SHRI JITESH JAIN, Bhopal V. THE ITO 1(2), Bhopal

ITA 218/IND/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5835 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 31-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOHD JAVED
• Assessee Lawyers: R K MANGAL
• Keywords: Reassessment proceedings
• Section: 143(3); 142(1); 194C; 147; 148; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE (SINGLE MEMBER CASE) BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER I.T.A.NO.218/IND/2015 A.Y. : 2008-09 SHRI JITESH JAIN, ITO, BHOPAL VS 1(2), BHOPAL. APPELLANT RESPONDENT PAN NO. AFDPJ6578C APPELLANT BY : SHRI R.K.MANGAL, CA RESPONDENT BY : SHRI MOHD.JAVED, DR O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A)-I DATED 18.11.2014 FOR THE ASSESSMENT YEA R 2008-09. 2. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL :- DATE OF HEARING : 2 0 .0 7. 2016 DATE OF PRONOUNCEMENT : 2 0 .0 7 .2016 SHRI JITESH JAIN, BHOPAL VS. ITO, 1(2), BHOPAL I.T. A.NO. 218/IND/2015 A.Y. 2008-09 2 2 1. THAT THE ORDER OF ASSESSMENT PASSED BY THE AO AND CONFIRMED BY CIT(A) IS BAD IN LAW AND NEEDS TO BE SET ASIDE. 2. THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITIONS OF RS. 22,91,700/- BY DISALLOWING THE FREIGHT PAYMENT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S AN INDIVIDUAL ENGAGED IN THE BUSINESS OF TRANSPORTATIO N AND TRUCK PLYING. THE ASSESSEE HAD FILED HIS RETURN OF INCOME FOR ASSESSMENT YEAR 2008-09 ON 11.09.2008 DECLARING TOT AL INCOME OF RS. 2,29,120/-. THE REGULAR ASSESSMENT U/ S 143(3) OF THE ACT WAS MADE ON 13.09.2010 DETERMINING INCOME AT RS. 2,32,120/-. SUBSEQUENTLY, THE ASSESSMENT WAS REOPENE D INITIATING REASSESSMENT PROCEEDINGS U/S 147 OF THE ACT BY ISSUING NOTICE U/S 148 OF THE ACT ON 14.02.2013. IN RESPONSE, THE ASSESSEE FURNISHED A LETTER STATING THAT THE OR IGINAL RETURN FILED ON 11.09.2008 OF THE ACT FOR ASSESSMENT YEAR 2008-09. THE AO ISSUED NOTICES U/S 143(2) AND 142(1) OF THE ACT AND AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE CO MPLETED THE REASSESSMENT U/S 147 R.W.S. 143(3) OF THE ACT ON 21. 01.2014 SHRI JITESH JAIN, BHOPAL VS. ITO, 1(2), BHOPAL I.T. A.NO. 218/IND/2015 A.Y. 2008-09 3 3 DETERMINING TOTAL INCOME AT RS. 25,23,820/-. THE AO NOTICED THAT THE ASSESSEE HAD CLAIMED FREIGHT EXPENSES OF R S. 22,91,700/- ON ACCOUNT OF BILLS RAISED BY SHRI PRAS HANT JAIN. THE ASSESSEE HAD ALSO MADE PAYMENT OF RS. 22,00,000 /- TO SHRI PRASHANT JAIN DURING THE YEAR BUT THE ASSESSEE HAD NOT DEDUCTED TAX AT SOURCE (TDS) ON THE PAYMENTS MADE T O SHRI PRASHANT JAIN, AS REQUIRED U/S 194C OF THE ACT. THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE FREIGHT EXPENSES O F RS. 22,91,700/- DEBITED ON WHICH TDS WAS NOT MADE, SHOULD NOT BE DISALLOWED U/S 40(A)(IA) OF THE ACT. IN RESPONSE , THE ASSESSEE SUBMITTED THAT HE HAD MADE PAYMENT OF FREI GHT AGAINST RUNNING OF TRUCKS TO SHRI PRASHANT JAIN, BH OPAL. IT WAS CONTENDED THAT THE PAYMENTS WERE MADE TO SMALL T RUCK OWNERS, WHO WERE NOT OWNING MORE THAN TWO TRUCKS. FURTHE R, THE RECIPIENT, SHRI PRASHANT JAIN, HAD SHOWN TRUCK I NCOME IN HIS RETURN OF INCOME IN THE YEAR UNDER REFERENCE AN D, HENCE, THE AMOUNT PAID TO SHRI PRASHANT JAIN SHOULD NOT BE DISALLOWED IN TERMS OF SECTION 40(A)(IA) OF THE ACT . THIS CONTENTION OF THE ASSESSEE WAS NOT ACCEPTED BY THE A O. THE AO STATED THAT THE ASSESSEE HAD MADE PAYMENTS TO SH RI SHRI JITESH JAIN, BHOPAL VS. ITO, 1(2), BHOPAL I.T. A.NO. 218/IND/2015 A.Y. 2008-09 4 4 PRASHANT JAIN AND NOT TO SMALL TRUCK OWNERS HAVING N OT MORE THAN TWO TRUCKS AND, THUS, THE ASSESSEE WAS LIABLE TO DEDUCT TDS OUT OF THE PAYMENTS MADE TO SHRI PRASHANT JAIN AND DEPOSIT THE SAME IN THE GOVERNMENT ACCOUNT AS PER P ROVISIONS OF SECTION 194C OF THE ACT. AS THE ASSESSEE FAILED TO DEDUCT TDS OUT OF PAYMENTS MADE TO SHRI PRASHANT JAIN, THE FREIGHT EXPENSES OF RS. 22,91,700/- ON ACCOUNT OF EXPENSES CLAIMED FOR BILLS RAISED BY SHRI PRASHANT JAIN WERE DISALLOW ABLE. ACCORDINGLY, THE AO DISALLOWED THE EXPENSES OF RS. 22,91,700/- U/S 40(A)(IA) OF THE INCOME-TAX ACT, 19 61. 4. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CI T(A) HAS CONFIRMED THE DISALLOWANCE OF RS. 22,91,700/-. 5. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED WRITTEN SUBMISSION WHICH READS AS UNDER:- IN CONTINUATION OF STATEMENT OF FACTS AND GROUNDS OF APPEAL, THE APPELLANT BEG TO SUBMIT AS UNDER:- 1. THAT THE LEARNED CIT(A)-L, BHOPAL HAS ERRED IN C ONFIRM THE ADDITION OF RS. 22,91,700/DISALLOWANCE OF FREIG HT PAYMENT IS BAD AND ILLEGAL AND THE APPELLANT BRINGS TO YOUR HONOR FOLLOWING DOCUMENTS AND SUBMISSION IN SHRI JITESH JAIN, BHOPAL VS. ITO, 1(2), BHOPAL I.T. A.NO. 218/IND/2015 A.Y. 2008-09 5 5 SUPPORT OF HIS CONTENTION:- A. THAT THE APPELLANT IN HIS CONTENTION STATES THAT FR EIGHT PAYMENT MADE BY THE ASSESSEE WITHOUT DISCHARGING HI S TAX WITHHOLDING OBLIGATIONS UNDER SECTION 194C SHOU LD NOT BE DISALLOWED, AS THE ASSESSEE HAS ALREADY SUBMITTE D THE COPY OF INCOME TAX RETURN OF PAYEE FILED U/S 139, I N WHICH THE PAYEE HAS INCLUDED THE ABOVE FREIGHT PAYMENT AS HIS INCOME AND HAS DULY PAID INCOME TAX ON THE SAME. B. THAT THE ABOVE CONTENTION HAS BEEN MADE BY ASSESSEE AS PER SECOND PROVISO OF SECTION 40(A)(IA) INTRODUC ED IN FINANCE ACT 2012, WHICH STATES THAT WHERE AN ASSES SEE FAILS TO DEDUCT THE WHOLE OR ANY PART OF THE TAX IN ACCORDANCE WITH PROVISIONS OF CHAPTER XVII-B ON ANY SUCH SUM BUT IS NOT DEEMED TO BE AN ASSESSEE IN DEF AULT UNDER THE FIRST PROVISO TO SUB-SECTION (1) OF SECTI ON 201, THEN, FOR THE PURPOSE OF THIS SUB-CLAUSE, IT SHALL BE DEEMED THAT THE ASSESSEE HAS DEDUCTED AND PAID THE TAX ON SUCH SUM ON THE DATE OF FURNISHING OF RETURN OF INCOME BY THE RESIDENT PAYEE. AND SUCH RESIDENT PAYEE (I) HAS FURNISHED HIS RETURN OF INCOME UNDER SHRI JITESH JAIN, BHOPAL VS. ITO, 1(2), BHOPAL I.T. A.NO. 218/IND/2015 A.Y. 2008-09 6 6 SECTION 139; (II) HAS TAKEN INTO ACCOUNT SUCH SUM F OR COMPUTING INCOME IN SUCH RETURN OF INCOME; AND (III ) HAS PAID THE TAX DUE ON THE INCOME DECLARED BY HIM IN SUCH RETURN OF INCOME, AND THE PERSON FURNISHES A CERTIFICATE TO THIS EFFECT FROM AN ACCOUNTANT IN SU CH FORM AS MAY BE PRESCRIBED.' C. SINCE THE APPELLANT HAS ALREADY SUBMITTED THE INCOME TAX RETURN OF PAYEE, MR. PRASHANT JAIN, BHOPAL(PAN: ADAPJ8947G) AS PER THE ABOVE PROVISO OF SECTION 40(A)(IA), HENCE THE APPELLANT PRAYS THAT T HE ADDITION MADE ON THIS GROUND NEEDS TO BE DELETED. D. THE APPELLANT HAD MADE A COMPLIANCE BY SUBMITTING FORM NO. 26A ALONG WITH A CERTIFICATE FROM THE CHARTERED ACCOUNTANT BEFORE THE LEARNED CIT (A)-L, BHOPAL VIDE HIS SUBMISSION DATED 21/08/2014 BUT THE LEARNED C1T(A)-L, BHOPAL HAVE FAILED TO' APPRECIATE HAVING MADE SUBMISSION AND HE HAD DISALLOWED THE APPEAL ON THIS ASPECT ALSO THAT THE APPELLANT HAD N OT MADE THE COMPLIANCE OF SUBMISSION OF FORM NO. 26-A. SHRI JITESH JAIN, BHOPAL VS. ITO, 1(2), BHOPAL I.T. A.NO. 218/IND/2015 A.Y. 2008-09 7 7 E. THE APPELLANT RELIES ON THE FOLLOWING JUDGMENTS WHI CH ARE SQUARELY APPLIES ON THE APPELLANT CASE. I) RAJEEV KUMAR AGARWAL VS. ACIT (ITAT AGRA), II) ITAT BANGLORE BENCH IN THE CASE OF SHRI G. SHANKAR, PWD CONTRACTOR, BIJAPUR VS. ACIT (ITAT BANGALORE). IN VIEW OF THE ABOVE SUBMISSIONS, THE APPELLANT PRAYS BEFORE YOUR HONOUR FOR DELETION OF ADDITION O F RS. 22,91,700/- 6. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDERS OF THE LOWER AUTHORITIES. 7. I HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD. I HAVE AL SO GONE THROUGH THE CASE LAWS RELIED UPON BY THE LD. AUTHO RIZED REPRESENTATIVE OF THE ASSESSEE. IN THE INTEREST OF JUSTICE AND FAIR PLAY, I RESTORE THIS MATTER TO THE FILE OF AO WITH THE DIRECTION THAT HE SHALL VERIFY WHETHER HE MADE PAYME NT OF FREIGHT AGAINST RUNNING OF TRUCKS TO SHRI PRASHANT JAIN, BHOPAL. HE SHALL ALSO VERIFY WHETHER THE PAYMENTS W ERE MADE TO THE SMALL TRUCK OWNERS, WHO WERE NOT OWNING M ORE SHRI JITESH JAIN, BHOPAL VS. ITO, 1(2), BHOPAL I.T. A.NO. 218/IND/2015 A.Y. 2008-09 8 8 THAN TWO TRUCKS. THEN THE AO SHALL DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW. HE SHALL ALSO AFFORD OPPORTU NITY OF HEARING TO THE ASSESSEE. 8. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTIC AL PURPOSES. THIS ORDER HAS BEEN PRONOUNCED IN THE OP EN COURT ON 20 TH JULY, 2016, SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 20 TH JULY, 2016. CPU*