MR. IVA PAUL ROOSEWELT, CHENNAI V. ITO NON CORPORATE WARD 5 (4), CHENNAI

ITA 1692/CHNY/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7371 (ITAT-CHENNAI)
• Duration Of Justice: 11 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 17-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M SUBASHRI
• Section: 142(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B BENCH, CHENNAI . , . , BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ I.T.A.NO.1692/CHNY/2018 / ASSESSMENT YEAR: 2014-15) SHRI IVA PAUL ROOUSEWELT, PROP. UNIVERSAL TRAILORS SERVICE, 7/4, GURUVAPPA STREET, OLD WASHERMENPET, CHENNAI. VS THE INCOME TAX OFFICER, NON CORPORATE WARD 5(4), CHENNAI. PAN: BCCPP0803P ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : NONE / RESPONDENT BY : MS. M. SUBASHRI, JCIT /DATE OF HEARING : 20.02.2019 /DATE OF PRONOUNCEMENT : 30.04.2019 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-5, CHENNAI, DATED 20.03.2018 IN ITA NO.2/CIT(A)-5/2017-18 FOR THE ASSESSMENT YEAR 2014-15 PASSED U/S.250(6) R.W.S. 274 R.W.S. 271B OF THE ACT. AT THE TIME OF HEARING THE LD.AR WAS NOT PRESENT BEFORE THE BENCH, HOWEVER ON PERUSING THE FILE AND THE SUBMISSION OF THE LD.DR THE BENCH DECIDED TO HEAR THE APPEAL EX-PARTE ON MERITS. 2. THE ASSESSEE HAS RAISED THE SEVERAL GROUNDS IN HIS APPEAL HOWEVER THE CRUX OF THE ISSUE IS THAT THE LD.CIT(A) HAS ERRED IN 2 ITA NO.1692/CHNY/2018 CONFIRMING THE ORDER OF THE LD.AO WHO HAD LEVIED PENALTY OF RS.1,50,000/- U/S.271B OF THE ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS UNDER THE NAME AND STYLE M/S. UNIVERSAL TRAILER SERVICE WHOSE ACTIVITY IS TO FUNCTION AS COMMISSION AGENT FOR COMMERCIAL VEHICLE OWNERS AND TRANSPORTERS, FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2014-15 ON 04.12.2014 ADMITTING TOTAL INCOME OF RS.7,92,850/-. THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND NOTICE U/S.143(2) & 142(1) OF THE ACT WERE ISSUED ON 28.08.2015 & 27.04.2016 RESPECTIVELY. FINALLY ASSESSMENT ORDER WAS PASSED U/S.143(3) OF THE ACT ON 01.09.2016 WHEREIN THE LD.AO MADE ADDITION OF RS.3,19,400/- TOWARDS MISMATCH IN THE RECEIPTS. THEREAFTER LD.AO ALSO INITIATED PENALTY PROCEEDINGS AND PASSED ORDER U/S.271B OF THE ACT IMPOSING PENALTY OF RS.1,50,000/- ON 30.03.2017. 4. THE LD.AO HAD LEVIED PENALTY U/S.271B OF THE ACT, BECAUSE THE ASSESSEE HAD NOT AUDITED HIS BALANCE SHEET U/S.44AB OF THE ACT, BY REJECTING THE SUBMISSION OF THE ASSESSEE THAT ITS TURNOVER HAD NOT EXCEEDED RS.1 CRORE AND HAD EARNED ONLY COMMISSION INCOME OF RS.49,74,030/-. THE CONTENTION OF THE ASSESSEE WAS THAT HE WAS TRANSPORT AGENT FOR VARIOUS VEHICLE OWNERS AND GOODS TRANSPORT AGENCIES AND HE WAS ASSIGNING THEIR VEHICLES TO VARIOUS CLIENTS FROM WHOM HE 3 ITA NO.1692/CHNY/2018 RECEIVES COMMISSION @ 2% ON THE FREIGHT AMOUNT. THE ASSESSEE ALSO RELIED ON THE CBDT CIRCULAR NO.452 DATED 17.03.1986 WHEREIN IT WAS CLARIFIED THAT, WHEN COMMISSION INCOME IS EARNED, ONLY THE COMMISSION AMOUNT WILL BE TREATED AS THE TURNOVER OF THE ASSESSEE. HOWEVER THE LD.AO VERIFYING THE BOOKS OF ACCOUNTS OF THE ASSESSEE WAS OF THE VIEW THAT THE TOTAL RECEIPTS RECORDED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE OF RS.21,54,05,023/- WHICH WAS ACCEPTED BY THE ASSESSEE SHOULD BE CONSIDERED AS THE TURNOVER OF THE ASSESSEE. 5. ON APPEAL THE LD.CIT(A) ALSO CONFIRMED THE ORDER OF THE LD.AO FOR LEVYING PENALTY OF RS.1,50,000/- ON THE ASSESSEE U/S.271B OF THE ACT BY AGREEING WITH HIS VIEW. 6. BEFORE US THE LD.DR RELIED ON THE ORDERS OF THE LD.REVENUE AUTHORITIES AND PLEADED THAT THEY MAY BE CONFIRMED. 7. AFTER PERUSING THE ORDERS OF THE LD.REVENUE AUTHORITIES AND HEARING THE LD.DR, WE FIND THAT THE NATURE OF BUSINESS CARRIED ON BY THE ASSESSEE IS COMMISSION AGENT PROCURING ORDERS FOR VARIOUS VEHICLE OWNERS AND TRANSPORTERS FOR TRANSPORT OF GOODS AND IT IS NOT IN DISPUTE. THAT BEING THE CASE, THE ASSESSEE THOUGH RECEIVES THE ENTIRE FREIGHT CHARGES FROM THE CLIENTS ALONG WITH HIS COMMISSION HE IS ONLY ENTITLED TO APPROPRIATE THE COMMISSION DUE TO HIM AS HIS INCOME. THE FREIGHT 4 ITA NO.1692/CHNY/2018 AMOUNT RECEIVED BY HIM IS ONLY ON BEHALF OF THE TRANSPORTER WHICH HE IS BOUND TO PAY TO THE TRANSPORTER. THEREFORE THE COMMISSION INCOME EARNED BY HIM CAN ONLY BE TREATED AS HIS TURNOVER. IN THE CASE OF THE ASSESSEE, SINCE THE COMMISSION INCOME EARNED BY HIM IS ONLY RS.49,74,030/- HIS TURNOVER FALLS BELOW THE RS.1 CRORE CAP STIPULATED BY THE ACT, AND THEREFORE THE ASSESSEE IS NOT REQUIRED TO AUDIT HIS BOOKS AS PER THE PROVISIONS OF SECTION 44AB OF THE ACT. HENCE WE DO NOT FIND ANY MERIT IN THE ORDER OF THE LD.AO AS WELL AS THAT OF THE LD.CIT(A) FOR INVOKING THE PROVISIONS OF SECTION 271B OF THE ACT IN THE CASE OF THE ASSESSEE. THEREFORE WE HEREBY DIRECT THE LD.AO TO DELETE THE PENALTY OF RS.1,50,000/- LEVIED ON THE ASSESSEE BY INVOKING THE PROVISIONS OF SECTION 271B OF THE ACT. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THE 30 TH APRIL, 2019 AT CHENNAI. SD/- SD/- ( ) (DUVVURU R.L REDDY) /JUDICIAL MEMBER ( . ) (A. MOHAN ALANKAMONY) / ACCOUNTANT MEMBER /CHENNAI, /DATED 30 TH APRIL, 2019 RSR /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. ( )/CIT(A) 4. /CIT 5. /DR 6. /GF