The Asstt. Commissioner of Income Tax 3(1), Bhopal v. M/s. Abhay Kumar Jain, BEGUMGANJ

ITA 619/IND/2010 | 2006-2007
Pronouncement Date: 20-12-2011 | Result: Dismissed

Appeal Details

RSA Number 61922714 RSA 2010
Assessee PAN AFQPJ0679F
Bench Indore
Appeal Number ITA 619/IND/2010
Duration Of Justice 1 year(s) 14 day(s)
Appellant The Asstt. Commissioner of Income Tax 3(1), Bhopal
Respondent M/s. Abhay Kumar Jain, BEGUMGANJ
Appeal Type Income Tax Appeal
Pronouncement Date 20-12-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 20-12-2011
Assessment Year 2006-2007
Appeal Filed On 06-12-2010
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI R.C. SHARMA ACCOUNTANT MEMBER ITA NO.619/IND/2010 A.Y.2006-07 ASSTT.COMMISSIONER OF INCOME TAX 3(1) BHOPAL ... APPELLANT VS ABHAY KUMAR JAIN BEGUMGANJ PAN AFQPJ0679F .. RESPONDENT APPELLANT BY : SHRI ARUN DEWAN RESPONDENT BY : SHRI H.P. VERMA AND SHRI ASHISH GOYAL DATE OF HEARING 14.12.2011 DATE OF PRONOUNCEMENT 20.12.2011 2 O R D E R PER R.C. SHRMA ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) DATED 31.8.2010 FOR THE ASSESSMENT YEAR 2006-07 WHEREIN T HE FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE REVENUE :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT(APPEAL) HAS ERRED IN (I) DELETING THE LABOUR EXPENSES AMOUNTING TO RS.1 76 735/- EVEN THOUGH THE EXPENSES ARE NON- VERIFIABLE. (II) DELETING THE PAYMENTS TO PETTY CONTRACTOR AMOUNTING TO RS.10 76 010/- MADE BY THE A.O. U/S 40(A)(IA) EVEN THOUGH TDS HAS NOT BEEN DEDUCTED. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. THE ASSESSEE IS A CIVIL CONTRACTOR. THE FI RST GROUND RELATES TO DISALLOWANCE OF RS.1 76 735/- OUT OF THE LABOUR EXPENSES CLAIMED DURING THE YEAR TO THE EXTENT OF RS.35 34 714/- ON THE GROUND THAT THE THU MB 3 IMPRESSION OF THE LABOURS ARE NOT CLEARLY DISTINGUISHABLE AND PRIMA FACIE IT WAS SEEN THAT TH UMB IMPRESSIONS ARE IMPRINTED BY THE SINGLE HAND OR WIT H THE HELP OF RIGHT AND LEFT HAND. THEREFORE ON ACCO UNT OF NON-VERIFIABILITY OF THE SAID EXPENSES THE A.O. PROCEEDED TO DISALLOW 5% OF THE LABOUR CHARGES AMOUNTING TO RS.1 76.735/-. 3. BY THE IMPUGNED ORDER THE COMMISSIONER OF INCOM E TAX (APPEALS) DELETED THE DISALLOWANCE AFTER HAVING MADE THE FOLLOWING OBSERVATIONS :- I HAVE GONE THROUGH THE ASSESSMENT ORDER AND THE REPLY OF THE APPELLANT. THE A.O. HAS MADE THE DISALLOWANCE OUT OF LABOUR CHARGES AMOUNTING TO RS.1 76 735/- ON THE GROUND THAT THUMB IMPRESSION ARE NOT DISTINGUISHABLE ON THE MUSTER ROLL AND MANY THUMB IMPRESSIONS ARE MADE WITH A SINGLE HAND. THE APPELLANT ON THE OTHER HAND HAS CONTENDED THAT ALL THE EXPENSES ARE FULLY VOUCHED AND THE BOOKS OF ACCOUNTS ARE 4 AUDITED. IT WAS CONTENDED THAT DESPITE OF NATURE OF WORK THE MUSTER ROLL OF THE LABOURS ARE MAINTAINED PROPERLY AND PRODUCED BUT THE A.O. HAS NOT POINTED OUT ANY SINGLE DEFECT WHERE THE THUMB IMPRESSION OF THE LABOURS ARE NOT DISTINGUISHABLE. THE A.O. HAS FURTHER NOT GIVEN ANY REASON HOW THE THUMB IMPRESSION OF THE LABOURS ARE NOT DISTINGUISHABLE. I HAVE EXAMINED THE CONTENTION OF THE APPELLANT AND IN MY CONSIDERED OPINION THE A.O. HAS PROCEEDED TO MAKE THE DISALLOWANCE ON AN ESTIMATED BASIS WITHOUT CITING ANY SPECIFIC DEFECT OR DISCREPANCY AND THE DISALLOWANCE HAS BEEN MADE WITHOUT ANY COGENT REASON. THUS THE ADDITION OF RS. 1 76 735/- MADE OUT OF THE LABOUR EXPENSES CANNOT BE SUSTAINED AND THE SAME IS DELETED. THIS GROUND IS ALLOWED TO THE APPELLANT. 4. WE HAVE CONSIDERED THE RIVAL CONTENTIONS G ONE 5 THROUGH THE MATERIAL AVAILABLE ON RECORD AND FIND T HAT THE EXPENSE WERE FULLY VOUCHED AND BOOKS OF ACCOUNTS WERE ALSO AUDITED AND PRODUCED BEFORE THE ASSESSING OFFICER FOR VERIFICATION. FURTHERMORE T HE ASSESSEE HAS ALSO PRODUCED BEFORE THE ASSESSING OFFICER THE MUSTER ROLL OF LABOURS WHEREIN THE ASSESSING OFFICER HAS NOT POINTED OUT ANY DEFECT WHERE THE THUMB IMPRESSIONS OF THE LABOURERS WERE NOT DISTINGUISHABLE. AFTER RECORDING DETAILED FIND ING AT PAGE 3 AS REPRODUCED ABOVE THE COMMISSIONER OF INCOME TAX (APPEALS) HAS DELETED THE DISALLOWANCE WHICH HAS NOT BEEN CONTROVERTED BY THE LEARNED SR. DR. ACCORDINGLY WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) I N DELETING THE ESTIMATED DISALLOWANCE OF 5% OUT OF LABOUR EXPENSES. 5. WITH REGARD TO THE DISALLOWANCE U/S40(A)(I A) WE FIND THAT THE ASSESSEE IS ENGAGED IN BUSINESS OF CONTRACTORSHIP OF CIVIL WORKS OF VARIOUS GOVERNMENT DEPARTMENTS IN THE NAME OF ABHAY KUMAR JAIN OR 6 UNDER THE PROPRIETORSHIP CONCERN OF M/S R.K. CONSTRUCTION. DURING THE RELEVANT ASSESSMENT YEAR THE ASSESSEE HAS SHOWN NET PROFIT OF RS. 8 15 502/- IN THE ASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE IS MAKING PAYMENTS OF RS. 11 28 200/- AS PETTY CONTRACT EXPENSES. THE ABOVE PAYMENT MADE ATTRACTS THE TDS PROVISIONS U/S 194C. IN THE ORDER SHEET ENTRY DATED 18.6.2008 THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS ABOUT PET TY CONTRACT EXPENSES ON WHICH ASSESSEE SUBMITTED FOLLOWING DETAILS :- S.NO. NAME PAYMENT TDS DEDUCTED 1 MUKESH AGRAWAL 42200 NO 2 NITIRAJ PATEL 986000 NO 3 GAINI SINGH THAKUR 47 810 NO 4 VIR BAHADUR THAPA 52190 NO 6. AS NO TDS WAS DEDUCTED THE ASSESSING OFFI CER 7 DISALLOWED A SUM OF RS. 11 28 200/-. 7. BY THE IMPUGNED ORDER COMMISSIONER OF INCOM E TAX (APPEALS) DELETED A SUM OF RS.10 76 010/- BY OBSERVING THAT IN CASE OF NONE OF THE PARTIES INDIV IDUAL PAYMENT WAS IN EXCESS OF RS. 20 000/- AND TOTAL PAYMENT WAS IN EXCESS OF RS. 50 000/- DURING THE ENTIRE PERIOD. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS EXAMINED EACH AND EVERY ACCOUNT AND FOUND THAT IN RESPECT OF GANI SINGH THAKUR AND SH RI BAHADUR THAPA. THE PRECISE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS) ARE AS UNDER :- I HAVE GONE THROUGH THE ASSESSMENT ORDER SUBMISSION OF THE APPELLANT AND THE DOCUMENTS SUBMITTED BEFORE ME.THE A.O. HAS MADE THE DISALLOWANCE BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT FOR NON DEDUCTION OF TAX ON THE PAYMENTS MADE TO SHRI NEETIRAJ PATEL. THE APPELLANT ON THE OTHER HAND SUBMITTED THAT SHRI NEETIRAJ WAS 8 APPOINTED TO LOOK AFTER THE WORK AT SITE FOR WHICH HE WAS PAID SALARY. THE COPY OF THE SALARY ACCOUNT WAS ALSO PRODUCED BEFORE ME REFLECTING SALARY PAID TO HIM. THE APPELLANT STATED THAT BY MISTAKE THE TOTAL AMOUNT TRANSFERRED TO NEETIRAJ ACCOUNT FOR MEETING EXPENSES OF SITES WASDEBITED IN THE PETTY CONTRACTORS ACCOUNT IN THE PROFIT AND LOSS ACCOUNT. THE EXPENSES ARE SUPPORTED BY DOCUMENTARY EVIDENCE AND ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS. THE EXPENSES HAVE BEEN INCURRED AT THE SITE ON BEHALF OF THE APPELLANT AND MR. NEETIRAJ PATEL HAS BEEN PAID SALARY/REMUNERATION FOR SUPERVISING THE WORK. THERE IS NO CONTRACT AGREEMENT BETWEEN THE APPELLANT AND SHRI NEETIRAJ AND SHRI NEETIRAJ PATEL WAS WORKING AS EMPLOYEE OF THE APPELLANT. ALL THE PAYMENTS MADE TO HIM ARE REFLECTED IN HIS BANK ACCOUNTAND THE SAME ARE WITHDRAWN FOR MEETING THE 9 EXPENSES. THE PAYMENTS MADE TO HM ARE FOR MEETING THE EXPENSES OF THE SITES AND NOT IN THE NATURE OF SUB-CONTRACT PAYMENT AND HENCE DOES NOT ATTRACT THE PROVISIONS OF SECTION 194C FOR DEDUCTION OF TDS. IN VEW OF THE ABOVE THE DISALLOWANCE MADE ON THIS ACCOUNT IS DELETED AND THE APPELLANT GETS RELIEF OF RS.9 86 000/-. SHRI GAINI SINGH THAKUR RS. 47810/- IT IS SUBMITTED THAT DURING THE YEAR UNDER CONSIDERATION THE APPELLANT HAS MADE TOTAL PAYMENT OF RS.47 810/- (N THE ASSESSMENT ORDER THE AMOUNT IS MENTIONED AT RS. 12 00 000/-) TO SHRI GIANI SINGH THAKUR. SIR THE SAID PAYMENT IS MADE ON DIFFERENT DATES IN PART. NOT A SINGLE PAYMENT EXCEEDS THE LIMIT OF RS. 20 000/- AND FURTHER THE AGGREGATE OF PAYMENT ALSO DOES NOT EXCEED THE LIMIT OF RS. 50 000/- ASA PROVIDED IN SECTION 194C(3) AND ITS PROVISO. THUS THE 10 APPELLANT IS NOT LIABLE TO DEDUCT THE TDS ON THE SAID PAYMENTS MADE AS PER THE PROVISIONS OF SECTION 194C OF THE ACT. THE A.O. HAS ALTOGETHER IGNORED THE PROVISIONS OF THE SECTION 194C OF THE ACT AND HAS MADE THE DISALLOWANCE OF THE SAID PAYMENT OF RS. 47 810/- ARBITRARILY WHICH IS NOT AS PER THE LAW AND LIABLE TO BE DELETED. COPY OF ACCOUNT OF SHRI GAINI SINGH THAKUR IS ENCLOSED HEREWITH. I HAVE GONE THROUGH THE ASSESSMENT ORDER SUBMISSION OF THE APPELLANT AND THE DOCUMENTS SUBMITTED BEFORE ME.THE A.O. HAS MADE THE DISALLOWANCE BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT FOR NON DEDUCTION OF TAX ON THE PAYMENTS MADE TO SHRI GAINI SINGH THAKUR. THE APPELLANT ON THE OTHER HAND HAS PRODUCED THE COPY OF ACCOUNTOFSHRI GAINI SINGH THAKUR AND STATED THAT AS PER THE PROVISIONS OF SECTION 194C THE 11 APPELLANT HAS NOT MADE ANY SINGLE PAYMENTS EXCEEDING AMOUNT OF RS. 20 000/- AND FURTHER AGGREGATE OF PAYMENTS MADE IS ALSO NOT EXCEEDS THE AMOUNT OF RS. 50 000/- AND HENCE THERE IS NO LIABILITY OF DEDUCTION OF TAX ON SUCH PAYMENTS. I HAVE SEEN THE COPY OF ACCOUNT OF THE PARTY IN THE BOOKS OF THE ASSESSEE AND FOUND THAT THE CONTENTION OF THE APPELLANT IS CORRECT. THE A.O. WHILE MAKING THE DISALLOWANCE HAS ONLY CONSIDERED ONE LIMIT OF RS. 20 000/- AND NOT TAKEN INTO CONSIDERATION THE OVERALL LIMIT OF RS. 50 000/-. IN THE PRESENT CASE SINGLE PAYMENT DOES NOT EXCEEDRS. 20 000/- AND TOTAL CUMULATIVE PAYMENT DURING THE YEAR IS BELOW RS. 50 000/-. IN VIEW OF THE ABOVE THE DISALLOWANCE MADE ON THIS ACCOUNT IS DELETED AND THE APPELLANT GETS RELIEF OF RS. 47 810/-. SHRI VIR BAHADUR THAPA RS. 52 190/- : IT IS 12 SUBMITTED THAT DURING THE YEAR UNDER CONSIDERATION THE APPELLANT HAS MADE TOTAL PAYMENT OF RS. 52 190/- TO SHRI VIR BAHADUR THAPA. SIR THE SAID PAYMENT IS MADE ON DIFFERENT DATES IN PART. NOT A SINGLE PAYMENT EXCEEDS THE LIMIT OF RS. 20 000/-. BUT THE AGGREGATE OF PAYMENT EXCEEDS THE LIMIT OF RS. 50 000/- AS PROVIDED IN SECTION 194C(3) AND ITS PROVISO. IT IS SUBMITTED THAT DUE TO MISTAKE THE APPELLANT COULD NOT DEDUCT THE TDS ON THE SAID PAYMENT MADE BY HIM. SIR IN ACTUAL THE PAYMENT WAS MADE IN PART AND THE AMOUNT OF PAYMENT DOES NOT EXCEED THE LIMIT OF RS. 20 000/- IN ONE TIME. AFTER MAKING THE TOTAL PAYMENT IN THE YEAR THE APPELLANT FORGOT TO DEDUCT THE TDS ON GROSS PAYMENT MADE WHICH INFACT CROSSED THE LIMIT OF RS.50 000/-. THIS WASA NOT INTENTIONAL ON THE PART OF THE APPELLANT BUT DUE TO MISTAKE TDS COULD NOT BE DEDUCTED. 13 I HAVE GONE THROUGH THE ASSESSMENT ORDER SUBMISSION OF THE APPELLANT AND THE DOCUMENTS SUBMITTED BEFORE ME.THE A.O. HAS MADE THE DISALLOWANCE BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT FOR NON DEDUCTION OF TAX ON THE PAYMENTS MADE TO SHRI VIR BAHADUR THAPA. THE APPELLANT SUBMITTED THAT NOT A SINGLE PAYMENT WAS MADE TO HIM EXCEEDING THE LIMIT OF RS. 20 000/- BUT AGGREGATE OF PAYMENTS EXCEEDS THE LIMIT OF RS. 50 000/- AND BY MISTAKE THE APPELLANT HAS FORGET TO DEDUCT THE TDS ON THE SAID PAYMENTS. SINCE THE APPELLANT HIMSELF HAS ACCEPTED THE MISTAKE THE ADDITION OF RS. 52 190/- ON THIS ACCOUNT IS HEREBY CONFIRMED. IN VIEW OF THE FINDINGS GIVEN IN THE ABOVE PARAS THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF EXPENSES IS PARTLY DELETED AND THE APPELLANT GETS RELIEF OF RS. 14 10 76 010/- WHILE ADDITION OF RS. 52 190/- IS HEREBY CONFIRMED. THUS THIS GROUND OF APPEAL IS PARTLY ALLOWED. 8. THE ABOVE FINDING OF THE COMMISSIONER O F INCOME TAX (APPEALS) HAS NOT BEEN CONTROVERTED BY THE LEARNED SR. DR AND SINCE INDIVIDUAL PAYMENT TO EACH PERSON WAS BELOW RS. 20 000/- AND TOTAL PAYMENT IN THE YEAR WAS BELOW RS. 50 000/- NO DISALLOWANCE IS WARRANTED U/S 194C OF THE ACT. ACCORDINGLY WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). 9. IN THE RESULT THE APPEAL OF THE REVEN UE IS DISMISSED. SD SD (JOGINDER SINGH) (R.C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DECEMBER 20 2011 COPY TO APPELLANT RESPONDENT CIT CIT(A) DR DN/- 15