The ITO, Ward-6(2), Surat V. M/s. K.G.N. Construction, Surat

ITA 2163/AHD/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1006 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 19-07-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 01-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S B VAIDYA
• Section: 143(3); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD , BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI N. K. BILLAIYA , ACCOUNTANT MEMBER. ITA. NO.2163/AHD/2012 (ASSESSMENT YEAR: 2005-06) THE INCOME-TAX OFFICER, WARD 6(2), ROOM NO.615, AAYAKAR BHAVAN, MAJURA GATE, SURAT APPELLANT VS. M/S. K.G.N. CONSTRUCTION ALIF NAGAR, OPP: UNN BUS STOP, UNN PATIA, NAVSARI ROAD, SURAT 395008 RESPONDENT PAN: AACFK9686Q /BY APPELLANT : SHRI JAMES KURIAN, SR. D.R. /BY RESPONDENT : SHRI S. B. VAIDYA, A.R. /DATE OF HEARING : 19.07.2016 /DATE OF PRONOUNCEMENT : 22.07.2016 ORDER ITA NO.2163/AHD/12 A.Y. 05-06 [ITO VS. M/S. K.G.N. CONSTRUCTION] PAGE 2 PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY REVENUE AGAINST THE O RDER OF COMMISSIONER OF INCOME TAX (APPEALS)-IV, SURAT, DATED 29.06.2012 FOR A.Y. 2005-06 ON FOLLOWING GROUND. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.38,95,659/- MADE U/S.40(A)(IA) OF TH E ACT. 2. ASSESSEE IS A CONTRACTOR. ORIGINAL ASSESSMENT U/S. 143(3) OF THE ACT WAS MADE ON 25.09.2007 AFTER MAKING AN A DDITION OF RS.42,600/- ON ACCOUNT OF WATER CHARGES. SUBSEQ UENTLY, NOTICE U/S.148 WAS ISSUED ON 23.03.2010 ON THE GROU ND THAT ASSESSEE HAS DEBITED RS.30,01,200/- TOWARDS LABOUR EXPENSES AND RS.8,94,459/- TOWARDS GOODS VEHICLE RENT WITHOU T DEDUCTION OF TAX AND HENCE THERE WAS ESCAPEMENT OF INCOME OF RS.38,95,659/- AND SAME WAS ADDED TO THE INCOME OF ASSESSEE. 2.1 MATTER WAS CARRIED BEFORE THE FIRST APPELLATE A UTHORITY, WHEREIN VARIOUS SUBMISSIONS MADE ON BEHALF OF ASSES SEE AND HAVING CONSIDERED THE SAME, CIT(A) GRANTED RELIEF O N MERIT. SAME HAS BEEN OPPOSED BEFORE US ON BEHALF OF REVENU E INTER ALIA SUBMITTING THAT CIT(A) WAS NOT JUSTIFIED IN DE LETING THE ADDITION OF RS.38,95,659/- MADE BY ASSESSING OFFICE R U/S.40(A)(IA) OF THE ACT. SAME SHOULD BE SET ASIDE AND THAT OF ASSESSING OFFICER BE RESTORED. ON THE OTHER HAND, LD. AUTHORIZED REPRESENTATIVE SUPPORTED THE ORDER OF CI T(A). ITA NO.2163/AHD/12 A.Y. 05-06 [ITO VS. M/S. K.G.N. CONSTRUCTION] PAGE 3 2.2 AFTER GOING THROUGH RIVAL SUBMISSIONS AND MATER IAL ON RECORD, WE FIND THAT ADDITION WAS MADE BECAUSE THE TAX AUDIT REPORT MENTIONED THAT NO TAX HAD BEEN DEDUCTED AT S OURCE BY ASSESSEE AND NO EXPLANATION WAS GIVEN BY ASSESSEE DURING RE- ASSESSMENT PROCEEDINGS. IN APPEAL, CIT(A) OBSERVED THAT BY LETTER DATED 21.04.2010, RECEIVED BY THE INCOME-TAX DEPARTMENT ON 23.04.2010, ASSESSEE HAD INFORMED THE ASSESSING OFFICER THAT THERE WAS NO LIABILITY TO DE DUCT TAX AT SOURCE BECAUSE; (I) THIS WAS THE FIRST YEAR OF TAX AUDIT FOR THE FI RM AND (II) THERE WERE NO SUB-CONTRACTS, AND ALL CONTRACTS HAD BEEN EXECUTED BY ASSESSEE BY EMPLOYING WORKERS AND STAFF . IT WAS THEREFORE NOT CORRECT ON THE PART OF ASSESSI NG OFFICER TO STATE THAT ASSESSEE HAD NOT GIVEN ANY REPLY BEFORE HIM. THE FIRST REASON GIVEN BY ASSESSEE WAS NOT ACCEPTED BY CIT(A) THAT THIS WAS THE FIRST YEAR OF TAX AUDIT FOR THE FIRM B ECAUSE THIS EXCEPTION APPLIES ONLY TO INDIVIDUALS AND HUF. REGA RDING SECOND REASON, ASSESSEE HAD MADE DETAILED SUBMISSIO NS AS DISCUSSED IN PARA 3.1 OF CIT(A)S ORDER. THE PROVI SION OF SECTION 194C COMES INTO OPERATION ONLY IF THERE EXI STS A CONTRACT OR SUB-CONTRACT BETWEEN THE PAYER AND THE PAYEE. ASSESSEE HAD DENIED THE EXISTENCE OF SUCH A CONTRAC T, BOTH IN RESPECT OF LABOUR PAYMENTS AND PAYMENTS MADE FOR GO ODS VEHICLE RENT. THERE IS NOTHING ON RECORD TO SUGGES T THAT THERE EXISTED A CONTRACT BETWEEN ASSESSEE AND PAYEE. SIN CE, THERE IS NO EXISTENCE OF CONTRACT/SUB-CONTRACT BETWEEN AS SESSEE AND PAYEE, THERE IS NO LIABILITY TO DEDUCT TAX AT SOURC E AND SAME HAS BEEN ALSO NOT APPLICABLE FOR PAYMENTS MADE FOR GOODS ITA NO.2163/AHD/12 A.Y. 05-06 [ITO VS. M/S. K.G.N. CONSTRUCTION] PAGE 4 VEHICLE RENT. ACCORDINGLY, CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION IN QUESTION MADE BY ASSESSING OFFICER IN C OGNIZANCE OF SECTION 40(A)(IA) OF THE ACT. SAME IS UPHELD. 3. AS A RESULT, APPEAL FILED BY REVENUE IS DISMISSE D. PRONOUNCED IN THE OPEN COURT ON THIS THE 22 ND DAY OF JULY, 2016. SD/- SD/- (N. K. BILLAIYA) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBE R AHMEDABAD: DATED 22/07/2016 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE $ %&%'( ) / CONCERNED CIT 4 )- / CIT (A) ,-./00'(1 '( 123& / DR, ITAT, AHMEDABAD 4/5678 / GUARD FILE. BY ORDER / 1 / 2% '( 123&