SHRI RAGHUVEER SHARAN GUPTA, Jaipur V. ADD. CIT, Jaipur

ITA 247/JPR/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70125 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 15-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K KHANDELWAL
• Assessee Lawyers: TANUJ AGARWAL
• Section: 143(3); 194C

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH, JAIPUR (BEFORE SHRI B.R. JAIN AND SHRI KUL BHARAT) ITA NO. 247/JP/2012 ASSESSMENT YEAR : 2007-08 PAN: ABUPG 9396 A SHRI RAGHUVEER SHARAN GUPTA VS. THE ADDL. CIT R-1, BEHIND MOTOR AIDS PETROL PUMP RANGE-1 SHASTRI NAGAR, JHOTWARA ROAD, JAIPUR JAIPUR (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI TANUJ AGARWAL DEPARTMENT BY: SHRI A.K. KHANDELWAL DATE OF HEARING: 22-08-2013 DATE OF PRONOUNCEMENT: 23-08-2013 ORDER PER KUL BHARAT, JM:- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE LD. LD. CIT(A) -III, JAIPUR DATED 23-12-2011 FOR THE ASSESSMENT YEAR 2 007-08 WHEREIN THE ASSESSEE HAS RAISED THE SOLITARY GROUND AS UNDER:- THE MACHINERY WAS NOT TAKEN ON HIRE BUT SOME EXCA VATION WORK WAS GOT DONE FROM MAHA LAXMI CONSTRUCTION CO. AND S HRI SHYAM EARTH MOVERS WHO DID IT WITH THEIR MACHINERY PROVIDING T HEIR OWN STAFF INCLUDING EXPENDITURE ON DIESEL ETC. THE EXCAVATION WORK WAS GONE BY THEM AS SUB-CONTRACTOR. DEDUCTION OF TAX U/S 194C W AS REQUIRED TO BE MADE WHICH WAS DONE. DEDUCTION OF TAX U/S 194 I OF THE I.T. ACT WAS NOT REQUIRED TO BE MADE. THUS THE LD. CIT(A) HAS ERRED IN APPLYING SECTION 194 I OF THE I.T. ACT AND CONFIRMING ADDITION OF RS . 2,56,397/- U/S 40(A)(IA) OF THE I.T. ACT WHICH MAY KINDLY BE DELET ED. 2.1 BRIEFLY, THE FACTS STATED ARE THAT THE CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S 143(3) OF THE INC OME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT) WAS FRAMED BY THE AO VIDE ORDER DATED 17-11-2009 DETERMINING 2 THE INCOME AT RS. 2,56,397/-. WHILE FRAMING THE AS SESSMENT, THE AO MADE ADDITION OF RS. 2,56,397/- U/S 40(A)(IA) OF THE ACT. AGAINST TH E ORDER OF THE AO, THE FILE AN APPEAL BEFORE THE LD. CIT(A) WHO AFTER CONSIDERING THE SUB MISSIONS OF THE ASSESSEE PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 2.2 NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBU NAL AGAINST THE ORDER OF THE LD. CIT(A). 2.3 DURING THE COURSE OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN MAKING ADDI TION BY INVOKING THE PROVISION OF SECTION 40(A)(IA) OF THE ACT. HE SUBMITTED THAT THE AO ESTIMATED THE PROFIT BY REJECTING THE BOOKS OF ACCOUNT OF THE ASSESSEE. HE SUBMITTED THAT WHEN THE ADDITION HAS BEEN MADE ON ESTIMATE BASIS THEN THERE WAS NO OCCASION TO MAK E FURTHER ADDITION U/S 40(A)(IA) OF THE ACT. IN SUPPORT OF HIS CONTENTIONS, THE HE RELIED U PON THE DECISION OF HON'BLE ANDHRA PRADESH HIGH COURT RENDERED IN THE CASE OF INDWELL CONSTRUCTIONS VS. CIT, (1998) 232 ITR 776 (ANDHRA). HE SUBMITTED THAT EVEN OTHERWISE ALSO, THE ASSESSEE HAD DEDUCTED TAX U/S 194 C OF THE ACT AND THE CASE OF THE AO IS THAT THE TAX WAS REQUIRED TO BE DEDUCTED U/S 194 I OF THE ACT. HE SUBMITTED THAT SUCH FINDING OF THE AO IS NOT CORRECT. IT CAN BE SEEN FROM THE FACTS OF THE PRESENT CASE THAT TAX WAS REQ UIRED TO BE DEDUCTED U/S 194C OF THE ACT BEING THE CONTRACT PAYMENT. THE LD. COUNSEL FOR TH E ASSESSEE PLACED RELIANCE OF HON'BLE CALCUTTA HIGH COURT RENDERED IN THE CASE OF CIT VS. S.K. TEKRIWAL, 90 DTR 26. 2.4 THE LD. DR SUPPORTED THE ORDERS OF THE AUTHORIT IES BELOW. THE LD. DR SUBMITTED THAT EVERY CASE WOULD HAVE THIS KIND OF EXCUSE THAT TAX HAS BEEN DEDUCTED, ALTHOUGH BY APPLYING THE WRONG PROVISION AND DEDUCTING OF LESSE R TAX YET PROVISION OF SECTION 40(A)(IA) OF THE ACT CANNOT BE INVOKED. HE SUBMITTE D THAT AS PER DECISION OF HON'BLE CALCUTTA HIGH COURT, THE ASSESSEE IS REQUIRED TO DE MONSTRATE ITS BONA FIDE IMPRESSION THAT 3 THAT WAS REQUIRED TO BE DEDUCTED UNDER THE PROVISIO N WHICH HE HAS ACTUALLY DEDUCTED THE TAX. 2.5 WE HAVE HEAD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD. SO FAR THE CONTENTION OF THE LD. COUNSEL FOR THE ASSE SSEE THAT ADDITION HAS BEEN MADE ON THE BASIS OF ESTIMATION OF PROFIT, THE PROVISION OF SEC TION 40(A)(IA) CANNOT BE INVOKED. WE DO NOT FIND MERIT IN SUCH CONTENTION OF THE LD. COUNSE L FOR THE ASSESSEE SINCE THE PROVISION OF SECTION 40(A)(IA) OF THE ACT ARE INVOKED DUE TO FAI LURE ON THE PART OF THE ASSESSEE TO DEDUCT THE TAX IN ACCORDANCE WITH THE PROVISION OF THE ACT. THEREFORE, IN OUR CONSIDERED VIEW, EVEN IF PROFIT HAS BEEN ESTIMATED BY THE AO, THERE IS NO BAR THAT HE CANNOT INVOKED THE PROVISION OF SECTION 40(A)(IA) OF THE ACT. WE A LSO DO NOT FIND MERIT IN THE CONTENTION OF THE LD. CIT(A) THAT CASE IN THE HAND, THE ASSESS EE HAS FAILED TO DEMONSTRATE THE BONA FIDE IMPRESSION. UNDISPUTEDLY, THE CONTENTION OF TH E ASSESSEE IS THAT THE ASSESSEE IS A CONTRACTOR AND DURING THE YEAR UNDER CONSIDERATION THE CONTRACT OF LAYING SEWERAGE LINE CHAMBER WAS AWARDED BY THE JDA. TO EXECUTE THE CONT RACT OF LAYING THE SEWERAGE LINE CHAMBER, THE ASSESSEE FURTHER SUB-CONTRACTED THE WO RK OF SOIL EXCAVATION AND SOIL FILLING TO M/S. MAHA LAXMI CONSTRUCTION CO. AND SHRI SHYAM EARTH MOVERS. THESE SUB- CONTRACTORS EXECUTED THE ASSIGNED WORK BY USING THE IR JCB MACHINES AND ITS OPERATORS AND ALSO THEMSELVES INCURRED THE EXPENSE ON FUEL, R EPAIRING AND MAINTENANCE OF JCB MACHINES. THE ASSESSEE NEITHER HAD POSSESSION NOR H AD ANY CONTROL ON JCB MACHINES. THE CONTENTION OF THE ASSESSEE WAS NOT ACCEPTABLE T O THE AUTHORITIES BELOW. AFTER CONSIDERING ALL THE ASPECTS OF THE MATTER, WE ARE O F THE VIEW THAT THE RATIO LAID DOWN BY THE HON'BLE CALCUTTA HIGH COURT RENDERED IN THE CA SE OF CIT VS. S.K. TEKRIWAL (SUPRA) IS APPLICABLE ON THE FACTS OF THE PRESENT CASE WHEREIN THE HON'BLE HIGH COURT HELD THAT THE CONDITIONS LAID DOWN U/S 40(A)(IA) OF THE ACT FOR M AKING ADDITION IS THAT TAX IS DEDUCTIBLE 4 AT SOURCE AND SUCH TAX HAS NOT BEEN DEDUCTED. IF BO TH THE CONDITIONS ARE SATISFIED THEN SUCH PAYMENT CAN BE DISALLOWED U/S 40(A)(IA) OF THE ACT BUT WHERE TAX IS DEDUCTED BY THE ASSESSEE, EVEN UNDER BONA FIDE WRONG IMPRESSION, UN DER WRONG PROVISIONS OF TDS, THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT CANNOT B E INVOKED. HENCE, IN THIS VIEW OF THE MATTER, THIS GROUND OF APPEAL OF THE ASSESSEE IS AL LOWED. 3.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23-08-2013 . SD/- SD/- (B.R. JAIN) (KUL BHARAT) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR DATED: 23 RD AUG, 2013 *MISHRA COPY FORWARDED TO:- BY ORDER 1. SHRI RAGHUVEER SHARAN GUPTA, JAIPUR 2. THE ADDL. CIT , RANGE-1, JAIPUR . 3. THE LD. CIT, (A) 4. THE LD. CIT 5. THE LD. DR 6. THE GUARD FILE (IT NO.247/JP/12 ) A.R. ITAT: JAIPUR 5 6