The ITO,Vapi Ward-4, Nani Daman V. Shri Dhirubhai Dajibhai Patel, Nani Daman

ITA 2820/AHD/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5824 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 28-06-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 07-08-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAURAV BATHAM
• Assessee Lawyers: M J SHAH
• Keywords: Presumptive income; TDS
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI T.K.SHARMA, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER DATE OF HEARING:28.06.10 DRAFTED ON:28.06.10 ITA NO.2820/AHD/2008 ASSESSMENT YEAR : 2005-2006 INCOME TAX OFFICER, VAPI WARD-4, DAMAN. VS. DHIRUBHAI DAJIBHAI PATEL PROP. OF PRATIK TEMPO SERVICE, NEAR PANCHAYAT OFFICE, DABHEL, DAMAN. PAN/GIR NO. : AIXPP1768P (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI GAURAV BATHAM D.R. RESPONDENT BY: SHRI M. J. SHAH A.R. O R D E R PER N.S.SAINI , ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE REVENUE AGAINST TH E ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-VALSAD, DATED 11.04.2008 BY TAKING FOLLOWING GROUNDS. 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION O F RS.88,35,698/- MADE ON ACCOUNT OF TDS NOT DEDUCTED ON TRANSPORT EXPENSES. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LEARNED CIT(A) HAS ERRED IN HOLDING THAT DUE TO CLE RICAL MISTAKE, THE ACCOUNTS ARE NOT AUDITABLE WHEN THE AS SESSEE HAS SHOWN TURNOVER OF RS.91,08,873/- IN HIS DULY VE RIFIED RETURN OF INCOME AND CLAIMED EXPENSES OF RS.88,35,6 98/- ON THE DEBIT SIDE. 2. SINCE, THE FACTS AND ISSUE INVOLVED IN ALL THE A BOVE GROUNDS OF APPEAL ARE COMMON THEY ARE BEING CONSIDERED AND DEC IDED TOGETHER AS UNDER. - 2 - 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E ENGAGED IN THE BUSINESS OF TEMPO PLYING. THE ASSESSEE IS HAVIN G THREE TEMPOS IN CARRYING OUT HIS BUSINESS. THE LEARNED ASSESSING OFFICER OBSERVED THAT ASSESSEE CLAIMED TRANSPORT EXPENSES O F RS.88,35,968/- IN THE PROFIT & LOSS ACCOUNT. THE LE ARNED ASSESSING OFFICER REQUIRED THE ASSESSEE TO FILE HEAD-WISE DET AILS OF EXPENSES AND ALSO TO FURNISH THE DETAILS OF TDS MADE ON THES E EXPENSES. THE ASSESSEE SUBMITTED THAT HE WAS NOT MUCH EDUCATED AN D DEPEND ON CONSULTANT FOR FILING OF RETURN OF INCOME. IT WAS S UBMITTED THAT HIS AVERAGE TURNOVER FOR LAST THREE ASSESSMENT YEARS 20 03-04 TO 2005- 06 WAS RS.6,28,150/-, 11,30,550/- AND RS.9,10,873/- RESPECTIVELY. DUE TO MISTAKE OF THE CONSULTANT, THE TURNOVER WAS SHOWN AS RS.91,08,873/- INSTEAD OF RS.9,10,873/-. IN SUPPORT OF THE SAME, HE SUBMITTED BANK STATEMENT FOR FINANCIAL YEAR 2004 -05. THE LEARNED ASSESSING OFFICER DID NOT ACCEPT THE EXPLAN ATION OF THE ASSESSEE FOR THE REASON THAT THE ASSESSEE PREPARED BOOKS OF ACCOUNT AND PROFIT & LOSS ACCOUNT IN A MANNER SUCH THAT CREDIT AND DEBIT SIDES OF THE PROFIT & LOSS ACCOUNT ARE TALLIE D. IF CONTENTION OF THE ASSESSEE IS CONSIDERED THAT ACCOUNTANT HAS MADE MISTAKE IN SHOWING INCOME OF RS.91,08,873/- IN PLACE OF RS.9,1 0,873/- THEN HOW EXPENSES OF RS.88,35,968/- WERE SHOWN IN THE PR OFIT & LOSS ACCOUNT. THE ASSESSEE HAS SUBMITTED BANK STATEMENT IN WHICH HIS TRANSACTIONS AND TURNOVER ARE EXPLAINED. IT IS NOT NECESSARY THAT ASSESSEE IS MAINTAINING ONLY BANK ACCOUNT. THERE CA N BE OTHER BANK ACCOUNTS WHICH ARE NOT PRODUCED TO THE DEPARTM ENT. ASSESSEE MUST HAVE RECEIPTS RECEIPT IN CASH AND ALL TRUE TRA NSACTION WOULD HAVE BEEN GIVEN TO THE ACCOUNT FOR WRITING BOOKS OF ACCOUNT AND PREPARING PROFIT & LOSS ACCOUNT. FURTHER, TRANSPORT EXPENSES ARE LIABLE TO TDS AND THE ASSESSEE HAS NOT DEDUCTED TDS ON TRANSPORT EXPENSES OF RS.88,35,698/- AND HAS FAILED TO FURNIS H PARTYWISE LEDGER ACCOUNT OF THE ASSESSEE. THEREFORE, HE DISAL LOWED THE - 3 - TRANSPORT EXPENSES MADE BY THE ASSESSEE AND MADE AD DITION OF RS.88,35,698/- TO THE INCOME OF THE ASSESSEE. 4. IN APPEAL BEFORE THE LEARNED COMMISSIONER OF INC OME TAX(APPEALS) IT WAS CLAIMED BY THE ASSESSEE THAT HI S VOLUME OF TURNOVER AND EXPENSES OF THE BUSINESS ARE ACTUALLY QUITE LOW AND THAT BECAUSE OF THE MISTAKE OF ACCOUNTANT, THE FIGU RE OF TURNOVER EXPENSES ETC. WERE PROJECTED HIGH BEFORE THE LEARNE D ASSESSING OFFICER. IT WAS CLAIMED BY THE ASSESSEE THAT HE HA S FILED RETURN ON PRESUMPTIVE TAXATION BASIS UNDER THE PROVISIONS OF SECTION 44AE OF THE ACT. SINCE, THE OBSERVATION OF THE LEARNED ASSE SSING OFFICER IN THE ASSESSMENT ORDER WAS CONTRADICTORY. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) CALLED FOR A RE MAND REPORT FROM THE LEARNED ASSESSING OFFICER VIDE LETTER DATE D 19.12.2007. 5. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AND THE REMAND REPORT FOUND THAT RELEVANT COMPARATIVE FIGURES OF RECEIPTS EXPENSES OF THE PRECEDING YEARS SHOULD HAVE BEEN CONSIDERED TO APPR ECIATE THE FACTS OF THE CASE. HE ALSO OBSERVED THAT EVEN OTHER WISE IT IS OBVIOUS THAT WITH THE HELP OF THREE TEMPOS ONE CANNOT ACHIE VE A BIG VOLUME OF RS.91,08,873/- OF TURNOVER. THE FIGURE ITSELF IS SUGGESTED THE ERROR OF THE ACCOUNTANT HAVING CREPT IN WHILE MAKIN G SUBMISSIONS BEFORE THE LEARNED ASSESSING OFFICER. HE THEREFORE, HELD THAT THERE WAS MERIT IN THE CONTENTION OF THE ASSESSEE THAT ER ROR HAD CREPT IN WHILE FILING THE RETURN OF INCOME. SINCE, VOLUME OF BUSINESS OF THE ASSESSEE IS BELOW RS.30,00,000/-, THE PROVISIONS OF SECTION 194C READ WITH SECTION 40A(IA) ARE NOT APPLICABLE TO THE ASSESSEE, THEREFORE, ADDITION OF RS.88,35,698/- ON ACCOUNT OF AN ERROR OF THE ACCOUNTANT DESERVES TO BE DELETED. - 4 - 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENT LY ARGUED IN SUPPORT OF THE ORDER OF THE LEARNED ASSESSING OF FICER WHEREAS THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESS EE SUPPORTED THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AND SUBMITTED THAT IN VIEW OF THE PROVISIONS OF CLAUSE (L) OF EXPLANATION TO SECTION 194C(7), A CONTRACTOR IS LIABLE TO DEDUC T TDS FROM PAYMENTS MADE TO CONTRACTEE, WHERE THE ACCOUNTS OF SUCH PAYER ARE LIABLE TO AUDIT UNDER CLAUSE (A) OR CLAUSE (B) OF SECTION 44AB DURING THE FINANCIAL YEAR IMMEDIATELY PRECEDING THE FINANCIAL YEAR IN WHICH SUCH SUM IS CREDITED OR PAID TO THE ACCOUNT O F THE CONTRACTOR. SINCE, IT IS AN UNDISPUTED FACT THAT THE TURNOVER I N THE IMMEDIATELY PRECEDING ASSESSMENT YEAR WAS LESS THEN RS.40,00,00 0/- THEREFORE, THE ASSESSEE WAS NOT LIABLE TO DEDUCT TDS FROM THE PAYMENTS MADE FOR TRANSPORT EXPENSES. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE , THE ASSESSEE IS ENGAGED IN TRANSPORT BUSINESS AND HAS THREE TEMPOS WHICH ARE USED IN THE BUSINESS. DURING THE YEAR, THE ASSESSEE IN ITS PROFIT & LOSS ACCOUNT CLAIMED EXPENSES OF RS.88,35,698/- ON ACCOUNT OF TRANSPORTATION EXPENSES. THE LEARNED ASSESSING OFFI CER OBSERVED THAT NO TDS WAS DEDUCTED FROM THE TRANSPORTATION EX PENSES. THEREFORE, THE LEARNED ASSESSING OFFICER DISALLOWED ENTIRE TRANSPORT EXPENSE OF RS.88,35,698/-. IN THE ABOVE FACTS AND C IRCUMSTANCES OF THE CASE, WE FIND THAT THE PROVISION OF CLAUSE (L) OF SECTION 194C (7) PROVIDES THAT THE PERSON IS LIABLE TO DEDUCT TD S FROM PAYMENTS MADE TO THE CONTRACTOR IF HIS ACCOUNTS ARE LIABLE TO BE AUDITED UNDER CLAUSE (A) OR CLAUSE (B) OF SECTION 44AB OF T HE INCOME TAX ACT, 1961 DURING THE FINANCIAL YEAR IMMEDIATELY PRE CEDING THE FINANCIAL YEAR IN WHICH SUCH PAYMENT IS CREDITED OR PAID TO THE ACCOUNT OF THE CONTRACTOR. IN THE IMMEDIATELY PRECE DING - 5 - ASSESSMENT YEAR 2004-05, THE ASSESSEE WAS NOT LIABL E TO GET HIS ACCOUNTS AUDITED UNDER SECTION 44AB OF THE INCOME T AX ACT, 1961 AND THEREFORE, HE WAS NOT REQUIRED TO DEDUCT TDS FR OM THE PAYMENTS MADE TO THE CONTRACTOR DURING THE YEAR UND ER CONSIDERATION. THEREFORE, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) WAS FULLY JUSTIFIED IN HOLDING THAT TH E ASSESSEE WAS NOT LIABLE TO DEDUCT TDS FROM THE TRANSPORT PAYMENT S MADE BY IT AND DELETING THE DISALLOWANCE OF RS.88,35,698/- PAI D AS TRANSPORT EXPENSES. WE THEREFORE, DO NOT FIND ANY GOOD AND JU STIFIABLE REASON TO INTERFERE WITH THE ORDER OF THE LEARNED COMMISSI ONER OF INCOME TAX(APPEALS). IT IS CONFIRMED AND THE GROUNDS OF AP PEAL OF THE REVENUE ARE DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. 9. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 30 TH DAY OF JUNE, 2010. SD/- SD/- ( T.K. SHARMA ) ( N .S. SAINI ) JUDICIAL MEMBER ACCO UNTANT MEMBER AHMEDABAD; ON THIS 30 TH DAY OF JUNE, 2010 PARAS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-VALSAD. 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD - 6 - DATE INITIALS 1. DRAFT DICTATED ON 28.06.2010 -------------- ----- 2. DRAFT PLACED BEFORE AUTHORITY 29.06.2010 ---- --------------- 3. DRAFT PROPOSED & PLACED 29.06.2010 ---------- --------- JM BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED 29.06.2010 ---------- --------- JM BY SECOND MEMBER 5. APPROVED DRAFT COMES TO P.S 30.06.2010 -------- ------------ 6. KEPT FOR PRONOUNCEMENT ON 30.06.2010 --------- ----------- 7. FILE SENT TO THE BENCH CLERK 30.06.2010 ------ -------------- 8. DATE ON WHICH FILE GOES TO THE ---------------- -------------------- 9. DATE OF DISPATCH OF ORDER ---------------- --- ------------------