TaxTMI 
TaxTMI 
2023 (5) TMI 1035
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....cts and circumstances of the case and in law the Ld. CIT (A) was justified in deleting the addition in the case of Sub Contractor Shri Jyantkumar Hirani, on account of assessee's failure to deduct TDS on Labour Contract Expenses, by observing that the said person has not filed ROI because of below taxable income, without considering the fact that the assessee had not adhered to all the conditions of first proviso of Section 201 of the Income Tax Act,1961? 3. Whether, on facts and circumstances of the case and in law the Ld. CIT (A) was justified in deleting the addition in the case of Sub Contractor Shi Laljibhai Narola, on account of assessee's failure to deduct TDS on Labour Contract Expenses, by observing that the said person has expired, without considering the fact that the assessee had not adhered to all the conditions of first proviso of Section 201 of the Income Tax Act,1961? 4. Whether, on the facts and in law the Ld. CIT(A) was justified in restricting the disallowance to Rs. 1,56,193/- out of Rs. 3,12,385/- made by the AO, being 20% of various expenses for want of supporting evidences, without considering the fact that the assessee has failed to furnish any d....
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....The Assessing Officer on perusal of audit report also noted that auditor has made remarks that the assessee has not deducted TDS on labour contract expenses. Thus, the Assessing Officer on the basis of report of auditor and in absence of complete details of contract payments, made disallowance under Section 40(a)(ia) of the Income Tax Act, 1961 (in short, the Act) of Rs. 3,28,67,900/- while passing the assessment order on 28/03/2016. 4. Aggrieved by the additions in the assessment order, the assessee filed appeal before the ld. CIT(A). Before the ld. CIT(A), the assessee filed its detailed written submissions vide submission dated 08/09/2018. The submission of assessee are recorded in para 4 of order of ld. CIT(A). On the disallowance under Section 40(a)(ia) of the Act, the assessee submitted that the Assessing Officer disallowed the entire amount of Rs. 3.28 crores under Section 40(a)(ia) for non-deduction of tax at source. The assessee further submitted that they gave explanation and furnished complete details and explained legal position that if the deductee filed their return of income for corresponding assessment year, and included such contract receipt and paid taxes thereon....
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....at in case of Hindustan Coca Cola Beverages Private Limited Vs CIT (supra), it has been held that the liability to deduct the tax at source is a vicarious liability which means if the tax on which amount paid or payable not deducted by the assessee, but the recipient of such payment has declared such income and paid the tax thereon, there will be no loss to the revenue and therefore, the deductor will not be treated as the assessee in default. Further the assessee also relied upon the decision of Hon'ble Delhi High Court in CIT Vs Ansal Landmark Private Limited (2015) 279 CTR 384 and decision of Ahmedabad Tribunal in DCIT Vs Esaote India (NS) Ltd. 2018 (*) TMI 1183 ITAT, wherein it was held that if the recipient has included payment made by assessee in their receipt and paid tax thereon, the deductor is not liable and the amended provisions are retrospective effect. For two sub-contractors, who have not filed their return of income, the assessee explained that their income was less than the taxable limit. Further one of such party namely Lalji Bhai Narola expired on 09/08/2013, so no return could not be filed. Regarding discrepancy in the receipt shown by Mahendrabhai Radadiya,....
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....ed by Accountant was submitted to the authorised person or not. No such evidence is submitted by assessee, therefore, the assessee is not eligible for benefit of Proviso 1 to Section 201 of the Act. The ld. CIT-DR for the revenue submits that there were clear discrepancies in the computation of income of Mahendrabhai Radadiya who has shown contract receipts from diamond labour. The other two sub-contractors namely Jayantkumar Hirani and Lalji Bhai Narola have not filed their return of income, therefore, the stand taken by assessee before the ld. CIT(A) has so many inconsistencies and the same is liable to be set aside and to restore the order of Assessing Officer. 11. With regard to ground No. 4 which relates to restricting the disallowance of various expenses to 10% instead of 20%, the ld. CIT-DR submits that the ld. CIT(A) has not given any reason as to why he has restricted 10% only. The ld. CIT-DR for revenue submits that no evidence to substantiated the expenses were filed by the assessee and would submit to restore the order of Assessing Officer. 12. On the other hand, the ld. AR of the assessee on ground Nos. 1 to 3 of the appeal supported the order of ld. CIT(A). The ld. ....
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....granted relief to the assessee by taking a view that Assessing Officer in his remand report has accepted the fact about payments to 8 sub-contractors out of 11, who had included the contract receipt in their income and Certificate of Accountant alongwith Form-26A therefore, the addition to the extent of Rs. 2.34 crores were deleted. So far as dispute relating to remaining two namely Shri Jayantkumar Hirani and Lalji Bhai Narola, return was not filed because of income was below the taxable income and death of Lalji Bhai Narola. Therefore, the ld. CIT(A) directed to delete the addition in respect of those two sub-contractors. Regarding discrepancy in case of Mahendrabhai Radadiya, the ld. CIT(A) took his view that the payment was made through cheque and was debited in the account of recipient, therefore, there is no dispute about the payment and directed to delete the entire addition. 15. We find that neither the Assessing Officer narrated the name and details of sub-contract in assessment order nor the ld. CIT(A) recorded in his order bifurcation of impugned expenses paid to various sub-contractors. The ld. CIT(A) called the remand report from the Assessing Officer during the pende....
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.... Vs ITO (supra). On considering such plea of ld AR for the assessee, we direct the assessing officer to restrict the disallowance to the extent of 30% of payments made to sub-contractor No. 4 & 5, thereby, the order of ld CIT(A) is modified to that extent. 18. Further, as per the remand report of assessing officer, there is discrepancy in the computation of income of Mahendrabhai Radadiya, wherein he has shown gross receipt of Rs. ,2,37,370/- that too from Diamond labour income and not from the contract of construction, whereas the assessee have claimed to have paid Rs. 29,17,000/-. Before us, the ld AR for the assessee has filed copy of return of income of Mahendrabhai Radadiya for AY 2013-14, with computation of income wherein he has shown construction labour income of Rs. 29,17,000/-, which is contrary to the remand report of assessing officer dated 03.10.2018, therefore, this part of disallowance is restored back to the file of assessing officer to examine the fact, if the assessee has included construction contact receipt in his computation of income or the assessee has filed this false and fabricated evidence before Tribunal. If the assessee has included construction contrac....