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TMI Blog2016 (3) TMI 542X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer. 4. It is , therefore , prayed that the order of the Ld. Commissioner of Income tax (A) may be set-aside and that of the Assessing Officer be restored. 2. Briefly stated facts as culled out from the assessment records are that the assessee is an individual carrying on the business of manufacturing of electric motor stamping and he has filed his return of income 23.10.2007 declaring total income at Rs. 14,33,570/-. The case was selected for scrutiny assessment and notice u/s 143(2) of the Act was issued on 22.09.2008 and served upon the assessee on 30.09.2008. Assessment was completed by assessing the income at Rs. 94,76,288/- after making following additions :- 1. Cessation of liability u/s 41(1) of the Act at per para no.3 Rs.62,62,863/- 2. Labour charges u/s 40(a)(ia) of the Act as per para no.4 Rs.17,79,855/- Total Rs.80,42,718/- Aggrieved, assessee went in appeal before ld. CIT(A) who deleted the addition for cessation of liability u/s 41(1) of the Act ar Rs. 62,62,863/- and partly deleted the disallowance u/s 40(a)(ia) of the Act by sustaining it to Rs. 5,33,965/- at the place of Rs. 17,79,855/- Aggrieved, Revenue is now in appeal before the Tribunal. 3. No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessing officer to be satisfactory. Therefore, while making the above addition t para-3.9 of the assessment order, the A.O. observed as under :- "3.9 . .In view of the above discussion, it is held that though the assessee has not written off the above creditors in its books of account, however, the facts and the surrounding circumstances do suggest that these liabilities are no more required to be paid, therefore, the provisions of section 41(1) clearly ;/ apply on such transactions. Also the assessee vide note sheet dated 22-12- 2009 agreed for the proposed addition. Accordingly an addition of Rs. 62,62,863/- is made to the total income of the assessee. 3.1. With regard to the above addition, in the written submissions it is submitted by the A. R. of the appellant as under :- "During the assessment proceedings u/s. 143(3) of I. T. Act, 1961 before the Id. ITO, for the creditors shown in the balance sheet as at 31-03-2007, we had submitted confirmation of the creditors amounting to Rs. 30,90,3827- and for the remaining amount of creditors, which were of out station, we had demanded the confirmation from our own side and further requested the Id. ITO to call for the direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee years against its gross revenue and further no concrete evidence has been placed on record to prove that there actually were some disputes with these parties and what was the correspondence for such disputes and finally the outcome of the disputes as to whether assessee has been able to get some discount or complete liability has been waived of or it has been partially waived of. Assessee cannot go away with a plea that he has not written of the balance in his books of account because there is every possibility that some of the sundry creditors are not genuine and happen to be a bogus purchase for which no amount was actually required to be paid and if this be a situation then there actually arise a cessation of liability. 7. We observe that in the assessment order ld. Assessing Officer recorded following at para 3.9 which reads as under :- "3.9 In view of the above discussion, it is held that though the assessee has not written off the above creditors in its books of account, however, the _ facts and the surrounding circumstances do suggest that these liabilities are no more required to be paid, therefore, the provisions of section 41(1) clearly apply on such transactions. Al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at assessee has himself agreed for the addition vide note sheet dated 22.12.2009 in the file of ld. Assessing Officer but the same has not been given any cognizance by the ld. CIT(A) in his appellate order. When the assessee himself is agreeing to the addition in the given circumstances, when the sundry creditors of Rs. 62,62,863/- were outstanding for some three years or more then this aspect should have been examined in depth by the ld. CIT(A) by way of passing a speaking order on this ground. We, therefore, are of the view that in the facts and circumstances of the case including the acceptance of assessee for agreeing to the proposed addition, matter needs to be relooked by the ld. CIT(A) by way of passing a speaking order in light of our findings and we accordingly set aside the issue to the file of ld. CIT(A). Accordingly, this ground of Revenue is allowed for statistical purposes. 11. Now we take up ground no.2 which relates to deletion of addition of Rs. 17,79,855/- made on account of disallowance of labour charges. Question was raised by ld. Assessing Officer that labour charges of Rs. 17,79,855/- has been deducted to the profit and loss account during the year without de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 194C(1) of the Act apply. It is not in dispute that assessee is covered under the provisions for deduction of tax at source. As far as liability to deduct tax at source on payment of labour charges is concerned the same needs to be examined on the basis of actual figure i.e. the amount of work contract as well as individual bill of labour contract charges and also the parameter of total labour contract charges paid/payable to a single person during the year. In case if the bills of labour contract charges are separately depicting value of goods and the value of services then bifurcated details of these amounts needs to be ascertained. But in no case can it be estimated as the way ld. CIT(A) has done by observing that the labour payment of the work is of 30% of the total payment and has restricted the disallowance from Rs. 17,79,855/- to Rs. 5,33,965/-. 14. We also observe that during the course of assessment proceedings proper information and evidences were not supplied before the Assessing Officer for examining the applicability of provisions of section 194C of the Act on the labour contract charges of Rs. 17,79,855/- as to whether the complete amount of Rs. 17,79,855/- i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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