ACIT, New Delhi V. M/s. Mana Ram Ganpat Ram & Co., New Delhi

ITA 3182/DEL/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74321 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 06-03-2014
• Assessment Year: misc
• Appeal Filed On: 20-06-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 142(1); 133A; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI) BEFORE SHRI U. B. S. BEDI, JUDICIAL MEMBER AND SHRI T. S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO. 3182, 3183, 3184 & 3185/DEL/2012 (ASSESSMENT YEAR 2004-05, 2005-06, 2006-07& 2007-08 ) ACIT, CIRCLE 50(1), VS. MANA RAM GANPAT RAM & CO. , NEW DELHI 251, CYCLE MARKET, JAHNDEWALAN EXTN., NEW DELHI PAN/GIR NO.:AAHFM2570Q (APPELLANTS) (RESPONDENTS) ASSESSEE BY : SHRI K.V.S.R. KRISHNA, CA DEPARTMENT BY: SHRI KEYUR PATEL, SR. DR ORDER PER BENCH: THESE FOUR APPEALS OF THE DEPARTMENT ARE DIRECTED AGAINST CONSOLIDATED ORDER PASSED BY LD. CIT(A) XXX, NEW DE LHI DATED 27.04.2012 RELEVANT TO ASSESSMENT YEAR 2004-05, 200 5-06, 2006-07 & 2007- 08 RESPECTIVELY. 2. ALL THESE APPEALS RAISED IDENTICAL FACTS AND SIM ILAR ISSUE, HAVING ARISEN FROM A CONSOLIDATED ORDER AND HAVING BEEN HEARD TOG ETHER, WE ARE DISPOSING OF THEM BY A SINGLE ORDER FOR THE SAKE OF CONVENIEN CE. 3. IN THESE APPEALS, DEDUCTION U/S 201(1) AND LEVY OF INTEREST U/S 201(1A) ON VARIOUS AMOUNTS FOR DIFFERENT YEARS HAVE BEEN CH ALLENGED BY THE ASSESSEE BEFORE THE FIRST APPELLATE AUTHORITY WHO NOTED THE FACTS AND DETAILS FROM 1-3 OF THE ORDER AS UNDER: THAT THE ASSESSEE HAS GIVEN CONTRACT (AS SUCH TDS PROVISIONS ARE APPLICABLE) FOR EARTH WORK, TRANSPORTATION, REP AIR AND MAINTENANCE, HIRE CHARGES, WORK SUBLET ETC. IS A ME RE ASSUMPTION OF I.T.A. NOS.3182-85/DEL/2012 2 THE A.O. AND ON MERELY ASSUMPTION, ONE CANNOT ARRIV E AT CONCLUSION. THE ASSESSMENT NEEDS TO BE SET ASIDE. ON 17.01.2007, THE SURVEY WAS CONDUCTED BY ACIT, TD S CIRCLE - 50(1), NEW DELHI ON THE PREMISES OF THE ASSESSEE TO VERIFY COMPLIANCE OF VARIOUS PROVISIONS CONTAINED IN CHAPTER XVII-B OF T HE ACT. LATER ON NOTICES WERE ISSUED BY ACIT, TDS CIRCLE-50(1), NEW DELHI, A SKING THE ASSESSEE TO FURNISHED CERTAIN DETAIL AND ASSESSEE VIDE ITS 3 LE TTERS DATED 08.03.2007, 10.04.2007 AND 23.04.2007 FILED CERTAIN DETAILS. PROCEEDINGS U/S 201(1) / 201(1A) WERE COMMENCED AGA IN BY ACIT, TDS CIRCLE-50(1), NEW DELHI AND CASE WAS FIXED FOR 09.12.2009. HOWEVER THERE WAS NO RESPONSE TO THE NOTICE. HEAD OF AMOUNT OF AMOUNT OF AMOUNT OF AMOUNT OF EXPENDITURE 2003-04 2004-05 2005-06 2006-07 EARTH WORK 40,00,936.00 2,21,24,542.00 44,05,30 1.00 76,30,364.00 (PROPORTIONATE TO (PROPORTIONATE TO (PROPORTIO NATE TO PURCHASES) PURCHASES) PURCHASES) MACHINERY / 36,24,164.00 12,30,279.00 23,19,04 5.00 29,96,517.00 TRUCK REPAIRS FREIGHT & 2,12,86,821.00 1,17,60,941.00 2,34,17,652.00 4,05,61,411.00 CARTAGE (PROPORTIONATE TO (PROPORTIO NATE TO (PROPORTIONATE TO PURCHASES) PURCHASES) PURCHAS ES) HIRE CHARGES 5,39,550.00 3,54,700.00 - - WORK SUBLET (SUB - - 73,30,777.00 - CONTRACT) TOTAL 2,94,51,471.00 3,54,70,463.00 3,74,72,775.00 5,11,88,292.00 LATER ON ADDITIONAL COMMISSION OF INCOME TAX, TDS R ANGE-50, NEW DELHI, ISSUED A NOTICE DATED 11.01.2010 FIXING THE CASE FO R 20.01.2010. ON 21.01.2010, AUDITED FINAL ACCOUNTS ALONG WITH PROOF OF PAYMENT OF TDS LIABILITY' OUTSTANDING AS ON 31 ST MARCH WERE FURNISHED THE ASSESSEE. COPIES OF ACCOUNTS OF EXPENSES MONTH WISE AND HEAD WISE EX PENSES ON WHICH TDS DEDUCTED AND THE ASSESSEE VIDE LETTER DATED 20.01.2010 CLAIMED T HAT NO TDS WAS REQUIRED TO BE DEDUCTED FROM ANY EXPENDITURE OTHER THEN SUB- CONTRACT AND INTEREST BUT THE ASSESSEE PRODUCED NO EVIDENCE TO SUBSTANTIATE I TS CONTENTION IN ANY OF THE YEARS. UNDER ABOVE CIRCUMSTANCES A.O. WAS LEFT WITH NO ALT ERNATIVE BUT TO PASS ORDER ON BASIS OF DOCUMENTS ALREADY ON RECORD. ACCORDINGLY A.O. CONCLUDED THAT ASSESSEE HAS COMMIT TED DEFAULT IN NOT DEDUCTING TAX OF SOURCE U/S 194-C OF INCOME-TAX, 19 61 ON TOTAL CHARGES AS I.T.A. NOS.3182-85/DEL/2012 3 CALCULATED ABOVE. THE ASSESSEE IS THEREFORE HELD TO BE AN ASSESSEE IN DEFAULT IN TERMS OF SECTION 201(1) OF INCOME TAX ACT, 1961. SINCE THE ASSESSEE HAD NOT DEDUCTED TAX AT SOURCE U /S 194-C OF INCOME TAX ACT, 1961 WHICH IT WAS REQUIRED TO DEDUCT AND PAY T O THE GOVERNMENT, IT HAS RENDERED ITSELF LIABLE TO PAY INTEREST U/S 201 (1 A ) OF THE ACT. THE CALCULATION OF LIABILITY OF THE ASSESSEE U/S 20 1 (1) & 201 (A) IS MADE AS UNDER: FINANCIAL GROSS AMOUNT RATE OF AMOUNT OF AMOUNT OF TOTAL YEAR LIABLE FOR TDS TDS TDS INTEREST U/S @2.266% 201(LA) 2003-04 2,94,51,471.00 2.266% 6,67,370.00 4,80,5 06.00 11,47,876.00 2004-05 3,54,70,462.00 2.266% 8,03,761.00 4,82,2 56.00 12,86,017.00 2005-06 3,04,41,998.00 2.266% 6,83,018.00 3,27,8 48.00 10,10,866.00 - DO- 73,30,777.00 1.133% 83,058.00 39,868.00 1,22,926.00 2006-07 5,11,88,292.00 2.266% 11,59,927.00 4,1 7,573.00 15,77,500.00 TOTAL 15,38,83,000.00 - 33,97,134.00 17,48, 051.00 51,45,185.00 4. ASSESSEES SUBMISSIONS WERE RECORDED BY LD. CIT( A) IN SUBSEQUENT PARAGRAPHS WHO CONCLUDED TO DELETE SUCH CLAIM OF DE MAND U/S 201(1) AND INTEREST U/S 201(1A) ON VARIOUS AMOUNTS FOR ALL THE FOUR YEARS BY CONCLUDING FROM PARA 10-13 AS UNDER: I HAVE GONE THROUGH THE SUBMISSION MADE BY APPELLAN T AND ALSO SURVEY RECORDS. WHILE THE APPELLANT HAD BEEN OVE RWHELMINGLY DENYING THAT HE IS LIABLE TO DEDUCT ANY TDS ON EART H WORK, MACHINERY / TRUCK REPAIR, FREIGHT & CARTAGE, HIRE CHARGES, A. O. HAD HELD HIM LIABLE TO DEDUCT TDS WITHOUT PUTTING ANY ADVERSE MA TERIAL ON RECORD. THE MAIN POINT OF THE REVENUE IS THAT APPELLANT H AD FAILED TO PRODUCED BOOKS OF ACCOUNT AND VOUCHERS BUT FROM THE SCRUTINY ASSESSMENT ORDERS, FILED BEFORE ME FOR THE FINANCIA L YEAR 2003-04, 2006-07 & 2007-08, I FIND THE ASSESSEE HAS PRODUCED BOOKS OF ACCOUNTS VOUCHERS AND BILLS BEFORE THE REGULAR AO O F THE COMPANY CIRCLE AND THIS EFFECT HAVE DULY BEING ACKNOWLEDGED AT VARIOUS PLACES IN THE SCRUTINY ORDERS. THE REGULAR AO HAD NOT COMM ENTED ON TDS DEFAULTS ANYWHERE THERE SHOULD BE PROPER COMMUNICAT ION BETWEEN AO (TDS) AND REGULAR AO OF THE APPELLANT COMPANY FO R ANY TAX DEFAULTED BY APPELLANT, SO THAT PROPER REVENUE CAN BE COLLECTED FROM APPELLANT. WITHOUT PROPER CO-ORDINATION, TEAM WORK IF WE MAKE I.T.A. NOS.3182-85/DEL/2012 4 ASSESSMENTS SEPARATELY, WE CANNOT IMPROVE IN OUR TA RGET ACHIEVEMENT LAWFULLY. WHEN THE APPELLANT DENIES TO DEDUCT ANY T AX UNDER TDS PROVISIONS, THE AO (TDS) SHOULD GATHER MORE INFORMA TION BY GOING DEEP INTO BOOKS OF A/CS AND FIELD ENQUIRY. THE APPE LLANT IS DOING CONTRACT WORK FOR THE GOVT. DEPARTMENT BY UTILISING HIS RESOURCES LIKE EMPLOYEES, TRUCKS, MACHINERY ETC. HOW HE DEDUCT TAX FROM HIMSELF? ASSESSMENT ORDER FOR FINANCIAL 2003-04 (2004-05) RE ADS THAT THE BOOKS OF ACCOUNTS CONSISTING OF CASH BOOKS, LEDGER ETC. WITH SUPPORTING VOUCHERS WERE PRODUCED EXAMINED ON TEST CHECK BASIS ..... . . . . .. THE PURCHASES ARE VERIFIABLE WITH REFERE NCE TO BOOKS OF ACCOUNTS, PURCHASE BILLS AND VOUCHERS . FINANCIAL YEAR 2005-06 (2006-07) .... ALL THE RECEIPTS AND PURCHASES HAVE BEEN FOUND ACCOUNTED FOR ON TEST CHECK, HENCE NO INTERVENTION IS MADE AFTER EXA MINATION OF BOOKS OF ACCOUNTS AND INFORMATION FILED BY THE ASSESSEE F ORM TIME TO TIME, THE FOLLOWING DISALLOWANCES WERE MADE DISALLOWANCE OF RS.1,00,000/- WAS MADE OUT OF LABOUR EXPENSES AND RS.47,500/- OUT OF TRUCK REPAIR AND MAINTENANCE. ASSESSMENT YEAR 2007-08 1ST PARA ..... A DETAILED QUESTIONNAIRE ALONG WITH NOTICE U/ S 142(1) WAS ISSUED TO THE ASSESSEE ON 19.01.2009. IN RESPONSE TO ABOVE NOTICES, SH. P K AGGARWAL, CHARTERED ACCOUNTANT, AUTHORIZED REPRESEN TATIVE OF THE ASSESSEE ATTENDED THE ASSESSMENT PROCEEDINGS FROM T IME TO TIME AND SUBMITTED THE VARIOUS DETAIL/INFORMATION CALLED FOR AND THE SAME HAVE BEEN EXAMINED AND PLACED ON RECORD. IIND PARA ASSESSEE IS IN THE BUSINESS OF CIVIL CONSTRUCTION. DURING THE YEAR UNDER CONSIDERATION, ASSESSEE DERIVES INCOME FROM C ONTRACTUAL ACTIVITIES UNDER THE HEAD PROFIT AND GAINS OF BUSIN ESS AND PROFESSION. IILRD PARA AFTER VERIFICATION OF VARIOUS DETAILS FURNISHED BY THE ASSESSEE, THE TOTAL INCOME OF THE ASSESSEE IS BEING DETERMINED AFTER CO NSIDERATION THE FOLLOWING FINDING:- A.O. MAKES DISALLOWANCE OF RS. 1,00,000/- OUT OF LA BOUR CHARGES AND WAGES AND ANOTHER' 1,00,000/- DISALLOWANCE HAS BEEN MADE OUT OF PURCHASES, CARRIAGE AND EARTH WORK. I HAVE THOROUGHLY GONE INTO RECORDS / BOOKS ETC OF ALL YEARS INCLUDING FINANCIAL YEAR 2004-05 AND ALSO SURVEY RECORDS AND FIND THAT TDS PROVISIONS ON CERTAIN EXPENSES MENTIONED IN SAID OR DER ARE APPLICABLE I.T.A. NOS.3182-85/DEL/2012 5 TO 'A' JUST BECAUSE HE HAS NOT PRODUCED BEFORE ADD! . CIT BOOKS OF ACCOUNTS ETC. THIS WILL NOT MEET THE END OF JUSTICE AS AMPLE EVIDENCE IS AVAILABLE THAT BOOKS OF ACCOUNTS AND VOUCHES AND BI LLS WERE PRODUCED AND THERE HAS BEEN NO DISALLOWANCES U/S 40(A)(IA) O F THE ITAT IN ANY OF THE S SCRUTINY ASSESSMENTS AS SUCH REGULAR SCRUT INY ASSESSMENT HAVE ATTAINED FINALITY. IN SUCH SURVEY CASE U/S 133A, I F THE A.O. DOS NOT FIND INFORMATION FORM APPELLANT COMPANY, THEN IT IS UNFO RTUNATE THING THAT WE CANNOT EXERCISE OUR POWER OF COLLECTING INFORMAT ION LAWFULLY. THE A.O. (TDS) SHOULD ALSO LEARN TO EXAMINE BOOKS OF AC COUNTS PROPERLY. IF APPELLANT DOES NOT PRODUCE BOOKS, A.O. (TDS) CAN IMPOUND BOOKS U/S 133A AND DERIVE THE RIGHT INFORMATION FORM RECO RDS AND USE NEGOTIATION TECHNIQUES TO COLLECT TAX AS PER LAW. STILL IF HE FAILS TO OBTAIN INFORMATION FORM AR/APPELLANT, PASS ON THE I NFORMATION TO REGULAR A.O. FOR NECESSARY ACTION AT HIS END. IN MY OPINION, THE A.O. (TDS) SHOULD PASS ALL INFORMATION TO REGULAR A.O. A FTER THE APPELLANT FILES RETURNS IN NEXT FINANCIAL YEAR. THIS WILL RE DUCE DESK WORK, AND A.O. (TDS) CAN GATHER MORE INFORMATION FORM MANY TA XPAYERS IN FIELD. IT WILL AUTOMATICALLY INCREASE TAX BASE OF THE DEPARTMENT. IN VIEW OF ABOVE ORDER OF THE ADDL. CIT, NEW DELHI IS CANCELLED. IN THE RESULT, APPEAL IS ALLOWED. 5. AGGRIEVED BY SUCH ORDER OF DELETION OF DEMAND, T HE DEPARTMENT HAS COME UP IN APPEAL AND WHILE RELYING UPON A.O.S ORD ER FOR ALL THE FOUR YEARS, IT WAS PLEADED FOR SETTING ASIDE THE ORDER OF LD. C IT(A) AND RESTORING THAT OF THE A.O. IT WAS ALSO SUBMITTED THAT LD. CIT(A) HAS ERRED IN JUST CONSIDERING THAT THE BOOKS OF ACCOUNTS, VOUCHERS AND BILLS WHIC H WAS PRODUCED BEFORE THE REGULAR A.O. OF THE CO. CIRCLE TO DELETE THE DE MAND WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE, THE MATERIAL ON RECORD AS CONTAINED IN THE ORDER, PASSED BY THE A.O. AND WITHOUT EXAMINING THE BOOKS OF ACCOUNTS, WHICH WERE NOT PRODUCED BEFORE THE A.O., WHILE CREA TING DEMAND U/S 201(1) AND INTEREST U/S 201(1A) OF THE I. T. ACT, 1961 FOR ALL THE FOUR YEARS. IT WAS THUS PLEADED FOR RESTORATION OF THE ORDER OF THE A. O. I.T.A. NOS.3182-85/DEL/2012 6 6. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT EACH AND EVERY ASPECT OF THE MATTER HAS BEEN FULLY EXPLAINED BEFORE LD. CIT( A) WITH ALL DOCUMENTARY EVIDENCE AND HE AFTER CONSIDERING ALL THE ASPECTS O F THE CASE HAVE CAME TO A JUST AND APPROPRIATE CONCLUSION TO DELETE THE DEMAN D BY PASSING VERY DETAILED ORDER, THEREFORE, HIS ORDER DESERVES TO BE CONFIRMED WHICH MAY BE CONFIRMED. 7. WE HAVE HEARD BOTH THE SIDES, CONSIDERED THE MAT ERIAL ON RECORD AS WELL AS DETAILS NOTED BY LOWER AUTHORITIES. FROM T HE PERUSAL OF THE MATERIAL AVAILABLE ON RECORD, WE FIND THAT CERTAIN DISCREPAN CIES WERE THERE IN THE ORDER OF THE A.O. AND ALSO IN THE ORDER OF LD. CIT(A), WH O HAS JUST RELIED UPON THE BOOKS OF ACCOUNTS PRODUCED BEFORE THE A.O. IN REGUL AR ASSESSMENT OF THE ASSESSEE WITHOUT EITHER CALLING FOR THE BOOKS OF AC COUNTS AND EXAMINING THEM HIMSELF. SINCE, THERE ARE SERIOUS INFIRMITIE S AND FLAWS IN BOTH THE ORDERS, THEREFORE, IT WOULD BE JUST AND APPROPRIATE TO SET ASIDE THE ORDERS OF BOTH THE AUTHORITIES BELOW FOR ALL THE FOUR YEARS A ND RESTORING THE MATTERS TO THE FILE OF THE A.O. FOR READJUDICATION OF THE ISSU ES AFRESH AFTER GIVING DUE OPPORTUNITY TO THE ASSESSEE, WHICH WE HOLD AND ORDE R ACCORDINGLY. 8. AS A RESULT, ALL THE APPEALS OF THE DEPARTMENT A RE TREATED TO HAVE BEEN ALLOWED FOR STATISTICAL PURPOSES. 9. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH MAR., 2014. SD./- SD./- (T. S. KAPOOR) (U.B.S.BEDI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 14 TH MAR., 2014. SP. I.T.A. NOS.3182-85/DEL/2012 7 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A)-XXV, NEW DELHI AR, ITAT, 5. CIT(ITAT), NEW DELHI NEW DELHI