ACIT, Circle -51, Kolkata, Kolkata V. Sri Tapas Paul, Kolkata

ITA 28/KOL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4117 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2016
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 17-10-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 07-01-2014
• Court: TRIBUNAL
• Department Lawyers: S S ALAM
• Assessee Lawyers: A K TIBREWAL F
• Section: 143(3); 194C

Judgement Text

I.T.A. NO. 28/KOL./2014 ASSESSMENT YEAR: 2006-2007 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI N.V. VASUDEVAN, JUDICIAL MEMBER I.T.A. NO. 28/KOL/ 2014 ASSESSMENT YEAR: 2006-2007 ASSISTANT COMMISSIONER OF INCOME TAX,.............. ........................APPELLANT CIRCLE-51, KOLKATA, BLOCK-DS-2 & 3, MANIKTALA CIVIC CENTRE, UTTARAPAN, KOLKATA-700 054 -VS.- SRI TAPAS PAUL,.................................... ........................................RESPONDENT 21, KUMARPARA ROAD, BHATPARA, BARRACKPORE, 24-PARGANAS (NORTH)-743 123 [PAN: AJIPP 3882 G] APPEARANCES BY: SHRI S.S. ALAM, ADDL. CIT, D.R., FOR THE DEPARTMENT SHRI A.K. TIBREWAL, F.C.A., FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING : NOVEMBER 23, 2016 DATE OF PRONOUNCING THE ORDER : DECEMBER 02, 2016 O R D E R PER SHRI P.M. JAGTAP, A.M .: THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-XXXII, KOLKATA DATED 09.10.2013 AND THE SOLITARY ISSUE INVOLVED THEREIN RELATES TO THE DELETION BY THE LD. CIT(APPEALS) OF THE ADDITION OF RS.90,12,960/- MADE BY THE ASSESSING OFFICER UNDER SECTION 40(A)(IA) OF THE INCOME TAX A CT, 1961. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L, WHO IS ENGAGED IN THE BUSINESS OF CIVIL CONTRACTOR. IN THE ASSESSMENT ORIGINALLY COMPLETED BY THE ASSESSING OFFICER UNDER SECTION 143(3) VIDE AN ORDER DATED 18.09.2008, THE TOTAL INCOME OF THE ASSESSEE WAS DE TERMINED AT RS.10,05,520/-. THE RECORD OF THE SAID ASSESSMENT C AME TO BE EXAMINED BY THE LD. CIT AND ON SUCH EXAMINATION, HE FOUND TH AT THE ISSUE RELATING TO THE DISALLOWANCE UNDER SECTION 40(A)(IA) ON ACCOUNT OF FAILURE OF THE I.T.A. NO. 28/KOL./2014 ASSESSMENT YEAR: 2006-2007 PAGE 2 OF 5 ASSESSEE TO DEDUCT TAX AT SOURCE FROM THE PAYMENT O F RS.90,12,960/- MADE ON ACCOUNT OF LABOUR CHARGES WAS NOT EXAMINED BY THE ASSESSING OFFICER. HE, THEREFORE, SET ASIDE THE ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) WITH A DIRECTION TO THE ASSESS ING OFFICER TO COMPLETE THE SAME AFRESH AFTER EXAMINING THE ISSUE RELATING TO DISALLOWANCE UNDER SECTION 40(A)(IA). AS PER THE DIRECTION OF THE LD. CIT GIVEN UNDER SECTION 263, ASSESSMENT PROCEEDINGS WERE INITIATED BY THE A SSESSING OFFICER. DURING THE COURSE OF THE SAID PROCEEDINGS, NO SATIS FACTORY EXPLANATION COULD BE OFFERED BY THE ASSESSEE AS REGARD HIS FAIL URE TO DEDUCT TAX AT SOURCE FROM THE PAYMENTS MADE ON ACCOUNT OF LABOUR CHARGES. THE ASSESSING OFFICER, THEREFORE, INVOKED THE PROVISION OF SECTION 40(A)(IA) AND MADE A DISALLOWANCE OF RS.90,12,960/- ON ACCOUN T OF LABOUR CHARGES IN THE ASSESSMENT COMPLETED UNDER SECTION 263/144 O F THE ACT VIDE ORDER DATED 30.12.2011. 3. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICE R UNDER SECTION 263/144, AN APPEAL WAS PREFERRED BY THE ASSESSEE BE FORE THE LD. CIT(APPEALS) AND AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE AS WELL AS THE MATERIAL AVAILABLE ON RECORD, THE LD . CIT(APPEALS) DELETED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDE R SECTION 40(A)(IA) FOR THE FOLLOWING REASONS GIVEN IN HIS IMPUGNED ORD ER:- IN THIS GROUND THE ASSESSEE HAS ASSAILED THE ACTIO N OF THE A.O. IN INVOKING SECTION 194C IN HIS CASE WHILE EXA MINING THE PAYMENTS TO LABOUR AT RS.90,12,960/- AND ULTIMA TELY DISALLOWING THE ENTIRE SUM U/S. 40(A)(IA) OF THE AC T. THE ASSESSMENT ORDER WAS PASSED U/S.144 OF THE ACT. IN THE REMAND PROCEEDINGS THE ASSESSEE FILED DETAILS OF PA YMENT MADE TO LABOUR AND ENCLOSED SAMPLE LABOUR PAYMENT SHEETS. IN THE REMAND PROCEEDINGS THE A.O. EXAMINED THE REGISTER OF WAGES AND EXAMINED TWO WORKERS. THE OBJECTIONS OF THE A.D. WERE THAT THE WAGE REGISTER COULD BE AN AFTERTHOUGHT AND THE REGISTER DOES NOT CONTAIN A DDRESS OF THE LABOUR AND THE DETAILS OF THE WORK LOCATION. IN THE REJOINDER THE ASSESSEE HAS CLAIMED THAT THERE IS NO REQUIREMENT BY LAW OF MENTIONING ADDRESSES IN THE W AGE REGISTER. THE SUBMISSIONS OF THE ASSESSEE ARE CORRE CT IN THE SENSE THAT THE LAW IN PRACTICE DOES NOT REQUIRE ADD RESSES TO BE MENTIONED IN THE WAGE REGISTER. THE ASSESSEE CLA IMS THAT THE MUSTER ROLL WAS PRODUCED BEFORE THE AO DUR ING THE I.T.A. NO. 28/KOL./2014 ASSESSMENT YEAR: 2006-2007 PAGE 3 OF 5 INITIAL ASSESSMENT PROCEEDINGS ALSO. THE A.R. HAS O RALLY CLAIMED THAT EVEN THOUGH DOZENS OF LABOUR WERE PROD UCED BEFORE THE AO DURING THE REMAND PROCEEDINGS, THE AO HAS NOT ACKNOWLEDGED THIS FACT FOR REASONS BEST KNOWN T O HIM. AFTER CONSIDERING THE ABOVE, IT IS SEEN THAT AT NO STAGE THE A.O. HAS MADE A CASE THAT THE ASSESSEE HAS PAID ANY SUM UNDER LABOUR PAYMENT TO A SUB-CONTRACTOR. ALL THE PAYMENTS ARE DECLARED TO BE MADE TO INDIVIDUAL LABO UR FORCE ONLY. THE LAW IS CLEAR THAT THE PAYMENTS TO D AILY WAGE LABOUR CANNOT BE EQUATED TO PAYMENTS MADE TO CONTRACTORS. DAILY WAGE LABOURS ARE LIKE EMPLOYEES ONLY AND THERE IS NO PRIVITY OF A CONTRACT AS HELD BY TH E DELHI HIGH COURT IN THE CASE OF CIT V DEWAN CHAND 178 TAX MAN 173 AND OTHERS. ALSO, THE ASSESSEE IS AN INDIVIDUAL AND THE ASSESSM ENT YEAR UNDER CONSIDERATION IN A. Y. 2006-07 I.E. PREVIOUS YEAR 2005-06. THE SECTION 194C AS APPLICABLE FOR A.Y. 20 06-07 WAS DIFFERENT THAN WHAT IT IS NOW AND TILL 01.06.20 07 THE PAYMENTS MADE BY INDIVIDUALS OR HUF DID NOT COME UN DER THE AMBIT OF SECTION 194C. THOUGH SECTION 194C(2) W AS APPLICABLE FOR A. Y. 2006-07, THIS SUBSECTION APPLI ES ONLY WHEN PAYMENTS ARE MADE TO SUB-CONT ACTORS BY A CONTRACTOR. THEREFORE, IN THE CASE OF INDIVIDUALS, SECTION 194C(1) OF THE ACT WAS NOT APPLICABLE FOR A.Y. 2006 -07. THIS HAS BEEN HELD BY THE FOLLOWING CASE LAWS:- 1. SMT. RINKU MALLICK V. ITO IN ITA NO.70/KOL/2010; WHICH HAS BEEN AFFIRMED BY HON'BLE HIGH COURT OF CALCUTTA IN ITA NO.96/2012 DATED 12.06.2012. 2. ACIT V. SMT. KEYA SHETH (2011) 48 SOT 1 (KOL), 3. CIT V PRASHANT H. SHAH (2013) 216 TAXMAN 287 (GU J.), 4. MYTHRI TRANSPORT CORPORATION V ACIT (2010) 1 ITR (TRIB) 290 (VISHK.), 5. CHETAN M. VIRA V DEPTT. OF LNCOME TAX (2012) IN ITA NO. 6300/MUM/2010 DATED 27.03.2012 (MUM), 6. DEBASHIS BHADRA V DCIT (2012) IN ITA NO.1562 & 1563/KOL/2011 DT.12.03.2012 (KOL), 7. CIT V VISHNUDUTT SHARMA (2013) 216 TAXMAN 41 (GU J) (MAG). AS PER THE DETAILS SUBMITTED BY THE ASSESSEE AND VE RIFIED BY THE AO, THE PAYMENT FOR LABOUR CHARGES WERE MADE TO I.T.A. NO. 28/KOL./2014 ASSESSMENT YEAR: 2006-2007 PAGE 4 OF 5 INDIVIDUAL LABOURERS. THUS IT IS HELD THAT THE AO H AS NOT BROUGHT ANY MATERIAL ON RECORD TO HOLD THAT THESE PAYMENTS ARE COVERED U/S 194C OF THE ACT. THEREFORE , THE DISALLOWANCES OF RS.90,12,960/- MADE BY THE AO U/S.40(A)(IA) FOR DEFAULT OF SECTION 194C OF THE AC T HAS NO LEGAL SANCTION AS HELD BY THE JURISDICTIONAL HIGH C OURT ALSO IN THE CASE OF CIT, KOLKATA-XVII V. SHRI RINKU MALL ICK IN ITAT NO.96 OF 2012, GA 1368 OF 2012 DATED 15.06.201 2. RESPECTFULLY FOLLOWING THE JURISDICTIONAL HIGH COUR T DECISION, THE REVISED GROUND OF APPEAL NO. 1 OF THE ASSESSEE IS ALLOWED AND THE DISALLOWANCE OF RS.90,1 2,960/- IS DELETED. AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), THE REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. ALTHOUGH THE LD. D.R. HAS CONTENDED THAT THE MATTER SHOULD BE SENT BACK TO THE ASSESSIN G OFFICER FOR VERIFICATION OF THE WAGE REGISTER/MASTER ROLL, WHIC H WAS PRODUCED BY THE ASSESSEE FOR THE FIRST TIME BEFORE THE LD. CIT(APPE ALS), IT IS OBSERVED THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDE R SECTION 40(A)(IA) ON ACCOUNT OF LABOUR CHARGES FOR THE ALLEGED NON-CO MPLIANCE BY THE ASSESSEE OF THE PROVISIONS OF SECTION 194C HAS BEEN DELETED BY THE LD. CIT(APPEALS) ALSO ON THE GROUND THAT THE PROVISIONS OF SECTION 194C WERE NOT APPLICABLE IN THE CASE OF THE ASSESSEE BEING IN DIVIDUAL FOR THE YEAR UNDER CONSIDERATION, I.E. A.Y. 2006-07 AS THE SAME WERE MADE APPLICABLE IN THE CASE OF INDIVIDUAL OR HUF ONLY WITH EFFECT F ROM 1 ST JUNE, 2007 AND THIS POSITION DULY SUPPORTED BY THE VARIOUS JUDICIA L PRONOUNCEMENTS REFERRED TO AND RELIED UPON BY THE LD. CIT(APPEALS) IN HIS IMPUGNED ORDER INCLUDING THE DECISION OF THE HONBLE JURISDICTIONA L HIGH COURT IN THE CASE OF SMT. RINKU MALLICK (SUPRA) HAS NOT BEEN DISPUTED BY THE LD. D.R. IT IS THUS CLEAR THAT THE ASSESSEE WAS NOT REQUIRED TO DE DUCT TAX AT SOURCE FROM THE PAYMENT OF LABOUR CHARGES UNDER SECTION 194C DU RING THE YEAR UNDER CONSIDERATION AND CONSEQUENTLY THE QUESTION OF DISA LLOWANCE UNDER SECTION 40(A)(IA) ON ACCOUNT OF LABOUR CHARGES WOUL D NOT ARISE. WE, THEREFORE, FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) I.T.A. NO. 28/KOL./2014 ASSESSMENT YEAR: 2006-2007 PAGE 5 OF 5 DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFF ICER UNDER SECTION 40(A)(IA) ON ACCOUNT OF LABOUR CHARGES AND UPHOLDIN G THE SAME, DISMISS THIS APPEAL OF THE REVENUE. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON DECEMBER 02, 2016. SD/- SD/- (N.V. VASUDEVAN) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT ME MBER KOLKATA, THE 2 ND DAY OF DECEMBER, 2016 COPIES TO : (1) ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-51, KOLKATA, BLOCK-DS-2 & 3, MANIKTALA CIVIC CENTRE, UTTARAPAN, KOLKATA-700 054 (2) SRI TAPAS PAUL, 21, KUMARPARA ROAD, BHATPARA, BARRACKPORE, 24-PARGANAS (NORTH)-743 123 (3) COMMISSIONER OF INCOME TAX(APPEALS)-XXXII, KOL KATA; (4) COMMISSIONER OF INCOME TAX- , KOLKATA, (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.