TaxTMI 
TaxTMI 
2022 (12) TMI 743
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....r of Income Tax has erred in failing to consider the various replies and submissions placed on record in proceedings before her in 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 dec....
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....ntract has shown the receipts at Rs. 1,11,23,432/-. On perusal of 26 AS, the assessee has received the following receipts:- Name of the Party Total amount received u/s194 C on which Tax 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 r....
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....nder VAT law has also not been taken as work done under section 194C, and no tax was deducted on it. The definition of works contract under the VAT Act is different than under the Income Tax. Under the VAT Act, pure labour jobs are non-taxable and are not to be reported in the VAT returns while it 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....
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.... as per 26AS-(Rs.1,20,74,241) after deduction of the amount declared under vat returns in Chandigarh and Punjab . This amount of balance also includes a sum of Rs 25,50,037/- which is not chargeable to vat and hence does not form part of the vat returns in these two states . After deduction of amount of Rs 25,50,037/-(which does not fall 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/- ....
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.... difference is on account of receipts totaling Rs. 579,228/- on which TDS has not been deducted. There is nothing on record to support the findings of the ld. PCIT that the labour charges amounting to Rs. 25,50,037/- are not subjected to TDS u/s. 194C and are not forming part of receipts of Rs. 1,30,94,241/- 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. 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 ....