Shri Saiyad Saukatali Saiyadmiya, Kheda V. The Income tax Officer,Ward-3, Nadiad

ITA 3168/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 76693 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 18-03-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 15-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P BATHEJA
• Assessee Lawyers: M J SHAH
• Keywords: Bonafide belief

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL C HATURVEDI, A.M.) I.T. A. NO. 3168 /AHD/2011 (ASSESSMENT Y EAR: 2006-07) SAIYAD SAUKATLI SAIYADMIYA PROP. SAIBABA TRANSPORT VILLAGE GOBLAJ, DIST. KAIRA. V/S THE ITO, WARD-3, NADIAD (APPELLANT) (RESPONDENT) PAN: ASBPS3510L APPELLANT BY : SHRI M.J. SHAH A.R. RESPONDENT BY : SHRI O.P. BATHEJA, SR. D.R. ( )/ ORDER DATE OF HEARING : 18-03-2014 DATE OF PRONOUNCEMENT : 09 -05-2014 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF CIT(A)-IV, BARODA DATED 12.09.2011 FOR A.Y. 2006-07. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 3. ASSESSEE IS AN INDIVIDUAL STATED TO BE ENGAGED IN T HE BUSINESS OF PLYING OF TRUCKS IN THE NAME AND STYLE OF SAIBABA TRANSPORT. ASSESSEE FILED HIS ITA NO 3168/AHD/2011 . A.Y. 2006- 07 2 RETURN OF INCOME FOR AY 2006-07 ON 27.11.2006 DECLA RING TOTAL INCOME OF RS 3,18,567/-. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AO NOTI CED THAT ASSESSEE WAS DOING CONTRACT WORK FOR HINDUSTAN COCA COLA BRA VERIES LTD AND HAD RECEIVED PAYMENT OF RS 80.64 LACS WHICH EXCEEDED TH E MONETARY LIMIT PRESCRIBED U/S 44AB OF THE ACT AND THEREFORE THE AS SESSEE SHOULD HAVE GOT HIS ACCOUNTS AUDITED FOR THE PREVIOUS YEAR 1.4. 2005 TO 31.3.2006 BEFORE THE SPECIFIED DATE AND FURNISHED THE AUDIT R EPORT. SINCE THE ASSESSEE HAD FAILED TO COMPLY WITH THE PROVISIONS O F S. 44AB, THE AO WAS OF THE VIEW THAT ASSESSEE HAS COMMITTED DEFAULT SO AS TO ATTRACT PENALTY U/S 271B OF THE ACT. THE SUBMISSION OF THE ASSESSEE THAT HE WAS A COMMISSION AGENT AND THE COMMISSION EARNED BY HIM WAS LESS THAN THE MONETARY LIMIT PRESCRIBED U/S 44AB FOR THE AUDIT WA S NOT FOUND ACCEPTABLE TO THE AO. HE THEREAFTER VIDE ORDER DATE D 30.12.2010 LEVIED PENALTY @ 1/2% OF THE TURNOVER (AMOUNTING TO RS 40, 324/). AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) VIDE ORDER DATED 12.9.2011 CONFIRMED THE ORDER OF AO BY HOLDING AS UNDER:- 2.3 BUT ENTIRE ABOVE SUBMISSION OF THE A.R IS NOT A CCEPTABLE IN VIEW OF THE FACTS INVOLVED IN THE CASE OF APPELLANT. IN THE CASE OF APPELLANT FORM NO. 16A DA TED 18.4.2006 HAS BEEN ISSUED BY ASSISTANT MANAGER, FINANCE OF HINDUSTAN COCA COLA. ON PERUSAL OF SUCH FORM 16A IT IS SEEN THAT AMOUNTS OF TDS OF RS 1,80,671/- HAVE BEEN MADE BY THIS COMPANY ON THE PAYMENTS MADE TO THE APPELLANT ON DIFFERENT DATES. THE TOTAL PAYMENTS OF RS. 80,64,85 5/- HAVE BEEN CREDITED TO THE BANK ACCOUNT OF THE APPELLANT. THE TDS HAVE BEEN MADE BY THE ABOVE COMP ANY IN THE CAPACITY OF CONTRACTOR AND OBVIOUSLY THE APPELLANT IS CONTRACTEE ASSESSEE. AGAIN ON PERU SAL OF RECEIPT & PAYMENTS ACCOUNT IN THE CASE OF APPELLANT FOR THE YEAR UNDER CONSIDERATION, IT IS F URTHER SEEN THAT AMOUNT OF RS. 80,64,855/- AS PAID BY THE ABOVE COMPANY IS CREDITED IN THE ACCOUNT OF APP ELLANT AND OUT OF SUCH AMOUNT AS CREDITED, PAYMENTS HAVE BEEN TO VARIOUS PERSONS ON ACCOUNT OF PURCHASES OF DIESELS. FURTHER, THE APPELLANT HAS MADE PAYMENTS AS COMMISSION TO TRUCK OWNERS AND TRU CK DRIVERS FROM HIS ACCOUNTS. OUT OF ABOVE AMOUNTS OF RS. 80,64,855/-, THE PAYMENTS HAVE ALSO BEEN MADE BY THE APPELLANT ON ACCOUNT OF SHORT BROKEN EXPENSES. THUS THE ENTIRE ABOVE RECEIPTS OF RS. 80,64,855/- AND VARIOUS EXPENDITURES INCURRED OUT OF SUCH RECEIPTS ARE ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS OF THE APPELLANT FOR THE YEAR UNDER ITA NO 3168/AHD/2011 . A.Y. 2006- 07 3 CONSIDERATION. THOUGH, THE APPELLANT HAS ALSO SHOWN ITS COMMISSION OF RS. 5,98,436/- IN THE PAYMENT SIDE OF ABOVE ACCOUNT, BUT THIS ASPECT DOES NOT AFF ECT THE MERITS OF THE CASE. THE VERY FACT IS THAT T HE APPELLANT IS GETTING THE ABOVE ENTIRE RECEIPTS CRED ITED IN ITS BANK ACCOUNT AND BOOKS OF ACCOUNT AND INCURRING VARIOUS EXPENSES OUT OF THE SAME. THESE F ACTS SHOW THAT APPELLANT IS JUST NOT ACTING AS AN AGENT ON BEHALF OF THE ABOVE COMPANY AND GETTING ON LY ITS COMMISSION PART IN LIEU OF SERVICES RENDERED BY IT AND REMAINING AMOUNTS ARE DIRECTLY PAID TO TR UCK OWNERS BY THE ABOVE COMPANY. THE ENTIRE STATE OF AFFAIRS SHOW THAT APPELLANT HAS GOT CREDITED ABO VE RECEIPT OF RS. 80,64,255/- AS CONTRACTEE ASSESSE E AND HAS MET OUT VARIOUS EXPENSES AT ITS OWN. THUS I NSTEAD OF ACTING MERELY AS COMMISSION AGENT, THE APPELLANT IS MANAGING AFFAIRS OF BUSINESS OF TRANSP ORTATION AT ITS OWN AND THEREFORE, IT CAN BE SAID T HAT HE IS LIABLE TO GET HIS BOOKS OF ACCOUNTS AUDITED I N TERMS OF PROVISIONS OF SECTION 44AB OF THE ACT. T HE TURNOVER/ RECEIPTS IN THE CASE OF APPELLANT IS EXCE EDING THE MONETARY LIMIT AS PRESCRIBED UNDER THE PROVISIONS OF SECTION 44AB OF THE ACT. IN VIEW OF T HESE FACTS, I AM OF THE VIEW, THAT A.O HAS CORRECTL Y LEVIED PENALTY OF RS. 40,324/-U/S.271B OF THE ACT, IN THE, CASE OF THE APPELLANT AND, THEREFORE, THE S AME IS CONFIRMED. 5. AGGRIEVED BY THE ORDER OF CIT(A), ASSESSEE IS NOW I N APPEAL BEFORE US. 6. BEFORE US ; THE LD. A.R. SUBMITTED THAT ASSESSEE DOES AGENCY B USINESS FOR COCA COLA HINDUSTAN BRAVERIES PVT LTD BY ARRANGING SUPPLY OF TRUCKS ON HIRE TO TRANSPORT THEIR GOODS. THE ASSESSEE AVAILS THE TRUCKS FROM THE TRUCK OWNERS FOR DEPLOYMENT WITH THE PRINCIPAL. HE FURTHE R SUBMITTED THAT THE ASSESSEE ACTED AS KACHA ARATIA AND NOT AS A TRADER AND THE RECEIPTS WERE RECEIVED BY HIM IN FIDUCIARY CAPACITY AND DID NOT B ELONG TO THE ASSESSEE AND HIS INCOME WAS FROM COMMISSION. HE FURTHER SUBM ITTED THAT ASSESSEE WAS UNDER THE BONAFIDE BELIEF THAT SINCE I T WAS ACTING SIMILAR TO KACHA ARAHATIA, THEREFORE AS PER CIRCULAR NO 452 DA TED 17.3.1986 ISSUED BY CBDT, THE AMOUNT RECEIVED FROM THE PRINCIPAL WAS NO T IN THE NATURE OF TURNOVER AND THEREFORE IT WAS NOT OBLIGED TO GET TH E ACCOUNTS AUDITED UNDER S. 44AB OF THE ACT. HE THEREFORE SUBMITTED TH AT SINCE THE ASSESSEE WAS UNDER A BONAFIDE BELIEF, THE PENALTY LEVIED U/S 271B BE DELETED. LD D.R. ON THE OTHER HAND SUPPORTED THE ORDER OF AO AN D CIT(A). ITA NO 3168/AHD/2011 . A.Y. 2006- 07 4 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. 8. BEFORE US, THE ARGUMENT OF THE ID AR IS THAT THE AS SESSEE WAS ACTING AS AN AGENT AND HAD ARRANGED THE TRUCKS OWNED BY OTHERS O N HIRE FOR HIS PRINCIPAL AND THE RECEIPTS WHICH WAS RECEIVED BY HI M WAS RECEIVED IN A FIDUCIARY CAPACITY WHICH DID NOT BELONG TO HIM AND WERE PAID BY HIM AND HE HAD ONLY RETAINED HIS COMMISSION. HE WAS FURTHER UNDER A BONAFIDE BELIEF THAT HIS ACTIVITY WAS SIMILAR TO KACHA ARAHA TIA AND THEREFORE THE AMOUNT RECEIVED BY HIM AS AN AGENT WAS NOT HIS TURN OVER AND THEREFORE HE WAS NOT LIABLE FOR TAX AUDIT U/S 44AB OF THE ACT. T HE AFORESAID SUBMISSIONS OF THE ASSESSEE, PRIMA FACIE, APPEARS O F BE BONAFIDE AND THE REVENUE HAS NOT BROUGHT ANY MATERIAL ON RECORD TO S UPPORT THAT THE BELIEF OF THE ASSESSEE WAS NOT BONAFIDE. CBDT VIDE CIRCULA R NO 452 DATED 17.3.1986 REGARDING THE APPLICABILITY OF S 44AB IN THE CASES OF COMMISSION AGENTS, ARHATIAS ETC HAS CLARIFIED THAT IN THE CASE OF AGENT WHOSE POSITION IS SIMILAR TO THAT OF KUCCHA ARHATIA , THE TURNOVER IS ONLY THE COMMISSION AND DOES NOT INCLUDE THE SALES ON BE HALF OF THE PRINCIPALS. WITH RESPECT TO LEVY OF PENALTY U/S 271B, THE AO IS VESTED WITH DISCRETION TO LEVY THE PENALTY. IT IS A SETTLED LAW THAT WHEN THERE IS TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF LAW, THE ENDS OF JUSTICE REQUIRE THAT DISCRETION SHOULD NOT BE EXERCISED IN FAVOUR OF PUN ISHING A MINOR DEFAULT. THE HON'BLE SUPREME COURT IN THE CASE OF HINDUSTAN STEEL LTD. VS STATE OF ORISSA (1972) 83 ITR 26 (SC) HAS HELD THAT: 'EVEN IF A MINIMUM PENALTY IS PRESCRIBED, THE AUTHO RITY COMPETENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PEN ALTY WHEN THERE IS A TECHNICAL OR ITA NO 3168/AHD/2011 . A.Y. 2006- 07 5 VENIAL BREACH OF THE PROVISIONS OF THE ACT OR WERE THE BREACH FLOWS FROM A BONA FIDE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN TH E MANNER PRESCRIBED BY THE STATUTE.' 9. CONSIDERING THE TOTALITY OF THE FACTS AND PLACING R ELIANCE OF THE AFORESAID DECISION OF HON'BLE APEX COURT, WE ARE OF THE VIEW THAT IN THE PRESENT CASE NO PENALTY UNDER S. 271B OF THE ACT WAS IMPOSA BLE AND THEREFORE DIRECT FOR ITS DELETION. THUS THIS GROUND OF ASSESS EE IS ALLOWED. 10. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN OPEN COURT ON 09 - 05 - 2014. SD/- SD/- (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AH MEDABAD