A.C.I.T., Circle-33,Kolkata, Kolkata V. Joydeb Chandra, Kolkata

ITA 2702/KOL/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4282 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2016
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 20-09-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 03-12-2013
• Court: TRIBUNAL
• Department Lawyers: BANIBRATA DUTTA
• Section: 133(6); 194C

Judgement Text

1 ITA NO. 2701-2702/KOL/2013 JOYDEB CHANDRA, AY 2005-06 & 2006-07 IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA [BEFORE SHRI N. V. VASUDEVAN, JM & SHRI M. BALAGAN ESH, AM] I.T.A NOS. 2701 & 2702/KOL/2013 ASSESSMENT YEARS: 2005-06 & 2006-07 ASSISTANT COMMISSIONER OF INCOME-TAX, VS. JOYDEB CHANDRA CIRCLE-33, KOLKATA. (PAN: ABZPC3187E) ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 20.09.2016 DATE OF PRONOUNCEMENT: 14.10.2016 FOR THE APPELLANT: SHRI BANIBRATA DUTTA, ADDL. CIT, SR. DR FOR THE RESPONDENT: SHRI SOUMITRA CHOUDHURY, A DVOCATE ORDER PER SHRI M. BALAGANESH, AM: BOTH THESE APPEALS BY REVENUE ARE ARISING OUT OF SE PARATE ORDERS OF CIT(A)-XIX, KOLKATA VIDE APPEAL NOS. 140 & 141/CIT(A)-XIX/CIRCL E-33/KOL/12-13 BOTH DATED 25.09.2013. ASSESSMENTS WERE FRAMED BY DCIT, CIRCLE -33, KOLKATA U/S. 143(3)/147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS TH E ACT) FOR AYS 2005-06 AND 2006-07 VIDE HIS SEPARATE ORDERS BOTH DATED 31.12.2010. SI NCE ISSUES ARE IDENTICAL AND FACTS ARE COMMON AND FOR THE SAKE OF BREVITY, WE DISPOSE OF B OTH THE APPEALS BY THIS CONSOLIDATED ORDER. 2. THE ONLY ISSUE TO BE DECIDED IN THESE APPEALS IS AS TO WHETHER THE LD CIT(A) IS JUSTIFIED IN DELETING THE DISALLOWANCE MADE U/S 40( A)(IA) OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. THE FACTS OF ASST YEAR 2005-06 ARE CONSIDERED HEREIN AND THE DECISION RENDERED THEREON WOULD APPLY WITH EQUAL FO RCE FOR THE ASST YEAR 2006-07 AS THE FACTS ARE IDENTICAL EXCEPT WITH VARIANCE IN FIGURES . 3. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSES SEE IS AN INDIVIDUAL CONTRACTOR ENGAGED IN VARIOUS CONTRACTUAL JOBS WITH GOVERNMENT OF WEST BE NGAL PARTICULARLY WITH THE PHE DEPARTMENT RUNNING ITS BUSINESS UNDER THE NAME AND STYLE OF ORIENTAL ENGINEERING CO.. THE ASSESSEE HAS BEEN AUTHORIZED AS PER CONTRACT WI TH THE VARIOUS DEPARTMENT TO MAINTAIN THE PUMP HOUSES, GUARDING, SUPPLY OF OIL AND FUEL T O RUN THE PUMPS AND OVERALL 2 ITA NO. 2701-2702/KOL/2013 JOYDEB CHANDRA, AY 2005-06 & 2006-07 MAINTENANCE AND LOOK AFTER THE SECURITY ASPECTS. TH E LD AO OBSERVED THAT THE ASSESSEE HAD SPENT A SUM OF RS. 62,90,803/- ON ACCOUNT OF OPERAT ION AND MAINTENANCE CHARGES IN DIFFERENT PUMP HOUSES MAINTAINED BY THE PHE , GOVERNMENT OF W EST BENGAL, INCLUDING LABOUR CHARGES AT GANGA SAGAR MELA. THE ASSESSEE ALSO SPEN T RS. 4,63,297/- ON ACCOUNT OF SITE LABOUR CHARGES AT THEIR VARIOUS SITES. THE LD AO DISALLOWED A SUM OF RS. 67,64,900/- U/S 40(A)(IA) OF THE ACT FOR PAYMENT OF LABOUR CHARGES WITHOUT DEDUCTION OF TAX AT SOURCE. THE ASSESSEE SUBMITTED THAT THE PAYMENTS TO LABOURERS A RE MADE AS PER CONTRACT WITH THE VARIOUS PHE DEPARTMENT, GOVERNMENT OF WEST BENGAL WHEREIN T HE RATE OF PAYMENT PER LABOUR IS ALSO GUIDED BY THE TERMS AND CONDITIONS OF THE CONT RACT. THE ASSESSEE PLACED THE COPIES OF THE CONTRACT WITH THE AUTHORITIES. AS PER THE CONT RACT, THE WAGES PER DAY FIXED WAS RS 65/- AND HENCE THERE WAS NO OBLIGATION TO DEDUCT TAX AT SOURCE IN TERMS OF SECTION 194C OF THE ACT AS ADMITTEDLY IT FALLS WITHIN THE TAX DEDUCTION LIMITS PRESCRIBED IN THE SAID SECTION. THE LD CITA DELETED THE ADDITION BY OBSERVING AS UN DER:- 6.5. WAGES ARE LIABLE FOR TDS U/S 192, BUT IF THE WAGES ARE BELOW THE BASIC EXEMPTION LIMIT THEN THERE IS NO NEED TO DEDUCT TAX ON IT. BUT IF T HE LABOURERS ARE SUPPLIED BY A LABOUR CONTRACTOR, THEN TDS IS LIABLE TO BE MADE ON THE BI LL OF THE LABOUR CONTRACTOR IF IT EXCEEDS RS. 20,000/- AND IF IT EXCEEDS RS. 50,000/- DURING THE WHOLE YEAR. THE AO COULD NOT FIND/ALLOCATE A SINGLE CASE WHERE PAYMENT EXCEEDS RS.50000/- TO JUS TIFY HIS ADDITION OR FOR THAT MATTER THERE WAS A CONTRACT. IT WAS FOUND THAT EXPENSES WERE INC URRED BY THE APPELLANT ON ACCOUNT OF HIRED LABOURERS TAKEN AT DIFFERENT SITES. THESE TYPES OF PAYMENTS WERE MADE TO DAILY HIRED LABOURERS AND HENCE DO NOT FALL WITHIN THE AMBIT OF SECTION 1 94C OF THE ACT. HENCE, THE DISALLOWANCE WAS ARBITRARY AND IS LIABLE TO BE DELETED. LAST BUT NOT THE LEAST WHILE GOING THROUGH THE ASSESSMENT ORDER IT IS OBSERVED THAT THE AO PASSED A NON-SPEAK ING ORDER FOR MAKING DISALLOWANCE U/S 40(A)(IA) AND THE ORDER IS ALSO SILENT ON THE REASO N FOR THE IMPUGNED ADDITION MADE. IN VIEW OF THIS THE ADDITION ON THIS COUNT AMOUNTING TO RS.67, 64,900/- IS DELETED. 4. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US O N THE FOLLOWING GROUNDS:- L. A.R. HAS ADMITTED THAT THERE WAS VIOLATION OF PROVISIONS U/S.194C HIMSELF AS PER PARA(3) OF THE ORDER. 2. SIMILARLY PARA 4.1 AND PARA NO. 4.2 OF THE A.O.' S ORDER IN WHICH IT IS VERY CLEAR THAT THE ASSESSEE NEVER PRODUCED THE BILLS, VOUCHER BEFORE T HE A.O. IN ANY OF THE EXPENSES. 3. EVEN IF WE SEE THE 3 CD REPORT, THE AUDITOR HIMS ELF GIVEN AVOIDING ANSWER BY SAYING 'NIL' THERE BY IT IS CLEAR THAT THE ASSESSEE NEVER FOLLOW ED TDS PROVISIONS. 4. REPORT UNDER 26AS HAS NOT SUBMITTED BY THE ASSES SEE. 5. THE LD. CIT(A) DELETED THE ADDITIONS BY SIMPLY P ICKING THE WORD 'CURSORY GLANCE' AND DELETED THE ENTIRE ADDITION WITHOUT APPRECIATING TH E FACTS. 6. THE LD. CIT(A)'S OBSERVATIONS IS WRONG AND NOT A CCORDING TO FACTS BECAUSE THE A.O. WAS 3 ITA NO. 2701-2702/KOL/2013 JOYDEB CHANDRA, AY 2005-06 & 2006-07 UNABLE TO VERIFY THE ENTIRE BOOKS, BILLS AND VOUCHE RS AS PER ORDER SHEET NOTING SINCE ASSESSEE'S A.R. NOT PRODUCED. HENCE, IT IS FACTUALLY WRONG TO 'PRESUME' THAT ONLY CURSORY GLANCE WAS MADE BY THE A.O. 7. HOW COME CIT HAD COME TO SUCH CONCLUSION WITHOUT EXAMINED ANY FACTS IS DOUBTFUL AND BASED ON ASSUMPTION ONLY THE ADDITION WAS DELETED. 5. THE LD DR ARGUED THAT ASSESSEE IS ENGAGED IN DO ING CONTRACT WORK WITH GOVERNMENT OF WEST BENGAL AND HAD ENGAGED SEVERAL LABOURERS FO R THE SAME AND MADE PAYMENT OF LABOUR CHARGES. HE STATED THAT THE ASSESSEE HAD NO T MAINTAINED PROPER WAGES REGISTER WITH PROPER DEDUCTION OF PF AND ESI THEREON WHICH WAS NO T DONE BY THE ASSESSEE. EVEN THE BOOKS OF ACCOUNTS WERE NOT PRODUCED BY THE ASSESSEE . ONLY LIST OF LABOURERS TO WHOM PAYMENTS WERE MADE WERE PRODUCED BY THE ASSESSEE . IN RESPONSE TO THIS, THE LD AR ARGUED THAT WITHOUT ENGAGING THESE LABOURERS, THE ASSESSEE COULD NOT HAVE CARRIED OUT THE GOVERNMENT CONTRACT. ALL THE WAGES PAID IS LESS TH AN RS 2000 PER MONTH AND HENCE THERE IS NO OBLIGATION TO DEDUCT TAX AT SOURCE UNDER SECTION 194C OF THE ACT. MOREOVER, THE ENTIRE DETAILS REGARDING THE PAYMENT OF LABOUR CHARGES WER E FILED BEFORE THE LOWER AUTHORITIES WHICH ARE ALSO ENCLOSED IN THE PAPER BOOK FILED BEF ORE THIS TRIBUNAL. ACCORDINGLY, HE PRAYED FOR NON-INTERFERENCE IN THE ORDER OF THE LD CITA. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD INCLUDING THE PAPER BOOK FILED BY THE ASSESSEE CONT AINING THE SUMMARY OF PAPER BOOK SUBMITTED TO THE LD AO ON 8.12.2010 (PAGE 1 OF PB) ; NAMES AND ADDRESSES OF WORKERS TO WHOM WAGES WERE PAID (PAGES 2 TO 16 OF PB) ; DETAI LS OF LABOUR CHARGES (PAGES 17 TO 77 OF PB) ; VOUCHERS FOR PAYMENT OF WAGES (PAGES 115 TO 144 OF PB) AND REPLY TO LD AO VIDE LETTER DATED 10.11.2010 FURNISHING THE DETAILS OF L ABOUR CHARGES FOR RS. 95,63,200/- (PAGES 171 TO 179 OF PB) . SIMILAR DETAILS WERE ALSO FIL ED BY WAY OF A SEPARATE PAPER BOOK FOR THE ASST YEAR 2006-07 COMPRISING OF PAGES 1 TO 250 BY T HE LD AR. WE FIND THAT THE ENTIRE DETAILS OF LABOUR CHARGES WERE DULY FILED BEFORE TH E LD AO. WE FIND THAT THESE DETAILS WERE NOT PROPERLY APPRECIATED BY THE LD AO WHILE MAKING THE DISALLOWANCE. INFACT CERTAIN LABOURERS HAD EVEN CONFIRMED BEFORE THE LD AO IN RE SPONSE TO NOTICE U/S 133(6) OF THE ACT. ALL THESE LABOUR PAYMENTS WERE MAXIMUM TO THE EXTEN T OF RS. 2,015/- PER MONTH. WE HOLD THAT THE PAYMENTS MADE THEREON WOULD DEFINITELY NOT FALL WITHIN THE LIMITS FOR TAX DEDUCTION OBLIGATIONS PRESCRIBED U/S 194C OF THE ACT. WE FI ND LOT OF FORCE IN THE ARGUMENT OF THE LD AR THAT WITHOUT INCURRENCE OF THESE LABOUR CHARGES, IT WOULD NOT BE PRACTICALLY POSSIBLE TO 4 ITA NO. 2701-2702/KOL/2013 JOYDEB CHANDRA, AY 2005-06 & 2006-07 EXECUTE THE GOVERNMENT CONTRACTS BY THE ASSESSEE. HENCE IN THESE FACTS AND CIRCUMSTANCES, WE HOLD THAT THERE IS NO OBLIGATION TO DEDUCT TAX A T SOURCE IN TERMS OF SECTION 194C OF THE ACT AND THEREFORE DISALLOWANCE MADE U/S 40(A)(IA) O F THE ACT IS NOT WARRANTED. ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 7. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14.10.2016 SD/- SD/- (N.V. VASUDEVAN) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTAN T MEMBER DATED : 14 TH OCTOBER, 2016 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT ACIT, CIRCLE-33, KOLKATA 2 RESPONDENT SHRI JOYDEB CHANDRA, 7/1A, ABHOY HALDER LANE, KOLKATA- 700 012. 3 . THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .