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Income Tax Appellate Tribunal, MUMBAI BENCH “B”, MUMBAI
Before: SHRI PRASHANT MAHARISHI & SHRI KULDIP SINGH
Per : Kuldip Singh, Judicial Member: At the very outside it is brought to the notice of the Bench by the Ld. A.R. for the appellant Shri Nitin Raghunath Thakur (hereinafter referred to as ‘the assessee’) that there is a delay of 30 days in filing the present appeal and sought to condone the same by moving an application for condonation of delay supported with an affidavit on the grounds inter-alia that the assessee challenged the assessment order passed under section 143(3) of the Income Tax Act, 1961 (for short 'the Act') before the Commissioner of Income Tax (Appeals) [hereinafter referred to as CIT(A)] which was transferred to National Faceless Appeal Centre (NFAC) on account of introduction of faceless appeal scheme by Government of India; that the CA of the assessee furnished detailed submissions to the NFAC via e-filing portal; that the impugned order passed by the Ld. CIT(A) was received electronically on email but due to the fact that the said order was received in the spam box the mail could not be accessed immediately which caused delay of 30 days in filing the appeal; that the delay is on account of bonafide reasons.
However, on the other hand, the Ld. D.R. for the Revenue opposed the application for condonation of delay on the ground that the late filing of appeals in this case is apparently malafide due to callous attitude of the assessee and prayed for dismissal of the application.
Keeping in view the averments made by the assessee and the fact that newly introduced procedure of hearing the appeals through National faceless appeal is at the initial stage and many technical difficulties are being faced by the assessee as well as by the department I find delay of 30 days in filing the present appeal to be bonafide and on the account of the fact that the order was served in spam box and could not be taken care of immediately by the assessee and is a “sufficient cause” to condone the delay. Consequently 30 days delay in filing the present appeal is hereby condoned. The appeal is ordered to be registered and is being heard by today itself.
The assessee by filing the present appeal, sought to set aside the impugned order dated 07.02.2023 passed by NFAC [CIT(A)] qua the assessment year 2015-16 on the grounds inter-alia that :-
“1. The learned Commissioner of Income-tax (Appeals) - National Faceless Appeal Centre, New Delhi ['CITA'], erred on facts and in circumstances of the case and in law, in confirming the disallowance of Rs. 12,02,756/- out of Total Tax Deduction at Source credit claimed by the appellant; 2. The CITA failed to appreciate that the appellant had offered the corresponding income to tax and therefore, the TDS credit was rightly claimed by the appellant. The Id. AO erred in disallowing the TDS credit by failing to appreciate that the TDS of Rs. 12,02,756 was deducted on reimbursement of expenses, merely because the appellant had netted off the reimbursements against the expenses incurred, did not indicate that corresponding receipts were not offered to tax; 3. The appellant prays to your Honours to direct the Id. AO to allow the TDS credit worth Rs. 12,02,756; 4. The above grounds of appeal are without prejudice to one another and the appellant craves leave to add, alter, amend, delete or modify any of the above grounds of appeal.”
5. Briefly stated facts necessary for consideration and adjudication of the issues at hand are : the assessee is an individual engaged in a business of supply of labour contractor in the name and style of proprietary concern M/s. Devang Global Solutions. The assessee’s return of income was subjected to scrutiny and Assessing Officer (AO) noticed that the total claim of TDS made by the assessee in return of income to the tune of Rs.12,24,461/- is not explained. The AO noticed that the TDS relatable to service charges comes to Rs.21,705/- only and the balance TDS of Rs.12,02,756/- pertains to the labour charges not shown in the P&L account of the assessee on the ground that the labour charges are paid directly to the labourer by M/s. Indiabulls Construction Limited and M/s. Store One Retail India Limited. Declining the contentions raised by the assessee the AO proceeded to disallow the TDS to the tune of Rs.12,02,756/-.
6. The assessee carried the matter before the Ld. CIT(A) by way of filing appeal who has confirmed the disallowance by dismissing the appeal. Feeling aggrieved with the impugned order passed by the Ld. CIT(A) the assessee has come up before the Tribunal by way of filing present appeal.
We have heard the Ld. Authorised Representatives of the parties to the appeal, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and law applicable thereto.
Undisputedly the AO as well as Ld. CIT(A) have disallowed the TDS claim made by the assessee of Rs.12,02,756/- on the ground that the same has not been reflected in the profit and loss account. The assessee has raised a valid ground both before the AO as well as the Ld. CIT(A) that since the labour charges are paid directly to the labourer by M/s. Indiabulls Construction Limited and M/s. Store One Retail India Limited the assessee has not claimed the TDS pertaining to these labour charges while drawing his P&L account. Moreover when the corresponding income was on account of labour charges paid by the assessee the net income comes to Nil and for this reason the same was not reflected in the profit and loss account. It is nowhere case of the Revenue that TDS on the amount in question has not been paid but denied the same on technical ground.
Moreover the assessee has consistently followed the practice of recording service charges separately in invoice and the books of account and to prove the same he has produced the entire records of his two clients to whom he has provided manpower. When the corresponding income of the assessee was on account of labour charges paid by him the net income comes to Rs.Nil and as such the same was not reflected in the profit and loss account.
Honourable High Court of Madras in case of PCIT & ors. Vs. M/s. KAL Comm Pvt. Ltd. (2021-TIOL-1816-HC-MAD-IT has held that the assessee is eligible for TDS credit without offering the corresponding income in its hand which is against the provision of section 199 of the Act.
In these circumstances, we are of the considered view that the impugned order passed by Ld. CIT(A) is not sustainable, hence set aside and matter is remitted back to the AO to decide afresh after verifying the records already brought on record by the assessee in the light of the observations made hereinabove by providing opportunity of being heard to the assessee.
Resultantly, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on 28.07.2023.