ITO 18(3)(4), MUMBAI V. TOPLINE FOODS, MUMBAI

ITA 3013/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1515 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 01-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Additional evidence
• Section: 234B; 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH E, MU MBAI BEFORE SHRI P.K.BANSAL, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.3013/MUM/2014 FOR (ASSESSMENT YEAR : 2009-10 ) ITO- 18(3)(4), ROOM NO. 206, 2 ND FLOOR, PIRAMAL CHAMBERS, LALBAUG, PAREL, MUMBAI- 400012 VS. M/S TOPLINE FOODS 701B, BAFNA APARTMENTS, MOGUL LANE, MATUNGA, MUMBAI-400016 PAN: AACFT2497E (APPELLANT) (RESPONDENT) APPELLANT BY : SH. B.S.BIST (DR) ASSESSEE BY : SH. SHIRUDE M.R. (AR) DATE OF HEARING : 19.12.2016 DATE OF PRONOUNCEMENT : 21.12.2016 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JM: 1. THE PRESENT APPEAL FILED BY REVENUE U/S 253 OF THE INCOME-TAX ACT (ACT) IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF I NCOME-TAX (APPEALS) [FOR SHORT THE CIT(A)] 29, MUMBAI DATED 14.02.2004 FOR ASSES SMENT YEAR (AY) 2009-10. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APP EAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT (A) ERRED IN ADMITTING ADDITIONAL EVIDENCES UNDER RULE 46A WITHOUT APPRECIATING THE FACT THAT THE CONDITIONS MENTIONED IN RULE 46A ARE NOT SATISFIED IN THIS CASE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) ERRED IN CONCLUDING THAT SELF MADE VOUCHERS ARE ADM ISSIBLE EVIDENCE WITHOUT APPRECIATING THAT THESE VOUCHERS DO NOT CON TAIN NAME, COMPLETE ADDRESS AND IDENTITY OF THE, OWNER OF THE TRUCK/LOR RIES. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) ERRED IN DISALLOWING ONLY THOSE PAYMENT WHICH WERE MADE TO MOTORCYCLE OWNER, WHEREAS ON SAMPLE BASIS ONLY IN SOME CASES, VERIFICATION U/S 133(6) WAS MADE AND NOT IN ALL CASES. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE U/S 40(A)(IA) O F RS. 91,13,629/- WITHOUT CONSIDERING THAT ASSESSEE NEVER PROVED THAT INDIVID UAL TRUCK OWNERS ARE NOT OWNER OF MORE THAN TWO TRUCKS AS REQUIRED FOR EXCLU SION U/S 194C. 2 ITA NO. 3013/M/2014 M/S TOPLINE FOODS. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) ERRED IN HOLDING THAT INTEREST U/S 234B IS NOT CHAR GEABLE WITHOUT APPRECIATING THE FACT THAT CHARGING OF INTEREST U/S 234B OF THE I.T. ACT IS MANDATORY AND IT IS CHARGED ON THE ASSESSED INCOME AS REDUCED BY TDS AND ADVANCE TAX PAID BY THE ASSESSEE. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE-FIRM IS ENGAGED IN THE BUSINESS OF MANUFACTURING THERAPEUTIC FOODS AND SUPPLIER OF MID -DAY MILL IN THE SCHEME OF GOVERNMENT OF MAHARASHTRA. THE ASSESSEE FILED RETUR N OF INCOME FOR RELEVANT AY ON 26.09.2009. THE ASSESSMENT WAS COMPLETED U/S. 143(3 ) ON 30.12.2011. WHILE MAKING THE ASSESSMENT, THE ASSESSING OFFICER (AO) M ADE THE DISALLOWANCE OF RS. 91,13,629/- U/S 40A(IA) OF THE ACT HOLDING THAT TH E ASSESSEE HAS NOT DEDUCTED TAX AT SOURCE (TDS) ON THE AFORESAID AMOUNT. ON APPEAL BEF ORE THE LD. CIT(A), THE DISALLOWANCE WAS RESTRICTED TO RS.7,15,643/- (RS.6, 93,713/- + RS,21,930) THEREBY GRANTED SUBSTANTIAL RELIEF TO THE ASSESSEE. HENCE, BEING AGGRIEVED BY THE ORDER OF LD CIT(A) THE REVENUE HAS FILED THE PRESENT APPEAL BEF ORE US. 3. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIVE ( DR) FOR THE REVENUE AND THE LD. AUTHORIZED REPRESENTATIVE (AR) FOR ASSESSEE AND PER USED THE MATERIAL AVAILABLE ON RECORD. THE LD. DR FOR REVENUE ARGUED THAT ASSESSEE HAS NOT MADE TDS ON THE PAYMENT OF TRANSPORTATION CHARGES TO THE EXTENT OF RS. 1,07,12,587/-. THE ASSESSEE HAS DEDUCTED THE TDS ONLY ON THE PAYMENT OF RS. 15, 98,958/- ONLY. DURING THE ASSESSMENT THE ASSESSEE HAS NOT PROVIDED THE DETAIL S OF PAYMENT MADE TO THE VARIOUS TRANSPORTERS. AS INCOMPLETE DETAILS WERE PROVIDED B Y THE ASSESSEE, THE DETAILS WHICH WERE FILED, WERE ONLY SELF-MADE VOUCHERS. IN ABSENC E OF COMPLETE DETAILS, THE AO DISALLOWED THE PAYMENT ON ACCOUNT OF TRANSPORTATION CHARGES TO THE EXTENT OF RS. 91,13,629/- U/S 40A(IA) OF THE ACT. IT WAS FURTHER ARGUED THAT THE LD. CIT(A) ADMITTED THE ADDITIONAL EVIDENCE WITHOUT APPRECIATING THE CO NDITIONS MENTIONED UNDER RULE 46 OF IT RULES. ON THE OTHER HAND, LD. AR OF THE ASSE SSEE ARGUED THAT ASSESSEE FILED APPLICATION UNDER RULE 46A OF THE ACT FOR ADMITTING THE ADDITIONAL EVIDENCE. THE LD CIT (A) FORWARDED THE APPLICATION AND THE ADDITIONA L EVIDENCE TO THE AO FOR HIS REMAND REPORT. IN RESPONSE TO THE ADDITIONAL EVIDEN CE, THE AO FURNISHED HIS REMAND REPORT ON 08.01.2014. AFTER CONSIDERING THE REMAND REPORT OF AO THE LD. CIT(A) GRANTED PARTIAL RELIEF TO THE ASSESSEE. 3 ITA NO. 3013/M/2014 M/S TOPLINE FOODS. 4. WE HAVE CONSIDERED THE RIVAL CONTENTION OF THE PART IES AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. DURING THE ASSESSMENT PROCEED INGS, THE AO OBSERVED THAT THE ASSESSEE HAS NOT MADE TDS ON THE PAYMENT OF TRANSPO RT CHARGES FOR OUTWARD FREIGHT FROM FACTORY. THE ASSESSEE MADE THE FREIGHT PAYMENT OF RS. 1,07,12,587/- DURING THE YEAR. THE AO ASKED THE ASSESSEE TO EXPLAIN AS TO WH Y THE ABOVE PAYMENT SHOULD NOT BE DISALLOWED U/S 40A(IA). IN RESPONSE TO THE QUERI ES OF AO, THE ASSESSEE CONTENDED THAT ASSESSEE-FIRM ENGAGED IN THE TRANSPORT CONTRAC T AS WELL AS ENGAGED INDIVIDUAL TRANSPORTER FOR OUTWARD FREIGHT FOR MATERIAL DISPAT CHED FROM THE FACTORY. NO TDS IS DEDUCTED ON THE PAYMENT MADE TO THE INDIVIDUAL, TRA NSPORT OPERATORS AS THEY INSIST ON CASH PAYMENT WITHOUT TDS. THE CONTENTION OF ASSESSE E WAS NOT ACCEPTED BY AO. THE AO OBSERVED THAT OUT OF THE TOTAL PAYMENT MADE ON ACCOUNT OF TRANSPORTATION CHARGES, THE ASSESSEE HAS MADE TDS ONLY ON RS. 15,9 8,958/-. THUS, DISALLOWED REMAINING AMOUNT OF RS. 91,13,629/- U/S 40A(IA). B EFORE THE LD. CIT(A), THE ASSESSEE FILED AN APPLICATION UNDER RULE 46A ALONG WITH CERTAIN DETAILS. THE APPLICATION FOR ADDITIONAL EVIDENCE WAS ADMITTED BY LD. CIT(A). APPLICATION OF THE ASSESSEE WAS FORWARDED TO THE AO FOR HIS REMAND REP ORT. THE AO FURNISHED HIS REMAND REPORT DATED 08.01.2014. IN THE REMAND REPOR T, THE AO MENTIONED THAT THE TRANSPORT CHARGES AMOUNTING TO RS. 91,13,629/- WERE PAID TO INDIVIDUAL TRUCK OWNERS IN CASH. THE PAYMENT TO THREE CONTRACTORS T URNOVER EXCEEDING RS. 50,000/- WAS PAID BEARING THE FOLLOWING TRUCK NUMBER: TRUCK NUMBER AMOUNT (RS.) MH-18-2818 52,625/- MH-43-E-8759 50,090/- MH-18-4657 5,90,998/- IT WAS FURTHER MENTIONED IN THE REMAND REPORT THAT A NUMBER OF VOUCHERS DO NOT ACCOMPANY THE THIRD PARTY EVIDENCE LIKE LORRY RECEI PT OR OCTARI RECEIPT ETC. TWO VEHICLE NUMBER PROVIDED BY ASSESSEE ARE MOTORCYCLE AND NOT TRUCK I.E. VEHICLE NO. MH-18-2818 & MH-18-5579. THE LD. CIT(A) CONSIDERED THE REMAND REPORT OF AO AND OBSERVED THAT THERE IS NO DISCREPANCY IN MAKING THE PAYMENT ON SELF-MADE VOUCHER AS ASSESSEE IS DEALING WITH THE INDIVIDUAL TRUCK DRIVER WHO WERE NOT WELL- EDUCATED AND HAVE TO MAKE THE OPERATIONAL EXPENSES DURING THE JOURNEY AND THEY DEMAND THE PAYMENT IN CASH. IT WAS FURTHER OBSERVED THAT SUCH CASH PAYMENT DOES 4 ITA NO. 3013/M/2014 M/S TOPLINE FOODS. NOT MAKE ANY DIFFERENCE ONCE THE VOUCHERS ARE IN TH E NAME OF FIRM AND SIGNED BY TRUCK DRIVER. IT WAS FURTHER CONCLUDE THAT AO HAS N OT POINTED OUT ANY DEFECT ON SUCH VOUCHERS AND AFTER CONSIDERING THE REPORT OF AO, TH E LD. CIT(A) DISALLOWED THE PAYMENT MADE TO VEHICLE NO. MH-18-2818 OF RS. 52,62 5/- , RS. 50,090/- TO VEHICLE NO MH 43-E-8759, RS. 5,90,998/- TO VEHICLE NO MH-18 -4657 AND OTHER PAYMENT OF RS. 21,930/- PAID AGAINST THE VEHICLE NO. MH-18-557 9. THE LD CIT(A) SUSTAINED THE DISALLOWANCE OF RS. 6,93,717/- AND RS. 21,930/- PAID AGAINST THE VEHICLE NO. MH-18-5579 AND DELETED THE REMAINING DISALLOWANCE. 5. WE HAVE SEEN THAT THE CONCLUSION ARRIVED BY THE LD. CIT(A) IS BASED ON DOCUMENTARY EVIDENCE. THE LD. CIT(A) CONSIDERED THE DISCREPAN CIES MENTIONED BY AO IN HIS REMAND REPORT. NO OTHER DISCREPANCIES EXCEPT AS BRO UGHT OUT BY AO IN HIS REMAND REPORT WERE BROUGHT TO OUR NOTICE, WHICH HAS ALREAD Y BEEN CONSIDERED BY LD CIT(A). THUS, WE DO NOT FIND ANY ILLEGALITY OR INFIRMITY IN THE ORDER PASSED BY LD. CIT(A) WHILE SUSTAINING THE DISALLOWANCE OF RS. 7,29,643/- AND DELETING THE REMAINING DISALLOWANCE U/S 40 (A) (IA). 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 21 ST DECEMBER, 2016. SD/- SD/- (P.K.BANSAL) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 21/12/2016 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/