ACIT, Cuttack V. M/s Utkal Highways, Cuttack

ITA 23/CTK/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61584 (ITAT-CUTTACK)
• Duration Of Justice: 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2012
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 23-05-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 06-01-2012
• Court: TRIBUNAL
• Department Lawyers: AND HAS FILED CROSS O
• Keywords: Additional evidence; Assessment record
• Section: 194C

Judgement Text

IN THE INC O ME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE : SHRI K.K.GUPTA, AM , AND SHRI K.S.S.PRASAD RAO, JM ITA NO. 23/CTK/2012 AND C.O.NO.009/CTK/2012 (ASSESSMENT YEAR 2008 - 09) (C.O.FILED BY THE ASSESSE EP ASST.COMMISSIONER OF INCOME - TAX, CIRCLE 2(1), CUTTACK. VERSUS M/S.UTKAL HIGHWAYS, SRIVIHAR COLOY,TULASIPUR, CUTTACK PAN: AAAFU 845 M (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI M.R.PANIGRAHI, DR FOR THE RESPONDENT SHRI B.PANDA, AR DATE OF H EARING : 23.05.2012 DATE OF PRONOUNCEMENT : 25.06.2012 ORDER SHRI K.S.S.PRASAD RAO, JM : THIS APPEAL IS FILED BY THE DEPARTMENT AND THE ASSESSEE HAS FILED THE CROSS OBJECTION, HAVING BEEN AGGRIEVED BY THE ORDER OF THE COMMISSIONER OF IN COME - TAX (APPEALS) DT.20.10.2011 FOR THE ASSESSMENT YEAR 2008 - 09 IN THE CASE OF THE ASSESSEE. WHEREAS THE ASSESSEE HAS FILED THE CROSS OBJECTION SUPPORTING THE IMPUGNED ORDER OF THE LEARNED CIT(A). 2. THE DEPARTMENT HAS RAISED THE FOLLOWING GROUNDS OF APP EAL. 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION OF 31,20,452 U/S.41(1) OF THE I.T.ACT ON ACCOUNT OF REMISSION OF LIABILITY ON THE GROUND THAT NO SUCH ADDITION CAN BE MADE BY THE A.O. UNLESS THE RE IS CESSATION OF LIABILITY. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN DELETING THE DISALLOWANCE U/S.40(A)(IA) OF 2,56,85,775 MADE BY WRONGLY HOLDING THAT THE PAYMENTS WERE IN THE NATURE OF PAYMENT TO SUB - CON TRACTORS U/S.194C AND NOT RENT PAYMENTS U/S.194I. 3. THE LD. CIT(A) WAS NOT JUSTIFIED TO ADMIT ADDITIONAL EVIDENCES IN THE FORM OF AGREEMENTS WITH THE SO - CALLED SUB - CONTRACTORS WITHOUT AFFORDING AN OPPORTUNITY TO THE A.O. TO EXAMINE THE SAME IN CONTRAVE NTION OF PROVISIONS OF RULE 46A OF THE I.T.RULES,1962 . ITA NO.23/CTK/2012 AND C.O.NO.009/CTK/2012 2 3. THE ASSESSEE HAS FILED THE CROSS OBJECTION SUPPORTING THE IMPUGNED ORDER OF THE LEARNED CIT(A) ON THE FOLLOWING GROUNDS THEREIN . 1. FOR THAT TH E APPEAL FILED BY THE APPELLANT, I.T.DEPARTMENT IS DEVOID OF MERIT AND LIABLE TO BE DISMISSED AND AS SUCH THE SECOND APPEAL IS NOT MAINTAINABLE UNDER THE FACTS AND THE LAW SETTLED SO FAR. 2. FOR THAT, THE ID. CTT (A) HAS RIGHTLY DELETED THE ADDITION OF 31 ,20,452 MADE BY THE L D. AO IN ILLEGAL MANNER THAT THE LIABILITY CAN NOT BE CLAIMED FOR MORE THAN A YEAR. 3. FOR THAT THE ID. CI1A) HAS RIGHTLY DELETED THE ADDITION MADE U/S.4 0 (A ) (IA ) OF THE I. T . ACT SINCE THE LD. A.O. WITHOUT VERIFYING THE DETAILS PR ODUCED AT THE TIME OF ASSESSMENT PROCEEDINGS HAD APP LIED THE PROVISIONS OF SEC.194 - I OF THE I. T . ACT IN THE CASE OF PAYMENTS MADE TO SUB - CONTRACTORS, THUS THE APPEAL FILED SHOULD BE DELETED ENTIRELY. 4. F OR THAT NO ADDITIONAL EVIDENCE WAS FILED WHICH VIOL ATED TO THE PROVISI ON AS ENVISAGED U/R.46A OF THE I. T . RULES BUT THE LD. A.O. WITHOUT ADEQUATE OPPORTU NI TY JUST MADE THE ADDITION IN ILLEGAL MANNER, THEREFORE THE LD. CIT(A) ALLOWED THE APPEAL AFTER BEING SATISFIED AND CONVINCED OVER THE MATTER ALONG WITH THE MATERIALS AVAILABLE AND FACTS OF THE CASE. 4. BOTH THE PARTIES WERE HEARD REGARDING THE ISSUES RAISED IN THE APPEAL AND THEIR LEGAL IMPLICATIONS. 5. ON CAREFUL CONSIDERATION OF THE MATERIAL MADE AVAILABLE TO THE TRIBUNAL AND ANALYZING THE SAME IN THE LIGHT OF THE SUBMISSIONS OF BOTH THE PARTIES, THE UNDISPUTED FACTS RELATING TO THE ISSUES ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE PERIOD UNDER CONSIDERATION SHOWING TOTAL INCOME OF 7,51,830. THIS RETURN WAS SELECTED FOR SCRUTINY AND AFTER ISSUING STATUTORY NOTICES , THE ASSESSING OFFICER COMPLETED THE ASSESSMENT AFTER HEARING THE ITA NO.23/CTK/2012 AND C.O.NO.009/CTK/2012 3 ASSESSEE AND PERUSING THE MATERIAL MADE AVAILABLE BEFORE HIM AND ULTIMATE PASSED THE ASS ESSMENT ORDER ON 7.12.2010 MAKING ADDITION S OF 31,20 ,452 ON ACCOUNT OF HIRING CHARGES NOT TAKEN INTO ACCOUNT , 2,56,85,775 TOWARDS DISALLOWANCE OUT OF HIRING CHARGES. 6. HAVING BEEN AGGRIEVED WITH THE SAID ASSESSMENT, THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A) AND THE LEARNED CIT(A) AFTER HEARING THE ASSESSEE AND PERUSING THE MATERIAL MADE AVAILABLE IN THE ASSESSMENT RECORDS AND TAKING INTO CONSIDERATION THE VIEWS OF THE ASSESSING OFFICER HAS DIRECTED DELETION OF THESE TWO ADDITIONS MADE BY THE ASSESS ING OFFICER. AGGRIEVED BY THIS ORDER OF THE LEARNED CIT(A), THE DEPARTMENT IS IN APPEAL HERE BEFORE THE TRIBUNAL, WHEREAS THE ASSESSEE HAS FILED THE CROSS OBJECTION SUPPORTING THE ORDER OF THE LEARNED CIT(A). 7. DURING THE COURSE OF HEARING, THE LEARNED DR HAS VEHEMENTLY ARGUED THAT THE LEARNED CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITIONS MADE BY THE ASSESSING OFFICER ON THE GROUND THAT HE HAS NOT CONSIDERED THE LATEST DECISIONS ON THE ISSUES ON HAND AND THE LEARNED CIT(A) HAS ADMITTED ADDITIONAL EVIDE NCE BEING THE AGREEMENT ENTERED INTO BY THE ASSESSEE WITH THE SUB - CONTRACTOR WITHOUT PUTTING THE SAME TO THE ASSESSING OFFICER TO HAVE HIS SAY. THEREFORE, THE LEARNED CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITIONS MADE BY THE ASSESSING OFFICER. HE FURTH ER CONTENDED THAT THE CIT(A)S ORDER IS NOT AT ALL SUSTAINABLE FOR LEGAL SCRUTINY AND LIABLE TO SET ASIDE BY ALLOWING THE APPEAL OF THE DEPARTMENT. HE RELIED ON THE DECISIONS OF HONBLE GAUHATI HIGH COURT IN THE CASE OF RANJIT KUMAR CHOUDHURY V . CIT (288 I TR 179), CIT V. PODDAR SWADESH UDYOG (P) LTD., (2 GLR 97) (COPY PRODUCED) AND ALSO THE DECISIONS RENDERED BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT V. VALIMOHMED AHMEDBHAI (134 ITR 214) AND THE IN THE CASE OF CIT V. SHREE MAHALAXMI TRANSPORT C O. (339 ITR 484). ITA NO.23/CTK/2012 AND C.O.NO.009/CTK/2012 4 8. THE LEARNED AR OF THE ASSESSEE, ON THE OTHER HAND, SUPPORTED THE IMPUGNED ORDER OF THE LEARNED CIT(A). 9. ON CAREFUL ANALYSIS OF THE ORDER PASSED BY THE LEARNED CIT(A) IT IS FOUND THAT THE LEARNED CIT(A) HAS CONSIDERED THESE ISSUES IN THE IMPUGNED ORDER THREADBARE WITH REFERENCE TO THE MATERIAL MADE AVAILABLE IN THE ASSESSMENT RECORDS AND TAKING INTO CONSIDERATION THE VIEWS EXPRESSED BY THE ASSESSING OFFICER AND ULTIMATELY CAME TO THE CONCLUSION THAT THE AMOUNT OF 31,20,450 WHICH REBATES TO THE RECEIPTS FROM BALAJI ASSOCIATES. THE ASSESSEE HAS SHOWN A LIABILITY OF 47,81,733 AGAINST THE SAID PARTY WHEREAS THE BALANCE AS ON 31.3.2007 WAS SHOWN AT 16,61,281. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE PARTY HAS I SSUED RECEIPT IN TOKEN OF RECEIVING OF THE AMOUNT AT 31,20,450 WHEREBY THE BALANCE DUE TO THAT PARTY WAS REDUCED TO 16,61,281 AS ON THE END OF THE YEAR I.E., 31.3.2007. HENCE, HE ADDED THE SAID AMOUNT AS RECESSION LIABILITY U/S.41(1) OF THE I.T.ACT. BUT THE LEARNED CIT(A) AFTER CONSIDERING THE DECISION OF HONBLE SUPREME COURT RENDERED IN THE CASE OF CIT V. SUGAULI SUGAR WORKS (P) LTD., (236 ITR 518) AND THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE CIT V. SILVER COTTON MILLS CO. LTD. [254 ITR 72 8 (GUJ)] HAS COME TO THE CONCLUSION THAT UNLESS THERE IS A CESSATION OF LIABILITY, INCOME CANNOT BE ADDED AS PER THE PROVISIONS OF SECTION 41(1) OF THE I.T.ACT. SINCE THE CIT(A) HAS RENDERED HIS DECISION FOLLOWING THE ABOVE TWO DICTUMS OF HONBLE SUPREME C OURT AND HONBLE GUJRAT HIGH COURT, WE FIND THAT THERE IS NO INFIRMITY IN THE ORDER OF THE LEARNED CIT(A) IN DIRECTING DELETION OF THE SAID ADDITION OF 31,20,452 MADE U/S.41(1) OF THE I.T.ACT, 1961. THEREFORE, WE UPHOLD THE SAME BY FINDING THE ISSUE RAISE D BY THE DEPARTMENT IN THIS REGARD AS DEVOID OF MERIT. 10. NOW COMING TO THE OTHER ISSUE I.E., DELETION OF THE DISALLOWANCE OF 2,56,85,775 MADE BY THE ASSESSING OFFICER U/S.40(A)(IA) OF THE I.T.AT,1961, ITA NO.23/CTK/2012 AND C.O.NO.009/CTK/2012 5 THE ASSESSING OFFICER HAS FOUND THAT THE ASSESSEE IS CARRYING OUT CONTRACT WORKS AND ALSO GIVING SUB - CONTRACTS ALSO. IN ITS COURSE OF BUSINESS, THE ASSESSEE HAS ASSIGNED SUB - CONTRACT TO SOME CONTRACTORS AND AGAINST SUCH CONTRACT THE ASSESSEE HAD DEDUCTED 1% OF TDS U/S.194C OF THE I.T.ACT, WHICH THE ASSESSIN G OFFICER OBSERVED AS NOT CORRECT AND HE CAME TO THE CONCLUSION THAT DEDUCTION MUST BE @10% HOLDING THAT THE MACHINERIES HAVE BEEN USED ON HIRE BASIS WHICH IS EXGIIBEL TO TDS @10% U/S.194I OF THE I.T.ACT. THUS, HE MADE THE DISALLOWANCE OF 2,56,85,775 U/S.40(A)(IA) OF THE I.T.ACT. WHILE CONSIDERING THIS ISSUE, THE LEARNED CIT(A) HAS OBSERVED IN PARAGRAPH 5.1 OF HIS ORDER THAT THE EXPRESSION OF SECTION 194C DEFINES THAT FOR CARRYING ON ANY WORK INCLUDES THE USE OF LABOUR, TRANSPORTATION AND OTHER MISCELLANEOUS ACTIVITIES JOINTLY TAKEN UP FOR COMPLETION OF THE WORKS. THAT BEING SO HE OPINED THAT THE DEDUCTION OF 1% TDS MADE BY THE ASSESSEE U/S.194C OF THE I.T.ACT IS VERY MUCH RIGHT AND THE OTHER VIEW TAKEN BY THE ASSESSING OFFICER IS INCORRECT AND HENCE, HE DIRECTED DELETION OF THE DISALLOWANCE AFTER CONSIDERING THE SUB - CONTRACT AGREEMENT MODEL WHICH WAS PRODUCED BEFORE HIM BY THE ASSESSEE. IT IS NOT THE CASE OF THE DEPARTMENT THAT THIS AGREEMENT MODEL WAS NOT BEFORE THE ASSESSING OFFICER AT THE TIME OF ASSESSMENT AND IT IS FOR THE DEPARTMENT TO ESTABLISH THIS FACT WHEN IT IS CONTENDING THAT THIS IS A NEW AND ADDITIONAL EVIDENCE PRODUCED BY THE ASSESSEE BEFORE THE LEARNED CIT(A) OF WHICH NO NOTICE WAS GIVEN TO THE ASSESSING OFFICER BY THE CIT( A) TO HAVE HIS SAID ON SUCH AGREEMENT. BUT BEFORE THE TRIBUNAL THE DEPARTMENT IS MERELY CONTENDING THAT IT WAS ADDITIONAL EVIDENCE BUT WITHOUT ESTABLISHING AS TO HOW THE SAME IS ADDITIONAL EVIDENCE. THEREFORE, THE GROUND TAKEN BY THE DEPARTMENT IS FOUND NO T ESTABLISHED AND HENCE, THE ISSUE RAISED BY THE DEPARTMENT IS FOUND DEVOID OF MERIT AND HENCE, THE SAME IS HEREBY DISMISSED. ACCORDINGLY THE DECISION GIVEN BY THE LEARNED CIT(A) IN DIRECTING ITA NO.23/CTK/2012 AND C.O.NO.009/CTK/2012 6 THE DELETION OF THE ADDITION OF 2,56,85,7875 MADE BY THE ASSESS ING OFFICER U/S.40(A)(IA) IS PERFECTLY VALID AND NOT INFIRMED IN ANY WAY. 11. SINCE THE ASSESSEE IN ITS CROSS OBJECTION HAS ONLY SUPPORTED THE IMPUGNED ORDER PASSED BY THE LEARNED ASSESSING OFFICER AND IN VIEW OF OUR UPHOLDING THE IMPUGNED ORDER OF THE LEA RNED CIT(A), THE CROSS OBJECTION FILED BY THE ASSESSEE IS DISPOSED OF ACCORDINGLY. 12. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED AND THE C.O. FILED BY THE ASSESSEE IS DISPOSED OF ACCORDINGLY. SD/ - SD/ - (K.K.GUPTA) ACCOUNTANT MEMBER ( K.S.S.PRASAD RAO) JUDICIAL MEMBER DATE: 25.06.2012 H.K.PADHEE, SENIOR PRIVATE SECRETARY. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT: ASST.COMMISSIONER OF INCOME - TAX, CIRCLE 2(1), CUTTACK 2. THE RESPONDENT: M/S.UTKAL HIGHWAYS, SRIVIHAR COLOY,TULASIPUR, CUTTACK PAN: AAAFU 845 M 3. THE CIT, 4. THE CIT(A), 5. THE DR, CUTTACK 6. GUARD FILE (IN DUPLICATE) TRUE COPY, BY ORDER, S ENIOR PRIVATE SECRETARY. APPENDIX XVII SEAL TO BE AFFIXED ON THE ORDER SHEET BY THE SR. P.S./P.S. AFTER DICTATION IS GIVEN 1. DATE OF DICTATION 07.06.2012 .. 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 08.06.2012 OTHER MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.... 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S . 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER ................ 9. DATE OF DESPATCH OF THE ORDER ..