M/s. Mangturam Ratanlal, Angul V. ITO, Angul Ward, Angul

ITA 151/CTK/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5329 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 21-04-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D K PRADHAN
• Section: 142(1); 194C

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI N.S.SAINI, AM & SHRI PAV AN KUMAR GADALE, JM ./ ITA NO. 151 / CTK /20 1 7 ( / ASSESSMENT YEAR : 20 13 - 20 14 ) M/S MANGTURAM RATANLA L, 1 ST FLOOR, M.R.TOWERS, MAIN ROAD, ANGUL - 759122 VS. ITO, ANGUL WARD, ANGUL ./ ./ PAN/GIR NO. : A A FFM 8851 J ( / APPELLANT ) .. ( / RESPONDENT ) /AS SESSEE BY : SHRI BINOD AGARWAL , AR /REVENUE BY : SHRI D.K.PRADHAN, DR / DATE OF HEARING : 03 / 05 /201 8 / DATE OF PRONOUNCEMENT 08 / 05 /201 8 / O R D E R PER SHRI PA V AN KUMAR GADALE, JM : TH IS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF CIT(A), CUTTACK , IN ITA PPEAL NO. 356 /201 5 - 16 , DATED 10.01.2017 , FOR THE ASSESSMENT YEAR 20 13 - 14 , PASSED U/S.143(3) / 250 OF THE I.T.ACT. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS : - 1 . FOR THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEA LS) HAS ERRED BOTH ON FACTS AND LAW IN CONFIRMING THE ADDITION OF RS.2,79,244/ - UNDER THE HEAD TANK LORRY EXPENSES IGNORING THE EVIDENCES AND THE DETAILS FILED AND WITHOUT ANY FINDING THAT THE EXPENDITURE WERE NOT GENUINE, NEITHER BOOKS OF ACCOUNT WERE REJ ECTED. THE ADDITION SO MADE SHOULD BE DELETED IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. FOR THAT, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS WHOLLY UNJUSTIFIED IN CONFIRMING ADDITION OF RS.85,050/ - MADE UNDER THE HEAD SERVICE STATION EXPENS ES UNDER SECTION 40(A)(IA) WHICH IS WHOLLY UNWARRANTED, UNJUSTIFIED AND VITIATED AND THEREFORE SHOULD BE DELETED IN FACTS AND CIRCUMSTANCES OF THE CASE. 3. FOR THAT THE APPELLANTS CRAVES FOR LEAVE TO ADD, ALTER AND AMEND ANY OF THE GROUNDS OF APPEAL, IF REQUIRED. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN TRADING IN PETROL, DIESEL, LUBRICANT, TYRE, WELDING EQUIPMENTS ETC. AND FILED THE RETURN ITA NO. 151 /CTK/201 7 2 OF INCOME FOR THE ASSESSMENT YEAR 2013 - 2014 ELECTRONICALLY ON 27.09.2013 WITH TOTAL INCOME O F RS. 5,90,189/ - AND THE RETURN OF INCOME WAS PROCESSED U/S.143(1) OF THE ACT . SUBSEQUENTLY, NOTICE U/S.143(2) & 142(1) OF THE ACT WAS ISSUED . IN COMPLIANCE, LD. AR OF THE ASSESSEE APPEARED AND SUBMITTED THE DOCUMENTS. THE AO HAVING DEALT WITH THE VARIOUS I SSUES HAS DISCUSSED ON THE POINT WITH RESPECT TO TANK LORRY EXPENSES. ON PERUSAL OF THE PROFIT AND LOSS ACCOUNT THE AO FOUND THAT THE ASSESSEE HAS CLAIMED LORRY EXPENSES OF RS.28,04,699/ - AGAINST THE LORRY FREIGHT RECEIPT OF RS.28,75,132/ - AND FOUND THAT T HE ASSESSEE HAS PERCENTAGE OF EXPENSE AS COMPARED TO THE RECEIPTS IS 97.55%. THE AO DEALT CATEGORICALLY ON THE ASPECTS OF RATE OF DIESEL CONSUMPTION AND KMS AND ALSO THE TRANSACTION AND DEALT AT PAGE 2 TO 8 OF THE ORDER AND FOUND THAT THE ASSESSEE HAS CLAI MED EXCESS DIESEL EXPENSES TO THE EXTENT OF RS. 2,79,244/ - AND MADE DISALLOWANCE. SIMILARLY THE ASSESSEE HAS MADE PAYMENT TO SERVICE STATION EXPENSES AND THESE PAYMENTS WERE MADE TO THE LABOUR USED FOR THE CONSTRUCTION WORK AT SERVICE STATION. THEREFORE, TH E ASSESSEE HAS VIOLATED THE PROVISIONS U/S.40(A)(IA) OF THE ACT AND NO EVIDENCE WAS PRODUCED IN RESPECT OF LABOUR PAYMENTS AND MADE ADDITION OF RS.85,050/ - ALONG WITH OTHER ADDITIONS ASSESSED THE TOTAL INCOME AT RS.9,80,110/ - AND PASSED ORDER U/S.143(3) OF THE ACT, DATED 09.09.2015. 4. ON APPEAL, ON THE DISPUTED ISSUE THE CIT(A) HAS CONFIRMED THE ADDITION OF TANK LORRY EXPENSES AND LABOUR PAYMENTS AND ALLOWED PARTIAL RELIEF IN THE CASE OF OTHER CLAIMS. ITA NO. 151 /CTK/201 7 3 5. BEFORE US, LD. AR SUBMITTED THAT THE CIT(A) HAS ERRE D IN CONFIRMING THE ADDITION WITHOUT CONSIDERING THE EVIDENCE AND ALSO BOOKS OF ACCOUNTS ARE NOT REJECTED AND RELIED ON THE JUDICIAL DECISIONS AND FURTHER SUBMITTED THAT THE PAYMENTS MADE TO THE LABOUR CANNOT BE DISALLOWED UNDER THE PROVISIONS OF SECTION 4 0(A)(IA) OF THE ACT AND AS THE PAYMENTS MADE DIRECTLY TO THE LABOURERS AND FILED THE AUDIT REPORT TO SUBSTANTIATE THAT THESE PAYMENTS HAVE BEEN DISCLOSED IN THE FINANCIAL STATEMENTS. 6. LD. DR RELIED ON THE ORDERS OF CIT(A). 7. WE HAVE HEARD RIVAL SUBMISSI ONS AND PERUSED THE MATERIAL ON RECORD. ON THE DISPUTED ISSUE OF DISALLOWANCE BY THE AO IN WORKING OUT THE EXCESS CLAIM OF DIESEL EXPENSES IN THE TANK LORRY EXPENSES THE LD. AO HAS METICULOUSLY CALCULAT ED THE KILOMETRE , MILEAGE AND THE RATES AS DISCUSSED I N THE ASSESSMENT ORDER. EVEN BEFORE US THE LD. AR COULD NOT SUBSTANTIATE WITH EVIDENCE. WE FOUND THE CALCULATION S OF THE AO ARE BASED ON THE RECORD WHICH COULD NOT BE CONTROVERTED BY THE ASSESSEE. THE LD. AR FURTHER SUBMITTED THAT THE ASSESSEE HAS BEEN DIS CLOSING THE EXPENDITURE IN THE EARLIER YEAR S AND ALSO IN THE SUBSEQUENT YEARS WHICH IS NOT DISPUTED BY THE REVENUE THEREFORE, WE CONSIDERING THE OVERALL ASPECTS AND BUSINESS OPERATIONS OF THE ASSESSEE , ARE OF THE OPINION THAT THE ADDITION MADE BY THE AO IS BASED ON THE CALCULATIONS AND CANNOT BE REALISTIC TO THE BUSINESS ACTIVITIES , THEREFORE, CONSIDERING THE CIRCUMSTANCES AND EXPLANATION ON THE CLAIM OF THE ASSESSEE, WE RESTRICT THE ADDITION TO THE EXTENT OF RS.2 LAKHS AND WE ORDER ACCORDINGLY AND PARTLY ALLO WED THE GROUND OF APPEAL. ITA NO. 151 /CTK/201 7 4 8. IN RESPECT OF CLAIM OF ADDITION MADE FOR NON - DEDUCTION OF TDS, WE FOUND THAT THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT SHALL NOT RESTRICT THE BUSINESS ACTIVITY AND THE ASSESSEE HAS UTILISED THE SERVICE S OF LABOUR FOR CONST RUCTION OF SERVICE STATION WHICH IS NOT DISPUTED AND EACH PA YMENT DOES NOT EXCEED THE PRESCRIBED LIMIT. WE SUPPORT OUR VIEW WITH THE DECISION OF THE KOLKATA BENCH OF THE TRIBUNAL IN THE CASE OF NEW MODERN CONSTRUCTION VS. ITO, (2017) 50 CCH 0050 (KOL TRIB ) HAS OBSERVED AS UNDER : - HELD: TRIBUNAL FIND THAT THERE IS NOTHING ON RECORD TO SUGGEST THAT THE PAYMENT TO LABOURERS WERE PAID TO THE CONTRACTORS. ON THE CONTRARY, ASSESSEE HAS MADE PAYMENT TO LABOURERS DIRECTLY AND IN SUPPORT OF ITS CLAIM, LD. AR OF ASSESSEE HAS PRODUCED THE MUSTER ROLL. IN THIS REGARD, LD. DR FAILED TO BRING ANY DEFECT / INFORMATION FROM THE MUSTER ROLL WHICH SUGGESTED THAT THE LABOUR CHARGES PAID BY ASSESSEE ARE SUBJECT TO TDS. SINCE NO COGENT MATERIAL HAS BEEN BROUGHT ON RECORD, I N OUR CONSIDERED OPINION, AO WAS NOT JUSTIFIED IN INVOKING THE PROVISION OF SEC. 194C R.W.S. 40(A)(IA) OF THE ACT. IN THE BACKGROUND OF THE ABOVE DISCUSSIONS AND PRECEDENT WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT(A) AND ACCORDINGLY TRIBUNAL UPH OLD THE SAME. IN THE CIRCUMSTANCES, THIS ISSUE OF REVENUE'S APPEAL IS DISMISSED. (PARA 24) WE RESPECTFULLY FOLLOW THE DECISION OF THE TRIBUNAL, DIRECT THE AO TO DELETE THE ADDITION AND ALLOW THIS GROUND OF APPEAL OF ASSESSEE. 9. IN THE RESULT, APPE AL OF THE ASSESSEE IS PARTLY ALLOWED. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 08 / 05 / 201 8 . SD/ - ( N.S.SAINI ) SD/ - ( PA V AN KUMAR GADALE ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER CUTTACK ; DATED 08 / 0 5 /2018 . . / PKM , SENIOR PRIVATE SECRETARY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT - 2. / THE RESPONDENT - 3. ( ) / THE CIT(A), 4. / CIT ITA NO. 151 /CTK/201 7 5 / BY ORDER, ( SENIOR PRIVATE SECRETARY ) , / ITAT, CUTTACK 5. , , / DR, ITAT, CUTTACK 6. / GUARD FILE. //TRUE COPY//