United Trading Co , Sagara V. Income Tax Officer Ward-3 , Shimoga

ITA 2042/BANG/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5643 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 23-10-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SWAPNA DAS
• Assessee Lawyers: A R VIVEK
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC-B BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER ITA NO. 2 042 / BANG/201 7 ASSESSMENT YEAR : 20 0 9 - 1 0 M/S. UNITED TRADING CO., SORABA ROAD, SAGAR 577 401, SHIVAMOGGA DISTRICT. PAN: AAAFU 3657M VS. THE INCOME TAX OFFICER, WARD 3, SHIMOGA. APPELLANT RESPONDENT APPELLANT BY : SHRI A.R. VIVEK, ADVOCATE RESPONDENT BY : SMT. SWAPNA DAS, JCIT (DR) DATE OF HEARING : 1 6 .01.2018 DATE OF PRONOUNCEMENT : 24 . 0 1 .201 8 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THIS IS AN ASSESSEES APPEAL DIRECTED AGAINST THE O RDER OF LD. CIT(A) DAVANGERE DATED 05.05.2017 FOR ASSESSMENT YEAR 2009 -10. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER. 1. THE ASSESSING OFFICER AND CIT(A)WAS NOT JUSTIFIE D IN ASSESSING THE TOTAL INCOME OF THE APPELLANT AT RS. 7,89,760/- AS AGAINST THE RETURNED INCOME OF THE APPELLANT. 2. THE COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT JUSTIFIED IN CONFIRMING AN ADDITION OF RS.50,000/- TOWARDS GROSS PROFIT ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THAT, THE ADDITION OF 50,000/- WAS WITHOUT ANY BASI S AND THE SAID ADDITION BY THE ASSESSING OFFICER WAS ALSO NOT BASE D ON ANY CREDIBLE MATERIAL AND THE ASSESSING OFFICER AND THE FIRST AP PELLANT HAS ACCEPTED ALL THE ACCOUNTS AS MAINTAINED BY THE APPELLANT HEN CE THE ADDITION WAS BAD IN LAW ON THE FACTS AND CIRCUMSTANCE OF THE CASE. 4. THE COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT JUSTIFIED IN CONFIRMING AN ADDITION OF RS.3,02,380/- UNDER SECTI ON 40(A (IA) ON THE FACTS AND CIRCUMSTANCES OF THE CASE. ITA NO.2042/BANG/2017 PAGE 2 OF 5 5. THE COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT JUSTIFIED IN CONFIRMING AN ADDITION OF RS.80,271/- BEING EQUAL T O 1/3RD OF CAR EXPENSES ON THE FACTS AND CIRCUMSTANCES OF THE CASE . 6. THE APPELLANT CRAVE THE LEAVE OF THE COURT TO AD D AND SUBSTITUTE SUCH GROUNDS AS RELEVANT DURING THE TIME OF HEARING . 7. THE APPELLANT PRAYS THAT THIS HON'BLE TRIBUNAL B E PLEASED TO ALLOW THE APPEAL OF IN THE INTEREST OF JUSTICE AND EQUITY . 3. IT IS SUBMITTED BY LD. AR OF ASSESSEE THAT GROUN D NO. 5 IS NOT PRESSED AND ACCORDINGLY THIS GROUND IS REJECTED AS NOT PRESSED. HE ALSO SUBMITTED THAT GROUND NOS. 1, 6 AND 7 ARE GENERAL FOR WHICH NO SEP ARATE ADJUDICATION IS CALLED FOR. 4. REGARDING GROUND NOS. 2 AND 3, HE SUBMITTED THAT ONLY ONE ISSUE IS INVOLVED AS PER THESE TWO GROUNDS REGARDING ADDITION MADE BY TH E AO OF RS. 1,00,000/- WHICH HAS BEEN REDUCED BY CIT(A) TO RS. 50,000/-. HE SUBMITTED THAT THE ADDITION PARTLY UPHELD BY CIT 9A) IS NOT JUSTIFIED. THE LD. DR OF REVENUE SUPPORTED THE ORDER OF CIT(A). 5. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. I FIND THAT AS PER THE ASSESSMENT ORDER, THE AO MADE ADDITION OF RS. 1,00,000/- BY AL LEGING THAT THE GP SHOWN BY THE ASSESSEE IN THE PRESENT YEAR IS LOW AS COMPARED TO THE IMMEDIATELY PRECEDING YEAR AND HE OBSERVED THAT SUCH LOWER G.P. IS ON DIESEL, TEA CHOCOLATE & MINTO, SUN FEAST BISCUITS, ASHIRWAD SAL T, STATIONARY NOTE BOOKS, SOAPS & SHAMPOO. BUT THIS ADDITION WAS MADE BY THE AO MAINLY ON THIS BASIS THAT WASTAGE OF 1,700 LITRES OF DIESEL AND 255 LITR ES IN RESPECT OF TURBO DIESEL CLAIMED BY THE ASSESSEE IS HIGH. THE CIT(A) HAS RE DUCED THIS ADDITION FROM RS. 1,00,000/- TO RS. 50,000/- ON THIS BASIS THAT T O SERVE THE INTEREST OF JUSTICE, FULL ADDITION IS RESTRICTED TO RS. 50,000/- I.E. 50 % OF THE ADDITION MADE BY THE AO. THE CIT(A) ALSO NOTED IN PARA NO. 4A OF THE IM PUGNED ORDER THAT THIS WAS SUBMITTED BY ASSESSEE BEFORE HIM THAT THE AO HAS NO T POINTED OUT ANY DEFECTS IN THE BOOKS OF ACCOUNTS AND ALSO NOT REJECTED THE BOOKS. IT IS ALSO SUBMITTED BEFORE CIT(A) THAT PETROL AND DIESEL SENT BY HPC LT D. FROM MANGALORE TO SAGAR HAS TO PASS THROUGH HIGH TEMPERATURES OF MANGALORE AND UDUPI AND HENCE, DRAINAGE IS MORE AND DRAINAGE AND WASTAGE IS INCIDE NTAL IN RUNNING THE ITA NO.2042/BANG/2017 PAGE 3 OF 5 BUSINESS OF PETROL PUMP. I FIND THAT THE AO AND CI T(A) HAS NOT MENTIONED THE QUANTUM OF WASTAGE OF DIESEL AND TURBO DIESEL OF TH E EARLIER YEARS AND WHAT IS THE NORMS BEING ACCEPTED PERCENTAGE OF SUCH TRANSIT LOSS AND THAT THE CLAIM OF THE ASSESSEE OF TRANSIT LOSS IS UNREASONABLY HIGH A S COM[PARED TO NORMS AND THE ADDITION WAS MADE PURELY ON AD HOC BASIS WITHOU T GIVING ANY COGENT REASON OR BASIS. IN MY CONSIDERED OPINION, SUCH AN AD HOC ADDITION IS NOT JUSTIFIED AND HENCE, I DELETE THE SAME. ACCORDINGLY GROUND NOS. 2 AND 3 ARE ALLOWED. 6. REGARDING GROUND NO. 4, THE LD. AR OF ASSESSEE P LACED RELIANCE ON A JUDGMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CAS E OF CIT VS. SRI MARIKAMBA TRANSPORT COMPANY IN ITA NO. 553/2013 DATED 13.04.2 015 COPY SUBMITTED AND KEPT ON RECORD. MY ATTENTION WAS DRAWN TO PAGE NO. 6 OF THIS JUDGEMENT AND IT WAS POINTED OUT THAT IT WAS HELD BY HON'BLE KARNATA KA HIGH COURT THAT EXEMPTION PROVIDED UNDER SUB-SECTION(3) OF SECTION 194C FROM THE LIABILITY TO DEDUCT TAX AT SOURCE UNDER SUB-SECTION (2) WOULD BE COMPLETE, THE MOMENT THE REQUIREMENTS CONTAINED THEREIN ARE SATISFIED AND ON CE THE DECLARATION FORMS ARE FILED BY THE SUB-CONTRACTOR, THE LIABILITY OF THE A SSESSEE TO DEDUCT TAX ON THE PAYMENTS MADE TO THE SUB-CONTRACTOR WOULD NOT ARISE . HE SUBMITTED THAT IN THE PRESENT CASE, THE RELEVANT FORM WAS SUBMITTED BY TH E SUB-CONTRACTOR TO THE ASSESSEE COPY OF WHICH IS AVAILABLE ON PAGE 2 OF TH E PAPER BOOK. HE POINTED OUT THAT AS PER THIS FORM NO. 15J, THE AMOUNT MENTI ONED IS RS. 24,57,624/- AND THE AO HAS MADE DISALLOWANCE OF RS. 3,02,380/- BEIN G THE DIFFERENCE BETWEEN THE ACTUAL AMOUNT PAYABLE ON ACCOUNT OF TRANSPORTAT ION CHARGES OF RS. 27,60,004/- TO SHRI RAJASHEKAR AND THE AMOUNT MENTI ONED IN FORM NO. 15J RS. 24,57,624/-. HE SUBMITTED THAT HENCE, IT IS UNDISP UTED THAT THE RELEVANT FORM 15J WAS DULY SUBMITTED BY SUB-CONTRACTOR TO THE ASS ESSEE CONTRACTOR. AS PER THE JUDGEMENT OF HON'BLE KARNATAKA HIGH COURT, NO D ISALLOWANCE IS JUSTIFIED. THE LD. DR OF REVENUE SUPPORTED THE ORDER OF CIT(A) . 7. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE SE COND PROVISO TO SUB SECTION 3 OF SECTION 194C IS RELEVANT AND HENCE, I REPRODUCE THE SAME HEREIN BELOW AS WAS IN THE STATUTE BOOK DURING THE RELEVANT PERIOD BEFORE AMENDMENT BY FINANCE ACT, 2009 W.E.F. 01.10.2009. THE SAME IS A S UNDER. ITA NO.2042/BANG/2017 PAGE 4 OF 5 PROVIDED FURTHER THAT NO DEDUCTION SHALL BE MADE UNDER SUB-SECTION (2), FROM THE AMOUNT OF ANY SUM CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID DURING THE PREVIOUS YEAR TO THE AC COUNT OF THE SUB- CONTRACTOR DURING THE COURSE OF BUSINESS OF PLYING, HIRING OR LEASING GOODS CARRIAGES, ON PRODUCTION OF A DECLARATION TO THE PERSON CONCERNED PAYING OR CREDITING SUCH SUM, IN THE PRES CRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER AND WITHIN SUCH T IME AS MAY BE PRESCRIBED, IF SUCH SUBCONTRACTOR IS AN INDIVIDUAL WHO HAS NOT OWNED MORE THAN TWO GOODS CARRIAGES AT ANY TIME DURING TH E PREVIOUS YEAR: 8. FROM THE ABOVE PROVISO REPRODUCED FROM THE STATU TE BOOK, IT IS SEEN THAT THE BASIS OF THIS EXEMPTION FROM DEDUCTING TDS IN RESPE CT OF PAYMENT TO SUB- CONTRACTORS IS THIS THAT IF THE SUB-CONTRACTOR IS A N INDIVIDUAL WHO HAS NOT OWNED MORE THAN 2 GOODS CARRIAGES AT ANY TIME DURING THE PREVIOUS YEAR AND RELEVANT AND PRESCRIBED FORM IS SUBMITTED WITHIN TIME. THIS IS NOT THE DISPUTE THAT THIS FORM WAS DULY FURNISHED BY SUB-CONTRACTOR TO THE AS SESSEE BEING CONTRACTOR AND SUCH SUB-CONTRACTOR WAS COMPLYING WITH THE REQUIRED CONDITIONS THAT HE IS AN INDIVIDUAL WHO HAS NOT OWNED MORE THAN TWO GOODS CA RRIAGES AT ANY TIME DURING THE PREVIOUS YEAR BECAUSE THE AO HIMSELF HAS ACCEPTED THE CLAIM OF THE ASSESSEE THAT FOR THE EXPENDITURE OF RS. 24,57,624/ -, TDS IS NOT REQUIRED TO BE DEDUCTED. IN MY CONSIDERED OPINION, SIMPLY BECAUSE THE AMOUNT MENTIONED IN THE FORM NO. 15J IS INCORRECT, IT CANNOT BE HELD TH AT TDS IS NOT REQUIRED TO BE DEDUCTED TO THE EXTENT OF THAT AMOUNT ONLY AND NOT TO THE EXTENT OF ENTIRE AMOUNT PAYABLE TO SUB-CONTRACTOR WHO IS FULFILLING ALL THE CONDITIONS OF SECOND PROVISO TO SUB-SECTION (3) OF SECTION 194C. BY RES PECTFULLY FOLLOWING THE JUDGEMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CIT VS. SRI MARIKAMBA TRANSPORT COMPANY(SUPRA), I DELETE THE DI SALLOWANCES MADE BY THE AO. ACCORDINGLY GROUND NO. 4 IS ALLOWED. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- (ARUN KUMAR GARODIA) ACCOUNTANT MEMBER BANGALORE, DATED, THE 24 TH JANUARY, 2018. /MS/ ITA NO.2042/BANG/2017 PAGE 5 OF 5 COPY TO: 1. APP ELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.