Shri Bharat Dhanpal Patil, Sindhudurg V. Deputy Commissioner of Income-tax, Circle-2 , Kolhapur

ITA 22/PUN/2019

AI Insights

The case involves Shri Bharat Dhanpal Patil, a civil contractor, who appealed against the order of the Commissioner of Income Tax (Appeals) - 2, Kolhapur, which confirmed the additions made by the AO for the assessment year 2010-11. The additions pertained to labor charges paid to Malati V. Deshpande and Sumati D. Patil, and supervision charges totaling Rs.5,51,350. The AO and CIT(A) disallowed these expenses on grounds of insufficient evidence to substantiate their business purpose, despite the payments being made through bank transactions and TDS deductions. The Tribunal upheld the lower authorities' decisions, noting the lack of detailed evidence and the improbability of the assessee's claims given the nature of the transactions and the absence of proper documentation.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 132961 (ITAT-PUNE)
• Duration Of Justice: 14 year(s) 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 11-10-2022
• Assessment Year: misc
• Appeal Filed On: 07-12-2007
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: TDS
• Section: 40A(3)

Judgement Text

आयकर अपीलीय अधिकरण “ए” न्यायपीठ पुणे में । IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, PUNE BEFORE SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER AND SHRI G.D. PADMAHSHALI, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No.22/PUN/2019 निर्ाारण वर्ा / Assessment Year : 2010-11 Shri Bharat Dhanpal Patil, Ratnadeep Shramvihar Hsg. Society, Jail Road, Sawantwadi, Distt.-Sindhudurg PAN : ABKPP3371Q .......अपीलार्थी / Appellant बिाम / V/s. Dy. Commissioner of Income Tax, Circle – 2, Kolhapur ......प्रत्यर्थी / Respondent Assessee by : Shri M.K. Kulkarni Revenue by : Shri Ramnath P. Murkunde सुिवाई की तारीख / Date of Hearing : 12-10-2022 घोर्णा की तारीख / Date of Pronouncement : 17-11-2022 आदेश / ORDER PER S.S. VISWANETHRA RAVI, JM : This appeal by the assessee against the order dated 26-11-2018 passed by the Commissioner of Income Tax (Appeals)-2, Kolhapur [‘CIT(A)’] for assessment year 2010-11. 2. Ground Nos. 1 and 5 raised by the assessee are general in nature, hence, require no adjudication. 2 ITA No. 22/PUN/2019, A.Y. 2010-11 3. Ground Nos. 2 and 3 raised by the assessee challenging the action of CIT(A) in confirming the addition made on account of payment of labour charges paid to Malati V. Deshpande and Sumati D. Patil. 4. Heard both the parties and perused the material available on record. We note that during the assessment proceedings, the AO found that the assessee inflated expenditure without obtaining bills. The summon u/s. 131 of the Act was issued to Malati V. Deshpande for verification of genuineness of labour charges of Rs.7,25,000/-. The said Malati V. Deshpande did not attend before the AO, but however, made submission stating her inability to attend his office being old age suffering from knee problem. As it is emanating from the assessment order that she filed copy of computation, on an examination of said computation of income, the AO opined that she has not offered any contractual receipt in her return of income and rejected the contention of the assessee the payment of labour charges to the said Malati V. Deshpande. In respect of other addition of Rs.7,50,000/- regarding labour contractor i.e. Sumati D. Patil appeared before the AO and answered each and every objections queries raised by the AO in respect of providing labour for loading/unloading of metal stone from stone crusher to the site of work except the name of the site, number of work supplied etc. According to the AO that she did not maintain any books, bills/vouchers and no return of income file. The AO treated her as that she was not engaged in such providing labour and payment shown by the assessee held as non-business purpose. 5. The AO added the said two amounts of the total income of the assessee. We note that the CIT(A) discussed the issue on hand at para 6.2 of the impugned order. It was contended before the CIT(A) all the payments to the said two persons were paid through bank by making TDS. 3 ITA No. 22/PUN/2019, A.Y. 2010-11 The said two persons confirmed work done for the assessee and filed return of income. It is also contested that the said amounts were transferred through State Bank of India, Sawantwadi Branch and the AO examined the same. The CIT(A) confirmed the order of AO for not providing sufficient details or even any details regarding the labour charges. We note that admittedly, the assessee is a Civil Contractor and undertaken contract work from PWD, Zila Parishad, Municipalities, MIDC and State transport during the year under consideration, it is not disputed by both the authorities below as it was stated before the CIT(A) as well as the AO. We note that both the authorities below disallowed the said amounts only on the ground that they disbelieved the contention of the assessee. Admittedly, all the details relating to the said payments pertaining to the assessee, Malati V. Deshpande and Sumati D. Patil were not furnished before the assessment proceedings as well as in the First Appellate proceedings, even actual performance of road construction work for Government Department. It is also not disputed that furnishing of PAN, copies of Income Tax Return of Malati V. Deshpande before the AO. Both the authorities below examined all the said details but however rejected the same for not having sufficient evidences. Admittedly, the Malati V. Deshpande did not appear before the AO and the AO held that she did not offer the labour payment receipt in her return of income. There was no evidence to show the same has been recognized in the account of Malati V. Deshpande brought on record by the assessee. Therefore, we find no infirmity in the order of CIT(A) in confirming the additions made by the AO on account of labour charges paid to labour contractors to Malati V. Deshpande and Sumati D. Patil. Thus, ground Nos. 2 and 3 raised by the assessee are dismissed. 4 ITA No. 22/PUN/2019, A.Y. 2010-11 6. Ground No. 4 raised by the assessee challenging the action of CIT(A) in confirming the disallowance of Rs.5,51,350/- paid on account of supervision charges. 7. The AO asked the assessee details of supervision charges during the course of assessment proceedings. The assessee submitted chart of payment made towards supervision charges. According to the AO that the assessee conveniently paid supervision charges to each person below Rs.20,000/- and the said payment made to various persons i.e. 36 persons. The assessee stated on every work site of road construction a responsible person is required to look after the work done, to locate and provide the required material for labour, service, transport, vehicle etc. The duty of the said supervisor to get the work done in the proper manner and time. The work sites of assessee are located at various places and the assessee appointed suitable supervisor at such various places and paid depending on the duration/quantum of work to the said 36 persons. According to the AO, there were no such sites where the assessee is carried out by the assessee and for not giving reasons for discontinuation of each person every time, to avoid the TDS provisions made supervision charges to every person below Rs.20,000/-. The CIT(A) observed that no details of sites and evidences regarding employing such persons on regular basis were furnished by the assessee. The said payments were made in vouchers prepared by the assessee and for not establishing the nature of work the CIT(A) confirmed the order of AO. We note that the assessee did not file any evidences rebutting the finding of AO and the CIT(A) before this Tribunal. The assessee filed written submissions before the CIT(A) inter alia stating that the receipts under the contract works is of Rs.9,00,00,000/- and supervision charges paid to 36 persons on different sites required to be allowed on the basis of above said work done involving 5 ITA No. 22/PUN/2019, A.Y. 2010-11 Rs.9,00,00,000/-. The AO and the CIT(A) was of the opinion that the assessee made these payments only to avoid TDS as well as rigors of the provisions u/s. 40A(3) of the Act and no evidences showing establishing the assessee paid such amount to 36 persons on different locations. Therefore, as discussed above, we find no evidences in respect of the contention raised by the assessee before the AO and the CIT(A) even before in support of grounds raised in Form No. 36. Therefore, we find no infirmity in the order of CIT(A) in confirming the addition made on account of supervision charges. Thus, ground No. 4 raised by the assessee fails and it is dismissed. 8. In the result, the appeal of assessee is dismissed. Order pronounced in the open court on 17 th November, 2022. Sd/- Sd/- (G.D. Padmahshali) (S.S. Viswanethra Ravi) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे / Pune; ददिांक / Dated : 17 th November, 2022. रवि आदेश की प्रनतनलनप अग्रेनर्त / Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant. 2. प्रत्यर्थी / The Respondent. 3. The CIT(A)-2, Kolhapur 4. The Pr. CIT-1, Kolhapur 5. नवभागीय प्रनतनिनर्, आयकर अपीलीय अनर्करण, “ए” बेंच, पुणे / DR, ITAT, “A” Bench, Pune. 6. गार्ा फ़ाइल / Guard File. //सत्यानपत प्रनत// True Copy// आदेशािुसार / BY ORDER, िररष्ठ विजी सविि / Sr. Private Secretary आयकर अपीलीय अविकरण ,पुणे / ITAT, Pune