The ITO,Vapi Ward-2, Vapi V. Shri Jayesh Devshibhai Parmar, SILVASSA

ITA 2886/AHD/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1988 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2009
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2006-2007
• Appeal Filed On: 16-10-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: C K MISHRA
• Assessee Lawyers: K N BHATT
• Keywords: Principle of natural justice; TDS; Set aside
• Section: 68

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'D' (BEFORE SHRI T K SHARMA AND D C AGRAWAL) ITA NO.2886/AHD/2009 (ASSESSMENT YEAR: 2006-07) THE INCOME-TAX OFFICER, VAPI WARD-2, VAPI V/S SHRI JAYESH DEVSHIBHAI PARMAR, PROP. J D CONSTRUCTION, OPP. GAYATRI MANDIR, AMLI, SILVASSA PAN: AILPP 2297 B (APPELLANT) (RESPONDENT) APPELLANT BY :- SHRI C K MISHRA, DR RESPONDENT BY:- SHRI K N BHATT, CA O R D E R PER D C AGRAWAL (ACCOUNTANT MEMBER) : THIS IS AN APPEAL BY THE REVENUE RAISING THE FOLLOWING GROUNDS: 1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION U/S 40(A) (IA) OF RS.1341088/-. 2 ON THE FACTS AND CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING ADDITION OF DIFFERENCE IN CREDIT OF RS.389382/-. 3 ON THE FACTS AND CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.387 000/- MADE U/S 68 ON ACCOUNT OF CASH RECEIPT. IT IS THEREFORE, PRAYED THAT THE ORDER OF THE LEARN ED CIT(A) BE SET ASIDE AND THAT THE ORDER OF THE AO BE RESTORED . 2 2 THE FACTS OF THE CASE ARE THAT THE ASSESSEE AN INDIVIDUAL IS ENGAGED IN THE CIVIL CONSTRUCTION WOR K. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTICED THA T THE ASSESSEE HAS CLAIMED HIRE CHARGES AND LABOUR CHARGE S AS UNDER BUT NO TDS HAS BEEN DEDUCTED AS REQUIRED U/S 194C(2 ) OF THE INCOME-TAX ACT, 1961 [THE ACT FOR SHORT]: SR. NO. NAME AMOUNT HEAD OF ACCOUNT 1 N D KAHAR 102000 HIRE CHARGES 2 NARAYANLAL GUJJAR 154155 HIRE CHARGES 3 V K KADAM 65450 HIRE CHARGES 4 P N CHAUHAN 98500 HIRE CHARGES 5 RAICHAND GUJJAR 188022 HIRE CHARGES 6 REDDY 74900 HIRE CHARGES 7 K K CONSTRUCTION 68500 HIRE CHARGES 8 KARIMKHAN 57450 HIRE CHARGES 9 J R ASSOCIATES 100000 HIRE CHARGES 10 RATANLAL J SHARMA 139511 HIRE CHARGES 11 PANDIT CONSTRUCTION 100000 HIRE CHARGES 12 D G KAHAR 192600 HIRE CHARGES 13 ATHARVA ENGINEERS 489250 LABOUR CHARGES 14 NANURAM SAINI 63500 LABOUR CHARGES TOTAL RS. 1893838 SINCE THERE WAS NO EVIDENCE OF ANY TAN OR DEDUCTION OF TDS OR PAYMENT THEREOF TO THE GOVERNMENT ACCOUNT, THE AO D ISALLOWED THE CLAIM OF RS.18,93,838/-, BY INVOKING SECTION 40 A(IA). 3 THE CIT(A), HOWEVER, CLASSIFIED THE PAYMENTS IN TWO CATEGORIES, I.E. (I) AMOUNTING TO RS.13,41,088/- BE ING THE AMOUNT PAID FOR HIRE CHARGES AND (II) AMOUNTING TO RS.5,52 ,750/- BEING THE PAYMENT MADE FOR LABOUR CHARGES. ACCORDING TO T HE LD. CIT(A), THE PAYMENT TO SUB-CONTRACTORS WAS MADE SUB JECT TO TDS 3 AS PER THE PROVISIONS OF SECTION 194C(1) WHICH WERE EFFECTIVE FROM 01-06-2007, THEREFORE, THE PROVISIONS OF THAT SECTION WOULD NOT BE APPLICABLE TO THE ASSESSEE FOR THE FY 2005-0 6 RELEVANT TO AY 2006-07. HE ACCORDINGLY DELETED THE ADDITION OF RS.13,41,088/-. 4 BEFORE US, THE LEARNED DR SUBMITTED THAT THE DIFFERENCE MADE BY LD. CIT(A) IS WHOLLY MISCONCEIVE D. THE ASSESSEE IS A CONTRACTOR AND IS ENGAGED IN THE BUSI NESS OF ONE OR MORE CONTRACTS RECEIVED FROM ONE OR MORE CONTRACTOR S. THE WORK SO RECEIVED BY HIM WAS DELEGATED TO A THIRD PERSON WHO CAN ONLY BE CALLED A SUB-CONTRACTOR. THUS, ACCORDING TO THE LEARNED DR, IF WHAT IS RECEIVED BY THE ASSESSEE IS A CONTRACT, THE N PART OF IT DELEGATED BY IT WOULD BE SUB-CONTRACT WITHIN THE ME ANING OF SECTION 194C. ACCORDING TO HIM, THE NATURE OF ACTI VITY WHETHER CARRIED OUT BY THE CONTRACTOR OR SUB-CONTRACTOR WOU LD REMAIN THE SAME. ON THE OTHER HAND, THE LEARNED AR RELIED ON T HE ORDER OF LD. CIT(A). 5 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW, THE DISTINCTION OF THE PAYMENT BETWEEN THE HIRE CHARGES AND LABOUR CHA RGES MADE BY LD. CIT(A) IS NOT FREE FROM DOUBT. THERE IS NO M ATERIAL ON RECORD TO SUGGEST THAT THE SUM OF RS.13,41,088/- IS HIRE CHARGES NOT COVERED BY SECTION 194C. IT IS NOT MADE CLEAR I N RESPECT TO WHAT SUCH HIRE CHARGES ARE PAID, WHETHER SUCH HIRE CHARGES WERE INTEGRAL PART OF MAIN CIVIL CONTRACT WORK UNDERTAKE N BY THE ASSESSEE OR THEY RELATED TO HIRING OF VEHICLES OR O F REMISES, ETC. THE ORDER OF THE LD. CIT(A) IS RATHER SILENT AS TO THE BASIS FOR MAKING SUCH DISTINCTION. THE ASSESSEE HAS ALSO NOT EXPLAINED THE 4 BASIS FOR MAKING SUCH DISTINCTION. WE ACCORDINGLY R ESTORE THE MATTER TO THE FILE OF THE AO WHERE THE ASSESSEE WIL L CLEARLY MAKE OUT THE DISTINCTION SO AS TO PROVE THAT HE IS NOT C OVERED BY MISCHIEF OF SECTION 194C. THIS GROUND OF APPEAL OF REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. 6 THE SECOND GROUND RELATES TO DIFFERENCE IN CREDI T OF RS.3,89,382/- ADDED BY LD. AO. THE LD. AO NOTICED T HAT THE CREDIT APPEARING IN THE BOOKS OF THE ASSESSEE IN TH E NAMES OF FOUR PARTIES DID NOT MATCH WITH THE CORRESPONDING DEBIT BALANCES AGAINST THE ASSESSEE IN THE BOOKS OF THOSE PARTIES. HE ACCORDINGLY MADE THE ADDITION OF THE DIFFERENCE. THE LD. CIT(A) DELETED THE ADDITION ON THE GROUND THAT PROPER OPPORTUNITY WAS NOT PROVIDED. 7 THE LEARNED DR SUBMITTED THAT THE ISSUE WAS RAIS ED BEFORE THE ASSESSEE BY LD. AO BUT NO SATISFACTORY E XPLANATION WAS GIVEN WHEREAS THE LEARNED AR SUBMITTED THAT THE ISSUE WAS RAISED ON 23-12-2008 WHEREAS THE ASSESSMENT ORDER W AS ALREADY PASSED ON THE SAME DATE. 8 AFTER HEARING BOTH THE PARTIES, WE RESTORE THE M ATTER TO THE FILE OF THE AO TO GIVE PROPER OPPORTUNITY OF BE ING HEARD TO THE ASSESSEE TO EXPLAIN THE DIFFERENCE. IN CASE THI S IS A NEW CREDIT, THE NECESSARY EXPLANATION IN ACCORDANCE WIT H SECTION 68 MAY BE CALLED FOR. ACCORDINGLY, THIS GROUND OF APPE AL IS ALLOWED FOR STATISTICAL PURPOSE. 9 THE THIRD ISSUE IS IN RESPECT OF ADDITION OF RS.3,87,000/- MADE BY THE AO U/S 68. THE AO NOTICED THAT THE ACCOUNT IN THE NAME OF M/S SHREE SHITALNATH DEVELOP ERS STANDING AS DEBIT BALANCE WAS PARTIALLY SQUARED UP BY SHOWIN G THE RECEIPT 5 OF RS.3,87,000/- IN CASH. SINCE NO EXPLANATION IN R ESPECT OF THIS RECEIPT WAS FOUND SATISFACTORY, THE AO MADE THE ADD ITION. THE CIT(A) DELETED THE SAME ON THE GROUND THAT THE PRIN CIPLES OF NATURAL JUSTICE ARE NOT FOLLOWED AND THERE IS A CAS E OF DOUBLE TAXATION OF SINGLE AMOUNT, ONCE U/S 68 AND OTHER U/ S 41(1). 10 AFTER HEARING BOTH THE PARTIES, WE RESTORE THE MATTER TO THE FILE OF THE AO WHO WILL EXAMINE THE RECEIPT OF RS.3,87,000/- LIKE A CASH CREDIT ONLY. IF THE EXPLANATION IS FOUN D SATISFACTORY, NO ADDITION WILL BE CALLED FOR. 11 IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 31-12-2009 SD/- SD/- (T K SHARMA) JUDICIAL MEMBER (D C AGRAWAL) ACCOUNTANT MEMBER DATE : 31-12-2009 COPY OF THE ORDER FORWARDED TO : 1. SHRI JAYESH DEVSHIBHAI PARMAR, PROP. J D CONSTRU CTION, OPP. GAYATRI MANDIR, AMLI, SILVASSA 2. THE ITO, VAPI WARD-2, VAPI 3. THE CIT CONCERNED 4. THE CIT(A)-VALSAD 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY.R/A R, ITAT, AHMEDABAD