TMI Blog2014 (4) TMI 433X X X X Extracts X X X X X X X X Extracts X X X X ..... n labourers - The mukadam had not given any margin money as profit on distribution of labour charges among labourers - When there is no profit element in payments, the TDS is not required to be deducted – the decision in DCIT vs. Laxmi Protein Products (P.) Ltd. 2010 (2) TMI 989 - ITAT AHMEDABAD] followed – The individual payment is not exceeding the prescribed limit and once this is not the case, the assessee is not supposed to deduct tax under section 194C of the Act - The assessee is not required to deduct TDS u/s. 194C on labour payments made through the mukadam – Decided in favour of Assessee. Restriction of addition u/s 68 of the Act – Held that:- The decision in BLESSING CONSTRUCTION Versus INCOME TAX OFFICER [ 2013 (10) TMI 154 - GUJARAT HIGH COURT] followed - there is no creditworthiness of the cash creditor to give loan of Rs.1,30,000/- to the assessee - the assessee had not proved creditworthiness of the cash creditor as he had shown only income of Rs.99,260/- in the return - The bank account shows that cash has been deposited in the bank account of the cash creditor - the identity and the genuineness of the transaction had been proved by the assessee but cash credito ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the circumstances of the case and in Law, the Ld. CIT(A)-IV, Surat has erred in restricting the disallowance @ 10% instead of 20% out of expenses. First we take ITA No. 428/Ahd/2010 (Assessee's appeal) 2. The assessee is in the construction business. It had taken loan of Rs.67,76,000/- during the year. The A.O. gave reasonable opportunity of being heard to show the identity, creditworthiness and genuineness of the loan creditor. The assessee filed the partial evidence before the A.O. He held as under: 4.1 On verification of the details filed during the course of assessment proceedings, it is seen that the assessee has received cash deposit from various persons. The assessee has produced only partial evidence regarding the identity, creditworthiness and genuineness of. transactions. The-details are as under:- Therefore, the assessee was repeatedly asked vide order sheet entries dated 22.9.2008, 17.11.2008 and 8.12.2008 to show the identity, creditworthiness and genuineness of the above transactions in with supporting evidence and was also requested to produce the above parties for verification. The assessee vide letter dated 18.12.2008 submitted the part detai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000 13 Raisa 347000 14 Yaqub M. Sayyed 98000 3776000 He confirmed the addition of Rs. 37,76,000/- u/s. 68 of the IT Act. 3. Being aggrieved by the order of the A.O., the assessee carried the matter before the CIT(A) who had partially allowed the appeal and he found three parties, namely, Shri Fuzail Qureshi, Shabeena A. Qureshi and Hira Bai Meghji Savla in totaling to the tune of Rs.10,15,000/- unexplained cash credit u/s. 68. The assessee gets relief from the CIT(A) at Rs.27,61,000/-. 4. Both the parties are before us. The assessee is against cash creditor confirmed by the CIT(A) at Rs.10,15,000/- and Revenue is against deleting the addition on account of cash creditor at Rs.27,61,000/-. Ld. Counsel for the assessee contended that assessee had filed confirmation before lower authorities with PAN no. along with copy of return. The assessee also filed confirmation at page no.14 and copy of bank account and argued that these payments were received by the assessee through account payee cheque and Rs.3,97,000/- was the total credit balance as o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .R. again reiterated that assessee had filed partially these affidavits before the lower authorities on which remand report has been called for by the ld. CIT(A). After considering the remand report, ld. CIT(A) has rightly confirmed the addition. It is also found that in bank account cash deposits entries were there. 4(ii). We have heard the rival contentions and perused the material on record. In case of two cash creditors, namely, Fuzail A. Qureshi and Shabeena A. Qureshi The facts of the A.R. had been found correct that originally amount came from the firm and returned back to firm. There is no substantial cash deposited. Both the cash creditors are minors. Thus, father s PAN had been quoted on both the confirmation. Therefore, we do not find any merit in the order of the CIT(A). Accordingly, we reverse the order of the CIT(A) in case of two cash creditors. Appeal on above two cash creditors are allowed. 4(iii). The third cash creditor was confirmed by the ld.CIT(A) in the name of Hira Bai Meghji Savla at Sr.no.9 where it was claimed that assessee is assessed to tax. Ld. Counsel has drawn our attention on page no.48 where copy of confirmation filed by the assessee shows th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee. Further, there were cash deposits also in bank account. Thus, we do not find any reason to revert the order of CIT(A). Accordingly, we dismiss the appeal on the assessee on this cash creditor. Ground no.1 is partly allowed. 5. Ground No.2 of assessee s appeal is against confirming the action of the A.O. in disallowing the labour expenses of Rs.15,22,585/- u/s. 40(a)(ia) of the Act. The A.O. observed that the assessee has debited labour charges amounting to Rs.15,22,585/- on which no TDS had been deducted by the assessee. As per the provisions of Section 40(a)(ia) r.w.s. 194C, the assessee should have deducted TDS on the said labour which the assessee failed to deduct the tax. The A.O. gave reasonable opportunity of being heard to the assessee. It was argued by the assessee before the A.O. that these payments were made to the labour through mukadam and single payment was less than required amount as per Section 194C of the IT Act. There is no contract between assessee and mukadam. Therefore, the assessee was not required to deduct TDS u/s. 194C of the IT Act. After considering the assessee s reply, the ld. A.O. held that there was a contract which mukadam and payment were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re is oral agreement with mukadam. Therefore, TDS was to be deducted by the assessee. 8. We have heard the rival contentions and perused the material on record. The assessee is in construction business. The expenses debited in the p l account and had not been doubted by the A.O. In construction business, the labour is required and it is an unorganized sector and some persons are required to arrange the labour for construction work. The assessee paid this amount through mukadam. The mukadam has further distributed these payments in labourers. The mukadam had not given any margin money as profit on distribution of labour charges among labourers. When there is no profit element in payments, the TDS is not required to be deducted as held by the Co-ordinate Bench in case of DCIT vs. Laxmi Protein Products (P.) Ltd. (supra). The operative portion is reproduced as under: 8. We have heard the rival contentions and gone through the facts and circumstances of the case. As we have noted above that the assessee has filed complete details vide letter dated 8-5-2007 and it is noted that the assessee instead made payments to labourers rather the assessee has made payment to the representat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icable in case of Asif A. Saiyed as there is no creditworthiness of the cash creditor to give loan of Rs.1,30,000/- to the assessee. Thus, we reverse the order of the CIT(A). 10(iii). Fourth cash creditor in the name of Imran Y. Saiyed for Rs.1,30,000/- The ld. Sr. D.R. argued that the assessee filed copy of PAN, return, confirmation but signatures and spelling of Saiyed does not tally. The assessee has income only Rs. 99,216/- prior to issue of two cheques, the assessee deposited the cash in the bank account. Thus, the source of the income has not been explained by the assessee. At the outset, ld. A.R. supported the order of the CIT(A) and he argued that the assessee has discharged his onus by following the copy of PAN, copy of return and confirmation. After considering both the sides, it is found that assessee had not proved creditworthiness of the cash creditor as he had shown only income of Rs.99,260/- in the return. The bank account shows that cash has been deposited in the bank account of the cash creditor and case laws referred by the Revenue is squarely applicable in case of Imran Y. Saiyed as there is no creditworthiness of the cash creditor. Accordingly, we reverse the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e A.R. argued that the assessee has discharged his onus by filing these evidences. Thus, he requested to confirm the order of the CIT(A). After considering both the sides and copy of bank account, it revealed that Rashida s bank account showed credit through account payee cheques. She deposited cash of Rs.40,000/- in the bank account thereafter issued cheque for loan to the assessee at Rs.4 lacs. The return of income is hardly Rs.20,000/-. The assessee proved the genuineness of the transaction and the identity of the cash creditor but not creditworthiness. Therefore, case laws referred by the Revenue is squarely applicable. Accordingly, we confirm the addition of Rs.4 lacs. Accordingly, we reverse the order of CIT(A). The Revenue s appeal is dismissed against this cash creditor. 10(vii). Serial no.10, cash creditor is Asha Laxmichand Shah for Rs. 5 lacs. Ld. Sr. D.R. argued that total income of the assessee has shown at Rs.1,97,741/- in the return and he supported the order of the A.O. At the outset, ld. A.R. for the assessee contended that assessee has filed copy of return, payments were received through cheque. No cash had been deposited in the bank account of cash creditor. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that she received Rs.1,55,000/- on 30th April, 2004 from the assessee before that the assessee has credit balance of Rs.2,36,037/- in the bank account. Thereafter, loan was given to the assessee by cash creditor. Thus, source of income has been explained by assessee in case of Sarifa Y. Sayyed. After considering the both sides, the loan received by the assessee at Rs.2,16,000/- , is found explained as assessee has reasonable income as well as opening balance in the bank account at Rs.2,36,037/- and also Rs.1,55,000/- received by the cash creditor from the assessee itself. Thus, we confirm the order of the CIT(A) and dismiss the appeal of the Revenue against this cash creditor. 10(x). Serial no.13, cash creditor is Raisa Rafique Quereshi for Rs. 3,47,000/-. Ld. Sr. D.R. argued that signature does not tally on various papers and returned income is only at Rs.1,26,077/-. Bank statement has not been attached in the paper book. At the outset, ld. A.R. argued that assessee has discharged his onus by providing copy of the return, copy of the bank account and confirmation. He further argued that Rs.1,20,000/- was received by the cash creditor from the assessee on 30.04.2005. Thereafter, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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