AINUL HAQUE & BROS., Kolkata V. I.T.O, Wd . (37)3, Kolkata, Kolkata

ITA 1949/KOL/2013

• Counselvise Citation: 194923514 RSA 2013
• Duration Of Justice: 2 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 18-06-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R P NAG
• Assessee Lawyers: S CHAUDHURY
• Keywords: Opportunity of being heard; Principle of natural justice; Retrospective amendment
• Section: 143(3); 234B; 194C

Judgement Text

I.T.A. NO . 1949 / KOL ./20 1 3 ASSESSMENT YEAR: 200 9 - 20 10 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA SMC BENCH, KOLKATA BEFORE SHRI MAHAVIR SINGH , JUDICIAL MEMBER I.T.A. NO. 1949 / KOL / 20 1 3 ASSESSMENT YEAR : 200 9 - 20 10 AINUL HAQUE & BROS.,.................. ........ ........ . APPELLANT 4, PETER LANE, KO LKATA - 700 073 [PAN : A AJFA 8094 K ] - VS. - INCOME TAX OFFICER , ............................... . ...... ..... . RESPONDENT WARD - 3 7 ( 3 ), KOLKATA, 18, RABINDRA SARANI, KOLKATA - 700 0 01 APPEARANCES BY: SHRI S. CHAUDHURY , ADVOCATE , FOR THE ASSESSEE S H RI R .P. N AG , JCIT, FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : JU LY 1 6 , 2 01 5 DATE OF PRONOUNCING THE ORDER : 03.08. 201 5 O R D E R THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS) - X X I V , KOLKATA IN A PPEAL NO. 1 073 / CIT(A) - XX I V / W - 37(3)/11 - 12 DATED 0 1 . 0 3 .20 1 3 FOR THE ASSESSMENT YEAR 200 9 - 10 ON THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL: - 1. FOR THAT ON THE FACTS OF THE CASE, THE ORDER PASSED BY THE LD. C.LT.(A) IS COMPLETELY ARBITRARY, UNJUSTIFIED AND ILL EGAL. 2. FOR THAT ON THE FACTS OF THE CASE, THE ORDER PASSED BY THE LD. C .I.T.(A) WITHOUT GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE WHICH IS COMPLETELY ARBITRARY, UNJUSTIFIED AND ILLEGAL. 3. FOR THAT ON THE FACTS OF THE CASE, THE LD. C.L T.(A) WAS WRONG IN NOT CONSIDERING THE MERIT OF THE CASE, THEREFORE, THE ORDER PASSED BY THE LD. C.LT.(A) IS COMPLETELY ARBITRARY, UNJUSTIFIED AND ILLEGAL. I.T.A. NO . 1949 / KOL ./20 1 3 ASSESSMENT YEAR: 200 9 - 20 10 PAGE 2 OF 5 4. FOR THAT ON THE FACTS OF THE CASE THE LD. CIT(A) WAS WRONG IN DITTOING THE ORDER OF THE A.O. AN D CONFIRMING THE FORWARDING & CLEARING CHARGES DISALLOWED U/ S. 40 (A) (IA) OF THE LT. ACT AMOUNTING TO RS.287,056 / - WHICH IS COMPLETELY ARBITRARY UNJUSTIFIED AND ILL EGAL. 5. FOR THAT ON THE FACTS OF THE CASE, THE ORDER OF THE LD. C.LT.(A) WAS WRONG IN CONF IRMING THE ADDITION U / S. 40 ( A ) (IA) AMOUNTING TO RS.2 , 87,056 / - O N FORWARDING & CLEARING CHARGES FROM THREE PARTIES AND WITHOUT C ONSIDERING THE FACT THAT SECTION 194C(1) OF I. T. ACT WAS NOT APPLICABLE TO THE ASSESSEE, THEREFORE, THE ACTION OF THE C.LT.(A) IS COMPLETELY ARBITRARY, UNJUSTIFIED AND ILLEGAL. 6. FOR THAT ON THE FACTS OF THE CASE THE LD. CIT(A) WAS WRONG IN DITTOING THE ORDER OF THE A.O. AND CONFIRMING THE ADDITION ON ESTIMATE BASIS ON ACCOUNT OF 20% OF MESS CHARGES & CUSTOMERS ENTERTAINMENT AMOU NTING TO RS.16,974 / - , INTEREST ON VAT AMOUNTING TO RS.2,310 / - AND 2% OF GENERAL CHARGES AMOUNTING TO R S.339 / - , ALTHOUGH THE SAID EXPENSES WERE INCURRED FOR THE PURPOSE OF BUSINESS, THEREFORE, THE SAID ESTIMATED DISALLOWANCE IS COMPLETELY ARBITRARY UNJUSTIF IED AND ILLEGAL. 7. FOR THAT THE INTEREST U / S. 234B & 234C AMOUNTING TO RS.33,960 / - A ND RS.2,139 / - RESPECTIVELY CHARGED MECHANICALLY IS WRONG & ILLEGAL. 2. THE ASSESSMENT WAS FRAMED BY THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE ACT ON 23.12.2011 DETERMINING THE TAXABLE INCOME OF THE ASSESSEE AT RS.5,41,860/ - . 3. THE FIRST ISSUE IN THIS APPEAL OF ASSESSEE IS IN REGARD TO DISALLOWANCE OF RS.2,87,056/ - UNDER SECTION 40(A)(IA) OF THE ACT ON ACCOUNT OF PAYMENT OF FORWARDING AND CLEARING CHARGES. 4. THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAS PAID FORWARDING AND CLEARING CHARGES AMOUNTING TO RS.2,87,056/ - TO THE FOLLOWING PARTIES: - (I) DUTCH ROADLINES RS.1,30,500/ - (II) NEW SHIV SHAKTI TRANSPORT CO. RS. 97,556/ - (III) INDIRA LORRY SERVICES RS . 59,000/ - TOTAL AMOUNT PAID RS.2,87,056/ - I.T.A. NO . 1949 / KOL ./20 1 3 ASSESSMENT YEAR: 200 9 - 20 10 PAGE 3 OF 5 THE TDS AS PER SECTION 194C(1)(IV) WAS NOT DEDUCTED BY THE ASSESSEE DURING THE YEAR NOR PAID. THEREFORE, THE ASSESSING OFFICER WAS OF THE VIEW THAT AS THE ASSESSEE HAS PAID FORWARDING & CLEARING CHARGES TO T HE ABOVENAMED PARTIES WHERE THE AGGREGATE OF THE AMOUNTS PAID DURING THE FINANCIAL YEAR HAS EXCEEDED RS.50,000/ - AND, THEREFORE, WAS HIT THE SECTION 40(A)(IA) OF THE ACT AND, THEREFORE, THE ASSESSING OFFICER ADDED BACK THE AMOUNT OF RS.2,87,056/ - TO THE TO TAL INCOME OF THE ASSESSEE. 5. THEREAFTER THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(APPEALS). THE LD. CIT(APPEALS) OBSERVED THAT THERE WAS NO COMPLIANCE OF SECTION 194C BY THE ASSESSEE AND IN ABSENCE OF PROPER EXPLANATION S WITH SUPPORTING DOCUMENTS , THE ADDITION OF RS.2,87,056/ - UNDER SECTION 40(A)(IA) ON ACCOUNT OF FORWARDING AND CLEARING CHARGES WAS CONFIRMED. 6. BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 7. LD. COUNSEL FOR THE ASSESSEE STATED THAT THE PAYMENT ON ACCOUNT OF FORWARDING AND CLEARING CHARGES GIVEN TO THREE TRANSPORTERS TOTALLING TO RS.2,87,056/ - HAS BEEN DULY SHOWN BY THE THREE PARTIES IN THEIR RETURN OF INCOME AND TAXES HAVE BEEN PAID ACCORDINGLY. 8. LD. D.R., ON THE OTHER HAND, VEHEMENTLY RELIED ON THE ORDER OF LD. CIT(APPEALS). 9 . I HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME ALONG WITH THE ORDERS OF TAX AUTHORITIES BELOW. THE PROVISIONS OF SECTION 40(A)(IA) ARE VERY CLEAR IF THE ASSESSEE FAILS TO DEDUCT THE TAX AT SOURCE OR AFTER DED UCTION HAS NOT PAID BEFORE THE DUE DATE SPECIFIED IN SUB - SECTION (1) OF SECTION 139, THE SAME WILL NOT BE ALLOWED IN COMPUTING THE INCOME UNDER THE HEAD PROFIT AND GAINS OF BUSINESS OR PROFESSION . THE CONTENTION OF THE ASSESSEE, HOWEVER, IS THAT THE PRO VISIONS OF SECTION 194C ARE NOT APPLICABLE ON THE FACTS AS THERE IS NO AGREEMENT OR CONTRACT I.T.A. NO . 1949 / KOL ./20 1 3 ASSESSMENT YEAR: 200 9 - 20 10 PAGE 4 OF 5 BETWEEN THE ASSESESE AND THE PERSONS FROM TRUCKS HAVE BEEN HIRED. A PLAIN READING OF SECTION 194C MAKES IT CLEAR THAT ANY PERSON RESPONSIBLE FOR PAYING ANY SUM TO ANY RESIDENT FOR CARRYING OUT ANY WORK IN PURSUANCE OF A CONTRACT BETWEEN THE TRANSPORTER AND A SPECIFIED PERSON IS REQUIRED TO DEDUCT TAX AT SOURCE UNDER SECTION FROM THE AMOUNTS SO PAID OR PAYABLE. THERE IS NO DOUBT THAT THE ASSESSEE IN HIS CASE HAS MADE THE PAYMENTS AS CLEARING AND FORWARDING CHARGES. BUT THE PAYMENTS HAVE NOT BEEN MADE IN PURSUANCE OF CONTRACT BETWEEN THE ASSESSEE AND THE TRANSPORTER. IN MY OPINION, A CONTRACT NEED NOT BE IN WRITING; EVEN AN ORAL CONTRACT IS GOOD ENOUGH TO INVOKE THE PR OVISIONS OF SECTION 194C. THE TRANSPORTERS HAVE RECEIVED THE PAYMENTS FROM THE ASSESSEE TOWARDS CLEARING AND FORWARDING CHARGES. THEREFORE, THE PRESUMPTION NORMALLY BE THAT ONE WOULD PROCEED ON THE BASIS THAT THERE WAS A CONTRACT FOR TRANSPORTATION OF GOOD S. THEREFORE, IF THE ASSESSEE HAS MADE THE PAYMENT FOR CLEARING AND FORWARDING CHARGES, THE PROVISIONS OF SECTION 194C ARE CLEARLY APPLICABLE. 10 . HOWEVER, I AM OF THE VIEW THAT INSERTION OF SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT BY THE FINANCE AC T, 2012 IS CURATIVE IN NATURE AND IT HAS RETROSPECTIVE EFFECT W.E.F. 1 ST APRIL, 2013 , THEREFORE, THE MATTER NEEDS FRESH ADJUDICATION LOOKING TO THE PRINCIPLES OF NATURAL JUSTICE AND FAIR PLAY TO BOTH THE PARTIES, THAT THE ASSESSING OFFICER WILL CARRY OUT N ECESSARY VERIFICATION IN REGARD TO THE PAYMENT HAVING BEEN TAKEN INTO ACCOUNT BY THE RECIPIENT IN COMPUTATION OF INCOME AND VERIFICATION OF PAYMENT OF TAXES IN RESPECT OF SUCH INCOME AND ALSO FILING OF INCOME TAX RETURN BY THE RECIPIENT. IN TERMS OF THE A BOVE, THIS ASPECT OF DISALLOWANCE OF RS.2,87,056/ - UNDER SECTION 40(A)(IA) IS RESTORED BACK TO THE FILE OF ASSESSING OFFICER AND THE ASSESSEE WILL PROVIDE ALL THE DETAILS IN TERMS OF SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT. NEEDLESS TO MENTION THAT THE ASSESSEE BE GIVEN REASONABLE OPPORTUNITY OF BEING HEARD SO THAT THE ASSESSEE CAN REPLY ALL THE QUERIES WHATEVER ASSESSING OFFICER MAY DESIRE. I.T.A. NO . 1949 / KOL ./20 1 3 ASSESSMENT YEAR: 200 9 - 20 10 PAGE 5 OF 5 1 1 . GROUNDS NO. 6 & 7 ARE NOT PRESSED BY THE LD. COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING. THEREFORE, BOTH THE GROUNDS ARE BEING DISMISSED AS NOT PRESSED. 1 2 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD AUGUST , 201 5 . SD/ - MAHAVIR SINGH ( JUDICIAL MEMBER) KOLKATA, THE 3 RD D AY OF AUGUST , 201 5 COPIES TO : (1) AINUL HAQUE & BROS., 4, PETER LANE, KOLKATA - 700 073 (2) INCOME TAX OFFICER, WARD - 37(3), KOLKATA, 18, RABINDRA SARANI, KOLKATA - 700 00 1 (3) COMMISSIONER OF INCOME - TAX (APPEALS) (4) COMMISSIONER OF INCOME TAX ( 5 ) THE DEPARTMENTAL REPRESENTATIVE ( 6 ) GUARD FILE BY ORDER ASSISTANT REGISTRAR INC OME TAX APPELLATE TRIBUNAL KOLKATA B ENCHES, KOLKATA LAHA/SR. P.S .