Commissioner Of Income Tax, Ward 2, Tirunelveli v. Shri.s.kalaiarasan

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 14.12.2016 C O R A M THE HON'BLE MR.JUSTICE HULUVADI G. RAMESHANDTHE HON'BLE DR.JUSTICE ANITA SUMANTH Tax Case Appeal No.699 of 2016 Commissioner of Income Tax,Ward 2, Tirunelveli. ... AppellantVs Shri.S.Kalaiarasan... Respondent Prayer:- Appeal filed under Section 260A of the Income Tax,1961, against the Order of the Income Tax Appellate Tribunal,Chennai A Bench, dated 4.3.2016, in I.T.A.No.1987/Mds/2015,against the Order of the Commissioner of Income Tax (Appeals)- 3, Madurai dated 26.06.2015 and made in I.T.A.No.0511/2014-15 for the Assessment Year 2006-07, against the Order of theIncome Tax Officer, Ward I92), Tirunelveli, dated 24.03.2014and made in P.A.No.AHFPA0383E for the Assessment year 2006-07. For Appellant : Mr.M.Swaminathan For Respondent: No appearance J U D G M E N T(Judgment of the Court was delivered by Dr.Anita Sumanth, J.,) This is an appeal filed by the Department raising thefollowing substantial questions of law:-"1) Whether, on the facts and circumstances ofthe case in law, Tribunal was right in dismissingthe appeal of the department without adjudicatingthe issue of jurisdiction?2) Whether, on the facts and circumstances of thecase in law, Tribunal was correct and justifiedin holding that assessee has not given any workto anyone when facts on record show thatassessment was completed ex parte under section144 and no evidence to this effect was producedby assessee before any authority?3) Whether, on the facts and circumstances of thecase in law, Tribunal erred in holding thatassessee is a sub-contractor without any facts onrecord to that effect and without even mentioninghttps://hcservices.ecourts.gov.in/hcservices/the name of the contractor from whom assessee hasfollowing substantial questions of law:-"1) Whether, on the facts and circumstances ofthe case in law, Tribunal was right in dismissingthe appeal of the department without adjudicatingthe issue of jurisdiction?2) Whether, on the facts and circumstances of thecase in law, Tribunal was correct and justifiedin holding that assessee has not given any workto anyone when facts on record show thatassessment was completed ex parte under section144 and no evidence to this effect was producedby assessee before any authority?3) Whether, on the facts and circumstances of thecase in law, Tribunal erred in holding thatassessee is a sub-contractor without any facts onrecord to that effect and without even mentioninghttps://hcservices.ecourts.gov.in/hcservices/the name of the contractor from whom assessee has taken sub-contract and to that extent the orderof the Tribunal is perverse?" 2. The assessee-respondent was served with notice on14.10.2011, but, has, however, not chosen to appear before us.Therefore, we proceed to dispose of the appeal on merits afterhearing the submissions of Mr.M.Swaminathan, learned counselappearing for the appellant-Department. 3. The assessee is an individual. In respect ofassessment year 2006-07, he filed a Return of income under theIncome Tax Act ('Act' in short) admitting total income of anamount of Rs.3,15,800/-. An order of assessment underscrutiny was passed on 29.12.2008 and thereafter, a noticeunder section 148 was issued for re-assessment of income thathad escaped tax. Despite service of several noticesthereafter, the assessee did not appear before the assessingofficer and the proceedings for re-assessment were completedex parte to the best of the assessing officer's judgment, byorder under section 144 of the Act, dated 24.3.2014. Interalia, the assessing authority made a disallowance undersection 40(a)(ia) of the Act to the tune of Rs.1,05,53,763/-on the ground that the amounts paid towards lorry freight,lorry hire charges and loader hire charges had not beensubject to tax deduction in terms of Section 194C of the Act.A demand for Rs.62,05,053/- was raised. 4. In appeal before the Commissioner of Income Tax(Appeals), grounds were raised by the assessee with regard tojurisdiction as well as on merits. The AppellateCommissioner, by order dated 26.6.2015, allowed the appealquashing the assessments on the ground of lack ofjurisdiction, against which an appeal was filed by the Revenuebefore the Income Tax Appellate Tribunal. When the appealbefore the Tribunal was taken up for hearing, the assesseeappears to have made a representation that he was a pauper,praying for dismissal of the appeal on merits. The Tribunalproceeds to reject the Department's appeal holding that theassessee appears to be a sub-contractor, to whom, theprovisions of Section 194C of the Act would not be applicable.In doing so, the Tribunal has observed that all the materialsavailable on record clearly establish that the assessee hasnot sub-contracted the work to anyone. 5. The Tribunal observed that while carrying out thework assigned to him as a sub-contractor, the assessee hadhired lorries, incurring hire and labour charges. On acareful examination of the record, we do not find any materialproduced either before the Assessing Officer or the AppellateAuthorities to justify the aforesaid conclusion. We,therefore, remand the matter to be adjudicated afresh by theCommissioner of Income Tax (Appeals) on the applicability ofSection 194C, after affording an opportunity to the assesseehttps://hcservices.ecourts.gov.in/hcservices/to furnish all materials in support of his claim. The Tax Case (Appeal) stands allowed by way of remand.No costs. Sd/- Assistant Registrar(J) //True Copy// Sub Assistant Registrar ssk To1.The Income Tax Appellate Tribunal, 'A' Bench, Chennai.2.The Commissioner of Income Tax(Appeals) - 3, Madurai.3.The Income Tax Officer, Ward I(2), Tirunelveli.+1cc to Mr.M.Swaminathan, Advocate, S.R.No.73069T.C.A.No.699 of 2016SV(CO)CA(02/05/2017)