The ITAT ‘C’ Bench Kolkata, hearing an appeal filed by the assessee who is a contractor against the Order of Ld. CIT(A)-14 in confirming the disallowance of Rs. 4,53,100/- made by AO for non reduction of Taxes ( TDS ) under Section 194C of Income Tax Act, 1961.
The Brief facts of the case are that The AO noted that assessee was engaged as a contractor and has declared a turnover of Rs. 2 Crores which was shown as his income. During scrutiny, the AO noted that the assessee had claimed and debited a sum of Rs.1,11,22,120/- under the head “ Labour Charges Paid”. While going through the list of labourers to whom payment was made, AO noted that some payments were made above the limit of Rs. 50,000/- during the year and the assessee had failed to deduct tax under Section 194C of the act , AO disallowed the sum and added it to the total income of assessee. Aggrieved, assessee preferred an appeal before the Ld. CIT(A) who was pleased to confirm the action of AO. Aggrieved by the same, the present appeal arises.
The main grievance of the assessee was that no proper opportunity was given to him to bring all the facts to the notice of AO. After going through the breakup of labour charges, the ITAT notes that the assessee had debited a sum of Rs.1,11, 22, 120/- under the head “ Labour Charges Paid” and the AO had disallowed entire expenditure made to the nine labourers which exceeded Rs 50,000/- and for which TDS was not deducted. The assessee’s plea before the Ld. CIT(A) to take notice about the break-up of the expenditure was not heard of. The ITAT agrees with Ld. AR that wages given to labourers without contract will not attract Section 194C of the act and the money given for purchasing materials, travel reimbursement does not attract Section 194C of the act.
The ITAT noted that is has to be kept in mind that onus is on the assessee to discharge the facts which has been given in the breakup because those are exclusively in his knowledge and he is only privy to it and AO has to keep in mind that merely because nomenclature of expense is given as “Labour Charges Paid” does not conclusively determine the character and nature of expense claimed and he has to decide the issue based on evidence/materials brought before him in accordance to law.
Allowing the appeal, the ITAT held “ we are inclined to set aside the order of Ld. CIT(A) and remand this issue back to AO for de novo examination in the light of facts and law in accordance to law, after giving opportunity to assessee.”
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