DRS Ligistics Private Limited, Secunderabad V. Addl. CIT, Hyderabad

ITA 229/HYD/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3184 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 02-06-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 15-02-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: E S NAGENDRA PRASAD
• Assessee Lawyers: M V ANIL KUMAR; A V SADASIVA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI G.C.GUPTA, VICE PRESIDENT AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMEBR ITA NO.229/HYD/2010 ASSTT. YEAR 2004-05 DRS LOGISTICS (P) LTD., SECUNDERABAD (PAN NO.AAACD 7182 R) V/S. ADD.CIT, RANGE-1, HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.V.SADASIVA & SHRI M.V. ANIL KUMAR RESPONDENT BY : SHRI E.S. NAGENDRA PRASAD, DR O R D E R PER SHRI G.C. GUPTA, VICE PRESIDENT: THIS APPEAL BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2006-0 7 IS DIRECTED AGAINST THE ORDER OF THE CIT (A). THE GROUND S OF APPEAL OF THE ASSESSEE ARE AS UNDER: '1. THE CIT (A) ERRED IN LAW AND FACTS OF THE CASE NOT CONSIDERING THE FACT THAT PERSONS TO WHOM PAYMENTS WERE MADE WERE NOT EXCISABLE TO DEDUCTION OF TAX AT SOURCE AMOUNTING TO RS.39,91,683/-, THEREFORE, NOT COVERED BY THE PROVISIONS OF SECTION 40(A) (IA) OF THE INCOME TAX ACT, 1961. 2. THE CIT (A) AS WELL AS THE AO DID NOT DOUBT THE GENUINENESS OF THE FORM 15I PROVIDED BY VARIOUS PER SONS AMOUNTING TO RS.39,91,683/- AND HENCE NOT JUSTIFIED IN DISALLOWING THE EXPENDITURE. 3.THE CIT (A) OUGHT TO HAVE CONSIDERED THE REMAND REPORT OF THE ASSESSING OFFICER ON FORM 15I AND ALL OWED THE BALANCE 50% BEING RS.39,91,683/-, PAYMENTS MADE TO TRUCK OWNERS/DRIVERS AS PAYMENT TO PERSONS WHO A RE ITA NO.229/HYD/2010 DRS LOGISTICS (P) LTD.,SECUNDERABAD. 2 NOT SUBJECTED TO DEDUCTION OF TAX AT SOURCE, THEREF ORE, NOT COVERED BY THE PROVISIONS OF SECTION 40(A) (IA) OF THE INCOME TAX ACT, 1961'. 2. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT T HE ASSESSEE IS IN THE TRANSPORT BUSINESS AND ONE OF THE LEADING TRANSPORTERS IN THE COUNTRY. HE SUBMITTED THAT THE ASSESSEE HAS ITS OWN TRUCKS AND ALSO TAKES VEHICLES ON HIRE BASIS FROM VARI OUS PERSONS FOR THE PURPOSE OF ITS TRANSPORT BUSINESS. HE SUBMITTED T HAT THE ADDITION OF RS.39.91 LAKHS WAS SUSTAINED BY THE CIT (A) UNDER THE PROVISIONS OF SEC.40(A)(IA) OF THE INCOME TAX ACT, 1961 BY OBSERVING THAT THE DECLARATIONS FILED BY VARIOUS PERSONS (OWNERS OF THE TRUCKS) ON FORM NO.15-I WERE DEFECTIVE. HE SUBMITTED THAT ON THE BACK OF FORM 15-I THE ASSESSEE HAS FILED THE PHOTOSTAT COPY OF ITS CHALL AN WHEREIN COMPLETE DETAILS OF THE TRUCK NO. AND THE NAME OF THE OWNER THEREOF ETC., WERE MENTIONED. HE SUBMITTED THAT THERE IS NO BAS IS FOR MAKING A DISALLOWANCE OF 50% OF THE TOTAL EXPENDITURE CLAIMED B Y THE ASSESSEE AND THE DISALLOWANCE AT 50% IS TOO HIGH. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER SHOULD HAVE PRO VIDED THE ASSESSEE OPPORTUNITY TO RECTIFY DEFECTS IN THE FORM NO .15-I, IF ANY, BEFORE THE FINALIZATION OF THE ASSESSMENT PROCEEDINGS IN THIS CASE. 3. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS RELIE D ON THE ORDER OF THE ASSESSING OFFICER AND THE CIT (A). HE SUBMITT ED THAT SUFFICIENT OPPORTUNITY WAS ALLOWED TO THE ASSESSEE TO RECT IFY THE DEFECTS IN THE FORM 15-I BY THE ASSESSING OFFICER. HE SUBMI TTED THAT THE DISALLOWANCE MADE HAS BEEN RESTRICTED TO 50% OF THE TOTAL PAYMENT INVOLVED BY THE CIT (A), WHICH IS MORE THAN REASONABLE IN THE FACTS OF THE CASE. ITA NO.229/HYD/2010 DRS LOGISTICS (P) LTD.,SECUNDERABAD. 3 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFULLY. WE HAVE PERUSED THE ORDER OF THE ASSESSING OFFICER AND THE CIT (A ). WE FIND THAT THERE WERE MANY DEFECTS IN THE PRESCRIBED FORM 15- I FILED BY THE ASSESSEE. THE CIT (A) HAS RECORDED THAT MOST OF THE COLUMN S ON THE FORM NO.15-I WERE NOT FILLED AND THE ADDRESS OF THE O WNERS WERE NOT PROVIDED IN MOST CASES AND THAT PAYMENTS WERE MADE TO PARTIES WHO HAVE MORE THAN 2 VEHICLES WITHOUT DEDUCTION OF TAX. TH E CIT (A) HAS FURTHER RECORDED THAT MANY FORMS WERE NOT SIGNED BY TH E OWNERS OF THE TRUCK. WE FIND THAT AMPLE OPPORTUNITIES WERE PROV IDED BY THE ASSESSING OFFICER TO THE ASSESSEE TO FILE THE CORRECT AND COMPL ETE PRESCRIBED FORM 15-I FROM THE OWNERS OF THE VEHICLES. T HE CIT (A) HAS ASKED FOR REMAND REPORT FROM THE ASSESSING OFFICER AND T HE ASSESSEE GOT ANOTHER OPPORTUNITY TO RECTIFY THE DEFECTS IN THE PRESCRIBED FORM 15-I BEFORE FINALIZATION OF THE REMAND REPORT BY TH E ASSESSING OFFICER. WE FIND THAT THE ASSESSEE COULD NOT FILE THE COMPLETE FO RM 15-I BEFORE THE ASSESSING OFFICER OR THE CIT (A) FOR NO VALID REASON. THE ONUS WAS ON THE ASSESSEE TO FILE THE CORRECT AND COMPLETE FORM 15-I BEFORE THE ASSESSING OFFICER, IN ORDER TO AVOID TAX DEDUCTION AT SOUR CE ON THE PAYMENTS MADE TO THE VARIOUS VEHICLE OWNERS. HAVING F AILED TO DO SO THE PROVISION OF SEC.40(A)(IA) OF THE ACT WAS RIGHTLY APPLIED TO THE CASE OF THE ASSESSEE. HOWEVER, THE ASSESSING OFFICER SHOULD HAVE SCRUTINIZED THE VARIOUS FORM 15-I FILED BEFORE IT AND SHOULD HAVE IDENTIFIED THE DEFECTIVE FORM 15-I AND SHOULD HAVE QU ANTIFIED THE AMOUNT OF PAYMENT THEREOF AND SHOULD HAVE MADE THE D ISALLOWANCE U/S 40(A)(IA) OF THE ACT ACCORDINGLY. WE FIND THAT NO SU CH EXERCISE WAS UNDERTAKEN BY THE ASSESSING OFFICER OR EVEN BY THE CIT ( A). THE CIT (A) HAS RESTRICTED THE DEDUCTION UNDER SEC.40(A)(IA) TO 50% OF THE TOTAL PAYMENTS. BEFORE US THE ASSESSEE HAS CLAIMED THAT MOST OF THE FORM NO.15-I WERE COMPLETE AS FAR AS MATERIAL COLUMNS T HEREOF ARE ITA NO.229/HYD/2010 DRS LOGISTICS (P) LTD.,SECUNDERABAD. 4 CONCERNED. IN THE ABSENCE OF ANY EVIDENCE FROM EITHER TH E ASSESSEE OR THE REVENUE BEFORE US TO QUANTIFY THE AMOUNT INVOLVE D IN THE DEFECTIVE FORM-15 I, WE HAVE TO RESTORE TO MAKE A FAIR ESTIMATE OF THE DISALLOWANCE TO BE MADE IN THIS CASE. SOME GUESS WORK IN SUCH A CASE HAS TO BE RESTORED TO. IN THE FACTS AND CIRCUMSTANCES OF T HE CASE AND CONSIDERING THE PLEADINGS OF THE PARTIES AND CONSIDERING THE COLUMNS FILLED-IN IN THE COPIES OF SOME OF THE FORM 15-I FILED BY THE ASSESSEE BEFORE US, WE HOLD THAT THE ENDS OF JUSTICE SHALL BE MET IF THE DISALLOWANCE UNDER THIS HEAD IS RESTRICTED TO 35% OF THE TOTAL PAYMENT OF RS.79,91,683/- AS AGAINST THE DISALLOWANCE OF 50% SUST AINED BY THE CIT (A) AND THE ASSESSING OFFICER IS DIRECTED ACCORDINGLY TO WORK OUT THE DISALLOWANCE AND THE GROUNDS OF THE APPEAL OF THE ASSESSEE ARE PARTLY ALLOWED. 4. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTLY ALL OWED. ORDER PRONOUNCED IN THE COURT ON 11-6-2010 SD/- SD/- (CHANDRA POOJARI) (G.C. GUPTA) ACCOUNTANT MEMBER VICE-PRESIDENT PVV/SPS DATE: 11TH JUNE, 2010. COPY FORWARDED TO: 1. M/S DRS LOGISTICS (P) LTD.,SEC'BAD C/O M. ANANDAM & CO., CA, 7-A SURYA TOWERS, S.D. ROAD, SECUNDERABAD-3 2. THE ADDL. COMMISSIONER OF INCOME-TAX, RANGE-I HYDER ABAD. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS) II, HYDERAB AD. 4. THE COMMISSIONER OF INCOME-TAX-I, HYDERABAD 5 THE DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD.