Shri Subhash Chand Jain, Kolkata V. ITO, Ward - 45(2), Kolkata, Kolkata

ITA 7/KOL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62133 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 03-01-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R K SAHA PER SHRI GEORG
• Assessee Lawyers: MANISH TIWARI
• Keywords: Difference of opinion; Change of opinion
• Section: 40A(3); 142(1); 194C; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA [BEFORE SHRI PRAMOD KUMAR, A.M. & SHRI GEORGE MATH AN, J.M. ] I.T.A. NO.07/KOL/2011 ASSESSMENT YEAR :2005-06 SRI SUBHASH CHAND JAIN V S- ITO, WARD-45(2), KOLKATA (PROP. OF M/S.JAIN BUILDERS & CONTRACTORS) 24/25, UPPER CHITPUR ROAD, KOLKATA 700 007 (PAN:ACTPJ 7762P) ( APPELLANT ) ( RESPONDENT ) DATE OF CONCLUDING THE HEARING : 22.06.2012 DATE OF PRONOUNCING THE ORDER : 22.06.2012 APPEARANCES : FOR THE APPELLANT : SHRI MANIS H TIWARI : FOR THE RESPONDENT : SHRI R.K.SAHA O R D E R PER SHRI GEORGE MATHAN,J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A)- XXX, KOLKATA IN APPEAL NO.141/CIT(A)-XXX/WARD-45(2) /2009-10 DATED 20 TH SEPTEMBER 2010 FOR THE ASSESSMENT YEAR 2005-06. 2. SHRI MANISH TIWARI, C.A. REPRESENTED ON BEHALF O F THE ASSESSEE AND SHRI R. K. SAHA REPRESENTED ON BEHALF OF THE REVENUE. 3. IN THIS ASSESSEES APPEAL, THE ASSESSEE HAS RAIS ED THE FOLLOWING GROUNDS: 1. (A) THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, LD. C.I.T.(APPEALS) HAS FAILED TO APPRECIATE THAT THE ISSUE REGARDING DEDUCIBILITY OF TDS FROM PAYMENTS TO SUB-CONTRACTO R HAVING BEEN EXAMINED IN COURSE OF ORIGINAL ASSESSMENT VIDE SPE CIFIC QUERY RAISED IN NOTICE U/S. 142(1) DATED 09/01/2007, THE INITIA TION OF REASSESSMENT PROCEEDING U/S. 147 OF I.T. ACT, 1961 ON THE SAME ISSUE TANTAMOUNTS TO CHANGE OF OPINION WHICH IS NOT PERMISSIBLE IN L AW. (B) THAT WITHOUT PREJUDICE TO THE ABOVE AND ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. C.I.T (APPEALS) IS WRONG AND 2 ITA NO.07/KOL/2011 SRI SUBHASH CHAND JAIN ASSESSMENT YEAR: 2005-06 UNJUSTIFIED IN CONFIRMING THE ACTION OF THE ASSESSI NG OFFICER WHO INITIATED PROCEEDING U/S. 147 OF I.T. ACT, 1961 AND ISSUED NO TICE U/S. 148 OF THE ACT ON 16.02.2009. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, LD. C.I.T (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER WHO DISALLOWED PAYMENT OF RS.2,85,318/- MADE TO CONTRACTOR U/S. 40 (A)(IA) OF I.T. ACT FOR ALLEGED NON- DEDUCTION OF TAX U/S. 194C OF I.T. ACT , 1961. 3. (A) THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, LD. C.I.T (APPEALS) IS WRONG AND UNJUSTIFIED IN CONFIRMING TH E ACTION OF ASSESSING OFFICER WHO DISALLOWED AGGREGATE PAYMENT OF RS.29,0 5,628/- TO 17 PERSONS TOWARDS LABOUR CHARGES U/S. 40(A)(IA) OF I. T. ACT ON MISCONCEPTION THAT PROVISIONS OF SECTION 194C WAS APPLICABLE. (B) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE DISALLOWANCE OF LABOUR CHARGE OF RS.29,05,628/- U/S. 40(A)IA) IS BAD IN LAW SINCE THE ASSESSING OFFICER HAS NOT CONFINED HIMSELF WITHIN T HE SCOPE FOR WHICH RE- ASSESSMENT PROCEEDING WAS INITIATED. 4.(A) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. C.I.T(APPEALS) IS WRONG AND UNJUSTIFIED IN CONFIRMI NG DISALLOWANCE OF RS.2,62,000/- U/S. 40A(3) OF I. T. ACT, 1961. (B) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE DISALLOWANCE U/S. 40A(3) OF RS.2,62,000/- IS BAD IN LAW SINCE TH E ASSESSING OFFICER HAS FAILED TO CONFINE HIMSELF ON POINTS FOR WHICH RE-AS SESSMENT PROCEEDING WAS INITIATED. 5. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, A DDUCE OR AMEND ANY GROUND O GROUNDS ON OR BEFORE THE DATE OF HEARING O F THE APPEAL. 4. IT WAS SUBMITTED BY THE LD. A.R., AT THE TIME OF HEARING, THAT HE DID NOT WISH TO PRESS GROUND NOS. 1(A), 1(B), 4(A) AND 4(B). CON SEQUENTLY, THE SAID GROUNDS ARE DISMISSED AS NOT PRESSED. 5. IN REGARD TO GROUND NOS. 2, 3(A) AND 3(B), IT WA S SUBMITTED BY THE LD. A.R. THAT THE ASSESSEE IS AN INDIVIDUAL WHO IS DOING THE BUSINESS OF CONSTRUCTION WORK ON CONTRACT BASIS AS A CONTRACTOR. IT WAS HIS SUBMI SSION THAT IN THE COURSE OF ASSESSMENT, THE AO HAD INVOKED THE PROVISIONS OF SE CTION 40(A)(IA) OF THE ACT AND 3 ITA NO.07/KOL/2011 SRI SUBHASH CHAND JAIN ASSESSMENT YEAR: 2005-06 HAD DISALLOWED THE PAYMENTS MADE BY THE ASSESSEE TO 17 PERSONS WHO ARE SUPPLYING THE LABOURERS TO THE ASSESSEE ON THE GROU ND THAT THE ASSESSEE HAD NOT DEDUCTED TDS ON THE SAID PAYMENTS. IT WAS HIS SUBMI SSION THAT THE AMENDMENT TO INCLUDE INDIVIDUAL IN SECTION 194C(1) WAS BROUGHT IN W.E.F. 01.06.2007 AND THE ASSESSMENT YEAR UNDER APPEAL WAS 2005-06. IT WAS SU BMISSION THAT THE AMENDMENT DID NOT APPLY TO THE ASSESSMENT YEAR 2005-06. CONSE QUENTLY, THE ASSESSEE DID NOT HAVE THE LIABILITY TO DEDUCT TDS. IT WAS SUBMISSION THAT AS THE ASSESSEE DID NOT HAVE THE LIABILITY TO DEDUCT TDS, THE ADDITION AS M ADE BY THE AO WAS LIABLE TO BE DELETED. IT WAS ALSO SUBMISSION THAT IN SOME CASES, THE ASSESSEE HAD DEDUCTED TDS AND THE SAME HAD BEEN PAID TO THE ACCOUNT OF THE CE NTRAL GOVERNMENT BEFORE THE DUE DATE OF FILING THE RETURN. 6. IN REPLY, THE LD. D.R. SUBMITTED THAT THE TERM INDIVIDUAL WAS BROUGHT IN TO THE PROVISION OF SECTION 194C(1) FROM 01.06.2007. H OWEVER, THE ASSESSEE WAS NOT MADE LIABLE UNDER SECTION 194C(1) BY THE AO. IT WAS HIS SUBMISSION THAT THE LIABILITY TO DEDUCT TAX IN THE CASE OF ASSESSEE WAS UNDER SECTION 194C(2) OF THE ACT. IT WAS SUBMISSION THAT THE ASSESSEES TOTAL RECEIPT S EXCEEDED THE MONETARY LIMITS SPECIFIED IN CLAUSE (A) OR CLAUSE (B) OF SECTION 44 AB DURING THE FINANCIAL YEAR IMMEDIATELY PRECEDING THE FINANCIAL YEAR IN WHICH T HE AMOUNT WAS PAID TO THE SUB- CONTRACTORS. IT WAS SUBMISSION THAT THE ASSESSEE WA S AN INDIVIDUAL AND IS A CONTRACTOR, AS PER THE PROVISION OF SECTION 194C(2) OF THE ACT. AS THE ASSESSEE WAS A CONTRACTOR UNDER THE PROVISION OF SECTION 194C(2) AND AS HIS TOTAL RECEIPTS EXCEEDED THE MONETARY LIMITS SPECIFIED IN SECTION 4 4AB, THE ASSESSEE HAD A LIABILITY TO DEDUCT TDS ON THE AMOUNT PAID TO THE S UB-CONTRACTORS. IT WAS SUBMISSION THAT EVEN ASSUMING 17 PERSONS WERE SUB-C ONTRACTORS IN THEIR INDIVIDUAL STATUS, STILL THE LIABILITY TO DEDUCT TDS REMAINED WITH THE ASSESSEE AND AS THE ASSESSEE HAD NOT DEDUCTED TDS, THE AO WAS RIGHT IN INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. IT WAS HIS FURTHER SU BMISSION THAT THOUGH THE ASSESSEE HAD MENTIONED THAT IN SOME CASES, HE HAD DEDUCTED T AX AND PAID TO THE ACCOUNT OF THE CENTRAL GOVERNMENT BEFORE THE DUE DATE OF FILIN G THE RETURN, NO EVIDENCE IN 4 ITA NO.07/KOL/2011 SRI SUBHASH CHAND JAIN ASSESSMENT YEAR: 2005-06 RESPECT OF THE SAME HAD BEEN PRODUCED. IT WAS SUBMI SSION THAT THE ORDER OF THE AO AND THAT OF THE LD. CIT(A) WAS LIABLE TO BE UPHELD. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PERU SAL OF THE FACTS, IN THE PRESENT CASE, CLEARLY SHOWS THAT THE ASSESSEE HAD M ADE PAYMENTS TOWARDS LABOUR CHARGES TO 17 PERSONS. IT IS ALSO AN UNDISPUTED FAC T THAT THE TOTAL RECEIPTS IN THE HANDS OF THE ASSESSEE FAR EXCEEDED THE MONETARY LIM ITS PRESCRIBED UNDER THE PROVISIONS OF SECTION 44AB OF THE ACT. 17 PERSONS T O WHOM THE ASSESSEE HAD PAID/CREDITED THE LABOUR CHARGES TO, ARE, OBVIOUSLY , THE SUB-CONTRACTORS OF THE ASSESSEE. A PERUSAL OF THE PROVISION OF SECTION 194 C(2) OF THE ACT CLEARLY SHOWS THAT THE ASSESSEE, BEING AN INDIVIDUAL, WHOSE TOTAL RECEIPTS EXCEEDED THE MONETARY LIMITS SPECIFIED IN SECTION 44AB OF THE ACT, IS LIA BLE TO DEDUCT TDS ON THE AMOUNTS PAID/CREDITED TO THE SUB-CONTRACTORS FOR THE SUPPLY OF THE LABOURERS FOR CARRYING OUT THE WHOLE OR ANY PART OF THE WORK UNDERTAKEN BY THE CONTRACTOR, BEING THE ASSESSEE. ADMITTEDLY, THE ASSESSEE HAD NOT DEDUCTED THE TDS U NDER SECTION 194C IN RESPECT OF 17 PERSONS. THE 17 PERSONS ARE TO BE CONSIDERED AS SUB-CONTRACTORS BECAUSE THE NOTING IN THE LABOUR CHARGES LEDGER, AS HAS BEEN EX TRACTED BY THE AO, SHOWS THAT AGAINST EACH PAYMENT, THE NOTING SHOWS FOURTEEN MI STRY SEVEN DAYS @110 & FOURTEEN LABOUR SEVEN DAYS @70 ETC. THEREFORE, IT CANNOT BE EVEN ASSUMED THAT THE PAYMENTS WERE MADE TO THE INDIVIDUAL WORKERS. T HE 17 PERSONS WOULD HAVE TO BE TREATED AS SUB-CONTRACTORS. ONCE IT IS NOTICED T HAT THE ASSESSEE, BEING A CONTRACTOR, HAS MADE PAYMENTS TO THE SUB-CONTRACTOR S FOR THE SUPPLY OF LABOURS FOR CARRYING OUT THE WHOLE OR PART OF THE WORK UNDERTAK EN BY THE CONTRACTOR, THEN THE ASSESSEE IS LIABLE TO DEDUCT TDS UNDER SECTION 194C OF THE ACT, WHICH, ADMITTEDLY, THE ASSESSEE HAS NOT DONE. IN THE CIRCUMSTANCES, TH E FINDING OF THE AO AS CONFIRMED BY THE LD. CIT(A) IS FOUND TO BE ON A RIG HT FOOTING AND DOES NOT CALL FOR ANY INTERFERENCE. 7.1 IN REGARD TO THE CLAIM OF THE ASSESSEE THAT HE HAS DEDUCTED TDS AND HAS PAID THE SAME TO THE ACCOUNT OF THE CENTRAL GOVERNMENT, THE ASSESSEE HAS NOT PRODUCED 5 ITA NO.07/KOL/2011 SRI SUBHASH CHAND JAIN ASSESSMENT YEAR: 2005-06 ANY EVIDENCE TO SUBSTANTIATE THIS CLAIM. IN THE CIR CUMSTANCES, FINDING OF THE LD. CIT(A) UPHOLDING THE DISALLOWANCE MADE BY THE AO IS FOUND TO BE ON A RIGHT FOOTING AND DOES NOT CALL FOR ANY INTERFERENCE. IN THE CIRCUMSTANCES, THE APPEAL OF THE ASSESSEE IS DISMISSED. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. THIS ORDER IS DICTATED AND PRONOUNCED IN THE OPEN C OURT ON 22 ND JUNE, 2012 IMMEDIATELY AFTER THE COMPLETION OF THE HEARING. SD/- SD/- (PRAMOD KUMAR) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 22 ND JUNE, 2012 COPY OF THE ORDER FORWARDED TO: 1. SRI SUBHASH CHAND JAIN, (PROP. OF M/S.JAIN BUILDERS & CONTRACTORS), 24/25, UPPER CHITPUR ROAD, KOLKATA 700 007 2 ITO, WARD-45(2), KOLKATA 3. THE CIT(A), KOLKATA 4. CIT, KOLKATA 5. DR, KOLKATA BENCHES, KOLKATA TRUE COPY, BY ORDER, ASSTT. REGISTRAR , ITAT, KOLKATA TALUKDAR(SR.P.S.) 6 ITA NO.07/KOL/2011 SRI SUBHASH CHAND JAIN ASSESSMENT YEAR: 2005-06