M/s. Chandan Trans-Cons (P) Ltd, Rourkela V. ITO(TDS), Roukela, Rourkela

ITA 108/CTK/2013

• Counselvise Citation: 10822114 RSA 2013
• Duration Of Justice: 2 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2015
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 25-05-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 20-02-2013
• Court: TRIBUNAL
• Assessee Lawyers: B PANDA
• Keywords: Search and seizure; Principle of natural justice
• Section: 194C

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH , CUTTACK [ , . . , BEFORE SHRI SUNIL KUMAR YADAV , J M & SHRI B.P.JAIN , A M ./ ITA NO S . 107 TO 109 /CTK/201 3 ( [ [ / ASSESSMENT YEAR S : 2008 - 2009 TO 2010 - 2011 ) M/S CHANDAN TRANS - CONS (P) LTD., FF/2, CIVIL TOWNSHIP, ROURKELA VS. ITO (TDS), ROURKELA ./ ./ PAN/GIR NO. : A A CCC 5185 B ( / A PPELLANT ) .. ( / RESPONDENT ) [ /ASSESSEE BY : SHRI B.PANDA /REVENUE BY : SHRI K.K.NATH / DATE OF HEARING : 2 5 TH MAY , 201 5 / DATE OF PRONOUNCEMENT 27 TH MA Y ,2015 / O R D E R PER SUNIL KUMAR YADAV (J.M) : TH IS ORDER SHALL GOVERN THE DISPOSAL OF THREE APPEALS FILED BY THE ASSESSEE AGAINST THE CONSOLIDATED ORDER OF THE CIT(A) - II, BHUBANESWAR, DATED 21 - 1 - 2013 FOR THE ASSESSMENT YEARS 2008 - 2009 TO 2010 - 2011, RESPEC TIVELY. FOR THE SAKE OF REFERENCE, WE EXTRACT THE GROUNDS RAISED IN APPEAL FOR THE ASSESSMENT YEAR 2008 - 09 I.E. ITA NO.107/CTK/2013 AS UNDER : - I. FOR THAT THE ORDERS OF THE FORUMS BELOW ARE HIGHLY ARBITRARY, UNJUST, ILLEGAL IN THE FACTS AND CIRCUMSTANCE S OF THE CASE AND NO JURISDICTION WAS VESTED ON THE A.O. FOR PASSING OF SUCH ORDER LEVYING DEMAND UNDER SECTION 201(1)/201(1A) OF THE I.T. ACT ON THE ALLEGATION OF FAILURE OF THE APPELLANT TO DEDUCT TAX AT SOURCE IN PURSUANCE TO SECTION 194(C) AND 194(1) O F THE I.T. ACT . WHEN TRANSFER OF OWNERSHIP OF VEHICLE AND MACHINERY WAS NOT MADE OR SURRENDERED TO THE APPELLANT . ITA NO S . 107 - 109/13 2 II . FOR THAT THE WORKS EXEC UTED THROUGH THE LABOUR BASIS IN RESPECT OF THE USE OF ALSO ON HOUR BASIS ON PIECEMEAL AS WELL AS PURELY ON TEMP ORARY WAY HAD NOT EXCEEDED THE LABOUR PAYMENT EITHER AT RS.50,000/ - ON EACH VEHICLE PER ANNUM OR RS.1,20,000/ - IN RESPECT OF EACH EQUIPMENT, MACHINERY AND EVEN THE STATUTORY LIMIT FIXED AT RS.20,000/ - THEREFORE THE ORDER PASSED IS LIABLE TO BE QUASHED AND VACATED. THERE WAS NO REQUIREMENT OF DEDUCTION OF TAX AT SOURCE. III. FOR THAT THE USE OF MACHINERY NEITHER WAS UNDER TAKEN AS TRANSFER OF OWNERSHIP FOR RIGHT TO USE NOR PAYMENT MADE TO EACH TRUCK OWNERS ON THE BASIS OF AGREEMENT FOR RIGHT TO USE BUT TO THE AGENTS IN RESPECT OF EACH VEHICLE, MACHINERY ON TRIP BASIS AND ALSO ON HOURLY BASIS ACCORDINGLY NOT LIABLE FOR ANY DEDUCTION OF TAX AT SOURCE HENCE THE ORDER PASSED IS LIABLE TO BE VACATED. THE FAILURE OF THE FORUMS BELOW TO EXAMINE THIS MATER CAUSED L EVY OF ILLEGAL DEMAND. IV. FOR THAT THE ORDER OF THE LEARNED CIT(A) IS COMPLETELY BASELESS AND ILLEGAL AND NOT VERIFIED IN SPITE OF THE DETAILS PRODUCED AND GONE THROUGH THE PRINCIPLES OF LAW DECIDED BY THE AUTHORITIES AND OBSERVATION MADE THEREIN INCLUD ING PASSING ORDER IS WRONG, ABSURD THUS IS LIABLE TO BE QUASHED AND VACATED. V. F OR THAT THE FAILURE OF THE FORUMS BELOW TO EXAMINE AND VERIFY THE DETA.LS O BE PAYMENT RECEIPTS AND VOUCHERS PRODU CED TO SATISFY THE PAYMENTS AGAI NST THE SERVICES RENDERED BY THE PARTIES INVOLVED IN THE CHAIN S H OU L D HAVE BEEN ENTERTAINED AND ALLOWED DELETING THE DEMANDS MADE. VI FOR THAT THE FORUMS BELOW HAVING BEEN SATISFIED WITH THE PAYMENTS TO THE ' OWNERS AND MACHINE, HOLDERS RAISED THE DEMAND ON DIFFERENT G ROUNDS AFTER TWISTING THE FACTS AND THE LAW IS NOT TO BE ENTERTAINED. 2. SINCE COMMON ISSUES ARE INVOLVED IN ALL THE APPEALS, THEREFORE, ALL THE APPEALS ARE BEING HEARD EN MASSE AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER. 3. THE CONCISE FACTS E MANATE FROM THE RECORD ARE THAT FROM THE BOOKS AND DOCUMENTS PRODUCED FOR VERIFICATION, THE AO OBSERVED THAT THE ASSESSEE COMPANY WAS A TRANSPORT OPERATOR - CUM - WORKS CONTRACTOR AND THE COMPANY HAD INCURRED EXPENDITURE IN FORM OF PAYMENTS OF HIRE ITA NO S . 107 - 109/13 3 CHARGES OF VARIOUS EQUIPMENT AND PAYMENTS OF TRANSPORT CHARGES. THE ITO IDENTIFIED CERTAIN PAYMENTS WHICH WERE INCURRED TOWARDS HIRING OF MACHINES SUCH AS LOADERS, EXCAVATORS ETC. AND STATED THAT THESE PAYMENTS HAD ATTRACTED PROVISIONS OF TDS U/S.194 - I OF THE INCOME TAX ACT. SIMILARLY, CERTAIN OTHER PAYMENTS WERE LISTED WHICH WERE CLASSIFIED AS PAYMENTS UNDER TRANSPORTATION CONTRACT WHICH ATTRACTED PROVISIONS OF SECTION 194C OF THE ACT. ACCORDINGLY, THE ITO(TDS) SEPARATELY CALCULATED DEMANDS U/S.201(1) AND 201(1A) OF THE ACT OF FOR NON - DEDUCTION OF TDS ON SUCH PAYMENTS. 4. BEING AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) WITH THE SUBMISSION THAT THE PAYMENTS SHOWN IN THE BOOKS OF ACCOUNTS IN THE NAMES OF CERTAIN PERSONS WERE ACTUALLY PAYMENTS MADE TO THESE PERSONS THROUGH AGENTS (VIA MEDIA) TO BE FURTHER DISBURSED TO THE LABOURERS, WHO HAD RENDERED THE SERVICES OR HAD PROVIDED THE EQUIPMENTS. THE ASSESSEE WAS ASKED TO EXPLAIN THAT THE IMPUGNED PAYMENTS SHOWN AGAINST THE PARTIES WERE RECEIVED BY THEM O NLY AS AGENTS OF THE ULTIMATE PAYEES AND CONSEQUENTLY THE WRITTEN SUBMISSION WAS FILED ON BEHALF OF THE ASSESSEE BEFORE THE CIT(A) AND SAME HAS BEEN EXTRACTED IN THE APPELLATE ORDER. THE CIT(A) RE - EXAMINED THE CLAIM OF THE ASSESSEE IN THE LIGHT OF THE WRIT TEN SUBMISSION BUT WAS NOT CONVINCE D WITH THE EXPLANATION OF THE ASSESSEE AND CONFIRMED THE ADDITION. THE RELEVANT OBSERVATIONS OF THE CIT(A) IS EXTRACTED HEREUNDER FOR THE SAKE OF REFERENCE : - ITA NO S . 107 - 109/13 4 5 . I HAVE CAREFULLY APPLIED MY MIND TO THE EXPLANATION AS ABO VE. IN PARA - 2 OF THE SUBMISSION APPARENTLY THERE IS A CONFUSION REGARDING TRANSFER OF OWNERSHIP OF MACHINE. IF THE OWNERSHIP IS TRANSFERRED, THERE WILL BE NO REQUIREMENT OF PAYING ANY RENT. THEREFORE, WHAT APPARENTLY THE APPELLANT HAS PROBABLY STATED IS TH AT DURING THE PERIOD FOR WHICH THE PAYMENT HAS BEEN MADE IT WAS NECESSARY THAT THE EFFECTIVE USE/CONTROL OF THE EQUIPMENT WAS WITH THE APPELLANT TO WARRANT PAYMENT OF RENT. FROM THE DISCUSSION OF THE AO IN HIS ORDER AND THE LETTER OF ITO(TDS), ROURKELA AS DISCUSSED WITH SRI PANDA, IT IS CLEAR THAT THE CONCERNED TIPPER/EXCAVATOR/MACHINE WHICH BELONGED TO SOMEONE ELSE WAS USED BY THE APPELLANT FOR LONG PERIODS FOR WHICH THE APPELLANT HAD MADE PAYMENTS OF RENT. 5.1 THE APPELLANT HAS TRIED TO ARGUE THAT THE PE RSON MENTIONED IN THE SPOOKS WAS THE LEADER OF A GROUP AND PAYMENTS WERE ACTUALLY MADE TO THE INDIVIDUAL MEMBERS OF THE GROUP CHANNELLED THROUGH THE LEADER. THEREFORE, THE INDIVIDUAL PAYMENTS FELL BELOW THE LIMIT AS PRESCRIBED IN THE RESPECTIVE PROVISIONS OF TDS. 5.2. I AM AFRAID, THIS PLEA HAS REMAINED ONLY A PLEA WITHOUT BEING SUPPORTED BY ANY CORROBORATIVE DOCUMENTS OR EVIDENCE SO AS TO BE ACCEPTED FOR THE PURPOSE OF APPEAL. 5.3. THE APPELLANT HAS ALSO TAKEN A PLEA THAT NATURAL JUSTICE HAD BEEN DENIED BY THE ITO(TDS) BECAUSE HE HAD NOT CONFRONTED THE PARTICULAR ITEMS WHICH WERE HELD TO ATTRACT PROVISIONS OF IDS, IN MY VIEW, THIS ARGUMENT IS UNTENABLE BECAUSE AS STATED IN THE ORDERS, THERE HAVE BEEN MULTIPLE OCCASIONS OF VERIFICATION AND THE AO HAD CLEAR LY PICKED UP THOSE ENTRIES IN FRONT OF THE ACCOUNTANT OF THE APPELLANT FROM THE BOOKS WHICH WERE SUBJECTED TO INSPECTION. SINCE THE FACTS ON RECORDS WHICH HAVE BEEN USED WERE FULLY KNOWN TO THE APPELLANT, THERE IS NO QUESTION OF DENIAL OF NATURAL JUSTICE. 5.4. THE AR OF THE APPELLANT HAS NOT DISPUTED ANY OF THE ENTRIES WHICH HAVE BEEN LISTED IN THE ORDERS FOR ALL THE THREE YEARS AND APART FROM WHATEVER HAS BEEN EXTRACTED IN FOREGOING PARAS, THERE HAS BEEN NO OTHER ARGUMENT ADDUCED ON BEHALF OF THE APPELLAN T. THEREFORE, I AM NOT INCLINED TO ACCEPT ANY IMPROPRIETY IN THE DEMANDS RAISED U/S.201(1) & 201(1A) FOR ALL THE THREE YEARS. THE APPEALS ARE DISMISSED. 5. NOW, THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. ITA NO S . 107 - 109/13 5 6. LD. AR OF THE ASSESSEE DREW OUR AT TENTION TO THE DETAILS OF PAYMENTS. DURING THE COURSE OF HEARING, LEARNED COUNSEL FOR THE ASSESSEE HAS ADMITTED THAT HE HAS PAID THE HIRE CHARGES ALSO FOR THE MACHINES SUCH AS LOADERS, EXCAVATORS ETC. FROM THE DETAILS OF PAYMENTS, LEARNED COUNSEL FOR THE A SSESSEE SHRI B.PANDA HAS INVITED OUR ATTENTION TO THE VARIOUS PAYMENTS WITH THE SUBMISSION THAT THE PAYMENTS WERE MADE TO ONE PERSON BUT IT WAS MADE IN THE CAPACITY OF AGENT AND THEY WERE TO BE DISBURSED TO THE LABOURERS WHO HA D RENDERED THE SERVICES . IT WAS FURTHER CONTENDED THAT THE ASSESSEE WAS ENGAGED IN THE ACTIVITIES OF EXCAVATION WORK AND TRANSPORTATION, HE WAS REQUIRED TO ENGAGE NUMBER OF LABOURERS AND THE ARRANGEMENT FOR THE LABOURERS WAS MADE BY THE MIDDLEMAN TO WHOM THE PAYMENTS WERE MADE FOR IT S DISBURSEMENT TO THE ACTUAL LABOURERS . THE INDIVIDUAL PAYMENT TO LABOURERS WAS ALWAYS BELOW THE PRESCRIBED LIMIT, THEREFORE, ASSESSEE WAS NOT REQUIRED TO DEDUCT THE TDS. IN SUPPORT OF HIS CONTENTION, LD. AR PLACED RELIANCE ON THE FOLLOWING JUDGMENTS : - I) DCIT VS. SATISH AGGARWAL & CO., (2009) ITR 0196; II) ITO VS. SHRI KAJAL DAS, ITA NO.1131/KOL/2011, ORDER DATED 3 - 1 - 2012; AND III) ACIT VS. DARWAN SINGH PARIHAR, 2013 TAXPUB(DT)2891(DEL - TRIB). 7. PER CONTRA , LEARNED DR PLACED RELIANCE UPON THE ORDER OF THE CIT(A). 8. HAVING CAREFULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE DOCUMENTS PLACED ON RECORD, WE FIND THAT THE AO HAS NOTED FROM THE ITA NO S . 107 - 109/13 6 BOOKS OF ACCOUNTS THAT ASSESSEE COMPANY IS A TRANSPORT - CUM - WORKS CONTRACTOR AND FOR EXECUTION OF CONTRACT WORK THE ASSESSEE HAS HIRED TRUCK, TIPPERS AND MACHINES SUCH AS LOADERS, EXCAVATORS ETC. ACCORDINGLY, HE DEBITED EXPENSES LIKE HIRE CHARGES, TRANSPORTATION CHARGES IN ITS PROFIT AND LOSS ACCOUNT FOR THE IMPUGNED FINANCIAL YEARS. THE AO ACCORDINGLY INVOKED PROVISIONS OF SECTION 194C AND 194 - I OF THE ACT AND FORMED A VIEW THAT ASSESSEE WAS REQUIRED TO DEDUCT TDS ON PAYMENTS AND SINCE THE TDS WAS NOT DEDUCTED , ASSESSEE WAS HELD TO BE IN DEFAULT. THEREFORE, ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) BUT HE HA S NOT FURNISHED ANY SATISFACTORY EXPLANATION WITH REGARD TO PAYMENTS MADE BY IT TO DIFFERENT PERSONS. DURING THE COURSE OF HEARING OF THE APPEAL, THOUGH THE LD. AR OF THE ASSESSEE INVITED OUR ATTENTION TO THE PAYMENTS MADE TO THE PARTICULAR PERSONS EXCEEDI NG THE PRESCRIBED LIMIT, BUT IT WAS MADE TO AGENT FOR ITS FURTHER DISBURSEMENT TO THE ACTUAL LABOURERS WHO HAD WORKED FOR THE ASSESSEE. IN THIS REGARD, EXCEPT ORAL SUBMISSION, NO DOCUMENTARY EVIDENCE WAS FILED BEFORE US . A T LEAST A CONFIRMATION SHOULD HAV E BEEN FILED FROM THE RECIPIENT IN SUPPORT OF THE CONTENTION OF THE ASSESSEE. SIMILAR IS THE POSITION WITH REGARD TO HIRE CHARGES PAID BY THE ASSESSEE. SINCE THE ASSESSEE HIRED MACHINES SUCH AS LOADERS, EXCAVATORS ETC. FOR EXCAVATION OF EARTH, HIRE CHARGES MUST HAVE BEEN PAID TO THE OWNER OF THE MACHINES . THOUGH IT WAS ARGUED BEFORE THE CIT(A) THAT OWNERSHIP MUST BE TRANSFERRED, HOWEVER, NO EVIDENCE IN THIS REGARD WAS PLACED BEFORE THE CIT(A). ITA NO S . 107 - 109/13 7 9. HAVING CAREFULLY EXAMINED THE ORDERS OF THE LOWER AUTHORITIES , WE FIND THAT THIS ISSUE WAS NOT PROPERLY EXAMINED BY THE LOWER AUTHORITIES. MO REOVER , THE ASSESSEE HAS ALSO NOT PRODUCED THE COMPLETE EVIDENCE IN SUPPORT OF HIS SUBMISSION, THEREFORE, THE ISSUE REQUIRES FRESH ADJUDICATION BY THE CIT(A) AND SINCE THE ASS ESSEE HAS TAKEN A STAND THAT HE HAS MADE THE PAYMENT TO THE AGENT FOR ITS FURTHER DISBURSEMENT TO THE ACTUAL LABOURERS , HE SHOULD FILE SOME DOCUMENTS IN THIS REGARD. SIMILAR IS THE POSITION WITH REGARD TO THE PAYMENTS MADE TOWARDS HIRING OF MACHINES SUCH A S LOADERS, EXCAVATORS ETC. THE ONUS IS UPON THE ASSESSEE TO ESTABLISH THAT THE HIRE CHARGES PAID TO THESE OWNERS OF THE MACHINES AND ASSESSEE WAS NOT REQUIRED TO DEDUCT TDS. SIMILAR IS THE POSITION WITH REGARD TO THE HIRE CHARGES PAID BY THE ASSESSEE. WE, THEREFORE, OF THE VIEW THAT THE ISSUE WAS NOT PROPERLY ADJUDICATED BY THE CIT(A). HENCE, WE SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THE MATTER BACK TO THE FILE OF THE CIT(A) WITH A DIRECTION TO ADJUDICATE THE ISSUE DE NOVO IN THE LIGHT OF OUR OBSERV ATIONS. 10 . IN THE RESULT, ALL THE APPEAL S OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 27 / 05 / 201 5 . SD/ - SD/ - ( . . ) ( B. P. JAIN ) ( ) ( SUNIL KUMAR YADAV) / ACCOUNTANT MEMBER / JUDICIAL MEMBER CUTTACK ; DATED 27 /0 5 / 201 5 . . /PKM , . / PS ITA NO S . 107 - 109/13 8 / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, CUTTACK 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT , CUTTACK 6. [ / GUARD FILE. //TRUE COPY//