ACIT - 32(1), MUMBAI vs. CHOICE CORPORATION, MUMBAI

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ITA 5341/MUM/2016Status: DisposedITAT Mumbai16 February 2018AY 2012-134 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the assessee failed to explain the payment by producing the party or providing a verifiable address. The CIT(A) did not conduct proper inquiries. Therefore, the matter was restored to the Assessing Officer for fresh examination.

What were the facts?

The Assessing Officer disallowed a payment made to a sub-contractor as the sub-contractor could not be produced for verification and a notice under section 133(6) was returned unserved. The CIT(A) deleted the addition, holding that payment by cheque and TDS deduction were sufficient.

What were the issues?

Whether the disallowance of payment to a sub-contractor is justified when the sub-contractor cannot be produced and notices are unserved, and if payment by cheque and TDS deduction are sufficient proof of genuineness.

Which sections of the Income-tax Act were involved?

Section 133(6),Section 143(3)

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Income Tax Appellate Tribunal, “J” BENCH, MUMBAI

For Respondent: DR Assessee by :

Date of hearing: 07-02-2018 Date of pronouncement : 16-02-2018 O R D E R PER MAHAVIR SINGH, JM:

This appeal by the Revenue is arising out of the order of Commissioner of Income Tax (Appeals)-44, Mumbai, [in short CIT(A)] in appeal No. CIT(A) 44/ACIT 32(1)/ ITA 400/15-16 dated 30-06-2016. The Assessment was framed by the Asst. Commissioner of Income Tax, Circle 32(1), Mumbai (in short ACIT) for the assessment year 2012-13 order dated 30-03-2015 under section 143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’).

2.

The only issue in this appeal of Revenue is against the order of CIT(A) deleting the addition made by assessee on account of payment made to sub-contractors. For this Revenue has raised the following two effective ground: -

“1. On the facts and in the circumstances of the case, and in law, the LCI.CIT(A), erred in deleting the addition of Rs. 56,62,800/- made on account of payment made to sub-contractor without appreciating the fact that the notice issued u/s. 133(6) was returned unserved from the address provided by the assessee.

2. On the facts and in the circumstances of the case, and in law, the Ld. CIT(A) erred in not appreciating the fact that mere payment by account payee cheque is not sufficient proof for claiming any expenditure as held in the case of Assam Pesticides and Agro Chemicals vs. Commissioner of Income Tax, 227 ITR 845..”

3.

Briefly stated facts are that the AO during the course of assessment proceedings noticed that the assessee has made payment to the sub-contractor Shri Mahendra Kumar Yadav. The assessee was asked to explained the payment made to sub-contractor and assessee vide letter dated 23-03-2015 stated the following : -

“One of our sub-contractor Mr. Mahendrakumar Yadav, address at U.P., we have given sub-contract to the said party, we have make the payment by cheque and also TDS has been deducted at the time of payment. Copy of the bank statement with marking of the payment is being produced herewith so it is a genuine transaction with the party.”

4.

The AO required the assessee to produce the party but the assessee could not produce the party for verification and AO issued notice under section 133(6) of the Act on the given address of that party. But the party did not responded or the notice could not be served.

Accordingly, the AO disallowed the entire payment made to sub- contractor. Aggrieved, assessee preferred the appeal before CIT(A), who accept the claim of the assessee for the reason that the payment has been made by cheque and the TDS has been deducted at the time of such payment. Accordingly, he allowed the claim of the assessee.

Aggrieved, now Revenue is in appeal before us. Despite service of notice none attended on behalf of the assessee.

5.

We find from the assessment order and the order of CIT(A) that the assessee has not been able to explain the payments to sub-contractor by producing the party. The CIT(A) has not considered the issue and simply allowed the claim of the assessee by observing that payment is made by cheque and TDS has been deducted. The CIT(A) never made any enquiry whether the given address is correct or not and also no confirmation from the party was filed. In view of these facts we are of the view that let the issue be examined by Assessing Officer afresh. Needless to say that the assessee will produce the party before AO for verification of the above payment or he will provide correct address of the party so that AO can verify from the same. It is also not clear whether the recipient has included these receipts in his income or not? To verify this fact also the matter is restored back to the file of the Assessing Officer. The appeal of Revenue is allowed for statistical purposes.

6.

In the Result, the appeal of Revenue is allowed for statistical purposes.

Order pronounced in the open court on 16-02-2018.

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