HELIOS LOGISTICS, MUMBAI V. ITO 25(1)(1), MUMBAI

ITA 1032/MUM/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2354 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 16-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3); 147; 148; 54

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE HONBLE S/SHRI JOGINDER SINGH (JM), AND RAJESH KUMAR, ( AM ) ./ I.T.A. NO . 1 032 /MUM/20 1 5 ( / ASSESSMENT YEAR : 200 8 - 09 ) M/S HELIOS LOGISTICS, A/402 RAJ SHIVAM SOCIETY, MARUTI NAGAR, DAHISAR (E), MUMBAI - 400068 / VS. INCOME TAX OFFICER, 25(1)(1) - C - 11, 2 ND FLOOR, ROOM NO.201, PRATYAKSHKAR BHAVAN, BANDRA (E), BKC, MUMBAI - 400051 ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN/GIR NO. : AAEFH7878M / APPELLANT BY: NONE / RESPONDENT BY SHRI KAILASH KANOJIYA / DATE OF HEARING : 20 . 7 .201 6 / DATE OF PRONOUNCEMENT : 29. 7.2016 / O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AND IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) - 35, MUMBAI DT. 14.11.2014 PERTAINING TO A.Y. 20 0 8 - 0 9 . DESPITE OF SERVICE OF NOTICE, NONE APPEARED ON BEHALF OF THE ASSESSEE, THEREFORE, WE PROCEED TO DECIDE THE APPEAL EX - PARTE WITHOUT PRESENCE OF ASSESSEE ON THE BASIS OF MATERIAL AVAILABLE BEFORE US AND AFTER HEARING THE LD.DR. ITA NO. 1032 / M/1 5 2 2. THE ISSUE RAISED IN THE GROUND OF APPEAL IS AGAINST THE CONFIRMATION OF PENALTY LEVIED UNDER SECTION 271B OF THE INCOME TAX ACT, 1961 OF RS.28,231/ - BY THE LD. CIT(A) AS IMPOSED BY THE AO. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE WAS REIMBURSED VARIUS EXPENSES INCUR RED BY IT BY CLIENTS /PRINCIPLES AND SHOULD NOT HAVE BEEN CONSIDERED AND TAKEN FOR DETERMINATION FOR APPLICABILITY OF SECTION 44AB OF THE ACT. 4. THE RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 22.12.2008 , DECLARING LOSS OF RS.47,848 / - WHICH WAS PROCESS ED UNDER SECTION 143(3) OF THE ACT. THE CASE WAS REOPENED UNDER SECTION 147 AND NOTICE U/S 148 WAS ISSUED TO THE ASSESSEE ON THE GROUND THAT THE ASSESSEE HAS SHOWN INCORRECT RECEIPT IN T HE BOOKS OF ACCOUNT VIZ AGGREGATE RECEIPT AS PER THE TDS CERTIFICA TE S THE ASSESSEE HAS SHOWN GROSS RECEIPT OF RS.14,51,994/ - INSTEAD OF RS.56,46,246/ - AS PER TDS CERTIFICATE S . FINALLY, THE ASSESSMENT U/S 143(3) READ WITH SECTION 147 OF THE ACT WAS COMPLETED ON 20.12.2011 AT A LOSS OF RS.( - 22848/) AND PENALTY PROCEEDIN GS UNDER SECTION 271B WAS ALSO INITIATED BY THE AO FOR FAILURE TO AUDIT ACCOUNT UNDER SECTION 44AB OF THE ACT. THE ASSESSEE WAS AN AGENT ENGAGED IN THE BUSINESS OF CLEARING AND FORWARDING . IN REPLY TO SHOW CAUSE NOTICE, THE ASSESSEE SUBMITTED THAT THE A SSESSEE IS IN THE BUSINESS OF CLEARING AND FORWARDING FOR ITS CLIENTS AND RECEIVES SERVICE CHARGES AS INCOME AGAINST THE CLEARING OF IMPORT, EXPORT AND HANDLING CONSIGNMENT OF ITS CLIENTS . AT THE SAME TIME, THE ASSESSEE HAS TO MAKE ITA NO. 1032 / M/1 5 3 VARIOUS PAYMENTS ON B EHALF OF THE CLIENTS SUCH AS CUSTOMS DUTY, FREIGHT CHARGES AND TRANSPORTATION FOR CLEARING GOODS ETC, WHICH WERE REIMBURSED BY T HE CLIENTS. IT IS ALSO PERTINENT TO NOTE THAT THE RECEIPT/ACKNOWLEDGEMENT GIVEN BY THE CONCERNED DEPARTMENT WERE ALSO IN THE NAM E OF PAYER /CLIENTS ONLY AND NOT IN THE NAME OF ASSESSEE , WHICH PROVED THE POSITION OF THE ASSESSEE AS AN AGENT AND NOT AS A PRINCIPAL . THE ASSESSEE FURNISHED BEFORE THE AO, DETAILS OF RS.56,46,246/ - COMPRISING OF CUSTOMS DUTY, SHIPPING LINE CHARGES(FR EIGHT EXPORT), OCEAN FREIGHT CHARGES (IMPORT), STAMP DUTY, TERMINAL HANDLING CHARGES PAID ON BEHALF OF THE MAJOR CLIENTS WHICH WERE INCLUDED IN RS.56,46,246/ - AND THUS THE TOTAL REIMBURSEMENT WORKED OUT TO RS.26 LAKHS DURING THE YEAR. THE ASSESSEE SUB MITTED THAT AFTER REDUCING THE AMOUNT REIMBURSED BY THE CLIENT S , THE TURNOVER WAS LESS THAN RS.40 LAKHS . THE ASSESSEE ALSO RELIED ON CBDT CIRCULA R NO.452 DATED 17.3.1986 WHICH STATE S THAT IN THE CA S E OF AGENT WHOSE POSITION IS SIMILAR TO KACCHA ARHATIA , THE TURNOVER IS ONLY THE COMMISSION (1) ASSESSEE LIKE THE KACCHA ARHATIA BRINGS THE PRIVATE CONTRACT BETWEEN CUSTOMS AUTHORITIES, DOCK AUTHORITIES AND SHIPPING LINE AUTHORITIES AND THE IMPORTER/EXPORTER. (2) ASSESSEE DOES NOT HAVE DOMINION OR ANY LEGA L TITLE OVER GOODS IMPORTED OR EXPORTED . (3) ASSESSEE IS AGENT AND AT ALL TIMES TRANSACTS WITH THESE AUTHORITIES AS CLEARING A GENT ONLY AND NOT AS OWNER OF GOODS TO BE IMPORTED /EXPORTED. THE ASSESSEE ALSO RELIED ON THE DECISION IN THE CASE OF GA ROAD CARRIE R V/S ITO (2011) 44DT 145 (HYD) WHEREIN IT IS H ELD THAT DEDUCTION OF TDS CANNOT LEAD TO CONCLUSION THAT FREIGHT CHARGES CONSTITUTED ASSESSEES FIRM TURNOVER OR ITA NO. 1032 / M/1 5 4 G RO SS RECEIPTS. HOWEVER, THE AO NOT BEING SATISFIED WI TH THE SUBMISSION O F THE ASSESSE E IMPOSED PENALTY OF RS.28321/ - BEING % OF THE TURNOVER. AGGRIEVED, BY THE ORDER OF THE AO , THE ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY , WHO ALSO CONFIRMED THE ACTION OF THE AO BY HOLDING THAT EVEN THOUGH THE AGENT OF OTHERS FOR CLEARING AND FORWARDING OF GOODS, IMPORT AND EXPORT, THE ASSESSEE NEED ED TO REFLECT GROSS PICTURE OF HIS AFFAIRS AND TO THAT EXTENT THE PROVISIONS OF SECTION 44AB OF THE ACT WOULD BE APPLICABLE TO THE AGENT . 5. WE HAVE CAREFULLY CONSIDERED THE MA TERIAL PLACED BEFORE US, ALSO THE SUBMISSIONS OF THE LD.DR INCLUDING THE ORDERS OF AUTHORITIES BELOW INCLUDING CBDT CIRCULAR AND CASE LAW RELIED UPON BY THE ASSESSEE. WE FIND FROM THE RECORD THAT THE ASSESSEE IS A CLEARING AND FORWARDING AGENT AND PROVI DING THE SERVICES TO THE CLIENTS FOR ARRANGING IMPORT - EXPORT AND FORWARDING GOODS AND GETTING CLEARANCE S FROM THE GOVERNMENT AUTHORITIES ON BEHALF OF THE CLIENTS FOR WHICH THE ASSESSEE NEEDS TO INCUR CERTAIN EXPENSES SUCH AS CUSTOM DUTY, FREIGHT CHARGES AN D TRANSPORTATION FOR CLEARING GOODS ETC, WHICH ARE REIMBURSED BY THE CLIENTS TO THE ASSESSEE. DURING THE YEAR, THE TURNOVER OF THE ASSESSEE AS ACCOUNTED FOR BY THE ASSESSEE WAS TO THE TUNE OF RS.14, 51 ,994/ - WHEREAS THE TOTAL RECEIPT S AS PER TDS CERTIFICA TES O N WHICH TDS WAS DEDUCTED WERE RS.56,46,246/ - WHICH WAS INCLUSIVE OF REIMBURSEMENT OF EXPENSES TO THE TUNE OF RS.26 LAKHS AND THUS, IF WE SUBTRACT THE AMOUNT REIMBURSEMENT FROM THE GROSS RECEIPT AS PER TDS ITA NO. 1032 / M/1 5 5 CERTIFICATE WHICH IS RS. 56,46,246/ - , T HE TURNOVER OF THE ASSESSEE WOULD BE LESS THAN RS.40 LAKHS. WE ALSO FIND MERIT IN THE CASE OF ASSESSEE THAT THE CBDT CIRCULAR MENTIONED ABOVE PROVIDES THAT IN CASE OF AGENT WHO WAS PLACED AS THE KACCHA ARHATIA , THE TURNOVER WOULD BE THE COMMISSION SERVICE CHARGES ONLY AND NOT GROSS RECEIPT RECEIVED BY THE ASSESSEE INCLUDING THE REIMBURSEMENT S . THE CASE OF THE ASSESSEE IS ALSO SUPPORTED BY THE DECISION OF GA ROAD CARRIE RS (SUPRA) WHEREIN IT HAS BEEN HELD THAT THE DEDUCTION OF TDS CANNOT LEAD TO CONCLUSION THAT FREIGHT CHARGES CONSTITUTED ASSESSEES FIRM TURNOVER OR GROSS RECEIPTS. MOREOVER, THE AO HAS NOT BROUGHT ANY MATERIAL ON RECORD TO PROVE THAT THE AMOUNT RECEIVED BY THE ASSESSEE AS PER THE TDS CERTIFICATE S WERE ACTUAL TURNOVER OF T HE ASSESS EE AND NO NET ELEMENT OF REIMBURSEMENT INCLUDED IN THE GROSS RECEIPT. THE PURPOSE OF APPLICABILITY OF PROVISIONS OF SECTION 44AB OF THE ACT. KEEPING IN VIEW, THE SUBMISSIONS AND THE RATIO LAID DOWN BY THE JURISDICTIONAL HIGH COURT, WE ARE OF THE CONSIDER ED VIEW THAT THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE ABOVE DECISION. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD. CIT(A) AND DIRECT THE AO TO DELETE THE PENALTY. 6 . IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. THE ABOVE ORDER W AS PRONOUNCED IN THE OPEN COURT ON 29TH JULY, 2016 . 29TH JULY, 2016 SD SD (JOGINDER SINGH ) ( RAJESH KUMAR ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 29TH JULY, 2016 . . . ./ SRL , SR. PS ITA NO. 1032 / M/1 5 6 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT . 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. 6. , , / DR, ITAT, MUMBAI CONCERNED / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI