The ITO, Ward-3(2)(6), Ahmedabad V. Shri Dilipkumar Bapusaheb Patole, Ahmedabad

ITA 1398/AHD/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 1920 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-09-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 25-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Assessee Lawyers: K C THAKKAR
• Keywords: Principle of natural justice; Additional evidence; TDS
• Section: 40(a)(ia); 194C; 201

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL , B BENCH, AHMEDABAD BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER AND SHRI WASEEM AHMED , ACCOUNTANT MEMBER ./ ITA NO. 1398/AHD/2016 / ASSTT. YEAR: 2007 - 2008 ITO , WARD - 3(2)(6) , AHMEDABAD. VS. SHRI DILIPKUMAR BAPUSAHEB PATOLE, PROP.OF M/S JAYHIND TRANSPORT, 20, VICTOR WAREHOUSE, TRANSPORT NAGAR NAROL, AHMEDABAD - 382405 PAN : ABCPP4852G (APPLICANT) ( RESPON D ENT ) REVENUE BY : MS SONIA KUMAR, SR. D.R ASSESSEE BY : SHRI K.C. THAKKAR, A.R / DATE OF HEARING : 28 / 06 / 201 9 / DATE OF PRONOUNCEMENT: 03 / 09 /201 9 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER : THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE REVENUE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 3 , AHMEDABAD DATED 21/03/2016 (IN SHORT LD.CIT(A) ) ARISING IN THE MATTER OF ASSESSMENT ORDER PASSED UNDER S. 143 OF THE INCOME TAX ACT, 1961 ( HERE - IN - AFTER REFERRED TO AS 'THE ACT') DT. 2 4 / 12/2009 RELEVANT TO THE ASSESSMENT YEAR 2007 - 20 08 . ITA NO. 1398/AHD/2016 ASSTT. YEAR 2007 - 08 2 THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL. 1. T HE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.3,49,02,235/ - MADE U/S.40(A)(IA) ON ACCOUNT OF NON - DEDUCTION OF TAX U/S.194C OF THE ACT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT (A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 3. IT IS THEREFORE, PRAYED THAT THE ORDER OF THE LD.CIT(A) MAY BE SET - ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTOTED. THE SOLE ISSUE RAISED BY THE ASSESSEE IS THAT THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 3,49,02,235/ - MADE BY THE AO ON ACCOUNT OF NON DEDUCTION OF TDS ON FREIGHT CHARGES PAID BY THE ASSESSEE. 2. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS AN INDIVID UAL ENGAGED IN THE BUSINESS OF TRANSPORTATION OF GOODS. THE AO DURING THE PROCEEDINGS FOUND THAT : I. THE ASSESSEE HAD MADE FREIGHT PAYMENT OF RS. 3,49,02,235/ - OUT OF WHICH 1,09,51,300/ - PAYABLE FOR MONTH OF FEBRUARY AND MARCH 2007. II. MOST OF THE FREIGHT PAY MENTS WERE IN EXCESS OF RS. 20,000/ - IN A YEAR . III. THE ASSESSEE DID NOT DEDUCT THE TDS ON THESE PAYMENTS. IV. THE ASSESSEE DID NOT FILE FORM 15 - I IN RESPECT OF SUCH PAYMENT TO ESCAPE FROM THE TDS LIABILITY. 2.1 IN VIEW OF THE ABOVE, THE AO OPINED THAT THE ASSES SEE FAILED TO COMPLIANCE THE PROVISION OF SECTION 40(A)(IA) OF THE ACT R.W.S. 194C(3) OF THE ACT. ACCORDINGLY, THE HE DISALLOWED THE SUM OF RS. 3,49,02,235 .00 AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. ITA NO. 1398/AHD/2016 ASSTT. YEAR 2007 - 08 3 AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE TH E LD.CIT (A) WHO UPHELD THE ORDER OF THE AO VIDE ORDER DATED 28 - 10 - 2010 . 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT - A, THE ASSESSEE FILED AN APPEAL BEFORE THE ITAT AHMEDABAD. THE ITAT RESTORED THE MATTER TO THE LD.CIT (A) VIDE ORDER DATED 5 TH JULY 2013 FOR FRESH ADJUDICATION WITH THE SPECIFIC DIRECTION AS DETAILED UNDER: 1) WHETHER THE ASSESSEE IS WORKING AS AN AGENT ONLY OR AS INDEPENDENT TRANSPORTER. 2) WHETHER THE ASSESSEE RECEIVED DULY FILLED FORM 15 - I FROM THE TRUCK OWNERS BEFORE THE DATE OF CR EDIT OR PAYMENT WHICH - EVER IS EARLIER. 3.1 ACCORDINGLY , THE LD. CIT (A) CALLED THE ASSESSEE TO FURNISH THE NECESSARY DETAILS: 3.2 THE ASSESSEE SUBMITTED BEFORE THE CIT (A) THAT HE IS DOING THE BUSINESS AS A TRANSPORTER COMMISSION AGENT AND FURNISHED THE FOLLOWING EVIDENCES IN SUPPORT OF HIS CLAIM: 1) COPY OF THE LORRY RECEIPT SHOWING TRUCK NO. OF VEHICLES. 2) COPY OF CASH VOUCHER OF PAYMENT FOR THE VEHICLE HIRED. 3) TRANSPORTATION CHARGE INVOICE ISSUED TO THE CUSTOMER . 4) THE MARGIN IS AROUND 300 TO 700 PER TRUCK ONLY. 5) HE DOES NOT OWN ANY TRUCK AS THE SAME IS VERIFIABLE FROM THE AUDITED BALANCE SHEET . 6) THE ACCOUNTANT LOOKING AFTER THE AFFAIRS WAS EXPIRED DUE TO ILLNESS IN 2013. THEREFORE IT WAS DIFFICULT TO COLLECT ALL THE RECORDS. ITA NO. 1398/AHD/2016 ASSTT. YEAR 2007 - 08 4 7) THE ASSESSEE COLLECTED THE FOR M - I AT THE TIME OF HIRING OF TRUCK AND BEFORE LOADING THE GOODS IN THE TRUCK. THEREFORE AT THE TIME OF PAYMENT THE FORM ARE AVAILABLE. HENCE THE TDS WAS NOT REQUIRED TO BE DEDUCTED AT THE TIME OF PAYMENT. 3.3 THE LD.CIT (A) FORWARDED THE SUBMISSION OF TH E ASSESSEE TO THE AO FOR THE REMAND REPORT WHO IN TURN OBJECTED ON THE ADMISSION OF ADDITIONAL EVIDENCES AS THERE IS NO VIOLATION OF THE RULE 46A OF INCOME TAX RULES. 3.4 THE AO WITHOUT PREJUDICE TO THE ABOVE, ON MERIT ALSO SUBMITTED THAT THE DETAILS OF FREIGHT PAYMENT SUBMITTED BEFORE THE LD. CIT (A) DO NOT REFLECT THE TOTAL FREIGHT PAYMENT MADE DURING THE YEAR UNDER CONSIDERATION. 3.5 HOWEVER THE LD. CIT - A AGREED WITH SUBMISSION OF THE ASSESSEE AND DELETED THE ADDITION MADE BY THE AO BY OBSERVING AS UN DER : 4.2 THE APPELLANT HAS EXPLAINED THE 1 ST ISSUE SAYING THAT THERE WERE MORE THAN 340 TRIPS BY THE 340 TRUCKS USED IN THE YEAR UNDER CONSIDERATION. APPELLANT HAS ALSO RELIED ON THE RATIO LAID DOWN IN THE CASE OF CIT VS. UNITED RICE LAND LTD. 217 CTR 33 2 (P&H) IN THIS REGARD. IN VIEW OF ABOVE, IT IS CONCLUDED THAT APPELLANT HAS EXPLAINED 1 SI ISSUE SATISFACTORILY. AS REGARDS SECOND ISSUE, THE APPELLANT ALSO FILED INFORMATION IN 8 PAGES ABOUT 340 PARTIES IN FOLLOWING FORMAT: - SR.NO. NAME OF PARTY ADDRESS HEAVY GOODS CARRIAGE TRUCK DATE OF REGISTRATION DATE OF FORM NO.15 - 1 & LOADING THE DATES OF RECEIPT OF FORM 15 - 1 FROM DIFFERENT TRUCK OWNERS ARE ALSO FOUND TO BE IN ORDER SO FAR 2 NO ISSUE IS CONCERNED, THE APPELLANT HAS SUBMITTED REASONABLE AND LOGICAL EXPLANATION IN ADDITION TO SAYING THAT TDS PROVISIONS VIS - A VIS SEC 40(A)(IA) WERE NOT APPLICABLE IN THE YEAR UNDER CONSIDERATION TO THE INDIVIDUAL AND HUF ASSESSEES. HOWEVER, EXAMIN ATION IS RESTRICTED TO ONLY THE 2 ISSUES SO AS TO COMPLY WITH THE DIRECTIONS OF HON'BLE ITAT. THE AO IS RIGHT IN SAYING THAT HE HAS LIMITED SCOPE TO EXAMINE THE NEW EVIDENCE WITH THE COMMENT THAT CIRCUMSTANCES TO INVOKE RULE 46A ARE NOT PREVALENT. HOWEVER, THE ITA NO. 1398/AHD/2016 ASSTT. YEAR 2007 - 08 5 ADDITIONAL EVIDENCES ARE CIRCUMSTANTIAL IN NATURE AND GO TO THE ROOT OF UNDERSTANDING THE CONTROVERSY IN QUESTION. THEREFORE, SAME ARE DECIDED TO BE ADMITTED FOR SAKE OF NATURAL JUSTICE. MOREOVER, IT IS TO BE KEPT IN MIND THAT IN THIS AUDITED CASE U/S .44AB, ADDITION OF RS.3,49,02,235/ - HAS BEEN MADE BY AO OUT OF TOTAL FREIGHT RECEIPTS OF RS.3,60,01,878/ - PERHAPS IT IS A CASE OF FASTENING UNREASONABLE TAX LIABILITY FOR WANT OF PROPER REPRESENTATION BY AR. IN ORDER TO COMPLY WITH THE DIRECTIONS OF HON'BL E ITAT, THE UNDERSIGNED MADE ENQUIRY U/S.250(4) ON THE BASIS OF WHATEVER RECORDS AVAILABLE. THE RESULT OF SUCH ENQUIRY IS THAT NO EVIDENCE COULD BE TRACED WHICH CAN DISAPPROVE CONTENTION RAISED BY THE APPELLANT. AS THE APPELLANT HAS OBTAINED FORM 15 - 1 WITHIN STIPULATED TIME, THE ADDITION MADE U/S40(A)(IA) OF RS.3,49,02,235/ - IS HEREBY DELETED. THE APPEAL IS ALLOWED. B EING AGGRIEVED BY THE ORDER OF THE LEARNED CIT (A), THE R EVENUE IS IN APPEAL BEFORE US. 4. THE LEARNED DR BEFORE US FILED A PAPER BOOK RUNNING FROM PAGES 1 TO 61 AND VEHEMENTLY SUPPORTED THE ORDER OF THE AO. 5. O N THE OTHER HAND, THE LEARNED AR BEFORE US FILED A PAPER BOOK RUNNING FROM PAGES 1 TO 132 AND VEHEMENTLY SUPPORTED THE ORDER OF THE LD. CIT - A. 6. WE HAVE HEARD THE RIVAL CONTE NTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. 6.1 THE ISSUE IN THE PRESENT CASE RELATES WHETHER THE ASSESSEE HAS MADE THE PAYMENT OF THE FREIGHT CHARGES TO THE TRUCK OWNERS AGAINST THE PROVISIONS OF SECTION 194C I.E. WITHOUT DEDUCTING THE TDS. IT IS A SET - ASIDE PROCEEDINGS WHICH WAS RESTORED BACK BY THE ITAT V IDE ORDER DATED 5 TH JULY 2013 TO THE LEARNED CIT (A) WITH THE SPECIFIC DIRECTION AS ELABORATED ABOVE . ITA NO. 1398/AHD/2016 ASSTT. YEAR 2007 - 08 6 6.2 AS PER THE DIRECTION OF THE ITAT, THE CONTROVERSY REVOLVES TO TWO DISPUTES: A. WHETHER THE ASSESSEE IS ACTING AS AN AGENT AND ITS INCOME IS LIMITED WITHIN THE RANGE OF 200 TO 700 PER TRUCK PER TRIP. B. WHETHER THE ASSESSEE HAS FURNISHED FORM 15 I DULY FILLED BEFORE MAKING THE PAYMENT TO THE TRUCK OWNERS. 6.3 REGARDING THE 1 ST ISSUE WE NOTE THAT THE ASSESSEE DOES NOT OWN ANY TRUCK AS EVIDENT FROM THE SUBMISSION OF THE ASSESSEE WHICH WAS NOT CONTROVERTED BY THE AO. THE RELEVANT SUBMISSION OF THE ASSESSEE IS REPRODUCED AS UNDER: WE FURTHER SUBMIT THAT THE ASSESS EE IS NOT HAVING HIS OWN TRUCK. HE IS SITTING AL TRANSPORTNAGAR, NAROL. AHMEDABAD AND DOING THE BUSINESS AS A TRANSPORT COMMISSION AGENT SINCE MORE THAN 15 YEARS. ASSESSEE HAS DEVELOPED CONTRACTS WITH THE TRUCK OWNERS HAVING ONE OR TWO TRUCKS OF GUJARAT AN D OTHER STATES. THE TRUCK OWNERS OF OTHER STATES DO NOT HAVE DIRECT CONTRACT WITH THE PARTIES, THEREFORE WE ARE ARRANGING THE LOADING OF GOODS FROM DIFFERENT PARTIES WHO ARE DEALING WITH US FROM LAST SEVERAL YEARS. FOR THESE SERVICES, WE ARE CHARGING COMM ISSION.' AFTER THE INTRODUCTION OF SECTION 40(A)(IA), OUR REGULAR PARTIES HAD INSISTED US TO RAISE LR IN OUR NAME. TO GET BULK BUSINESS, WE HAD ACCEPTED THEIR REQUEST AND STARTED TO ISSUE OUR OWN LR. BY CONSIDERING OUR COMMISSION AMOUNT. THEREFORE, IN PROF IT AND LOSS ACCOUNT, WE HAVE CREDITED THE TRANSPORT FREIGHT RECEIPT AND CORRESPONDING TDS DEDUCTED BY THE PARTIES HAS BEEN CLAIMED BY US. SUCH TYPE OF PRESENTATION IN THE FINANCIAL STATEMENT DOES NOT CHANGE THE FACTS. WE FURTHER SUBMIT THAT ON VERIFICATION OF RECORDS PRODUCED BEFORE YOUR GOODSELF, YOU WILL FIND THE SAID FACTS. 6.4 T HE LEARNED AR FOR THE ASSESSEE HAS ALSO SUBMITTED THE DETAILS OF THE COMMISSION INCOME EAR N ED BY HIM ON SAMPLE BASIS WHICH IS PLACED ON PAGES 8 TO 9 OF THE PAPER BOOK WHICH WAS ALSO NOT CONTROVERTED BY THE AO DURING THE REMAND PROCEEDINGS. INDEED, THE ASSESSEE HAS NOT FURNISHED THE DETAILS OF THE COMMISSION INCOME FOR THE ENTIRE YEAR . B UT TO OUR M IND IF THE AO WA S NOT SATISFIED WITH THE DETAILS FURNISHED BY THE ASSESSEE THEN HE SHOULD HAVE REQUIRED THE ASSESSEE TO FURNISH THE DETAILS FOR THE ENTIRE YEAR. MOREOVER , WE ITA NO. 1398/AHD/2016 ASSTT. YEAR 2007 - 08 7 NOTE THAT THE AO IN THE REMAND PROCEEDING H AS NOT POINTED OUT ANY DEFECT IN THE SU BMISSION FILED BY THE ASSESSEE. ACCORDINGLY WE NOTE THAT THE ASSESSEE WAS MERELY ACTING AS AN AGENT. ACCORDINGLY, THE ASSESSEE IS NOT LIABLE TO DEDUCT THE TDS ON THE PAYMENT MADE TO THE TRUCK OWNERS. 6.5 REGARDING THE 2 ND CONTROVERSY WHETHER THE ASSESSEE HAS RECEIVED FORM 15 I DULY FILLED FROM THE TRUCK OWNERS, WE NOTE THAT THE ASSESSEE HAS FURNISHED A LIST OF 340 PARTIES ALONG WITH THEIR ADDRESSES, TRUCK NUMBERS WITH THE DATE OF REGISTRATION AND THE DATE OF FORM 15 I WHICH IS PLACED ON PAGES 83 TO 90 OF THE PAPER BOOK. ON PERUSAL OF THE SAME, WE NOTE THAT ALL THE DETAILS OF THE TRUCK OWNERS WERE FURNISHED BEFORE THE AO. HOWEVER, THE AO HAS NOT CARRIED OUT ANY VERIFICATION OF SUCH DETAILS TO PROVE THEM ERRONEOUS BY ISSUING NOTICE TO ANY OF THE PARTY UNDER SECTION 133 ( 6 ) /131 OF THE ACT. 6.6 WE FURTHER NOTE THAT THE ASSESSEE IS ABSOLVED THE FROM THE PROVISIONS OF THE TDS ONCE HE HAS COLLECTED FROM 15 I BEFORE MAKING THE PAYMENT TO THEM OR CREDITING THEIR ACCOUNT. THERE IS NO AMBIGUITY TO THE FACT THAT THE N ECESSARY FORMS 15 I WERE COLLECTED BY THE ASSESSEE W IT HIN TIME. THIS FACT HAS NOT BEEN CONTROVERTED BY THE LEARNED DR FOR THE R EVENUE. INDEED, THE ASSESSEE IS UNDER THE OBLIGATION TO FILE A REPORT TO THE COMMISSION OF INCOME TAX IN FORM 15 J AFTER COMPILIN G ALL THE DETAILS COLLECTED IN THE FORM 15 I BUT THIS REQUIREMENT IS PROCEDURAL AS HELD BY THIS TRIBUNAL IN THE CASE OF ITO VS. ANDHRA ROADWAYS REPORTED IN 61 TAXMANN.COM 203 . THE RELEVANT FINDING READS AS UNDER: FROM THIS, IT FOLLOWS THAT THIRD PROVISO TO SECTION 194C(3)(I) WHICH REQUIRES ASSESSEE TO SUBMIT FORM NO. 15 - J IS ONLY PROCEDURAL FORMALITY AND WHAT HAS BEEN DONE BY SECOND PROVISO. NON - SUBMISSION OF FORM NO. 15 - J TO THE COMMISSIONER WITHIN THE TIME PRESCRIBED IN RULE 29D CANNOT HAVE ANY EFFECT O N DECIDING AS TO WHETHER TAX WAS DEDUCTIBLE OR NOT DEDUCTIBLE FROM THE PAYMENTS MADE BY ASSESSEE TO THE SUB - CONTRACTORS. FOR INVOKING PROVISIONS OF SECTION 40(A)(IA) IT IS TO BE DECIDED WHETHER TAX WAS DEDUCTIBLE OR NOT, IF ANY, WHETHER DEDUCTED/PAID OR NO T. WHEN ONE LOOKS INTO SECTION 194C(3)(I) FOR THE PURPOSES OF INVOKING SECTION ITA NO. 1398/AHD/2016 ASSTT. YEAR 2007 - 08 8 40(A)(IA), IT IS FOUND THAT ONLY SECOND PROVISO TO IT IS SUFFICIENT TO DECIDE WHETHER TAX WAS DEDUCTIBLE OR NOT. TIME FACTORS INVOLVED FOR COMPLIANCE OF THE CONDITIONS MENTIONED IN TWO PROVISIONS ARE DIFFERENT. SECOND PROVISO IS TO BE COMPLIED WITH AT THE TIME OF MAKING PAYMENT TO THE SUB - CONTRACTOR, WHEREAS COMPLIANCE OF THIRD PROVISO CAN BE DEFERRED TILL 30TH JUNE OF NEXT FINANCIAL YEAR. IN OTHER WORDS, THE CONTRACTOR CAN WAIT TO COMPLY WITH THIRD PROVISO TILL 30TH JUNE OF NEXT FINANCIAL YEAR AFTER COMPLYING WITH SECOND PROVISO. HOWEVER, THE DECISION ON DEDUCTIBILITY OF TAX FROM THE PAYMENT MADE TO THE SUB - CONTRACTOR CANNOT BE DEFERRED TILL 30TH JUNE OF NEXT FINANCIAL YEAR. HE H AS TO TAKE THIS DECISION (ABOUT DEDUCTIBILITY OF TAX FROM PAYMENTS BEING MADE BY IT TO THE SUB - CONTRACTORS) JUST AT THE TIME WHEN HE IS RELEASING THE PAYMENTS TO THE SUB - CONTRACTORS. IT IS AT THIS POINT OF TIME THAT SECOND PROVISO WOULD COME INTO PLAY AND WHEN FORM NO. 15 - I ARE SUBMITTED BY THE SUB - CONTRACTORS TO THE CONTRACTOR, THEN CONTRACTOR WAS NOT REQUIRED TO DEDUCT TAX FROM SUCH PAYMENTS. ONCE DEDUCTIBILITY OF TAX DEPENDS UPON SUBMISSION OR NON - SUBMISSION OF FORM NO. 15 - I FROM THE SUB - CONTRACTOR TO TH E ASSESSEE, THEN NON - COMPLIANCE OF THIRD PROVISO BECOMES MERELY TECHNICAL WITHOUT AFFECTING IN SUBSTANCE THE DEDUCTIBILITY OR NON - DEDUCTIBILITY OF TAX ON PAYMENTS MADE BY THE ASSESSEE TO THE SUB - CONTRACTORS. IN VIEW OF ABOVE, NON - COMPLIANCE OF THIRD PROVIS O BECOMES MERELY A TECHNICAL DEFAULT WHICH WOULD NOT AFFECT THE PROVISION OF SECTION 40(A)(IA). IN VIEW OF ABOVE, THE COMMISSIONER (APPEALS) WAS JUSTIFIED IN RESTRICTING THE DISALLOWANCE. IN VIEW OF THE ABOVE, WE NOTE THAT THE ASSESSEE HAS DULY COMPLIED THE PROVISIONS OF SECTION 194 - C OF THE ACT BY COLLECTING THE REQUISITE 15 - I FORMS AND THEREFORE THE ASSESSEE IS NOT LIABLE TO DEDUCT THE TDS ON THE PAYMENT MADE TO THE TRANSPORTERS. HENCE THE GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 7. IN THE RESULT , THE APPEAL FILED BY THE REVENUE IS DISMISSED. O RDER PRONOUNCED IN THE COURT ON 03 /09 / 2019 AT AHMEDABAD. - SD - - SD - (MAHAVIR PRASAD ) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER (TRUE COPY) A HMEDABAD; DATED 03 / 09 /2019 MANISH