THE ITO, WARD - 2(3), Vijayawada V. M/s Coastal Transporters, Vijayawada

ITA 34/VIZ/2013

• Counselvise Citation: [2016] 130 COUNSELVISE.COM (IT) 9722 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 9 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 16-02-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 01-02-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T. SATYANADHAM
• Keywords: Additional evidence; TDS
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 142(1); 40(a)(ia); 194C; 143(1); 143(2); 13

Judgement Text

ITA NO.34/VIZAG/2013 COASTAL TRANSPORTERS, VIJAYAWADA 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NO.34/VIZAG/2013 ( / ASSESSMENT YEAR: 2008-09) ITO, WARD - 2(3), VIJAYAWADA VS. COASTAL TRANSPORTERS, VIJAYAWADA [PAN: AADFC3 353R ] ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SHRI T. SATYANADHAM, DR / RESPONDENT BY : SHRI C.P. RAMASWAMY, AR / DATE OF HEARING : 06.10.2016 / DATE OF PRONOUNCEMENT : 30.11.2016 / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST ORDER OF THE CIT(A), VIJAYAWADA DATED 27.11.2012 AND IT PERTAINS TO THE ASSESSMENT YEAR 2008-09. ITA NO.34/VIZAG/2013 COASTAL TRANSPORTERS, VIJAYAWADA 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A PARTNERSHIP FIRM DERIVING INCOME FROM TRANSPORTATION BUSINESS F ILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008-09 ON 12.8.2008 DECLARING TOTAL INCOME OF ` 95,400/-. THE RETURN WAS PROCESSED U/S 143(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS 'THE AC T'), LATER ON, CONVERTED INTO SCRUTINY ASSESSMENT AND ACCORDINGLY NOTICES U/S 143(2) & 142(1) OF THE ACT CALLING FOR SPECIFIC INFORMATION WERE ISSUED. IN RESPONSE TO NOTICES, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED AND FURNISHED BOOKS OF ACCOUNTS AND OTHER DETAILS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ON VERIFICATION O F THE BOOKS OF ACCOUNTS, THE A.O. NOTICED THAT THE ASSESSEE HAS CL AIMED FREIGHT CHARGES AMOUNTING TO ` 54,84,150/-. TO ASCERTAIN THE NATURE OF PAYMENTS AND ALSO TO EXAMINE THE APPLICABILITY OF THE PROVISIONS OF SECTION 194C OF THE ACT, THE A.O. ISSUED A NOTICE AND ASKED TO FURNISH LEDGER EXTRACT OF TRANSPORTATION CHARGES ALONG WITH DETAILS OF VEHICL E NUMBERS AND OTHER PARTICULARS. IN RESPONSE TO NOTICE, THE ASSESSEE H AS FILED BOOKS OF ACCOUNTS AND ACCOUNT COPY OF FREIGHT EXPENSES PAID, WHICH CONTAINS LORRY NUMBERS AND AMOUNT OF FREIGHT CHARGES PAID TO EACH LORRY. THE A.O., ON PERUSAL OF THE DETAILS FILED BY THE ASSESS EE, OBSERVED THAT THE ASSESSEE CLAIMED TO HAVE PAID TRANSPORTATION CHARGE S RANGING FROM ` 40,000/- TO ` 49,900/-, THEREFORE, CROSS VERIFIED THE VEHICLE NU MBERS ITA NO.34/VIZAG/2013 COASTAL TRANSPORTERS, VIJAYAWADA 3 FURNISHED BY THE A.R. WITH REFERENCE TO WEBSITE OF THE A.P. ROAD TRANSPORT CORPORATION AND FOUND THAT SOME OF THE RE GISTRATION NUMBERS GIVEN BY THE A.R. BELONGS TO MOTOR CYCLES, AUTO RIC KSHAWS, MOTOR CARS AND BUSES. THEREFORE, OPINED THAT THE FREIGHT CHAR GES CLAIMED BY THE ASSESSEE IS BOGUS AND ACCORDINGLY MADE ADDITIONS OF ` 54,84,150/-. 3. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE A SSESSEE HAS FILED ELABORATE WRITTEN SUBMISSIONS ALONG WITH ADDITIONAL EVIDENCES IN THE FORM OF LIST OF PAYMENTS MADE TO LORRY OWNERS ALONG WITH VEHICLE NUMBERS. THE ASSESSEE ALSO FILED A PETITION FOR AD MISSION OF ADDITIONAL EVIDENCES UNDER RULE 46A AND SUBMITTED THAT THE A.R . OF THE ASSESSEE HAS FILED INCORRECT DETAILS OF VEHICLE NUMBERS AT T HE TIME OF ASSESSMENT PROCEEDINGS, BASED ON WHICH THE A.O. HAS CONCLUDED THAT FREIGHT CHARGES CLAIMED BY THE ASSESSEE IS BOGUS. BUT, THE FACT IS THAT THE A.R. OF THE ASSESSEE, AT THE TIME OF FILING DETAILS HAS NOT OBTAINED CORRECT DETAILS FROM THE ASSESSEE AND ACCORDINGLY THE ASSES SEE HAS LODGED A COMPLAINT WITH THE INSTITUTE OF CHARTERED ACCOUNTAN TS OF INDIA FOR TAKING NECESSARY ACTION AGAINST THE A.R. FOR PROFESSIONAL MISCONDUCT. 4. THE CIT(A) HAS FORWARDED ADDITIONAL EVIDENCES FI LED BY THE ASSESSEE TO THE A.O. FOR HIS COMMENTS. THE ASSESSI NG OFFICER VIDE HIS ITA NO.34/VIZAG/2013 COASTAL TRANSPORTERS, VIJAYAWADA 4 REMAND REPORT DATED 23.5.2012 HAS STATED THAT ON VE RIFICATION OF THE INFORMATION FURNISHED BY THE ASSESSEE AS WELL AS TH E CLARIFICATION SUBMITTED BY THE THEN A.R., IT APPEARS THAT THE ASS ESSEE HAS RETRACTED FROM THE INFORMATION ALREADY FURNISHED DURING THE C OURSE OF ASSESSMENT PROCEEDINGS AND FILED ENTIRELY DIFFERENT INFORMATIO N UNDER THE GUISE OF ADDITIONAL EVIDENCES, WHICH CANNOT BE RELIED UPON A T THIS JUNCTURE. THE A.O. ALSO STATED THAT AT THE TIME OF ASSESSMENT, TH E A.O. HAS EXAMINED THE INFORMATION FILED BY THE ASSESSEE IN DETAIL AND CAME TO A CONCLUSION THAT THE ASSESSEE HAS FILED INACCURATE PARTICULARS OF VEHICLES IN RESPECT OF WHICH IT HAS CLAIMED FREIGHT CHARGES AND ACCORDINGL Y DISALLOWED, THEREFORE, OBJECTED FOR ADMITTING ADDITIONAL EVIDEN CES FILED BY THE ASSESSEE. THE CIT(A) AFTER CONSIDERING THE EVIDENC ES FILED BY THE ASSESSEE AND ALSO TAKEN INTO ACCOUNT THE REMAND REP ORT OF THE A.O., HELD THAT IT TRANSPIRED FROM THE RECORD THAT ALL TH E VEHICLE OWNERS ARE HAVING PAN NUMBERS AND ACCORDINGLY THE PROVISIONS O F SECTION 194C OF THE ACT IS NOT APPLICABLE. THE CIT(A) FURTHER HELD THAT THE ASSESSEE HAS FILED ADDITIONAL EVIDENCES IN THE FORM OF TRANSPORT ATION CHARGE BILLS CLAIMED FROM M/S. HINDUSTAN COCA COLA BEVERAGES COM PANY LTD. ALONG WITH TRIP SHEETS. THE COMPLETE DETAILS OF TRANSPOR TATION CHARGES WITH VEHICLE NUMBERS HAVE BEEN FURNISHED. WITH THESE OB SERVATIONS, DIRECTED THE A.O. TO DELETE ADDITIONS MADE TOWARDS TRANSPORT ATION CHARGES U/S ITA NO.34/VIZAG/2013 COASTAL TRANSPORTERS, VIJAYAWADA 5 40(A)(IA) OF THE ACT. AGGRIEVED BY THE CIT(A) ORD ER, THE REVENUE IS IN APPEAL BEFORE US. 5. THE LD. D.R. SUBMITTED THAT THE LD. CIT(A) HAS F AILED TO CONSIDER THE REMAND REPORT SUBMITTED BY THE A.O., WHEREIN IT WAS CATEGORICALLY REJECTED ADDITIONAL EVIDENCES FILED BY THE ASSESSEE AT THE TIME OF APPELLATE PROCEEDINGS. THE D.R. FURTHER SUBMITTED THAT THE CIT(A) OUGHT NOT TO HAVE ADMITTED THE ADDITIONAL EVIDENCES AS THE INFORMATION SUBMITTED BEFORE THE A.O. DURING THE ASSESSMENT PRO CEEDINGS IS THE SAME BASIS ON WHICH THE AUDIT REPORT AND THE FINANC IAL STATEMENTS HAVE BEEN PREPARED AND WHICH WAS CERTIFIED BY THE AUDITO R. IT IS FURTHER ARGUED THAT THE LD. CIT(A) ERRED IN STATING THAT TH E PROVISIONS OF SECTION 194C(6) OF THE ACT IS APPLICABLE AND THE ASSESSEE D ID NOT FILE FORM NO.15J BEFORE THE JURISDICTIONAL COMMISSIONER OF IN COME TAX ON OR BEFORE 30.6.2008 AS PER THE PROVISIONS OF SECTION 1 94C(7) OF THE ACT. THE CIT(A) ERRED IN OBSERVING THAT THE TOTAL FREIGH T CHARGES DID NOT EXCEED THE MAXIMUM LIMIT BEYOND WHICH THE TDS PROVI SIONS ARE APPLICABLE, SINCE AS PER THE ADDITIONAL INFORMATION FURNISHED, EXCEPT IN THE CASE OF 6 LORRIES, ALL PAYMENTS TO OTHER 13 LOR RIES EXCEEDED THE MAXIMUM LIMIT. ITA NO.34/VIZAG/2013 COASTAL TRANSPORTERS, VIJAYAWADA 6 6. ON THE OTHER HAND, THE LD. A.R. FOR THE ASSESSEE STRONGLY SUPPORTED THE CIT(A) ORDER. THE A.R. FURTHER SUBMI TTED THAT THE CIT(A), BASED ON THE ADDITIONAL EVIDENCES FILED BY THE ASSE SSEE IN THE FORM OF TRIP SHEETS, GAVE CATEGORICAL FINDING WHEREIN ALL D ETAILS PERTAINING TO TRANSPORTATION CHARGES HAS BEEN FURNISHED. THE A.R . FURTHER ARGUED THAT THE THEN A.R. OF THE ASSESSEE, AT THE TIME OF ASSES SMENT HAS FURNISHED INCORRECT PARTICULARS OF VEHICLE NUMBERS WITHOUT TH E KNOWLEDGE OF THE ASSESSEE BASED ON WHICH THE A.O. CONCLUDED THAT THE FREIGHT CHARGES INCURRED BY THE ASSESSEE IS BOGUS, BUT THE FACT IS THAT THE ASSESSEE HAS FILED COMPLETE DETAILS OF TRANSPORTATION CHARGES AL ONG WITH BILLS, WHICH WAS VERIFIED BY THE CIT(A) AND HELD THAT THE TRANSP ORTATION CHARGES IS NOT SUBJECT TO TDS PROVISIONS U/S 194C OF THE ACT A ND ACCORDINGLY, THE CIT(A) ORDER SHOULD BE UPHELD. 7. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE A.O. DISALLOWED TRANSPORTATION CHARGES FOR THE REAS ON THAT THE ASSESSEE HAS FAILED TO SUBSTANTIATE FREIGHT CHARGES WITH NEC ESSARY EVIDENCES. THE A.O. FURTHER OBSERVED THAT THE VEHICLE NUMBERS FURN ISHED BY THE ASSESSEE ARE MISMATCHED, THEREFORE, OPINED THAT THE FREIGHT CHARGES CLAIMED BY THE ASSESSEE IS BOGUS AND CANNOT BE ALLO WED. IT IS THE ITA NO.34/VIZAG/2013 COASTAL TRANSPORTERS, VIJAYAWADA 7 CONTENTION OF THE ASSESSEE THAT THE A.R. OF THE ASS ESSEE HAS FILED INCORRECT DETAILS OF TRANSPORTATION CHARGES BASED O N WHICH THE A.O. CAME TO THE CONCLUSION THAT THE TRANSPORTATION CHARGES C LAIMED BY THE ASSESSEE IS BOGUS. BUT, THE FACT IS THAT THE ASSES SEE HAS FILED ALL THE DETAILS WITH NECESSARY VEHICLE & PAN NUMBERS OF THE TRANSPORTERS TO PROVE THAT THE EXPENDITURE IS NOT LIABLE FOR TDS. WE FIND FORCE IN THE ARGUMENTS OF THE ASSESSEE FOR THE REASON THAT DURIN G THE COURSE OF APPELLATE PROCEEDINGS, THE CIT(A), AFTER CONSIDERIN G THE ADDITIONAL EVIDENCES FILED BY THE ASSESSEE AND ALSO TAKEN INTO ACCOUNT THE REMAND REPORT OF THE A.O., GAVE A CATEGORICAL FINDING THAT TRANSPORTATION CHARGES PAID BY THE ASSESSEE DOES NOT EXCEED THE PRESCRIBED LIMIT PROVIDED U/S 194C OF THE ACT FOR DEDUCTION OF TAX AT SOURCE. TH E CIT(A) FURTHER OBSERVED THAT ALL THE VEHICLE OWNERS ARE HAVING PAN NUMBERS AND ACCORDINGLY AS PER THE PROVISIONS OF SECTION 194C(6 ) OF THE ACT, TAX NEED NOT BE DEDUCTED, IN CASE OF OWNERS OF TRUCKS HAVING ONE OR TWO TRUCKS AND USED IN THE BUSINESS OF PLYING, HIRING OR LEASI NG GOODS CARRIAGES ON FURNISHING OF THEIR PAN NUMBERS. THE RELEVANT OBSE RVATIONS OF THE CIT(A) ARE EXTRACTED BELOW: I HAVE GONE THROUGH THE SUBMISSIONS OF THE APPELLANT , SEEN THE ASSESSMENT ORDER, PERUSED THE REMAND REPORT AND OBT AINED THE REJOINDER OF THE APPELLANT ON THE REMAND REPORT SENT BY THE A .O. IT TRANSPIRES FROM RECORDS AND MATERIAL ON RECORD THAT DURING THE COUR SE OF THE ASSESSMENT ITA NO.34/VIZAG/2013 COASTAL TRANSPORTERS, VIJAYAWADA 8 PROCEEDINGS, THE THEN AR HAS FURNISHED WRONG INFORM ATION TO THE AO, BASED ON WHICH THE ASSESSMENT HAS BEEN FINALIZED. SINCE, THE INFORMATION WAS PROVIDED TO THE AO BY TH E THEN AR, WITHOUT GETTING THE CONSENT OF THE APPELLANT, WHICH HAS LED TO THE COMPLETION OF THE ASSESSMENT PROCEEDINGS ON 24.12.2010, OPPORTUNI TY UNDER RULE 46A WAS SOUGHT BY PROVIDING CORRECT INFORMATION AS APPE ARING IN THE BOOKS. THIS REQUEST OF THE APPELLANT WAS ACCEPTED BY MY PR EDECESSOR IN OFFICE AND CALLED FOR A REPORT FROM THE AO. AS IT IS SEEN FROM THE REMAND REPORT, THE AO BY AND LARGE STICK TO THE ORIGINAL GUNS. IN THE REJOINDER, THE AR HAS REFUTED THE REMAND REPORT AND THE ASSESSMENT OR DER LINE BY LINE. IT IS IMPORTANT TO NOTE HERE THAT THE APPELLANT IS A T RANSPORTER OF BOTTLES TO COCA-COLA COMPANY. IN THE ASSESSMENT PROCEEDINGS, THE AO CONCENTRATED HIS INVESTIGATION ON FREIGHT PAYMENTS MADE AND CONCLUDED THAT IN MOST OF THE CASES TO WHOM PAYMENTS HAVE BEE N MADE WERE HAVING VEHICLES, WHICH WERE NOT REGISTERED AS TRUCK S. HENCE, HE CAME TO THE CONCLUSION THAT FREIGHT PAYMENTS WERE BOGUS AND DISALLOWED THE SAME WHILE FINALIZING THE ASSESSMENT PROCEEDINGS. AT THE TIME OF CONCLUDING THE ASSESSMENT PROCEEDINGS, THE AO COULD NOT BE FOUND FAULT WITH AS HE WAS GUIDED BY THE INFORMATION PROVIDED B Y THE THEN AR. IN THE COURSE OF THE REMAND PROCEEDINGS, THE APPELLANT HAS PROVIDED EVERY INFORMATION INCLUDING SERIAL NO., DATE, INVOICE NO. , COMMISSION INVOICE NO., PLACES OF TRANSPORTATION, VEHICLE NO., RATE PE R CASE (CARTON), AMOUNT, TOLLGATE ETC AND ETC., WHICH GIVES BIRDS EYE VIEW OF THE TRANSACTIONS INVOLVED. IT IS ALSO RELEVANT TO NOTE HERE THAT AS PER SECTION 194(C)(6), NO DEDUCTION OF TAX IS NEEDED IN CASE OF OWNERS OF TRUCKS, HAVING ONE OR TWO TRUCKS AND USED IN THE BUSINESS OF PLYING, HIRI NG OR LEASING GOODS CARRIAGES, ON FURNISHING OF HIS PAN NUMBER. IT IS R ELEVANT TO NOTE HERE THAT AS PER THE MATERIAL AVAILABLE ON RECORD, ALL T HE VEHICLE OWNERS ARE HAVING PAN NUMBERS. IT IS ALSO IMPORTANT TO NOTE HE RE THAT ONLY FEW TRUCKS WERE FOUND PLYING TWICE ON A SINGLE DAY, BUT HOWEVER, THE TOTAL FREIGHT RECEIPTS DID NOT EXCEED THE MAXIMUM LIMIT B EYOND WHICH THE TDS PROVISIONS ARE APPLICABLE. IN VIEW OF SUCH A SCENAR IO, NO TDS PROVISIONS ARE APPLICABLE AND AS SUCH THE ADDITION MADE BY THE AO IN TERMS OF THE PROVISIONS OF SECTION 40(A)(IA) AT ` 54,84,150 IS FOUND UNSUSTAINABLE AND AS SUCH THE AO IS DIRECTED TO DELETE THE SAME. 8. THE FACTS REMAIN UNCHANGED. THE REVENUE FAILS T O BRING ON RECORDS ANY MATERIALS TO PROVE THE FINDINGS OF FAC TS RECORDED BY THE CIT(A) ARE INCORRECT. THEREFORE, WE UPHOLD THE CIT (A) ORDER AND DISMISS THE APPEAL FILED BY THE REVENUE. ITA NO.34/VIZAG/2013 COASTAL TRANSPORTERS, VIJAYAWADA 9 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 30 TH NOV16. SD/- SD/- ( . ) ( . ) (G. MANJUNATHA) (V. DURGA RAO) /ACCOUNTANT MEMBER /JUDICIAL MEMBER ! /VISAKHAPATNAM: % /DATED : 30.11.2016 VG/SPS '! (! /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT THE ITO, WARD-2(3), VIJAYAWADA 2. / THE RESPONDENT M/S. COASTAL TRANSPORTERS, 59A- 7-3/1, PLOT NO.35, 2 ND CROSS ROAD, RTC COLONY, VIJAYAWADA-520 008. 3. ) / THE CIT, VIJAYAWADA 4. ) ( ) / THE CIT(A), VIJAYAWADA 5. ! , , , , ! / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // /0 , (SR.PRIVATE SECRETARY) , , ! / ITAT, VISAKHAPATNAM