IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH MUMBAI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA No. 4451/MUM/2024 Assessment Year: 2014-15 Assistant Commissioner of Premier Marine Products Pvt. Ltd., Income Tax-3, 3rd Floor, D Wing Thane Vs Amerchand Mansion, 16 Madam Cama Road, Colaba, Mumbai 400039 (PAN : AAHCP1350N)

(Appellant) (Respondent)

Present for:

Assessee : Shri Nitesh Joshi Advocate, and Shri Pratik Mehta, CA Revenue : Shri R. A. Dhyani, CIT DR Date of Hearing : 26.11.2024 Date of Pronouncement : 21.02.2025 O R D E R PER GIRISH AGRAWAL, ACCOUNTANT MEMBER:

This appeal filed by the Revenue is against the order of Ld.

CIT(A), Pune-11, vide order no. ITBA/APL/S/250/2024- 25/1065665358(1), dated 14.06.2024, passed against the assessment order by Assistant Commissioner of Income Tax, Circle – 3, Thane, u/s. 143(3) r.w.s. 153A of the Income-tax Act (hereinafter referred to as the “Act”), dated 24.12.2019 for Assessment Year 2014-15. 2. Grounds taken by the Revenue are reproduced as under:

1. “On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in holding that Assessing officer has not disputed that the payments for wages were made directly to individual labour without appreciating the fact that the Assessing Officer held that as per exclusive clause in the agreement between the assessee and the Contractor, the assessee had deducted TDS u/s 194C of the Act and the contractors had claimed expenses in their P&L A/c establishing that the said payment was not made to the labourers directly by the assessee.

2. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in not appreciating the fact that in the subsequent year, on the same terms and conditions of the agreement, the assessee had made payment to the contractor by cheque directly and not to the labourers.”

3. Facts of the case are that assessee is in the business of processing of sea food, i.e., procuring raw material, processing, packing and export of shrimps and fish. In the present case, impugned assessment order arises out of search and seizure operations u/s. 132 carried out on the business as well as residential premises of Liberty Group including assessee on 05.10.2017. Case of the assessee was centralised with Central Circle-3, Thane, vide order dated 24.08.2018. Notice u/s.153A was issued on 13.09.2019 for Assessment Years 2012-13 to 2017-18. Pursuant to this notice, assessee filed its return of income for Assessment Year 2014-15 on 12.10.2019, reporting total income at Rs.2,17,59,240/-, which is same as originally reported in return filed u/s.139(1) on 19.09.2014.

3.1. Prior to the impugned assessment proceedings u/s.153A r.w.s. 143(3), case of the assessee for the year under consideration i.e. Assessment Year 2014-15 was subjected to scrutiny assessment u/s.143(3) for which assessment order was passed on 08.12.2016. In this assessment order, in para 3, ld. Assessing Officer noted that “On perusal of submissions made by assessee, it is noticed that the assessee made payment of Rs.1,42,71,871/- as processing charges to Shri M. Marthandan and Rs.2,47,07,215/- as contract payment to Ms. Thenmozhi by way of cash. All the above said payments are more than Rs.20 thousand which violates section 40A(3) of IT Act” [emphasis supplied by us by underline]. Accordingly, after issuing show cause notice, ld. Assessing Officer disallowed these payments u/s.40A(3) and completed the said assessment by recording the following reasons-

i. On perusal of the ledgers, the payments were made directly to Mr.

Marthandam and Mrs. Thenmozhi as contract payments and processing charges and not towards labours in lieu of wages as claimed by it.

ii. The assessee was not able to furnish any direct evidence to show that the payments were directly made to labourers towards wages as agent. The assessee had also not claimed these payments as either wages or salary but only as contract payments falli