ITO 13(2)(2), MUMBAI V. SHREE SWAMI SAMARTHA AGRO PROCESSORS, NAVI MUMBAI

ITA 5578/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8689 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2008-2009
• Appeal Filed On: 04-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order
• Section: 143(3); 194C; 131; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH E,MUM BAI BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.5578/MUM/2014 FOR (ASSESSMENT YEAR : 2008-09 ) ITO-13(2)(2), ROOM NO. 412, 4 TH FLOOR, AAYAKAR BHAVAN, M. K. ROAD, MUMBAI-400020 . VS. M/S SHREE SWAMI SAMARTHA AGRO PROCESSORS, F-207/209, ITC PARK, BELAPUR STATION COMPLEX, CBD BELAPUR, NAVI MUMBAI-400614 PAN: AALFS3153M (APPELLANT) (RESPONDENT) REVENUE BY : SHRI GOLI SRINIVAS RAO (CIT-DR) ASSESSEE BY : DR. K. SHIVRAM & RAHUL HAKANI (AR) DATE OF HEARING : 17.01.2017 DATE OF PRONOUNCEMENT : 17 .01.2017 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JM: 1. THIS APPEAL BY REVENUE U/S 253 OF THE INCOME-TAX AC T (ACT) IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS) [ FOR SHORT THE CIT(A)] 24, MUMBAI DATED 20.06.2014 FOR ASSESSMENT YEAR (AY) 20 08-09. THE REVENUE HAS RAISED ONLY ONE GROUNDS OF APPEAL THAT: THE CIT(A) ERRED IN DELETING THE ADDITION OF RS. 91,90,424/- MADE UNDER THE PROVISIONS OF SEC. 4 0(A)(IA) OF THE ACT. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME FOR RELEVANT AY ON 30.09.2008 DECLARING TOTAL INCOME OF 5,76,907/-. TH E ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 31.03.2010 DETERMINING THE TOT AL INCOME OF RS. 5,76,907/-. SUBSEQUENTLY, AN ORDER U/S 263 OF THE ACT WAS PASSE D BY LD. CIT ON 23.01.2013 DIRECTING THE ASSESSING OFFICER (AO) TO EXAMINE WHE THER THERE WAS ANY CONTRACT BETWEEN THE ASSESSEE AND THE MUKADAMS OR ANY CONT RACTUAL RELATION EXIST. CONSEQUENT UPON THE AO PASSED THE ORDER AFTER GIVIN G THE OPPORTUNITY OF HEARING TO THE ASSESSEE. THE AO PASSED THE ORDER ON 28.02.201 4 U/S 143(3) R.W.S. 263 AND MADE A DISALLOWANCE OF RS. 52,90,424/- U/S 40(A)(IA) OF THE ACT. THE AO MADE DISALLOWANCE 2 ITA NO. 5578/M/2014 M/S SHREE SWAMI SAMARTHA AGRO PROCESSORS HOLDING THAT LABOUR CHARGES PAYMENT OF RS. 52,90,4 24/- IS LIABLE FOR TDS U/S 194C. AS THE ASSESSEE FAILED TO DEDUCT THE TDS ON SUCH L ABOUR PAYMENTS HENCE THE DISALLOWANCE WAS MADE. ON APPEAL BEFORE THE LD. CIT (A), THE ENTIRE DISALLOWANCE WAS DELETED HOLDING THAT THE LABOUR REPRESENTATIVE (MUK ADAMS) DID NOT RETAIN ANY AMOUNT RECEIVED FROM ASSESSEE AND THE PROVISION OF SECTION 194 ARE NOT ATTRACTED. AGGRIEVED BY THE ORDER OF LD. CIT(A), THE REVENUE HAS FILED T HE PRESENT APPEAL BEFORE US. 3. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIVE ( DR) FOR THE REVENUE AND THE LD. AUTHORIZED REPRESENTATIVE (AR) OF THE ASSESSEE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. DR FOR THE REVENUE ARGUED THAT THE PAYMENTS MADE TO THE SO-CALLED MUKADAMS WERE PAYMENT TO CONTRACTORS WHO WERE SUPPL YING THE LABOUR TO THE ASSESSEE. THE LD. DR FOR THE REVENUE FURTHER ARGUE D THAT THE AO MADE THE DISALLOWANCE AS THE SAME WAS THE CONTRACTUAL PAYMEN T. ON THE OTHER HAND THE LD. AR OF THE ASSESSEE ARGUED THAT THE AO ERRED IN APPRECI ATING THE FACT AND MADE THE ADDITION WITHOUT ANY SUBSTANCE. THE ADDITION WAS MA DE ON ASSUMPTION AND PRESUMPTION AND THE SAME WAS NOT BASED ON ANY POSIT IVE AND CONCRETE EVIDENCE. THE AO FAILED TO APPRECIATE THE VARIOUS FACTS AND EVIDE NCE AVAILABLE BEFORE HIM. IT WAS FURTHER ARGUED THAT THE MUKADAMS WERE SUMMONED U/S 131 DURING THE ASSESSMENT PROCEEDING AND THEY ADMIT THAT THEY ARE MUKADAMS-CU M-EMPLOYEE OF THE ASSESSEE AND THEY HAVE DISTRIBUTED THE CASH TO THE TEMPORARY WORKERS/DAILY WAGERS UNDER THE SUPERVISION OF ASSESSEE. ALL THE MUKADAMS HAVE FILE D THEIR AFFIDAVIT CONTENDING THAT THEY ARE EMPLOYEE OF THE ASSESSEE AND THEY SUPERVIS E THE WORK OF DAILY WAGERS/TEMPORARY WORKERS. 4. WE HAVE CONSIDERED THE RIVAL CONTENTIONS OF THE PAR TIES AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE AO MADE THE ADDITION THAT TH E LABOUR CHARGES WERE PAID TO THE MUKADAMS/SUPERVISOR AND NOT TO THE INDIVIDUAL PERSO NS. HENCE, THE PROVISION OF SECTION 194C WAS ATTRACTED. AS THE ASSESSEE FAILED TO DEDUCT THE TDS ON SUCH LABOUR CHARGES OF RS. 51,90,440/- WAS DISALLOWED. BEFORE T HE LD. CIT(A) THE ASSESSEE MADE THE SIMILAR CONTENTION AS PLEADED BEFORE THE AO WAS MADE. THE LD. CIT(A) OBSERVED THAT THE AO IN OBEDIENCE TO THE DIRECTION OF LD. CI T(A) INITIATED THE PROCEEDING U/S 143(3) R.W.S. 263 OF THE ACT AND CONCLUDED THAT ASS ESSEES ACCOUNT ARE SUBJECT TO AUDIT AND AUDIT REPORT DID NOT MENTION ANYTHING ABOUT THE NATURE OF PAYMENT. ASSESSEE DID NOT FILE THE DETAILS OF ALL MUKADAMS AND PAYMENT MA DE TO THEM AND THUS, THE ASSESSEE 3 ITA NO. 5578/M/2014 M/S SHREE SWAMI SAMARTHA AGRO PROCESSORS COULD NOT ESTABLISH THAT THERE WAS NO CONTRACT BETW EEN THE ASSESSEE AND MUKADAMS. THE LD. CIT(A) CONCLUDED THAT THE AO DID NOT ESTABL ISH THE ASPECT BY BRINGING ANY EVIDENCE THAT ASSESSEE MADE THE PAYMENT IN PURSUANC E OF A CONTRACT AND SIMPLY JUMPED TO THE CONCLUSION THAT THESE PAYMENTS WERE C ONTRACTUAL PAYMENT DESPITE THE DEPOSITION (AFFIDAVIT) OF MUKADAMS CONFIRMING THE F ACT THAT THEY WERE EMPLOYEE OF THE ASSESSEE. THE LD. CIT(A) CONCLUDED THAT HE DID NOT FIND ANY INDICATION WHICH MAY SUGGEST THAT THE PAYMENTS WERE MADE UNDER THE CONTR ACT, IN FACT THE PAYMENT WERE RECEIVED BY THE LABORERS FROM THE ASSESSEE. ALL THE PAYMENTS MADE TO THE LABORERS WERE BELOW TO RS. 50,000/-. THERE IS NO EVIDENCE TH AT LABOUR WERE ENGAGED ON REGULAR BASIS, WHICH MAY GIVE RISE TO THE FACT THAT THERE W AS A CONTRACT IN EXISTENCE AND DELETED THE DISALLOWANCES. WE HAVE SEEN THAT THE LD . CIT(A) PASSED THE ORDER AFTER CONSIDERING THE ENTIRE FACT, AFFIDAVIT OF MUKADAMS AND THE NATURE OF PAYMENT. IN VIEW OF THE ABOVE DISCUSSION, WE DO NOT FIND ANY REASON TO INTERFERE IN THE FINDINGS OF LD. CIT(A). 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 1 7 TH JANUARY, 2017. SD/- SD/- (B.R. BASKARAN) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 17/01/2017 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/