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TMI Blog2022 (12) TMI 743X X X X Extracts X X X X X X X X Extracts X X X X ..... gs of the ld. PCIT that the labour charges are not subjected to TDS u/s. 194C and are not forming part of receipts as shown in Form 26AS. The fact that the labour charges are not treated as works contracts under VAT laws doesn t take the same outside the ambit of section 194C of the Act. The receipts thus disclosed by the assessee in its profit/loss account and correspondingly, in the return of income are thus reconciling and in any case, the receipts reported in the return of income are more than disclosed in Form 26AS and thus, on this account, where the AO has accepted the receipts disclosed in the return of income, the order so passed by the AO cannot be held to be erroneous in so far as prejudicial to the interest of the Revenue. Also evident that the assessee has been allotted work by three Garrison Engineers under the Ministry of Defence, namely, Garrison Engineer, Chandigarh, Garrison Engineer, I R D and Garrison Engineer, Jatogh and the execution of work is spread over two states namely, Punjab, Hayana and UT Chandigarh requiring the assessee to seek separate VAT registrations and file separate VAT returns in these states/UT. As per VAT returns, the total receipts have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the correct perspective which is arbitrary and unjustified. That the assessment order having been passed by the Assessing Officer after due application of mind and taking into consideration the various replies, material on record and books of account, the action resorted to by the Principal Commissioner of Income Tax is unwarranted and uncalled for. That the Ld. Principal Commissioner of Income Tax has failed to carry out any enquiry during the course of revisionary proceedings in respect of the issues being raised by her which is mandatory and as such the order passed by her is arbitrary and unjustified. That the issues in respect of sales/turnover/receipt was scrutinised by the Assessing Officer in depth and as such revising the order passed by the Assessing Officer is arbitrary and unjustified That the order of Commissioner of Income tax is erroneous, arbitrary, opposed to the facts of the case and is unsustainable in law." 2. Briefly the facts of the case are that the assessee has filed his return of income declaring total income of Rs. 4,71,510/- which was selected for limited scrutiny under CASS and thereafter, after issuance of notice and calling for necessary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax has been deducted. Garrison Engineer Chandigarh Rs. 87,63,891/- Garrison Engineer IR and D Rs. 33,10,3507- Garrison Engineer Jutooh Shimla Rs. 10,20,000/- Total Rs. 1,30,94,241/- Hence there is a difference in the receipts as shown by the assessee vis-à-vis as per Form 26 AS, the detail of which is as under: State Receipts as per 26 AS Receipts declared/ assessed Non/short assessed Chandigarh 1,20,74,241 (87,63,891+33,10,350) 71,06,370 49,67,871 Punjab 20,87,241 0 Haryana 19,29,821 0 Himachal 10,20,000 0 10,20,000 Total 59,87,871/- However, the AO has not taken note regarding the difference in the receipts as per 26 AS and as declared by the assessee and not raised a single enquiry. The AO should call for the bills raised by the assessee and verify the payments received during the year. No third party verification was made to examine whether the receipts shown by the assessee are correct or not. Without examining the facts and documents placed on file, the AO simply accepted the version of the assessee that the receipts shown are excessive than the receipts as per Form 26 AS. 5.1 Even during the course of proceedings u/s. 263, the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is taxable under the Income Tax Act and is also considered for deduction of tax at source under section 194C. It was submitted that the this observation of the Pr. CIT is incorrect that no TDS was deducted on it. 4.2. It was further submitted that the PCIT in para 5.1 of the impugned order stated that the contract income to the tune of Rs. 1,11,23,432/- only was shown in the books of accounts and return of income is therefore incorrect. The Pr. CIT has arrived at this figure after deducting labour charges of Rs. 25,50,037/- from the declared receipts of Rs. 1,36,73,469/- which do not form part of the works contract under VAT Acts on the presumption that no deduction under section 194C was also made on these labour charges and are not reflected in the Form 26AS. It may be mentioned that the assessee had accounted for a total receipt from contract as Rs. 1,36,73,469/- against Rs. 1,30,94,241 reported in Form 26AS. In the chart prepared and incorporated at Page 10 of the impugned order, there is mix and match of the facts and figures. The figures in 26AS have been compared with the VAT returns and not with the figure declared in the balance sheet and the return of income. The certif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the definition of works contract under VAT)from the balance of Rs . 28,80,630 ,the balance figure remains as Rs.3,30,593/- Rs. 25,50,037/- was on account of labour charges not taxable under VAT receipt, Rs. 1,20,74,241/- on which TDS deducted under section 194C 2 Garrison Engineer Jatogh HP Rs. 10,20,000/- Shown in work done in Haryana, Rs. 10,20,000/- along-with work allotted by Garrison Engineers at Chandigarh (Rs. 1020,000+ Rs.330593 plus the excess amount of Rs.5,79,228/- declared as work done in the balance sheet over and above the amount as per 26AS )which is Rs 19,29,821/- Rs. 10,20,000/- plus Rs. 5,79,228/- on which TDS was not deducted being small works orders Total work Rs 1,30,94,241/- Rs. 1,11,23,432/- Rs. 25,50,037/- Rs. 1,36,73,469/- NIL 4.4. It was further submitted that the matter relating to wages/labour expenses was not subject matter of limited scrutiny and hence, the same cannot be raised in revisionary proceedings u/s. 263 for the first time as held by the various Benches of the Tribunal and that too, without confronting the same to the assessee either as part of the show-cause notice or even during the revisionary proceedings. 4.5. It was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act. The receipts thus disclosed by the assessee in its profit/loss account and correspondingly, in the return of income are thus reconciling and in any case, the receipts reported in the return of income are more than disclosed in Form 26AS and thus, on this account, where the AO has accepted the receipts disclosed in the return of income, the order so passed by the AO cannot be held to be erroneous in so far as prejudicial to the interest of the Revenue. 8. Further, on perusal of records, it is also evident that the assessee has been allotted work by three Garrison Engineers under the Ministry of Defence, namely, Garrison Engineer, Chandigarh, Garrison Engineer, I R& D and Garrison Engineer, Jatogh and the execution of work is spread over two states namely, Punjab, Hayana and UT Chandigarh requiring the assessee to seek separate VAT registrations and file separate VAT returns in these states/UT. As per VAT returns, the total receipts have been shown at Rs. 1,11,23,432/- which after adding receipts of Rs. 25,50,037/- towards labour charges (not subject to VAT and hence, not part of disclosure under VAT returns) equates with total receipts of Rs. 1,36,73,469/- as shown in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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