THE ITO, WARD - 2(3), Vijayawada V. M/s Best feeds, Vijayawada

ITA 282/VIZ/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2094 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2016
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 02-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: I SARISH KUMAR
• Keywords: Unexplained cash credit
• Section: 143(3); 142(1); 194C; 132

Judgement Text

ITA NO.282/VIZAG/2013 M/S. BEST FEEDS, VIJAYAWADA 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , ' BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./ I.T.A.NO.282/VIZAG/2013 ( / ASSESSMENT YEAR : 2008-09) ITO WARD-2(3) VIJAYAWADA VS. M/S. BEST FEEDS VIJAYAWADA [ PAN: AAHFB8687P] ( / APPELLANT) ( / RESPONDENT ) / APPELLANT BY : SHRI I. SARISH KUMAR, DR #$ / RESPONDENT BY : SHRI C. SUBRAHMANYAM, AR / DATE OF HEARING 20.01.201 6 ( / DATE OF PRONOUNCEMENT : 05.02.2016 / O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE REVENUE, IS DIRECTED AGAIN ST THE ORDER OF CIT(A), VIJAYAWADA DATED 14.2.2013 AND IT PERTAINS TO THE ASSESSMENT YEAR 2008-09. ITA NO.282/VIZAG/2013 M/S. BEST FEEDS, VIJAYAWADA 2 2. THE BRIEF FACTS OF THE CASE, ARE THAT THE ASSESS EE IS A PARTNERSHIP FIRM WHICH IS ENGAGED IN THE BUSINESS OF PROCESSING OF CATTLE AND ANIMAL FEEDS, FILED ITS RETURN OF INCOME FOR THE ASSESSMEN T YEAR 2008-09 ON 27.9.2008 DECLARING TOTAL INCOME OF RS.2,98,920/-. THE RETURN WAS PROCESSED U/S 143(1) OF THE INCOME-TAX ACT, 1961 (H EREINAFTER CALLED AS THE ACT) AND LATER CONVERTED INTO SCRUTINY AND AC CORDINGLY, NOTICES U/S 143(2) & 142(1) OF THE ACT WERE ISSUED. IN RESPONS E TO SUCH NOTICES, AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED AND FURNISHED THE REQUISITE INFORMATION. DURING THE COURSE OF ASSESS MENT PROCEEDINGS, THE A.O. NOTICED THAT THE ASSESSEE HAS DEBITED AN AMOUN T OF RS.16,86,052/- TOWARDS HAMALI CHARGES. ON PERUSAL OF THE DETAILS FILED BY THE ASSESSEE, IT WAS NOTICED THAT THE HAMALI CHARGES WERE PAID TO DAILY LABOURERS EMPLOYED BY THE ASSESSEE. THEREFORE, THE A.O. ASKE D TO PRODUCE THE BILLS & VOUCHERS AND TDS PARTICULARS FOR THE HAMALI CHARGES CLAIMED IN THE P&L ACCOUNT. IN RESPONSE TO NOTICE, THE ASSESS EE STATED THAT IT HAS EMPLOYED DAILY LABOURERS FOR HANDLING THE MATERIALS IN THE FACTORY PREMISES FOR WHICH IT HAS PAID WAGES TO THE LABOURE RS ON WEEKLY/FORTNIGHTLY BASIS. THE ASSESSEE FURTHER SUB MITTED THAT FOR THE SAKE OF CONVENIENCE, IT HAS PAID THE WAGES THROUGH A PERSON CALLED MESTRI. HOWEVER, NO PAYMENTS TO ANY INDIVIDUAL LAB OURERS EXCEED RS.20,000/- IN EACH CASE AND AGGREGATE OF SUCH PAYM ENTS ALSO DOES NOT ITA NO.282/VIZAG/2013 M/S. BEST FEEDS, VIJAYAWADA 3 EXCEED RS.50,000/-. SIMILARLY, THE A.O. NOTICED TH AT THE ASSESSEE HAS CLAIMED PRODUCTION CHARGES AMOUNTING TO RS.20,82,28 8/-. WHEN ASKED TO PRODUCE THE BILLS & VOUCHERS AND TDS PARTICULARS FOR THE SAME, THE ASSESSEE HAS SUBMITTED THAT IT HAS EMPLOYED DAILY L ABOURERS FOR WORKING IN THE FACTORY PREMISES AND PAID THE WAGES ON WEEKL Y/FORTNIGHTLY BASIS. THE ASSESSEE FURTHER SUBMITTED THAT IT HAS NOT DEDU CTED TDS, BECAUSE THERE IS NO WRITTEN CONTRACT ENTERED INTO BETWEEN A NY INDIVIDUAL AND THE PAYMENT IS MADE TO INDIVIDUAL LABOUERS, THEREFORE, NO DISALLOWANCE CAN BE MADE BY INVOKING THE PROVISIONS OF 40(A)(IA) OF THE ACT. THE A.O., HOWEVER, AFTER CONSIDERING THE EXPLANATIONS FURNISH ED BY THE ASSESSEE, DISALLOWED THE AMOUNTS U/S 40(A)(IA) OF THE ACT AND ADDED BACK TO THE INCOME OF THE ASSESSEE. WHILE DOING SO, THE A.O. HE LD THAT THE ASSESSEE HAS FAILED TO DEDUCT TDS ON SUCH PAYMENTS U/S 194C OF THE ACT, THEREFORE, DISALLOWANCE U/S 40(A)(IA) OF THE ACT IS APPLICABLE FOR FAILURE TO DEDUCT TDS. 3. SIMILARLY, DURING THE COURSE OF ASSESSMENT PROCE EDINGS, THE A.O. NOTICED THAT SRI M. SURENDRA NATH, MANAGING PARTNER OF THE FIRM HAS INTRODUCED CAPITAL OF RS.77,04,274/-. WHEN ASKED TO PRODUCE THE SOURCES FOR THE CAPITAL INTRODUCED, THE ASSESSEE ST ATED THAT THERE IS A SEARCH & SEIZURE OPERATION U/S 132 OF THE ACT, IN T HE CASE OF ASSESSEE ITA NO.282/VIZAG/2013 M/S. BEST FEEDS, VIJAYAWADA 4 AND ITS GROUP CONCERNS AND ALL THE BOOKS OF ACCOUNT S AND OTHER DETAILS WERE SEIZED BY THE DEPARTMENT. HOWEVER, THE ASSESS EE HAS FURNISHED THE PERSONAL BOOKS OF ACCOUNTS OF THE PARTNER OF TH E FIRM SRI M. SURENDRA NATH AND ALSO EXPLAINED THE SOURCES FOR TH E CAPITAL INTRODUCED. THE ASSESSEE FURTHER SUBMITTED THAT THE SOURCES FOR CAPITAL INTRODUCED INTO THE FIRM WERE DRAWN FROM OTHER GROUP CONCERNS, WHEREIN MR. M. SURENDRA NATH WAS EITHER A PARTNER OR PROPRIETOR. HOWEVER, THE A.O. AFTER CONSIDERING THE DETAILS FURNISHED BY THE ASSE SSEE TREATED THE CAPITAL INTRODUCED BY THE PARTNER INTO THE FIRM AMO UNTING TO RS.77,04,275/- AS UNEXPLAINED CREDIT AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. WHILE DOING SO, THE A.O. WAS OF T HE OPINION THAT SINCE, THE ASSESSMENT IS TIME BARRED IT IS NOT POSSIBLE TO CALL FOR THE EXPLANATIONS REGARDING THE CASH INFLOW INTO THE CAP ITAL ACCOUNT AND HENCE IT WAS PROPOSED TO ADD BACK TO DIFFERENCE BET WEEN THE OPENING AND CLOSING BALANCE OF THE CAPITAL ACCOUNT AS UNEXP LAINED CREDITS. 4. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE A SSESSEE SUBMITTED THAT DURING THE YEAR THE FIRM HAS PAID A SUM OF RS .16,86,052/- TOWARDS HAMALI CHARGES. THE ASSESSEE FURTHER SUBMITTED THA T THE ASSESSEE ENGAGED DAILY LABOURERS AND PAID THE WAGES ON WEEKL Y/FORTNIGHTLY BASIS. ITA NO.282/VIZAG/2013 M/S. BEST FEEDS, VIJAYAWADA 5 THE PAYMENTS AS PER THE CUSTOM WERE MADE TO MESTRI ON BEHALF OF THE LABOUR, IN TURN THE MESTRI DISTRIBUTES THE PAYMENTS TO THE LABOURERS. THE ASSESSEE FURTHER SUBMITTED THAT IT IS NOT A CONTRAC T OF WORK OR CONTRACT FOR SUPPLY OF LABOUR, BUT ONLY PAYMENT OF LABOUR CH ARGES TO THE DAILY LABOURERS EMPLOYED IN THE FACTORY PREMISES FOR HAND LING THE MATERIALS. THE A.O. WITHOUT CONSIDERING THE ABOVE SUBMISSIONS APPLIED THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT AND DISA LLOWED THE AMOUNT WHICH IS NOT CORRECT. 5. SIMILARLY, THE ASSESSEE HAS PAID PRODUCTION CHAR GES OF RS.20,82,228/- TOWARDS LABOUR WORKING IN THE FACTOR Y IN THE PRODUCTION PROCESS. THE ASSESSEE FURTHER SUBMITTED THAT THESE LABOURERS WERE ENGAGED IN THE FACTORY PREMISES TO ASSIST THE PRODU CTION PROCESS AND WAGES WAS PAID ON WEEKLY/FORTNIGHTLY BASIS. AS PER THE CUSTOM, THE PAYMENTS WERE MADE TO MESTRI, IN TURN THE MESTRI HA S DISTRIBUTED THE PAYMENT TO THE WORKERS ON WEEKLY BASIS. THE ASSESS EE FURTHER SUBMITTED THAT IT IS NOT A CONTRACT OF WORK OR CONT ACT FOR SUPPLY OF LABOUR, BUT ONLY A PAYMENT OF LABOUR CHARGES FOR DA ILY WORKERS. THEREFORE, THE PROVISIONS OF SECTION 40(A)(IA) OF T HE ACT CANNOT BE INVOKED. ITA NO.282/VIZAG/2013 M/S. BEST FEEDS, VIJAYAWADA 6 6. THE ASSESSEE FURTHER SUBMITTED THAT AS FAR AS TH E ADDITION TOWARDS CREDITS IN CAPITAL ACCOUNT IS CONCERNED, THE ASSESS EE HAS FURNISHED ALL THE DETAILS BEFORE THE A.O. WITH REGARD TO THE SOUR CE FOR THE CAPITAL INTRODUCED. THE A.O. WITHOUT VERIFYING THE DETAILS FURNISHED BY THE ASSESSEE, COMPLETED THE ASSESSMENT JUST BECAUSE THE ASSESSMENT IS TIME BARRED. THE ASSESSEE FURTHER SUBMITTED THAT T HE SOURCES FOR THE CAPITAL INTRODUCED WAS EXPLAINED BY FURNISHING LEDG ER ACCOUNT COPIES OF THE PARTNER AND ALSO EXPLAINED THE SOURCES FOR THE CAPITAL BY STATING THAT THE AMOUNT WAS DRAWN FROM VARIOUS FIRMS, WHEREIN TH E PARTNER WAS EITHER PROPRIETOR OR PARTNER. WHEN THE SOURCE FOR TH E CAPITAL ACCOUNT WAS EXPLAINED, THE A.O. WAS NOT CORRECT IN MAKING A DDITIONS. 7. THE CIT(A), AFTER CONSIDERING THE EXPLANATIONS F URNISHED BY THE ASSESSEE DELETED THE ADDITIONS MADE UNDER THE HEAD HAMALI CHARGES AND PRODUCTION CHARGES. WHILE DOING SO, THE CIT(A) WAS OF THE OPINION THAT THERE IS NO CONTRACT BETWEEN THE MESTRI AND THE ASS ESSEE AND AS SUCH THESE PAYMENTS ARE NOT COVERED UNDER THE PROVISIONS OF SECTION 194C OF THE ACT AND THUS IT HAS TO BE HELD THAT A.O. HAS WR ONGLY INVOKED THE PROVISIONS OF SECTION 194C OF THE ACT AND THERE BY DISALLOWED THE AMOUNTS U/S 40(A)(IA) OF THE ACT. SIMILARLY, THE C IT(A), DELETED ADDITION MADE TOWARDS CAPITAL ACCOUNT BY HOLDING THAT WHEN T HE SOURCES FOR THE ITA NO.282/VIZAG/2013 M/S. BEST FEEDS, VIJAYAWADA 7 CAPITAL WAS EXPLAINED AND ALSO FROM WHICH CONCERN M ONEY HAVE FLOWN INTO THE INDIVIDUAL HANDS WERE PRODUCED BEFORE THE A.O., THE A.O. COULD HAVE DISCHARGED HIS ONUS IN REJECTING THE SAME BY B RINGING COGENT MATERIALS ON RECORD, WHICH WAS NOT DONE. IN ADDITI ON, AS RIGHTLY CONTENDED BY THE A.R. IF AT ALL THE SOURCES IN THE INDIVIDUAL HANDS OF THE ASSESSEE IS DOUBTFUL, THE PROPER COURSE WOULD BE TO SUBJECT THE SAME IN THE HANDS OF THE INDIVIDUAL PARTNERS RATHER THAN IN THE HANDS OF THE FIRM IS ACCEPTABLE. THUS TAKING THE OVERALL FACTS AND C IRCUMSTANCES OF THE CASE, THE A.O. IS DIRECTED TO DELETE THE ADDITIONS. AGGRIEVED BY THE CIT(A) ORDER, THE REVENUE IS IN APPEAL BEFORE US. 8. THE LD. D.R. SUBMITTED THAT THE CIT(A) WAS ERRED IN DELETING THE ADDITIONS MADE U/S 40(A)(IA) OF THE ACT. THE LD. D .R. FURTHER SUBMITTED THAT THE CIT(A) OUGHT TO HAVE SUSTAINED THE DISALLO WANCE U/S 40(A)(IA) OF THE ACT TOWARDS HAMALI CHARGES OF RS.16,86,052/- AND PRODUCTION CHARGES OF RS.20,82,288/-, AS THE PAYMENTS WERE MAD E TO A SINGLE PERSON FOR SUPPLY OF LABOUR FROM TIME TO TIME WHICH IS EVIDENT FROM THE VOUCHERS PRODUCED BEFORE THE A.O. THE LD. D.R. FUR THER SUBMITTED THAT THE CIT(A) WAS ERRED IN DELETING THE ADDITION BY ST ATING THAT THERE IS NO WRITTEN CONTRACT BETWEEN THE MESTRI AND THE ASSESSE E, SINCE THERE EXIST AN ORAL CONTRACT BETWEEN THE MESTRI AND ASSESSEE. THE MESTRI IS BOUND ITA NO.282/VIZAG/2013 M/S. BEST FEEDS, VIJAYAWADA 8 TO SUPPLY THE LABOUR/WORK FORCE AS PER THE TERMS TI LL THE WORK IS COMPLETED WHICH AMOUNTS TO CONTACT AS STIPULATED U/ S 194C OF THE ACT. SINCE, THE ASSESSEE FAILED TO DEDUCT THE TAX U/S 19 4C OF THE ACT ON SUCH PAYMENTS, THE A.O. HAS RIGHTLY DISALLOWED THE AMOUN T BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT AND HIS ORDER SHOULD BE UPHELD. SIMILARLY, AS REGARDS THE ADDITIONS TOWARDS CAPITAL IS CONCERNED, THE LD. D.R. SUBMITTED THAT THE ASSESSEE HAS FAILED TO FURN ISH SOURCES FOR THE CASH CREDITS IN CAPITAL ACCOUNT THEREFORE, THE A.O. HAS RIGHTLY MADE THE ADDITIONS. THE LD. D.R. FURTHER SUBMITTED THAT THE CIT(A) ERRED IN HOLDING THAT THE A.O. SHOULD HAVE DISCHARGED HIS ON US IN REJECTING THE SAME BY BRINGING COGENT MATERIAL ON RECORD WHICH WA S NOT DONE AS THE ASSESSEE DID NOT DISCHARGED INITIAL BURDEN CAST UPO N IT. THEREFORE, THE ADDITIONS MADE BY THE A.O. SHOULD BE UPHELD. 9. ON THE OTHER HAND, THE LD. A.R. OF THE ASSESSEE STRONGLY SUPPORTED THE ORDER OF THE CIT(A). THE A.R. FURTHER SUBMITTE D THAT THE ASSESSEE HAS INCURRED HAMALI CHARGES TOWARDS LABOUR PAYMENT TO DAILY LABOURERS EMPLOYED IN THE FACTORY FOR HANDLING THE MATERIAL. THE PAYMENTS AS PER CUSTOMS WERE MADE TO MESTRI ON BEHALF OF LABOURERS, IN TURN THE MESTRI HAS DISTRIBUTED THE PAYMENT TO THE INDIVIDUAL LABOU RERS. THE A.R. FURTHER SUBMITTED THAT IT IS NOT A CONTRACT FOR WOR K OR CONTRACT FOR SUPPLY ITA NO.282/VIZAG/2013 M/S. BEST FEEDS, VIJAYAWADA 9 OF LABOURERS, BUT IT IS ONLY A PAYMENT OF WAGES TO DAILY LABOURERS EMPLOYED IN THE ASSESSEES FIRM. THEREFORE, THE A. O. WAS NOT CORRECT IN INVOKING THE PROVISIONS OF SECTION 194C OF THE ACT, THEREBY DISALLOWING THE AMOUNTS U/S 40(A)(IA) OF THE ACT. THE A.R. FUR THER SUBMITTED THAT AS FAR AS THE PRODUCTION CHARGE IS CONCERNED, THIS IS ALSO SIMILAR PAYMENT MADE TO THE DAILY LABOURERS FOR WORKING IN THE FACT ORY PREMISES FOR HANDLING THE MATERIALS. THESE PAYMENTS ARE MADE TO THE LABOURERS THROUGH A MESTRI, IN TURN THE MESTRI HAS PAID THE A MOUNT TO THE INDIVIDUAL LABOURERS. THE A.R. FURTHER SUBMITTED T HAT IT IS NOT A CONTACT OF WORK OR CONTRACT FOR SUPPLY OF LABOUR, BUT ONLY A PAYMENT OF WAGES TO THE DAILY LABOURERS. THEREFORE, THE A.O. WAS NOT C ORRECT IN DISALLOWING THE AMOUNT BY INVOKING THE PROVISIONS OF SECTION 40 (A)(IA) OF THE ACT. IN SUPPORT OF ITS CONTENTIONS, FILED LEDGER ACCOUNT CO PIES OF HAMALI CHARGES AND PRODUCTION CHARGES ALONG WITH NAMES OF PERSONS TO WHOM THE AMOUNT IS PAID. 10. THE LD. A.R. SUBMITTED THAT THE A.O. WAS ERRED IN ADDING THE CREDITS IN CAPITAL ACCOUNT. THE A.R. FURTHER SUBMI TTED THAT THE ASSESSEE HAS SUBMITTED LEDGER ACCOUNT COPIES FROM THE BOOKS OF BOTH, THE PARTNER AND THE FIRM AND ALSO PRODUCED THE PERSONAL BOOKS O F THE PARTNERS TO CONFIRM THE SOURCE FOR CREDITS IN CAPITAL ACCOUNT. THE A.O. WITHOUT ITA NO.282/VIZAG/2013 M/S. BEST FEEDS, VIJAYAWADA 10 CONSIDERING THE MATERIAL AND EXPLANATIONS OF THE FI RM HAS MADE ADDITIONS TOWARDS UNEXPLAINED CREDITS ON THE GROUND THAT THE INFORMATION IS NOT AVAILABLE. THE ASSESSEE FURTHER SUBMITTED THAT THE PARTNER IS HAVING SOURCES FOR THE CREDITS IN CAPITA L ACCOUNT, WHICH WAS EXPLAINED BEFORE THE A.O. BY FURNISHING LEDGER ACCO UNT COPIES OF VARIOUS FIRMS, WHEREIN THE PARTNER OF THE FIRM WAS EITHER A PARTNER OR PROPRIETOR. THE A.R. FURTHER SUBMITTED THAT SRI M. SURENDRA NAT H WAS REGULARLY ASSESSED TO INCOME TAX AND HIS CASE WAS SUBJECTED T O ASSESSMENT U/S 143(3) OF THE ACT, WHEREIN THE A.O. HAS ACCEPTED TH E SOURCE FOR INVESTMENT IN CAPITAL ACCOUNT OF BEST FEEDS. THE A .R. FURTHER SUBMITTED THAT IF AT ALL THE A.O. IS NOT SATISFIED WITH THE S OURCES FOR CREDITS IN CAPITAL ACCOUNT, THEN, THE ADDITIONS CAN BE MADE ON LY IN THE HANDS OF THE PARTNERS, BUT NOT IN THE HANDS OF THE FIRM. THE REFORE, THE ORDER OF CIT(A) SHOULD BE UPHELD. 11. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE A.O. DISALLOWED HAMALI CHARGES AND PRODUCTION CHARG ES BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. THE A. O. WAS OF THE OPINION THAT THE ASSESSEE HAS MADE THE PAYMENT TO THE MESTR I FOR SUPPLY OF LABOURERS, THEREFORE, IT ATTRACTS THE PROVISIONS OF SECTION 194C OF THE ACT, ITA NO.282/VIZAG/2013 M/S. BEST FEEDS, VIJAYAWADA 11 THEREFORE, DISALLOWED THE AMOUNT U/S 40(A)(IA) OF T HE ACT. IT WAS THE CONTENTION OF THE ASSESSEE THAT THE AMOUNTS PAID TO WARDS HAMALI CHARGES AND PRODUCTION CHARGES ARE NOT COVERED U/S 194C OF THE ACT. THE ASSESSEE FURTHER SUBMITTED THAT THESE PAYMENTS WERE MADE TO DAILY WORKERS EMPLOYED IN THE FACTORY FOR HANDLING THE MA TERIALS AND THE PAYMENTS WERE MADE ON WEEKLY/FORTNIGHTLY BASIS. TH E PAYMENTS WERE MADE THROUGH THE MESTRI FOR THE SAKE OF CONVENIENCE . THEREFORE, IT CANNOT BE CONSTRUED AS WORK CONTRACT TO INVOKE THE PROVISIONS OF SECTION 194C OF THE ACT. WE FIND FORCE IN THE ARGUMENTS OF THE ASSESSEE FOR THE REASON THAT THE ASSESSEE HAS FURNISHED LEDGER ACCOU NT COPIES OF HAMALI CHARGES AND PRODUCTION CHARGES ALONG WITH NAME AND ADDRESS OF THE PERSONS TO WHOM THE PAYMENTS WERE MADE. ON VERIFIC ATION OF THE LEDGER ACCOUNTS, IT WAS NOTICED THAT THE ASSESSEE H AS MADE THE PAYMENTS ON WEEKLY BASIS TOWARDS WAGES PAYMENTS TO THE DAILY WORKERS EMPLOYED IN THE FACTORY. THE ASSESSEE MADE THE PAY MENTS THROUGH THE MESTRI, JUST BECAUSE FOR IT IS CONVENIENT AND ALSO THIS HAS TWO ADVANTAGES I.E. IT IS THE RESPONSIBILITY OF THE MES TRI TO PROVIDE LABOUR TO THE MANAGEMENT ON ONE HAND AND ON THE OTHER HAND, I T IS CONVENIENT TO THE ASSESSEE INSTEAD OF DEALING THE WHOLE LOT, THE ASSESSEE COULD DEAL WITH A SINGLE PERSON. THIS IS A RECOGNIZED SYSTEM FOLLOWED EVERYWHERE, WHERE THERE IN UNSKILLED WORK FORCE. JUST BECAUSE THE PAYMENTS ARE ITA NO.282/VIZAG/2013 M/S. BEST FEEDS, VIJAYAWADA 12 MADE THROUGH THE MESTRI, THE A.O. WAS NOT CORRECT I N COMING TO THE CONCLUSION THAT THERE EXIST WRITTEN OR ORAL CONTRAC T FOR SUPPLY OF LABOUR WHICH ATTRACTS THE PROVISIONS OF SECTION 194C OF TH E ACT. THERE IS NO CONTRACT BETWEEN THE MESTRI AND THE ASSESSEE, AS SU CH THESE PAYMENTS ARE NOT COVERED UNDER THE PROVISIONS OF SECTION 194 C OF THE ACT, THEREFORE THE A.O. WAS NOT CORRECT IN DISALLOWING T HE AMOUNTS BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. THE CIT(A) AFTER CONSIDERING THE RELEVANT DETAILS AND SUBMISSIONS OF THE ASSESSEE DELETED THE ADDITIONS MADE BY THE A.O. WE DO NOT FIND ANY ER ROR OR INFIRMITY IN THE ORDER PASSED BY THE CIT(A). HENCE, WE INCLINED TO UPHELD THE ORDER PASSED BY THE CIT(A) AND DIRECT THE A.O. TO DELETE THE ADDITIONS. 12. THE NEXT ISSUE, CAME UP FOR OUR CONSIDERATION I S WHETHER THE CIT(A) WAS RIGHT IN DELETING THE ADDITION MADE TOWA RDS CREDITS IN CAPITAL ACCOUNT? THE CIT(A) DELETED THE ADDITIONS BY HOLDI NG THAT THE ASSESSEE HAS FURNISHED DETAILS WITH REGARD TO THE SOURCES FO R THE CREDITS IN CAPITAL ACCOUNT, THEREFORE, THE A.O. WAS NOT CORRECT IN ADD ING THE CREDITS IN THE HANDS OF THE PARTNERSHIP FIRM. THE CIT(A) WAS OF T HE OPINION THAT IF AT ALL THE SOURCES FOR THE CREDITS WAS NOT PROVED BY T HE PARTNERS, THEN THE SAME CAN BE ADDED IN THE HANDS OF THE PARTNERS, BUT NOT IN THE HANDS OF THE FIRM. IT WAS THE CONTENTION OF THE A.O. THAT T HE ASSESSEE HAS NOT ITA NO.282/VIZAG/2013 M/S. BEST FEEDS, VIJAYAWADA 13 FURNISHED DETAILS WITH REGARD TO THE SOURCES AT THE TIME OF ASSESSMENT. THE ASSESSEE CONTENDED THAT IT HAS FURNISHED THE LE DGER ACCOUNT COPIES OF THE PARTNERS ALONG WITH PROOF FOR SOURCES FOR CA SH CREDITS. THE ASSESSEE CLAIMED THAT IT HAS DRAWN MONEY FROM VARIO US FIRMS WHEREIN THE PARTNER WAS EITHER PROPRIETOR OR PARTNER AND AL L THE DETAILS WERE FURNISHED BEFORE THE A.O. FOR HIS VERIFICATION. TH E A.O. WITHOUT VERIFICATION SIMPLY MADE THE ADDITIONS BY STATING T HAT IT IS NOT POSSIBLE TO CALL FOR THE EXPLANATIONS REGARDING CASH INFLOW AND OUTFLOW AS THE ASSESSMENT IS TIME BARRED. 13. WE HAVE GONE THROUGH THE ASSESSMENT ORDER, SUBMI SSIONS OF THE ASSESSEE AND ORDER OF THE CIT(A). THE ASSESSEE HAS FILED PAPER BOOK, WHICH CONTAINS THE LEDGER ACCOUNT COPIES OF CAPITAL ACCOUNT OF M. SURENDRA NATH AND ALSO LEDGER ACCOUNT COPIES OF M. SURENDRA NATH IN THE BOOKS OF THE ASSESSEE FIRM. ON PERUSAL OF THE LEDGER ACCOUNT COPIES, WE FIND THAT MOST OF THE TRANSACTIONS WERE DONE IN CASH. THOUGH ASSESSEE CLAIMED TO HAVE FURNISHED THE RELEV ANT DETAILS BEFORE THE A.O. WITH REGARD TO THE SOURCES FOR THE CREDITS IN CAPITAL ACCOUNT, THE A.O. COULD NOT HAD AN OCCASION TO VERIFY THE SAME, BECAUSE THE BOOKS OF ASSESSEE WERE NOT AVAILABLE AT THE TIME OF ASSESSME NT. IT IS AN ADMITTED FACT THAT THE BOOKS OF ASSESSEE WERE NOT BEFORE THE A.O. TO VERIFY THE ITA NO.282/VIZAG/2013 M/S. BEST FEEDS, VIJAYAWADA 14 SOURCES OF THE CREDITS IN CAPITAL ACCOUNT. UNLESS, THE A.O. SATISFIED HIMSELF ABOUT THE SOURCE WITH REFERENCE TO ASSESSEE BOOKS OF ACCOUNT, HE CANNOT CAME TO A CONCLUSION THAT THE SOURCES FOR THE CREDITS WERE SATISFACTORILY EXPLAINED. THEREFORE, WE ARE OF TH E OPINION THAT TO MEET THE ENDS OF JUSTICE, WE DEEM IT PROPER TO REMIT THE ISSUE BACK TO THE FILE OF THE A.O. AND DIRECT THE A.O. TO VERIFY THE DETAI LS FILED BY THE ASSESSEE WITH REGARD TO THE SOURCES FOR THE CREDITS IN CAPIT AL ACCOUNT AND PASS APPROPRIATE ORDERS AS PER LAW. ACCORDINGLY, WE ALLO W THE GROUND RAISED BY THE REVENUE FOR STATISTICAL PURPOSES. 14. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 5 TH FEB16 SD/- SD/- (. ) ( . ) ( V. DURGA RAO ) ( G. MANJUNATHA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER * /VISAKHAPATNAM: . / DATED : 5.2.2016 VG/SPS ITA NO.282/VIZAG/2013 M/S. BEST FEEDS, VIJAYAWADA 15 # 0* 1*/ COPY OF THE ORDER FORWARDED TO :- 1. / THE APPELLANT THE ITO WARD-2(3), VIJAYAWADA 2. #$ / THE RESPONDENT M/S. BEST FEEDS, 27-33-01, GRANDHI KAMARAJU BHAVAN, 2 ND FLOOR, GUNDAVALLIVARI STREET, GOVERNORPET, VIJAYAW ADA 3. 4 / THE CIT, VIJAYAWADA 4. 4 () / THE CIT (A), VIJAYAWADA 5. * # 9, ( 9 , * / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // >? 9 ( SR.PRIVATE SECRETARY ) ( 9 , * / ITAT, VISAKHAPATNAM