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TMI Blog2016 (10) TMI 495X X X X Extracts X X X X X X X X Extracts X X X X ..... "1. "whether on the facts and in the circumstances of the case and in law, the Ld. CIT(Appeals) has erred in deleting the addition made on account of Rs. 2,35,500/- unexplained purchase from M/s Konked International as the same could not be verified." 2. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(Appeals) has erred in deleting the addition made on account of outstanding liability in relation to M/s Bharat Somani as the same could not be verified." 3. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(Appeals) has erred in deleting the addition made on account of non-deduction of TDS on transport charges u/s/s 40(a)(ia) of the Income-tax Act, 1961." 4. First issue raised by Revenue is that Ld. CIT(A) erred in deleting the addition made by Assessing Officer for Rs. 2,35,500/- from M/s Konked International (for short KI) which was not verified u/s. 133(6) of the Act. 5. Facts of the case are that assessee- an individual is engaged in the business of civil construction as a Govt. contractor and running its proprietorship business under the name of M/s Vida Engineering Co. The assessee during the year has sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,00,737 respectively during the relevant assessment year and at the same time, the appellant having failed to produce any of the parties except the bills alleged to be raised by those concerns, the Tribunal was justified in disbelieving those transactions and there is no reason to interfere with such finding which is basically a finding of fact based on appreciation of material evidence. However, as regards the payments made to SP are concerned amounting to Rs. 3,12,302, those have been made by account payee cheques and those have been encashed through the bankers of SP. It appears that according to the appellant, at the time of assessment, the appellant had no business transaction with SP and consequently, the said party did not co-operate with the AO. However, the transaction having taken place through account payee cheques, the contention of the advocate appearing for the Revenue that the transaction was a non-existent one cannot be accepted. If an assessee took care to purchase materials for his business by way of account payee cheques from a third party and subsequently, three years after the purchase, the said third party does not appear before the AO pursuant to the notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evant bills, R.C of Central and State and bank statement were filed before the AO in response to his letter dated 16.12.200, a copy of which is also filed during appellate proceedings. As in the case of Konked International, the AO alleged that the notice u/s. 133(6) of the Act could not be served by postal authorities and even by the Inspector deputed by the department, which promoted him to treat the transaction ingenuine, resulting in addition to the total income as unexplained credit. For the reasons discussed hereinabove while dealing with the addition of Rs. 2,35,500/- in respect of Konked International, I find no plausible ground to concur with such arbitrary action of the AO an addition made thereunder. That apart, the AR has pointed out that the AO made conflicting observation in respect of Bharat Somani, inasmuch as on one hand addition of Rs. 4,00,000/- was allegedly made as unexplained credit and on the other hand the transportation charge of Rs. 5,51,995-, which was shown by Bharta Somani in his supply bills were disallowed u/s. 40(a)(ia) of the Act. If total effect of these two is taken together, the total addition would be more than the total transaction of the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then it should have been added in the cost of material. Accordingly, AO disallowed the same of Rs. 25,32,484/- and added to the total income of assessee. 14. Aggrieved, assessee preferred an appeal before Ld. CIT(A) who deleted the addition made by AO by observing as under:- "7.4. I have considered the submissions made on behalf of the appellant, gone through the various documents filed and the impugned assessment order. It is apparent from the table (supra) that except in the case of Suresh Gupta, in all other cases of three suppliers, the cost of transportation was higher than the cost of materials supplied by those parties. The AR tried to explain that the suppliers were charging the price of raw materials for their convenience under different headings seemingly for the reasons that the price of such raw materials were either of negligible value or of no value and the suppliers may add their expenses with the cost of goods and collected the price of raw materials in the garb of transportation cost and loading cost. Whatever it may be, it was submitted the total bill raised by the respective suppliers represented the cost of materials supplied by them to the appellant and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e establishing existence of any oral or written agreement, provisions of section 194C of the Act do not come into play warranting any disallowance u/s 40(a)(ia) of the Act. That being so, the observation of the AO in respect of default in deducting tax at source on transport charges u/s 194C of the Act is misconceived and not sustainable in the eye of law. 7.5. Without prejudice to what has been stated above the case of the appellant impliedly falls under the category of 'contract for sale' and not contract for carrying out any work. Although there was no oral or written agreement between the appellant and the suppliers, but on the facts of the case it emerges that there was impliedly a contract for sale on the part of the supplier. The appellant used to purchase raw materials from the suppliers. Therefore, there was a relationship of purchaser and seller between them. The appellant purchased raw materials for the purpose of use of the same in his construction job and it was, therefore, a contract for sale and not a contract for any work. In the case of Kishak Bharati Co-op. Ltd. (2011) 10 ITR (Trib) 527, the Hon'ble I.T.A.T., Delhi has held that "The contract for sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant, and we have gone through the impugned judgment and order. We are of the view that this appeal does not require admission for hearing as the applicability of law involved herein is admittedly settled. It is admitted position that the matter relates to the assessment year 2006-07, whereas Section 194C(1) has been made applicable to the individual assessee with effect from 1.6.2007. There is no dispute that the respondent is an individual assessee. Considering the position of the law, the learned Tribunal has consistently held that Section 194C(1) cannot be made applicable for the assessment year 2006-07. On identical fact the learned Tribunal has held so in the case of Ajay Rawla vs. DCIT, Circle-28, Kolkata [ITA No.353/Kol/2010 dated 22.6.2011]. It has not been submitted that the aforesaid judgment has been upset by this Court. In fact, on narration of undisputed fact, we do not think that the learned Tribunal has decided wrongly in this case or in the previous year. Accordingly, this appeal is dismissed." Respectfully, following the above precedents of the above case, we do not any reason to interfere in the order of the ld. CIT(A). We hold accordingly. This gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereas assessee submitted that the payment of Rs. 3,61,716/- was made to the party (M/s SE) only but the bank has entered the short name in its statement as 'Sun Enterprises'. Similarly, the payment of Rs. 3,58,500/- was made 'P. Beriwala' as authorised by the party (M/s SE). The closing balances as appearing in the books of accounts in the name of SE for Rs. 7,69,672/- was cleared through account payee cheque in the subsequent year. The ld. CIT(A) accordingly deleted the addition made by the AO by observing as under:- "5.9 Fourthly, as is found from the impugned assessment order, the Inspector deputed by the AO restricted his query/inspection to the purchase transaction i.e. sale transactions of Sunidhi Enterprise without verifying the payments received by that party from the appellant. Therefore, the enquiry was not directed to the proper direction, yielding no fruitful purpose. Further, the AO before relying on such report of the Inspector ought to have given an opportunity to counter that report and/or establish his case with evidence. From the above factual matrix of the case and several documents placed on record. I have no hesitation to hold that the appellant, in fact, ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n by the assessee. On question by the AO assessee failed to provide any supporting evidence to explain the difference. Accordingly the AO has treated the excess liability shown by the assessee as income and added to the total income of the assessee. 24. Aggrieved, assessee preferred an appeal to learned CIT(A). The assessee before the ld CIT(A) submitted that the party ERS in the response to the notice u/s 133(6) of the Act has furnished the details of the purchase transactions took place during the year but failed to incorporate the opening balance of Rs. 90,752/-. The difference of Rs. 90,752/- is arising only on account of the opening balance as shown by the assessee and the party in the response to the notice u/s 133(6) of the Act. The ld CIT(A) accordingly deleted the addition made by the AO by observing as under:- "6.5 Coming to the addition of Rs. 90,752/- on account of sundry credits, on perusal of the Bill issued by ESS Refilling Station for the period 05/03/2006 to 31/03/2006, it is observed that the AO considered the information supplied by ESS Refilling Station as true without considering the app's explanation thereof. The appellant furnished a reconciliation stateme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued under section 133(6) of the Act. The learned DR has not brought anything on record contrary to the finding of ld. CIT(A). We also find that the confirmation received by the AO in response to notice under section 133(6) of the Act have not been confronted to the assessee. In view of above we find no reason to interfere in the order of learned CIT(A). Hence this ground of appeal of the Revenue is dismissed. 26. Next issued raised by the Revenue in this appeal is that ld CIT(A) erred in deleting the addition made by the AO for Rs. 17,30,671/- on account of short deduction of TDS under section 194-I viz a viz 40(a)(ia) of the Act. 27. The assessee for the year under consideration has incurred expenses for Rs. 21,63,339/- towards machine hire charges and deducted TDS @ 2% on such expenses whereas the liability to deduct TDS was at the rate of 10% u/s194-I of the Act. Accordingly the AO has disallowed proportionate expenses of Rs. 17,30,671/- and added to the total income of the assessee u/s 40(a)(ia) of the Act. 28. Aggrieved, assessee preferred an appeal to ld. CIT(A) who has deleted the addition made by the AO by observing as under:- "7.4 Provisions of section 40(a)(ia) h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter alia, the assessee has to pay into Government Account. There is nothing in the said section to treat, inter alia, the assessee as defaulter where there is a shortfall in deduction. With regard to the shortfall, it cannot be assumed that there is a default as the deduction is not as required by or under the Act, but the facts is that this expression, 'on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or, after deduction has not been paid on or before the due date specified in sub-section (1) of section 139'. This section 40(a)(ia) of the Act refers only to the duty to deduct tax and pay to government account. If there is any shortfall due to any difference of opinion as to the taxability of any item or the nature of payments falling under various TDs provisions, the assessee can be declared to be an assessee in default us/s 201 of the Act and no disallowance can be made by invoking the provisions of section 40(a)(ia) of the Act. Accordingly, we confirm the order of CIT(A) allowing the claim of assessee and this issue of Revenue's appeal is dismissed." .. In view of the aforesaid facts and respectfully following the judicial precedent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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