Income Tax Officer -VI(2), Lucknow V. Shri Junaid Ahmad Siddiqui, Lucknow

ITA 56/LKW/2012

• Counselvise Citation: 5623714 RSA 2012
• Duration Of Justice: 1 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 03-06-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 07-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Procedural lapse; Assessment record
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI. PRAMOD KUMAR, ACCOUNTANT MEMBER ITA NO.56/LKW/2012 ASSESSMENT YEAR:2008-09 INCOME TAX OFFICER VI(2) LUCKNOW V. SHRI. JUNAID AHMAD SIDDIQUI M-254, AASHIYANA KAN P UR ROAD, LUCKNOW PAN:AWMPS1841D ( A PP ELLANT ) ( RES P ONDENT ) A PP ELLANT B Y :SHRI. ALOK MITRA, D.R. RESPONDENT BY: SHRI. RAKESH GARG, ADVOCATE DATE OF HEARING: 03.06.2013 DATE OF PRONOU NCEMENT: 07.08.2013 O R D E R PER SUNIL KUMAR YADAV: THIS APPEAL IS PREFERRED BY TH E REVENUE AGAINST THE ORDER OF THE LD. CIT(A) ON A SOLITARY GROUND THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITI ON MADE BY THE A SSESSING OFFICER FOR VIOLATION OF PROVISIONS OF SECTION 40A(3) AND 40(A)(IA) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER CALL ED IN SHORT THE ACT') FO R THE PAYMENTS MADE IN CASH EXCEEDING ` 20,000 TO VARIOUS CONTRACTORS AND FOR NON-DEDUCTION OF TDS THEREON. 2. THE FACTS RELEVANT TO THE IMPU GNED ISSUE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON VE RIFICATION OF THE LE DGER ACCOUNT, THE ASSESSING OFFICER NOTICED THAT PAYMENT OF ` 11,22,636 WERE MADE IN CASH TO VARIOUS CONTRACTORS AND NO TDS HAS BEEN DEDUCTED TH EREON. THE ASSESSING OFFICER OBSERVED THAT PAY MENTS IN CASH MORE THAN ` 20,000 WERE MADE TO :-2-: CONTRACTORS, THEREFORE, THE AMOUNT WA S DISALLOWED FOR CONTRAVENTION OF THE PROVISIONS OF SECTION 40A(3 ) AND 40(A)(IA) OF THE ACT. 3. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WITH THE SUBMISSION THAT WHILE MA KING ADDITION, NO OPPORT UNITY WAS ALLOWED TO THE ASSESSEE TO EXPLAIN THE PA YMENTS. IT WAS CONTENDE D THAT PAYMENTS HAVE BEEN MADE TO LABOURERS THROUGH MUST ER ROLLS. THE PAYMENT HAS NOT BEEN MADE TO A SINGLE PERSON OR CONTRACTOR AS HELD BY THE ASSESSING OFFICER. THE LD. CIT(A) CALLED FOR THE RECORDS AND EXAMINED THE SAME AND WAS OF THE VIEW THAT WHILE COMPLETING THE AS SESSMENT PROCEEDINGS THE ASSESSING OFFICER HAS NOT RAISED ANY QUERY ON THE IMPUGNED DISA LLOWANCE BEFORE ADDING IT FINALLY TO TH E INCOME OF THE ASSESSEE. THEREFORE, PROPER OPPORTUNITY OF BEING HEARD WAS NOT AFFO RDED TO THE ASSESS EE. HE HAS ALSO EXAMINED THE COPIES OF TH E MUSTER ROLL AND NOTICED THAT PAYMENTS HAVE NOT BEEN MADE TO THE CONTRACTORS AS MENTIO NED BY THE ASSESSING OFFICER. FROM THE DETAILS OF PAYMENTS, THE LD. CIT( A) CAME TO THE CONCLUSION THAT PAYMENTS WERE MADE TO LABOURERS TH ROUGH MUSTER ROLL. HE ACCORDINGLY DELETED THE ADDITION. 4. AGGRIEVED, THE REVENUE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL WITH THE SUBMISSION THAT THE PAYMENTS WERE MADE TO ONE SUB- CONTRACTOR WHO HAD ORGANIZED THE LABO URER. THEREFORE, THE ASSESSEE WAS REQUIRED TO DEDUCT TAX AT SO URCE ON SUCH PAYMENTS. 5. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, BESIDES PLACING RELIANCE UPON THE ORDER OF TH E LD. CIT(A) HAS SUBMITTED THAT THE ASSESSEE HAS NOT MADE AN Y PAYMENT TO A SINGLE PERSON. RATHER, THE PAYMENTS WERE MADE TO THE LABOURER THROUGH MUSTER ROLL. 6. HAVING GIVEN A THOUGHTFUL CONSIDER ATION TO THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF RECORD , WE FIND THAT UNDISPUTEDLY NO QUERY WITH REGARD TO THE PAYMENT MADE TO LABOURERS WAS RAISED FROM THE ASSESSEE BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT :-3-: PROCEEDINGS. THE LD. CIT(A) HAS EXAM INED THE DETAILS OF PAYMENTS AND COPIES OF MUSTER ROLL PLACED BEFORE HI M. THE MUSTER ROLL GIVES THE NAMES OF LABOURERS, ATTENDANCE DURING A PERIOD AND PAYMENT MADE TO THEM. IN THE LIGHT OF EVIDENCE PLACED BEFORE THE LD . CIT(A), THE LD. CIT(A) CONCLUDED THAT PROVISIONS OF SECTION 40A(3) AND 40(A)(I A) OF THE ACT ARE NOT APPLICABLE. THE RELEVANT OBSERVATIONS OF THE LD. CIT(A) ARE EXTRACTED HEREUNDER FOR THE SAKE OF REFERENCE:- 4(2) I HAVE EXAMINED THE FACTS A ND CIRCUMSTANCES OF THE CASE. THE APPELLANT HAS VEHEMENT LY ARGUED THAT PROPER OPPORTUNITY WAS NOT GIVEN TO EXPLAIN THE TRANSACTIO NS BEFORE MAKING THE IMPUGNED ADDITION. I HAVE ALSO CALLED FO R AND EXAMINED THE ASSESSMENT RECORDS. I FIND THAT THE AO HA S NOT RAISED ANY QUERY ON THE IMPUGNED DISALLOWANCE OF RS.11,22,636/- BEFORE A DDING IT FINALLY TO THE INCOME OF THE ASSESSEE WH ILE COMPLETING THE ASSESSMENT PROCEEDINGS. THE PRINCIPLE OF AUDI ALTERAM PARTEM MEANS THAT THE PARTY AFFECTED SHOULD BE GIVEN SUFFICIENT OPPORTUNITY TO MEET THE CASE AGAINST HIM. HOWEVER, AS LAID DOWN BY HON'BLE SPECIAL BENCH IN THE CASE OF KAILASH MOUDGIL VS DCIT (ITAT, DEL-SB) 72 ITD 97 SIMPLY BECAUSE AN OPPO RTUNITY OF BEING HEARD WAS NOT GIVEN TO THE ASSESSEE, IT WILL NOT INVALIDATE AN ASSESSMENT ORDER. IT IS ONLY A PROCEDURAL LAPSE. 4(3) I HAVE EXAMINED THE COPIES OF MUSTER ROLLS WHICH WERE FILED BEFORE ME. I FIND THAT THE PAYMENT HAVE BEEN MADE TO LABORERS IN CONTRADISTINCTION TO CONTRACTORS AS MENTIONED BY THE AO. I FIND THAT THE PAYMENTS HAVE NOT BEEN MADE TO CONTRACTORS AS MENTIONED BY THE AO. THE DETAILS OF PAYMENTS MA DE AS MENTIONED BY THE AO IN THE ASSESSMENT ORDER HAVE BEEN CO MPILED BY ME. THESE PAYMENTS HAVE BEEN MADE TO LABORERS THRO UGH MUSTER ROLLS. THE MUSTER ROLLS GIVE THE NAME OF THE LABORER, ATTENDANCE DURING A PERIOD AND :-4-: PAYMENT MADE TO HIM. INITIALS OF THE CONCERNED LABORER OR, AS THE CASE MAY BE, THE THUMB IMPRESSIONS HAVE ALSO BEEN OBTAINED AS AN EVIDENCE OF PAYMENT OF WAGES. THE PERIODICAL PAYMENTS HAVE BEEN SUMMED UP ON PARTICULAR DATE TO MAKE THE IMPUGNED ADDITION. THE DETAILS OF PAYMENTS ARE AS UNDER- PERIOD FOR WHICH PAYMENT MADE NO. OF LABORERS AMOUNT (IN RS.) REFERENCE TO TABLE AT PAGE 2 OF ASSESSMENT ORDER 06.04.2007 TO 12.04.2007 100 1 , 00 , 000 / - 12.04.2007 06.05.2007 TO 12.05.2007 50 50 , 000 / - 12.05.2007 10.06.2007 TO 16.06.2007 56 50,000 / - 16.06.2007 25.07.2007 TO 31.07.2007 79 80 , 000 / - 31.07.2007 23.09.2007 TO 29.09.2007 55 50,000/- 29.09.2007 23.10.2007 TO 29.10.2007 100 92 , 876 / - 29:10.2007 13.11.2007 TO 17.11.2007 56 50,000/- 17.11.2007 22.11.2007 TO 28.11.2007 57 50,000/- 28.11.2007 23.12.2007 TO 30.12.2007 60 50,000/- 30.12.2007 14.01.2008 TO 20.01.2008 100 95,000/- 20.01.2008 07.02.2008 TO 13.02.2008 100 1,00,000 / - 13.02.2008 28.12.2008 TO 05.03.2008 58 50,000 / - 05.03.2008 23.03.2008 TO 31.03.2008 60 60,000 / - 31.03.2008 SUB-TOTAL 8 , 77 , 876/- LABOUR CONTRACTOR 06.03.2008 TO 15.03.2008 30 43,000/- SANITAR Y CONTRACTOR 14.03.2008 TO 20.03.2008 70 1,19,340/- FURNITURE CONTRACTOR 17.03.2008 TO 26.03.2008 49 82,420/- ELECTRICAL CONTRACTOR TOTAL DISALLOWANCE 11,22,636/- 4(4) THE AFORESAID PAYMENTS TO LABORERS MADE THROUGH MUSTER ROLLS ALSO CARRY SIGNATURES OR, AS THE CASE MAY BE, THE THUMB IMPRESSIONS OF THE LABORERS TO WHOM PAYMENT HAS BEEN GRADE. THERE IS NO REFERENCE TO PAYMEN TS MADE TO ANY CONTRACTOR FOR THE SUPPLY OF LABORERS. THE AO HAS ALSO NOT IDENTIFIED ANY CONTRACTOR TO WHOM THE PAYMEN T HAS BEEN MADE. FURTHER, NO SINGLE PAYMENT TO A SINGLE LABORE R EXCEEDS A SUM OF RS.20,000/-. THE ACCOUNTS HAVE BEEN SETTLED ON A WEEKLY BASIS AND THE :-5-: PAYMENT FOR EACH LABORER OVER TH E WEEK HAS BEEN SUMMED UP TO A FIGURE IN THE MUSTER ROLLS WHIC H HAS BEEN ADDED AS DISALLOWED BY THE AO. 4(5) IN VIEW OF MY EXAMINATION I FIND THAT NEITHER IS THERE A SINGLE PAYMENT MADE WHICH EX CEEDS A SUM OF RS. 20,000/- NOT THE PAYMENT HAS BEEN MADE TO ANY CONTRACTOR. THE PAYMENTS HAVE BEEN MADE ON A WEEKLY BA SIS TO LABORERS AS WAGES THROUGH DULY MAINTAINED MUSTER ROLLS. THER E IS NO CONTRACTOR TO WHOM THE PAYMENTS WERE MADE. EVIDENTLY, THE PROVISIONS OF SECTION 40A(3) OR SECTION 40(A)(IA) OF THE ACT ARE NOT APPLICABLE. THE ADDITION OF RS.11,22,636/- IS DIRECTED TO BE DE LETED GIVING EQUIVALENT RELIEF TO THE APPELLANT. THE GROUND OF APPEAL IS ALLOWED. 7. FROM THE EVIDENCE PLACED BEFORE THE LD. CIT(A), IT HAS BECOME ABUNDANTLY CLEAR THAT THE PAYMENTS HAVE BEEN MADE TO THE LABOURERS THROUGH MUSTER ROLL AND EACH PAYMENT IS LESS THAN ` 20,000. THEREFORE, PROVISIONS OF SECTION 40A(3) AND 40(A) (IA) OF THE ACT ARE NOT ATTRACTED. THUS, WE DO NOT FIND ANY ERROR IN THE ORDER OF THE LD. CIT( A) WHO HAS RIGHTLY ADJUDICATED THE ISSUE IN THE GIVEN CIRCUMSTANCES. WE ACCORDINGLY CONFIRM HIS ORDER. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN TH E OPEN COURT ON 7.8.2013. SD/- SD/- [PRAMOD KUMAR] [S UNIL KUMAR YADAV] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:7.8.2013 JJ:0207 :-6-: COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSISTANT REGISTRAR