Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, “E ” BENCH, MUMBAI
Before: SHRI RAJENDRA & SHRI C.N. PRASAD
आदेश / O R D E R PER C.N. PRASAD, JM:
This appeal is filed by the Revenue against the order of the Ld. CIT(A)-35, Mumbai dated 7.6.2012 pertaining to assessment year 2009-10.
Inspite of issue of notice none appeared on behalf of the assessee. We further observed from the record that on earlier occasions also when the notices were issued by Registered post, they came back unserved with the endorsement of the postal authorities that the addressee had left the premises. Therefore, we heard the Ld. Departmental Representative and disposed off this appeal on merit.
The first issue in the appeal of the Revenue is that the Ld. CIT(A) erred in directing the Assessing Officer to delete the disallowance made u/s. 40(a)(ia) in respect of the payments made to labourers.
The Ld. Departmental Representative referring to the assessment order submits that the Assessing Officer while completing the assessment disallowed labour charges paid to various labour contractors/supervisors amounting to Rs. 56,60,115/- for the reason that the assessee has not deducted TDS on such labour charges paid. The Ld. Departmental Representative submits that the assessee in the course of assessment proceedings submitted that the nature of business of the assessee is such that they have to search for the workers which were not easily available and therefore they have mobilized workers through supervisor and payments were made to supervisors who in turn made payments to the workers and since the total amount paid to the individual labour never exceeded threshold limit for deducting TDS, no TDS was made. The Ld. Departmental Representative submits that the contentions of the assessee were not accepted by the Assessing Officer and by invoking the provisions of Sec. 40(a)(ia), the Assessing Officer disallowed the labour charges for non deduction of TDS on these payments made to labour contractors. The Ld. Departmental Representative submits that the Ld. CIT(A) deleted the disallowance observing that since threshold limit for deducting TDS on the said amounts not exceeded in the case of an individual, the Assessing Officer is not justified in making disallowance u/s. 40(a)(ia) of the Act. The Ld. Departmental Representative vehemently supports the orders of the Assessing Officer.
We have heard the Ld. Departmental Representative and perused the orders of the authorities below. The issue in appeal has been elaborately considered by the Ld. CIT(A) with reference to the averments of the Assessing Officer and the submissions made by the assessee and concluded that the payments were made through group leaders, family head, mukadams, jamadars, supervisors etc., to the labourers only on behalf of the assessee and the assessee under his control and supervision executed whole of the contract work. Thus he deleted the disallowance observing as under:
“ 4.1. The A.O. found that the appellant claimed payments towards labour charges paid to 15 parties totaling to Rs. 56,60,115/-. The A.O. was of the opinion that the appellant was liable to deduct tax at source as the appellant has awarded contracts to those parties. The A.O. has not accepted the submission of the appellant that the payments have been made to group leaders/ mukadams/ jamadars/ supervisors etc. and individually in the hands of labours, the amounts of labour charges never exceeds the threshold limit applicable for TDS.
4.2. At the time of hearing, the Authorised Representative submitted that the all the facts and details have been furnished before the Assessing Officer during the course of assessment proceedings. The A.R. also contended that there are at least 10- 15 workers working under one Jamadar or supervisors and because of unavailability of time and management and this arrangement is necessary to control the laborers. In such a situation, the appellant makes the payments to supervisors to distribute the same to workers falling under their groups and accordingly the payment to individual worker does not exceed the limit of Rs. 30,000/- p.a. and as such the appellant was not liable to deduct tax at source. The A.R. has also contended that the similar issue has already been decided in favour of the appellant in A.Y. 2007-08 vide appellate order dated 30/01/2012.
4.3 I have considered the submissions of the Authorised Representative and the stand taken by the A.O. I fully agree with the submission of the representative that in the case of appellant the group leaders, family head, mukadams, jamadars, supervisors etc. made payments to the labourers only on behalf of the appellant and the appellant under his control and supervision executed whole of the contract and as such the ultimately if in the hands of individual labour, if the amount does not exceed the threshold limit of Rs. 30,000/-, the appellant is not liable to deduct tax at source. Accordingly, The A.O. is not justified in disallowing the labour charges u/s. 40(a)(ia) and as such the addition of Rs. 56,60,115/- is deleted”.
On going through the order of the Ld. CIT(A), we do not find any valid reason to interfere with the findings of the Ld. CIT(A). Therefore, we reject the ground raised by the revenue and sustain the order of the Ld. CIT(A).
The next issue in the appeal of the revenue is that the Ld. CIT(A) erred in deleting the disallowance u/s. 40A(3) of the Act.
The Ld. Departmental Representative referring to the assessment order submits that the Assessing Officer while completing the assessment disallowed Rs. 9,57,253/- being 20% of the payments made to the labour contractors amounting to Rs. 47,86,265/- u/s. 40A(3) for want of proper verification as the payments to labour contractors supported only by self made vouchers and bills and not possible to verify whether the assessee has paid the amounts to labour contractors in cash. The Ld. Departmental Representative submits that the Ld. CIT(A) deleted the disallowance holding that the Assessing Officer failed to establish that the payments exceeding Rs. 20,000/- has been made in cash on a single occasion to a particular person which can attract the provisions of Rs. 40A(3) of the Act. The Ld. Departmental Representative supports the order of the Assessing Officer.
We have considered the submissions made by the assessee before the Ld. CIT(A) and the findings of the Ld. CIT(A) therein. The Ld. CIT(A) deleted the disallowance observing as under:
5.1. The Assessing Officer noticed that the appellant has made the payments to two parties namely 1) Dev Reddy Rs. 19,19,865/- and 2) Bhagyashree Enterprises Rs. 28,66,400/- totaling to Rs. 47,86,285/- in cash and accordingly added Rs. 9,57,253/- u/s. 40A(3) being 20% of the total amount paid in cash for want of verification of records.
5.2. At the time of hearing, the representative submitted that the A.O, has made the additions in spite of the fact that the appellant has submitted ledger accounts of both the creditors parties reflecting the entries of cash payments duly signed and confirmed by them. These parties have agreed to have received the payments of Rs.20,000/- or less on multiple several dates. The allegation of the A.O. is prejudicial because the entries are supported by the confirmations from the third party and not by the self made vouchers only and hence no further verification is required.
5.3. I have carefully considered the submission of the representative of the appellant and the stand taken by the A.O. and find no hesitation to say that the A.O. has failed to establish the fact that the payments exceeding Rs.20,000/- has been made in cash on a single occasion to a particular person which can attract provisions of section 40A(3) of the I.T. Act, 1961. Accordingly, the disallowance made u/s. 40A(3) of Rs. 9,57,253/- is deleted”.
As could be seen from the above, it is the finding of the Ld. CIT(A) that the assessee has submitted ledger accounts of both the creditor parties reflecting the entries of cash payments duly signed and confirmed by them and these parties have agreed to have received the payments of Rs. 20,000/- or less on several dates. Thus, the Ld. CIT(A) deleted the disallowance holding that the creditors have confirmed that they received cash of Rs. 20,000/- or less on several occasions and the Assessing Officer has failed to establish that the payments made by the assessee exceeded Rs. 20,000/- in cash on a single occasion. Therefore, we do not see any infirmity in the order passed by the Ld. CIT(A) . This ground of the Revenue is dismissed.
The last issue in the appeal of the Revenue is that the Ld. CIT(A) erred in deleting the addition of Rs. 17,02,569/- by admitting fresh evidence in contravention of Rule 46A.
The Ld. Departmental Representative submits that the Assessing Officer while completing the assessment added Rs. 17,02,569/- as business income of the assessee on the ground that as per AIR information there is difference in the contractual receipts shown by Bharati Airtel Ltd., and the receipts shown by the assessee in her books of accounts/reconciliation statement. The Ld. Departmental Representative submits that the Ld. CIT(A) deleted the disallowance observing that addition was made based only on AIR information available on records at the time of assessment proceedings and this information was revised which resulted in reversal of said amount which was wrongly reported by Bharati Airtel Ltd. The Ld. Departmental Representative supported the orders of the Assessing Officer.
We have considered the submissions made by the assessee before the Ld. CIT(A) and the findings of the Ld. CIT(A) therein. The Ld. CIT(A) deleted the disallowance observing as under:
“The Assessing Officer noticed that as per AIR information available on records, the contract receipts from Bharti Airtel is 1,57,79,280/ - and as per the reconciliation statement submitted by the assessee, the same is Rs. 1,40,76,711/- resulting short fall of Rs. 17,02,569/-. Accordingly the A.O. has added the same on account of under reporting of contract receipts.
6.2 At the time of hearing, the representative submitted that the A.O. has made the additions only based on the AIR information available on records. The form 26AS which keeps changing on the basis of TDS returns uploaded by the third party cannot be relied purely while adding such sums without giving any proper findings or without proving anything contrary. It has also been submitted that Bharti Airtel has revised its TDS return on 10/11/2011 and reversed the said amount of Rs. 17,02,569/-. As a result of revision of TDS statement, the difference is coming to Rs. 37,35,574/- and the same is due to the fact that the Bharti Airtel has reported the contract receipts pertaining to F.Y. 2009-10 on the same amount. The appellant has also accounted the said amount of Rs. 37,35,574/- as contract receipts in F.Y. 2009-10 and as such the same cannot be accounted twice. The A.R. has also furnished copy of ledger account reflecting the said entry in F.Y. 2009-10.
6.3. I have carefully considered the submission of the representative of the appellant and the stand taken by the A.O. and find no hesitation to say that the A.O. has made the addition only based on AIR information available on records at the time of assessment proceedings. I agree with the fact that the revision in AIR information resulted in reversal of the said amount which was reported wrongly by Bharti Airtel and as such he question of difference in contract receipts does not arise. As far as actual difference of Rs. 37,35,574/- is concerned, the appellant has already accounted the same in F.Y. 2009-10 and as such no addition is justified on that issue too. Hence the addition of Rs. 17,02,569/- is at all not justified and accordingly deleted”. 14. On going through the order of the Ld. CIT(A), we do not find any valid reason to interfere with the findings of the Ld. CIT(A) in deleting the disallowance.
In the result, the appeal filed by the Revenue is dismissed.