V.K.Enterprises, CHENNAI V. ACIT, CHENNAI

CO 39/CHNY/2014

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 9824 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 15 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 25-08-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 25-08-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 10-04-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V S JAYAKUMAR
• Assessee Lawyers: A SASI KUMAR
• Keywords: Additional evidence; Wrong claim
• Section: 194C

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , D B ENCH, CHENNAI . . . , ! ' , % & BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER I.T.A.NO. 547/MDS/2014 & C.O.NO.39/MDS/2014 (IN ITA NO.547/MDS/2014) ( / ASSESSMENT YEAR : 2010-11) THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-XV, CHENNAI-600 034. VS M/S. V.K. ENTERPRISES, FLAT NO.F1, 1 ST FLOOR, 23, SUNDARARAJAN STREETM ABHIRAMAPURAM, CHENNAI-600 018. PAN: AAAFV1990Q ( /APPELLANT) (RESPONDENT/CROSS OBJECTOR) / APPELLANT BY : MR. A. SASI KUMAR, JCIT /RESPONDENT BY : MR. V.S.JAYA KUMAR, ADVOCATE / DATE OF HEARING : 25 TH AUGUST, 2014 /DATE OF PRONOUNCEMENT : 25 TH AUGUST, 2014 / O R D E R PER CHALLA NAGENDRA PRASAD , JM: THE REVENUE HAS FILED THIS APPEAL AGAINST THE ORD ER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-V, CHENNAI DATED 27.11.2013 FOR THE ASSESSMENT YEAR 2010-11. THE ASS ESSEE HAS FILED CROSS OBJECTION IN SUPPORT OF THE ORDER O F THE COMMISSIONER OF INCOME TAX (APPEALS). 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS IN ITS APPEAL:- 1. T H E ORDER OF THE ID. CIT(A) IS CONTRARY TO LAW AND 2 ITA NO.547/MDS/2014 & CO NO.39/MDS/2014 FACTS OF THE CASE 2. TH E LD. CIT(J I . ) ERRED IN DELETING THE DISALLOWANCE OF ` 3, 2 7 ,35,109/- OF FREIGHT CHARGES FOR HEAVY GOODS AND MULTI AXLE G O O DS VEH I CLES HAVING INCORRECT TAMILNADU REG I STRATION NUMBERS. 3. T H E I D. CIT(A) ER R ED IN DELETING THE DISALLOWANCE OF ` 3,00,974/- OU T OF THE DISALLOWANCE OF ` 3,46,376/- FOR VEHICLES HAVING P U D UCHERRY REQI S TRATION NUMBERS USED VEHICLES OTHER THAN H G V/ MAV L IKE MGV , LGV, TRACTORS, HMV ETC . 4. T H E ID . CIT(A) ERRED IN DELETING THE DISALLOWANCE OF ` 4 ,34,084/- O U T O F THE TOTA L DISALLOWANCE OF ` 6,74,908/ - FOR VEHICLES HAVING KERALA REG I STRATIO N NUMBERS . 5. I T I S SUBMITTED T H AT THE I SSUE HAS BEEN DECIDED B Y THE CIT(A) ON T H E BASIS OF EVI D ENCE P R ODUCED FO R THE FIRST TIME BEFORE THE ID. C I T (A) SUCH AS CORRECT REGISTRATION NUMBERS OF THE VEHICLES C OR R ESPONDING T O THE INCORRECT VEHICLE NUMBERS WHICH WERE P R O DUCED DURING S CRUTINY PROCEEDINGS, WITHOUT GIVING THE ASSESSING O F F I C E R A R E ASON ABL E OPPORTUNITY TO EXAMINE THE SAME EV I DENCE. 6. H A V ING REGARD T O THE PROVISIONS OF RULE 46A OF I . T. RULES , THE C IT(A) OUGHT TO HAVE GIVEN THE ASSESSING OFFICER A REASONABLE O P PO RTUNITY TO EXAMINE THE EVIDENCE PRODUCED . 7. FO R TH ESE AND OT H ER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEA RI N G, IT I S PRAYED THAT THE ORDER OF THE LEARNED CIT(A) MAY BE SET AS IDE AND THAT OF THE ASSESSING OFFICER RESTORED. 3. THE REVENUE HAS RAISED GROUND 5 & 6 STATING TH AT COMMISSIONER OF INCOME TAX (APPEALS) CONSIDERED THE ADDITIONAL EVIDENCES PRODUCED BY THE ASSESSEE FOR T HE FIRST 3 ITA NO.547/MDS/2014 & CO NO.39/MDS/2014 TIME BEFORE HIM AND PASSED THE ORDER WITHOUT GIVIN G OPPORTUNITY TO THE ASSESSING OFFICER VIOLATING THE PROVISIONS OF RULE 46A. 4. COUNSEL FOR THE ASSESSEE SUBMITS THAT NO ADDITIO NAL EVIDENCES WERE FILED BY THE ASSESSEE IN RESPECT OF TAMIL NADU, PUDUCHERY AND KERAL TRANSACTIONS AND ADDITIO NAL EVIDENCES WERE PRODUCED ONLY FOR ANDHRA PRADESH TRANSACTIONS. HOWEVER, THE COMMISSIONER OF INCOME T AX (APPEALS) SUSTAINED THE ADDITION MADE WITH REGARD T O ANDHRA PRADESH TRANSACTIONS AND ASSESSEE IS NOT IN APPEAL. THEREFORE, COUNSEL SUBMITS THAT SINCE THERE IS NO A DDITIONAL EVIDENCE FILED BY THE ASSESSEE IN RESPECT OF TAMIL NADU, PUDUCHERRY AND KERALA TRANSACTIONS, THERE IS NO VIO LATION OF RULE 46A. 5. COMING TO GROUND NOS.2 TO 4 OF GROUNDS OF APPEAL , THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT DISALLOWED ` 3,50,33,384/- BEING EXPENDITURE INCURRED FOR FREIGHT CHARGES TREATING AS BOGUS IN NATURE. DURIN G THE 4 ITA NO.547/MDS/2014 & CO NO.39/MDS/2014 ASSESSMENT PROCEEDINGS, ASSESSEE FURNISHED FREIGHT CHARGES PAID UNDER THREE CATEGORIES NAMELY : I) LORRY FREIGHT WARRANTING DEDUCTION OF TDS U/S.194C; II) PAYMENTS TO (A) TRANSPORT SUB-CONTRACTORS AND FREIGHT OPERATORS WHO HAVE FURNISHED THEIR PAN UNDER CLAUSE 6 TO SEC.194 OR (B) TRANSPORT SUB-CONTRACTORS OWNING NOT MORE THAN 2 GOODS CARRIAGE VEHICLES AS PER RULE 29D(1). III) SINGLE PAYMENTS NOT EXCEEDING ` 20,000/- AND THE AGGREGATE PAYMENTS NOT EXCEEDING ` 50,000/- PER ANNUM AS PROVIDED IN SEC.194C. 6. THE ASSESSEE WAS ASKED TO PROVIDE SOFT COPY OF T HE DETAILS OF FREIGHT CHARGES PAID UNDER THE CATEGORY OF SINGLE PAYMENTS NOT EXCEEDING ` 20,000/- AND AGGREGATE PAYMENTS NOT EXCEEDING ` 50,000/- PER ANNUM AS PROVIDED UNDER SECTION 194C OF THE ACT. BASED ON THE INFORMATION FURNISHED BY THE ASSESSEE, THE ASSESSING OFFICER MADE ENQUIRI ES WITH THE STATE TRANSPORT COMMISSIONER / PRINCIPAL SECRET ARY OF THE STATES OF KERALA, TAMIL NADU, KARNATAKA , ANDHR A PRADESH AND PONDICHERRY. THE COMMISSIONERS OF REGIO NAL TRANSPORT AUTHORITIES OF THESE STATES HAVE WRITTEN TO THE 5 ITA NO.547/MDS/2014 & CO NO.39/MDS/2014 ASSESSING OFFICER INFORMING THAT NUMBER OF VEHICLES COMING UNDER THE CLASS OF VEHICLE OTHER THAN THE HEAVY GO ODS VEHICLE/MULTI-AXLE GOODS VEHICLE. THEREFORE, ASSE SSING OFFICER WAS OF THE VIEW THAT ASSESSEE HAS CLAIMED B OGUS EXPENDITURE ON ACCOUNT OF FREIGHT CHARGES PAID BASE D ON THE INFORMATION RECEIVED FROM TRANSPORT COMMISSIONER OF FICES. ASSESSING OFFICER CALLED FOR EXPLANATION AND THE AS SESSEE FURNISHED A DETAILED SUBMISSIONS DATED 18.3.2013 S TATING AS UNDER:- BY NO STRETCH OF IMAGINATION, THE VEHICLES SUCH AS MOTORCYCLES, MOPEDS, BUS AND SIMILAR VEHICLES CAN BE USED FOR THE TRANSPORTATION OF GOODS BY THE ASSESSEE. THE VEHICLES CLASSIFICATION INDICATED IN THE SHOW CAUSE NOTICE ARE EITHER THE RESULT OF WRON G VEHICLE NUMBERS INADVERTENTLY PROVIDED OR WRONG CLASSIFICATION DONE EITHER AT THE TIME OF COMPILIN G DATA COLLECTED FROM THE TRANSPORT COMMISIONERATE OR WRONG CLASSIFICATION AVAILABLE IN THE DATABASE O F THE TRANSPORT COMMISSIONERATE. 7. THE SUBMISSIONS OF THE ASSESSEE DID NOT FIND FAV OUR TO THE ASSESSING OFFICER AND HE CONCLUDED THE ASSESSME NT DISALLOWING EXPENDITURE OF ` 3,50,33,384/- ON ACCOUNT OF FREIGHT CHARGES. ON APPEAL, COMMISSIONER OF INCOME TAX (APPEALS) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE . THE 6 ITA NO.547/MDS/2014 & CO NO.39/MDS/2014 COMMISSIONER OF INCOME TAX (APPEALS) OUT OF DISALLO WANCE ` 3,36,59,630/- OF FREIGHT CHARGES FOR HEAVY GOODS AN D MULTI- AXLE GOODS VEHICLES OF TAMIL NADU REGISTRATION SUS TAINED THE ADDITION TO THE EXTENT OF ` 9,24,531/- AND BALANCE OF ` 3,27,35,109/- IS DELETED. OUT OF DISALLOWANCE OF ` 3,46,376/- FOR VEHICLES HAVING PUDUCHERRY REGISTRATION NUMBERS , COMMISSIONER OF INCOME TAX (APPEALS) SUSTAINED THE ADDITION TO THE EXTENT OF ` 46,302/- AND BALANCE OF ` 3,00,974/- IS DELETED. SIMILARLY OUT OF DISALLOWAN CE OF ` 11,55,448/- COMMISSIONER OF INCOME TAX (APPEALS) DE LETED ` 9,14,624/- AND SUSTAINED THE ADDITION OF ` 2,40,824/-. 8. THE DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER IN DIS ALLOWING THE FREIGHT CHARGES. DEPARTMENTAL REPRESENTATIVE SU BMITS THAT THE ASSESSEE DID NOT PROVIDE INCURRING OF FREI GHT CHARGES WITH CORRECT DETAILS. THE DETAILS FURNISHED BY THE ASSESSEE ARE INCORRECT AND THEREFORE DEPARTMENTAL REPRESENTA TIVE SUBMITS THAT THE ASSESSING OFFICER IS CORRECT IN DI SALLOWING THE FREIGHT CHARGES. 7 ITA NO.547/MDS/2014 & CO NO.39/MDS/2014 9. COUNSEL FOR THE ASSESSEE STRONGLY RELIES ON THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) AND THE SUBMIS SIONS MADE BEFORE HIM. 10. HEARD BOTH SIDES. PERUSED ORDERS OF LOWER AUTHO RITIES. THE COMMISSIONER OF INCOME TAX (APPEALS) GAVE RELIE F TO THE ASSESSEE ON EXAMINING THE SUBMISSIONS THOROUGHLY AN D VARIOUS MISTAKES COMMITTED BY THE ASSESSEE WHILE CO MPILING DATA AND VARIOUS MISTAKES COMMITTED BY THE ASSESSEE IN PROVIDING DATA TO THE ASSESSING OFFICER. IT WAS THE FINDING OF THE COMMISSIONER OF INCOME TAX (APPEALS) THAT ASSES SING OFFICER HAS NEVER EXAMINED THE VOUCHERS AND BILLS SUBMITTED BY THE ASSESSEE BEFORE HIM TO ESTABLISH THAT THE EX PENDITURE IS BOGUS. COMMISSIONER OF INCOME TAX (APPEALS) CONC LUDED WITHOUT VERIFYING THE BILLS AND VOUCHERS RAISED BY THE ASSESSEE FOR CLAIMING TRANSPORT CHARGES FROM VARIO US PARTIES, NO ADDITION CAN BE MADE DISALLOWING THE TRANSPORT E XPENSES CLAIMED BY THE ASSESSEE. COMMISSIONER OF INCOME TA X (APPEALS) CONCLUDED THAT SINCE THIS EXERCISE HAS NO T BEEN DONE TO ESTABLISH THE BOGUS CLAIM OF TRANSPORT CHAR GES PAID TO 8 ITA NO.547/MDS/2014 & CO NO.39/MDS/2014 NON-EXISTING PARTIES, ADDITION MADE CANNOT BE SUSTA INED. IT IS ALSO THE FINDING OF THE COMMISSIONER OF INCOME TAX (APPEALS) THAT ADDITION MADE BY THE ASSESSING OFFIC ER IS NOT BASED ON THE FACT FINDING DISPROVING THE CLAIM MADE BY THE ASSESSEE OR ESTABLISHING THE BOGUS CLAIM OF EXPENDI TURE. THE ASSESSEE WHEREVER COULD NOT RECONCILE OR PROVID E BILLS AND CLARIFICATION BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) TRANSPORT CHARGES TO THAT EXTENT WERE DIS ALLOWED. ON OVERALL EXAMINATION OF THE RECORDS AND THE ORDER S OF LOWER AUTHORITIES, WE FIND THAT THERE ARE LAPSES ON THE P ART OF THE ASSESSEE IN PROVIDING INFORMATION CORRECTLY TO THE ASSESSING OFFICER AND ALSO THE EXAMINATION OF ASSESSING OFFIC ER WITH REGARD TO THE SUBMISSIONS MADE BY THE ASSESSEE. TA KING THE OVERALL VIEW OF THE MATTER, WE DIRECT THE ASSESSING OFFICER TO DISALLOW FURTHER TEN PER CENTAGE OUT OF THE RELIE F GRANTED BY THE COMMISSIONER OF INCOME TAX (APPEALS) ON THE FR EIGHT CHARGES IN RESPECT OF TAMIL NADU, PUDUCHERRY AND KE RALA TRANSACTIONS TO MEET THE ENDS OF JUSTICE. THE APPE AL OF THE REVENUE IS THUS PARTLY ALLOWED. 9 ITA NO.547/MDS/2014 & CO NO.39/MDS/2014 11. SINCE THE APPEAL OF THE REVENUE IS PARTLY ALLOW ED, THE CROSS OBJECTION FILED BY THE ASSESSEE IN SUPPORT OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IS DISM ISSED AS SUCH. 12. IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY ALLOWED AND CROSS OBJECTION OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON MONDAY, THE 25 TH DAY OF AUGUST, 2014 AT CHENNAI. SD/- SD/- ( . . . ) ( $ &' ) ( DR. O.K. NARAYANAN ) ( CHALLA NAGENDRA PRASAD ) *+ /VICE-PRESIDENT & , / JUDICIAL MEMBER & /CHENNAI, - /DATED, 25 TH AUGUST, 2014 SOMU 12 32 /COPY TO: 1. APPELLANT 2. /RESPONDENT 3. 4 () /CIT(A) 4. 4 /CIT 5. 2 7 /DR 6. /GF .