Shubh Infra JV, Ahmedabad V. The Dy.CIT, Circle-2(1)(1), Ahmedabad

ITA 76/AHD/2023

• Counselvise Citation: [2023] 100 COUNSELVISE.COM (IT) 6514 (ITAT-AHMEDABAD)
• Duration Of Justice: 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 18-07-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 06-02-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRIASHOKKUMAR
• Keywords: TDS

Judgement Text

आयकरअपीलीयअधिकरण , अहमदाबादनयायपीी INTHEINCOMETAXAPPELLATETRIBUNAL, ‘’D’’BENCH,AHMEDABAD BEFORESHRIWASEEMAHMED,ACCOUNTANTMEMBER And SHRISIDDHARTHANAUTIYAL,JUDICIALMEMBER आयकरअपीलसं./ITANo.76/AHD/2023 धििाधरणवरध / Asstt.Year:2018-2019 ShubhInfraJV, 502,ShailSquare, Nr.RadhaRamanComplex, Khodiyarnagar, Ahmedabad-382350. PAN:AAPAS2819H Vs. D.C.I.T, Circle-2(1)(1), Ahmedabad. (Applicant)(Respondent) Assesseeby:ShriBandishSoparkar,with ShriParinShah,A.Rs Revenueby:ShriAshokKumar,Sr.D.R सुिवाईकीतारीख /DateofHearing:19/07/2023 घोरणाकीतारीख /DateofPronouncement:16/10/2023 आदेश /ORDER PERWASEEMAHMED,ACCOUNTANTMEMBER: ThecaptionedappealhasbeenfiledattheinstanceoftheAssesseeagainst theorderoftheLearnedCommissionerofIncomeTax(Appeals),NFAC,Delhi, arisinginthematterofassessmentorderpassedunders.143(3)oftheIncome TaxAct,1961(here-in-afterreferredtoas"theAct")relevanttotheAssessment Year2018-2019. ITAno.76/AHD/2023 A.Y.2018-19 2 2.TheonlyeffectiveissueraisedbytheassesseeisthatthelearnedCIT(A) erredinconfirmingthedisallowancemadebytheAOofcontractexpenseson accountofnon-deductionoftaxatsourcebyinvokingtheprovisionofsection 40(a)(ia)oftheAct. 3.ThefactsinbriefarethattheassesseeisanAOPandengagedinthe constructionbusiness.Thecaseoftheassesseehasbeenselectedforcomplete scrutinyunderCASS.TheAOduringtheassessmentproceedingsfoundthatthe assesseeintheprofit&lossaccounthasclaimedexpenseamountingtoRs. 15,50,74,744/-undertheheadcontractexpenses.TheAOonverificationof scheduleof“contractexpenses”foundthatthecontractexpensesincludean amountofRs.12,22,13,475/-underthesub-headnamely“laboursub-contract” whicharesubjecttoTDSbuttaxatsourcewasnotdeductedonthepaymentof suchexpense. 4.However,theassesseeclaimedthattheimpugnedamountofRs. 12,22,13,475/-relatestopurchaseofmaterialsandthereforethesamecannotbe madesubjecttotheprovisionofTaxDeductedatsource.Theassessee,in responsetothequeryraisedbytheAO,submittedledgercopiesofalltheparties coveredunderthecontractexpenses(Rs.15,50,74,744/-),bankstatementand copiesof65billsonsamplebasisaggregatingtoRs.2,82,52,953/-only. 5.ButtheAOfoundthattheassesseewasaskedtofurnishthebills/vouchers, ledgeraccountandbankstatementshowingpaymentinrelationtoexpensesclaim underthehead“laboursub-contract”amountingtoRs.Rs.12,22,13,475/-and substantiatehowthesameisinrelationtopurchaseofmaterial.Buttheassessee failedtofurnishtherelevantcorroborativedetails.Thus,theAOintheabsenceof corroborativematerialsheldthattheexpensesclaimedareinrelationtosupplyof labouronwhichtaxatsourcewasrequiredtobedeductedbuttheassesseefailed todoso.Hence,theAOinvokedtheprovisionsofsection40(a)(ia)oftheActand ITAno.76/AHD/2023 A.Y.2018-19 3 disallowedthe30%ofimpugnedexpensesi.e.Rs.3,66,64,042/-andaddedtothe totalincomeoftheassessee. 6.TheaggrievedassesseepreferredanappealbeforethelearnedCIT(A).the assesseebeforethelearnedCIT(A)reiteratedthattheexpensesclaimedunder theheadcontractexpensesareinrelationtopurchaseofmaterialsonly.Asper theassessee,allthenecessarysupportingdocumentsintheformofledgercopies ofall95creditorsalongwithbankstatementsshowingpaymenttothemwere furnishedduringtheassessmentproceedings.Thesupportingdocumentsalso includedcopiesofbillsonsamplebasisasitwasnotpossibletouploadallthebills onincometaxportal.However,theAOmisunderstoodandfailedtoconsiderthe documentaryevidenceuploadedonportal.Thus,theAOheldthattheassessee failedtosubstantiateitsclaim. 7.However,thelearnedCIT(A)confirmedthedisallowancemadebytheAO byobservingasunder: 6.Ihavecarefullyconsideredthegroundsofappeal,statementoffacts, contentsofassessmentorderandwrittensubmissionmadebytheappellant. 6.1Videhearingnoticedated02/01/2023issuedbythisoffice,theappellantwas askedtofilethefollowing: Pleasefurnishtheauditedfinancialaccountsi.e.profitandlossaccount,balance sheetandtaxauditreportalongwithdocumentsfiledbeforetheAO." 6.2However,theappellanton07/01/2022uploadedthewrittensubmissiondated 14/04/2022againwhichwasfiledearlierandwhichhasbeenreproducedinthe precedingparagraphs.Therefore,Idonothaveanyevidencefiledbythe appellantinsupportofitsclaimingroundsofappeal,statementoffactsand writtensubmissionthatthepaymentsweremadeforpurchaseofrawmaterials. Thebasicissueinthisappealisrelatedtoexaminationofthenatureofpayments astowhetherthesamewasforpurchaseofrawmaterialsoronaccountof contractualexpenses.TheAOhasclearlymentionedthatonverificationofprofit andlossaccount,itisseenthatassesseehasclaimedexpensesunderthehead contractexpensesatRs.15,50,74,744/-.Onverificationofscheduleofcontract expenses,itisseenthatassesseehaspaidanamountofRs.12,22,13,475/-under theheadlaboursub-contractonwhichassesseehasnotdeductedTDS.During ITAno.76/AHD/2023 A.Y.2018-19 4 theappellateproceedings,theassesseehasmerelyclaimedthatamountswere paidforpurchaseofrawmaterialsandlistofpurchasebillsincaseof62suppliers fortotalamountofRs.2,82,52,953/-wasfiledbeforetheAO.However,eventhose billswerenotsubmittedinthisofficeevenafteraskingtheassesseetofilethe samevidehearingnoticedated02.01.2023.Theappellanthasnotfurnishedany justificationastowhytheexpensesofRs.12,22,13,475/-wasdebitedunderthe head'laboursub-contract'underthehead'contractexpenses'.Inabsenceofany contraryevidencefiledbytheappellantagainstthefindingsoftheAO,Idonot haveanymaterialtointerferewiththefindingsoftheAOandthedisallowanceof Rs.3,66,64,042/-madeu/s.40(a)(ia)isherebyupheld.Allgroundsofappealare dismissed.Accordingly,theappealisherebytreatedas'dismissed'. 8.BeingaggrievedbytheorderofthelearnedCIT(A),theassesseeisin appealbeforeus. 9.ThelearnedARbeforeusfiledapaperbookrunningfrompages1to286 andcontendedthatexpensesindisputerepresentthematerialpurchaseswhichis outsidethepurviewoftheTDSundertheprovisionsofsection194CoftheAct andthereforethesamecannotbemadesubjecttothedisallowanceonaccountof non-deductionofTDS.ThelearnedARinsupportofhiscontentionhasinvitedour attentiononthecopiesoftheledgersoftheparties,purchasebillsonsample basisandthebankstatementdemonstratingthepaymenttothepartieswhichare placedonpages71to276ofthepaperbook. 10.Ontheotherhand,thelearnedDRvehementlysupportedtheorderofthe authoritiesbelow. 11.Wehaveheardtherivalcontentionsofboththepartiesandperusedthe materialsavailableonrecord.Inthepresentcase,theAOmadethedisallowance ofthelabourexpenseonaccountofnon-deductionofTDS.However,itwas contendedbytheassesseethatsuchlabourexpensesinfactrepresentmaterial purchasesandthereforethesamecannotbemadesubjecttotheprovisionsof TDS.However,thecontentionoftheassesseewasdisbelievedbytheAOonthe reasoningthattheassesseehasnotfurnishedtheledgeroflabourexpensesto establishthenexusofthematerialpurchasebillsreproducedbyhim.Assuch,the ITAno.76/AHD/2023 A.Y.2018-19 5 AOdidnotfindanynexusbetweenthelabourexpensesvizavizmaterial purchase.Hence,theAOconfirmedthedisallowanceonaccountofnon-deduction ofTDS. 11.1Onappeal,thelearnedCIT-AconfirmedtheorderoftheAOonthe reasoningthattheassesseehasnotfurnishedanysupportingevidenceexcept filingthewrittensubmissionstatingthatthelabourexpensesrepresentthe materialpurchases.Thus,thelearnedCIT-Aintheabsenceofthesupporting documentsupheldthefindingofthelearnedCIT-A. 11.2Onperusalofthepaperbookfiledbytheassesseebeforeus,wenotethat theassesseehasnotfiledanydocumentaryevidencesoastodemonstratethat thelabourexpensesshowninthefinancialstatementswererepresentingthe materialpurchasesduringtheappellateproceedings.Theassesseehasonlyfiled thewrittensubmissionbeforethelearnedCIT-A,runningfrompages77to226of thepaperbook,whichisnotsupportedbasedontheevidence. 11.3Itisthesettledprovisionsoflawthatthepurchasescannotbemade subjecttotheprovisionsofTDSundersection194CoftheAct.However,theonus liesupontheassesseetoestablishthatithasclassifiedmaterialpurchase expensesundertheheadlabourexpensesinadvertently.Assuch,theassessee failedtodischargetheonusbeforethelearnedCIT-Abasedonthedocumentary evidence.Bethatasitmaybe,intheinterestofjusticeandfairplay,weare inclinedtoextendonemoreopportunitytotheassesseetoraiseitscontention beforethelearnedCIT-Aalongwiththesupportingdocuments.Accordingly,we aresettingasideimpugnedissuetothefileofthelearnedCIT-Aforfresh/denovo adjudicationaspertheprovisionsoflaw.Itisalsodirectedtotheassesseeto provideallthesufficientmaterialsduringtheappellateproceedingsasrequiredby ld.CIT-A.Hence,thegroundofappealoftheassesseeisherebyallowedfor statisticalpurposes. ITAno.76/AHD/2023 A.Y.2018-19 6 12.Intheresult,theappealfiledbytheassesseeisallowedforthestatistical purposes. OrderpronouncedintheCourton16/10/2023atAhmedabad. Sd/-Sd/- (SIDDHARTHANAUTIYAL)(WASEEMAHMED) JUDICIALMEMBERACCOUNTANTMEMBER (TrueCopy) Ahmedabad:Dated16/10/2023 Manish