ITO, Ward - 12(2), Kolkata V. M/s. Precision Logistic Pvt. Ltd., Kolkata

ITA 1762/KOL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2474 (ITAT-KOLKATA)
• Duration Of Justice: 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2010
• Appeal Filed By: Department
• Bench Allotted: D
• Next Hearing Date: 13-05-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 16-10-2009
• Court: TRIBUNAL
• Department Lawyers: HOMI RAJVANSH
• Assessee Lawyers: S BANDYOPADHYYA
• Keywords: Document seized; Additional evidence; Corroborative evidences; Documents seized; TDS; Set aside
• Section: 40A(3); 40(a)(ia); 194C

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL 'B BENCH : KOLKATA (BEFORE HONBLE SRI B.R.MITTAL, J.M. AND HONBLE S RI C.D.RAO, A.M.) I.T.A. NO. 1762 /KOL/2009 ASSESSM ENT YEAR : 2006-07 ITO, WARD 12(2), KOLKATA VS. M/S PRE CISION LOGISTIC P. LTD. (PAN AADCP 4462 D) (APPELLANT) (RESPONDENT) C .O.NO.88(KOL)/2009 (ITA N O. 1762(KOL)/2009) ASSES SMENT YEAR: 2006-07 PRECISION LOGISTICS (P) LTD. VS ITO, WARD 12(2), KOLKATA (CROSS OBJECTOR) (RESPONDENT) DEPARTMENT BY : SR I HOMI RAJVANSH, CIT. ASSESSEE BY : SRI S. BANDYOPADHYYA. O R D E R PER SHRI C.D.RAO, A.M. THIS APPEAL BY THE REVENUE AND THE CROSS OBJECTION FILED BY THE ASSESSEE ARE AGAINST THE ORDER OF THE CIT(A)-XII, KOLKATA DATED 29.07.09 FOR THE ASSESSMENT YEAR 2006-07. 2. THE REVENUE HAS TAKEN THE FOLLOWING THREE GROUND S : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, LD. CIT(A) ERRED IN DELETING ADDITION OF RS.6,95,25,034/- FOR VIOLA TION FOR SECTION 40(A)(IA) WITHOUT VERIFYING ANY DOCUMENTS CLAIMED TO HAVE BEE N SEIZED BY THE CBI AUTHORITIES. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN DIRECTING TO DISALLOW 10% OF THE TOTAL FREIGHT PAYMENT OF RS.5,84,84,028/- AMOUNTING TO RS.58,48,402/- U/S 40 (A)(IA) WITHOUT VERIFYING ANY DOCUMENT CLAIMED TO HAVE NOT BEEN R ELEASED BY THE CBI AUTHORITIES. 3. ON THE FACTS AND UNDER THE CIRCUMSTANCES O F THE CASE, LD CIT(A) HAS ERRED IN NOT ADJUDICATING THE POSSIBILITY OF APPL ICATION OF SEC. 40A(3) WHICH WAS DETECTED FROM THE DOCUMENTS SUBMITTED DU RING THE REMAND REPORT STAGE, THAT CASH WITHDRAWAL FROM BANK WA S RS.10,00,37,415/- THOUGH CASH DEPOSIT TO THE BANK WAS RS.1,90,56,300/ - ONLY. 2 3. THE FOLLOWING TWO EFFECTIVE GROUNDS HAVE BEEN RA ISED BY THE ASSESSEE IN THE CROSS OBJECTION : 1. THAT LD. CIT(A) HAS ERRED ON THE FACTS OF THE CASE AND IN LAW IN CONFIRMING THE ADDITION OF RS.58,48,402 U/S 40(A) (IA) ON ESTIMATED BASIS OUT OF LORRY HIRE PAID TO LORRY DRIVERS HIRED FROM MARKET BEING 10% OF SUCH HIRE PAID RS.5,84,84,028/-. 2. THAT CONSIDERING THE FACT THAT RELEVANT P AYMENTS WERE NOT COVERED UNDER ANY OF THE PROVISIONS OF SECTION 194C OF THE I.T.ACT, 1961 LD. CIT(A) OUGHT TO HAVE HELD THAT PROVISIONS OF SECTION 40(A )(IA) OF THE ACT ARE NOT APPLICABLE TO THESE PAYMENTS AS REFERRED TO IN G ROUND NO. 1 ABOVE. 4. AT THE TIME OF HEARING BEFORE US, THE BENCH OBS ERVED THAT GROUND NO. 3 RAISED BY THE REVENUE IS NOT ARISING OUT OF TH E IMPUGNED ORDER . THE LEARNED CIT, D.R. FAIRLY ACCEPTED THE OBSERVATIONS OF TH E BENCH. THEREFORE, GROUND NO. 3 RAISED BY THE REVENUE IS DISMISSED AS IT IS NO T ARISING OUT OF THE IMPUGNED ORDER. 5. AS REGARDS THE FIRST TWO GROUNDS RAISED BY THE REVENUE AS WELL AS THE GROUNDS RAISED BY THE ASSESSEE IN THE CROSS OBJECT ION ARE RELATING TO THE DISALLOWANCE U/S 40(A)(IA) OF THE INCOME TAX ACT . BRIEF FACTS OF THIS ISSUE ARE THAT THE A.O. HAS DISALLOWED RS.12,80,09,062 OBS ERVING AS UNDER : THE ASSESSEE COULD NOT PROVIDE ANY SUPPORTING DO CUMENTS REGARDING DEDUCTION & DEPOSITION OF TDS ON ACCOUNT OF THE AS SESSEES CLAIM OF PAYMENT OF FREIGHT CHARGES. AS PER THE FILED LIS T IN THIS REGARD, EACH OF THE PARTIES WERE PAID BY MORE THAN RS.50,000/- DUR ING THE PERIOD UNDER CONSIDERATION AND, THEREFORE, ENTIRE EXPENSES OF RS .12,80,09,062/- CLAIMED IN THIS REGARD IS DISALLOWED U/S 40(A)(IA) OF THE I.T.ACT, 1961. 6. ON APPEAL, THE LEARNED CIT(A) HAS DELETED THE ADDITION OF RS.6,95,25,034 AND DIRECTED TO DISALLOW 10% OF THE BALANCE PAYMEN T OF RS.5,84,84,028 BY OBSERVING AS UNDER : AFTER GOING THROUGH THE CONTENTS OF THE REMAN D REPORT , THE APPELLANT SUBMITTED THAT IN RESPECT OF RS.6,95,25,034 OF FR EIGHT CHARGES PAID WHERE THE AMOUNTS EXCEEDED RS.50,000 DURING THE YEAR, AL L THE RELEVANT DETAILS INCLUDING DETAILS OF TDS CREDIT TO CENTRAL GOVER NMENT ACCOUNT FURNISHED TO THE AO AND THAT THE ORIGINAL TDS CHALL ANS COULD NOT BE 3 SUBMITTED AS THE SAME WERE SEIZED BY THE CBI. AS R EGARDS RS.5,84,84,028/- RELATED TO PAYMENTS MADE TO TRUCK-OWNERS IN CASH I T IS SUBMITTED AS UNDER : TDS WAS NOT APPLICABLE AS INDIVIDUAL PAYMENT WAS B ELOW RS.20,000/- AND AGGREGATE PAYMENT TO ANY OF THE TRUCK OWNER DUR ING THE YEAR IS BELOW RS.50,000. FREIGHT PAYMENT OF RS.5,84,84,028 WAS MADE TO INNUMERABLE TRUCK OWNERS FOR TRANSPORTING GOODS LOCALLY AND INDIVIDUAL PAYMENT VARIED BETWEEN RS.1,100 TO BELOW RS.20,000. WE HAV E FULL DETAILS WITH US . IT WAS LIKELY TO BE VERY VOLUMINOUS SO WE HAD SUBM ITTED A SAMPLE COPY OF 46 PAGES TO ITO GIVING DATE, VEHICLE NUMBER, WEIG HT, RATE, PLACE OF LOADING AND DESTINATION AND TOTAL FREIGHT TO EACH VEHICLE. WE ARE ONCE AGAIN ENCLOSING HERE THE SAME MARKED AS ANNEXURE C. I HAVE DULY CONSIDERED THE APPELLANTS SUBMISSIONS . THE A.O. ADDED THE ENTIRE AMOUNT ON THE GROUND THAT THE TDS DETAILS U/S 194C AND THE RELEVANT TDS CHALLANS WERE NOT PRODUCED BY THE APP ELLANT. ON THE OTHER HAND, THE APPELLANT HAS CONTENDED THAT CONTENTION OF THE AO ALLEGING THE NON-DEDUCTION OF TDS U/S 194C(3) IS NOT CORRECT AS THE ASSESSEE HAS DEDUCTED TDS WHEREVER IT WAS APPLICABLE. THE A PPELLANT HAS FILED A DETAILED SUBMISSION IN THIS REGARD AND HAS ALSO PRODUCED TWO CONFIRMATION LETTERS FOR DEPOSIT OF TDS TO THE CR EDIT OF CENTRAL GOVERNMENT ON VARIOUS DATES FROM STATE BANK OF TRIVANCORE, LAKE MARKET BRANCH, KOLKATA-26 FOR RS.5,96,134/- AN D FROM UNITED BANK OF INDIA , GARIAHAT BRANCH, KOLKATA-29 FOR RS.3,00,0 00/- TOTALLING TO RS.8,96,134/-. THE APPELLANT COMPANY HAS FURT HER STATED THAT ORIGINAL TDS CHALLANS FOR THE AFORESAID TDS COULD NOT BE PRODUCED BEFORE THE A.O. AS THEY WERE SEIZED BY C.B.I. A COPY OF LE TTER ADDRESSED TO CBI FOR RELEASE OF SEIZED DOCUMENTS WAS FILED BEFORE THE A.O. AS WELL AS BEFORE THIS OFFICE. FROM THE ABOVE IT IS CLEAR THAT A.OS ACTION IN MA KING ADDITION OF ENTIRE FREIGHT PAYMENT OF RS.12,80,09,062/- IS NOT CORRE CT. EVIDENCE OF TDS PAYMENT TO THE EXTENT OF RS.7,80,708/- RELATED T O FREIGHT PAYMENT OF RS.6,95,25,034/- HAS BEEN PRODUCED BY WAY OF BANK CERTIFICATES. HENCE ADDITION TO THIS EXTENT OUT OF RS.12,80,09,062/- CANNOT BE SUSTAINED. NOW COMING TO BALANCE RS.5,84,84,028/- THE ASSESSEE H AS FURNISHED A SAMPLE LIST CONTAINING 46 PAGES OF THOSE TRUCKS ON WHOS E PAYMENTS TO TDS NEED TO BE DEDUCTED U/S 194C. A.O. IN HIS REMAND RE PORT HAS NOT DENIED ASSESSEES SUBMISSION BUT REFUSED TO ACCEPT THE L IST ON THE GROUND THAT NO SUPPORTING EVIDENCES OF THESE PAYMENTS WERE PRODUC ED. IT IS A FACT THAT THE APPELLANT FAILED TO PRODUCE SUPPORTING VOUCHER S LIKE PAYMENT VOUCHERS EVIDENCING THE FREIGHT CHARGES PAID TO VAR IOUS TRUCK DRIVERS. FOR THIS THE APPELLANT SUBMITTED THAT ALL THESE RE LEVANT DOCUMENTS HAVE BEEN SEIZED BY THE CBI AUTHORITIES. HOWEVER, THE APPELL ANT SUBMITTED THAT IT PRODUCED ALL THE RELEVANT DETAILS INCLUDING DATE O F PAYMENT, NAME OF THE PLACES WITHIN WHICH THE GOOD WERE CARRIED , REGIS TRATION NO. OF VEHICLES, WEIGHT OF GOODS CARRIED, RATE PER TON, TOTAL CA RRYING CHARGES ETC. BEFORE 4 THE A.O. AND THIS FACT HAS ALSO BEEN VOUCHED BY TH E A.O. IN HIS REMAND REPORT. I HAVE ALSO PERUSED THE DETAILS OF SUCH LI STS FURNISHED ALONG WITH THE PAPER BOOKS. HOWEVER, FACT REMAINS THAT THE V ITAL DOCUMENTS LIKE THE PAYMENT VOUCHERS HAVE NOT BEEN PRODUCED EITHER B EFORE THE A.O. OR BEFORE ME. AS SUCH THE GENUINENESS OF PAYMENTS IN RESPECT OF THE BALANCE AMOUNT OF RS.5,84,84,028/- IS NOT SUBSTA NTIATED . KEEPING IN VIEW THE NATURE OF BUSINESS AND THE NATURE OF CASH PAYMENTS AND THE ELEMENT OF INFLATION OF EXPENSES, I FEEL A DISAL LOWANCE OF 10% AMOUNTING TO RS.58.48 LAKHS OUT OF RS.5,84,84,028/- IS MOR E REASONABLE. ACCORDINGLY, I DIRECT THE A.O. TO RESTRICT THE DISALLOWANCE TO RS.58.48 LAKHS AND DELETE THE BALANCE OF RS.12,21,60,659/ - (RS.12,80,09,062/- - RS.58,48,402/-). 7. AGGRIEVED BY THIS NOW BOTH THE PARTIES ARE IN C ROSS APPEALS. 8. THE ASSESSEE HAS FILED THE PAPER BOOK CONTAIN ING THE FOLLOWING DOCUMENTS IN SUPPORT OF THE CONTENTION OF THE ASSE SSEE : SL.NO. NATURE OF DOCUMENTS 1. SUMMARY OF TOTAL FREIGHT PAID TO PARTIES AND DIRECT TRUCK OWNER AND TDS WITH DETAILS OF TDS PAYMENT AND ASSESSEES S UBMISSION ON CASH WITHDRAWAL & CASH DEPOSITS IN BANK. 2. DETAILS OF FREIGHT CHARGES PAID TO TRANSPORTER S 3. SAMPLE DETAILS OUT OF FREIGHT PAID DIRECT TO LO RRYWALLA 4. CERTIFICATE FROM UCO BANK FOR TDS TOTAL PAYMEN T RS.5,96,134/- 5. CERTIFICATE FROM STATE BANK OF TRAVANCORE FOR TD S PAYMENT RS.3,00,000/- 9. ON THE OTHER HAND, THE LEARNED CIT , D.R. , A PPEARING ON BEHALF OF THE REVENUE, HAS POINTED OUT THAT THE CIT(A)S OBSER VATIONS MADE IN THE IMPUGNED ORDER ARE NOT BASED ON THE RELEVANT DOCUMENTS AN D THE LEARNED CIT(A) HAS SIMPLY ACCEPTED THE SUBMISSIONS OF THE ASSESSEE. IN THE REMAND REPORT ALSO THE A.O. HAS NOT ACCEPTED THE ASSESSEES CLAIM BY OBS ERVING THAT IN THE ABSENCE OF THE SUPPORTING EVIDENCES THE ASSESSEES CLAIM F OR MAKING TDS FROM DIFFERENT PARTIES IS NOT ESTABLISHED. THEREFORE, HE REQUESTE D TO SET ASIDE THE MATTER TO THE FILE OF THE A.O. FOR FRESH ADJUDICATION. THE LEA RNED COUNSEL APPEARING ON BEHALF OF THE ASSESSEE HAS NOT OBJECTED TO THE SAID REQ UEST OF THE LD. D.R. 5 10. AFTER HEARING THE RIVAL SUBMISSIONS AND CAREFUL PERUSAL OF THE MATERIALS AVAILABLE ON RECORD KEEPING IN VIEW THE FACT THAT T HE ENTIRE REMAND REPORT SUBMITTED BY THE A.O. TO THE LEARNED CIT(A) IS NOT AVAILABLE ON RECORD AND THE BANK CERTIFICATES FILED BY THE ASSESSEE IN THE PAPE R BOOK DATED 13.07.2009 WHICH ARE PLACED AT PAGE NOS. 51 & 52 REQUIRE FRESH VE RIFICATION BY THE A.O. THEREFORE, WE SET ASIDE THE APPEAL OF THE REVENUE AS WELL AS THE CROSS OBJECTION OF THE ASSESSEE TO THE FILE OF THE A.O. FOR FRESH ADJUDI CATION AS PER LAW AFTER GIVING REASONABLE OPPORTUNITIES OF BEING HEARD TO THE ASS ESSEE. THE ASSESSEE IS ALSO AT LIBERTY TO FILE ADDITIONAL EVIDENCES IN SUPPORT O F THE CLAIM OF THE ASSESSEE. WE ORDER ACCORDINGLY. 11. IN THE RESULT, THE REVENUES APPEAL IS ALLOWED IN PART FOR STATISTICAL PURPOSES WHEREAS THE CROSS OBJECTION OF THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 30 .07.2010 SD/- SD/- (B.R.MITTAL) (C.D.RAO ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 30.07.2010 COPY FORWARDED TO :- 1) ITO, WARD 12(2), KOLKATA. 2) M/S PRECISION LOGISTICS P. LTD., 114, SOUTHERN P. LTD., KOLKATA-29 3) CIT(A), KOLKATA. 4) CIT, KOLKATA. 5) D.R., ITAT, KOLKATA BY ORDER ASSISTANT R EGISTRAR I.T.AT., KOLKATA. BCD