The DCIT, Circle 1(2), Ahmedabad V. Kataria Transport & Company., Ahmedabad

ITA 1418/AHD/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4921 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 03-02-2020
• Assessment Year: 2005-2006
• Appeal Filed On: 29-05-2018

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. 1418/AHD/2018 ( / ASSESSMENT YEAR : 2005-06) THE DCIT CIRCLE-1(2) AHMEDABAD / VS. KATARIA TRANSPORT & CO. INSIDE PREMDARWAJA NR. SURYADAS MANDIR PREM DARWAJA, DARIYAPUR AHMEDABAD ./ ./ PAN/GIR NO. : AAAAT 9774 F ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI VIDHYUT TRIVEDI, SR.DR / RESPONDENT BY : SHRI P.B.PARMAR, AR / DATE OF HEARING 03/02/2020 !'# / DATE OF PRONOUNCEMENT 21/02/2020 / O R D E R PER MAHAVIR PRASAD, JUDICIAL MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF I NCOME TAX (APPEALS)10, AHMEDABAD [CIT(A) IN SHORT] VIDE APPE AL NO.CIT(A)- 10/DCIT CIRCLE-1(2)/10540/2017-18 DATED 28/03/2018 ARISING IN THE ASSESSMENT ORDER PASSED UNDER S.143(3) OF THE INCOM E TAX ACT, 1961(HEREINAFTER REFERRED TO AS 'THE ACT') DATED 27 /12/2007 AND PENALTY ORDER U/S.271(1)(C) R.W.S.274 OF THE ACT RELEVANT T O ASSESSMENT YEAR (AY) 2005-06. ITA NO.1418/AHD/2018 DCIT VS. KATARIA TRANSPORT & CO. ASST .YEAR 2005-06 - 2 - 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- (1) ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN LAW AND/OR ON FACTS IN DELETING THE PENALTY U/S.271(1)(C) OF THE ACT OF RS.1,65,48,303/- ON ACC OUNT OF FURNISHING INACCURATE PARTICULARS OF INCOME BY NON DEDUCTION OF TDS U/S.194C OF THE ACT. (2) THAT THE LD.CIT(A) HAS SUBSTANTIALLY ERRED BY NOT C ONSIDERING THE FACT THAT THE ASSESSEE HAS FAILED TO DEDUCT TDS U/S.194C OF THE ACT ATTRACTING THE VIOLENCE OF SECTION 40(A)(IA ) OF THE ACT AND FURNISHED INACCURATE PARTICULARS OF INCOME. (3) THE APPELLANT CRAVES, TO LEAVE, TO AMEND AND/OR TO ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 3. FACTS OF THE CASE ARE THAT RETURN OF INCOME WAS FILLED BY THE ASSESSEE ON 27/10/2005 DECLARING TOTAL INCOME OF RS. 29,01,2 40/- THE ASSESSMENT WAS COMPLETED U/S. 143(3) OF I.T. ACT ON 27/12/2007 DETERMINING TOTAL INCOME AT 2,51,85,660/-, THE ADDITIONS AND DISALLOW ANCES OF RS.2,22,84,420/- WERE MADE IN THE ASSESSMENT, WHICH INCLUDED DISALLOWANCE OF RS.2,21,56,800/- OUT OF FREIGHT EXP ENSES U/S 40(A)(IA) OF THE ACT AND RS.52,800/- OUT OF INTEREST EXPENSES. T HE PENALTY PROCEEDINGS U/S 271(L)(C) OF THE ACT WERE INITIATED. A SHOW CAU SE NOTICE WAS ISSUED AND SERVED ON THE ASSESSEE. 3.1. THE ASSESSEE HAD PREFERRED AN APPEAL AGAINST THE ASSESSMENT AGITATING THE DISALLOWANCE MADE U/S 40(A)(IA) OF TH E ACT. THE LD.CIT(A), VIDE ORDER DATED 12.12.2008, HAS GRANTED RELIEF OF RS.55,92,622/- OUT OF ITA NO.1418/AHD/2018 DCIT VS. KATARIA TRANSPORT & CO. ASST .YEAR 2005-06 - 3 - THE DISALLOWANCE OF FREIGHT EXPENSES MADE U/S 40(A) (IA) OF THE ACT AND RS.17,550/- OUT OF DISALLOWANCE OF INTEREST. THE LD .CIT(A) HAS THUS UPHELD THE DISALLOWANCES TO THE EXTENT OF RS.1,65,6 4,178/- AND RS.35,250/- OUT OF FREIGHT EXPENSES AND INTEREST EX PENSES RESPECTIVELY. THE CIT(A) HAS FURTHER MADE ENHANCEMENT OF RS.2,42, 42,615/- OUT OF FREIGHT EXPENSES AND ALSO ADDITION OF RS.13,25,000/ - IS MADE ON ACCOUNT OF UNEXPLAINED CASH CREDITS/DEPOSITS. THE INCOME AS PER ORDER DATED 21.01.2009 GIVING EFFECT TO CIT(A)'S ORDER WAS DETE RMINED AT RS.4,61,01,010/-. 3.2. THE ASSESSEE WAS GRANTED ANOTHER OPPORTUNITY OF BEING HEARD VIDE SHOW CAUSE NOTICE OF PENALTY U/S 271(1)( C) DATED 13.01.2010, WHICH WAS DULY SERVED UPON THE ASSESSEE. IN RESPONS E TO THE ABOVE NOTICE, ASSESSEE HAS FURNISHED WRITTEN SUBMISSION D ATED 22.01.2010, FILED IN THE OFFICE ON 27.01.2010. THE ASSESSEE HAS RAISE D THE FOLLOWING CONTENTIONS. '1 . THAT THE COMMISSIONER OF INCOME TAX APPEALS PASSED THE ORDER EX-PARTY WITHOUT APPRECIATING THE FACTS AND EVEN REFUSED TO ACCEPT THE SUBMISSION SENT BY SPEED POST AND THEREFORE THE ORDER PASSED AND AD DITION SUSTAINED ARE HIGHLY DEBATABLE AND PREJUDICE AND SHOULD NOT BE TREATED A GAINST THE ASSESSEE FIRM. 2. THAT AS REGARDS THE DISALLOWANCE OF FREIGHT EXPE NSES U/S 40(A)(IA) ARE CONCERNED, IT IS SUBMITTED THAT THE ENTIRE DETAILS WERE PART OF THE RETURN FILED AND MERELY DISALLOWING SHOULD NOT BE TREATED AS FIL LING THE INACCURATE PARTICULARS OF INCOME. THAT DURING THE YEAR FOR THE PAYMENT OF FREIGHT EVERY EACH TRANSACTION WAS A SEPARATE CONTRACT AS PER THE BOARD CIRCULAR AND THE AMENDMENT CAME IN THE MID OF THE YEAR AND HOW ASSES SEE IS KNOWN AT THAT TIME AND HE CAME TO KNOW ONLY WHEN HIS ACCOUNTS ARE FINA LIZED AND THEREFORE ANY ITA NO.1418/AHD/2018 DCIT VS. KATARIA TRANSPORT & CO. ASST .YEAR 2005-06 - 4 - ADDITION IN THIS REGARD SHOULD NOT BE TREATED AS FI LING THE INACCURATE PARTICULARS OF INCOME OR CONCEALMENT. 3. THAT FURTHER NEITHER THE ASSESSING OFFICER NOR A PPELLANT AUTHORITY MADE RECONCILIATION WEATHER THE OTHER PARTY TO WHOM FREI GHT PAID HAS OFFERED THE SAME FOR TAXATION OR NOT AND MAKE THE DISALLOWANCE ONLY ON BOOK ENTRY. 4. THAT FURTHER IT WILL BE NOT OUT OF PLACE TO MENT ION THAT THE ASSESSEE HAS ALREADY APPROACHED THE GUJARAT HIGH COURT FILED A S PECIAL CIVIL APPLICATION CHALLENGING THE VALIDITY OF PROVISION OF SECTION 40 (A)(IA) AND THE SAME HAS BEEN ACCEPTED BY THE COURT AND IT IS STILL PENDING. A CO PY OF HIGH COURT ORDER HAS ALREADY BEEN SERVED TO YOUR OFFICE BY THE COURT AND IT IS PART OF THE RECORD. SINCE THE MATTER IS STILL SUB JUDICE THE PENALTY PR OCEEDING INITIATED ABOVE ARE OF QUASI JUDICIAL PROCEEDINGS HENCE THEY SHOULD BE KEP T AT LEAST IN ABEYANCE TILL THE DISPOSAL OF PETITION. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES SINCE THE MATTER ON WHICH THE PENALTY PROCEEDING ARE INITIATED IS PENDING BEFORE THE HIGHEST COURT OF THE STATE AND THE ORDER OF THE COMMISSIONER APPEALS HAS BEEN PASSED EX-PARTY AGAINST WHICH THE ASSESSEE HAS PREFERRED AN APPEAL BEFORE T HE INCOME TAX TRIBUNAL AND FURTHER THERE ARE NO INACCURATE PARTICULARS OF INCO ME FILED HENCE THE PENALTY PROCEEDING INITIATED MAY PLEASE BE KEPT IN ABEYANCE TILL THE ORDER OF THE HIGH COURT ON THE CONSTITUTIONAL VALIDITY OF THE SECTION OR MAY PLEASE BE DROPPED. 5. THAT AS REGARDS THE INITIATION OF PENALTY PROCEEDIN GS FOR THE UNSECURED LOAN U/S 68 IS CONCERNED, IT IS SUBMITTED THAT THE LEARN ED COMMISSIONER OF APPEALS WITHOUT VERIFYING THE ASSESSMENT RECORDS CONFIRMED THE DEPOSITS ACCEPTED BY THE ASSESSES FIRM. IN FACT THE CONFIRMATIONS WERE FILED BEFORE T HE ASSESSING OFFICER, WERE NOT SENT TO HER AND WERE NOT CONSIDER ED WHILE PASSING THE ORDER OF APPEAL. SINCE THE CONFIRMATION OF UNSECURED LOANS WERE FILE D AT THE TIME OF ASSESSMENT AND EVEN THE ASSESSING OFFICER ACCEPTED THE SAME AN D DID NOT MAKE ANY DISALLOWANCE WHILE PASSING THE ORDER U/S 143(3) OF INCOME TAX ACT AND NO PENALTY PROCEEDING WERE INITIATED BY HIM. SINCE THE ADDITION MADE BY THE COMMISSIONER APPEALS IS FACTUALLY NOT CORRECT AS PER THE ASSESSMENT RECORDS AND THE CONFIRMATIONS OF THE DEPOSITORS ALREADY ITA NO.1418/AHD/2018 DCIT VS. KATARIA TRANSPORT & CO. ASST .YEAR 2005-06 - 5 - FILED AND ACCEPTED BY THE ASSESSMENT OFFICER, HENCE NO PROCEEDING FOR CONCEALING INACCURATE PARTICULARS OF INCOME SHOULD BE INITIATED OR BE KEPT IN ABEYANCE AS THE ADDITION IS DISPUTED AS THE ASSESSE E HAS FILED THE APPEAL BEFORE THE INCOME TAX TRIBUNAL '. 3.3. THE CONTENTIONS RAISED BY THE ASSESSEE HAVE B EEN CONSIDERED CAREFULLY AS ALSO THE FACTS OF THE CASE. IN THE CAS E OF ASSESSEE, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, FROM ANENXURE-6 T O THE AUDIT REPORT, IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE AS SESSEE HAD MADE TDS OF RS.2,21,568/- ON VARIOUS DATES DURING THE YEAR F ROM FREIGHT PAYMENTS TO DIFFERENT PARTIES, BUT PAID THE SAME INTO GOVERN MENT ACCOUNT AFTER EXPIRY OF THE PREVIOUS YEAR I.E. 31.03.2005, THE DE TAILS OF WHICH ARE AS UNDER: S.NO. TDS U/S MONTH AMOUNT OF TDS DUE DATE PAYMENT DATE 1 194 C DEC. 2004 71,541/- 01.01.2005 05.04.2005 2 194 C JAN. 2005 31,801/- 07.02.2005 17.05.2005 3 194 C FEB. 2005 16,598/- 07.03.2005 25.05.2005 4 194 C MAE. 2005 1,01,628/- 31.05.2005 JUNE & JULY, 2005 TOTAL TDS AMOUNT PAID LATE 2,21,568/- ITA NO.1418/AHD/2018 DCIT VS. KATARIA TRANSPORT & CO. ASST .YEAR 2005-06 - 6 - THE PAYMENTS OF TDS WERE NOT MADE WITHIN THE STIPUL ATED TIME BY THE ASSESSEE, BUT THESE WERE PAID AFTER EXPIRY OF PREVI OUS YEAR I.E. AFTER 31.03.2005. THE CORRESPONDING/PROPORTIONATE DISALLO WANCE OUT OF FREIGHT EXPENSES OF RS.2,21,56,800/- WAS MADE U/S 40(A)(IA) OF THE I.T.ACT IN THE ASSESSMENT. THE CIT(A) HAS RESTRICTED THE DISALLOWA NCES TO THE EXTENT OF RS.1,65,64,178/- AS HELD IN PARA 10 OF HER ORDER. I N THE CASE OF ASSESSEE, DISALLOWANCE OF RS.52,800/- WAS MADE OUT OF INTERE ST EXPENSES, BUT THE CIT(A) HAS RESTRICTED THE DISALLOWANCE TO RS.35,250 /-. THUS THE CIT(A) HAS UPHELD THE DISALLOWANCES OF RS.1,65,64,178/- AN D RS.35,250/- MADE IN THE ASSESSMENT BY THE ASSESSING OFFICER. 3.4. FURTHER, WHILE DECIDING THE APPEAL, THE CIT( A), HAD NOTICED THAT OUT OF THE FREIGHT EXPENSES DEBITED OF RS.6,93,67,089/- TO P&L ACCOUNT, THE ASSESSEE WAS REQUIRED TO DEDUCT TDS U/S 194C ON RS. 4,51,24,474/- AND ON BALANCE FREIGHT AMOUNT OF RS.2,42,42,615/-, PROV ISIONS OF SECTION 194C WERE NOT APPLICABLE EITHER ON ACCOUNT OF PAYME NTS BEING BELOW RS.50,000/- OR ON ACCOUNT OF OWNERSHIP OF LESS THAN TWO VEHICLES BY THE PAYEES. THE CIT(A) HAD, THEREFORE, GIVEN AN OPPORTU NITY OF BEING HEARD TO THE ASSESSEE TO FURNISH THE EVIDENCES AND EXPLAI N THE MATTER. THE ASSESSEE, HOWEVER, COULD NOT PRODUCE EVIDENCES AND EXPLANATION BEFORE THE CIT(A) IN SPITE OF SEVERAL OPPORTUNITIES AFFORD ED BY THE CIT(A). THE CIT(A), THEREFORE, AFTER RECORDING ELABORATE FINDIN GS ON FACTS OF THE CASE IN PARA NO. 11 TO 20 OF HER ORDER, CATEGORICALLY HE LD THAT THE FREIGHT AMOUNT OF RS.2,42,42,615/- REMAINED UNSUBSTANTIATED . THE CIT(A), THEREFORE, ENHANCED THE DISALLOWANCE OF FREIGHT EXP ENSES BY ITA NO.1418/AHD/2018 DCIT VS. KATARIA TRANSPORT & CO. ASST .YEAR 2005-06 - 7 - RS.2,42,42,615/-. THUS, THE TOTAL DISALLOWANCE U/S 40(A)(IA) OF THE ACT WORKED OUT TO RS.4,08,14,550/-. THE ASSESSEE IS, TH EREFORE, LIABLE FOR PENALTY ON THE INCOME OF RS.4,08,14,550/-, FOR WHIC H THE ASSESSEE IS DEEMED TO HAVE FURNISHED INACCURATE PARTICULARS OF INCOME. 3.5. THE PROVISIONS OF SECTION 40 (A)(IA) OF T HE IT ACT PROVIDE AS UNDER:- 'NOTWITHSTANDING ANYTHING TO THE CONTRARY IN SECTIO NS 30 TO 38, THE FOLLOWING AMOUNTS SHALL NOT BE DEDUCTED IN COMPUTING THE INCO ME CHARGEABLE UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION ' , (A) IN THE CASE OF THE ASSESSEE- (IA) ANY INTEREST , COMMISSION OR BROKERAGE, FEES F OR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SERVICES PAYABLE TO A RESIDENT, OR AMOUNTS PAYABLE TO A CONTRACTOR OR SUB CONTRACTOR, BEING RESIDENT ,FOR C ARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WO RK), ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVIIB AND SUCH T AX HAS NOT BEEN DEDUCTED OR, AFTER DEDUCTION , HAS NOT BEEN PAID DURING THE PREVIOUS YEAR, OR IN THE SUBSEQUENT YEAR BEFORE THE EXPIRY OF THE TIME PRESC RIBED UNDER SUB-SECTION (1) OF SECTION 200:' 3.6. THE NON-COMPLIANCE OF STATUTORY PROVISIONS OF THE INCOME-TAX ACT AS ABOVE ATTRACTED DISALLOWANCE OF ENTIRE EXPENSES AND DEEMED THE INCOME OF THE ASSESSEE. THE PAYMENTS CLAIMED BY THE ASSESSEE WITHOUT PROPER DEDUCTION OF TAX AND PAYMENT THEREOF WITHIN STIPULATED TIME, ARE CLEARLY HIT BY THE PROVISIONS OF SECTION 40 (A) (IA ) OF THE ACT. THE ASSESSEE WAS REQUIRED TO ADD BACK THE AMOUNTS TO INCOME AND PAY THE TAX PAYABLE THEREON. THE ASSESSEE HOWEVER HAD FAILED TO INCLUDE THE ABOVE AMOUNTS ITA NO.1418/AHD/2018 DCIT VS. KATARIA TRANSPORT & CO. ASST .YEAR 2005-06 - 8 - IN ITS INCOME AND FAILED TO PAY THE TAXES. THUS, TH E ASSESSEE HAS FURNISHED INACCURATE PARTICULARS IN RESPECT OF INCOME OF RS.4 ,08,14,550/- (RS.1,65,64,175 + RS.2,42,42,615/- + RS.35,250/-) ADDED U/S 40(A)(IA) OF THE ACT. 3.7. THE CIT(A) FURTHER NOTICED THAT THERE WERE UNS ECURED LOANS OUTSTANDING IN THE BALANCE SHEET OF RS.18,35,000/- IN RESPECT OF FOLLOWING DEPOSITORS. (1) SNEHA V SETHI RS. 1,50,000/- (2) ANKIT SETHI RS. 3,00,000/- (3) SHEFALI JAIN RS. 60,000/- (4) NEHA R KATARIA RS. 4,25,000/~ (5) NAVIN AGRO INDUSTRIES RS. 5,00,000/- (6) SHEETAL AGARWAL RS. 4,00,000/- TOTAL RS.18,35,000/- IT WAS OBSERVED BY THE LD.CIT(A) THAT NO CONFIRMATI ONS WERE AVAILABLE ON RECORD IN RESPECT OF UNSECURED LOANS RECEIVED FR OM PERSONS APPEARING AT SR.4 TO 6 ABOVE AGGREGATING TO RS.13,25,000/-. IT WAS ALSO OBSERVED BY THE CIT(A) THAT IN RESPECT OF THESE 3 DEPOSITORS, T HE ASSESSEE HAD NOT FURNISHED INFORMATION WHATSOEVER TO THE ASSESSING O FFICER. THE CIT(A) HAD, THEREFORE, GIVEN AN OPPORTUNITY TO ASSESSEE TO INFORM ABOUT CONFIRMATION WITH RESPECT TO THESE UNSECURED LOANS. THE ASSESSEE, HOWEVER, COULD NOT PRODUCE SATISFACTORY EVIDENCES A ND EXPLANATION BEFORE THE CIT(A). THE CIT(A), THEREFORE, ENHANCED THE ADDITION BY ITA NO.1418/AHD/2018 DCIT VS. KATARIA TRANSPORT & CO. ASST .YEAR 2005-06 - 9 - RS.13,25,000/- U/S 68 OF THE IT.ACT, THE ASSESSEE I S, THEREFORE, LIABLE FOR PENALTY ON THE AMOUNT OF RS.13,25,000/-, FOR WHICH THE ASSESSEE IS DEEMED TO HAVE FURNISHED INACCURATE PARTICULARS OF INCOME. 3.8. ASSESSEE'S CONTENTION THAT IT HAD FILED THE CONFIRMATIONS BEFORE THE ASSESSING OFFICER AND SAME WERE ACCEPTED IS NOT FOU ND SUBSTANTIATED BEFORE THE CIT(A). THE ISSUE REGARDING UNSECURED LO ANS HAS NOT BEEN ADJUDICATED IN FAVOUR OF ASSESSEE BY THE CIT(A), BU T THE CIT(A) AFTER GIVING HER FINDINGS ON FACTS OF THE CASE HAS, MADE ENHANCEMENT OF RS.13,25,000/-. THE INCOME ADDED IN THE ASSESSMENT ON ACCOUNT OF UNEXPLAINED CASH CREDIT IS CONCEALED INCOME AND THE ASSESSEE IS DEEMED TO HAVE CONCEALED THE PARTICULARS OF INCOME. 3.9. THE ASSESSEE'S REQUEST FOR KEEPING THE PENAL PROCEEDINGS IN ABEYANCE TILL THE DECISION OF APPEAL BY THE ITAT IS NOT ACCEPTABLE AS THERE IS NO PROVISION TO KEEP PROCEEDINGS PENDING. THE ASSESSEE'S PLEA TO KEEP THE PROCEEDINGS IN ABEYANCE TILL THE ORDER OF THE HON'BLE HIGH COURT ON THE CONSTITUTIONAL VALIDITY OF THE PROVISI ONS IN SPECIAL CIVIL APPLICATION MOVED BY THE ASSESSEE IS ALSO NOT ACCEP TABLE AS THERE IS NO ORDER FROM THE HON'BLE HIGH COURT RESTRAINING THE P ROCEEDINGS BEFORE THE UNDERSIGNED. 3.10. THE EXPLANATION OFFERED BY THE ASSESSEE IN RESPECT OF ABOVE ISSUES ARE NOT SATISFACTORY. THE ASSESSEE FAILED TO COMPLY WITH THE REQUIREMENTS OF TAX DEDUCTION PROVISIONS LAID U/S 194C OF THE AC T AND PAY THE TAX AS ITA NO.1418/AHD/2018 DCIT VS. KATARIA TRANSPORT & CO. ASST .YEAR 2005-06 - 10 - PER THE PROVISIONS OF THE ACT, WHICH ATTRACTED DISA LLOWANCE U/S 40(A)(IA) OF THE ACT. IT WAS FOR THE ASSESSEE TO PREPARE AND FILE TRUE AND CORRECT RETURN OF INCOME TAKING INTO ACCOUNT ALL INADMISSIB LE ITEMS. THE ASSESSEE HOWEVER HAS NOT TAKEN CARE TO INCLUDE THE ABOVE ITE MS IN ITS INCOME WHICH ATTRACTED PENAL PROCEEDINGS. THE ASSESSEE HAS ALSO NOT EXPLAINED THE UNSECURED LOANS SATISFACTORILY. IN VIEW OF THE ABOVE, AO SATISFIED THAT THIS IS A FIT CASE FOR LEVY A PENALTY U/S 271 (1) (C) OF THE IT ACT. HE THEREFORE, LEVIED A PENALTY OF RS. 1,65,48,303/-. 4. THEREAFTER, ASSESSEE HAS PREFERRED APPEAL AGAIN ST THE LEVY OF PENALTY MADE BY THE LD.AO, WHEREIN RELIEF WAS GRA NTED BY THE CIT(A) TO THE ASSESSEE. 5. NOW THE REVENUE HAS COME BEFORE US BY WAY OF SECOND STATUTORY APPEAL. 6. WE HAVE HEARD THE LD. REPRESENTATIVES APPEARING FOR THE RESPECTIVE PARTIES AND PERUSED THE RELEVANT MATERIA L AVAILABLE ON RECORD AS WELL AS THE IMPUGNED ORDER. SO FAR AS DISALLOWANC E U/S.40(A)(IA) OF THE ACT IS CONCERNED, THE SAME HAS BEEN DELETED BY THE COORDINATE BENCH BY HOLDING THAT PROVISIONS OF SECTION 40(A)(IA) OF THE ACT WERE NOT APPLICABLE FOR THE YEAR UNDER CONSIDERATION WITH THE FOLLOWING OBSERVATION OF ITAT PASSED IN ASSESSEES OWN CASE FOR AY 2005-06 (IN QU ANTUM APPEAL ITA NO.1990/AHD/2012-BY REVENUE WITH CO NO.228/AHD/201 2-BY ASSESSEE), ORDER DATED 06/10/2016: ITA NO.1418/AHD/2018 DCIT VS. KATARIA TRANSPORT & CO. ASST .YEAR 2005-06 - 11 - 9. THE FACTS IN THE CASE OF KATARIA TRANSPORT I.E. ITA NO.1990/AHD/2012 ON THIS ISSUE CAN BE GATHERED FROM THE EXPLANATION GIVEN BY THE ASSESSEE BEFORE THE LD.CIT(A). IT READS AS UNDER: (7.2) (A) IN RESPECT OF GROUND RELATED TO DISA LLOWANCE U/S 40(A)(IA) OF THE ACT, THE FOLLOWING DISALLOWANCE WERE MADE : SR. NO. PARTICULARS AMOUNT IN RS. 1 DISALLOWANCE MADE BY THE LD. AO CONFIRMED BY THE CIT(A) 1,65,64,178 2 ENHANCEMENT MADE BY YOUR HONOURS IN FIRST ROUND 2,42,15,122 TOTAL 4,07,79,300 (B) THE APPELLANT SUBMITTED THAT: 'SO FAR AS SR. NO. 1 I.E DISALLOWANCE OF RS. 1,65,6 4,178/- U/S 40(A)(IA) IS CONCERNED, THE APPELLANT SUBMITS THAT IT IS ADMITTE D FACTS THAT THE APPELLANT HAS DEDUCTED TAX AT SOURCE, HOWEVER, NOT DEPOSITED WITHIN THE PRESCRIBED TIME LIMIT BUT IN ANY CASE HAS BEEN DULY DEPOSITED BEFOR E THE DUE DATE OF FILING RETURN OF INCOME. PLEASE REFER PARA 3 OF THE ASSESS MENT ORDER WHEREIN THE DETAILS OF TAX DEDUCTED AT SOURCE HAS BEEN GIVEN. A S A MATTER OF FACTS, THE TAX HAS BEEN DEDUCTED AT SOURCE AND HAS BEEN PAID BEFOR E THE DUE DATE OF FILING OF RETURN OF INCOME. COPY OF THE DETAILS OF DEDUCTION OF TAX AT SOURCE ON AMOUNT OF RS. 1,65,64,178/-ALONGWITH THE BANK STATEMENT SH OWING CLEARANCE OF AMOUNT OF IDS IS ENCLOSED HEREWITH MARKED AS 'ANNEX URE - D'. IN THIS CONNECTION, THE APPELLANT FURTHER SUBMITS T HAT THE PROVISIONS OF S.40(A)(IA) HAS UNDERGONE A CHANGE BY THE FINANCE A CT, 2010 WHEREBY IT HAS BEEN AMENDED IN A MANNER THAT EVEN IF FOR ANY MONTH OF EXPENDITURE, TAX HAS BEEN DEDUCTED AND DEPOSITED BEFORE THE DUE DATE OF FILING RETURN OF INCOME, DISALLOWANCE CANNOT BE MADE U/S 40(A)(IA) OF THE AC T. THE APPELLANT SUBMITS THAT THIS AMENDMENT IS CURATIVE IN NATURE AND THERE FORE THE SAME IS APPLICABLE FOR THE YEAR UNDER CONSIDERATION AND ACCORDINGLY NO DISALLOWANCE CAN BE MADE IN THIS COUNT ALSO. RELIANCE IS PLACED ON THE ORDER OF JURISDICTIONAL AHMEDABAD TRIBUNAL IN THE CASE OF SHRIKANUBHAIRAMI' IBHAIMAKWANA VS. ITO REPORTED IN 44 SOT 264 (AHD.)' ITA NO.1418/AHD/2018 DCIT VS. KATARIA TRANSPORT & CO. ASST .YEAR 2005-06 - 12 - 'SO FAR AS SR.NO.2 OF ABOVE TABLE I.E ENHANCEMENT O F DISALLOWANCE OF RS.2,42,15,122/- IS CONCERNED , THE APPELLANT SUBMITS AS UNDER: PARTICULARS AMOUNT IN RS. A) FREIGHT ON OWN TRUCKS 1,30,86,314 B) NO TDS MADE ON INDIVIDUAL TRUCKS 1,08,22,029 C) BALANCE FREIGHT REPRESENTING DEBIT NOTES 3,06,779 2,42,15,122 FREIGHT ON OWN TRUCK - RS.1,30,85,814/- UNDER THE CIRCUMSTANCES, THE APPELLANT HAS UTILIZED OWN TRUCKS FOR THE PURPOSE OF TRANSPORTATION ON WHICH FREIGHT HAS BEEN PAID THEREFORE, THE APPELLANT SUBMITS THAT PROVISIONS OF SECTION 194C C ANNOT MADE APPLICABLE IN THE ABSENCE OF ANY CONTRACT WORK. COPY OF DETAILS OF FREIGHT ON OWN TRUCK ALONG WITH RC BOOK IS ENCLOSED HEREWITH MARKED AS ANNEXURE-F > FREIGHT ON INDIVIDUAL TRUCKS - RS.1,08,22,029/- FOR THE YEAR UNDER CONSIDERATION, THE APPELLANT HA S INCURRED FREIGHT AMOUNT OF RS.1,08,22,029/- PAID TO INDIVIDUAL TRUCKS. THE APPELLANT SUBMITS THAT AS PER THE PROVISIONS OF SUB-SECTION (3) OF S.194C OF THE ACT APPLICABLE TO THE YEAR UNDER CONSIDERATION, THE APPELLANT WAS NOT REQ UIRED TO DEDUCT TAX AT SOURCE ON ANY SUM CREDITED OR PAID IN PURSUANCE OF ANY CONTRACT THE CONSIDERATION OF WHICH DOES NOT EXCEED RS.20,000/-. FOR READY REFERENCE, PROVISIONS OF SUB-SECTION (3) TO SECTION 194C OF THE ACT IS REPRODUCED HEREUNDER: '(I) THE AMOUNT OF ANY SUM CREDITED OR PAID OR LIKE LY TO BE CREDITED OR PAID TO THE ACCOUNT OF, OR TO, THE CONTRACTOR OR SUB-CONTRA CTOR, IF SUCH SUM DOES NOT EXCEED TWENTY THOUSAND RUPEES' HOWEVER, WITH EFFECT FROM 01/10/2004, THE LAW HAS U NDERGONE A CHANGE BY THE FINANCE ACT, 2004 WHICH PROVIDES AS UNDER: ITA NO.1418/AHD/2018 DCIT VS. KATARIA TRANSPORT & CO. ASST .YEAR 2005-06 - 13 - '(1) THE AMOUNT OF ANY SUM CREDITED OR' PAID OR LIK ELY TO BE CREDITED OR PAID TO THE ACCOUNT OF, OR TO, THE CONTRACTOR OR SUB-CONTRA CTOR, IF SUCH SUM DOES NOT EXCEED TWENTY THOUSAND RUPEES: PROVIDED THAT WHERE THE AGGREGATE OF THE AMOUNTS OF SUCH SUMS CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID DURING THE FI NANCIAL YEAR EXCEEDS FIFTY THOUSAND RUPEES, THE PERSON RESPONSIBLE FOR PAYING SUCH SUMS REFERRED TO IN SUB-SECTION (1) OR, AS THE CASE MAY BE, SUB-SECTION (2) SHALL BE LIABLE TO DEDUCT INCOME-TAX UNDER THIS SECTION' HENCE, FROM THE ABOV E QUOTED PROVISIONS, IT IS VERY MUCH CLEAR THAT THE APPELLANT WAS NOT REQUIRED TO DEDUCT TAX AT SOURCE ON AN AMOUNT, UPTO 30/09/2004, IF IMPUGNED AMOUNT D OES NOT EXCEED RS.20,000/- PER CONTRACT. IT IS FURTHER SUBMITTED T HAT FROM 01/10/2004, IF THE AMOUNT CREDITED OR PAID TO THE CONTRACTOR OR SUB-CO NTRACTOR DOES NOT EXCEED RS.20,000/- IN SINGLE TRANSACTION AND RS.50,000/- I N AGGREGATE, THAN THE APPELLANT WAS NOT REQUIRED TO DEDUCT TAX AT SOURCE. THEREFORE, THE APPELLANT HAS BIFURCATED AN AMOUNT O F RS.1,08,22,029/- IN TO TWO PERIODS VIZ. PERIOD FROM 01/04/2004 TO 30/09/20 04 AND 01/10/2004 TO 31/03/2005, WHICH IS RS.46,73,017/- AND RS.61,49,01 2/-RESPECTIVELY. THE APPELLANT FURTHER SUBMITS OUT OF AN AMOUNT OF R S.46,73,018/- FOR THE PERIOD OF 01/04/2004 TO 30/09/2004, AN AMOUNT OF RS .24,18,866/-IS PERTAINING TO AN AMOUNT WHICH IS IN EXCESS OF RS.20,000/- PER CONTRACT ON WHICH THE APPELLANT HAS NOT DEDUCTED TAX AT SOURCE, WHEREAS B ALANCE AMOUNT OF RS.22,54,151/- IS AGGREGATE OF AN AMOUNT WHICH IS N OT EXCEEDING AN AMOUNT OF RS.20,000/- ON WHICH TAX IS NOT REQUIRED TO BE D EDUCTED AT SOURCE. COPY OF SUCH DETAILS IS ENCLOSED HEREWITH MARKED AS 'ANNEXU RE H & I'. SIMILARLY, FOR THE PERIOD 01/10/2004 TO 31/03/2005, THE APPELLANT SUBMITS THAT OUT OF AN AMOUNT OF RS.61,49,812/-, AN AMOUNT OF RS .12,53,039/- IS PERTAINING TO AGGREGATE AMOUNT WHICH IS IN EXCESS OF RS.50,000 /- ON WHICH TAX IS NOT DEDUCTED AT SOURCE, WHERE THE BALANCE AMOUNT OF RS. 48,95,973/- IS PERTAINING TO AGGREGATE AMOUNT WHICH IS NOT IN EXCESS OF RS.50 ,000/- ON WHICH THE TAX IS NOT REQUIRED TO BE DEDUCTED AT SOURCE. COPY OF SUCH DETAILS IS ENCLOSED HEREWITH MARKED AS 'ANNEXURE J'. IN SUMMARY, THE APPELLANT SUBMITS AS UNDER: PARTICULARS 01/04/2004 TO 30/09/2004 01/10/2004 TO 31/03/2005 AGGREGATE OF AN AMOUNT WHICH IS IN EXCESS OF RS.20,000/- PER CONTRACT ON 24,18,866 --- ITA NO.1418/AHD/2018 DCIT VS. KATARIA TRANSPORT & CO. ASST .YEAR 2005-06 - 14 - WHICH TAX IS NOT DEDUCTED AT SOURCE. (PL. REFER ANNEXURE- I) AGGREGATE OF AN MOUNT WHICH IS IN EXCESS OF RS.50,000/- PER CONTRACTOR ON WHICH TAX IS NOT DEDUCTED AT SOURCE. (PL. REFER ANNEXURE - K) -- 12,53,039 AGGREGATE OF AN AMOUNT WHICH IS NOT IN EXCESS OF RS.20,000/- PER CONTRACT ON WHICH TAX IS NOT REQUIRED TO BE DEDUCTED AT SOURCE. 22,54,151 -- AGGREGATE OF AN AMOUNT WHICH IS NOT IN EXCESS OF RS.50,000/- PER CONTRACTOR ON WHICH TAX IS NOT REQUIRED TO BE DEDUCTED AT SOURCE. 48,95,973 TOTAL 46,73,017 64,49,012 BALANCE FREIGHT REPRESENTING DEBIT NOTES - RS.3,06, 779/- COPY OF DETAILS OF FREIGHT REPRESENTING DEBITS NOTE S OF RS.3,06,779/- .IS ENCLOSED HEREWITH MARKED AS 'ANNEXURE - K', ON WHIC H THE TAX IS NOT REQUIRED TO BE DEDUCTED AT SOURCE UNDER THE SCHEME OF THE AC T 10. THE LD.DR WHILE IMPUGNING THE ORDERS OF THE LD. CIT(A) CONTENDED THAT IN THE CASE OF M/S.KATARIA MOVERS, THE LD.CIT(A) HAS RELIE D UPON THE ORDER OF THE ITAT, SPECIAL BENCH DECISION IN THE CASE OF MERILYN SHIPP ING & TRANSPORTS VS. ACIT, 16 ITR (TRIB.) 1. HE POINTED OUT THAT ANALYSIS MADE B Y THE LD.CIT(A) ON THE STRENGTH OF THIS DECISION IS NOT SUSTAINABLE, BECAUSE, HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SIKHANDHARKHAN N. TANVAR, 257 ITR 212 HAS O VERRULED THIS DECISION. HE POINTED OUT THAT IN THE CASE OF M/S.KATARIA MOVERS, THE LD.CIT(A) HAS OBSERVED THAT TOTAL DISALLOWANCE OF RS.6,53,59,734/- INCLUDING EN HANCEMENT MADE BY THE CIT(A) WAS TO BE DONE IN THIS CASE. OUT OF THIS AMOUNT, A SUM OF RS.3,39,11,223/- IS THE AMOUNT ON WHICH TDS WAS DEDUCTED BY THE ASSESSEE, B UT WAS PAID LATE I.E. BEFORE THE DUE DATE OF FILING OF THE RETURN. WHEN THE LD.CIT (A) HAS WORKED OUT THE BALANCE AMOUNT, THEN, THIS AMOUNT WAS NOT EXAMINED WITH THE ANGLE WHETHER TDS WAS TO BE ITA NO.1418/AHD/2018 DCIT VS. KATARIA TRANSPORT & CO. ASST .YEAR 2005-06 - 15 - DEDUCTED BY THE ASSESSEE OR NOT. THE LD.CIT(A) HAS OBSERVED THAT ONLY A SUM OF RS.3,07,35,157/- REMAINED PAYABLE AS ON 31.3.2005. IN A WAY, ON THE STRENGTH OF ORDER OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE C ASE OF MERILYN SHIPPING & TRANSPORTS (SUPRA) HAS CONSTRUED THAT THE AMOUNT WH ICH IS NOT PAYABLE ON 31.3.2005 ALLOWABILITY OR DISALLOWABILITY ON ACCOUNT OF NON-D EDUCTION OF TDS OUGHT NOT TO BE CONSIDERED. OUT OF THIS TOTAL AMOUNT, THE LD.CIT(A) HAS OBSERVED THAT A SUM OF RS.2,34,30,157/- REPRESENTING THE AMOUNT ON WHICH T HE ASSESSEE HAS ALREADY DEDUCTED TDS AND DEPOSITED IN THE GOVERNMENT TREASURY. THUS , THE LD.CIT(A) HAS WORKED OUT A SUM OF RS.7,30,50,000/- AS PAYABLE ON 31.3.2005 ON WHICH IT IS TO BE SEEN WHETHER TDS WAS DEDUCTIBLE OR NOT DEDUCTIBLE. ON THIS AMOU NT, THE LD.CIT(A) HAS APPLIED THRESHOLD LIMIT OF RS.20,000/- AND RS.50,000/- I.E. PAYMENT REQUIRED TO BE MADE BY THE ASSESSEE TO A SINGLE TRUCK OWNER DURING THAT YE AR. ACCORDING TO THE LD.CIT(A), IF THE PAYMENT OF RS.20,000/- WAS MADE AS FREIGHT CHAR GES DURING THE PERIOD OF 1.4.2004 TO 31.9.2004, THEN, THE ASSESSEE WAS NOT R EQUIRED TO DEDUCT TDS. SIMILARLY, IF AGGREGATE PAYMENT DOES NOT EXCEED RS.50,000/- FR OM 1.10.2004 UPTO 31.3.2005, THEN ALSO, THE ASSESSEE WAS NOT REQUIRED TO DEDUCT TDS. IN THIS WAY, THE LD.CIT(A) HAS CONFIRMED THE DISALLOWANCE AT RS.8,37,290/-. A CCORDING TO THE LD.DR, HIS ANALYSIS IS INHERENTLY WRONG, BECAUSE, IT IS BASED ON THE ORDER OF THE ITAT, SPECIAL BENCH DECISION WHICH HAS BEEN OVERRULED BY THE HON BLE GUJARAT HIGH COURT. HE PRAYED THAT THIS ORDER OF THE LD.CIT(A) BE SET ASID E. 11. ON THE OTHER HAND, THE LD.COUNSEL FOR THE ASSES SEE HAS RAISED THREE FOLD SUBMISSIONS. HE POINTED OUT THAT AS FAR AS QUANTIF ICATION OF THE TOTAL AMOUNT IN THE CASE OF M/S.KATARIA MOVERS AT RS.6,53,59,734/- AGIT ATED IN BOTH GROUNDS RAISED BY THE REVENUE, AND GROUND NO.1 IN THE CO OF THE ASSES SEE ARE CONCERNED, NOT IN DISPUTE. THE LD.CIT(A) WHILE MAKING AN ANALYSIS OF THIS AMOUNT HAS DIVIDED IT INTO TWO PARTS. THE FIRST PART PERTAINS TO THE SUM ON W HICH THE ASSESSEE HAS DEDUCTED TDS, BUT DEPOSITED AFTER 31.3.2005. THIS AMOUNT WAS DEP OSITED IN THE GOVERNMENT TREASURY BEFORE THE DUE DATE OF FILING OF THE RETUR N. THEREFORE, AFTER THE AMENDMENT CARRIED OUT IN SECTION 40(A)(IA) BY WAY OF FINANCE ACT, 2010 NO DISALLOWANCE CAN BE MADE FROM THIS AMOUNT. THIS AMOUNT HAS BEEN QUANTI FIED AT RS.3,39,11,223/-. THIS HAS BEEN IMPUGNED IN GROUND NO.1 IN THE CASE OF M/S .KATARIA MOVERS. SIMILARLY, AN AMOUNT OF RS.1,11,73,780/- AND RS.1,65,77,280/- HA VE BEEN WORKED OUT IN THE CASE OF KATARIA LOGISTIC SERVICE AND KATARIA TRANSPORT CO. RESPECTIVELY. AS FAR AS THESE AMOUNTS ARE CONCERNED, THE ISSUES ARE NOT IN DISPUT E. HE RELIED UPON THE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT V S. B.M.S. PROJECTS P.LTD., 48 TAXMANN.COM 13 (GUJ). HE PLACED ON RECORD COPY OF THE JUDGMENT. THE HONBLE GUJARAT HIGH COURT WHILE PUTTING RELIANCE UPON ITS EARLIER DECISION IN THE CASE OF GUJARAT NARMADA VALLEY FERTILIZERS CO. LTD., 361 IT R 192 (GUJ) AND IN THE CASE OF CIT VS.OMPRAKASH R. CHAUDHARY HAS HELD THAT AMENDME NT IN SECTION 40(A)(IA) BY FINANCE ACT, 2010 HAS RETROSPECTIVE EFFECT, MEANING THEREBY, IF THE EXPENDITURE WAS INCURRED BY THE ASSESSEE IN ANY MONTH DURING THE PR EVIOUS YEAR AND TDS WAS DEDUCTED, BUT SUCH TDS WAS DEPOSITED AFTER EXPIRY O F ACCOUNTING YEAR, BUT BEFORE DUE ITA NO.1418/AHD/2018 DCIT VS. KATARIA TRANSPORT & CO. ASST .YEAR 2005-06 - 16 - DATE OF FILING OF THE RETURN, THEN DISALLOWANCE UND ER SECTION 40(A)(IA) WOULD NOT BE MADE. THE LD.DR WAS UNABLE TO CONTROVERT THIS CONT ENTION OF THE LD.COUNSEL FOR THE ASSESSEE. 12. ON DUE CONSIDERATION OF THE FACTS AND CIRCUMSTA NCES, WE ARE OF THE VIEW THAT AS FAR AS GROUND NO.1 IN ALL THESE THREE APPEALS AR E CONCERNED, THEY ARE DEVOID OF ANY MERIT, BECAUSE, THE ASSESSEE HAS DEDUCTED TDS ON TH ESE AMOUNTS AND TDS WAS DEPOSITED BEFORE THE DUE DATE OF FILING OF THE RETU RN. THE LD.AO HAS MADE DISALLOWANCE ON THE GROUND THAT TDS WAS NOT DEPOSIT ED BEFORE THE END OF THE ACCOUNTING YEAR I.E. BEFORE 31.3.2005. THEREFORE, GROUND NO.1 IN ALL THREE YEARS IS REJECTED. 13. WITH REGARD TO GROUND NO.2 IN ALL THREE APPEALS , THE LD.COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT HIS REST OF TWO FOLD SU BMISSION ARE RELEVANT. IN HIS FIRST FOLD OF SUBMISSION, HE CONTENDED THAT HONBLE CALCU TTA HIGH COURT IN ITA NO.191 OF 2009 HAS HELD THAT SECTION 40(A)(IA) IS NOT APPLICA BLE IN THE ASSTT.YEAR 2005-06. HE PLACED ON RECORD COPY OF THE DECISION OF THE HONBL E HIGH COURT. ON THE STRENGTH OF THIS DECISION, IT WAS CONTENDED THAT THE HONBLE CA LCUTTA HIGH COURT HAS OBSERVED THAT FINANCE ACT, 2004 GOT PRESIDENTIAL ASSENT ON 1 0.9.2004 AND THE ASSESSEE COULD NOT FORESEE PRIOR TO 10.9.2004 THAT ANY AMOUNT PAID TO THE CONTRACTOR WITHOUT DEDUCTING TAX AT SOURCE WAS LIKELY TO BECOME NON-DE DUCTIBLE. IN OTHER WORDS, ACCORDING TO THE LD.CIT(A) IF THE AMENDMENT CARRIED OUT IN SECTION 40(A)(IA) BY WAY OF FINANCE ACT, 2004 WAS NOT TO BE APPLICABLE IN AC COUNTING YEAR RELEVANT TO THE ASSTTT.YEAR 2004-05, THEN, NO DISALLOWANCE CAN BE M ADE. IN HIS SECOND FOLD OF SUBMISSION, HE CONTENDED THAT THE ASSESSEE IS ENGAG ED IN THE BUSINESS OF TRANSPORTATION. DURING THE COURSE OF WHICH, IT REQ UIRES TO HIRE TRUCKS FROM VARIOUS PERSONS FOR TRANSPORTATION. THE ASSESSEE DID NOT E NTER INTO ANY AGREEMENT EITHER ORAL OR WRITTEN WITH THE TRUCK OWNERS OR DRIVERS WHOSE T RUCKS WERE TAKEN ON HIRE BY IT. IT AVAILS SERVICES OF SUCH OTHER TRUCK OWNERS ONLY FOR TRANSPORTATION OF GOODS. THE DUTIES OF SUCH TRUCK OWNERS OR DRIVER IS RESTRICTED MERELY TO CARRYING GOODS FROM ONE POINT TO ANOTHER AS DIRECTED TO THEM. IN OTHER WOR DS, THERE IS NO RELATIONSHIP OF CONTRACTOR AND CONTRACTEE BETWEEN THE ASSESSEE AND TRUCK OWNERS. FOR BUTTRESSING HIS CONTENTIONS, HE RELIED UPON THE FOLLOWING DECIS IONS: I) CIT VS. POOMPHUHAR SHIPPING CORPORATION LTD., 282 I TR 3 (MAD); II) CIT VS. UNITED RICE LTD., 322 ITR 594 (P&H); III) CIT VS. ESS KAY CONSTRUCTION CO., 267 ITR 618 (P&H) ; IV) ACIT VS. AMIR TRADERS, ITA NO.563/AHD/2009 & CO. NO.171/AHD/2011; V) ISMAILBHAI I. GANDHI VS. ACIT, ITA NO.3445/AHD/2009 14. WE ALSO APPRAISED HIM THE ORDER OF THE ITAT, DE LHI BENCH IN THE CASE OF KULDEEP KUMAR SHARMA VS. ITO, ITA NO.5672/DEL/10. HE FURTHER CONTENDED THAT ITA NO.1418/AHD/2018 DCIT VS. KATARIA TRANSPORT & CO. ASST .YEAR 2005-06 - 17 - BEFORE THE LD.CIT(A), THE ASSESSEE HAS FILED COMPLE TE DETAILS EXHIBITING THE PAYMENTS MADE BY THE ASSESSEE. HE TOOK US THROUGH SUBMISSIO NS OF THE ASSESSEE REPRODUCED BY THE LD.CIT(A) ON PAGE NO.13 OF THE IMPUGNED ORDER. HE POINTED OUT THAT FOR THE SAKE OF ARGUMENTS, IF IT IS ASSUMED THAT SECTION 194C IS APPLICABLE UPON THE ASSESSEE AND IT WAS REQUIRED TO BE DEDUCTED TDS, THEN, SUB-CLAUSE ( III) OF SECTION 194C CONTEMPLATES THAT UPTO 30.9.2004, IF PAYMENT DOES NOT EXCEED RS. 20,000/- PER CONTRACT, THEN, THE ASSESSEE WAS NOT REQUIRED TO DEDUCT TDS. SIMILARLY , AFTER 1.10.2002 UPTO 31.3.2005, IF THE AMOUNT CREDITED OR PAID TO THE CONTRACTOR OR SUB-CONTRACTOR DOES NOT EXCEED RS.20,000/- IN A SINGLE TRANSACTION AND RS.50,000/- IN AGGREGATE, THEN, THE ASSESSEE WAS NOT REQUIRED TO DEDUCT TDS. THE ASSESSEE HAS G IVEN BIFURCATION OF THESE AMOUNTS, WHICH HAS DULY BEEN REPRODUCED BY THE LD.C IT(A) ON PAGE NO.15 OF THE IMPUGNED ORDER. AS PER WORKING REPRODUCED BY US IN THE FOREGOING PARAS, THE ASSESSEE, IN THE CASE OF KATARIA MOVERS, REQUIRED T O DEDUCT TDS AT RS.1,60,09,690/-. SIMILARLY, WORKING SUBMITTED BY THE ASSESSEE IN RES T OF TWO APPEALS WHICH HAS ALSO BEEN REPRODUCED ON PAGE NOS.14 AND 15 OF THE IMPUGN ED ORDERS (RS.36,71,905/- IN THE CASE OF KATARIA TRANSPORT CO., AND RS.13,05,044 /- IN KATARIA LOGISTIC SERVICES). IT WAS DEMONSTRATED BEFORE US THAT IF OTHER EXPLANA TION OF THE RESPONDENTS, TO SUPPORT THE ORDER OF CIT(A) IS NOT BEING ACCEPTED, THEN, TO THE EXTENT OF ABOVE WORKING, AT THE MOST DISALLOWANCE CAN BE MADE IN ALL THREE CASES. I N THIS WAY, THE ASSESSEE CONTENDED THAT NO DISALLOWANCE DESERVES TO BE MADE SECTION 40 (A)(IA) IN THE CASES OF THE ASSESSEE AND THE APPEALS OF THE REVENUE DESERVE TO BE DISMISSED. 15. IN REBUTTAL, THE LD.DR CONTENDED THAT THE ASSES SEE FAILED TO DEDUCT TDS, AND THEREFORE, THE LD.CIT(A) OUGHT TO HAVE DISALLOWED T HE AMOUNTS PLEADED IN GROUND NO.2 IN RESPECTIVE APPEALS. 16. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND G ONE THROUGH THE RECORD CAREFULLY. AS FAR AS SUBMISSION OF THE LD.DR IS CONCERNED THAT THE LD.CIT(A) HAS MADE ANALYSIS OF ISSUE REGARDING ENHANCEMENT OF DIS ALLOWANCE ON THE STRENGTH OF ITAT, SPECIAL BENCH DECISION IN THE CASE OF MERILYN SHIPPING & TRANSPORTS (SUPRA) IS CONCERNED, WE FIND FORCE. THE LD.CIT(A) IN THE CAS E OF KATARIA MOVERS HAS COMMITTED AN ERROR BY WORKING OUT A SUM OF RS.3,07, 35,157/- AS AN AMOUNT WHICH REMAINED PAYABLE ON 31.3.2005. THE LD.CIT(A) HAS MADE ANALYSIS WHETHER ANY AMOUNT CAN BE DISALLOWED FROM THIS AMOUNT. IN OUR OPINION, THIS APPRECIATION OF FACT IS NOT IN ACCORDANCE WITH THE PROPOSITION LAID DOWN BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF SIKHANDARKHAN M. TANVAR (SUPRA ). NEVERTHELESS, IT IS NOT DIRECT ON THE ISSUE. 17. WE ARE CALLED UPON TO DECIDE WHETHER THE ASSESS EE BEING A TRANSPORTER WAS REQUIRED TO DEDUCT TDS ON HIRING OF TRUCKS OR NOT. SECTION 194C AND 40(A)(IA) HAVE THE DIRECT BEARING ON THE CONTROVERSY. THEREFORE WE DEEM IT APPROPRIATE TO TAKE NOTE OF THE RELEVANT CLAUSES. ITA NO.1418/AHD/2018 DCIT VS. KATARIA TRANSPORT & CO. ASST .YEAR 2005-06 - 18 - 40. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN S ECTIONS 30 TO [38], THE FOLLOWING AMOUNTS SHALL NOT BE DEDUCTED IN COMPUTIN G THE INCOME CHARGEABLE UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR P ROFESSION (A) IN THE CASE OF ANY ASSESSEE XXXXXXXXX (IA) ANY INTEREST, COMMISSION OR BROKERAGE, [RENT, ROYALTY] FEES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SERVICE S PAYABLE TO A RESIDENT, OR AMOUNTS PAYABLE TO A CONTRACTOR OR SUB-CONTRACTOR, BEING RESIDENT, FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR F OR CARRYING OUT ANY WORK), ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII-B AND SUCH TAX HAS NOT BEEN DEDUCTED OR , AFTER DEDUCTION, [HAS NOT B EEN PAID. XXXXXXXXXX 194C. PAYMENTS TO CONTRACTORS AND SUB-CONTRACTORS. (1) ANY PERSON RESPONSIBLE FOR PAYING ANY SUM TO ANY RESIDENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE CONTRACTOR) FOR CAR RYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK) IN PURS UANCE OF A CONTRACT BETWEEN THE CONTRACTOR AND SHALL AT THE TIME OF CREDIT OF SUCH SUM TO THE ACCOUNT OF THE CONTRACTOR OR AT THE TIME OF PAYME NT THEREOF IN CASH OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE, WH ICHEVER IS EARLIER, DEDUCT AN AMOUNT EQUAL TO (I) ONE PER CENT IN CASE OF ADVERTISING (II) IN ANY OTHER CASE TWO PER CENT, OF SUCH SUM AS INCOME-TAX ON INCOME COMPRISED THERE IN. (2) ANY PERSON (BEING A CONTRACTOR AND NOT BEING AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY) RESPONSIBLE FOR PAYING ANY S UM TO ANY RESIDENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE SUB-C ONTRACTOR) IN PURSUANCE OF A CONTRACT WITH THE SUB-CONTRACTOR FOR CARRYING OUT, OR FOR THE SUPPLY OF LABOUR FOR CARRYING OUT, THE WHOLE OR ANY PART OF THE WOR K UNDERTAKEN BY THE CONTRACTOR OR FOR SUPPLYING WHETHER WHOLLY OR P ARTLY ANY LABOUR WHICH THE CONTRACTOR HAS UNDERTAKEN TO SUPPLY SHALL, AT THE T IME OF CREDIT OF SUCH SUM TO THE ACCOUNT OF THE SUB-CONTRACTOR OR AT THE TIME OF PAYMENT THEREOF IN CASH OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTH ER MODE, WHICHEVER IS EARLIER, DEDUCT AN AMOUNT EQUAL TO ONE PER CENT OF SUCH SUM AS INCOME-TAX ON INCOME COMPRISED THEREIN. 18. BARE PERUSAL OF SECTION 40 (A) (IA) WOULD SU GGEST THAT DISALLOWANCE UNDER THIS SECTION CAN BE MADE IN RESPECT OF AMOUNTS P AYABLE TO A CONTRACTOR OR SUB CONTRACTOR FOR CARRYING OUT ANY WORK ON WHIC H TAX IS DEDUCTIBLE UNDER CHAPTER 17B AND SUCH TAX HAS NOT BEEN DEDUCTED OR PAID DURI NG THE PREVIOUS YEAR OR IN THE SUBSEQUENT YEAR BEFORE THE EXPIRY OF THE TIME PER IOD PRESCRIBED U/S 200 (1) OF THE ITA NO.1418/AHD/2018 DCIT VS. KATARIA TRANSPORT & CO. ASST .YEAR 2005-06 - 19 - ACT. SECTION 194C(2) PROVIDES THAT WHERE A C ONTRACTOR , NOT BEING AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY ENGAGED FOR CARRYING OUT ANY WORK OR FOR SUPPLYING LABOUR FOR CARRYING OUT SUCH WORK BY CENTRAL OR STATE GOVERNMENT, A LOCAL AUTHORITY OR A CORPORATION HAS IN TERMS ENGA GED ANY SUB CONTRACTOR FOR CARRYING OUT THE WHOLE OR ANY PART OF THE WORK UNDERTAKEN BY THE CONTRACTOR OR FOR SUPPLY OF LABOUR UNDERTAKEN BY THE CONTRACTO R TO SUPPLY, HE WILL BE REQUIRED TO DEDUCT TAX AT SOURCE FROM THE PAYMENT MADE TO THE SUB CONTRACTOR. THUS IT CONTEMPLATES THREE CONDITIONS NAMELY 1) THERE MUST BE A CONTRACT BETWEEN THE PERSONS RESPONSIBLE FOR MAKING THE PAYMENT AND T HE CONTRACTOR (B) THE CONTRACT MUST BE FOR SUPPLY OF LABOUR OR FOR CARRYING OUT ANY WORK (C) CONTRACTOR MUST HAVE ENGAGED A SUB CONTRACTOR FOR CARRYING OUT THE WHOLE OR ANY PART OF THE WORK UNDERTAKEN OR SUPPLY OF LABOUR. 19. AN ANALYSIS OF ACCOUNT, WE FIND THAT REVENUE AU THORITIES HAVE ASSUMED EXISTENCE OF EITHER CONTRACTOR-SHIP BETWEEN THE ASS ESSEE AND OTHER TRUCK OWNERS, WHOSE TRUCKS WERE HIRED BY THE ASSESSEE FOR TRANSPO RT. THERE IS NO EVIDENCE ON RECORD. THE ASSESSEE HAS EVER ENTERED INTO ANY CON TRACT OR CREATED ANY SUBCONTRACT- SHIP WITH ANY OF THE TRUCK OWNERS. IN THE ORDER OF THE ITAT, DELHI BENCH IN THE CASE OF KULDEEP KUMAR SHARMA (SUPRA), A REFERENCE WAS MA DE TO THE ORDER OF THE ITAT, VISAKHAPATNAM BENCH IN THE CASE OF MYTHRI TRANSPORT CORPORATION VS. ACIT, 124 ITD 40. RELEVANT DISCUSSION BY THE ITAT, VISAKHAPAT NAM IS WORTH TO NOTE. IT READS AS UNDER: 8.2 AS STATED EARLIER, THE ASSESSEE HEREIN IS A T RANSPORT CONTRACTOR AND HAS ENTERED INTO AN AGREEMENT WITH PARTIES WHEREB Y THE ASSESSEE UNDERTOOK TO TRANSPORT BITUMEN TO VARIOUS POINTS AS PER THEI R DIRECTIONS. ACCORDING TO THE ASSESSEE, THE LORRIES USED FOR THE SAID PURPOSE ARE SPECIALLY DESIGNED WITH PROPER HEATING ARRANGEMENTS . TH E CLAIM OF THE ASSESSEE IS THAT SINCE IT DID NOT HAVE REQUIRED NUMBER OF LORRI ES, IT HAD TO HIRE LORRIES FROM OTHERS WHO SIMPLY PLACED THE VEHICLES A T THE DISPOSAL OF THE ASSESSEE. THE ASSESSEE ALONE, UNDER ITS CONT ROL AND SUPERVISION, HAS EXECUTED WHOLE OF THE CONTRACT. ACCORDING TO THE ASSESSEE, THE INDIVIDUAL LORRY OWNERS HAVE NOT CARRIED OUT ANY PART OF THE WORK UNDERTAKEN BY THE ASSESSEE. X X X X X X X X X X X X 8.6 AS PER THE PROVISIONS OF SECTION 194C(2 ), AS EXPLAINED IN PARA 8.1 SUPRA, THE SUB-CONTRACTOR SHOULD CARRY OUT THE WHOLE OR ANY PART OF THE WORK UNDERTAKEN BY THE ASSESSEE. THE DICTIONARY MEA NING OF THE WORDS 'CARRY OUT' IS TO CARRY INTO PRACTICE; TO EXECUT E; TO ACCOMPLISH. IT SIGNIFIES A POSITIVE INVOLVEMENT IN THE EXECUTION OF T HE WHOLE OR ANY PART OF THE MAIN WORK BY SPENDING HIS TIME, MONEY, ENERGY ETC., AND FURTHER TAKING THE RISKS IN CARRYING ON THE SAID ACTIVITY. IN THE INSTANT CASE, THERE IS ITA NO.1418/AHD/2018 DCIT VS. KATARIA TRANSPORT & CO. ASST .YEAR 2005-06 - 20 - NO MATERIAL TO SUGGEST THAT THE OTHER LORRY OWNERS INVOLVED THEMSELVES IN CARRYING OUT ANY PART OF THE WORK UNDERTAKEN BY TH E ASSESSEE BY SPENDING THEIR TIME, ENERGY AND BY TAKING THE RISKS AS SOCIATED WITH THE MAIN CONTRACT WORK. IN THE ABSENCE OF THE ABOVE S AID CHARACTERISTICS ATTACHED TO A SUB-CONTRACT IN THE INSTANT CASE, THE PA YMENT MADE TO THE LORRY OWNERS STANDS AT PAR WITH THE PAYMENTS MADE TOWARDS SALARIES, RENT ETC. HENCE THE REASONING OF THE TAX AUTHORITI ES, WHICH IS STATED IN PARA 8.3 SUPRA, TO HOLD THAT THE PAYMENT MADE FOR HIRED VEHICLES IS A SUB- CONTRACT PAYMENT, IN OUR OPINION, IS NOT CORRECT A ND NOT BASED ON RELEVANT CONSIDERATIONS. HENCE, IN OUR CONSIDERED OPINION , IT CANNOT BE SAID THAT THE PAYMENTS MADE FOR HIRED VEHICLES WOULD FALL IN THE CATEGORY OF PAYMENT TOWARDS A SUB-CONTRACT WITH THE LORRY OWNERS. IN THAT CASE THE ASSESSEE IS NOT LIABLE TO DEDUCT TAX AT SOURCE, AS PE R THE PROVISIONS OF SECTION 194C(2), ON THE PAYMENTS MADE TO THE LORRY O WNERS FOR LORRY HIRE. CONSEQUENTLY, THE PROVISIONS OF SECTION 40(A)(IA) SHALL NOT APPLY TO SUCH PAYMENTS. 8.7 AS WE HAVE DECIDED THE ISSUE IN FAV OUR OF THE ASSESSEE FOR THE REASONS STATED ABOVE, IN OUR OPINION, C ONSIDERATION OF OTHER CONTENTIONS OF THE ASSESSEE AS WELL AS THE REVENUE IS NOT NECESSARY. 20. SIMILAR LOGIC IS AVAILABLE IN THE PRESENT CASE. AS OBSERVED EARLIER, THE ASSESSEE COULD BE FASTENED WITH THE OBLIGATIONS TO DEDUCT TDS, IF IT HAS ENTERED INTO A CONTRACT WITH TRUCK OWNERS. THE ASSESSEE HAS ONLY AVAILED SERVICES OF THE CONTRACTOR FOR TRANSPORTING THE GOODS FROM POINT A TO B. ALL RISK AND REWARD FOR TRANSPORTING THE GOODS REMAIN WITH THE ASSESSEE. T HEREFORE, THE LD.REVENUE AUTHORITIES HAVE FAILED TO APPRECIATE THAT RELATION SHIP OF CONTRACTOR AND CONTRACTEE WAS NOT EXISTED BETWEEN THE ASSESSEE AND THE ALLEGE D TRUCK OWNERS. ON THIS REASON, AMONGST OTHER, WE ARE OF THE VIEW THAT THE ORDERS O F THE CIT(A) ARE NOT DESERVE TO BE INTERFERED WITH, THOUGH BY WAY OF DIFFERENT REASONS . 21. IN THE NEXT FOLD OF SUBMISSION, IT WAS CONTENDE D BY THE ASSESSEE THAT SECTION 40(A)(IA) IS NOT APPLICABLE DURING THE ASSTT.YAR 20 05-06. THIS ARGUMENT WAS RAISED ON THE STRENGTH OF HONBLE CALCUTTA HIGH COURTS DE CISION IN THE CASE OF PIU GHOSH VS. DCIT, RENDERED IN ITA NO.191 OF 2009. THE LD.C OUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS IS THE SOLITARY DECISION ON THE POINT AND TRIBUNAL IS BOUND TO FOLLOW. HE POINTED OUT THAT SOLITARY DECISION OF NON-JURISDICT IONAL HIGH COURT IS REQUIRED TO BE FOLLOWED UNTIL AN UNLESS THERE IS A CONTRARY DECISI ON AT THE END OF HONBLE JURISDICTIONAL HIGH COURT OR AT THE END OF THE HON BLE SUPREME COURT. IN THIS DECISION, THE HONBLE HIGH COURT HAS HELD THAT SECT ION 40(A)(IA) IS NOT APPLICABLE IN THE ASSTT.YEAR 2005-06, THEREFORE, NO DISALLOWANCE CAN BE MADE. THE DISCUSSION MADE BY THE HONBLE CALCUTTA HIGH COURT READ AS UND ER: ITA NO.1418/AHD/2018 DCIT VS. KATARIA TRANSPORT & CO. ASST .YEAR 2005-06 - 21 - MR.AGARWALS CRITICISM IS NOT WITHOUT FORCE BUT HE HAS NOT BEEN ABLE TO POINT OUT AS TO HOW COULD THE ASSESSEE HAVE COME TO KNOW THAT THE OMISSION TO DEDUCT TAX FROM ANY PAYMENT MADE TO A CONTRACTOR SH ALL BECOME NOT DEDUCTIBLE UNDER SECTION 40 BEFORE THE FINANCE ACT 2004 GOT PRESIDENTIAL ASSENT ON 10TH SEPTEMBER, 2004. THIS QUESTION HE HA S NOT ANSWERED BECAUSE HE HAS NO ANSWER TO OFFER. ADMITTEDLY, THE FINANCE ACT, 2004 GOT PRESIDENTIAL ASSENT ON 10TH SEPTEMBER, 2004. THE ASSESSEE COULD NOT HAVE FORESEEN PRIOR TO 10TH SEPTEMBER, 2004 THAT ANY AMOUNT PAID TO A CONTRACTOR WITHOUT DEDUCT ING TAX AT SOURCE WAS LIKELY TO BECOME NOT DEDUCTIBLE UNDER SECTION 40. I T IS DIFFICULT TO ASSUME THAT THE LEGISLATURE WAS NOT AWARE OR DID NOT FORESEE TH E AFORESAID PREDICAMENT. THE LEGISLATURE THEREFORE PROVIDED THAT THE ACT SHA LL BECOME OPERATIVE ON 1ST APRIL, 2005. ANY OTHER INTERPRETATION SHALL AMOUNT TO PUNISHING THE ASSESSEE FOR NO FAULT OF HIS FOLLOWING THE JUDGMENT IN THE CASE OF HINDUSTHAN ELECTOR GRAPHITES LTD. [SUPRA]. ON THE TOP OF THAT, SECTION 4 RELIED UPON BY MR.AGA RWAL MERELY PROVIDES FOR AN ENACTMENT AS REGARDS RATE OF TAX TO BE CHARGED I N ANY PARTICULAR ASSESSMENT YEAR WHICH HAS NO APPLICATION TO THE CAS E BEFORE US. SECTION 11 OF THE FINANCE ACT BY WHICH CLAUSE (IA) WAS ADDED TO S ECTION 40 OF THE INCOME TAX ACT DOES NOT PROVIDE THAT THE SAME WAS TO BECOM E EFFECTIVE FROM THE ASSESSMENT YEAR 2005-06. IT MERELY SAYS IT SHALL BE COME EFFECTIVE ON 1ST APRIL, 2005 WHICH FOR REASONS ALREADY DISCUSSED SHOULD MEA N TO REFER TO THE FINANCIAL YEAR. THERE IS, AS SUCH, NO SCOPE FOR ANY AMBIGUITY NOR IS THERE ANY SCOPE FOR CONFUSION. EVEN IN A CASE WHERE THERE IS ANY AMBIGUITY, LAW IN THAT REGARD WAS NOTICED BY THE SUPREME COURT IN THE CASE OF CIT (CENTRAL)-I VS. VATIKA TOWNSHIP PVT.LTD., REPORTED IN (2014) 367 IT R 466 (SC), AS FOLLOWS : TAX LAWS ARE CLEARLY IN DEROGATION OF PERSONAL RIG HTS AND PROPERTY INTERESTS AND ARE, THEREFORE, SUBJECT TO STRICT CON STRUCTION, AND ANY AMBIGUITY MUST BE RESOLVED AGAINST IMPOSITION OF TH E TAX. IN BILLINGS V. U.S. (232 U.S. 261, S.CT. 421 (1914)), THE SUPREME COURT CLEARLY ACKNOWLEDGED THIS BASIC AND LONGSTANDING RULE OF ST ATUTORY CONSTRUCTION : TAX STATUTES SHOULD BE STRICTLY CONSTRUED, AND, IF ANY AMBIGUITY BE FOUND TO EXIST, IT MUST BE RESOLVED IN FAVOR OF THE CITIZEN. EIDMAN V. MARTINEZ, 184 U.S. 578, 583; UNITED STATES V. WIGGL ESWORTH, 2 STORY, 369, 374; MUTUAL BENEFIT LIFE INS. CO.7 V. HEROD, 1 98 F. 199, 201, AFFD 201 F. 918; PARKVIEW BLDG. ASSN. V. HEROD, 20 3 F. 876, 880; MUTUAL TRUST CO. V. MILLER, 177 N.Y. 51, 57. ITA NO.1418/AHD/2018 DCIT VS. KATARIA TRANSPORT & CO. ASST .YEAR 2005-06 - 22 - AGAIN, IN UNITED STATES V. MERRIAM (263 U.S. 179, 4 4 S. CT.69 (1923), THE SUPREME COURT CLEARLY STATED AT PP. 187-88: ON BEHALF OF THE GOVERNMENT IT IS URGED THAT TAXATI ON IS A PRACTICAL MATTER AND CONCERNS ITSELF WITH THE SUBSTANCE OF TH E THING UPON WHICH THE TAX IS IMPOSED RATHER THAN WITH LEGAL FORMS OR EXPRESSIONS. BUT IN STATUTES LEVYING TAXES THE LITERAL MEANING OF THE W ORDS EMPLOYED IS MOST IMPORTANT, FOR SUCH STATUTES ARE NOT TO BE EXT ENDED BY IMPLICATION BEYOND THE CLEAR IMPORT OF THE LANGUAGE USED. IF TH E WORDS ARE DOUBTFUL, THE DOUBT MUST BE RESOLVED AGAINST THE GO VERNMENT AND IN FAVOR OF THE TAXPAYER. GOULD V. GOULD, 245 U.S. 151 , 153. WE ARE OF THE OPINION THAT THE LEARNED TRIBUNAL ERR ED IN APPLYING PROVISION OF SECTION 40(A)(IA) IN DISALLOWING PAYME NT OF A SUM OF RS.4,30,386/- TO A CONTRACTOR WITHOUT DEDUCTING TDS DURING THE FINANCIAL YEAR 2004-05, CORRESPONDING TO ASSESSMENT YEAR 2005-06. IN THAT VIEW OF THE MATTER, THE QUESTION FORMULATED IS ANSWERED IN THE AFFIRMATIVE AND IN FAVOUR OF THE ASSESSEE. 22. IN THE ABSENCE OF ANY CONTRARY DECISION BROUGHT TO OUR NOTICE BY THE LD.DR, WE ARE BOUND TO FOLLOW, AND THEREFORE, THE ASSESSEE CA NNOT BE HELD IN DEFAULT FOR NON- DEDUCTING THE TDS ON THE PAYMENTS MADE TO TRUCK OWN ERS FOR HIRING THE TRUCKS. 7. IN PARITY WITH THE AFORESAID ITAT ORDER AND ON T HE PRINCIPLE OF CONSISTENCY, WE DISMISS THIS GROUND OF THE REVENUE. 8. NOW COMING TO GROUND RELATING TO PENALTY ON ADDI TION U/S.68 OF THE ACT. 8.1. THE LD.CIT(A) WHILE PASSING ORDER DATED 21/06/ 2012 IN QUANTUM APPEAL IN SECOND ROUND OF LITIGATION DELETED THE AD DITION SO MADE U/S.68 OF THE ACT WITH THE FOLLOWING OBSERVATION: ITA NO.1418/AHD/2018 DCIT VS. KATARIA TRANSPORT & CO. ASST .YEAR 2005-06 - 23 - 7.3. IN RESPECT OF GROUND RELATED TO ENHANCEMENT OF RS.13,50,000 BY THE LD.CIT(A) IN EARLIER APPELLANT PROCEEDINGS, THE APP ELLANT VIDE WRITTEN SUBMISSION DATED 12.05.2011 SUBMITTED CONTRA ACCOUN T WITH CONFIRMATION WITH COMPLETE ADDRESS, PAN IN RESPECT OF FOLLOWING THREE PARTIES FROM WHOM LOAN IS ACCEPTED BY APPELLANT BUT ON ACCOUNT OF NON-FURNISH ING OF SUCH CONTRA ACCOUNT AND CONFIRMATION BEFORE LD.CIT(A)XV, AHMEDABAD VIDE ORDER DATED 12.12.2008 ENHANCED THE INCOME OF APPELLANT. SR.NO. NAME & ADDRESS AMOUNT IN RS. PAN REPAID DURING YEAR MODE OF ACCEPTANCE 1. MS. NEHA KATARIA F-42, AKASH TOWER PREMCHAND NAGAR RD., VASTRAPUR AHMEDABAD 4,25,000 ALYPK 9643 A NO CHEQUE 2. NAVIN AGRO INDUSTRIES G-500, RD.NO.12, VKIA, JAIPUR 5,00,000 ACFPT 8338 M YES CHEQUE 3. SMT.SHEETAL AGARWAL 4 JANKI NAGAR, INDORE (M.P.) 4,00,000 ABDPA 8566B NO CHEQUE I HAVE PERUSED THE DETAIL SO FURNISHED. THIS ISSU E WAS NOT THERE AS GROUND OF APPEAL SINCE A.O. HAS NOT MADE ANY ADDITI ON ON THIS ACCOUNT. BUT, SINCE HONBLE ITAT HAS DIRECTED TO PASS APPEAL ORDE R DENOVO AND MY PREDECESSOR AFTER GIVING OPPORTUNITY TO APPELLANT M ADE THIS ADDITION AS ENHANCEMENT OF INCOME, THE SAME IS CONSIDERED FOR A DJUDICATION. OUT OF TOTAL PARTIES 1 TO 6 AS DISCUSSED BY LD.CIT(A) XV AHMEDAB AD IN HER ORDER DT.12/12/08, NO ADDITION WAS MADE BY HER IN RESPECT OF PARTIES FOR WHICH CONFIRMATION WAS FURNISHED BY APPELLANT TO THE A.O. NOW FOR THESE THREE PARTIES APPELLANT FILED SUCH CONTRA ACCOUNT AND CON FIRMATION WITH THE DETAILS OF ITA NO.1418/AHD/2018 DCIT VS. KATARIA TRANSPORT & CO. ASST .YEAR 2005-06 - 24 - MODE OF ACCEPTANCE (I.E. THROUGH ACCOUNT PAYEE CHEQ UES) AND DETAILS OF REPAYMENT ALSO. IT IS THEREFORE FOLLOWING THE REAS ONING OF LD.CIT(A)XV, AHMEDABAD AS HELD IN FIRST APPEAL PROCEEDINGS IN HE R ORDER DATED 12.12.2008 THERE IS NO BASIS OF GROUND FOR SUCH ADDITION IN TH E FORM OF ENHANCEMENT. 9. THE REVENUE HAS NOT FILED ANY APPEAL AGAINST THE ORDER OF THE LD.CIT(A); MEANING THEREBY ORDER DATED 21/06/2012 HAS ATTAINED THE FINALITY. 10. THE LD.DR HAS NOTHING TO CONTROVERT. 11. IN VIEW OF THE CIT(A)S ORDER DATED 21/06/201 2, WE DISMISS THIS GROUND OF APPEAL OF THE REVENUE. 12. IN THE RESULT, APPEAL OF THE REVENUE IS DISM ISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 21/02/2020 SD/- SD/- ( WASEEM AHMED ) ( MAHAVIR PRASAD ) ACCOUNTANT MEMBER J UDICIAL MEMBER AHMEDABAD; DATED 21/ 02 /2020 &.., .(.. / T.C. NAIR, SR. PS !'#' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. )*+ , / CONCERNED CIT 4. , ( ) / THE CIT(A)-10, AHMEDABAD 5. /01 ((*+ , *+# , ) / DR, ITAT, AHMEDABAD 6. 145 6 / GUARD FILE. / BY ORDER, / ( //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD