M/sPandey Transport Co., Sonebhadra V. ITO, Mirzapur

ITA 248/ALLD/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6909 (ITAT-ALLAHABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 11-08-2014
• Assessment Year: misc
• Appeal Filed On: 23-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K LACHHIRAMKA
• Assessee Lawyers: PRAVEEN GODBOLEC A
• Keywords: Depreciation
• Section: 40A(3); 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, ALLAHABAD BENCH, ALLAHABAD BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO. 248/ALLD./2011 ASSTT. YEAR : 2007-08 M/S. PANDEY TRANSPORT CO. VS. INCOME-TAX OFFICER , SINDURA, CHOPAN, RANGE 3(3), MIRZAPUR. SONEBHADRA. (PAN : AAEFP 7577 M) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PRAVEEN GODBOLE,C.A. RESPONDENT BY : SHRI R.K. LACHHIRAMKA, CIT(DR DATE OF HEARING : 12.08.2014 DATE OF PRONOUNCEMENT : 21.08.2014 ORDER PER BHAVNESH SAINI, J.M.: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT, ALLAHABAD DATED 31.10.2011 FOR THE ASSESSMENT YEAR 2007-08 U/S. 263 OF THE IT ACT. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE AO P ASSED THE ASSESSMENT ORDER U/S. 143(3) FOR THE ASSESSMENT YEAR UNDER APPEAL ON DATE D 11.05.2009 AND ASSESSED THE INCOME AT RS.68,615/-. THE LD. CIT ISSUED SHOW CAUS E NOTICE U/S. 263 OF THE IT ACT ON FOUR REASONS AND AFTER GIVING OPPORTUNITY OF BEI NG HEARD TO THE ASSESSEE HELD ITA NO. 248/ALLD./2011 2 THAT THE AO HAS NOT PROPERLY THRASHED OUT THESE ISS UES DURING THE ASSESSMENT PROCEEDINGS. THEREFORE, THE ORDER OF THE AO IS DETR IMENTAL TO THE REVENUE AND WAS CONSIDERED ERRONEOUS IN SO FAR AS PREJUDICIAL TO TH E INTEREST OF REVENUE. THE LD. CIT DISCUSSED ALL THE FOUR ISSUES IN THE IMPUGNED ORDER . THE FIRST ISSUE WAS REGARDING TRANSPORTATION CHARGES AS CLAIMED AT RS.43,25,728/- , ON WHICH THE TAX AT SOURCE WAS NOT FOUND DEDUCTED, THEREFORE, DISALLOWABLE U/S. 40 (A)(IA) OF THE IT ACT. THE ASSESSEE, HOWEVER, CLAIMED THAT PAYMENTS WERE BELOW RS.20,000/- AND WERE PAID TO VARIOUS TRANSPORTERS ON A PARTICULAR DAY. THEREF ORE, THE TDS PROVISIONS WOULD NOT APPLY. THE LD. CIT, HOWEVER, FOUND THAT THE ASS ESSEE FAILED TO PRODUCE LEDGER AND CASH BOOK, THEREFORE, ON ACCOUNT OF THE TAX WAS NOT DEDUCTED, THE TRANSPORTATION CHARGES ARE DISALLOWABLE U/S. 40(A)( IA) OF THE IT ACT. 2.1 ON SECOND ISSUE WITH REGARD TO CASH PAYMENT OF M/S. N.K. PANDEY & CO. IN A SUM OF RS.1,50,000/-, THE ASSESSEE EXPLAINED THAT IT WAS TRANSFER ENTRY FROM BANK AND THE ASSESSEE PRODUCED CONFIRMATION LETTER FROM SAID PARTY THAT THEY HAVE RECEIVED THE AMOUNT IN QUESTION FROM THE ASSESSEE B Y WAY OF BANK TRANSFER ENTRY. THE LD.CIT, HOWEVER, OBSERVED THAT IT IS NOT CLEAR AS TO HOW A TRANSFER BY WAY OF WITHDRAWALS HAS BEEN CLAIMED. THEREFORE, THE ENTIRE SUM WAS NOT CONSIDERED AS EXPLAINED AND NOT RELATED TO THE BUSINESS. ITA NO. 248/ALLD./2011 3 2.2 ON THIRD QUERY ALSO WITH REGARD TO LABOUR CHARG ES PAID AT RS.11,81,526/-, TDS WAS NOT FOUND DEDUCTED, BUT ACCORDING TO THE AS SESSEE, THE PAYMENTS WERE MADE TO DIFFERENT LABOURERS, SO THE PROVISIONS OF T DS WOULD NOT APPLY. THE LD.CIT OBSERVED THAT THE ASSESSEE FAILED TO PRODUCE THE BO OKS OF ACCOUNT AND CASH BOOK, THEREFORE, THE AMOUNT IN QUESTION WAS HELD TO BE DI SALLOWABLE U/S. 40(A)(IA) OF THE IT ACT. 2.3. ON 4 TH ISSUE, IT WAS FOUND THAT THE ASSESSEE CLAIMED EXCE SSIVE DEPRECIATION, BUT ACCORDING TO THE ASSESSEE, THE ASSESSEE MADE CL AIM OF DEPRECIATION ON THE HEAVY VEHICLES AT THE SAME RATE AS WERE CLAIMED IN PAST. THE LD. CIT, HOWEVER, REJECTED THE CLAIM OF ASSESSEE THAT VEHICLE IN QUESTION WAS TRANSPORT VEHICLE OR COMMERCIAL VEHICLE. INCOME OF THE ASSESSEE WAS ACCORDINGLY FOU ND TO BE NOT PROPERLY ASSESSED AND TO THE EXTENT OF ABOVE AMOUNTS WERE DIRECTED TO BE ENHANCED. 3. WE HAVE HEARD THE LD. REPRESENTATIVES OF BOTH TH E PARTIES, PERUSED THE FINDINGS OF AUTHORITIES BELOW AND CONSIDERED THE MA TERIAL AVAILABLE ON RECORD. THE ASSESSMENT ORDER IN QUESTION WOULD SHOW THAT THE AS SESSEES COUNSEL APPEARED TIME TO TIME BEFORE THE AO AND IN RESPONSE TO THE N OTICES AND QUERIES ISSUED BY THE AO TIME TO TIME, THE ASSESSEE PRODUCED BOOKS OF ACC OUNT BEFORE THE AO AND FURNISHED OTHER DETAILS, INFORMATION AND EXPLANATIO NS WHICH WERE EXAMINED AND ITA NO. 248/ALLD./2011 4 CONSIDERED BY THE AO. THE AO AFTER EXAMINING THE B OOKS OF ACCOUNT AND DETAILS AFTER DETAILED ENQUIRY, COMPUTED THE BUSINESS INCOM E OF ASSESSEE AT RS.68,620/-. THE ASSESSEE HAS FILED COPY OF QUERY NOTICE DATED 1 7.04.2009 AT PAGE 6 OF THE PAPER BOOK, IN WHICH THE AO HAS CALLED FOR THE DETAILED I NFORMATION FROM THE ASSESSEE WITH REGARD TO THE DEPRECIATION ON HCV DUMPER ETC. AS WELL AS WITH REGARD TO THE TRANSPORTATION CHARGES AND LABOUR CHARGES PAID BY T HE ASSESSEE. THEREFORE, WITH REGARD TO THREE OF THE ISSUES, THE AO CALLED FOR TH E DETAILED EXPLANATION OF THE ASSESSEE AT ASSESSMENT STAGE AND AFTER EXAMINING TH ESE THREE ISSUES ACCEPTED THE CLAIM OF THE ASSESSEE. COPY OF THE ORDER SHEET IS A LSO FILED TO SHOW THAT AT DIFFERENT STAGES, THE AO EXAMINED ALL THE THREE ISSUES AND AC CEPTED THE CLAIM OF THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE REFERRED TO PB-32, WHICH IS BALANCE SHEET AS ON 31.03.2007 TO SHOW THAT WITH REGARD TO TRANSPORTATI ON CHARGES AND LABOUR CHARGES PAID, THE AMOUNT IN QUESTION WERE PAID AND NO AMOUN T WAS PAYABLE. ACCORDING TO THE SUBMISSIONS OF THE ASSESSEE, THE AMOUNTS IN QUE STION WERE PAID TO DIFFERENT TRANSPORTERS AND THE AMOUNT WAS BELOW RS.20,000/- A ND IN CASE OF LABOUR CHARGES, NO SINGLE AMOUNT EXCEEDED THE PRESCRIBED LIMIT. THE REFORE, TDS PROVISIONS WERE NOT APPLICABLE IN THE CASE OF ASSESSEE. SINCE THE A SSESSEE PRODUCED CASH BOOK, LEDGER AND OTHER DETAILS BEFORE THE AO, THEREFORE, THERE IS NO QUESTION OF ANY FAILURE ON THE PART OF THE ASSESSEE NOT TO PRODUCE THE LEDG ER AND CASH BOOK BEFORE THE AO. THUS, THE OBSERVATION OF THE LD. CIT IS WHOLLY INCO RRECT TO SAY THAT NO BOOKS OF ITA NO. 248/ALLD./2011 5 ACCOUNT AND OTHER DETAILS WERE PRODUCED ON THESE IS SUES. HONBLE ALLAHABAD HIGH CURT IN CASE OF CIT VS. VECTOR SHIPPING SERVICES PV T. LTD., 357 ITR 642 CONSIDERED THE ISSUE OF DISALLOWANCE OF EXPENSES U/ S. 40(A)(IA) AND OBSERVED THAT IT IS ALSO TO BE NOTED THAT FOR DISALLOWING EXPENSE S FROM BUSINESS AND PROFESSION ON THE GROUND THAT TDS HAS NOT BEEN DEDUCTED, THE AMOUNT SHOULD BE PAYABLE AND NOT WHIC H HAS BEEN PAID BY THE END OF THE YEAR. SINCE IN THE PRESENT CASE ACCORDING TO THE BALANCE SHEET OF THE ASSESSEE AND EXPLANATION OF THE ASSESSEE, THE AMOUNTS OF TRANSPO RTATION CHARGES AND LABOUR CHARGES WERE NOT PAYABLE, THEREFORE, THE PROVISIONS OF SECTION 40(A)(IA) WOULD NOT APPLY IN THE CASE OF ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE ALSO FILED COPY OF ASSESSMENT ORDER OF SUBSEQUENT ASSESSMENT YEAR 2008 -09 AT PAGE 61 OF THE PAPER BOOK TO SHOW THAT THE ASSESSEE WAS A TRANSPORT CONT RACTOR ONLY. THEREFORE, THESE PROVISIONS WOULD NOT APPLY IN THE CASE OF ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE ALSO FILED COPY OF THE BANK ACCOUNT AT PAGE 52 TO S HOW THAT THE AMOUNT OF RS.1,50,000/- WAS TRANSFER ENTRY. THE LD. CIT ALSO DID NOT GIVE ANY SPECIFIC FINDING AGAINST THE SAME PAYMENT ON ISSUE NO. 2. THEREFORE, THE EXPLANATION OF THE ASSESSEE SHOULD NOT HAVE BEEN REJECTED. FURTHER, T HE NOTICE WAS GIVEN TO THE ASSESSEE WITH REGARD TO PAYMENT OF RS.1,50,000/- FO R VIOLATION OF SECTION 40A(3) OF THE IT ACT AND WHEN NO CASH PAYMENT WAS FOUND, THE LD. CIT CONSIDERED IT TO BE THE PAYMENT OF UNEXPLAINED NATURE. SINCE NO SHOW CA USE NOTICE IS GIVEN ON SUCH ITA NO. 248/ALLD./2011 6 REASON, THEREFORE, NO ADVERSE FINDING CAN BE GIVEN AGAINST THE ASSESSEE. HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. VS. CIT, 243 ITR 83 HELD AS UNDER : EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER, CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, FOR EXAMPLE, WHEN AN INCOME TAX OFFICE R ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF REVENUE OR WHERE TWO VIEWS ARE POSSIBLE AND THE INCOME-TAX OFF ICER HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE , IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE IN TERESTS OF THE REVENUE UNLESS THE VIEW TAKEN BY THE INCOME-TAX OFF ICER IS UNSUSTAINABLE IN LAW. SAME VIEW IS TAKEN BY HONBLE SUPREME COURT IN SUBS EQUENT DECISION IN THE CASE OF CIT VS. MAX INDIA LTD., 295 ITR 282. SINCE THE A O HAS TAKEN ONE OF THE POSSIBLE VIEW IN THE MATTER AND THE LD.CIT DID NOT AGREE WITH THE SAME THOUGH WITHOUT ANY REASONS, THE ASSESSMENT ORDER COULD NOT BE TREATED AS ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF REVENUE. HONBLE GUJ RAT HIGH COURT IN THE CASE OF CIT VS. AMIT CORPORATION, 21 TAXMAN.COM 64 HELD THAT WH ERE THE AO AFTER DETAILED VERIFICATION OF RECORDS AND MAKING ENQUIRY HAD FRAM ED ASSESSMENT, THE COMMISSIONER COULD NOT REVISE THE ORDER OF AO. CONS IDERING THE ABOVE DISCUSSION IN THE LIGHT OF THE FACTS AVAILABLE ON RECORD, WE A RE OF THE VIEW, THE LD. CIT WAS NOT JUSTIFIED IN EXERCISING POWERS U/S. 263 OF THE IT A CT IN THE MATTER. THE ORDER OF THE AO IS SUSTAINABLE IN LAW AND WAS PASSED AFTER DETAI LED ENQUIRY. THEREFORE, COULD NOT BE SAID TO BE ERRONEOUS IN SO FAR AS IT IS PREJ UDICIAL TO THE INTERESTS OF REVENUE. ITA NO. 248/ALLD./2011 7 WE ACCORDINGLY SET ASIDE THE ORDER U/S. 263 OF THE IT ACT AND QUASH THE SAME. RESULTANTLY, THE ASSESSMENT ORDER IS RESTORED. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (B.C. MEENA) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 21 ST AUGUST, 2014 *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT BY ORDER 2. RESPONDENT 3. CIT(A), CONCERNED ASSTT. REGISTRAR 4. CIT, CONCERNED 5. DR, ITAT, ALLAHABAD 6. GUARD FILE TRUE COPY