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TMI Blog2015 (11) TMI 182X X X X Extracts X X X X X X X X Extracts X X X X ..... the deposit of TDS - Addition on account of payment of job charges as per provisions of section 40(a)(ia) - Held that:- In the case under appeal before us, the TDS was deposited before the due date for filing of the return. The Assessing Officer has given the chart in page no.2 of the assessment order from which it is evident that the TDS was deposited on 30.05.2005 which was much before the due date for filing of the return. See M/s JK. CONSTRUCTION CO.case [2013 (2) TMI 54 - GUJARAT HIGH COURT] - Decided in favour of assessee. 20% disallowance out of wages u/s 40A(3)- Held that:- dmittedly, for applicability of Section 40A(3), it is essential to establish that there was payment exceeding ₹ 20,000/- in cash for the wages. In the case under consideration before us, the Assessing Officer has no where pointed out any specific item of payment, which was exceeding ₹ 20,000/-. He merely presumed that all the cash payments would be exceeding ₹ 20,000/-. The disallowance u/s 40A(3) cannot be made on the basis of presumption. As not a single payment in cash exceeding ₹ 20,000/- for wages have been pointed out; therefore, in our opinion, Section 40A(3) is not appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wever, for such lump-sum disallowance out of wages on the basis of presumption, no penalty u/s 271(1)(c) is leviable. Therefore, we uphold the order of the CIT(A) in this regard and dismiss the appeal filed by the Revenue. - ITA No. 2704/Ahd/2008, CO No. 109/Ahd/2010, ITA No. 1597/Ahd/2009, CO No. 175/Ahd/2009, ITA No. 1195/Ahd/2010, ITA No. 545/Ahd/2010, ITA No. 748/Ahd/2011, ITA No. 988/Ahd/2011, ITA No. 989/Ahd/2011 - - - Dated:- 29-9-2015 - SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI S. S. GODARA, JUDICIAL MEMBER For The Revenue : Shri Vilas Shinde, Sr. DR with Shri M.P. Singh, CIT-DR For The Assessee : Shri K.K. Shah, AR ORDER PER G.D. AGRAWAL, VICE PRESIDENT: ITA Nos. 2704/Ahd/2008 and 1597/Ahd/2009 are the appeals filed by the Revenue and CO Nos. 109/Ahd/2010 and 175/Ahd/2009 are the cross-objections thereof filed by the assessee against the orders of the CIT(A)-I, Surat dated 22.05.2008 and 13.03.2009 for Assessment Years 2005-06 and 2006-07 respectively. ITA Nos. 1195/Ahd/2010 and 545/Ahd/2010 are the cross appeals filed by the Revenue and assessee respectively against the order of the CIT(A)-I, Surat dated 04.02.2010 for Assessment Year 2007-08 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n support of his contention for condonation of delay. 3. The earned Departmental Representative, on the other hand, stated that the facts stated by the learned Counsel may be verified from the ITAT s record and thereafter, the Bench may decide the issue in accordance with law. 4. We have carefully considered the arguments of both the sides and perused the material placed before us. We have verified our record and found the contention of the learned Counsel for the assessee to be correct. ITA No.2704/Ahd/2008 is the appeal filed by the Revenue in the case of M/s. Abhishek Exim Pvt Ltd, but we find that the acknowledgement has been issued in the name of Abhishek Exports. Even in the order-sheet of the ITAT, the name of the respondent is mentioned as Abhishek Exports. On the file cover of the ITAT also name of the respondent was mentioned as Abhishek Exports, which is subsequently rectified as Abhishek Exim Pvt Ltd. These facts support the contention of the learned Counsel that the copy of the appeal memo for filing of the appeal by the Revenue is served on the wrong assessee. The assessee came to know about the filing of the appeal by the Revenue for the first time when the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or export, but it is not clear that the assessee had purchased goods from which parties. As such, the actual purchase expense of the assessee must be at much lower amount than what claimed by the assessee. 3.6. It is pertinent to mention here that in the submission, the assessee itself has stated that without prejudice to the submission made there is a possibility of purchases from unauthorized dealers and in that case some lumpsum disallowance may be made. Reliance is placed on the decision in the case of Income Tax Officer Vs. Sun Steel ITAT Ahd. B Bench (2005) 92 TTJ 1126. In the said case the Hon ble ITAT has laid down that On the basis of above facts, at the most it can be presumed that the assessee did not make purchase from above parties but made from other unregistered dealers and got benefit of margin of purchases from unregistered dealer. We find that to that extent and the estimate of profit can be made which would be fair and reasonable under facts and circumstances of the case. Reliance is also placed on the decisions in the cases of Milk Food Ltd. Vs. DCIT (1999) 065 TTJ 0848 (Delhi ITAT) CIT Vs. M.K . Brothers (1987) 163 ITR 249 (Guj). In view of the abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowance made by the AO is adhoc and also the AO has not given any reason for adopting the figure of 10%. But it is also true that the appellant has not been able to give the correct address of these parties. In view of these reasons and considering the higher gross profit rate and higher net profit rate compared to the last year it would be reasonable to keep the disallowance at 2% of the purchases, therefore, the disallowance of ₹ 1,00,51,455/- is restricted to ₹ 20,10,291/-. Hence this ground of appeal is partly allowed. 7. Both the parties, aggrieved with the order of the CIT(A), are in appeal before us. Revenue is aggrieved for the reduction made by the Assessing Officer while the assessee is aggrieved for the disallowance sustained. 8. We have heard both the parties and carefully considered their arguments and have also perused the orders of the lower authorities as well as the material produced before us. We find that the Assessing Officer himself has recorded the finding that the goods purchased by the assessee which is found to be unverifiable have actually been exported by the assessee and exports sales have been disclosed. Therefore, The Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 2,31,33,256/- on account of payment of job charges as per provisions of section 40(a)(ia) of the Act as per para 2.3 of the appeal order. 10. We have heard both the parties and perused the material placed before us. We find that the Assessing Officer has disallowed the job charges on the ground that there was delay in the deposit of TDS. At the time of hearing before us, it was submitted by the learned Counsel that the TDS was deposited well before the due date for filing of the return. He submitted that the Hon ble jurisdictional High Court has considered the identical issue in the case of CIT vs. J.K. Construction Co., reported in [2014] 361 ITR 181 (Guj.), wherein the Hon ble Jurisdictional High Court has held that if the TDS has been deposited before the due date for filing of the return, no disallowance u/s 40(a)(ia) is to be made. The learned Departmental Representative, on the other hand, relied upon the orders of the authorities below. The Hon ble jurisdictional High Court in the case of CIT vs. J.K. Construction Co. (supra) has held as under:- Held, dismissing the appeal, that the assessee had to make deduction before 31st March of the year and as long a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration before us, the Assessing Officer has no where pointed out any specific item of payment, which was exceeding ₹ 20,000/-. He merely presumed that all the cash payments would be exceeding ₹ 20,000/-. The disallowance u/s 40A(3) cannot be made on the basis of presumption. As not a single payment in cash exceeding ₹ 20,000/- for wages have been pointed out; therefore, in our opinion, Section 40A(3) is not applicable. 15. Now, we find that in Assessment Year 2008-09 the CIT(A) while deleting the disallowance out of wages u/s 40A(3) have sustained lump-sum disallowance of ₹ 5,00,000/- out of wages and such disallowance have been accepted by the assessee. Therefore, for the sake of consistency, we sustain the disallowance out of wages at ₹ 5,00,000/-. ITA No.1597/Ahd/2009 - Revenue s appeal: AY 2006-07 CO No.175/Ahd/2009 by Assessee : AY 2006-07 16. The only ground raised in the Revenue s appeal is against the restriction of disallowance out of purchases at 2% as against 10% disallowed by the Assessing Officer; while Ground No.1 of the crossobjection of the assessee is against the sustenance of 2% disallowance out of purchases. It was ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unds of the Revenue s appeal. ITA No.988/Ahd/2011 - Revenue s appeal: AY 2005-06 21. The only ground raised in the appeal by the Revenue is against the deletion of penalty levied u/s 271(1)(c), which was cancelled by the CIT(A). 22. We have heard both the parties and perused the material placed before us. The Assessing Officer has levied the penalty u/s 271(1)(c) for disallowance u/s 40(a)(ia) ₹ 2,31,33,256/-, disallowance out of unverifiable purchases-Rs.20,10,291/- and disallowance u/s 40A(3)- ₹ 49,94,612/-. While deciding the assessee s cross-objection, we have deleted the disallowance made u/s 40(a)(ia) as well as 40A(3). So far as the disallowance out of purchases are concerned, we find that the Assessing Officer himself has admitted that the goods have been actually purchased by the assessee because the goods have been exported by the assessee and sale consideration from such export of the goods was disclosed. The Assessing Officer doubted the genuineness of the purchases merely because the parties were not found at the address given. On these facts, the Assessing Officer presumed that the goods might have been purchased by the assessee from some o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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