ITO, Kumbakonam V. Shri R.Sundaramurthy, Mayiladuthurai

ITA 1018/CHNY/2012

• Counselvise Citation: 101821714 RSA 2012
• Duration Of Justice: 3 year(s) 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2015
• Appeal Filed By: Department
• Bench Allotted: D
• Next Hearing Date: 12-10-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 09-05-2012
• Court: TRIBUNAL
• Department Lawyers: DR B NISCHAL
• Assessee Lawyers: S SRIDHAR
• Keywords: Unexplained cash credit
• Section: 194C; 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI . . . , . !' , # $ % [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ] ./ I.T.A.NO.1018/MDS/2012 / ASSESSMENT YEAR : 2005-06 THE INCOME TAX OFFICER WARD I(2) KUMBAKONAM VS. SHRI R . SUNDARAMURTHY NO.4, THENNAMARA SALAI MAYILADUTHURAI [PAN AASPS 6376 F ] ( &' / APPELLANT) ( ()&' /RESPONDENT) / APPELLANT BY : DR. B NISCHAL, JCIT /RESPONDENT BY : SHRI S. SRIDHAR, ADVOCATE / DATE OF HEARING : 12 - 10 - 2015 ! / DATE OF PRONOUNCEMENT : 28 - 10 - 2015 / O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS), TIRUCHIRA PALLI, DATED 29.02.2012 AND PERTAINS TO ASSESSMENT YEAR 2005-0 6. 2. DR. B. NISCHAL, LD. DEPARTMENTAL REPRESENTATIVE SUB MITTED THAT THE ASSESSEE IS A CONTRACTOR WITH ONGC. DURI NG THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS PAID A SUM OF ` 3,31,207/- AS INTEREST TO M/S SUNDARAM FINANCE AND ANOTHER SUM OF ` 18,54,192/- TO VARIOUS SUB-CONTRACTORS FOR HIRING VEHICLES TO CARRY OUT TH E WORK UNDERTAKEN ITA NO.1018/12 :- 2 -: FROM ONGC. THE ASSESSING OFFICER DISALLOWED A SUM OF ` 22,21,149/- U/S 40(A)(IA) OF THE ACT ON ACCOUNT OF NON-DEDUCTIO N OF TAX WITH REGARD TO THE PAYMENT MADE TO HIRING OF THE VEHICLE S AND THE INTEREST PAID TO M/S SUNDARAM FINANCE. HOWEVER, THE CIT(A) D ELETED THE ENTIRE ADDITION MADE BY THE ASSESSING OFFICER. THE REVENU E HAS NOW FILED THE APPEAL IN RESPECT OF DISALLOWANCE OF ` 18,54,192/- BEING THE PAYMENT MADE FOR HIRING THE VEHICLES BY THE ASSESS EE WITHOUT DEDUCTION OF TAX. ACCORDING TO THE LD. DR, THE PAY MENT MADE BY THE ASSESSEE IS TO THE SUB-CONTRACTORS, THEREFORE, THE SAME HAS TO BE DISALLOWED U/S 40(A)(IA) OF THE ACT SINCE ADMITTED LY, NO TAX WAS DEDUCTED. 3. ON THE CONTRARY, SHRI S. SRIDHAR, LD. COUNSEL FOR T HE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS HIRED THE VEHICLE S TO CARRY OUT THE WORK ENTRUSTED BY ONGC TO THE ASSESSEE. ACCORDING TO THE LD. COUNSEL, IT IS SIMPLY A HIRING OF THE VEHICLES AND NO PART OF THE WORK WAS ENTRUSTED TO THE LORRY OWNERS, THEREFORE, IT I S NOT A SUB-CONTRACT AT ALL. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. AD MITTEDLY, THE ASSESSEE TOOK CONTRACT FROM ONGC. TO CARRY OUT THE WORK ENTRUSTED BY ONGC, THE ASSESSEE HIRED VEHICLES FROM VARIOUS PERSONS. THE ITA NO.1018/12 :- 3 -: ASSESSEE HAS PAID THE HIRE CHARGES. THE VEHICLES W ERE IN FACT USED BY THE ASSESSEE FOR CARRYING OUT THE WORK ENTRUSTED B Y ONGC. FROM THE MATERIAL AVAILABLE ON RECORD IT IS CLEAR THAT NO PA RT OF THE WORK WAS ENTRUSTED TO THE LORRY OWNERS. THEREFORE, AT ANY ST RETCH OF IMAGINATION, IT CANNOT BE CONSTRUED AS SUB-CONTRACT. IT IS A S IMPLE PAYMENT OF HIRE CHARGES FOR HIRING THE VEHICLES. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT SEC. 194C OF THE ACT IS NO T APPLICABLE FOR THE PRESENT TRANSACTION. SEC. 194I IS ALSO NOT APPLICA BLE FOR THE YEAR UNDER CONSIDERATION. THEREFORE, THE ASSESSEE IS NOT LIA BLE TO DEDUCT TAX ON HIRE CHARGES PAID TO THE VEHICLE OWNERS. THIS TRI BUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) ON THIS ISSUE. ACCORDINGLY, THE SAME IS CONFIRMED. 5. THE NEXT GROUND IS WITH REGARD TO ADDITION MADE BY THE ASSESSING OFFICER U/S 68 OF THE ACT. 6. DR. B. NISCHAL, LD. DR SUBMITTED THAT THE ASSESSING OFFICER MADE AN ADDITION OF ` 12,50,000/- AS UNEXPLAINED CREDIT. ACCORDING TO THE LD. DR, THE ASSESSEE HAS RECEIVED ` 12,50,000/- FROM FOUR CREDITORS. HOWEVER, THE ASSESSEE FAILED TO ESTABLI SH THE CREDITWORTHINESS OF THE CREDITORS, CAPACITY OF THE CREDITORS TO ADVANCE THE LOAN AND GENUINENESS OF THE TRANSACTION. HOWEV ER, THE CIT(A) FOUND THAT THE LOAN TRANSACTION WAS MADE THROUGH BA NKING CHANNEL. ITA NO.1018/12 :- 4 -: ACCORDING TO THE LD. DR, MERELY BECAUSE THE TRANSAC TION WAS MADE THROUGH BANKING CHANNEL, THAT CANNOT PROVE THE CRED ITWORTHINESS OF THE CREDITORS. ACCORDING TO THE LD. DR, THE CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER WITHOUT ANY MATERIAL AVAILABLE ON RECORD TO ESTABLISH THE CREDI TWORTHINESS OF THE CREDITORS. 7. ON THE CONTRARY, SHRI S. SRIDHAR, LD. COUNSEL FOR T HE ASSESSEE SUBMITTED THAT THE LOAN WAS OBTAINED THROUGH BANKIN G CHANNEL WHICH ESTABLISHES THE IDENTITY OF THE CREDITORS AND GENUI NENESS OF THE TRANSACTION. TO PROVE THE CREDITWORTHINESS OF THE CREDITORS, THE ASSESSEE HAS FILED PROMISSORY NOTES, CONFIRMATION L ETTERS AND NOTARY AFFIDAVITS. THE ASSESSING OFFICER, WITHOUT EXAMINI NG THESE DOCUMENTS, MADE THE ADDITION, THEREFORE, THE CIT(A) HAS RIGHTL Y DELETED THE ADDITION. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. TO ESTABLISH LOAN TRANSACTION, THE ASSESSEE HAS TO NECESSARILY ESTAB LISH THE IDENTITY OF THE CREDITOR, CREDITWORTHINESS OF THE CREDITOR AND GENUINENESS OF THE TRANSACTION. IN THE CASE BEFORE US, THOUGH THE AS SESSEE CLAIMS THAT CONFIRMATION LETTERS AND PROMISSORY NOTES WERE FILE D BEFORE THE ASSESSING OFFICER, NO MATERIAL IS AVAILABLE ON RECO RD TO SUGGEST THAT ITA NO.1018/12 :- 5 -: SUCH MATERIALS WERE AVAILABLE BEFORE THE ASSESSING OFFICER. THE CIT(A) HAS NOT EXAMINED THE MATERIAL FILED BEFORE HIM. ON THE BASIS OF THE MATERIAL FILED BEFORE HIM, THE CIT(A) OBSERVED THAT THE ASSESSING OFFICER IS NOT JUSTIFIED IN JUMPING TO THE CONCLUSI ON. THE CIT(A), BEING AN OFFICER HAVING POWERS CO-TERMINUS WITH THAT OF T HE ASSESSING OFFICER, HAS TO EXAMINE THE GENUINENESS OF THE MATE RIAL FILED BEFORE HIM OR CALL FOR A REMAND REPORT FROM THE ASSESSING OFFICER. UNFORTUNATELY, THE CIT(A) HAS NEITHER EXAMINED THE MATERIAL AVAILABLE BEFORE HIM NOR CALLED FOR ANY REMAND REPORT FROM TH E ASSESSING OFFICER. THEREFORE, THIS TRIBUNAL IS OF THE CONSID ERED OPINION THAT THE MATTER NEEDS TO BE RE-EXAMINED BY THE ASSESSING OFF ICER. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES WITH REGARD TO ADDITION OF ` 12,50,000/- AS UNEXPLAINED CREDIT ARE SET ASIDE AN D THE ISSUE IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RE-EXAMINE THE ISSUE AFRESH IN THE LI GHT OF THE MATERIAL THAT MAY BE FILED BY THE ASSESSEE AND THEREAFTER D ECIDE THE ISSUE IN ACCORDANCE WITH LAW AFTER GIVING A REASONABLE OPPOR TUNITY TO THE ASSESSEE. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO.1018/12 :- 6 -: ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH OCTOBER, 2015, AT CHENNAI. SD/- SD/- ( . !' ) (A. MOHAN ALANKAMONY) # / ACCOUNTANT MEMBER ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER #$ / CHENNAI %& / DATED: 28 TH OCTOBER, 2015 RD &' ()*) / COPY TO: 1 . / APPELLANT 3. +,' / CIT(A) 5. )-. / / DR 2. / RESPONDENT 4. + / CIT 6. .01 / GF