ACIT, Bijapur V. M/s Espee Minerals & Transport, Bagalkot

ITA 148/BANG/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5543 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 15-06-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 08-02-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: ETWA MUNDA CITIIIDR
• Section: 133A; 194C; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI N. BARATHVAJA SANKAR, VICE PRESIDENT AND SHRI GEORGE GEORGE K., JUDICIAL MEMBER ITA NO.148/BANG/2010 ASSESSMENT YEAR : 2006-07 THE ASSISTANT COMMISSIONER OF INCOME TAX, BIJAPUR. APPELLANT VS. M/S. ESPEE MINERALS & TRANSPORTS, SIGIKERI CROSS, BADAMI ROAD, BAGALKOT. : RESPONDENT ASSESSEE BY : SHRI ETWA MUNDA, CIT-III(DR). REVENUE BY : SMT. SHEETAL, ADVOCATE. O R D E R PER GEORGE GEORGE K., JUDICIAL MEMBER THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST T HE ORDER OF THE CIT(APPEALS), BELGAUM DATED 30.11.2009 FOR THE ASSE SSMENT YEAR 2006-07 ON THE FOLLOWING GROUNDS: 1. THE CIT(A) ERRED IN DELETING ADDITION OF RS.5,6 8,64,595/- MADE U/S. 40(A)(IA) ON ACCOUNT OF FAILURE OF ASSESS EE TO DEDUCT TDS U/S .194C(2) ON PAYMENTS MADE TO LORRY OWNERS F OR TRANSPORTATION OF GOODS. ITA NO.148/BANG/10 PAGE 2 OF 5 2. THE CIT(A) ERRED IN HOLDING THAT THERE WAS NO CO NTRACT BETWEEN ASSESSEE AND LORRY OWNERS OVERLOOKING THE F ACT THAT, MAJORITY OF LORRY OWNERS HAVE WORKED WITH ASSESSEE THROUGHOUT THE YEAR AND ALSO PAYMENT MADE TO EACH LORRY OWNER WAS MORE THAN RS.50,000/- WHICH IS NOT POSSIBLE WITHOUT ORAL CONTRACT. 3. THE CIT(A) ERRED IN ALLOWING THE RELIEF BY HOLDI NG THAT ASSESSEE HAD NOT ENTRUSTED ENTIRE WORK INCLUDING RI SK FACTOR UNDERTAKEN BY IT TO LORRY OWNERS AND HENCE, PROVISI ONS OF SEC. 194C(2) IS NOT APPLICABLE, OVERLOOKING PROVISIONS O F EXPLANATION III TO SEC. 194C(2) WHEREIN NO SUCH STIPULATIONS IS MADE AND EVEN CARRIAGE OF GOODS IS TERMED AS WORK. 4. THE CIT(A) ERRED IN ALLOWING RELIEF IN CONTRAVEN TION OF SEC. 194C(2) WHICH CLEARLY STIPULATES THAT, ENTRUST ING EVEN PART OF WORK UNDERTAKEN BY ASSESSEE TO SUB-CONTRACTOR ALSO FAILS UNDER SEC. 194C(2). 5. THE CIT(A) ERRED IN RELYING UPON ITAT DECISION I N THE CASE OF MARUTI S. PATIL AND DECISION REPORTED IN 21 7 CTR 332 THOUGH, THE FACTS OF THE SAID CASE ARE NOT APPLICAB LE TO ASSESSEES CASE, AS CERTAIN LORRY OWNERS HAVE CARRIED OUT ASSE SSEES WORK DURING ENTIRE YEAR AND PAYMENTS MADE TO EACH LORRY OWNER EXCEEDED RS.50,000/- WHICH IS NOT POSSIBLE WITHOUT ORAL CONTRACT WITH THEM. 6. THE CIT(A) ERRED IN NOT FOLLOWING DECISION OF UT TARANCHAL HIGH COURT REPORTED IN 290 ITR 530 AS ASSESSEES JO B OF ASSIGNING TRANSPORATION OF MATERIAL TO LORRY OWNERS AMOUNTS TO WORK ASSIGNED TO AGENT FOR WHICH TDS LIABILITY VERY MUCH ARISES U/S. 194C. 2. WE HAVE PERUSED THE RIVAL SUBMISSIONS AND PERU SED THE MATERIAL ON RECORD. AT THE OUTSET, WE FIND THAT SIMILAR ISS UES HAVE BEEN DEALT WITH BY THE TRIBUNAL IN ITA NO.84/PANAJI/09 IN THE ASSESSEE S OWN CASE FOR THE A.Y. 2005-06 AND VIDE ORDER DATED 13.05.2011, THE TRIBUN AL REMITTED BACK THE ISSUES TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO REDO THE ASSESSMENT WITH THE FOLLOWING OBSERVATIONS IN PARAS 6.4.5 TO 6.4.6 OF THE ORDER: ITA NO.148/BANG/10 PAGE 3 OF 5 6.4.4. REVERTING BACK TO THE ISSUE ON HAND , THE LD. AO HAD, IN FACT, NOT TOUCHED UPON THIS ISSUE DURING THE ASS ESSMENT PROCEEDINGS. ON HIS PART, THE LD. CIT, BY TAKING C OGNIZANCE OF THE STATEMENT OF THE MANAGER OF THE ASSESSEE DURING THE COURSE OF SURVEY OPERATION U/S 133A OF THE ACT AND ALSO DETAI LS FILED IN RESPECT OF PAYMENT OF FREIGHT CHARGES, HAD COME TO A CONCLUSION THAT THE ASSESSEE WAS LIABLE TO DEDUCT TDS U/S 194 C OF THE ACT ON RS.4.22 (SIC) 4.32 CRORES DEBITED IN ITS P & L ACCOUNT TOWARDS LORRY PAYMENTS AND FAILURE TO DEDUCT TDS ATTRACTS T HE PROVISIONS OF S.40 (A) (IA) OF THE ACT. 6.4.5. TAKING INTO ACCOUNT THE SEQUENCE O F EVENTS WHICH HAD RESULTED IN SUO MOTU ACTION ON THE PART OF THE LD. CIT U/S 263 OF THE ACT, THEREBY DIRECTING THE AO TO DISALLOW T HE ENTIRE SUM OF RS.4.32 CRORES U/S 40(A) (IA) OF THE ACT. HOWEVER, THE LD. A O HAS BEEN DEPRIVED OF THE FACTUAL ASPECTS SUCH AS (I) WHETHER THE TRANSPORT COMPANIES OWNING LORRIES /TRUCKS HAVE LENT THEIR VEHICLES WITH DRIVES TO THE ASSESSEE FOR TRANSPORTING THE GOODS OF MYSORE MINERALS LIMITED TO JINDAL FACT ORY SITUATED AT TORNAGAL? (II) THERE WERE ALSO POSSIBILITIES THAT MOST OF TH E LORRY OWNERS WHO THEMSELVES AT THE WHEELS COULD HAVE BEEN ENGAGE D BY THE ASSESSEE TO CARRY THE GOODS. - THERE WERE ALSO INSTANCES THAT SOME OF THE LORRY COMPANIES HAVING FLEET OF VEHICLES WITH ADEQUATE DRIVERS ON S HIFTS WOULD HAVE LENT THEIR SAME VEHICLES WITH DIFFERENT DRIVER S ON DIFFERENT DAYS TO THE ASSESSEE WHICH COULD NATURALL Y HAVE CONTRIBUTED IN MAKING A NUMBER OF TRIPS DURING THE PERIOD UNDER CHALLENGE; - EVEN SOME OF THE LORRY OWNERS COULD HAVE LEASED OUT THEIR VEHICLES ON MONTHLY BASIS TO THE PERSONS WHO INTEND ED TO DRIVE SUCH VEHICLES THEMSELVES TO THRIVE THEIR FORT UNES; (III)THE INTENTION OF THE LEGISLATURE IS VERY CLEAR FROM THE PROVISIONS OF S.194C OF THE ACT. IF ANY CONTRACT W AS ENTERED INTO FOR CARRYING OUT ANY WORK, THEN THE ASSESSEE W AS LIABLE TO DEDUCT TAX. MERE HIRING OF VEHICLES CANNOT BE CONS TRUED AS IF THE ASSESSEE HAD ENTERED INTO A CONTRACT FOR CARRYI NG OUT ANY WORK; (IV) . (V) NO DOUBT, THE MANAGER OF THE ASSESSEE, DURING THE C OURSE OF SURVEY OPERATION, ADMITTED THAT NO TDS WAS MADE WHILE ITA NO.148/BANG/10 PAGE 4 OF 5 MAKING PAYMENTS TO VARIOUS TRUCK OWNERS. THIS CANN OT BE A SOLE REASON TO COME TO A CONCLUSION THAT THE ASSE SSEE HAD IN FACT ENTERED INTO A CONTRACT EITHER IN WRITING O R VERBAL TO CARRY OUT THE WORK ON BEHALF OF THE ASSESSEE. (VI) . 6.4.5. THE ABOVE FACTS HAVE NOT BEEN EXAM INED BY THE LD. CIT WHILE ARRIVING AT SUCH A CONCLUSION. AS THESE FACTUAL ASPECTS HAVE NOT BEEN EXAMINED EITHER BY THE ASSESSING AUTH ORITY OR THE LD. CIT DURING THE COURSE OF PROCEEDINGS U/S 263 OF THE ACT, WE ARE OF THE CONSIDERED VIEW THAT THE ENTIRE ISSUE RE QUIRES A COMPREHENSIVE EXAMINATION AT THE LOWER LEVEL ASSE SSING AUTHORITY. 6.4.6. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, WE REMIT BACK THE ISSUE ON THE FILE OF THE LD . AO WITH A SPECIFIC DIRECTION TO REDO THE ASSESSMENT AFTER CON SIDERING THE ENTIRE MATRIX AS TO WHETHER THE ASSESSEES CASE IS HIT BY THE PROVISIONS OF S. 194C OF THE ACT AND TO TAKE APPROP RIATE ACTION IN ACCORDANCE WITH THE PROVISIONS OF THE ACT, OF COURS E, AFTER AFFORDING A REASONABLE OPPORTUNITY TO THE ASSESSEE OF BEING HEARD. IT IS ORDERED ACCORDINGLY. 3. THE FACTS FOR THE ASSESSMENT YEAR BEFORE US BEI NG SIMILAR TO THE A.Y. 2005-06 IN THE ASSESSEES OWN CASE, EXCEPT THA T THE PRESENT APPEAL IS AGAINST THE ORDER OF THE CIT(A) U/S. 251 OF THE ACT , WHILE THE FORMER CASE IS AN APPEAL AGAINST THE ORDER U/S. 263 OF THE ACT, W E DEEM IT FIT TO RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR THIS ASSESSMENT YEAR ALSO WITH SIMILAR DIRECTIONS TO THE ASSESSING OFFICER AS CONT AINED IN THE ORDER OF THE TRIBUNAL DATED 13.5.2011 (REPRODUCED HEREINABOVE) F OR FRESH CONSIDERATION AND DECISION IN ACCORDANCE WITH THE LAW. 4. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSES. ITA NO.148/BANG/10 PAGE 5 OF 5 PRONOUNCED IN THE OPEN COURT ON THIS 24 DAY OF J UNE, 2011. SD/- SD/- ( N. BARATHVAJA SANKAR ) ( GEORGE GEORGE K. ) VICE PRESIDENT JUDICIAL MEMBER BANGALORE, DATED, THE 24 TH JUNE, 2011. DS/- COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE (1+1) BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.