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2017 (3) TMI 433 - AT - Income TaxTDS u/s 194C - addition u/s. 40(a)(ia) - Held that - We find that the assessee had filed additional evidence in terms of rules 29 of ITAT Rules in the form of certificate from M/s. Baba Transport which is enclosed in page 1 of the paper book and from the said certificate it is seen that M/s. Baba Transport had duly accounted for in their books and in the income tax return the receipt of monies from the assessee to the tune of ₹ 9,50,000/-. It is also seen that the said certificate admittedly contains PAN and income tax particulars of M/s. Baba Transport. We find that even though the said certificate is not signed by the Chartered Accountant of M/s. Baba Transport, but still in the interest of justice and fair-play, we deem it fit and appropriate to set aside this issue to the file of the AO to examine the veracity of the contents of the said certificate given by M/s. Baba Transport, and if found to be correct, the assessee would be entitled for taking the benefit of second proviso to sec. 40(a)(ia) of the Act read with section 201(1) of the Act which has been held to be retrospective in operation by the decision cited supra and accordingly, the issue should not be invited with disallowance u/s. 40(a)(ia) of the Act. With regard to other two payments in the sum of ₹ 1,00,000/- each to M/s. Maa Jagadamba Transport and M/s. Shiv Shakti Transport, we find that the assessee was not able to adduce any evidence even before us. However, in view of the fact that the said payments were made by account payee cheques and those parties being residing at a far away location, we deem it fit and proper in the interest of justice and fair play to set aside this aspect of the issue (i.e in respect of these two parties only) also to the file of the AO to decide the same afresh in accordance with law. Disallowance of payments made to labourers for screening work - Held that - We find from the bank statement enclosed in page 33 of the paper book, the names of the three parties viz., A. K. Goala, Sanja and labour association are duly reflected therein on three different dates. This clearly proves that the assessee had issued bearer cheques to those three parties. Hence, the finding of the AO that payments were made by account payee cheques is factually incorrect. We also find that the assessee had filed ledger account before the AO which clearly proves that the payments were made to two labour sardars and one labour association for payment to labourers for various dates. This fact is also supported by wage sheet filed by the assessee in the form of additional evidence before us. However, since wage sheet was not available before the lower authorities for their examination, we deem it fit and appropriate in the interest of justice and fair play, to set aside this issue to the file of the AO to examine the wage sheet and the contention of the assessee that the payments were made to labour sardar and labour association and if the same are found to be true, the assessee should not be invited with disallowance u/s. 40(a)(ia) of the Act as the same does not fall within the ambit of provisions of section 194C of the Act. Addtion on account of difference in the value of sundry creditors - Held that - We find lot of force in the argument advanced by the Ld. AR that no addition could be made in respect of the opening balance difference in sundry creditors to the tune of ₹ 5 lacs. Accordingly, we direct the AO to delete the same. In respect of balance sum of ₹ 3,34,070/- being the two cheque payments purported to have been paid by the assessee to the said party the same could be easily verified by the AO from the bank statements of the assessee. Hence, we direct the AO to obtain the details of cheques credited by the said party Nirmal Kumar Pradip Kumar and produce the same to the assessee and match the same with the bank statement of the assessee to understand the factual position as to whether the assessee had indeed made any payment to the said party in the sum of ₹ 3 lacs and ₹ 34,070/-. This, in our considered opinion, would meet the ends of justice. We are not inclined to accept the argument of the Ld. DR to give direction to the AO for assessment of ₹ 5 lacs in the earlier years instead of AY 2009-10 as, in our considered opinion, the same cannot be given as it is not relevant for the disposal of the year under appeal.
Issues Involved:
1. Disallowance under Section 40(a)(ia) of the Income-tax Act, 1961 for transport charges. 2. Disallowance under Section 40(a)(ia) for payments made to laborers for screening work. 3. Addition on account of difference in the value of sundry creditors. Issue-wise Detailed Analysis: 1. Disallowance under Section 40(a)(ia) for Transport Charges: The first issue is whether the CIT(A) was justified in upholding the disallowance made under Section 40(a)(ia) of the Act regarding transport charges. The assessee, engaged in trading iron ores, had debited ?11,62,000/- as freight charges, with payments made to M/s. Baba Transport, M/s. Maa Jagadamba Transport, and Shiv Shakti Roadlines without deducting tax at source. The AO disallowed these expenses under Section 40(a)(ia) for violating Section 194C. The CIT(A) confirmed this addition. The assessee provided a certificate from M/s. Baba Transport confirming the inclusion of ?9,50,000/- in their accounts and tax returns, invoking the second proviso to Section 40(a)(ia) as retrospective, supported by the Delhi High Court's decision in CIT Vs. Ansal Landmark Township Pvt. Ltd. The Tribunal admitted this additional evidence and set aside the issue to the AO for verification. For payments to M/s. Maa Jagadamba Transport and Shiv Shakti Roadlines, the Tribunal allowed the assessee to produce fresh evidence to support their case. Thus, ground nos. 3 to 5 were allowed for statistical purposes. 2. Disallowance for Payments Made to Laborers for Screening Work: The second issue is whether the CIT(A) was justified in upholding the disallowance of ?12,90,000/- paid to laborers for screening work under Section 40(a)(ia). The AO disallowed the amount, considering it fell under Section 194C. The assessee argued these were direct labor payments through labor sardars and did not constitute a contract. The Tribunal found discrepancies in the AO's findings regarding payment methods and admitted additional evidence in the form of wage sheets. It set aside the issue to the AO to verify the wage sheets and the nature of payments. If verified, the disallowance under Section 40(a)(ia) would not apply. Thus, ground no. 6 was allowed for statistical purposes. 3. Addition on Account of Difference in the Value of Sundry Creditors: The third issue concerns the addition of ?8,34,070/- due to discrepancies in sundry creditors' value. The AO noted a difference between the assessee's and a creditor's (Mr. Nirmal Kumar Pradip Kumar) account statements. The assessee's records showed an opening balance of ?22,06,533/-, while the creditor's statement showed ?17,06,533/-. The AO added the difference to the assessee's income. The Tribunal found merit in the assessee's argument that no addition should be made for opening balance differences and directed the AO to delete the ?5 lacs difference. For the remaining ?3,34,070/-, the AO was directed to verify the bank statements to confirm the payments. Thus, ground no. 9 was partly allowed for statistical purposes. Conclusion: The appeal was partly allowed for statistical purposes, with directions for the AO to verify specific details and evidence provided by the assessee. The Tribunal emphasized the need for justice and fair play in examining the evidence and resolving discrepancies.
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