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2016 (6) TMI 38 - ITAT AGRA

2016 (6) TMI 38 - ITAT AGRA - TMI - Revision u/s 263 - non deduction of tds on payment to contractor for supply of labour and transportation - Held that:- There is no error in the order of the AO causing prejudice to the Revenue. The assessee had duly demonstrated before the Ld. CIT, that it was not required to deduct TDS on the impugned payments. The assessee has stated before the Ld. CIT that no payment was made for supply of labour & transportation, in pursuance to any contract for the supply .....

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t paid any commission to these so-called contractors. Further the assessee demonstrated before the Ld. CIT that no payment to a single labour exceeded ₹ 20,000/- i.e., the prescribed limit for deducting tax at source. The Ld. CIT we find has not controverted all these facts. In fact the entire case of the Ld. CIT rests on the submission of the assessee in which he has termed these persons as “Contractor” This alone cannot lead to the conclusion that the payments were made to contractor, wi .....

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igated during assessment proceedings and the AO after considering the assessee reply, had taken a plausible view and allowed the assessee 100% depreciation on the temporary structure. Moreover the case of the Ld. CIT we find is that in the absence of bills and vouchers pertaining to the impugned expenses, the assessee has claimed double deduction. We fail to understand how the assessee has claimed double deduction when the fact is that the impugned amount was debited to capital account and 100% .....

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ng of any error in the order of the AO. In our considered opinion, revisionary powers under section 263 cannot be exercised in such circumstances. Moreover, the fact that two supplies are presumably defaulters being not registered under the relevant law, does not lead to any adverse inference being drawn against the assessee, more particularly when no defect has been found in the bills and vouchers produced by the assessee. Further we find that in the assessment order passed in consequence to th .....

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the income of the assessee - Held that:- We uphold the order of the Ld. CIT, since clearly there was an error in the order of the AO, having not examined the issue of taxability of interest, which resulted in an amount of ₹ 36,287/- escaping assessment thus causing prejudice to the Revenue. The assesssee we find has given no plausible explanation for not disclosing the impugned amount in its Profit & Loss account.- Decided against assessee - Disallowance of rent paid for equipment and .....

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deduct tax at source in the payments of rent and legal expenses and the same having not been examined during assessment proceedings also, the Ld. CIT had rightly held the order of the AO to be erroneous so as to cause prejudice to the Revenue.- Decided against assessee - ITA No.170/Ag/2013 - Dated:- 26-4-2016 - SHRI BHAVNESH SAINI , JUDICIAL MEMBER AND MS. ANNAPURNA MEHROTRA, ACCOUNTANT MEMBER For The Appel lant : Sh. Dipendra Mohan For The Respondent : Sh. Rajarshi Dwivedy ORDER PER ANNAPURN .....

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ome Tax Act, 1961. 2. Because the Ld. CIT has erred in law and on facts in disallowing the claim of write off of temporary structures at ₹ 13,82,300/- because the above amount has been claimed only once and not twice as alleged, therefore the question of double deduction does not arise. 3. Because the Ld. CIT has erred in law and on facts in challenging the genuinity of purchases of ₹ 15,95,001/- made in the month of February merely on the ground that due to typographical error the d .....

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lete bills and vouchers of the purchases made from them and the assessee should not be held responsible if these persons are presumed to be defaulters. 5. Because the Ld. CIT has erred in law and on facts in adding back the amount of purchases of ₹ 10,09,208/- made on 31.03.2008, as it is not being reflected in closing stock or work in progress. He has completely ignored the fact that as a consistently adopted accounting policy the assessee treats the stock delivered at site as consumed an .....

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ed u/s 194 I and 194 J of the Income Tax Act, 1961. 7. Because the notice u/s 263 is bad in law and the learned CIT has taken a conscious decision on the allowability of expenses and estimation of income. To disregard his findings would tantamount to change of opinion, whichis contrary to the provision of law. 8. Because the order of the Ld. CIT, Agra U/s 263 of the IT Act, is arbitrary , unjust, merely based on presumptions and that no error existed or prejudice was caused to the revenue, there .....

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nt under section 143(3) was completed on 29/10/2010 at an income of ₹ 22,19,330/- after making an addition of ₹ 12,00,000/- on agreed basis, since the AO noted that some of the vouchers of purchases and expenses were of unverifiable nature. Subsequently a show cause notice under section 263 of the Income Tax Act dt. 11/02/2013 was issued to the assessee on the following points. i. During the assessment proceedings, assessee filed month-wise details of purchases made during the year v .....

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f the Act, and amount of ₹ 86,65,626/- is required to be added to the total income of the assessee firm. ii. From perusal of assessment records it is found that the assessee has claimed depreciation amounting to ₹ 13,82,300/- on the temporary structure of office, whereas no separate capital bills & vouchers were furnished in support of this claim of capital nature of expenditure. Therefore, by debiting the depreciation of ₹ 13,82,300/-, the assessee has claimed double deduc .....

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erified as the purchases are claimed to have been made on 31.02.2008. iv. It is further noticed that the assessee firm has made purchases on different dates which exceeds ₹ 40 lacs from following parties a. Bajrant Int Udyog ₹ 47,31,100/- b. Rahimuddin & Sons ₹ 53,60,594/- Both above parties are not registered in the Trade Tax Department though, the turnover exceeds ₹ 40 lacs. Therefore, the genuineness of the above purchases need to be verified as the sellers having .....

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total income of the assessee. vi. From perusal of Profit & Loss Account and TDS certificates it is noticed thtat during the year under consideration, the assessee has received interest at ₹ 81,507/- as interest from Sh. Ramesh Lal Prop. M/s Vidha Mal Idan Das, Dibiapur and claimed TDS of ₹ 8,395/- but in the Profit & Loss Account it was shown at ₹ 45,220/- . Hence the difference of ₹ 36,287/- is required to be added to the total income of the firm. vii. Further, .....

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issues raised. After considering the same the Ld. CIT held that on all the issues raised, the assessment order dt. 29/10/2010 was erroneous in so far as pre judicial to the interest of the Revenue as it was passed without making sufficient and proper enquiries. Ld. CIT held that the AO did not make any attempt to verify the genuineness of the various transactions outlined in the notice issue under section 263 and therefore he set aside the assessment order and asked the AO to pass a fresh order .....

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irst issue raised in the proceeding under section 263, is that, it was found that the assessee had made payment to contractor for supply of labour, and transportation to the tune of ₹ 86,65,626/- but no TDS had been deducted on the same. Therefore as per the Ld. CIT the amount ought to have been added to the total income of the assessee as per the provision of Section 40a(ia) of the Act. With regard to the same Ld. AR submitted that it was demonstrated before the Ld. CIT that no TDS was re .....

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e contractors in their turn would take 10% commission from the labourer and no payment was being made by the assessee to the contractor themselves. Ld. AR further stated that the aforesaid amount also included payment made on account of transportation made by Ram Transport for taking Tractor Trolly, labour etc. on rent for transport purposes of the assessee. Ld. AR stated that in this case also payment was made by the assessee directly to the tractor owner from whom Ram Transport used to take co .....

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eja Construction Vs. CIT (2010) 39 SOT (Hyd) in this regard. Alternatively the Ld. AR pleaded that the entire amount had been paid during the year itself which was an admitted fact and nothing was outstanding for payment. Therefore following the decision of the Jurisdictional High Court in the case of CIT Vs. M/s Vector Shipping Services (P) Ltd. Muzaffarnagar in ITA No. 122 of 2013 dt. 09/07/2013, no disallowance under section 40a(ia) could be made on the amount which had been paid during the y .....

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owed and added back to the income of the assessee as per the provision of Section 40a(ia) of the Act. Ld. DR therefore stated that there was a clear error in the order of the AO who had not looked this aspect while framing the assessment on the assessee as a consequence of which there was prejudice cause to the Revenue. The order passed under section 263 on this count was therefore valid. 10. We find that on this issue there is no error in the order of the AO causing prejudice to the Revenue. Th .....

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tire payment relating to a group of labourers being made to one so-called contractor, who in turn distributed it to the individual labourers. The assessee had demonstrated the same through monthly wage sheets of various labours attached to the so called contractor which stated तुलाराम राजपूत के साथ अमानी लेबर etc. The assessee had also .....

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e to contractor, without controverting the evidences produced by the assessee in support of its contention. In view of the same, we hold that the impugned payments of ₹ 86,65,626/- on account of labour and transportation was not made to contractors and therefore provision of section 194C of the Act were not violated by the assessee. There was therefore no error in the order of the AO so as to cause prejudice to the Revenue and the revisionary proceedings on this issue are therefore set asi .....

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was eligible to claim 100% depreciation on the same . Ld. AR drew our attention to the question raised during the assessment proceeding wherein vide question no. 13 the assessee was required to furnish details of all fixed assets acquired during the year and depreciation claimed thereon placed at paper book page no. 10. Ld. AR further drew our attention to the reply furnished by the assessee placed at paper book page no. 17 wherein the assessee had clearly stated that it had not acquired any fix .....

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;्रार्थी का पी डब्ल्यू डी के अंर्तगत कार्य भाग्य नगर रोड पर, एरवा कटरा रोड पर गोपियापुर .....

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2352; में कार्य सिविल निर्माण का चला है जहाँ पर उसे अस्थायी तौर पर आफिस का निर्माण करना पड़ा .....

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0; हुयी थी जिसे खाते में डाला गया है इस खर्चे को अन्य व्यक्तियों द्वारा कार्य करवाया जाê .....

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it is evident that this matter had been investigated during the assessment proceeding also and due reply had been furnished by the assessee, after considering which the AO had allowed the assessee depreciation @100% for temporary structure constructed. In such circumstances it could not be said that there was any error in the order of the AO, so as to give revisionary power for the same to the Ld. CIT under section 263. 12. Ld. DR on the other hand relied on the order of the Ld. CIT. 13. We fin .....

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ited to capital account and 100% depreciation claimed thereon. The assessment order we therefore hold cannot be held to be erroneous and the Ld. CIT has wrongly invoked revisionary powers under section 263 of the Act on this issue. 14. The third issue, pertains to purchases made from four parties namely (i) M/s Kumar Building Material, (ii) M/s Rahimuddin & Sons, (iii) Sh. Tula Ram Rajput and (iv) Sh. Bhanvar Lal Thekedar amounting in all ₹ 15,95,001/-which as per the Ld. CIT needed to .....

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s dates on which purchase was made by the assessee. With regard to payment made to Sh. Tula Ram Rajput and Sh. Bhawar Lal Thekedar. Ld. AR submitted that they were persons who supplied temporary labourers to the assessee on daily basis and since payments could not be recorded in the name of each labour, since the labour changed every day the payment was shown to be made in the name of the contractor. Ld. AR submitted that these contractors had no agreement with the assessee and received no payme .....

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nt Int Udyog and Rahimuddin & Sons. Ld. AR stated that the ld. CIT had doubted these purchases for the reason that they were not registered with the Trade Tax Department though their turnover exceeded ₹ 40 lacs. Ld. AR stated that the assessee had furnished complete bills and vouchers of the purchase made from them and the assessee should not be held responsible if these persons were presumed to be defaulters. Ld. AR further stated that during assessment proceedings the assessee had hi .....

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the other hand stated that with regard to purchases made from the four parties amounting to ₹ 15,95,001/- it was found from the copies of bills submitted by the assessee that there were various discrepancy in the same. Ld. DR pointed out the observations of the Ld. CIT in this regard reproduced at para 6 of its order: 6. Regarding purchase claimed to have been made from four parties on 31.02.2008 the assessee firm in its reply has stated …………Therefore, the entir .....

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the assessee before the AO bill No. 940 of ₹ 9163/- is mentioned in month of July 2007dated 31.03.2007. Similarly, bill No. 340 dated 31.07.2007 is listed in the month of February, 2008 dated 31.02.2008. Similarly bill No. nil dated 31.01.2008 of Rahimuddin & Sons is not mentioned interest the list in the month of January, 2008. Ld. DR therefore stated that the genuineness of these purchases needed to be verified in the light of the above facts and therefore there was error in the orde .....

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. Having done so, we find that the Ld. CIT intends to revisit this very issue in the current proceedings and that too for verifying the genuineness of the impugned purchases. Meaning thereby that there is no categorical finding of any error in the order of the AO. In our considered opinion, revisionary powers under section 263 cannot be exercised in such circumstances. Moreover, the fact that two supplies are presumably defaulters being not registered under the relevant law, does not lead to any .....

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ng Int Udyog, & ₹ 53,60,594/- from M/s Rahimuddin & Sons, there is no categorical finding of any error in the order of the AO and the order of the Ld. CIT on these issues is also set aside. 17. The next issue pertains to purchase made on 31/03/2008 but not shown as work in progress. On this issue Ld. AR submitted that it had been explained to the Ld. CIT that all purchases made on the 31/03/2008 was utilized the same day itself and therefore no amount remained as stock as such. Ld. .....

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ks of account. 18. Ld. DR on the other hand relied upon the order of the Ld. CIT and stated that this matter required verification since the assessee had not produced any evidence to prove that similar purchases made in the preceding year were not shown as opening stock in this year. Therefore Ld. DR pleaded that proceeding under section 263 on this count were valid. 19. We find that no addition on this account has been made in the assessment order passed in consequence to the order passed under .....

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ence the difference of ₹ 36,287/- as per the Ld. CIT was required to be added to the total income of the assessee. Ld. AR stated that during the impugned AY the assessee had received interest of only ₹ 45,220/- which it had duly reflected in the P& L Account. Since the balance amount of ₹ 36,287/- had not been received by it during the year there was no occasion to include the same in its P&L Account and hence there was no error in the order of the AO on this count. Ld. .....

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The assesssee we find has given no plausible explanation for not disclosing the impugned amount in its Profit & Loss account. 22. We therefore uphold the order of the Ld. CIT on this issue. 23. The next issue pertains to disallowance of rent paid for equipment amounting to ₹ 4,92,250/- and legal expenses of ₹ 34,150/- on which no TDS was found to have been deducted and which as per the Ld. CIT had to be added back to the income of the assessee as per the provision of Section 40a .....

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