Hanumant Construction Pvt.Ltd.,, ... vs Assessee

अपीलाथ!/ (Appellant) "#यथ!/ (Respondent)

Assessee(s) by : Shri Surendra Modiani Revenue by : Shri Dinesh Singh, Sr.DR

सन ु वाई क तार ख/ Dateof Hearing : 22/01/2015 घोषणा क तार ख / Date of Pronouncement: 02/02/2015

आदे श/O R D E R

PER N.S. SAINI, ACCOUNTANT MEMBER: This is an appeal filed by

the assessee against the order of the Commissioner of Income-Tax (Appeals)-I, Baroda dated 15.3.2011.

2. The ground no.1 of the appeal of the assessee is as under:

"1. The ld.CIT(A) has erred in law and on facts in confirming the action of the AO disallowing the amount of Rs.13,224/- paid for employee contribution beyond the due date as per the provisions of section 36(1)(va) of the Act. The disallowance of Rs.13,224/- has been made in complete disregard of the law and facts, deserves to be allowed."

3. At the time of hearing, AR of the assessee submitted that he is not pressing ground no.1 of the appeal, hence, the same is dismissed, as not pressed.

ITA No.1217/Ahd/2011 2 4. The ground no.2 of the appeal of the assessee is as under:

"2. The ld.CIT(A) has erred in law and in facts in confirming the following disallowances of expenses amounting to Rs.36,17,456/- claimed under various heads for want of non-deduction of TDS u/s.40(a)(ia) of the Act in complete disregard of the facts and material available on record.

i) Freight Expenses Rs.56,500/- ii) Road & Pitching Rs.24,95,310/- work expenses iii) Drilling & Grouting Rs.10,65,646/- Total Rs.36,17,456/-

5. At the time of hearing, AR of the assessee submitted that he is not pressing ground no.2(i), hence, the same is dismissed, as not pressed.

6. The brief facts of the case with regard to ground no.2(ii) and 2(iii) are that the AO made disallowance of Rs.24,95,310/- under the head "Road & Pitching Work Expenses." and Rs.10,65,646/- under the head "Drilling & Grouting Expenses" on the ground that the assessee had not deducted TDS under section 194C of the Act, at the time of credit of the amounts in the accounts of the creditor.

7. On appeal, the CIT(A) observed that the observation of the AO in the remand report is that all the payments were made in cash and normally in civil construction works the labour is hired through labour contractors who in turn make payments to the labourers. No evidences are furnished to show that the appellant directly made payments to labourers. Therefore, he confirmed the disallowance of Rs.24,95,310/- and Rs.10,65,646/- made by the AO under section 40(a)(ia) of the Act.

8. Before us, the AR of the assessee submitted that these payments were made directly to the labourers as per the wage sheet. He referred to the written submission filed before the CIT(A) during the course of ITA No.1217/Ahd/2011 3

appeal hearing, copy of which is placed at page no.18 to 21 of the paper book. By referring to page no.21 of the PB in para (iii) submitted that it was submitted before the CIT(A) that the payments for road and pitching work and drilling & grouting work was made by the assessee to the labourers directly employed by the assessee as per wage sheet. He submitted that the CIT(A) has not accepted the submission of the assessee on the ground that no evidence could be filed before him to establish that the payments were made to the labourers directly employed by the assessee. He argued that, if one more opportunity is granted to the assessee, the assessee is in a position to file evidences in support of its claim that the payments were made directly to the labourers and not to the contractors, and therefore, the provision of section 194C are not applicable to the assessee, and therefore, the assessee was not required to deduct TDS from the payments made to the labourers, and the AO was not justified in making the disallowance by invoking the provision of section 40(a)(ia) of the Act.

9. DR, on the other hand, supported the orders of the lower authorities.

10. After considering rival submissions and perusing the material on record, we find that the disallowance of Rs.24,95,310/- under the head "Road & Pitching Work Expenses" and Rs.10,65,646/- under the head "Drilling & Grouting Expenses" was made by the AO by invoking the provisions of section 40(a)(ia) of the Act, on the ground of non- deduction of TDS by the assessee from the payments made to contractors under section 194C of the Act. The same was confirmed in appeal by the CIT(A) on the ground that no evidences were furnished to show that the payments were made by the assessee directly to the labourers employed by him. The AR of the assessee has submitted that the assessee is now in a position to produce the evidences to support its claim that the payments were made by the assessee directly to the ITA No.1217/Ahd/2011 4

labourers, and requested for one more opportunity before the AO to file necessary evidences for verification. In our considered view, it shall be just and fair and in the interest of justice to remand the issue back to the file for AO for adjudicating the issue afresh as per law, after proper verification of the evidences that may be filed by the assessee before him in the remand proceedings. The assessee is also directed to file evidences before the AO as and when called upon to do so. Needless to mention, the AO shall allow reasonable and proper opportunity of hearing to the assessee before adjudicating the issue afresh. This ground of the appeal of the assessee is partly allowed for statistical purpose.

11. The ground no.3 of the assessee is as under:

"3. The ld.CIT() has erred in law and in facts in directing the AO to verify the claim of expenses amounting to Rs.17,56,212/- claimed under the head hire chares for want of non-deduction of TDS u/s.40(a)(ia) of the Act in complete disregard of the facts and material available on record. The direction of the ld.CIT(A) is in complete disregard of the law and facts and, therefore, the claim of the expenses deserves to be allowed."

12. At the time of hearing, no submissions were made by the AR of the assessee, and therefore, this ground of the appeal of the assessee is dismissed for want of prosecution.

13. In the result, the appeal of the assessee is partly allowed for statistical purpose.

Order pronounced in the Court on Monday, the 2nd February, 2015 at Ahmedabad.

Sd/- Sd/- (SHAILENDRA KUMAR YADAV) ( N.S. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER