ITO, New Delhi V. M/s. Vijay Bharat Roadlines Pvt. Ltd., New Delhi

ITA 1963/DEL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3638 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 23-06-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 30-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MONA MOHANTY
• Assessee Lawyers: POONAM AH UJA ADVS; RANI KIYALA KAMAL NAGPAL
• Keywords: Additional evidence; Non-deduction of tax
• Section: 194C

Judgement Text

I.T.A. NO.1963/DEL./2010 (A.Y. : 2006-07) 1 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH H : NEW DELHI) BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO.1963/DEL./2010 (ASSESSMENT YEAR : 2006-07) ITO, WARD 17(3), VS. M/S VIJAY BHARAT ROADLINES PVT. LTD., NEW DELHI. 502,503, CHAMELION ROAD, FILMISTAN, MODEL BASTI, DELHI. (PAN/GIR NO.AAACV2687H) (APPELLANT) (RESPONDENT) ASSESSEE BY : MS. RANI KIYALA, KAMAL NAGPAL & POONAM AH UJA, ADVS. REVENUE BY : MS. MONA MOHANTY, DR ORDER PER A.D. JAIN: JM THIS IS DEPARTMENTS APPEAL FOR ASSESSMENT YEAR 2006-07 AG AINST THE ORDER DATED 26.02.2010 PASSED BY THE CIT(A)-XIX, NEW DELHI, DELETING THE DISALLOWANCE OF `1,32,58,651/-, MADE U/ S 40(A)(IA) OF THE I.T. ACT, 1961, ON ACCOUNT OF NON-DEDUCTION OF TAX AT SOURCE ON THE FREIGHT CHARGES PAID BY THE ASSESSEE COMPANY. 2. WHILE MAKING THE ADDITION, THE ASSESSING OFFICER OBSE RVED, INTER ALIA, THAT THE ASSESSEE HAD FAILED TO FURNISH THE DETAIL S OF TDS EFFECTED ON FREIGHT CHARGES PAID AND TO PRODUCE THE BOOKS OF A CCOUNT; THAT AS SUCH, IT WAS CLEARLY A CASE OF NON-DEDUCTION OF TAX AT SOURCE ON THE FREIGHT CHARGES PAID AND THE ASSESSEE WAS DELIBERATELY AV OIDING FILING THE DETAILS; THAT THEREFORE, IT WAS ASSUMED THAT THE ASSE SSEE HAD NOT DEDUCTED TAX AT SOURCE; THAT AS PER THE PROVISIONS OF SE CTION 194C OF THE ACT, THE ASSESSEE WAS LIABLE TO DEDUCT TAX AT SOURCE ON THE FREIGHT CHARGES ON THE CARRIAGE OF GOODS; THAT PAYMENT EXCEED ING `50,000 HAD BEEN MADE IN EACH CASE; THAT AS SUCH, THE ASSESSEE WAS NOT I.T.A. NO.1963/DEL./2010 (A.Y. : 2006-07) 2 COVERED IN THE EXCEPTION PROVIDED IN THE PROVISO TO SECTION 194C(3)(I) OF THE ACT; THAT THE ASSESSEE HAD NOT BROUGHT ON RECORD ANY DECLARATION, AS PROVIDED UNDER RULE 29D OF THE INCOM E TAX RULES, 1962; THAT THEREFORE, THE ASSESSEE WAS LIABLE TO DEDUCT TAX AT SOURCE ON THE FREIGHT CHARGES PAID; THAT THE ASSESSEE HAD FAILE D TO DEDUCT TAX AT SOURCE ON THE FREIGHT CHARGES AMOUNTING TO `1,32,5 8,651/-; THAT SUCH THE EXPENSE HAD BEEN INCURRED ON ACCOUNT OF PAYM ENT OF FREIGHT CHARGES ON WHICH TDS HAD NOT BEEN DEDUCTED, AS REQUIR ED U/S 194C OF THE ACT; AND THAT HENCE, SUCH EXPENSES WERE BEING DISA LLOWED WITHIN THE MEANING OF SECTION 40(A)(IA) OF THE ACT AND ADDE D TO THE INCOME OF THE ASSESSEE. 3. BY VIRTUE OF THE IMPUGNED ORDER, THE CIT(A) DELE TED THE DISALLOWANCE. 4. AGGRIEVED, THE DEPARTMENT HAS FILED THE PRESENT AP PEAL. 5. CHALLENGING THE IMPUGNED ORDER, THE LD.DR CONTEN DED THAT THE CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF `1,3 2,58,651/- MADE U/S 40(A)(IA) OF THE ACT, ON ACCOUNT OF NON-DEDUCTIO N OF TAX AT SOURCE BY THE ASSESSEE COMPANY ON THE FREIGHT CHARGES PAID BY I T; THAT WHILE DOING SO, THE CIT(A) HAS GONE WRONG IN ADMITTING ADDI TIONAL EVIDENCE IN CONTRAVENTION OF RULE 46A OF THE INCOME TAX RULES, 1 962, PARTICULARLY WHEN THE ASSESSEE HAD NOT FURNISHED THE REQUISITE DETAILS BEFORE THE ASSESSING OFFICER AND NO COMPLIANCE WAS MADE EVEN TO THE SHOW CAUSE NOTICE ISSUED BY THE ASSESSING OFFICER; THAT SUCH ADD ITIONAL EVIDENCE WAS IN THE SHAPE OF DECLARATION IN FORM NO. 15J, WHICH WAS WRONGLY ADMITTED BY THE CIT(A), DESPITE THE FACT THA T THE AFFIDAVIT OF SHRI SANT GOPAL GUPTA, ONE OF THE DIRECTORS OF THE A SSESSEE COMPANY, ALSO FILED AS FRESH EVIDENCE BEFORE THE CIT(A) REGARDI NG NON-RECEIPT OF SHOW-CAUSE NOTICE, STOOD REJECTED BY THE CIT(A); THAT THE CIT(A) HAS ERRED IN RELYING ON THE DECLARATION FILED IN FORM N O.15 J, IGNORING THE I.T.A. NO.1963/DEL./2010 (A.Y. : 2006-07) 3 FACT THAT THE ASSESSEE HAD FAILED TO PRODUCE THE PARTIE S WHO HAD STATELY SUBMITTED A DECLARATION IN FORM NO.15-I TO T HE ASSESSEE COMPANY, BEFORE THE ASSESSING OFFICER, AS DIRECTED BY TH E CIT(A) IN THE REMAND PROCEEDINGS; THAT THE CIT(A) HAS GONE WRONG IN HOLDING THAT THE FREIGHT PAYMENTS AMOUNTING TO `14,43,246/- WERE LIABLE FOR TDS, BEING BELOW THE LIMIT FOR TDS; THAT WHILE DOING SO, THE CIT(A) FAILED TO APPRECIATE THAT THE ASSESSEE HAD NOT PRODUCED ANY EVIDE NCE OR BOOKS OF ACCOUNT, EITHER IN THE ORIGINAL ASSESSMENT PROCEEDIN GS, OR DURING THE REMAND PROCEEDINGS, IN SPITE OF THE ASSESSING OFFICER HAV ING SPECIFICALLY ASKED THE ASSESSEE TO DO SO; AND THAT THE CIT (A) HAS ALSO ERRED IN HOLING THAT THE PROVISIONS OF SECTION 194C OF THE ACT ARE NOT APPLICABLE TO THE ASSESSEES CASE, EVEN THOUGH EXPLANATIO N (IV)(C) TO SECTION 194C OF THE ACT SPECIFICALLY PROVIDES THAT WO RK INCLUDES CARRIAGE OF GOODS AND PASSENGERS BY ANY MODE OF TRANSPO RT OTHER THAN BY RAILWAYS. 6. THE LD.COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, H AS PLACED STRONG RELIANCE ON THE IMPUGNED ORDER. IT HAS BEEN CO NTENDED THAT THE ASSESSEE IS A TRANSPORT CONTRACTOR AND IT MOVES STOCK FOR F CI, AS PER DIFFERENT AGREEMENTS ENTERED INTO BETWEEN THE ASSESSEE AND FCI; THAT TDS HAD NOT BEEN DEDUCTED ON THE PAYMENTS AMOUNTING TO `1,32,58,651/-, MADE TO TRUCK/LORRY OWNERS, FOR SUPPL Y OF HIRING OF VEHICLES, UNDER THE HEAD FREIGHT CHARGES; THAT IT WAS IN THE ABSENCE OF ANY DECLARATION IN FORM NO.15-I, READ WITH RULE 29D OF THE INCOME TAX RULES, 1962, FROM THE SUPPLIERS OF THE LORRIES TO T HE ASSESSEE, THAT THE ASSESSING OFFICER INVOKED THE PROVISIONS OF SECTION 40 (A)(IA) READ WITH SECTION 194C OF THE ACT; THAT IT WAS IN THE FIRST APPELLATE PROCEEDINGS, THAT THE ASSESSEE FILED THE FOLLOWING DOCUM ENTS AS ADDITIONAL EVIDENCE: (1) AFFIDAVIT OF SHRI RAVINDER JAIN, CA AND AR WHO REPRESENTED THE CASE BEFORE THE ITO. I.T.A. NO.1963/DEL./2010 (A.Y. : 2006-07) 4 (2) AFFIDAVIT OF SHRI SANT GOPAL GUPTA, DIRECTOR OF THE ASSESSEE COMPANY. (3) COPY OF FORM 15 J FILED WITH THE CIT(TDS) ON 12 .06.2006. (4) COPY OF FORM 15 I RECEIVED FROM PARTIES. (5) DETAILS OF FREIGHT CHARGES SHOWING INAPPLICABILITY OF TDS. (6) COPY OF AGREEMENTS WITH PARTIES FOR WHOM WORK PERFORM ED BY THE ASSESSEE. IT HAS BEEN FURTHER SUBMITTED THAT THE ABOVE BEING AD DITIONAL EVIDENCE, THE MATTER WAS REMANDED TO THE ASSESSING OFFIC ER BY THE CIT(A); THAT THE ASSESSING OFFICER OBJECTED TO THE ADMI SSION OF THE ADDITIONAL EVIDENCE BY WAY OF AFFIDAVITS, FOR THE RE ASON THAT THE DEPONENTS OF THE AFFIDAVITS HAD NOT BEEN PRODUCED FOR VERIFICATION OF THE CONTENTS OF THE AFFIDAVITS; THAT APROPOS THE FORM NOS.15I & 15J, THE ASSESSING OFFICER, IN THE REMAND REPORT, STATED THAT THO UGH THE COPIES OF THE FORM 15J CONTAINED A STAMP IMPRESSION OF THE OF FICE OF THE CIT(TDS), RECEIPT THEREOF IN THE OFFICE OF THE CIT( TDS) HAD NEITHER BEEN CONFIRMED NOR DENIED, FOR THE REASON THAT THE RECORD WAS NOT TRACEABLE, SINCE THE RECEIPT REGISTER WAS EITHER MIS-PLACED OR DEST ROYED IN A FIRE AND AS SUCH, THE ASSESSING OFFICER WAS NOT ABLE TO COMMENT THEREON; THAT HOWEVER, THE PLAUSIBLE CONCLUSION WAS, THAT HAD T HE ASSESSEE SUBMITTED THE FORM NO.15 J BEFORE THE CIT(TDS) BY 12 .6.06, THEY WOULD CERTAINLY HAVE BEEN SUBMITTED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER ALSO; THAT IT WAS IN THESE CIRCUMSTANCES, THAT T HE AFFIDAVITS HAD NOT BEEN TAKEN ON RECORD AS ADDITIONAL EVIDENCE BY T HE CIT(A), WHEREAS THE FORM NOS.15-I AND 15-J ALONG WITH DETAILS OF FREIGHT CHARGES PAID HAD BEEN SO ADMITTED, HOLDING THEM TO BE ESSENTIAL TO DECIDE THE ISSUE UNDER CONSIDERATION AND IN THE INTERE ST OF JUSTICE; WHILE DELETING THE DISALLOWANCE, THE CIT(A) HAS CORRE CTLY FOLLOWED MYTHRI TRANSPORT CORPORATION VS. ACIT, 124 TTJ 970 (VISAKHA); THAT APROPOS THE AMOUNT OF `14,43,246/-, THE PAYMENTS WERE UNDENIABLY OF LESS THAN `50,000/- IN THE ENTIRE YEAR AND NO SINGLE P AYMENT EXCEEDED `20,000/-, I.E., THE PRESCRIBED LIMIT FOR THE PURPOSE OF TDS; THAT SO FAR I.T.A. NO.1963/DEL./2010 (A.Y. : 2006-07) 5 AS REGARDS THE PAYMENT OF `1,18,15,405/-, THE ASSESSEE HA D FURNISHED FORM NOS.15-I & 15-J AND SO, THE LEGAL REQUIREMENT WA S MET AND TDS WAS NOT ATTRACTED; AND THAT THEREFORE, THERE BEING N O ERROR WHATSOEVER IN THE ORDER OF THE CIT(A), THE SAME BE CONFIRMED WH ILE DISMISSING THE APPEAL FILED BY THE DEPARTMENT, WHICH CARRIES NO MER IT. 8. WE HAVE HEARD BOTH THE PARTIES AND HAVE PERUSED TH E MATERIAL ON RECORD. APROPOS THE GRIEVANCE OF THE DEPARTMENT THAT FORM NO.15J WAS WRONGLY ADMITTED BY THE CIT(A), IN THE FACE OF T HE FACT THAT IN THAT VERY STROKE, THE CIT(A) HAD REJECTED THE ADDITIONAL EVIDENCE BY WAY OF AFFIDAVIT OF SHRI SANT GOPAL GUPTA, ONE OF THE DIRE CTORS OF THE ASSESSEE COMPANY, THE CIT(A) HAS OBSERVED IN THE IMPUGNED ORDE R THAT THE AFFIDAVITS OF BOTH SHRI RAVINDER JAIN, CA AND SHRI S ANT GOPAL GUPTA, AR, DIRECTOR OF THE ASSESSEE COMPANY, WERE NOT BEING ADMITT ED, SINCE THE ASSESSEE HAD REMAINED UNABLE TO PRODUCE THESE PERSONS, DUE TO WHICH, THE CONTENTS OF THE AFFIDAVITS WERE INCAPABLE OF BEING VERIFIED. 9. AS FOR THE ADMISSION OF FORM NO.15 J, AS ADDITIONAL EVIDENCE, IT REMAINS UNDISPUTED THAT THESE DOCUMENTS WERE ESSENTIAL TO DECIDE THE ISSUE OF APPLICABILITY OF SECTION 194C OF THE ACT AND THE CONSEQUENT LIABILITY OF THE ASSESSEE U/S 40(A)(IA) OF THE ACT, AS PO INTED OUT BY THE LD.COUNSEL FOR THE ASSESSEE. ON THE ISSUE OF ADMISSION OF T HIS ADDITIONAL EVIDENCE, THE MATTER HAD BEEN DULY REMAN DED BY THE CIT(A) TO THE ASSESSING OFFICER. THE ASSESSING OFFICER, IN THE RE MAND REPORT, HAD EXPRESSED ONLY A CONJUNCTURE BY STATING THAT IF TH ESE DOCUMENTS HAD BEEN FILED BY THE ASSESSEE BEFORE THE CIT(TDS), THE RE WAS NO REASON WHY THE ASSESSEE COULD NOT HAVE FURNISHED THE SAME BEFORE THE ASSESSING OFFICER ALSO. THIS, DESPITE THE FACT THAT THE COPY OF THIS FORM NO.15 J PRODUCED BY THE ASSESSEE CONTAINED A STAMP IMPRESSION OF THE OFFICE OF THE CIT(TDS). ON ENQUIRY BY THE A SSESSING OFFICER, THE OFFICE OF THE CIT(TDS) WAS NOT ABLE TO DENY RECEIPT THEREOF. 10. SO FAR AS REGARDS THE MERITS OF THE CASE, THE CIT( A) HAS PLACED RELIANCE ON THE CASE OF MYTHRI TRANSPORT CORPORATION VS. ACIT (SUPRA), I.T.A. NO.1963/DEL./2010 (A.Y. : 2006-07) 6 WHEREIN, THE ASSESSEE, A TRANSPORT CONTRACTOR, HAD ITSELF EXECUTED A CONTRACT FOR TRANSPORTATION OF BITUMEN BY HIRING LOR RIES FROM OTHER LORRY OWNERS, WHO SIMPLY PLACED THE VEHICLES AT THE DISPOSAL O F THE ASSESSEE, WITHOUT INVOLVING THEMSELVES IN CARRYING OUT AN Y PART OF THE WORK UNDERTAKEN BY THE ASSESSEE. IT WAS IN THESE FACTS, T HAT THE TRIBUNAL HELD THAT IT COULD NOT BE SAID THAT PAYMENT S MADE FOR HIRING OF VEHICLES FELL IN THE CATEGORY OF PAYMENTS TOWARDS THE SUB-CONTRACT AND THAT THEREFORE, THE ASSESSEE WAS NOT LIABLE TO DEDUCT TA X AT SOURCE AS PER THE PROVISIONS OF SECTION 194C(2) OF THE ACT FROM THE PAYMENTS MADE TO THE LORRY OWNERS AND CONSEQUENTLY, THE PROVISI ONS OF SECTION 40(A)(IA) OF THE ACT WERE NOT APPLICABLE TO SUCH PAY MENTS. 11. THE PRESENT CASE IS EXACTLY SIMILARLY SITUATED. HER EIN, THE ASSESSEE IS A TRANSPORT CONTRACTOR FOR FCI, FOR MOVEMENT OF STOCK. THE FREIGHT CHARGES WERE PAID TO LORRY/TRUCK OWNERS FOR SU PPLY/HIRING OF VEHICLES. THESE FACTS REMAIN ENTIRELY UNDISPUTED. HEN CE, IN KEEPING WITH MYTHRI TRANSPORT CORPORATION VS. ACIT (SUPRA), THE ASSESSEE HAD EXECUTED THE CONTRACT OF TRANSPORTATION OF STOCK OF F CI BY HIRING LORRIES/TRUCKS FROM OTHER LORRY/TRUCK OWNERS, WHO HAD SIMPLY PLACED THEIR LORRIES/TRUCKS AT THE DISPOSAL OF THE ASSESSEE AND WH O WERE THEMSELVES IN NO WAY DIRECTLY INVOLVED IN CARRYING OU T ANY PART OF THE WORK UNDERTAKEN BY THE ASSESSEE WITH FCI. THAT BEING SO, MYTHRI TRANSPORT CORPORATION VS. ACIT(SUPRA) IS SQUARELY APPL ICABLE TO THE PRESENT CASE. NO DECISION TO THE CONTRARY HAD BEEN BR OUGHT TO OUR NOTICE. 12. BESIDES, THE FACTUAL FINDING OF THE CIT(A) THAT T HE PAYMENTS OF `14,43,240/- WERE PAYMENTS OF LESS THAN `50,000/- IN THE WHOLE YEAR AND THAT NO PAYMENT EXCEEDED `20,000, REMAINS UNHING ED. THE CIT(A) HAD ADMITTED THE DETAILS OF FREIGHT CHARGES PAID BY T HE ASSESSEE, AS ADDITIONAL EVIDENCE, WHICH HAS NOWHERE BEEN DISPUTED OR CHALLENGED BY THE DEPARTMENT. THAT BEING SO, IT DOES NOT NOW LI E IN THE MOUTH OF THE DEPARTMENT TO STATE THAT THIS WAS ONLY A PLEA OF T HE ASSESSEE SINCE I.T.A. NO.1963/DEL./2010 (A.Y. : 2006-07) 7 THE ASSESSEE HAD NOT PRODUCED ANY EVIDENCE OR BOOKS OF ACCOUNT, EITHER DURING THE ASSESSMENT PROCEEDINGS, OR DURING THE REMAND PROCEEDINGS. PERTINENTLY, IN THE REMAND REPORT ALSO, NO CHALLENGE WAS RAISED BY THE ASSESSING OFFICER TO THE DETAILS OF FREIGHT CHARGES, AS FILED BY THE ASSESSEE BEFORE CIT(A). 13. IN VIEW OF THE ABOVE, IT CANNOT AT ALL BE SAID THAT THE CIT(A) HAS ERRED IN HOLDING THAT THE PROVISIONS OF SECTION 194C A RE NOT APPLICABLE TO THE ASSESSEES CASE. THOUGH THE DEPARTMENT SEEKS TO REL Y ON EXPLANATION (IV)(C) BELOW SECTION 194C OF THE ACT, I T HAS NOT BEEN SHOWN AS TO HOW THE SAID EXPLANATION IS DETRIMENTAL TO THE ASSESSEES CASE. MYTHRI TRANSPORT CORPORATION (SUPRA) DOES NOT STAND OVERRULED. TRUE, WORK WITHIN THE MEANING OF THE SAID EXPLANAT ION (IV)(C) TO SECTION 194 (WRONGLY MENTIONED AS EXPLANATION III IN GROUND NO.6 TAKEN BY THE DEPARTMENT) INCLUDES CARRIAGE OF GOODS AND PASSE NGERS BY ANY MODE OTHER THAN BY RAILWAYS. THE FACT REMAINS THAT TH E PAYMENTS IN QUESTION WERE MADE TO LORRY/TRUCK OWNERS WHO MERELY P LACED THE VEHICLES AT THE DISPOSAL OF THE ASSESSEE AND NEVER INVOLVE D THEMSELVES IN THE WORK TO BE CARRIED OUT BY THE ASSESSEE FOR FCI. MYTHRI TRANSPORT CORPORATION VS. ACIT (SUPRA) THUS HOLDS SWAY. 14. IN VIEW OF THE ABOVE DISCUSSION, FINDING NO MERIT THEREIN, THE GRIEVANCE SOUGHT TO BE RAISED BY THE DEPARTMENT IS REJ ECTED WHILE CONFIRMING THE WELL REASONED ORDER PASSED BY THE CIT(A ). 15. IN THE RESULT, THE APPEAL FILED BY THE DEPARTMEN T IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 23.06.2011. SD/- SD/- (SHAMIM YAHYA) (A.D.JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DELHI, DATED : JUNE 23, 2011. SKB I.T.A. NO.1963/DEL./2010 (A.Y. : 2006-07) 8 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT, 4.CIT(A)-XIX, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR/ITAT