TaxTMI 
TaxTMI 
2021 (3) TMI 77
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....IT(A) erred on facts and in law in confirming the disallowance of Rs. 49,88,608/- on account of alleged failure to deduct tax on the payment of Rs. 48,38,330/- made to sub-contractor and Rs. 1,50,278/- for jobwork. 2. That on the facts and in the circumstances of the case, the CIT(A) erred on facts and in law in not appreciating that the said sum of Rs. 48,38,330/- included Rs. 22,98,330 being payments made to various vendors for purchase of material on which there was no need for deduction of tax at source. 3. That on the facts and in the circumstances of the case, the CIT(A) erred on facts and in law in not appreciating the fact that the contractee had paid, after deducting tax, Rs. 25,44,000/- to subcontractors directly....
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....ssing Officer ("AO" for short) under section 40(a)(ia) of Income Tax Act, 1961 ("IT Act" for short) on the ground that the assessee failed to deduct tax at source. The failure of the assessee to deduct tax at source was reported by statutory auditor in the audit report. Relevant portion of assessment order is reproduced below : "3. As in the past, the assessee company continues to engaged in the business of contractor of waste water treatment for Pvt. / Govt. Department. During the year under consideration the assessee company has declared income from Business only and no other income has been declared by the assessee company. 4. During the course of assessment proceedings it was observed that during the year Assessee Comp....
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.... account of Job-work and Rs. 48,38,330/- on account of payment made to subcontractor on which tax was deductible at source under Chapter XVII-B and such tax have not been deducted, are disallowed u/s 40(a)(ia). I am satisfied that the assessee company to conceal the taxable income and furnished inaccurate particulars of income, hence, is liable to penalty proceedings u/s 271(1)(c) of the I.T.Act, 1961." (C) The aforesaid disallowance of Rs. 49,88,608/- was confirmed by Ld. Commissioner of Income Tax (Appeals) ["Ld. CIT(A)" , for short] vide her impugned appellate order dated 23.12.2014; holding as under : "5. Ground No. 2 & 3 is in respect of addition of Rs. 49,88,608/-. The appellant was awareded a contract from M/s. Meat Produ....
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....directly to the sub-contractors, due to which there was no requirement for the assessee to deduct tax at source. He further submitted that the aforesaid amount of Rs. 48,38,330/- included Rs. 22,98,330/- which was the payment made for purchase of contract material, and not for work; because of which the assessee was under no requirement to deduct tax at source. In respect of the aforesaid amount of Rs. 1,50,278/- he submitted that it included smaller amounts each of which was either below the threshold limit of Rs. 20,000/- as provided u/s 194C(5) of IT Act or was payment made for purchase of materials for the project; due to which the assessee was not required to deduct tax at source. In view of the foregoing, he submitted that aforesaid d....