ITO, Ward - 46(2), Kolkata, Kolkata V. Morsalim Ali Sheikh, Howrah

ITA 50/KOL/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54452 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 14-04-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 08-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K ROY
• Keywords: Additional evidence; Non-deduction of tax
• Section: 194C

Judgement Text

, , , , , , ,, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : KOLKATA [ . . . . . .. . , , !' !' !' !' , ] [BEFORE HONBLE SHRI S.V. MEHROTRA, AM & HONBLE SHRI MAHAVIR SINGH, JM '# '# '# '# / I.T.A NO. 50/KOL/2010 !$% &' !$% &' !$% &' !$% &'/ // / ASSESSMENT YEAR : 2006-07 INCOME TAX OFFICER/WARD-46(2) -VS.- MORSALIM ALI SHEIKH KOLKATA. HOWRAH [PAN : AVEPS 8 757 R] [ )* )* )* )* /APPELLANT ] ]] ] [ ,-)* ,-)* ,-)* ,-)*/ // / RESPONDENT ] ]] ] )* )* )* )* / FOR THE APPELLANT : SHRI S. K. ROY ,-)* ,-)* ,-)* ,-)* / FOR THE RESPONDENT : NONE . /ORDER . . . . . .. . , PER S. V. MEHROTRA, A. M. THE ASSESSEE HAS PREFERRED THIS APPEAL FOR ASSESSM ENT YEAR 2006-07 AGAINST THE ORDER OF LD. CIT(A)-XXX, KOLKATA DATED 08.10.2009. 2. AT THE TIME OF HEARING, LD. AUTHORISED REPRESENT ATIVE OF THE ASSESSEE FILED AN ADJOURNMENT PETITION DATED 08.08.2011, STATING THAT HE WAS BUSY WITH SOME FAMILY MATTERS AND COULD NOT PREPARE TO REPRESENT THE APPEAL WHICH PREVENTED HIM TO APPEAR AND ARGUE THE APPEAL. THE PETITION WAS REJECTED AND WE DECIDED TO PROCEED WITH THE APP EAL AFTER HEARING THE LD. DEPARTMENTAL REPRESENTATIVE. 3. THE ASSESSEE, IN THE RELEVANT ASSESSMENT YEAR, W AS ENGAGED IN THE BUSINESS OF EMBROIDERY WORK ON CONTRACT BASIS. ASSESSING OFFICER NOTICED T HAT ASSESSEE HAD SHOWN TURN OVER AT RS.96,60,626/- AGAINST WHICH, INTER ALIA, CLAIMED L ABOUR PAYMENT FOR EMBROIDERY WORK AT RS.70,45,900/-. THE ASSESSEE HAD FILED A LIST OF LA BOUR PAYMENTS SHOWING NAMES OF PERSONS TO WHOM PAYMENTS WERE MADE BY CASH. FROM THESE DETAILS , ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD MADE PAYMENT IN EXCESS OF RS.50,000/- TO 25 PERSONS ON SUB-CONTRACT BASIS WHICH AGGREGATED TO RS.13,91,600/-. ASSESSING OFFICER POI NTED OUT THAT THOUGH THE ASSESSEE HAD EXECUTED THE WORK ON SUB-CONTRACT BASIS WITH THE ABOVE PERSO NS AND MADE PAYMENTS IN EXCESS OF [ ITA NO. 50/KOL/2010] 2 RS.50,000/- BUT FAILED TO DEDUCT ANY TAX ON SUCH PA YMENTS OF RS.13,91,600/- UNDER SECTION 194C OF THE ACT. HE ALSO POINTED OUT THAT ADMITTEDLY THE SE PERSONS HAD NOT FILED ANY FORM NO.15G FOR NON-DEDUCTION OF TAX ON SUCH PAYMENTS. IN REPLY TO SHOW CAUSE NOTICE, LD. AUTHORISED REPRESENTATIVE OF THE ASSESSEE FILED A LETTER STATI NG AS UNDER :- ..THE ASSESSEE WAS UNAWARE OF THE FACT THAT TAX HAVE TO BE DEDUCTED. IT IS ALSO STATED THAT IF THE ASSESSEE DEDUCTS TAX ON PAYMENTS THE LABOURERS SHALL NOT TAKE ANY CONTRACT JOB AND HENCE HIS BUSINESS WI LL HAMPER. HOWEVER, HE DID NOT ACCEPT ASSESSEES CONTENTION AN D MADE A DISALLOWANCE OF RS.13,91,600/- UNDER SECTION 40(A)(IA). BEFORE LD. CIT(A), IT WAS SUBMITTED THAT ASSESSEE ENGAGED LABOUR FOR UNDERTAKING JORI WORK. IT WAS SUBMITTED THAT THE PAYMENTS WERE MADE TO THE INDIVIDUAL KARIGARS AS WAGES. FURTHER, IT WAS POINTED OUT THAT LABOURER S HAD SIGNED THE PAY REGISTER FOR EACH OF THE MONTH. FURTHER, IT WAS POINTED OUT THAT THE PERSONS RECEIVING THE AMOUNT WERE LABOURERS AND NOT SUB-CONTRACTORS. IT WAS ALSO POINTED OUT THAT IN TH E LETTER FILED BEFORE THE ASSESSING OFFICER, ASSESSEE INFORMED THAT THE WORK WAS NOT DONE ON SUB -CONTRACT BASIS AND THERE WAS NO AGREEMENT WITH THE LABOURERS REGARDING SUB-CONTRACT. LD. CIT( A) OBSERVED AS UNDER :- THE A.O FAILED TO BRING ANY MATERIAL ON RECORD TO P ROVE EXISTENCE OF SUB- CONTRACT BETWEEN THE APPELLANT AND LABOURERS. THE P ERUSAL OF THE PAYMENT REGISTER INDICATES THAT THE PAYMENT IS MADE TO THIS INDIVIDUAL LABOURERS TOWARDS WAGES EARNED BY THE LABOURERS ON EXECUTION OF JORI EMBROIDERY WORK. DURING APPEAL PROCEEDINGS THE APPELLANT PRESENTED NOTARIZE D AFFIDAVIT FROM SEVEN LABOURERS WHO RECEIVED PAYMENT FROM THE APPELLANT. THE PERSONS FILED AFFIDAVIT AND DETAILS OF PAYMENT RECEIVED ARE AS UNDER :- SL.NO. NAME PAY REGISTER SL. NO. AMOUNT PAID 1. HAIDAR MALLICK 01 RS.56,875.00 2. SK. EMAINUL 10 RS.53,125.00 3. RAJU KHAN 16 RS.51,900.00 4. SK. AHAMMED (KAZI) 24 RS.52,375.00 5. RUHUL JAMADAR 27 RS.56,250.00 6. RESHMAUL MONDAL 28 RS.62,375.00 7. SAGAR SEPAI 36 RS.56,250.00 THE PERUSAL OF THE WAGES REGISTER INDICATES THAT TH ESE PERSONS ARE PAID WAGES RANGING FROM RS.190/- TO RS.220/- PER DAY FOR THE W ORK UNDERTAKEN. IT IS CLEAR FROM THE PAY REGISTER AND QUANTUM OF PAYMENT RECEIV ED BY THE LABOURERS THAT THE AMOUNT EARNED IS FOR THE WORK EXECUTED BY THEM. THE PAYMENT TO EACH OF THE LABOURERS IS BELOW RS.65,000/- PER DAY. ON AN A VERAGE WORKING DAYS OF ABOUT 320 DAYS IN THE YEAR, AVERAGE LABOUR COST OF RS.200/- PER DAY, WAGES ARE [ ITA NO. 50/KOL/2010] 3 EARNED BY INDIVIDUAL LABOUR. THE A.O IS NOT CORRECT IN CONSIDERING LABOUR PAYMENT TO THIS LABOURERS AS SUB-CONTRACT PAYMENT. IN THE ABSENCE OF EVIDENCE THE A.OS CONCLUSION IS NOT CORRECT. THE APPELLANT IS NOT LIABLE TO DEDUCT TAX AS PER SEC. 194C(2) SINCE THE PAYMENT IS NOT SUB-CONTR ACT PAYMENT AND IS WAGES PAID INDIVIDUAL LABOUR. SINCE TAX IS NOT DEDUCTIBLE , PROVISIONS OF SECTION 40A(IA) ARE NOT APPLICABLE AND DISALLOWANCE MADE BY THE A.O IS NOT CORRECT. THE A.O IS DIRECTED TO DELETE THE ADDITION OF RS.13,91,600/-. 4. LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT L D. CIT(A) HAD TAKEN INTO CONSIDERATION THE AFFIDAVITS FILED BY 7 LABOURERS WHICH WERE NOT AVAILABLE BEFORE THE ASSESSING OFFICER. THEREFORE, THE MATTER NEEDS TO BE RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER. 5. WE HAVE CONSIDERED THE SUBMISSIONS OF LD. DEPART MENTAL REPRESENTATIVE. ASSESSING OFFICER HAS INFERRED ONLY ON THE BASIS OF AGGREGATE AMOUNT PAID TO THESE PERSONS THAT THERE WAS SUB-CONTRACT BUT HE HAS NOT POINTED OUT AS TO HOW T HESE PAYMENTS WERE MADE. LD. CIT(A) HAS GIVEN A SPECIFIC FINDING WITH REFERENCE TO THE PAYM ENT REGISTER THAT THE PAYMENT WAS MADE TO INDIVIDUAL LABOURERS TOWARDS WAGES EARNED BY LABOUR ERS ON EXECUTION OF JORI EMBROIDERY WORK. FROM THE FINDINGS OF LD. CIT(A) NOTED ABOVE, IT IS EVIDENT THAT 7 LABOURERS, WHOSE AFFIDAVITS WERE FILED BEFORE THE LD. CIT(A), CONFIRMED THE AMOUNT R ECEIVED BY THEM. THE CONTENTION OF ASSESSEE FROM THE BEGINNING WAS THAT THE IMPUGNED AMOUNTS WE RE PAID ON WAGES TO LABOURERS AND FOR SUPPORTING THOSE CONTENTIONS ONLY ASSESSEE FILED AF FIDAVITS OF LABOURERS. THESE AFFIDAVITS, THEREFORE, COULD NOT BE CONSIDERED ADDITIONAL EVIDENCES. THE F INDINGS OF LD. CIT(A) FROM THE PAYMENT REGISTER HAVE NOT BEEN CONTROVERTED BY THE DEPARTME NT. THEREFORE, THE CONCLUSION OF LD. CIT(A) THAT THESE WERE ONLY LABOUR PAYMENTS AND NOT IN RES PECT OF PAYMENT TOWARDS SUB-CONTRACT WAS FULLY JUSTIFIED IN THE FACTS AND CIRCUMSTANCES OF THE CAS E. WE, THEREFORE, CONFIRM THE ACTION OF THE LD. CIT(A). 6. IN THE RESULT, THE APPEAL FILED BY THE DEPARTMEN T IS DISMISSED. . . . . / / / / 0 /$ 1 2 0 /$ 1 2 0 /$ 1 2 0 /$ 1 2 3 3 3 3 ORDER PRONOUNCED IN THE COURT ON 08. 08. 2011. [ !' , ] [ .. , ] [ MAHAVIR SINGH ] [ S.V. MEHROTRA ] JUDICIAL MEMBER ACCOUNTANT MEMBER ( (( (3 3 3 3) )) ) DATED : 08 TH AUGUST, 2011. [ ITA NO. 50/KOL/2010] 4 . 6 ,!!7 87&/ COPY OF THE ORDER FORWARDED TO: 1. )* /APPELLANT : INCOME TAX OFFICER/WARD-46(2), 3, GOV ERNMENT PLACE (W), KOLKOTA-700 001. 2 ,-)* / RESPONDENT : MORSALIM ALI SHEIKH, EAST BURIKHALI (KADAMTALA), BU RIKHALI, HOWRAH-711 310. 3. !.$ / CIT, 4. !.$ ()/ CIT(A), KOLKATA. 5. !1 ,!$/ DR, KOLKATA BENCHES, KOLKATA [-7 ,!/ TRUE COPY] .$// BY ORDER, '? /ASSTT REGISTRAR [KKC @A !$B? !C /SR.PS] [ ITA NO. 50/KOL/2010] 5 SL.NO. NAME PAY REGISTER SL. NO. AMOUNT PAID 8. HAIDAR MALLICK 01 RS.56,875.00 9. SK. EMAINUL 10 RS.53,125.00 10. RAJU KHAN 16 RS.51,900.00 11. SK. AHAMMED (KAZI) 24 RS.52,375.00 12. RUHUL JAMADAR 27 RS.56,250.00 13. RESHMAUL MONDAL 28 RS.62,375.00 14. SAGAR SEPAI 36 RS.56,250.00