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TMI Blog2017 (12) TMI 1532X X X X Extracts X X X X X X X X Extracts X X X X ..... had merely paid them through the head labourer. In the absence of any contract to carry out any work with a specified person, the provisions of section 194C of the Act would not be attracted and hence there would be no liability to deduct tax at source so as to attract the provisions section 40(a)(ia) of the Act. The Tribunal, therefore, did not commit any error in confirming the order passed by the Commissioner (Appeals). - Decided in favour of assessee Unexplained cash credit - addition u/s 68 - Held that:- The course of action adopted by the Assessing Officer defies logic. If the Assessing Officer had disbelieved that M/s Hemani Enterprises had executed the contract as a sub-contractor, he, at best, could have disbelieved the payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and circumstances of the case and in law, the Appellate Tribunal is justified in holding that the addition made u/s 68 of the Income Tax Act, 1961 cannot be held bogus despite of the fact that identity of M/s Himali Enterprise, in whose name the bills were raised, was not proved and who is a non-filer of Income Tax Return since 2002? 2. The assessment year is 2007-08 and the corresponding accounting period is the previous year from 1.4.2006 to 31.3.2007. 3. The assessee firm was engaged in the business of civil construction during the year under consideration. The assessee filed its return of income on 31.10.2007 declaring total income of ₹ 23,940/-. The case of the assessee was selected for scrutiny assessment. On scrutiny ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... work was to be completed in its entirety as per the terms of the tender and the assessee firm was to retain 1.75% of the billed amount under the tender as its profit. M/s Hemani Enterprises had billed for ₹ 2,17,02,016/- and the total payment of ₹ 1,44,13,137/- (including TDS made to it) and balance amount of ₹ 72,88,879/- was shown payable to it by the assessee in its accounts as on 31.3.2007. The Assessing Officer added this amount of ₹ 72.88,879/-, being outstanding sundry creditors in the books of the assessee, as unexplained cash credit under section 68 of the Act. The assessee carried the matter in appeal before the Commissioner (Appeals), who deleted the deductions. The revenue carried the matter in appeal bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot expect a labourer to provide a bill for the same. 9. The Commissioner (Appeals) observed that in connection with the submissions advanced by the assessee, remand report was called for from the Assessing Officer, who, however, stated that he requires more time to make a detailed investigation. The Commissioner (Appeals), however, took note of the fact that the assessee had produced two persons before the Assessing Officer. However, the Assessing Officer asked them to come on some other occasion. Ultimately, therefore, the labourers did not turn up and instead affidavits of such labourers were sent to the Assessing Officer. In this backdrop, the Commissioner (Appeals) held that labour charges, being direct expenses, are covered under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in confirming the order passed by the Commissioner (Appeals). No question of law can be said to arise in relation to this ground of appeal. 12. Insofar as proposed question (B) is concerned, the Commissioner (Appeals) had noted the submissions advanced by the assessee and had observed that the assessee was a Government contractor and hence the receipt was not doubtful. The assessee had sub-contracted major part of its work and had deducted tax at source as applicable on the payments made to the sub-contractor. Further, this outstanding payment had been fully paid in the next year by account payee cheque. The Commissioner (Appeals) observed that the Assessing Officer, on the one hand had come to the conclusion that the entire payments to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for a civil work. 14. In the opinion of this court, the course of action adopted by the Assessing Officer defies logic. If the Assessing Officer had disbelieved that M/s Hemani Enterprises had executed the contract as a sub-contractor, he, at best, could have disbelieved the payment made to it and held that it was the assessee, who had executed the contract and worked out the profit accordingly. But when the entire amount received by the assessee was towards payment for the contract, there was no question of considering any part thereof as unexplained cash credit. In the opinion of this court, the view adopted by the Commissioner (Appeals) as concurred by the Tribunal is just and proper. Consequently, this ground of appeal also does not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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