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TMI Blog2017 (5) TMI 1216X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, the arguments advanced the by the ld.AR of the assessee are rejected. In view of above discussion, we uphold the impugned order of the CIT-A. Non deduction of TDS u/s. 194C and 194I - Held that:- The labour sardars are not suppliers of labour and as such he rightly deleted the impugned addition made u/s. 40(a)(ia) of the Act. Therefore, we delete the addition made by the AO and confirmed by the CIT-A. TDS on Hire charges - Held that:- We find that the assessee is a sub-contractor to M/s. Pobi Technologies & Constructions Pvt. Ltd and executed the work awarded to said concern.On examination of the ledger of the said concern by the AO in remand proceedings that AO found the impugned amount was credited to the assessee along with all other receipts. But, however, it is not clear from the record under which head the assessee received the impugned amount from the said concern whether it is received under the head ‘hire charges or transit mixture or something else to the assessee for executing the said contract work as a sub-contractor on behalf of said concern. The ld. AR did not produce anything to show that the said concern deducted the said hire charges and the said a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x (Appeals), confirming the additions of ₹ 7,72,957/- made u/s 40(a)(ia) of the Income Tax Act, 1961 for nondeduction of TDS u/s 194-I of the Income Tax Act, 1961 by the Ld. Assessing Officer is erroneous in law as well as on the facts of the case. 06) That the order of the Learned Commissioner of Income Tax (Appeals), confirming the additions of ₹ 4,36,693/- made u/s 40(a)(ia) of the Income Tax Act, 1961 for nondeduction of TDS u/s 194-I for Machinery Charges by the Ld. Assessing Officer is erroneous in law as well as on the facts of the case. 07) The appellant craves leave to add/or amend any ground(s) of this appeal. 3. The brief facts of the case are that the assessee is a firm and conducts its business under the name and style New Modern Construction and filed its return of income showing a total income at ₹ 75,735/- on 28-09-2008. Under scrutiny, the notices u/s. 143(2) and 142(1) of the Act were issued. In response to which the assessee appeared through his AR and filed relevant supporting documents. The AO determined the total income of the assessee at ₹ 85,24,663/- vide his order dt: 29-12-2010 U/Sec. 143(3) of the Act. 4. Gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt, the AO stated that the amount of ₹ 6,49,210/- received from Ion Exchange Limited was credited to account of assessee on 31-03-08 and other amount of ₹ 9,554/- received from M/s. Pobi Technologies Constructions P.Ltd was credited to assessee s account on 31-07-07. The CIT-A considering the remand report of the AO confirmed the impugned additions by stating as under:- 4.4 I have gone through the findings of the A.O. in the assessment order and remand report, as the well as the submissions of the appellant. It will be seen and well appreciated that the AO. has given very crystal clear findings in the body of the assessment order as well as in the remand report. As per the statement 26AS of the Department it is seen that the payment of Pobi Technologies Constructions Pvt. Ltd. amounting to ₹ 9554/- is credited on 31.07.2007 and ₹ 649210/-of Ion Exchange (India) Ltd. is credited on 31.03.2008. Since the appellant is following mercantile system of accounting consistently, as will seen from its Tax Audit report at column 11(a) for the AY. 2008-09 (as well as for A.Y. 2007-08 and A.Y. 2009-10), these amounts should have accounted for in the income for A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redited the same to assessee s account. But, thereafter, in explanation to statement u/s. 133(6) of the Act another partner of the assessee submitted that the said company issued cheque on 6-4-08 and assessee shown the same as credit for the F.Y 2008-09 relevant to A.Y 2009-10. But, however, it is observed from the remand report as discussed by the CIT-A that amount of ₹ 6,49,210/- was credited to assessee s account on 31-03-08 and other amount of ₹ 9,554/- came into account of the assessee on 31-03-08. The findings show that both the said amounts came into account of the assessee in the asstt. year under consideration. But, the AO found that the said amounts were not entered into books of the assessee. It appears that the submissions made by one of the partners, Mr. Amit Baran Roy the cheque was received by the assessee on 6-4-08 is incorrect. We find that the AO has rightly held that both the amounts were not entered in the books of account for the A.Y under consideration. The CIT-A confirmed the same, which is justified. Accordingly, ground no. 1 raised by the assessee is dismissed. 11. Ground no. 2 relates to addition of ₹ 35,24,438/-made u/s. 68 of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f his predecessor in the assessment order dt. 29.12.2010. It will be seen from the body of the assessment order that there is no iota of discussion related to corruption of data of the books of account in the system of the assessee firm. The appellant has not made any such submission during the assessment proceedings. The assessee firm has rather admitted vide its letter dt. 22.2.2010 to the AO during the assessment proceeding, that it has received cash as advance from these parties and returned these amounts to these two parties during the year. This letter dt. 22.12.2010 is a clear admission of fact which cannot be washed off now under the garb of data corruption in the system. Besides a cursory look at the tabular chart will clearly reveal that various amounts of cash have been received on various dates and from the Ledger account of these parties in the books of the assessee it will be seen that all these cash receipts are maintained in a chronological order. The most worth noticing factor is that all these amounts are in amounts below ₹ 20,000/-. Since the assessee firm is running the business of subcontractor, all these individual receipts have been meticulously kept be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le foreign data got merged with its books of accounts, and thus miserably failed to bring out any evidence in support of its contentions raised in ground no. 2 of its grounds of appeal. Besides the appellant has also not explained as to how only selectively this portion of the data in the computer system got corrupted by virus and other data in the system have remained unaffected and have remained intact. This mystry has not been resolved by the appellant during this appellate proceedings. Hence in the light of the above findings I am of the firm belief and opinion that such theory of data corruption is definitely a well concocted after thought by the appellant. In the light of the plethora evidences brought on record, the theory of data corruption as advanced by the appellant now during the appellate proceedings, even cannot be palated with a bucket of salt. In the remand report the A.O. has got swayed away by this theory and accepted it without bothering to see the clinching evidences brought in the body of the assessment order. Besides t the appellant had admitted during the assessment proceedings that the cash transactions have been carried out with these two parties by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l base. Thus in the light of the above discussion and in the facts and circumstances of the case, the AO is absolutely right in his finding that the amount of ₹ 35,24,438/- is unexplained cash credits in the books of the assessee and the AO is in a very sound legal footing to invoke the provisions S-68 of the Act on this point. In the light of above, I find no infirmity in the findings of the AO in the assessment order and accordingly the addition of ₹ 35,24,438/- by the A.O is hereby upheld. Accordingly this ground of appeal is dismissed. 14. The ld.AR of the assessee submits that the addition was made for not providing any explanation. He further submits that the amounts in question received from the said two parties were returned back in the same year. He submits that the entire addition cannot be added to the total income of the assessee. 15. On the other hand, the ld.DR relied on the orders of the authorities below. 16. Heard rival submissions and perused the material available on record. It is observed that before the AO the assessee stated under show cause that it received cash payments from the said two parties and the same were returned back ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certain labour suppliers and no TDS was deducted u/s. 194C of the Act. In explanation, the assessee stated that there was no contract with the labour suppliers and as such the assessee did not make any TDS on such payments. Being not satisfied with the submissions of the assessee the AO made the addition of ₹ 9,02,950/- u/s. 40(a)(ia) of the Act for violation of section 194C of the Act. 19. The CIT-A sought remand report, wherein the AO found that the assessee has been maintaining separate ledger accounts for each and every labour suppliers and taking into consideration the same the CIT-A held that there is some kinds of contract with the labour suppliers confirmed the addition made by the AO. 20. Regarding the addition of ₹ 10,55,878/-, the AO found that assessee claimed the expenses of ₹ 10,55,878/- out of which ₹ 7,24,720/- has been shown as Creditors in the balance sheet of the assessee as on 31-03-08. But non production of any evidence and for not furnishing the addresses of the labour suppliers, the AO disallowed the expenses of ₹ 10,55,878/- and added the same to the total income of the assessee. 21. Before the CIT-A the assessee conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uance 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 of evidence of payment made by the assessee to the transporters, the assessee cannot be saddled with the liability of deducting tax at source. Before us no other point has been urged not it is said that the aforesaid fact finding is truthful without any basis whatsoever. 7.2. We find that the decision of this tribunal in the case of Samanwaya vs ACIT reported in 34 SOT 332 in ITA No. 484 (Kol) of 2008 dated 23.4.2009 directly supports the case of the assessee wherein it was held that :- We find that in this case, admittedly, the labour sardars in the present case has no locus standi as labour contractor as a labour sardar and a labour contractor are as different as chalk and cheese. We find that there was no contract between the assessee and the labour sardars for supply of labourers and without which there cannot be any application of section 194C and as such the invocation of provision of section 40(a)(ia)is outside the scope and ambit of such enactment. In view of the matter, we are of the considered opinion th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur 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. From the above it is amply clear that the AO himself is not sure and forming the opinion on his own surmise and conjecture. In our considered view the ld. DR has not brought anything contrary to the findings of ld. CIT(A). In this connection we rely on the decision of ACIT vs. Kalindi Agro Biotech Ltd. (2012) 20 taxmann.com 339 where it was held that the provisions of Sec. 194C of the Act are applicable if the payment has been made to a contractor for the year exceeding ₹ 20,000/-. Similarly the jurisdictional ITAT, Kolkata in the case of Samanwaya Vs. ACIT 34 SOT 332 has held as under : Business expenditure--Disallowance under s. 40(a)(ia)--Need for TDS under s. 194Crelating to payments made for disbursement of labour charges to labour Sardars--Assessee had specifically stated before the lower authorities that there is no contract between the assessee and the labour Sardars--Revenue authorities could not controvert the submission of the assessee in this respect--Even before the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pobi Technologies Constructions Pvt. Ltd supplied Transit Mixture machine to the assessee. For which the said concern charged ₹ 7,72,957/-.In explanation, the assessee submitted that the assessee was not aware of the provisions of section 194I of the Act. Such submission of the assessee was not acceptable to the AO and added the said amount of ₹ 7,72,957/- to the total income of assessee for non deduction of TDS on such payment by invoking the provisions of section 40(a)(ia) of the Act for violation of section 194I of the Act. 27. Before the CIT-A the assessee contended that the said contract was awarded to M/s. Pobi Technologies Constructions Pvt. Ltd. The said concern, M/s. Pobi Technologies Constructions Pvt. Ltd deducted hire charges out of the bill raised by the said concern. Before him the assessee contended that it had no scope to affect the TDS. Basing on such submissions of assessee, the CIT-A sought for remand report from the AO. In the remand proceedings, the assessee produced ledger of M/s. Pobi Technologies Constructions Pvt. Ltd in its books and found that the impugned amount of ₹ 7,72, 957/- have been credited along with other receipts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the said bills are containing no telephone nos. and has only signature of parties. The CIT-A also found no stamp and signature of dealing staff and details of payments made by the assessee to the parties on the said bills. The CIT-A in the interest of justice directed the AO to verify all the bills before giving effect to the impugned order of the CIT-A. The CIT-A out of the disallowance of ₹ 15,33,941/- made by the AO upheld the addition to an extent of ₹ 4,36,693/- and deleted the addition of ₹ 10,97,248/-. 33. The ld.AR submits that the issue may be restored to the AO for the verification. 34. The ld. DR relied on the order of AO. 35. Heard rival submissions and perused the material available on record. We find that the CIT-A confirmed the impugned addition to an extent of ₹ 4,36,693/-. The CIT-A while examining the ledger accounts of various parties to whom the machine hire charges paid, found that no deduction made U/Sec. 194I of the Act. The Ld.AR did not bring on record to show that the TDS was deducted on the amounts paid to Shri Gautam and Suniti Soren, but, however, in the interest of justice, taking to consideration the submission ..... X X X X Extracts X X X X X X X X Extracts X X X X
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