TaxTMI 
TaxTMI 
2014 (4) TMI 433
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....irming the action of Assessing Officer in disallowing labour expenses of Rs.15,22,585/- u/s. 40(a)(ia) of the Act. 3. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income-tax (Appeals) has erred in partly confirming the disallowance out of various expenses to the extent of Rs.35,064/- @ 10% as against disallowance of Rs.70,128/- made by Assessing Officer @ 20% of telephone expense, staff welfare expense, vehicle petrol and repairing expense and depreciation on vehicle. Ground of ITA No. 429/Ahd/2010(Revenue's appeal) [1] On the facts and in the circumstances of the case and in Law, the Ld. CIT(A)-IV, Surat has erred in restricting the addition at Rs.10.25 lakhs instead of Rs.37.61 lakhs made by the AO u/s. 68 of the Act. [2] On the facts and in the circumstances of the case and in Law, the Ld. CIT(A)-IV, Surat has erred in restricting the disallowance @ 10% instead of 20% out of expenses. First we take ITA No. 428/Ahd/2010 (Assessee's appeal) 2. The assessee is in the construction business. It had taken loan of Rs.67,76,000/- during the year. The A.O. gave reasonable opportunity of being heard to show the identity, c....
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....reshi 397000 2 Shabeena A. Qureshi 418000 3 Asif A. Saiyed 130000 4 Imran Y. Saiyed 130000 5 Majiya Qureshi 165000 6 Sameer E Sureshwala 300000 7 Ebrahim A 300000 8 Rashida E 400000 9 Hira Bai Meghji Savla 200000 10 Asha Laxmichand Shah 500000 11 Rafique F. Qureshi 175000 12 Sarifa Y. Sayyed 216000 13 Raisa 347000 14 Yaqub M. Sayyed 98000 3776000 He confirmed the addition of Rs. 37,76,000/- u/s. 68 of the IT Act. 3. Being aggrieved by the order of the A.O., the assessee carried the matter before the CIT(A) who had partially allowed the appeal and he found three parties, namely, Shri Fuzail Qureshi, Shabeena A. Qureshi and Hira Bai Meghji Savla in totaling to the tune of Rs.10,15,000/- unexplained cash credit u/s. 68. The assessee gets relief from the CIT(A) at Rs.27,61,000/-. 4. Both the parties are before us. The assessee is against cash creditor confirmed by the CIT(A) at Rs.10,15,000/- and Revenue is against deleting the addition on account of cash creditor at Rs.27,61,000/-. Ld. Counsel for the assessee contended that assessee had filed confirmation before lower authorities with PAN no. along with copy of return. The assessee also f....
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....n of Shabeena A. Qureshi. As such, there is no loan from the Shabeena A. Qureshi. It is an amount originally transferred by the assessee and returned back to the assessee. At the outset, ld. Sr. D.R. again reiterated that assessee had filed partially these affidavits before the lower authorities on which remand report has been called for by the ld. CIT(A). After considering the remand report, ld. CIT(A) has rightly confirmed the addition. It is also found that in bank account cash deposits entries were there. 4(ii). We have heard the rival contentions and perused the material on record. In case of two cash creditors, namely, Fuzail A. Qureshi and Shabeena A. Qureshi The facts of the A.R. had been found correct that originally amount came from the firm and returned back to firm. There is no substantial cash deposited. Both the cash creditors are minors. Thus, father's PAN had been quoted on both the confirmation. Therefore, we do not find any merit in the order of the CIT(A). Accordingly, we reverse the order of the CIT(A) in case of two cash creditors. Appeal on above two cash creditors are allowed. 4(iii). The third cash creditor was confirmed by the ld.CIT(A) in the name of Hir....
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....filed only copy of PAN card given to the A.O. The source of income has not been explained. The full copy of bank account maintained with HDFC, Vapi has not been filed by the assessee. Further, there were cash deposits also in bank account. Thus, we do not find any reason to revert the order of CIT(A). Accordingly, we dismiss the appeal on the assessee on this cash creditor. Ground no.1 is partly allowed. 5. Ground No.2 of assessee's appeal is against confirming the action of the A.O. in disallowing the labour expenses of Rs.15,22,585/- u/s. 40(a)(ia) of the Act. The A.O. observed that the assessee has debited labour charges amounting to Rs.15,22,585/- on which no TDS had been deducted by the assessee. As per the provisions of Section 40(a)(ia) r.w.s. 194C, the assessee should have deducted TDS on the said labour which the assessee failed to deduct the tax. The A.O. gave reasonable opportunity of being heard to the assessee. It was argued by the assessee before the A.O. that these payments were made to the labour through mukadam and single payment was less than required amount as per Section 194C of the IT Act. There is no contract between assessee and mukadam. Therefore, the asses....
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.....R. also argued that there is no commission/profit was given to mukadam on labour charges. At the outset, ld. Sr. D.R. supported the order of CIT(A) and argued that there is oral agreement with mukadam. Therefore, TDS was to be deducted by the assessee. 8. We have heard the rival contentions and perused the material on record. The assessee is in construction business. The expenses debited in the p&l account and had not been doubted by the A.O. In construction business, the labour is required and it is an unorganized sector and some persons are required to arrange the labour for construction work. The assessee paid this amount through mukadam. The mukadam has further distributed these payments in labourers. The mukadam had not given any margin money as profit on distribution of labour charges among labourers. When there is no profit element in payments, the TDS is not required to be deducted as held by the Co-ordinate Bench in case of DCIT vs. Laxmi Protein Products (P.) Ltd. (supra). The operative portion is reproduced as under: "8. We have heard the rival contentions and gone through the facts and circumstances of the case. As we have noted above that the assessee has filed comp....
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....bank account shows that assessee has only income to the tune of Rs.98,000/-. In our considered view, the case laws referred by the Sr. D.R. is squarely applicable in case of Asif A. Saiyed as there is no creditworthiness of the cash creditor to give loan of Rs.1,30,000/- to the assessee. Thus, we reverse the order of the CIT(A). 10(iii). Fourth cash creditor in the name of Imran Y. Saiyed for Rs.1,30,000/- The ld. Sr. D.R. argued that the assessee filed copy of PAN, return, confirmation but signatures and spelling of Saiyed does not tally. The assessee has income only Rs. 99,216/- prior to issue of two cheques, the assessee deposited the cash in the bank account. Thus, the source of the income has not been explained by the assessee. At the outset, ld. A.R. supported the order of the CIT(A) and he argued that the assessee has discharged his onus by following the copy of PAN, copy of return and confirmation. After considering both the sides, it is found that assessee had not proved creditworthiness of the cash creditor as he had shown only income of Rs.99,260/- in the return. The bank account shows that cash has been deposited in the bank account of the cash creditor and case laws r....
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....reiterated that by filing the copy of return, PAN, confirmation, the cash creditor cannot be treated as explained in absence of creditworthiness. The A.R. argued that the assessee has discharged his onus by filing these evidences. Thus, he requested to confirm the order of the CIT(A). After considering both the sides and copy of bank account, it revealed that Rashida's bank account showed credit through account payee cheques. She deposited cash of Rs.40,000/- in the bank account thereafter issued cheque for loan to the assessee at Rs.4 lacs. The return of income is hardly Rs.20,000/-. The assessee proved the genuineness of the transaction and the identity of the cash creditor but not creditworthiness. Therefore, case laws referred by the Revenue is squarely applicable. Accordingly, we confirm the addition of Rs.4 lacs. Accordingly, we reverse the order of CIT(A). The Revenue's appeal is dismissed against this cash creditor. 10(vii). Serial no.10, cash creditor is Asha Laxmichand Shah for Rs. 5 lacs. Ld. Sr. D.R. argued that total income of the assessee has shown at Rs.1,97,741/- in the return and he supported the order of the A.O. At the outset, ld. A.R. for the assessee contended....
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....t and confirmation. The assessee received loan of Rs.2,16,000/- from the cash creditor, namely, Sarifa Y. Sayyed. The confirmation itself proved that she received Rs.1,55,000/- on 30th April, 2004 from the assessee before that the assessee has credit balance of Rs.2,36,037/- in the bank account. Thereafter, loan was given to the assessee by cash creditor. Thus, source of income has been explained by assessee in case of Sarifa Y. Sayyed. After considering the both sides, the loan received by the assessee at Rs.2,16,000/- , is found explained as assessee has reasonable income as well as opening balance in the bank account at Rs.2,36,037/- and also Rs.1,55,000/- received by the cash creditor from the assessee itself. Thus, we confirm the order of the CIT(A) and dismiss the appeal of the Revenue against this cash creditor. 10(x). Serial no.13, cash creditor is Raisa Rafique Quereshi for Rs. 3,47,000/-. Ld. Sr. D.R. argued that signature does not tally on various papers and returned income is only at Rs.1,26,077/-. Bank statement has not been attached in the paper book. At the outset, ld. A.R. argued that assessee has discharged his onus by providing copy of the return, copy of the bank....