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Income Tax Appellate Tribunal, BENCH “A”, KOLKATA
Before: Shri Mahavir Singh, JM & Shri M.Balaganesh, AM]
Per Shri M.Balaganesh, AM
This appeal of the revenue arises out of the order of the Learned CIT(A)- Asansol in Appeal No.285/CIT(A)/ASL/W.1(2)/ASL/2010-11 for the Asst Year 2008- 09 passed against the order of assessment framed by the Learned AO u/s 144 of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’).
The issues to be decided in this appeal are as to whether the learned CIT(A) is justified in restricting the disallowance of transportation charges to 10% and labour charges to 7.5% of the total disallowance in the facts and circumstances of the case.
The brief facts of this appeal are that the assessment for A.Y.2008-09 was completed by the ld. AO u/s 144 of the Act for non production of books of accounts and non compliance of notice u/s 142(1) of the Act. In the said assessment, the truck hire charges of Rs.46,19,808/- was disallowed by the ld. AO u/s 40(a)(ia) of the Act for violation of the provisions of section 194C of the Act. Similarly the ld. AO for want of evidences sought to disallow labour charges of Rs.16,63,052/- in the assessment.
M/s. B.K.Traders A.Y.2008-09 4. On first appeal, the assessee produced details of truck hire charges and details of labour charges which were treated as additional evidences by the ld. CIT(A). The ld. CIT(A) admitted these evidences and called for remand report from the ld. AO and observed that the assessee had not provided proper details even during the remand proceedings before the ld.AO and also observed that in the absence of details there cannot be any clear finding that could be given in the facts and circumstances of the case that as to whether the assessee had violated the provision of section 194C of the Act or not. Accordingly, he resorted to restrict the disallowance to 10% of the total truck hire charges and 7.5% of the total labour charges to meet the ends of justice. Aggrieved, the revenue is in appeal before us on the following grounds :- “
1. That Ld. Commissioner of Income tax (Appeal) erred in law and on facts by deleting the addition of Rs.,46,19,808/- (payment made as transportation charges) on account of disallowance u/s 40(a)(ia) and restricted the addition to 10% of total disallowance.
2. That Ld. Commissioner of Income Tax (Appeal) erred in law and on facts by deleting the addition of Rs.16,63,052/- (payment made a labour charges) on account of disallowance u/s 40(a)(ia) and restricted the addition to 7.5% of total disallowance.”
5. The ld. DR argued that the ld. CIT(A) ought not to have restricted the disallowance of truck hire charges and labour charges to 10% and 7.5% of the total expenses as admittedly the assessee had not provided any details even during the remand proceedings before the ld. AO and prayed for non interference of the order of the ld. AO.
In response to this the ld.AR argued that in respect of truck hire charges, the assessee had duly provided date wise, truck no. wise, site location wise, details of payments and stated that on a single day, there were no payments exceeding Rs.20,000/- and accordingly the provisions of section 194C of the Act were not at all applicable to the assessee. He also argued that the assessee had entered into a contract which a contractor who had supplied several trucks at the disposal of the assessee and the assessee had not used the same truck for the second time and hence the assessee had not made any payment exceeding Rs.50,000/- aggregating in the previous year and hence the provisions of section 194C of the Act are not applicable to the assessee. In respect of labour charges, he argued that the assessee had produced the labour
M/s. B.K.Traders A.Y.2008-09 vouchers which were duly attested by thumb impression by the concerned labourers which were also produced before the ld. AO during the remand proceedings. He accordingly prayed that disallowance made by the ld. CIT(A) in the facts and circumstances is very fair and reasonable and prayed for non interference of the CIT(A)’s order.
We have heard the rival submissions and perused the materials available on record. We find that the original disallowance was made by the ld.AO u/s 40(a)(ia) of the Act for violation of TDS provisions u/s 194C of the Act. However, no factual finding has been recorded by the lower authorities as to whether there is any violation per se u/s 194C warranting invocation of the provisions of section 40(a)(ia) of the Act. We find that the ld. CIT(A) though conceded to the fact of absence of finding for violation of TDS provisions in his appellate order, resorted to make estimation of disallowances to 10% and 7.5% for truck hire charges and labour charges respectively without any basis. In the facts and circumstances of the case, we find that one more opportunity be given to the assessee to explain his case before the ld. AO by producing every evidences during the set aside proceedings. Accordingly, we deem it fit and proper, in the interest of justice and fair play, to set aside both the issues to the file of the ld.AO, to decide the issues afresh in accordance with law.
In the result the appeal of the revenue is allowed for statistical purposes.
Order pronounced in the court on 06.05.2016.