The ITO, Ward-5(4), Baroda V. M/s. S.R. Suppliers & Commission Agent, Baroda

ITA 2594/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6598 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 03-05-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 16-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G M CHAUHAN
• Assessee Lawyers: S N L AGARWAL
• Keywords: Additional evidence
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C BEFORE SHRI G.D. AGARWAL, VICE-PRESIDENT (AZ) AND SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER DATE OF HEARING : 3/5/11 DRAFTED ON:3/5/11 ITA NO.2594/AHD/2009 ASSESSMENT YEAR : 2006-07 INCOME TAX OFFICER WARD-5(4) BARODA VS. M/S.S.R. SUPPLIERS & COMMISSION AGENT KALEDIA TAL.SANKHEDA, DIST. BARODA PAN/GIR NO. : AAVFS 4522 N (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI G.M. CHAUHAN, SR. D.R. RESPONDENT BY: SHRI S.N.L.AGARWAL O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE REVENUE WH ICH HAS EMANATED FROM THE ORDER OF LEARNED CIT(APPEALS)-V B ARODA DATED 29.06.2009 PASSED FOR ASSESSMENT YEAR 2006-07. 2. GROUND NO.1 READS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.42,93,175/- MA DE BY THE A.O. U/S.40(A) (IA) AFTER ADMITTING FRESH EVIDENCE DURIN G THE APPEAL PROCEEDINGS WITHOUT AFFORDING THE OPPORTUNITY TO TH E ASSESSING OFFICER WHICH IS IN CONTRAVENTION TO RULE 46A(3) OF THE I.T . RULES 1962. 2.1. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDI NG ASSESSMENT ORDER PASSED U/S.143(3) OF THE I.T. ACT, 1961 DATED 16/ 12/2008 WERE THAT THE ITA NO. 2594/AHD/2009 ITO VS. M/S.S.R. SUPPLIERS & COMMISSION ASST.YEAR - 2006-07 - 2 - ASSESSEE-FIRM IS IN THE BUSINESS OF TRADING OF COTT ON SEEDS. THE FIRM IS ALSO PROVIDING LABOUR TO COTTON CORPORATION OF INDI A AND EARNING LABOUR CHARGES. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE HAS INFORMED THAT THE LABOUR IS REQUIRED FOR SORTING OF COTTON. IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS SHOW N LABOUR CHARGES AT RS.44,16,785/- IT WAS ALSO COMMENTED BY THE ASSESS ING OFFICER THAT PAYMENT MADE UNDER THE HEAD LABOUR EXPENSES WAS I N CASH ON VARIOUS DATES. IT WAS ALSO NOTICED BY THE ASSESSING OFFICE R THAT THE ASSESSEE HAD NOT DEDUCTED TAX ON SUCH PAYMENTS. A SHOW-CAUSE NO TICE WAS ISSUED AND THE RELEVANT CONTENTS WERE AS UNDER:- A. DURING THE COURSE OF ASSESSMENT PROCEEDING, IT IS SEEN FROM THE AUDIT REPORT AND THE DETAILS FILED DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS IN RESPECT OF THE LABOUR CHARGES EXPENSES. YOU HAVE SHOWN THE PAYMENT OF RS.44,16,7 85/- AS LABOUR CHARGES PAID. AS PER SECTION 201 OF THE IT ACT YOU HAVE TO DEDUCT THE TAX FROM THE PAYMENT OF RS.44,16 ,785/- AT THE RATE APPLICABLE DURING THE PREVIOUS YEAR. YOUR FIRM HAS NOT DEDUCTED THE TAX AT THE APPROPRIATE RATE U/S.19 4C OF THE IT ACT. B. IN VIEW OF SECTION 40(A) (IA) OF THE IT ACT, TH E EXPENSES OF RS.44,16,785/- IS NOT DEDUCTIBLE IN THE A.Y. 2006-0 7 BY REASONS OF NOT DEDUCTING THE TAX FROM THE LABOUR CH ARGES EXPENSES. THEREFORE, YOU ARE HEREBY DIRECTED TO SH OW-CAUSE AS TO WHY ON AMOUNT OF RS.44,16,785/- SHOULD NOT BE DISALLOWED U/S.40(A)(IA) OF THE IT ACT. 2.2. BY REFERRING THE PROVISIONS OF SECTION 200(1) OF THE I.T. ACT, IT WAS HELD THAT SINCE THE ASSESSEE HAD FAILED TO DEDU CT THE TAX FROM LABOUR CHARGES U/S.194C, THEREFORE, IN TERMS OF SEC TION 40(A)(IA), THE ITA NO. 2594/AHD/2009 ITO VS. M/S.S.R. SUPPLIERS & COMMISSION ASST.YEAR - 2006-07 - 3 - EXPENDITURE WAS ADDED. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY, CERTAIN WAGE REGISTERS HAVE BE EN REFERRED AND CONTESTED THAT THE APPELLANT HAD NOT MADE THE PAYME NT TO ANY CONTRACTOR OR ANY SUB-CONTRACTOR BUT THE PAYMENTS W ERE MADE TO THE WORKERS DIRECTLY THROUGH SUPERVISORS. IN THIS REGA RD, THE EVIDENCES WERE PRODUCED AND IT WAS ALSO INFORMED THAT THE ASS ESSEE HAS PAID THE COMMISSION TO SUPERVISORS. HENCE, IT WAS ARGUE D THAT THERE WAS NO OBLIGATION TO DEDUCT THE TAX AT SOURCE U/S.194C OF THE I.T.ACT BECAUSE NO PAYMENT WAS MADE TO A CONTRACTOR BUT TO WORKERS DIRECTLY. IT WAS ALSO INFORMED THAT THE ASSESSEE H AD NOT MADE ANY PAYMENT OF LABOUR CHARGES TO ANY WORKER EXCEEDING R S.20,000/- AT A RELEVANT POINT OF TIME AND ALSO THE PAYMENT DID NOT EXIST IN AGGREGATE RS.50,000/- IN ANY FINANCIAL YEAR. THE L EARNED CIT(APPEALS) HAS CONCLUDED THAT SINCE THE COMMISSIO N PAID TO SUPERVISORS HAD ATTRACTED THE PROVISIONS OF TDS, TH EREFORE, THE COMMISSION AMOUNT IN TOTAL RS.1,23,610/- WAS CONFIR MED AND THE BALANCE AMOUNT OF RS.42,93,175/- WAS DELETED. NOW THE REVENUE BEFORE US. 3. WE HAVE HEARD BOTH THE SIDES. WE HAVE ALSO PERU SED THE ORDERS OF THE AUTHORITIES BELOW. THE PRIMARY OBJECTION OF LE ARNED DEPARTMENTAL REPRESENTATIVE MR.G.M. CHAUHAN IS THAT THE FIRST APPELLATE AUTHORITY HAS APPRECIATED CERTAIN EVIDENCES WHICH WERE NOT BEFORE THE ASSESSING OFFICER. IT WAS CONTESTED THAT THOSE EVIDENCES WER E ENTERTAINED IN CONTRAVENTION TO RULE 46A(3) OF THE I.T.ACT WITOUT AFFORDING OPPORTUNITY ITA NO. 2594/AHD/2009 ITO VS. M/S.S.R. SUPPLIERS & COMMISSION ASST.YEAR - 2006-07 - 4 - TO THE ASSESSING OFFICER. ON THE OTHER HAND, FRO M THE SIDE OF THE ASSESSEE LEARNED AUTHORISED REPRESENTATIVE MR.S.N.L . AGARWAL HAS VEHEMENTLY OPPOSED THE SAID ALLEGATION AND DEMONSTR ATED FROM THE ORDER OF THE ASSESSING OFFICER THAT ALL THOSE EVIDENCES A ND REGISTERS WERE DULY FURNISHED BEFORE THE ASSESSING OFFICER IN COMPLIANC E OF THE SHOW-CAUSE NOTICE, HENCE, THERE WAS NO ADDITIONAL EVIDENCE PLA CED BEFORE LEARNED CIT(APPEALS), BUT DEFINITELY ADDITIONAL SUBMISSIONS WERE MADE WHICH WERE NOT APPRECIATED BY THE ASSESSING OFFICER. IN THIS REGARD, LEARNED AUTHORISED REPRESENTATIVE HAS ALSO POINTED OUT AN O BSERVATION OF THE ASSESSING OFFICER AS PER THE ASSESSMENT ORDER ON PA GE NO.10, QUOTE THE ASSESSEE HAS SUBMITTED ALL RELEVANT DETAILS. THE D ETAILS FILED ARE THOROUGHLY VERIFIED AND PLACED ON RECORD .UNQUOTE. ON DUE CONSIDERATION OF THE TOTALITY OF THE CIRCUMSTANCES OF THE CASE AND THE FACTS NARRATED BEFORE US ONCE A FINDING ON FACT HAS BEEN GIVEN THAT THE PAYMENT UNDER THE HEAD LABOUR CHARGES WAS DIRECTLY MADE T O THE WORKERS AND IN SUPPORT WAGE REGISTER WAS PLACED BEFORE THE A UTHORITIES BELOW, THEREFORE, WE FIND NO FALLACY IN THE VERDICT GIVEN BY THE LEARNED CIT(APPEALS). THIS GROUND OF THE REVENUE IS DISMIS SED. 4. GROUND NO.2 READS AS UNDER: 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.8,7 1,867/- MADE U/S.40A(3). 4.1. IT WAS FOUND BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS INCURRED CERTAIN EXPENSES IN CASH EXCEEDING RS.20,0 00/- AS LABOUR CHARGES TOTALLING TO RS.44,16,785/-. BY INVOKING THE PROVISIONS OF SECTION 40A(3) OF THE I.T.ACT, 20% OF THE SAID AMOU NT, I.E. RS.8,83,357/- ITA NO. 2594/AHD/2009 ITO VS. M/S.S.R. SUPPLIERS & COMMISSION ASST.YEAR - 2006-07 - 5 - WAS ADDED IN THE TOTAL INCOME OF THE ASSESSEE. BEF ORE LEARNED CIT(APPEALS), IT WAS PLEADED THAT NO CASH PAYMENT E XCEEDED RS.20,000/- AT A RELEVANT POINT OF TIME. IT WAS ALSO SUBMITTED THAT IN AGGREGATE THE PAYMENT HAD NEVER EXCEEDED RS.50,000/- IN A FINANCI AL YEAR. HOWEVER, LEARNED CIT(APPEALS) HAS FOUND THAT THERE WERE TWO PAYMENTS OF RS.28,858/- AND RS.28,591/- (TOTAL RS.57,449/-) WHI CH WERE PAID IN CASH TO SUPERVISORS, THEREFORE, 20% OF THE SAME AMOUNTI NG TO RS.11,490/- WAS DISALLOWED AND REST OF THE ADDITION WAS DELETED . 5. ON HEARING BOTH THE SIDES; EVEN FOR THIS GROUND, WE FIND NO FORCE BECAUSE THE FIRST APPELLATE AUTHORITY HAS DULY APPR ECIATED THE FACTUAL ASPECT OF THE CASE AND ON DUE VERIFICATION HE HAS F OUND THAT THERE WERE ONLY TWO CASH PAYMENTS WHICH HAD FALLEN UNDER THE C LUTCHES OF THE PROVISIONS OF SECTION 40A(3) OF THE I.T.ACT, HENCE WE HEREBY UPHOLD THE VIEW TAKEN BY THE LEARNED CIT(APPEALS). THIS GROUN D OF THE REVENUE IS DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 20/ 05 /2011. SD/- SD/- ( G.D. AGARWAL ) ( MUKUL KR. SHRAWAT ) VICE PRESIDENT (AZ) JUDICIAL ME MBER AHMEDABAD; DATED 20 / 05 /2011 T.C. NAIR, SR. PS ITA NO. 2594/AHD/2009 ITO VS. M/S.S.R. SUPPLIERS & COMMISSION ASST.YEAR - 2006-07 - 6 - COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE. 2. THE DEPARTMENT. 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-BARODA 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD 1. DATE OF DICTATION.. 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 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 D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S20/5/2011 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 20/5/2011 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER