Mr. Rajinder Pal Singh, Ludhiana V. ITO, Khanna

ITA 1346/CHANDI/2012

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 4880 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-04-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 27-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, B CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER ITA NO. 1346/CHD/2012 ASSESSMENT YEAR : 2009-10 MR RAJINDER PAL SINGH, VS. THE ITO, WARD-III, C/O M/S KHANNA GUJRAT ROADWAYS, AAYKAR BHAWAN, VILLAGE BHATIAN, KHANNA G.T. ROAD,KHANNA-141401 PAN NO. AVVPS9985P (APPELLANT) (RESPONDENT) APPELLANT BY : SH. PARIKSHIT AGGARWAL, CA RESPONDENT BY : SH. MANJIT SINGH, SR DR DATE OF HEARING : 09.05.2018 DATE OF PRONOUNCEMENT : 09. 05.2018 ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 25.10.2012 OF THE COMMISSIONER OF I NCOME TAX(APPEALS)-II, LUDHIANA [HEREINAFTER REFERRED TO AS CIT(A)]. 2. THE ASSESSEE THROUGH ITS GROUNDS OF APPEAL HAS A GITATED THE ESTIMATION OF GP RATE @ 20% AND FURTHER DISALLOWANC E MADE BY THE ASSESSING OFFICER U/S 40(A)(IA) OF THE INCOME-TAX A CT, 1961 (IN SHORT 'THE ACT'). 3. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE IS INVOLVED IN THE BUSINESS OF TR ANSPORTATION OF ITA NO.1346/CHD/2017- R. RAJINDER PAL SINGH, KHANNA 2 GOODS. HOWEVER, THE ASSESSEE DOES NOT POSSESS ANY T RUCK / VEHICLE. THE ASSESSEE, IN FACT, IS A COMMISSION AGENT AS THE CUSTOMERS / CONSIGNEES / CONSIGNORS BOOK THE TRUCKS THROUGH ASS ESSEE WHICH WORK IS FURTHER OUTSOURCED TO THE TRUCK OWNERS. TH E CONSIGNEE / CONSIGNERS WHILE MAKING PAYMENT DEDUCT TDS IN THE N AME OF THE ASSESSEE BECAUSE THE TRUCKS ARE HIRED IN THE NAME / THROUGH THE ASSESSEE. THE ASSESSEE RETURNED HIS INCOME FOR THE YEAR UNDER CONSIDERATION AT RS. 1,85,300/- UNDER THE HEAD BUS INESS OR PROFESSION. THE ASSESSING OFFICER, HOWEVER, FROM T HE TDS CERTIFICATES NOTED THAT THE TURNOVER OF THE ASSESSE E FOR THE YEAR UNDER CONSIDERATION WAS AT ABOUT RS. 75 LACS. HE, THEREFO RE, ESTIMATED THE INCOME OF THE ASSESSEE FROM THE AFORESAID TURN OVER @ 20% OF THE GROSS RECEIPTS. THE ASSESSING OFFICER FURTHER NOTED THAT THOUGH, THE CUSTOMERS WHILE MAKING PAYMENTS TO THE ASSESSEE HAD DEDUCTED TDS FOR WHICH THE ASSESSEE HAD AVAILED REFUND, HOWEVER, SINCE THE ASSESSEE HAD SUB-CONTRACTED THE WORK TO THE TRUCK O WNERS, HENCE, THE ASSESSEE WAS REQUIRED TO DEDUCT TDS ON THE PAYMENTS MADE TO THE TRUCK OWNERS. HE, THEREFORE, MADE A DISALLOWANCE O F RS. 8,47,618/- AND RS. 23,97,226/- (TOTAL RS. 32,44,844/- ) U/S 4 0(A)(IA) OF THE ACT. 4. THE ASSESSEE CHALLENGED THE AFORESAID ADDITIONS MADE BY THE ASSESSING OFFICER BEFORE THE CIT(A), HOWEVER, REMAI NED UNSUCCESSFUL. 5. BEFORE US, LD. COUNSEL FOR THE ASSESSEE HAS SUBM ITTED THAT THOUGH THE TRUCKS WERE BOOKED THROUGH THE ASSESSEE, HOWEVER, THE ASSESSEE ACTED JUST AS A COMMISSION AGENT. ON THE S UBMISSIONS OF THE ITA NO.1346/CHD/2017- R. RAJINDER PAL SINGH, KHANNA 3 ASSESSEE, THIS TRIBUNAL VIDE ORDER DATED 12.07.2016 DIRECTED THE ASSESSING OFFICER TO GIVE REPORT IN RESPECT OF THE ABOVE SUBMISSIONS OF THE ASSESSEE AFTER GOING THROUGH THE ACCOUNTS OF THE ASSESSEE. THE LD. ASSESSING OFFICER IN HER REPORT DATED 27.7.201 6 HAS REPORTED AS UNDER:- F.NO. ITO/W-3/KHANNA/2016-17/684 DATED 27.07.2016 THE ADDL. COMMISSIONER OF INCOME TAX (DR), O/O COMMISSIONER OF INCOME TAX (DR)(ITAT,) AAYAKAR BHAWAN, SECTOR 17-E, CHANDIGARH SIR, SUB:- APPEAL IN THE CASE OF SH. RAJIDNER PAL SINGH, KHANNA PAN NO. AYVPS09985P IN ITA NO. 136/CHD/2012 ASSESSMENT YEAR 2009-10 REGARDING KINDLY REFER TO YOUR LETTER F.NO. CIT (DR)/ITAT/CHD/2016-17/297 DATED 16.6.2016 VIDE WHIC H YOU HAVE DIRECTED TO APPEAL BEFORE THE HON'BLE BENC H ON 12.7.2016. 2. IN THIS REGARD, IT IS SUBMITTED THAT AS DIRECTED BY THE HON'BLE BENCH, THE DATE OF HERRING, THE REQUISI TE REPORT OF ACCOUNTING OF TDS DEDUCTED ON FREIGHT PAYMENTS IN THE ABOVE NOTED CASE IS SUBMITTED ASUND ER:- 2.1 THE BOOKS OF ACCOUNT ALONGWITH RELEVANT DOCUMEN TS HAVE BEEN PRODUCED BY THE SHRI HUKMINDER SAHI, CA COUNSEL FOR THE ASSESSEE AND HAVE BEEN TEST-CHECKED . THE ASSESSEES COUNSEL HAS ALSO FURNMISHED COPIES OF TH E LEDGER ACCOUNTS OF FREIGHT & OCTROI PATEL (MODERN STEEL LTD), FREIGHT & OCTROI PAYABLE (OTHERS), 26AS STAT EMENT AND TDS ACCOUNT WHICH WERE ETO PRODUCED AT THE TI ME OF ASSESSMENT. 2.2 ON PERUSAL OF THESE ACCOUNTS, IT IS FOUND THAT THE ASSESSEE IS DOING BUSINESS OF TRANSPORT BOOKING AGE NT. THE ASSESSEE HAD BOOKED TRUCKS AND ISSUED BILLS / G RS SHOWING TRUCK NUMBER IN THE NAME OF M/S MODERN STEE L LTD AND OTHER PARTIES MENTIONED IN 26AS STATEMENT. THESE PARTIES HAD DEDUCTED TDS OF THE ASSESSEE AT THE TIM E OF ITA NO.1346/CHD/2017- R. RAJINDER PAL SINGH, KHANNA 4 PAYMENT ON THE BASIS OF BILLS / GRS ISSUED. AFTER R ECEIVING THE PAYMENT OF FREIGHT FROM THE DEDICATORS, THE ASS ESSEE HAD MADE PAYMENTS IN CASH TO THE TRUCK OWNERS AS PE R THE AMOUNTS MENTIONED AGAINST THE SAID BILLS / GRS ISSU ED TO THE ASSESSEE. THE ASSESSEE HAS NOT MAINTAINED ANY L EDGER ACCOUNTS OF THESE TRUCK OWNERS IN HIS BOOKS OF ACCO UNT. HE HAD ONLY MAINTAINED FREIGHT & OCTROI PAYABLE ACCOUNT AND COMMISSION ACCOUNT IN HIS BOOKS OF ACCOUNT AND BOOKED COMMISSION @ 200/- PER TRUCK. HOWEVER, ON RECEIPT OF THESE PAYMENTS FROM THE DEDU CTORS THROUGH CHEQUES, THE ASSESSEE HAD RETURNED THIS FRE IGHT AMOUNT TO THE TRUCK OWNERS AS PER BILLS / GRS AND C LAIMED TDS IN HIS ITR FOR ASSESSMENT YEAR 2009-10. IT IS PERTINENT TO MENTION HERE THAT ALL THE PAYMENTS OF FREIGHT MADE TO TRUCK OWNERS WAS BELOW RS. 20,000/- EACH AN D IN CASH MODE ONLY. 2.3 IT IS FURTHER SUBMITTED THAT THE ASSESSEE HAS N OT ENTERED ANY RECEIPTS OF FREIGHT PAYMENTS ON WHICH T AX DEDUCTED MADE BY THE DEDUCTOR AND ALSO NOT CLAIMED ANY EXPENDITURE OUT OF THESE RECEIPTS. SUBMITTED OF KIND PERUSAL, SIR, YOURS FAITHFULLY, SD/- (KIRAN BALA) ITO, WARD-3, KHANNA 6. THE LD. COUNSEL FOR THE ASSESSEE WHILE RELYING U PON THE REPORT OF THE ASSESSING OFFICER HAS SUBMITTED THAT THE ASS ESSEE WAS NOT OPERATING AS AN INDEPENDENT CONTRACTOR BUT JUST AS A BOOKING AGENT. WHATEVER THE AMOUNT OF FREIGHT WAS RECEIVED, THE AS SESSEE GOT JUST A COMMISSION OF RS. 200 PER TRUCK. THE LD. COUNSEL, T HEREFORE, HAS SUBMITTED THAT THE ASSESSING OFFICER HAS ERRED IN E STIMATING THE GP RATE ON THE BASIS OF TDS CERTIFICATES AND FURTHER T O INVOKE THE PROVISIONS OF SECTION 194C OF THE ACT AND HOLDING T HE ASSESSEE AS AN INDEPENDENT CONTRACTOR AND THEREBY MAKING DISALLOWA NCE U/S 40(A)(IA) OF THE ACT THAT TOO ON ASSUMPTION BASIS. ITA NO.1346/CHD/2017- R. RAJINDER PAL SINGH, KHANNA 5 7. THE LD. DR, ON THE OTHER HAND, HAS RELIED ON THE FINDINGS OF THE LOWER AUTHORITIES. 8. WE HAVE HEARD THE RIVAL SUBMISSION. IN THE PECUL IAR FACTS AND CIRCUMSTANCES OF THIS CASE, IN OUR VIEW, THE ASSESS EE WOULD NOT BE TERMED AS AN INDEPENDENT CONTRACTOR THOUGH THE PA YMENTS WERE MADE BY THE RESPECTIVE CONSIGNEE / CONSIGNER IN THE NAME OF THE ASSESSEE WHICH WERE FURTHER PAID BY THE ASSESSEE TO THE RESPECTIVE TRUCK OWNERS. HOWEVER, THE ELEMENT OF PROFIT MAKING BY OPERATING INDIVIDUALLY AS A CONTRACTOR WAS MISSING IN THESE T RANSACTIONS. THE ASSESSEE WAS GETTING ONLY COMMISSION AT FIXED RATE. THE OPERATION OF THE ASSESSEE WAS IN SUCH A MANNER THAT NEITHER THE ASSESSEE HAD GOT CHANCE TO EARN MORE / VARIABLE PROFITS OUT OF CONTR ACT OR THE FREIGHT RECEIVED EXCEPT THE FIXED COMMISSION INCOME OF RS . 200/- PER TRUCK, NOR THE ASSESSEE BORE ANY RISK OF LOSS OUT OF THE TRANSACTIONS BOOKED. IN THE CIRCUMSTANCES, THE ASSESSEE ACTED JU ST AS A COMMISSION AGENT. IN VIEW OF THE REPORT OF THE ASSESSING OFFIC ER, THE ASSESSEE USED TO RS. 200/- PER TRUCK AS COMMISSION PER BOOK ING. CONSIDERING THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE AN D ALSO IN VIEW OF THE REPORT OF THE ASSESSING OFFICER, WE DO NOT FIND ANY JUSTIFICATION ON THE PART OF THE LOWER AUTHORITIES IN ESTIMATING THE GROSS PROFITS OF THE ASSESSEE ON THE BASIS OF TDS CERTIFICATES AND FURTHER MAKING DISALLOWANCE U/S 40(A)(IA) OF THE ACT, SINCE, THE A SSESSING OFFICER IN HER REPORT HAS STATED THAT THE ASSESSEE ONLY RECEI VED COMMISSION OF RS. 200 PER TRUCK, HENCE, THERE WAS NO JUSTIFICATIO N FOR ESTIMATING THE PROFIT OF THE ASSESSEE ON BASIS OF GROSS RECEIPTS WHICH, IN FACT, WERE FURTHER PAID BY THE ASSESSEE TO THE TRUCK OWNERS. ITA NO.1346/CHD/2017- R. RAJINDER PAL SINGH, KHANNA 6 9. CONSIDERING THE OVERALL FACTS AND CIRCUMSTANCES, WE DO NOT FIND ANY JUSTIFICATION ON THE PART OF THE LOWER AUTHORIT IES IN MAKING THE IMPUGNED ADDITIONS AND THE SAME ARE ACCORDINGLY HER EBY SET ASIDE. HOWEVER, BEFORE PARTING WITH THE ORDER, WE CLARIFY THAT OUR ABOVE OBSERVATIONS MADE IN THIS CASE ARE ON THE PECULIAR FACTS AND CIRCUMSTANCES OF THIS VERY CASE AND THESE WILL NEI THER OPERATE AS A JUDICIAL PRECEDENT NOR SHOULD BE TAKEN AS LAYING DO WN ANY PROPOSITION OF LAW. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (B.R.R.KUMAR) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 09.05.2018 RKK COPY TO: THE APPELLANT THE RESPONDENT THE CIT THE CIT(A) THE DR