ASTT.COMMISSIONER OF INCOME TAX,AMRAVATI CIR.AMRAVATI, AMRAVATI V. SHRI AKASH RAMESHWAR PANPALIA,

ITA 446/NAG/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9646 (ITAT-NAGPUR)
• Duration Of Justice: 3 year(s) 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 31-05-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 17-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K BARAL
• Section: 40A(3); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SH. G.D.AGRAWAL, HONBLE PRESIDENT AND SH. MAHAVIR SINGH, JUDICIAL MEMBER ITA NO.446/NAG/2014 (ASSESSMENT YEAR: 2008-09) ACIT, AMRAVATI CIRCLE, AMRAVATI, AAYAKAR BHAWAN, AMBAPETH, AMRAVATI444601. VS AKASH RAMESHWAR PANPALIA, WARD NO.14, DHAMANGAON RAILWAY, DISTT.-AMRAVATI44479. PANAIOPP8687J (APPELLANT) (RESPONDENT) APPELLANT BY SH.R.K.BARAL, SR.DR RESPONDENT BY SH.K.P.DEWANI, ADV. DATE OF HEARING 08.03.2018 DATE OF PRONOUNCEMENT 08.03.2018 O R D E R PER BENCH THIS APPEAL BY REVENUE IS ARISING OUT OF THE ORDER OF LD.CIT(A)-II, NAGPUR VIDE ORDER NO.CIT(A)-II/517/2010-11 DATED 02.07.201 4. THE ASSESSMENT WAS FRAMED BY ACIT, AMRAVATI CIRCLE, AMRAVATI U/S 143(3 ) OF THE INCOME TAX ACT, 1961 (IN SHORT ACT) FOR A.Y. 2008-09 VIDE HIS ORD ER DATED 28.12.2010. 2. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST THE ORDER OF LD.CIT(A) DELETING THE DISALLOWANCE OF EXPENSES MADE BY THE A SSESSING OFFICER BY APPLYING THE PROVISION OF SECTION 40A(3) OF THE ACT I.E. MAKING CASH PAYMENT IN EXCESS OF RS.20,000/. FOR THIS, THE REVENUE HAS R AISED THE FOLLOWING GROUND: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW THE LEARNED CIT(APPEAL)II, NAGPUR WAS RIGHT IN DELETIN G DISALLOWANCE OF EXPENSES OF RS.1,19,18,353/ MADE WITHOUT DEDUCTION OF TDS AND THE PAYMENTS FOR THE SAME WERE MADE FOR MORE THAN RS.20 ,000/ IN A SINGLE ITA NO. 446/NAG/2014 PAGE | 2 DAY IN CASH, CONTRAVENING SECTION 194C AND 40A(3) O F THE I.T.ACT, 1961 RESPECTIVELY. 3. IT IS CLARIFIED THAT THE REVENUE HAS RAISED THE ISSUE FOR CONTRAVENTION OF PROVISION OF SECTION 194C FOR MAKING DISALLOWANCE A S THE PAYMENTS ARE MADE WITHOUT DEDUCTION OF TDS AND ALSO FOR MAKING CASH P AYMENT IN EXCESS OF RS.20,000/ IN A SINGLE DAY IN VIOLATION OF PROVISI ON OF SECTION 40A(3) OF THE ACT. BUT WE HAVE GONE THROUGH THE ASSESSMENT ORDER, AND IT IS NOTICED THAT THE ASSESSING OFFICER HAS NOT INVOKED THE PROVISION OF SECTION 40(A)(IA) OF THE ACT FOR MAKING DISALLOWANCE AND HENCE THE ISSUE REMAINS THE APPLICABILITY OF THE PROVISION OF SECTION 40A(3) OF THE ACT. 4. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS A CIVIL CONTRACTOR MAINTAINED ITS BOOKS OF ACCOUNTS AND AUDITED THE SAME UNDER SE CTION 44AB OF THE ACT. THE ASSESSEE HAS PRODUCED BOOKS OF ACCOUNTS AND VER IFIED BY THE ASSESSING OFFICER. ACCORDING TO THE ASSESSING OFFICER, THE A SSESSEE HAS MADE PAYMENT OF RS.1,19,18,353/ ON ACCOUNT OF LABOUR CHARGES FOR F .Y 200708 RELEVANT TO THE A.Y 200809 TO 52 PERSONS. BEFORE THE ASSESSING OF FICER, THE ASSESSEE CLAIMED THAT HE HAS PAID LABOUR CHARGES DIRECTLY TO THE GRO UP (SARDARS) AND THE GROUP IN TURN MADE PAYMENT TO INDIVIDUAL PERSON ON DIFFER ENT DATES AND ALL THESE PAYMENTS ARE MADE IN CASH LESS THAN RS.20,000/ IND IVIDUALLY TO THE LABOURERS IN THE SINGLE DAY. BUT THE ASSESSING OFFICER HAS N OT ACCEPTED THE EXPLANATION OF THE ASSESSEE STATING THAT THE ASSESSEE HAS MADE PAYMENT EXCEEDING TO RS.20,000/ IN A SINGLE DAY AS PRESCRIBED IN CHART TO DIFFERENT INDIVIDUAL IS REPRODUCED IN THE ASSESSMENT ORDER. THE ASSESSING OFFICER ACCORDINGLY ITA NO. 446/NAG/2014 PAGE | 3 DISALLOWED A SUM OF RS.1,19,18,353/. AGGRIEVED, T HE ASSESSEE PREFERRED APPEAL BEFORE LD.CIT(A). 5. LD.CIT(A) DELETED THE ADDITION BY OBSERVING THAT THE ASSESSEE HAS MADE PAYMENT TO THE LABOURERS WHICH WAS BELOW PRESCRIBED LIMIT AS PRESCRIBED BY THE PROVISIONS OF SECTION 40A(3) OF THE ACT I.E. LE SS THAN RS.20,000/. LD. CIT(A DEALT THIS ISSUE IN PARA 7 AS UNDER: 7. THE ABOVE JUDICIAL PRONOUNCEMENTS HAVE BEEN DEL IVERED IN IDENTICAL SET OF FACTS AS IN THE CASE OF THE APPELLANT. IN S UCH CIRCUMSTANCES THERE IS CLEAR EVIDENCE TO ESTABLISH THAT EACH PAYMENT WAS M ADE TO INDIVIDUAL LABOURER WHICH IS BELOW THE THRESHOLD LIMIT PRESCRI BED BY SECTION 40A(3) AND HENCE THERE IS NO QUESTION OF ANY VIOLATION OF PROVISIONS OF SECTION 40A(3) & 40(A)(IA) AND IN VIEW OF THE SAME, THE ADD ITION MADE AMOUNTING TO RS.11918353/ IS DIRECTED TO BE DELETED. AGGRIEVED, NOW THE REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESS EE HAS PAID WAGES TO INDIVIDUAL WORKERS AND VOUCHERS WAS OBTAINED FROM R EPRESENTATIVE WORKERS OR THE SARDARS, WHO IS EMPLOYEE OF THE ASSESSEE FOR AC COUNTING PURPOSE IN RESPECT OF PAYMENTS MADE TO INDIVIDUAL LABOURERS. IT WAS E XPLAINED BY LD. COUNSEL FOR THE ASSESSEE THAT THE PAYMENT MADE TO VARIOUS INDIV IDUAL LABOURERS BEING IN NATURE OF LABOURER CHARGES WAS PAID BELOW RS.20,000 /, THE PROVISION OF SECTION 40A(3) WILL NOT APPLY. EVEN THE MUSTER REG ISTER EXPLAIN THE SUBMISSIONS OF THE ASSESSEE THAT THE PAYMENTS HAVE BEEN MADE TOWARDS DAILY WAGES AND ARE NOT IN RESPECT OF ANY CONTRACT AND WH ICH ARE BELOW RS.20,000/ ITA NO. 446/NAG/2014 PAGE | 4 AS CAN BE EVIDENCED FROM PAGE 12 TO 17 OF THE ASSES SEES PAPER BOOK. IN VIEW OF THE ABOVE, WE ARE OF THE VIEW THAT LD.CIT(A) HAS RIGHTLY DELETED THE ADDITION AND WE CONFIRM THE SAME. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 08 TH MARCH, 2018. SD/ SD/ (G.D.AGRAWAL) (MAHAVIR SINGH) HONBLE PRESIDENT JUDICIAL MEMBER DATED: 08 TH MARCH, 2018 *AMIT KUMAR* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A), NAGPUR 4. THE CIT, NAGPUR 5. THE DR, BENCH, ITAT, NAGPUR BY ORD ER ASSISTANT REGISTRAR ITAT, NAGPUR BENCH, NAGPUR