MAA KALAPATA CONSTRUCTION & TRANSPORT,ANGUL V. DCIT,CIRCLE 1(1), BHUBANESWAR, BHUBANESWAR

ITA 376/CTK/2025

AI Insights

The case involves an appeal by Maa Kalapata Construction & Transport against the order of the CIT(A), National Faceless Appeal Centre, Delhi, for the assessment year 2018-2019. The primary issues in dispute were the disallowance of labor payments made in cash exceeding Rs.10,000 under Section 40A(3) of the Income Tax Act, and disallowances under the head sundry creditors. The Tribunal found that the disallowance of labor payments was unjustified as the payments were made to casual laborers and were substantiated by records. Regarding sundry creditors, some disallowances were deleted based on confirmations, while others were restored to the AO for further verification regarding payments.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 846172 (ITAT-CUTTACK)
• Duration Of Justice: 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2026
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Cuttack
• Assessment Year: 2018-2019
• Appeal Filed On: 27-06-2025
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Condonation of delay
• Section: 40A(3)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “CUTTACK BENCH, CUTTACK VIRTUAL HEARING AT KOLKATA Before Shri George Mathan, Judicial Member and Shri Rajesh Kumar, Accountant Member I.T.A. No.376/CTK/2025 Assessment Year: 2018-2019 Maa Kalapata Construction & Transport……………………………………Appellant Danara, Colliery, Angul, Odisha-759103 [PAN: ABBFM 5336 M] vs. DCIT, Circle-1(1), Bhubaneswar…..........................……........……...…..…..Respondent Appearances by: Shri Mohit Sheth, AR, appeared on behalf of the assessee. Shri Sanjib Banerjee, Sr.DR, appeared on behalf of the Revenue. Date of concluding the hearing : 26th March, 2026 Date of pronouncing the order : 26th March, 2026 ORDER Per Bench: This is an appeal filed by the assessee against the order of the ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi, passed in DIN & Order No.ITBA/NFAC/S/250/2024-25/1070552144(1), dated 22.11.2024 for the assessment year 2018-2019. 2. Shri Mohit Sheth, ld. AR appeared on behalf of the assessee and Shri Sanjib Banerjee, ld. Sr. DR appeared on behalf of the revenue. 3. The appeal of the assessee has been filed belatedly by 147 days. The assessee has filed an application supported with an affidavit stating sufficient reasons for condonation of delay which are not found to be false. Ld. Sr. DR also did not object to condone the delay. Accordingly, the delay of 147 days in filing the appeal is condoned and appeal of the assessee is admitted for hearing. 4. It was submitted by the ld. AR that two additions are in dispute before the Tribunal. It was the submission that first issue is in regard to Printed from counselvise.com I.T.A. No.376/CTK/2025 Maa Kalapata Construction & Transport 2 the disallowance made by the AO by applying the provisions of Section 40A(3) of the Act in respect of labour payments made on the site in cash. It was the submission that the total labour payments was Rs.5,62,25,882/-. It was the submission that site of the assessee was 30- 35 KM from Angul office of the assessee. It was the submission that the cash has been drawn from the bank and the money sent to the site where the payments have been made. Ld. AR drew our attention to the cash book of the assessee which have been filed at pages 110 onwards of the paper book. It was the submission that these are daily labourers to whom the payments have been made. It was the submission that no disallowance on account of labour charges has been made by the AO and the expenses claimed of Rs.5,62,25,882/- has been accepted. It was the submission that only because the cash payment exceeds Rs.10,000/-, disallowance has been made by the AO by applying the provisions of Section 40A(3) of the Act. It was the submission that these payments have been made in cash as labourers were casual labourers and they cannot be paid through cheque. 5. In reply, ld. Sr. DR submitted that the disallowance u/s.40A(3) of the Act is liable to be upheld, insofar as the payments have been made in excess of Rs.10,000/-. He vehemently supported the orders of the ld. AO and ld. CIT(A). 6. We have considered the rival submissions. A perusal of the facts in the present case clearly shows that the total labour charges paid during the impugned assessment year is Rs.5,62,25,882/-. The cash payment which has been disallowed by the AO by invoking the provisions of Section 40A(3) of the Act to Rs.51,04,065/- which is less than 10% of the total labour payments. The submission made by the ld. AR that these are payments to local labourers and casual labourers is found to be substantiated, insofar as the break up of the expenses which have been shown in the assessment year itself shows that the payments have been Printed from counselvise.com I.T.A. No.376/CTK/2025 Maa Kalapata Construction & Transport 3 made to substantial number of people and in some case it is noticed that the payments have been made to the labour sardars. This being so, the disallowance as made by the ld. AO and as confirmed by the ld. CIT(A) stands deleted. 7. It would be worthwhile to mention here that the ld. AR brought to our attention that similar payments have been made during the earlier years also and the assessment u/s.143(3) of the Act has been done wherein the claim of the assessee has been accepted and no disallowance has been made. 8. The second issue raised is in regard to the disallowance of Rs.7,79,724/- under the head sundry creditors. It was the submission that in one case being Manoj Kumar Sahoo, the AO has made the disallowance to Rs.5,22,198/-. It was the submission that in the case of Shri Manoj Kumar Sahoo the actual claim is of Rs.15,84,583/-. Shri Manoj Kumar Sahoo had directed the assessee to make payment of Rs.5,22,198/- to various persons as has been mentioned in the ledger account maintained by the assessee in respect of Shri Manoj Kumar Sahoo, which reads as follows :- Printed from counselvise.com I.T.A. No.376/CTK/2025 Maa Kalapata Construction & Transport 4 9. It was the submission that the balance shown in the name of Manoj Kumar Sahoo was Rs.10,38,226/- which has also been categorically confirmed by Shri Manoj Kumar Sahoo in his letter dated 02.01.2021, which reads as follows :- 10. It was the submission that the said addition may be deleted. 11. It was the further submission that in respect of M/s Jagannath Engineering, M/s Sahoo Enterprises, M/s Saralia Filling Station and Sunil Kumar Agrawalla, the notices were issued u/s.133(6) of the Act has been replied to though belatedly. The ld. AR draw our attention to the four confirmation letters provided to the said four sundry creditors which reads as follows :- Printed from counselvise.com I.T.A. No.376/CTK/2025 Maa Kalapata Construction & Transport 5 Printed from counselvise.com I.T.A. No.376/CTK/2025 Maa Kalapata Construction & Transport 6 Printed from counselvise.com I.T.A. No.376/CTK/2025 Maa Kalapata Construction & Transport 7 Printed from counselvise.com I.T.A. No.376/CTK/2025 Maa Kalapata Construction & Transport 8 Printed from counselvise.com I.T.A. No.376/CTK/2025 Maa Kalapata Construction & Transport 9 12. It was the submission that the said confirmations have been provided to the assessee. It was the submission that in respect of National Machinery Stores, Surya Machinery & Engineering Works and Swastik Enterprises the amounts have been paid subsequently in the subsequent years. It was the submission that he had no objection if the issue is restored to the file of ld. AO for verification as to whether the payments have been made subsequently. 13. In reply, ld. Sr. DR vehemently supported the order of the ld. AO and ld. CIT(A). It was the submission that the said creditors are not responded to the notice issued u/s.133(6) of the Act and some of the said creditors have confirmed with “zero balance”. 14. We have considered the rival submissions. A perusal of the facts of the present case clearly shows that in case of Manoj Kumar Sahoo, the amount of Rs.5,22,198/- represents the payments made to third party as has been recorded in the confirmation issued by Shri Manoj Kumar Sahoo. This being so, the addition made in the name of Manoj Kumar Sahoo representing Rs.5,22,198/- stands deleted. 15. In respect of M/s Jagannath Engineering, M/s Sahoo Enterprises, M/s Saralia Filling Station and Sunil Kumar Agrawalla, it is noticed that the confirmation letters have categorically been given admitting the said balance. Consequently, the said disallowance as made by the AO and as confirmed by the ld. CIT(A) in respect of M/s Jagannath Engineering, M/s Sahoo Enterprises, M/s Saralia Filling Station and Sunil Kumar Agrawalla stands deleted. 16. In respect of the other sundry creditors namely, National Machinery Stores, Surya Machinery & Engineering Works and Swastik Enterprises, it is noticed that the evidences have not been produced before us. It is stated by the ld. AR that the balance has been paid in the subsequent year. This being so, in the interest of justice, the issue in respect of M/s Printed from counselvise.com I.T.A. No.376/CTK/2025 Maa Kalapata Construction & Transport 10 National Machinery Stores, Surya Machinery & Engineering Works and Swastik Enterprises is restored to the file of ld. AO for verification as to whether the amounts have been paid in the subsequent year. If the amounts have been paid in the subsequent year, the same is liable to be allowed. If not, the addition made in this regard, shall stand confirmed. 17. In the result, appeal of the assessee is partly allowed for statistical purposes. Order dictated and pronounced in the open court on 26/03/2026. Sd/- Sd/- [Rajesh Kumar] [George Mathan] लेखा सदस्य/Accountant Member न्याययक सदस्य/Judicial Member Dated: 26.03.2026 Sr.PS Copy of the order forwarded to: 1. Appellant - 2. Respondent - 3. CIT(A)- 4. CIT- , 5. CIT(DR), //True copy// By order Assistant Registrar, Cuttack Bench, Cuttack Printed from counselvise.com "