M/s Prabhat Goods Transport Service, Bhopal V. The ACIT 3(1), Bhopal

ITA 208/IND/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1507 (ITAT-INDORE)
• Duration Of Justice: 8 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-01-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 18-04-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K K SINGH
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL , INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, J.M. AND SHRI R.C.SHARM A, A.M. PAN NO. : AAFFP9229H I.T.A.NO. 208 /IND/201 2 . A.Y. : 2007 - 08 M/S.PRABHAT GOODS TRANSPORT SERVICE, ACIT, 3(1), BHOPAL BHOPAL VS APPELLANT RESPONDENT APPELLANT BY : SHRI HITESH CHIMNANI, C. A. RESPONDENT BY : SHRI K.K. SINGH, CIT DR DATE OF HEARING : 19 . 1 2 .2012 DATE OF PRONOUNCEMENT : 14 . 01 .201 3 O R D E R PER R. C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) DATED 08.12.2011 FOR THE ASSESSMENT YEAR 2007-08, WHEREIN THE ASSESSEE IS AGGRIEVED FOR DISALLOWANCE MADE U/S 40(A)(IA) OF THE INCOME-TAX ACT, 1961, ON ACCOUNT O F NON -: 2: - 2 DEDUCTION OF TDS ON HIRE CHARGES PAID TO VARIOUS TR UCK OPERATORS. 2. AT THE OUT-SET, IT WAS SUBMITTED THAT THE ISSUE IS SQUARELY COVERED BY THE ORDER OF THE TRIBUNAL DATED 02.07.2012 IN ASSESSEES OWN CASE FOR THE IMMEDIATE LY PRECEDING ASSESSMENT YEAR 2006-07. IT WAS FURTHER S UBMITTED THAT THE ISSUE IS ALSO COVERED BY THE FOLLOWING DEC ISION OF THE TRIBUNAL WHICH WERE FILED BEFORE THE CIT(A) :- (I) MYTHRI TRANSPORT, 124 TTJ 970 (VIZAG). (II) R.R.CARRYING CORPORATION, 126 TTJ 240 (CTK). (III) CHANDRAKANT THAKKAR, 129 TTJ 1 (CTK)(UO). (IV) KAVITA CHUGS, 134TTJ 103 (KOL). (V) TEJA CONSTRUCTION, 129 TTJ 57 (HYD). (VI) INDIAN ROADLINES, 45 DTR 49 (ASR) (VII) BHAGWATI STEELS, 326 ITR 108 (P & H) SLP OF DEPARTMENT DISMISSED) (VIII) ITO VS. VANDANA GOEL, 32CCH 153 (CHD) (TRI B) 3. ON THE OTHER HAND, THE LD. CIT DR SUBMITTED THAT FA CTS OF THE YEARS UNDER CONSIDERATION ARE SLIGHTLY DIFFE RENT FROM THE EARLIER YEAR WHERE THE TRIBUNAL HAS TAKEN THE DECIS ION. -: 3: - 3 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS ORDER OF THE TRIBUNAL DATED 2.7.2012 IN ASSESSEES OWN CASE. FACTS IN BRIEF ARE THAT THE ASSESSEE IS A PARTNERSH IP FIRM CONSISTING OF THREE PARTNERS AND IS CARRYING ON BUS INESS OF TRANSPORT OPERATORS. ASSESSEE ALSO USED TO HIRE TRU CK FROM OUTSIDE PARTY AND PAY HIRE CHARGES TO THEM. FOR THE YEAR UNDER CONSIDERATION, THE BOOKS WERE GOT AUDITED AND THE RETURN OF INCOME WAS FILED ALONGWITH THE AUDIT REPO RT DATED 28.10.2007. HOWEVER, OWING TO ONGOING DISPUTES BETW EEN THE PARTNERS, WHICH LATER TURNED TO BITTER ENMITY BETWE EN THEM, THE BOOKS OF ACCOUNTS, TILL BOOKS AND VOUCHERS COUL D NOT BE PRODUCED BEFORE THE ASSESSING OFFICER AT THE TIME O F FRAMING ASSESSMENT BUT ONLY AUDITED ACCOUNT S( AS PER AUDIT REPORT DATED 28.10.2007, WHICH WERE FILED ALONGWITH THE RE TURN) WERE MADE AVAILABLE BEFORE THE ASSESSING OFFICER (SINCE THE POSSESSION OF BOOKS OF ACCOUNTS, VOUCHERS ETC. WERE , AND CONTINUE TO BE, WITH THE HOSTILE PARTNER BEING PART NER NO. 3 SHRI JATINDER SINGH). THE LD. ASSESSING OFFICER, WH ILE FRAMING THE ASSESSMENT ORDER DATED 24.12.2009 PASSED U/S 14 3(3) OF -: 4: - 4 THE INCOME-TAX ACT, 1961, HAD ASKED THE ASSESSEE TO INDICATE WHY TDS WAS NOT DEDUCTED ON HIRE CHARGES PAID ( PG. 1 OF ASSESSMENT ORDER ) AND TO FURTHER SUBSTANTIATE THE NON DEDUCTION BY PRODUCING BOOKS AND EVIDENCES ALONGWIT H WRITTEN SUBMISSIONS. SINCE THE REMAINING PARTNERS WERE NOT IN POSSESSION OF ENTIRE RECORDS, THEY COOPERATED BY PR ODUCING WHATEVER INFORMATION THEY HAD. THE LD. ASSESSING OF FICER, THEREAFTER, DISALLOWED ENTIRE HIRE CHARGES PAID OF RS. 2,09,37,688 ( WHICH AMOUNTS TO 93.66% OF THE RECEIP TS ) U/S 40A(IA) OF THE INCOME-TAX ACT, 1961, STATING THAT D UE TDS AS ENVISAGED U/S 194C HAD NOT BEEN MADE. AGGRIEVED BY THE AFORESAID DISALLOWANCES, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A), WHO DISMISSED ASSESSEES APPEAL. THE LD. CIT(A) PASSED HIS ORDER ON 8.12.2011, WHEREIN HE MA INTAINED THE DISALLOWANCE OF RS. 2,09,37,688/- U/S 40A(IA) O F THE INCOME-TAX ACT, 1961. AGAINST THIS ORDER OF CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 5. AFTER GOING THROUGH THE ORDER OF THE TRIBUNAL DATE D 2.07.2012, WE FOUND THAT THE FACTS DURING THE YEAR UNDER CONSIDERATION AS WELL AS ISSUE INVOLVED IN THE APPE AL ARE PARI -: 5: - 5 MATERIA, WHEREIN DECISION WAS TAKEN BY THE TRIBUNAL IN RESPECT OF DISALLOWANCE MADE BY THE ASSESSING OFFICER U/S 4 0A(IA) IN RESPECT OF PAYMENTS MADE ON ACCOUNT OF HIRING OF TR UCKS. THE RELEVANT OBSERVATION AND CONCLUSION OF THE TRIBUNAL WAS AS UNDER :- 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM RECORD THAT THE ASSESSEE WAS CARRYING ON BUSINESS OF TRANSPORTATION OF GOODS. RETURN OF INCOME WAS FILED ALONGWITH THE AUDITED ACCOUNTS. ON THE TOTAL HIRE CHARGES AND OTHER INCOME OF RS. 3.38 CRORES, THE ASSESSEE HAS DECLARED NET PROFIT OF RS. 7.00 LAKHS, THUS, NET PROFIT RATE WAS SHOWN AT 2.06 %. DURING THE COURSE OF SCRUTINY ASSESSMENT DUE TO THE DISPUTE BETWEEN THE PARTNERS, THE ASSESSEE COULD NOT PRODUCE THE BOOKS OF ACCOUNT, WHICH WAS ALLEGED TO BE IN THE POSSESSION OF ONE OF THE PARTNERS SHRI JITENDRA SINGH. IT WAS ALSO CONTENDED BY THE LD. -: 6: - 6 AUTHORIZED REPRESENTATIVE THAT INSPITE OF SPECIFIC REQUEST TO THE ASSESSING OFFICER, HE DID NOT ISSUE ANY NOTICE TO SHRI JITENDRA SINGH FOR PRODUCING THE BOOKS OF ACCOUNT WHICH WAS IN HIS POSSESSION. AS PER LD. AUTHORIZED REPRESENTATIVE , THERE WAS NO PAYMENT OF HIRE CHARGES IN EXCESS OF THE PRESCRIBED LIMIT, SO AS TO WARRANT ANY DISALLOWANCE U/S 194C AND AFFIDAVIT OF AUDITOR OF THE COMPANY DATED 3.1.2012 WAS ALSO PLACED ON RECORD, WHEREIN IT WAS STATED THAT HE HAD PHYSICALLY VERIFIED THE BOOKS OF ACCOUNT AND AFTER DUE VERIFICATION, HAD REPORTED UNDER CLAUSE 27(A) OF THE SAID REPORT THAT THERE WAS NO REQUIREMENT OF TDS ON HIRE CHARGES PAID SINCE THE SAME WAS PAID TO INDIVIDUAL TRUCK OWNERS. HOWEVER, ON ACCOUNT OF NON PRODUCTION OF BOOKS OF ACCOUNT, THE ASSESSING OFFICER DISALLOWED ENTIRE PAYMENT OF HIRE CHARGES PAID TO THE TRUCK OWNERS, WHICH HAVE BEEN HIRED BY THE ASSESSEE FOR CARRYING -: 7: - 7 THE GOODS, BY INVOKING THE PROVISIONS OF SECTION 40A(IA). BECAUSE OF NON PRODUCTION OF BOOKS OF ACCOUNT, THE ASSESSING OFFICER ALSO REJECTED THE BOOK RESULTS AND ESTIMATED NET PROFIT RATE OF 8 % OF THE GROSS TRANSPORT RECEIPT. CONTENTION OF LD. CIT DR WAS THAT TRANSPORT CHARGES PAID TO THE TRUCK OWNERS WAS LIABLE TO DEDUCTION OF TAX U/S 194C AND IN SUPPORT OF THE PROPOSITION, HE PLACED ON RECORD THE ORDER OF HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF SHRI CHOUDHARY TRANSPORT COMPANY, 225 CGTR 125. WE ARE IN AGREEMENT TO THIS CONTENTION OF LD. CIT DR THAT PAYMENT MADE BY ASSESSEE TO OTHER TRANSPORTERS COME WITHIN THE PURVIEW OF SECTION 194C AND ASSESSEE IS UNDER OBLIGATION TO DEDUCT TAX AT SOURCE ON SUCH PAYMENT. 6. AFTER GOING THROUGH THE ENTIRE MATERIAL PLACED ON RECORD, WE FOUND THAT EVEN THOUGH BOOKS OF ACCOUNT WERE AUDITED, BUT THE SAME WAS NOT -: 8: - 8 PRODUCED BEFORE THE ASSESSING OFFICER NOR BEFORE CIT(A) FOR VERIFICATION AND THE AUDIT REPORT MENTIONING FACT THAT THERE WAS NO REQUIREMENT FOR DEDUCTION OF TDS ON HIRE CHARGES PAID WHICH WAS BELOW THE PRESCRIBED LIMIT, CANNOT BE ACCEPTED IN THE ABSENCE OF BOOKS OF ACCOUNT AND PAYMENT VOUCHERS. ACCORDINGLY, THE ACTION OF THE ASSESSING OFFICER FOR REJECTION OF BOOKS OF ACCOUNT WAS CORRECT. ONCE THE BOOKS OF ACCOUNT WAS REJECTED, PROFIT IS TO BE ESTIMATED AFTER TAKING INTO ACCOUNT THE FACTS AND CIRCUMSTANCES OF THE CASE AND PAST RECORDS OF THE ASSESSEE. KEEPING IN VIEW THE FACTS DISCUSSED BY THE ASSESSING OFFICER, ESTIMATION A NET PROFIT RATE AT 8 % IS JUSTIFIED. ONCE THE BOOKS OF ACCOUNT ARE REJECTED AND PROFIT IS ESTIMATED, THERE IS NO REASON TO MAKE FURTHER DISALLOWANCE OF ANY OF THE EXPENDITURE. HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF PURSHOTTAMLAL TAMRAKAR, 270 ITR 314, OBSERVED THAT WHERE PROFIT IS -: 9: - 9 ASSESSED ON ESTIMATED BASIS BY APPLYING NET PROFIT RATE, THE EXPENSES ARE DEEMED TO BE CONSIDERED AND NO FURTHER DEDUCTION IS TO BE ALLOWED OR DISALLOWED. HON'BLE HYDERABAD BENCH IN THE CASE OF TEJA CONSTRUCTION 129 TTJ 57, HELD THAT AFTER REJECTING THE BOOKS OF ACCOUNT AND ESTIMATING PROFIT, IT WOULD BE LIKE PUNISHING THE ASSESSEE IF ANY FURTHER DISALLOWANCE IS MADE U/S 40A(IA). 7. IN VIEW OF THE DECISION OF THE JURISDICTIONAL HIGH COURT AND THE DECISION OF THE TRIBUNAL AS DISCUSSED HEREINABOVE, WE DO NOT FIND ANY MERIT IN THE ACTION OF LOWER AUTHORITIES FOR MAKING ANY FURTHER DISALLOWANCE U/S 40A(IA) AFTER ESTIMATING THE NET PROFIT AT 8 % OF GROSS RECEIPT. 8. IN VIEW OF THE ABOVE, WE MODIFY THE ORDER OF BOTH THE LOWER AUTHORITIES AND DIRECT THE ASSESSING OFFICER TO WORK OUT INCOME BY APPLYING 8 % NET PROFIT RATE ON THE TOTAL HIRE -: 10: - 10 CHARGES SHOWN BY THE ASSESSEE. NO FURTHER DISALLOWANCE OF EXPENSES U/S 40A(IA) IS WARRANTED. 9. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISSED WHEREAS APPEAL OF THE ASSESSEE IS ALLOWED IN PART IN TERMS INDICATED HEREINABOVE. 7. IT IS CLEAR FROM THE ABOVE OBSERVATION THAT FACTS O F THE YEAR UNDER CONSIDERATION ARE SIMILAR TO THAT OF EAR LIER YEAR, THEREFORE, WE RESPECTFULLY FOLLOW THE DECISION OF T HE TRIBUNAL IN EARLIER YEARS AND DIRECT THE ASSESSING OFFICER TO W ORK OUT INCOME BY APPLYING 8 % NET PROFIT ON THE TOTAL HIRI NG CHARGES RECEIPTS SHOWN BY THE ASSESSEE. WE DIRECT ACCORDING LY. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D IN PART IN TERMS INDICATED HEREINABOVE. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 14 TH JANUARY, 2013. SD/ - SD/ - (JOGINDER SINGH) (R. C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 14 TH JANUARY, 2013. CPU* 141