SITARAM D WAIKAR, MUMBAI V. ITO 23(1)(4), MUMBAI

ITA 1321/MUM/2012

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9032 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 06-09-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 27-02-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KRISHNAMURTHY
• Keywords: Opportunity of being heard
• Section: 143(3); 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E, MUMBAI BEFORE SHRI DINESH KUMAR AGARWAL (J.M.) AND SHRI N.K. BILLAIYA (A.M.) ITA NO. 1321/MUM /2012 ASSESSMENT YEAR : 2008-09 MR. SITARAM D. WAIKAR, 13-B, MINILAND, TANK ROAD, BHANDUP (W), MUMBAI 400 078. PAN AALPW2250P VS. ITO 23(1)(4), BANDRA (E), MUMBAI - 51. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI BHUPENDRA SHAH DEPARTMENT BY : SHRI KRISHNAMURTHY DATE OF HEARING 06-9-2012 DATE OF PRONOUNCEMENT 14-9-2012 O R D E R PER DINESH KUMAR AGARWAL, J.M. THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DTD. 24-01-2012 PASSED BY THE LD. CIT(A) 33, MUMB AI FOR A.Y. 2008-09. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE AN INDIVIDUAL ENGAGED IN THE BUSINESS OF TRANSPORTATION OF PRINTE D DRUMS AND TINS. THE RETURN OF INCOME WAS FILED DECLARING TOTAL INCO ME OF RS. 7,32,900/-. DURING THE COURSE OF ASSESSMENT PROCEEDING, IT WAS INTER ALIA OBSERVED BY THE A.O. THAT THE ASSESSEE HAS DEBITED AN AMOUNT OF RS. 98,05,436/- ON ACCOUNT OF TRANSPORT CHARGES. THE ASSESSEE WAS ASKED TO FILE THE ITA NO. 1321/MUM/2012 2 DETAILS OF THE SAID EXPENSES. ON PERUSAL OF THE DE TAILS FILED BY THE ASSESSEE, THE A.O. OBSERVED THAT THE ASSESSEE HAS D EBITED AN AMOUNT OF RS. 12,79,670/- ON ACCOUNT OF FREIGHT PAID. HE FUR THER OBSERVED THAT THE ASSESSEE HAS PROVIDED VEHICLE NUMBERS AND PAYMENT D ETAILS FOR SUCH PAYMENTS. HOWEVER, THE ASSESSEE DID NOT PRODUCE OW NERSHIP DETAILS OF THE VEHICLES, THEREFORE, THE ASSESSEE WAS ASKED TO FILE THE DETAILS. IN RESPONSE, IT WAS INTER ALIA SUBMITTED BY THE ASSESS EE THAT DUE TO TIME GAP OF MORE THAN 2 YEARS IT IS NOT POSSIBLE TO GIVE P AN CARD OR RC BOOK OF THE TRUCK FROM THE OF THE TRUCKS. REGARDING FORM N O. 15J, THE ASSESSEE SUBMITTED THAT SINCE EACH PAYMENT IS LESS THAN RS. 20,000/-, NO TDS HAS BEEN MADE AS THE PROVISIONS OF SECTION 194-C OF THE INCOME TAX ACT, 1961 (THE ACT) ARE NOT APPLICABLE. IT WAS FURTHER S UBMITTED BY THE ASSESSEE THAT THE ASSESSEE IS RUNNING HIS TRANSPORT ACTIVITY BETWEEN MUMBAI TO ANDHRA PRADESH PATH FOR THE LAST 7 TO 9 Y EARS. THE COMPANY IS HAVING GOOD RELATION WITH MANY TRUCK OWNERS WHO ARE GOING VACANT AND RETURN FROM VARIOUS NAKAS KHOPOLI, PANVEL, OMER GA, PUNE, SOLAPUR TO HYDERABAD ROUTE. AS THE TRUCKS GOING VACANT IN R ETURN TRIP, WITHOUT FREIGHT, THEY PREFER TO CARRY OUR GOODS AT RATE AND OUR COMPANY FILLED THE FUEL AT OUR COST. HOWEVER, THE A.O. DID NOT ACCEPT THE ASSESSEES SUBMISSION FOR THE FOLLOWING REASONS:- (A) IN SUBMISSION ASSESSEE HAS CLAIMED HE HAS GIVE N DETAILS OF HIRE CHARGES PAID WITH TRUCK NUMBER AND AMOUNT PAI D TO EACH TRUCK OWNER. HOWEVER, IDENTITY OF THE TRUCK OWNER S HAVE NOT BEEN PROVIDED BY THE ASSESSEE. ITA NO. 1321/MUM/2012 3 (B) ASSESSEE HAS ARGUED TODAY IT IS NOT POSSIBLE F OR ME TO TAKE THE COPY OF THE PAN CARD OR RC BOOK OF THE TRUCK FR OM THE OWNER OF THE TRUCK. THE A.O. FURTHER OBSERVED THAT NOTICE U/S 142(1) OF THE INCOME TAX ACT, 1961 (THE ACT) CALLING FOR ALL THE BOOKS OF ACCOUNT S ALONG WITH ALL BILLS AND VOUCHERS WAS ISSUED ON 29-12-2010. IN THE ABSENCE O F ANY COMPLIANCE BY THE ASSESSEE TO PRODUCE THE BOOKS OF ACCOUNTS AN D THE DETAILS CALLED FOR, THE A.O. HELD THAT THE ASSESSEE HAS FAILED TO DISCHARGE ITS ONUS AND ACCORDINGLY HE DISALLOWED RS. 12,79,600/- DEBITED O N ACCOUNT OF FREIGHT PAID. THE A.O. FURTHER OBSERVED THAT THE ASSESSEE HAS ALSO DEBITED AN AMOUNT OF RS. 54,40,044/- ON ACCOUNT OF FUEL EXPENS ES. BESIDES THIS, THE A.O. FURTHER OBSERVED THAT THE ASSESSEE HAS DEB ITED AN AMOUNT OF RS. 5,18,791/- ON ACCOUNT OF TRUCK REPAIR AND MAINTENAN CE UNDER HIRE CHARGES. SINCE THE ASSESSEE HAS NOT PRODUCED THE B OOKS OF ACCOUNT ALONG WITH BILLS AND VOUCHERS FOR VERIFICATION, THE A.O. DISALLOWED RS. 54,40,044/- DEBITED ON ACCOUNT OF FUEL EXPENSES ARE RS. 5,18,719/- DEBITED ON ACCOUNT OF TRUCK REPAIR AND MAINTENANCE CHARGES. THUS THE A.O. HAS MADE TOTAL DISALLOWANCE OF RS. 72,38,435/- AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE AND THEREBY COM PLETED THE ASSESSMENT AT AN INCOME OF RS. 79,71,330/- VIDE ORD ER DTD. 30-12-2010 PASSED U/S 143(3) OF THE ACT. 3. ON APPEAL, THE LD. CIT(A) WHILE AGREEING WITH TH E VIEWS OF THE A.O., PARTLY ALLOWED THE RELIEF OUT OF DISALLOWANCE OF TR UCK REPAIR AND MAINTENANCE EXPENSES. ITA NO. 1321/MUM/2012 4 4. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE ASSESSEE IS IN APPEAL BEFORE US TAKING THE FOLLOWING GROUNDS OF AP PEAL:- 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED A.O. ERRED IN DISALLOWING ENTIRE SUM OF RS. 12,79,6 00/- OUT OF FREIGHT EXPENSES WITHOUT ANY BASIS EVEN THOUGH THE PAYMENT FOR EACH TRUCK IS LESS THAN RS. 20,000/- WHICH DOES NOT REQUIRE FILIN G OF FORM 15J. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED A.O. ERRED IN DISALLOWING ENTIRE SUM OF RS. 54,04,0 44/- WITHOUT ANY BASIS OUT OF DIESEL AND FUEL EXPENSES BY HOLDING TH AT NO TDS IS DEDUCTED EVEN THOUGH THE SAME IS NOT PAID TO THE TRUCK OWNER BUT IS INCURRED BY THE APPELLANT HIMSELF AND ALSO BY DISREGARDING THE DETAILS SUBMITTED. 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED A.O. ERRED IN DISALLOWING ENTIRE SUM OF RS.5,18,791 /- WITHOUT ANY BASIS OUT OF TRUCK REPAIR AND MAINTENANCE CHARGES EVEN TH OUGH ALL THE DETAILS WERE SUBMITTED. 4. THE CIT(A) ALSO ERRED IN CONFIRMING DISALLOWANCE OUT OF FREIGHT EXPENSES OF RS. 12,79,000/- AND DISALLOWANCE OUT OF DIESEL AND FUEL EXPENSES OF RS. 54,04,044/-. THE CIT(A) ALSO ERRED IN CONFIRMING ADHOC DISALLOWANCE OF RS. 77,819/- (15% OF 5,18,791/-) OU T OF TRUCK REPAIR AND MAINTENANCE CHARGES. 5. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED A.O. ERRED IN CHARGING INTEREST U/S 234A, B & C AND INITIATING PENALTY U/S 271(1)(C) IN RESPECT OF ABOVE DISALLOWANCES. 5. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE A SSESSEE WHILE EXPLAINING THE NATURE OF THE ASSESSEES BUSINESS SU BMITS THAT THE ASSESSEE OWNS ONLY TWO TRUCKS. HE FURTHER SUBMITS T HAT FOR TRANSPORTATION WORK, THE ASSESSEE HAS TAKEN TRUCKS ON HIRE FROM OTHER PARTIES STANDING AT VARIOUS NAKAS AS PER ORAL CONTR ACT ON LUMP SUM BASIS AND WHERE THE TRUCK OWNER CONTRACTED ORALLY W AS RESPONSIBLE ONLY TO GIVE TRUCK ON HIRE. OTHER CHARGES LIKE PAYMENT OF WAGES TO DRIVERS TO AND FRO, FUEL EXPENSES, REPAIRS AND MAINTENANCE IF ANY DURING THE ITA NO. 1321/MUM/2012 5 JOURNEY UNDERTAKEN BY THE ASSESSEE WERE THE RESPONS IBILITY OF THE ASSESSEE. THE TRUCK OWNERS HAD ONLY CONTRACTED FOR HIRE CHARGES AND THE TRUCK OWNER WAS PAID ONLY THE HIRE CHARGES. THE TD S, IF ANY, HAS TO BE DEDUCTED ONLY FROM THE PAYMENTS MADE OR CREDITED TO ACCOUNT OF TRUCK OWNERS. SINCE THE AMOUNT PAID OR CREDITED WAS ONLY HIRE CHARGES, THE ASSESSEE IS NOT LIABLE TO DEDUCT TDS. THE LD. COUN SEL FOR THE ASSESSEE WHILE REFERRING TO THE DETAILS OF FREIGHT PAID AGGR EGATING TO RS. 12,79,600/- APPEARING AT PAGE 4 TO 6 OF THE ADDITIO NAL PAPER BOOK SUBMITS THAT ALL THE PAYMENTS ARE LESS THAN RS. 20, 000/-, THEREFORE, THE PROVISIONS OF SECTION 194-C OF THE ACT ARE NOT APPL ICABLE. HE FURTHER SUBMITS THAT SINCE THE ASSESSEE HAS PAID ONLY THE R ENT OF THE TRUCKS TO THE TRUCK OWNERS AND NOT THE DRIVERS SALARY, FUEL, THEREFORE, THE ASSESSEES CASE DOES NOT FALL UNDER THE PROVISIONS OF SECTION 194-C OF THE ACT BUT FALLS UNDER THE PROVISIONS OF SECTION 194-I FOR WHICH THE LIMIT FOR TDS IS RS. 1,20,000/-. IN SUPPORT OF HIS PLEA THAT THE PROVISION OF SECTION 194-C IS NOT APPLICABLE, THE LD. COUNSEL FO R THE ASSESSEE RELIED ON THE FOLLOWING DECISIONS:- 1. NASIB SINGH, HILLPATNA VS. ACIT (2012) 50 SOT 48 6 (CUTTACK) 2. KULDEEP KUMAR SHARMA VS. ITO (2012) 23 RTAXMANN. COM 335 (DEL). 3. R R CARRYING CORN VS. ACIT (2009) 126 TTJ 240 (C UTTACK) 4. DCIT VS. SATISH AGRAWAL & CO. (2009) 124 TTJ 543 (ASR) 5. T.L. VERMA & CO. PVT. LTD. (2011) TIOL 170 P&H ITA NO. 1321/MUM/2012 6 HE FURTHER SUBMITS THAT THE PAYMENTS MADE BY THE AS SESSEE TO DIFFERENT TRUCK OWNERS AND EACH JOB UNDERTAKEN BY THE TRUCK O WNERS WAS A SEPARATE JOB AT DIFFERENT RATE AND TERMS, HENCE, TH E DIFFERENT JOB WILL NOT TURN INTO A SINGLE CONTRACT AND, HENCE, THE PROVISI ON OF SECTION 40(A)(IA) ARE NOT APPLICABLE AND FOR THIS PROPOSITION THE REL IANCE WAS ALSO PLACED ON THE DECISION IN ITO VS. INDIAN ROAD LINES (2010) 45 DTR (ASR)(TRIB) 49. HE FURTHER SUBMITS THAT SINCE ONLY THE TRUCKS WERE TAKEN ON RENT, THEREFORE, THE TRANSACTION BETWEEN ASSESSEE AND SUP PLIERS IS PRINCIPAL TO PRINCIPAL BASIS ON WHICH THE PROVISIONS OF SECTION 194-C ARE NOT APPLICABLE AND FOR THIS PROPOSITION THE RELIANCE WA S ALSO PLACED IN CIT VS. SEAGRAM MANUFACTURING (P) LTD. (2009) 221 CTR (DEL ) 509. HE FURTHER SUBMITS THAT SINCE ALL THE PAYMENTS HAVE BEEN PAID TO THE TRUCK OWNERS AND NOTHING IS PAYABLE ON THE LAST DATE OF THE ACCO UNTING YEAR, THEREFORE, PROVISIONS OF SECTION 40(A)(IA) ARE NOT APPLICABLE FOLLOWING THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN MERILYN SHIPPI NG & TRANSPORTS VS. ACIT SINCE REPORTED (2012) 136 ITD 23 (VISAKHAPATNA M) [SB]. HE, THEREFORE, SUBMITS THAT SINCE THE ASSESSEE HAS FILE D ALL THE DETAILS, THEREFORE, THE DISALLOWANCE OF RS. 72,38,435/- MADE BY THE A.O. AND PARTLY SUSTAINED BY THE LD. CIT(A) BE DELETED. 6. ON THE OTHER HAND, THE LD. D.R. SUPPORTS THE ORD ER OF THE A.O. AND LD. CIT(A). HE FURTHER SUBMITS THAT HE HAS NO OBJEC TION IF THE ISSUES ARE SET ASIDE TO THE FILE OF THE A.O. ITA NO. 1321/MUM/2012 7 7. WE HAVE CAREFULLY CONSIDERED THE SUBMISSION OF T HE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FI ND FROM THE ASSESSMENT ORDER THAT THE A.O. HAS REPEATEDLY MENTI ONED THAT THE ASSESSEE HAS NEITHER PRODUCED THE BOOKS OF ACCOUNTS NOR BILLS AND VOUCHERS FOR VERIFICATION. IN THE ABSENCE THEREOF HE MADE DISALLOWANCE OUT OF FREIGHT EXPENSES RS. 12,79,600/-, OUT OF DIE SEL AND FUEL EXPENSES RS. 54,40,044/- AND OUT OF TRUCK REPAIR AND MAINTEN ANCE EXPENSES RS. 5,18,719/- AGGREGATING TO RS. 72,38,435/-. ON APPE AL, THE LD. CIT(A) WHILE UPHOLDING THE DISALLOWANCE OF FREIGHT AND FUE L EXPENSES, REDUCED THE DISALLOWANCE OF TRUCK REPAIR AND MAINTENANCE EX PENSES TO RS.77,819/-. THERE IS NO MATERIAL ON RECORD TO SHO W AS TO WHETHER THE ASSESSEE HAS PRODUCED BOOKS OF ACCOUNTS, BILLS AND VOUCHERS EITHER BEFORE THE A.O. OR BEFORE THE LD. CIT(A). EVEN AT THIS STAGE, THE ASSESSEE HAS FAILED TO PRODUCE THE BOOKS OF ACCOUNTS, BILLS AND VOUCHERS. 8. IN GOODYEAR INDIA LTD. VS. CIT (2000) 246 ITR 11 6 (DEL) IT HAS BEEN OBSERVED (PAGE 118) MERELY BECAUSE AN AUDIT REPORT IS AVAILABLE THERE IS NO FETTER ON THE POWER OF THE INCOME-TAX O FFICER TO REQUIRE THE ASSESSEE TO JUSTIFY ITS CLAIM WITH REFERENCE TO THE RECORDS, MATERIALS AND EVIDENCE. SUCH A POWER IS INHERENT IN AN ASSESSING OFFICER IN THE SCHEME OF THE ACT. 9. SINCE THE ASSESSEE HAS FAILED TO DISCHARGE THE P RIMARY ONUS, WE ARE OF THE VIEW THAT, IN THE INTEREST OF JUSTICE, THE M ATTER SHOULD GO BACK TO ITA NO. 1321/MUM/2012 8 THE FILE OF THE A.O. AND ACCORDINGLY WE SET ASIDE T HE ORDERS PASSED BY THE REVENUE AUTHORITIES ON THIS ACCOUNT AND RESTORE THE MATTER TO THE FILE OF THE A.O. TO DECIDE THE SAME AFRESH IN THE LIGHT OF OUR OBSERVATIONS HEREINABOVE AND ACCORDING TO LAW AFTER PROVIDING RE ASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ALL THE GROUNDS TAK EN BY THE ASSESSEE ARE, THEREFORE, PARTLY ALLOWED FOR STATISTICAL PURPOSES. 10. IN THE RESULT, THE ASSESSEES APPEAL STANDS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 14-9-2012 SD/- (N.K. BILLAIYA) ACCOUNTANT MEMBER SD/- (DINESH KUMAR AGARWAL) JUDICIAL MEMBER MUMBAI, DATED : 14-9-2012 RK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)- 33, MUMBA I 4. COMMISSIONER OF INCOME TAX CONCERNED 5. DEPARTMENTAL REPRESENTATIVE, BENCH E, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI