Appeal details
Counselvise Citation
[2015] 120 COUNSELVISE.COM (IT) 8665 (ITAT-AMRITSAR)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
7 month(s) 2 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
09-02-2015
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
DB
Assessment Year
2009-2010
Appeal Filed On
07-07-2014
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. A.D.JAIN, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.445(ASR)/2014 ASSESSMENT YEAR:2009-10 PAN :AAWFM8157J INCOME TAX OFFICER, VS. M/S. M.COMPANY, WARD-2(1), AMRITSAR. GALI NO.3, AMARKOT, AMRITSA R. (APPELLANT) (RESPONDENT) APPELLANT BY:SH.TARSEM LAL, DR RESPONDENT BY:SH. P.N.ARORA, ADVOCATE DATE OF HEARING:05/02/2015 DATE OF PRONOUNCEMENT:09/02/2015 ORDER PER A.D.JAIN,JM: THIS IS DEPARTMENTS APPEAL FOR THE ASSESSMENT YEA R 2009-10 AGAINST THE ORDER DATED 05.05.2014 PASSED BY THE CIT(A), AM RISAR, DELETING ADDITION OF RS.33,10,795/- UNDER SECTION 40(A)(IA) OF THE IN COME-TAX ACT, 1961 ( IN SHORT, THE ACT), BY VIRTUE OF ORDER DATED 17.01.2 014 PASSED BY THE AO UNDER SECTION 154 OF THE ACT. 2. THE FACTS OF THE CASE ARE THAT VIDE ORIGINAL AS SESSMENT ORDER DATED 11.05.2011 PASSED BY THE AO U/S 143(3) OF THE ACT, THE INCOME OF THE ASSESSEE WAS ASSESSED AT RS.2 LACS AS AGAINST THE R ETURNED INCOME OF ITA NO.445(ASR)/2014 2 RS.1,42,720/-. AS PER ORDER PASSED U/S 154 OF THE A CT, IT WAS LATER ON NOTICED BY THE AO THAT THE ASSESSEE HAD DEBITED A SUM OF RS .33,10,795/- AS LABOUR CHARGES. THE AO OBSERVED THAT DETAILS AVAILABLE ON RECORD SHOWED THAT IN ALL THE CASES THE CONTRACT PAYMENTS EXCEEDED RS.50,000 /- AND THAT NO TAX HAD BEEN DEDUCTED AT SOURCE THEREIN, IN VIOLATION OF PR OVISIONS OF SECTION 194C OF THE ACT AND THAT AS SUCH, IN ACCORDANCE WITH THE PR OVISIONS OF SECTION 40A(IA) OF THE ACT, THE EXPENDITURE MADE BY THE ASSESSEE WA S NOT ALLOWABLE. 3. THE ASSESSEES REPLY TO THE NOTICE U/S 154 OF TH E ACT WAS CONSIDERED AS REJECTED BY THE AO AND THE ADDITION IN QUESTION WAS MADE. WHILE DOING SO, THE AO OBSERVED AS UNDER: THE ASSESSEES COUNSEL TRIED TO JUSTIFY THE ABOVE PAYMENT BY FILING THE LIST OF LABOUR BY PUTTING THE AMOUNT AGAINST T HEM IN SUCH A WAY THAT IT WOULD RECONCILE WITH THE ABOVE FIGURE OF RS .33,10,795/-. SINCE THE ASSESSEE HAS NOT PRODUCED ANY LABOUR REGISTER A T THE TIME OF MAKING THE ORIGINAL ASSESSMENT AND NOW TRIED TO REC ONCILE THE FIGURES BY FILING BOGUS NAMES, AMOUNTS AND EVEN FAILED TO GIVE THE ADDRESSES OF THE ABOVE 18 PERSONS/PARTIES TO WHOM THE PAYMENT WAS MADE. HENCE, THE ASSESSEE WAS LIABLE TO DEDUCT THE TAX AT SOURCE SECTION 194C, WHERE THE AGGREGATE OF THE AMOUNTS OF SUCH SU MS CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID DURING THE FI NANCIAL YEAR EXCEEDS RS.50,000/-. I HAVE CONSIDERED THE REPLY OF THE ASSESSEE WHICH H AS NOT FORCE. IT IS SEEN THAT THE AO AT THE TIME OF MAKING ASSESSMENT H AS DULY EXAMINED BOOKS OF ACCOUNT, AS IS APPARENT FROM 2 ND PARA OF THE ASSTT. ORDER, AND PERUSED THE NATURE & QUANTUM OF CONTRACT PAYMENTS MADE TO VARIOUS PARTIES. HOWEVER, DUE TO AN ACT OF OMISSION, THE TH EN AO HAS FAILED TO APPLY THE PROVISIONS OF SECTION 40(A)(IA) FOR NON-D EDUCTION OF THE TAX AT SOURCE AGAINST THE SAID CONTRACT PAYMENT. IT IS FURTHER SEEN THAT THE DETAILS OF THE PERSONS TO WHOM LABOUR CHARGES H AVE BEEN PAID AS GIVEN SUPRA, BARE READING OF THIS LIST SHOWS THAT M OST OF THESE PERSONS ITA NO.445(ASR)/2014 3 ARE TRADERS/BUSINESSMEN WHICH IS APPARENT FROM THE TRADE NAMES, FOR EXAMBLE S.P. IRON WORKS, DEPUTY IRON STORE, DAVINDE R WELDING, SATNAM WELDING & IRON WORKS, WOOD WORK LABOUR JOGIN DER & CO., PAINT & ENAMEL GOKAL CHAND MADAN GOPAL & CO., DHARA MVIR SINGH & CO., SATNAM & CO. ALL ARE THESE APPARENTLY APPEAR S TO BE BUSINESSMAN. THE ASSESSEES CLAIM THAT WAGES HAVE B EEN PAID TO DAILY WAGERS IS CLEARLY AN AFTERTHOUGHT TO THWART THE PRO CEEDINGS U/S 154. AS IS EVIDENT FROM THE TRADE NAMES CITED ABOVE, THE ASSESSEE COULD EASILY IDENTIFY THEM AND FURNISH THEIR ADDRESSES. H OWEVER, THE ASSESSEE ON THE CONTRARY HAS TRIED TO DIVERT THE IS SUE BY BRINGING IN FICTITIOUS NAMES OF DAILY WAGERS. IT IS OBVIOUS THA T THE ASSESSEE HAS MADE THE CONTRACT PAYMENTS UNDER REFERENCE IN EXCE SS OF RS.50,000/- IN EACH CASE WITHOUT TDS & THUS THE PROVISIONS OF S ECTION 40(A)(IA) ARE ATTRACTED IN THIS CASE. THE MISTAKE IS APPARENT FROM RECORD. ALL THESE PERSONS MENTIONED ABOVE FALLS WITHIN THE AMBI T OF TDS AND THE TDS HAS NOT BEEN DEDUCTED IN THEIR CASES. SO AS SUC H SUM OF RS.33,10,795/- WAS REQUIRED TO BE ADDED BACK U/S 40 (A)(IA). THE MISTAKE BEING APPARENT FROM RECORD AND THEREFORE, RECTIFIED U/S 154 OF THE I.T. ACT, 1961 4. BY VIRTUE OF THE IMPUGNED ORDER, THE LD. CIT(A) DELETED THE ADDITION MADE BY THE AO IN THE RECTIFICATION ORDER. THE LD. CIT(A) OBSERVED AS FOLLOWS: THUS IT CAN BE SEEN FROM ABOVE DECISIONS AND DECISI ON OF HONBLE SUPREME COURT AS QUOTED BY THE APPELLANT THAT A MIS TAKE WHICH IS APPARENT FROM RECORD CAN ONLY BE RECTIFIED THROUGH PROVISIONS OF SECTION 154. THE AO WAS HAVING OTHER ALTERNATIVES I N THIS REGARD, BUT HE CHOOSE TO RECTIFY ASSESSMENT ORDER WHERE CLEARLY A MISTAKE APPARENT FROM RECORD WAS NOT THERE AS THE ISSUE REQ UIRES DETAILED EXAMINATION OF FACTS AND ALSO TO CONSIDER NORMAL PR ACTICES ADOPTED BY CONTRACTORS IN ENGAGING LABOUR FOR CARRYING OUT VAR IOUS CONTRACTS. UNDER NO CIRCUMSTANCES THIS ISSUE CAN BE TREATED A APPARENT MISTAKE IN THE RECORD AS IT REQUIRES DETAILED SCRUTINY AND INVESTIGATION AND APPLICABILITY OF PROVISIONS OF THE ACT. IT FURTHER REQUIRES PRODUCTION OF BOOKS OF ACCOUNT, LABOUR REGISTER AND OTHER RELEVAN T EVIDENCES. IN VIEW OF ABOVE, RECTIFICATION CARRIED OUT BY THE AO IS QUASHED AND DISALLOWANCE IS DELETED. ITA NO.445(ASR)/2014 4 5. BEFORE US, BESIDES REITERATING THE GROUND TAKEN , THE LD. DR HAS CONTENDED, AS MENTIONED BY THE AO IN THE RECTIFICAT ION ORDER ALSO, THAT THE ASSESSEE HAD NOT PRODUCED ANY LABOUR REGISTER DURIN G THE ORIGINAL ASSESSMENT PROCEEDINGS. ACCORDING TO THE LD. DR, THEREFORE, TH ERE DID EXIST A MISTAKE RECTIFIABLE U/S 154 OF THE ACT AND THEREFORE, THE R ECTIFICATION ORDER PASSED BY THE AO IS ON ALL FORRS AND THE LD. CIT(A) HAS EARRE D IN DELETING THE ADDITION CORRECTLY MADE. 6. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE HAS PLACED STRONG RELIANCE ON THE ORDER UNDER APPEAL AND IT HAS BEEN SUBMITTED, AS BEFORE THE LD. CIT(A), THAT SINCE THE ISSUE RAKED UP BY THE AO IN THE PROCEEDINGS U/S 154 OF THE ACT, WAS AN ISSUE INVOLVING A LENGTHY P ROCESS OF ARGUMENTS, BESIDES THERE BEING A CLEAR DIFFERENCE OF OPINION B ETWEEN THE ORDER PASSED IN ORIGINAL ASSESSMENT AND THE RECTIFICATION ORDER, IT WAS NOT AT ALL A MISTAKE APPARENT FROM THE RECORD. ACCORDING TO THE LD. COUN SEL FOR THE ASSESSEE, THEREFORE, THE LD. CIT(A) HAS RIGHTLY DELETED THE A DDITION WRONGLY MADE. 7. WE HAVE HEARD THE PARTIES AND HAVE PERUSED THE M ATERIAL AVAILABLE ON RECORD. A PERUSAL OF THE RELEVANT PORTION OF THE RE CTIFICATION ORDER PASSED BY THE AO, AS REPRODUCED HEREINABOVE, ITSELF AMPLY SUP PORTS THE ASSESSEES STAND THAT THE ISSUE OF TDS UNDER SECTION 194C OF THE ACT AND ITA NO.445(ASR)/2014 5 ALLOWABILITY OF DEDUCTION U/S 40(A)(IA) THEREOF, IS A VEXED MIXED QUESTION OF FACTS AND LAW, REQUIRING ELABORATE ARGUMENTS AND AP PLICATION OF MIND. 7.1. NOW, RECTIFICATION OF A MISTAKE UNDER THE PROV ISIONS OF SECTION 154 OF THE ACT CAN BE DONE ONLY WHERE THE MISTAKE IS APPAR ENT FROM THE RECORD. THIS HAS ALSO BEEN HELD BY THE FULL BENCH DECISION OF TH E HONBLE PUNJAB & HARYANA HIGH COURT, IN THE CASE OF CIT VS. SMT. AR UNA LUTHRA, REPORTED IN 252 ITR 56 (PH) (FB) OBSERVING, INTER-ALIA, THAT T HE PLAIN LANGUAGE OF THE PROVISION SUGGESTS THAT THE MISTAKE SHOULD BE APPAR ENT., THAT IT MUST APPEAR EX FACIE FROM THE RECORD., THAT IT MUST NOT BE A ME RE POSSIBLE VIEW AND THAT THE ISSUE SHOULD NOT BE DEBATABLE. THIS DECISIO N HAS DULY BEEN TAKEN INTO CONSIDERATION BY THE LD. CIT(A). THE LD. CIT(A) HAS ALSO TAKEN NOTE OF THE FULL BENCH DECISION OF THE HONBLE GUJARAT HIGH C OURT, IN THE CASE OF SARANGPUR COTTON MANUFACTURING LTD. VS. CIT, REP ORTED IN 152 ITR 251 (GUJ) (FB), WHICH IS ALSO TO THE SAME EFFECT, HOLD ING, INTER-ALIA, TO THE EFFECT THAT WHERE THERE IS A POSSIBILITY OF THE ASSESSEE CONTENDING THAT HE HAS A DIFFERENT CASE OF AN APPROACH OR THAT THERE IS A DEBATABLE QUESTION, THERE CAN BE A OBJECTION TO THE RECTIFICATION ISSUE. 7.3. THE LD. CIT(A) ALSO TOOK INTO CONSIDERATION, THOUGH IT WAS NOT DEALT WITH AT LENGTH, THE DECISION OF THE HONBLE SUPREME COURT IN T.S. BALARAM ITA NO.445(ASR)/2014 6 VS. VOLKART BROTHERS AND OTHERS, REPORTED IN 82 I TR 50 (SC), RELIED ON BY THE ASSESSEE IN THIS REGARD. 7.4. CONSIDERING THAT THE ISSUE WRONGLY TAKEN BY TH E AO AS A RECTIFIABLE ONE, COULD NOT HAVE BEEN SO RECTIFIED U/S 154 OF TH E ACT, THE LD. CIT(A) DULY TOOK NOTE THAT OTHER ALTERNATIVES WERE AVAILABLE TO THE AO IN THIS REGARD, BUT SINCE THE ISSUE REQUIRES DETAILED EXAMINATION OF F ACTS AND ALSO TO CONSIDER NORMAL PRACTICE ADOPTED BY CONTRACTORS IN ENGAGING LABOUR FOR CARRYING OUT VARIOUS CONTRACTS, TO CORRECTLY ARRIVE AT THE CONC LUSION THAT THIS ISSUE COULD NOT BE TREATED AS A MISTAKE APPARENT FROM THE RECOR D. THE LD. CIT(A) HAS OBSERVED , AND THE DEPARTMENT HAS NOT BEEN ABLE TO REPEL THIS OBSERVATION, THAT THE ISSUE REQUIRES DETAILED SCRUTINY AND INVE STIGATION AND APPLICABILITY OF PROVISIONS OF THE ACT AND THAT IT FURTHER REQUIR ES PRODUCTION OF BOOKS OF ACCOUNT, LABOUR REGISTER AND OTHER RELEVANT EVIDENC ES. IT WAS ON THESE OBSERVATIONS THAT THE RECTIFICATION CARRIED OUT BY THE AO WAS QUASHED BY THE LD. CIT(A) AND IN OUR CONSIDERED OPINION, RIGHTLY S O. APROPOS THE CONTENTION OF THE LD. DR THAT SINCE THE LABOUR REGISTER WAS NO T PRODUCED IN THE ORIGINAL ASSESSMENT PROCEEDINGS, THEREBY REMAINING UNABLE TO PROVE THAT THE PAYMENT MADE WAS LESS THAN THAT REQUIRED UNDER THE PROVISIO NS OF SECTION 40(A)(IA) OF THE ACT, THE MISTAKE WAS CORRECTLY RECTIFIED BY THE AO AS A MISTAKE APPARENT FROM RECORD, IN VIEW OF THE DETAILED DISCUSSION MAD E HEREINABOVE, WE ARE ITA NO.445(ASR)/2014 7 UNABLE TO FIND OURSELVES AT ONE WITH SUCH CONTENTI ON. THE LD. DR HAS NOT BEEN ABLE TO CONTROVERT THE SUBSISTING POSITION THA T THE ISSUE OF TDS U/S 194C OF THE ACT AND APPLICABILITY OF SECTION 40(A)( IA) THEREOF IS NOT AN ISSUE SIMPLICITOR, PARTICULARLY IN THE FACTS OF THE PRES ENT CASE, WHICH CAN BE TAKEN TO BE MISTAKE APPARENT FROM THE RECORD RECTIFIABALE UNDER THE PROVISIONS OF U/S 154 OF THE ACT. IN CASE AFTER COMPLETION OF TH E SCRUTINY ASSESSMENT PROCEEDINGS, IT WAS FELT THAT THERE HAD BEEN A LAPS E, THIS COULD HAVE BEEN TAKEN CARE OF UNDER OTHER APPLICABLE PROVISIONS OF THE ACT, BUT FOR TAKING RECOURSE TO RECTIFICATION U/S 154, AS HAS REPEATEDL Y BEEN HELD BY THE COURTS, RIGHT UPTO THE HONBLE SUPREME COURT, AS RIGHTLY TA KEN INTO CONSIDERATION BY THE LD. CIT(A). THAT BEING SO, THIS CONTENTION OF T HE LD. DR ALSO HOLDS NO WATER AND IT IS REJECTED. 7.5 FOR THE ABOVE DISCUSSION, FINDING NO MERIT THER EIN, THE GRIEVANCE SOUGHT TO BE RAISED BY THE DEPARTMENT IS HEREBY REJ ECTED. 8. IN THE RESULT, THE APPEAL FILED BY THE DEPARTMEN T IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 9TH FEBRUARY, 2015. SD/- SD/- (B.P. JAIN) (A.D.JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 9TH FEBRUARY, 2015 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. M.COMPANY, AMRITSAR. 2. THE ITO WARD 2(1), AMRITSAR. ITA NO.445(ASR)/2014 8 3. THE CIT(A), AMRITSAR. 4. THE CIT AMRITSAR. 5.THE SR DR, ITAT, AMRITSAR.
