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Facts
The assessee, an employee of Shri Surendra Kumar Panigrahi, appealed against the order of the CIT(A) for AY 2015-2016. The assessee received payments for supervisory work and reimbursement of expenses from Panigrahi. The AO treated a portion of these payments as income, and the CIT(A) enhanced the assessment.
Held
The Tribunal held that the reimbursements made by Shri Surendra Kumar Panigrahi to the assessee for expenses incurred on behalf of Panigrahi, as evidenced by bank transactions and contract details, were not to be treated as the assessee's income.
Key Issues
Whether the payments received by the assessee from his employer, partly as salary and partly as reimbursement for expenses incurred on behalf of the employer, could be treated as the assessee's income.
Sections Cited
Sec. 133(6), Sec. 194C
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Income Tax Appellate Tribunal, CUTTACK BENCH CUTTACK
Before: SHRI GEORGE MATHAN & SHRI RAJESH KUMAR
("नधा"रण वष" / Assessment Year : 2015-2016) Malay Bishoi, Vs ITO, Jeypore Ward, Jeypore Kolar Street, Dabugaon, Nabarangapaur, Odisha-764059 PAN No. :AINPB 9603 M (अपीलाथ" /Appellant) (""यथ" / Respondent) .. "नधा"रती क" ओर से /Assessee by : Shri N.Anand Rao, AR राज"व क" ओर से /Revenue by : Shri Vijay Singh, Sr. DR सुनवाई क" तार"ख / Date of Hearing : 02/12/2025 घोषणा क" तार"ख/Date of Pronouncement : 02/12/2025 आदेश / O R D E R Per Bench : This is an appeal filed by the assessee against the order passed by the ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi, dated 26.05.2025 for the assessment year 2015-2016.
It was submitted by the Ld. AR that the assessee is an employee of Shri Surendra Kumar Panigrahi. It was submission that the assessee had undertaken the supervisory work on the behalf of the said Surendra Kumar Panigrahi. Consequently the assessee had received payments to an extent of Rs.2,67,09,890/-.It was submission that out of the said Rs.2,67,09,870/- Rs.2,50,500/- was the salary received by the assessee. The balance were expenses reimbursed by Shri Surnedra Kumar Panigrahi on account of the materials and wages. It was the submission that Shri Surendra Kumar Panigrahi was having turnover of Rs.13,17,76,617/- and in response to 2 notice u/s.133(6) of the Act and Shri Surendra Kumar Panigrahi has confirmed that the assessee was his employee and that salary was being paid to him at the rate of Rs.18,500/- per month. He had also confirmed that the payments had been made to the assessee towards reimbursement of the expenses incurred on behalf of Shri Surendra Panigrahi. In respect of the contract that was being at Dabugaon, Nabarangpur. It was the submission that the name of the work was also provided OR/22-AB-03. It was the submission that the AO did not accept the contention of the asseseee and did not consider the response of Shri Surendra Kumar Panigrahi to the notice issued u/s.133(6) of the Act and treated the assessee as a sub contractor and made an addition @ 8% of the said of Rs.2,67,09,890/- as the income of the assessee. It was the submission that the assessment in the case of Shri Surendra Kumar Panigrahi has also been completed on 01/03/2022 wherein 30% of the said contract amount has been disallowed by holding that Shree Panigrahi had not deducted TDS u/s.194C of the Act on the payments made to the assessee. It was submission that the assessee was not a sub-contractor, the contract belonged to Shree Panigrahi. The contract was allotted to Shree Panigrahi and the assessee was only a supervisor and was receiving salary only. As the assessee was on-site supervisor, the payments have been routed through assessee’s bank account as transporting so much of cash was difficult. It was the submission that the addition as made by the AO and confirmed by the Ld.CIT(A) is liable to be deleted. It was submission that the Ld.CIT(A) enhanced the assessment and treated the entire 3 Rs.2,69,66,500, as the income from other sources by holding that that there was no service provided by the assessee to Surendra Ku. Panigrahi. It was submission that in response to 133(6) notice Shri Panigrahi has categorically given the all details. The bank transactions are also clearly available, the expenses have also been shown. It was the submission that the enhancement as made by the Ld.CIT(A) is liable to be deleted.
In reply, the Ld.Sr.DR vehemently supported the order of the AO and CIT(A). It was the submission that the ledger account had not been provided. It was submission that the enhancement done by the CIT(A) also liable to be upheld.
In reply, Ld.AR submitted that the even the ledger account have been provided before the AO and CIT(A). He showed proof of submission of the ledger account also. The Ld. AR also drew our attention to statement recorded from the assessee on 10/05/2023 in the chamber of the DCIT Central Circle-2, Bhubaneswar wherein also he has admitted that he is working as an employee of Shri Panigrahi and that the amounts were transferred from Shri Panigrahi to the assessee for making small payments to vendors labourers and the material suppliers. It was the submission that the addition is liable to be deleted.
We have considered the rival submissions. A perusal of the facts in the present case clearly shows that Shree Panigrahi has responded notice issued u/s.133(6) of the Act. The response has also been extracted by the Ld. AO in his order. The assessment in the case of Shree Panigrahi also has been done, wherein the payment to the assessee has been disallowed 4 the rate 30% of on account of the non-deduction of TDS u/s.194C of the Act. The business transaction between the assessee and Shree Panigrahi has been proved even in the statement recorded from the assessee. The ledger accounts have also been produced. The amount of Rs.2,69,66,500/- admittedly contains the salary of the assessee, the reimbursement for the materials and the reimbursement of the labour charges. This being so, as the assessee has proved the receipt of the moneys from Shree Panigrahi towards the reimbursement of the expenses incurred on behalf of Shree Panigrahi in respect of the contract No.OR-22-LV-03 which has been awarded to Shree Panigrahi, we are of the view that the addition made by the AO to the extent of the various reimbursement to the extent of Rs.2,26,66,890/- and the reimbursement of the materials to an extent of Rs.38,02,500/-, are not liable to be treated as the income of the assessee. Consequently, the said additions are deleted. However, the salary to extent of Rs.2,40,500/- is to be treated as the income of the assessee. With these directions, the issue is decided in favour of the assessee.
In result, the appeal of the assessee is partly allowed. Order dictated and pronounced in the open court on 02/12/2025. (राजेश कुमार) (जाज" माथन) (RAJESH KUMAR) (GEORGE MATHAN) लेखा सद"य/ ACCOUNTANT MEMBER "या"यक सद"य / JUDICIAL MEMBER "दनांक Dated 02/12/2025 Prakash Kumar Mishra, Sr.P.S.