Mohit Sharma, GANDHIDHAM V. The Assistant Commissioner Of Income Tax, Gandhidham Circle, GANDHIDHAM

ITA 284/RJT/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9073 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 17-04-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 28-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AVINASH KUMAR
• Assessee Lawyers: MJ RANPURA
• Keywords: Unexplained cash credit; Depreciation; Opportunity of being heard; Additional evidence; Reason to believe

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL , RAJKOT BENCH, RAJKOT (CONDUCTED THROUGH E - COURT AT AHMEDAB A D) BEFORE SHRI MAHAVIR PRASAD , JUDICIAL MEMBER AND SHRI MANISH BORAD , ACCOUNTANT MEMBER ./ ITA NO.284/ RJT/2014 AND ./ ITA NO.104/RJT/2015 / ASSTT. YEAR S : 20 0 9 - 20 10 AND 2010 - 2011 SHRI MOHIT K. SHARMA, BUNGALOW NO.60, SECTOR NO.3, OSLO, GHANDHIDHAM PAN:AOUPS9821F VS . ACIT, GHANDHIDHAM CIRCLE, GHANDHIDHAM ./ ITA NO.355/RJT/2014 / ASSTT. YEAR: 2009 - 2010 DCIT, GHANDHIDHAM CIRCLE, GHANDHIDHAM VS . SHRI MOHIT K. SHARMA, BUNGALOW NO.60, SECTOR NO.3, OSLO, GHANDHIDHAM PAN:AOUPS9821F (APPLICANT) (RESPONENT) ASSESSEE BY : SHRI M.J. RANPURA , AR REVENUE BY : SHRI AVINASH KUMAR , SR. DR / DATE OF HEARING : 1 7 / 04 / 201 7 / DATE OF PRONOUNCEMENT: 21 / 04 /201 7 / O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER THESE ARE BUNCH OF THREE A PPEALS . C ROSS A PPEALS FOR A.Y. 2009 - 10 IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - ITA NO.284/RJT/2014 & 104/RJT/2015 ASSTT. YEARS 2009 - 10 & 2010 - 2011 AND ITA NO.355/RJT/2014 ASSTT. YEAR 2009 - 2010 2 II, RAJKOT (IN SHORT LD.CIT(A)) DATED 25/03/2014 ARISING OUT OF ORDER U/S.143(3) OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS ACT) FRAMED BY ACIT, GANDHIDHAM, KUTCH. ASSESSEE APPEAL FOR A.Y.2010 - 11 IS DIRECTED AGAINST THE ORDER OF LD.CIT(A) - III DATED 16/01/2015 ARISING OUT OF ORDER U/S.143(3) OF THE ACT FRAMED BY ACIT, GANDHIDHAM, KUTCH 2. THE ISSUES RAISED IN THESE THREE APPEALS ARE MOSTLY COMMON AND RELATES TO THE SAME ASSESSEE, THEREFORE, THEY HAVE BEEN HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 3. FIRST WE TA KE UP CROSS APPEALS FOR A.Y.2009 - 10. A SSESSEE H A S RAISED FOLLOWING COMMON ISSUES AGAINST THE ORDER OF LD.CIT(A) 1. SUSTAINING DISALLOWANCE OF TRANSPORTATION EXPENSES AT THE RATE OF 35%. 2. CONFIRMING ADDITION TOWARDS UNEXPLAINED CASH CREDIT U/S.68 OF THE ACT, AT RS.1,11,43,297/ - AND REVENUE HAS RAISED FOLLOWING TWO COMMON ISSUES AGAINST THE ORDER OF LD.CIT(A). 1. DELETING DISALLOWANCE OF TRANSPORTATION EXPENSES AT RS.66 , 16 , 350/ - AND ALSO NOT SUSTAINING DISALLOWANCE U/S.40 (A) (IA) ON TH E IMPUGNED PAYMENT OF TRANSPORTATION CHARGES AT RS.1 , 01 , 79 , 000/ - 2. DELETING ADDITION TOWARDS UNEXPLAINED EXPENSES OF RS.3 , 59 , 587/ - MADE THROUGH CREDIT CARD. 4 . GROUND RELATING TO TRANSPORTATION EXPENS ES IS COMMONLY BEEN RAISED BY B OTH THE PARTIE S. BRIEF FACTS RELATING TO THIS ISSUE ARE THAT ASSESSE IS EN GAGED IN ITA NO.284/RJT/2014 & 104/RJT/2015 ASSTT. YEARS 2009 - 10 & 2010 - 2011 AND ITA NO.355/RJT/2014 ASSTT. YEAR 2009 - 2010 3 THE BUSINESS OF IMPORT/ EXPORT TRADING A S WELL AS TRANSPORTATION. HE FILED HIS RETURN OF INCOME FOR A.Y.2009 - 2010 ON 29/09/2009 DECLARING TOTAL INCOME OF RS.20 , 46 , 130/ - . ON PERUSAL OF PROFIT AND LO SS ACCOUNT , IT HAS BEEN NOTICED THAT ASSESSEE HAS DEBITED AMOUNT OF RS.1 , 01 , 79 , 000/ - TOWARDS FREIGHT EXPENSES PAID TO SEVEN TRANSPORTERS. DURING THE ASSESSMENT PROCEEDINGS ASSESSE E SUBMITTED THAT PAYMENT HAS BEEN M A DE TO THE ALLEGED SEVEN PARTIES WHICH ARE BOOKING AGENT S AND TRANSPORTATION PAYMENT HAS BEEN DIRECTLY MADE TO THE TRUCK OWNERS BY THEM. HOWEVER, EACH PAYMENT IS LESS THAN RS.19 ,000 / - AND NO TDS WAS REQUIRED TO BE DEDUCTED. ASSESSEE WAS ASKED TO PRODUCE THE ALLEGED SEVEN PARTIES BEFORE THE REVENUE AUTHORITIES BUT ASSESSEE FAILED IN DOING THE NEEDFUL . A S A RESULT TRANSPORTATION EXPENDITURE OF RS.1 , 01 , 79 , 000/ - WAS TREATED AS BOGUS AND ADDED BACK TO THE INCOME. WHEN THE ISSUE CA ME UP BEFORE FIRST APPELLANT AUTHORITY LD.CIT(A) CONFIRMED THE ACTION OF L D.ASSESSING OFFICER (IN SHORT LD.AO) TREATING THE ALLEGED TRANSPORTATION EXPENDITURE AS BOGUS BUT IN ORDER TO MEET THE END OF JUSTICE AND TO KEEP THE NET PROFIT RATE IN CONSONANCE WITH THE PRECEDING YEAR SUSTAINED DISALLOWANCE AT THE RATE OF 35% OF TOTAL FREIGHT EXPENSES OF RS.1 , 01 , 79 , 000/ - WHICH WAS CALCULATED AT RS.39 , 69 , 810/ - . 5 . AGGREIVED BOTH ASSESSEE AND REVENUE ARE IN APPEAL BEFORE TRIBUNAL. LD.COUNSEL S UBMITTED THAT ASSESSEE IS ALSO INTO THE BUSINESS OF TRANSPORTATION FOR LAST MANY YEARS AND DURING THE YEAR UNDER AP PEAL GROSS TRANSPORTATION RECEIPT WAS AT RS.1 , 08 , 50 , 930/ - . P AYEES OF FREIGHT EXPENSES WERE ONLY BOOKING AGENTS FOR TRANSPORTATION WHO IN TURN ALLOTTED WORK TO THE TRUCK OWNERS . PAYMENTS WERE GIVEN TO THE TRUCK OWNERS BY THE BOOKING AGENTS AFTER RETAINING THEIR COMMISSION AS PER PREVALENT BUSINESS PRACTICE IN GANDHIDHAM AND SURROUNDING AREAS. THE APPELLANT HAS REQUISITE KACHA PAPERS ISSUED BY THE PAYEES TO PROVE THAT THEY HAVE ARRANGED THE TRANSPORTATION. THE DENIAL BY THE ITA NO.284/RJT/2014 & 104/RJT/2015 ASSTT. YEARS 2009 - 10 & 2010 - 2011 AND ITA NO.355/RJT/2014 ASSTT. YEAR 2009 - 2010 4 PAYEES M AY HAVE ARISEN DUE TO THE FACT THAT THEY MAY NOT HAVE RECORDED THE INCOME EARNED FROM THE APPELLANT IN THEIR BOOKS OF ACCOUNTS. LD.COUSEL FURTHER SUBMITTED THAT IT REMAINS THE FACT BEYOND ANY DOUBT THAT APPELLANT EARNED AND OFFERED FREIGHT INCOME OF RS.1,0 8,50,930/ - AND TO EARN SUCH FREIGHT INCOME ASSESSEE HAD INCURRED EXPENDITURE ON TRANSPORTATION. IT IS A SETTLED PRINCIPLE OF ACCOUNTANCY AND TAX LAWS THAT ONLY NET PROFIT IS CHARGEABLE TO TAX AND NOT THE GROSS RECEIPTS. REFERENCE WAS ALSO MADE TO GROSS TU RNOVER OF THREE FINANCIAL YEAR INCLUDING PRECEDING TWO YEARS TO SHOW THAT NET PROFIT RATE HAS BEEN IN RANGE OF 1.2% TO 0.82% OF THE GROSS RECEIPTS AND THE FINANCIAL STATEMENT AND TAX RETURN STANDS DULY ACCEPTED BY THE REVENUE AUTHORITIES FOR LAST TWO FINAN CIAL YEARS. IT WAS FURTHER SUBMITTED THAT IF THE SUSTAINED DISALLOWANCE OF RS.39 , 69 , 810/ - HELD BY LD.CIT(A) IS CONFIRMED THAN THE NET PROFIT RATIO WILL COME S TO 8.7 % WHICH WILL BE HIGHLY IMPROBABLE AND UNREALISTIC IN THE BUSINESS OF TRANSPORTATION. FURTHE R LD.COUNSEL ADDED THAT AT THE MOST DISALLOWANCE , IF ANY , CAN BE MADE AT THE RATE OF 1.25% ON THE ALLEGED FREIGHT EXPENDITURE. 6 . ON THE OTHER HAND LD.DEPARTMENTAL REPRESENTATIVE (IN SHORT LD.DR) VEHEMENTLY ARGUED SUPPORTING THE ORDER OF LOWER AUTHORITIES . 7 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED RECORDS PLACED BEFORE US. THE COMMON ISSUES RAISED BY BOTH THE PARTIES REVOLVES AROUND THE TRANSPORTATION EXPENSES OF RS.1 , 01 , 79 , 000/ - . WE OBSERVE THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF IMPORT/EXPO RT, TRADING AND TRANSPOR TATION. D URING THE YEAR PAYMENT OF RS.1 , 0 1 , 79 , 000/ - WAS MADE TO SEVEN AGENTS WHO IN TURN HAVE MADE PAYMENT TO INDIVIDUAL TRUCK OWNERS. REVENUE HAS NOT DISPUTED THE FACT CONTENDED BY ASSESSEE THAT EACH PAYMENT TO TRUCK OWNERS WAS LESS THAN RS.19,000/ - . IN SUCH SITUATION WE HAVE NO REASON TO BELIEVE THAT TDS WAS ITA NO.284/RJT/2014 & 104/RJT/2015 ASSTT. YEARS 2009 - 10 & 2010 - 2011 AND ITA NO.355/RJT/2014 ASSTT. YEAR 2009 - 2010 5 DEDUCTIBLE ON TH E ALLEGED PAYMENT TO EACH TRUCK OWNER. WE ACCEPT THE ASSESSEES CONTENTIONS AND DISMISS THE REVENUE OBJECTION FOR NON DEDUCTION OF TAX AT SOU RCE ON RS.1 , 0 1 , 79 , 000/ - AND THIS CALLS FOR NO DISALLOWANCE U/S.40(A)( I A ) OF THE ACT . 8. AS REGARD THE ISSUE OF BOGUS EXPENDITURE, WE NOTICE THAT ALLEGED SE VEN PARTIES WHICH WERE INQUIRED BY THE REVENUE AUTHORITIES , FOR VERIFYING AS TO WHETHER THEY HAVE PROVIDED TRANSPORTATION SERVICES TO THE ASSESSEE , DID NOT APPEAR ED BEFORE THE ASSESSING AUTHORITY AND NEITHER ANY CONFIRMATION/BILLS/LEDGER ACCOUNT/ AND PAYMENT PROOF WERE PROVIDED. FROM THIS ANGLE THE ALLEGED FREIGHT EXPENSES WERE TREATED AS BOGUS BY THE ASSESSING AUTHORITY. HOWEVER, IT IS ALSO A FACT THAT ASSESSEE IS IN THIS BUSINESS OF TRANSPORTATION SINCE LAST MANY YEARS AND DURING THE YEAR GROSS FREIGHT CHARGES RECEIVED H AVE BEEN SHOWN AT RS.1 , 08 , 50 , 930/ - . ALSO NET PROFIT RATE CONSISTENTLY OFFERED SIN CE PAST FEW YEARS IS RANGING BE T WEEN 1.2% TO 0.82% OF THE TOTAL TURNOVER . IN THE SE CIRCUMSTANCES , THIS FACT CANNOT BE DENIED THAT ASSESSEE HAS INCURR ED FREIGHT EXPENDITURE TO EARN THE FREIGHT INCOME AND IT IS A WELL ESTABLISH ED PRINCIPLE THAT NET INCOME IS CHARGEABLE TO TAX AND NOT THE GROSS RECEIPTS. 9. WE FURTHER NOTICE THAT AGAINST GROSS FREIGHT RECEIPTS OF RS.1 , 08 , 50 , 930/ - ASSESSEE HAS CLAIMED FREIGHT EXPENDITURE OF RS.1 , 01 , 79 , 000/ - WHICH SHOWS A NET GAIN FROM PROVIDING FREIGHT SERV ICES AT RS.6,71,930/ - WHICH IN PERCENTAGE COMES TO AROUND 6.19% . F URTHER LOOKING TO THE FACTUAL MATRIX AND INABILITY OF THE ASSESSEE TO FURNISH NECESSARY DOCUMENTS TO PROVE THE GENUINENESS OF EXPENDITURE AND IN ORDER TO MEET THE END S OF JUSTICE WE SUSTA IN THE DISALLOWANCE AT 1.81 % OF THE GROSS F REIGHT RECEIPT . THIS DISALLOWANCE OF 1.81% ITA NO.284/RJT/2014 & 104/RJT/2015 ASSTT. YEARS 2009 - 10 & 2010 - 2011 AND ITA NO.355/RJT/2014 ASSTT. YEAR 2009 - 2010 6 OF GROSS RECEIPT TOGETHER WITH INCOME DISCLOSED FROM TRANSPORTATION BUSINESS AT RS.6,71,930/ - WILL ARRIVE AT A NET PROFIT RATE OF 8% OF THE GROSS RECEIPT FROM TRANSPORT ATION. ACCORDINGLY, THE DISALLOWANCE OF FREIGHT EXPENSES IS RESTRICTED TO RS.1 , 96 , 402/ - AS AGAINST RS.39 , 69 ,810/ - SUSTAINED BY LD.CIT(A). 9.1 IN T HE RESULT, GROUND NO.1 RAISED BOTH BY THE ASSESSEE AND REVENUE ARE PARTLY ALLOWED. 10. ASSESSEE S SECOND GROUND FOR A.Y.2009 - 10 IS AGAINST THE ORDER OF LD.CIT(A) FOR NOT ENTERTAINING THE ADDITION AL EVIDENCES SUBMITTED DURING THE APPELLANT PROCEEDINGS UNDER RULE 46A OF THE IT RULES. AT THE OUTSET LD.COUNSEL REQUESTED FOR REMITTING THE ISSUES RAISED IN THIS GROUND RELATING TO UNEXPLAINED CASH CREDIT TO THE FILE OF LD.AO BY ACCEPTING ADDITIONAL EVIDENCES. LD.COUNSEL FURTHER SUBMITTED THAT THE ALLEGED UNEXPLAINED CASH CREDIT S RELATES TO TWO PARTIES NAMELY M/S. MALP ANI SECURITIES AND MR.RAMESH H. PANCHAL AN D THE UNSECURED LOAN HAS BEEN TREATED AS UNEXPLAINED BY LD.AO WITHOUT APPRECIATING THE FACTS THAT LOAN FROM BOTH THESE PARTIES WAS RE - PAID IN SUBSEQUENT YEAR . HOWEVER, DUE TO DISPUTE BETWEEN THE PARTIES , ASSESSEE WAS UNABLE TO GATHER AND FURTHER FILE NECES SARY DOCUMENTS , PROOF OF IDENTITY GENUINENESS AND CREDIT WORTHINESS OF THE ALLEGED CASH CREDITORS BEFORE THE LD.AO . 11. ON THE OTHER HAN D LD.DR SUPPORTED THE ORDER OF LOWER AUTHORITI ES. 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD PLAC ED BEFORE US. DURING THE COURSE OF ASSESSMENT PROCEEDINGS LD.AO OBSERVED THAT ASSESSEE H AS ACCEPTED UNSECURED LOAN OF RS.11,43,297/ - FROM M/S.MALP ANI SECURITIES AND RS.1 CRORE FROM MR.RAMESH H PANCHAL. NECESSARY DETAILS WERE CALLED BY ITA NO.284/RJT/2014 & 104/RJT/2015 ASSTT. YEARS 2009 - 10 & 2010 - 2011 AND ITA NO.355/RJT/2014 ASSTT. YEAR 2009 - 2010 7 LD.AO TO VERIFY THE IDENTITY GENUINENESS AND CREDIT WORTHINESS OF THE ALLEGED CASH CREDITORS. HOWEVER DURING THE ASSESSMENT PROCEEDINGS , ASSESSEE FAILED TO PROVIDE ANY DETAILS ACCEPT THE LEDGER ACCOUNT ALLEGEDLY SIGNED BY BOT H THE CASH CREDITORS. AS A RESULT , WHILE FRAMING THE ASSESSMENT ADDITION OF RS.1 , 11 , 43 , 297/ - WAS MADE U/S.68 OF THE ACT. WHEN THE MATTER TRAVELLED TO FIRST APPELLANT AUTHORITY THE ASSESSEE REQUESTED TO ENTERTAIN ADDITIONAL EVIDENCES UNDER RULE 46A OF THE IT RULES RELATING TO THE ALLEGED TW O PARTIES WHICH INCLUDED THEIR NAMES , ADDRESSES , PAN, BANK ACCOUNTS, CONFIRMATION LETTERS. HOWEVER, LD.CIT(A) DID NOT ENTERTAIN ADDITIONAL EVIDENCES AS THE APPELLANT WAS UNABLE TO SHOW THE CIRCUMSTANCES AND EVIDENCES WHICH PREVENTED HIM FROM FILING THEM B EFORE LD.AO . WE FURTHER OBSERVE THAT ASSESSEE H AS PLACED THE DETAILS OF LEDGER ACCOUNTS OF BOTH THE PARTIES M/S.MALPANI SECURITIES AND MR.RAMESH H. PANCHAL WHICH SHOWS THAT ALLEGED UNEXPLAINED LOAN WERE PAID BACK BY ACCOUNT PAYEE CHEQUE IN THE SUBSEQUENT ASSESSMENT YEAR I.E FINANCIAL YEAR 2009 - 10. WE ALSO OBSERVE THAT ASSESSE HAS PLACED COPIES OF LEGAL NOTICES IN THE CASE OF MR.RAMESH PANCHAL WHICH ARE ENOUGH TO PROVE THAT THERE WAS SOME LEGAL BATTLE GOING BETWEEN THE ALLEGED CASH CREDITOR AND ASSESSEE. WE ARE THEREFORE , OF THE VIEW THAT IN THE G IVEN FACTS AND CIRCUMSTANCES ASSESSEE WAS HAVING SUFFICIENT REASONS WHICH PREVENTED HIM FROM FURNISHING NECESSARY DETAILS BEFORE THE ASSESSING AUTHORITY TO PROVE THE GENUINENESS , CREDIT WORTHINESS AND IDENTITY OF T HE ALLEGED CASH CREDITORS OF RS.1,11,43,297/ - . WE ACCORDINGLY ENTERTAIN THE ADDITIONAL EVID ENCES AND DIRECT THE LD.ASSESSING OFFICER TO DECIDE THE ISSUE AFRESH AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE GIVING COGNIZANCE TO THE ADDI TIONAL EVIDENCES REFERRED ABOVE. 12.1 IN THE RESULT, THIS GROUND OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ITA NO.284/RJT/2014 & 104/RJT/2015 ASSTT. YEARS 2009 - 10 & 2010 - 2011 AND ITA NO.355/RJT/2014 ASSTT. YEAR 2009 - 2010 8 13. IN REVENUE APPEAL FOR A.Y.2009 - 10 GROUND NO.2 IS RAISED AGAINST THE DELETION OF ADDITION AGAINST THE LD.CIT(A) OF RS.3 , 59 , 5 87/ - AS UNEXPLAINED SOURCE OF PAYMENT MADE THROUGH CREDIT CARD. 14. TH E LD.DR WAS UNABLE TO REBUT THE FINDINGS OF THE LD.CIT(A) AND LD.COUNSEL SUPPORTED THE ORDER OF FIRST APPELLANT AUTHORITY. 15. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACE D BEFORE US. ISSUE S RAISED IN THIS GROUND EMANATES FROM THE AIR REPORT SHOWING THAT APPELLANT HAS MADE PAYMENT OF RS.3,59,587/ - THROUGH CREDIT CARD ON 31/03/2009. LD.CIT(A) DELETED THE IMPUGNED ADDITION OF RS.3,59,587/ - BY OBSERVING THAT , FINDINGS OF LD.AO WAS INCOMPLETE AS THERE WAS NO DETAILS PLACED ON RECORD TO SHOW AS TO WHETHER THE ALLEGED PAYMENT IS SINGLE PAYMENT OR CUMULATIVE FIGURES OF VARIOUS PAYMENTS. THERE WAS ALSO NO MENTION ABOUT THE NATURE OF PAYMENT. WE THEREFORE , IN THE BACK DROP OF THESE F INDINGS OF LD.CIT(A) ARE OF THE VIEW THAT LD.AO DID NOT PROVIDE ANY CONCLUSIVE DETAILS WHICH CAN PROVE THAT THE ALLEGED PAYMENT MADE THROUGH CREDIT CARD ON 31/03/2009 OF RS.3,59,587/ - HAVE BEEN IN CURRED BY ASSESSEE. W E THEREFORE FIND NO REASON TO INTERFER E WITH THE ORDER OF LD.CIT(A) AND UPHELD THE SAME. 15.1 IN THE RESULT THIS GROUND OF REVENUE IS DISMISSED. 16. NOW WE TAKE UP ASSESSEE S APPEAL BEARING ITA NO.104/RJT/2015 FOR A.Y. 2010 - 11 RAISING FOLLOWING TWO ISSUES AGAINST THE ORDER OF LD.CIT(A). ITA NO.284/RJT/2014 & 104/RJT/2015 ASSTT. YEARS 2009 - 10 & 2010 - 2011 AND ITA NO.355/RJT/2014 ASSTT. YEAR 2009 - 2010 9 1. CON FIRMING DISALLOWANCE OF THE DEPRECIATION OF RS.27,43,084/ - AND NOT ENTERTAINING ADDITIONAL EVIDENCES FOR PROVING THE OWNER SHIP OF THE ASSETS . 2. DISALLOWANCE U/S.40(A)(AI) OF RS.33,97,441/ - ON ACCOUNT OF NON - DEDUCTION OF TDS ON PAYMENT OF FREIGHT EXPENSES. 17. AT THE OUTSET, LD.COUNSEL PRAYED FOR ADMISSION OF ADDITI ONAL EVIDENCE UNDER THE RULE 46A OF IT RULES WHICH RELATES TO PURCHASE OF TRAILER/TRUCKS DURING THE FINANCIAL YEAR 2009 - 10. FURTHER AS REGARD TO DISALLOWANCE U/S.40(A)(IA) LD.COUNSEL SUBMITTED TH AT OUT OF TOTAL PAYMENT OF RS.22,19,762/ - ON ACCOUNT OF FREIGHT CHARGES PAID TO M/S.KANDLA CARGO CARRIERS ASSESSEE FAILED TO DEDUCT INCOME TAX AT SOURCE ON SUM OF RS.33, 97,441/ - HOWEVER, THE ALLEGED SUM OF RS.33,97,441/ - HAS BEEN SHOWN AS INCOME BY M/ S.KANDLA CARGO CARRIERS, KUTCH , AS VERIFIABLE FROM THE CERTIFICATE ISSUED BY C.A M/S.MDB ASSOCIATES. FURTHER THE ISSUE IS SQUARELY COVERED BY THE JUDGMENT OF HONBLE APEX COURT IN THE CASE OF HINDUSTAN COCA COLA BEVERAGES LTD. VS. CIT[(2007)] 163 TAXMAN 35 5(SC) WHEREIN IT HAS BEEN HELD THAT WHETHER WHERE DEDUCTEE, RECIPIENT OF INCOME, HAS ALR EADY PAID TAXES ON AMOUNT RECEIVED FROM DEDUCTOR, DEPARTMENT ONCE AGAIN CANNOT RECOVER TAX FROM DEDUCTOR ON S A ME INCOME BY TREATING DEDUCTOR TO BE ASSESSEE - IN - DEFAULT FOR SHORTFALL IN ITS AMOUNT OF TAX DEDUCTED AT SOURCE. LD.COUNSEL HOWEVER, REQUESTED THAT ISSUE MAY BE SET ASIDE TO THE FILE OF LD.AO TO VERIFY FORM 26A UNDER IT RULES PROVING THAT ALLEGED SUM OF RS.33,97,441/ - HAS BEEN OFFERED TO TAX BY M/S.KANDLA CARGO CARRIERS, KUTCH IN THEIR INCOME TAX RETURN . 18. ON THE OTHER HAND, LD.DR SUPPORTED THE ORDER OF THE LOWER AUTHORI TIES BUT COULD NOT REBUT THE CONTENTIONS RAISED BY THE LD.COUNSEL. ITA NO.284/RJT/2014 & 104/RJT/2015 ASSTT. YEARS 2009 - 10 & 2010 - 2011 AND ITA NO.355/RJT/2014 ASSTT. YEAR 2009 - 2010 10 19. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US. FIRST ISSUE RELATES TO DISALLOWANCE OF DEPRECIATION OF RS.27,43,084/ - MADE BY LD.AO BY OBSERVING THAT, THE ASSESSEE WAS UNABLE TO PROVE THE OWNERSHIP OF THE 8 TRUCKS/TRAILER PURCHASED DURING THE FINANCIAL YEAR 2009 - 10 AND ALSO TO PROVE THAT T HEY HAVE BEEN PUT TO USE FOR BUSINESS PURPOSES. THE ACTION OF LD.AO WAS CONFIRMED BY LD.CIT(A) ALSO. BEFORE THE TRIBUNAL ASSESSEE PRAYED FOR ADMISSION OF ADDITIONAL EVIDENCES RELATING TO SALE CERTIFICATE ISSUED BY THE SELLER IN RESPECT OF TRAILER PURCHASED, COPIES OF DIESEL REQUISITION SLIP, DELIVERY CHALLAN AND CASH VOUCHERS IN RESP ECT OF TRANSPORTATION CHARGES OF NEWLY PURCHASED VEHICLES. WE OBSERVE THAT ALL T HESE DOCUMENTS ARE GOING TO THE ROOT CAUSE OF THE AL LEGED DISALLOWANCE AND ASSESSEE WILL FAIL TO GET DUE JUSTICE IF THESE ADDITIONAL EVIDENCES ARE NOT ENTERTAINED AND EXAMINED BY THE LD.AO . 20. WE THEREFORE, TO MEET THE END OF JUSTICE ARE OF THE VIEW THAT ASSESEE DESERVE S ONE MORE O PPORTUNITY TO PROVE GEN UI NENESS OF CLAIM OF DEPRECIATION ON TRUCK/TRAILER PURCHASED DURING THE YEAR. WE THEREFORE, ADMIT ADDITIONAL EVIDENCES AND DIRECT THE LD.AO TO EXAMINE THEM AFTER PROVIDING SUFFICIENT OPPORTUNITY OF B EING HEARD TO THE ASSESSEE TO PROVE THE OWNERSHIP OF THE 8 TRUCK/TRAILER PURCHASED DURING THE YEAR AND ALSO TO PROVE THAT THEY HAVE BEEN PUT TO USE FOR BUSINESS PURPOSES. 20.1 THIS GROUND NO.1 OF ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. 21. AS REGARD TO GROUND NO.2 RELATING TO DISALLOWANCE U/S.40 (A)(IA) OF THE ACT WE OBSERVE THAT ASSESSEE FAILED TO DEDUCT INCOME TAX AT SOURCE OF PAYMENT OF ITA NO.284/RJT/2014 & 104/RJT/2015 ASSTT. YEARS 2009 - 10 & 2010 - 2011 AND ITA NO.355/RJT/2014 ASSTT. YEAR 2009 - 2010 11 RS.33,97,441/ - PAID TO M/S.KANDLA KARGO CARRIERS, KUTCH. WE ALSO OBSERVE THAT ASSESSEE HAS REFERRED AND RELIED UPON THE JUDGMENT OF HONBLE APEX HIGH COURT IN T HE CASE OF HINDUSTAN COCA COLA BEVERAGES LTD. VS. CIT[(2007)] 163 TAXMAN 355(SC) (SUPRA) . THE LD.COUNSE L HAS ALSO PLACED ON RECORD FORM 26A AND THE COPIES OF CERTIFICATE FROM CHARTED ACCOUNTANT CERTIFYING THAT PAYEE I.E M/S.KANDLA CARGO CARRIERS, KUTCH HAS FULFILL THE CONDITION S MENTIONED IN THE FIRST PROVISO TO SUB SECTION(1) OF SECTION 201 OF THE INCOME TAX ACT, 1961 AND HAS INCLUDED THE IMPUGNED AMOUNT OF RS.33 ,97,441/ - IN THE GROSS REVENUE AND H AS OFFERED IT FOR TAX. 22. WE FU RTHER OBSERVE THAT HONBLE APEX COURT IN THE CASE HINDUSTAN COCA COLA BEVERAGES LTD. VS. CIT[(2007)] 163 TAXMAN 355(SC) WHEREIN IT HAS BEEN HELD THAT IN CASE WHERE DEDUCTEE, RECIPIENT OF INCOME, HAS ALR EADY PAID TAXES ON AMOUNT RECEIVED FROM DEDUCTOR, D EPARTMENT ONCE AGAIN CANNOT RECOVER TAX FROM DEDUCTOR ON S A ME INCOME BY TREATING DEDUCTOR TO BE ASSESSEE - IN - DEFAULT FOR SHORTFALL IN ITS AMOUNT OF TAX DEDUCTED AT SOURCE 23 . WE THEREFORE, RESPECTFULLY FOLLOWING THE JUDGMENT OF HONBLE APEX COURT IN THE CASE HINDUSTAN COCA COLA BEVERAGES LTD. VS. CIT[(2007)] 163 TAXMAN 355(SC) (SUPRA) SET ASIDE THE ISSUES TO T HE FILE OF L D.ASSESSING OFFICER AND DIRECT HIM TO VERIFY FORM 26A AND ITS ANNEXURES PLACED AT PAGE 25 TO 29 OF THE PAPER BOOK AND ON BEING SATISFIED, DELETE THE DISALLOWANCE U/S.40(A)(IA) OF THE ACT OF RS.33,97,441/ - 23 .1 IN T HE RESULT THIS GROUND OF ASSESSEE IS ALSO ALLOWED FOR STATISTICAL PURPOSE. ITA NO.284/RJT/2014 & 104/RJT/2015 ASSTT. YEARS 2009 - 10 & 2010 - 2011 AND ITA NO.355/RJT/2014 ASSTT. YEAR 2009 - 2010 12 24 . APPEAL OF THE ASSESSEE FOR A.Y.2010 - 11 IS ALLOWED FOR STATISTICAL PURPOS E. O RDER PRONOUNCED IN THE COURT ON 21 ST APRIL , 2017 AT AHMEDABAD. SD/ - SD/ - ( MAHAVIR PRASAD ) JUDICIAL MEMBER (MANISH BORA D ) ACCOUNTANT MEMBER TRUE COPY A HMEDABAD; DATED 21 / 04 /2017 MANISH / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , / DR, ITAT, 6. / GUARD FILE .