ITO, Ward - 40(1), Kolkata, Kolkata V. Shri Anil Kumar Nevatia, Kolkata

ITA 1479/KOL/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0471 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 20-06-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K MONDAL
• Assessee Lawyers: K K SURANA LD
• Section: 143(3); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : KOLKATA [BEFORE HONBLE SHRI M.BALAGANESH, AM & HONBLE S HRI S.S.VISWANETHRA RAVI, JM] I.T.A NO. 1479/KOL/20 17 ASSESSMENT YEAR : 2009-1 0 ITO, WARD-40(1), KOLKATA -VS- SHRI ANIL KUMAR NEVATIA . [PAN: AADCS 5486 L] (APPELLANT) (RESPOND ENT) FOR THE APPELLANT : SHRI K. MONDAL, SR . DR FOR THE RESPONDENT : SHRI K.K. SURANA, LD. A R DATE OF HEARING : 11.09.2018 DATE OF PRONOUNCEMENT : 19. 09 .2018 ORDER PER M.BALAGANESH, AM 1. THIS APPEAL BY THE REVENUE ARISES OUT OF THE OR DER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-12, KOLKATA [IN SHORT THE LD CIT(A)] IN APPEAL NO. 17/CIT(A)-12/KOL/WD.40(1)/2015-16 DATED 01.03.2017 AGAINST THE ORDER PASSED BY THE ITO, WARD-40(1), KOLKATA [ IN SHORT THE LD AO] UNDER SECTION 143(3) / 263 / 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 02.03.2015 FOR THE ASSESSMENT YEAR 2009-10. 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS A S TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE DISALLOWANCE MADE IN THE SUM OF RS. 1,17,40,659/-U/S 40A(IA) OF THE ACT TOWARDS TRANSPORTATION CHARGES , IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 2 ITA NO.1479/KOL/2017 SHRI ANIL KUMAR NEVATIA A.YR. 2009-10 2 3. BRIEF FACTS OF THIS ISSUE ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF TRANSPORT AND STEEL PROCESSING. THE ASS ESSEE DERIVES HIS INCOME FROM HIS PROPRIETORSHIP BUSINESS UNDER NAME AND STYLE M/S S UNNY STEEL PROCESSORS AND SHREE BALAJI ROAD LINES. THE RETURN OF INCOME FOR ASSESSMENT YEAR 2009-10 WAS FILED BY THE ASSESSEE INDIVIDUAL ON 30.09.2009 DECL ARING TOTAL INCOME OF RS. 7,87,470/-. THE ASSESSMENT WAS COMPLETED U/ S 143(3 ) OF THE ACT ON 20.05.2011 DETERMINING TOTAL INCOME OF RS. 8,88,130/-. SUBSEQU ENTLY THE SAID ASSESSMENT ORDER WAS SET ASIDE BY THE LD. ADMINISTRATIVE COMMISSIONE R U/S 263 OF THE ACT TREATING THE ORDER OF THE LD. AO AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE WITH A DIRECTION TO PASS A FRESH ASSESSMENT ORDER AND RE-C OMPUTE THE ASSESSEES INCOME AFTER MAKING SUFFICIENT ENQUIRY AND GIVING DUE OPPORTUNIT Y TO THE ASSESSEE. THE LD. AO FROM THE AUDITED FINANCIAL STATEMENTS OF SHREE BALA JI ROAD LINES OBSERVED THAT THE ASSESSEE HAS PAID TRANSPORTATION CHARGES OF RS. 1,8 6,60,256/-; CRANE CHARGES OF RS. 2,90,173/- AND LIFTING CHARGES OF RS. 3,92,971/- TO TALING TO RS. 1,91,59,588/-. ON GOING THROUGH THE PROFIT AND LOSS ACCOUNT OF SHREE BALAJI ROAD LINES ON ACCOUNT OF TOTAL TRANSPORTATION EXPENSES OF RS. 1,86,60,256/- BEING REPRESENTED BY BAWAL BRANCH (RS. 1,12,07,396/-); RAMPUR BRANCH (RS. 37,9 3,981/-) & GHAJIABAD BRANCH (RS. 36,58,879/-), THE ASSESSEE FURNISHED THE TRUCK WISE DETAILS OF THE SAME. THE LD. AO OUT OF TOTAL TRANSPORTATION CHARGES PAID FOR BAW AL BRANCH IN THE SUM OF RS. 1,12,07,396/- OBSERVED THAT THE ASSESSEE HAD INCURR ED TRANSPORTATION CHARGES OF RS. 57,54,430/- TO VARIOUS TRUCK OWNERS ON WHICH PROVIS IONS OF SECTION 194C OF THE ACT WOULD BE APPLICABLE AS NO DEDUCTION OF TAX AT SOUR CE MADE BY THE ASSESSEE. SIMILARLY OUT OF TOTAL PAYMENTS OF RS. 37,93,981/- MADE TOWARDS TRANSPORTATION CHARGES TO VARIOUS TRUCK OWNERS FROM RAMPUR BRANCH, THE LD. AO OBSERVED THAT A SUM OF RS. 18,28,018/- WAS PAID WITHOUT DEDUCTION O F TAX AT SOURCE. THE LD. AO ALSO OBSERVED THAT THE ASSESSEE HAS MADE PAYMENT OF RS. 4,99,332/- TOWARDS TRANSPORTATION CHARGES TO VARIOUS TRUCK OWNERS WITH OUT DEDUCTION OF TAX AT SOURCE. 3 ITA NO.1479/KOL/2017 SHRI ANIL KUMAR NEVATIA A.YR. 2009-10 3 SINCE NO DETAILS WERE SUBMITTED ON ACCOUNT OF TRANS PORTATION OF CHARGES OF GHAZIABAD BRANCH IN THE SUM OF RS. 36,58,879/-, THE LD. AO ASSUMED THAT THE SAME WAS MADE WITHOUT DEDUCTION OF TAX AT SOURCE BY THE ASSESSEE IN VIOLATION OF SECTION 194C OF THE ACT. ACCORDINGLY, THE LD. AO PROPOSED T O DISALLOW THE SUM OF RS. 1,17,40,659/- (57,54,430 + 18,28,018 + 4,94,332 + 36, 58,879) U/S 40A(IA) FOR PAYMENTS MADE TOWARDS TRANSPORTATION CHARGES TO VAR IOUS TRUCK OWNERS IN VIOLATION OF PROVISIONS OF SECTION 194C OF THE ACT. THE ASSES SEE SUBMITTED BEFORE THE LD. AO THAT THERE WAS NO ORAL OR WRITTEN CONTRACT ENTERED INTO BY THE ASSESSEE WITH ANY TRUCK OWNER. THE PAYMENTS WERE NOT MADE TO THE TRUCK OWNE RS. INSTEAD THE PAYMENTS WERE MADE ONLY TO THE TRUCK DRIVERS. SINCE THERE WAS NO ORAL OR WRITTEN CONTRACT, THE ASSESSEE PLEADED THAT PROVISIONS OF SECTION 194C OF THE ACT WOULD NOT BE APPLICABLE. IT WAS ALSO PLEADED THAT THE PAYMENTS MADE TO INDIV IDUAL TRUCK DRIVERS NEVER EXCEEDED RS. 20,000/- IN A DAY. 4. THE LD. AO FOUND THE AFORESAID EXPLANATION OF TH E ASSESSEE AS NOT SATISFACTORY AND PROCEEDED TO MAKE DISALLOWANCE U/S 40A(IA) OF THE A CT. THE LD. CIT(A) DELETED THE SAID DISALLOWANCE BY OBSERVING THAT THE LD. AO HAD HELD THE ASSESSEE LIABLE FOR DEDUCTION OF TAX ONLY ON THE ASSUMPTION THAT ASSESS EE WAS HAVING AGREEMENT WITH THE PARTIES THROUGH WHOM TRUCKS WERE ARRANGED FOR TRANS PORTATION OF GOODS. HE FURTHER OBSERVED THAT IT WAS NOT ESTABLISHED BY THE LD. AO THAT MONEY REGARDING FREIGHT CHARGES WAS PAID TO THEM IN PURSUANCE OF CONTRACT F OR SPECIFIC PERIOD, QUANTITY OR PRICE. ACCORDINGLY, HE DELETED THE DISALLOWANCE MAD E IN THE SUM OF RS. 1,17,40,659/- U/S 40A(IA) OF THE ACT. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. 4 ITA NO.1479/KOL/2017 SHRI ANIL KUMAR NEVATIA A.YR. 2009-10 4 5. WE HAVE HEARD RIVAL SUBMISSIONS. THE LD. DR VEHE MENTLY ARGUED THAT THE ASSESSEE HAD USED THE SAME TRUCK NUMBERS FOR TRANSPORTING IT S GOODS AND HENCE EXPLANATION OF THE ASSESSEE THAT PAYMENTS WERE MADE ONLY TO THE TR UCK DRIVERS AND THAT NO ORAL OR WRITTEN CONTRACT WAS ENTERED INTO WITH THE TRUCK OW NERS COULD NOT BE BELIEVED AND NOT SUBSTANTIATED WITH ANY EVIDENCE. THE LD. AR ON THE OTHER HAND REITERATED HIS SUBMISSIONS BEFORE THE LOWER AUTHORITIES. HE SPECIF ICALLY DREW OUR ATTENTION TO THE DETAILS OF VARIOUS PAYMENTS MADE TO TRUCK DRIVERS W HICH ARE ENCLOSED AT PARA 4(A) AND 4(B) OF THE PAPER BOOK. WE HAVE GONE THROUGH TH E SAME AND WE FIND THAT THE ASSESSEE HAS MADE PAYMENT ON ACCOUNT OF TRANSPORTAT ION CHARGES FOR TRANSPORTING GOODS IN SAME TRUCKS ON A FREQUENT BASIS. FROM THE DETAILS IT COULD BE OBSERVED THAT THERE IS NO DISPUTE THAT THE AGGREGATE PAYMENTS TOW ARDS THOSE INDIVIDUAL TRUCKS DURING THE YEAR HAD INDEED EXCEEDED RS. 50,000/- EV EN THOUGH THE PAYMENT MADE ON A SINGLE DAY HAD NOT EXCEEDED RS. 20,000/-. THE EXP LANATION OF THE LD. AR THAT THE PAYMENTS WERE MADE ONLY TO THE TRUCK DRIVERS AND NO T TO THE TRUCK OWNERS IS HARD TO BELIEVE INASMUCH AS THE PAYMENTS SO MADE EVENTUALLY REACHES ONLY THE TRUCK OWNER AS THE TRUCK DRIVER CANNOT HAVE THE BENEFIT OF ENJO YING THE SAID MONEY. IN OTHER WORDS, TRUCK DRIVER HAD ONLY ACTED AS A TEMPORARY C USTODIAN OF THE MONEY PAID BY THE ASSESSEE FOR ONWARD TRANSFER/PAYMENT TO THE UL TIMATE TRUCK OWNERS. HENCE EFFECTIVELY PAYMENTS WERE MADE BY THE ASSESSEE ONLY TO THE TRUCK OWNERS THROUGH THE TRUCK DRIVERS. WE ARE OF THE CONSIDERED OPINION THA T THE TRUCK DRIVER CANNOT DECIDE THE ENTIRE TERMS AND CONDITION OF THE TRANSPORT SUC H AS RATE OF FREIGHT, WEIGHT TO BE CARRIED FOR SPECIFIC DESTINATION AND OTHER LIABILIT IES ATTACHED WITH THE SAID TRANSPORTATION ON HIS OWN WITHOUT CONSENT OF THE T RUCK OWNER. HENCE IT COULD BE SAFELY CONCLUDED THAT THERE IS AN ORAL CONTRACT ENT ERED INTO BY THE ASSESSEE WITH THE ULTIMATE TRUCK OWNER DURING THE MEDIUM OF THE TRUCK DRIVERS FOR WHICH PAYMENTS ON ACCOUNT OF TRANSPORTATION CHARGES WERE MADE. HENCE, WE HOLD THAT THE PROVISIONS OF SECTION 194C ARE APPLICABLE IN THE INSTANT CASE AND DISALLOWANCE U/S 40A(IA) OF THE 5 ITA NO.1479/KOL/2017 SHRI ANIL KUMAR NEVATIA A.YR. 2009-10 5 ACT HAVE RIGHTLY BEEN MADE BY THE LD. AO. ACCORDING LY, GROUNDS RAISED BY THE REVENUE ARE ALLOWED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON 19.09.2018 SD/- SD/- [S.S. VISWANETHRA RAVI] [ M.BAL AGANESH ] JUDICIAL MEMBER ACCOUNTANT MEM BER DATED : 19.09.2018 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. ITO, WARD-40(1), KOLKATA, 3, GOVT. PLACE (WEST), KOLKATA-01. 2. SHRI ANIL KUMAR NEVATIA, 18/1, MAHARSHI DEVENDRA ROAD, KOLKATA-700007. 3..C.I.T.(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S