Commissioner Of Income Tax, Udaipur v. M/S. K.p.s.construction(D.b.income Tax Appeal

COMMISSIONER OF INCOME TAX, UDAIPUR VS. M/S.K.P.S. CONSTRUCTION(D.B.INCOME TAX APPEAL NO.16/14) Dated:- 3.5.16. HON'BLE MR.JUSTICE SANGEET LODHAHON'BLE MR.JUSTICE KAILASH CHANDRA SHARMA Mr.K.K.Bissa, for the appellant. 1.This appeal is directed against order dated 22.7.13 ofIncome Tax Appellate Tribunal (ITAT), Jodhpur Bench, Jodhpur,whereby an appeal preferred by the Revenue against the orderof Commissioner of Income Tax (Appeals) [CIT(A)], Jodhpur,dated 10.10.12, deleting the disallowance of Rs.65,77,814/-made by the Assessing Officer (AO) under Section 40(a) (ia) ofthe Income Tax Act, 1961 ( for short “the Act”), vide assessmentorder dated 22.12.11, for the assessment year 2005-06, hasbeen dismissed. 2.The relevant facts are that the assessee claimed anexpense of Rs.65,77,814/- under the head 'transportationexpenses' without deducting TDS in violation of the provisions ofSection 194C of the Act, which was dis-allowed by the AO underSection 40(a) (ia) of the Act. The assessee claimed that thepayments made to individual tractor owners were aroundRs.15,000/- only and therefore, there was no obligation of theassessee to deduct TDS under the provisions of Section 194C. The AO observed that the payment was made every time to adifferent person, which is not possible and accordingly, inferredthat adjustments have been made by the assessee in the books/internally prepared vouchers to suit its requirement to by-passthe liability to deduct the tax under the provisions of Section194C. Accordingly, the expenses of Rs.65,77,814/- claimed,were added to the income of assessee, applying the provisions ofSection 40(a)(ia) of the Act. 3.Aggrieved thereby, an appeal preferred by the assesseewas allowed by the CIT (A) vide order dated 10.7.12 and theaddition made was deleted, taking into consideration the factthat 450 vouchers were there which were duly stamped showingthe receipt by the various persons. The CIT (A) observed that ithas not been shown by an inquiry that the above payments werenot made to different persons. The CIT (A) opined that theinference drawn by the AO in this regard is without any basis.Accordingly, the addition made was ordered to be deleted. 4. Aggrieved by the appellate order, an appeal preferred bythe Revenue before the ITAT, stands dismissed by the orderimpugned. Hence, this appeal. 5.Learned counsel for the Revenue contended that the ITAThas failed to examine the matter in correct perspective. Learnedcounsel submitted that every time, the payment made by the assessee to a different person has rightly not been believed bythe AO. Learned counsel submitted that on the facts and in thecircumstances of the case, keeping in view the huge turn overthe assessee, the AO was justified in not believing that theassessee would engage so many different tractor owners for thejob of transportation. 6.We have considered the submissions of the learned counseland perused the material on record. 7.A bare perusal of the assessment order reveals that the AOhas proceeded with the presumption that adjustments have beenmade by the assessee in the books/internally prepared vouchersto suit its requirement so as to bypass the liability to deduct taxunder Section 194C. It is to be noticed that there was absolutelyno evidence on record suggesting that the vouchers preparedwere fake and were so prepared by the assessee to avoid theliability of deduction of tax at source under Section 194C. In theconsidered opinion of this court, without making any inquiryworth the name in this regard, the inference drawn by the AO asaforesaid, could not have been made basis for disallowance ofthe expenses claimed by the assessee as aforesaid under Section40(a)(ia) of the Act. Thus, the finding arrived at by the CIT (A),affirmed by the ITAT, cannot be faulted with. 8.In view of the discussion above, in our considered opinion, Aditya/ no substantial question of law arises for consideration of this court in the present appeal.