Tarun Chakraborty, Kolkata V. ACIT, Circle - 33, Kolkata, Kolkata

ITA 244/KOL/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0958 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 8 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 18-02-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ARINDAM BHATTACHARJEE
• Assessee Lawyers: A K SARANGI
• Keywords: Non-deduction of tax
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : KOLKATA [BEFORE HONBLE SHRI M.BALAGANESH, AM & SHRI S.S. VISWANETHRA RAVI, JM] I.T.A NO. 244/KOL/201 6 ASSESSMENT YEAR : 2010-1 1 TARUN CHAKRABORTY -VS- ACIT, CIRCLE-33 , KOLKATA [PAN: AEAPC 7947 J] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI A.K. SARANGI, ADVOCATE FOR THE RESPONDENT : SHRI ARINDAM BHATTACHARJ EE, ADDL. CIT DATE OF HEARING : 14.11.2017 DATE OF PRONOUNCEMENT : 14 .11.2017 ORDER PER M.BALAGANESH, AM 1. THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE O RDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-9, KOLKATA [IN SHORT THE LD CIT (A)] IN APPEAL NO.58/CIT(A)- 9/CIR-33/2014-15/KOL DATED 07.01.2016 AGAINST THE ORDER PASSED BY THE ACIT, CIRCLE- 33, KOLKATA [ IN SHORT THE LD AO] UNDER SECTION 143 (3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 11.03.2013 FOR THE ASSESSM ENT YEAR 2010-11. 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS A S TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN UPHOLDING THE DISALLOWANCES MADE U/S 4 0A(IA) OF THE ACT IN THE SUMS OF RS. 9,75,970/- TOWARDS PAYMENTS MADE TO CONSULTANTS AND OTHERS AND RS. 10,04,895/- TOWARDS PAYMENTS MADE TO LABOURERS, IN THE FACTS AN D CIRCUMSTANCES OF THE CASE. 2 ITA NO.244/KOL/2016 TARUN CHAKRABORTY A.YR.2010-11 2 3. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSESS EE IS AN INDIVIDUAL DOING HIS BUSINESS AS A GOVERNMENT AND CIVIL ELECTRICAL CONTRACTOR FOR SE VERAL YEARS. THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2010-11 WAS FILED BY THE A SSESSEE ON 30.09.2010 DISCLOSING TOTAL INCOME OF RS. 23,80,363/-. THE LD. AO DURING THE COURSE OF SCRUTINY PROCEEDINGS OBSERVED THAT THE ASSESSEE FURNISHED THE DETAILS AN D EVIDENCES THAT WERE CALLED FOR AND HAD ALSO PRODUCED BOOKS OF ACCOUNTS PARTIALLY AND H AD ALSO FURNISHED THE ENTIRE BANK STATEMENTS, WHICH WERE EXAMINED AND TEST CHECKED BY THE LD. AO. THE LD. AO OBSERVED FROM THE PROFIT AND LOSS ACCOUNT THAT THE ASSESSEE HAD MADE THE FOLLOWING PAYMENTS WITHOUT DEDUCTION OF TAX AT SOURCE. NAME OF PARTY NATURE OF PAYMENT SECTION AMOUNT 1.A.K. SARANGI ACCOUNTING CHARGE 194 J 35,000/- 2. DEV & CO. AUDIT CHARGE 194 J 50,000/- 3. A.K. SARANGI CONSULTANCY FEES 194 J 1,00,000/- 4. VARIOUS PARTIES (PAID EACH TO ABOVE RS. 2,500/-) COMMISSION 194 H 5,10,000/- 5. HARI RAM NISHAD/PACHANAN TRANSPORT TRANSPORT 194 C 1,20,970/- TOTAL AMOUNT 9,75,970/- FOR WANT OF SATISFACTORY EXPLANATION WITH DOCUMENTA RY EVIDENCES THE LD. AO DISALLOWED THE SUM OF RS. 9,75,970/- AS ABOVE U/S 4 0A(IA) OF THE ACT. 3.1. THE LD. AO OBSERVED FROM THE PROFIT AND LOSS A CCOUNT THAT THE ASSESSEE HAD MADE PAYMENT OF LABOUR CHARGES TO THE FOLLOWING PARTIES WITHOUT DEDUCTION OF TAX AT SOURCE. 3 ITA NO.244/KOL/2016 TARUN CHAKRABORTY A.YR.2010-11 3 NAME OF PARTY SECTION AMOUNT REMARKS 1.SWARUP SINHA 194C 64,520/- 2. AMAL ELECTRIC 194C 64,520/- 3. MADAN BARUI 194C 78,450/- 4. A.R. ENTERPRISE 194C 70,800/- 5. GANESH MAJEE 194C 1,54,000/- 6. SAJAY SINGH 194C 74,311/- 7. ZAKIR HOSSAIN 194C 69,000/- 8. METRO ELECTRIC & ENGG. WORK 194C 73,000/- 9. S.P. ENTERPRISE 194C 95,000/- 10. POPULAR ENTERPRISE 194C 1,08,163/- 11. PAUL ELECTRIC 194C 1,53,131/- TOTAL AMOUNT 10,04,895/- FOR WANT OF SATISFACTORY EXPLANATION WITH DOCUMENT ARY EVIDENCES THE LD. AO DISALLOWED THE SUM OF RS. 10,04,895/- AS ABOVE U/S 40A(IA) OF THE ACT. 4. BEFORE THE LD. CIT(A), THE ASSESSEE GAVE DETAILE D EXPLANATION WITH REGARD TO EACH AND EVERY PAYMENT OF LABOUR CHARGES FOR EACH PARTY AND ALSO PAYMENT OF CONSULTANCY AND AUDIT FEES CHARGES TO EACH PARTY. THE LD. CIT(A ) DID NOT APPRECIATE THE SAID EXPLANATION AND UPHELD THE DISALLOWANCES MADE BY TH E LD. AO. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS: 1. THE LD. CIT(APPEALS)-9, KOLKATA RS. 9,75,970/- O N ACCOUNT OF PAYMENTS MADE TO CONSULTANTS AUDITORS AND ALSO TO SOME SMALL PART IES WHO ARE NOT IN THE MOTHER ORGANIZATION, THE PAYMENTS HAVE BEEN MADE FOR AND O N BEHALF OF THE SISTER ORGANIZATION ALSO. 2. THE LD. CIT(APPEALS)-9, KOLKATA HAD ADDED 10,04, 895/- FOR NON-DEDUCTION OF TDS FROM THE PAYMENT TO LABOURS. SINCE, A LARGE NUM BER OF WORKERS ARE INVOLVED FOR THE JOB, THE PAYMENTS ARE MADE INDIVIDUALLY TO WORKERS IN SMALL AMOUNTS BUT TO REDUCE THE ACCOUNTING ENTRIES THE PAYMENTS ARE S HOWN IN THE NAME OF THEIR 4 ITA NO.244/KOL/2016 TARUN CHAKRABORTY A.YR.2010-11 4 SARDERS. THE ADDITION OF SUCH A BIG AMOUNT ON GROUN D OF NON-DEDUCTION OF TDS SHOULD PLEASE BE DELETED. THE APPELLANT CRAVES LEAVE TO ALTER, AMEND AND/TO M ODIFY THE GROUND OF APPEAL BEFORE OR AT THE TIME OF HEARING AND ALSO TO ADDUCE SUCH OTHER OR FURTHER EVIDENCES AS THE APPELLANT MAY BE ADVISED AT THE TI ME OF HEARING. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND THA T THE DISALLOWANCE OF EXPENSES HAS BEEN MADE ONLY ON ACCOUNT OF NON-DEDUCTION OF TAX A T SOURCE U/S 40A(IA) OF THE ACT. DURING THE COURSE OF HEARING, BOTH THE PARTIES AGRE ED FOR REMANDING OF THIS APPEAL TO THE FILE OF THE LD. AO TO DECIDE THE APPEAL IN ACCORDAN CE WITH 2 ND PROVISO TO SECTION 40A(IA) OF THE ACT. WE FIND THAT THE 2 ND PROVISO TO SECTION 40A(IA), THOUGH INTRODUCED W.E.F. 01.04.2012, HAS BEEN HELD TO BE RETROSPECTIV E IN OPERATION BY THE DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF PR. CIT VS. TIRUPATI CONSTRUCTION IN GA NO. 2146 OF 2016 WITH ITAT NO. 287 OF 2016 DATED 23.08. 2016. WE ALSO FIND THAT THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ANS AL LAND MARK TOWNSHIP PVT. LTD. REPORTED IN 377 ITR 635 (DEL) HAD HELD THE SAME. IN VIEW OF THE 2 ND PROVISO TO SECTION 40A(IA) OF THE ACT READ WITH SECTION 201 OF THE ACT , WE DEEM IT FIT AND APPROPRIATE TO REMAND THIS APPEAL TO THE FILE OF THE LD. AO WITH T HE FOLLOWING DIRECTIONS: (I) THE ASSESSEE HAS TO PRODUCE THE EVIDENCES TO TH E EFFECT THAT THE RECIPIENTS OF THE PAYMENTS MADE BY THE ASSESSEE HAD INDEED DECLARED SUBJECT MENTIONED PAYMENT IN THEIR RESPECTIVE RETURNS OF INCOME. (II) IN CASE, IF THE ASSESSEE IS NOT ABLE TO PROVI DE THE SAME, THE LD. AO IS DIRECTED TO ASCERTAIN THE SAID FACTS IN THE PROCESS KNOWN TO LA W. (III) IN CASE, IF THE SUBJECT MENTIONED RECIPIENTS ARE NOT LIABLE FOR TAXATION, ON SATISFACTORY ASCERTAINMENT OF THIS FACT, THE LD. A O IS DIRECTED TO DECIDE THE ISSUE. WE FURTHER DIRECT THAT IF ANY OR ALL OF THE AFORESA ID CONDITIONS WERE SATISFIED, THEN THERE COULD BE NO DISALLOWANCE U/S 40A(IA) OF THE A CT IN THE HANDS OF THE ASSESSEE. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 5 ITA NO.244/KOL/2016 TARUN CHAKRABORTY A.YR.2010-11 5 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 14.11.2017 SD/- SD/- [S.S. VISWANETHRA RAVI] [ M.BALAGA NESH ] JUDICIAL MEMBER ACCOUNTANT MEM BER DATED : 14.11.2017 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. TARUN CHAKRABORTY, 9/C, SANTOSH ROY ROAD, BARISH A, KOLKATA-700008 2. ACIT, CIRCLE-33, KOLKATA, 10B, MIDDLE TON ROW, K OLKATA-71. 3..C.I.T.- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S