Triyogi Narayan Singh, Kolkata V. ITO, Ward - 28(2), Kolkata

ITA 1648/KOL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2544 (ITAT-KOLKATA)
• Duration Of Justice: 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2010
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2005-2006
• Appeal Filed On: 22-09-2009
• Court: TRIBUNAL
• Department Lawyers: O P AGARWAL
• Assessee Lawyers: R DHAR
• Keywords: Additional evidence; Reason to believe; Reassessment proceedings
• Section: 40A(3); 143(3); 142(1); 133(6); 194C; 147; 148; 144

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL : C BENCH : KOLKATA [ BEFORE SHRI B.R. MITTAL, J.M. & SHRI C.D. RAO, A. M. ] I.T.A.NOS.1648 & 1649 (KOL) OF 2009 ASSESSMENT YEARS 2005-06 & 2006-07 TRIYOGI NARAYAN SINGH, -VS- INCOME-TAX O FFICER, WARD-28(2), KOLKATA, [PAN-APMPS8395D] KOLKATA. ( APPELLANT ) ( RESPONDE NT ) APPELLA NT BY : SHRI R. DHAR RESPONDENT BY : SHRI O.P. AGARWAL O R D E R PER SHRI B.R.MITTAL, J.M. : THE ASSESSEE HAS FILED THESE TWO APPEALS FOR ASSESS MENT YEARS 2005-06 AND 2006-07 AGAINST TWO ORDERS OF LD. C.I.T.(A) BOTH DATED 31/7/2009. 2. THE GROUNDS OF APPEAL FILED BY THE ASSESSEE FOR BOTH THE ASSESSMENT YEARS UNDER CONSIDERATION WERE REVISED VIDE LETTERS BOTH DATED 23/11/2009 AND THE SAME ARE AS UNDER: ASSESSMENT YEAR 2005-06 1) FOR THAT LD. CIT (A) SHOULD HAVE HELD THAT ON THE FACTS & CIRCUMSTANCES OF THE CASE LEARNED LT.O. HAD NO JURISDICTION TO PASS THE ORDER U/S 144 OF THE I.T. ACT 1961. 2) FOR THAT LD. C.I.T.(A) SHOULD HAVE HELD T HAT ON THE FACTS & CIRCUMSTANCES OF THE CASE LD. I.T.O. HAD NO JURISDICTION TO PROCEED U/S 147 OF THE ACT 1961. 3) FOR THAT LD. C.I.T.(A) SHOULD HAVE HELD THAT, WHEN NOTICE U/S 143(2) OF THE ACT 1961 DATED WAS SERVED LONG AFTER 12 MONTHS FROM 21.12.20 05 WHEN THE RETURN WAS FILED, THE ASSESSMENT ORDER DATED 29.12.2008 U/S 144 OF TH E I.T. ACT 1961 WAS BARRED BY LIMITATION. 4) FOR THAT LD. C.I.T. (A) SHOULD HAVE HELD T HAT WHEN PROCEEDINGS U/S 147 OF THE I.T. ACT 1961 WAS STARTED BY THE I.T.O. ALLEGING PROBABL E VIOLATION OF SEC. 194C OF THE I.T. ACT 1961 ONLY BUT HE HAD NO JURISDICTION TO MA KE FISHING & ROVING ENQUIRIES AND CONSEQUENTLY ALL ADDITIONS & DISALLOWANCES BASED ON SURMISE & SUSPICIOUS ONLY SHOULD HAVE BEEN DELETED BY HIM. 5) FOR THAT LD. C.I.T.(A) SHOULD HAVE HELD TH AT FOLLOWING DISALLOWANCES & ADDITIONS WERE FANCIFUL, VAGUE BASED ON SUSPICIOUS & SURMISE ONLY: A) RS.19,53,054/- DISALLOWED ALLEGE DLY U/S 40(A)(IA) OF THE I.T. ACT 1961, WITHOUT ANY EVIDENCE OR MATERIAL PRODUCED BY THE I.T.O. 2 B) RS.13,31,807/ OUT OF TYRE EXPENS ES. C) RS.29,66,318/ OUT OF OIL EXPENSES D) RS.3,02,090/ OUT OF BUSINESS PROMOTION AND SHO ULD HAVE DELETED THEM. 6) FOR THAT EACH OF THE GROUND IS WITHOUT PRE JUDICE TO ALL OTHER GROUNDS AND VICE VERSA. 7) FOR THAT THE ORDER OF THE LD. C.I.T.(A) IS OTHERWISE WRONG UNJUST & UNFAIR. ASSESSMENT YEAR 2006-07 1) FOR THAT LD. CIT (A) SHOULD HAVE HELD THA T ON THE FACTS & CIRCUMSTANCES OF THE CASE LEARNED I.T.O. HAD NO JURISDICTION TO PASS THE ORDER U/S 144 OF THE I.T. ACT 1961. 2) FOR THAT LD. C.LT.(A) SHOULD HAVE HELD TH AT IN ABSENCE OF SERVICE OF NOTICE U/S 148 OF THE I.T. ACT1961 LD. I.T.O. HAD NO JURISDICTION TO PROCEED U/S 147 OF THE I.T. ACT 1961 (AS STATED BY HIM AT PAGE 2 OF THE ASSESSM ENT ORDER). 3) FOR THAT LD. CIT (A) SHOULD HAVE HELD THA T THE ASSESSMENT ORDER WAS BARRED BY LIMITATION. 4) FOR THAT LD. C.I.T. (A) SHOULD HAVE HELD THAT WHEN PROCEEDINGS U/S 147 OF THE I.T. ACT 1961 WAS STARTED BY THE I.T.O. ALLEGING PROBABL E VIOLATION OF SEC. 194C OF THE I.T. ACT 1961 ONLY BUT HE HAD NO JURISDICTION TO MA KE FISHING & ROVING ENQUIRIES AND CONSEQUENTLY ALL ADDITIONS & DISALLOWANCES BASED ON SURMISE & SUSPICIOUS ONLY SHOULD HAVE BEEN DELETED BY HIM. 5) FOR THAT LD. C.I,T.(A) SHOULD HAVE HELD T HAT FOLLOWING DISALLOWANCES & ADDITIONS WERE FANCIFUL, VAGUE BASED ON SUSPICIOUS & SURMISE ONLY: A) RS. 15,89,446/- DISALLOWED ALLEG EDLY U/S 40(A)(IA) OF THE I.T. ACT 1961, WITHOUT ANY EVIDENCE OR MATERIAL PRODUCED BY THE I.T.O. B) RS. 29,48,295/- OUT OF TYRE EXPE NSES. C) RS.38,43,480/ OUT OF TRANSPORTATION CHARGES CHA RGES. 6) FOR THAT EACH OF THE GROUND IS WITHOUT PR EJUDICE TO ALL OTHER GROUNDS AND VICE VERSA. 7) FOR THAT THE ORDER OF THE LD. C.I.T.(A) IS OTHERWISE WRONG UNJUST & UNFAIR. I.T.A.NO.1648 (KOL) OF 2009 (A.Y. 2005-06) : 3. FIRSTLY, WE TAKE UP THE APPEAL FOR ASSESSMENT Y EAR 2005-06 BEING I.T.A.NO. 1648 (KOL)/2009. 3 4. THE RELEVANT FACTS GIVING RISE TO THIS APPEAL A RE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRANSPORTATION AND HIRE OF HEAVY VEHICL ES. THE ASSESSEE FILED HIS RETURN OF INCOME ON 21/12/2005 SHOWING TOTAL INCOME OF RS.3,2 3,420/-. IT APPEARS THAT THE RETURN WAS PROCESSED U/S. 143(1) OF THE ACT. SUBSEQUENTLY , THE CASE OF THE ASSESSEE WAS REOPENED FOR SCRUTINY AND A NOTICE WAS ISSUED U/S. 147/148 OF THE ACT DATED 07/5/2007. THE REASONS RECORDED ARE STATED AT PAGE-7 OF THE PA PER BOOK FILED BY THE ASSESSEE. FOR READY REFERENCE, WE CONSIDER IT PRUDENT TO REPRODUC E THE REASONS RECORDED BY THE A.O. BEFORE ISSUING NOTICE U/S. 148 OF THE ACT. IT READ S AS UNDER :- 07.05.07 - WHILE GOING THROUGH THE I.T. RETURN F OR A.Y. 05-06, IT HAS COME TO MY NOTICE THAT THE A IS TRANSPORT CONTRACTOR AND HIR E HEAVY VEHICLES AND RECEIVED CONTRACT / HIRE CHARGES OF RS.3,09,55,672/- AND PAI D SUB-CONTRACTUALLY HIRE CHARGES OF RS.1,43,27,563/- AND TRANSPORTATION CHAR GES OF RS.56,12,109/-, CAR HIRE CHARGES OF RS.3,17,280/- WHICH WERE SUBJECT TO T.D.S. AS PER PROV. OF SEC. 194C OF THE I.T. ACT. BUT THE A FAILED TO DEDUCT T.D.S. AT THE TIME OF MAKING ABOVE PAYMENTS. THE AUDITOR MADE HIS REMARKS AS NI L IN THE SPECIFIED COLUMN IN THE TAX AUDIT REPORT. THUS THE A VIOLATED THE PRO VISION OF SEC. 40(A)(IA) OF THE I.T. ACT AND AS PER THIS SEC. 40(A)(IA) READ WITH S EC. 194C OF THE I.T. ACT, THE ABOVE MENTIONED SUB-CONTRACTUAL PAYMENTS AS CLAIMED SHOULD BE DISALLOWED. UNDER THE FACTS & CIRCUMSTANCES OF THE CASE, I HAV E REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SEC.147 OF THE I.T. ACT. ACCORDINGLY NOTICE U/S 148 OF THE I.T. AC T IS ISSUED. SD/-(T.N.SINGH) 5. PURSUANT TO THE SAID NOTICE, THE ASSESSEE VIDE HIS LETTER DATED 26/6/2008 REQUESTED THE A.O. TO TREAT THE RETURN FILED BY HIM ON 21/12/2005 AS RETURN IN TERMS OF NOTICE U/S. 148 OF THE ACT. SUBSEQUENTLY, THE A.O. ISSUED NOTICES U/S. 143(2) & 142(1) OF THE ACT. SINCE THE ASSESSEE DID NOT PRODUCE BOOKS OF ACCOUNTS AND REQUISITE VOUCHERS, THE A.O. AFTER GIVING NUMBER OF OPPORTUNITIES TO THE AS SESSEE COMPLETED THE ASSESSMENT U/S. 144 OF THE ACT. THE SAID ACTION OF THE A.O. WAS CO NFIRMED BY THE LD. C.I.T.(A). HENCE THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL D ISPUTING THE JURISDICTION OF THE A.O. TO PASS ORDER U/S. 144 OF THE ACT AND ALSO DISPUTING T HE PROCEEDINGS INITIATED U/S. 147 OF THE ACT AND THE RELEVANT REVISED GROUNDS IN THIS REGARD ARE GROUNDS NO.1 TO 4 OF THE APPEAL, AS MENTIONED HEREINABOVE. 4 6. DURING THE COURSE OF HEARING, THE LD. A/R OF TH E ASSESSEE SUBMITTED THAT WHEN THE ASSESSEE FILED THE ORIGINAL RETURN U/S. 139(1) OF T HE ACT AND NO ASSESSMENT U/S. 143(3) WAS MADE, THE INITIATION OF REASSESSMENT PROCEEDINGS BY ISSUING NOTICE U/S. 148 OF THE ACT IS NOT VALID. IN SUPPORT OF HIS SUBMISSION, THE LD. A /R PLACED RELIANCE ON THE DECISION OF THE HONBLE KERALA HIGH COURT IN THE CASE OF TRAVANCORE CEMENTS LTD. VS. ACIT [305 ITR 170], DECISION OF THE HONBLE APEX COURT IN THE CASE OF L .N. HOTA & CO. VS. CIT [301 ITR 184 (SC)], DECISION OF HONBLE PUNJAB & HARYANA HIGH CO URT IN THE CASE OF CIT VS. SMT. VARSHA GOEL [319 ITR 92] AND THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. BATRA BHATTA CO. [321 ITR 526]. THE LD. A/R FURTHE R SUBMITTED THAT IN THE NOTICE ISSUED U/S. 148 OF THE ACT, THE A.O. DID NOT STATE THE ITE MS FOR WHICH THE REASSESSMENT PROCEEDINGS HAVE BEEN INITIATED. HE FURTHER SUBMIT TED THAT THE A.O. IN ORDER TO HAVE VALID JURISDICTION FOR MAKING REASSESSMENT SHOULD H AVE ENCLOSED THE COPY OF THE REASONS RECORDED ALONG WITH THE NOTICE ISSUED U/S. 148 OF T HE ACT. SINCE THE A.O. DID NOT ENCLOSE THE COPY OF THE REASONS RECORDED WITH THE NOTICE, T HE ASSESSMENT PROCEEDING IS INVALID. THE LD. A/R FURTHER SUBMITTED THAT THE A.O. WHILE M AKING THE ASSESSMENT U/S. 147 OF THE ACT HAD ALSO CONSIDERED THE OTHER ITEMS, WHICH IS N OT PERMISSIBLE FOR MAKING THE DISALLOWANCES. IT IS RELEVANT TO STATE THAT THE A. O. ALSO FILED A COPY OF THE WRITTEN SUBMISSION WHICH WAS FILED BEFORE THE LD. C.I.T.(A) AND THE SAME IS PLACED AT PAGES 2 TO 4 OF THE PAPER BOOK. THE LD. A/R ALSO FILED A COPY O F THE BRIEF NOTE STATING THE ABOVE POINTS BEFORE US AND THE SAME HAS BEEN CONSIDERED. THE LD . A/R SUBMITTED THAT THE ASSESSMENT MADE BY THE A.O. SHOULD BE QUASHED. 7. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESE NTATIVE SUPPORTED THE ACTION OF THE A.O. TO INITIATE REASSESSMENT PROCEEDINGS. HE FURTHER SUBMITTED THAT THE ASSESSEE DID NOT PRODUCE THE BOOKS OF ACCOUNTS AND THE REQUI SITE PAPERS IN SPITE OF GIVING A NUMBER OF OPPORTUNITIES AND THUS THE A.O. WAS LEFT WITH NO ALTERNATIVE EXCEPT TO COMPLETE THE ASSESSMENT U/S. 144 OF THE ACT. THE LD. DEPARTMENT AL REPRESENTATIVE FURTHER SUBMITTED THAT THE GROUNDS WHICH HAVE BEEN TAKEN BY THE ASSES SEE BEFORE THE TRIBUNAL ARE IDENTICAL TO THE GROUNDS TAKEN BEFORE THE LD. C.I.T.(A) AND T HE LD. C.I.T.(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE HAS RIGHTLY HELD THAT T HE ASSESSMENT ORDER PASSED BY THE A.O. 5 BY APPLYING SEC. 144 IS IN ACCORDANCE WITH LAW. HE SUBMITTED THAT THE ORDER OF THE LD. C.I.T.(A) BE CONFIRMED. 8. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE LEARNED REPRESENTATIVES OF THE PARTIES AND THE ORDERS OF THE AUTHORITIES BELOW . WE HAVE ALSO GONE THROUGH THE RELEVANT CASE LAWS CITED BY THE LD. A/R IN SUPPORT OF HIS SUBMISSIONS. 9. IN ORDER TO APPRECIATE THE CONTENTION OF THE LD . A/R, WE OBSERVE THAT THE LD. CIT(A) HAS SUMMARIZED IN PARA-2 OF THE IMPUGNED ORD ER THE REASONS FOR COMPLETING THE ASSESSMENT U/S. 144 OF THE ACT. WE CONSIDER IT PRU DENT TO STATE THE SAME, WHICH READ AS UNDER :- THE AO HAS MENTIONED THAT AT THE BEGINNING OF TH E ASSESSMENT PROCEEDINGS WHEN THE BOOKS OF A/CS AND VOUCHERS OF THE ASSESSEE WERE CALLED FOR, THE SAME WERE NOT PRODUCED. LATER ON THE ACCOUNTANT OF THE ASSESSEE A SKED FOR ADJOURNMENT ON 5-8- 2008. ON THAT DATE THE ACCOUNTANT ATTEND WITH A NEW AUTHORIZED REPRESENTATIVE SHRI AMIT PAUL AND THE HEARING WAS ADJOURNED TO 25- 8- 2008. HOWEVER, ON THAT DATE NOBODY ATTENDED ON BEHALF OF THE ASSESSEE. SUBSEQUE NTLY A LETTER WAS ISSUED TO THE ASSESSEE FIXING THE HEARING ON 03-09-2008. ON 3-9-0 8, THE AR SHRI AMIT PAUL APPEARED AND FILED HIS AUTHORITY. HE FILED A SUBMIS SION FROM THE ASSESSEE ALONG WITH A RECASTED P/L A/C. IN THE SUBMISSION IT WAS STATED THAT IN THE ORIGINAL P/L A/C. MANY EXPENSES HAVE BEEN INCLUDED UNDER WRONG HEADS. SUCH EXPENSES WERE DESCRIBED IN THE SUBMISSION. HE WAS ASKED TO ATTEND WITH BOOKS OF ACCOUNTS AND VOUCHERS OF THE ASSESSEE ON 23-9-08. ON 23-9-08, TH E AR PRODUCED ONLY THE BANK STATEMENT AND A LIST DETAILING THE TURNOVER AND A R ECASTED TRADING ACCOUNT. THE BOOKS OF ACCOUNTS AND VOUCHERS WERE NOT PRODUCED. T HE AR INFORMED THAT THE BOOKS OF A/CS. LYING WITH THE ASSESSEE WERE NOT SUP PORTED BY DOCUMENTARY EVIDENCES. HE WAS ASKED TO FILE DETAILS AVAILABLE W ITH THE ASSESSEE ON THE NEXT HEARING. AFTER THIS ON 22-10-08 THE ASSESSEE SOUGHT FOR DIRECTION FROM THE ADD. CIT, R-28, KOL. U/S.144A OF THE IT ACT, 1961. DURIN G THE PROCEEDINGS U/S.144A, THE AO SENT REPORT TO THE ADDL. CIT AS CALLED FOR, HOWE VER, ON 3-12-08 THE ADDL. CIT INFORMED THE AO THAT FOR AY 2005-06, THE ASSESSEE H AD WITHDRAWN THE PETITION ULS.144A AND THE ASSESSMENT MAY 1E COMPLETED AS PER LAW. THE AO ISSUED A LETTER DT. 03-12-08 TO THE ASSESSEE CALLING FOR CERTAIN DE TAILS AND BOOKS OF A/CS AND SUPPORTING BILLS AND VOUCHERS AND FIXED THE HEARING ON 10-12-08. ON 10-12-08, ANOTHER AUTHORIZED REPRESENTATIVE SHRI A.K.SAMANTA, FCA ATTENDED WITH COMPUTERIZED BOOKS OF A/CS BUT DID NOT PRODUCE ANY SUPPORTING BILLS AND VOUCHERS. HE WAS ASKED TO PRODUCE BILLS AND VOUCHERS ON 15-12 -08 BUT HE DID NOT DO SO. THE, AO AGAIN ISSUED A REQUISITION U/S.142(1) VIDE LETTE R DT.15-12-08 AND FIXED THE HEARING ON 22-12-08. IN RESPONSE TO THIS LETTER, TH E AR APPEARED ON 17-12-08 AND REQUESTED FOR ADJOURNMENT OF THE HEARING ON 19-12-0 8. ON 19-12-08, THE AR APPEARED AND FILED A WRITTEN SUBMISSION AND STATED THAT HE WOULD ATTEND WITH BILLS OF HIRE CHARGES AND TRANSPORTATION CHARGES RECEIVED AND PAID BY THE ASSESSEE ON 6 22-12-08. ON 22-12-08, ANOTHER AR SHRI NARAIN C. RO Y APPEARED AND PRODUCED COPIES OF THE BILLS RAISED BY THE ASSESSEE TO HIS C USTOMERS FOR HIRE CHARGES AND TRANSPORTATION CHARGES. HOWEVER, THE BILLS FOR THE HIRE CHARGES AND TRANSPORTATION CHARGES CLAIMED BY THE ASSESSEE AS DEDUCTION WERE P RODUCED AND THE AR STATED THAT IT WAS NOT POSSIBLE FOR HIM TO PRODUCE THEM. T HE AR WAS ASKED TO PRODUCE THE ORIGINAL BILLS FOR TYRE PURCHASES ON 26-12-08. ON 2 6-12-08, SHRI N C ROY APPEARED AND STATED -THAT THE ASSESSEE COULD NOT TRACE OUT T HE BILLS AND VOUCHERS FOR TRANSPORT CHARGES, HIRE CHARGES AND TYRE CHARGES AN D WOULD BE ABLE TO PRODUCE THE SAME AS AND WHEN THEY ARE AVAILABLE. IN VIEW OF THE ABOVE DISCREPANCIE S AND FAILURE OF THE ASSESSEE TO PRODUCE RELEVANT BILLS AND VOUCHERS REQUISITIONED ULS.142(1 ) AND 143(2) THE AO CONCLUDED THAT THE ACCOUNTS SUBMITTED BY THE ASSESSEE ARE INC ORRECT AND INCOMPLETE. HE, THEREFORE, REJECTED THE BOOKS OF A/CS OF THE ASSESS EE U/S. 145(3) AND PROCEEDED TO MAKE AN ASSESSMENT IN THE MANNER PROVIDED IN SEC TION 144 OF THE IT ACT, I.E., BEST JUDGEMENT ASSESSMENT. 10. WE FURTHER OBSERVE THAT THE LD. C.I.T.(A) CONS IDERED ALL THE TECHNICAL AND LEGAL ISSUES RAISED BY THE ASSESSEE BEFORE US AND THE SAM E WERE ALSO TAKEN BY THE ASSESSEE BEFORE THE FIRST APPELLATE AUTHORITY. WE OBSERVE T HAT THE LD. C.I.T.(A) HAS STATED THE SAID LEGAL ISSUES AND HIS FINDING IN PARA - 7.1(I) TO (V ) AT PAGES 11 TO 13 OF THE IMPUGNED ORDER. WE CONSIDER IT PRUDENT TO STATE THE SAME, WHICH REA D AS UNDER :- (I) FIRST OF ALL THE LD. AR HAS CHALLENGED THE IS SUING OF NOTICE U/S148 AND HAS STATED THAT NOTICE U/S 148 IS NOT A SUBSTITUTE FOR NOTICE U/S. 143(2). IN THIS RESPECT, IT IS SEEN THAT THE RETURN OF INCOME FOR AY 2005-06 WAS FILED BY THE ASSESSEE ON 21-12-2005. INITIALLY, THE CASE WAS NOT SELECTED FOR SCRUTINY BY ISSUING OF NOTICE U/S 143(2). SUBSEQUENTLY, THE AO NOTED THAT IN THE AUDIT REPORT FILED BY THE ASSESSEE, THE AUDITOR HAD MENTI ONED THAT NO TDS HAD BEEN DEDUCTED THOUGH THE ASSESSEE HAD SHOWN TO HAVE PAID CONTRACT/HIRE CHARGES OF RS. 1,43,27,563/-, TRANSPORT CHARGES TO THE TUNE OF RS. 56,63,109/- AND CAR HIRE CHARGES OF RS.3,27,280/-, ON WHICH AS PER THE PROVI SIONS OF SEC.194C THE ASSESSEE WAS REQUIRED TO DEDUCT TDS. THE AO FOUND THIS TO BE VIOLATION OF THE PROVISIONS OF SEC. 40(A)(IA). HE WAS OF THE OPINION THAT ON ACCOU NT OF THIS VIOLATION THESE EXPENSES CLAIMED BY THE ASSESSEE WOULD BE DISALLOWA BLE U/S.40(A)(IA). HE THEREFORE, HAD A REASON TO BELIEVE THAT INCOME TO T HE TUNE OF THESE EXPENSES HAD ESCAPED ASSESSMENT. HENCE, TO BRING THIS ESCAPED IN COME TO TAX HE INITIATED PROCEEDINGS U1S147 OF THE INCOME TAX ACT, 1961 AND ISSUED NOTICE U/S.148 WHICH WAS WELL WITHIN TIME. IT MAY BE NOTED THAT AFTER FILING OF THE RET URN BY THE ASSESSEE, ONLY THE INTIMATION U!S.143(1) WAS SENT ALONG WITH DUE REFUN D. NO ASSESSMENT WAS COMPLETED. THEREFORE, THE PROCEEDINGS STARTED ULS.L47 IS NOTHI NG BUT ASSESSMENT PROCEEDINGS ONLY. THE DISALLOWANCE U/S.40(A)(IA) FOR NON-DEDUCT ION OF TDS ON EXPENSES FOR 7 WHICH TDS IS TO BE DEDUCTED IS A VALID REASON TO BE LIEVE THAT INCOME HAS ESCAPED ASSESSMENT. THE NOTICE U/S 143(2) DT. 26-6-08 WAS I SSUED FOR THE PURPOSE OF PROCEEDING WITH THE ACTION INITIATED U/S. 147. THER EFORE, IT IS NOT THE NORMAL NOTICE WHICH IS ISSUED WITHIN 12 MONTHS OF FILING OF THE R ETURN FOR TAKING UP CASE U/S.143(2). THEREFORE, IT IS WRONG ON THE PART OF L D.AR TO SAY THAT THE NOTICE U/S. 143(2) WAS BARRED BY LIMITATION. (II) THE LD.AR HAS ALSO FOUND FAULT IN THE WORDS S OME FURTHER INFORMATION IN THE NOTICE U/S. 143(2) ISSUED BY THE AO. THERE IS NOTHI NG WRONG IN THESE WORDS AS THEY ARE VERY MUCH A PART OF THE PRESCRIBED FORMAT OF NO TICE U/S.143(2). (III) ANOTHER ARGUMENT OF LD. AR IS THAT THE AO INI TIATED PROCEEDINGS U/S 147 ONLY FOR THE REASON OF VIOLATION OF SEC. 194C AND SEC.40 (A)(IA) BUT MADE ADDITIONS OTHER THAN THIS ALLEGATION ALSO, WHICH WAS NOT ALLOWABLE. THIS ARGUMENT IS ALSO UNACCEPTABLE BECAUSE IT IS NOW A SETTLED PRINCIPLE OF LAW THAT ONCE THE PROCEEDINGS U/S 147 HAVE BEEN INITIATED THROUGH A VALID REASONI NG THE AO IS FREE TO ENQUIRE ABOUT THE TRUE INCOME OF THE ASSESSEE AND MAKE ADD ITIONS OTHER THAN THE ISSUE ON WHICH NOTICE U/S. 148 HAS BEEN ISSUED. (IV) NEXT THE LD. AR HAS ATTACKED THE NOTICE U/S.14 2(1) STATING THAT IN THE NOTICE DT.10-06-08, THE AO DID NOT MENTION THE SUB-SECTION UNDER WHICH THIS NOTICE WAS ISSUED. ON EXAMINATION OF THIS NOTICE IT CAN BE SEE N THAT THIS ARGUMENT IS FACTUALLY WRONG. IN THIS NOTICE CLEARLY CLAUSE (B) HAS BEEN F ILLED. PROBABLY, LD. AR IS USED TO SEEING PRINTED AND HANDWRITTEN NOTICES AND COULD NO T UNDERSTAND THIS NOTICE WHICH IS FULLY TYPED THROUGH COMPUTER. (V) THE LD. AR HAS ALSO CHA1LENGED THE PASSING OF T HE ORDER U/S.144 OF THE INCOME TAX ACT, 1961. ON EXAMINATION OF SECTION 144(1) IT CAN BE SEEN THAT THE AO CAN MAKE A BEST JUDGEMENT ASSESSMENT IF ANY PERSON (B) FAILS TO CO MPLY WITH ALL THE TERMS OF A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142 [OR FAILS TO COMPLY WITH A DIRECTION ISSUED UNDER SUB-SECTION (2A) OF THAT SEC TION], OR, (C) HAVING MADE A RETURN, FAILS TO COMPLY WITH ALL THE TERMS OF A NOT ICE ISSUED UNDER SUB-SECTION (2) OF SECTION 143 FROM THE FACTS OF THIS CASE NARRATED IN PAR A 2 OF THIS ORDER IT CAN BE SEEN THAT THERE WAS TOTAL CALLOUSNESS ON THE PART OF THE ASSESSEE TO REPRESENT HIS CASE BEFORE THE AO. THE AUTHORIZED REPRESENTATIVES WERE CHANGED A NUMBER OF TIMES. ONE OF THE ARS CLEARLY STATED THAT THE BOOKS OF A/C S AND DOCUMENTS AVAILABLE WITH THE ASSESSEE DO NOT MATCH WITH THE ACCOUNTS FILED A LONG WITH THE RETURN OF INCOME. THE AO GAVE A NUMBER OF OPPORTUNITIES TO THE ASSESS EE THROUGH NOTICES U/S. 143(2) & 142(1 ) TO PRODUCE THE BOOKS OF A/CS AND S UPPORTING BILLS AND VOUCHERS. THE AR OF THE ASSESSEE COULD ONLY PRODUCE SOME COMP UTERIZED BOOKS OF A/CS BUT THE SUPPORTING BILLS & VOUCHERS FOR DIFFERENT TYPES OF EXPENSES WERE NEVER PRODUCED. THUS, IT IS CLEAR THAT THE CASE OF THE AS SESSEE IS COVERED U/S. 144(1)(B) 8 & (C) OF THE OF THE INCOME TAX ACT, 1961 AND THE AO HAS CORRECTLY PASSED THE ORDER U/S 144. THERE IS NO PROVISION WHICH PREVENTS THE ASSESSING OFFICER FROM PASSING A BEST JUDGEMENT ORDER U/S. 144 IF THE PROC EEDINGS U/S 147 HAVE BEEN INITIATED. IN FACT AFTER STARTING PROCEEDINGS U/S. 147 THE ASSESSMENT IS ALWAYS COMPLETED U/S. 147 RWS 143(3) IN NORMAL CIRCUMSTANC ES. BUT IN THE CASE OF THE ASSESSEE THE AO HAD TO MAKE A BEST JUDGEMENT ASSESS MENT IN THE MANNER PROVIDED U/S. 144 BECAUSE OF THE DEFAULTS OF THE ASSESSEE DE SCRIBED ABOVE. THIS ASSESSMENT HAS TO BE TREATED AS ASSESSMENT COMPLETE D U/S. 141 RWS 144 AND THE TIME LIMIT AVAILABLE IN 153(2) WILL BE AVAILABLE TO THE AO. IN VIEW OF THE ABOVE DISCUSSION, I HOLD THA T THERE IS NO LEGAL INFIRMITY IN THE NOTICES ISSUED BY THE AO AND THE ORDER PASSED BY HI M U/S. 144 WAS IN ACCORDANCE WITH LAW WHICH IS NOTHING BUT ORDER PASSED U/S 147 RWS 144. 11. DURING THE COURSE OF HEARING, THE LD. A/R HAS NOT DISPUTED THE FACTS AS STATED BY THE A.O. AND/OR LD. C.I.T.(A). THAT THE ASSESSEE F AILED TO PRODUCE THE BOOKS OF ACCOUNTS AND THE RELEVANT VOUCHERS BEFORE THE A.O. DURING TH E COURSE OF ASSESSMENT PROCEEDINGS, THE DETAILS OF WHICH ARE MENTIONED HEREINABOVE BY T HE A.O. THE LD. A/R HAS ALSO NOT DISPUTED THE FACT THAT NO ASSESSMENT U/S. 143(3) WA S COMPLETED PURSUANT TO THE RETURN FILED BY THE ASSESSEE DATED 21/12/2005. THE LD. A/ R HAS ALSO NOT DISPUTED THE FACT THAT THE ASSESSEE CLAIMED TO HAVE PAID CONTRACT/HIRE CHA RGES OF RS.1,43,27,563/- AND CAR HIRE CHARGES OF RS.3,17,280/- BESIDES PAYMENT OF TRANSPO RT CHARGES TO THE TUNE OF RS. 56,63,109/- AND NO TDS WAS DEDUCTED AS PER PROVISIO NS OF SEC. 194C OF THE ACT. WE OBSERVE THAT AS PER EXPLANATION 2 TO SEC. 147 OF TH E ACT, THE A.O. CAN INITIATE REASSESSMENT PROCEEDINGS WHERE A RETURN OF INCOME H AS BEEN FURNISHED BY THE ASSESSEE BUT NO ASSESSMENT HAS BEEN MADE AND SUBSEQUENTLY IT IS NOTICED BY THE A.O. THAT THE ASSESSEE HAS UNDERSTATED THE INCOME OR HAS CLAIMED EXCESSIVE LOSS, DEDUCTION, ALLOWANCE OR RELIEF IN THE RETURN. IN SUCH CASES IT WILL BE DEEMED THAT THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT AND THE A.O. AFTER RECORDING THE REASONS U/S. 148(2) OF THE ACT COULD INITIATE REASSESSMENT PROCEEDINGS. IN THE CA SE BEFORE US, THERE IS NO DISPUTE TO THE FACT THAT NO ASSESSMENT U/S. 143(3) OF THE ACT WAS MADE ON THE RETURN FILED BY THE ASSESSEE. SUBSEQUENTLY, THE A.O. OBSERVED THAT ON ACCOUNT OF NON-DEDUCTION OF TDS ON EXPENSES, FOR WHICH TDS WAS TO BE DEDUCTED, THE INC OME OF THE ASSESSEE HAS ESCAPED ASSESSMENT ON ACCOUNT OF NON-DISALLOWANCE OF THE SA ID EXPENSES AS PER SEC. 40(A)(IA) OF THE ACT. WE OBSERVE THAT THE A.O. RECORDED THE REA SONS, COPY OF WHICH IS PLACED AT PAGE- 9 7 OF THE PAPER BOOK, AND THEREAFTER INITIATED REASS ESSMENT PROCEEDINGS BY ISSUING NOTICE U/S. 148 OF THE ACT. IN VIEW OF THE ABOVE, WE ARE OF THE CONSIDERED VIEW THAT THE LD. C.I.T.(A) HAS RIGHTLY HELD THAT THE A.O. HAS INITIA TED REASSESSMENT PROCEEDINGS VALIDLY AND AS PER PROVISIONS OF LAW. THE CASE LAWS RELIED UPO N BY THE LD. A/R ARE NOT APPLICABLE TO THE FACTS OF THE CASE OF THE ASSESSEE. 12. IN THE CASE OF TRAVANCORE CEMENTS LTD. VS. ACI T (SUPRA), WE OBSERVE THAT IN THAT CASE THE A.O. BEFORE ISSUING NOTICE DID NOT RECORD REASONS U/S. 148(2) OF THE ACT. FURTHER, THE A.O. ALSO DID NOT ASSESS THE INCOME WHILE MAKIN G THE ASSESSMENT IN RESPECT OF THE ITEMS WHICH WERE MENTIONED BY ISSUING NOTICE U/S. 1 48 OF THE ACT. IN VIEW OF THOSE FACTS, HONBLE KERALA HIGH COURT HELD THAT THE A.O. IN THE COURSE OF REASSESSMENT PROCEEDINGS COULD NOT MAKE FISHING ENQUIRY ON THE BASIS OF UNCO NNECTED ISSUES. IN THE CASE BEFORE US, WE OBSERVE THAT THE A.O. HAS RECORDED THE REASONS U /S. 148(2) OF THE ACT BEFORE INITIATING REASSESSMENT PROCEEDINGS U/S. 147 BY ISSUING THE NO TICE U/S. 148 OF THE ACT. NOW THE QUESTION ARISES AS TO WHETHER THE A.O. WHILE MAKING THE ASSESSMENT U/S. 147 OF THE ACT COULD CONSIDER THE OTHER ITEMS AND MADE DISALLOWANC E THEREOF. WE OBSERVE THAT SEC. 147 OF THE ACT ITSELF PROVIDES THAT THE A.O. WHILE MAKI NG THE ASSESSMENT CAN ALSO CONSIDER OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED AS SESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDING S U/S. 147 OF THE ACT. THEREFORE, THE CONTENTION OF THE LD. A/R HAS NO MERIT THAT THE A.O . COULD NOT MAKE OTHER DISALLOWANCES WHICH WERE NOT MENTIONED IN THE REASONS RECORDED BY HIM. 13. IN RESPECT OF THE CONTENTION OF THE LD. A/R TH AT THE A.O. COULD NOT COMPLETE AN ASSESSMENT U/S. 144 AFTER THE PROCEEDING U/S. 147 H AS BEEN INITIATED, WE DO NOT FIND MERIT THERETO. SEC. 144 OF THE ACT PROVIDES, INTER ALIA, THAT IF THE ASSESSEE FAILS TO COMPLY WITH ALL THE TERMS OF A NOTICE ISSUED UNDER SUB-SEC. (1) OF SEC. 142 OR HAVING MADE A RETURN, FAILS TO COMPLY WITH ALL THE TERMS OF A NOTICE ISSU ED UNDER SUB-SEC.(2) OF SEC. 143 OF THE ACT, THE A.O. CAN COMPLETE THE ASSESSMENT U/S. 144 OF THE ACT. IN THE CASE BEFORE US, THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE, IN SPITE OF GIVING NUMBER OF OPPORTUNITIES TO THE ASSESSEE THROUGH NOTICES U/S. 142(1) AND/OR 143(2) TO PRODUCE THE BOOKS OF ACCOUNTS AND SUPPORTING BILLS AND VOUCHERS , FAILED TO COMPLY WITH THE SAME AND, THEREFORE, THE A.O. HAS CORRECTLY PASSED THE BEST J UDGMENT ASSESSMENT U/S. 144 OF THE 10 ACT. THEREFORE, THE LD. C.I.T.(A) HAS RIGHTLY HELD THAT THE ORDER PASSED BY THE A.O. U/S. 144 OF THE ACT IS IN ACCORDANCE WITH LAW. 14. IN VIEW OF THE ABOVE, GROUNDS NO. 1 TO 4 OF TH E REVISED GROUNDS OF APPEAL TAKEN BY THE ASSESSEE ARE REJECTED BY CONFIRMING THE ORDER O F THE LD. C.I.T.(A). 15. IN RESPECT OF GROUND NO.5(A) FOR DISPUTING THE DISALLOWANCE/ADDITION OF RS. 19,53,054/- U/S. 40(A)(IA) OF THE ACT, THE LD. A/R AT THE TIME OF HEARING SUBMITTED THAT THE ASSESSEE IS IN THE BUSINESS OF TRANSPORTATION A ND HIRE OF HEAVY VEHICLES AND AS SUCH ON THE PAYMENTS MADE TOWARDS HIRING OF LORRY FOR TRANS PORTING THE GOODS, THE PROVISIONS OF SEC. 194C OF THE ACT ARE NOT APPLICABLE AND AS SUCH THE ASSESSEE WAS NOT REQUIRED TO DEDUCT TDS. IN SUPPORT OF HIS SUBMISSION, THE LD. A/R REFERRED TO THE DECISION IN THE CASE OF MYTHRI TRANSPORT CORPN. VS. ACIT [124 TTJ 970], WHEREIN ON THE FACTS AND CIRCUMSTANCES OF THAT CASE IT WAS OBSERVED THAT THE PAYMENTS MADE FOR HIRING OF VEHICLES DID NOT FALL IN THE CATEGORY OF PAYMENTS TOWARDS SU B-CONTRACTS AND, THEREFORE, THE ASSESSEE WAS NOT LIABLE TO DEDUCT TDS AS PER PROVIS IONS OF SEC. 194C(2) OF THE ACT. BUT IN THE CASE OF THE ASSESSEE BEFORE US, IT IS OBSERVED THAT THE PAYMENTS TOWARDS CONTRACT/HIRE CHARES & TRANSPORTATION CHARGES WERE MADE TO THE SUBCONTRACTOR TRANSPORTERS AND, THEREFORE, PROVISIONS OF SEC. 194 C OF THE ACT ARE CLEARLY APPLICABLE TO THE CASE OF THE ASSESSEE. 16. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRES ENTATIVE JUSTIFIED THE ORDER OF THE LD. C.I.T.(A) CONFIRMING THE DISALLOWANCE MADE BY T HE A.O. AS THE ASSESSEE WAS LIABLE TO DEDUCT TDS ON THE PAYMENTS MADE TOWARDS HIRE CHARGE S/TRANSPORTATION CHARGES AND SINCE THE ASSESSEE FAILED TO DEDUCT TDS, THE LD. DEPARTME NTAL REPRESENTATIVE SUBMITTED THAT THE AMOUNT HAS RIGHTLY BEEN DISALLOWED U/S. 40(A)(I A) OF THE ACT. 17. WE HAVE CONSIDERED THE ORDERS OF THE AUTHORITI ES BELOW AND SUBMISSIONS OF THE LEARNED REPRESENTATIVES OF THE PARTIES. WE OBSERVE THAT THE A.O. HAS DISALLOWED THE SAID SUM OF RS.19,53,054/- BY OBSERVING AS UNDER :- IN THE TRADING A/C. FILED BY THE ASSESSEE WITH T HE RETURN OF INCOME THE ASSESSEE HAD CLAIMED CONTRACT/HIRE CHARGES OF RS.1,43,27,563 /- AND TRANSPORTATION CHARGES OF RS.56,12,109/-. SUBSEQUENTLY IN A WRITTEN SUBMIS SION DT.19-12-08 THE AR OF THE ASSESSEE STATED THAT DUE TO WRONG INTERPRETATION OF BILLS SOME EXPENSES WERE INCLUDED UNDER WRONG HEADS. HE GAVE THE PARTY-WISE BREAKUP AND NATURE OF EXPENSES INCLUDED UNDER THESE TWO MAJOR HEADS. ON E XAMINATION OF THIS BREAK UP 11 THE AO FOUND THAT DIFFERENT TYPES OF EXPENSES HAD B EEN MIXED UP UNDER THESE TWO HEADS. SINCE HE DID NOT GET ANY ASSISTANCE FROM THE ARS OF THE ASSESSEE HE SEGREGATED THESE EXPENSES DEPENDING UPON THE NATURE OF THE EXPENDITURE AND PUT THEM IN A TABULAR FORM IN HIS ORDER. THE HEAD-WISE SEPARATION DONE BY THE AO IS AS FOLLOWS: SL NO HEAD OF EXPENSES CLAIM AS PER A/C. FILED WITH RETURN EXPENSES SEGREGATED ON THE BASIS OF DETAILS FILED ON 19.12.2008 1. CONTRACT/HIRE CHARGES CHARGES PAID RS.14327563/- RS.948158/- 2. TRANSPORTATION CHARGES RS. 5612109/- RS. 13252 57/- 3. OIL EXPENSES RS. 4666170/- RS.20902856/- 4. TYRE EXPENSES RS. 417217/- RS. 2189807/- 5. REPAIRS & MAINTENANCE EXP RS. 497210/- RS. 304231/- 6. CAR HIRE CHARGES RS. 317280/- RS. 167240/- TOTAL RS.25837549/- RS.25837549/- THUS, THE REVISED AMOUNTS OF CONTRACT/HIRE CHA RGES AND TRANSPORTATION CHARGES WERE FOUND TO BE RS.9,48,158/- AND RS.13,25,257/-. THE ASSESSEE FURNISHED TWO LISTS OF THE PARTIES TO WHOM THESE CHARGES WERE PAI D. THESE LISTS HAVE BEEN COMBINED AND SUMMARIZED BY THE AO IN HIS ORDER AT P AGE NO.4&5 IN THE FORM OF TABLE-II. THE AO HAS MENTIONED THAT DURING THE COUR SE OF HEARING THE ASSESSEE FAILED TO FURNISH THE BILLS/VOUCHERS OF ALL THE ABO VE PARTIES. .THE ASSESSEE ALSO FAILED TO FURNISH ANY EVIDENCE REGARDING DEDUCTING TDS ON THE PAYMENTS PAID/CREDITED TO THESE PARTIES. IN VIEW OF THESE RE ASONS, THE AO CONCLUDED THAT THE AMOUNTS CLAIMED AS PAYABLE TO THE FIRST 21 PART IES MENTIONED BY HIM IN TABLE-II OF HIS ASSESSMENT ORDER ARE IN VIOLATION OF SECTION 40(A)(IA) OF THE IT ACT AND THEREFORE, DISALLOWED AN AMOUNT OF RS.19,53,054/-. 18. WE OBSERVE THAT THE LD. C.I.T.(A) AFTER CONSID ERING THE SUBMISSION OF THE ASSESSEE HAS CONFIRMED THE ACTION OF THE A.O. AND THE RELEVA NT PARA OF THE ORDER OF THE C.I.T.(A), I.E. PARA 7.2(I), AT PAGES 14 & 15 READS AS UNDER :- (I) CONTRACT / HIRE CHARGES & TRANSPORTATION CHARG ES : ON THE BASIS OF SOME DETAILS ABOUT VARIOUS EXPENSES FILED BY THE ASSESSEE, THE AO CALCULATED THAT DURING THE PREVIOUS YEAR THE ASSESS EE PAID CONTRACT/HIRE CHARGES AND TRANSPORTATION CHARGES OF RS.9,48,158/- AND RS. 13,25,257/- RESPECTIVELY TO SOME SUBCONTRACTORS THE AR THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS HAD ACCEPTED THAT THE BILLS FOR THESE EXPENSES ARE NOT AVAILABLE WITH THE ASSESSEE. IN ABSENCE OF BILLS AND VOUCHERS THESE EXPENSES CANNOT BE L1OWED TO THE ASSESSEE AND, I, THEREFORE, UPHOLD THIS DISALLOWANCE MADE BY THE ASSESSING OFFICER. IN RESPECT OF THESE EXPENSES, THERE IS ONE MORE DEFAULT COMMITTED BY THE ASSESSEE. ON THESE PAYMENTS TO THE SUBCONTRACTOR TR ANSPORTERS, THE ASSESSEE WAS 12 REQUIRED TO DEDUCT TDS AS PROVIDED U/S.194C OF CHAP TER-XVIIB OF THE INCOME TAX ACT, 1961. THE ASSESSEE DID NOT DEDUCT ANY TAX ON T HESE AMOUNTS PAYABLE BY HIM TO THE SUBCONTRACTORS. THEREFORE, THESE EXPENSES ARE D ISALLOWABLE U/S.40(A)(IA) ALSO. DURING THE APPELLATE PROCEEDINGS, THE AR OF THE ASSESSEE CONTENDED THAT OUT OF THE PARTIES LISTED BY THE AO ON PAGE 4 & 5 OF HI S ASSESSMENT ORDER THERE ARE SOME PARTIES TO WHOM TOTAL AMOUNT PAYABLE BY THE AS SESSEE DURING THE PREVIOUS YEAR WAS LESS THAN RS.50,000/- AND ON THESE AMOUNTS TDS WAS NOT DEDUCTIBLE. DURING THE APPEAL PROCEEDINGS THE AR FILED THE COPI ES OF THE BILLS OF SOME SUCH PARTIES AND CLAIMED THAT THE INDIVIDUAL BILLS OF TH ESE PARTIES WERE LESS THAN RS.20,000/- AND THEREFORE, TDS WAS NOT DEDUCTIBLE O THEM. SINCE THESE BILLS WERE NOT PRODUCED BEFORE THE AO THESE WERE ADDITIONAL EV IDENCES AND COULD NOT BE ACCEPTED DURING THE APPELLATE PROCEEDINGS AS PROVID ED IN RULE 46A OF I.T.RULES 1962. THE LD. AR WAS REQUESTED TO EXPLAIN WHY THESE BILLS WERE NOT PRODUCED BEFORE THE AO. NO EXPLANATION WAS FILED BY THE ASSE SSEE OR HIS AR REGARDING THIS QUERY. I, THEREFORE, HOLD THAT THESE BILLS FOR SOME PARTIES CANNOT BE ADMITTED AS EVIDENCE. IT IS SEEN THAT THE AMOUNTS RELATED TO THE PARTIES FOR WHICH THE ASSESSEE CLAIMS THAT TDS WAS NOT DEDUCTIBLE ARE MORE THAN RS .20,000/- AND THEREFORE, IN ABSENCE OF ANY EVIDENCES I HOLD THAT THE TDS ON THE SE AMOUNTS WAS DEDUCTIBLE BY THE ASSESSEE. IN VIEW OF THE ABOVE DISCUSSION, I HO LD THAT THE CONTRACT/HIRE CHARGES AND TRANSPORTATION CHARGES TOTALING TO RS.1 9,53,054/- ARE DISALLOWABLE U/S 4O(A)(IA) ALSO AND CONFIRM THE ADDITION MADE BY THE AO. 19. DURING THE COURSE OF HEARING BEFORE US, THE LD . A/R HAS NOT DISPUTED THE OBSERVATIONS AND THE FINDINGS OF THE AUTHORITIES BE LOW AS MENTIONED HEREINABOVE SAVE AND EXCEPT SUBMITTED THAT NO TDS WAS REQUIRED TO BE DED UCTED ON THE PAYMENTS MADE BY THE ASSESSEE TOWARDS HIRE CHARGES FOR TRANSPORTING THE GOODS. IN VIEW OF THE FACTS STATED BY THE AUTHORITIES BELOW, WE ARE OF THE CONSIDERED VIE W THAT THE ASSESSEE WAS REQUIRED TO DEDUCT TDS WHEN THE TOTAL AMOUNT PAID BY THE ASSESS EE DURING THE PREVIOUS YEAR TO A SINGLE PARTY WAS NOT LESS THAN RS.50,000/- AND THE INDIVIDUAL BILL WAS EXCEEDING RS.20,000/-. ON PERUSAL OF TABLE-II AT PAGES 4 & 5 OF THE ASSESSMENT ORDER AND ALSO CONSIDERING PAGES 13 TO 15 OF THE PAPER BOOK, WHICH ARE THE COPIES OF THE LEDGER ACCOUNTS OF MD. ALAM, ROY TRANSPORT ORGANISER AND M/S. JAWAH AR TRANSPORT RESPECTIVELY, WE OBSERVE THAT THE ASSESSEE HAS NOT BEEN ABLE TO FURN ISH ANY DETAILS THAT THE ASSESSEE WAS NOT REQUIRED TO DEDUCT TDS IN RESPECT OF THE REMAIN ING 21 PARTIES. WE ALSO OBSERVE THAT THE A.O. HAS ALSO COMPUTED THE TOTAL INCOME OF RS.1 9,53,054/- IN RESPECT OF 21 PARTIES OUT OF THE TOTAL PAYMENT OF RS.20,81,166/- PAID TO 24 P ARTIES AND, ACCORDINGLY, WE HOLD THAT 13 THE LD. C.I.T.(A) HAS RIGHTLY CONFIRMED THE ACTION OF THE A.O. TO DISALLOW THE SAID SUM OF RS.19,53,054/- U/S. 40(A)(IA) OF THE ACT. THEREFOR E, GROUND NO. 5(I) OF THE REVISED GROUNDS OF APPEAL IS REJECTED. 20. IN RESPECT OF GROUNDS NO. 5(B), 5(C) AND 5(D) OF THE REVISED GROUNDS OF APPEAL, THE LD. A/R HAS NOT SUBMITTED ANY DETAILS SAVE AND EXCE PT SUBMITTED THAT THE DISALLOWANCE MADE BY THE A.O. IS NOT JUSTIFIED AS THE SAID EXPEN SES WERE INCURRED BY THE ASSESSEE FOR BUSINESS PURPOSES. ON THE OTHER HAND, THE LD. DEPA RTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. HE SUBMITTED THAT THE ASSESSEE FAILED TO PRODUCE THE BILLS AND/OR ANY EVIDENCE TO JUSTIFY THE EXPENSES C LAIMED BY HIM. 21. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMISSIONS OF THE LEARNED REPRESENTATIVES OF THE PARTIES. 22. WE OBSERVE THAT THE A.O. WHILE MAKING THE SAID DISALLOWANCE UNDER THE HEAD TYRE EXPENSES HAS GIVEN THE REASONS THAT DURING THE ASS ESSMENT PROCEEDINGS THE ASSESSEE FAILED TO PRODUCE ANY BILLS/VOUCHERS FOR PURCHASE O F TYRE EXPENSES. FROM THE AUDIT REPORTS FILED WITH THE RETURNS FOR A.YS 2005-06 & 2 006-07, THE A.O. FOUND THAT THE ASSESSEE COULD HAVE SOME TRANSACTION WITH EAST INDI A TYRE COMPANY, KOLKATA. THEREFORE, HE CALLED FOR INFORMATION RELATED TO TYRE PURCHASE FROM THIS CONCERN WHO INFORMED THAT DURING F.YS 2004-05 AND 2005-06, THEY DID NOT HAVE ANY BUSINESS TRANSACTION WITH THE ASSESSEE. THE AO, THEREFORE, CONCLUDED THAT THE ASS ESSEE FAILED TO SUBSTANTIATE HIS CLAIM OF TYRE EXPENSES AND WENT ON TO DETERMINE THESE EXP ENSES ON ESTIMATE BASIS. THE AO HAS MENTIONED THAT IN THE COURSE OF HEARING THE ASSESSE E HAD PRODUCED THE LIST OF VEHICLES UTILIZED BY HIM DURING THE RELEVANT YEAR. WE FEEL I T PRUDENT TO REPRODUCE THE METHOD OF CALCULATION USED BY THE AO AS UNDER : ON GOING THROUGH THE LIST IT IS FOUND THAT DURIN G THE YEAR THE ASSESSEE UTILIZED HIS 10 VEHICLES INCLUDING CRAIN, TRAILOR AND TRUCKS HAV ING TOTAL WHEELS OF 88. THE PRICE OF TYRE DURING THE YEAR FOR HEAVY VEHICLES WAS NOT MORE THAN RS. 19500/- PER PAIR. EVEN F IT IS CONSIDERED THAT THE ASSESSEE REPLACED ALL THE TYRES OF HIS VEHICLES WITHIN A YEAR THEN THE REQUIREMENT OF NEW TYRE COME S TO 44 PAIRS. THE EXPENSES FOR TYRE THUS CAN BE ESTIMATED ON A CONSERVATIVE MA NNER AT RS.858000/-. AS SUCH THE EXCESS EXPENSES UNDER THE HEAD TYRE EXPENSES CL AIMED BY THE ASSESSEE COMES TO RS. 1331807/- [RS.2189807 - RS. 858000]. AS SUCH THE SAID EXCESS CLAIM OF EXPENSES AMOUNTING TO RS.1331807/- IS DISALLOWED AN D ADDED BACK TO THE NET PROFIT OF THE ASSESSEE FOR THE A. Y-2005-06. 14 THUS, OUT OF TYRE EXPENSES, THE AO DISALLOWED AN AM OUNT OF RS.13,31,807/- 23. WE OBSERVE THAT THE LD. C.I.T.(A) AFTER CONSI DERING THE SUBMISSION OF THE ASSESSEE HAS CONFIRMED THE ACTION OF THE A.O. IN SO FAR AS T YRE EXPENSES ARE CONCERNED AND THE RELEVANT PARA OF THE ORDER OF THE C.I.T.(A), I.E. P ARA 7.2(II), AT PAGE 15 READS AS UNDER :- (II) TYRE EXPENSES : THE AO HAS DISALLOWED AN AMOUNT OF RS.13,31,8O7/- O UT OF TYRE EXPENSES OF RS.21,89,807/- CLAIMED BY THE ASSESSEE. IT HAS BEEN DISCUSSED ABOVE THAT DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE COULD NOT P RODUCE ANY SUPPORTING PURCHASE BILLS REGARDING THESE TYRE EXPENSES. IN AB SENCE OF ANY PURCHASE BILLS THE AO COULD HAVE DISALLOWED THE WHOLE TYRE EXPENSES. B UT HE ACTED REASONABLY AND THROUGH SOME LOGICAL CALCULATION SHOWED THAT KEEPIN G IN VIEW THE VEHICLES USED BY THE ASSESSEE EXPENSES ON TYRES COULD HAVE BEEN ONLY RS.8,58,000/-. THE REMAINING AMOUNT OF RS.13,31,807/- WAS DISALLOWED BY HIM. IT IS INTERESTING TO SEE THAT THOUGH THIS D ISALLOWANCE WAS CHALLENGED BY THE ASSESSEE IN THE GROUNDS OF APPEAL BUT DURING THE AP PEAL PROCEEDINGS THE ASSESSEE HAS NOT FURNISHED ANY SUBMISSION OR DOCUMENTS TO SH OW WHAT IS WRONG IN THIS ADDITION. I, THEREFORE, CONFIRM THIS ADDITION MADE BY THE AO. CONSIDERING THE ABOVE FACTS, WE DO NOT FIND ANY INF IRMITY IN THE ORDER OF THE LD. C.I.T.(A) AS NO DETAILS HAVE BEEN FURNISHED BY THE ASSESSEE B EFORE US. WE, THEREFORE, REJECT GROUND NO. 5(B) OF THE REVISED GROUNDS OF APPEAL. 24. IN RESPECT OF OIL EXPENSES, THE A.O. ON THE BA SIS OF SOME DETAILS FURNISHED BY THE ASSESSEE FOUND THAT THE ASSESSEE CLAIMED EXPENSES O F RS.2,09,02,856/- UNDER THIS HEAD, OUT OF WHICH HE DISALLOWED A SUM OF RS.29,66,318/- FOR THE REASONS STATED AS UNDER :- IT HAS BEEN SHOWN IN THE TABLE-I ABOVE THAT THE AS SESSEE DURING THE RELEVANT F. Y. CLAIMED OIL EXPENSES MINGLED WITH DIFFERENT HEADS O F EXPENSES AMOUNTING TO RS.2,09,02,856/-. IN COURSE OF HEARING THE ASSESSEE FAILED TO FURNISH ANY EVIDENCE IN SUPPORT OF FUEL EXPENSES. IN COURSE OF HEARING L ETTER U/S 133(6) WERE ISSUED TO SARAOGI SERVICE STATION. IN REPLY THE SAID CO. INFO RMED THAT DURING THE F Y 2004- 05 & 2005-06 THEY ARE NOT ABLE TO FIND ANY IN THE N AME SPECIFIED IN THE LETTER. THEY ALSO INFORMED THAT IT WAS NOT POSSIBLE FOR THE M TO RETRIEVE THE DETAILS OF THE PARTIES WHO TOOK FUEL ON CASH. IN COURSE OF HEARING , IN ABSENCE OF EVIDENCE, THE ASSESSEE WAS ASKED TO FURNISH THE DISTANCE COVERED BY HIS OWN TRUCK AS WELL AS HIRED TRUCKS DURING THE YEAR. IN RESPONSE TO THAT R EQUISITION THE ASSESSEE FILED A WRITTEN SUBMISSION CONTAINING A TABLE WHERE IT IS O NLY MENTIONED AS PER BILL. BUT THE ASSESSEE NEVER PRODUCED ANY BILLS RAISED THE PARTIE S FROM WHOM HE HIRED LORRIES. THE ASSESSEE FAILED TO FURNISH ANY DETAILS REGARDIN G DISTANCE COVERED BY HIS OWN TRUCKS AS WELL AS HIRED TRUCKS DURING THE RELEVANT YEAR. THUS THE ASSESSEE FAILED TO 15 FURNISH BOTH THE EVIDENCES IN SUPPORT OF FUEL EXPEN SES AND UTILIZATION OF FUELS DURING THE YEAR. UNDER THE STATED CIRCUMSTANCES THE ASSESSEE WAS ASKED TO PRODUCE THE BILLS WHICH HE RAISED TO HIS CONTRACTEE DEPARTMENT FOR EXECUTION OF CONTRACT WORK. THE ASSESSEE FILED PHOTOCOPY OF BILL S RAISED AGAINST HIS WORK FOR CASTRO! INDIA AND BALMER & LAWRIE. ON PERUSAL OF TH E LIST IT IS RECORDED THAT THE ASSESSEE PUT TO USE TEN VEHICLES FOR EXECUTING THE WORKS OF CASTROL INDIA. THE NO. OF THE TRUCKS ARE WB 15 7037, NL OJA 8569, NL OJA 8 478, NL OJA 9129, NL OJA 8483, NL OJA 9241, WB 15 7819, WB 15 7817, WB 0 3A 3642 & NL 0]A 8487. ON UTILIZING THIS TEN VEHICLES THE ASSESSEE RAISED BILLS FOR CASTROL INDIA A SUM OF RS.6471902/-. IF IT IS CONSIDERED THAT THE ASSESSEE UTILI ZED THE ABOVEMENTIONED TEN VEHICLES SOLELY FOR THE WORK OF CASTROL INDIA THROUGH OUT TH E YEAR THEN THE FUEL EXPENSES FOR THOSE TEN TRUCKS CAN BE ESTIMATED AS UNDER: ON AN AVERAGE A HEAVY GOODS VEHICLE CANNOT RUN MORE THAN 250 DAYS IN A YEAR. THIS ALSO JUSTIFIES THE CLAIM OF REPAIRS & MAINTENA NCE AND TYRES EXPENSES, SINCE IT REQUIRES IDLE TIME FOR THE VEHICLE HEAVY GOODS VEHI CLE CANNOT RUN AT FASTER SPEED AND CANNOT INGRESS OR EGRESS FROM THE CITY AT THE D AY TIME. FURTHER, FOR A SINGLE TRANSPORTATION IT REQUIRES LOADING & UNLOADING AT S TARTING POINT & DESTINATION POINT WHICH REQUIRES SUFFICIENT TIMES. CONSIDERING THE FA CTS IT IS ACCEPTED THAT ON AN AVERAGE A HEAVY GOODS VEHICLE CAN COVER MAXIMUM 200 KM PER DAY. FROM THE ABOVE DATA IT CAN DEDUCED THAT TO EXECUTE THE WORK OF CAS TROL INDIA THE TEN VEHICLE COVERED 10 X250 DAYS X 200 KM = 500000 KM DURING TH E YEAR. THE ASSESSEE IN HIS WRITTEN SUBMISSION HAS STATED THE APPROX. MILEAGE O F A VEHICLE AT 4 KM PER LITRE OF DIESEL. AS SUCH THE REQUIREMENT OF DIESEL WAS 12500 0 LITRES. THE AVERAGE PRICE OF DIESEL DURING THE F. Y 2004- 05 WAS RS. 30/-. AS SU CH THE ASSESSEE HAD TO INCUR OIL EXPENSES FOR THE EXECUTION OF HIS WORK OF CASTRO! I NDIA IS ESTIMATED AT RS.3750000/-. AS SUCH IT IS ESTIMATED ON A CONSERVATIVE M ANNER AS ABOVE THAT THE ASSESSEE GENERATED TURNOVER OF RS. 6471902/- BY INCURRING FU EL EXPENSES OF RS.3 750000/-. THUS THE ASSESSEE GENERATED TURNOVER OF RS. 30955672/-[AS DECLARED IN THE RETURN] BY INCURRING FUEL EXPENSES OF [3750000/6471 902 X 30955672] RS. 17936577/-. BUT THE ASSESSEE CLAIMED FUEL EXPENSES UNDER THE DIFFERENT LISTS FOR EXPENSES UNDER DIFFERENT HEADS, FILED IN COURSE OF HEARING, TOTAL AMOUNTING TO RS.20902856/- AS PER TABLE-I SUPRA. FROM THE ABOVE OBSERVATION IT IS CONCLUDED THAT THE ASSESSEE DURING THE YEAR CLAIMED EXCESSIVE EXPENSES ON ACCOUNT OF FUEL AND A S SUCH THE EXCESS CLAIM OF EXPENSES AS ESTIMATED ABOVE ON A CONSERVATIVE MANNE R AMOUNTING TO RS.2966318/- [RS.20902895 RS.17936577] IS DISALLOWED AND ADDED BACK TO THE NET PROFIT OF THE ASSESSEE FOR THE A.Y. 2005-06. 16 25. WE OBSERVE THAT THE LD. C.I.T.(A) AFTER CONSIDE RING THE SUBMISSION OF THE ASSESSEE HAS CONFIRMED THE ACTION OF THE A.O. IN RESPECT OF OIL EXPENSES AND THE RELEVANT PARA OF THE ORDER OF THE C.I.T.(A), I.E. PARA 7.2(III), A T PAGE 15 READS AS UNDER :- (III) OIL EXPENSES : THE AO HAS DISALLOWED AN AMOUNT OF RS.29,66, 318/- OUT OF OIL EXPENSES OF RS.2,09,02,895/- CLAIMED BY THE ASSESSEE. IT HAS BE EN DISCUSSED ABOVE THAT DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE COULD NOT P RODUCE ANY SUPPORTING PURCHASE BILLS REGARDING THESE OIL EXPENSES. IN ABS ENCE OF ANY PURCHASE BILLS THE AO COULD HAVE DISALLOWED THE WHOLE OIL EXPENSES. BUT H E ACTED REASONABLY AND THROUGH SOME LOGICAL CALCULATION SHOWED THAT KEEPING IN VIE W THE VEHICLES USED BY THE ASSESSEE EXPENSES ON OIL COULD HAVE BEEN ONLY RS.1, 79,36,577/-. THE REMAINING AMOUNT OF RS.29,66,318/- WAS DISALLOWED BY HIM. IT IS INTERESTING TO SEE THAT JUST LIKE TYR E EXPENSES THOUGH THIS DISALLOWANCE WAS CHALLENGED BY THE ASSESSEE IN THE GROUNDS OF AP PEAL BUT DURING THE APPEAL PROCEEDINGS THE ASSESSEE HAS NOT FURNISHED ANY SUBM ISSION OR DOCUMENTS TO SHOW WHAT IS WRONG IN THIS ADDITION. I, THEREFORE, CONFI RM THIS ADDITION MADE BY THE AO. 26. CONSIDERING THE ABOVE FACTS, WE DO NOT FIND AN Y INFIRMITY IN THE ORDER OF THE LD. C.I.T.(A) AS NO SUPPORTING PURCHASE BILLS REGARDING OIL EXPENSES COULD BE FURNISHED BY THE ASSESSEE BEFORE US. WE, THEREFORE, REJECT GROUND N O. 5(C) OF THE REVISED GROUNDS OF APPEAL. 27. IN RESPECT OF BUSINESS PROMOTION EXPENSES, WE OBSERVE THAT THE A.O. HAS DISALLOWED THESE EXPENSES TO THE TUNE OF RS.3,02,90 0/- FOR THE REASONS GIVEN AS UNDER :- THE ASSESSEE IN HIS STATEMENT OF ACCOUNT FILED WI TH THE RETURN CLAIMED EXPENSES UNDER THE HEAD BUSINESS PROMOTION A SUM OF RS.515 215/-. IN COURSE OF HEARING THE AR OF THE ASSESSEE FILED A WRITTEN SUBMISSION EXPLA INED THAT THE THESE TYPE OF EXPENSES ARE GENERALLY INCURRED FOR IN HOUSE PROMOT ION BY MEANS OF ENTERTAINMENT TO THE EXISTING AND PROPOSED CLIENTS AND VARIOUS ON GOING EXPENSES FOR GETTING VALUED ORDERS FROM THE VALUED CLIENTS. BUT THE ASSESSEE CO ULD NOT PRODUCE ANY EVIDENCE WHICH WOULD JUSTIFY HIS EXPLANATION. FURTHER ON VER IFICATION OF THE LEDGER COPY FILED BY THE ASSESSEE IT IS NOTED THAT SOME EXPENSES UNDE R THIS HEAD HAS BEEN DEBITED WITH THE NARRATION PAID FOR AGENT COMMISSION TO DIF FERENT PERSONS NAMED I) A JANA II) P K GUPTA III) R K PANDIT IV) AJOY DEY AMOUNTIN G TO RS.302090/-. BUT THE ASSESSEE DID NOT DEDUCT ANY TDS AGAINST SUCH COMMISSION PAYM ENT ABOVE RS.2500/- AS PER PROVISIONS OF SEC.194H. AS SUCH THE SAID EXPENSES A MOUNTING TO RS.302090/- IS DISALLOWED U/S. 40(A)(IA) AND ADDED BACK TO THE NET PROFIT OF THE ASSESSEE FOR THE A.Y. 2005-06. 17 28. ON APPEAL, THE LD. C.I.T.(A) CONFIRMED THE DIS ALLOWANCE WITH THE FOLLOWING OBSERVATIONS :- (IV) BUSINESS PROMOTION EXPENSES : OUT OF THE BUSINESS PROMOTION EXPENSES THE AO FOUND THAT COMMISSION WAS PAID TO FOUR AGENTS TO THE TUNE OF RS.3,02,090/-. T HOUGH THESE COMMISSION PAYMENTS WERE ABOVE RS.2,500/-, TDS WAS NOT DEDUCTE D ON THESE AS PROVIDED IN SEC. 194H OF THE INCOME TAX ACT, 1961. THE AO DISAL LOWED THESE EXPENSES U/S.40(A)(IA). DURING THE APPELLATE PROCEEDINGS LD. AR OF THE ASSESSEE DID NOT FURNISH ANY SUBMISSION TO SHOW WHAT WAS WRONG WITH THIS DISALLOWANCE MADE BY THE AO. THIS SHOWS THAT THE ASSESSEE DOES NOT HAVE ANYT HING TO SAY ON THIS GROUND OF APPEAL. I, THEREFORE, CONFIRM THIS DISALLOWANCE MA DE BY THE AO U/S.40(A)(IA). 29. ON THE ABOVE FACTS AND IN THE ABSENCE OF ANY D ETAILS BEFORE US, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LD. C.I.T .(A) AND HENCE HIS ORDER SUSTAINING THE DISALLOWANCE MADE BY THE A.O. FOR BUSINESS PROMOTIO N EXPENSES IS UPHELD. WE, THEREFORE, REJECT GROUND NO. 5(D) OF THE REVISED GROUNDS OF AP PEAL. 30. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS D ISMISSED. I.T.A.NO. 1649 (KOL) OF 2009 (A.Y. 2006-07) : 31. NOW WE TAKE UP THE APPEAL FOR ASSESSMENT YEAR 2006-07 BEING I.T.A. NO. 1649 (KOL)/2009. 32. IN RESPECT OF GROUNDS NO. 1 TO 4 OF REVISED GR OUNDS OF APPEAL, AS REPRODUCED ABOVE, THE LD. A/R OF THE ASSESSEE SUBMITTED THAT HIS SUBM ISSIONS ARE SAME AS WERE FOR ASSESSMENT YEAR 2005-06. HOWEVER, THE ATTENTION OF THE LD. A/R WAS DRAWN THAT IN RESPECT OF THE ASSESSMENT YEAR 2006-07, NO REASSESS MENT PROCEEDINGS WERE INITIATED BY THE A.O. AND RATHER THE ASSESSMENT WAS COMPLETED ON THE BASIS OF THE ORIGINAL RETURN FILED BY THE ASSESSEE DATED 30.10.2006 AFTER THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY THROUGH CASS. HOWEVER, THE LD. A/R REFERR ED TO PAGE-2 OF THE ASSESSMENT ORDER AND SUBMITTED THAT THE A.O. HAS MENTIONED THAT HE R ECORDED THE REASONS BEFORE ISSUING NOTICE U/S. 148 OF THE ACT AND, THEREFORE, THIS ASS ESSMENT SHOULD BE TAKEN TO HAVE BEEN MADE U/S. 147 READ WITH SEC. 144 OF THE ACT. THE L D. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE A.O. MADE THE ASSESSMENT U/S. 14 4 OF THE ACT AS THE ASSESSEE FAILED TO COMPLY WITH THE NOTICE ISSUED U/S. 142(1) AND/OR U/S. 143(2) OF THE ACT. HE SUBMITTED 18 THAT NO REASSESSMENT PROCEEDINGS WERE INITIATED BY THE A.O. IN RESPECT OF ASSESSMENT YEAR 2006-07. 33. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LD. REPRESENTATIVES OF THE PARTIES AND THE ORDER OF THE A.O. WE OBSERVE THAT THE LD. C.I. T.(A) HAS ALSO CLARIFIED IN PARA 7.1(I) OF THE IMPUGNED ORDER THAT MENTION OF NOTICE U/S. 148 ON PAGE-2 OF THE ASSESSMENT ORDER WAS MERELY A TYPING MISTAKE. THE LD. C.I.T.(A) HAS MEN TIONED THAT IN THE SAID PARA THE A.O. HAS REPRODUCED HIS LETTER DATED 03/12/2008 IN WHICH HE HAD FIXED THE HEARING ON 10/12/2008. THE LD. C.I.T.(A) HAS FURTHER STATED THAT WHEN HE C OMPARED THAT LETTER, THERE WAS NO LINE TALKING ABOUT ISSUING A NOTICVE U/S. 148 OF THE ACT . WE AGREE WITH THE LD. DEPARTMENTAL REPRESENTATIVE THAT THIS APPEAL IS ARISING OUT OF A N ASSESSMENT MADE IN THE REGULAR COURSE AND NOT PURSUANT TO THE NOTICE ISSUED U/S. 148 OF T HE ACT. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY THROUGH CASS AND NOTICES UNDE R SECS. 143(2) AND 142(1) WERE SERVED ON THE ASSESSEE. WE OBSERVE THAT WHEN THE ASSESSEE ENQUIRED FROM THE A.O. ABOUT NOTICE ISSUED U/S. 148 OF THE ACT FOR ASSESSMENT YEAR 2006 -07, THE A.O. HAD CLARIFIED THAT NO NOTICE U/S. 148 OF THE ACT WAS ISSUED FOR THE IMPUG NED ASSESSMENT YEAR, I.E. ASSESSMENT YEAR 2006-07. THE ABOVE FACTS ARE CLEARLY STATED B Y THE LD. C.I.T.(A). THEREFORE, GROUNDS NO. 2 TO 4 OF THE REVISED GROUNDS OF APPEAL ARE NOT FACTUALLY CORRECT AND THE SAME ARE REJECTED. 34. NOW THE QUESTION ARISES AS TO WHETHER THE ASSE SSMENT MADE U/S. 144 OF THE ACT WAS VALIDLY MADE. IN THIS RESPECT WE MENTION PARA- 2 OF THE ORDER OF THE LD. C.I.T.(A). THE FACTS MENTIONED THEREIN HAVE BEEN TAKEN FROM THE OR DER OF THE A.O. AND THE SAME HAVE NOT BEEN DISPUTED BY THE LD. A/R AT THE TIME OF HEA RING OF THE APPEAL. FURTHER, THE LD. C.I.T.(A) HAS ALSO CONSIDERED THE SAID GROUND IN PA RA 7.1(IV) OF THE IMPUGNED ORDER AT PAGES 11 & 12. FOR THE SAKE OF CLARITY, WE REPRODUCE SAI D PARAS 2 & 7.1(IV) OF THE ORDER OF THE LD. C.I.T.(A), WHICH READ AS UNDER :- 2. IN THE ASSESSMENT ORDER ON PAGE NOS. 1 TO 3 TH E AO HAS ELABORATELY DESCRIBED THE REASONS FOR COMPLETING THE ASSESSMENT U/S. 144 OF THE IT ACT. THE AO HAS MENTIONED THAT AT THE BEGINNING OF THE ASSESSMENT P ROCEEDINGS WHEN THE BOOKS OF A/CS AND VOUCHERS OF THE ASSESSEE WERE CALLED FOR, THE SAME WERE NOT PRODUCED. LATER ON THE ACCOUNTANT OF THE ASSESSEE ASKED FOR A DJOURNMENT ON 5-8-2008. ON THAT DATE THE ACCOUNTANT ATTENDED WITH A NEW AUTHOR IZED REPRESENTATIVE SHRI AMIT PAUL AND THE HEARING WAS ADJOURNED TO 28-8- 200 8. HOWEVER, ON THAT DATE NOBODY 19 ATTENDED ON BEHALF OF THE ASSESSEE. SUBSEQUENTLY A LETTER WAS ISSUED TO THE ASSESSEE FIXING THE HEARING ON 03-09-2008. ON 3-9-0 8, THE AR SHRI AMIT PAUL APPEARED AND FILED HIS AUTHORITY. HE WAS ASKED TO A TTEND WITH BOOKS OF ACCOUNTS AND VOUCHERS OF THE ASSESSEE ON 23-9-08. ON 23-9-08 , SHRI PAUL STATED THAT THE BOOKS OF A/CS AVAILABLE WITH THE ASSESSEE DO NOT TA LLY WITH THE AUDITED BALANCE SHEET AND PJL A/C. FILED WITH THE RETURN. AFTER THI S ON 22-10-08 THE ASSESSEE SOUGHT FOR DIRECTION FROM THE ADDL. CIT, R-28, KOL. U/S. 144A OF THE IT ACT, 1961. DURING THE PROCEEDINGS U/S. 144A, THE AO SENT REPOR T TO THE ADDL. CIT AS CALLED FOR. HOWEVER, ON 3- 12-08 THE ADDL. CIT INFORMED TH E AO THAT FOR AY 2006-07, THE ASSESSEE HAD WITHDRAWN THE PETITION U/S.144A AN D THE ASSESSMENT. MAY BE COMPLETED AS PER LAW. THE AO ISSUED A LETTER DT. 3- 12-08 TO THE ASSESSEE CALLING FOR CERTAIN DETAILS AND BOOKS OF A/CS AND SUPPORTING BI LLS AND VOUCHERS AND FIXED THE HEARING ON 10-12-08. ON 10-12-08, ANOTHER AUTHORIZE D REPRESENTATIVE SHRI A. K. SAMANTA, FCA ATTENDED WITH COMPUTERIZED BOOKS OF A/ CS BUT DID NOT PRODUCE ANY SUPPORTING BILLS AND VOUCHERS. HE WAS ASKED TO PROD UCE BILLS AND VOUCHERS ON 15-12- 08 BUT HE DID NOT DO SO. THE AO AGAIN ISSUED A REQU ISITION U/S.L42(L) VIDE LETTER DT.15-12-08 AND FIXED THE HEARING ON 22-12-08. IN R ESPONSE TO THIS LETTER, THE AR APPEARED ON 17-12-08 AND REQUESTED FOR ADJOURNMENT OF THE HEARING ON 19- 12-08. ON 19-12-08, THE AR APPEARED AND FILED A WRITTEN SU BMISSION AND STATED THAT HE WOULD ATTEND WITH BILLS OF HIRE CHARGES AND TRANSPO RTATION CHARGES RECEIVED AND PAID BY THE ASSESSEE ON 22-12-08. ON 22-12-08, ANOT HER AR SHRI NARAIN C. ROY APPEARED AND PRODUCED COPIES OF THE BILLS RAISED BY THE ASSESSEE TO HIS CUSTOMERS FOR HIRE CHARGES AND TRANSPORTATION CHARGES. HOWEVE R, THE BILLS FOR THE HIRE CHARGES AND TRANSPORTATION CHARGES CLAIMED BY THE A SSESSEE AS DEDUCTION WERE NOT PRODUCED AND THE AR STATED THAT IT WAS NOT POSSIBLE FOR HIM TO PRODUCE THEM. THE AR WAS ASKED TO PRODUCE THE ORIGINAL BILLS FOR TYRE PURCHASES ON 26-12-08. ON 26- 12-08, SHRI N C ROY APPEARED AND STATED THAT THE AS SESSEE COULD NOT TRACE OUT THE BILLS AND VOUCHERS FOR TRANSPORT CHARGES, HIRE CHAR GES AND TYRE CHARGES AND WOULD BE ABLE TO PRODUCE THE SAME AS AND WHEN THEY ARE AV AILABLE. IN VIEW OF THE ABOVE DISCREPANCIES AND FAIL URE OF THE ASSESSEE TO PRODUCE RELEVANT BILLS AND VOUCHERS REQUISITIONED U/S.142(1 ) AND 143(2) THE AO CONCLUDED THAT THE ACCOUNTS SUBMITTED BY THE ASSESSEE ARE INC ORRECT AND INCOMPLETE. HE, THEREFORE, REJECTED THE BOOKS OF ALES OF THE ASSESS EE U/S.145(3) AND PROCEEDED TO MAKE AN ASSESSMENT IN THE MANNER PROVIDED IN SECTIO N 144 OFT HE IT ACT, I.E., BEST JUDGEMENT ASSESSMENT. (IV) THE LD. AR HAS ALSO CHALLENGED THE PASSING OF THE ORDER UL/S.144 OF THE INCOME TAX ACT, 1961. ON EXAMINATION OF SECTION 144(1) IT CAN BE SEEN THAT THE AO CAN MAKE A BEST JUDGEMENT ASSESSMENT IF ANY PERSON (B) FAILS TO COMPLY WITH ALL THE TERMS OF A NOTICE ISSUED UNDER SUB-SECTION (1) OF S ECTION 142 [OR FAILS TO COMPLY WITH A DIRECTION ISSUED UNDER SUB-SECTION (2A) OF T HAT SECTION], OR, (C) HAVING MADE A RETURN, FAILS TO COMPLY WITH ALL THE TERMS OF A N OTICE ISSUED UNDER SUB-SECTION (2) OF SECTION 143. 20 FROM THE FACTS OF THIS CASE NARRATED IN PAR A 2 OF THIS ORDER IT CAN BE SEEN THAT THERE WAS TOTAL CALLOUSNESS ON THE PART OF THE ASSESSEE TO REPRESENT HIS CASE BEFORE THE AO. THE AUTHORIZED REPRESENTATIVES WERE CHANGED A NUMBER OF TIMES. ONE OF THE ARS CLEARLY STATED THAT THE BOOKS A/CS A ND DOCUMENTS AVAILABLE WITH THE ASSESSEE DO NOT MATCH WITH THE ACCOUNTS FILED ALONG WITH THE RETURN OF INCOME. THE AO GAVE A NUMBER OF OPPORTUNITIES TO THE ASSESSEE T HROUGH NOTICES U/S. L43(2) & 142(L ) TO PRODUCE THE BOOKS OF A/CS AND SUPPORTING BILLS AND VOUCHERS. THE AR OF THE ASSESSEE COULD PRODUCE SOME COMPUTERIZED BOOKS OF A/CS ONLY BUT THE SUPPORTING BILLS & VOUCHERS FOR DIFFERENT TYPES OF EXPENSES WERE NEVER PRODUCED. THUS, IT IS CLEAR THAT THE CASE OF THE ASSESSEE IS COVERED U/S.144(1)(B) & (C) OF THE OF THE INCOME TAX ACT, 1961 AND THE AO HAS CORRECTL Y PASSED THE ORDER U/S144. THE AO WAS ALSO RIGHT IN REJECTING BOOKS OF A/CS OF THE ASSESSEE BECAUSE OF THE VARIOUS DISCREPANCIES POINTED OUT BY HIM AND FAILUR E OF THE ASSESSEE TO PRODUCE SUPPORTING BILLS OR VOUCHERS FOR EXPENSES CLAIMED. IN VIEW OF THE ABOVE DISCUSSION, I HOLD THA T THERE IS NO LEGAL INFIRMITY IN ANY OF THE NOTICES ISSUED BY THE AO AND THE ORDER PASSED B Y HIM U/S.144 IS IN ACCORDANCE WITH LAW. 35. AS MENTIONED HEREINABOVE, THE LD. A/R HAS NOT DISPUTED THE FACTS MENTIONED BY THE LD. C.I.T.(A). WE, THEREFORE, HOLD THAT IN THE FAC TS AND CIRCUMSTANCES OF THE CASE THE A.O. WAS JUSTIFIED TO COMPLETE THE ASSESSMENT AS PER SEC . 144 OF THE ACT. HENCE GROUND NO.1 OF THE REVISED GROUND OF APPEAL TAKEN BY THE ASSESS EE IS ALSO REJECTED. 36. IN RESPECT OF GROUNDS NO. 5(A), (B) & (C) OF T HE REVISED GROUNDS OF APPEAL, THE REASONS GIVEN BY THE A.O. FOR MAKING THE DISALLOWAN CES HAVE BEEN MENTIONED BY LD. C.I.T.(A) IN PARA-3 OF THE IMPUGNED ORDER AND WE CO NSIDER IT PRUDENT TO REPRODUCE PARAS 3(I), (II) & (III) AT PAGES 3 TO 5, WHICH ARE AS UN DER :- (I) CONTRACT / HIRE CHARGES AND TRANSPORTATION CHA RGES : IN THE TRADING A/C. FILED BY THE A SSESSEE WITH THE RETURN OF INCOME THE ASSESSEE HAD CLAIMED CONTRACT/HIRE CHARGES OF RS.69 ,35,873/- AND TRANSPORTATION CHARGES OF RS.20, 15,107/-. SUBSEQUENTLY IN A WRITT EN SUBMISSION DT. 19-12-08 THE AR OF THE ASSESSEE STATED THAT DUE TO WRONG INTERPR ETATION OF BILLS SOME EXPENSES WERE INCLUDED UNDER WRONG HEADS. HE GAVE THE PARTY- WISE BREAKUP AND NATURE OF EXPENSES INCLUDED UNDER THESE TWO MAJOR HEADS. ON E XAMINATION OF THIS BREAK UP THE AO FOUND THAT DIFFERENT TYPES OF EXPENSES HAD B EEN MIXED UP UNDER THESE TWO HEADS. SINCE HE DID NOT ANY ASSISTANCE FROM THE ARS OF THE ASSESSEE HE SEGREGATED THESE EXPENSES DEPENDING UPON THE NATURE OF THE EXP ENDITURE AND PUT THEM IN A TABULAR FORM IN HIS ORDER. THE HEADWISE SEPARATION DONE BY THE AO IS AS FOLLOWS : 21 SL NO HEAD OF EXPENSES CLAIM AS PER A/C. FILED WITH RETURN EXPENSES SEGREGATED ON THE BASIS OF DETAILS FILED ON 19.12.2008 1. CONTRACT/HIRE CHARGES CHARGES PAID RS.6935873/- RS. 862093/- 2. TRANSPORTATION CHARGES RS.2015107/- RS. 727264/- 3. OIL EXPENSES RS. 2370990/- RS.5851068/- 4. TYRE EXPENSES RS. 217250/- RS.4098795/- TOTAL RS.11539220/- RS.11539220/- THUS, THE REVISED AMOUNTS OF CONTRACT/HIRE CHARGES AND TRANSPORTATION CHARGES WERE FOUND TO BE RS.8,62,093/- AND RS.3,27, 264/-. THE ASSESSEE FURNISHED TWO LISTS OF THE PARTIES TO WHOM THESE CHARGES WERE PAID. THESE LISTS HAVE BEEN COMBINED AND SUMMARIZED BY THE AO IN HIS ORDER AT P AGE NO.4 IN THE FORM OF TABLE- II. THE AO HAS MENTIONED THAT DURING THE COURSE OF HEARING THE ASSESSEE FAILED TO FURNISH THE BILLS/VOUCHERS OF ALL THE ABOVE PARTIES . HE HAS MENTIONED THAT IN ABSENCE OF THE BILLS IT WAS NOT POSSIBLE TO DECIDE WHETHER THE ASSESSEE WAS LIABLE FOR DEDUCTING TDS ON PAYMENTS TO THESE PARTIES. THE ASSESSEE ALSO FAILED TO FURNISH ANY EVIDENCE REGARDING DEDUCTING TDS ON THE PAYMENTS PAID / CREDITED TO THESE PARTIES. IN VIEW OF THESE REASONS, THE AO CON CLUDED THAT THE AMOUNTS CLAIMED AS PAYABLE TO THE 23 PARTIES MENTIONED BY H IM IN TABLE-IT OF HIS ASSESSMENT ORDER ARE IN VIOLATION OF SECTION 40(A)( IA) OF THE IT ACT AND THEREFORE, DISALLOWED THE TOTAL AMOUNT OF RS.15,89,446/-. (THE RE SEEMS TO BE SOME TOTALING MISTAKE AS THE TOTAL OF RS.8,62,093/- AND RS.7,27,2 64/- COMES TO RS.15,89,357/-.) (II) TRANSPORTATION CHARGES PAID TO M/S. LIFT & SHI FT SERVICES : FROM THE TAX AUDIT REPORT OF THE ASSESSEE AT SL. NO.18 OF FORM 3CD THE AO OBSERVED THAT THE AUDITOR HAD MENTIONED THAT DURING THE PREVIOUS YEAR UNDER CONSIDERATION THE ASSESSEE PAID TRANSPORT CHARGES T O M/S. LIFT & SHIFT SERVICES AMOUNTING TO RS.38,43,480/-. HOWEVER, IN THE LIST F ILED BY THE ASSESSEE SHOWING THE NAMES OF PARTIES TO WHOM TRANSPORT CHARGES WERE PAI D THE NAME OF M/S. LIFT & SHIFT WAS NOT REFLECTED. BECAUSE OF THIS, THE AO CO NCLUDED THAT IN ORDER TO AVOID DISALLOWANCE THE ASSESSEE DISTRIBUTED THE SAID PAYM ENT UNDER VARIOUS HEADS OF INCOME WHICH ARE NOT SUPPORTED BY EVIDENCE. HOWEVER , SINCE THIS PAYMENT HAD BEEN SHOWN IN THE TAX AUDIT REPORT THEREFORE, THE AO CON CLUDED THAT THESE CHARGES WERE PAID TO M/S. LIFT & SHIFT BUT ON THESE THE TDS WAS NOT DEDUCTED. HE TREATED PAYMENT OF THESES EXPENSES AMOUNTING TO RS.38,43,48 0/- AS VIOLATION OF PROVISIONS OF SECTION 40(A)(IA) AND DISALLOWED THEM. (III) TYRE EXPENSES : AS PER THE MODIFIED DETAILS OF EXPENSES GIVE N ON 19-12-08 THE ASSESSEE HAD CLAIMED TYRE EXPENSES AMOUNTING RS.40,98,795/-. AS DISCUSSED ABOVE, DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE FAILED TO PRODU CE ANY BILLS/VOUCHERS FOR PURCHASE OF TYRE EXPENSES. THE AO CALLED FOR INFORM ATION RELATED TO TYRE PURCHASE FROM EAST INDIA TYRE COMPANY WHO INFORMED THAT DURI NG FY 2004-05 AND 2005-06, 22 THEY DID NOT HAVE ANY BUSINESS TRANSACTION WITH THE ASSESSEE. THE AO. CONCLUDED THAT THE ASSESSEE FAILED TO SUBSTANTIATE HIS CLAIM OF TYRE EXPENSES AND WENT ON TO DETERMINE THESE EXPENSES ON ESTIMATE BASIS. THE AO HAS MENTIONED THAT IN THE COURSE OF HEARING THE ASSESSEE HAD PRODUCED THE LIS T OF VEHICLES UTILIZED BY HIM DURING THE RELEVANT YEAR. THE METHOD OF CALCULATION USED BY THE AO IS REPRODUCED BELOW FOR THE SAKE OF CONVENIENCE: ON GOING THROUGH THE LIST IT IS FOUND THAT DURING THE YEAR THE ASSESSEE UTILIZED HIS 13 VEHICLES INCLUDING CRAIN, TRAILOR AND TRUCKS HAVING TOTAL WHEELS OF 118. THE PRICE OF LYRE DURING THE YEAR FOR HEAVY VEHICLE S WAS NOT MORE THAN RS. 19500/- PER PAIR. EVEN IF IT IS CONSIDERED THAT THE ASSESSEE REPLACED ALL THE TYRES OF HIS VEHICLES WITHIN A YEAR THEN THE REQUIR EMENT OF NEW TYRE COMES TO 44 PAIRS. THE EXPENSES FOR LYRE THUS CAN BE ESTIMAT ED ON A CONSERVATIVE MANNER AT RS.1150500/-. AS SUCH THE EXCESS EXPENSES UNDER THE HEAD TYRE EXPENSES CLAIMED BY THE ASSESSEE COMES TO RS.294829 5/- [RS4098795 - RS.1150500]. AS SUCH THE SAID EXCESS CLAIM OF EXPEN SES AMOUNTING TO RS.294829Z IS DISALLOWED AND ADDED BACK TO THE NET PROFIT OF THE ASSESSEE FOR THE A. Y-2005-06. THUS, OUT OF TYRE EXPENSES, THE AO DISALLOWED AN AM OUNT OF RS.29,48,295/-. 37. THE LD. C.I.T.(A) HAS CONFIRMED THE ABOVE ACTI ON OF THE A.O. VIDE PARAS 7.2(I), (II) & (III) AT PAGES 12 TO 14 OF THE IMPUGNED ORDER AND T HE SAME ARE AS UNDER :- 7.2. MERIT OF THE ADDITIONS MADE BY THE AO : (I) CONTRACT / HIRE CHARGES & TRANSPORTATION CHARG ES : ON THE BASIS OF SOME DETAILS ABOUT VARIOUS EX PENSES FILED BY THE ASSESSEE, THE AO CALCULATED THAT DURING THE PREVIOUS YEAR THE ASS ESSEE PAID CONTRACT/HIRE CHARGES AND TRANSPORTATION CHARGES OF RS.8,62,093/- AND RS.7,27,264/- RESPECTIVELY TO SOME SUBCONTRACTORS. THE AR OF THE ASSESSEE, DURING THE ASSESSMENT PROCEEDINGS, HAD ACCEPTED THAT THE BILLS FOR THESE EXPENSES ARE NOT AVAILABLE WITH THE ASSESSEE. IN ABSENCE OF BILLS AN D VOUCHERS THESE EXPENSES CAN NOT BE ALLOWED TO THE ASSESSEE AND, I, THEREFORE, U PHOLD THIS DISALLOWANCE MADE BY THE ASSESSING OFFICER. IN RESPECT OF THESE EXPENSES, THERE IS ONE MORE DEFAULT COMMITTED BY THE ASSESSEE. ON THESE PAYMENTS TO THE SUBCONTRACTOR TR ANSPORTERS, THE ASSESSEE WAS REQUIRED TO DEDUCT TDS AS PROVIDED U/S. 194C OF CHA PTER-XVIIB OF THE INCOME TAX ACT, 1961. THE ASSESSEE DID NOT DEDUCT ANY TAX ON THESE AMOUNTS PAYABLE BY HIM TO THE SUBCONTRACTORS. THEREFORE, THESE EXPENSE S ARE DISALLOWABLE U/S.40(A)(IA) ALSO. DURING THE APPELLATE PROCEEDINGS, THE AR OF THE ASSESSEE CONTENDED THAT OUT OF THE PARTIES LISTED BY THE AO ON PAGE 4 OF HIS AS SESSMENT ORDER THERE ARE SOME PARTIES TO WHOM TOTAL AMOUNT PAYABLE BY THE ASSESSE E DURING THE PREVIOUS YEAR WAS 23 LESS THAN RS.50,000/- AND ON THESE AMOUNTS TDS WAS NOT DEDUCTIBLE. DURING THE APPEAL PROCEEDINGS THE AR FILED THE COPIES OF THE B ILLS OF SOME SUCH PARTIES AND CLAIMED THAT THE INDIVIDUAL BILLS OF THESE PARTIES WERE LESS THAN RS.20,000/- AND THEREFORE, TDS WAS NOT DEDUCTIBLE ON THEM. SINCE T HESE BILLS WERE NOT PRODUCED BEFORE THE AO THESE WERE ADDITIONAL EVIDENCES AND C OULD NOT BE ACCEPTED DURING THE APPELLATE PROCEEDINGS AS PROVIDED IN RULE 46A O F I.T.RULES 1962. THE LD. AR WAS REQUESTED TO EXPLAIN WHY THESE BILLS WERE NOT P RODUCED BEFORE THE AO. NO EXPLANATION WAS FILED BY THE ASSESSEE OR HIS AR REG ARDING THIS QUERY. I, THEREFORE, HOLD THAT THESE BILLS FOR SOME PARTIES CAN NOT BE A DMITTED AS EVIDENCE DURING THE APPELLATE PROCEEDINGS. THESE SEEM TO HAVE BEEN FABR ICATED BY THE ASSESSEE AFTER THE PASSING OF THE ASSESSMENT ORDER AS THEY WERE NO T PRODUCED BEFORE THE AO DESPITE BEING GIVEN A NUMBER OF OPPORTUNITIES. IT IS SEEN THAT THE AMOUNTS RELATED TO THE PARTIES FOR WHICH THE ASSESSEE CLAIMS THAT TDS WAS NOT DEDUCTIBLE ARE MORE THAN RS .20 THOUSAND AND THEREFORE, IN ABSENCE OF ANY EVIDENCES I HOLD THAT THE TDS ON THE SE AMOUNTS WAS DEDUCTIBLE BY THE ASSESSEE. IN VIEW OF THE ABOVE DISCUSSION, I HO LD THAT THE CONTRACT/HIRE CHARGES AND TRANSPORTATION CHARGES TOTALING TO RS.1 5,89,357/- ARE DISALLOWABLE U/S. 4O(A)(IA) ALSO. (II) TRANSPORTATION CHARGES PAID TO M/S. LIFT & S HIFT SERVICES : IN THE TAX AUDIT REPORT THE ASSESSEE HAS SH OWN TO HAVE PAID TRANSPORTATION CHARGES OF RS.38,43,480/- TO A CONCERN NAMED M/S. L IFT & SHIFT SERVICES. THIS CONCERN IS SHOWN TO BE RELATED TO THE ASSESSEE IN T ERMS OF THE PROVISIONS OF SEC. 40A(3) OF THE INCOME TAX ACT, 1961. THE AO OBSERVED THAT IN THE PARTY-WISE DETAILS OF TRANSPORTATION CHARGES FILED DURING THE ASSESSMENT PROCEEDINGS, THE NAME OF THIS CONCERN IS NOT APPEARING ANYWHERE. SIN CE THE ASSESSEE HAS SHOWN THESE EXPENSES, BUT HAS NOT SUBMITTED ANY DOCUMENTA RY EVIDENCE SUPPORTING THESE, THE AO DISALLOWED THEM AND ADDED IN THE TOTAL INCOM E OF THE ASSESSEE. THE AO ALSO FELT THAT ON THESE CHARGES THE ASSESSEE SHOULD HAVE DEDUCTED TDS BUT HE DID NOT DO THAT. THUS, THE ASSESSEE VIOLATED THE PROVISIONS OF SEE. 40(A)(IA) AND HENCE THESE EXPENSES ARE DISALLOWABLE UNDER THIS SECTION ALSO. DURING THE APPELLATE PROCEEDINGS THE LD. AR OF THE ASSESSEE CLAIMED THAT THIS DISALL OWANCE AMOUNTS TO DOUBLE DISALLOWANCE. BUT HE HAS NOT BEEN ABLE TO SHOW HOW THIS IS A DOUBLE DISALLOWANCE. DURING THE APPEAL PROCEEDINGS ALSO NO EXPLANATION H AS BEEN FILED ABOUT WHO IS M/S. LIFT & SHIFT SERVICES AND FOR WHAT HAS THE TRANSPOR TATION CHARGES BEING PAID TO IT. I, THEREFORE, CONFIRM THIS DISALLOWANCE MADE BY THE AO. (III) TYRE EXPENSES : THE AO HAS DISALLOWED AN AMOUNT OF RS.29,4 8,295/- OUT OF TYRE EXPENSES OF RS.48,98,795/- CLAIMED BY THE ASSESSEE. IT HAS BEEN DISCUSSED ABOVE THAT DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE COULD NOT P RODUCE ANY SUPPORTING PURCHASE BILLS REGARDING THESE TYRE EXPENSES. IN AB SENCE OF ANY PURCHASE BILLS THE AO COULD HAVE DISALLOWED THE WHOLE TYRE EXPENSES. B UT, HE ACTED REASONABLY AND THROUGH SOME LOGICAL CALCULATION SHOWED THAT KEEPIN G IN VIEW THE VEHICLES USED BY 24 THE ASSESSEE EXPENSES ON TYRES COULD HAVE BEEN ONLY RS.LL,50,500/-. THE REMAINING AMOUNT OF RS.29,48,295/- WAS DISALLOWED BY HIM. IT IS INTERESTING TO SEE THAT THOUGH THIS D ISALLOWANCE WAS CHALLENGED BY THE ASSESSEE IN THE GROUNDS OF APPEAL BUT DURING THE AP PEAL PROCEEDINGS THE ASSESSEE HAS NOT FURNISHED ANY SUBMISSION OR DOCUMENTS TO SH OW WHAT IS WRONG IN THIS ADDITION. I, THEREFORE CONFIRM THIS ADDITION MADE B Y THE AO. 38. AT THE TIME OF HEARING, THE LD. A/R SUBMITTED THAT THE SAID DISALLOWANCES ARE NOT JUSTIFIED AS THE BOOKS OF ACCOUNTS OF THE ASSESSEE WERE AUDITED AND HENCE DISALLOWANCES SHOULD BE DELETED. ON THE OTHER HAND, THE LD. DEPA RTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE LD. C.I.T.(A). 39. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF THE AUTHORITIES BELOW AND THE SUBMISSIONS OF THE LEARNED REPRESENTATIVES OF THE P ARTIES. WE HAVE ALSO GONE THROUGH THE RELEVANT PAGES OF THE PAPER BOOK FILED BY THE ASSES SEE. WE OBSERVE THAT IN RESPECT OF THE DISALLOWANCE MADE UNDER THE HEAD CONTRACT/HIRE CHA RGES & TRANSPORTATION CHARGES AMOUNTING TO RS.15,89,446/-, THERE ARE 12 PARTIES O UT OF 23 PARTIES, THE DETAILS OF WHICH ARE GIVEN BY THE A.O. AT PAGE-4 IN TABLE-II, WHERE THE AGGREGATE PAYMENT MADE BY THE ASSESSEE WAS LESS THAN RS.50,000/-. FURTHER, ON PE RUSAL OF PAGES-9, 11, 12, 13, 14, 15, 16, 17, 18, 19 & 20 OF THE PAPER BOOK RELATING TO THE P ARTIES MENTIONED AT SL. NOS. 8, 12, 14, 15, 16, 17, 18, 19, 20, 21 & 22 RESPECTIVELY, WE OBSERV E THAT EXCEPT OF ONE PAYMENT OF RS.20,000/- IN THE CASE OF MD. ALAM, ALL THE INDIVI DUAL PAYMENTS ARE ALSO LESS THAN RS.20,000/-. IN VIEW OF THE ABOVE, WE ARE OF THE C ONSIDERED VIEW THAT IN THE ABSENCE OF ANY MATERIAL ON RECORD AND CONSIDERING THE PAGES- 9 & 11 TO 20 OF THE PAPER BOOK, THE DISALLOWANCE OF RS.5,48,789/- OUT OF RS.15,89,446/- AS PER SEC. 40(A)(IA) OF THE ACT IS NOT JUSTIFIED AS THE PROVISIONS OF SEC. 194C OF THE ACT WILL NOT APPLY IN RESPECT THERETO. ACCORDINGLY, WE MODIFY THE ORDERS OF THE AUTHORITIE S BELOW BY RESTRICTING THE DISALLOWANCE OF RS.10,40,657/- [RS.15,89,446 RS.5,48,789] BY A LLOWING IN PART GROUND NO. 5(A) OF THE REVISED GROUNDS OF APPEAL. 40. HOWEVER, IN RESPECT OF THE DISALLOWANCES MADE O UT OF TYRE EXPENSES AND OUT OF TRANSPORTATION CHARGES, IN THE ABSENCE OF ANY SUPPO RTING MATERIAL ON RECORD, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDERS OF THE AUTHORITIES BELOW AND THE 25 DISALLOWANCES AS CONFIRMED BY THE LD. C.I.T.(A) ARE JUSTIFIED. HENCE, GROUNDS NO. 5(B) & (C) OF THE REVISED GROUNDS OF APPEAL ARE REJECTED. 41. AS A RESULT, GROUND NO.5 OF THE REVISED GROUND S OF APPEAL FOR ASSESSMENT YEAR 2006-07 IS ALLOWED IN PART. 42. IN THE RESULT, APPEAL FOR ASSESSMENT YEAR 2005 -06 IS DISMISSED, WHEREAS APPEAL FOR ASSESSMENT YEAR 2006-07 IS ALLOWED IN PART. ORDER IS PRONOUNCED IN THE COURT ON 25.06.2010. SD/- SD/- [C.D. RAO] [B.R. MITT AL] ACCOUNTANT MEMBER JUDICIAL MEMBE R DATED : 25-06-2010 COPY FORWARDED TO : 1. TRIYOGI NARAYAN SINGH, 98, GARDEN REACH ROAD, KOLKA TA-700 023. 2. I.T.O., WARD-28(2), KOLKATA (3) THE C.I.T.(A)-XIV, KOLKATA 4. CIT, KOL - 5. THE DEPARTMENTAL REPRESENTATIVE, ITAT, KOLKATA. TRUE COPY, BY OR DER [DKP] DY.REGISTRAR.