NOBLE ENGINEERS ,MUMBAI V. ASSISTANT COMMISSIONER OF INCOME TAX , MUMBAI

ITA 778/MUM/2025

AI Insights

The case involves Noble Engineering, the appellant, contesting the orders of the Commissioner of Income Tax (Exemptions), Mumbai, which upheld the disallowance of labor charges due to non-deduction of TDS and the addition of undisclosed rental income for the Assessment Year 2022-23. The appellant argued that the labor charges were documented with TDS deductions, and the rental income had already been accounted for in the previous assessment year, thus avoiding double taxation. The revenue supported the AO's decision, citing non-compliance with TDS deduction requirements and failure to adequately account for the rental income in the current assessment year.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 470967 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2022-2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LEYAQAT ALI AAFAQUI
• Assessee Lawyers: AJAY R. SINGH; AKSHAY A. PAWAR
• Keywords: TDS
• Section: 250; 40(a)(ia); 194C

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH MUMBAI BEFORE HON’BLE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER & HON’BLE SMT. RENU JAUHRI, ACCOUNTANT MEMBER ITA No. 778/Mum/2025 (Assessment Year: 2022-23) Noble Engineering F3, Sharad Ind. Estate Lake Road, Bandup (W) Mumbai – 400 078. Vs. The DCIT, Circle 41(2)(1) Kautilya Bhavan, BKC Mumbai. PAN/GIR No. AAGFN0520J (Applicant) (Respondent) Assessee by Shri Ajay R. Singh, Adv. & Shri Akshay A. Pawar, Adv. Revenue by Shri Leyaqat Ali Aafaqui, Sr. AR Date of Hearing 20.03.2025 Date of Pronouncement 04.04.2025 आदेश / ORDER PER SANDEEP GOSAIN, JM: The present appeal has been filed by the revenue challenging the impugned order 13.12.2024 passed u/s 250 of the Income Tax Act, 1961 (‘the Act’), by the Commissioner of Income Tax (Exemptions), Mumbai, for the A.Y: 2022-23. The assessee has raised the following grounds of appeal: Disallowance of labour charges u/s 40(a)(ia) of the Act of Rs. 2,50,234/-: 2 ITA No. 778/Mum/2025 Noble Engineering, Mumbai 1. The Id. CIT(A) erred in upholding the addition of labour charges on account of non-deduction of TDS to the tune of Rs. 2,50,234/- (being 30% of 8,34,119/-) without appreciating that assessee had provided party-wise ledgers of labour charges and TDS deducted, therefore the disallowance sustained without providing the list of parties whose TDS was deductible but not deducted, the disallowance made under section 40(a)(ia) is not justified. II. Addition on Account of undisclosed rental income of Rs. 9,53,134: 2. The Ld. CIT(A) erred in upholding the addition on account of undisclosed rental income to the tune of Rs. 9,53,134/- without appreciating that assessee had accounted the rental income in AY: 2021-22 following mercantile basis of accounting, thus the rental income is taxed twice. 3. The Assessee craves leave to add, alter modify or delete one or more ground before or at the time of hearing of appeal. 2. Ground No. 1 raised by the assessee relates to challenging the order of Ld. CIT(A) in upholding the addition of labour charges on account of non deduction of TDS. In this regard Ld. AR reiterated the same arguments as were raised by him before the revenue authorities and also relied upon the fact sheet placed on record. It was submitted that although assessee had provided party wise ledger of labour charges and TDS deducted but even then AO made additions without providing list of parties, whose TDS was deductable but not deduced. It was further submitted that assessee had thoroughly explained by placing on record labour charges TDS summary, ledger 3 ITA No. 778/Mum/2025 Noble Engineering, Mumbai account of labour charges and TDS certificate in Form No. 16A. 3. On the other hand, Ld. DR submitted that assessee had claimed huge expenses under “purchase of labour charges”. However, no TDS was deducted in respect of these expenses u/s 194C of the Act and therefore the provisions of Sec. 40(a)(ia) of the Act was clearly attracted and relied upon the orders passed by the revenue authorities. 4. We have heard the counsels for both the parties, perused the material placed on record and the orders passed by the revenue authorities. After evaluating the facts of the present case, we noticed that in the order of Ld. CIT(A) it is specifically been mentioned that assessee has claimed and debited Rs. 86,79,511/- towards labour charges and deducted TDS on an amount of Rs. 78,25,366/- and with regard to the difference, the assessee was silent even reconciliation in this regard was not furnished. 5. Be that as it may after hearing the parties at length we are of the view that the issue in question requires reconciliation and verification therefore without going into the merits of this issue, we are of the view that matter needs to be restored back to the file of the AO reconciliation and verification and thereafter for 4 ITA No. 778/Mum/2025 Noble Engineering, Mumbai adjudicating afresh on merits. Accordingly this ground raised by the assessee is allowed for statistical purposes. 6. Ground No. 2, this ground raised by the assessee relates to challenging the order of Ld. CIT(A) in upholding the addition on account of undisclosed rental income. In this regard Ld. AR reiterated the same arguments as were raised by him before the revenue authorities and submitted that the total rent received is Rs. 54,23,361/- which is as per bank reconciliation statement submitted by the assessee. It was further submitted that the assessee’s opening rent receivable was included in sundry debtor which was also brought to the notice of the Ld.AO, however he has not considered the same and added an amount of Rs. 9,53,134/- as income. Ld. AR further drawn our attention to the documents filed during the course of assessment in the shape of opening and closing sundry debtors as on 31.03.2021 and 31.03.2022, detailed breakup of rent received and rent offered for taxation, return of income, acknowledgement along with computation of total income and audited financial statement for the A.Y 2021-22, as per the assessee the revenue authorities fail to consider the above details and explanations. Therefore requested to delete the additions. 7. Whereas on contrary, Ld. DR while relying upon the orders of revenue authorities submitted that assessee 5 ITA No. 778/Mum/2025 Noble Engineering, Mumbai could not explain regarding rental income of Rs. 13,61,619/- during the year under consideration therefore after giving statutory deduction a sum of Rs. 9,53,134/- was rightly considered as undisclosed house property income. 8. We have heard the counsels for both the parties and perused the material placed on record. From the records, we noticed that assessee had relied upon the break up mentioned in para 4.5.4. Since the assessee could not substantiate with evidence to prove the details of rent receivable as on 31.03.2021 and rent receivable as on 31.03.2022, which the assessee was to explain along with corroborating evidences. Therefore, in our view this matter needs reconciliation and verification. Hence the same is restored to the file of AO for reconciliation and verification and therefore AO is directed to decide the same on merits after providing fair opportunity of hearing to both the parties. The assessee shall be at liberty to file documents as called for by AO and shall not seek any adjournment on frivolous grounds and shall remain cooperative during the course of proceedings. 9. Before parting, we make it clear that our decision to restore the matter back to the file of the AO shall in no way be construed as having any reflection or expression on the 6 ITA No. 778/Mum/2025 Noble Engineering, Mumbai merits of the dispute which shall be adjudicated by the AO independently in accordance with law. 10. In the result the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on 04.04.2025. Sd/- Sd/- (RENU JAUHRI) (SANDEEP GOSAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated 04/04/2025 KRK, PS आदेश की \bितिलिप अ\u000eेिषत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. \u000eथ / The Respondent. 3. संबंिधत आयकर आयु\u0019 / The CIT(A) 4. आयकर आयु\u0019(अपील) / Concerned CIT 5. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, मु\u0003बई / DR, ITAT, Mumbai 6. गाड फाईल / Guard file. आदेशानुसार/ BY ORDER, स\u000eािपत ित //True Copy// 1. उप/सहायक पंजीकार ( Asst. Registrar) आयकर अपीलीय अिधकरण, मु\u0003बई मु\u0003बई मु\u0003बई मु\u0003बई / ITAT, Mumbai "