPEAL PROCEEDINGS ALSO, IT WAS EMPHASIZED THAT THERE WAS NO ORAL OR WRITTEN AGREEMENT WITH ANY OF SUCH 18 PE RSONS AND INFECT, SUCH PERSONS THEMSELVES WERE EMPLOYEES OF THE APPELLANT. FOR SAKE OF IDENTIFICATION OF THE SITE AND FOR CONVENIENCE, THE LABOUR PAYMENTS MADE AT A SITE HAD BEEN GROUPED UNDER THEIR RESPECTIVE NAMES. THERE WAS NO SUB - CONTRACTOR OR MIDDLEMA N. FURTHER, IT WAS SUBMITTED THAT THE CASE PERTAINED TO GAYA AND ASSESSMENT PROCEEDINGS WERE CONDUCTED BY THE ADDL. CIT AT PATNA. IN THE SHORT TIME AVAILABLE, IT WAS NOT POSSIBLE FOR HIM TO EXAMINE IN DETAIL THE SUBMISSIONS OF THE APPELLANT. THE AO WAS DIR ECTED TO EXAMINE THE SUBMISSIONS OF THE APPELLANT AND FURNISH REMAND REPORT IN THE MATTER. FOR SAKE OF REFERENCE, THE RELEVANT PART OF THE REMAND REPORT IS REPRODUCED HEREUNDER: THE REMAND REPORT SOUGHT VIDE LETTER UNDER REFERENCE MAINLY CONCERNS WITH TWO ISSUES I.E. DISALLOWANCE U/S 40(A)(IA) AND UNEXPLAINED CASH CREDIT U/S 68. (A) AS REGARDS DISALLOWANCE U/S 40(A)(IA) OF THE ACT FOR NON - DEDUCTION OF TDS, THE ASSESSEE WAS ASKED TO PRODUCE THE CONCERNED PERSONS TO APPEAR BEFORE THE UNDERSIGNED. OUT OF THE 18 PERSONS 15 APPEARED BEFORE THE UNDERSIGNED AND THEIR STATEMENT WERE RECORDED. WHEN THEY WERE CONFRONTED AS TO WHETHER THERE IS ANY AGREEMENT BETWEEN YOU AND THE ASSESSEE REGARDING SUPPLY OF LABOUR. IN REPLY THEY DENIED ANY AGREEMENT FOR SUPPLY OF LABOUR WITH M/S KUMAR A.S. CONSTRUCTION, GAYA. FURTHER, THEY WERE QUERIED ABOUT LABOUR PAYMENTS MADE TO THEM BY M/S KUMAR A.S. CONSTRUCTION, GAYA. IN REPLY, THEY HAVE STATED AS UNDER: - 4 I TA NO S . - 180 & 184 / PAT /20 1 2 SL. NO. NAME OF PERSONS RELATION WITH THE ASSESSEE AMOUNT OF LABOUR AND CHAR GES PAID PER STATEMENT BALANCE OUTSTANDING ON 31/03/2009 AS PER STATEMENT 01. MANOJ KUMAR LABOUR RS.46,130/ - RS.3700/ - 02. SATYENDRE SINGH - DO - RS.44,674/ - RS.5156/ - 03. MAHENDRA SINGH - DO - RS.44,480/ - RS.5350/ - 04. DARA SINGH - DO - RS.43,910/ - RS.5650/ - 05. ANIL DAS - DO - RS.45,605/ - RS.4390/ - 06. VEERA CHOUHAN - DO - RS.46,323/ - RS.3672/ - 07. VIJAY MANJHI - DO - RS.45,305/ - RS.4690/ - 08. SANJAY KR. YADAV - DO - RS.46,180/ - RS.3650/ - 09. SUKHDEO MANJHI - DO - RS.48,180/ - RS.1650/ - 10. HARENADRA SINGH - DO - RS.44,870/ - RS.5125/ - 11. RANJIT SINGH - DO - RS.44,990/ - RS.4840/ - 12. ARVIND SINGH - DO - RS.45,200/ - RS.4630/ - 13. PINTU SINGH - DO - RS.46,255/ - RS.3740/ - 14. PAPPU SINGH - DO - RS.44,780/ - RS.5050/ - 15. MANOJ MANJHI - DO - RS.44,350/ - RS.5150/ - 5. FORM T HE ABOVE REMAND REPORT; IT IS CLEAR THAT THE RELATIONSHIP BETWEEN THE APPELLANT AND SUCH PERSONS IS THAT OF EMPLOYER AND EMPLOYEE AND NOT THAT OF CONTRACTOR AND SUB - CONTRACTOR. IN VIEW OF THIS FACT AND OTHER FACTS AS ABOVE, THE ADDITION IS NOT SUSTAINABLE AND THE SAME IS DELETED. 7 . AFTER HAVING GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND HEARING THE LD. DR , WE FIND THAT THE LD. CIT(A ) WHILE DECIDING THE ISSUE 5 I TA NO S . - 180 & 184 / PAT /20 1 2 HAD CALLED FOR REMAND REORT AND AFTER APPRECIATING THE SAME HAS RIGHTLY CONCLUDED THAT THE RELATION SHIP WITH THE ASSESSEE AND SUCH PERSONS AS ARE DEALT IN PARA NO.4 OF ITS ORDER ARE THAT OF EMPLOYER AND EMPLOYEE AND NOT OF CONTRACTOR AND SUB - CONTRACTOR. THEREFORE, WHILE TAKING INTO CONSIDERATION THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITI ONS. NO NEW FACTS, CIRCUMSTANCES OR CONTRARY JUDGMENTS HAVE BEEN PRODUCED BEFORE US IN ORDER TO CONTROVERT OR REBUT THE FINDINGS SO RECORDED. WE THEREFORE, FIND THAT THERE ARE NO REASON TO INTERFRERE WITH THE FINDINGS OF THE LD. CIT(A) . HENCE, THE GROUND RAISED BY THE REVENUE STANDS DISMISSED AND THE ORDER PASSED BY THE LD.CIT(A) IS UPHLED. 8 . GROUND NO. 3 RAISED BY THE REVENUE IS AGAINST CHALLENGING THE ORDER OF LD. CIT(A) IN ALLOWING RELIEF TO THE TUNE OF RS.89,54,030/ - OUT OF RS.1,43,55,930/ - WHICH WA S ADDED BY THE AO ON ACCOUNT OF UNEXPLAINED SUNDRY CREDITORS U/S68 OF THE INCOME - TAX ACT. WE HAVE HEARD LD. DR AND PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS THE ORDERS OF THE AUTHORITIES BELOW. BEFORE WE DECIDE THE MERITS OF THE CASE, IT IS NECESSARY TO EVALUATE AND ANALYSE THE ORDERS PASSED BY THE LD. CIT(A) WHILE DEALING WITH THIS GROUND. THE LD. CIT(A) HAS DEALT WITH THESE GROUNDS IN PARA NOS.6 TO 11 OF ITS ORDER AND THE SAME IS REPRODUCED BELOW: 6. GROUNDS OF APPEAL NUMBER 5 AND 6 ARE AGAINST ADDITION OF RS.1,43,55,930/ - ON ACCOUNT OF SUNDRY CREDITORS. IN THE ASSESSMENT PROCEEDINGS, 6 I TA NO S . - 180 & 184 / PAT /20 1 2 THE AO FOUND THE FOLLOWING SUNDRY CREDITORS AS UNVERIFIABLE AND ACCORDINGLY, THE ADDITION WAS MADE. NAME AMOUNT REMARKS OF PO HARIDWAR SINGH RS.42,62,730/ - NOT KN OWN AKHILESH SINGH RS.29,34,200/ - NOT KNOWN AJAY SINGH RS.24,67,700/ - NOT KNOWN KOLENDRA SAH RS.15,64,800/ - NOT KNOWN SANTOSH KUMAR RS.15,94,800/ - INCOMPLETE ADDRESS ARUN SINGH RS.15,31,700/ - NOT KNOWN RS.1,43,55,930/ - 7. IN THE APPEAL PROCEEDING S, IT WAS SUBMITTED THAT THESE PERSONS WERE SUPPLYING STONES TO THE APPELLANT AND THEIR STONE CRUSHERS WERE CLOSED DUE TO POLICIES OF BIHAR GOVERNMENT AND SUCH PERSONS SHIFTED TO OTHER PLACES. THE AO DIRECTED THE APPELLANT ON 21.12.2011 TO PRODUCE SUCH CRE DITORS ON 27.12.2011. THE APPELLANT TRIED TO SEARCH TEIR NEW ADDRESSES. HOWEVER, BY THE TIME, THE ASSESSMENT ORDER WAS PASSED. 8. THE AO WAS DIRECTED TO EXAMINE THE SUBMISSIONS OF THE APPELLANT AND FURNISH REMAND REPORT. THE SUBMISSIONS OF THE AO IN THIS R EGARD ARE AS UNDER: (A) FURTHER WITH REGARD TO SIX CONCERNED SUNDRY CREDITOR CONFIRMATIONS LETTER U/S 133(6) OF THE I.T. ACT, 1961 WERE ISSUED TO THEM AT THE ADDRESS PROVIDED BY THE ASSESSEE. REPLIES ON FOR CASES HAVE BEEN RECEIVED IN THE OFFICE, THE DET AILS OF CONFIRMATION ARE AS FOLLOWS: - SL. NO. NAME OF THE SUNDRY CREDITORS AMOUNT SHOWN AS CREDIT IN THE BOOKS OF THE ASSESSEE AS 31/03/2009 CONFIRMATION OF AMOUNT SHOWN SUNDRY CREDITORS ON 31/03/2009 01. SANTOSH KUMAR RS.15,94,800/ - RS.15,94,800/ - 02. A RUN SINGH RS.15,31,700/ - RS.15,31,700/ - 03. KOLENDRA SAH RS.15,64,800/ - RS.15,64,800/ - 04. HARIDWAR SINGH RS.42,62,730/ - RS.42,62,730/ - IN THE REMAINING TWO CASES, NO REPLY WAS RECEIVED FROM THE CREDITORS. 9. THE SUBMISSIONS OF THE APPELLANT IN THE REJOINDER TO REMAND REPORT ARE AS UNDER: UNEXPLAINED TRADE CREDITORS OF RS.1,43,5,930/ - THAT YOUR HONOUR WAS PLEASED TO SEND BACK THE CASE OF UNEXPLAINED TRADE CREDITORS FOR REMAND REPORT AS WELL. YOU HONOUR WAS PLEASED TO ASK THE APPELLANT TO FILE THE C HANGED ADDRESS OF THE 6 TRADE CREDITORS. OUT OF 6 TRADE CREDITORS 4 OF THEM FILED AND SUBMITTED THEIR LETTER OF CONFIRMATIONS AND TWO NAMELY SRI AJAY SINGH AND AKHILESH SINGH WERE NOT TRACED SINCE THEIR PRESENT ADDRESS WAS NOT LOCATED BY THE APPELLANT. THE 4 TRADE CREDITORS WHO HAD FILED THEIR LETTER OF CONFIRMATION WERE AGAIN ISSUED LETTERS TO CONFIRM DUES BY AO. IN RESPONSE TO 7 I TA NO S . - 180 & 184 / PAT /20 1 2 NOTICE ISSUED U/S 133(6) OF IT ACT, 1961 THE 4 PERSONS NAMELY SANTOSH KUMAR, ARUN SINGH, KALENDAR SHAH AND HARIDWAR SINGH CONFIRME D THE OUTSTANDING DUES. IN THE REMAND REPORT LEARNED ACIT CIRCLE - 3, GAYA HAS ALSO MENTIONED THEIR NAME AND AMOUNT OF CREDITOR HENCE THE ADDITIONS IN THE GROUND OF TRADE CREDIT STAND CONFIRMED AND IS FIT TO BE CONSIDER GENUINE. FURTHERMORE 99 PER CENT OF T HE TRADE CREDITORS HAVE CONFIRMED THE CREDITS HENCE THE ENTIRE AMOUNT OF RS.1,43,55,930/ - STANDS EXPLAINED AND THE ENTIRE ADDITION IS FIT TO BE DELETED. 10. THUS, THE CRUX OF THE SUBMISSIONS OF THE APPELLANT IS THAT MORE THAN PER CENT OF THE TRADE CREDIT S HAVE BEEN FOUND VERIFIABLE IN THE ASSESSMENT PROCEEDINGS OR IN REMAND PROCEEDINGS. ONLY TWO SUNDRY CREDITORS HAVE REMAIN UNVERIFIABLE AND THEREFORE, TAKING AN OVERALL VIEW, ADDITION SHOULD BE DELETED. 11. I HAVE CONSIDERED THE FACTS OF THE CASE. THE SI TUATION WHICH EMERGES THAT INSPITE OF SUFFICIENT TIME AND OPPORTUNITY ALLOWED DURING THE REMAND PROCEEDINGS, TWO TRADE CREDITORS NAMELY AKHILESH SINGH AND AJAY SINGH AGAIN WHOM SUBSTANTIAL AMOUNTS OF RS.29,34,200/ - AND RS.24,67,700/ - HAVE BEEN SHOWN OUTSTA NDING HAVE NOT BEEN FOUND TO BE VERIFIABLE. IN THE REJOINDER ALSO THE APPELLANT HAS NOT BEEN ABLE TO FURNISH ANY COGENT REASON FOR THE SAME. ACCORDINGLY, ADDITION OF RS.29,34,200/ - + RS.24,67,700/ - = RS.54,01,900/ - CONFIRMED AND THE BALANCE ADDITION IS DEL ETED. 9 . AFTER HAVING GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND HEARING THE LD. DR, WE FIND THAT THE LD. CIT(A) WHILE DECIDING THE ISSUE HAD CALLED FOR REMAND RE P ORT AND AFTER APPRECIATING THE SAME HAS RIGHTLY CONCLUDED THAT ONLY TWO SUNDRY C REDITORS HAVE REMAIN UNVERIFIABLE AND THEREFORE, AFTER CONSIDERING THE REASONS SUBMITTED BY OTHER SUNDRY CREDITORS THE LD. CIT(A) HAS RESTRICTED THE ADDITIONS OF RS.54,01,900/ - PERTAINING TO UNVERIFIABLE CREDITORS NAMELY AKHILESH SINGH AND AJAY SINGH. 10. N O NEW FACTS, CIRCUMSTANCES OR CONTRARY JUDGMENTS HAVE BEEN PRODUCED BEFORE US IN ORDER TO CONTROVERT OR REBUT THE FINDINGS SO RECORDED. WE THEREFORE, FIND THAT THERE ARE NO REASON TO INTERFRERE WITH THE FINDINGS OF 8 I TA NO S . - 180 & 184 / PAT /20 1 2 THE LD. CIT(A). HENCE, THE GROUND RAISE D BY THE REVENUE STANDS DISMISSED . ITA NO.184/PAT/2012 11 . NOW WE TAKE UP THE APPEAL FILED BY THE ASSESSEE. THE S OLITARY GR O UND RAISED BY THE ASSESSEE IS CHALLENGING THE ORDER OF LD. CIT(A) IN CONFIRMING THE ADDITIONS OF RS.54,01,900/ - . SINCE, WE HAVE ALR EADY DECIDED ON MERITS THE ORDERS OF LD.CIT(A) WHILE DEALING WITH THE APPEAL FILED BY THE REVENUE IN ITA NO.180/PAT/2012. THEREFORE, OUR FINDING S IN THIS REGARD ARE BINDING AND ALSO APPLICABLE IN ITA NO. 184/PAT/2012 FILED BY THE ASSE SS EE. THEREFORE, KEEP ING IN VIEW OUR OWN FINDING IN ITA NO. 180/PAT/2012 WE DISMISS THE GROUND RAISED BY THE ASSESSEE. 9 . I N THE RESULT, BOTH THE APPEAL S FILED BY THE REVENUE AND ASSESSEE STAND DISMISSED. O RDER IS PRONOUNCED IN THE OPEN COURT ON 06 TH OCTOBER , 201 7 . SD/ - SD/ - ( J. SUDHAKAR REDDY ) ( SANDEEP GOSAIN ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE OF ORDER: 06 TH OCTOBER , 201 7 . S . S INH A (PS) COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT . 2. THE RESPONDENT.: 9 I TA NO S . - 180 & 184 / PAT /20 1 2 3. THE CIT(A) - PATNA 4. CIT , PATNA 5. INCOME TAX APPELLATE TRIBUNAL,PATNA 6. GUARD FILE. //TRUE COPY// BY ORDER PRIVATE SECRETARY