Meetali Road Carriers, Ahmedabad V. The Income tax Officer,Ward-9(4), Ahmedabad

ITA 1839/AHD/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1883 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-04-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 10-03-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 23-08-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NARENDRA SINGH
• Section: 194C

Judgement Text

, B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ./ ITA.NO.1839/AHD/2012 / ASSTT. YEAR: 2008-2009 M/S.MEETALI ROAD CARRIERS 25, GF, SWASTIK CENTRE NAROL CHAR RASTA NAROL, AHMEDABAD. AHMEDABAD. PAN : AAOFM 6306 M VS ITO, WARD-9(4) AHMEDABAD. ./ ITA.NO.2177/AHD/2012 / ASSTT. YEAR: 2008-2009 ITO, WARD - 9(4) AHMEDABAD. VS M/S.MEETALI ROAD CARRIERS 25, GF, SWASTIK CENTRE NAROL CHAR RASTA NAROL, AHMEDABAD. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI NARENDRA SINGH, SR.DR / DATE OF HEARING : 10/03/2016 / DATE OF PRONOUNCEMENT: 07/04/2016 $%/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE ASSESSEE AND THE REVENUE ARE IN CROSS-APPEAL AG AINST THE ORDER OF THE LD.CIT(A) DATED 2-7-2012 PASSED FOR THE ASSTT.Y EAR 2008-09. ITA NO.1839 AND 2177/AHD/2012 2 2. IN RESPONSE TO THE NOTICE OF HEARING NO ONE HAS COME PRESENT ON BEHALF OF THE ASSESSEE. THEREFORE, SERVICE OF NOTICE WAS DIRECTED TO BE EFFECTED THROUGH THE DEPARTMENT. THE ITO, WARD-4(2)(4), AHM EDABAD WROTE A LETTER TO THE TRIBUNAL ON 3.12.2015 WHICH WAS RECEIVED ON 5.1 1.2015 THAT SERVICE HAS BEEN EFFECTED UPON THE ASSESSEE AND EMAIL WAS ALSO SENT TO THE ASSESSEE. THEREAFTER, FRESH NOTICE WAS SENT THROUGH THE DEPAR TMENT, WHICH HAS BEEN DULY SERVED UPON THE ASSESSEE. COPIES OF THE REPORTS SU BMITTED BY THE AO ARE PLACED ON RECORD. IN SPITE OF SERVICE OF NOTICE, NO ONE HAS COME PRESENT ON BEHALF OF THE ASSESSEE. 3. WITH THE ASSISTANCE OF THE LD.DR, WE HAVE GONE T HROUGH THE RECORD CAREFULLY AND PROCEEDED TO DECIDE THE APPEAL EX PARTE QUA THE ASSESSEE. 4. SOLITARY ISSUE INVOLVED IN BOTH THESE APPEALS RE LATES TO QUANTIFICATION OF DISALLOWANCE, IF ANY, REQUIRED TO BE DISALLOWED UND ER SECTION 40(A)(IA) OF THE INCOME TAX ACT, ON ACCOUNT OF NON-DEDUCTION OF TDS. 5. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE-FI RM IS ENGAGED IN THE BUSINESS OF TRANSPORTATION. IT HAS FILED ITS RETUR N OF INCOME ON 9.9.2008 DECLARING TOTAL INCOME AT RS.50,680/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND NOTICE UNDER SECTION 14 3(2) WAS ISSUED AND SERVED UPON THE ASSESSEE. ON VERIFICATION OF THE BOOKS OF ACCOUNTS, BILLS, VOUCHERS AND OTHER DETAILS FURNISHED BY THE ASSESSEE, IT CAM E TO THE NOTICE OF THE AO THAT DURING THE YEAR, THE ASSESSEE FIRM HAS PAID FR EIGHT AMOUNTING TO RS.71,51,715/- TO VARIOUS SUB-CONTRACTORS EXCEEDING RS.50,000/- DURING THE YEAR. THE LD.AO HAS NOTED THAT THE BREAK-UP OF THE SE PAYMENTS IN PARA-3 OF THE ASSESSMENT ORDER. THE LD.AO HAS FURTHER OBSERV ED THAT THE ASSESSEE-FIRM FAILED TO DEDUCT TDS UNDER SECTION 194C OF THE INCO ME TAX ACT, THEREFORE, IT ITA NO.1839 AND 2177/AHD/2012 3 NOT ENTITLED FOR THE EXPENSES OF RS.71,51,715/-. A FTER HEARING THE ASSESSEE, THE LD.AO HAS DISALLOWED THE CLAIM OF THE ASSESSEE. 6. DISSATISFIED WITH THE ORDER OF THE LD.AO, THE AS SESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). THE ASSESSEE HAD RAIS ED VARIOUS ARGUMENTS INCLUDING THAT IT IS NOT LIABLE TO DEDUCT TDS BECAU SE EACH CONTRACT IS TO BE TREATED AS SUB-CONTRACT FOR HIRING THE TRANSPORTER FOR WHICH PAYMENTS HAVE BEEN MADE. THE LD.CIT(A) HAS CONSIDERED ALL THESE ARGUMENTS OF THE ASSESSEE, BUT REJECTED THEM. HOWEVER, THE LD.CIT(A ) HAS FOLLOWED THE JUDGMENT OF THE SPECIAL BENCH IN THE CASE OF M/S.ME RILYN SHIPPING & TRANSPORTS VS. ACIT, 146 TTJ 1 (VIZAG) AND HELD TH AT THE DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT IS TO BE MADE QUA THE AMOUNTS WHICH ARE PAYABLE BY THE ASSESSEE. AS FAR AS THE AMOUNTS PAI D DURING THIS YEAR, THE DISALLOWANCE UNDER SECTION 40(A)(IA) CANNOT BE MADE . THE LD.CIT(A) HAS SEGREGATED BOTH THESE AMOUNTS. ACCORDINGLY, THE DI SALLOWANCE TO THE EXTENT OF RS.51,65,500/- WAS DELETED BY THE CIT(A). THIS ORDER IS BEING IMPUGNED BY THE REVENUE IN ITS APPEAL, WHEREAS, THE AMOUNTS WHICH WERE OUTSTANDING AS ON 31 ST MARCH, AND ON WHICH TDS HAS NOT BEEN DEDUCTED BY T HE ASSESSEE, THE LD.CIT(A) HAS UPHELD THE DISALLOWANCE. THUS, ADDIT ION WAS CONFIRMED AT RS.19,06,615/-. THE ASSESSEE IS IMPUGNING THIS ADD ITION. 7. AT THE VERY OUTSET, THE LD.DR CONTENDED THAT THE ISSUE IN DISPUTE IS SQUARELY COVERED IN FAVOUR OF THE REVENUE BY THE DE CISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SIKANDARK HAN N TUNVAR IN TAX APPEAL NO.905 OF 2012 AND OTHERS. THE HONBLE HIGH COURT HAS FRAMED THE FOLLOWING QUESTIONS OF LAW: ITA NO.1839 AND 2177/AHD/2012 4 1. WHETHER DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE INCOME TAX ACT, 1961 COULD BE MADE ONLY IN RESPECT OF SUCH AMO UNTS WHICH ARE PAYABLE AS ON 31ST MARCH OF THE YEAR UNDER CONSIDER ATION? 2. WHETHER DECISION OF SPECIAL BENCH OF THE TRIBUNA L IN THE CASE OF M/S. MERILYN SHIPPING & TRANSPORTS VS. ACIT (SUPRA) LAYS DOWN CORRECT LAW?' THE HONBLE HIGH COURT HAS ANSWERED BOTH THESE QUE STIONS IN FAVOUR OF THE REVENUE. THE OBSERVATION OF THE HONBLE HIGH C OURT CONTAINED IN PAGE NO.39 AND 40 OF THE JUDGMENT READS AS UNDER: 39. WE ANSWER THE QUESTIONS AS UNDER:- QUESTION (1) IN THE NEGATIVE I.E. IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEES. QUESTION (2) ALSO IN THE NEG ATIVE I.E. IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEES. 40. ALL TAX APPEALS ARE ALLOWED. DECISIONS OF THE T RIBUNAL UNDER CHALLENGE ARE REVERSED. IN THE EARLIER PORTION OF T HE JUDGMENT, WE HAD RECORDED THAT THE TRIBUNAL IN ALL CASES HAD PROCEED ED ONLY ON THIS SHORT BASIS WITHOUT ADDRESSING OTHER ISSUES. WE, THEREFOR E, PLACE ALL THESE MATTERS BACK BEFORE THE TRIBUNAL FOR FRESH CONSIDER ATION OF OTHER ISSUES, IF ANY, REGARDING DISALLOWANCE UNDER SECTIO N 40(A)(IA) OF THE ACT. ALL APPEALS ARE DISPOSED OF ACCORDINGLY. THUS, THE HONBLE HIGH COURT HAS OVERRULED THE OR DER OF THE SPECIAL BENCH IN THE CASE OF M/S. MERILYN SHIPPING & TRANSP ORTS VS. ACIT (SUPRA). 8. IN LIGHT OF HONBLE HIGH COURTS DECISION, WE HA VE TO EXAMINE THE FACTS OF THE PRESENT CASE. WE FIND THAT THE CIT(A) HAS R EJECTED ALL ARGUMENTS OF THE ASSESSEE ON MERIT. IT IS WORTH TO NOTE THE FINDING S RECORDED BY THE CIT(A). IT READS AS UNDER: 5. I HAVE PERUSED THE FACTS AND SUBMISSION OF THE A PPELLANT. I HAVE ALSO PERUSED THE CASE LAWS RELIED ON BY APPELLANT. AFTER CAREFUL CONSIDERATION OF CONTENTION OF BOTH A.O. AS WELL AS APPELLANT, I AM NOT ITA NO.1839 AND 2177/AHD/2012 5 INCLINED TO ACCEPT THE CONTENTIONS OF THE APPELLANT IN TOTALITY. WITH DUE REGARD TO VARIOUS CASE LAWS RELIED ON BY APPELLANT, THE RATIO OF ALL THESE CASE LAWS ARE APPLICABLE IN THE CASE WHERE ALL THE FACTS ARE REVEALED AND SUBJECTED TO SCRUTINY. IN THE CASE OF APPELLANT DESPITE BEING GIVEN MORE THAN ENOUGH OPPORTUNITIES, APPELLANT FAILED TO PRODUCE GRS IN RESPECT OF FREIGHT DEBITED AS ASKED BY MY PREDECESS OR AND LATER ON BY ME DURING APPEAL PROCEEDINGS. WHETHER THE APPELLANT WAS HAVING ANY CONTRACT WITH PARTIES/PERSONS THROUGH WHOM HE GOT C OMPLETED HIS CONTRACT WITH 'DRIVE INDIA ENT. SOLUTION LTD.' CAN ONLY BE EXAMINED ON THE BASIS OF TERMS & CONDITIONS MENTIONED ON GRS WH ICH ARE DULY AGREED AND SIGNED BY PARTY/PERSON OF TRUCK OWNER UT ILIZED BY APPELLANT. IT IS ONLY VERIFICATION OF THIS ALL IMPORTANT AND M EANINGFUL DOCUMENT, IT CAN BE DETERMINED WHETHER THE APPELLANT WAS HAVING SUBCONTRACTOR RELATIONSHIP WITH THESE PARTIES AS PER THE RATIO OF HON'BLE SUPREME COURT JUDGMENT IN THE CASE OF ASSOCIATED CEMENT (SU PRA). AS PER CLAUSE AND UNAMBIGUOUS WORD 'ANY WORK' USED IN SECTION 194 C OF THE ACT, THE LIABILITY TO DEDUCT IDS FASTENS ON THE APPELLAN T EVEN IF THE CONTRACT IS NOT ORAL OR WRITTEN BUT IMPLIED. BUT, THE APPELL ANT EXCEPT SUBMITTING THE SELF SERVING CONTENTION WITH THE HELP OF RATIO OF VARIOUS CASE LAWS PRECLUDE THE VERIFICATION OF FACTS. AS PER THE VERI FICATION OF A.O. AT PARA 3 OF THE ASSTT. ORDER THERE IS NO DOUBT ABOUT THE P AYMENT IN EXCESS OF RS. 50,000 IN AGGREGATE TO TOTAL 11 PARTIES AMOUNTI NG TO RS. 71,37,065 IS MENTIONED. FURTHER APPELLANT FAILED TO OFFER ANY REPLY BEFORE A.O, IN RESPONSE TO SHOW CAUSE, THEREFORE VERIFICATION OF G RS BECOME ALL CRUCIAL CONSIDERING THE GROUNDS OF APPEAL AND CONTE NTION OF THE APPELLANT BUT APPELLANT FAILED TO SHOW ANY OF SUCH GRS. THE APPELLANT IN THE STATEMENT OF FACT AT POINT NO. 11 CONTENDED (WITHOUT PREJUDICE) THAT CBDT CIRCULAR NO. 714 DT. 03/08/95, QUESTION N O. 9 STIPULATE THAT EACH BILTY OR EACH TRANSPORT TRANSACTION SHALL BE C ONSIDERED AS SEPARATE CONTRACT AND THE A.O. HAS NOT GIVEN ANY FI NDING TO THE FACT THAT PAYMENT FOR EACH SEPARATE BILTY /GRS/INSTRUCTION/TR ANSACTION EXCEEDS THE AFORE MENTIONED STATUTORY' LIMIT IS A CONTRARY CONTENTION IN VIEW OF NO EXPLANATION BEFORE A.O. AND NON PRODUCTION OF AN Y OF SUCH DETAIL/EVIDENCES BEFORE ANY OF THE AUTHORITY. IN PO INT NO. 12 OF SOF IT IS CONTENDED THAT THERE IS NO REVENUE LOSS SINCE ALL T HE TRANSPORTERS TO WHOM PAYMENTS MADE HAD ALREADY FILED THEIR IT. RETU RNS AND PAID TAXES ON IT AND HENCE, RELYING ON HON'BLE SUPREME COURT C ASE OF HINDUSTAN COCA COLA, THE APPELLANT IS NO LONGER AN 'ASSESSEE IN DEFAULT' AND THEREFORE PROVISIONS OF SECTION 194 C R.W.S. 201(1 A) SHALL NOT APPLIED. THIS CONTENTION IS ALSO A SELF SERVING CONTENTION B ECAUSE APPELLANT HAS ITA NO.1839 AND 2177/AHD/2012 6 NOT SUBMITTED ANY DETAIL WITH NAME, ADDRESS, PAN AN D DETAIL OF THESE PARTIES FOR FILING OF RETURN OF INCOME AND PAYMENT OF TAXES AS CONTENDED. IT IS THEREFORE, APPELLANT CONTENTION FO R NON APPLICABILITY OF PROVISION OF SECTION 194 C R.W.S. 40 (A)(IA) OF THE IT ACT IS REJECTED SINCE NOT SUPPORTED WITH DOCUMENTARY EVIDENCES AND CASE RELIED ON ARE TREATED AS NOT APPLICABLE IN THE CASE OF APPELLANT. THE A.O. 'S ACTION OF DISALLOWANCE U/S 40(A)(IA) OF THE ACT OF THE PAYMEN TS MADE BY APPELLANT IN EXCESS OF RS. 50,000 IN AGGREGATE AS DISCUSSED I N EARLIER PARA ARE THEREFORE UPHELD. BUT, THE APPELLANT IN WRITTEN SUB MISSION CONTENDED THAT THE APPLICABILITY OF DISALLOWANCE U/S 40 (A)(I A)OF THE ACT IS APPLIED ONLY TO THE AMOUNTS REMAINED PAYABLE AS ON 31ST MAR CH OF PREVIOUS YEAR IN VIEW OF HON'BLE ITAT SPECIAL BENCH ORDER IN THE CASE OF M/S. MARILYN SHIPPING & TRANSPORT V/S ACIT (SUPRA). IT I S IN THIS REGARD APPELLANT FILED A DETAIL SHOWING OUTSTANDING BALANC E BEING PAYABLE TO THESE ELEVEN PARTIES IN A TABULAR FORM AS FOLLOWS: 'MEETALI ROAD CARRIERS' NAME OF THE VENDOR EXPENSES INCURRED PAYMENTS MADE DURING THE YEAR PAYMENTS OUTSTANDING BALAJI TRANSPORTATION CORPORATION 75,600 - 75,600 CHETAK ROADWEWAYS 55,200 - 55,200 GANESH FREIGHT CARRIERS 85,600 - 85,600 MAYUR ROADWAYS 63,600 - 63,600 NANALAL R SHAH 500,000 215,000 284,500 NEW SUPREME TRAN 1,705,000 1,480,000 225,000 RAVI KIRAN TRANSPORT 4,282,115 3,385,000 897,115 R R ROADWAYS 66,750 - 66,750 SHRI LAXMI TRANSPORT 64,950 25,000 39,950 ITA NO.1839 AND 2177/AHD/2012 7 SURYA GOODS CARRIERS 91,800 50,000 41,800 TEJAS ROADWAYS 81,500 10,000 71,500 7,072,115 5,165,500 1,906,615 I AM INCLINED TO ACCEPT THIS CONTENTION OF THE APPE LLANT FOLLOWING THE RATIO OF HON'BLE SPECIAL BENCH OF ITAT. IT IS IN TH IS REGARDS, THE TOTAL DISALLOWANCES WHICH CAN BE UPHELD BEING SUSTAINABLE U/S 40(A)(IA) OF THE ACT IS RS. 19,06,615 ONLY. THE DISALLOWANCE AND ADDITION TO THIS EXTENT IS THEREFORE CONFIRMED. FOR THE BALANCE AMOU NT I.E. RS. 51,65,500 (70,72,115-19,06,615), THE A.O. IS DIRECT ED TO VERIFY FROM CASE RECORD I.E. AUDITED P&L A/C. AND BALANCE SHEET AND ALLOW THE PAYMENTS MADE TO THESE PARTIES DURING THE PREVIOUS YEAR. THE APPELLANT GETS RELIEF ACCORDINGLY. 9. WE FIND THAT THE LD.CIT(A) HAS REJECTED THE CONT ENTIONS OF THE ASSESSEE ON MERIT ON THE GROUND THAT THE ASSESSEE FAILED TO SUBMIT DETAILS EVEN CALLED FOR BY THE LD.CIT(A). THE DETAILS OUGHT TO HAVE BE EN SUBMITTED BEFORE THE AO, BUT IN THE INTEREST OF JUSTICE, THE LD.CIT(A) H AS ALSO CALLED FOR THE DETAILS VIZ. COPIES OF GRS. NOT SUBMITTED BY THE ASSESSEE W ITH REGARD TO THE 11 PARTIES. THE ASSESSEE DID NOT FILE THEIR INCOME TA X DETAILS IN ORDER TO DETERMINE WHETHER THESE PARTIES HAVE PAID TAXES ON THE AMOUNTS PAID BY THE ASSESSEE TO THEM WITHOUT DEDUCTION OF TAXES. THUS, A PERUSAL OF THE CIT(A)S ORDER WOULD INDICATE THAT THE LD.CIT(A) WAS CONSCIO US OF THE FACT THAT OTHER ISSUES HAVE ALSO BEARING ON THE CONTROVERSY AND THE Y ARE REQUIRED TO BE EXAMINED. BEFORE US, NEITHER ANY PAPER BOOK HAS BE EN FILED BY THE ASSESSEE NOR ANY ONE HAS APPEARED IN SPITE OF SERVICE OF NOT ICE. THEREFORE, WE DO NOT HAVE ANY MATERIAL ON THE STRENGTH OF THAT WE COULD DISPUTE THE FINDING OF THE FACTS RECORDED BY THE CIT(A). IN VIEW OF THE ABOVE DISCUSSION, WE ALLOW THE ITA NO.1839 AND 2177/AHD/2012 8 APPEAL OF THE REVENUE AND DISMISS THE APPEAL OF THE ASSESSEE. THE ASSESSMENT ORDER IS RESTORED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED AND THAT OF THE REVENUE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 7 TH APRIL, , 2016 AT AHMEDABAD. SD/- SD/- ( MANISH BORAD ) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER