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Income Tax Appellate Tribunal, SURAT BENCH, SURAT
Before: SHRI C.M.GARG & SHRI O.P.MEENA
आदेश /O R D E R PER O. P. MEENA, ACCOUTANT MEMBER: 1. This appeal by the Assessee is directed against the order of learned Commissioner of Income tax (Appeals)-Valsad (in short “the CIT (A)”) dated 19.10.2016 pertaining to Assessment Year 2007-08, which in turn has arisen from the assessment order passed by the under section 144 read with section 254 of Income Tax Act,1961 ( in short of “the Act”) dated 28.09.2015 by the Income-tax Officer, Ward- Silvasa (in short “the AO”).
Vijay Kumar Roshan v. ITO-Silvasa/I.T.A. No.3153/Ahd/2016/A.Y.:07-08 Page 2 of 8 2. The grounds of appeal states that Ld. CIT (A) erred in upholding the addition of Rs.61,02,981 made under section 40(a)(ia) of the Act for failure to deduct TDS on labour charges paid. The ld. CIT (A) failed to appreciate that labourer’s did not file return of income since their taxable income was below threshold limit. Hence, the appellant satisfied the condition mentioned in second proviso to section 40(a)(ia)of the Act. The ld. CIT (A) erred in not admitting the additional evidence under Rule 46A in the form of affidavit of sub-contractor admitting the labour charges were duly reflected in their bank statement and they have not filed return of income since it was below taxable limit, therefore, it was prayed to admit additional evidence.
Succinctly, facts as culled out from the orders of lower authorities are that the assessee is labour contractor and filed his return of income on 27.12.2007 declaring total income of Rs. 2,02,300. The assessee has received a contract of supply of labour from M/s. Donear Industries Ltd. and subcontracted the same to other six small sub-contractors. Since the assessee has not deducted TDS under section 194C on payments made to 6 sub- contractors amounting to Rs. 61,02,981. Therefore, the AO disallowed the said payments under section 40(a)(ia) of the Act. The CIT (A) in his order dtd. 24.08.2010 upheld the order of the AO thereby disregarded the additional evidence filed under Rule
Vijay Kumar Roshan v. ITO-Silvasa/I.T.A. No.3153/Ahd/2016/A.Y.:07-08 Page 3 of 8 46A of Income-Tax Rules, 1962. On further appeal, Tribunal vide order dated 27.06.2014 in I.T.A. No. 3194/Ahd/2010 placing reliance on the decision in the case of ITO V. Parasmal Manekchand Jain dtd. 22.11.2013 in I.T.A. No. 2690/Ahd/2012 restored the matter back to the file of the AO with the direction to consider the above decision of tribunal and verify if payees have offered the labour charges to tax in their returns in the light of amendment introduced by Finance Act, 2012 in section 40(a)(ia) of the Act. In view of these facts, the AO passed a fresh assessment order disallowing Rs. 61,02,981 under section 40(a)(ia) of the Act as the assessee has failed to produced necessary evidence. Aggrieved, the assessee has again filed appeal before CIT (A). However, Ld. CIT (A) upheld the order of the AO without admitting additional evidence in form of affidavits of 6 sub-contractors to claim that they are having income below taxable limit hence, not required to file return of income. The CIT (A) was of the view that the assessee was not prevented from sufficient cause for producing the same before the AO. 4. Being, aggrieved the assessee filed this appeal before the Tribunal. The learned counsel for the assessee relying on decision of this bench in the case of Amiya Sachindra Dey v. ITO [I.T.A. No.
Vijay Kumar Roshan v. ITO-Silvasa/I.T.A. No.3153/Ahd/2016/A.Y.:07-08 Page 4 of 8 3154/Ahd/2016 dtd. 18.04.2018] submitted that the ITAT has set- aside the issue to file of the AO to consider the decision of Delhi High Court in the case of CIT vs. Ansal Land Mark Township (P) Ltd. [2015] 377 ITR 635 (Del) /[2015] 61 taxmann.com 45 (Delhi). Since the facts of present case are identical, hence, the issue may be set-aside to the file of the AO. The learned counsel for the assessee further relying on the decision in the case of CIT v. Kotak Securities Ltd. [2012] 340 ITR 333 (Bombay) submitted that the assessee was not deducting TDS for last so many years and the A.Y. 2007-08 is first year in which the AO applied section 40(a)(ia) since the tax audit limit was crossed in the preceding assessment year 2006-07. Hence, the assessee was not aware of TDS compliance. Even if TDS was deducted at 1% which amounts to Rs. 61,030/-, these small sub-contractor have claimed refund of TDS hence, there was no loss of revenue. In support of this the learned counsel for the assessee placed reliance in the case of Ved Prakash Samariya v. ACIT [I.T.A. No. 116/Jaipur/2015 dtd. 11.03.2016 in which such disallowance were deleted by the Tribunal on the ground that there was no loss of revenue. 5. Au contraire, the ld. Sr. D.R. supported the orders of the lower authorities.
Vijay Kumar Roshan v. ITO-Silvasa/I.T.A. No.3153/Ahd/2016/A.Y.:07-08 Page 5 of 8
We have heard the rival submissions and perused the material available on record. Looking to the facts and circumstances of the case and law, we are of the view that these additional evidences filed under Rule 46A before CIT (A) by the assessee are necessary for proper appreciation of the issue under appeal and would cause of substantial justice. Such evidence may ultimately turn out to the benefit of either taxpayer or the Revenue. Reliance is placed in the case of CIT v. Text Hundred India (P)Ltd.[2011] 351 ITR 57 (Del): 197 Taxman 128(Del) : 51 DTR 241(Del) wherein it was observed as follows: “13. The aforesaid case law clearly lays down a neat principle of law that discretion lies with the Tribunal to admit additional evidence in the interest of justice once the Tribunal affirms the opinion that doing so would be necessary for proper adjudication of the matter. This can be done even when application is filed by one of the parties to the appeal and it need not to be a suo-moto action of the Tribunal. The aforesaid rule is made enabling the Tribunal to admit the additional evidence in its discretion if the Tribunal holds the view that such additional evidence would be necessary to do substantial justice in the matter. It is well-settled that the procedure is handmade of justice and justice should not be
Vijay Kumar Roshan v. ITO-Silvasa/I.T.A. No.3153/Ahd/2016/A.Y.:07-08 Page 6 of 8 allowed to be choked only because of some inadvertent error or omission on the part of one of the parties to lead evidence at the appropriate stage. Once it is found that the party intending to lead evidence before the Tribunal for the first time was prevented by sufficient cause to lead such an evidence and that this evidence would have material bearing on the issue which needs to be decided by the Tribunal and ends of justice demand admission of such an evidence, the Tribunal can pass an order to that effect.” In the light of above facts and circumstances and relying on aforesaid decision, we admit the additional evidence filed by the assessee. We find that the AO has not allowed proper opportunity of being heard nor the CIT (A) has admitted additional evidence for proper adjudication of appeal. The principle of audi alteram partem is the basic concept of natural justice. The expression “audi alteram partem” implies that a person must be given an opportunity to defend himself. This principle is sine qua non of every civilized society. The right to notice, right to present case and evidence, right to rebut adverse evidence, right to cross examination, right to legal representation, disclosure of evidence to party, report of enquiry to be shown to the other party and reasoned decisions or speaking orders. We find the guidance for
Vijay Kumar Roshan v. ITO-Silvasa/I.T.A. No.3153/Ahd/2016/A.Y.:07-08 Page 7 of 8 right of hearing, as is laid down by the Hon'ble Supreme Court in the case of Maneka Gandhi v. Union of India, wherein Hon'ble Supreme Court has held that rule of fair hearing is necessary before passing any order. We find that it is pre-decision hearing standard of norm of rule of audi alteram partem. We find that in this instant case, the assessee was not given proper hearing. Therefore, we are of the view that the assessee must be given one more opportunity of hearing and to represent his case. We further noticed that the issue is covered, in principle, in favor of the assessee by Hon’ble Delhi High Court’s judgement in the case of CIT vs. Ansal Land Mark Township (P) Ltd. [2015] 377 ITR 635 (Del) /[2015] 61 taxmann.com 45 (Delhi) Judgement dated 26th August, 2015, wherein their Lordships have held that as long as the recipient of the income has paid the due tax in respect of the income embedded in the payments, disallowance under section 40(a) (ia) of the Act cannot be invoked. However, as this aspect of the matter has not been examined by any of the authorities below, the matter is therefore, once again remitted back to the file of the AO for adjudication denovo in the light of above observations and in the light of law laid down by the Hon’ble Delhi High Court in the case of CIT vs. Ansal Land Mark Township (P) Ltd. (supra).
Vijay Kumar Roshan v. ITO-Silvasa/I.T.A. No.3153/Ahd/2016/A.Y.:07-08 Page 8 of 8 Therefore, in exercise of power conferred under Rule 28 of Tribunal Rules, we restore this appeal to the file of the Ld.AO for allowing proper opportunity of being heard in accordance with law. Nevertheless, to mention that the assessee will cooperate in the fresh assessment proceedings and file necessary evidences on which he wants to rely upon and if the assessee failed to adduce necessary evidence before the AO and failed to appear before the AO, then the AO is free to make disallowance under section 40(a)(ia) of the Act. 7. In the result, appeal is allowed for statistical purposes. 8. Order pronounced in the open Court on 20.06.2018. Sd/- Sd/- (सी.एम.गग� /C.M. GARG) (ओ.पी.मीना/O.P.MEENA) �याियकसद�यतथा/JUDICIAL MEMBER लेखासद�यकेसम� /ACCOUNTANT MEMBER सुरत Dated: 20th June, 2018 आदेश क� �ितिलिप अ�ेिषत/Copy of the Order is forwarded to : 1. अपीलाथ�/ The Appellant; 2. ��थ�/ The Respondent; 3. आयकरआयु� (अपील) The CIT(A), 4. आयकरआयु� /Pr. CIT 5.िवभागीय�ितिनिध, आयकरअपीलीयअिधकरण/ D.R.-ITAT; 6. गाड�फाईल / Guard file ITAT. By order / / TRUE COPY / / Assistant Registrar, Surat