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Income Tax Appellate Tribunal, “A”, BENCH KOLKATA
Before: SHRI S. S. GODARA, JM & Dr. A. L. SAINI, AM
BEFORE SHRI S. S. GODARA, JM & Dr. A. L. SAINI, AM आयकर अपीलसं/ ("नधा"रण वष" / Assessment Year: 2013-14) Bibhuti Bhushan Das Vs. ITO, Ward-25(3), Kolkata. P-42, Block-A, Shatabdi Park, Mukundpur, Kolkata – 700099. "थायीलेखासं./जीआइआरसं./PAN/GIR No.: AIDPD4689B (Appellant) .. (Respondent) Appellant by : None Respondent by : Shri Dhrubajyoti Ray, JCIT सुनवाई क" तार"ख/ Date of Hearing : 15/01/2020 घोषणा क" तार"ख/Date of Pronouncement : 21/02/2020 आदेश / O R D E R Per Shri S. S. Godara: This assessee’s appeal for assessment year 2013-14 arises against the Commissioner of Income Tax - 7, Kolkata’s order dated 25.02.2019 passed in case no.36/CIT(A)-7/Kol/Ward-25(3)/16-17 involving proceedings u/s 143(3) of the Income Tax Act, 1961 (in short ‘the Act’). Case called twice. None appears at assessee’s behest. Case file suggests that RPAD notice dated 29.11.2019 stand returned unserved. We therefore proceed ex parte.
The assessee raises the following three substantive grounds in the instant appeal:
1) That under the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming addition of a sum of Rs.61,78,180/- for the money received on behalf of M/s. City Live Construction and deposited in the bank account of M/s. Anila Construction, the proprietorship concern of the assessee. The addition is unjustified and need to be deleted. 2) That under the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs.33,44,502/- in terms of sec.40(a)(ia) of the Income Tax Act, 1961. The addition is unjustified & therefore need to be deleted. 3) That under the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming addition of a sum of Rs.46,343/- for the donation & subscription paid. The addition is unjustified & therefore need to be deleted.
We now advert the assessee’s first substantive grievance challenges correctness of both the lower authorities’ action making section 68 addition of Rs.61,78,180/-. The CIT(A)’s detailed discussion to this effect reads as under:
Ground No.2: I have gone through the assessment order as well as the submission of the Ld. A/R. The assessee had contemplated a partnership venture with nine persons and had received the initial seed capital from these persons in cash and had deposited the entire contribution received from such nine persons in his personal bank account. It needs to be mentioned here that no separate partnership deed was formed and registered, further no separate bank account for this partnership was opened and also no separate PAN had been applied for. The A.O had therefore rightly treated the same as unexplained cash credit u/s 68 of the IT Act and had added back an amount of Rs.89,79,080/- to the total income under this head. However, after a careful analysis it is seen that certain sum of money from four persons namely Motilal Mondal, Pankaj Das, Swapan Kr. Roy and Kalpana Sarkar had actually been received during the earlier F.Y. 2011-12. The total amount of such receipts when added came to Rs.28,00,900/-. Therefore, an amount of Rs.61,78,180/ (Rs.89,79,080 - Rs.28,00,900 received in F.Y. 2011-12) is to be added under section 68 of the I.T Act. Accordingly, appeal of the assessee on this ground is partly allowed.
It is crystal clear from the assessee’s first substantive ground and in view of the CIT(A)’s foregoing detailed discussion that the clinching fact involved herein is that reconciliation of impugned sum allegedly received on behalf of M/s City Live Construction and deposited in the bank account of M/s Anila Construction (taxpayer’s proprietorship concern). We are of the view in this factual backdrop that the assessee deserves one more opportunity for reconciliation of impugned figures before the CIT(A). We order accordingly. The assessee shall appear before the CIT(A) along with the corresponding books of accounts and other relevant details of M/s City Live Construction as well as M/s Anila Construction to Bibhuti Bhushan Das reconcile the figures in dispute. This first and foremost substantive ground is accepted for statistical purposes.
Next comes the second issue of section 40(a)(ia) disallowance of Rs.33,44,502/- affirmed in the lower appellate proceedings as follows:
Ground No.3: The A.O during the assessment stage had added an amount of Rs.69,01,524/- u/s 40(a)(ia) of the IT Act. Out of this total addition, an amount of Rs.53,53,724/- was added on the ground that labour payment has been made exceeding the threshold limit without deducting TDS. Further, an amount of Rs.4,10,500/- was paid to four persons as interest without deducting TDS as per the provision of section 194A, and further a sum of Rs.11,37,300/- was paid to eleven different persons as brokerage and commission exceeding the threshold limit prescribed for deduction of TDS u/s 194H. During the appellate hearing, the details have been filed before me from which it transpires that the entire amount alone of Rs.53,53,724/- did not represent the labour charges as had been described earlier. From the details it transpires that the assessee, being a promoter and developer, had made certain material purchases from five persons/entities namely Mr. Arun Kumar (Glass), Purbaloke Infrastructure, Siddheswar Bag, Swastik and Tarun Purkait amounting to Rs.7,05,544/-. This component, being material purchase alone, will not be subjected to any deduction of TDS. The actual contract for electrical job had been given to two entities namely M/s G.S. Electric and M/s K.K. Enterprise and a contract for plumber had been given to one Roy Enterprise and contract for Glass had been given to one Ram Thakur, the contractual component where TDS should have been deducted, therefore, comes to Rs.21,96,703/-. Further, it is seen that the assessee has engaged two labour Sardars for supply of labour through Sri Gunader Bala (Marble) for an amount of Rs.89,501/- and for hiring of various construction workers for an amount of Rs.24,61,976/- through one Sri Sailendra Prasad totaling an amount of Rs.25,51,477/-. Since these payments were made to the said persons without entering into a valid contract as per the ratio laid down in the Calcutta High Court's decision in the case of Jiauddin Mollah Versus CIT (2016) 385 ITR 0394 (Cal) and the decision of the jurisdictional Tribunal in the case of Samanwaya Vs. ACIT (2009) 34 SOT 332 (Kol) and ACIT vs. Shiva Construction (ITA No.2162 of 2010) this such amount paid to the labour Sardar without any written, valid contractual agreement shall not attract any TDS. Therefore, to sum up, an amount of Rs.7,05,544/- on account of purchase of material and an amount of Rs.25,51,477/- on account of payment to labour Sardars for construction workers shall not attract any provision of TDS and therefore, these amounts are to be subtracted from Rs.53,53,724/- which was earlier disallowed during the assessment stage. Thus, the addition under this head is restricted to Rs.33,44,502/-. Accordingly, appeal of the assessee on this ground is partly allowed.
It is clear from a perusal of the above-extracted lower appellate discussion that the assessee had not deducted TDS as per Chapter XVIIB of the Act qua the Bibhuti Bhushan Das impugned contractual/sub-contractual payments. We notice that the CIT(A) has already granted substantial relief to the assessee whilst restricting the impugned disallowance of Rs.69,01,524/- to Rs.33,44,502/- only. We therefore uphold the CIT(A)’s action in principle.
Next comes equally important aspect of quantification of the impugned disallowance. This tribunal’s coordinate bench’s order in Dipak Parui vs. JCIT dated 20.07.2018 has taken note of section 40(a)(ia) as amended by Finance Act 2014 w.e.f. 01.04.15, restricting such a disallowance @30% only than the entire amount of expenditure. It holds that the said amendment as a curative one having retrospective effect. We therefore restrict the impugned disallowance to Rs.33,44,502/- to 30% only. Necessary computation shall follow as per law.
Lastly comes donation and subscription disallowance of Rs.46,343/-. We find that the CIT(A) has nowhere adjudicated this last issue forming subject matter of assessee’s ground no.4 in the lower appellate proceedings. We therefore direct the CIT(A) to adjudicate the same whilst deciding assessee’s first substantive grievance as per law.
This assessee’s appeal partly allowed in above terms.