TaxTMI 
TaxTMI 
2020 (2) TMI 1041
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....non deduction of TDS u/s.194C of the Act. (2) That the ld.CIT(A) has substantially erred by not considering the fact that the assessee has failed to deduct TDS u/s.194C of the Act attracting the violence of section 40(a)(ia) of the Act and furnished inaccurate particulars of income. (3) The appellant craves, to leave, to amend and/or to alter any ground or add a new ground which may be necessary. 3. Facts of the case are that return of income was filled by the assessee on 27/10/2005 declaring total income of Rs. 29,01,240/- The assessment was completed u/s. 143(3) of I.T. Act on 27/12/2007 determining total income at 2,51,85,660/-, The additions and disallowances of Rs. 2,22,84,420/- were made in the assessment, which included disallowance of Rs. 2,21,56,800/- out of freight expenses u/s 40(a)(ia) of the Act and Rs. 52,800/- out of interest expenses. The penalty proceedings u/s 271(l)(c) of the Act were initiated. A show cause notice was issued and served on the assessee. 3.1. The assessee had preferred an appeal against the assessment agitating the disallowance made u/s 40(a)(ia) of the Act. The Ld.CIT(A), vide order dated 12.12.2008, has granted relief of Rs. 55,92,622/- ou....
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.... Court order has already been served to your office by the court and it is part of the record. Since the matter is still sub judice the penalty proceeding initiated above are of Quasi judicial proceedings hence they should be kept at least in abeyance till the disposal of petition. In view of the above facts and circumstances since the matter on which the penalty proceeding are initiated is pending before the highest court of the state and the order of the Commissioner Appeals has been passed ex-party against which the assessee has preferred an appeal before the income tax tribunal and further there are no inaccurate particulars of income filed hence the penalty proceeding initiated may please be kept in abeyance till the order of the High Court on the constitutional validity of the section or may please be dropped. 5. That as regards the initiation of penalty proceedings for the unsecured loan u/s 68 is concerned, it is submitted that the learned commissioner of appeals without verifying the assessment records confirmed the deposits accepted by the assesses firm. In fact the confirmations were filed before the assessing officer, were not sent to her and were not considered w....
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....Rs. 6,93,67,089/- to P&L Account, the assessee was required to deduct TDS u/s 194C on Rs. 4,51,24,474/- and on balance freight amount of Rs. 2,42,42,615/-, provisions of section 194C were not applicable either on account of payments being below Rs. 50,000/- or on account of ownership of less than two vehicles by the payees. The CIT(A) had, therefore, given an opportunity of being heard to the assessee to furnish the evidences and explain the matter. The assessee, however, could not produce evidences and explanation before the CIT(A) in spite of several opportunities afforded by the CIT(A). The CIT(A), therefore, after recording elaborate findings on facts of the case in para No. 11 to 20 of her order, categorically held that the freight amount of Rs. 2,42,42,615/- remained unsubstantiated. The CIT(A), therefore, enhanced the disallowance of freight expenses by Rs. 2,42,42,615/-. Thus, the total disallowance u/s 40(a)(ia) of the Act worked out to Rs. 4,08,14,550/-. The assessee is, therefore, liable for penalty on the income of Rs. 4,08,14,550/-, for which the assessee is deemed to have furnished inaccurate particulars of income. 3.5. The provisions of section 40 (a)(ia) of the IT ....
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....espect to these unsecured loans. The assessee, however, could not produce satisfactory evidences and explanation before the CIT(A). The CIT(A), therefore, enhanced the addition by Rs. 13,25,000/- u/s 68 of the IT.Act, The assessee is, therefore, liable for penalty on the amount of Rs. 13,25,000/-, for which the assessee is deemed to have furnished inaccurate particulars of income. 3.8. Assessee's contention that it had filed the confirmations before the Assessing Officer and same were accepted is not found substantiated before the CIT(A). The issue regarding unsecured loans has not been adjudicated in favour of assessee by the CIT(A), but the CIT(A) after giving her findings on facts of the case has, made enhancement of Rs. 13,25,000/-. The income added in the assessment on account of unexplained cash credit is concealed income and the assessee is deemed to have concealed the particulars of income. 3.9. The assessee's request for keeping the penal proceedings in abeyance till the decision of appeal by the ITAT is not acceptable as there is no provision to keep proceedings pending. The assessee's plea to keep the proceedings in abeyance till the order of the Hon'bl....
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....s Sr. No. 1 i.e disallowance of Rs. 1,65,64,178/- u/s 40(a)(ia) is concerned, the Appellant submits that it is admitted facts that the Appellant has deducted tax at source, however, not deposited within the prescribed time limit but in any case has been duly deposited before the due date of filing return of income. Please refer para 3 of the assessment order wherein the details of tax deducted at source has been given. As a matter of facts, the tax has been deducted at source and has been paid before the due date of filing of return of income. Copy of the details of deduction of tax at source on amount of Rs. 1,65,64,178/-alongwith the bank statement showing clearance of amount of IDS is enclosed herewith marked as "Annexure - D". In this connection, The Appellant further submits that the provisions of S.40(a)(ia) has undergone a change by the Finance Act, 2010 whereby it has been amended in a manner that even if for any month of expenditure, tax has been deducted and deposited before the due date of filing return of income, disallowance cannot be made u/s 40(a)(ia) of the Act. The Appellant submits that this amendment is curative in nature and therefore the same is applicable fo....
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....able to deduct income-tax under this section" Hence, from the above quoted provisions, it is very much clear that the Appellant was not required to deduct tax at source on an amount, upto 30/09/2004, if impugned amount does not exceed Rs. 20,000/- per contract. It is further submitted that from 01/10/2004, if the amount credited or paid to the contractor or sub-contractor does not exceed Rs. 20,000/- in single transaction and Rs. 50,000/- in aggregate, than the Appellant was not required to deduct tax at source. Therefore, the Appellant has bifurcated an amount of Rs. 1,08,22,029/- in to two periods viz. period from 01/04/2004 to 30/09/2004 and 01/10/2004 to 31/03/2005, which is Rs. 46,73,017/- and Rs. 61,49,012/-respectively. The Appellant further submits out of an amount of Rs. 46,73,018/- for the period of 01/04/2004 to 30/09/2004, an amount of Rs. 24,18,866/-is pertaining to an amount which is in excess of Rs. 20,000/- per contract on which the Appellant has not deducted tax at source, whereas balance amount of Rs. 22,54,151/- is aggregate of an amount which is not exceeding an amount of Rs. 20,000/- on which tax is not required to be deducted at source. Copy of such detail....
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....date of filing of the return. When the ld.CIT(A) has worked out the balance amount, then, this amount was not examined with the angle whether TDS was to be deducted by the assessee or not. The ld.CIT(A) has observed that only a sum of Rs. 3,07,35,157/- remained payable as on 31.3.2005. In a way, on the strength of order of the special Bench of the Tribunal in the case of Merilyn Shipping & Transports (supra) has construed that the amount which is not payable on 31.3.2005 allowability or disallowability on account of non-deduction of TDS ought not to be considered. Out of this total amount, the ld.CIT(A) has observed that a sum of Rs. 2,34,30,157/- representing the amount on which the assessee has already deducted TDS and deposited in the government treasury. Thus, the ld.CIT(A) has worked out a sum of Rs. 7,30,50,000/- as payable on 31.3.2005 on which it is to be seen whether TDS was deductible or not deductible. On this amount, the ld.CIT(A) has applied threshold limit of Rs. 20,000/- and Rs. 50,000/- i.e. payment required to be made by the assessee to a single truck owner during that year. According to the ld.CIT(A), if the payment of Rs. 20,000/- was made as freight charges duri....
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....wance under section 40(a)(ia) would not be made. The ld.DR was unable to controvert this contention of the ld.counsel for the assessee. 12. On due consideration of the facts and circumstances, we are of the view that as far as ground no.1 in all these three appeals are concerned, they are devoid of any merit, because, the assessee has deducted TDS on these amounts and TDS was deposited before the due date of filing of the return. The ld.AO has made disallowance on the ground that TDS was not deposited before the end of the accounting year i.e. before 31.3.2005. Therefore, ground no.1 in all three years is rejected. 13. With regard to ground no.2 in all three appeals, the ld.counsel for the assessee has submitted that his rest of two fold submission are relevant. In his first fold of submission, he contended that Hon'ble Calcutta High Court in ITA No.191 of 2009 has held that section 40(a)(ia) is not applicable in the Asstt.Year 2005-06. He placed on record copy of the decision of the Hon'ble High Court. On the strength of this decision, it was contended that the Hon'ble Calcutta High Court has observed that Finance Act, 2004 got Presidential assent on 10.9.2004 and the assessee....
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....en bifurcation of these amounts, which has duly been reproduced by the ld.CIT(A) on page no.15 of the impugned order. As per working reproduced by us in the foregoing paras, the assessee, in the case of Kataria Movers, required to deduct TDS at Rs. 1,60,09,690/-. Similarly, working submitted by the assessee in rest of two appeals which has also been reproduced on page nos.14 and 15 of the impugned orders (Rs. 36,71,905/- in the case of Kataria Transport Co., and Rs. 13,05,044/- in Kataria Logistic Services). It was demonstrated before us that if other explanation of the respondents, to support the order of CIT(A) is not being accepted, then, to the extent of above working, at the most disallowance can be made in all three cases. In this way, the assessee contended that no disallowance deserves to be made section 40(a)(ia) in the cases of the assessee and the appeals of the Revenue deserve to be dismissed. 15. In rebuttal, the ld.DR contended that the assessee failed to deduct TDS, and therefore, the ld.CIT(A) ought to have disallowed the amounts pleaded in ground no.2 in respective appeals. 16. We have duly considered rival contentions and gone through the record carefully.....
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.... a contractor and not being an individual or a Hindu undivided family) responsible for paying any sum to any resident (hereafter in this section referred to as the sub-contractor) in pursuance of a contract with the sub-contractor for carrying out, or for the supply of labour for carrying out, the whole or any part of the work undertaken by the contractor or for supplying whether wholly or partly any labour which the contractor has undertaken to supply shall, at the time of credit of such sum to the account of the sub-contractor or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to one per cent of such sum as income-tax on income comprised therein." 18. Bare perusal of section 40 (a) (ia) would suggest that disallowance under this section can be made in respect of amounts payable to a contractor or sub contractor for carrying out any work on which tax is deductible under chapter 17B and such tax has not been deducted or paid during the previous year or in the subsequent year before the expiry of the time period prescribed u/s 200 (1) of the Act. Section 194C(2) provides that where a contrac....
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....work undertaken by the assessee. The dictionary meaning of the words "Carry out" is 'to carry into practice'; 'to execute'; 'to accomplish'. It signifies a positive involvement in the execution of the whole or any part of the main work by spending his time, money, energy etc., and further taking the risks in carrying on the said activity. In the instant case, there is no material to suggest that the other lorry owners involved themselves in carrying out any part of the work undertaken by the assessee by spending their time, energy and by taking the risks associated with the main contract work. In the absence of the above said characteristics attached to a sub-contract in the instant case, the payment made to the lorry owners stands at par with the payments made towards salaries, rent etc. Hence the reasoning of the tax authorities, which is stated in para 8.3 supra, to hold that the payment made for hired vehicles is a subcontract payment, in our opinion, is not correct and not based on relevant considerations. Hence, in our considered opinion, it cannot be said that the payments made for hired vehicles would fall in the category of payment towards a sub-contract with the lorry own....
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....ed because he has no answer to offer. Admittedly, the Finance Act, 2004 got presidential assent on 10th September, 2004. The assessee could not have foreseen prior to 10th September, 2004 that any amount paid to a contractor without deducting tax at source was likely to become not deductible under Section 40. It is difficult to assume that the legislature was not aware or did not foresee the aforesaid predicament. The legislature therefore provided that the act shall become operative on 1st April, 2005. Any other interpretation shall amount to "punishing the assessee for no fault of his" following the judgment in the case of Hindusthan Elector Graphites Ltd. [supra]. On the top of that, Section 4 relied upon by Mr.Agarwal merely provides for an enactment as regards rate of tax to be charged in any particular assessment year which has no application to the case before us. Section 11 of the Finance Act by which Clause (ia) was added to Section 40 of the Income Tax Act does not provide that the same was to become effective from the assessment year 2005-06. It merely says it shall become effective on 1st April, 2005 which for reasons already discussed should mean to refer to the ....
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....e principle of consistency, we dismiss this ground of the revenue. 8. Now coming to ground relating to penalty on addition u/s.68 of the Act. 8.1. The ld.CIT(A) while passing order dated 21/06/2012 in quantum appeal in second round of litigation deleted the addition so made u/s.68 of the Act with the following observation: "7.3. In respect of ground related to enhancement of Rs. 13,50,000 by the Ld.CIT(A) in earlier appellant proceedings, the appellant vide written submission dated 12.05.2011 submitted contra account with confirmation with complete address, PAN in respect of following three parties from whom loan is accepted by appellant but on account of non-furnishing of such contra account and confirmation before ld.CIT(A)XV, Ahmedabad vide order dated 12.12.2008 enhanced the income of appellant. Sr.No. Name & address Amount in Rs. PAN Repaid during year Mode of acceptance 1. Ms. Neha Kataria F-42, Akash Tower Premchand Nagar Rd., Vastrapur Ahmedabad 4,25,000 ALYPK 9643 A No Cheque 2. Navin Agro Industries G-500, Rd.No.12, VKIA, Jaipur 5,00,000 ACFPT 8338 M Yes Cheque 3. Smt.Sheetal Agarwal 4 Janki Nagar, Indore (M.P.) 4,00,000 ABDPA 85....