JAYNAL ABDDIN Vs. COMMISSIONER OF INCOME TAX, KOLKATA

JUDGEMENT

(1.) Heard Sri J. P. Khaitan, learned senior advocate assisted by Smt. Anupa Banerjee, learned counsel for the appellant/assessee and Smt. Smita Das De, learned standing counsel for the respondent/Income Tax Department.

(2.) This appeal was admitted by this Court by order dtd. 25/1/2012 on the following substantial question of law:

(3.) Briefly stated facts of the present case are that the appellant/assessee is engaged in business of embroidery and stitching. The assessee paid a sum of Rs.1,21,49,190.00 for payment to labourers. According to the assessee, the aforesaid amount was paid to labours through supervisors who were employees of the assessee. The assessee used to draw a lump sum amount from bank by cheque through his employees i.e., supervisors for payment to be made to labours. The supervisors used to make payment to labours and give an account to the assessee in the form of a list containing payments made to each individual labour. In none of the cases, the payment so made by the supervisors to individual labour exceeded Rs.20,000.00. The assessing officer, while passing the assessment order dtd. 31/12/2008 for the assessment year in question i.e., 2006-07, invoked Sec. 40A(3) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act, 1961') by recording the following facts :