High Court Kolkatta held in CIT,TDS Vs Khadim Shoes Pvt Ltd that the order passed by the CIT(A) should contain reasons for its conclusions of decisions. An order without reasons is of no relevance. So the appeal had been dismissed.
Facts of the case:
Assessee was a merchant of footwear made total purchase of Rs 46.30 Crores approx out of which purchase amounting to Rs 7.90 Crores was with the label of “kadim” so according to AO this amount of purchase should come under sec 194C and TDS should be deducted and rest of purchase of Rs 38.39 Crores was without label and should not come under the purview of sec 194C because purchase of goods worth Rs 7.90 Crores would be with specific specifications of the assesse but the rest were not with specific specifications and was simple purchase.
So as per the view of revenue, assesse failed to deduct TDS on above Rs 7.90 Crores so penalty should be levied u/s 201.
Contention of the assesee:
Assessee was of the view that as all the purchase of Rs 46.30Crores is a normal purchase and would not come under the purview of sec 194C because it had not done any job work from outside, Moreover assesse had paid sales tax, excise duty on the same and also availed cenvat credit on the same purchase.
Further the revenue was not having any correct finding and they were not having any supporting to support that the assesse had made job work from outside. So penalty levied u/s 201 for non-deduction of TDS was not valid.
Contention of the revenue:
Revenue was of the view that out of total purchase of Rs 46.30 Crores only purchase of Rs 7.90 would come under purview of job work because they were labeled in the name of “kadim” and rest of the purchase was without label and without any identity and was a simple purchase. So as assesse had given special order to the vendor to manufacture the goods as per assesse specification so it should be considered as a job work and TDS should be deducted but as TDS had not been deducted on Rs 7.90 Crores of job work so penalty u/s 201 should be levied.
Held by High Court:
High Court held that Tribunal was right in dismissing the appeal as the CIT(A) had passed the order without giving any reason for its decision because the reasons given by the revenue for considering the above transaction of Rs 7.90 Crores as a job work were neither supported by law nor were correct finding just as revenue gave the reason that the goods were manufactured with the tag of “Kadim” was not tenable because the assesse had paid sales tax and excise duty on the same which was inconsistent with the job work as contemplated by sec 194C of the income tax act, so the matter should be remanded back to the AO to make fresh assessment after giving reasonable opportunity of being heard to the assesse.