ACIT, V. M/s Commercial Carriers Pvt Ltd,

ITA 162/RAN/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0023 (ITAT-RANCHI)
• Duration Of Justice: 2 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2016
• Appeal Filed By: Department
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 05-05-2014
• Court: TRIBUNAL
• Department Lawyers: ABHAY KUMAR
• Assessee Lawyers: S K PODDAR; DEVESH PODDAR ADVO
• Keywords: Question of law; Commercial expediency
• Section: 143(3); 234B; 194C

Judgement Text

1 ITA NO. 162/RAN/2014, CO NO.08/RAN/ 2016 AY 2009-10 COMMERCIAL CARRIERS PVT. LTD. IN THE INCOME TAX APPELLATE TRIBUNAL: RANCHI BENCH, RANCHI [BEFORE SHRI N. V. VASUDEVAN, JM & SHRI M. BALAGAN ESH, AM] I.T.A NO. 162/RAN/2014 ASSESSMENT YEAR: 2009-10 ASSISTANT COMMISSIONER OF INCOME-TAX VS. M/S. COMM ERCIAL CARRIERS PVT. LTD. CIRCLE-1, JAMSHEDPUR 2 ND FLOOR, CHANDRA CENTRE, 9, BAGAN AREA, NEW KALIMATI ROAD, JASSHEDPUR-831001 (PAN: AAACC6949F) (APPELLANT) (RESPONDENT) & C.O. NO. 08/RAN/2016 IN I.T.A NO. 162/RAN/2014 ASSESSMENT YEAR: 2009-10 M/S. COMMERCIAL CARRIERS PVT. LTD. VS. ASSTT. COMM ISSIONER OF INCOME-TAX CIRCLE-1, JAMSHEDPUR (CROSS OBJECTOR) (RESPONDENT) DATE OF HEARING: 08.09.2016 DATE OF PRONOUNCEMENT: 12.09.2016 FOR THE REVENUE: SHRI ABHAY KUMAR, DR FOR THE ASSESSEE: SHRI S.K.PODDAR & SHRI DEVESH PODDAR, ADVOCATES ORDER PER SHRI M. BALAGANESH, AM: THIS APPEAL BY REVENUE AND CROSS OBJECTION BY ASSES SEE ARE ARISING OUT OF ORDER OF CIT(A), JAMSHEDPUR VIDE APPEAL NO. 344/JSR /2011-12 DATED 28.02.2014. ASSESSMENT WAS FRAMED BY DCIT, CIRCLE-1, JAMSHEDPUR U/S. 143(3) OF THE INCOME- TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) FOR AY 2009-10 VIDE HIS ORDER DATED 29.12.2011. SINCE INTERCONNECTED ISSUES ARE THERE, WE DISPOSE OFF BOTH THE APPEAL OF REVENUE AND CROSS OBJECTION OF ASSESSEE B Y THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. DISALLOWANCE OF HIRE CHARGES GROUND NO. 1 OF REVE NUES APPEAL AND GROUND NO. 2 OF ASSESSEES CROSS OBJECTION. 2 ITA NO. 162/RAN/2014, CO NO.08/RAN/ 2016 AY 2009-10 COMMERCIAL CARRIERS PVT. LTD. 2.1. THE FACTS OF THE CASE ARE THAT THE ASSESSEE WH ICH IS A COMPANY ENGAGED IN THE BUSINESS OF TRANSPORTATION HAD DEBITED A SUM OF RS. 5,62,04,360/- AS HIRE CHARGES OF TRUCKS AND TRAILERS WHICH IT HAD ENGAGED IN THE COU RSE OF ITS BUSINESS. THE DETAILS OF LEDGER COPIES OF ALL HIRE CHARGES WERE DULY SUBMITT ED BY THE ASSESSEE. OUT OF THIS, THE LD. AO OBSERVED THAT THE ASSESSEE HAD DEDUCTED TDS ONLY IN RESPECT OF HIRE CHARGES OF TRUCKS AND TRAILERS TO THE TUNE OF RS.4, 34,49,384/-. THE ASSESSEE ALSO SUBMITTED THAT THE BALANCE PAYMENT OF RS.1,27,54,97 6/- DOES NOT WARRANT ANY DEDUCTION OF TAX AT SOURCE AS INDIVIDUAL PAYMENT MA DE TO VARIOUS PARTIES WERE LESS THAN RS.20,000/-. IT WAS ALSO SUBMITTED FURTHER TH AT FORM NO. 15I/15J WERE SUBMITTED BY TRANSPORTERS WHICH WERE ALSO PRODUCED FOR VERIFICATION BY AO. HOWEVER, THE ASSESSEE CONCEDED THAT THE SAID FORMS 15I/15J WERE NOT SUBMITTED BEFORE THE JURISDICTIONAL CIT AS MANDATED IN THE I. T. RULES. THE LD. AO MADE DISALLOWANCE U/S. 40(A)(IA) OF THE ACT IN THE SUM O F RS.1,27,54,976/- NOT CONVINCED WITH THE CONTENTIONS OF THE ASSESSEE. 2.2. BEFORE THE LD. CIT(A) THE DETAILS OF PAYMENTS MADE TOWARDS HIRE CHARGES OF TRUCKS AND TRAILERS WERE AGAIN SUBMITTED BY THE AS SESSEE WHICH WERE SUBJECT MATTER OF VERIFICATION IN THE REMAND PROCEEDINGS BY THE AO . THE ASSESSEE ALSO STATED THAT OUT OF THE TOTAL DISALLOWANCE OF RS.1,27,54,976/-, AN AMOUNT OF RS.75,16,400/- (RS.18,780/- X 380 TRIPS) AND RS.33,47,070/- (RS.18 290 X 183 TRIPS) HAS BEEN PAID AS FREIGHT CHARGES TOTALING TO RS.1,08,63,470/- BELOW RS.20,000/- ON EACH TRIP AND, THEREFORE, THE PROVISIONS OF SECTION 40(A)(IA) OF T HE ACT ARE NOT APPLICABLE IN RESPECT OF THE SAME. THE DETAILS OF THE SAME ARE AS UNDER: 1. 19780X380 7516400 FREIGHT INVOLVED FROM JAMSHEDP UR TO HALDIA BY TRAILER. FREIGHT AMOUNTING RS.19,780/- (FREIGHT CHARGES RS.20,000 LESS LOADING CHARGE RS.220). 2. 18290X183 3347070 FREIGHT INVOLVED FROM KOLKATA TO JAMSHEDPUR BY 10 WHEELER VEHICLE. FREIGHT AMOUNTING RS.18,290 (FREIGHT CHARGES RS.18,500 LESS LOADING CHARGE RS.210). 2.3. THE LD. CIT(A) ON OBTAINING REMAND REPORT FROM THE LD. AO VIDE REPORT DATED 04.03.2013 AND 29.10.2013 AND FURTHER REPORT FROM JCIT DATED 29.11.2003 3 ITA NO. 162/RAN/2014, CO NO.08/RAN/ 2016 AY 2009-10 COMMERCIAL CARRIERS PVT. LTD. OBSERVED THAT THE LD. JCIT HAD CONFIRMED THE FACT T HAT ALL PAYMENTS EXCEPT ONE WERE MADE BELOW RS.20,000/-. THE LD. AO ALSO SOUGH T TO VERIFY BY WRITING A LETTER TO DISTRICT TRANSPORT OFFICER (DTO) TO VERIFY REGAR DING REGISTRATION NO. OF THE VEHICLES AND ITS OWNERSHIP TO ESTABLISH THE GENUINE NESS OF TRANSACTIONS. THE DTO REPLIED TO AO THAT MOST OF THE VEHICLES WERE REGIST ERED WITH WEST BENGAL AND OTHER STATES AND NO CENTRALIZED SYSTEM FOR INTER-STATE RE GISTRATION OF VEHICLES WERE MAINTAINED IN HIS OFFICE. THE LD. AO FURTHER STATE D THAT THE ASSESSEE HAD ONLY SUBMITTED THE LIST OF TRUCK DRIVERS NAMES, NOS. A ND AMOUNT OF CASH PAYMENT WHICH WERE SUPPORTED BY INTERNAL VOUCHERS. THE LD. CIT(A ) OBSERVED THAT LD. JCIT HAD SUBMITTED THAT SINCE EXPENDITURE OF RS.1,27,54,976/ - HAS BEEN INCURRED IN CASH, BUT THE SAME IS INCIDENTAL TO THE NATURE OF THE BUSINES S OF THE ASSESSEE, A SUITABLE PERCENTAGE OF DISALLOWANCE MAY BE CONFIRMED. THE L D. CIT(A), ACCORDINGLY, RESTRICTED THE DISALLOWANCE TO RS.15 LACS AND ALSO DISALLOWED RS.22,521/- WHICH WAS PAID IN EXCESS OF RS.20,000/- IN VIOLATION OF SECTI ON 194C OF THE ACT. AGGRIEVED, THE REVENUE IS IN APPEAL FOR RELIEF GRANTED BY THE LD. CIT(A) IN THE SUM OF RS.1,12,32,455/- AND ASSESSEE IS IN CROSS OBJECTION FOR UPHOLDING THE ADDITION OF RS.15 LACS ON AD HOC BASIS. 2.4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROU GH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSEE HAD PRODUCE D THE BOOKS OF ACCOUNTS AND INTERNAL VOUCHERS BOTH DURING THE ASSESSMENT AS WEL L AS FIRST APPELLATE PROCEEDING WHICH WERE VERIFIED BY THE AUTHORITIES ON TEST CHEC K BASIS. FURTHER, IT IS SEEN ON PERUSAL OF THE LIST OF THE PARTIES THAT THE ASSESSE E HAD CARRIED OUT TRANSPORTATION WORK FOR REPUTED COMPANIES WHICH, INTER ALIA, INCLUDES L &T LTD. (RS.53.75 LACS), TATA CAMMINS LTD. (RS.34.11 LACS), TATA STEEL LTD. (RS.4 2.86 LACS), USHA MARTIN LTD. (RS.9.27 CR.) AND TATA MOTORS LTD. (RS.12.65 CR.). IT IS NOT IN DISPUTE THAT THE PAYMENTS AMOUNTING TO RS.1.27 CR. WERE MADE TO THE TRUCK OWNERS FOR THE JOURNEY FROM JAMSHEDPUR TO HALDIA AND KOLKATA. THEREFORE, IT CANNOT BE DENIED THAT THE ASSESSEE IN ORDER TO CARRY OUT THE ABOVE TRANSPORTA TION WORK WOULD HAVE ENGAGED THE SERVICES OF THE TRUCK OWNERS AND TRUCK DRIVERS TO W HOM PAYMENTS WERE MADE. 4 ITA NO. 162/RAN/2014, CO NO.08/RAN/ 2016 AY 2009-10 COMMERCIAL CARRIERS PVT. LTD. MAJORITY OF THE PAYMENTS WERE MADE IN RESPECT OF TR ANSPORTATION WORK RELATING TO TATA MOTORS LTD. AND USHA MARTIN LTD. WITH REGARD TO FIXED PAYMENTS MADE IN THE SUM OR RS.19,780/- PER TRIP TO HALDIA AND RS.18,290 /- FROM KOLKATA TO JAMSHEDPUR, WE FIND LOT OF FORCE IN THE ARGUMENTS OF THE LD. AR THAT THEY WERE PAID PURSUANT TO FIXED RATE AGREEMENT BETWEEN THE ASSESSEE AND USHA MARTIN LTD. AND TATA MOTORS LTD. FOR THE SAID PERIOD. WE ALSO FIND THAT THE ASS ESSEE HAD SUBMITTED THE FULL DETAILS OF THE EXPENSES AMOUNTING TO RS.1,27,54,976/- AND C ONSIDERING THE NATURE OF BUSINESS AND THE COMMERCIAL EXPEDIENCY, THE PAYMENT S WERE REQUIRED TO BE MADE IN CASH ONLY. IT IS NOT THE CASE OF THE REVENUE THAT THE SAID PAYMENTS WERE NOT MEANT FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. IN FA CT, THE LD. JCIT IN HIS REPORT DATED 29.11.2013 HAD ALSO CATEGORICALLY STATED THAT THE P AYMENTS MADE WERE INCIDENTAL TO THE BUSINESS OF THE ASSESSEE. UNDER THESE CIRCUMST ANCES, THERE IS NO NEED TO MAKE ANY AD HOC DISALLOWANCE OF RS. 15 LACS AS CONTEMPLA TED BY THE LD. CIT(A) WHICH IN OUR CONSIDERED OPINION HAS GOT NO BASIS IN THE EYES OF LAW. HENCE, WE HAVE NO HESITATION IN DIRECTING THE LD. AO TO DELETE THE SU M OF RS.15 LACS SUSTAINED BY THE LD. CIT(A). WE ALSO FIND NO JUSTIFIABLE REASON TO INTERFERE IN THE ORDER OF THE LD. CIT(A) FOR DELETION OF THE EXPENDITURE TO THE TUNE OF RS.1,12,32,455/-. HENCE, THE GROUND NO.1 RAISED BY THE REVENUE IS DISMISSED AND GROUND NO. 2 OF THE C.O. RAISED BY THE ASSESSEE IS ALLOWED. 3. THE NEXT GROUND TO BE DECIDED IN THE APPEAL OF T HE REVENUE IS AS TO WHETHER THE LD. CIT(A) IS JUSTIFIED IN DELETING THE ADDITIO N MADE TOWARDS CASH DEPOSIT IN THE SUM OF RS.4,25,000/- IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3.1. THE LD. AO DURING THE COURSE OF ASSESSMENT PRO CEEDING OBSERVED THAT BASED ON AIR INFORMATION REGARDING DEPOSIT OF CASH TO THE TUNE OF RS.4,25,000/- IN THE BANK ACCOUNT OF THE ASSESSEE FOR WHICH THE NATURE O F SOURCE OF DEPOSIT COULD NOT BE PROPERLY EXPLAINED IN THE OPINION OF THE AO. THE A SSESSEE ACTUALLY SUBMITTED BEFORE THE LD. AO THAT THE CASH DEPOSIT HAS BEEN MA DE DUE TO SALE OF OLD TYRES, TUBES AND LUBRICANTS WHICH COULD NOT BE SUBSTANTIAT ED WITH ANY SUPPORTING 5 ITA NO. 162/RAN/2014, CO NO.08/RAN/ 2016 AY 2009-10 COMMERCIAL CARRIERS PVT. LTD. DOCUMENTS. IN THE ABSENCE OF ANY MATERIAL, THE LD. AO ADDED THE SAID SUM OF RS.4,25,000/- TO THE TOTAL INCOME OF THE ASSESSEE. 3.2. BEFORE THE LD. CIT(A) THE ASSESSEE SUBMITTED T HAT THE SOURCE OF CASH DEPOSIT RELATED TO RECOVERIES MADE FROM SCRAP, DRUM, SCRAP MOTOR PARTS, BURNT DIESEL AND LUBRICANTS ETC. IT WAS ALSO SUBMITTED THAT THE ASS ESSEE OWNS 207 VEHICLES WHICH GENERATE HUGE SCRAPS AND JUNKS, THE DETAILS OF WHIC H WERE FURNISHED BEFORE THE LD. CIT(A). THE CIT(A) RIGHTLY CALLED FOR REMAND REPOR T FROM THE LD. AO IN THIS REGARD. IN THE REMAND REPORT, THE LD. AO OBSERVED THAT ON PERUSAL OF THE CASH BOOK OF THE ASSESSEE IT WAS FOUND THAT THE STATEMENT OF THE ASSESSEE DIFFERS FROM THE FACTS AND FURTHER STATED THAT THE CASH WAS DEPOSITED FROM THE OPENING BALANCE OF CASH AND WITHDRAWAL FROM HDFC BANK AND THEN IT WAS DEPOSITED IN INDUS IND BANK BY THE ASSESSEE. THE LD. CIT(A) ALSO TABULATED THE CASH WI THDRAWAL MADE FROM HDFC BANK ON VARIOUS DATES AND CASH DEPOSITS MADE ON THE SAME DAY IN INDUS IND BANK VIDE PAGE 34 OF ITS ORDER. THE LD. CIT(A) ACCORDIN GLY, OBSERVED THAT THE SOURCE OF CASH DEPOSIT OF RS.4,25,000/- HAVING DULY EXPLAINED OUT OF THE OPENING BALANCE OF CASH AND CASH WITHDRAWALS MADE BY THE ASSESSEE FRO M ONE OF ITS BANK ACCOUNTS WHICH HAS ALSO BEEN ACCEPTED BY THE AO IN HIS REMAN D REPORT AND ACCORDINGLY, DELETED THE ADDITION. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 3.3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROU GH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE AO HAD ALREADY ACCEP TED THE CONTENTIONS OF THE ASSESSEE WITH REGARD TO THE EXPLANATION FOR SOURCE OF THE CASH DEPOSIT IN HIS REMAND REPORT, HAVING DONE SO, HE OUGHT NOT TO HAVE PREFER RED ANY APPEAL ON THIS GROUND BEFORE US. IN ANY CASE, WE FIND THAT THE LD. CIT(A ) HAD GIVEN A CATEGORICAL FINDING WITH REGARD TO SOURCE OF CASH DEPOSIT IN HIS ORDER. HENCE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT(A) AND ACCORDINGL Y, GROUND NO. 2 RAISED BY THE REVENUE IS DISMISSED. 4. GROUND NO. 3 RAISED BY THE ASSESSEE IN HIS CROSS OBJECTION IS ONLY SUPPORTIVE OF THE ORDER OF LD. CIT(A) AND HENCE, IS DISMISSED BEING INFRUCTUOUS. 6 ITA NO. 162/RAN/2014, CO NO.08/RAN/ 2016 AY 2009-10 COMMERCIAL CARRIERS PVT. LTD. 5. THE NEXT ISSUE TO BE DECIDED IN THE APPEAL OF TH E REVENUE IS AS TO WHETHER THE LD. CIT(A) IS JUSTIFIED IN DELETING THE ADDITION OF RS.3,32,546/- TOWARDS LIAISON AND LEGAL CHARGES U/S. 40(A)(IA) OF THE ACT IN THE FACT S AND CIRCUMSTANCES OF THE CASE. 5.1. THE LD. AO OBSERVED THAT ASSESSEE HAS DEBITED A SUM OF RS.11,32,546/- TOWARDS LIAISON CHARGES AND LEGAL AND PROFESSIONAL CHARGES FOR WHICH THE COMPLIANCE OF TDS PROVISIONS WERE SOUGHT TO BE EXAM INED BY THE AO. THE ASSESSEE GAVE A VERY VAGUE REPLY STATING THAT TRANS ACTIONS INVOLVED HUGE VOLUME OF DOCUMENTS AND CONCERNED EXPENDITURE WERE DULY SUBJE CTED TO AUDIT AND HENCE, THE SAME MAY KINDLY BE ACCEPTED. SINCE NO SPECIFIC RE PLY WAS FORTHCOMING FROM THE ASSESSEE, THE AO SOUGHT TO DISALLOW THE SAME U/S. 4 0(A)(IA) OF THE ACT. 5.2. BEFORE THE LD. CIT(A) THE ASSESSEE SUBMITTED T HAT THE PAYMENT OF RS. 8 LAC TOWARDS LIAISON CHARGES WAS PAID BY THE ASSESSEE ON DIFFERENT DATES AND THE SAME WERE DULY SUBJECTED TO TDS AND A SUM OF RS.91,207/- TOWARDS TDS HAS BEEN DULY REMITTED TO THE ACCOUNT OF THE CENTRAL GOVERNMENT. THE NECESSARY EVIDENCE IN THE FORM OF TDS REMITTANCE CHALLANS WERE ALSO PRODUCED. IN RESPECT OF THE BALANCE SUM OF RS.3,32,546/- TOWARDS LEGAL AND PROFESSIONAL CHA RGES, THE ASSESSEE SUBMITTED THAT THE SAME REPRESENTS PAYMENT MADE TO VARIOUS PARTIES AND EACH PAYMENT DID NOT EXCEED RS.20,000/- THEREBY THE PROVISIONS OF SECTIO N 194J OF THE ACT WOULD NOT COME INTO PLAY. BOTH THESE DETAILS WERE SUBJECTED TO REMAND PROCEEDINGS BY THE LD. CIT(A) AND THE AO ACCEPTED THE CONTENTIONS OF THE A SSESSEE IN HIS REMAND REPORT AND THE LD. CIT(A) BY PLACING RELIANCE ON THE SAME DELETED THE DISALLOWANCE. AGGRIEVED, REVENUE IS IN APPEAL BEFORE US. 5.3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROU GH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE LD. AO HAVING ACCEPT ED THE CONTENTION OF THE ASSESSEE THAT THE SUBJECT MENTIONED PAYMENTS WOULD NOT WARRA NT ANY DISALLOWANCE U/S. 40(A)(IA) OF THE ACT IN HIS REMAND REPORT, HAVING D ONE SO, HE OUGHT NOT TO HAVE PREFERRED ANY APPEAL ON THIS GROUND BEFORE US. HENC E, WE DO NOT FIND ANY INFIRMITY 7 ITA NO. 162/RAN/2014, CO NO.08/RAN/ 2016 AY 2009-10 COMMERCIAL CARRIERS PVT. LTD. IN THE ORDER OF LD. CIT(A) AND ACCORDINGLY, GROUND NO. 3 RAISED BY THE REVENUE IS DISMISSED. 6. GROUND NOS. 1 AND 4 OF THE ASSESSEES C.O IS ONL Y SUPPORTIVE OF THE ORDER OF CIT(A) AND HENCE, ARE DISMISSED BEING INFRUCTUOUS. 7. THE NEXT GROUND RAISED BY THE ASSESSEE IN ITS CO IS WITH REGARD TO SUSTENANCE OF THE ADDITION OF RS.6,65,000/- BY THE LD. CIT(A) TOWARDS ALLEGED DIFFERENCE IN GROSS RECEIPT DECLARED BY THE ASSESSEE. 7.1. THE BRIEF FACTS OF THIS ISSUE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE LD. AO FOUND THAT AS PER FORM NO. 2 6AS THE GROSS RECEIPT WAS RS.28,35,84,885/-, WHEREAS THE ASSESSEE HAD SHOWN O NLY RS.25,93,64,939/- AS GROSS RECEIPT. ACCORDINGLY, THE DIFFERENCE OF RS.2,42,29 ,946/- WAS ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE BY THE AO. THE ASSESSEE FIL ED RECONCILIATION OF THE SAME BEFORE THE LD. CIT(A) AS BELOW: GROSS TURNOVER AS PER OUR BOOKS ADD: GROSS RECEIPT APPEARING IN 26AS OF FEW ORGANIZ ATIONS WITH WHOM WE HAVE NO TRANSACTION DURING FY 2008-09 LESS: TURNOVER RELATED TO US BUT NOT INCLUDED IN 26 AS LESS: OTHER INCOME INCLUDED IN P&L ACCOUNT NOT INCL UDED IN 26AS TURNOVER AS PER 26AS RS.25,93,64,939/- RS.2,75,76,730/- RS.28,69,41,669/- RS.24,70,367/- RS.28,44,71,302/- RS.8,86,417/- RS.28,35,84,885/- THE ASSESSEE ALSO STATED THAT THE FOLLOWING TRANSAC TIONS WERE NOT RELATED TO THE ASSESSEE BUT WHICH WERE REFLECTED IN FORM NO. 26AS IN ITS NAME: PARTICULARS TAN AMOUNT ATO(1) LTD. J.S. LOGISTICS MITHILA CARGO MOVERS RRC INTERNATIONAL FREIGHT SERVICES LTD. SETUSUMANDRAM CORPORATION LTD., TATA STEEL LTD. KARAN SHER SINGH CALA00156C MUMJ11306B RCHM02172C MUMR6458B CHES26376A CALT02940A JBPK01301G TOTAL : 1,45,000.00 1,35,000.00 25,000.00 1,60,000.00 16,75,000.00 2,52,36,730.00 2,00,000.00 2,75,76,730/- 8 ITA NO. 162/RAN/2014, CO NO.08/RAN/ 2016 AY 2009-10 COMMERCIAL CARRIERS PVT. LTD. OUT OF THESE PARTIES, THE AO ACCEPTED THE CONTENTIO N OF THE ASSESSEE IN RESPECT OF FIGURES REFLECTED IN THE NAME OF SETUSAMUDRAM CORPO RATION LTD. (RS.16,75,000/-) AND TATA STEEL LTD. (RS.2,52,36,730/-). THE LD. AO SOUGHT TO MAKE VERIFICATION FROM THE OTHER PARTIES IN THE REMAND PROCEEDINGS TO EXAMINE THE CLAIM OF THE ASSESSEE THAT THEY ARE NOT RELATED TO THE ASSESSEE. THE LETTER SENT TO SHRI KARAN SHER SINGH (RS. 2 LACS) RETURNED BACK UNSERVED, M/S. RRC INTERNATIONAL FREIGHT SERVICES LTD. CONFIRMED THAT IT HAD MADE PAYMENT OF RS.1,60, 000/- TO THE ASSESSEE. M/S. MITHILA CARGO MOVERS CONFIRMED THAT THEY HAD PAID R S.25,000/- TO THE ASSESSEE. THE LD. AO ALSO OBSERVED THAT A REPLY FROM ATO(I) L TD. WAS RECEIVED BUT IT DID NOT COMMENT ANYTHING ABOUT THE TRANSACTION WITH THE ASS ESSEE. ACCORDINGLY, ANOTHER LETTER WAS SENT BY THE AO TO ATO (I) LTD. FOR WHICH NO REPLY WAS RECEIVED. BASED ON THESE FACTS, THE LD. CIT(A) SUSTAINED THE DISALL OWANCE TO RS.6,65,000/- IN RESPECT OF THE FOLLOWING PARTIES: (I) ATO (I) LTD. RS.1,45,000/- (II) J.S. LOGISTICS RS.1,35,000/- (III) MITHILA CARGO MOVERS RS. 25,000/- (IV) RRC INTERNATIONAL FREIGHT SERVICES LTD. RS.1, 60,000/- (V) KARAN SHER SINGH RS.2,00,000/- TOTAL : RS.6,65,000/- AGGRIEVED, ASSESSEE IS IN CROSS OBJECTION BEFORE US . 7.2. THE LD. AR ARGUED THAT THERE IS ABSOLUTELY NO RELATION BETWEEN THE ASSESSEE AND THE AFORESAID PARTIES AND THERE IS NO REASON FO R ASSESSEE NOT TO DISCLOSE THIS SUBJECT MENTIONED RECEIPT IN ITS GROSS RECEIPT TAKI NG INTO ACCOUNT THE HUGE VOLUME OF GROSS RECEIPT ALREADY DISCLOSED BY THE ASSESSEE TO THE TUNE OF RS. 25 CR APPROXIMATELY. IN FACT, AFTER MAKING ENQUIRIES SU O MOTO BY THE ASSESSEE, MR. KARAN SHER SINGH HAS BEEN FOUND TO BE A PERSON ENGAGED IN LEGAL PROFESSION IN JABALPUR AND HAD SHOWN THIS PAYMENT OF RS.2 LACS AS RENT PUR PORTED TO HAVE BEEN MADE TO THE ASSESSEE. IN THIS REGARD, THE LD. AR ARGUED THAT N O PROPERTY WAS OWNED BY THE ASSESSEE IN JABALPUR WARRANTING ANY RECEIPT OF RENT AL INCOME. HENCE, THIS IS A CLEAR CASE OF MR. KARAN SHER SINGH ERRONEOUSLY USING PAN OF THE ASSESSEE BY MISTAKE 9 ITA NO. 162/RAN/2014, CO NO.08/RAN/ 2016 AY 2009-10 COMMERCIAL CARRIERS PVT. LTD. WHICH HAD ADMITTEDLY FOUND PLACE IN THE FORM NO. 26 AS OF THE ASSESSEE WARRANTING THE ADDITION. THE LD. AR, HOWEVER, FAIRLY CONCEDED THAT THOUGH M/S. RRC INTERNATIONAL FREIGHT SERVICES LTD. AND MITHILA CAR GO MOVERS TOTALING TO RS.1,85,000/- WERE NOT RELATED TO THE ASSESSEE BUT STILL SINCE THESE PARTIES HAD CONFIRMED BEFORE THE AO THAT THEY HAD MADE PAYMENTS TO THE ASSESSEE, HE ARGUED THAT LET THE SAME BE CONFIRMED BY THE BENCH. HE, H OWEVER, PRAYED IN RESPECT OF ALLEGED RECEIPT FROM ATO(I) LTD. IN THE SUM OF RS.1 ,45,000/- AND J.S. LOGISTICS IN THE SUM OF RS.1,35,000/- WHO WERE ALSO NOT RELATED TO THE ASSESSEE AND HAD ALSO NOT GIVEN ANY CONFIRMATION TO THE AO AND HENCE, THE SAM E WAS PRAYED TO BE DELETED FROM THE GROSS RECEIPT OF THE ASSESSEE. IN RESPONS E TO THIS, THE LD. DR VEHEMENTLY SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 7.3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROU GH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT IT IS NOT IN DISPUTE THA T ONLY TWO PARTIES CONFIRMED NAMELY, RRC INTERNATIONAL FREIGHT SERVICES LTD. AND MITHILA CARGO MOVERS, HAVING MADE PAYMENT TO THE ASSESSEE BEFORE THE AO AT THE REMAND PROCEEDINGS AND THE OTHER PARTIES DID NOT CONFIRM AND IN THIS REGARD MERELY B ECAUSE CERTAIN NAMES QUOTING THE PAN OF THE ASSESSEE FOUND PLACED IN FORM NO. 26AS, ADDITION TOWARDS CONCEALED RECEIPT CANNOT BE DIRECTLY MADE WITHOUT BRINGING MA TERIAL EVIDENCE IN THAT REGARD AS TO NATURE OF RECEIPT AND THE SERVICES RENDERED BY T HE ASSESSEE FOR RECEIVING THAT RECEIPT. THIS FACT IS ALSO PROVED BEYOND DOUBT IN RESPECT OF AMOUNTS ALLEGED TO HAVE BEEN RECEIVED FROM KARAN SHER SINGH IN THE SUM OF R S. 2 LACS WHICH FROM FORM 26AS OF KARAN SHER SINGH WAS FOUND TO HAVE BEEN MAD E TOWARDS RENTAL RECEIPT. MR. KARAN SHER SINGH IS A PERSON ENGAGED IN LEGAL P ROFESSION IN JABALPUR AS PER THE STATEMENT MADE BY THE LD. AR. IT WAS ALSO SUBMITTE D BY THE LD. AR THAT THE ASSESSEE DOES NOT OWN ANY PROPERTY IN JABALPUR WARR ANTING ANY RECEIPT OF RENTAL INCOME FROM THE SAME. IN ANY CASE, NO ADDITION WAS MADE TOWARDS THIS RECEIPT OF RS. 2 LACS UNDER THE HEAD INCOME FROM HOUSE PROP ERTY BY THE AO. UNDER THESE CIRCUMSTANCES, WE HOLD THAT THE ADDITION OF RS.1,85 ,000/- IN RESPECT OF TWO PARTIES WHO HAD CONFIRMED (RS.1,60,000/- + RS.25,000/-) NEE DS TO BE SUSTAINED AND THE 10 ITA NO. 162/RAN/2014, CO NO.08/RAN/ 2016 AY 2009-10 COMMERCIAL CARRIERS PVT. LTD. BALANCE SUM OF RS.4,80,000/- DESERVES TO BE DELETED . WE ORDER ACCORDINGLY. GROUND NO. 5 OF THE ASSESSEES CO IS PARTLY ALLOWED . 8. THE NEXT GROUND RAISED BY THE ASSESSEE IN ITS CO IS WITH REGARD TO DISALLOWANCE OF RS.5 LACS TOWARDS LOADING AND UNLOA DING EXPENSES, WAGES PAID TO DRIVERS AND KHALASIS, FOOD TO DRIVERS AND KHALASIS, REPAIRS AND MAINTENANCE, FUEL AND LUBRICANTS, TYRES AND TUBES, STORES AND SPARE PARTS ETC. 8.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE LD. AO OBSERVED THAT THE ASSESSEE HAD INCURRED THE FOLLOWING EXPENSES: I. II. III. IV. V. VI. VII. VIII. IX. X. XI . XII. XIII. LOADING & UNLOADING EXPENSES WAGES PAID TO DRIVER & KHALASIS REPAIRS & MAINTENANCE RENT RATES & PERMITS FOODING TO DRIVERS & KHALASIS ESCORTING EXPENSES LATE DELIVERY CHARGES DEMERALGELY CHARGES TRIP EXPENSES TYRES & TUBE EXPENSES STORES & SPARES PARTS FUEL LUBRICANT MISC. EXPENSES RS.68,39,421/- RS.42,12,406/- RS.2,57,49,151/- RS.95,12,724/- RS.32,24,908/- RS.2,33,944/- RS.72,291/- RS.17,530/- RS.6,51,298/- RS.1,46,46,282/- RS.19,49,761/- RS.7,57,91,291/- RS.12,24,799/- RS.14,41,25,806/- THE AO FELT THAT THESE EXPENSES WERE INCURRED ON TH E HIGHER SIDE WHICH COULD NOT BE SUBSTANTIATED WITH EVIDENCE AND ACCORDINGLY, DIS ALLOWED 0.5% OF THE SAME AND ARRIVED AT THE DISALLOWANCE FIGURE OF RS.7,19,756/- . THE ASSESSEE BEFORE THE LD. CIT(A) TRIED TO EXPLAIN THE LIST OF GENERAL EXPENSE S CLAIMED BY THE ASSESSEE BY PROVIDING A COMPARATIVE CHART FROM AY 2006-07 ONWAR DS AND TRIED TO JUSTIFY THE CLAIM OF THE EXPENDITURE VIS-A-VIS THE TURNOVER FIG URES OF EACH YEAR. THE LD. CIT(A) GOING BY THE SAID COMPARATIVE CHART FOUND TH AT THE DISALLOWANCE OF RS. 5 LACS WOULD MEET THE ENDS OF JUSTICE AND GRANTED REL IEF FOR RS.2,19,576/-. AGGRIEVED, ASSESSEE IS IN CO BEFORE US FOR SUSTENANCE OF THE A DDITION OF RS. 5 LACS. 8.2. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THRO UGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSEE HAD REGULAR LY MAINTAINED ITS BOOKS OF ACCOUNT 11 ITA NO. 162/RAN/2014, CO NO.08/RAN/ 2016 AY 2009-10 COMMERCIAL CARRIERS PVT. LTD. AND THE SAID BOOKS OF ACCOUNT WERE DULY SUBJECTED T O AUDIT. WE FIND WITHOUT REJECTING THE BOOKS OF ACCOUNT NO ADDITION COULD BE MADE BASED ON ESTIMATE BASIS. HENCE, WE DO NOT FIND ANY LOGIC FOR THE DISALLOWANC E MADE BY THE AO AND FURTHER REDUCED BY THE LD. CIT(A). WE ALSO FIND SIMILAR DI SALLOWANCE MADE BY THE REVENUE IN ASSESSEES OWN CASE FOR AY 2007-08 WHICH WAS DEL ETED BY THIS TRIBUNAL IN ITA NO. 35/RAN/2012 DATED 09.10.2012. RESPECTFULLY FOL LOWING THE SAME AND IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ALLOW GROUN D NO. 6 OF THE CROSS OBJECTION OF THE ASSESSEE BY DELETING THE SUM OF RS.5 LACS. 9. THE NEXT GROUND RAISED BY THE ASSESSEE IN ITS CO WITH REGARD TO CHARGEABILITY OF INTEREST U/S. 234B OF THE ACT ON THE RETURNED IN COME. WE FIND THAT THIS ISSUE IS COVERED BY THE DECISION OF THE HONBLE JHARKHAND HI GH COURT IN TA NO. 38 OF 2010 DATED 25.07.2012 IN THE CASE OF AJAY PRAKASH VERMA VS. ITO, WHEREIN THEIR LORDSHIPS HAD HELD AS BELOW: 23.LEARNED COUNSEL FOR THE APPELLANT SUBMITTED THA T IT HAS BEEN ORDERED BY THE AO THAT INTEREST BE CHARGED AS PER RULE. INTEREST CAN BE LEVIED UNDER SECTIONS 234A AND 234B OF THE ACT. IT IS SUBMITTED THAT IN VIEW OF T HE JUDGMENT OF FULL BENCH OF RANCHI BENCH OF PATNA HIGH COURT DELIVERED IN THE CASE OF SMT. TEJ KUMARI VRS. COMMISSIONER OF INCOME-TAX REPORTED IN (2001) 114 T AXMAN 404 (PAT) (FB), THE INTEREST CANNOT BE LEVIED OVER THE ASSESSED INCOME AND IT CAN BE LEVIED ONLY ON THE INCOME DECLARED IN THE RETURN. THE REVENUE PREFERR ED SLP BEFORE HONBLE SUPREME COURT AGAINST THE SAID JUDGMENT OF THE FULL BENCH O F PATNA HIGH COURT, WHICH WAS DISMISSED BY THE HONBLE SUPREME COURT ON MERITS VI DE ORDER DATED 01.08.2000 BY SAYING THAT THERE IS NO MERIT IN THE APPEAL. 24. LEARNED COUNSEL FOR THE REVENUE COULD NOT DISPU TE THIS LEGAL POSITION. THEREFORE, SO FAR AS QUESTION OF LAW INVOLVED IN THIS APPEAL T HAT WHETHER THE INTEREST COULD HAVE BEEN LEVIED AGAINST THE ASSESSED INCOME OF THE ASSE SSEE UNDER SECTIONS 234A AND 234B IS CONCERNED, IN VIEW OF THE FULL BENCH JUDGME NT OF RANCHI BENCH OF PATNA HIGH COURT DELIVERED IN THE CASE OF SMT. TEJ KUMARI , THE REVENUE CAN LEVY THE INTEREST ONLY ON THE TOTAL INCOME DECLARED IN THE R ETURNS AND NOT ON THE INCOME ASSESSED AND DETERMINED BY THE AO TO THAT EXTENT. THE ORDERS PASSED BY THE AUTHORITIES BELOW ARE ACCORDINGLY MODIFIED AND INTE REST SHALL BE CHARGEABLE IN THE LIGHT OF THE FULL BENCH JUDGMENT, REFERRED ABOVE. 9.1. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FA CTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ISSUE IS SQUARELY COVERE D BY THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT, SUPRA AND RESPECTFULLY F OLLOWING THE SAME, WE DIRECT THE AO TO CHARGE INTEREST U/S. 234B OF THE ACT ONLY ON THE RETURNED INCOME. 12 ITA NO. 162/RAN/2014, CO NO.08/RAN/ 2016 AY 2009-10 COMMERCIAL CARRIERS PVT. LTD. ACCORDINGLY, THE GROUND RAISED BY THE ASSESSEE IN I TS CO IS ALLOWED AS INDICATED ABOVE. 10. THE OTHER CONNECTED ISSUES RAISED BY THE ASSESS EE IN ITS CO IN GROUND NO. 7 WAS WITH REGARD TO CHARGEABILITY OF INTEREST U/S. 2 34D OF THE ACT WHICH IS ONLY CONSEQUENTIAL IN NATURE AND DOES NOT REQUIRE ANY AD JUDICATION. 11. THE LAST GROUND RAISED BY THE ASSESSEE IN ITS C O IS ONLY GENERAL IN NATURE AND DOES NOT REQUIRE ANY ADJUDICATION. 12. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED AND THE CO OF ASSESSEE IS PARTLY ALLOWED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 12.09.2016 SD/- SD/- (N. V. VASUDEVAN) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTAN T MEMBER DATED :12TH SEPTEMBER, 2016 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT 2 RESPONDENT 3 . THE CIT(A), 4. 5. CIT DR, ITAT, RANCHI / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .