ITO, Sangrur V. Sh. Sukhdev Singh HTC, Sunam

ITA 1261/CHANDI/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95498 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 18-08-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 30-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Section: 6; 40A(3); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI H.L.KARWA, VICE PRESIDENT AND MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO.1261/CHD/2012 (ASSESSMENT YEAR : 2008-09) THE INCOME TAX OFFICER, VS. SH.SUKHDEV SINGH HTC, WARD SUNAM, H.Q. SANGRUR. DHANAULA, H.Q. SUNAM. PAN: ABLFS1449R (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.K. MITTAL RESPONDENT BY : NONE DATE OF HEARING : 18.08.2015 DATE OF PRONOUNCEMENT : 21.08.2015 O R D E R PER RANO JAIN, A.M . : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS), PATIALA DATED 21.9.2012 FOR ASSESSMENT Y EAR 2008-09. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASS ESSEE IS A LABOUR AND TRANSPORTATION HANDLING CONTRACTOR. HE CLAIMED TRANSPORTATION EXPENSES AT RS.64,87,728/- DURING TH E YEAR. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HA D HIRED A NUMBER OF TRUCKS ON VARIOUS DATES AND MADE PAYMENT TO THEM 2 IN CASH. IT WAS ALSO FOUND THAT THE ASSESSEE HAD HIRED 5772 TRUCKS AND PAID RS.1124/- PER TRUCK. AS PER THE AS SESSING OFFICER, THE COPIES OF THE GATE PASS REGISTER MAINT AINED BY THE CONCERNED DEPARTMENT WERE ALSO PRODUCED FOR VERIFIC ATION. ALL THE VOUCHERS OF PAYMENT FOR TRUCKS AND LABOUR WERE PRODUCED FOR VERIFICATION EXCEPT FOR MONTH OF MARCH, 2008 ON THE GROUND THAT THESE WERE MISPLACED. THE ASSESSEE WAS ASKED TO GIVE THE DETAILS OF THE TAX DEDUCTED AT SOURCE AND FILIN G OF TDS RETURNS. IN RESPONSE TO THIS, THE ASSESSEE CLAIMED THAT HE WAS NOT LIABLE TO DEDUCT TAX AT SOURCE. THUS, INV OKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE INCOME TAX A CT, 1961 (IN SHORT THE ACT). THE ASSESSING OFFICER DISALLOWED THE ENTIRE EXPENSES OF RS.64,87,728/-. FURTHER, THE ASSESSIN G OFFICER NOTED THAT THE PAYMENT OF THESE EXPENSES WERE MADE IN CASH AND THE ASSESSEE HAD NOT BEEN ABLE TO DISCLOSE THE NAMES OF THE OWNERS OF THE TRUCKS TO WHOM THE PAYMENTS HAVE BEEN MADE. THEREFORE, THE ASSESSING OFFICER WAS OF THE VIEW THAT THE SAID AMOUNT OF RS.64,87,728/- IS OTHERWISE ALSO NOT ALLOWABLE UNDER SECTION 40A(3) OF THE ACT. 3. THE ASSESSEE WENT IN APPEAL BEFORE THE LEARNED CIT (APPEALS). THE ASSESSEE SUBMITTED BEFORE THE LEAR NED CIT (APPEALS) THAT HE IS A CONTRACTOR AND TAKES CONTRAC TS FROM VARIOUS GOVERNMENT DEPARTMENTS FOR TRANSPORTATION O F FOOD GRAINS. DURING THE YEAR, HE TOOK CONTRACT FROM FOO D CORPORATION OF INDIA AND OTHER AGENCIES FOR TRANSPO RTATION AND LABOUR FOR FOOD GRAINS FROM FOOD STORAGE GODOWNS AT DHANAULA TO RAIL HEAD AT BARNALA. IT WAS STATED THAT HE DI D NOT OWN ANY TRUCK AND WHEN REQUIRED, REQUISITIONS WERE MADE FROM 3 MARKET FOR TRANSPORTATION AND RS.1124/- PER TRUCK W ERE PAID AS HIRE CHARGES. THE PARTICULARS OF EACH TRUCK AND NUMBER OF BAGS ARE RECORDED IN A GATE PASS REGISTER MAINTAINE D BY THE FOOD CORPORATION OF INDIA. A DATE-WISE RECORD OF PAYMENT MADE TO THE TRUCK DRIVER OR TRUCK OWNER ALONGWITH T HE SIGNATURE OF THE PERSON RECEIVING THE PAYMENT HAS B EEN MAINTAINED BY THE ASSESSEE. AS REGARDS INVOKING O F PROVISIONS OF SECTION 40(A)(IA) OF THE ACT, IT WAS SUBMITTED THAT THERE WAS NO JUSTIFICATION IN TREATING THE ASS ESSEE LIABLE TO DEDUCT TDS UNDER SECTION 194C OF THE ACT AS THER E WAS NEITHER ANY WRITTEN NOR ANY ORAL AGREEMENT BETWEEN THE ASSESSEE AND THE TRANSPORTERS OR TRUCK OWNERS FOR T HE CARRIAGE OF GOODS. FURTHER, RELIANCE WAS PLACED ON A NUMBER OF JUDGMENTS AND ALSO ON CBDT CIRCULAR NO.715 DATED 8. 8.1995. FURTHER, AS REGARDS THE PROVISIONS OF SECTION 40A(3 ) OF THE ACT, IT WAS SUBMITTED THAT THE ADDITION HAS BEEN MA DE PRESUMING THE POSSIBILITY OF MORE THAN ONE PAYMENT TO ANY PARTICULAR PERSON OWNING MORE THAN ONE TRUCK IN A D AY. IT WAS SUBMITTED THAT FOR ONE ROUND OF TRUCK ONLY A SU M OF RS.1124/- WAS PAID AND TO MAKE OF FIGURE OF RS.20,0 00/- TO A SINGLE PERSON MORE THAN 17 PAYMENTS TO A SINGLE PER SON IN A DAY OR TO A PARTICULAR PERSON OWNING MORE THAN 17 T RUCKS HAVE TO BE MADE, WHICH IS NOT POSSIBLE AND COULD EA SILY BE VERIFIED FROM THE GATE PASS REGISTER PRODUCED BEFOR E THE ASSESSING OFFICER. IN VIEW OF THESE SUBMISSIONS, IT WAS PRAYED BEFORE THE LEARNED CIT (APPEALS) TO DELETE T HE ADDITION. 4. THE LEARNED CIT (APPEALS) DELETED THE ADDITION SO MADE BY THE ASSESSING OFFICER OBSERVING AS UNDER : 4 4.3 I HAVE CONSIDERED THE SUBMISSION MADE. FIRSTL Y THE A.O. HAS GIVEN A CATEGORICAL SUBMISSION THAT FACTS IN THIS YEAR ARE SAME AS IN SUCCEEDLY YEAR WHEREIN THE SAME ISSUE OF 40A(3) AND 40A(IA) WAS INVOLVED AND THAT APPELLANT'S SUBMISSION WAS FOUND CORRECT. THE ASSESSMENT YEAR I N THIS QUESTION PERTAINS TO 2008-09. RULE 40A (3) AS SUBST ITUTED BY THE FINANCE ACT 2007 WITH AFFECT FROM 1/04/ 2008, R EAD AS UNDER ' A) WHERE THE ASSESSEE INCURRED ANY EXPENDIT URE IN RESPECT OF WHICH PAYMENT IS MADE IN A SUM EXCEEDS 2 0,000 RS. OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE DRAWN ON BANK OR ACCOUNT PAYEE BANK DRAFT, NO DEDUCTION SHAL L BE ALLOWED IN RESPECT OF SUCH EXPENDITURE'. IN THIS CASE AS ADMITTED BY THE A.O. PAYMENTS WERE MADE TO THE TRUC KS AT RS.1154 PER TRUCK. THE APPELLANT HAS GIVEN DETAILS O F TRUCK AGAINST WHICH PAYMENTS ARE MADE. THE APPELLANT HAS ALSO PRODUCED THE VOUCHERS DULY SIGNED BY EITHER DRIVER OR OWNER. THEREFORE IN VIEW OF THE SUBMISSION OF A.O. AND RELY ING ON THE FACTS OF THE CASE AND ALSO THE RATIO OF DECISION IN CAS ES DISCUSSED BEFORE, SECTION 40A(3) IS NOT APPLICABLE. REGARDING A PPLICABILITY OF SECTION 194C, IN THIS CASE NOTHING HAS BEEN BROU GHT ON RECORD BY THE ID. A.O. THAT THERE WAS ANY WRITTEN O R ORAL AGREEMENT BETWEEN THE APPELLANT AND THE TRUCK DRIVE R OR THAT THE GOODS ARE TRANSPORTED IN PURSUANCE OF A CONTRAC T FOR SPECIFIC PERIOD OR QUANTITY. THEREFORE EACH INSTANC E OF TRANSPORT IS A SEPARATE CONTRACT AND THE PAYMENT MA DE AGAINST SUCH TRIPS HAS NOT EXCEEDED THE PRESCRIBED LIMIT. T HUS RELYING ON THE CATEGORICAL SUBMISSION OF A.O. AS REPRODUCED IN PARA 4.2 REGARDING NON APPLICABILITY OF SECTION 40A(3) & 40(A )(IA) OF IT ACT AND FACTS OF THE CASE, IT IS CLEAR THAT THE PROVISI ONS OF SECTION 40A(3) AND 40A(IA) CANNOT BE INVOKED IN THIS CASE. THEREFORE ON THE BASIS OF SUBMISSIONS MADE AND RELYING ON THE CASE LAWS DISCUSSED ABOVE, THE ADDITIONS MADE BY THE A.O. ARE H ERE BY DELETED. 5 5. NOW, THE DEPARTMENT HAS COME UP IN APPEAL BEFOR E US. DURING THE COURSE OF HEARING REVISED GROUNDS OF APPEAL WERE FILED, WHICH READ AS UNDER : 1. IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, LD. CIT [A) HAS ERRED IN GIVING RELIEF TO THE ASSESSEE ON THE G ROUND THAT PROVISIONS OF SECTION 40A (3) AND 40(A)(IA) OF THE INCOME TAX ACT, 1961 CAN NOT BE INVOKED WITHOUT APPEARING THE F ACT THAT THE ASSESSEE HAD FAILED TO DISCLOSE THE NAMES OF THE TRUCK OWNERS TO WHOM THE PAYMENTS HAD BEEN MADE. THUS, TH E OWNERSHIP OF MORE THAN ONE TRUCK BY A PARTICULAR PE RSON CAN NOT BE RULED OUT. SINCE THE ASSESSEE HAD FAILED TO D ISCHARGE THE ONUS CAST ON HIM, THE AO WAS JUSTIFIED IN TAKIN G AN ADVERSE VIEW. 2. IN THE FACTS & CIRCUMSTANCES OF THE CASE ID. CIT (A) HAS ERRED IN OBSERVING THAT THE FACTS OF THE CASE UNDER CONSI DERATION ARE SIMILAR TO THAT OF AY. 2009-10 AS IN THIS YEAR. 5732 TRUCKS WERE INVOLVED FOR USE OF TRANSPORTATION FROM DHANAU LA AS AGAINST 440 TRUCKS FROM DHANAULA UNION IN A.Y. 2009 -10. FURTHER IN A.Y. 2009-10, THERE WAS FINDING THAT AGG REGATE AMOUNT EXCEEDING RS.50,000/- WAS NOT PAID TO 'ANY INDIVIDUAL TRUCK' DURING THE WHOLE YEAR, WHEREAS THE ISSUE IN A.Y. 2008-09 CONCERNS PAYMENT TO 'INDIVIDUAL TRUCK OW NER'. 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE ID. C IT (A) HAS FURTHER ERRED IN GIVING RELIEF TO THE ASSESSEE ON TH E GROUND THAT PROVISIONS OF SECTION 40A (3) OF THE INCOME TAX ACT , 1961 COULD NOT BE INVOKED WITHOUT APPRECIATING THAT THE ASS ESSEE HAD FAILED TO DISCHARGE HIS ONUS BY PROVING THAT CAS H PAYMENTS EXCEEDING RS.20,000/- HAD NOT BEEN MADE IN VIOLATION OF THE SAID SECTION. 4. IN THE FACTS & CIRCUMSTANCES OF THE CASE ID. CIT (A] HAS FURTHER ERRED IN GIVING RELIEF TO THE ASSESSEE ON THE GROUND THAT 6 PROVISIONS OF SECTION 40(A) (IA)) OF THE INCOME TAX ACT, 1961 COULD NOT BE INVOKED WITHOUT APPRECIATING THAT THE AS SESSEE HAD FAILED TO DISCHARGE HIS ONUS BY PROVING THAT PAY MENTS EXCEEDING RS. 50,000/- HAD NOT BEEN MADE IN VIOLATION OF THE SAID SECTION. 5. IT IS PRAYED THE ORDER OF THE ID. CIT (A) BE SET ASIDE AND THAT OF THE AO RESTORED. 6. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GR OUNDS OF APPEAL BEFORE THE APPEAL IS FINALLY HEARD DISPOSED O F. 6. THE LEARNED D.R. RELIED UPON THE ORDER OF THE ASSESSING OFFICER AND PRAYED THAT THE SAME BEING IN ACCORDANCE WITH LAW MAY PLEASE BE UPHELD. NO ONE APPEARED ON BEHALF OF THE ASSESSEE. 7. WE HAVE HEARD THE LEARNED D.R. AT LENGTH AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE DO NO T FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT (APPEALS) AS REPRODUCED HEREINABOVE. AS REGARDS SECTION 40(A)(I A) OF THE ACT, NOTHING HAS BEEN BROUGHT ON RECORD BY THE ASSE SSING OFFICER THAT THERE WAS ANY ORAL OR WRITTEN AGREEMEN T BETWEEN THE ASSESSEE AND THE TRUCK DRIVERS. IN THE ABSENCE OF ANY CONTRACT, THE PROVISIONS OF SECTION 194C OF THE ACT ARE NOT APPLICABLE. FURTHER ON PERUSAL OF CBDT CIRCULAR NO .715 DATED 8.8.1995 AS RELIED ON BY THE LEARNED CIT (APP EALS), WE SEE THAT AS PER QUESTION NO.6, THE PRE-REQUISITE CO NDITION FOR DEDUCTION OF TAX IS THAT THERE MUST BE A CONTRACT F OR CARRIAGE OF GOODS. IN THE ABSENCE OF SUCH CONTRACT, PROVIS IONS OF SECTION 194C OF THE ACT NOT BEING APPLICABLE, SECTI ON 40(A)(IA) OF THE ACT CANNOT BE INVOKED. ALSO AS PER QUESTI ON 9 OF THE 7 SAME CIRCULAR, IN THE ABSENCE OF ANY SUCH CONTRACT EVERY GR SHOULD BE TREATED AS SEPARATE CONTRACT, IT IS A MAT TER OF FACT THAT IN THE PRESENT CASE, EVERY GR IS OF RS.1124/- ONLY. THE AMOUNT IS WITHIN THE LIMIT PROVIDED UNDER THE EXCEP TION TO BOTH THE SECTIONS 40(A)(IA) AND 40A(3) OF THE ACT. THEREFORE, NEITHER THE PROVISIONS OF SECTION 40(A)(IA), NOR TH E PROVISIONS OF SECTION 40A(3) OF THE ACT CAN BE APPLIED IN SUCH CIRCUMSTANCES. IN VIEW OF THE ABOVE, THE FINDINGS OF THE LEARNED CIT (APPEALS) ARE CONFIRMED. 13. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 21 ST DAY OF AUGUST, 2015. SD/- SD/- (H.L.KARWA) (RANO JAIN) VICE PRESIDENT ACOUNTANT MEMBER DATED : 21 ST AUGUST, 2015 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH