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TMI Blog2019 (8) TMI 1317X X X X Extracts X X X X X X X X Extracts X X X X ..... nce by the incumbent and moreover, since the assessee had shown expenses towards 'Salary' and 'Accounting Charges' separately in in the audited Profit & Loss A/c. proves that the plea of employeremployee relationship is only an afterthought on the port of the assessee to absolve himself from the provisions of Section 40(a (ia) of the Act. 2. That on the facts and in the circumstances of the case, the powers of the Id. CIT (A) are coterminus with those of the AO and once the AO. in his Remand Report pointed out that mere submission of evidence in support of payment of Rs. 80,000/does not absolve the assessee from deducting tax at source u/s.40(a) (ia), ld. CIT (A) should have either rejected the assessee's plea of mistake in the nature of payment keeping in view that the audited accounts of the assessee reflected the impugned payment as 'Commission' or asked for further remand from the AO. 3. That on the facts and in the circumstances of the case, the ld. CIT(A) erred in deleting the addition of Rs. 1,51,83,363/u/ s.40(a)(ia) on account of Labour Charges without appreciating the facts and after accepting fresh evidence in contravention of Rule 46A of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tracts Section 192 of the Act. Hence, the provision of Sec 40(a)(ia) is not applicable in this case. Therefore, the addition made by the then AO was deleted by ld. CIT(A). On the other hand, Ld. DR for the Revenue submitted before us that the decision of Ld. CIT (A) is not accepted in this case because during the course of assessment proceedings the assessee failed to submit any suitable explanation as to why the TDS was not deducted u/s 194J of the I.T Act on payment of accounting charges. However, during the course of remand proceedings the assessee furnished a copy of appointment letter given to Shri Sachindra Kumar Jha to whom the accounting charges was paid but the assessee failed to establish whether the same offer of appointment was accepted by Shri Sachindra Kumar Jha or not. Therefore, considering the above mentioned factual findings, the decision of Ld. CIT (A), Kol is not accepted. However, on the other hand, the ld.AR relied on the impugned order of the ld. CIT(A). We note that the assessee made a payment of accounting charges to the part time Accountant, who was not a Chartered Accountant. Therefore, section 194J does not apply to the issue under consideration. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly 10 persons were mentioned to whom such labour payments amounting to Rs. 87,46,572/- had been made. Further, the assessee disclosed an amount of Rs. 44,27,640/- shown as payment to 'Others' but no details were filed. The assessee was asked to file the details but he failed to do so. Moreover, during the course of assessment proceeding the assessee himself admitted that the tax was not deducted while making such payment. Therefore, the total amount of Rs. 1,51,83,363/- (Rs. 1,07,55,723/- + Rs. 44,27,640/-) was disallowed and added back to the total income of the assessee. 13. Aggrieved by the stand so taken by the AO, the assessee carried the matter in appeal before the ld. CIT(A), who has deleted the impugned addition. Aggrieved the Revenue is in appeal before us. 14. We have heard both the parties and perused the material available on record. We note that in this case, the alleged labour contractor is undoubtedly a labourer himself. He gets paid in same manner as other labourers. The entire affair is managed through Labour sardar. Further contract is executed by the assessee and he has not subcontracted any part of work to execute the contract. There is also no explici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd addition was made as there was violation of provision of Sec 40(a)(ia) of the Act. On the other hand, Ld. Counsel for the assessee defended the order passed by the ld. CIT(A). 16. We note that the payment of Rs. 1,51,83,363/- was made by the assessee to the labourers through labour sardars, who is eventually a labour. We note that this issue is squarely covered by the judgment of the Co-ordinate Bench of ITAT, Kolkata, in ITA No. 582/Kol/2014 in the case of Dilip Saha's order dt. 5-5-2017, wherein the co-ordinate bench held that the payment made through labour sardars, who is suppliers of labours and he himself is also a labourer, the addition made u/s. 40(a)(ia) of the Act needs to be deleted. The finding of the co-ordinate bench in this regard is given below:- "5. The assessee challenged the same before the CITA. Before him the assessee reiterated the same submissions as made before the AO and in support of his contentions filed the following details: a) Certificate of Railway Contractors Labour Union (W.B), Katwa Branch b) Disbursement register, and c) Certain case decision in favour of assessee 6. Considering the submissions of assessee, the CITA directed the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of findings are reproduced herein below for better realization: 7.1. We find that the ld CITA had deleted the disallowance on the ground that there is no contract entered into by the assessee and the labour sardars. We find that the impugned issue is covered by the decision of the Hon'ble Calcutta High Court in the case of CIT vs Stumm India in ITA No. 127 of 2009 dated 16.8.2010 , wherein it was held that :" The court: This appeal is sought to be preferred against the judgment and order of the Ld. Tribunal in relation to the assessment year 200506, dated October 24, 2008, being aggrieved by a portion of the same. It is urged before us that the learned Tribunal ought not to have accepted the judgment and order of the CIT (Appeal) who has quashed the disallowance of deduction of Rs. 41,33,710/and on account of tax deduction at source. The learned Tribunal has recorded the fact that the department has not been able to bring any material on record to show that the assessee has made the payment to the transporters in pursuance of contract for carriage of goods of the assessee and the question of deduction at source under section 194C does not and cannot arise. In the absence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 18/Kol/2014 M/s. Kwality Construction, AY 2009-10 labourers through them, make payments to the other labourers in their presence, though there is no written contract. In the absence of any documentary evidence, I can't call them as Labour Sardars but they are enjoying some special status before the assessee. All the payments were made through them as per Books of Accounts whereas the assessee produced the Muster Roll establishing through it that payments were made to the other colabourers in their presence for the sake of convenience and the amounts were debited in their names only because the assessee can not keep track of all the labourers without the help of these labourers. Though the assessee claims them to be it's labour and these persons have deposed that they are the labourers, yet, I am not fully convinced with their plea that these persons are simply labourers and nothing more than that. From their appearance, dress, behavior and confidence, I am confident that they are the labour sardars, though they are denying this fact. Whether you admit or not but it can not be denied that these persons enjoy some privileged positions in comparison to other labourers." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t justified in invoking the provision of Sec. 194C r.w.s. 40(a)(ia) of the Act. In the background of the above discussions and precedent we do not find any infirmity in the order of Ld. CIT(A) and accordingly we uphold the same. In the circumstances, this issue of Revenue's appeal is dismissed." Respectfully following the judicial precedents relied upon hereinabove, we do not find any reason to interfere with the order of the ld CITA and accordingly dismiss the ground of the revenue. 17. Respectfully following the judgment of the Co-ordinate Bench in the case of Kwality Construction (Supra), we are of the opinion that the CIT-A was justified in accepting the plea of assessee being the labour sardars are not suppliers of labours and as such he rightly deleted the impugned addition made u/s. 40(a)(ia) of the Act. We uphold the impugned order of the CIT-A. Therefore, the grounds raised by the revenue are dismissed. 18. Ground nos. 4 to 7 raised by the revenue are inter linked and relate to addition of Rs. 1,21,73,000/- made on account of capital introduction. 19. Brief facts qua the issue are that during the scrutiny proceedings AO noticed that the assessee had introduced an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .V. at Rs. 3,68,000/-. While going through the Explanation 5 to Section 43(1), the Ld. CIT (A) held that it is clearly mentioned how to record a property in the books of accounts clearly mentioned that it should at cost less depreciation. However, for other asset Explanation 5 to Section 43(1) is silent. Since, in the remand report the AO. has mentioned that the assessee has submitted the evidence in respect of car purchased by the necessary journal entry hence, it is clear that no financial transaction is involved. Therefore, the addition made by AO to the tune ofRs. 3,68,000/- was deleted by ld.CIT(A). We do not find any infirmity in the order of ld. CIT(A), hence, we uphold the order of ld. CIT(A). (3) Car B was purchased in the F.Y. 2012-13. However, the Counsel of the assessee admitted that due to an accounting error committed by the earlier accountant, the assessee has wrongly entered the car in the books of account. Wrong accounting treatment done by the assessee clearly shows that addition in capital is purely on account of an asset which was not owned by the assessee in F.Y. 2012-13. Hence, the AO.'s action to treat the same as unexplained cash credit is not valid an ..... 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