ACIT, Circle - 3, Asansol, Asansol V. M/s. Sanjay Transport Agency, Burdwan

ITA 1627/KOL/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100075 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 11 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2015
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 28-11-2011
• Court: TRIBUNAL
• Department Lawyers: DEBASISH ROY
• Assessee Lawyers: SUNIL KUMAR SARANA
• Keywords: Assessment record
• Section: 143(3); 133(6); 194C; 68; 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA [BEFORE SHRI MAHAVIR SINGH, JM & SHRI WASEEM AHMED , AM] I.T.A NO. 1627/KOL/2011 ASSESSMENT YEAR: 2008-09 ASSISTANT COMMISSIONER OF INCOME-TAX, VS. M/S. SA NJAY TRANSPORT AGENCY CIRCLE-3, ASANSOL (PAN: AAVFS6659N) ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 10.11.2015 DATE OF PRONOUNCEMENT: 20.11.2015 FOR THE APPELLANT: SHRI DEBASISH ROY, JCIT FOR THE RESPONDENT: SHRI SUNIL KUMAR SARANA, FCA ORDER PER SHRI MAHAVIR SINGH, JM: THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF C IT(A), ASANSOL KOLKATA IN APPEAL NO.96/CIT(A)/ASL/R-3/ASL/2010-11 DATED 20.09 .2011. ASSESSMENT WAS FRAMED BY JCIT, RANGE-3, ASANSOL U/S. 143(3) OF THE INCOME-TA X ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR AY 2008-09 VIDE ITS ORDER DATED 04.1 0.2010. 2. THE FIRST ISSUE IN THIS APPEAL OF REVENUE IS AGA INST THE ORDER OF CIT(A) DELETING THE ADDITION MADE BY AO ON ACCOUNT OF TRADE CREDITORS. FOR THIS, REVENUE HAS RAISED FOLLOWING GROUND NO.1: 1. THAT THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION ON ACCOUNT OF TRADE CREDITORS OF RS.1,54,41,614/- IGNORING THE MATERIAL FACTS AND CI RCUMSTANTIAL EVIDENCE BROUGHT ON THE ASSESSMENT RECORDS OF THE ASSESSEE. 3. BRIEFLY STATED FACTS ARE THAT THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS MADE ADDITION ON ACCOUNT OF SUNDRY CREDITORS FROM W HOM THE ASSESSEE PURCHASED GOODS. THE ASSESSEE HAS PURCHASED HEAVY EARTH MOVING MACHI NERIES FROM THE FOLLOWING PARTIES: SL. NO. N A M E ADDRESS PROVIDED BY THE ASSESSEE OPENING BALANCE ADDITION SUBTRACTION CLOSING BALANCE 1. D. S. ENTERPRISES 2, CANNING ST., KOL- 700001 0 29.08.900 0 29.08.900 2. DURGA TRADING CORPORATION 309, B. B. GANGULY ST., 1 ST FLOOR, KOL-700012 0 14,56,000 0 14,56,000 3. GEM TRADERS P-41, PRINCEP ST., KOL- 700072 0 32,68,754 0 32,68,754 4. KALIMATA TRADING COMPLEX SALAP, KALITALA, HOWRAH- 711409 0 32,91,600 0 32,91,600 5. RADHIKA STEEL SYNDICATE KONA, BENARA ROAD, HOWRAH-711114 0 22,54,360 0 22,54,360 6. SANGEET RAHINI CORPORATION 62, BENTINCK ST., KOLKATA-69 0 9,10,000 0 9,10,000 7. SEEMA ENTERPRISE 62, BENTINCK ST., KOLKATA-700069. 0 13,52,000 0 13,52,000 THE AO REQUIRED THE ASSESSEE TO FILE THE DETAILS OF PURCHASES AND ALSO ESTABLISHED THE IDENTITY OF THE CREDITORS AND GENUINENESS OF TRANSA CTION AS THE GOODS WERE PURCHASED ON 2 ITA NO.1627/K/2011 SANJAY TRANSPORT AGENCY AY 2008-09 CREDITS AND PAYMENTS WERE MADE BY ACCOUNT PAYEE CHE QUE. THE ASSESSEE BEFORE THE AO SUBMITTED COMPLETE DETAILS LIKE PURCHASE BILL, PAYM ENT BY CHEQUE AND PARTYS CONFIRMATION AND BOOKS OF ACCOUNT. THE AO ISSUED N OTICE U/S. 133(6) OF THE ACT AND THESE PARTIES REPLIED AND CONFIRMED THE TRANSACTION S WITH THE ASSESSEE BUT ACCORDING TO AO THESE PARTIES WERE UNABLE TO PROVE THE CREDITWORTHI NESS AND ACCORDINGLY, HE MADE THE ADDITION OF THESE SUNDRY CREDITORS U/S. 68 OF THE A CT. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO DELETED THE ADDITION. AGGRIEVED , REVENUE IS IN SECOND APPEAL BEFORE TRIBUNAL. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT, ADMITTEDLY, THESE ARE TRADE CR EDITORS AND NOT UNSECURED LOANS. THE ASSESSEE HAS FILED COMPLETE DETAILS INCLUDING PURCH ASE BILLS, PAYMENT MADE BY CHEQUES, AND CONFIRMATION ALONG WITH THE NAMES AND ADDRESSES AND THEIR ASSESSMENT DETAILS TO THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. AL L THE PARTIES HAVE CONFIRMED THESE PURCHASE TRANSACTIONS BUT THE AO WANTED THEIR CREDI TWORTHINESS. THESE ARE SIMPLY TRADE CREDITORS AND ALL OF THEM SUPPLIED MACHINERY TO THE ASSESSEE. SUPPLY OF MACHINERY IS NOT IN DOUBT. THESE ARE NOT UNSECURED LOANS. ONCE THIS IS THE POSITION, THE AO CANNOT INVOKE THE PROVISIONS OF SECTION 68 OF THE ACT. ALL THE P ARTIES HAVE CONFIRMED HAVING MADE SALES TO ASSESSEE IN RESPONSE TO NOTICE U/S. 133(6) OF TH E ACT. IN THE CASE OF TRADE CREDITORS, AT THE BEST, FIRST OF ALL, THE AO HAS TO DOUBT THE PUR CHASES AND SALES AND WITHOUT GOING INTO THESE FACTS, THE AO APPLIED THE PROVISIONS OF SECTI ON 68 OF THE ACT IN THE ABSENCE OF CREDITWORTHINESS OF THESE PARTIES AND MADE ADDITION . WE FIND NO REASON TO SUSTAIN THE SAME, AS THE VERY BASIS IS NOT DOUBTED BY THE AO, A ND ASSESSEE HAS DISCHARGED ITS ONUS BY FILING ALL THE DETAILS BEFORE THE AO. ACCORDINGLY, WE CONFIRM THE ORDER OF CIT(A) AND THIS ISSUE OF REVENUES APPEAL IS DISMISSED. 5. THE NEXT ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST THE ORDER OF CIT(A) DELETING THE ADDITION OF UNSECURED LOANS OF RS.7.5 LACS. FOR TH IS, REVENUE HAS RAISED FOLLOWING GROUND NO. 2: 2. THAT THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION UNDER THE HEAD UNSECURED LOAN CREDITOR OF RS.7,50,000/- IGNORING THE MATERIAL FAC TS AND CIRCUMSTANTIAL EVIDENCE BROUGHT ON THE ASSESSMENT RECORDS OF THE ASSESSEE. 6. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE HA S TAKEN UNSECURED LOANS FROM THE FOLLOWING PERSONS: 3 ITA NO.1627/K/2011 SANJAY TRANSPORT AGENCY AY 2008-09 SL. NO. N A M E OPENING BALANCE ADDITION INTEREST TDS CLOSI NG BALANCE 1. BINA CHAUDHURY 0 400,000 395 0 400,395/- 2. BRIJMOHAN TIBREWAL 0 350,000 394 0 350,345/- THE AO REQUIRED THE ASSESSEE TO PROVIDE THE NAMES, ADDRESS ALONG WITH EVIDENCE TO PROVE THE CREDITWORTHINESS OF THE ABOVE UNSECURED LOANS A ND BOTH THE CREDITORS HAVE CONFIRMED GIVING ABOVE LOANS TO THE ASSESSEE BUT ASSESSEE FAI LED TO PRODUCE THE EVIDENCE IN RESPECT OF CREDITWORTHINESS OF THESE PARTIES AND IN THE ABS ENCE OF THE SAME, THE AO ADDED THESE UNSECURED LOANS OF RS.7.5 LACS TO THE RETURNED INCO ME OF THE ASSESSEE. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO DELETE D THE ADDITION BY RELYING ON THE DECISIONS OF HONBLE GUJARAT HIGH COURT IN THE CASE OF DCIT V ROHINI BUILDERS (2002) 256 ITR 360 (GUJ). 7. WE FIND FROM THE ABOVE FACTS THAT BOTH THE CREDI TORS HAVE CONFIRMED THE TRANSACTION AND ALSO FILED DETAILS OF THEIR ASSESSMENT PARTICUL ARS AND THESE CREDITS ARE GIVEN OUT OF THEIR BANK ACCOUNT BUT THE AO DID NOT CARRY OUT ANY EXERC ISE WHATSOEVER TO VERIFY THESE UNSECURED LOANS AS IS CLEARLY EVIDENCED FROM THE AS SESSMENT ORDER. EVEN CIT(A)S FINDING IS THAT AO HAS NOT CONDUCTED ANY FURTHER EN QUIRY DESPITE THE FACT THAT ASSESSEE HAS DISCHARGED ITS ONUS BY FILLING THE DETAILS. ONCE T HIS IS THE POSITION, WE HAVE NO HESITATION IN CONFIRMING THE ORDER OF CIT(A) AND THIS ISSUE O F REVENUES APPEAL IS DISMISSED. 8. THE NEXT ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST THE ORDER OF CIT(A) DELETING THE ADDITION MADE BY AO ON ACCOUNT OF PURCHASE OF SPAR E PARTS. FOR THIS, REVENUE HAS RAISED FOLLOWING GROUND NO.3: 3. THAT THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION ON ACCOUNT OF PURCHASE OF SPARE PARTS OF RS.86,41,727/- IGNORING THE MATERIAL FACTS AND CIRCUMSTANTIAL EVIDENCE BROUGHT ON THE ASSESSMENT RECORDS OF THE ASSESSEE. 9. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSEE CLAIMED TO HAVE MA DE PURCHASE FROM FOLLOWING THREE PARTIES: SL. NO. NAME OF THE PERSON AMOUNT OF TRANSACTION ENTERED DURING THE YEAR (RS.) MISC. 1. VISHAL ENTERPRISES 36,62,361 NO EVIDENCE OF CRE DITWORTHINESS /THIRD PARTY EVIDENCE IS FILED. NOT EVEN CONFIRMATION IS FILED BY THE PARTY ALTHOUGH IT WAS MENTIONED IN THE LETTER THAT THE CONFIRMATION IS ENCLOSED. 2. NANDI ISPAT CORPORATION 36,64,024 NO EVIDENCE OF CREDITWORTHINESS /THIRD PARTY EVIDENCE IS FILED. 4 ITA NO.1627/K/2011 SANJAY TRANSPORT AGENCY AY 2008-09 3. GOODWILL AGENCIES 13,15,322 NO EVIDENCE OF CREDI TWORTHINESS / THIRD PARTY EVIDENCE IS FILED. THE AO REQUIRED THE ASSESSEE TO EXPLAIN THE PURCHAS E MADE WITH EVIDENCE. ACCORDING TO AO, NO EVIDENCE HAS BEEN FILED RECORDING THE VERACI TY OF THE TRANSACTIONS AND ACCORDINGLY, HE ADDED THE SAME. THE CIT(A) DELETED THE ADDITION BY OBSERVING AS UNDER: PERUSAL OF THE ASSESSMENT ORDER REVEALS THAT THE A.O. HAS DISCOUNTED EVIDENCE THAT THESE PARTIES ARE ASSESSED TO SALES TAX AND THE PAYMENTS TO THEM, DURING THE YEAR HAVE BEEN MADE BY ACCOUNT PAYEE CHEQUES. IN HIS VIEW, THESE ARE CI RCUMSTANTIAL EVIDENCE. BUT, IN THAT EVENT, IT APPEARS THAT THE APPELLANT HAS INDEED PROVIDED S UCH EVIDENCE. EVIDENCE, WHETHER PRIMARY OR CIRCUMSTANTIAL, CANNOT BE BRUSHED ASIDE SUMMARIL Y. NO ENQUIRY IS ON RECORD, AS PER THE ASSESSMENT ORDER, WHEREIN THE A.O. COULD HAVE BEEN SAID TO HAVE NEGATED EVEN THIS CIRCUMSTANTIAL EVIDENCE. AS PER THE A.O, ONLY PRIMA RY EVIDENCE IN THE NATURE OF RETURN OF INCOME/ BALANCE SHEET/P&L ACCOUNT IS ACCEPTABLE AS EVIDENCE OF CREDITWORTHINESS AND NONE OF THESE HAVE BEEN FILED BY THE APPELLANT IN RESPEC T OF THESE PARTIES. THE A.O. STATES THAT HIS VIEW IS BASED ON THE PRONOUNCEMENTS OF VARIOUS COUR TS INCLUDING THE HON'BLE SUPREME COURT. IF THE A.O. STATES THAT HIS STAND, THAT, EVE N WHERE CONFIRMATIONS OF PURCHASE TRANSACTIONS ARE AVAILABLE ON RECORD, A BUYER HAS T O, SUO MOTO, PRODUCE IT RETURNS/BALANCE SHEETS P&L ACCOUNTS OF THE SELLER AS PROOF OF SUCH SELLERS' CREDITWORTHINESS, IS BASED ON JUDICIAL DECISIONS THEN CITATIONS OF SUCH JUDICIAL DECISIONS BECOME NECESSARY. HOWEVER, NO SUCH CITATION HAS BEEN GIVEN. IN THIS CASE, IN MY O PINION, IF THE A.O. FELT THAT PRIMARY EVIDENCE OF THE CREDITWORTHINESS WAS LACKING, I DO NOT SEE WHAT PREVENTED HIM FROM RAISING FURTHER QUERIES. THE ADDRESSES AND THE PA NOS. OF T HESE PARTIES WERE AVAILABLE WITH HIM. YET, FOR REASONS BEST KNOWN TO HIM, HE IS NOT SEEN TO RA ISE ANY FURTHER QUERIES WITH THESE PARTIES. HE HAS MENTIONED IN THE ORDER THAT PURCHASE BILLS/M ODE OF TRANSPORTATION OF THESE PURCHASES HAVE NOT BEEN PRODUCED. HOWEVER, THE APPELLANT CLAI MS THAT NECESSARY DETAILS INCLUDING BILLS, VAT & PAN HAD BEEN FILED IN THE COURSE OF AS SESSMENT PROCEEDINGS. IN FACT, IN THE ULTIMATE ANALYSIS THE A.O. IS NOT SEEN TO DOUBT THE IDENTITIES OF THESE PARTIES. THE DISALLOWANCES ARE SEEN TO HAVE BEEN MADE FOR LA CK OF PROOF OF CREDITWORTHINESS OF THE SELLERS. THE A.O. HAS MENTIONED THAT ONE OF THE PAR TIES, M/S VISHAL ENTERPRISES DID NOT NAME ITS OWN SUPPLIERS SO AS TO VERIFY THE VERACITY OF I TS REPLIES. HOWEVER, IN THAT CASE, I DO NOT SEE WHY THE A.O. DID NOT RAISE FURTHER QUERIES. AS ADMI TTEDLY, THE ASSESSMENT DETAILS OF THESE PARTIES WERE AVAILABLE WITH HIM HE COULD HAVE MADE INTERNAL ENQUIRIES ALSO. NONE OF THIS APPEARS TO HAVE BEEN DONE. IN MY OPINION, ONCE EVID ENCE IS PRODUCED BEFORE THE A.O. HE HAS TO ACT UPON IT AND PROVE THROUGH ENQUIRIES THAT FAC TS ARE CONTRARY TO SUCH EVIDENCE. WITHOUT DOING SO, HE CANNOT BRUSH THEM ASIDE. IN THIS CASE, EVEN THE A.O. ADMITS THAT CIRCUMSTANTIAL EVIDENCE HAS BEEN PROVIDED. UNDER THE CIRCUMSTANCES , IN MY OPINION, THE APPELLANT HAS DISCHARGED ITS PRIMARY ONUS. IF THE A.O. DOUBTED TH E CREDITWORTHINESS OF THE PARTIES, HE SHOULD HAVE MADE HIS OWN ENQUIRIES REGARDING THEM. WITHOUT DOING SO, IN MY VIEW, HE CANNOT DOUBT THEIR CREDITWORTHINESS AND DISALLOW TH E APPELLANT'S CLAIM OF PURCHASES. THE DISALLOWANCES ARE DIRECTED TO BE DELETED. THIS GROU ND OF APPEAL IS ALLOWED. AGGRIEVED, NOW REVENUE IS IN SECOND APPEAL BEFORE T RIBUNAL. 10. WE FIND FROM THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE THAT THE ASSESSEE HAS FILED CONFIRMATION FROM THE PARTIES FROM WHOM PURCH ASES WERE MADE AND ALSO DETAILS OF TRANSACTION AS ARE AVAILABLE ON RECORD AND EVEN NOW BEFORE US I.E. PURCHASE BILLS, PAYMENT BY CHEQUE AND THESE PARTYS I. T DETAILS. DESPITE THE FACT THAT THESE DETAILS ARE AVAILABLE BEFORE THE AO, THE AO HAS NOT CARRIED OUT ANY FURTH ER ENQUIRY ON THE BASIS OF THESE EVIDENCE AND STRAIGHTWAY MADE ADDITION ON UNVERIFIA BLE PURCHASES. FROM THE ORDER OF 5 ITA NO.1627/K/2011 SANJAY TRANSPORT AGENCY AY 2008-09 CIT(A), WE FIND THAT COMPLETE DETAILS WERE AVAILABL E BEFORE HIM AND ON THE BASIS OF THE SAME HE HAS ALLOWED THE CLAIM OF THE ASSESSEE. EVE N THE SALES ARISING OUT OF THE SAME PURCHASES HAVE NOT BEEN DOUBTED BY THE AO. HERE IN THE PRESENT CASE ONLY EXCEPTION IS M/S. VISHAL ENTERPRISES WHEREIN IT HAS NOT VERIFIED THE VERACITY OF THE TRANSACTION. HENCE, QUA THIS ONLY, WE SET ASIDE THE MATTER TO THE FILE OF THE AO SO THAT ASSESSEE CAN PROVE THE VERACITY OF THE TRANSACTION AND FOR THE BALANCE PUR CHASES, WE CONFIRM THE ORDER OF CIT(A) AND THIS ISSUE OF REVENUES APPEAL IS PARTLY ALLOWE D. 11. THE NEXT ISSUE IN THIS APPEAL OF REVENUE IS AGA INST THE ORDER OF CIT(A) DELETING THE ADDITION MADE BY AO ON BEHALF OF DISPROPORTIONATE P AYMENT OF EXPENSES MADE TO PERSONS SPECIFIED U/S. 40A(2)(B) OF THE ACT. FOR THIS, REV ENUE HAS RAISED FOLLOWING GROUND NO.4: 4. THAT THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION ON ACCOUNT OF U/S. 40A(2)(B) OF RS.29,50,000/- IGNORING THE MATERIAL FACTS AND CIRC UMSTANTIAL EVIDENCE BROUGHT ON THE ASSESSMENT RECORDS OF THE ASSESSEE. 12. BRIEFLY STATED FACTS ARE THAT THE AO NOTICED FR OM AUDIT REPORT THAT THE EXPENDITURE OF RS.2,29,72,459/- WERE PAID TO RELATED PERSONS SP ECIFIED U/S. 40A(2)(B) OF THE ACT AND ACCORDING TO HIM TO BLOCK THE POSSIBLE LEAKAGE IN T HE REVENUE, HE DISALLOWED ON AD-HOC BASIS AT RS.29.50 LACS AS UNDER: TO PLUG THE POSSIBLE LEAKAGE IN THE REVENUE ON THE ACCOUNT OF THE ABOVE, THE UNDERSIGNED THINKS IT FIT TO DISALLOW AS UNDER: POINT DESCRIPTION OF EXPENDITURES DISALLOWANCE (RS. ) 4A A) 4A B) 4A C) 4A C) RELATING TO COAL RAISING AT SIKNI RELATING TO SAND TRANSPORTATION RELATING TO ROAD CONSTRUCTION AT BARHAWA IN P/L ACCOUNT RS.10,00,000/- RS. 4,00,000/- RS.13,00,000/- RS. 2,50,000/- AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO DELETED THE ADDITION. AGGRIEVED, NOW REVENUE IS IN APPEAL BEFORE TRIBUNAL . 13. WE FIND FROM THE FACTS OF THE CASE THAT THE AO HAS JUST MADE AD-HOC DISALLOWANCE WITHOUT GOING INTO THE EXPENSES OR THE REASONABLENE SS OF THE PAYMENT AS MENTIONED IN THE PROVISION OF SECTION 40A(2)(B) OF THE ACT. WE FIND FROM THE FACTS OF THE CASE THAT THE ASSESSEE HAS PRODUCED COMPLETE SUPPORTING BILLS AND VOUCHERS TO PROVE THE GENUINENESS OF THE CLAIM OF EXPENDITURE WHICH IS NOT DOUBTED BUT H E HAS MADE AD HOC DISALLOWANCE FOR THE REASON THAT THESE PAYMENTS ARE MADE TO THE PERS ONS SPECIFIED U/S. 40A(2)(B) OF THE ACT FOR INVOCATION OF PROVISION OF SECTION 40A(2)(B) OF THE ACT. FIRST OF ALL, THERE SHOULD BE A FINDING RECORDED BY THE AO THAT THE EXPENSES ARE UN REASONABLE AND HOW? BUT FROM THE ORDER OF THE AO, IT IS NOT COMING OUT THAT WHAT IS THE BASIS FOR DISALLOWANCE. JUST SIMPLY 6 ITA NO.1627/K/2011 SANJAY TRANSPORT AGENCY AY 2008-09 AD HOC DISALLOWANCE CANNOT BE MADE. ACCORDINGLY, W E CONFIRM THE ORDER OF CIT(A) DELETING THE ADDITION. THIS ISSUE OF REVENUES APPE AL IS DISMISSED. 14. THE NEXT ISSUE IN THIS APPEAL OF REVENUE IS AGA INST THE ORDER OF CIT(A) DELETING THE DISALLOWANCE ON ACCOUNT OF TRUCK HIRE CHARGES FOR N ON-DEDUCTION OF TDS U/S. 194C OF THE ACT BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. FOR THIS, REVENUE HAS RAISED FOLLOWING GROUND NO.5: 5. THAT THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION UNDER SECTION 40(A)(IA) OF RS.31,96,956/- IGNORING THE MATERIAL FACTS AND CIRC UMSTANTIAL EVIDENCE BROUGHT ON THE ASSESSMENT RECORDS OF THE ASSESSEE. 15. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H FACTS AND CIRCUMSTANCES OF THE CASE. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE C LAIMED TO HAVE INCURRED EXPENSES ON TRUCK HIRE CHARGES AT RS.31,96,956/- FOR WHICH NO TDS WAS DEDUCTED FOR THE REASON THAT THE RECIPIENT PARTIES HAVE SUBMITTED FORM 15-I FOR NON- DEDUCTION OF TDS BUT THE AO MADE DISALLOWANCE. WE FIND FROM THE FACTS OF THE CASE T HAT THE RECIPIENT HAS ISSUED FORM 15-I FOR NON-DEDUCTION OF TDS ON THESE TRUCK HIRE CHARGE S AND THESE PERSONS SUBMITTED THE FORM 15-I BEFORE DCIT, CIRCLE-2 BUT NOT BEFORE CIT CONCERNED. IT IS AN ADMITTED POSITION THAT THE RECIPIENTS HAVE ISSUED FORM 15-I AND ASSES SEE HAS RECEIVED THE SUM AND NOT DEDUCTED THE TDS ON TRUCK HIRE CHARGES PAID TO THEM . ONCE THE ASSESSEE RECEIVES FORM 15-I HE IS NOT OBLIGED TO DEDUCT TDS BUT TO MAKE PA YMENT WITHOUT DEDUCTION OF TDS. THIS VIEW OF OURS IS FORTIFIED BY THE DECISION OF C OORDINATE BENCH OF MUMBAI TRIBUNAL IN THE CASE OF VIPIN P.MEHTA IN ITA NO.3317/M/2010 DAT ED 20 TH MAY, 2011, WHEREIN IT IS HELD AS UNDER: 6. WE HAVE CAREFULLY CONSIDERED THE FACTS AND TH E RI VA L CO NT E NT IO N S . SEC T I ON 19 4A PR OVIDES FOR DE D UC TION OF TAX FROM THE INTEREST PAID BY THE ASSESS E E , A T THE APPROPRIAT E R A T E . SECTION 197A(LA) PROVIDES THAT NOTWITHSTANDING AN Y THING CONTAINED IN SECTION 194A NO DEDUCTION OF TAX SHALL BE MADE UNDER THE SECTION IF THE PAYEE OF THE INTEREST FURNISHED T O TH E PERSON RESPONSIBLE FOR PAYING TH E I NT E REST , A DECLAR A T IO N IN WRIT I N G I N DUPLICATE IN THE PRES C R I B E D FOR M A ND VE RIFI ED IN THE PRES C R I BED MANN E R TO TH E EFFE C T TH A T TH E TAX O N HI S ES T I M ATED TOT A L I N C OM E O F THE PR EVIO US YEAR I N W H IC H T H E IN TERE S T IS TO B E INCLUDED WILL BE NIL . SUB - SECTION ( 2) PRO V IDES THAT THE P E R SO N RESPONSIBLE FOR PAYING INTEREST S HALL DELIVER O R CA US E TO BE DELIVERED TO THE CCIT OR CIT ONE C O P Y O F THE D EC L ARA T IO N SUBMITTED BY THE PAYEE OF THE INTEREST TO THE ASSESSEE O N O R BEFORE THE SEVENTH DAY OF THE MONTH NE X T FOLLO WI NG T HE MONT H IN WHICH THE DECLARATION WAS FURNISHED TO HIM . IF TH E PER SO N RESPONSIBLE F OR PAYIN G THE INTEREST (I.E . THE ASSESSEE ) D OES N OT COMPL Y WITH SUB-SECTION 2 OF SEC T ION 1 9 7A, H E IS LI A B LE T O P AY P E N A L TY OF RS . 100/- FOR EV ER Y D AY DU R IN G W H IC H TH E F A I L U R E C ONTINUES . SUCH PENALT Y C A N BE I MPOSED O NL Y B Y T HE COMMISSION E R OR CHIEF C O MMI SSIO N ER OF I N CO M E T AX AS ST A TED IN CLAUS E (B) OF SUB-SECTION 3 OF SEC TION 272A A ND SUB - S ECT I O N 4 REQUIRES THAT AN OPPORTUNITY SHALL BE GIVEN TO THE AS S E SSEE BEFORE ANY PENALTY ORDER IS PASSED . 7 ITA NO.1627/K/2011 SANJAY TRANSPORT AGENCY AY 2008-09 7. IN THE PRESENT C A SE THE CL A IM OF T HE ASSESS EE IS T H AT AT THE TIME OF PAYING THE INTEREST TO THE 34 PERSONS M E NT IONE D I N T H E A SS ES SMEN T ORDER, HE H A D BEFORE HIM TH E A PPR O PR IATE DE C L ARA TIONS I N T H E PR ESCRI B E D FORM FROM THE PAYEES STATING TH A T NO T AX WAS PA YA BLE BY TH E M IN R E S PEC T O F TH E I R T OTA L I N COME AND THEREFORE TA X NEED NOT BE DEDUCTED F ROM INTEREST UNDER SE CTION 194A, AND IN THE LIGHT OF THESE DECLARATIONS HE HAD NO OPT IO N BUT TO MAKE THE PAYMENT OF INTEREST WITHOUT AN Y TAX DEDU C TI O N . IF THE CLAIM IS TRUE THEN T HE CO NTENTION MUS T BE ACCEPTED BECAUSE UNDER SUB-SECTION (LA) OF SECT I O N 197A, IF SUCH A DECL A RATION IS FILED B Y THE PA Y EE O F INT E REST , NO DEDUCTI O N OF TA X SHALL BE MADE B Y THE A SSESSEE . T HE RE V EN UE A U THOR ITIES HAVE DOUBTED THE ASSESSEE'S VERSION B E CAUS E ACCORD I N G TO THEM IT IS ONL Y W HEN THE ASSESSING OFFICE R PROPOSED THE DIS AL L OWANCE OF THE I NTEREST B Y I N V OK I N G T HE SEC TION 40(A)(IA) IN T H E COURSE OF THE ASSESSMENT PR OC EEDIN G S TH AT T H E ASSESSEE FILED THE DECLARATIONS CLAIM E D TO H AVE B EEN SU BMIT TED TO HI M BY THE PAYEES O F TH E INTEREST, IN THE OFFICE OF THE CIT(TDS) AS REQU I RED B Y SUB-S EC T ION 2 OF SECTION 197A. APART FROM THIS INFERENCE , THERE I S NO O TH ER EVIDENCE IN THEIR POSSESSION TO HOLD T HA T THE DECLAR A TION S WERE NOT SUBMITTED B Y THE PA Y EES OF TH E I NT E R E ST TO TH E A S SESSEE AT T HE TI ME W H E N THE PA Y ME NT S WERE MA D E . WITHOUT DISPRO V ING TH E ASSESSEE ' S CL A IM O N THE B A SIS O F OTHE R E VI DEN CE, EXCEPT BY WAY OF INFERENCE , IT WOULD NOT BE FAIR OR PROPER TO DISCARD THE CLAIM . THE ASSESSING OFFICER HAS NOT RECORDED AN Y S T ATEMEN T S FROM THE PAYEES OF THE INTEREST TO THE EFF E C T T HAT THE Y D I D N O T FILE AN Y DECLARATIONS WITH THE ASSESSEE AT T HE APPROPRIATE TIME OR T O T HE EFFECT THAT THE Y F ILED THE D E CLAR ATI ONS ONLY AT THE REQ U EST OF TH E ASSESSEE I N SEPTEMBER / OCTOBE R, 2 00 8. IN THE ABSENCE OF A N Y SUCH DIRECT EVIDENCE , WE ARE UN A BLE T O RE J ECT THE AS SE SS EE'S CLAIM . TH E ASSESSING O FFICER H AS S T AT ED I N PA R A 4 . 4 OF TH E A SS ESS M E N T OR DER TH AT HE F O UND THAT SO M E OF T H E LOAN CR E DIT ORS WERE HA VI N G TA XABLE IN C OM E BU T STI LL THE ASSESSEE HAD SUBMITT E D DECLARATIONS FROM THEM I N F ORM NO . 15 G . UNLESS IT IS P ROVED THAT THESE FORMS WERE NOT I N FACT SUBM I TTED B Y TH E L O A N C R EDITORS, THE ASSESSEE CANNOT BE BLAM E D B ECA USE AT TH E TIM E OF P A YING THE INTEREST TO THE LOAN CREDITO R S , H E H A S T O PER F O RC E RELY U P ON THE DE C LARATIONS FILED B Y TH E LOAN C R E D ITO RS AND H E WAS N OT EXPECTED TO EMBARK UPON AN ENQU I R Y AS TO WHETHER TH E LOAN CREDITORS REALL Y AND IN TRUTH HA VE NO TAXABLE I NCOM E ON WHICH TAX IS PA Y ABL E. THAT WOULD B E P U T TI N G AN I MP O S SI BL E BURDEN ON TH E A SS E SSEE. T H AT APA RT SUB - S ECTION LA OF SECTION 197A MERE LY R E QUIRES A DECLARATION TO BE FILED B Y TH E P AY E E OF TH E I N TEREST AND ONCE IT IS FILED THE PAYER OF THE INTEREST HAS NO CHOICE EX C E PT TO DESIST FROM DEDUCTING TAX FROM THE INTEREST . TH E SUB - S E CT ION USES THE WORD ' SHALL' WHICH LEA V ES NO CHOICE T O T HE AS S ESS E E IN THE MATTER . IN THE CASE OF PA Y MEN T O F L EA V E T RA V E L CON C ESS ION AND CON V E Y ANCE ALLO WA N C E T O EMPLOYEES WHO ARE LIABLE TO D E DU CT TAX FRO M T HE SA L ARY P A ID TO THE EMPL OYEE S UND E R SECTI O N 1 92, T H E S UPR E ME C OURT HA S H ELD IN C I T V S . LAR S E N & TOUBRO LTD . (2009) 313 ITR 1 , T H AT THE ASS E SSEE WA S UNDE R N O S T A T U TORY OBLIGATION UNDER THE A C T OR RULES TO COLLE C T EVIDE N CE T O SH OW THAT TH E EMPLOYEE HAD ACTUALLY UTILIZED THE MONE Y P A ID TOW A RD S LEAVE TRAVEL CONCESS I ON/CON V E Y ANCE A L L O WA N CE . T H E P OSI TI ON IS S T RONGER UNDER SECTION 197A W H ICH DO ES N O T A PP LY TO SE C TI ON 192, BUT WHICH PROVIDES IN SUB-SE CTI O N (L A ) T HA T IF THE P AYEE OF THE INTEREST HAS FILED THE PRESCRIBED FORM TO THE E FFECT T H AT H E IS NOT LIABLE TO PAY ANY TAX IN COMPUTING HIS TOTAL I NCOME , THE PA Y ER SHALL NOT DEDUCT AN Y TA X . THE S U B-SE CTI ON DO E S NOT I MP OSE A N Y O BL I G ATION O N T H E P AYER TO F I N D OUT THE TRUTH OF TH E D ECLA R A TION S FI L ED B Y T HE P AYEE . E V EN IF THE ASS E SSEE H A S DEL AYE D T H E FI LING O F TH E D EC L ARATIO N S WITH THE OFFICE OF THE C IT / CCIT (TDS) WITHIN T HE TI ME LIM IT SP E C IFIED IN SUB -SE CTION (2) OF SECTION 197A , T HAT IS A D I STIN CT OMISSION OR DEFAULT FOR WHI CH A PENALTY IS PRESCRIBED . SECTION 2 7 3 B PRO VI D ES T H AT NO PEN ALTY SHALL BE IMP O S E D UND E R A N Y OF THE CLAUSES OF SU B -SE C TI O N ( 2 ) O F S ECT I ON 272A FOR THE DELA Y, IF THE ASSES SE E PR OVES T HAT TH ERE WAS REASONABLE CAUS E F O R THE SAME . W E H AVE A L READY S EE N T H AT UNDER SUB-S E CTION ( 4 ) O F SECTION 27 2A , N O PE N A L TY CAN BE IMPOS E D UNLE SS T H E A S S ESSEE I S G IV EN A N O PP O RTUN I T Y OF B E IN G H E A RD . ALL TH ESE PROV I SIO NS IND ICA T E TH A T TH E F A ILURE O N TH E P A R T OF T H E A SS ES S EE, W H O IS TH E P AYER OF TH E INT E R E ST , T O F I LE TH E D E CL ARAT I O N S G I VE N TO HIM B Y THE P AYEES OF T HE I NT EREST, WITHIN TH E TIM E LIMI T SPECIFIED IN SUB-SECTION (2) TO S E CTI O N 1 97A I S DIS T IN CT AND SEPARATE AND MERELY BECAUSE THERE IS A FAILURE ON THE P A R T OF THE ASSESSEE TO SUBMIT THE 8 ITA NO.1627/K/2011 SANJAY TRANSPORT AGENCY AY 2008-09 DE C LARATIONS TO THE IN C OME- TAX DEPARTMENT WITHIN THE TIME LIMIT, IT CANNOT BE S A ID THAT THE ASSESSEE DID NOT HAVE DECLARATIONS WI TH HIM AT TH E T IM E W H E N H E PAID THE INTEREST TO THE PA Y EES. TH A T WO ULD B E A S E PA RA TE M AT T ER AND SEPARATE PROOF AND E V IDEN CE IS REQ U IRED TO S H OW T H AT E V EN W H EN T H E ASSES S EE P AI D THE INTEREST, HE DID NOT HA VE TH E D EC L A R ATION S FRO M T H E P A Y EES WITH H IM A ND T H E REFORE HE OUG HT TO HA V E D E DUCTED THE T AX FR O M TH E P AY M E N T. NO S U C H EVI D EN C E OR P ROOF HAS BEEN BROUGHT B Y THE DEPARTMENT . 8 . FOR THE A FORESAID REASONS , W E ACCE PT THE ASSESSE E' S CLAI M THAT SINCE HE HA D THE D ECLARATIONS OF THE PAYEES IN TH E PRESCRIBED FORM BEFORE HIM AT THE TIME WHEN THE INTER E ST WAS PAID , HE WAS NOT LIABLE TO DEDUCT TAX THERE FROM UNDER S EC TI O N 197A. IF HE WAS NOT LIABLE TO DEDUCT TA X, SECTION 40(A)(IA) IS NO T ATTRACTED. 16. FROM THE ABOVE DECISION OF THE CO-ORDINATE BENC H OF MUMBAI TRIBUNAL IN THE CASE OF VIPIN MEHTA (SUPRA) AND THE FACT IN THIS CASE IS THAT THE ASSESSEE HAS RECEIVED FORM 15- I FROM THE RESPECTIVE PAYEES TO WHOM TRUCK HIRE CHA RGES WERE PAID, THE AO HAS NO AUTHORITY TO MAKE ANY DISALLOWANCE FOR NON DEDUCTIO N OF TDS U/S 40(A)(IA) OF THE ACT. ACCORDINGLY THIS ISSUE OF REVENUES APPEAL IS DISMI SSED. 17. IN THE RESULT, THE APPEAL OF REVENUE IS PARTLY ALLOWED. 18. ORDER IS PRONOUNCED IN THE OPEN COURT ON 20.11. 2015 SD/- SD/- (WASEEM AHMED) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED :20TH NOVEMBER, 2015 JD. SR. P.S COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT ACIT, CIR-3, ASANSOL 2 RESPONDENT M/S. SANJAY TRANSPORT AGENCY, 42, N. S . B. ROAD, RANIGANJ, BURDWAN, PIN-713847 3 . THE CIT(A), ASANSOL 4. 5. CIT ASANSOL DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .