ITO 24(2)(3), MUMBAI V. OMPRAKASH VISHWAKARMA, MUMBAI

ITA 6119/MUM/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0130 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 22-11-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 01-10-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITTAL
• Keywords: Opportunity of being heard; Principle of natural justice; Assessment record
• Section: 143(3); 194C

Judgement Text

C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO. 6119/ MUM/2014 ( / ASSESSMENT YEAR : 2007-08) ITO 24(2)(3), C-13, ROOM NO. 603, 6 TH FLOOR, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI 400 051. / V. SHRI OMPRAKASH VISHWKARMA, ADARSH VIKAS CO-OP. HSG SOCIETY, INDIRA NAGAR, RANI SATI MARG, MALAD (E), MUMBAI 400 064. ./ PAN :ABZPV0582E ( / APPELLANT ) .. ( / RESPONDENT ) REVENUE BY : SHRI RAJAT MITTAL , DR ASSESSEE BY : SHRI BHUPENDRA SHAH / DATE OF HEARING : 11-07-2017 / DATE OF PRONOUNCEMENT : 29.08.2017 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER THIS APPEAL, FILED BY THE REVENUE BEING ITA NO. 61 19/MUM/2014, IS DIRECTED AGAINST THE APPELLATE ORDER DATED 25.07.20 14 PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- 34, MUMBAI (H EREINAFTER CALLED THE CIT(A)), FOR ASSESSMENT YEAR 2007-08, THE APPELLAT E PROCEEDINGS BEFORE THE LEARNED CIT(A) HAS ARISEN FROM THE ASSESSMENT ORDER DATED 05.03.2013 PASSED BY THE LEARNED ASSESSING OFFICER (HEREINAFTE R CALLED THE AO ) U/S 143(3) R.W.S. 263 OF THE INCOME-TAX ACT,1961 (HEREI NAFTER CALLED THE ACT). ITA 6119/MUM/2014 2 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE IN T HE MEMO OF APPEAL FILED WITH THE INCOME-TAX APPELLATE TRIBUNAL, MUMBA I (HEREINAFTER CALLED THE TRIBUNAL) READ AS UNDER:- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE AD DITION OF RS.19,59,838/- MADE ON ACCOUNT OF DISCREPANCY IN RE CEIPT FROM M/S. PROVOGUE (I) LTD. AS PER TDS CERTIFICATES AND RECEIPTS BOOKED BY THE ASSESSEE IN THE NAME OF M/S. PROVOGUE (I) LT D. IGNORING THE FACT THAT THE ASSESSEE FAILED TO FURNISH ANY EXPLAN ATION FOR THE SAID DIFFERENCE. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE AD DITION OF RS.19,59,838/- SAYING THAT THE ACCOUNTS OF THE ASSE SSEE ARE AUDITED U/S.44AB OF THE ACT AND AO HAS NOT FOUND AN Y DISCREPANCY THEREIN IGNORING THE FACT THAT AN OPPOR TUNITY WAS GIVEN AND ASSESSEE WAS QUESTIONED ABOUT THE DISCREP ANCY WHO IN TURN REPLIED THAT WHILE MAKING TDS DEDUCTION THE PA RTY HAS NOT TAKEN INTO ACCOUNT THE DEBIT NOTE ISSUED BY THEM. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE AD DITION OF RS.19,59,838/- IGNORING THE FACT THAT THE DEBIT NOT ES SUBMITTED BY THE ASSESSEE AMOUNTS TO ONLY RS.39,46,344/- WHER EAS THE SHORT BOOKING WAS OF RS.59,05,882/-. NOW ON VERIFIC ATION FROM THE ACCOUNT COPIES OF ASSESSEE IN THE BOOKS OF M/S PROVOGUE (I) LTD. AVAILABLE IN ASSESSMENT RECORD IT IS FOUND THA T THE ACTUAL AMOUNT OF DEBIT NOTES RAISED BY M/S. PROVOGUE (I) L TD. IS ONLY RS.36,81,029/- AND NOT RS.39,46,344/- REPORTED BY T HE AO IN THE ASSESSMENT ORDER. 4. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE AD DITION OF RS.38,375/- MADE ON ACCOUNT OF DISCREPANCY IN RECEI PT FROM M/S. CATWALK WORLD WIDE PVT. LTD. AS PER TDS CERTIFICATE S AND RECEIPTS BOOKED BY THE ASSESSEE IN THE NAME OF M/S. CATWALK WORLD WIDE PVT. LTD IGNORING THE FACT THAT THE ASSESSEE FAILED TO FURNISH ANY EXPLANATION FOR THE SAID DIFFERENCE. 5. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE AD DITION OF ITA 6119/MUM/2014 3 RS.38.375/- HOLDING THAT THIS DIFFERENCE IS ONLY O F TDS DEDUCTED OF RS.38,375/- IGNORING THE FACT THAT TDS DEDUCTED IS ALSO AN INCOME WHICH IS TO BE ASSESSED IN VIE(W) OF SECTION 198 OF THE I.T. ACT. 6. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. C.I.T. (A) ERRED IN DELETING TH E ADDITION OF RS. 1,01,04,662/- AND RS.7,64,497/- MADE U/S 40(A)(IA) OF THE ACT IGNORING THE FACT THAT THE SAID AMOUNTS WERE PAID T O DIFFERENT PARTIES INDIVIDUALLY EXCEEDING RS.50,000/- AND THER EFORE PROVISIONS U/S.194C ARE ATTRACTED. 7. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. C.I.T. (A) ERRED IN DELETING TH E ADDITION OF RS. 1,01,04,662/- AND RS.7,64,497/- MADE U/S 40(A)(IA) OF THE ACT IGNORING THE FACT THAT THE ASSESSEE HAS ADMITTED TH AT THESE PAYMENTS WERE MADE IN CASH AND NO TDS AS REQUIRED U /S.194C HAS BEEN DEDUCTED. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) BE SET ASIDE AND MATTER MAY BE DECIDED ACCORDING TO LAW. THE APPELLA NT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD NEW GROUN D WHICH MAY BE NECESSARY. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF INTERIOR DECORATIONS UNDER NAME AND STYLE OF M/S GURUKRUPA. THE ASSESSEE FILED HIS RETURN OF INCOME DECLARING INCOME OF RS. 46,69,667/- ON 31 ST OCTOBER, 2007 , AGAINST WHICH AN ASSESSMENT WAS ORIGINALLY COMPLETED U/S 143(3) OF THE ACT ON 17 TH DECEMBER, 2009 WHEREIN TOTAL INCOME OF RS. 50,54,270/- WAS ASSESSED BY THE AO. PROCEEDINGS U/S 263 OF THE ACT WERE INITIATED ON VARIOUS GROUNDS BY LEARNED CIT WHEREIN DIRECTIONS WERE , INTER-ALIA, ISSUED BY LD. CIT TO THE AO TO VERIFICATIONS OF CERTAIN ISSUES DE-NOVO, VIDE ORDERS DATED 25-08-20 11. THE DETAILS OF THE ORDERS PASSED BY LEARNED CIT U/S 263 ARE SET-OUT BY THE AO IN ITS ASSESSMENT ORDER DATED 05-03-2013 AT PAGE 1-6. WE WILL BE RES TRICTING OUR DISCUSSIONS ONLY TO THE ISSUES WHICH HAD ARISEN FROM REVENUE AP PEAL BEFORE US . THE ASSESSEE IS NOT IN APPEAL AGAINST THE ADDITIONS SUS TAINED BY LEARNED CIT(A). ITA 6119/MUM/2014 4 IT WAS OBSERVED BY THE A.O. IN ASSESSMENT PROCEEDI NGS ARISING OUT OF DIRECTIONS GIVEN BY LEARNED CIT U/S 263 , THAT FROM THE TDS CERTIFICATES THAT THE RECEIPT FROM M/S PROVOGUE (I) LTD. AMOUNTS TO R S. 6,89,34,259/- WHILE PARTY-WISE BREAK UP OF RECEIPTS SUBMITTED BY THE AS SESSEE SHOWED THAT THE AMOUNT OF INCOME BOOKED IN THE NAME OF PROVOGUE (I) LTD. WAS ONLY RS.6,30,28,377/-, THEREBY RESULTING INTO AN APPAREN T SHORT BOOKING OF INCOME TO THE TUNE OF RS.59,05,882/-. ON BEING ASKED BY TH E AO, THE ASSESSEE EXPLAINED THAT WHILE MAKING TDS DEDUCTION, THE PART Y HAD NOT TAKEN INTO ACCOUNT THE DEBIT NOTE ISSUED BY THEM AND DEDUCTED TDS FROM THE ENTIRE AMOUNT OF SALE AS PER BILL. IT WAS CLAIMED THAT THE SAID DETAILS WERE AGAIN SUBMITTED BEFORE THE AO DURING THE ASSESSMENT PROCE EDINGS IN PURSUANCE TO DIRECTIONS U/S 263 AS ALSO IT WAS EARLIER SUBMITTED BY THE ASSESSEE DURING ORIGINAL ASSESSMENT PROCEEDINGS U/S 143(3) R.W.S. 1 43(2). THE A.O. OBSERVED THAT THE DEBIT NOTE AMOUNT WAS ONLY RS. 39,46,344/- AND EVEN AFTER TAKING INTO ACCOUNT THE SAID DISCOUNTS, THERE WAS A DIFFER ENCE IN GROSS RECEIPTS TO TUNE OF RS. 19,59,538/- WHICH WAS NOT EXPLAINED BY THE ASSESSEE AND OF WHICH ADDITIONS WERE MADE BY THE A.O. U/S 143(3) R. W.S. 263 OF THE ACT , VIDE ASSESSMENT ORDER DATED 05-03-2013 PASSED BY THE AO U/S 143(3) R.W.S. 263 OF THE 1961 ACT. 4. AGGRIEVED BY THE ASSESSMENT ORDER DATED 05-03-20 13 PASSED BY THE AO U/S 263 R.W.S. 143(3) THE ASSESSEE FILED FIRST APPEAL B EFORE LEARNED CIT(A) , THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION OF THE ASSE SSEE DELETED THE ADDITION OF RS. 19,59,538/- BY HOLDING AS UNDER, VIDE APPELLATE ORDER DATED 25-07-2014:- 3.3. I HAVE CAREFULLY CONSIDERED THE ASSESSMENT OR DER AS WELL AS THE SUBMISSIONS MADE BY THE APPELLANT AS ABOVE. I H AVE OBSERVED THAT THE ACCOUNTS OF THE APPELLANT ARE AUDITED U/S 44AB OF THE INCOME TAX ACT,1961 AND THE ASSESSING OFFICER HAS N OT NOTICED ANY DISCREPANCY THEREIN. THE APPELLANT HAS FILED TH E NECESSARY ITA 6119/MUM/2014 5 DETAILS AS REGARDS AMOUNTS DEBITED BY M/S PROVOGUE (I) LTD AND THE PRIMARY ONUS THAT LAY UPON THE APPELLANT WAS AL READY DISCHARGED BY HIM. I AM OF THE OPINION THAT IF THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLANATION OFFE RED BY THE APPELLANT, HE SHOULD HAVE EXERCISED HIS POWER U/S 1 31/133(6) OF THE INCOME TAX ACT 1961 AND SHOULD HAVE EXAMINED M/ S PROVOGUE (I) LTD AND SHOULD HAVE OFFERED AN OPPORTU NITY TO THE APPELLANT TO CROSS EXAMINE THIS PARTY. IN VIEW OF THE ABOVE, I AM OF THE OPINION THAT THE ASSESSING OFFICER HAS NOT D ISCHARGED HIS ONUS WHILE MAKING AN ADDITION OF RS. 19,59,538/- ON ACCOUNT OF ALLEGED SHORT BOOKING OF INCOME BY THE APPELLANT. RESULTANTLY, I DELETE THIS ADDITION OF RS. 19,59,538/- MADE BY THE ASSESSING OFFICER. THIS GROUND OF APPEAL IS ALLOWED. 5. AGGRIEVED BY THE APPELLATE ORDER DATED 25-07-201 4 PASSED BY THE LD. CIT(A), THE REVENUE HAS FILED AN APPEAL BEFORE THE TRIBUNAL . 6. THE LD. D.R. SUBMITTED THAT THERE WAS A DIFFEREN CE OF RS. 19,59,538/- IN THE INCOME AS DECLARED BY THE ASSESSEE IN ITS RETUR N OF INCOME FILED BY THE ASSESSEE WITH THE REVENUE AS WELL TDS CERTIFICATE W .R.T. RECEIPT FROM M/S PROVOGUE (I) LTD., WHICH LED TO LOWER INCOME BEING OFFERED TO TAX . IT WAS FURTHER BROUGHT TO THE NOTICE OF THE BENCH THAT DEB IT NOTE ISSUED BY PROVOGUE (I) LTD. WERE TO THE TUNE OF RS. 36,81,029/- AND NO T RS. 39,46,344/- AS MENTIONED BY THE A.O. IN ITS ASSESSMENT ORDER U/S 1 43(3) R.W.S. 263 , AND HENCE THE DISALLOWANCE WILL GO FURTHER UP BY RS. 3 LACS. IT IS SUBMITTED THAT THE LD. CIT(A) DELETED THE ADDITION ON THE GROUND T HAT THE A.O. HAD NOT DISCHARGED HIS ONUS WHILE MAKING THE ADDITION AS NO ENQUIRY WAS MADE BY THE AO U/S 131/133(6). IT IS SUBMITTED THAT THE POW ER OF LD. CIT(A) IS CO- TERMINUS WITH THE POWER OF A.O. AND IN CASE THE AO DID NOT MADE ENQUIRY, THE LEARNED CIT(A) SHOULD HAVE MADE THE ENQUIRY HIMSELF OR DIRECTED THE AO TO MAKE ENQUIRY U/S 133(6)/131 OF THE 1961 ACT BY ISSU ING NOTICES/SUMMONS TO PROVOGUE INDIA LIMITED. IT WAS SUBMITTED THAT THE L EARNED CIT(A) DELETED THE ADDITIONS WITHOUT ANY EVIDENCE ON RECORD. ITA 6119/MUM/2014 6 7. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER H AND, RELIED ON THE ORDER OF THE LD. CIT(A) AND SUBMITTED THAT THE LD. CIT(A) HAS RIGHTLY GRANTED THE RELIEF.OUR ATTENTION WAS DRAWN TO PAPER BOOK FILED WITH THE TRIBUNAL. 8. WE HAVE HEARD RIVAL CONTENTIONS AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE OBSERVED THAT AS PER THE TDS CER TIFICATE, THE RECEIPT FROM M/S PROVOGUE (I) LTD. WERE TO THE TUNE OF TO RS. 6 ,89,34,259/- WHILE THE AMOUNT BOOKED BY THE ASSESSEE AS INCOME IN ITS BOOK S OF ACCOUNTS FROM M/S PROVOGUE (I) LTD. WAS TO THE TUNE OF RS. 6,30,28,37 7/- WHICH WAS OFFERED FOR TAXATION. THERE WERE DEBIT NOTE OF RS. 39,46,344/- ( NOW CLAIMED TO BE RS. 36,81,029/- BY REVENUE ) AND THUS THERE WAS A DIFFE RENCE OF RS. 19,59,538/- WHICH INCOME WAS SHORT OFFERED FOR TAXATION BY THE ASSESSEE WHICH WAS BROUGHT TO TAX BY THE AO AS THE ASSESSEE COULD NOT GIVE PROPER AND SATISFACTORY EXPLANATIONS. THE LD. CIT(A) GRANTED R ELIEF TO THE ASSESSEE ON THE GROUND THAT THE A.O. HAS NOT POINTED OUT ANY DISCRE PANCY IN THE AUDITED ACCOUNTS WHICH WERE AUDITED U/S 44AB AS WELL AS THE A.O. FAILED TO MAKE ANY ENQUIRY WITH PROVOGUE INDIA LIMITED AS NO NOTICE/S UMMONS U/S 133(6)/131 OF THE ACT RESPECTIVELY WERE ISSUED BY THE AO. WE HAVE OBSERVED THAT THE POWER OF LD. CIT(A) IS CO-TERMINUS WITH THE POWER O F A.O. AND THE LD. CIT(A) UNDER THESE CIRCUMSTANCES SHOULD HAVE DIRECTED THE A.O. TO ISSUE SUMMONS/NOTICES U/S 131/133(6) OF THE ACT TO THE M/ S PROVOGUE (I) LTD. TO VERIFY THIS DISCREPANCY IN INCOME OR COULD HAVE HIM SELF ISSUED SUCH NOTICES/SUMMONS TO PROVOGUE INDIA LIMITED FOR NECES SARY VERIFICATIONS, THE OBJECTIVE BEING TO COMPUTE CORRECT INCOME CHARGEABL E TO TAX WHICH IS MANDATE OF THE 1961 ACT. THE PRIMARY ONUS IS ON THE ASSESSE E TO RECONCILE THE INCOME AS IS REFLECTED IN TDS CERTIFICATES WITH BOOKS OF A CCOUNTS , AS THE SAID INCOME STOOD CREDITED IN ASSESSEES BOOKS OF ACCOUNTS WHIC H ONUS WAS NOT DISCHARGED BY THE ASSESSEE IN THE INSTANT CASE. HEN CE, KEEPING IN VIEW THE FACTUAL MATRIX OF THE CASE, WE ARE INCLINED TO SET ASIDE AND RESTORE THIS MATTER TO THE FILE OF THE A.O. FOR DE NOVO DETERMINATION O F THE ISSUE ON MERIT IN ITA 6119/MUM/2014 7 ACCORDANCE WITH LAW. THE ASSESSEE IS DIRECTED TO F ILE NECESSARY EVIDENCES/EXPLANATIONS BEFORE THE A.O. IN THE DE NO VO PROCEEDING TO RECONCILE THE DIFFERENCE BETWEEN THE INCOME AS IS REFLECTED I N THE BOOKS OF ACCOUNTS AND TDS CERTIFICATES W.R.T. PROVOGUE INDIA LIMITED. NE EDLESS TO SAY, THE A.O. SHALL PROVIDE SUFFICIENT OPPORTUNITY OF BEING HEARD TO TH E ASSESSEE IN ACCORDANCE WITH PRINCIPLES OF NATURAL JUSTICE IN ACCORDANCE WI TH LAW.THE AO SHALL ALLOW ASSESSEE TO FILE ALL NECESSARY EXPLANATIONS/EVIDENC ES IN SUPPORT OF HIS CONTENTIONS. WE ORDER ACCORDINGLY. 9. THE A.O. FURTHER OBSERVED FROM THE TDS CERTIFICA TE THAT THE RECEIPT FROM M/S CATWALK WORLD WIDE PVT. LTD. WAS TO THE TUNE OF RS. 17,10,712/- WHILE FROM THE PARTY-WISE BREAK UP OF RECEIPTS SUBMITTED BY THE ASSESSEE SHOWED AN AMOUNT OF INCOME OF RS. 16,72,337/- WHICH WAS OF FERED TO TAXATION BY THE ASSESSEE IN RETURN OF INCOME FILED WITH THE REVENUE , WHICH LED TO A DIFFERENCE OF RS. 38,375/- BEING SUPPRESSED INCOME SHORT BOOKE D BY THE ASSESSEE. THE ASSESSEE COULD NOT FURNISH ANY EXPLANATION W.R.T. T HIS SHORT BOOKING OF INCOME AND HENCE THE A.O. ADDED AN AMOUNT OF RS. 38 ,375/- TO THE TOTAL INCOME OF THE ASSESSEE , VIDE ASSESSMENT ORDER DATE D 05-03-2013 PASSED BY THE AO U/S 263 R.W.S 143(3). 10. AGGRIEVED BY THE ASSESSMENT ORDER DATED 05-03-2 013 PASSED BY THE AO U/S 143(3) R.W.S. 263 , THE ASSESSEE CARRIED THE MA TTER IN APPEAL BEFORE THE LD. CIT(A) WHO GRANTED RELIEF TO THE ASSESSEE BY HOLDIN G THAT THE INCOME SHOWN AGAINST CATWALK WORLDWIDE PVT. LTD. WAS TO THE TUNE OF RS. 17,10,712/- WHICH WAS THE SAME AS PER THE TDS CERTIFICATE ISSUED BY T HE SAID PARTY AND THE DIFFERENCE OF RS. 38,375/- IS NOTHING BUT THE AMOUN T OF TDS, VIDE APPELLATE ORDER DATED 25-07-2014 PASSED BY THE LEARNED CIT(A) . 11.AGGRIEVED BY THE APPELLATE ORDER DATED 25-07-201 4 PASSED BY THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNA L. ITA 6119/MUM/2014 8 12. THE LD. D.R. SUBMITTED THAT THERE WAS A DIFFERE NCE OF RS. 38,375/- AS PER THE TDS CERTIFICATE ISSUED BY M/S CATWALK WORLD WIDE PVT. LTD. AND THE PARTY-WISE BREAKUP SUBMITTED BY THE ASSESSEE, WHICH LED TO SUPPRESSION OF INCOME AND THE SAME SHOULD BE TREATED AS INCOME OF THE ASSESSEE. IT WAS SUBMITTED THAT LEARNED CIT(A) ACCEPTED THE CONTENTI ON OF THE ASSESSEE WITHOUT ANY EVIDENCES ON RECORD. 13. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, RELIED ON THE ORDER OF THE LD. CIT(A) AND SUBMITTED THAT THE LD. CIT(A) HAS RIGHTLY GRANTED THE RELIEF. 14. WE HAVE HEARD RIVAL CONTENTIONS AND ALSO PERUSE D THE MATERIAL AVAILABLE ON RECORD. WE HAVE OBSERVED FROM THE ORDER OF THE A O, THAT THE CONTROVERSY IS W.R.T. DIFFERENCE OF INCOME AS PER TDS CERTIFICATE ISSUED BY M/S CATWALK WORLDWIDE PVT. LTD., WHEREIN THE RECEIPT FROM THIS PARTY BY THE ASSESSEE WAS TO THE TUNE OF RS. 17,10,712/- WHILE THE PARTY-WISE BREAK-UP OF THE RECEIPTS SUBMITTED BY THE ASSESSEE SHOWED THAT THE AMOUNT B OOKED IN THE NAME OF M/S CATWALK WORLDWIDE PVT. LTD. AMOUNTED TO RS.16,7 2,337/- AND THEREBY A SHORT RECEIPT OF RS. 38,375/- WHICH WAS NOT OFFERED FOR TAXATION BY THE ASSESSEE. WE HAVE GONE THROUGH THE PAPER BOOK FILED BY THE ASSESSEE AND FIND THAT NO DETAILS/EVIDENCES WERE FURNISHED BY THE ASS ESSEE TO EXPLAIN THIS DIFFERENCE/SUPPRESSION OF THIS INCOME AND IN THE A BSENCE OF EVIDENCES/DETAILS, WE ARE NOT INCLINED TO ACCEPT TH E CONTENTION OF THE ASSESSEE. THE PAPER BOOK DID NOT CONTAINED ANY EVID ENCE WHICH WAS PLACED BEFORE THE AO / CIT(A) TO EXPLAIN AND RECONCILE THE SAID DIFFERENCE. AS SUCH, THIS MATTER IS SET ASIDE AND RESTORED TO THE FILE O F THE A.O. FOR DE NOVO DETERMINATION OF THE ISSUE ON MERITS IN ACCORDANCE WITH LAW BY THE AO IN SET ASIDE PROCEEDINGS. THE ASSESSEE IS DIRECTED TO FIL E EVIDENCES/EXPLANATION BEFORE THE A.O. IN THE DE NOVO PROCEEDING TO RECONC ILE THE DIFFERENCE BETWEEN ITA 6119/MUM/2014 9 THE INCOME AS IS REFLECTED IN THE BOOKS OF ACCOUNTS AND TDS CERTIFICATES W.R.T. CATWALK WORLDWIDE PRIVATE LIMITED. NEEDLESS TO SAY , THE A.O. SHALL PROVIDE SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESS EE IN ACCORDANCE WITH PRINCIPLES OF NATURAL JUSTICE IN ACCORDANCE WITH LA W. WE ORDER ACCORDINGLY. 15. THE THIRD ADDITION IS WITH RESPECT TO THE DISAL LOWANCE U/S 40(A)(IA) OF THE ACT TO THE TUNE OF RS. 1,01,04,662/- AND RS. 7, 67,497/- ON ACCOUNT OF PAYMENTS BEING MADE WITHOUT DEDUCTION OF TAX AT SOU RCE FROM LABOUR PAYMENTS. THE A.O. OBSERVED THAT THE ASESSEE HAD MADE LABOUR PAYMENTS TO THE TUNE OF RS. 3,41,79,685/-. THE ASSESSEE HAD SUBMITTED THAT TDS HAS BEEN MADE FROM LABOUR PAYMENT OF RS.61,73,124/- PAID TO CONTRACTOR S AND DULY REMITTED TO THE GOVERNMENT TREASURY AND IN RESPECT OF THE BALAN CE AMOUNT, THE ASSESSEE HAD EXPLAINED THAT SINCE THE ASSESSEE IS IN THE BUS INESS OF INTERIOR DECORATION, HUGE AMOUNT OF LABOUR IS INVOLVED LIKE CARPENTER, P AINTER, ELECTRICIAN, PLUMBERS, HELPERS ETC. ON DAY TO DAY BASIS, THEY HA VE BEEN PAID IN SMALL AMOUNTS, WHICH DO NOT EXCEED THE LIMIT PRESCRIBED F OR DEDUCTION OF TDS. HOWEVER, THE A.O. ON VERIFICATION OF THE DETAILS OF THE BALANCE AMOUNT FROM THE LEDGER OF THE ASSESSEE OBSERVED THAT AN AMOUNT AGGREGATING TO RS. 1,01,04,662/-, PAID TO DIFFERENT PARTIES ATTRACTS T HE PROVISIONS OF SECTION 194C OF THE 1961 ACT. SINCE THERE WAS A FAILURE ON THE P ART OF THE ASSESSEE WHEREIN TDS WAS NOT DEDUCTED U/S 194C, THE EXPENDITURE ON L ABOUR AMOUNTING TO RS. 1,01,04,662/- WAS DISALLOWED BY THE A.O. AND ADDED TO THE INCOME BY INVOKING PROVISIONS OF SECTION 40(A)(IA) , THE A.O. FURTHER MADE A DISALLOWANCE OF RS. 7,64,497/-FOR PAYMENTS MADE TO CONTRACTORS W ITHOUT DEDUCTION OF TDS U/S 194C OF THE 1961 ACT AND THE PAYMENTS EXCEEDED THRESHOLD LIMIT OF RS.50,000/- WHICH ATTRACTED DISALLOWANCE U/S 40(A)( IA) OF THE 1961 ACT, VIDE ASSESSMENT ORDER DATED 05-03-2013 PASSED BY THE AO U/S 143(3) R.W.S. 263 OF THE 1961 ACT. ITA 6119/MUM/2014 10 16. AGGRIEVED BY THE ASSESSMENT ORDER DATED 05-03-2 013 PASSED BY THE A.O. U/S 263 R.W.S. 143(3) OF THE 1961 ACT, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) WHEREBY THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS AN INTERIOR DECORATOR AND HAD DEDUCTED TAX ON LABOUR PAYMENTS. THE ASSESSEE SUBMITTED THAT IT HAD EMPLOYED VARIOUS INDIVIDUAL L ABOURERS AND CARPENTERS ON DAILY BASIS WHO WERE SUPERVISED BY INDEPENDENT S UPERVISORS. THE LABOURERS AND CARPENTERS WERE EMPLOYED AT VARIOUS S ITES ON DAILY BASIS AND PAYMENTS TO THEM WERE ROUTED THROUGH THE SUPERVISOR S. THE ASSESSEE HAD SUBMITTED THAT THE PAYMENTS WERE GIVEN TO THESE IND EPENDENT SUPERVISORS WHO IN TURN DISTRIBUTE THESE PAYMENTS ON BEHALF OF THE ASSESSEE TO VARIOUS CARPENTERS AND CONTRACTORS. IT WAS SUBMITTED THAT T HESE SUPERVISORS DO NOT RETAIN ANY MONEY OUT OF THE PAYMENTS MADE TO THEM A ND THEY DO NOT EARN ANY INCOME THEREFROM. THE DETAILS WERE SUBMITTED BY THE ASSESSEE AND IT WAS CONTENDED THAT THESE SUPERVISOR HAD NOT MADE PAYMEN TS TO LABOURER AND CONTRACTORS OF MORE THAN THRESHOLD LIMIT OF RS 50,0 00/- . THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE ALLOWED THE APPEAL OF THE ASSESSEE BY HOLDING AS UNDER, VIDE APPELLATE ORDER DATED 25- 07-2014:- I HAVE CAREFULLY CONSIDERED THE OBSERVATION OF THE ASSESSING OFFICER AND THE ARGUMENTS PLACED BEFORE ME BY THE L EARNED A.R. IT IS VERY COMMON IN THE CONTRACTING BUSINESS TO AP POINT INDEPENDENT SUPERVISORS WHO SUPERVISE VARIOUS LABOU RERS UNDER HIS CHARGE. FOR THE PURPOSE OF CONTROL & CONVENIENC E THE PAYMENTS ARE MADE TO SUCH INDEPENDENT SUPERVISORS O R MUKADAMS WHO IN TURN DISTRIBUTE THE MONEY TO VARIOU S LABOURERS WHO ARE EMPLOYED BY THE CONTRACTORS THEMSELVES. I O BSERVE FROM THE STATEMENT THAT NO INDIVIDUAL PAYMENTS MADE TO D IFFERENT PARTIES DURING THE YEAR UNDER REVIEW EXCEEDED RS. 5 0,000/- AND THEREFORE, IN MY OPINION, THE APPELLANT WAS NOT REQ UIRED TO DEDUCT TAX AT SOURCE U/S 194C OF THE INCOME TAX ACT ,1961. ACCORDINGLY, I DELETE THESE ADDITIONS OF RS. 1,01,0 4,662/- AND RS.7,64,497/- MADE BY THE ASSESSING OFFICER U/S.40( A)(IA). THIS GROUND OF APPEAL IS ALLOWED. ITA 6119/MUM/2014 11 17. AGGRIEVED BY THE APPELLATE ORDER DATED 25-07-20 14 PASSED BY THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNA L. 18. THE LD. D.R. SUBMITTED THAT THE ASSESSEE HAS MA DE PAYMENTS OF RS. 1.01 CRORES AND RS. 7.64 LACS FOR LABOUR PAYMENTS A GAINST WHICH NO DEDUCTION OF TAX AT SOURCE WAS MADE BY THE ASSESSEE AND PROVISION OF SECTION 194C WAS VIOLATED. IT WAS SUBMITTED THAT NEW PLEA O F PAYMENTS BEING MADE TO SUPERVISORS WHO IN TURN MADE PAYMENTS TO LABOURERS HAS BEEN SET UP BY THE ASSESSEE BEFORE LEARNED CIT(A) FOR THE FIRST TIME W HICH WAS NOT RAISED BEFORE THE AO. IT WAS SUBMITTED THAT NEW PLEA OF THE ASSES SEE REQUIRED VERIFICATION BY THE AO AND LEARNED CIT(A) DID NOT CALLED FOR REM AND REPORT FROM THE AO AND ALLOWED THE APPEAL OF THE ASSESSEE WITHOUT CALL ING FOR REMAND REPORT FROM THE AO IN VIOLATION OF RULE 46A OF THE INCOME- TAX RULES, 1962. THUS, IT IS PRAYED THAT THE MATTER BE RESTORED TO THE AO FOR DE NOVO DETERMINATION OF THE ISSUE ON MERITS BY THE AO AFTER CONSIDERING THE PLE AS OF THE ASSESSEE. 17. THE LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTEN TION TO PAPER BOOK PAGE NO. 91 TO 96 AND SUBMITTED THAT ALL THE DETAILS WER E FILED BEFORE THE AUTHORITIES BELOW. THE LD. COUNSEL ALSO INVITED OUR ATTENTION TO PAPER BOOK PAGE 78 WHEREBY COPY OF REPLY GIVEN TO THE AO IS PL ACED AND SUBMITTED THAT THESE DOCUMENTS WERE SUBMITTED BEFORE THE A.O. DURI NG THE ASSESSMENT PROCEEDING. THE LD. COUNSEL ALSO INVITED OUR ATTEN TION TO PAPER BOOK PAGE 46 TO 60 WHEREBY THE LABOUR PAYMENT DETAILS WERE FURNI SHED. IT IS SUBMITTED THAT THE PAYMENTS TO SUPERVISORS DID NOT ATTRACT PR OVISIONS OF SECTION 194C. 18. WE HAVE CONSIDERED RIVAL CONTENTIONS AND ALSO P ERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE OBSERVED THAT THE ASSE SSEE IS AN INDIVIDUAL WHO IS ENGAGED IN THE BUSINESS OF INTERIOR DECORATIONS WORKING UNDER THE NAME AND STYLE OF M/S GURUKRUPA. THE ASSESSEE HAD MADE P AYMENTS TO THE TUNE OF RS. 1,01,04,662/- AND RS. RS. 7,64,497/- TO VARIOUS PERSONS WHICH WAS ITA 6119/MUM/2014 12 CLAIMED BY THE AO TO HAVE EXCEEDED THRESHOLD LIMITS AS STIPULATED U/S 194C OF THE 1961 ACT AND THE ASSESSEE HAD MADE PAYMENTS WITHOUT DEDUCTING TAX AT SOURCE AS STIPULATED U/S 194C WHICH AS PER AO IN FRINGED PROVISIONS OF SECTION 40(A)(IA) . WE FIND THAT THE ASSESSEE HAD CLAIMED THAT THESE PAYMENTS WERE MADE TO SUPERVISORS WHO DISTRIBUTED P AYMENT TO LABOURERS WITHOUT RETAINING ANY INCOME FOR THEMSELVES AND HEN CE NO VIOLATION OF SECTION 194C R.W.S. 40(A)(IA). THE ASSESSEE SET UP THIS PLE A OF MAKING PAYMENT TO SUPERVISORS WHO IN TURN MADE PAYMENTS TO LABOURERS WITHOUT RETAINING ANY PROFIT FOR THEMSELVES, FOR THE FIRST TIME BEFORE LD . CIT(A) AND LEARNED CIT(A) DID NOT CALLED FOR ANY REMAND REPORT FROM A.O. BUT ACCE PTED THE PLEA OF THE ASSESSEE WHILE GRANTING RELIEF TO THE ASSESSEE WITH OUT ANY VERIFICATION/ EXAMINATION OF THE CLAIM OF THE ASSESSEE. THIS NE W PLEA OF THE ASSESSEE THAT PAYMENTS WERE MADE TO SUPERVISORS WHO IN TURN DISTR IBUTED PAYMENTS TO LABOURERS WITHOUT KEEPING ANY INCOME FOR THEMSELVES AND HENCE NO INFRINGEMENT OF SECTION 194C R.W.S. 40(A)(IA) NEED VERIFICATION BY THE AO. THUS, THIS MATTER NEEDS TO BE SET ASIDE AND RESTORE D TO THE FILE OF THE A.O. FOR DENOVO DETERMINATION OF THIS ISSUE ON MERITS, WHO WILL EVALUATE THE CONTENTION OF THE ASSESSEE ON MERITS IN ACCORDANCE WITH LAW. THE UNDERSTANDING AND AGREEMENTS WITH THE SAID SUPERVIS ORS , THEIR ROLES, RESPONSIBILITY, THEIR TAX RETURNS , PAN ETC SHALL B E SUBMITTED BY THE ASSESSEE BEFORE THE AO WHO SHALL EVALUATE AND EXAMINE ON MER ITS TO ESTABLISH WHETHER THE SAID PAYMENTS WERE COVERED WITHIN THE MEANING A ND MANDATE OF PROVISIONS OF SECTION 194C OF THE 1961 ACT. AS SUC H, THE APPELLATE ORDER OF THE LD. CIT(A) IS SET ASIDE AND MATTER IS SENT BACK TO A.O. FOR DENOVO DETERMINATION OF THE ISSUE ON MERITS IN ACCORDANCE WITH LAW . THE ASSESSEE IS DIRECTED TO FILE EVIDENCES AND EXPLANATIONS BEFORE THE A.O. IN THE DE NOVO PROCEEDING TO SUBSTANTIATE ITS CLAIM. NEEDLESS TO SAY, THE A.O. SHALL PROVIDE SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESS EE IN ACCORDANCE WITH PRINCIPLES OF NATURAL JUSTICE IN ACCORDANCE WITH LA W . WE ORDER ACCORDINGLY. ITA 6119/MUM/2014 13 19. IN THE RESULT, APPEAL OF THE REVENUE IN ITA NO. 6119/MUM/2014 FOR ASSESSMENT YEAR 2007-08 IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH AUGUST, 2017. # $% &' 29 TH ( ) SD/- SD/- (SAKTIJIT DEY) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED 29-08-2017 [ .9../ R.K. R.K. R.K. R.K. , EX. SR. PS !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. : ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. : / CIT- CONCERNED, MUMBAI 5. =>( 99?@ , ?@ , $ / DR, ITAT, MUMBAI C BENCH 6. (BC D / GUARD FILE. / BY ORDER, = 9 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI