Mr. Ajay Goel, New Delhi V. ITO, New Delhi

ITA 232/DEL/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58892 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 15-03-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 13-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR MS MAMTA KOCHAR
• Assessee Lawyers: ANOOP SHARMAM K GIRI
• Keywords: Opportunity of being heard; Onus to prove
• Section: 194C; 6

Judgement Text

ITA 232/DEL/2012 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `A NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER I.T.A.NO.232/DEL/2012 ASSESSMENT YEAR : 2007-08 SHRI AJAY GOEL, VS INCO ME TAX OFFICER, F-4/2, WARD 20(3), MODEL TOWN, NE W DELHI. NEW DELHI. (PAN AAIPG2147G) (APPELLANT) (RESPONDENT) APPELLANT BY: S/SHRI ANOOP SHARMA,M.K. GIRI RESPONDENT BY : DR. MS MAMTA KOCHAR, DR O R D E R PER CHANDRA MOHAN GARG, JUDICIAL MEMBER THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGA INST THE ORDER OF CIT(A)-VIII, NEW DELHI DATED 25.11.2011 BY WHICH TH E LD. CIT(A)-VIII CONFIRMED THE ADDITION OF RS.19,02,800 MADE BY AO THOUGH ASSESSMENT ORDER DATED 29.12.2009 HOLDING TRANSPORTATION CHEQU ES PAYABLE AT THE END OF FINANCIAL YEAR AS SHOWN IN THE BALANCE SHEET. THE CASE PERTAINS TO AY 2007-08. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRANSPORTATION AND FORWARDING OF GO ODS THROUGH ROAD ITA 232/DEL/2012 2 TRANSPORT. DURING THE COURSE OF ASSESSMENT, THE AO NOTICED THAT THE SUM OF RS.19,02,800 HAS BEEN SHOWN AS LIABILITY PAYABLE AS OUTSTANDING TRANSPORTATION CHARGES. THE AO EXAMINED THE GENUIN ENESS AND CORRECTNESS OF THE LIABILITY SHOWN AS ABOVE AND HE ASKED TO FUR NISH THE NAMES AND COMPLETE ADDRESSES ALONG WITH CONFIRMATION FROM SAI D PARTIES. THE ASSESSEE DID NOT FILE REQUIRED DETAILS DESPITE SEVERAL OPPOR TUNITIES GIVEN TO HIM AND THE AO CONCLUDED THE ASSESSMENT ORDER BY ADDING RS. 19,02,800 TO THE INCOME OF THE ASSESSEE. 3. BEING AGGRIEVED BY THE ABOVE ASSESSMENT ORDER, T HE ASSESSEE PREFERRED AN APPEAL BUT LD. CIT(A)-VIII DISMISSED THE SAME WI TH THE FINDINGS THAT THE ASSESSEE WAS ASKED TO FURNISH NAMES AND COMPLETE AD DRESSES OF TRUCK OWNERS, THEIR CONFIRMATION, THEIR IT PARTICULARS AN D INFORMATION REGARDING TRUCKS OWNED BY INDIVIDUAL TRUCK OWNERS BUT THE REQ UIRED INFORMATION WAS NOT FILED. IN THE ABSENCE OF REQUIRED INFORMATION AND SATISFACTORY REPLY, THE LD. CIT(A)-VIII CONFIRMED THE ADDITION OF RS.19,02, 800 ON ACCOUNT OF LORRY HIRE PAYABLE AS SHOWN IN THE BALANCE SHEET. HENCE, THIS APPEAL BEFORE THE TRIBUNAL BY THE ASSESSEE. 4. THE LD. COUNSEL APPEARING BEFORE US VEHEMENTLY A RGUED THAT THE LD. AO AS WELL AS THE LD. CIT(A)-VIII IGNORED THE FACTS AND DOCUMENTS SUBMITTED BEFORE THEM, THEREFORE, THIS UNJUSTIFIED ADDITION WAS MADE. HE ITA 232/DEL/2012 3 FURTHER SUBMITTED THAT THE ASSESSEE MAINTAINED ALL THE REQUISITE BOOKS OF ACCOUNTS WHICH HAVE BEEN DULY AUDITED BY COMPETENT CA. SINCE THE ASSESSEE DOES NOT OWN VEHICLES FOR TRANSPORTATION, HE MERELY ARRANGED TRUCKS AND LORRIES FROM TRUCK OWNERS AND DRIVERS FOR CARRY ING OUT TRANSPORTATION CONTRACTS AND ORDERS. 5. THE AR ALSO SUBMITTED THAT DURING THE FINANCIAL YEAR UNDER CONSIDERATION I.E. 2006-07, THE ASSESSEE HAS SHOWN FREIGHT RECEIPT OF RS.2,21,56,771 IN THE PROFIT & LOSS ACCOUNT, WHICH INCLUDES THE AMOUNT RECEIVABLE FROM THE CLIENTS RS. 17,00,581(SHOWN AS CURRENT ASSETS IN THE BALANCE SHEET) AND IN THE SAME FASHION, RS.1,99,56 ,882 HAS BEEN SHOWN IN THE P&L ACCOUNT AS LORRY HIRE PAID WHICH INCLUDES R S. 19,02,800 AS LORRY HIRE PAYABLE. THIS PRACTICE HAS BEEN CARRIED OUT B Y THE ASSESSEE IN THE BALANCE SHEETS OF F.Y. 2005-06, 2007-08 AND 2008-09 . HE FURTHER ADDED THAT IN THE ASSESSMENT ORDER DATED 11.2011 PERTAINI NG TO A.Y. 2009-10, THE AO HAS ACCEPTED THESE KIND OF ENTRIES IN THE PROFIT & LOSS ACCOUNT AND BALANCE SHEET WITHOUT ANY OBJECTION IN THIS REGARD. 6. THE AR ALSO SUBMITTED THAT THE ASSESSEE IS A TRA NSPORTATION CONTRACTOR AND HE ARRANGED TRANSPORTATION FACILITIES FOR HIS C LIENTS AS PER THEIR REQUIREMENT BY ARRANGING LORRIES AND TRUCKS FROM TR UCK OWNERS AND THEIR DRIVERS OR REPRESENTATIVES AND PAYMENT IS MADE TO T HEM ON SUBMISSION OF ITA 232/DEL/2012 4 DELIVERY RECEIPTS/CHALLANS DULY VERIFIED AND SIGNED BY CONSIGNEE. DURING THIS PRACTICE AT THE END OF FINANCIAL YEAR, SOME PA YMENTS REMAINED RECEIVABLE FROM THE CLIENTS OF ASSESSEE WHICH HAVE BEEN SHOWN AS CURRENT ASSETS OF SUNDRY DEBTORS AS PER ANNEXURE-II AS SUM OF RS.17,00,581 IN THE BALANCE SHEET AND IN THE SAME PRACTICE, SOME PAYMENTS PAYAB LE TO TRUCK OWNERS OR THEIR REPRESENTATIVE DRIVERS REMAIN UNPAID ON ACCOU NT OF NON-SUBMISSION OF DELIVERY RECEIPTS AND VERIFICATIONS, THEREFORE, THE BALANCE OF LORRY HIRE PAYABLE IS MENTIONED IN THE BALANCE SHEET. 7. THE AR CONCLUDED HIS CONTENTIONS WITH A LEGAL NO TE THAT PROVISIONS OF SECTION 44AA ARE NOT APPLICABLE TO THE ASSESSEE AS HE IS NOT A TRUCK OWNER AND LOOKING INTO THE AMOUNT AS SHOWN IN THE LIST OF PAYABLE AMOUNTS, THE AMOUNTS ARE BELOW RS. 20,000 IN ALL INDIVIDUAL TRAN SACTIONS, THEREFORE, PROVISIONS OF SECTION 194C(5) OF THE ACT EXEMPT THE ASSESSEE FROM LEGAL OBLIGATION OF MAKING REQUIRED DEDUCTION. 8. IN THE CASE OF BIRLA CEMENT WORKS VS CENTRAL BOA RD OF DIRECT TAXES & OTHERS (2001) 248 ITR 216 (SC), THE HONBLE FULL BENCH OF THE APEX COURT HELD AS UNDER: - SECTION 194C OF THE ACT, WHICH PROVIDES FOR DEDUCTION OF TAX AT SOURCE FROM PAYMENTS TO CONTRAC TORS AND SUB-CONTRACTORS, PRIOR TO THE INSERTION OF EXPL ANATION III THEREIN WITH EFFECT FROM JULY 1, 1995, WAS NOT APPLICABLE TO TRANSPORT CONTRACTS, I.E., CONTRACTS FOR CARRIAGE OF GOODS. THIS INTERPRETATION, WHICH IS O NE TO ITA 232/DEL/2012 5 TWO POSSIBLE INTERPRETATIONS AS TO WHETHER CONTRACT S FOR CARRYING OF GOODS WOULD OR WOULD NOT COME WITHIN TH E AMBIT OF THE EXPRESSION CARRYING OUT ANY WORK IN THAT SECTION, WHICH FAVOURS THE ASSESSEE AND WHICH HAS B EEN ACTED UPON AND ACCEPTED BY THE REVENUE FOR A LONG PERIOD, WOULD NOT BE DISTURBED EXCEPT FOR COMPELLIN G REASONS. FURTHER, THERE ARE NO COMPELLING REASONS FOR HOLDING THAT EXPLANATION III WAS CLARIFICATORY IN N ATURE OR RETROSPECTIVE IN OPERATION. 9. SOON AFTER THE INSERTION OF SECTION 194C IN THE INCOME TAX ACT, 1961, WITH EFFECT FROM APRIL 1, 1972, CIRC ULAR NO. 86 DATED MAY 29, 1972, WAS ISSUED BY THE CENTRA L BOARD OF DIRECT TAXES STATING THAT THE PROVISIONS O F THAT SECTION WOULD APPLY ONLY IN RELATION TO WORKS CONTRACTS AND LABOUR CONTRACTS AND WOULD NOT COV ER A CONTRACT FOR THE SALE OF GOODS. ANOTHER CIRCULAR NO. 93, DATED SEPTEMBER 26, 1972, WAS ISSUED CLARIFYING THAT SECTION 194C WOULD NOT APPLY TO TRANSPORT CONTRACTS . RIGHT FROM APRIL 1, 1972, ACCORDING TO THE UNDERSTA NDING OF THE DEPARTMENT, SECTION 194C WAS NOT APPLICABLE TO PAYMENTS MADE IN RESPECT OF TRANSPORT CONTRACTS, TI LL THE ISSUE OF A FRESH CIRCULAR NO. 681, DATED MARCH 8, 1 994, WITHDRAWING THE EARLIER CIRCULARS AND ISSUING FRESH GUIDELINES DIRECTING THAT SECTION 194C WOULD APPLY TO ALL TYPES OF CONTRACTS FOR CARRYING OUT WORK INCLUDING TRANSPORT CONTRACTS, BECAUSE OF CERTAIN OBSERVATION S OF THE SUPREME COURT IN ASSOCIATED CEMENT CO. LTD. VS CIT (!993) 201 ITR 435. THE QUESTION WHETHER THE EXPRE SSION CARRYING OUT ANY WORK WOULD INCLUDE THEREIN THE CARRYING OF GOODS OR NOT WAS NOT IN ISSUE IN THAT C ASE AND THAT DECISION HAS NOT BEEN CORRECTLY UNDERSTOOD BY THE CENTRAL BOARD OF DIRECT TAXES, CIRCULAR NO. 681 DAT ED MARCH 8, 1994, WHICH WAS MADE APPLICABLE WITH EFFEC T FROM APRIL 1, 1994, TO THE EXTENT THAT IT RELATED T O TRANSPORT CONTRACTS IS INVALID. THEREFORE, IN THE LIGHT OF ABOVE DECISIONS OF BIRLA CEMENT WORKS (SUPRA) AND ASSOCIATED CEMENT CO. LTD. (SUPRA), THE HONBLE APE X COURT OPINED THAT ITA 232/DEL/2012 6 SECTION 194C OF THE ACT WAS NOT APPLICABLE TO TRANS PORT CONTRACTS. HENCE, THE PRESENT CASE OF THE ASSESSEE IS SQUARELY COVERE D BY THE ABOVE JUDGEMENTS. 9. THE LD. DR SUPPORTED THE ORDER OF CIT(A)-VIII AN D REPLIED THAT THE ASSESSEE DID NOT FURNISH REQUIRED RELEVANT INFORMAT ION PERTAINING TO NAMES AND ADDRESSES OF THE TRUCK OWNERS TO WHOM LIABILITY IS PAYABLE, CONFIRMATIONS FROM SO-CALLED CREDITORS, THEIR IT PA RTICULARS AND INFORMATION REGARDING NUMBERS OF TRUCKS OR LORRIES OWNED BY IND IVIDUAL VEHICLE OWNERS, NEITHER BEFORE THE AO NOR BEFORE THE CIT(A). THERE FORE, ADDITION MADE BY THE AO AND CONFIRMED BY LD. CIT(A) IS JUSTIFIED AND VALID AS ONUS TO PROVE THESE LIABILITIES AS GENUINE RESTS WITH THE ASSESSE E. HE RESTRICTED HIMSELF TO COMMENT OVER THE ASSESSMENT ORDER DATED 11.11.2011 PERTAINING TO A.Y. 2009-10 FOR THE SAME ASSESSEE WHERE NO ADDITION HAS BEEN MADE ON ACCOUNT OF LORRY HIRE PAYABLE RS. 17,19,862.52 AS SHOWN IN THE BALANCE SHEET. LD. AO FINALIZED THE ASSESSMENT BY COMPUTING TOTAL INCOME TO RS. 6,53,290 (ROUNDED OFF). 10. WE HAVE PERUSED THE ENTIRE RECORD IN THE LIGHT OF RIVAL ARGUMENTS ADVANCED BY BOTH THE PARTIES. DURING THE ARGUMENT, BOTH THE PARTIES SUBMITTED THAT AN ENQUIRY REGARDING DETAILS OF LORR Y HIRE CHARGES PAYABLE (PAPER BOOK SL.NO.4 PAGE 9 TO 11) IS REQUIRED BY TH E ASSESSING OFFICER FOR ITA 232/DEL/2012 7 PROPER ADJUDICATION OF THE DISPUTE AS IT APPEARS FR OM A BARE READING OF THE ASSESSMENT ORDER THAT THE AO WAS NOT GIVEN AN OPPOR TUNITY TO VERIFY THE DETAILS. THE AO WOULD ENQUIRE AND VERIFY THE DETAIL S AND INFORMATION SUBMITTED BY THE ASSESSEE IN THIS REGARD AND, NEEDL ESS TO SAY, THE ASSESSEE WOULD BE GIVEN AN OPPORTUNITY TO BE HEARD. 11. WITH ABOVE DIRECTIONS TO THE AO, THE IMPUGNED O RDER AND THE ASSESSMENT ORDERS ARE SET ASIDE AND THE CASE IS REM ITTED TO THE FILE OF AO FOR COMPLIANCE OF DIRECTIONS. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 15.3.2012. SD/- SD/- (G.D. AGRAWAL) (CHANDRA MOHAN GARG) VICE PRESIDENT JUDICIAL MEMBER DT. 15TH MARCH, 2012 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER ASSTT. REGISTRAR ITA 232/DEL/2012 8